Enel Americas Annual Report 2013

Plain-text annual report

Annual Report s i s r e n E t r o p e R l a u n n A 3 1 0 2 Enersis es una empresa del Grupo Enel www.enersis.cl Annual Report and Financial Statements of Enersis 2013 @ABCDEF) GA!A Santiago Stock Exchange ENERSIS New York Stock Exchange ENI Madrid Stock Exchange XENI Enersis S.A. was incorporated, initially, with the name Compañía Metropolitana de Distribución Eléctrica S.A., and changed its name to Enersis S.A. on August 1, 1988. Its corporate capital is ThCh$5,669,280,725, divided into 49,092,772,462 shares. Its shares are quoted on the Chilean exchanges, on the New York Stock Exchange in the form of American Depositary Receipts (ADR) and on the Latin American Securities Exchange of the Madrid Stock Exchange (Latibex). Its main business is the exploitation, development, operation, generation, distribution, transmission, transformation and/or sale of energy in any of its forms or nature, directly or through other companies, and also businesses in telecommunications and engineering consultancy services, in Chile and abroad, in addition to investing and managing its investments in subsidiaries and associate companies. Its total assets amounted to ThCh$15,177,664,307 as of December 31, 2013. Enersis controls and manages a group of companies that operate in the electricity markets of five countries in Latin America (Argentina, Brazil, Chile, Colombia and Peru). In 2013, net income attributable to the dominant company amounted to MCh$658,514 and operating income amounted to MCh$1,741,138. At the end of 2013, it provided direct jobs to 11,574 people through its subsidiaries in South America. Directors and Executive Officers CHAIRMAN Pablo Yrarrázaval Valdés PHONE NUMBER (56-2) 2353 4663 VICE CHAIRMAN Borja Prado Eulate PHONE NUMBER (56-2) 2353 4631 DIRECTOR Andrea Brentan PHONE NUMBER (56-2) 2353 4631 DIRECTOR Luigi Ferraris PHONE NUMBER (56-2) 2353 4631 DIRECTOR Hernán Somerville Senn PHONE NUMBER (56-2) 2353 4631 DIRECTOR Leonidas Vial Echeverría PHONE NUMBER (56-2) 2353 4631 DIRECTOR Rafael Fernández Morandé PHONE NUMBER (56-2) 2353 4631 CEO Ignacio Antoñanzas Alvear PHONE NUMBER (56-2) 2353 4510 DEPUTY CEO Massimo Tambosco PHONE NUMBER (56-2) 2353 4613 COMMUNICATIONS OFFICER Daniel Martini PHONE NUMBER (56-2) 2353 4666 INTERNAL AUDIT OFFICER Alain Rosolino PHONE NUMBER (56-2) 2353 4647 ADMINISTRATION, FINANCE AND CONTROL OFFICER Eduardo Escaffi Johnson PHONE NUMBER (56-2) 2353 4682 PLANNING AND CONTROL OFFICER Marco Fadda PHONE NUMBER (56-2) 2353 4684 LEGAL COUNCEL AND SECRETARY OF THE BOARD Domingo Valdés Prieto PHONE NUMBER (56-2) 2353 4631 HUMAN RESOURCES OFFICER Carlos Niño Forero PHONE NUMBER (56-2) 2675 2780 PROCUREMENT OFFICER Eduardo López Miller PHONE NUMBER (56-2) 2353 4635 SHARED SERVICES OFFICER Jaime Sánchez-Cano PHONE NUMBER (56-2) 2353 5159 Investor Relations INVESTOR RELATIONS DIRECTOR Pedro Cañamero González PHONE NUMBER (56-2) 2353 4682 CITIBANK NY Teresa Loureiro-Stein PHONE NUMBER (1-212) 816 6814 SANTANDER INVESTMENT Ignacio Algora PHONE NUMBER (34-91) 289 3951 Design and Production LEADERS Annual Report 2013 2 2013 ANNUAL REPORT ENERSISIndex Chairman´s Letter to Shareholders | 4 Main financial and operating indicators | 14 Company identification and governing documents | 18 Ownership and control | 22 Management | 26 Human resources | 46 Stock exchange transactions | 58 Dividends | 64 Investment policy and financing for the accounting period 2013 | 68 Company business | 72 Investments and financial activities | 84 Risk factors | 96 Regulatory framework for the electric industry | 102 Description of electric business per country | 124 Summary chart of participations | 158 Relevant facts for the entity | 164 Identification of affiliates and related companies | 180 Declaration of responsibility | 200 Consolidated Financial Statements | 202 Reasoned Analysis of Consolidated Financial Statements | 376 Affiliates Summarized Financial Statements | 397 3 Chairman´s Letter to Shareholders Dear Shareholders, Results for 2013 In 2013, Enersis achieved one of the most significant In short, the company’s net earnings increased by 74.5%, economic-financial results of its history, comparable to thus reaching $658.514 billion. This improved performance is the $660.231 billion of 2009. The foregoing is due to the mainly due to three factors: the operational improvement of adequate strategy we have implemented year after year, the generation business in Chile, Argentina, and Colombia; the main sustaining factors of which are making each of the incorporation of the Cono Sur assets; and the positive the operations we run in the five countries in the region impact of the accounting acknowledgment of the greater (Argentina, Brazil, Chile, Colombia, and Peru) profitable; historical costs in Edesur, Argentina, as of the second quarter maintaining a solid financial position; adding value to our of 2013. shareholders’ investment; and promoting relations based on trust and cooperation with the communities we operate in. The EBITDA was $2 billion 251 million 489 thousand, or US$4.547 billion, an amount which entails an increase of Also—thanks to the trust placed in us by each of you— 15.6%. Due to an adequate strategy implemented by the Enersis has consolidated its position as Endesa’s (Spain) sole company, this indicator exceeded US$4.0 billion for the fifth investment means in South America, with almost 16,000 MW year in a row. of installed capacity and over 14 million clients. Confirming the region’s dynamic performance and the The latter is due to a fact that has been vital for the present promising economic perspectives showed by the five and future of the company. I’m referring to the successful countries where we run operations, the sale of energy in the capital increase concluded on March 28, 2013, whereby distribution sector grew by 3.8%, to 75,443 GWh, thanks to 100% of the shares available for subscription were acquired. the increases achieved in Brazil, Colombia, and Chile. In the generation business line, energy sales reached 69,369 GWh, In view of the result of the operation, whereby over US$6 which entailed an increase of 5.2%. billion were obtained between assets in kind and cash, I am able to proudly and tTax IDhfully assert that in spite of the fact that it was not an easy task and one which was not short Regional Scenario on issues, we achieved an operation that was unprecedented Our stakes in the countries where we operate are based for the Chilean capital market, thereby providing the on the macro-economic perspectives of the region, and company with the necessary resources to carry out a namely, on our long-term commitment, which implies significant growth and expansion plan. providing solutions to energy needs and being a party to the development of each of these markets. Today Enersis is larger, more robust, and has the muscle to enable it to continue to lead the energy sector in South In spite of a global scenario that still shows some dark clouds, America, thereby maximizing the benefit of each of our the five countries where we operate offer a solid basis and shareholders. stable growth signals—though in the last few months of 2013, Chile showed come signs of deceleration, which we will As an example of the foregoing, in spite of the 50% increase pay close attention to in order to promptly take any actions in the number of shares as a result of the capital increase that may be necessary—thus providing enough energy to re- operation, the earnings per share reached $13.4, that is, boost the local economy. 16.1% higher than 2012, while the sole incorporation of the Cono Sur assets—the company through which Endesa (Spain) Another issue also worthy of our attention is Standard and subscribed its proportional part in this operation—accounts Poor’s recent reduction of Brazil’s rating from “BBB” to for 19% of the company’s net earnings during 2013. “BBB-”, wherein the electrical sector’s risks are pointed out 4 CHAIRMAN´S LETTER TO SHAREHOLDERS 2013 ANNUAL REPORT ENERSISas one of the main problems the country will face in the The message we conveyed to the market was clear: We will short and medium-term. This reduction brought an end to a not go out and purchase and invest the resources provided decade of rising ratings and surprised a major portion of the by the capital increase at any price. We will not make international market. acquisitions if the conditions are not adequate to increase the value of the investment of our shareholders. And as However, we should not lose our perspective, since South we have done since day one, we will analyze each of the America continues to compare favorably with regard to the operations to seek to maximize the value of the company for OECD countries in terms of growth, due to demographic and the benefit of each and every one of our shareholders. macro-economic factors. Because of that, and within this dynamic context—though it is a little slower in Chile, Brazil, and Argentina—we are certain and rest in the assurance that we have the necessary tools and the backing of Endesa (Spain) and the Enel Group to face the challenges posed us on a day-to-day basis by the regional electricity sector and to provide a safe and reliable power supply at competitive prices. Voluntary Tender Offer for Coelce The market is anxious for us to begin investing the funds obtained through the capital increase operation. We have been cautious and the waiting period has proved us right. Refraining from going to market at a time when most of the target companies’ securities were above their historical transaction averages has enabled us to increase our purchasing power by 20%. However, we have already taken a first step. And a successful one at that. I’m referring to the Voluntary tender offer made to the minority shareholders of our Brazilian electrical distribution business, Companhia Energética do Ceará (Coelce), notified to the market on January 14, 2014, and concluded on February 17. Enersis acquired a total of 11,783,080 shares, which account for 15.13% of the equity of said company, thereby directly and indirectly obtaining 74% of controlling ownership of Coelce. During the bidding, Enersis did not increase the offered price as it estimated that the prize offered (with an implicit premium of 20.1%) was adequate and expedient for the company’s equity interests. The acquisition of 15.13% of Coelce entailed the disbursement of about $132.340 billion, or US$242 million. Pablo Yrarrázaval Valdés Chairman 5 A New Way of Operating However, I wish to be clear about something: As a Group, we must go beyond the requirements put forth in the law, the Last year, I commented on these pages on the difficulties regulations, and sectorial permits. As a leading company in we were facing in Chile to develop the projects, not only the electricity sector, we must take the initiative and tune in the electrical sector, but also in the rest of the country’s into more stringent requirements. production sectors. This is a symptom of a substantial change in the relationships between companies, communities, and Endesa Chile has developed a new relationship plan with the authorities, which we are also a part of as a company that Coronel, which seeks to address the fundamental issues by acts responsibly in the environments where it operates. proposing definitive solutions to our main stakeholders. Endesa Chile is under the obligation to recover the leading This precaution is necessary in order to understand the full role in each of the environments where it operates. This scope of the facts that I am going to describe below. is a turning point and we cannot go back. Ignoring the new reality of the country would be a mistake that would In late October 2012, our affiliate company, Endesa Chile, ultimately impact on the market. We cannot waste the commissioned Bocamina II in the district of Coronel, Region capital of trust and credibility that our companies have of Biobío, thus providing the country 350 MW of efficient enjoyed in the past. capacity at low operational costs, which amount to about 50 US$/MWh (of variable cost) during a third year of drought. Do we have pending tasks? Certainly. We have only taken the first steps so that this new way of operating by means In September 2013, the Superintendence of the Environment of projects that integrate the communities’ comments right filed a penalizing procedure against Bocamina II. Said from the beginning and share the effects and benefits of the procedure was reformulated in December and included new initiatives from the out start, can become a part of our DNA breaches. The same month, after a motion filed against the and permeate all our activities. power plant, the Court of Appeals of Concepción issued an order to refrain from innovation, thus paralyzing the An example of this new way of operating was the agreement operation of Bocamina II. signed by Endesa Chile in February 2014 with the irrigators of the Region of Maule. After months of negotiations Dear shareholders, the operation of Bocamina II has abided and meetings, an agreement was reached to enable the at all times by the Environmental Qualification Resolution feasibility of the construction of the 150-MW Los Cóndores (RCA, by its Spanish acronym) issued in 2007, which is still hydroelectric power plant, which is to begin this year (2014). effective. We have not infringed on the permit issued by the competent authorities in any way, and have fulfilled the Having clear guidelines for developing long-term regulations that govern the activity; therefore, there is no investments is paramount and crucial for a company. But we pollution or risk, let alone any detriment to the health of the must take into account that we are undergoing a process of population or the environment. profound change. The power not generated by Bocamina II is being replaced by Rest assured that we are working and will continue to do inefficient diesel power plants. This entails operational over- so as a Group in order to be up to the new challenges, costs for the entire Central Interconnected System (SIC, by its maintain our leadership, and respond to society’s and our Spanish acronym) of about US$100 million (to March 2014). stakeholders’ new needs. This brings out the significance that this power plant has for the system, especially in the light of the four years of drought incurred by the central area of the country. 6 CHAIRMAN´S LETTER TO SHAREHOLDERS 2013 ANNUAL REPORT ENERSISCommitment of all Parties the reconversion of the Salaco chain, which will contribute close to 145 MW in addition to the 76.2 already operating However, companies’ intent to develop projects that are in the area. Both of these projects are located in Colombia. aligned with effective environmental regulations is not the In addition to these two initiatives, the construction of only thing required in order to make progress and provide Los Cóndores and the reconversion of the Taltal plant to Chile the power it needs to continue to grow, also necessary combined cycle will be initiated in Chile, thus adding another is the communities’ support and commitment by the 120 MW to the 245 MW already generated by this unit. The authorities. It is urgent to re-activate the projects, otherwise, latter project is now well into the environmental approval both our competitive capability and our image as a country procedure after our affiliated company, Endesa Chile, that respects its institutions will be in jeopardy. submitted the Environmental Impact Statement in late 2013, in order to carry out this enterprise. To date, the materialization of close to 11,000 MW of new capacity has faced difficulties. 6,650 MW of that amount Concerning the third and fourth actions, respectively, we have been stopped due to issues arisen in the approval hope to reduce the cash-cost (cost per client) by 15% and we process, 1,660 MW have been stopped on a permanent basis, will seek to leverage gas commercialization opportunities, and 2,400 MW associated with already approved projects wherein we have taken relevant steps in Colombia and Chile. have not been able to initiate construction. Initiatives such as Barrancones and Castilla, owned by new operators which We will continue to materialize the other initiatives we have intend to enter the local market failed due to the difficulties in our generation portfolio or pipeline. I’m referring to Punta that arose in the processing of their permits or due to court Alcalde (740 MW) and Neltume (490 MW) in Chile, and proceedings. Curibamba (188 MW) in Peru. Business Plan Among the projects in our portfolio, special mention should be made to the HidroAysén project. As is publicly known, it Dear shareholders, as a Group, our commitment toward Chile has a favorable RCA since 2011. Additionally, the Supreme and the countries where we operate remains in place. Court dismissed all the protection motions filed against the environmental assessment process of the project. Thus, the main actions of our business plan for the five years between 2014-2018 in the power generation and In June 2011, HidroAysén filed a claim with the Committee of commercialization sectors are based on the following Ministers requesting that certain requirements established strategic guidelines: a demand supported by solid economic in the RCA be reviewed. Along the same lines, congressmen, principles, increase of the installed capacity, increase of NGO’s, and environmentalist groups also filed other motions efficiency, and launching of new business lines. for a total of 35 claims. In the first point we foresee an annual cumulative rate (TACC, Throughout 2012 and 2013, the Committee of Ministers by its Spanish acronym) of 4.2%, including our operations in did not meet to review said claims. Finally, in late January, Argentina, Brazil, Chile, Colombia, and Peru. 2014, after two and half years of waiting, the Committee of Ministers decided to request further information and studies. In order to materialize the second item, we will incorporate Once they were submitted, the Committee of Ministers over 800 MW of new capacity during the next five years. would reevaluate part of the claims and issue its final This new capacity includes the 400 MW that we will add decision concerning the project. with the commissioning of El Quimbo in early 2015, and 7 However, the new administration of President Michelle We will also work to increase the contribution margin, reduce Bachelet brought the decision of the Committee of Ministers the equivalent downtime of the installed power (TIEPI, by its back to square one by annulling it and setting a new deadline Spanish acronym), with a special focus on Brazil regarding of 60 days for the new Committee of Ministers to analyze the loss reduction, and a reduction of 6% in cash-cost (cost per claims. client) by 2018. As a Group we are fully committed to carry on with We will continue to move forward with innovative ideas HidroAysén, provided there is political, social, and national in the area of distribution, such as smart cities, electrical disposition to consider this project in Chile’s best interest. mobility, and distributed generation. The time has come to make decisions and refrain from This year, our affiliated company Chilectra will inaugurate the further extending the waiting period. first SmartCity in our country at Ciudad Empresarial. Latest The companies and various social players—but especially the Santiago, thus enabling users active participation in energy Executive and Legislative Branches—must do their part for administration, integrating renewable energy sources, the country to be able to strengthen its electric power matrix and reducing CO2 emissions, with the object of knowing, and fully tap into the primary energy it has, such as water, evaluating, and measuring their impact in order to enable generation technologies will be put to the test at Smartcity which provides competitive, abundant, clean, and local their replication on a greater scale. energy resources. The relevant factor for preventing waste of time and resources, whether it be by private companies or Along the same lines, during 2013 we continued to move public entities in charge of evaluating the projects, is to have forward with the SmartCity Búzios project in Río de Janeiro, a clear understanding of what the country needs in terms of Brazil, by integrating electrical mobility into this initiative. To energy. this end, an electric taxi, or “aqua taxi”, was commissioned, which will be used in research and transportation; electric The decision is everyone’s, and as Group, we are and will be bicycles for use by the Municipal Guard and for rental at part of the solution. hostels and hotels, in addition to electric cars for use by the Added Value project’s researchers. In order to move ahead with all these initiatives, in the five Concerning activities in the distribution sector, the actions years from 2014-2018, we will invest a total of US$9.085 for the 2014-2018 period will focus on new connections, billion, US$3.98 billion of which will be focused on the development and growth in the portfolio of added value generation sector, and the remaining US$5.105 billion products, improvement of service quality, reduction of losses, on the distribution sector. In Chile, US$2.483 billion of all and increase in efficiency. investments will be made in the next five years, US$1.786 billion in generation and US$697 million in distribution. In order to meet these goals, we will acquire from 400,000 to 500,000 new clients a year. In other words, by the end of 2018, the Group should have over 2 million new clients, for Leadership a total client base of 16 million clients in the six concession I wish to conclude my words with a brief reflection on what it areas where we are operating (Buenos Aires, part of the State has meant to Chile to abandon hydroelectric development, as of Río de Janeiro, Fortaleza, Santiago, Bogota, and Lima) in opposed to countries such as Brazil, Colombia, or Peru, which the region. have strongly supported this type of development in recent 8 CHAIRMAN´S LETTER TO SHAREHOLDERS 2013 ANNUAL REPORT ENERSISyears, thus generating the necessary conditions for private promoting energy efficiency to reduce total costs; recovering entities to develop this type of initiative. environmental institutional procedures, and taking into From 2006 to 2013, in the central area of the country only, precautions to preserve the environment in each generation account the needs of the community and the necessary the installed capacity has increased by over 5,800 MW, 78% project from its very inception. of which are based on thermal plants. In view of this, the contribution of hydroelectric power to the SIC production Chile used to be at the forefront of power generation in the mix went from 71% in 2006 to 40% to the end of 2013. hemisphere. It wasn’t for nothing that it created some the The consequence has been a notorious increase in fuel most solid companies in the sector. Things have changed expenses—from an annual disbursement of US$350 million and times are not what they used to be. But change must to US$2.3 billion. not paralyze us. To the contrary, it should drive us to look at things anew, as if it were the first time, but from different The foregoing has not only had an impact in terms of a fuel angles, and find the solutions to the challenges of the cost increase that we have had to foot as a country, thus present and the future. reducing competitiveness in the industrial sector, but it has also meant an increase of 40 US$/MWh in power grid We are not asking for tailor-made playing rules, but rather operational costs, whereby the average marginal costs of 29 stable rules that are known and accepted by all sectors US$/ MWh went to 165 US$/ MWh in the same period due to and players in the business. We need institutions that are greater fuel consumption, a factor which has further affected respected by all because of their legal, political, and social the loss of leadership at the regional level. legitimacy. Chile has an untapped potential of over 20,000 MW of new Our commitment toward Chile and each of the countries we hydric capacity, which would contribute a low-cost power operate in is intact. base which we are not leveraging because we don’t have clear guidelines for developing it. Best Regards, As a Group, we are fully aware of this and want to be part of the solution to the energy problems and the need for more energy of each of the countries where we operate. In the recent call for bids among the distribution companies for electric power supply that was conducted in our country, Endesa Chile was one of the two companies that submitted proposals and was awarded 35 of the 50 energy sub-blocks. This is what we know how to do—provide a safe and reliable electricity service at competitive prices. But as a country and as a region, we need to be capable of Pablo Yrarrázaval Valdés unblocking and speeding up the administrative processing Chairman of projects, once again undertaking the development of initiatives with special emphasis on hydroelectric power; 9 Highlights 2013 JANUARY FEBRUARY MARCH APRIL Coelce ranked second in Service Quality Coelce ranked second in service quality among distributors in the country, according to the ranking disclosed by the Agencia Nacional de Energía Eléctrica (Aneel). Endesa Chile ranked second in the Corporate Sustainability Index The company ranked second nationally in the Corporate Sustainability Index, according to the digital magazine The Note, of the Capital Magazine, where 110 companies in the country participated Edelnor and the Peruvian government electrified Valle del Río Chillón Edelnor and the Peruvian government inaugurated in the Centro Poblado Huertos del Río Seco rural electrification of the communities of Valle de Río Chillón in Lima, works that are co-financed by the Peruvian State and Edelnor. Light reached 42 communities with these works, where 2,500 families of Valle Chillón were benefited. Edelnor inaugurates Huarangal Substation Under the framework of complying with the company’s Transmission Plan, the new 220/60 kV Transmission Substation (SET, as per its acronym in Spanish) Huarangal, located in the emerging Lima district of Carabayllo and built in a 22 thousand square meter area, becoming a milestone works for Edelnor. Its infrastructure forms part of a comprehensive installed power and reliability increase plan of the electric system in Lima’s northern zone, with the objective of servicing increase of demand in residential, commercial and industrial segments. Endesa (Spain), Pension Funds and Institutional Shareholders subscribe Enersis capital increase. Endesa (Spain) exercised the overall total of the preferred subscription rights that were assigned by its affiliate Endesa Latinoamérica, through entering a stock subscription contract with Enersis. Such contract accounts for the subscription of 9,967,630,058 ordinary shares corresponding to the capital increase at a value of $173 per share, which corresponds to a total subscription value of $1,724,400,000,034. The total subscription value that Endesa (Spain) paid through the transference of the overall total of its company rights in Cono Sur Participaciones, S.L., which were approved as non- monetary goods contribution by Enersis’ Extraordinary Shareholders’ Meeting held on December 20, 2012. Enersis’ successful capital increase Enersis’ shareholders subscribe an approximate total of US$6,022 million with a historical result for this type of operations in the local market, placing 100% of available shares for the capital increase. The amount collected, in the largest capital increase carried out in the country to date is broken-down in the following manner: once the preferred option periods concluded in Chile, United States of America and Spain, the company shareholders subscribed a total of 16,284,562,981 shares, corresponding to 99.04% of the total authorized for its issue, adding approximately US$5,961 million (of these shares, Endesa (Spain), through the contribution of its participations grouped in the Southern Cone, subscribed 9,967,630,058 shares). In turn, the remnant 157,043,316 shares that were left at the end of the preferred option periods, the overall total were placed in an auction in the Santiago Stock Exchange of Santiago, collecting approximately US$60.6 million, auctioning the overall total packages at $182.30 per share. 10 HIGHLIGHTS 2013 2013 ANNUAL REPORT ENERSISMAY JUNE JULY Positive Effect of Resolution No. 250/2013 in Edesur In order to regularize the status of Edesur’s credits and liabilities, the Energy Secretary through its resolution No. 250/2013 provided compensation from May 2007 to February 2013 between the MMC accretions not transferred at a determined rate by ENRE, with the PUREE balances that the company retained. In a complementary manner the authority instructed CAMMESA to issue in favor of Edesur the so-called Sales Settlements due a Due Date Pending Definition (LVFVD, Liquidaciones de Ventas con Fecha de Vencimiento a Definir, as per its acronym in Spanish), for the surplus values derived from the aforementioned compensation and authorized CAMMESA to receive these settlements as part payment of the Edesur debts. Emgesa receives IR (Investor Relations) seal by the Stock Exchange Within the framework of the Fifth Asobolsa (Asociación de Comisionistas de Bolsa de Colombia) annual congress, Emgesa was recognized with the IR (Investor Relations) by the Colombian Stock Exchange. This recognition granted for the first time in Colombia was obtained due to the company’s actions to increase its relevant information standards towards investors and the financial community. . Fitch Ratings increased Emgesa’s international rating Fitch Ratings increased Emgesa’s international rating from “BBB-” to “BBB” with a stable perspective (local and foreign currency). It also confirmed the AAA risk rating of Emgesa’s Long-Term National Rating and of its local bond issues. The decision is based in the company’s solid financial performance, robust cash generation and expectation of low and moderate leveraging after the complete start of the commercial operation of El Quimbo. Enersis Group kicked-off innovating Teletrabajo (Tele- working) Program in Chile Within the framework of their concern and commitment towards the well-being of its workers and in order to improve the quality of life of its collaborators, Enersis Group started and innovating project called the Tele- working Program, in order to have 38 employees of their companies in Chile, as a start, to form part this initiative’s implementation process. Eepsa places in commercial operation new thermal plant in Piura A new Eepsa-owned 180 MW effective power unit of the Malacas Thermal Power Plant, in Talara was commercially started-up being the first unit that enters into commercial operation as the system’s cold reserve. This new plan is dual open cycle and contributes 180 MW of additional energy to the Interconnected National Electric System (SEIN, Sistema Eléctrico Interconectado Nacional as per its acronym in Spanish) in emergency cases. This works is the first cold reserve unit that enters the SEIN and means an extension of the electric generation capacity for the company of its Malacas Thermal Power, in Piura. Coelce was chosen as the third best distributor in Brazil Coelce was chosen as the best third energy distributor in Brazil and for the eighth consecutive year the best distributor in the Northeast. Ampla is among the 4 best Quality Management companies and went from being ranked 19th to 15th in the 2013 national ranking. Punta Alcalde electric transmission line project goes into the environmental assessment process. The Atacama Region Environmental Assessment Service (SEA, Servicio de Evaluación Ambiental) accepted for processing the Electric Transmission Project of the Punta Alcalde Substation-Maitencillo Substation, initiative that will allow supplying energy that the Punta Alcalde Power Plant generates to the Central Interconnected System (SIC, Sistema Interconectado Central). 11 SEPTEMBER OCTOBER Placement of Emgesa Bonds Emgesa successfully placed bonds in the Colombian capitals market in September 2013 for a total of US$294 million at 6 and 12-year terms and at CPI +4.25% and CPI +5% rates, respectively. It received a total demand of 2.2 times the offered value, reaching US$459 million. The National Industry Association (Sociedad Nacional de Industrias, SNI, as per its acronym in Spanish) Awards Edegel The SNI granted Edegel the Recognition to Organizations with the Certificate Management System, an award that seeks to empower companies like Edegel to foster other organization in optimizing their processes, in order to promote global competitiveness in Peru. AUGUST Enersis Group Companies Achieve Certification as Family Responsible Firms The companies of the Enersis Group in Chile achieved certification as Family Responsible Firms under the efr I 1000 - 1 Edition 3 Standard, achievement that ratifies the maturity and robustness reached in this matter by the Group in our country. Chilectra and Endesa Chile are awarded in the RSE Prohumana Ranking Consolidating a leadership position, the Enersis Group companies, Chilectra and Endesa Chile, ranked second and tenth, respectively, in the 9th RSE 2013 ranking organized by the Prohumana Foundation and the magazine Qué Pasa, a distinction that highlights the best companies in matters pertaining to Corporate Social Responsibility. Enersis, Fundación Integra and Desafío inaugurated nursery schools built in the Biobío Region The facilities benefited were the Los Angeles Millantú Nursery School and the San Miguel de Pemuco Nursery School, providing a totally equipped installation to 64 children. Both nursery schools suffered severe damages due to the February 27, 2010 earthquake. Endesa Chile turned to the Supreme Court due to the Court of Appeals’ sentence on Punta Alcalde After analyzing Santiago’s Court of Appeals sentences, which left without effect Agreement No. 17/2012 adopted by the Ministers’ Committee, through which it approved the Punta Alcalde Project, Endesa Chile decided to appeal before the Supreme Court, and thus, seeks to ratify the decision taken by the Ministers’ Committee. Enersis ends simplified company structure within the capital increase framework. Once the simplified company structure is closed the capital increase approved on December 20, 2012 by the Enersis Extraordinary Shareholders’ Meeting, the company acquired the company participations of its affiliate Inversiones Sudamérica Ltda., producing consequentially the termination of the last mentioned company. Thus, Enersis acquired company participations that Endesa Spain contributed as payment of capital increase shares, becoming the direct title holder of the contributed company shares, a fact that was legally effective starting last October 1. Inversiones Sudamérica Ltda., had previously absorbed, during last July, the company Cono Sur, company that originally grouped the company contributions that Endesa Spain provided within the framework of the capital increase operation. Supérate (Excel Yourself) Award Enersis Group and Qué Pasa magazine distinguished schools that showed the best progress in the Simce Reading and Mathematics Exams taken by Eight Graders in 2000 and 2011. The analysis, given nationally, involved 5,800 school facilities. The objective of the Supérate Awards is to underscore the task of hundreds of teachers that have worked so that their students have better academic performances. They are schools that might never be in the best schools official rankings, but that have made significant efforts to improve the quality of education. Ampla Launches Electric Mobility in Buzios In September Ampla launched electric mobility in Búzios, unit that forms part of the Smart City Búzios project. At the time an electric vessel was presented that will be used in the research and transportation, electric bicycles to be used by the Municipal Guard and that will be leased in hostels and hotels, in addition to the electric cars that the project researchers will use. 12 HIGHLIGHTS 2013 2013 ANNUAL REPORT ENERSISEndesa Costanera Capital Increase Endesa Costanera’s Shareholders’ Meeting on April 5 resolved to increase its corporate capital for an amount of up to 555 million Argentinean Pesos and, consequently, the issue of a total of up to 555 million new registered common shares at a nominal value of one Argentinean Peso and with one right to vote per share. The capital increase operation concluded on November 21. Ignacio Antoñanzas is elected as “2013 International CEO of the Year” by Latin Trade Group Ignacio Antoñanzas, Enesis General Manager received the award as 2013 International CEO of the Year, for “leading the noticeable expansion of one of the largest private electricity multinationals in Latin America”, according to what Latin Trade Group specified. Starting from 2005 to 2012, the Enersis Group EBITDA went from US$2,277 million to US$4,075 million, showing growth of 79%, almost tripling electric demand growth. The award was granted by the Latin Trade business publication (distributed in the United States and Latin America) jointly with the Inter-American Development Bank. NOVEMBER DECEMBER The first Salaco Chain optimizing unit starts operating One of the most relevant milestones of the Salaco Project in November was the formal commercial start-up of Unit 2 of the Colegio Power Plant (50 MW) in the Colombian National Interconnected System (Sistema Interconectado Nacional de Colombia). Chilectra among the best companies to work in Chile Chilecta was ranked 35th among the best companies to work in the country in the Award of the Eighth Ranking Great Place to Work, jointly with the El Mercurio newspaper. Ventanilla Thermal Power Plant obtains the AENOR certification Ventanilla Thermal Power Plant has obtained the certification of reducing close to 2.5 TCO2e by the Spanish Association of Normalization and Certification (AENOR, Asociación Española de Normalización y Certificación) within the framework of its project Clean Development Mechanism (MDL, Mecanismo de Desarrollo Limpio), associated to the Kyoto Protocol and that is registered in the TÜV Blue Registry. On completing this last step Edegel will formally enter the Voluntary Carbon Market. Enersis, Fundación Integra and Desafío inaugurate first Nursery School rebuilt in the Renca District In a ceremony with the presence of authorized officials, social players, government authorities of the District of Renca and representatives of the Enersis Group, the Papelucho nursery school was inaugurated the first of three educational facilities that Fundación Integra will build in the Metropolitan Region after the earthquake that affected the central- southern zone of the country in February 2010, thanks to the contribution made by Fundación Endesa. Endesa Chile is awarded the supply bid for regulated clients The company was awarded 3,500 GWh/year in order to guarantee supply to regulated clients in the Central Interconnected System (SIC, Sistema Interconectado Central), for the December 2013 to December 2024 period. The price offered was of US$129,035/MWh. Emgesa is recognized in matter relating to Sustainability Emgesa received a special acknowledgment in the 2013 Bibo Awards, due to its environmental commitment, preserving and restoring forests, preserving water resources and seeking alternatives to achieve energy efficiency in the country. El Quimbo Project shows 57% progress During 2013 a significant effort was made in the execution of the El Quimbo Hydroelectric Project in Colombia, reaching 57% progress in its execution at the 2013 closing. Bocamina Second Unit Thermal Electric Power Plant Optimization goes into environmental EIA processing Due to the engineering studies carried out starting 2008 and from a machine performance analysis the design of the Second Unit was optimized, which allow improving its functioning in environmental and security of supply terms, without modifying the approved project’s essential characteristics allowing, in turn, to increase power in 20 MW. Enersis wins award “Deal of the Year” in the “Equity Follow- on” category due to capital increase Enersis formed part of the select group of only three Chilean institutions that were acknowledged within a total of 24 categories. The award is under the framework of the most important operations carried out by companies, due to the issue of sovereign bonds and government financing of private financial institutions in Latin America and in the Caribbean, between October 1, 2012 and September 30, 2013. The selection process took into account the offers’ market importance or strategic relevance, as well as the way in which each one of the operations were structured and executed. The award ceremony of the “2013 Deals of the Year Awards” was carried out in a Gala Dinner at Gotham Hall, in New York City in January 2014 and was granted by the prestigious financial magazine LatinFinance. Enersis surpassed 14 million electric energy distribution clients in South America This figure meant an increase of 3.5% in reference to the 13.9 million of December 2012 or the equivalent of 492 thousand new clients, confirming the company as a leader in the private South American sector. 13 Main financial and operating indicators 14 MAIN FINANCIAL AND OPERATING INDICATORS 2013 ANNUAL REPORT ENERSISTotal Assets Total Liabilities As of December 31 of each year (figure in million nominal Pesos) 2008 (1) 13,781,177 2009 (1) 13,210,140 2010 (1) 13,005,845 2011 (1) 13,733,871 2012 13,317,834 2013 15,177,664 7,752,045 6,833,137 6,491,817 6,837,717 6,354,065 6,670,199 Operating Revenue 6,579,945 6,472,056 6,563,581 6,534,880 6,577,667 6,264,446 EBITDA Net Income (2) Liquidity Ratio Debt coefficient (3) GENERATION BUSINESS ARGENTINA Number of employees Number of generation units Installed capacity (MW) Electricity generated(GWh) Sales of electricity (GWh) BRAZIL Number of employees Number of generation units Installed capacity (MW) Electricity generated(GWh) Sales of electricity (GWh) CHILE Number of employees Number of generation units Installed capacity (MW) Electricity generated(GWh) Sales of electricity (GWh) COLOMBIA Number of employees Number of generation units Installed capacity (MW) Electricity generated(GWh) Sales of electricity (GWh) PERU Number of employees Number of generation units Installed capacity (MW) Electricity generated(GWh) Sales of electricity (GWh) TOTAL Number of employees Number of generation units Installed capacity (MW) Electricity generated (GWh) Sales of electricity (GWh) 2,301,714 507,590 2,467,101 660,231 2,261,691 486,227 2,127,368 375,471 1,982,924 377,351 2,251,489 658,514 1.09 1.29 1.17 1.07 0.97 1 1.03 0.99 0.99 0.91 1.31 0.78 2008 (1) 2009 (1) 2010 (1) 2011 (1) 2012 2013 As of December 31 of each year 325 20 3,652 10,480 11,098 193 13 987 3,379 7,093 1,123 65 5,283 21,267 21,532 404 29 2,895 12,905 16,368 219 24 1,467 8,102 8,461 2,264 151 14,284 56,133 64,552 332 20 3,652 11,955 12,405 200 13 987 3,319 6,869 1,172 110 5,650 22,239 22,327 415 29 2,895 12,674 16,806 224 25 1,667 8,163 8,321 2,343 197 14,851 58,350 66,728 426 20 3,652 10,940 11,378 193 13 987 5,095 6,790 607 107 5,611 20,914 21,847 444 30 2,914 11,283 14,817 244 25 1,668 8,466 8,598 1,914 195 14,832 56,698 63,430 473 20 3,652 10,801 11,381 202 13 987 4,155 6,828 1,081 107 5,611 20,722 22,070 498 30 2,914 12,090 15,112 247 25 1,668 9,153 9,450 2,501 195 14,832 56,921 64,841 501 20 3,652 11,289 11,852 202 13 987 5,177 7,291 1,141 111 5,961 20,194 21,277 517 30 2,914 13,294 16,304 263 25 1,657 8,740 9,587 2,624 199 15,171 58,694 66,311 628 25 4,522 14,422 16,549 205 13 987 4,992 6,826 1,141 105 5,571 19,432 20,406 563 29 2,925 12,748 16,090 316 27 1,842 8,489 9,497 2,853 199 15,847 60,083 69,368 15 DISTRIBUTION BUSINESS ARGENTINA Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees BRAZIL Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees CHILE Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees COLOMBIA Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees PERU Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees TOTAL Sales of electricity (GWh) Number of Customers Energy losses Number of employees Customers / employees 2008 (2) 2009 (2) 2010 (2) 2011 (2) 2012 2013 As of December 31 of each year 16,160 2,262,231 10.60% 2,590 873 16,689 5,308,306 16.40% 2,576 2,061 12,535 1,533,866 5.90% 717 2,139 11,822 2,284,855 8.10% 932 2,452 5,599 1,027,750 8.20% 571 1,800 16,026 2,305,060 10.50% 2,628 877 17,253 5,487,066 16.80% 2,533 2,166 12,585 1,579,069 6.10% 731 2,160 12,114 2,473,747 8.40% 1,017 2,432 5,716 1,060,508 8.10% 595 1,782 16,759 2,352,720 10.50% 2,627 896 18,777 5,665,195 16.80% 2,484 2,281 13,098 1,609,652 5.80% 719 2,239 12,515 2,546,559 8.50% 1,083 2,351 6,126 1,097,533 8.30% 553 1,985 17,233 2,388,605 10.50% 2,849 838 19,193 5,867,888 16.20% 2,496 2,351 13,697 1,637,977 5.50% 712 2,301 12,857 2,616,909 8.10% 1,101 2,377 6,572 1,144,034 8.20% 550 2,080 17,338 2,388,675 10.6% 2,948 810 20,694 6,050,522 16.30% 2,382 2,540 14,445 1,658,637 5.40% 734 2,260 13,364 2,712,987 7.50% 1,127 2,407 6,863 1,203,061 8.20% 607 1,982 18,137 2,444,013 10.80% 3,320 736 21,767 6,301,582 16.10% 2,370 2,659 15,152 1,693,947 5.30% 745 2,274 13,342 2,686,919 7.00% 1,036 2,594 7,045 1,254,624 7.90% 616 2,037 62,805 12,417,008 9.84% 7,386 1,865 63,694 12,905,450 9.98% 7,504 1,883 67,275 13,271,659 9.98% 7,466 1,950 69,552 13,655,413 9.70% 7,708 1,989 72,704 14,013,882 9.35% 7,798 2,000 75,443 14,381,085 9.42% 8,087 2,060 (1) IFRS accounting figures. Until 2008, the annual financial statements were prepared in accordance with accounting principles generally accepted in Chile. Since 2009; the financial statements have been prepared in accordance with International Financial Reporting Standards, also presenting the 2008 financial statements under this new accounting standard. Due to this change, companies of joint control in which Enersis has participation, are consolidated according to the proportion Enersis represents of its social capital, therefore the figures in 2008, 2009, 2010, 2011and 2012 include the percentage of power generation, energy sales and employees of these companies. (2) For 2008, 2009, 2010, 2011, and 2012 it is net profit attributable to parent company (3) Total Liabilities/Equity plus Minority Interest. 16 MAIN FINANCIAL AND OPERATING INDICATORS 2013 ANNUAL REPORT ENERSIS17 Identification of the company and documents of incorporation 18 IDENTIFICATION OF THE COMPANY AND DOCUMENTS OF INCORPORATION 2013 ANNUAL REPORT ENERSISIdentification of the Company Name Address Type of Company Tax ID Address Telephone Fax P.O. Box Web site Email Securities Registration number External Auditors Subscribed and paid-in capital (M$) Ticker in Chilean stock exchanges Ticker in New York stock exchange Ticker in Madrid stock exchange Custodial Bank ADR’s Depositary Bank ADR’s Latibex custodial bank Latibex link Domestic Risk Rating Agency International Risk Rating Agency Enersis S.A. Santiago, although able to establish branches or agencies in other parts of the country or abroad Publicly traded company 94,271,000 – 3 Santa Rosa Nº 76, Santiago, Chile (56-2) 2353 4400 - (56-2) 2378 4400 (56-2) 2378 4788 1557, Santiago www.enersis.cl informaciones@enersis.cl Nº175 Ernst & Young 5,669,280,725 ENERSIS ENI XENI Banco Santander Chile Citibank N.A. Banco Santander Santander Central Hispano Investment S.A. Feller Rate and Fitch Ratings Fitch Ratings, Moody´s and Standard & Poor´s 19 Documents of Incorporation The company that gave rise to Enersis S.A. was formed initially with the name Compañía Chilena Metropolitana de Distribucion Electrica S.A. by public deed dated June 19, 1981 granted by the notary Patricio Zaldívar Mackenna in Santiago, and was modified by public deed dated July 13 the same year before the same notary. The company’s incorporation was authorized and its bylaws approved by Resolution 409-S of July 17, 1981 of the Securities and Insurance Commission (SVS). The extract of the incorporation authorization and approval of the bylaws was registered in the Santiago Trade Registry on page 13,099 Nº7,269 for year 1981, and Corporate Purpose were published in the Official Gazette The company’s objectives are to explore, develop, operate, of July 23, 1981. The bylaws of Enersis generate, distribute, transmit, transform and/or sell energy in have since undergone a number of any of its forms or nature, in the country or abroad, directly modifications. or through other companies, and also telecommunications activities and the provision of engineering consultancy within On August 1, 1988, the company’s the country and abroad. It may also invest and manage its name was changed to Enersis S.A. The subsidiaries and associate companies, whether generators, latest modification is that set out in transmitters, distributors or traders of electricity or whose public deed dated December 28, 2012, business is any of the following: (i) energy, in any of its forms certified by the Santiago notary Iván or nature, (ii) the supply of public utilities or whose main raw Torrealba Acevedo, whose extract material is energy, (iii) telecommunications and information was registered in the Santiago Trade technology, and (iv) trading over internet. Register for 2013, page 3,562, Nº2,344 and published in the Official Gazette on January 11, 2013. 20 IDENTIFICATION OF THE COMPANY AND DOCUMENTS OF INCORPORATION 2013 ANNUAL REPORT ENERSISIn complying with its main objects, the company will carry out the following functions: a) promote, organize, build, modify, dissolve or liquidate companies of any nature which have similar corporate objects to its own; b) propose investment, financing and business policies to subsidiary companies, as well as accounting criteria and systems that these should follow; c) supervise subsidiary management: d) provide subsidiary or associate companies In addition to its main objects and always acting within the limits established with the necessary financing for their by the Investment and Financing Policy approved by the shareholders meeting, business development and provide the Company may invest in: i) the acquisition, operation, construction, rental, management services; financial, administration, intermediation, trading and disposal of all kinds of movable and technical, legal and auditing advice; immovable assets, either directly or through subsidiaries or associate companies; and in general any type of service ii) all kinds of financial assets, including shares, bonds and debentures, that appears necessary for their best commercial paper and in general all kinds of titles or securities and company performance. contributions, either directly or through subsidiaries or associate companies. 21 Ownership and control 22 OWNERSHIP AND CONTROL 2013 ANNUAL REPORT ENERSISOwnership structure The company capital is divided into en 49,092,772,762 shares of no par value and of the same sole series. As of December 31, 2013, all shares were subscribed and paid, and distributed in the following manner: Shareholder Endesa Latinoamérica S.A. Endesa (España) S.A. Pension funds ADR´S (Citibank N,A, according to circular N°1,375 of the SVS) Stock brokers, insurance companies, mutual funds Foreign Investment Funds Banco de Chile on behalf of third parties Other shareholders Total Shares Number of shares 19,794,583,473 9,967,630,058 6,291,916,133 5,260,330,500 2,829,716,846 2,161,679,190 1,654,861,817 1,132,054,745 49,092,772,762 Participation 40.32% 20.30% 12.82% 10.72% 5.76% 4.40% 3.37% 2.31% 100.00% 23 Controllers According to Chapter XV of Law 18,045, the direct controller of the Company is Endesa Latinoamérica S.A., a Spanish corporation that holds 60.62% of Enersis. Endesa Latinoamérica S.A., in turn is controlled 100% by ENDESA, S.A., a corporation located in the Kingdom of Spain and whose main shareholders as of December 31, 2012, and according to the CNMV (Spanish National Securities Market Commission) are: ENEL ENERGY EUROPE S.L. with a 92.063% shareholding (ENEL ENERGY EUROPE S.L) which in turn is controlled 100% by ENEL S.p.A. The free float1 of ENDESA S.A. as of December 31, 2012 was 7.937%. The twelve largest shareholders of the Company As of December 31, 2013, Enersis had 7,200 shareholders. The twelve largest were: Name Endesa Latinoamérica S.A. Endesa S.A. (Endesa Spain) Citibank N.A. (according to circular N°1,375 of the SVS) AFP Provida S.A. Banco de Chile (on behalf of third parties) AFP Habitat S.A. AFP Capital S.A. AFP Cuprum S.A. Banco Itaú (on behalf of investorss) Banco Santander (on behalf of foreign investors) Bolsa Electrónica de Chile Bolsa de Valores Banchile Corredores de Bolsa S.A. Sub total 12 shareholders Other 7,188 shareholders TOTAL 7,200 SHAREHOLDERS ID 59,072,610-9 59,066,580-0 59,135,290-3 98,000,400-7 97,004,000-5 98,000,100-8 98,000,000-1 98,001,000-7 76,645,030-K 97,036,000-K 96,551,730-8 96,571,220-8 Number of shares 19,794,583,473 9,967,630,058 5,260,330,500 1,770,756,659 1,654,861,817 1,645,665,591 1,329,819,976 1,287,690,305 1,241,226,075 840,379,612 317,045,355 297,494,819 45,407,484,240 3,685,288,522 Participation 40.32% 20.30% 10.72% 3.61% 3.37% 3.35% 2.71% 2.62% 2.53% 1.71% 0.65% 0.61% 92.49% 7.51% 49,092,772,762 100% Most important changes in ownership The most important changes in the ownership of Enersis during 2013 were: Name Endesa S.A. (Endesa España) Citibank N.A. (according to circular N°1,375 of SVS) AFP Provida S.A. Banco de Chile on behalf of non-resident third parties AFP Habitat S.A. AFP Capital S.A. AFP Cuprum S.A. Banco Itau on behalf of investors Banco Santander on behalf of foreign investors Bolsa Electrónica de Chile Bolsa de Valores Banchile C. de B. S.A. BTG Pactual Chile S.A. C. de B. Larrain Vial S.A. Corredora de Bolsa Bolsa de Comercio de Santiago Bolsa de Valores DV ID 59,066,580 0 59,135,290 3 98,000,400 7 97,004,000 5 98,000,100 8 98,000,000 1 98,001,000 7 76,645,030 K 97,036,000 K 96,551,730 8 96,571,220 8 84,177,300 4 80,537,000 9 90,249,000 0 N° of shares as of 31/12/2012 0 3,694,698,650 1,304,042,640 977,171,885 1,122,471,041 911,634,819 930,517,958 642,734,035 482,166,494 153,599,086 288,428,936 123,245,391 155,098,236 157,245,378 N° of shares as of 31/12/2013 9,967,630,058 5,260,330,500 1,770,756,659 1,654,861,817 1,645,665,591 1,329,819,976 1,287,690,305 1,241,226,075 840,379,612 317,045,355 297,494,819 288,008,500 220,774,080 84,130,412 Change in number of shares 9,967,630,058 1,565,631,850 466,714,019 677,689,932 523,194,550 418,185,157 357,172,347 598,492,040 358,213,118 163,446,269 9,065,883 164,763,109 65,675,844 -73,114,966 24 OWNERSHIP AND CONTROL 2013 ANNUAL REPORT ENERSIS Stock Exchange transactions by related parties Shareholder TAX ID Buyer/ Seller Date of transaction Number of Shares Traded Unit price of transaction (Pesos) Total transaction amount (Pesos) Purpose of the Transaction Inversiones Santa Veronica Ltda. 79,880,230-5 Comprador 11-04-2012 1,000,000 197.34 197,340,000 Financial Investment Relation to the Company Related to Hernán Somerville Senn Enersis Director Jean Paul Zalaquett 8,668,933-2 Vendedor 14-12-2012 Beatriz García Huidobro 6,981,877-3 Vendedor 15-01-2013 1,530 2,425 172.00 176.00 263,160 Financial Investment Susteinability Director in Chilectra 426,800 Financial Investment Related to Francisco Silva Bafalluy Enersis Manager Endesa, S.A. Pablo Yrarrázaval Valdés 59,066,580-0 5,710,967-K SVPE SVPE 21-03-2013 9,967,630,058 173.00 1,724,400,000,034 In kind contribution Controller 25-03-2013 274,075 173.00 47,414,975 Financial Investment Chairman of the Board of Directors María Elena Yrarrázaval Valdés 5,710,932-7 SVPE 25-03-2013 274,075 173.00 47,414,975 Financial Investment Related to Chairman of the Board of Directors Santana S.A. 90,856,000-0 Agrícola e Inversiones La Viña S.A. 88,462,100-3 SVPE SVPE 26-03-2013 26-03-2013 2,407,457 1,249 173.00 173.00 416,490,061 Financial Investment Related to Enersis Director L. Vial 216,077 Financial Investment Related to Enersis Director L. Vial Inversiones Marpel Ltda. 78,171,230-2 SVPE 26-03-2013 505,490 173.00 8,744,770 Financial Investment Related to Chairman of the Board of Directors Rentas ST Ltda. Leonidas Vial Echeverría Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza Marcos Cruz Sanhueza 76,256,627-3 5,719,922-9 SVPE SVPE 26-03-2013 10,000,000 26-03-2013 10,702,983-4 Comprador 30-05-2013 10,702,983-4 Comprador 05-06-2013 10,702,983-4 Comprador 17-06-2013 10,702,983-4 Comprador 24-06-2013 10,702,983-4 Vendedor 08-07-2013 10,702,983-4 Comprador 08-07-2013 10,702,983-4 Vendedor 03-01-2014 10,702,983-4 Comprador 03-01-2014 1,187 480,000 890,000 310,000 27,000 1,312,179 1,312,179 1,371,369 1,371,369 (*) First emission values subscription (SVPE for its spanish acronym) 173.00 173.00 167.26 167.91 160.73 148.00 157.00 161.59 158.00 162.08 1,730,000,000 Financial Investment Related to Enersis Director L. Vial 205,351 Financial Investment Enersis Director 80,283,200 Financial Investment Tax Advisor 149,441,400 Financial Investment Tax Advisor 49,824,900 Financial Investment Tax Advisor 3,996,000 Financial Investment Tax Advisor 206,012,103 Financial Investment Tax Advisor 212,035,005 Financial Investment Tax Advisor 216,676,302 Financial Investment Tax Advisor 222,266,002 v Tax Advisor Summary of Director´s Committee and shareholders comments and proposals Enersis did not receive any comments or proposals on the progress of the business during 2013 from the Directors Committee or shareholders representing or holding 10% or more of the issued shares with voting rights, in accordance with the provisions of Article 74 of Law 18,046 and Articles 82 and 83 of the Corporations Law. 25 Main executives 26 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISBoard of Directors 1. CHAIRMAN Pablo Yrarrázaval Valdés Chairman of the Santiago Stock Exchange Tax ID: 5,710,967-K Since 26.07.2002 2. VICE CHAIRMAN Borja Prado Eulate Chairman of Endesa (Spain) Law studies Universidad Autónoma de Madrid Passport: AAC809697 Since 16.04.2013 3. DIRECTOR Andrea Brentan Civil Mechanic Engineer Politécnico di Milano Máster en Ciencias Aplicadas Universidad de Nueva York Passport: YA0688158 Since 29.07.2009 4. DIRECTOR Luigi Ferraris Licensed in Economics and Commerce Universidad de Génova Passport: YA2600789 Since 16.04.13 5. DIRECTOR Hernán Somerville Senn Lawyer Universidad de Chile Máster of Comparative Jurisprudence Universidad de New York Tax ID: 4,132,185-7 Since 29.07.1999 6. DIRECTOR Leonidas Vial Echeverría Vice Chairman of the Santiago Stock Exchange Tax ID: 5,719,922-9 Since 22.04.2010 7. DIRECTOR Rafael Fernández Morandé Civil Industrial Engineer Pontificia Universidad Católica de Chile Tax ID: 6,429,250-1 Since 22.04.2010 2 5 1 4 7 3 6 SECRETARY TO BOARD OF DIRECTORS Domingo Valdés Prieto Lawyer Universidad de Chile and Máster of Laws University of Chicago Tax ID: 6,973,465-0 Since 30.04.1999 Enersis is managed by a Board of Directors formed by seven members, which remain in office for a three-year period, who can be re-elected. The Board of Directors was elected in a Regular Shareholders’ Meeting dated April 16, 2013. 27 Board of Directors’ and Directors’ Committee Fees As per what is established in Article 33 of Law No. 18,046 on Closely-Held Stock Companies, the Regular Shareholders Meeting held on April 16, 2013 agreed on the fee to be paid to the Board of Directors and Directors’ Committee for the 2013 accounting period. The Board of Directors’ fee consists on the payment of an annual variable wage equal to one per thousand of the net profits obtained in the accounting period. It was determined to pay as an advance one monthly fee, part at all events and a variable part, attributable to the referred to annual variable wage. The Directors’ Committee fee consists on an annual variable fee equal to one point eleven thousand seven-hundred and sixty-five per thousand of the net profits achieved during the accounting period. It was determined to pay as an advance one monthly fee, part at all events and a variable part, attributable to the referred to annual variable wage. Total expenses due to fees during 2013 were of $409,854.602 and are detailed in the following table. The Board of Directors did not incur in expenses for external consulting services. 2013 Amounts in Ch$ Name Pablo Yrarrázaval Borja Prado Eulate Hernán Somerville Leonidas Vial Rafael Fernández Andrea Brentan (2) Luigi Ferraris (2) Rafael Miranda(1) Eugenio Tironi(1) Total Position Chairman Vice Chairman Director Director Director Director Director Director Director Fixed remuneration 55,759,468 29,700,991 27,879,734 27,879,734 27,879,734 - 8,079,073 8,079,073 185,257,807 Ordinary and extraordinary sessions 54,563,615 22,822,191 25,758,205 22,718,701 27,281,808 - - 10,559,674 12,067,014 175,771,207 Committee fixed remuneration 10,489,405 10,489,405 10,489,405 31,468,215 Committee Ordinary and extraordinary sessions - - 5,786,397 5,369,050 6,201,925 - - - - 17,357,372 Variable remuneration - - - - - - - - - - TOTAL 2013 110,323,083 52,523,182 69,913,741 66,456,890 71,852,871 - 18,638,747 20,146,087 409,854,602 NOTES: (1) Mr. Rafael Miranda and Mr. Eugenio Tironi, held the position of Directors of the Board until April 16, 2013 (2) Mr. Andrea Brentan and Mr. Luigi Ferraris waived their compensation as members of the Board of Directors of the Company. 2012 Amounts in Ch$ Name Pablo Yrarrázaval Andrea Brentan (1) Hernán Somerville Eugenio Tironi Leonidas Vial Rafael Fernández Rafael Miranda Total Position Chairman Vice chairman Director Director Director Director Director Fixed remuneration 54,838,518 - 27,419,259 27,419,259 27,419,259 27,419,259 27,419,259 191,934,812 Ordinary and extraordinary sessions 65,815,603 - 33,721,624 32,907,801 33,314,463 33,721,624 32,907,801 232,388,916 Committee fixed remuneration 10,316,157 10,316,157 10,316,157 30,948,470 Committee Ordinary and extraordinary sessions - - 8,569,913 - 8,162,621 8,569,913 - 25,302,448 Variable remuneration 12,323,000 7,607,000 6,161,000 7,607,000 7,607,000 6,161,000 47,466,000 TOTAL 2012 132,977,120 - 87,633,953 66,488,060 86,819,499 87,633,953 66,488,060 528,040,646 NOTE: (1) Mr. Andrea Brentan waived his compensation as member of the Board of Directors of the Company. 28 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSIS Property over Enersis As of December 31, 2013, the shareholders’ register reflected that 0.002% of the total company shares were on behalf of the Director Pablo Yrarrázaval. The rest of the Directors did not have any ownership in the Company. Directors’ Committee In conformance with what is provided for in Article 50 bis of Law No. 18.046 on Closely-Held Stock Companies, Enersis has a Directors’ Committee formed by three members, who have the faculties and duties considered in the above Article and the delegates appointed by the Board of Directors that are evident in the Regulation on the Directors’ Committee. In session dated April 16, 2013 the company Board of Directors appointed as members of the Enersis Directors’ Committee Hernán Somerville Senn (independent), Rafael Fernández Morandé (independent) and Leonidas Vial Board of Directors Consulting Expenses During 2013, the Board of Directors did Echeverría (independent). not make any expenses in consulting services. Similarly, the Directors’ Committee, in session dated April 29, 2013 appointed Mr. Hernán Somerville Senn President and Domingo Valdés Prieto as its Secretary. In the aforementioned session, the Board of Directors appointed Hernán Somerville Senn as Financial Expert. In reference to the structure of the 2012 Directors’ Committee, in session dated April 23, 2010 the company Board of Directors appointed as members of the Enersis Directors’ Committee, Mr. Hernán Somerville Senn (independent), Mr. Rafael Fernández Morandé (independent) and Mr. Leonidas Vial Echeverría (independent). Similarly, the Directors’ Committee, in session dated on the same date appointed Mr. Hernán Somerville Senn as President and Mr. Domingo Valdés Prieto as its Secretary. In the aforementioned session, the Board of Directors appointed Mr. Leonidas Vial Echeverría as Financial Expert. As of January 2012, the Directors’ Committee did not register any variations regarding the above structure. 29 Annual management report a visit from the external auditors, Ernst & Young (E&Y), in which they informed him regarding the review made by the Public Company Accounting Oversight Board (PCAOB) of the The Directors’ Committee President, Mr. Hernán Somerville United States of America regarding the audit that E&Y had Senn stated that according to what is established in performed to the 20-F Enersis S.A. 2011 accounting period. Article 50, bis of Law No. 18.046 on Closely-Held Stock Regarding the matter, the external auditors informed the Companies (LSA), it corresponds that the Enersis S.A.‘s President and the Finance Manager, Mr. Eduardo Escaffi Directors’ Committee present the Annual Report and gives Johnson that the PCAOB had made three comments. account to the company’s Regular Shareholders’ Meeting Regarding the matter, the Directors’ Committee President regarding its annual management report, underscoring underscored that Enersis S.A., in turn, had requested reports the activities developed by the Committee during the 2013 in law from Chadbourne & Parke y Carey y Cía. in order to accounting period, as well as expenses that it has incurred confirm that such objections do not affect the validity of the upon, including those of its advisors, during such period. 2011 accounting period, 20-F, or would delay or would mean The approval of the following text was proposed to the a suspension of the Enersis capital increase operation. After Committee for its approval: a series of questions made to the Finances Manager, which Directors’ Committee Annual Management Report were duly answered, on the risks associated to the topics informed by Ernst & Young in the aforementioned meeting, the Directors’ Committee requested that in the next session this issue be treated to determine future actions to be taken. As of January 1, 2013 the Enersis Directors’ Committee In the second mission, held on January 30, 2013, the was formed by Hernán Somerville Senn (independent), Directors’ Committee analyzed the situation that had arisen Leonidas Vial Echeverría (independent) and Rafael Fernández due to the investigation that PCAOB opened against Ernst Morandé (independent), being Hernán Somerville Senn its & Young and, particularly, the implications it could have President and Domingo Valdés Prieto its Secretary. on the capital increase in process. Regarding the matter, The Directors’ Committee has held 15 sessions during 2013, under the US law and another legal opinion under the including this session. If nothing is expressed in this report, it Chilean law so that this Committee can form an opinion is understood that the session is a regular one. regarding the situation and adopt the courses of action it was recalled that a legal opinion had been requested that were deemed convenient. The Legal Counsel and In its first extraordinary session, dated January 14, Secretary of the Directors’ Committee, Domingo Valdés 2013, the Directors’ Committee with the favorable vote of Prieto, gave a brief summary regarding the report in law all its non-involved members, i.e., with the sole exclusion issued dated January 20, 2013 by the New York legal offices of Mr. Leonidas Vial Echeverría, who abstained his opinion of Chadbourne & Parke and the report issued dated January and voting, concluded that contracting Larraín Vial, for 17, 2013 by the legal offices of Carey y Cía. Such explanation the operation between related parties, as a placement was supplemented by the Finance Manager, Mr. Eduardo agent, in the context of the capital increase agreed in the Escaffi Johnson. The Directors’ Committee, unanimously Extraordinary Shareholders’ Meeting dated December 20, agreed to: 1. Verify that this situation is adequately revealed 2012 would contribute to the Enersis company interest and by the Company to Davis Polk & Wardwell, legal advisors of was according to the terms and conditions that prevailed in the underwriting banks, and that this legal office should the market at the time of its approval. Similarly, the Directors’ inform the underwriting banks; 2. Monitor the evolution of Committee agreed to issue the respective report, to be this situation in an on-going manner, requesting for such placed at the Board of Directors’ availability, granting its purpose that the Finance Manager continue informing this President Mr. Hernán Somerville Senn faculties to do so. Committee on the changes and news that are produced due to the PCAOB investigation and the effects that Ernst & Afterwards the Directors’ Committee President, Hernán Young can identify regarding the matter; 3. That the Finance Somerville Senn, informed the remaining members of such Management collect from Ernst & Young all legal, financial company Committee that the prior week he had received and accounting expenses that turn out or could result from the aforementioned situation. 30 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISAfterwards, the Directors’ Committee, unanimously, and not represent any change in the final figures of the previously according to what is stated in Article 50 bis No. 1 of Law approved Financial Statements. Such supplementary reports No. 18.046 on Closely-Held Stock Companies, declared the and their contents, as well as the rest of the documentation Company Financial Statements as of December 31, 2012, their is in conformance with the Enersis United States external Notes, Income Statements and Relevant Facts, as examined auditors and external attorneys’ opinions, Chadbourne and as well as the Internal Auditors’ Reports and those of the Parke and of the bank attorneys, Davis Polk & Wardwell. Accounts Inspectors regarding the matter. Similarly, the Directors’ Committee requested that the In the same session, this entity unanimously agreed to leave the referred to supplementary information to the 2011 evidence the Report on Money Brokers and Bank Drafts had 20-F accounting period that could be produced from the been formally and expressly made known as prepared by the local accounting point of view and, particularly, without it Enersis S.A. External Auditors, Ernst & Young, dated January demanding any type of analogue supplementary data of the Finance Manager go on to analyze the consequences of 30, 2013. local financial statements. In this same extraordinary session, the Finance Manager, explained that, in conformance with The Directors’ Committee, unanimously agreed to leave was what requested in the last session by the Directors’ evidence that it had been formally and expressly recognized Committee President, this situation had been presented to knowing of the Enersis S.A. Internal Control Letter, dated Davis Polk & Wardwell, United States legal consulting office January 24, 2013 as prepared by the company external of the underwriting banks contracted by Enersis S.A. to carry auditors, Messrs. Ernst & Young. out the capital increase in process, who agreed with the report issued by Chadbourne & Parke. In its third extraordinary session held on February 15, 2013, the Directors’ Committee, according to what is stated In its fourth session, held on February 28, 2013, the in Section 202 of the Sarbanes Oxley Act and in Article 242, Directors’ Committee unanimously agreed to qualify as final paragraph of Law No. 18,045 of the Securities Market, reasonable the work of the company’s external auditors the Directors’ Committee unanimously agreed to declare carried out during the 2012 accounting period, with the that the contracting of the services presented that the previously explained preclusion relative to PCAOB’s open external auditor can supply do not commit the technical investigation against Ernst & Young and to represent such correctness or the independence of opinion of the external preclusion to Ernst & Young. auditing companies and instructed the General Manager so that part of the additional fees to be paid be negotiated as The Directors’ Committee, unanimously agreed to propose an advance on account of the Annual Audit, given that the to the Board of Directors so that, in turn, it suggests to the work requested is to accelerate a part of the audit. Regular Shareholders’ Meeting the companies Feller Rate In this same session, the Directors’ Committee, unanimously de Riesgo Limitada as private national risk rating companies agreed to approve the presentation of a supplement report and the companies Fitch Ratings, Moody’s Investors Services to the Enersis 20-F corresponding to the 2011 accounting and Standard & Poor’s International Ratings Services as period, which includes the changes described by the private international risk rating companies of Enersis S.A. for Clasificadora de Riesgo Limitada and Fitch Chile Clasificadora Finance Manager, Mr. Eduardo Escaffi Johnson, in order to the 2013 accounting period. register the capital increase in the United States of America, indispensable to carry out a securities offer in international The Directors’ Committee, according to what is stated in markets, consisting in that both the annual Financial Section 202 of the Sarbanes Oxley Act, in Article 242, final Statements (included in the 2011 20-F) as well as the 2012 paragraph, of Law 18.045 on the Securities Market and in third quarter interim financial statements are drafted the Regulation of the Directors’ Committee, unanimously on comparable basis. Due to the above, it is necessary to agreed, to declare that the contracting of services not related supplement the 2011 20-F accounting period, including to external audit to be provided by the external auditors, the Effective Cash Flows Statement drafted with the direct presented by Mr. Héctor Escobar Vargas, External Auditors’ method. Mr. Escaffi explained that these supplementary Coordinator, do not commit the technical correctness or the reports are merely formal and with a scarce relevance and do external auditing companies’ independence of opinion. 31 The Directors’ Committee, unanimously, issued its opinion the Securities and Exchange Commission of the United States regarding each one of the claims filed through the Ethical of America (SEC) to be included in such form. The Finance Channel, delivering guidelines to be followed for each Manager, Mr. Eduardo Escaffi Johnson stated that, in tune one of them and confirming what was already resolved with the alignments derived from the Sarbanes Oxley Act by this entity, in that it would correspond to the Directors’ and in order to satisfy the IFRS demands, the drafting of such Committee President to call to meet in an extraordinary document has complied with the strict controls foreseen in meeting of this body in case that a claim thus justifies in the the respective procedure for their preparation, verification opinion of the President of the Committee. and backing of the information contained therein. To that end, different areas of Enersis S.A. and of its affiliates The Directors’ Committee President, Hernán Somerville Senn, have participated in such process, all of them under the expressed that in the last session of such company entity coordination and supervision of the “Compliance Officer” Mr. the Finance Manager, Eduardo Escaffi Johnson, has been Nicolás Billikopf Encina, the Finance Management’s Assistant requested to analyze jointly with the Accounting Manager, Manager. Similarly, Eduardo Escaffi Johnson underscored Ángel Chocarro García, eventual consequences, from the that Form 20-F had been reviewed by the local and United local accounting point of view, that could be generated by States external auditors and by Enersis S.A.’s United States the supplementary data provided on the 20-F corresponding legal advisors, the legal offices of Chadbourne & Parke. to the accounting period 2011 in order to submit the F-3 to The Finance Manager, similarly explained that, according the Securities and Exchange Commission of the United States to Section 404 of the Sarbanes Oxley Act, it is required of America (SEC) in relation to the current capital increase. that the annual report of each issuing company include a report on internal control that states management’s The Directors’ Committee unanimously agreed that taking responsibility in the implementation and maintenance of into consideration the answer that Ernst & Young delivered to an adequate structure and internal control procedures for the Finance Manager, Eduardo Escaffi Johnson, it is resolved the issuer’s financial reporting, as well as the assessment not to re-forward the financial statements corresponding on the effectiveness of the structure and internal control to the 2011 accounting period, consequently resulting in a procedures for financial reporting. The Ernst & Young, Rubén unnecessary result to their exam by this Committee and the associates López y Marek Borowski, gave a presentation Board of Directors’ approval and the Shareholders’ Meeting. regarding the effectiveness of the structure and internal The Directors’ Committee, without detriment to the above control procedures for the financial reporting of Enersis also unanimously agreed that the Finance Manager obtain S.A., as well as regarding Ernst & Young’s independence, in the formalization of the answer that Ernst & Young already their capacity as Enersis S.A.’s external auditors during the provided that has been analyzed by the company entity. 2012 accounting period, stating that there were no material deficiencies and that the Internal Control Procedures were In the accounting period’s fifth session, held on March in order. The director, Mr. Rafael Fernández Morandé asked 20, 2013, the Directors’ Committee unanimously agreed to if any checking had been done regarding non-performing approve the proposal of the Directors’ Committee Budget debt in the distribution scope, to which Mr. Borowski for the 2013 accounting period, according to which it will answered affirmatively and that the exams performed amount to 10,000 Unidades de Fomento for expenses showed reasonable standards. The Committee members and functioning of the Directors’ Committee and for its were made knowledgeable, due to the above presentation, advisors. Similarly, the members of the Directors’ Committee that Ernst & Young had committed two violations against unanimously resolved to submit the above Directors’ the PCAOB standards, different from the investigation Committee budget proposal for the 2013 accounting period, procedure informed in the session held on January 14, 2013, to the Enersis S.A.’s Regular Shareholders’ Meeting, in order which is why they asked that the Legal Counsel, Domingo to have it definitely decide regarding the matter. Valdés Prieto request an opinion from the United States legal offices, Chadbourne & Parke regarding such violations and In this session the issue of Form 20-F was analyzed taking their consequences for the Enersis Group and if it generated into consideration that Enersis S.A., in its issuing condition any obligation to disclose or file a claim. of the ADSs and bonds in the US market had to present such Form, corresponding to the company’s financial statements The Directors’ Committee President, Hernán Somerville in IFRS, as well as the other related information demanded by Senn, consulted the associates of Ernst & Young regarding 32 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISthe investigation procedure that PCAOB opened against for appointing the Enersis S.A. external audit company for Ernst & Young that had been informed in January 2013. 2013: 1. Ernst & Young, 2. KPMG and 3. BDO Auditores & The Ernst & Young associate, Mr. Rubén López, expressed Consultores Ltda, taking into consideration that: (i) presented that they had legal opinions from Chile and the United the most competitive proposal according to the technical and States that indicated that the investigation lacked basis. The economic evaluations verified on the proposals received; (ii) director Rafael Fernández Morandé, expressed that if Ernst that it has ample experience in the electric sector; (iii) it is one & Young received relevant information it had to share it with of the four most important audit firms internationally and Enersis S.A. The Directors’ Committee, after some additional nationally, (iv) changing the company would have a cost of questions to the Finance Manager, Mr. Eduardo Escaffi approximately $52 million in reference to the second option Johnson, and to the external auditor, Mr. Marek Borowski and (v) it is the auditing company with the greatest synergy and an exchange of opinions among them regarding the level for Enersis S.A., since Enersis’ matrix and controlling matter, unanimously agreed to approve Form 20-F and thus companies have Ernst & Young as their main External authorize its being filed before the Securities and Exchange Auditor. It was informed that Ernst & Young have been Commission of the United States of America (SEC), in order Enersis S.A.’s External Auditor since the 2011 accounting to comply with the standards and requirements derived from period, i.e., from two years ago. Similarly, the Committee such public authority related to the issue of securities in such proposed as second alternative to hold the position as the country. company’s external auditor, the audit company KPMG, taking into consideration that it is one of the four most important Similarly, the Directors’ Committee unanimously agreed companies internationally and nationally and because it to approve the aforementioned payments corresponding has presented a more attractive economic offer than BDO to the fees paid by the companies of the Enersis Group Auditores & Consultores Ltda. Company that is proposed to during the 2012 accounting period, to the different external be the third alternative. audit companies that it uses as well as authorizing the fees estimate proposed for the 2013 accounting period. However, In its sixth session of the accounting period, held on the Directors’ Committee observed that it is indispensable April 29, 2013, the appointment of the President and the to recover from the external auditors costs associated to the Secretary of the Directors’ Committee was carried out. The errors committed on presenting these services, reiterating Director Mr. Leonidas Vial Echeverría proposed Hernán such fact to the Finance Manager, so that he may proceed as Somerville Senn as President and Domingo Valdés Prieto instructed. as Secretary of the Directors’ Committee. The director, Mr. Rafael Fernández Morandé, abstained regarding such According to what is established in Article 50 bis of Law proposals, stating that he did not agree on appointing as No. 18,046 and the Official Writs No. 718/2012 and No. President an involved director according to what is provided 764/2012 from the Superintendence of Securities and by the Closely-Held Stock Companies Law in Article 147 No. Insurance, the Enersis S.A.’s Directors’ Committee must 2 of Title XVI. The Directors’ Committee, by the majority of propose the appointment of an external auditors company its members, with the abstention of the Director Mr. Rafael to the company Board of Directors so that it may suggest Fernández Morandé, chose Mr. Hernán Somerville Senn as a determined company of External Auditors to the Enersis Directors’ Committee President and Mr. Domingo Valdés Regular Shareholders’ Meeting for the 2013 accounting Prieto as Secretary. period. On examining the Enersis Consolidated Financial Statements, The General Manager, Ignacio Antoñanzas Alvear went on the Directors’ Committee, upon request of the Director Mr. to inform the members of the aforementioned Committee Rafael Fernández Morandé asked the Accounting Manager on the different options of the external audit companies that regarding if the external auditors have issued a certificate had been considered, so that the Board of Directors can go regarding the provisions made regarding the Enersis Group on to determine their priority that will be proposed to the litigations, to which he stated that at that time it had not Regular Shareholders’ Meeting been issued, but that he expected that for the next financial statements it could be available and that it would thereafter The Directors’ Committee unanimously agreed to propose be done quarterly. The Directors’ Committee, unanimously, to the Board of Directors the following priority ranking declared to have examined the Enersis S.A.’s Consolidated 33 Financial Statements as of March 31, 2013, its Notes, Income and approved by the company instances of Enersis S.A., Statements and Relevant Facts, as well as the special opinion contract that must be complied with and that is precisely issued by Ernst & Young regarding the note on balances and what is being examined in this session. He expressed that transactions with related parties. Similarly, the Directors’ the determination and payment of the “fee” by Enersis S.A. Committee unanimously resolved insisting in that Ernst to Larraín Vial constituted an operation between related & Young provide now and in every quarter the certificate parties, since the Director Mr. Leonidas Vial Echeverría is, in relative to the provisions made due to the Enersis Group addition to Enersis S.A. director and member of the Directors’ litigations. Committee of the latter, as well as President and associate of that financial entity. Consequently, it deals with a matter The Directors’ Committee, after an exchange of opinion that must be examined and informed by the Directors’ regarding the matter, unanimously agreed to approve the Committee. The Finance Manager, Mr. Eduardo Escaffi new calendar of the Committee’s regular sessions for the Johnson, regarding the matter presented the payment 2013 accounting period proposed above, without detriment proposal referred to above, indicating that the discretional to the fact that such entity can resolve, according to what is “fee”, in his opinion, it corresponded to pay to each one deemed relevant, to call on extraordinary sessions. of the consulting banks in relation to the functions they performed in the referred to operation. The Directors’ Committee President, Hernán Somerville Senn, stated that to the members of the Committee that during The Directors’ Committee, on analyzing the background the last session held he had requested that the company information that the Finance Manager presented, with the Legal Counsel, Domingo Valdés Prieto, obtain a legal opinion exclusion of Mr. Leonidas Vial Echeverría, who abstained from from the United States legal offices of Chadbourne & intervening in the corresponding exam, concluded that that Parke regarding the two violations that Ernst & Young had operation contributed to the Enersis company interest and committed against the PCAOB norms, their consequences that it was according to terms and conditions that prevailed for Enersis and, particularly, if such situation generated any in the market at the time of its approval. Consequently, the objection regarding the company disclosure or claim. Enersis S.A.’s Directors’ Committee, resolved to issue the corresponding report. The Directors’ Committee, with the Regarding the matter, the company Legal Counsel, favorable vote of all its non-involved members, i.e. with the Domingo Valdés Prieto, informed that it had requested the sole exclusion of Mr. Leonidas Vial Echeverría, who abstained legal opinion of Chadbourne & Parke, copy of which was from intervening in the corresponding exam and in the distributed to the members of the Directors’ Committee. issue of the respective report, concluded that the proposed Such legal opinion concludes that no actions are required discretional “fee” that the Finance Manager made, to be by Enersis S.A. regarding the violations committed by Ernst payable by Enersis S.A. to the investment bank Larraín Vial as & Young in relation to the PCAOB standards and that, underwriting agent in the capital increase operation agreed from the United States legislation point of view, there is in the Extraordinary Shareholders’ Meeting dated December no responsibility or of the Directors’ Committee or of the 20, 2012, contributed to the Enersis company interest and company in relation to this matter. was according to terms and conditions that prevailed in the market at the time of its approval. The Directors’ Committee noted the legal opinion of the United States legal offices of Chadbourne & Parke regarding In its last session of the accounting period, held on May the matter. 29, 2013, the Directors’ Committee, with the favorable vote of all its members, concluded that the merger by absorption The Directors’ Committee President, Mr. Hernán Somerville, by Inversiones Sudamérica from Conosur Ltda. and the later explained to the members of the Directors’ Committee that, improper merger of Inversiones Sudamérica, under the terms they needed to examine a payment proposal of a discretional described, contributed to the Enersis company interest and “fee” for the consulting banks in the operation of the capital was according to the terms and conditions that prevailed in increase approved by Extraordinary Shareholders’ Meeting the market at the time of its approval; that, in the terms and dated December 20, 2012. He observed that the payment of within the parameters considered in the agreement, issued this “fee” to the agents is directly related to the contract that the report prescribed by legislation regarding operations was signed with each one of them and that was examined between related companies. 34 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISThe Directors’ Committee, according to what is stated in September 30, 2013 and thus successively in every quarter Section 202 of the Sarbanes Oxley Act and in Article 242, where the Financial Statements are discussed. The Directors’ final paragraph, of Law 18.045 on the Securities Market, Committee unanimously agreed to approve the external audit unanimously agreed, to declare that the contracting of plan presented by Messrs. Rubén López and Marek Borowski, services not related with external audits to be supplied by associates of Ernst & Young, external auditors, did not commit the technical correctness or the independence of opinion of the external auditing On Julio 31, 2013 the tenth extraordinary session of companies. the accounting period was held, in which the Directors’ Committee unanimously agreed to declare as examined the The Director, Mr. Rafael Fernández Morandé, reiterated his self-assessment structures and procedures and internal audit request that the external auditors present in a quarterly review regarding Enersis S.A. internal control. manner their letter of opinion regarding their review of provisions due to litigation, to which the remaining members The Directors’ Committee unanimously issued its opinion of the Committee also agreed to request it. regarding each one of the claims filed through the Ethics Channel, providing guidelines to be followed for each one On June 17, 2013 the eight session of the Directors’ of them and confirming what has already been resolved by Committee was held, according to what is stated in Section this entity, in that it would correspond that the Directors’ 202 of the Sarbanes Oxley Act, in Article 242, final paragraph, Committee President to determine the correctness of calling of Law 18.045 on the Securities Market and the Regulation an extraordinary session of this entity in case that a claim of the Directors’ Committee, unanimously agreed, to declare files thus justifies so, in the opinion of the President of the that the contracting of services not related to external Committee. In relation to the claim filed by the Internal audits to be supplied by external auditors do not commit Audit Manager, Mr. Alain Rosolino, regarding a constructing the technical correctness or independence of opinion of the company, the Directors’ Committee requested that the external auditing companies. background information corresponding to an external attorney be requested, who is a specialist in criminal matters The Director Rafael Fernández Morandé requested that, in to the determine the action course to be followed by the the next session of the Directors’ Committee, a presentation Enersis S.A.’s Directors’ Committee and, similarly, agreed that be given detailing the 2013 objectives and the 2012 Bonuses, the Enersis General Manager address a letter to the Endesa for each one of the main executives reporting to the General Chile General Manager representing his concern regarding Manager, which is part of examining the remunerations what happened. system and the compensation plan of the Group’s executives and workers. The Directors’ Committee President, Mr. Hernán Somerville Senn, explained the members of the Directors’ Committee In its ninth session of the accounting period, held on July 24, that it corresponded, according to what is prescribed by 2013, the Directors’ Committee, unanimously, and according Article 50 bis of Law No. 18.046, the exam of wage systems to what is stated in Article 50 bis No. 1 of Law No. 18.046 and compensation plans for managers, main executives on Closely-Held Stock Companies, declared the Enersis S.A. and the company workers. The Human Resources Manager, Consolidated Financial Statements examined as of June 30, 2013, Mr. Carlos Niño Forero, gave a presentation regarding with the provisions that are indicated, their Notes, Reasoned the topic explaining market references and the existing Analysis, Income Statements, Relevant Facts and the opinion of remunerations structure. The Director Rafael Fernández the External Auditors issued “an unqualified opinion” dated July Morandé asked different questions regarding the 24, 2013 signed by Mr. Rubén López, associate of Ernst & Young, bonuses associated to variables wages of executives and expressing their conformity with the statements. Similarly, the professionals, specifically regarding the 2013 accounting Directors’ Committee resolved to remind López y Borowski, period objectives referred to in the Enersis S.A. capital Ernst & Young associates, on their prior request consisting on increase. The Human Resources Manager answered that the counting with a report from the external auditors in the October aforementioned capital increase was not reflected in the session where they review the provisions related with Derivatives objectives and, therefore, neither was the variable of the and Litigation in relation with the financial statements as of executives that participated in such operation. The members of the Directors’ Committee expressed the need that Enersis 35 S.A.’s main operation in at least the last ten years and one company entity, a confirmation of the responsibilities that of the most relevant performed in the Chilean securities Enersis takes on regarding Endesa Chile in relation to the market and, extraordinarily, had to be expressed in the supply contract for internal audit services between Enersis variable wages of those who participated in the operation. and Endesa Chile that had been effectively subscribed, that The members of the Directors’ Committee observed that it was duly complied and that the same had been entered taking into consideration the effort made by the team that into in market conditions. The remaining members of the had participated in such successful operation it proceeded Directors’ Committee agreed with such request. to award this extraordinary work, for which it corresponded to make a clear and precise recommendation to the Board The eleventh session of the accounting period was held of Directors so that, before the end of the current year, an on August 30, 2013. The Directors’ Committee, according extraordinary bonus be established that would constitute to what is stated in Section 202 of the Sarbanes Oxley Act, in a compensation according to the effort made starting from Article 242, final paragraph, of Law 18,045 on the Securities the Enersis S.A.’s Extraordinary Shareholders’ Meeting Market and in the Regulation of the Directors’ Committee, that was held on December 20, 2012 that approved the unanimously agreed to declare that the contracting of the aforementioned capital increase. services not related to the external audit to be supplied by external auditors do not commit the technical correctness or Afterwards the Director Rafael Fernández Morandé asked independence of opinion of the external auditing companies. the Human Resources regarding if an objective had been established regarding the use of funds that would be The General Manager, Ignacio Antoñanzas Alvear, in developed during the 2013 accounting period, to which he conformance with what is requested by the Directors’ answered negatively. Rafael Fernández Morandé expressed Committee in the prior session gave account of the approval that in his opinion, it was fundamental that the operations procedure that, in its day, had been followed in the internal corresponding to the uses of funds be among the objectives audit services supply contract entered into Enersis S.A. and of the company executives corresponding to 2013 that would its affiliate Endesa Chile. develop the corresponding investments, prior to the Board of Directors authorization. Upon request of the Director Mr. Rafael Fernández Morandé, the Directors’ Committee, unanimously agreed to request The Directors’ Committee President proposed that this last confirmation to the affiliate Endesa Chile that the Board of mentioned topic be analyzed in greater detail during the Directors of the last mentioned consider, among its corporate next regular session foreseen for August 30, 2013. practices, a periodic presentation to the Internal Audit Management that heads the unit that provides the internal The Directors’ Committee unanimously declared to have audit services to such affiliate, thus as the aforementioned examined the wages systems and compensation plans manager thus communicates to the Committee and to the of managers, main executives and company workers. Enersis S.A.’s Board of Directors in a future session, certifying Similarly, the Directors’ Committee, unanimously agreed the periodicity of such meetings. to recommend to the Enersis S.A.’s Board of Directors that, before the end of the current year, to establish and The Directors’ Committee President, Hernán Somerville Senn, distribute an extraordinary bonus that would be a special expressed that it would be discussed in the coming Board compensation for the company members participating in of Directors to be held after an operation between related the capital increase that is proportional to the effort made parties consisting in an intercompany loan to be granted by starting from the Enersis S.A.’s Extraordinary Shareholders’ Enersis S.A. to its affiliate Endesa Chile and that although Meeting that was held on December 20, 2012, that approved the same was comprised in the company effective Regularity the aforementioned capital increase and that allowed Policy, proposed to treat it voluntarily and with greater carrying out in such a successful manner the complex Enersis transparency in the forum of this Committee, which was S.A.’s capital increase. unanimously approved by the members present. The Directors’ Committee President, Hernán Somerville Senn The company General Manager, Mr. Ignacio Antoñanzas expressed to the General Manager, Ignacio Antoñanzas Alvear, informed that the operation proposed consists on Alvear that he requested that for the next session of such structuring an intercompany loan in Chilean Pesos between 36 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISEnersis S.A. and Endesa Chile, so that the first can grant the that from the point of view of the affiliate Endesa Chile this second a loan for up to 250 MMUSD, within a 6 month time is convenient, since such affiliate is taking a “forward” for period. covering its flows, which is why he asked that this topic be treated due to the financial report. The Finance Manager, Regarding the matter, the General Manager stated that, Eduardo Escaffi Johnson, adding to the above nodded taking into consideration to the high cash flow levels that and expressed that the affiliate Endesa Chile would not be Enersis S.A. has after the capital increase, it had been getting a loan that is more expensive or cheaper that the one commercially estimated as attractive for the company to it could get in the market and that, therefore, it is in market formalize a structured loan with its affiliate Endesa Chile, conditions and that quotes had been asked regarding the which would allow diversifying in an adequate manner its matter. short-term loan portfolio, improving the profitability that it currently receives, at a six-month rate of around 5.0% to 5.1% The Director Rafael Fernández Morandé asked if taking approximately. into consideration that the loan deals with funds collected through capital increase if it contravened any standard or For Endesa Chile in turn, it was convenient to decide for this commitment related with the use of capital increase funds, financing alternative since this year its Yankee Bond matures to which the Finance Manager assured that there was no for approximately 400 MMUS$ and according to what is such contravention. He explained that the handling of the explained it deals with market conditions. treasury, since it was not an investment, required to be made on the short and mid-term and that it should not affect the Mr. Ignacio Antoñanzas Alvear similarly stated that the net profit of Enersis S.A.’s shareholders, which in the Finance operations proposed constituted operations between related Manager’s opinion, the loan absolutely complied. companies, since Endesa Chile is an affiliate of Enersis S.A. He also observed that it also corresponds that the company The General Manager observed that this loan was short-term Board of Directors give its opinion regarding this matter, and considered a pre-payment clause without cost. which is under the framework of the regularity policy that the Board of Directors approved. After an exchange of opinions among the directors and once all the background information on the operation was The Director Hernán Somerville Senn asked what the analyzed, the Directors’ Committee, concluded that the regularity policy stated regarding the matter, to which operation proposed contributes to Enersis S.A.’s company the company Legal Counsel and Secretary of the Board interest and is according to the terms and conditions of those of Directors, Domingo Valdés Prieto, read the effective that prevail in the market at the time of approval, going on to policy approved in April 2010 unanimously by the Board of issue the corresponding report. Directors and that it was communicated in a timely manner to the Superintendence of Securities and Insurance, Stock The Directors’ Committee unanimously agreed to the Exchanges and the market in general, through an essential following: fact. Similarly, the company Legal Counsel and Secretary of the Board of Directors informed that granting loans to a) Declare the operation between related companies affiliates and related companies was part of Enersis S.A.’s consisting on structuring an inter-company loan that company objective. Then, the Director Hernán Somerville Enersis S.A. will grant in favor of its affiliate Endesa Chile Senn, asked if this policy had legal grounds, to which the is examined, under the terms expressed by the General company Legal Counsel and Secretary of the Board of Manager. Directors answered, that it corresponded to the Board of Directors to determine the general regularity policies in b) Declare that this operation constitutes an operation conformance with the Closely-Held Stock Companies Law. between related companies that is governed by Title Sixteen of the Closely-Held Companies Law, which Afterwards, the Director Hernán Somerville Senn asked contributes to Enersis S.A.’s company interest and that is the loan was being given in Chilean pesos, at six-months, according to the price, terms and conditions of those loans considering that the Peso would continue to deteriorate in that currently prevail in the market. reference to the US Dollar. Hernán Somerville Senn observed 37 c) Declare that this operation is comprised within the was comprised in the effective company Regularity Policy, he company’s regularity policy and that, notwithstanding the proposed to treat it voluntarily and for greater transparency above, this Committee resolves to voluntarily analyze it in in the forum of this Committee, which was unanimously order to have greater transparency. approved by the members present. The Directors’ Committee unanimously resolved to The company General Manager, Mr. Ignacio Antoñanzas incorporate in 2013, among the personal objectives of the Alvear, informed that the operation proposed consists on company’s management team, one that refers to the funds structuring an intercompany loan in Chilean Pesos between collected due to the capital increase approved in December Enersis S.A. and Endesa Chile, so that the first one can grant 2012. The Committee agreed with such purpose that, in the the second one a loan for up to 400 MMUS$, within a six- next session of the Committee, the General Manager make month time period. a proposal regarding personal objectives under the terms requested by such company entity. Regarding the matter, the General Manager stated that, taking into consideration the financial needs that its affiliate In the twelfth session of the accounting period held on Endesa Chile has and the high cash flow levels that Enersis September 26, 2013, it was unanimously agreed by the S.A. has after the capital increase, it had been commercially members of the Committee attending the session, upon the estimated as attractive for the company to formalize a absence of the President of such company entity, Mr. Hernán structured loan with its affiliate Endesa Chile, which would Somerville Senn to appoint Mr. Leonidas Vial Echeverría as Ad- allow diversifying in an adequate manner its short-term loan Hoc President of the session. portfolio, improving the profitability that it currently receives, at a six-month rate of around 5.0% to 5.1% approximately. The Directors’ Committee, according to what is stated in Section 202 of the Sarbanes Oxley Act, in Article 242, final Mr. Ignacio Antoñanzas Alvear similarly stated that the paragraph, of Law 18.045 on the Securities Market and in operations proposed constitute operations between related the Regulation of the Directors’ Committee, unanimously parties, since Endesa Chile is an affiliate of Enersis S.A. He also agreed to declare that the contracting of services not related observed that it corresponded that the company Board of to external audit to be provided by the external auditors, do Directors give its opinion regarding this matter that is under not commit the technical correctness or external auditing the framework of the regularity policy that the Board of companies’ independence of opinion. In terms of one of Directors approved. the services proposed, i.e., the review of the information regarding legal contingencies in Latin America, the Directors’ The Director Rafael Fernández Morandé asked if taking Committee resolved not to approve it, since it considers that it into consideration that the loan deals with funds collected is excessively expensive and went on to grant faculties to the through capital increase if it contravened any standard or Finance Manager, Mr. Eduardo Escaffi Johnson, to negotiate commitment related with the use of capital increase funds. He both the price as well as the object of the matter entrusted. explained that the handling of the treasury, since it was not an The Director Rafael Fernández Morandé expressed that it investment, required to be made on the short and mid-term should be verified that the amounts in the notes adequately and that it should not affect the net profit of Enersis S.A.’s reflect associated risks and in such respect he considered that shareholders, which in the Finance Manager’s opinion, the the notes and not only the provisions should also be reviewed. loan absolutely complied. The Directors’ Committee resolved that in the next session, the Finance Manager will give an account of the progress status of The “Ad – Hoc” President, Mr. Leonidas Vial Echeverría, the negotiations entrusted. requested that the Finance Manager analyze in detail the taxing effects of these structured loans and particularly the The “Ad – Hoc” Directors’ Committee President, Leonidas Vial applicability of the seals and stamps tax, to which Eduardo Echeverría, expressed that in the Board of Directors session to Escaffi Johnson expressed that it would proceed to go in be held afterwards on that day, an operation between related depth regarding the analysis already prepared and that he parties consisting on a structured loan to be granted by Enersis would inform in the next Committee. S.A. to its affiliate Endesa Chile and that although the same 38 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISThe General Manager observed that this was a short-term loan support and extended the congratulations to all company and considered a prepayment clause without costs and that managements and their teams, since he only had the honor the funds were available for Enersis S.A. at any time. of directing them. The Directors’ Committee concluded that the operation According to what is stated in Section 202 of the Sarbanes proposed contributes to the company interest of Enersis S.A. Oxley Act, in Article 242, final paragraph, of Law 18.045 on and that it is according to the terms and conditions of those the Securities Market and in the Regulation of the Directors’ that prevail in the market at the time of approval, proceeding Committee, the Directors’ Committee unanimously agreed to issue the corresponding report. to declare that the contracting of services not related to The Directors’ Committee unanimously agreed the following: not commit the technical correctness or respective external external audit to be provided by the external auditors, do auditing companies’ independence of opinion. a) Declare the operation between related companies consisting on structuring an inter-company loan that The Directors’ Committee, unanimously, declared the Enersis S.A. will grant in favor of its affiliate Endesa Chile Enersis S.A. Consolidated Financial Statements examined al is examined, under the terms expressed by the General September 30, 2013, their Notes, Reasoned Analysis, Income Manager. Statements, and Relevant Facts, as well as the special opinion b) Declare that this operation constitutes an operation issued by Ernst & Young regarding the note on balances and between related companies that is governed by Title transactions with related parties. Sixteen of the Closely-Held Companies Law, which contributes to Enersis S.A.’s company interest and that is The fourteenth session was held on November 26, 2013, according to the price, terms and conditions of those loans in which it was agreed to leave evidence that the Internal that currently prevail in the market. Control Letter was examined and that formal and express c) Declare that this operation is comprised within the knowledge was taken of the Internal Control Letter referred company’s regularity policy and that, notwithstanding the to Enersis S.A., dated November 8, 2013, prepared by the above, this Committee resolves to voluntarily analyze it in company external auditors, Ernst & Young. The Directors’ order to have greater transparency. Committee President, Hernán Somerville Senn, and the The Directors’ Committee unanimously expressed that clarifications in the drafting of the letter referred to, which according to what was requested in due time in relation to were accepted, and the associated of such company Mr. the internal audit services contract that Enersis provides to Marek Borowski committed to send a text with the changes Director Rafael Fernández Morandé requested different Endesa Chile, a letter issued by the company Legal Counsel requested as briefly as possible. and Secretary of the Board of Directors of Endesa Chile, Carlos Martín Vergara, had been delivered through which he certified In addition, and according to what the Enersis S.A.’s Board of the corporate practice of the affiliate Endesa Chile regarding Directors resolved, in conformance with the General nature the matter. Standard No. 341 from the Superintendence of Securities and Insurance, the External Auditors, represented by the In the thirteenth session held on October 30, 2003, the associate of such company, Mr. Marek Borowski presented Directors’ Committee President, Mr. Hernán Somerville Senn, regarding the following matters, the Directors’ Committee went on to congratulate Mr. Ignacio Antoñanzas Alvear, becoming familiar with the same: company General Manager, for having received the award as International CEO of the Year that is awarded by the i. Eventual differences detected in the audit regarding Latin Trade Group of the United States of America. The rest accounting practices, administrative systems and internal of the members of the Directors’ Committee took on the audit. words from the President and expressed their satisfaction on the deserved distinction. The General Manager, Ignacio Antoñanzas Alvear, thanked the Directors’ Committee on its 39 ii. Eventual serious differences that were detected and Lastly, the regular sessions’ calendar was approved for 2014. those irregular situations that due to their nature must be communicated to competent supervising organizations. In conclusion, during the 2013 accounting period, the Enersis iii. Results from the annual external audit program. the matters that are specified in Article 50 bis of Law 18,046 iv. Possible conflicts of interest that there could be regarding contributed to the best development of the operations the relation with an external company or its personnel, previously analyzed. on Closely-Held Stock Companies and has analyzed and S.A.’s Directors’ Committee has fully been concerned with both due to the supply of other services to the company or companies from their entrepreneurial group, as well as de to other situations. The Committee President, Mr. Hernán Somerville Senn, and the Director Rafael Fernández Morandé asked several questions to Mr. Borowski and requested certain clarifications on the presentation made, which were accepted. The Directors’ Committee during the 2013 accounting period, examined the following Operations Between Related Parties (OPR, Operaciones Entre Partes Relacionadas) 1.- In its first extraordinary session dated January 14, 2013, the Directors’ Committee with the favorable vote of The Director Rafael Fernández Morandé asked if the all its non-involved members, i.e., with the sole exclusion presentation of January that accounts for the closing of the of Mr. Leonidas Vial Echeverría, who abstained from giving 2013 accounting period by the external auditors considered his opinion and voting concluded that the contracting the note on litigations and derivatives that had been of Larraín Vial, operation between related companies, as requested several times, to which Mr. Borowski responded an underwriting agent, within the context of the capital affirmatively. increase agreed in the Extraordinary Shareholders’ Meeting dated December 20, 2012, contributed to the Enersis Lastly, it was unanimously agreed to examine the company interest and was according to the terms and Committee’s regular sessions’ calendar proposed and provide conditions to those that prevail in the market at the time of their observations before the next regular session. its approval. Similarly, the Directors’ Committee issued the respective report, to be placed at the Board of Directors’ In the fifteenth session of the accounting period held availability. on December 17, 2013 the Annual Management Report, Activities and Expenses of the Directors’ Committee were 2.- In its sixteenth session of the accounting period, approved. held on April 29, 2013, the Directors’ Committee, with the favorable vote of all its non-involved members, i.e., with the The Directors’ Committee, according to what is stated in sole exclusion of Mr. Leonidas Vial Echeverría, who abstained Section 202 of the Sarbanes Oxley Act, in Article 242, final from intervening in the corresponding exam and from paragraph of Law 18.045 on the Securities Market and in the voting, concluded that the proposed discretional “fee” to be Regulation of the Directors’ Committee, unanimously agreed paid by Enersis S.A. to the investment bank Larraín Vial as the to declare that the contracting of services not related to underwriting agent in the capital increase operation agreed external audit to be provided by the external auditors, do not in the Extraordinary Shareholders’ Meeting dated December commit the technical correctness or the respective external 20, 2012, contributed to the Enersis company interest and auditing companies’ independence of opinion. was according to the terms and conditions as those that 40 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISprevail in the market at the time of its approval. Similarly, Chilean Pesos between Enersis S.A. and Endesa Chile, so that the Directors’ Committee issued the respective report, to be the first can grant the second a loan for up to 400 MMUSD, placed at the Board of Directors’ availability. within a 6 month time period. The Directors’ Committee concluded that the operation proposed contributes to Enersis 3.- In its seventh session of the accounting period held on S.A.’s company interest and is according to the terms and May 29, 2013, the Directors’ Committee, with the favorable conditions of those that prevail in the market at the time of vote of all its members concluded that the merger through approval, going on to issue the corresponding report. absorption by Inversiones Sudamérica to Conosur Ltda. and the later improper merger of Inversiones Sudamérica, under the terms described contributed to the Enersis company interest and was according to the terms and conditions of those that prevail in the at the time of its approval; the above, under the terms and within the parameters considered in the Directors’ Committee Consulting Expensess agreement, issuing the respective report to be placed at the The budget for functioning expenses approved by the Board of Directors’ availability. company’s Regular Shareholders’ Meeting held on April 16, 2013 was not used. The Directors’ Committee has not 4.- On August 30, 2013 the eleventh session of the required contracting professional consulting services for the accounting period was held, the Directors’ Committee development of its functions. examined an operation between related parties consisting on an intercompany loan to be granted by Enersis S.A. to its affiliate Endesa Chile, which although it was comprised in the effective company Regularity Policy was treated voluntarily and for greater transparency in the forum of this Committee. The operation proposed consists on structuring an intercompany loan in Chilean Pesos between Enersis S.A. and Endesa Chile, so that the first can grant the second a loan for up to 250 MMUSD, within a 6 month time period. The Board of Directors Committee concluded that the operation proposed contributes to Enersis S.A.’s company interest and is according to the terms and conditions of those that prevail in the market at the time of approval, going on to issue the corresponding report. 5.- In the twelfth session of the accounting period held on September 26, 2013, the Directors’ Committee examined an operation among related parties consisting on a structured loan to be granted by Enersis S.A. to its affiliate Endesa Chile and which although it was comprised in the effective company Regularity Policy was treated voluntarily and for greater transparency in the forum of this Committee. The operation proposed consists on structuring an intercompany loan in 41 Organization structure Board of Directors Chief Executive Officer Ignacio Antoñanzas Alvear Deputy Chief Executive Officer Massimo Tambosco Communications Officer Daniel Martini Morales Internal Audit Officer Alain Rosolino Shared Services Officer Jaime Sanchez-Cano Human Resources Officer Carlos Alberto Niño Forero Administration, Finances and Control Officer Eduardo Escaffi Johnson Legal Councel Domingo Valdés Prieto Procurement Officer Eduardo López Miller Planning and Control Officer Marco Fadda 42 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISMain Executives 1 CHIEF EXECUTIVE OFFICER Ignacio Antoñanzas Alvear Mining Engineer Universidad Politécnica de Madrid Tax ID: 22.298.662-1 Since 26.10.06 2 DEPUTY CHIEF EXECUTIVE OFFICER Massimo Tambosco Bachelor in Business Administration Universidad Comercial Luigi Bocconi Tax ID: 23.535.550-7 Since 01.10.10 3 INTERNAL AUDIT OFFICER Alain Rosolino Bachelor in Business Administration L.U.I.S.S University of Rome Tax ID: 24.166.243-8 Since 12.12.12 4 ADMINISTRATION, FINANCE AND CONTROL OFFICER Eduardo Escaffi Johnson Civil Engineer Universidad de Chile Tax ID: 7.984.912-K Since 31.08.12 5 PLANNING AND CONTROL OFFICER Marco Fadda Bachelor in Economics and Business Universidad de Génova Tax ID: 24.271.056-8 Since 01.04.13 6 LEGAL COUNCEL AND SECRETARY OF THE BOARD Domingo Valdés Prieto Lawyer Universidad de Chile Master of Laws Universidad de Chicago Tax ID: 6.973.465-0 Since 30.04.99 7 HUMAN RESOURCES OFFICER Carlos Niño Forero Lawyer Universidad Externado de Colombia Tax ID: 23.014.537-7 Since 17.12.10 8 PROCUREMENT OFFICER Eduardo López Miller Commercial Engineer Pontificia Universidad Católica de Valparaíso Tax ID: 7.706.387-0 Since 01.11.10 9 SHARED SERVICES OFFICER Jaime Sánchez-Cano Torres Bachelor in Economics and Business Universidad Complutense de Madrid Tax ID: 24.191.937-4 Since 30.08.13 2 5 8 1 4 7 10 3 6 9 10 COMMUNICATIONS OFFICER Daniel Horacio Martini Morales (*) Licenciado en Periodismo de la Universidad Nacional de Lomas de Zamora Tax ID: 24.499.646-9 Since 28.01.2014 (*) Designated by the Board of Director son session held on January 28, 2014 43 Compensation of managers and main executives During 2013, the remunerations and benefits received by the General Manager and main company executives amounted to $2,522 million in fixed wages and $834 million in variable wages. During 2012, the remunerations and benefits received by the General Manager, other managers and main company executives amounted to $2.616 million in fixed wages and $1,499 million in variable wages. This amount included both managers and main executives present as of December 31, each year, as well as those that left the company all along the respective accounting period. Benefits for managers and main executives Incentive plans for managers and main executives Enersis has an annual bonus plan for complying with As benefit, the company has a supplementary health objectives and the level of individual contribution to the insurance and a catastrophic insurance for its main executives company results for its executives. This plan includes and their family group that is credited as a dependent charge. a definition of the ranges of bonus according to the In addition, the company has life insurance for each main hierarchical level of the executives. executive. These benefits will be granted in conformance to the management level that corresponds to the worker at Bonuses are given to the executives consisting in a each time. determined number of gross monthly wages. In 2013, the amount was of $16.5 million, value that is included in the wages received by the main executives. Compensations paid to managers and main executives In reference to compensation for years of service (severance) received by managers and main executives that left the company, $194 million were paid during the 2013 enforcement period. 44 MAIN EXECUTIVES 2013 ANNUAL REPORT ENERSISProperty over Enersis As of December 31, 2013, the shareholders’ register reflected that no main executive had company ownership. Administration of main subsidiaries BRAZIL Endesa Cachoeira Guilherme Gomes Lencastre Civil Engineer Pontifícia Universidad Católica Río de Janeiro Endesa Fortaleza Manuel Rigoberto Herrera Vargas Industrial Electric Engineer Pontifícia Universidad Católica de Santiago Endesa CIEN Guilherme Gomes Lencastre Civil Engineer Pontifícia Universidad Católica Río de Janeiro Ampla Marcelo Llévenes Rebolledo Commercial Engineer Universidad de Chile Coelce Abel Alves Rochinha Mecanic Engineer Pontifícia Universidad Católica Río de Janeiro CHILE Endesa Chile Joaquín Galindo Vélez Superior Industrial Engineer Universidad de Sevilla Chilectra Cristián Fierro Montes Electric Civil Engineer Universidad de Chile COLOMBIA Emgesa Lucio Rubio Díaz Bachelor in Business and Economics Universidad Santiago de Compostela Codensa David Felipe Acosta Correa Electric Engineer Universidad Pontificia Bolivariana PERU Edegel Francisco Javier Perez Thoden Industrial Engineer Universidad de la Escuela Técnica Superior del ICAI Universidad Pontificia Comillas en España Edelnor Ignacio Blanco Fernández Industrial Engineer Bachelor in Business and Economics Universidad de Zaragoza 45 (1) insertar notas Human resources 46 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISDistribution of human resources The personnel distribution of the Company, including information relating to subsidiaries in the five countries where the Enersis Group operates in South America, to December 31, 2012, was as follows: Company Enersis (1) Endesa Brasil (2) Endesa Chile (3) Chilectra (4) Edesur (5) Edelnor (6) Codensa Manso de Velasco (7) Total general Managers and main executives 9 20 34 12 13 9 11 1 109 Professionals and technicians 378 2,399 2,340 605 2,374 535 1,008 32 9,671 Workers and others 81 258 135 128 1,032 134 17 9 1,794 Total 468 2,677 2,509 745 3,419 678 1,036 42 11,574 Notes: (1) Includes ICT. (2) Includes Ampla, Coelce, CIEN, CTM, TESA, Cachoeira Dourada, Fortaleza, and En-Brasil Comercio y Servicios. (3) Includes Costanera, El Chocón, Pehuenche, Celta, Túnel el Melón, Emgesa and Edegel. (4) Includes Empresa Eléctrica de Colina and Luz Andes. (5) Includes: Cemsa and Dock Sud. (6) Includes: Piura and Generalima. (7) Includes: Aguas Santiago Poniente y Const. and Proyecto Los Maitenes. 47 Human resources activities Employee Relations During 2013 the periodic meeting program with Trade Union Organizations has continued, which has allowed consolidating in time an open, frank dialogue without restrictions with the workers’ representatives, in benefit of improving labor conditions and the work climate of our employees. Safety and Health at Work At Enersis safety and health at work are objectives closely linked to the clothing, face protection masks against electric arc and works business, which by nature is subject in heights systems, all of these elements with high safety to the presence of critical risks. In the standards that guarantee the maximum workers protection. It continuous improvement process, with is also worth noting that in order to reach the zero accidents everyone’s contribution, a value that goal, at Enersis the implementation of the One Safety Project is specially underscored is leadership has continued, both in our own workers as well as those of regarding the actual integration of contractors, in order to improve the behavior of those who safety and health at work at all levels work on-site and thus eliminate risky behaviors at the works. and in all the activities the company develops, reinforcing its priority in In matters pertaining to Labor Health the following programs entrepreneurial management due are highlighted: to its strategic importance. In the leadership scope active participation of the different company areas in controlling the workers risks in their different activities, through reviewing preventive management in the Safety 2013 Health Disclosure and Promotion Committees, revising safety conditions This program’s objective is to provide, educate and form the on-site through the Safety Walks and company workers through activities pertaining to fostering Ipal Programs, risk prevention formation quality of life and bio-psychosocial well-being. plans and safety campaigns. On the other hand, innovations have also The mass disclosure actions that are considered within the been implemented that have allowed activities are first posters, graphic materials and talks given by equipping the workers exposed to specialists regarding thematic cycles with topics of interest, risk with equipment such as: fire-safe such as: 48 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISHuman resources activities 2013 Psychosocial Risk Assessment Program This program’s objective is to identify psychosocial risk factors present in work conditions and work organization and their occurrence in the workers’ health. In order to do so, the program has been extended to all the Enersis Managements, through the following sequence: Quantitative and qualitative identification of the psychosocial factors with greater presence, divided in stages: - Breast Cancer Prevention: Train women regarding the 1.- Coordinate meetings with Managers and Assistant Managers. importance of performing breast self-examinations and in a specific 2.- Present Psychosocial Risk Assessment Program. case an ultrasound scan or mammography. 3.- Program and coordinate dates and places where the assessment will be - Prostrate Cancer Prevention: applied with appointed personnel. Carry out promotion and prevention 4.- Apply assessment instrument to the universe of workers considered. activities for men in early detection and treatment. 5.- Analyze and manage quantitative and qualitative data on the assessment. - Colorectal Cancer Prevention: 6.- Draft a report per company, management and area/unit. Carry out promotion and prevention activities in the personnel to 7.- Present results to direct lines and collect proposals. detect and treat in an early manner pathologies associated to Colorectal 8.- Present and deliver results to middle management and collect proposals. Cancer. 9.- Present results to evaluated personnel and collect proposals. - Skin Cancer Prevention: Inform and sensitize the population 10.- Draft a final written report. on the prevention, early detection and treatment of the illness. 11.- Process closing meeting with technical counterpart. - Prevention of Sexually Transmitted Diseases and HIV. - Mental Health and Quality of Life. - “Heart Month” Cardiovascular Risk Prevention 49 2013 Immunization Program The Enersis’ workers immunization program is a preventive measure that seeks through a medical process generating in people an immune memory base that allows forming protecting antibodies against the antigen to which the person can be exposed to. In order to do so, the objective of implementing the program in Enersis’ workers, calls on preventing the appearance of illnesses that are recurrently massively spread and through dissemination, education and periodic controls. that on affecting people cause high Periods of exams, controls and medical follow-ups were absenteeism and detriment to people’s carried out in order to detect in a premature manner this quality of life. possible pathology in women. This program is directed to all the Enersis workers. This program is addressed to all Enersis’ workers, implementing the following vaccines: - Seasonal Trivalent Influenza Vaccine: it is implemented during the 2013 Periodic Preventive Exams Program first quarter of the year annually, The objective of this program s to carry out medical and preventing the outbreak that starts periodic evaluations, according to the job risks to which the at the beginning of June. workers are exposed to, in order to decrease the probability of having events occur due to alternations or severe - Hepatitis A and B Vaccine: it is pathologies without control or treatments with potential implemented in two dosages per damage to people’s health. This program is directed to person every 5 years and is addressed all company workers and is carried out through a defined to employees working in confined protocol according to gender, age and job. spaces with sewage water vaults. 2013 Healthy Woman Program The following programs can be underscored in matters pertaining to Labor Safety: Safety campaigns The objective of this program is Development of activities under the framework of safety decreasing the occurrence of death due week held in April and November 2013, in order to become to breast and cervical-uterine cancer in familiar and reinforce preventive actions tending towards women, acting in a preventive manner avoiding the occurrence of labor accidents. 50 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISSafety walks Activity developed by executives in 18 work centers, consisting in on-site inspections in order to corroborate compliance of procedures and use of equipment, tools and adequate machineries. Security campaigns Development of activities under the framework of security week held in April and November 2013, in order to become familiar and reinforce preventive actions tending towards avoiding the occurrence of labor accidents. Implementation of work standards in heights Defining and implementing equipment Dissemination of lessons learned for work in heights, delivering new Project that considers delivering a folder with inquiry and formation documents security harnesses and other accessories containing the analysis of each one of the serious and mortal accidents that have and equipment in order to decrease happened. In this document causes of unfortunate events at work are analyzed the risk of falls and thus allow rescuing and their preventive measures are discussed in order to review lessons learned and workers in emergency situations. therefore contributes towards eliminating conditions and substandard acts seen daily when executing activities that have the risk of accidents. Formation in security Within the framework of training associated to Labor Health, Safety and Security of people at work, and seeking to reinforce our competencies in this matter, the course “Safety Goal Training” is given to 69 persons, an initiative launched in all countries where the Enersis Group is present. Among the course’s objectives to be underscored are those that internalize that the responsibility in terms of Labor Health, Safety and Security is of each one of us and not only the people directly responsible for operational activities, becoming worldwide references in terms of Labor Health, Safety and Security. 51 Implementation of work standards in activities associated to the electric area Definition and implementation of equipment for works in electric installations, delivering fire-safe clothing and a protection face mask Leadership Course in SSL for Directors and Managers Study development to identify leadership characteristics in risk prevention for 26 persons in order to develop an intervention program to establish improvements in preventive People management Work climate management actions. Starting from the results of the labor climate and the 2012 Development of training programs Great Place to Work study, which have been disclosed to the workers, human resources jointly with each one of the areas has prepared a Climate Plan. This plan considered specific work lines, such as Leadership, and Meritocracy and Development that are translated in Execution of rescue training programs concrete actions. for workers in emergency situations. In relation to Leadership, the initiative Manager and Close Boss (Gerente y Jefe Cercano) that focuses on developing closer contact of management levels with the workers implemented the practice “Coffee with Ignacio” in order to generate instances of closeness and conversation between the General Manager and workers. Another 2013 action line has been Meritocracy and Development. Through fostering different activities towards the workers, during 2013 recognition of the workers continued to be promoted. One of these initiatives was the ceremony Let´s Acknowledge Each Other (Reconocernos) acknowledged workers who represented certain Enersis categories and values. Those acknowledged were chosen through popular votes among work mates and area heads. 52 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISAt the same time, Enersis has available for all workers and their families a broad extension program, including sports, culture and special activities; just to mention some: Knowing my parents’ work “Conociendo el trabajo de mis padres”, Come to my birthday “Ven a mi cumpleaños”, summer and winter camps for children, family trips, training courses for the family and others that seek balancing Enersis’ employees work and personal life. Enersis has addressed servicing specific benefits to different workers’ groups, such as the program Mothers who work “Madres que trabajan”; additionally, with financial support for parents with student children, through soft loans to finance their higher education. Added to these benefits are the end-of-the year, national holiday celebrations and the good company practices, such as a free afternoon The priority that the Company grants on the worker’s birthday, leaving work early on special dates prior to holidays, all on conducting internal application towards granting better quality of life to our workers. processes to cover job vacancies can also be highlighted, such as implementing a feedback workflow in the process allowing to keep candidates informed in each stage of the job filling process. It is important to state that the above actions have been carried out with Recruitment and Selection Coverage of Vacancies the participation of Top Management, Enersis’ main objective is incorporating the best people in vacant jobs, being our Managers, Human Resources and all guiding principle first privileging internal candidates. workers, who have committed through their participation implementing the During 2013 a total of 62 vacancies were generated in generation, 37% different initiatives considered in the corresponding to vacancies that were covered internally, performing close to 9 plan. lateral movements and promotions and close to 17 internal application processes, whether nationally or incorporating internal applicants within Latin America. Enersis has an ample array of benefits for its workers and their families, Similarly, in this context, from the external labor force that become part of the among them, health benefits with a Group, 11% corresponds to students in practice, who were considered candidates group Isapre plan and supplementary and were finally contracted on concluding their internship period. insurance including outpatient and dental medical services, medications and inpatient hospital services with catastrophic coverage on a per expense basis. Educational benefits can also be highlighted with aid in money to cover children’s study expenses, plus incentives for all high performance students, reimbursements for pre-college specialized institutes and summer schools. 53 Practices Program The practices program is an outstanding project in terms of generating new sources of recruitment incorporating future young professionals belonging to the best universities in the country as students in practice and thesis students, to whom the opportunity is provided to consolidate gradual learning on Enersis complexity and style, thus achieving, two objectives the availability of close sources of recruitment and of relative rapid access, both due to the possibility of having references and direct assessment of students who are outstanding and can reach not only technical competencies but also the values associated to our company and additionally, mark our ongoing Diversity and Inclusion presence in our country’s main higher Having different work teams and cultivating an inclusive education facilities. This Practices labor environment is essential for Enersis, reflected on the Program is carried out throughout the on-going search for new forms allowing awareness and year, being the peak of participants facilitating building a diverse labor force and a working during the summer, where a total of 53 environment where individualized differences are respected students participated in 2013. and valued. Thus, a pilot action taken is managing the Company Entry Program, where we seek incorporating practice students from technical and professional careers who are physically challenged, forming work alliances with different foundations to make this program concrete. Similarly, along the lines of fostering diversity in all scopes and contributing to the generation of development alternatives, we can highlight the growing participation of women in internal job application processes, reaching 45% of total job awards, thus fostering in a gradual manner feminine empowerment and leadership. 54 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISEducational action Enersis training Quality, Efficiency and Customer Focus Finally and within the perspective of continuous improvement, Enersis seeks the on-going assessment of the quality and efficiency of selection processes, through generating instances and mechanisms that allow getting feedback both from each area’s managers as well as from the job occupants, achieving a level of satisfaction of 89% in terms of quality of internal customer service in the total coverage process to fill a vacancy, and 98% satisfaction in reference to complying with the heads’ expectations in terms of new incorporations, as well as those of the job occupants themselves regarding their perception and adaptation to the position and company. The objective of having this data is to assure the processes’ stabilization and the possibility of continuous improvement. Starting from the 2013 formation program, Enersis established a training schedule focused on the trade’s needs, structured by different sources of detecting training needs, aligned with the business strategic plan, made concrete through an articulated training offer in two main action lines: A Transversal Plan with topics relating to development and a Functional Technical Formation. Professionals of the Enersis Group for the fourth consecutive year attended the “Category Management” course. The Category Management Purchases Model is a systematic focus used by world-class organizations to maximize contributing Business Supplies. The objectives are to convey to tools buyers methodologies necessary to: segment total expenses in categories according to their impact criteria in the business and market where they buy, understand (Market Intelligence) the suppliers markets, design a strategy for each category, analyze strategies, situations and perspectives of the materials, investment and services markets and, assess risk situations, establishing mitigation and/or contingency plans. 55 The third version of “Electric Markets Diploma” was started in the facilities of the Universidad del Desarrollo within the context of closed Graduate studies, specially designed for the company with the attendance of 34 workers from the Enersis Group, which has the general objective of deepening and strengthening the characteristics and challenges of the electric business and contribute in the negotiation processes, in electric supply contracting aspects, supplementary services offers and distribution tolls, empowering their performance and positioning within the company. Thus the first version of “Diploma in Control and Management” was stated in the Universidad de Chile, Two other programs were given for the Enersis Group which has the objective of providing to workers, i.e. Training for Young Professionals, whose participates basic business management purpose was to extend this group’s vision so that they can tools under a management control contribute to the business with ventures, preparing their perspective, allowing students to career development within the organization, which was held develop necessary competencies in the Executive Education Center of the Universidad Adolfo to understand the entrepreneurial Ibáñez, with the attendance of 39 professionals and Skills resources management, designing and Training for Managers, held in the ESE Business School of maintaining control on the different the Universidad de Los Andes, with the participation of 38 processes that define the organization’s workers, which in eight sessions strengthened the leadership, performance with the attendance of strategic thinking, decision making, innovation and coaching 30 workers from the Enersis Group competencies. A workshop on Change Management was attended. held as a final activity for both training programs with the objective of understanding change from the personal and Post Performance Review (PPR) organizational point of view, as an on-going element; foster implementation was started, which is better understanding of the dynamics that facilitate change focused on developing the behaviors processes and understand the concepts and methods for defined by the Company Leadership change management. Program, where 29 courses were given with the participation of 630 company employees. 56 HUMAN RESOURCES 2013 ANNUAL REPORT ENERSISAnother relevant formation activity was the course on Derivative Assets as support to Corporate Management, given by Universidad Adolfo Ibáñez, for 15 company workers in order to acquire the skills and competencies that allow using the derivatives instruments as tools destined towards protecting; rate of exchange risks, volatilities in product prices and factors or strong changes in interest rates. Training in Savings Keys (Claves de Ahorro) was also given, through award and APPIA, in order to train buyers in the use of the system to reflect savings correctly and associate purchase planning correctly. Thirty (30) company workers participated in the activity. Just as in prior years, in order to deliver development opportunities within the company, “study scholarships” were granted to workers, totaling 12 persons in 2013, accessing this benefit. This program has the objective of supporting workers in carrying out perfecting studies or continuing with pre and post graduate studies. Similarly, through the Latam Campus, virtual space, formation with e-learning courses continues to allow reaching employees in a massive and simultaneous manner with topics such as: Business Knowledge, Reinduction in S&SL, Senda Plan, Information Security and Criminal Risk Prevention Model. There was a special concern for topics pertaining o safety, security and labor health where among others the following courses were given: Leadership Program in Safety, Security and Labor Health; Prevention of Accidents on the Way to Work and Public Roads; Handling and Use of Fire Extinguishers; Cardiopulmonary Resuscitation; First Aid; Safety Training Goal and, One Safety Navigators. 57 Stock exchange transactions 58 STOCK EXCHANGE TRANSACTIONS 2013 ANNUAL REPORT ENERSISStock trading in the stock markets Quarterly transactions of the last three years made in the stock exchanges where the Enersis shares are traded both in Chile, through the Santiago Stock Exchange, the Electronic Stock Exchange of Chile and the Valparaíso Stock Exchange, as well as in the United States of America and Spain, through the New York Stock Exchange (NYSE) and the Latin American Stock Exchange of the Madrid Stock Exchange (LATIBEX), respectively, are detailed below. Santiago Stock Exchange During 2013, in the Santiago Stock Exchange, 8,074 million shares were traded, which is equal to $1,367,562 million. The closing price per share as of December was of $157.6. Periods 1st quarter 2011 2nd quarter 2011 3rd quarter 2011 4th quarter 2011 Total 2011 1st quarter 2012 2nd quarter 2012 3rd quarter 2012 4th quarter 2012 Total 2012 1st quarter 2013 2nd quarter 2013 3rd quarter 2013 4th quarter 2013 Total 2013 Shares 1,596,636,759 958,803,877 886,100,149 900,057,047 4,341,597,832 1,288,014,289 1,139,562,913 1,744,269,270 1,392,408,280 5,564,254,752 2,438,386,788 2,192,921,524 1,972,388,086 1,470,668,035 8,074,364,433 Amounts (Pesos) 322,199,069,612 195,120,504,650 168,023,460,684 165,182,488,252 850,525,523,198 240,222,466,312 212,301,014,944 285,537,513,398 231,119,124,139 969,180,118,793 438,757,705,262 374,486,929,466 314,491,374,642 239,826,138,771 1,367,562,148,141 Average Price 201.80 203.50 189.62 183.52 186.51 186.30 163.70 165.99 179.94 170.77 159.45 163.07 59 Chile Electronic Exchange In the Chile Electronic Stock Exchange during the year the amount of 1,142 million shares were traded, which is equal to $196,606 million. The closing price of the share as of December was of $155.5. Periods 1st quarter 2011 2nd quarter 2011 3rd quarter 2011 4th quarter 2011 Total 2011 1st quarter 2012 2nd quarter 2012 3rd quarter 2012 4th quarter 2012 Total 2012 1st quarter 2013 2nd quarter 2013 3rd quarter 2013 4th quarter 2013 Total 2013 Shares 199,064,082 181,558,922 182,448,505 144,335,958 707,407,467 142,929,291 141,381,535 166,172,134 155,911,737 606,394,697 457,040,369 307,352,957 187,542,120 190,280,215 1,142,215,661 Amount (Pesos) 39,760,396,718 37,031,576,257 34,606,048,013 26,534,354,814 137,932,375,802 26,878,396,526 26,913,331,231 26,990,815,636 25,901,302,515 106,683,845,908 82,674,197,920 52,399,743,916 30,138,018,160 31,394,375,774 196,606,3335,770 Average Price 199.74 203.96 189.68 183.84 188.05 190.36 162.43 166.13 180.89 170.49 160.70 164.99 Valparaíso Stock Exchange In the Valparaíso Stock Exchange a total of 46 million shares were traded, which is equal to $7,548 million. The closing price of the share as of December was of $155.44 Periods 1st quarter 2011 2nd quarter 2011 3rd quarter 2011 4th quarter 2011 Total 2011 1st quarter 2012 2nd quarter 2012 3rd quarter 2012 4th quarter 2012 Total 2012 1st quarter 2013 2nd quarter 2013 3rd quarter 2013 4th quarter 2013 Total 2013 Shares 5,692,610 1,248,485 9,623,945 5,790,809 22,355,849 15,555,048 7,532,539 19,911,829 29,102,662 72,102,078 7,662,176 5,159,336 33,748,331 0 46,569,843 Amount (Pesos) 1,218,753,280 248,888,295 1,753,711,300 1,059,644,493 4,056,997,368 2,852,153,260 1,446,019,519 3,293,321,040 4,910,148,630 12,501,642,449 1,409,775,514 834,654,380 5,304,258,272 0 7,548,688,166 Average Price 214.09 199.35 182.22 182.99 183.36 191.97 165.40 168.72 183.99 161.78 157.17 60 STOCK EXCHANGE TRANSACTIONS 2013 ANNUAL REPORT ENERSIS New York Stock Exchange (NYSE) The Enersis shares began to be traded in the New York Stock Exchange (NYSE) on October 20, 1993. An Enersis ADS (American Depositary Share) represented 50 shares and its account code is ENI. Citibank N.A. acts as a depositary bank and Banco Santander Chile as custody in our country. During 2013, in the United States of America 167 million ADS were traded that is equal to US$2,895 million. The ADS price closed as of December in US$15.85. Periods 1st quarter 2011 2nd quarter 2011 3rd quarter 2011 4th quarter 2011 Total 2011 1st quarter 2012 2nd quarter 2012 3rd quarter 2012 4th quarter 2012 Total 2012 1st quarter 2013 2nd quarter 2013 3rd quarter 2013 4th quarter 2013 Total 2013 Shares 45,063,352 28,212,252 38,872,327 32,721,937 144,869,868 38,448,445 31,111,964 34,003,544 32,168,392 135,732,345 45,963,195 50,929,574 36,942,777 33,394,036 167,229,582 Amount (Pesos) 924,262,083 610,562,978 769,407,917 593,068,611 2,897,301,588 732,794,989 587,263,102 582,431,845 554,979,796 2,457,469,732 874,885,600 907,083,863 583,580,477 529,200,532 2,894,750,472 Average Price 20.51 21.64 19.79 18.12 19.06 18.88 17.13 17.25 19.03 17.81 15.80 15.85 Latin American Securities Stock Exchange of the Madrid Stock Exchange (Latibex, Bolsa de Valores Latinoamericanos de la Bolsa de Madrid) The Enersis shares started to be traded in the Latin American Securities Stock Exchange of the Madrid Stock Exchange (Latibex) on December 17, 2001. Until April 2011, the contracting unit for the company was of 50 shares and its account code is XENI. Starting from May 2, 2011 the contracting unit is unitary. Santander Central Hispano Investment S.A. acts as the liaison entity and Banco Santander is the custody in Chile. During 2013, 6.9 million shares were traded, which is equal to 1.7 million Euros. The contracting unit price in December closed at 0.23 Euros. Periods 1st quarter 2011 2nd quarter 2011 3rd quarter 2011 4th quarter 2011 Total 2011 (*) 1st quarter 2012 2nd quarter 2012 3rd quarter 2012 4th quarter 2012 Total 2012 1st quarter 2013 2nd quarter 2013 3rd quarter 2013 4th quarter 2013 Total 2013 Shares 3,824,700 3,395,992 5,259,100 3,293,219 15,773,011 1,652,978 1,867,239 1,656,889 1,225,821 6,402,927 1,329,415 1,396,386 2,376,982 1,819,724 6,922,507 Amount (Pesos) 1,155,781 1,024,002 1,414,624 893,885 4,488,292 476,501 561,570 459,797 327,777 1,825,645 383,687 364,307 554,612 418,887 1,721,493 Average Price 0.30 0.30 0.27 0.27 0.29 0.30 0.28 0.27 0.29 0.26 0.23 0.23 (*) Contracting unit was expressed in the prior years in 50 units per share. 61 Market information During 2013, the Chilean shareholding market continued the low trend, with an accrued decrease during the period of 14% in comparison to 2012. This is partially explained by the increase in the region’s uncertainty, mainly related with the exposure of these markets to the time lapse withdrawal effect of fiscal stimulus in the United States, decrease in the price of commodities, such as copper and the slowdown of the economic activity in China. On the other hand, the generalized recovery of the operational and financial results in North America, linked to the improvement in the uncertainty situation related to the debt crisis of some of the member countries in the Euro zone have caused an exit of capitals in South America in reference to these markets. Santiago Stock Exchange Enersis’ performance during the last two years in comparison to the Shares Selective Price Index (Índice Selectivo de Precios de Acciones, IPSA) in the local market. Variation Enersis IPSA 2012 -3.7% 3.0% 2013 Cumulative 2012-2013 -11.3% -7.9% -11.5% -14.0% New York Stock Exchange (NYSE) Behavior of Enersis’ ADR’s listed in the NYSE (ENI) in comparison to the Dow Jones Industrial and Dow Jones Utilities Indexes during the last two years: Variation ENI Dow Jones Industrial Dow Jones Utilities 2012 3.3% 7.3% -2.5% 2013 Cumulative 2012-2013 -14.7% 35.7% 5.6% -17.5% 26.5% 8.3% Latin American Securities Exchange of the Madrid Stock Exchange (Latibex in its Spanish acronym) Enersis’ (XENI) performance per share listed in the Madrid Stock Exchange (Latibex) all along the last two years in comparison to the LATIBEX Index. Variation XENI LATIBEX 2012 4.1% -10.7% 2013 Cumulative 2012-2013 -13.8% -28.5% -17.2% -20.0% 62 STOCK EXCHANGE TRANSACTIONS 2013 ANNUAL REPORT ENERSIS63 Dividends 64 DIVIDENDS 2013 ANNUAL REPORT ENERSISIn accordance with the General Rule No. 283, Number 5), the dividends policies of the company corresponding to the 2014 and 2013 accounting periods are described below. Dividends Policy 2014 General Aspects The Company Board of Directors, in session dated February 28, 2014 approved the following Dividends Policy and the corresponding procedure on the dividends payment of Enersis S.A., for the 2014 accounting period. Dividends Policy The Board of Directors has the intention of distributing a provisory dividend, charged on the 2014 accounting period profits, of up to 15% of the profits as of September 30, 2014, according to what is shown in the Enersis S.A.A’s financial statements up to such date, to be paid in January 2015. The Board of Directors has the intention of proposing to the Regular Shareholders’ Meeting, to be held on the first quarter 2015, to distribute as a definite dividend, an amount equal to 50% of the profits for the 2014 accounting period. The definite dividend will correspond to be defined by the Regular Shareholders’ Meeting, to be held on the first 2015 quarter. Compliance of the aforementioned program will be conditioned, in matter pertaining to dividends, to the profits effectively obtained, as well as on the results that forecasts that periodically made by the Company or the existence of determined conditions, according to what corresponds. 65 For these purposes, checking or savings banking accounts can be in any area of the country. It is necessary to underscore that the payment modality chosen by each shareholder will be used by DCV Registros S.A. for all dividends payment, while the shareholder does not express in writing his intention of modifying it and registers a new option. The shareholders that do not have a payment modality registered, they will be paid according to modality No. 4 stated herein above. In cases where the checks or on-site drafts are returned by mail to DCV Registros S.A., they will remain under their custody until the shareholders withdraw or request them. Procedure to pay dividends For the payment of dividends, whether provisory or definite, and in order to In case of deposits in banking checking accounts, Enersis S.A. avoid their undue collection, Enersis and/or DCV Registros S.A. can request, for security reasons, S.A. considers the modalities that are their verification by the corresponding banks. If the accounts indicated as follows indicated by the shareholders are objected, whether in a prior verification process or for any other cause, the dividend 1. Deposit in banking checking account, will be paid according to the modality indicated in Point No. whose title holder is the shareholder. 4 herein above. 2. Deposit in banking savings account, On the other hand, the Company has adopted and will whose title holder is the shareholder. continue to adopt in the future all necessary security 3. Forwarding a nominative check or process, in order to safeguard both the shareholders as well measures required that is required by the dividends payment on-sight draft by registered mail to as Enersis S.A. the residence of the shareholder that is listed in the Enersis S.A.’s shareholders’ register 4. Withdrawal of the check or on-site draft at the offices of DCV Registros S.A., in its capacity as the Enersis S.A’s administrator of the shareholders’ register or in the bank or branch offices that are determined for such purpose and that will be informed in the notice that is published regarding the payment of dividends. 66 DIVIDENDS 2013 ANNUAL REPORT ENERSISDividend policy 2013 Compliance with the above program will be subject, in terms of dividends, to the actual net income booked and also the results of the projections made periodically by the company or the existence of certain conditions, as the case may be. General Aspects (1) Through Significant Event published on SVS on November 26, 2013, Enersis S.A. informed the following The Board of Directors of the Company, In accordance with articles 9 and 10 of the Securities Market Law 18,045, the in its session taken place February 28, provisions of General Rule No. 30 of the Superintendence, duly authorized and on 2013, approved the following dividend behalf of Enersis S.A. (the “Company”), I hereby inform you as a Significant Event, policy and the procedures for payment that the Board of Directors of Enersis S.A., at its meeting held today, agreed by of Enersis S.A. dividends. unanimously vote to distribute on January 31,2014, an interim dividend of Ch$ Dividend policy(1) The Board of directors has the intention to propose to the General shareholders meeting, to be held during the first four month of 2014, to distribute a final 1.42964 per share, attributable to 2013 fiscal period, corresponding to 15% of liquid net income as of September 30, 2013, in accordance with the Company’s dividend policy. Distributable net income year 2013 dividend equivalent to 50% of profits of The distributable net income for year 2013 is indicated below: year 2013. The board also has the intention to Net Income * Distribuible Net Income distribute an interim dividend against * Attributable to the parent company the net income for 2013 of up to 15% of the net income to September 30, 2013, as shown in the financial statements at that date, payable in January 2014. Distributed dividends Million $ 658,514 658,514 The following chart shows the dividends per share paid during the last few years: Dividend No. 77 78 79 80 81 82 83 84 85 86 87 88 Dividend Type Final Interim Final Interim Final Interim Final Interim Final Interim Final Interim Closing Date 24-04-2008 13-12-2008 07-05-2009 11-12-2009 29-04-2010 21-01-2011 06-05-2011 21-01-2012 17-05-2012 19-01-2013 04-05-2013 25-01-2014 Payment date 30-04-2008 19-12-2008 13-05-2009 17-12-2009 06-05-2010 27-01-2011 12-05-2011 27-01-2012 24-05-2012 25-01-2013 10-05-2013 31-01-2014 Pesos per share 3.41256 1.53931 4.56069 2.45677 4.64323 1.57180 5.87398 1.46560 4.28410 1.21538 3.03489 1.42964 Charged to accounting period 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 67 Investment and financing policy 2014 68 INVESTMENT AND FINANCING POLICY 2014 2013 ANNUAL REPORT ENERSISInvestment and financing policy 2014 Investments Areas of investment Enersis S.A. will invest, as authorized by its bylaws, in the following areas: • Contributions for investment in or for the incorporation of subsidiaries and related companies whose activity is aligned, related or linked to any forms or types of energy or the supply of public utilities or whose main raw material is energy. • Investments consistent in the acquisition, exploitation, construction, rental, administration, trading and disposal of any class of fixed assets, whether directly or through subsidiaries. • Other investments in all kinds of financial assets, titles or securities. Maximum investment limits The maximum investment limits for each investment area shall be the following: i) Investments in its subsidiaries in the electricity sector: amounts needed by the subsidiaries to meet their respective corporate purposes. ii) Investments in other subsidiaries: given amount such that the addition of the proportional fixed assets corresponding to Enersis S.A.’s stake on these other subsidiaries does not exceed the proportional fixed assets corresponding to the Enersis S.A.’s stake in the electricity sector subsidiaries and Enersis S.A. 69 Monitoring of the areas of investment Financing In order to monitor the investment (a) Maximum debt level areas and in accordance with Enersis The maximum leverage of Enersis S.A. is a debt to S.A. corporate purpose, the following shareholders’ equity ratio of 2.20 times, based on the procedure will be pursued whenever consolidated statements of financial position. possible: • At the Ordinary Shareholders’ Meetings of our subsidiaries or related companies it will be proposed (b) Management powers for agreeing dividend restrictions with lenders the appointment of directors Dividend restrictions may only be agreed with creditors if corresponding to the Enersis S.A.’s previously approved by a shareholders’ meeting (ordinary or stake in that company, who must extraordinary). be preferably chosen from among directors or executives of the Company or its subsidiaries. • Investment, financial and commercial (c) Management powers for granting security to creditors policies will be proposed to the The Company’s management may agree with creditors the subsidiaries and related companies, granting of tangible security or guarantees in accordance as well as the accounting criteria and with the law and the corporate bylaws. (d) Essential assets for the normal operations of the company The shares representing Enersis S.A.’s stake in its subsidiary Chilectra S.A. are considered essential assets for the normal operations of Enersis S.A. systems they should follow. • The management of the subsidiaries and related companies will be supervised. • Permanent control of debt limits will be maintained, to the extent that the investments or contributions implemented or that are planned to be carried out do not represent an unusual variation from the parameters defined by the maximum investment limits. 70 INVESTMENT AND FINANCING POLICY 2014 2013 ANNUAL REPORT ENERSIS71 The Company’s businesses 72 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSISBusiness structure GENERATION Endesa Chile Endesa Costanera Hidroeléctrica El Chocón Central Dock Sud Endesa Fortaleza Endesa Cachoeira Endesa CIEN* Emgesa Edegel EEPSA (*) Transmission DISTRIBUTION Chilectra Edesur Ampla Coelce Codensa Edelnor OTHER BUSINESS ICT Inmobiliaria Manso de Velasco 73 Historical background On August 1, 1988, as resolved at the extraordinary shareholders meeting of April 12, 1988, one of the companies born from the division changed its name to Enersis S.A. At the extraordinary shareholders meeting of April 11, 2002, the company’s objects were modified, introducing On June 19, 1981, Compañía Chilena telecommunications activities and the investment and de Electricidad S.A. formed a new management of companies whose businesses are in corporate structure which gave telecommunications and information technology, and birth to a parent company and internet trading businesses. three subsidiaries. One of these was Compañía Chilena Metropolitana de In 1988, and in order to successfully meet its development Distribucion Electrica S.A. In 1985, under and growth, the company was split into 5 business units the Chilean government’s privatization which in turn gave birth to five subsidiaries. Of these, policy, the process of transferring the Chilectra and Río Maipo were responsible for electricity; share capital of Compañía Chilena Manso de Velasco concentrated on electrical engineering Metropolitana de Distribucion Electrica and construction services, plus real-estate management, S.A. to the private sector was begun, Synapsis in the area of information technology and data ending finally on August 10, 1987. In this processing, while Diprel focused on providing procurement process, the pension fund management and commercialization of electrical product. companies (AFPs), company employees, institutional investors and thousands Today, Enersis is one of the largest private electricity of small shareholders joined the groups in Latin America in terms of consolidated assets and Company. Its organizational structure operating revenue, achieved through steady and balanced was based on activities or operative growth in its electricity businesses: generation, transmission functions whose results were evaluated and distribution. The development of the electricity functionally and its profitability was distribution business abroad has been implemented jointly limited by a tariff structure as a result of with its subsidiary Chilectra, a company that distributes the Company’s exclusive dedication to electricity in the Metropolitan Region, Chile. Its investments the electricity distribution business. in electricity generation in Chile and abroad have been developed mainly through its subsidiary Empresa Nacional de In 1987, the company’s board proposed Electricidad S.A. (Endesa Chile). forming a division for each of the parent company’s activities. Four In addition, it is involved in businesses that complement its subsidiaries were therefore created principal ones through majority holdings in the following to be managed as business units each companies: Real estate Manso de Velasco Ltda. committed to with its own objectives, thus expanding the real-estate business through the integral development of the company’s activities toward other real-estate projects and the administration, rental, purchase non-regulated activities but linked and sale of the property assets of Enersis and its subsidiaries to the main business. This division in Chile; ICT Servicios Informáticos Limitada is a consulting was approved by the extraordinary services company in technology, information and computing, shareholders meeting of November and telecommunications 25, 1987 which defined its new corporate objects. Compañía Chilena Metropolitana de Distribucion Electrica S.A. thus became an investment holding company. 74 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSIS1993 • In July, it bought the generator Hidroeléctrica El Chocón, located in the province of Neuquén and Río Negro, Argentina. 1994 • In July, Enersis acquired for US$176 million 60% of the share capital of Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor, in Peru. It also acquired Edechancay, another electricity distributor in that country, which was later absorbed by the former. • At the end of the year, Enersis acquired an additional 1.9% of the share capital of Endesa Chile, increasing its shareholding to 17.2%. Expansion and development Enersis began its international expansion in 1992 through participating 1995 in different privatization processes • On December 12, Enersis acquired an additional 39% in Edesur gaining in Latin America, thus developing a control of the company. significant presence in the electricity sectors of Argentina, Brazil, Colombia • It also acquired the generator Edegel in Peru. and Peru. 1992 1996 • On May 15, it acquired a 60% on April 15, Endesa Chile became a subsidiary of Enersis. shareholding and control of the generator Central Costanera, • It invests in the sanitation market with the acquisition of Agua Potable Lo • On February 15, Enersis reached a 25.28% shareholding in Endesa Chile and, currently Endesa Costanera, in Castillo S.A. Buenos Aires, Argentina. • On July 30, it was awarded 51% of a large block of shares in the previously-called Companhia de Eletricidade of Empresa Distribuidora Sur S.A., do Río de Janeiro S.A., Cerj, a company that distributes electricity in the city Edesur, a company that distributes of Río de Janeiro and Niteroi, Brazil. Its present name is Ampla Energía e • On December 20, Enersis entered the Brazilian market with the acquisition electricity in the city of Buenos Aires, Serviços S.A. Argentina. • On December 20, it acquired a 99.9% shareholding in Central Hidroeléctrica de Betania S.A. E.S.P, in Colombia. 75 1997 • On September 5, it acquired for US$715 million a 78.9% shareholding in Centrais Elétricas Cachoeira Dourada, Brazil. • On September 15, Enersis successfully took part in the capitalization of Codensa S.A. E.S.P., acquiring a shareholding of 48.5% for US$1.226 million, company that distributes electricity in the city of Bogotá and the department of Cundinamarca, Colombia. It was also awarded 5.5% of Empresa Eléctrica de Bogotá. • On September 15, it acquired a 75% shareholding, for an amount of US$951 million, in Emgesa, a Colombian generator, and an additional 5.5% of Empresa Eléctrica de Bogotá S.A. • ENDESA S.A., (Spain), acquired 32% of Enersis. 1998 • On May 11, Enersis acquired 35% of Endesa Chile which, added to the 25%already held, enabled it to obtain a 60% shareholding in the generator. It therefore consolidated its position as one of the principal private sector electricity • On April 3, Enersis again entered the Brazilian market, companies in Latin America. this time being awarded 89% and control of Companhia Energética de Ceará S.A., Coelce, company distributes electricity in the north-east of the country, in the state of 2000 Ceará for US$868 million. • On April 22, Enersis reached 100% shareholding in Aguas Transelec, Esval, Aguas Cordillera and real-estate assets Cordillera, Santiago, Chile. were sold for US$1,400 million. • As part of its Genesis Plan strategy, the subsidiaries • On December 28, Enersis gained control of Esval, located in the Valparaiso region, through being awarded 40% of 2001 the share capital of the company. 1999 • Large investments were made: US$364 million for increasing its shareholding in Chilectra, in Chile; US$150 million in the acquisition of 10% of the share capital of Edesur, in Argentina, a percentage that was held by the • ENDESA S.A., (Spain), took control of Enersis. Through a company’s employees; US$132 million to increase its public share offering (OPA), the multinational company shareholding in Ampla, in Brazil; US$23 million to increase ENDESA S.A., acquired an additional holding of 32% in its shareholding by 15% in Río Maipo, in Chile, and US$1.6 Enersis which, together with the 32% already acquired million to increase its shareholding by 1.7% in Distrilima, in in August 1997, gave it a total holding of 64%. This Peru. transaction, completed on April 7, 1999, involved an investment of US$1,450 million. As a result of the capital increase made by Enersis in 2003, this shareholding reduced to the present 60.62%. 76 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSIS2002 2006 • In Brazil, Central Termoeléctrica Fortaleza in the state of Ceará was awarded to the Company. The commercial operation of the second phase of the electricity interconnection between Argentina and Brazil, CIEN, completing a transmission capacity of 2,100 MW between both countries, also began. 2003 • Assets amounting to US$757 million were sold, including the Canutillar generating plant and the distributor Río Maipo, both in Chile. 2004 • The Central Hidroelectrica Ralco hydroelectric plant • During February, the Termocartagena (142 MW) plant in located in the Bio Region and contributes 690 MW of Colombia, which operates with fuel oil or gas, was bought capacity, began operations. for approximately US$17 million. 2005 • In March, Enersis informed the SVS about the merger of Elesur and Chilectra by the absorption of the latter by the former. The legal effects of this merger were effective • On April 18, the subsidiary Endesa Eco was formed to from April 1, 2006. promote and develop renewable energy projects like mini-hydro plants, wind farms, geothermal, solar and • In June, Edegel and Etevensa were merged, the latter biomass plants, and to act as the depositary and trader a subsidiary of Endesa Internacional (now Endesa of the emission reduction certificates produced by these Latinoamérica S.A.) in Peru. projects. • The subsidiary Endesa Brasil S.A. was formed with Chile signed an agreement defining the structure of the all the assets held in Brazil by the Enersis Group and liquefied natural gas (LNG) project in which Endesa Chile Endesa Internacional (now Endesa Latinoamérica): CIEN, participates with a 20% holding. • On September 29, Endesa Chile, ENAP, Metrogas and GNL Fortaleza, Cachoeira Dourada, Ampla, Investluz and Coelce. 2007 • In March, the company Centrales Hidroeléctricas de Aysén S.A. (HidroAysén) was formed, to develop and exploit the hydroelectric project in the region of Aysén, called the “Aysén Project”, which will imply 2,750 MW of new installed capacity for Chile. 77 • In April, the first phase of the San Isidro combined-cycle thermal plant, second unit, with a capacity of 248 MW, was made available to Economic Load Dispatch Center (CDEC-SIC). • In September, the merger of the Colombian generating companies, Emgesa and Betania was completed. • On October 11, ENEL S.p.A. and ACCIONA, S.A. took control of Enersis through ENDESA S.A. and Endesa Internacional, S.A. (now Endesa Latinoamérica S.A.). • During November, the Palmucho hydroelectric plant started up its commercial operations, located below the Ralco plant dam in the Upper Biobío area, supplying 32 MW of capacity to the Central Interconnected system SIC). • Canela was inaugurated on December 6, the first wind farm on the SIC. Canela is located in the village of that name in the Region of Coquimbo and contributes 18 2009 MW to the SIC. 2008 • The companies ACCIONA, S.A. and ENEL S.p.A. announced an agreement whereby ACCIONA, S.A. will directly and indirectly transfer to ENEL ENERGY EUROPE S.L. a 25.01% shareholding in ENDESA, S.A. ENEL ENERGY EUROPE S.L., • In January, the second phase of the San Isidro II controlled 100% by ENEL S.p.A., will thus hold 92.06% of combined-cycle thermal plant began its commercial the share capital of ENDESA, S.A. operations, with an installed capacity of 353 MW. • On March 24, the dual operation of Unit Nº1 of the Tal- ACCIONA, S.A. came into effect whereby the ENEL Group Tal thermal plant began operations, with an installed became the controller of 92.06% of the share capital of capacity of 245 MW. ENDESA, S.A. • On June 25, the agreement between ENEL S.p.A. and • In June 27, the Ojos de Agua mini-hydro plant began • On October 9, Endesa Chile acquired 29.3974% of its operations, contributing 9 MW of installed capacity to Peruvian generation subsidiary Edegel. The shares the SIC. were acquired at market price from Generalima S.A.C., a company which in turn is a subsidiary of Endesa Latinoamérica S.A. Endesa Chile thus now holds directly and indirectly 62.46% of the shares of Edegel. • On October 15, Enersis S.A. acquired 153,255,366 shares, representing 24% of the share capital, of its Peruvian subsidiary, Edelnor, at a price of 2.72 soles per share. This was purchased from Generalima S.A.C., a Peruvian subsidiary of Endesa Latinoamérica S.A., the parent company of Enersis. With this transaction, the direct and indirect shareholding of Enersis S.A. in Edelnor rose from 33.53% to 57.53%. 78 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSIS2010 • In October, 2010, the company submitted the Environmental Impact Study (EIA In its Spanish acronym) of the Project LTE Central Hidroeléctrica Los Cóndores to the Environmental Assessment Service (SEA In its Spanish acronym), initiative that will allow connecting the future power plant Central Hidroeléctrica Los Cóndores to the Sistema Interconectado Central (SIC In its Spanish acronym), main electricity grid in the country, and that services more than 90% of the population. • In December 2010, Endesa Chile submitted the environmental impact assessment (EIA) of Central Hidroeléctrica Neltume again. The company submitted the environmental impact study to the Environmental Assessment Service (SEA), incorporating the additional information requested by the different organisms that participated in the evaluation process of the initiative. The 490 MW installed capacity intends to make use of the existing hydroelectric potential in the area, specifically in the River Fuy, natural drainage of the lake Pirehueico. • In February, the San Isidro plant increased its capacity to 399 MW; the combined cycle unit increased 22 MW of • In December Endesa Chile submitted the EIA of the capacity after implementing technological changes that Project named High Voltage S/E Neltume-Pullinque to the allowed him to operate in a dual manner (LNG and oil). SEA of the Lake Region. The initiative’s purpose is to build and operate the necessary infrastructure to transport • On May 31 in the context of the ongoing effort to provide and inject the energy to come from the future Central its customers with excellent service, Chilectra began Hidroeléctrica Neltume, into the Central Interconnected the project distribution network remote management System (SIC). (DT) implemented by CAM, a technological change that will allow a qualitative leap in the registration of power • Enersis accepted the offer presented by the company consumption and reducing energy losses. Grana y Montero S.A.A., to acquire the entire stake it holds, directly and indirectly, in its subsidiary Compañía • In early June Chilectra and Clínica Dávila opened the Americana de Multiservicios Limitada, CAM; and likewise, largest solar Project in Chile. With a total of 264 solar accepted the offer by Riverwood Capital L.P to acquire thermal collectors, installed in 740 square meters, the the entire shareholding, both directly and indirectly, in solar electric technology will allow heating more than its subsidiary Synapsis Soluciones y Servicios IT Ltda. The 70,000 liters of sanitary water a day, using two types of price offered for CAM and its subsidiaries in Argentina, totally clean energy, uncontaminated and with savings of Brazil, Colombia and Peru amounted to US$20 million. In up to 85%. the case of Synapsis, the price offered for the company and its subsidiaries in Argentina, Brazil, Colombia and Peru • In July Endesa Chile and Minera Lumina Copper Chile S.A. amounted to US$52 million. formalized a supply contract to satisfy electricity needs of Caserones Project, located 162 kilometers southeast of Copiapo. The agreement considers supplying energy and capacity from September 1, 2012 until December 31, 2022. 79 2011 • Four projects were submitted for environmental approval: “Optimization of Los Cóndores Hydroelectric Power Plant”, “Renaico Wind Farm”, “LAT S/E PE Renaico - S/E Bureo” and “Optimization Second Unit of Thermal Power Plant Bocamina”. The project “Optimization of Los Cóndores Hydroelectric Power Plant” has been qualified as environmentally favorable. The projects: “LTE CH Los Cóndores - S/E Ancoa”, “Hydroelectric Power Plant Neltume”, “High Tension line S/E Neltume - Pullinque”, “Renaico Wind Farm”, “LAT S/E PE Renaico - S/E Bureo” and “Optimization Second Unit of Thermal Power Plant Bocamina” are in the process of environmental approval. • In May, the Environmental Assessment Commission of the Aysen region approved the Environmental Impact Study of the HydroAysen project power plants presented on August 14, 2008, which constitutes an important • In September, the Enersis Group measured the Carbon milestone in the process of obtaining the necessary Footprint of its generation power plants in Latin America. authorizations to develop this project, in which Endesa Through its subsidiary Endesa Chile, the company Chile has a 51% share, and the Chilean electricity company carried out the calculation of the carbon footprint Colbun has the remaining 49%. If the project is carried for 13 generation plants located in Argentina, Chile out, it would imply adding 2,750 MW of hydroelectric and Colombia, and also for the corporate building in capacity to the Chilean electricity system, from five power Santiago, Chile. Simultaneously, in Peru, a methodology plants, making an important contribution to reliability of calculation was developed in house and applied to of the electricity supply of the country. The project also calculate the Carbon Footprint of hydroelectric and considers building a high tension transmission line, thermal power plants and also corporate headquarters developed by third parties, approximately 1,912 Km long, in Lima. Chilectra on the other hand, has measured that will begin its approval process shortly. carbon footprint and has disclosed results publicly in its Sustainability Report since 2007. The distributor • In August, Endesa Latinoamérica, S.A. (wholly owned brought up this subject with the objective of offering its subsidiary of Endesa, S.A.) informed, as a significant event, customers various actions to reduce emissions of CO2, entering into an agreement for Endesa Latinoamérica through Energy Efficiency (EE) or the implementation of to acquire EDP’s 7.70% stakes in Endesa’s Brazilian Non-Conventional Renewable Energy. In order to do so, subsidiaries Ampla Energia e Serviços S.A. and Ampla Chilectra has a strategic alliance with the environmental Investimentos e Serviços S.A. for Euro 76 million and company POCH Ambiental, a firm with extensive Euro 9 million, respectively. After these acquisitions, the experience in Climate Change and Carbon Footprint Endesa Group will control 99.64% of the share capital of consulting, which offers calculation and certification both companies, whose shares trade on the Sao Paulo services, and also reduction of emission by EE or ERNC. stock exchange. In compliance with securities market regulations in Brazil, once the acquisition is complete Endesa will launch a tender offer for the remaining 0.36% stakes held by the minorities shareholders of Ampla Energia and Ampla Investimentos under the terms set out in these regulations. 80 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSIS2012 • On February 29, 2012, the power plant Bocamina II began commercial operations. This allows compensating the hydroelectricity generation deficit present for the last 3 years and contributes with an important increase in efficient low cost thermal electricity as back up capacity of the Central Interconnected. • The power plant project Punta Alcalde, to have 740 MW of installed capacity and that will be locate 13 kilometers from the city Huasco, received environmental approval from the Ministers Committee In early December, after being rejected by the Environmental Assessment Commission of the Atacama Region In June 2012. The project will have the highest standards of technology, efficiency and environmental commitment, considering world class parameters in terms of emissions and operations. established by Articles 15, 67 and Title XVI of Law 18,046 (the Board of Directors requested the independent • In July, through a Significant Fact submitted to the valuation of IM Trust and the Directors Committee Superintendence of Securities and Insurance (SVS),the requested the independent valuation of Claro y Asociados Board of Directors of Enersis informed its decision to call Ltda., the Directors Committee issued its report and each an Extraordinary Shareholders Meeting to take place Director gave his opinion with respect to the proposed September 13, with the purpose of resolving, among operation), the Extraordinary Shareholders Meeting held other matters, the capital increase of the Company on December 20 ruled on the capital increase. A very according to Endesa’s (Spain) proposal, amounting to up large majority, almost 86% of all shareholders present to the equivalent of US$8,020 million in Chilean pesos, with voting rights, equivalent to 81.94% of the total shares or the amount that the Extraordinary Shareholders with voting rights of the Company, approved the capital Meeting determines. In early August, the SVS stated that increase of the following characteristics: 1) Maximum the Board of Enersis must adopt the actions necessary amount of the capital increase: Ch$ 2,844,397,889,381, to strictly comply with the conditions established by divided into 16,441,606,297 ordinary nominative payment Articles 15, 67 and Title XVI of Law 18,046 (Corporations shares of the same series, with no preferences and no Law),considering that they are complementary and when par value, 2) Value of non-in-kind contributions to be applicable should be considered simultaneously. These capitalized: The total issued capital of Cono Sur, Company conditions are related to capital increase transactions that will concentrate the activities that are identified and related party transactions respectively. Once the in the reports that have been made available to the indications of the SVS were acknowledged, Enersis shareholders and that would be contributed by Endesa adopted them and continued with the capital increase to Enersis S.A., will amount to Ch$ 1,724,400,000,034 operation. The Board of Directors resolve postponing corresponding to 9,967,630,058 shares of Enersis S.A. at the Extraordinary Shareholders Meeting to take a price of Ch$ 173 per share, 3) Placement share price: A place September 13 to a later date to be determined fixed price of Ch$173 for every payment share to be issued opportunely. After strictly complying with the conditions as a result of the capital increase. 81 2013 • Capital Increase. With a historic result for this type of operation in the local market, Enersis shareholders subscribed a total of approximately $ 6,022,000, a placement of 100% of the shares available for Capital Increase. • During the year, progress continued in the construction of the El Quimbo project in Colombia, which is located south of the department of Huila, southeast of Bogotá and feeds from the flow of the Magdalena River. It includes the construction of a 400 MW hydroelectric dam and with an average annual generation of about 2,216 GWh. During the year and according to the commitments of the Environmental License of El Quimbo, the projects related with the resettlement nuclei and their respective irrigation and urbanization districts were executed, these were directly linked to the conditions accepted by the people On December 3, 2012, by unanimous vote, the Committee affected by the project and the needs expressed by the of Ministers decided to reverse the decision of the EAC local authorities. in the Region of Atacama, granting an environmental approval to the project. In early 2013, four court • Punta Alcalde Thermal Power Plant Project. In July 2013, proceedings (stay for protection) against the decision of the transmission project that would connect the power the Committee of Ministers, which were received by the plant to the Maitencillo substation of the SIC underwent Court of Appeals in August 2013. In December 2013, the environmental assessment. The Punta Alcalde Thermal case was in the Supreme court pending ruling, which was Power Plant will be located in the Atacama Region, finally ruled in favor of the project on January 17, 2014. Province and Municipality of Huasco, 13 kilometers south of Huasco. The initiative provides for the construction • In July 2013, the new Malacas power plant was of a power plant which uses bituminous coal as its main commissioned in Peru. With a power output of 185 MW, fuel. It will have two power blocks, each having an the new unit of the Malacas thermal power plant began installed capacity of 370 MW. The plant will be connected operations in Piura, this pant is owned by the Piura Electricity to the trunk Maitencillo substation by a 220 kV and Company (EEPSA) part of the Enersis Group. This new plant approximately 40 km in length, double circuit transmission required an investment of US$ 105 million, and supplies system. additional energy to the System. In 2009, Endesa Chile submitted the project to the • During the year, the progress in optimizing the Salaco Environmental Impact Assessment Bureau. A regulatory Chain continued, which will represent a growth in change occurred in June 2011 regarding emissions installed capacity of 144.8 MW and an additional requirements, which led to major changes in the project. average increase on expected energy generation of 482 On June 25, 2012, the EAC (Environmental Assessment GWh for Emegesa. The plants will begin operating with Commission) of the Atacama Region rejected the project, their original names Salto II (from 19.4 MW to 35 MW); after which Endesa Chile submitted a Claim to the Laguneta (from 18 MW to 36 MW) and Dario Valencia Committee of Ministers. (from 38.8 MW to 150 MW). The project has duration of 82 THE COMPANY’S BUSINESSES 2013 ANNUAL REPORT ENERSIS 24 months. On November 6, 2013, the first modernized • Closure of Taltal Project Combined Cycle. In December unit of the Salaco project began operating; this was unit 2013, an Environmental Impact Statement (EIS) was 2 of the filo de agua Darío Valencia Samper power plant, entered to process. which environmentally optimizes with an installed capacity of 50 MW. This unit generated the project, replacing the originally considered seawater 46.3 GWh from the moment of its commissioning to cooling system with a dry cooling system with air coolers. midnight of December 31st. The proposed closure of the combined cycle will use the two existing gas turbines of 123 MW each, and add a • In November 2013, the Water Works Permit authorizing steam turbine of about 130 MW. Thereby, the Taltal plant the intervention of water courses for the construction will be able to generate a net power of around 370 MW of the Los Cóndores plant was obtained. The generation and display an efficiency gain from the current 35% to project has had an environmental approval since about 50%. The injection of energy of the combined cycle November 2011. Regarding transmission, in May 2013, a plant is through the existing double circuit 220 kV-Diego modification of the environmental approval for the line de Almagro-Paposo transmission line. connecting the power plant to the SIC was obtained. The Los Cóndores Hydroelectric Project will be located in • Renaico Wind Farm. During the 2013, tenders for civil the Maule Region, Province of Talca, Municipality of San works contracts, internal connections of the park, Clemente. It includes the construction of a run-of-the- transmission line, transformer substations and equipment river hydroelectric plant of about 150 MW of installed were constructed. The project is located in Region IX, capacity, with an average annual generation of 560 GWh, in the Renaico commune. It consists of 44 2 MW wind which would use the waters of the Laguna del Maule turbines, with a hub height of 95 meters, reaching a reservoir by means of a 12km long adduction. The plant total capacity of 88 MW to generate 255 GWh / year. will be connected to the SIC by a 220 kV double circuit The connection of power to the SIC will be conducted by line between Los Cóndores power plant and the Ancoa means of a single circuit, 27 km transmission line 220 kV, substation, with a length of approximately 90 km. to the future Bureo substation, in Region VIII. • In November and December 2013, respectively, • Piruquina Mini-Hydro Project. During 2013, the basic Addendum No. 4 to the EIS of the generation project and engineering was completed and the processing of the Addendum No. 4 to the EIS for the transmission project for application for the Water Works Permit was continued. the Neltume Hydroelectric Project were submitted. This It is expected that all the necessary permits for the project will be located in the Los Ríos Region, Province of construction of the project will be granted during the first Valdivia, Municipality of Panguipulli. The initiative includes half of 2014. The Piruquina Mini-Hydro Project is located the construction of a run-of-the-river hydroelectric power in Region X, Chiloe Island, in the Dalcahue commune and plant with an installed capacity of 490 MW, with an seeks to harness the Carihueico river water. The plant average annual generation of 1,885 GWh, which would includes the installation of two Kaplan and one Francis build the existing energy potential between Neltume and turbines, and has an installed capacity of 7.9 MW and an Pirehueico lakes. The plant will be connected to the SIC in estimated average generation of 33.7 GWh / year. the Pullinque area by a 220 kV double circuit transmission line. Also, during the second half of 2013, the SEA began the process of consultation with indigenous communities which are territorially present in the area, both for the plant and the transmission line, in order to comply with ILO Convention c N° 169. The project is currently completed with basic engineering finalized and under environmental assessment process by the Environmental Assessment Agency (SEA) of the region. 83 Investments and financial activities 84 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISCapital Increase In July 2012 Endesa SA proposed the Enersis Board of Directors to conduct a Capital Increase consisting of a real non-cash contribution by the controller and a cash contribution by minority shareholders. The aim of this operation was to leave Enersis as the only investment vehicle of Endesa in Latin America and also provide it with resources to enable it to carry out a major expansion plan, consisting of purchases of minority interests in companies already consolidated and execute M & A operations. The March 28, 2013, after the purchase of 100 % of the shares offered, the Capital Increase operation was totally and successfully completed. The amount collected in the operation, which became the more substantial Capital Increase to date in the country, breaks down as follows: Completed the periods of first preferred options in Chile, USA and Spain, the shareholders of the company purchased a total of 16,284,562,981 shares, representing 99.04 % of the total authorized for issuance, totaling U.S. $ 5,961 million (of these shares, Endesa Spain, by contributing with its holdings grouped in the Southern Cone, purchased 9,967.630.058 shares). Meanwhile, the remaining 157,043,316 shares left at the end of the periods of first preferred option, was placed entirely in an auction held on March 28 in the Santiago Stock Exchange, raising $ 60.6 million, auctioning off all the packages at $ 182.30 per share. As a result of the Capital Increase, all shares of Endesa Spain in South America were unified in Enersis, and gave the company the resources to carry out a meaningful plan for growth and expansion in the region via purchase of minority and M & A. Enersis incorporated shares in operating power generation, transmission and distribution companies in South America, representing during 2013 a net income an increase of approximately $ 255 million considering only three quarters, equivalent to an annualized amount of $ 340 million, increase which was achieved without incurring in further incremental transaction costs and risks, since these are companies, which almost entirely, were managed by Enersis. 85 The contribution of shares in Emgesa and Codensa, both in the Colombian market, allow Enersis to consolidate these investments in their own right. The addition of Piura (Eepsa) implies increased presence in the power generation sector in Peru, through an asset that presents attractive growth opportunities. Thus, the incorporation of Cono Sur will rebalance Enersis net income, reinforcing the weight of Colombia and Brazil, which are growing at very significant rates, while in terms of market, the company established itself as the main power generator listed in South America also increasing its weight in the IPSA, climbing from an eighth to a third place in terms of stock market capitalization. 20, 2012 by the Enersis Extraordinary Shareholders’ Meeting, From the second quarter of 2013, the the company acquired the shares in its Inversiones South companies: SAC Generalima, Cabo America Ltda. subsidiary, producing consequentially the Blanco Electric SAC, Empresa Electrica termination of the company. Thus, Enersis acquired the de Piura SA, Endesa Cemsa SA, Dock shares that had been provided by Endesa Spain as payment Sud SA Investments, and Central Dock for shares of Capital Increase, becoming the direct owner Sud SA entered the Enersis Group of the contributed shares, a fact that has produced legal scope of consolidation, All of them effects since October 1, 2013. Investments South America contributed by Endesa Spain, grouped Ltda. had previously absorbed, during last July, Southern in Southern Cone Holdings SLU, as Cone Society, a company that originally grouped the social part of the Capital Increase process contributions that Endesa Spain brought under the Capital conducted by the company. The income Increase operation. of these companies consolidated in the Enersis Group was an increase in the Thanks to the new shares received in this transaction, the consolidated statement of financial company’s net profit attributable to Enersis shareholders position of M $ 110,222,618 in current grew from 42% in 2012 to 60% in 2013. assets, M $ 163,196,934, in non-current assets, M $ 180,637,895 in current All records mentioned in this chapter are available to the liabilities and M $ 54,241,781 in non- shareholders at the Enersis website (www.enersis.cl) as current liabilities. well as at its head office located in Avda. Santa Rosa N°76, Santiago. In October 2013, and having closed the corporate simplification process of the Capital Increase approved in December 86 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISInvestment Plan We Coordinate the overall financing strategy of our subsidiaries and intercompany loans in order to optimize the management of debt in addition to the terms and conditions of our funding. Our subsidiaries develop separate capital investment plans which are financed on the basis of internally generated funds or direct funding. One of our goals is to focus on investments that will yield long- term profit, such as projects to reduce energy losses. Our investment plan is flexible enough to adapt to changing circumstances by assigning different priorities to each project according to profitability and strategic opportunity. Investment priorities are currently focused on developing the works plan in Chile, Peru and Colombia. During 2013, by means of the Capital Increase, some companies that brought their respective projects (e.g. Reserva Fría in Peru) joined the Enersis perimeter. Moreover, the change in the Consolidation Standard implied the deconsolidation of some companies for comparative purposes, in 2012 Endesa was certified to this standard. 87 Generation Distribution Our capital expenditures in generation During 2013 investments were made for a total of $ 455 totaled $ 368 billion in 2013, of which billion, mainly to meet the needs of consumption, due to $ 135 billion were in Chile and $ 233 population growth and new customers, via investment billion out of the country, while in 2012, not only in connection, but also in increases in capacity these expenses totaled $ 311 billion, of and strengthening the facilities in AT, MT and BT of the which $ 68 billion were in Chile and the companies. Of this total, $ 55 billion were invested in Chile rest abroad. and $ 400 billion abroad. Moreover, in 2012, investments of $ 395 billion (homogenization by changes to the Consolidation In Chile our main investments during Standard) were made to serve the consumption needs, 2013 were concentrated on completion due to population growth and new customers, as well as of the outstanding works of Bocamina to improve quality of service. Of this total, $ 52 billion were II, 350 MW. In Colombia, our investment invested in Chile. expansion was concentrated in the construction of the El Quimbo In Chile during 2013, Chilectra made investments totaling $ Hydroelectric Project, 400 MW and 55 billion, related primarily to meet growing energy demand, the commissioning of the first unit of quality of service, safety, information and remote control the Cadena Salaco Project which will systems, and losses. expand the power of the complex by 145 MW. In Peru, investments were In the 2013 results, the expansion in 150 MVA transformation concentrated mainly in commissioning capacity, particularly in the Chacabuco (110/23 kV), San Reserva Fría Project with 183 MW. Cristobal (110/12 kV) and Recoleta (110/12 kV) substations, Additionally, the investment and each with an expansion of 50 MVA are worth mentioning. development studies of pipeline projects, both hydraulic as well as AT networks were repowered with high capacity investments thermoelectric in Chile and in the region in reinforcing the 110 kV Chena - Cerro Navia lines in the Tap continue. San Jose - Pudahuel section, and in two 110 kV branchings (taps) at the Lo Boza and San Jose Substations. In Argentina, during 2013 Central Costanera had contributions from In MT networks, 3 new feeders were built: Magdalena (12 the Government by the Encos Plan kV) in the Alonso de Cordova substation; Chiloé (12 kV) project for $ 36 billion. However, these in the Club Hípico substation; and Huelén (12 kV) in the contributions are not considered in the San Cristobal substation. And to supply large customers, total capital expenditures reported Santa Clara (12 kV) in the Recoleta substation. Also, the here. construction of 2 additional supply lines to be commissioned during 2014 was advanced. 88 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISFinally the investment to increase automation of the MT Network in Chilectra SA continued, where 91 new remotely controlled equipment were added to the system, and a special plan on 127 existing pieces of equipment in the network with capacity of remote command was implemented, allowing to add 100 of these to the SCADA system during 2013 by completing 191 new units in exploitation; also, a second project of self-reconfiguration of the MT network was implemented in the Portezuelo and Aguas Claras power supply lines to improve the quality of service of the Lampa sector, which adds to the one implemented in Colina in 2012; and physical works on the MT network and the installation of equipment at the Smart City project was completed in the Ciudad Empresarial in Santiago which will be commissioned in 2014 with the implementation of a STM centralized control platform, scheduled for the first four months. In Argentina, our subsidiary Edesur made investments totaling $ 106 billion, mainly concentrated in loss reduction made investments of about $ 96 billion projects, quality of distribution networks and connecting new customers. In the case of Brazil, the total investment reached $ 173 billion. Specifically, Ampla primarily related to the investment plan submitted to the Argentinean In the case of Coelce, investment totaled $ 67 billion, mainly for networks and government according to the connection projects intended to bring in new customers. Necessary investments obligations in ruling 347/2013. This plan were also made to support the sustained growth in demand in the state of Ceará involved major electrical infrastructure in recent years. works allowing network expansion and renovation of low and medium In Colombia, the investments totaled $ 72 billion in projects aimed at expanding voltage networks. Finally, the medium to serve new customers and meet the growing demand in an integrated manner voltage network telecontrol project in the different voltages of the distribution network. which began in 2011 continued, and the technical quality of the service was Investments by Codensa focused primarily on connections to new customers and improved. networks to improve service quality. In Peru, Edelnor invested a total of $ 58 billion focused primarily in meeting the growth in demand, always seeking to strengthen safety in the Medium and Low Voltage feeder lines. 89 Financial activities The financial activities of the Enersis group have always been an important and a priority issue. Work has been conducted to improve the financial profile of both Enersis and its subsidiaries, issuing equity and debt with the best market conditions. The most significant financial events in the history of Enersis include, among others, the following events: Between 1988 and 1992 Enersis shares began trading on the local stock exchanges and on October 20, 1993, in In 2000, Enersis conducted a new Capital Increase by the New York Stock Exchange (NYSE), approximately $ 525 million. by means of the ADSs, under the NEMO ENI. On December 17, 2001 it began trading in the Latin American Stock Exchange in the Madrid Stock Exchange (LATIBEX) In February 1996, Enersis made a second Enersis shares traded under the NEMO XENI. issue of shares in both the local and international markets. In addition, it Between June and December 2003, Enersis conducted issued bonds in the United States for a another Capital Increase, which allowed increasing the equity total of U.S. $ 800 million, due in 2006, base of the company to more than US$ 2 billion. 2016 and 2026. In 2012 financial transactions, both refinancing and new In February 1998, Enersis again financing and hedging in the foreign subsidiaries for a total increased its capital and issued bonds in amount equivalent to U.S. $ 1,376 million, of which $ 117 the amount of $ 200 million. million came from Argentina, U.S. $ 533 million from Brazil, U.S. $ 623 million from Colombia and U.S. $ 104 million from Peru . In March 2013 The Capital Increase by over U.S. $ 6 billion was successfully completed, the largest by a Chilean company. Due to amendments made between 2006 and 2010 to local bonds contracts, Yankee bonds, and credit lines under the New York Law of Enersis and Endesa Chile to date, default events of any foreign subsidiary have no effect on the Chilean debt matrix. 90 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISNational Finance Enersis consolidated accounts at the end of 2013 with committed credit lines available for the equivalent of U.S. $ 757 million. Enersis and Endesa Chile and its respective subsidiaries in Chile and abroad, also feature at the end of 2013 with uncommitted credit lines available for the equivalent of U.S. $ 925 million. During 2013, Enersis maintained available for withdrawal the entire Additional to the already mentioned credit contracts and bonds programs, Enersis program of local bonds for UF and Endesa Chile with its Chilean subsidiaries ended with available cash of US$ 12.5 million, program registered 1,728 million, corresponding to Enersis the sum of U.S. US$ 1,620 million and to in the Securities Register of the Endesa Chile US$ 108 million. Superintendence of Securities and Insurances in February 2008. Regarding the consolidated financial debt of Enersis until December 2013, it At the end of 2013 Commerce Effect Chile consolidated debt. This debt is primarily composed of international bonds, reached U.S. $ 6,921 million. Of this amount, U.S. $ 3,836 million related to Endesa Lines for a total amount of up to U.S. local bonds and bank debt. $ 200 million for both Enersis and Endesa Chile remained unused. These It should be noted that the consolidated cash of Enersis ended at U.S. $ 3,065 Commerce effect lines were registered million, therefore, the consolidated net debt amounts to U.S. $ 3,855 million. in January 2009 in the Securities However U.S. $ 1,422 million in instruments placed over 90 days remain. Register of the Superintendence of Securities and Insurance. As for bank financing, Endesa Chile has an existing debt of U.S. $ 200 million for the syndicated loan in June 2008 and it has its final due date in June 2014, in which BBVA Bancomer is the Agent of the transaction. 91 International Finance 2013 was marked by the poor performance of world powers such as the U.S. and China which did not meet their growth expectations, however, about the end of the year, some signs of recovery were observed. With the announcement of the FED on the withdrawal of monetary stimulus, that would imply a gradual increase in interest rates in dollars. This started a trend of depreciation of emerging currencies. Debt markets in most countries where the assets Enersis are located, remained Main completed financial operations open and allowed Enersis foreign subsidiaries to continue refinancing Argentina its debt to longer terms, including Endesa Costanera conducted a Capital Increase for $ 85 improving the levels of interest rates million and refinanced bank due dates for $ 34 million. and complying with a policy that allows controlled financial risk. In El Chocón entered into a new syndicated loan for an amount Argentina the complex operational of $ 23 million and refinanced bank due dates for $ 20 situation has created instability in the million. cash flows of the companies, however, through various operating and financial Edesur achievement the repay all of its loans secured by US$ activities; the balance has been 15.5 million and refinance US$ 33 million with local banks. achieved at the end of 2013. In 2013 financial transactions were conducted for both refinancing as well as new financing and hedging in the foreign subsidiaries for a total amount of U.S. $ 1,473 million, of which $ 208 million came from Argentina, U.S. $ 410 million from Brazil, U.S. $ 686 million from Colombia and U.S. $ 169 million from Perú.2.3. 92 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISBrazil Exchange rate hedging Policy Endesa Brazil, by means of a corporate simplification operation, absorbed Ampla, Investimentos and Investluz Exchange rates investment vehicles. The exchange rate hedging policy of the Group is based on cash flows and aims to maintain a balance between the indexing Ampla obtained the release of $ 152 of flows indexed to foreign currency (dollar), and the levels of million under the program of CAPEX indexation of assets and liabilities in that currency. During 2013, financing with BNDES. Coelce in turn, the financial transactions conducted by Enersis allowed it to obtained the release of $ 79 million, maintain a level of dollar liabilities adjusted to the expected cash under the same program with BNDES. flows in such currency, with the exception of Argentina. Cachoeira undertook a capital reduction As part of this policy, in Chile, forwards were hired for U.S. $ of $ 96 million, of which Endesa Brazil 900 million to cover dividends from subsidiaries in different received 99.6%. currencies. The rest of the group companies in the region Colombia Emgesa issued local bonds amounting to U.S. $ 293 million with a term of 6 to 12 years, and formalized the refinancing contracted exchange rate forwards for U.S. $ 40 million to exchange future disbursements in accordance to the indexing of their flows. Interest rates of a syndicated loan for U.S. $ 158 The policy of the Group is to maintain fixed and protected million. Codensa meanwhile, issued the debt levels over the total net debt, within a band of plus local bonds for US$ 195 million with a or minus 10% with respect to the ratio established in the term of 5 to 12 years. annual budget debt levels. In case of any deviation from the Peru submitted budget, hedging transactions are made based on market conditions. Edelnor performed local bond As of December, the most protected consolidated fixed debt issues totaling $ 88 million and has level on net debt was of 72%. formalized bank loans for U.S. $ 39 million. Furthermore, it is the first Peruvian corporation to contract hiring committed bank credit lines with a term of 2 years for an amount of U.S. $ 39 million. Edegel structured a program of corporate bonds for an amount of U.S. $ 350 million. 93 Risk Classification The ratings are supported by the diversified asset portfolio held by the company, strong credit parameters, suitable composition of debt and ample liquidity. The geographical On November 9, 1994, Standard and Poor’s and Duff diversification of Enersis in Latin America provides a & Phelps ranked Enersis for the first time at BBB +, i.e. natural hedge against the various regulations and weather investment Grade Company. Later, in 1996, Moody’s rated conditions. long-term debt in foreign currency of the company at Baa1. Over time, most of the risk ratings have varied. Currently, all are in the “investment grade” with stable outlook, which are based on the diversified asset portfolio, liquidity and appropriate debt service hedging policies. International Rating Enersis Corporate S&P BBB+ / Stable Moody’s Baa2 / Stable Fitch BBB+ / Stable Enersis subsidiaries are financially strong and hold a leading position in the markets where they operate. Local Rating Summarizing the major events that have taken place over the last few months, we can highlight the following: Enersis Stocks Bonds Fitch Feller Rate 1st class, Level 1 1st class, Level 1 1st class, Level 1 AA / Stable Humphreys AA / Stable AA / Stable • On February 28, 2012, Humphreys ratified the “AA” rating for Enersis local bonds, “AA / level 1” commercial paper program and “1st class level 1” to the shares of the company. Properties and Insurance The company owns some equipment and substations located in the Metropolitan Region. At the same time, holds • On July 1, 2013, Feller Rate confirmed “AA” rating for insurance against risks such as fire, lightning, explosion, existing bond, shares and commercial paper local malicious acts, earthquakes, floods, mud avalanches, programs, as well as confirming the stable outlook. terrorism, liability and others. • On August 2, 2013, Standard & Poor’s Also confirmed the International Classification for Eneris as “BBB +” with a Brands stable outlook. • On August 9, 2013, Fitch Ratings ratified the Eneris rating the speed of light Enersis PLC. The company has registered the brand Enersis and Internet at on local and foreign currency as “BBB +”, as well as its classification of long-term national scale rating at ‘AA (cl)’. The outlook is “stable”. • Finally, Moody’s ratified the corporate classification of Enersis as Baa2 with stable outlook on September 30, 2013. 94 INVESTMENTS AND FINANCIAL ACTIVITIES 2013 ANNUAL REPORT ENERSISS.A. Automacao E Controle, Integratech S.A., Ims Srl –Mei Srl – Ute, Turismo Patagonia S.A., Zeppilli Enrique Félix, Central Puerto -SADESA, Termoandes – AES, Central Térmica Güemes /HINISA/HIDISA – Pampa Energía, CT Alto Valle – DUKE Energy. Brazil: Energisa, Petrobrás, Rio Polímero (Braskem), Votorantim, Cedae, Vicunha Ind De Implemen Rodoviarios Ltda., Grendene S A, Cagece Cia Agua Esgoto Do Ceara, Votorantim Cimentos N/Ne S.A., Gerdau Comercial De Acos S/A, MPX, BTG Pactual, Rhodia, Enertrade, CPFL Brazil, Coelce, Compel-Const.Mon.Proj.Elet.Ltda., Personal Service Rec Hum Asses Emp, Landis+Gyr Equip. Medicao Ltda., Provider Solucoes Tecnol. Ltda., Unimed Sao Goncalo- Niteroi Med Hosp, Porto Do Pecem Geracao De Energia S, Cosampa Projetos E Construcoes Ltda., Eficaz Engenharia E Servicios Ltd, B&Q Energia Ltda., Endicon Eng. Instalacoes E Const. Ltd., Andritz Hydro Inepar Do Brazil S/A, Safira Admin Comercializadora, Edp – Comercializ E Servs. De Ener, Quatira Energia Sa – Pch Pari, Energisa Solucoes S/A, Alstom Suppliers, customers and relevant competitors Being Enersis a company that operates mainly in the field of Power O&M ltd, Cogerh-Cia Gestao De Rec.Hidricos, Cagece, generation and distribution of electricity has been taken to Alstom Brazil Ltda., Jgp Consultoria E Particip. Ltda., AES SUL, consider, besides its own appropriate suppliers, customers CPFL Piratininga. EDP Bandeirante, Celpe, Elektro, Ceming and most relevant competitors of its main subsidiaries in GX, Duke Brazil Gx, CPFL Gx, AES Tiete, Copel Gx, Termope Chile and other countries in Latin America where it operates: (Neoenergia) y Eneva (MPX). Consistent with the aforementioned, it was established that Colombia: Alumbrado Público Bogotá, Opain S.A., AJE suppliers, customers and most relevant competitors to the Colombia S.A., Ministerio De Hacienda, Telefónica Móvil de company are: Colombia, CODENSA, CARIBE, TOLIMA, EBSA, EPM, Deltec S.A, Cam Colombia Multisevicios S.A.S., Consorcio Energía Chile: Metro S.A., Gerdau Aza S.A., Mall Plaza S.A., CGE, Colombia S A. Cene, Consorcio Mecam, Villa Hernández y Saesa, Chilquinta S.A., Emel, Mitsubischi Corporation, Salfa Compañía Sas, Transportes C&C, Transportes Especializados S.A., Securitas S.A., Crompton Greaves Limited, Shaffner Jr Sas, Corporación De Taxis De Colombia, Vatia, Enertotal, S.A., Cobre Cerrillos S.A., Colbún S.A., AES Gener, Tinguiririca Enermont, Dicel, Ruitoque, EPM, ISAGEN, GELCELCA, CHIVOR, Energía, Pacific Hydro, Guacolda, E-Cl (Suez). EPSA. Argentina: Aysa S.A., Coto C.I.C.S.A., Telefónica Argentina Peru: Corporacion Celima, Filamentos Industriales S.A., S.A., Metrovías S.A., Gobierno de La Ciudad de Buenos Corporación Lindley S.A., Peruana de Moldeados S.A., Aires,Cerámica Cerro Negro, Molinos Cabodi Hnos. S.A., Lima Airport Partners S.R.L., Edelnor, Votorantin Matais Industrias Termoplásticas Argentinas, Telecón Argentina, Cajamarquilla, Cruz del Sur, Compañía Minera Antamina, Yesos Knauf (Plana Mendoza), Minera Lumbrera, Air Liquide Electrosur, CobraPerú S.A., Calatel Infraestructuras y Servicio, Argentina S.A., Chevrón Argentina S.R.L, Petroquímica Montajes e Ingeniería Arce, S.L., Compañía Americana de C. Rivadavia S.A. Papelera Samseng S.A., Soc.Integrada Multiservicio, Juan Galindo Slu Sucursal del Perú, Skanska del de Buenos Aires Ute, Contrucsur S.R.L, Leccentro S.A., Perú S.A., Siemens S.A.C, Siemens Ag, Yikanomi Contratistas Tecnodock S.R.L, Mor S.A., Masa Argentina S.A., Sarandi Generales Sac, Enersur S.A., Enersur, Kallpa Generación, Construcciones I. y C.S.R.L, Mitsubishi Corporation, Ingser ElectroPerú, Coelvisac, Termoselva S.R.L., Compañía Eléctrica Ingeniería y Servicios Srl, Grúas Móviles Mix S.A.C.I.F, Reivax El Platanal 95 Risk factors 96 RISK FACTORS 2013 ANNUAL REPORT ENERSISThe Group’s companies are exposed to certain risks that are managed by systems that identify measure, limit concentration of, and monitor these risks. The main principles in the Group’s risk management policy include the following: - Compliance with corporate governance standards. - Strict compliance with all the Group’s internal policies. - Each business and corporate area determines: I. The markets and product areas in which it will operate based on its knowledge and ability to ensure effective risk management. II. Criteria regarding counterparts. III. Authorized operators. - Business and corporate areas establish their risk tolerance in a manner consistent with the defined strategy for each market in which they operate. - All of the operations of the businesses and corporate areas are conducted within the limits approved for each case. - Businesses, corporate areas, lines of business and companies design the risk management controls necessary to ensure that transactions in the markets are conducted in accordance with Enersis’ policies, standards, and procedures. 97 Interest Rate Risk Interest rate variations modify the fair value of those assets and liabilities that accrue a fixed interest rate, as well as the future flows of assets and liabilities based on a variable interest rate. The objective of the management of interest rate risk is to obtain a balance in the debt structure that permits minimizing the debt cost with reduced volatility in the income statements. In compliance with the current interest rate hedging policy, the portion of fixed and/or hedged debt to total net debt was 72% as of December 31, 2013. Depending on the Group’s estimates and debt structure objectives, hedge transactions are carried out by contracting derivatives that mitigate these risks. The instruments currently used in compliance with the policy are interest-rate swaps that convert variable to fixed rates. The structure of Enersis Group’s financial debt by fixed and/or hedged and variable interest rates, and after the derivatives contracted, is as follows: Net Position: Fixed Interest Rate Variable Interest Rate Total 31-12-2013 % 72% 28% 100% 31-12-2012 % 60% 40% 100% 01-01-2012 % 61% 39% 100% 98 RISK FACTORS 2013 ANNUAL REPORT ENERSISExchange rate risk Commodities Risk Exchange risks are mainly related to the The Enersis Group is exposed to the price fluctuation risk of some commodities, following transactions: basically through: - Debt contracted by Group companies - Fuel purchases for electricity generation. in currencies other than those to which their cash flows are indexed. - Energy trading on the local markets. - Payments for the acquisition of In order to reduce risks in extreme drought conditions, the Company has designed project-related materials and a commercial policy that defines sales commitment levels that are consistent with payments of insurance premiums in the capacity of its generating plants in a dry year, and includes risk-mitigation currencies other than those to which clauses in some non-regulated customers’ contracts. In the case of regulated their cash flows are indexed. customers subject to long-term tender processes, certain indexation clauses are - Revenues of Group companies included to reduce exposure to commodities. that are directly linked to dollar In view of the operative conditions faced by the electricity generation market in fluctuations. Chile, like drought and volatile commodity prices on the international market, the Company is constantly reviewing the benefits of contracting hedges to mitigate - Cash flows from foreign subsidiaries the effects of these price variations on its results. As of December 31, 2013, there to their parents exposed to exchange are no commodity hedges outstanding. As of December 31, 2012, there were rate fluctuations. swap transactions for 462 barrels of Brent oil for January 2013 and 365 thousand tons of coal for the period January-June 2013. (There were no hedges outstanding In order to mitigate exchange risk, as of January 1, 2012). the exchange rate hedging policy of the Enersis Group is based on cash These hedges may be modified, or include other commodities, depending on the flows and seeks to maintain a balance operative conditions which are constantly being reviewed. between dollar-indexed flows and the levels of assets and liabilities in that currency. The objective is to minimize exposure of cash flows to variations in Liquidity Risk the exchange rate. The Group maintains liquidity policy that consists on contracting committed Cross-currency swaps and forward necessary to support projected needs for a period, according to the situation and long-term credit facilities and short-term financial investments, for the amounts exchange contracts are the instruments expectations in the debt and capital markets. currently used to comply with this policy. The policy also seeks to refinance These projected needs include the maturities of net financial debt, i.e. after debt in each company’s functional financial derivatives. For further details about the characteristics and conditions of currency. the financial debt and financial derivatives, see Notes 19 and 21 and Appendix 4. 99 As of December 31, 2013, the Enersis In the electricity generation business, in some countries, it is Group shows a liquidity of ThCh$ possible to cut off supplies in the event of non-payment, and 1,606,387,569 in cash and cash in almost all the contracts, there is a contract termination equivalents and ThCh$ 208,900,680 in clause for events of non-payment. Credit risk is therefore available committed long-term credit monitored constantly and the maximum amounts exposed lines. As of December 31, 2012, the to non-payment are measured, although these are limited, as Enersis Group had a liquidity position already explained. of ThCh$ 815,832,061 in cash and cash equivalents and ThCh$ 240,683,000 In the case of the electricity distribution companies, supplies in committed long-term credit lines may be cut off by our companies in the event of non- (ThCh$ 1,187,684,209 and ThCh$ payment by customers. This is applied in accordance with 238,832,000 respectively as of January the current regulations in each country, which facilitates the 1, 2012). evaluation and control of credit risk, which is also limited. Credit Risk. Assets of a financial nature: The Enersis Group thoroughly follows national and international financial entities (with a credit up the credit risk rating equivalent to investment grade) within limits Investments of cash surpluses are made with first-class established for each entity. Trade accounts receivable: The credit risk corresponding to In selecting banks for investments, only those of investment grade are considered, according to the three principal credit- rating agencies (Moody’s, S&P and Fitch). accounts receivable derived from Placements may be supported by treasury bonds of the business activities has historically been countries where we operate and/or paper issued by first- very limited as the short-term nature class banks, preferring the latter in offering the best returns of the receivables does not allow (always in accordance with current investment policies). the accumulation of very significant individual amounts. This applies to The contracting of derivatives is carried out with highly- both our electricity generation and solvent entities so that all transactions are contracted with distribution businesses. entities of investment grade. 100 RISK FACTORS 2013 ANNUAL REPORT ENERSISRisk Measurement Financial debt. Derivatives for hedging debt, dividends and projects. The calculated Value at Risk represents the possible loss of value of the above- mentioned positions portfolio over a one-day time horizon with 95% of confidence. The volatility of the risk variables that affect the value of the positions portfolio has therefore been studied, including: The US dollar Libor interest rate. The usual local banking-practice indices for the different currencies in which our The Enersis Group measures the Value companies operate. at Risk (VaR) of its debt and financial- derivatives positions in order to monitor The exchange rates of the different currencies involved in the calculation. the risk assumed by the Company, thus restricting volatility in its statement of The calculation of Value at Risk (VaR) is based on generating possible future income. scenarios (at one day) of market values (both spot and term) for the risk variables, using Bootstrapping methodology. The number of scenarios generated ensures The positions portfolio used in the compliance with the simulation convergence criteria. A matrix of volatilities and calculations of the current Value at Risk correlations between the various risk variables calculated from historical price- is comprised of: return values, has been applied to simulate the future price scenario. Once the price scenarios are obtained, the fair value of the portfolio is calculated using each of the scenarios, obtaining a distribution of possible values at one day. The one-day 95% confidence VaR number is calculated as the 5% percentile of the potential increases in the fair value of the portfolio in one day. The valuation of the various debt and financial-derivatives positions included in the calculation has been made consistently using the financial capital calculation methodology reported to management. Taking into consideration the above-mentioned hypotheses, the breakdown for VaR in every mentioned type of position is the following: Financial Positions Interest Rate Exchange Rate Correlation Total 31-12-2013 M$ 17,236,855 3,074,168 (390,965) 19,920,058 31-12-2012 M$ 15,933,808 2,346,380 (468,249) 17,811,939 The Value at Risk positions have evolved during the 2013 period and year 2012 as a function of the start/maturity of the transactions. 101 Regulatory framework of the electricity industry 102 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISDescription of the industrial sector Enersis, its subsidiaries and jointly controlled companies as well as being engaged in the generation, transmission, distribution and trading of power in five countries, each of which has a regulatory, framework, energy matrices participating companies, and different patterns of growth and consumption. Here is a brief summary of the main laws that regulate the activity, the market structure and the most relevant aspects of the agents of each of the countries in which the company operates. Argentina Structure of the industry The Argentinean electricity sector is governed, among others, by Law No. 15,336 of 1960 and Law No. 24,065 of 1992. In the Bulk Electricity Market (MEM) there are four categories of local agents (generators, transmitters, distributors and large customers) and foreign agents (distributors in generation and distributors in demand) that are authorized to buy and sell electricity as well as related products. Originally, the generation sector was organized on a competitive basis (marginalism), with independent generators selling energy on the spot market or MEM, or through private contracts to customers in the MEM contract market or “Wholesale Electricity Market Administrator company” (CAMMESA), through special transactions as contracts under Ruling SE No. 220/2007 and Ruling S. E. N 724/2008. However, this regime changed substantially in March 2013, when the Energy Department approved Ruling No. 95/2013, which establishes a payment scheme for generation based on average costs, forcing to deliver all energy produced to Cammesa. This new payment scheme came into force during February 2013. 103 Transmission operates under monopolistic conditions and is composed by several companies to which the Federal Government grants concessions. The distribution, in turn, operates under monopolistic conditions and is serviced by companies that have also been granted concessions. Distribution companies are the sole responsibility that electricity is available to end customers within their specific concession area, regardless if the customer has a contract with the distributor or with a generator. In 2002, due to the economic downturn that hit the country, Emergency Law No. “Empresa Distribuidora de Energía del Sur S.A.” (Edesur) a 25,561 was passed. The Law broke the Memorandum of Contract Renegotiation was signed with parity with the U.S. dollar and imposed the Government in 2006, which was subsequently ratified the conversion into Argentine pesos of by Decree N°1959/2006, which would gradually adapt its obligations and rights assumed before tariff revenues in order to ensure business sustainability. The in U.S. currency. This forced nominal implementation of this agreement was paralyzed since 2008 conversion from dollars to pesos had a and until 2013, as we will later detail. strong impact on the entire Argentinean electrical industry. Additionally, No generator, distributor, large user, nor any company the Government approved several controlled by any of these or under its control, may be the regulatory measures that gradually owner or a majority shareholder of a transmission company intervened in the development of the or its controlling companies. At the same time, transmission industry. The Emergency Law has been companies are forbidden to generate, distribute, buy and/ subject to successive extensions and or sell electricity. Distribution companies cannot own depending on the last one, approved generation units. by Law 26,896, will be valid until December 31, 2015. The conversion Regulated customers are supplied by distributors at of the economy to pesos and the regulated tariffs, unless they have a minimum capacity devaluation of the economy forced demand of 30 kW. In this case, they are considered as “large the renegotiation of all concession customers” and are free to negotiate their prices with the contracts. Specifically, in the distribution generation companies. sector and within the company we own 104 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISRegulation of generation companies The regulation of the generation companies has changed significantly since it began by means of Law 24,065 until Ruling No. 95/2013. According to the Law, all generator agents of the MEM must be connected to the SIN (National Interconnected System) and are required to comply with the order of dispatch to generate and deliver power in order to be sold in the spot market and the forward market (MAT). Distribution companies, marketers, and large customers that have signed supply contracts with private generating companies, pay the contract price, directly to the generator and also pay a toll to the transmission and distribution company for the use of its. In order to stabilize generation prices regarding the rate paid by the customers, the market defined a seasonal price which is the price of energy paid by dealers for their purchases of electricity traded in the spot market. This price is determined every six months by the Secretary of Energy after Cammesa has made their spot price projections for the period considered. To adjust for differences between this price and the actual cost of the generation a stabilization fund was originally created. If the seasonal price was lower than the cost of generation, money is withdrawn from the fund to compensate generation, if the situation is the 105 opposite, money is contributed to the fund. Since 2002 the 2010 the generating companies, in which Enersis participates Ministry of Energy in practice has kept the average seasonal along with other companies, took part in the creation of price unchanged. This has created a significant shortfall another trust fund for the construction of another combined in the stabilization fund, which has been covered by the cycle plant which is currently under construction. Part of their Argentinean government, by means of increasing larger credits for the energy they sold during the years 2008-2011 subsidies. was also destined to this new work. Rulings passed due to the Emergency Law, had a significant In 2012, as part of the agreements reached with the impact on energy prices. Among the measures implemented, government to allow the development of operations of our Ruling SE 240/2003, which amended the way in which the subsidiary signed an agreement for the implementation of spot price is established by decoupling the calculation of an investment plan in units of Central Costanera in order to marginal operating costs, is worth noting. Ruling SE No. optimize the reliability and availability of such equipment, for 240/2003 has the purpose of preventing price indexation a total of U.S. $ 304 million, within a period of 7 years. The linked to the dollar, despite the fact that the dispatch agreement also provides for the payment of obligations of of generation is still based on the actual fuel used, the the maintenance contract (Long-Term Service Agreement- calculation of the spot price is based on the absolute LTSA) of the combined cycles of the plant. availability of gas to meet the demand, even in circumstances where many generators did use alternative fuels, such as Finally, Ruling S. E. No. 95/2013 leaves the marginality price diesel, due to the difficulties in the supply of natural gas. system, ushering in a mechanism for the recognition of The value of water is not considered if its opportunity cost average costs. The ruling recognizes the compensation of is higher than the cost of natural gas generation. The ruling fixed, variable costs and an additional remuneration. Fixed also sets a limit to the spot price of 120 Ar$/MWh, which is costs are paid (in $ / MW- hrp) in terms of technology, scale still valid. Actual variable costs of thermal units that burn and Available Power. It is also subject to the achievement liquid fuels are paid by CAMMESA through a mechanism of set availability goal. As for the variable, operating and called Transient overruns Dispatch (STD). maintenance costs based on the energy generated (in $ / MWh) are remunerated depending on the fuel used and the Moreover, based on the provisions of the Emergency Law, technology itself (the generators do not have fuel cost as it is the per capacity payment was reduced from 10 USD to 10 provided CAMMESA). Finally, the additional compensation is pesos per MW-hrp (hrp: Remuneration hours of power). calculated based on the total power generated (in $ / MWh), Subsequently, the power guarantee was slightly increased considering the technology and scale of the generator. Part to 12 pesos, about 1/3 of the amount paid before the 2002 of that income is accumulated in a fund to be used to finance crisis. investments in new infrastructure in the electricity sector. In December 2004, the Secretary of Energy approved the The ruling impacts generators, co-generators and self- Act of Accession for the Rehabilitation of the bulk electricity generators, except plants which became operational since market by Ruling 1427/2004. The Act was signed by most of 2005, nuclear power plants and Binational hydroelectric the generating units, including generating companies owned generation; Centralized and reserves the business by Enersis. Under this ruling, the Secretariat established a management and delivery of fuels in Cammesa and trust fund called FONINVEMEM, where private generators suspended bilateral energy contract signing between contributed part of their credits for energy sold during generators and MEM agents, the latter shall acquire their the years 2004 to 2007 for the construction of two new power demands from CAMMESA. combined cycle plants. In addition to this new capability, in 106 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISRegulation in distribution companies savings based on a reference consumption. The net difference between bonds and penalties were originally deposited in the The distribution activity is carried out by companies which Stabilization Fund of the MEM, but this was later amended obtain concessions. Distribution companies must supply all the by request from Edesur and Edenor, so that distribution demand for electricity in their area exclusive at prices (rates) companies could use these resources to compensate for cost and conditions established in the regulation. Concession variations in not recognized costs increases (MMC). Thus, on agreements include penalties for non delivery. The concessions May 7, 2013, the Energy Secretariat passed ruling 250/2013, were granted for distribution sales, and retail distribution. The which determines the MMC amounts receivable until February concession periods are divided into “management periods” 2013 to compensate with the debts corresponding to the that allow the dealership to, from time to time abandon the PUREE program and other debts that Edesur accumulates in concession. the system. In the development of this important ruling on November 6, the Ministry of Energy published Note 6852 Since 2011, there are two electricity distribution areas subject authorizing Edesur and Edenor to conduct the compensation to federal concessions. The concessionaires are Edesur and of the MMC with debts arising from the PUREE program for the Edenor, located in the city of Buenos Aires and Greater Buenos March- September 2013 period. Aires. Until 2011 Edelap was also under federal jurisdiction. The majority of the distribution companies renegotiated their also been approved to finance new expansion and quality contracts in 2005 and 2006, although the rates were increased investments of the distributors. So in November 2012, ENRE partially and temporarily, the Full Tariff Review (RTI) of the Ruling 347 was approved, authorizing the application of this distribution companies with national jurisdiction has yet to be differential charge per customer account as pre payment of At the same time, additional charges to customers’ fees have made. the RTI. The application of the fee meant additional revenue for Edesur for a total of 437 million of Argentinean pesos, Thus, regarding Edesur, in 2006, the distribution company representing an increase of 40% of the VAD and 20% of the signed a “Memorandum of Agreement for the renegotiation fees. of the Concession Agreement.” This agreement established, among several other conditions, a transitional rate system which included an increase of 28 percent of VAD, with monthly Regulation of transmission updates; a system of quality of service and Tariff Review The transmission was designed based on the general concept Process (RTI) to be implemented by the ENRE. On a semi- and principles established in Law 24,065, adapting the annual adjustment mechanism based on rates of evolution activity to the general criteria contained in the concession of an ad-hoc inflation index called the Cost Monitoring granted to Transener S.A., by Decree 2.473/92. For Mechanism (MMC). The first update due to inflation technological reasons, the transmission business is related occurred in 2008, but from that year is no longer officially to economies of scale that do not allow competition; it recognized. But the Argentinean Government has created is therefore a monopoly and is subject to considerable various regulatory alternatives that have allowed distribution regulation. companies to continue providing electrical service. One such alternative has been called the Program for the Rational Use of Electric Energy or PUREE. This program was created in 2004 by the Secretary of Energy, establishing bonds and penalties to customers depending on the level of energy 107 Environmental regulation Electrical installations are subject to environmental laws and federal and local regulations, including Law No. 24,051, or Hazardous Waste Act and its related regulations. Certain obligations to report and monitor certain emissions standards are imposed on the electricity sector and, Failure to comply with these requirements entitles the government to impose penalties, such as suspension of operations that in the case of public services may result in the cancellation of concessions. Law No. 26,190, enacted in 2007, describes the use of renewable sources for electricity production as a national interest and sets a goal of an 8% market share for renewable energy within a Brazil Structure of the industry period of 10 years. The Brazilian electricity industry is organized on a large interconnected power system, the (National Interconnected System), comprising most of the regions of Brazil, and several other smaller isolated systems. The generation, transmission, distribution and trading activities are legally separated in Brazil. The industry is regulated by the Federal Government, through the Ministry of Mines and Energy (MME) and the National Electric Energy Agency (ANEEL). According to Law No. 10,848 of 2004, bulk electricity market as a tool for spot price definition is residual. Instead, the bulk price is based on average prices of bids, independent bidding processes exist for existing energy and new energy. The latter provides for long term contracts in the new generation projects which should cover anticipated increases in demand by distributors. Tenders of old energy considered shorter term contracts and seek to cover the needs of the distribution arising from the expiration of previous contracts. Each bidding process is coordinated centrally, the authority defines maximum prices and as a result, distributors’ contracts are signed where all participants in the process purchase pro rata from each one of the offering generators. 108 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSIS The price at which the transactions are settled on the spot market is called the Dispute Settlement price - PLD - which takes into account the curve of risk aversion of the agents. The transmission works under monopoly conditions. Rates for transmission companies are set by the Brazilian government. The transmission charge is fixed and transmission revenues do not depend on the amount of electricity transmitted. corporation or partnership; or (iv) develop activities that are unrelated to Distribution is a utility that also works concession agreement. Generators are not allowed to have equity interest in under conditions of monopoly and is excess of 10 percent in distribution companies. their respective concessions, except those permitted by law or in the relevant provided by companies that in turn have been awarded concessions. The regulated market does not include the sale of electricity between generation The distributors in the Brazilian concessionaires, independent producers, self-producers, marketers of electricity, system are not entitled to: (i) develop electricity importers, consumers and unregulated special customers. It also activities related to the generation includes existing contracts under the old regulatory framework between or transmission of electricity; (ii) sell generators and distributors, until they expire, at which time the new contracts electricity to unregulated customers, must comply with the new regulatory framework. According to the specifications except those within its concession laid down in Law 9.427/96, unregulated consumers in Brazil are those that: area and under the same conditions (i) demand a capacity of at least 3,000 kW and choose to contract the power and rates applicable to their captive supply directly with generators or distributors; or (ii) require a capacity in the customers of the Regulated Market; range of 500 to 3,000 kW and choose to contract the power supply directly with (iii) maintain direct or indirect equity generators or distributors. interest in any other company, 109 The Brazilian system is coordinated by the Brazilian Electric contracts, so that energy can be sold at lower prices. Each System Operator (ONS) and is divided into four sub-systems: bidding process is coordinated centrally, the authority Southeast, Central-West, South, North and Northeast. In defines maximum prices and as a result, distribution, addition to the Brazilian system there are also some isolated contracts are signed, where all distributors taking part in systems, i.e., systems that are not part of the Brazilian system the process purchase pro rata from each of the offering and are usually located in the northern and northeastern generators. regions of Brazil, and whose only source of electricity are coal or oil thermal power plants. Decree 5.163/2004 established that the selling agents should Regulation in generation companies ensure 100% physical coverage for their energy and power contracts. This coverage may be constituted by a physical collateral of their own generation plants or any other Generator Agents are public generation concessionaires, plant, in this case, through an electricity or power purchase IPP or self-producers, as well as the trading Agents can agreement. Among other things, Regulation ruling 109/2004 sell electricity within two contracting environments. One ANEEL specifies that when these limits are not met, agents is the Regulated Contracting Environment (ACR), where are subject to financial penalties. those distribution companies operate, in which the purchase of energy should be conducted under a bidding Finally, regarding generation activity, on September 11, 2012, process coordinated by ANEEL; and the other, called Free the Government approved the Provisional Measure 579 Contracting Environment (ACL), in which the conditions for (subsequently converted into Law No. 12,783, of January 11, the purchase of energy are traded directly between suppliers 2013), which sets the conditions for the renewal of the power and their customers. Regardless of ACR or ACL, generator sector concessions which will expire between 2015 and 2017 sales contracts are registered in the Chamber of Electric and the reduction of taxes on electricity rates. Provisional Energy Commercialization (CCEE) and are part of the basis Measure was adopted to reduce the final price of the average for the recognition and determination of adjustments for electric rate by 20% and boost economic activity in Brazil. differences in the short-term market. The measure does not directly affect any of the concessions of Enersis subsidiaries in Brazil. According to market regulation, 100% of the energy demand from distributors must be met by means of long-term Since some generators did not renew their concessions contracts in the current regulated environment. Thus, the and other factors (such as delays in construction of power regulated price purchase rates for the definition of rates to plants, low rainfall, etc.) During the first months of 2013 the end users is based on an average bid prices, independent distribution companies have suffered an imbalance between bidding processes exist for “new energy” and “existing demand and the regulated energy supply, thus being energy”. involuntarily exposed to spot market prices to meet their energy needs. In this context, Presidential Decree 7.945/2013 The new energy tenders contemplate long-term contracts that authorized funding based on federal resources for (15 years for thermal plants and 30 for hydro) in which distributors may pay part of the extra cost of energy was new generation projects should cover increases in demand issued on March 8, 2013. The unpaid portion of overhead anticipated by the distributors. Tenders of old energy by means of government resources will be covered by the considered shorter contracts and seek to cover the needs regulated rates in 2014 and 2015, duly adjusted by the SELIC of the distributors arising from the expiration of previous index of the Central Bank of Brazil. 110 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISRegulation in distribution companies The regular rate revision takes into consideration the whole rate setting structure of the company, including the costs of providing services, the costs of purchasing power and the return for the investor. Under their concession contracts, In the regulated market, distribution companies purchase Coelce and Ampla are subject to rate reviews every four to electricity through tenders that are regulated by ANEEL and five years respectively. The basis of the assets to calculate the organized by the CCEE. Distributors must purchase electricity return allowed for the investor is the market replacement in public tenders. The government also has the right to call value, depreciated over its useful life from an accounting for special tenders for renewable electricity (biomass, small point of view, and the rate of return on asset allocation is hydro, solar and wind farms). ANEEL and CCEE conduct based on the Average Cost of weighted Capital, or WACC annual tenders. The contracting system is multilateral, with (its acronym in English) of a model company. The WACC generating companies that sign contracts with all distributors is reviewed at each rate cycle. The value of the WACC for who call for the tenders. distribution currently in force is 11.4% real before taxes. The Concessions Law establishes three types or adjustment of final consumer rates: the Rate Repositioning Index Regulation in transmission (IRT), representing an annual adjustment for inflation; the Any agent in the power market that produces or consumes Annual rate Review (RTO) to be conducted every four or energy is authorized to use the Basic Network. The free five years depending on each concession contract and the market consumers also have this right, provided that they Extraordinary rate Review (RTE), which are carried out when meet certain technical and legal requirements. Free access is a relevant event that significantly affects the rate value guaranteed by law and supervised by ANEEL. occurs. Thus, the Law guarantees an economic and financial balance for a company in the event that a material change The operation and management of the basic network is the in their operating costs occurs. In the event the components responsibility of the ONS, which also has the responsibility of the cost of Parcel A, such as energy purchases or taxes of managing the dispatch of energy from plants under increase significantly in the period between two annual rate optimized conditions, involving the use of the interconnected adjustments, the concessionaire may file a formal request to system, hydroelectric and thermal power plants. ANEEL to have those costs passed on to end customers. All reviews and tariff repositioning are approved by ANEEL /2011 were published in the Official Journal, which equates On April 5, 2011 the Ministerial “portarias” 210/2011 and 211 both interconnection lines of the Energy Interconnection In the rate revisions (RTO and RTE), ANEEL revises the rates Company S.A. to public service concessions, with payment in response to changes in the costs of buying power and of a regulated toll. The allowed Annual Revenue (hereinafter the market conditions. By adjusting distribution rates “ RAP “) is adjusted annually, during the month of June by ANEEL divides the Annual Reference Value, i.e. the costs the National Consumer Price Index (hereinafter “IPCA “) with of distribution companies in: (i) costs not manageable by rate reviews every four years. a Gross Income Base of 1.760 distributors, also called “Parcel A”, and (ii) costs manageable million reais ($ 885 million) and a Net Base 1,160 million by distributors or “Parcel B”, the latter corresponding to what reais ($ 585 million) were defined. In 2012, ANEEL approved is known as Distribution Added Value (VAD). 111 the deployment of reinforcements in transmission facilities, recognizing an additional investment of 47 million reais ($ 23 million) in the revenue Base. The applicable rate of remuneration was defined according to current regulations as 7.24% (real after taxes). The period of authorization is until June 2020 for Line 1, and until July 2022 for Line 2, with estimated damages compensations for unrecovered investments. Environmental regulation Although the Brazilian Constitution gives both the Federal, state, and local governments the right to enact laws to protect the environment. Most environmental regulations in Brazil are at the State and local government level. Chile Structure of the industry Hydroelectric power plants must The electricity industry in Chile is divided into three segments obtain concessions for water rights or businesses: generation, transmission and distribution. The and environmental approvals. generation sector is composed of electricity generators. They Thermal generation, transmission and sell their production to distribution companies, clients and distribution companies must obtain other non-regulated generators through the spot market. environmental approval from the The transmission sector includes companies that transmit environmental regulatory authorities. high voltage electricity from generating companies. Finally, the distribution sector is defined as comprising any supply to end customers at a voltage not exceeding 23 kV. These three major segments or businesses operate in an interconnected and coordinated manner, and its main objective is to provide electrical energy to the market at minimal cost and preserving the quality and safety standards of service required by the electrical codes. Because of its essential characteristics, Transmission and Distribution activities are natural monopolies, this is why these segments are regulated as such by the electrical codes, requiring open access to networks and the definition of regulated rates. The electricity sector in Chile is regulated by the General Law of Electric Services, contained in Legislative Decree No. 1 of 1982 of the Ministry of Mining, the revised and coordinated text was established by the DFL No. 4 of 2006 of the Ministry of Economy (“ Electricity Act “) and its Regulations, contained in DS . No. 327 of 1998. Three government agencies are responsible for the implementation and enforcement of the Electricity Act: 112 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISthe National Energy Commission (CNE), which has the authority to propose the regulated rates, and to develop indicative plans for the construction of new generating units; the Superintendence of Electricity and Fuels ( SEC) , which regulates and monitors compliance with laws, regulations and technical standards for the generation, transmission and distribution of electricity, liquid and gaseous fuels; and finally , the Ministry of Energy, which is responsible for proposing and conducting public policy on energy and has under its control the SEC, the CNE and the Chilean Nuclear Energy Commission ( CChEN ) , strengthening coordination and providing a comprehensive view of the sector. It also has an Agency for Energy Efficiency and a Renewable Energy Center. The joining TalTal in the North, with Quellon, in the island of Chiloe on the South. The SING law also establishes a Panel of Experts covers the northern area of the country, from Arica to Coloso, covering a length of whose primary function is to resolve about 700 kilometers, where a large part of the mining industry is located. discrepancies that occur between the various players in the electricity market: According to the electricity Law, the companies involved in the generation and utilities, system operators, regulator, etc. transmission in an interconnected system must coordinate their operations in an efficient and centralized manner by means of a, operator entity, the Center for From a physical standpoint, the Economic Load Dispatch (CDEC), with the purpose of operating the system at a Chilean electrical sector is divided into minimum cost, preserving the security of the system. For this, the CDEC plans and four electrical systems: The central operates the system, including the per hour marginal cost calculation, Price at which interconnected system (SIC), the great the energy transfers between generators are conducted in the CDEC. The CEDECs north interconnected system (SING), and (CDEC-SIC and DCEC-SING), are two autonomous agencies integrated by generation, two isolated mid size systems: Aysén and transmission sub transmission companies, and important customers. Magallanes. The SIC, which is the main electrical system, where about 93% of the Chilean population lives, extends longitudinally for 2.400 kilometers, 113 Regulation of generation companies Regulation in Distribution Companies The generation sector encompasses the companies which The distribution segment is defined, for regulatory purposes, have plants to produce electricity, which is transmitted as all electricity supplies to end customers at a voltage not and distributed, to the final consumer. This segment exceeding 23 kV. Distribution companies operate under a is characterized by being a competitive market where concession of public service regime, with a service obligation electricity is sold to: i) distribution companies to supply to supply regulated customers at regulated rates. their regulated customers within their concession areas. ii) to free or unregulated customers, mainly industries and Distribution companies supply both regulated customers, mining companies, and iii) other generation companies, whose demand is less than 500 kW, a segment for which through the spot market, by energy and power transactions the price and supply conditions is the result of bidding conducted in the CDECs. processes regulated by the National Energy Commission, as well as unregulated customers with bilateral contracts with As already mentioned, the operation of the generation generators with conditions are freely negotiated and agreed companies in each electrical system is coordinated by its upon. respective CDEC. As a consequence of this efficient and coordinated operation of the electrical systems, at any Consumers are classified according to the size of their level of demand, the proper supply is delivered, at the demand in regulated customers whose connected capacity lowest possible production cost alternative available in is less than 500 KW; and free or unregulated customers, the market. The marginal cost is used as the Price that the those with connected capacities greater than 2,000 KW. other generators are selling at, at an hourly rate, including Customers whose connected capacity is in the range of 500 the injections to the system, as well as the withdrawal or to 2,000 KW capacity may choose to have regulated rates or purchases to provide the service to its clients. an unregulated scheme, for a minimum of four years in each The generators take part in energy tenders of up to 15 regime. years. The tenders are conducted in accordance with the Since 2010, with the enactment of Law 20,018, the requirements of the demands of the distribution and are distributors must have a permanently supply for the total supervised by the National Energy Commission This allows of a three year demand forecast, for which long term public the generators to have stable and predictable incomes, tenders of up to 15 years should be conducted. preventing variability of the marginal const, therefore driving investment in the area. The process to establish distribution rates is held every four years. Both the CNE as well as the representative firm in its In Chile, there is payment by capacity, which depends of usual area commission studies by independent consultants to an annual centralized calculation currently conducted set the Distribution Value Added for their typical area. Basic centrally by each CDEC, beginning from an amount which rates are obtained by weighting the preliminary results of the remunerates the development of a gas turbine. As a study commissioned by the CNE and the company in a 2/3 - marginal unit to supply the demands of the system. The 1/3 ratios respectively. With these basic rates it is verified that capacity charge of each plant is independent of its dispatch the aggregate profitability of the industry was established and prizes the availability and contribution to the reserve within a range of 10 percent with a margin of ± 4 percent. margin of the country. 114 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISAlso, rates are reviewed every four years in the sub more precisely, modifies the notification process, provides transmission sector (which correspond to high voltage summary judicial proceedings, introduces the possibility installations that connect distribution networks with of dividing the application for a concession, modifies the transmission). This process is performed in an alternate appraisal procedure for properties and solves conflicts manner to the rate revision process in distribution, so that between different types of concessions. both are distanced by two years. Additionally quadrennial review of the associated services is a SIC-SING interconnection law it is in an advanced stage of conducted, which corresponds to all services not included in approval, the two largest electrical systems in the country, the distribution reviews. which will allow a coordinated operation of the system with In the field of transmission it is also necessary to mention that The Chilean model is an established distribution model, with eight tariff fixings conducted since the privatization of the sector. Regulation in Transmission greater efficiency. Environmental Regulation Chile has numerous laws, regulations, decrees and ordinances that may pose environmental considerations. Including regulations relating to waste disposal, the The segment comprises a combination of transmission establishment of industries in areas that could affect public lines, substations and equipment for the transmission of health and the protection of drinking water. electricity from the production centers (generators) to the centers of consumption or distribution. Transmission In renewable energy, in April 2008, Law 20.257 was passed, in Chile is defined as lines or substations with a voltage or which encourages the use of Non-Conventional Renewable voltage greater than 23 KV. The transmission system is of Energy (NCRE). The main aspect of this rule is that it originally open access and transmission companies establish rights forced the generators to - at least - 5 percent of the energy of way on the available transmission capacity through toll sold to customers came from these renewable sources payments. between 2010 and 2014, gradually increasing by 0.5 percent from 2015 to 2024, where they reach 10 percent. This Law Since the transmission assets are constructed according has recently been amended by another passed on October to the concessions granted by the Government, the Law 14, 2013, called Law 20/25. The new regulations passed set requires a company to operate in an “open access” mode, in for 2015 a mandatory percentage of NCRE of 20 percent of which users can access the system, contributing to the costs the energy matrix, respecting the withdrawals referred to in of operating, maintaining and if necessary, to expand the the previous Law on existing contracts until July 2013, i.e. for system. contracts signed between 2007 and July 2013, the target is 10% in 2024, while for those signed after that date it shall be On October 14, 2013 Law 20,701, called Procedure for 20% in 2025. granting electrical concessions was published in the Official Journal, which aims to streamline the processing of electrical concessions. The new law simplifies the process of granting provisional concessions, shortens processing times, any comments and objections to the projects are issued 115 Colombia Structure of the Industry The Colombian electricity sector was structurally amended by Law 142, of Home Public Utilities, and Electricity Law 143, both of 1994. According to Law 143 of 1994, the various economic, public, private or mixed agents can participate in activities in the sector and are free to perform their functions in a context of free market competition. To operate or initiate projects, permits must be obtained from the competent authorities regarding the environmental, health and water rights issues, and those of a municipal nature that might be required. methodology for calculating and establishing maximum rates The Ministry of Mines and Energy (MME) for the supply of the regulated market, establishing standards defines the government policy for for the planning and coordination of the operations of the the energy sector. Other government system, establishing the technical requirements for quality, entities that play an important role reliability and security of supply and protect the rights of in the electricity industry are: The clients. Superintendence of Public Services (SSPD), which oversees and audits all The Bulk Electricity Market in Colombia (MEM) is based on a utilities companies; the Committee on competitive market model and operates under the principles Energy and Gas Regulation (CREG), which of open access. The operation and administration of the MEM is the regulatory body regarding energy; is a centralized market operator, consisting of a Commercial and the Mining and Energy Planning Exchange Manager of the System (ASIC) and the National Unit (UPME), which is responsible for Dispatch Center (CND). the planning and expansion of the distribution network. The generation sector is organized on a competitive basis. Electricity transactions in the MEM are carried out under The CREG is empowered to make the arrangements of spot energy market (short term or regulations governing the technical and daily market); Bilateral Contract Market (long term) and the commercial operations as well as rates for Reliability Charge. Generation companies must mandatorily regulated activities. The main functions participate in the MEM, with all its generation plants or of the CREG are setting the conditions units whose capabilities are equal to or greater than 20 for the progressive liberalization of MW connected to the Colombian system. (Plants with the electricity sector towards an open capacities between 10 and 20 MW can participate optionally). and competitive market, approve Generation companies declare the energy available and charges for networks and the costs of the price at they wish to sell it. This electricity is dispatched transmission and distribution to supply centrally by the National Dispatch Center (CND). regulated customers, establishing the 116 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISMarketing is the intermediation between the players providing Regulation in Generation Companies electricity generation, transmission and The Colombian government can participate in the implementation and operation distribution as well as the users of the of generation projects like the private sector. The Government is only authorized service. Marketing can be carried out or to enter into concession agreements related to the generation when there is no not, in conjunction with other activities other entity prepared to conduct these activities under comparable conditions. of the electricity sector. Transmission operates under conditions of monopoly and a guaranteed fixed annual income, which is determined by the new replacement value of networks and equipment and the value resulting from the bidding process that awarded new projects for the expansion of the National Transmission System (STN). This value is shared by all traders in the market in proportion to their energy demands. The national interconnected system (SIN) serves 98% of the country’s The CND receives price bids every day and the available capacity for each hour demand. Non-interconnected systems in the following day from all generators taking part in the bulk market. Based on serve remote areas of the country. this information, the NDA takes economic dispatch using an optimized process for the following 24 hour period, taking into account network limitations and other Distribution is defined as the operation conditions needed to meet expected energy demand for the next day in a safe, of networks of Local and Regional reliable and efficient manner, from the point of view of cost. Unlike other countries Transmission Distribution. Any customer where the central office is based on variable costs of production in Colombia can have access to a distribution dispatch is based on prices quoted by the agents. network for which they pay a connection fee. Distributors or network operators The energy exchange is a balancing market where you sell or buy the excess or are responsible for the planning, deficit of energy resulting from the enforcement of contracts against the actual investment, operation and maintenance demand for power generators and marketers. The energy market determines of electrical networks with voltages the spot price by the ASIC after the day of operations by means of an optimized below 220 KV. procedure for a period of 24 hours referred to as ideal dispatch, with an infinite capacity for network transmission and considers initial operating conditions, thus establishing what generators should be dispatched to meet the actual demand. The price paid to all generators that are dispatched by merit of price is the price of the most expensive generator dispatched in each hour under ideal dispatch. 117 The cost differences between the ‘economic dispatch’ and commercial conditions, where the demand to contract would ‘perfect dispatch’ are called “restriction costs.” The cost of be treated as a single aggregate demand. each constraint is assigned initially to the agent responsible of the restriction, and when it is not possible to identify an The distribution charges are set by the CREG based on the agent it is distributed proportionally between all marketers new replacement value of the existing distribution assets, the in the Colombian system, according to their energy demand, capital cost as well as operational and maintenance cost for and these costs are passed on to end customers. each company in four different voltage levels, is as follows: Generators connected to the Colombian system can also level IV up to 115 kV. Voltage levels 1, 2 and 3 are called Local participate in the “Reliability charge” which is a mechanism Distribution Systems (SDL) and Level 4 is called Regional Level 1 to 1 kV, Level 2, up to 30kV, Level 3 up to 57.5 kV and that aims to encourage investment in generating capacity Transmission System (STR). to secure the service of the long term country’s energy demands. The fee consists of assigning Firm Energy In 2009, after auditing information reported by the Obligations (OEF) by a descending auction to existing or new companies, the CREG determined distribution charges generators, who must ensure that the amount of energy applicable until 2013. Charges are fixed for a period of five available in the system for a given period. The allocation for years and are updated monthly according to the producer existing generators is made annually and for new projects for price index. Currently immersed in the process of reviewing up to 20 years. The OEF is a commitment by the generating the distribution charges for the five year period from 2014 to company, backed by its physical resources that enable them 2018. One aspect under discussion it the recognized profit to produce firm energy. The generator that acquires an OEF rate, which is currently set by the CREG in 13.9% before taxes receives a fixed compensation for the commitment period, for local distribution assets and 13% for regional transmission regardless that compliance with its obligation is required or assets based on the WACC / CAPM methodology. The not. methodology for calculating the distribution charges includes an incentive scheme for management, operation The price per KW/h from an OEF is the value of the auction and maintenance costs from service quality and energy closing or firm energy or the reliability charge. When this firm losses. energy is required, which occurs when the spot price exceeds the scarcity price, the generator receives the Reliability Charge and also receives the scarcity price for every kW/h Regulation in Transmission generated with the OEF. If the power generated is greater Transmission networks operating at 220 kV or higher form than the obligation specified in the OEF, this additional the National Transmission System (STN). The transmission rate energy is paid at Spot Price. includes a charge to cover the operating costs of the facilities, and a charge for use that applies only to marketers who Regulation in Distribution Companies transfer it directly to the end users. In Colombia, the distributors are free to purchase their The CREG guarantees transmission companies a fixed annual supply, and can define the conditions of the bidding process income. This income is determined by the replacement value to acquire the energy required for the regulated market and of a new network and equipment, and the resulting value can also go and buy energy in the spot market. The price paid of the bidding process that have awarded new projects for by the end user reflects an average of the purchase price. expansion of the STN. This value is allocated to the traders of Since 2004, the CREG is working on a proposal to amend the STN in proportion with their energy demand. the contracting procedures in the Colombian market, called Organized Regulated Market -MOR-, which would be an The construction, operation and maintenance of the new electronic contract system. This mechanism would replace projects is awarded to the company that offers the lowest the current bids for energy auctions under standardized present value of cash flows required to perform it. 118 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISRegulation in Commercialization Any entity planning to develop projects or activities relating to the generation, interconnection, transmission or The trading market is divided into regulated and unregulated distribution of electricity, which may result in environmental customers. Customers in the free or unregulated market degradation, must first obtain an environmental license. may freely contract their power directly from a generator or a distributor, acting as traders, or as pure marketers. The According to law No. 99 power generation plants having market for unregulated customers, consists of customers a total installed capacity greater than 10 MW, should with more than 0.1 MW peak demand or a minimum monthly contribute to environmental conservation through consumption of 55 MWh. a payment for their activities at a regulated rate to Marketing can be conducted by generators, distributors and where the plants are located. Hydroelectric plants must independent agents, who meet certain requirements. The pay 6% of their generation and thermo electrical power parties freely agree to the transaction prices for unregulated plants must pay 4% of their generation, with rates that are customers. determined annually. municipalities and environmental corporations in localities The energy trader is responsible for billing the costs of Act 1450, 2011, issued the 2010-2014 National Development electricity to final consumers and transfer payments to the Plan. The plan stated that between 2010 and 2014, the various players in the industry. Marketing for regulated Government should develop environmental sustainability customers is subject to the “regulated freedom regime” in issues and risk management. which the rates are set by each trader using a combination of general cost formulas determined by the CREG, and In 2011, Decree 3570 established the new structure of individual trading costs approved by the CREG for each the environmental sector, creating the Ministry of the marketer. Rates include, among others, costs of energy Environment and Sustainable Development (previously, supply, transmission charges, distribution charges and a the functions of the Ministry of the Environment were trading profit margin. Additionally, the final costs of the established with the functions of the Ministry of Housing). service are affected by subsidies or contributions that are applied according to the socioeconomic status of each user. In recent years, the Environmental Regulation for the power sector has been focused on issues related to regulating The rates or marketing charge for regulated customers must emissions from plants, hydro policies (including water be reviewed every five years and must be updated monthly discharges and watershed organization) and environmental based on the Consumer Price Index. These fees have not licenses and penalties. been revised since 1998 and are expected to be reviewed during 2014. Environmental Regulation In Colombia, there is currently a path indicative of participation of the NCREs in the National Energy System 3.5% in 2015 and 6.5% in 2020. Nevertheless, these forecasts are under review, as is a bill before Parliament that regulates The legal framework for environmental regulation in the integration of the NCRE to the National energy System to Colombia was established in Law 99/1993, which also encourage savings and energy efficiency. created the Ministry of the Environment as the authority for defining environmental policies. The Ministry defines issues and executes policies and regulations aimed at the recovery, conservation, protection, organization, management and use of renewable resources. 119 Peru Structure of the Industry The general legal framework applicable to the Peruvian electricity industry is mainly constituted by the Electricity Concessions Law (Law Decree No. 25,844 of 1992) and its accompanying regulations. The Ministry of Energy and Mines (MINEM) defines energy policies applicable at a national level, regulates environmental matters applicable to the energy sector and oversees the allocation, monitoring, termination The Committee on Economic Operation of the System (COES) and revoking of licenses, authorizations is the body that coordinates the operation and dispatch of and concessions for the generation, electricity in the national interconnected Electrical System transmission and distribution activities. (SEIN) and prepares the technical and financial study that forms the basis for annual estimates of bar prices. In the The Supervisory Agency for Investment COES, generation, transmission and distribution companies, in Energy and Mining (Osinergmin) is are represented as well as unregulated customers: consumers the regulatory body that oversees and with demands exceeding 200 KW power. monitors compliance with legal and technical regulations related to the In addition to the SEIN, several regional smaller isolated electricity and hydrocarbons activities, systems that provide electricity in specific areas exist. enforces the obligations under the concession contracts and is responsible The main characteristics of the electricity industry in Peru for the preservation of the environment are: (i) separation of the three main activities: generation, in relation to the development of these transmission and distribution; (ii) free market for energy activities. The Deputy Management supply in competitive market conditions; (iii) a system of of Rate Regulation of Osinergmin regulated prices based on the principle of efficiency and a (GART) has the authority to publish bidding regime; and (iv) privatization of the operation of the the regulated rates. Osinergmin also interconnected power systems subject to the principles of controls and oversees the bidding efficiency and quality of service. process required by the distribution companies to buy power from the generators. 120 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSISRegulation in Generation Companies Generation companies that own or operate a power plant with an installed capacity greater than 500 kW require an indefinite concession granted by the MINEM. Coordination of power dispatching operations, determination of spot prices and the control and management of economic transactions that occur in the SEIN, are controlled by the COES. The generators can sell their power customers, or at an agreed price in the case of unregulated customers. In addition directly to large consumers and buy to this bilateral approach, Law 28,832 of 2006, named Law to Ensure the Efficient the deficit or transfer surplus energy Development of Electricity Generation also established the possibility for dealers between the contracted and actual to meet the demand of its regulated and unregulated customers under contracts production, in the pool, at the spot entered after a power and energy bidding process. The approval of this mechanism price. Sales to unregulated customers is important for generators because it allows them to have a stable price over the are conducted at mutually agreed prices life of the contract, which is not set by the regulator and can last up to 20 years. and terms, which include tolls and compensation for the use of transmission Following the introduction of competitive bidding, the new contracts to sell power systems and, where necessary, to the to distribution companies for resale to regulated customers must be at fixed distribution companies for use of their prices determined by these tenders. Only a small part of the power purchased by networks. distribution companies, including in the old contracts is still maintained at bar prices (price equivalent to knot price in Chile), which are established by the Osinergmin. Originally the Electricity Concessions Law allowed that the sales to distributors In Peru there is payment per capacity, given by the amount that pays for developing may be conducted under bilateral a gas turbine, as the marginal unit to supply the system demand. As in Chile, contracts at a price not greater than the the load capacity of each plant is independent of its dispatch and remunerates regulated price, in the case of regulated availability and margin contribution to the reserve of the country. 121 Regulation in Distribution Companies Regulation in Transmission The electricity rate for regulated customers include energy Transmission activities are divided into two categories: and capacity charges for generation and transmission, and primary, which is for common use and allows the flow the Added Value for Distribution (VAD) which considers a of energy through the national network; and secondary, regulated return on investments, fixed charges for operation which is of those lines that connect to a power plant with and maintenance, and a standard percentage for energy the system or a substation with a distribution company or losses in distribution. consumer. The main lines and secured system are available for all generators and allow electricity to be supplied to all The VAD is established every four years. Osinergmin classifies customers. The transmission concessionaire receives a fixed companies in groups according to the “typical distribution annual income as well as income from variable fees and areas” based on economic factors that bring together connection fees per KW. The lines of the secondary and companies with similar distribution costs by population complementary system are available for all generators, but density, which determines the amount of equipment on the are used only for certain customers who are responsible for network. making payments in connection with the use of the system; these are remunerated at a fixed rate for 20 years, reviewing The actual return on investment of a distribution company only additional investments. depends on its performance against the standards set by Osinergmin for a theoretical model company. The rate system allows for a greater return to the distribution companies that Environmental regulations are more efficient than the model company. Preliminary rates The environmental legal framework applied to energy are calculated as a midpoint (50-50) between the results of related activities in Peru is stipulated in the Environmental the study contracted by Osinergmin and the study by the Law (Law No. 28,611) and the Environmental Protection companies. Preliminary rates are checked to ensure that the Regulations for Electrical Activities (Supreme Decree 029-94- average annual internal return rate of all industry is 12% with EM). a variation of ± 4%. During the last rate-setting process concluded on October incentivize the generation of electricity by means of NCRE. 16, 2013, OSINERGMIN defined Edelnor rates for the The decree stipulates that 5% of demand of the SEIN must November 2013 to October 2017 period. The new rate was be provided with the use of NCRE. This goal could increase 1.2% higher than that in October 2013. 5% every 5 years. The technologies considered renewable In 2008, the MINEM enacted Supreme Decree 050-2008 to resources include: biomass, wind, tidal, geothermal, solar and mini-hydro (less than 20 MW hydroelectric power plants). 122 REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 2013 ANNUAL REPORT ENERSIS123 Description of the electrical business by country 124 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISGeneration of electricity The generation businesses are mainly conducted through our subsidiary Endesa Chile. In this segment, the Enersis Group has operating subsidiaries in Argentina, Brazil, Chile, Colombia and Peru. In its entirety, the installed capacity of the Enersis Group amounted to 15,847 MW in December 2013 and the consolidated electricity production reached 60,089 GWh, while sales totaled 69,369 GWh of energy. In the electrical industry, business segmentation between hydro and thermal generation is natural, since the variable costs of generation are different for each type of production. Thermal generation requires the purchase of fossil fuels and hydroelectric power requires building water reservoirs and water from rivers. 55% of our consolidated generating capacity comes from hydro, 44% from thermal sources and 1% from wind. Therefore, the established commercial policy is relevant for the proper management of the business. Transmission of electricity For the Enersis Group, the business of power transmission is carried out mainly through the interconnection line between Argentina and Brazil, CIEN, a subsidiary of Endesa Brazil, with a transport capacity of 2,100 MW. Distribution of electricity Our distribution business is conducted through Edesur in Argentina, Ampla and Coelce (owned by Endesa Brazil) in Brazil, Chilectra in Chile, Codensa in Colombia and in Edelnor in Peru. During 2013, our main subsidiaries and related distribution companies sold 75,859 GWh. Currently, Edesur, Ampla, Coelce Chilectra Codensa and Edelnor serve major cities in Latin America, providing electric service to more than 14.5 million customers. These companies faced increasing electricity demand, which forced them to constantly invest, both due to natural growth as well as for the maintenance of their facilities. 125 Generation Transmission Distribution Córdoba Costanera Power Plant Buenos Aires Dock Sud Power Plant Mendoza Arroyito Power Plant Edesur El Chocón Power Plant Neuquén 126 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISTypeHydroelectricInstalled Capacity128 MWTypeHydroelectricInstalled Capacity1,200 MWTypeThermoelectricInstalled Capacity2,324 MWEnergy sales18,137 GWhClients10.8%Clients2.4 millonesTypeThermoelectricInstalled Capacity870 MWArgentina Electrical generation In July 2012 by means of Ruling No. 1261/12, the Department of Energy authorized the increase of power in the José de San Martín thermoelectric (19.01 MW would be added) and Manuel Belgrano (25 MW would be added) power plants, being the amount of the works of approximately $ 10.1 million and $ 11.9 million respectively. In the preamble to this ruling, the bases for We take part in the generation of electricity in Argentina the financing of the work were advanced. through subsidiaries of Endesa Chile, Endesa Costanera and Hydropower El Chocón, and from March 2013, through our On October 4, 2013, Endesa Costanera adhered to the subsidiary Dock Sud. commitments defined in Ruling SE No. 1261-12. On December 12, 2013 the Department of Energy issued Note No. 8180/13 El Chocón owns nine hydroelectric hydropower units with a which authorizes Endesa Costanera to dispose Overstock total installed capacity of 1,328 MW, while Endesa Costanera Sales with an Expiration Date to be defined (LVFVD) of has eleven thermal units with a total installed capacity of 2,324 2008-2011 from the VOSA Project (Vuelta de Obligado S.A. MW and Dock Sud has five thermal units with a total installed Plant) to destine the expansion of power of the units of the capacity of 870 MW. These companies have a combined FONINVEMEM, being in analysis on the use of the LVFVD issued installed capacity of 4,522 MW. This power represented under Ruling SE No.95/13. 14.4% of the installed capacity of the Argentine National Interconnected System (SIN) at the end of 2013. Regarding the VOSA project, which includes the installation of a combined cycle of around 800 MW by adding to what was Electrical generation by these companies amounted to 14,422 reported in the previous year, in 2013 additional contracts such GWh, 11.1% of the total generation in the country, and the as an addendum to the supply and construction contract to physical energy sales totaled 16,549 GWh, 13.2% of the total advance in the implementation of the simple cycle gas turbines, sales. and the dedicated gas pipeline contract. Endesa Costanera and El Chocón take part in partnerships Regarding equipment involved in the project, on October 15, engaged in the operation of two combined cycles, initiatives the gas turbines arrived at the port of Zarate. On November 19, coordinated by the Fund for Investments Required to Increase the TG1 was installed on its pedestal, while TG2 was installed on the Supply of Electric Power in the bulk Electricity Market December 2. (FONINVEMEN), with 5,326% and 18.85 % of ownership of the initiatives, respectively. Once the combined cycle is commissioned (in 2015) the During 2010, commercial operation under the combined cycle companies who contributed to the project, including El Chocón thermoelectric plants Manuel Belgrano and José de San Martín Hydroelectric and Costanera, through a supply contract for 10 was enabled. years and a libor rate of 30 days plus 5%, according to the 2008- repayment of the debt owed by CAMMESA to the generating 2011 Generators Agreement. The combined cycle operation determined the effective date of entering the contract for the operation and management Other generators connected to Argentine SIN are: AES Alicura, of the plant maintenance and supply contract, therefore, the Sadesa, Capex, Petrobras, Pampa Generation and Pluspetrol. companies involved in the FONINVEMEM, including Endesa Costanera and El Chocón began to recover their credits from the cash flows generated by the project for a 10 year contract to sell its production to the MEM administered by CAMMESA, on December 31, 2013, the installments been in accordance with the forecast. 127 Endesa Costanera It is located in the city of Buenos Aires and has six steam turbine units totaling 1,138 MW, which can generate with natural gas or fuel oil. It also operates two 859 MW and 327 MW combined cycles, respectively, totaling an installed capacity of 2,324 MW. In 2013, the net generation was 8,523 GWh and total sales reached 8,962 GWh. During 2013, the Argentinean electricity system demand recorded a 3.2% increase when compared to 2012. In terms of electricity production, the gross maximum power in the national grid (SIN) reached a new historical During January we proceeded to sign the contract called record of 23,794 MW, the same day Commitment for steam turbine equipment availability, that the record energy occurred including the Administrator of the bulk Electricity Market (December 23), exceeding by 8.4 % Company SA (CAMMESA) and Endesa Costanera ensuring the record of 21,949 MW established rehabilitation works for the Conventional Units. in 2012. In the area of finance, it is worth noting the continuing of Regarding the operational aspects, the financial strategy adopted in earlier years, prioritizing during 2013, the thermal dispatch with conservative management thereof so as to ensure the liquid fuel use was critical to supplying necessary financial resources for the proper operation of the the demand. plant. As in previous years a maintenance Under the accumulated losses to December 31, 2012, and program was carried out, in this case in order to restore the financial position of the company, called Short Term Plan, to ensure the at the board meeting of April 5, 2013, it was resolved to functioning of Conventional Units of increase the capital of the company for an amount of up to the plant during the winter months. $ 555,000.000 and the issuance of new shares. In October, The plan included the inspection of the by Ruling No. 17,201, the authorization for public offering Conventional Units and all common of new shares was obtained from the CNV. Meanwhile, the and ancillary services. Stock Exchange of Buenos Aires authorized the listing of the new shares on October 28, 2013; the Capital Increase was The predicted maintenance was performed in November 2013. performed earlier this year under the long-term maintenance (LTSA) Regarding the agreement signed in October 2012 between contracts current for combined cycle Endesa Costanera and the Secretariate of Energy, to II and combined cycle I (CBA) after a implement an investment plan in the generating units of the period of operation 12,000 equivalent plant in order to optimize the reliability and availability of hours (EOH). such equipment for an amount of by $ 304 million, within 128 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSIS7 years this will result in an increase in the generation and significant cost savings for the system. On March 14, the company signed the contract for the rehabilitation of its steam turbine technology units with DF Operations and Assembly S.A. - MASA International Operations S.L. Temporary Joint El Chocón Hydro Venture and Duro Felguera Argentina S.A. - MASA Argentina S.A. temporary joint venture. As established in clauses 7.2 of the availability of steam turbine and combined cycle Contracts, regarding the treatment of the remuneration thereof and the regulatory changes that occur to supplement or replace the remunerative concepts established by the Secretariate of Energy for the Spot Market of the MEM for energy and El Chocón Hydropower SA is a hydropower generation company, which operates power, the Secretariate of energy issued the exploitations of El Chocón and Arroyito, located on the Limay River. It is the following notes SE No.7594/13 and located in the provinces of Neuquén and Rio Negro. The hydroelectric plant has No. 8376/13 which instructs CAMMESA a total installed capacity of 1,328 MW, and includes The El Chocón plants with an to apply the methodology to reconcile installed capacity of 1,200 MW (hydro power artificial reservoir) and Arroyito, with earnings of Ruling No. 95/13 and the an installed capacity of 128 MW, using both water from the Collon Cura and Limay contracts beginning on January 2014. rivers for generation. On regulatory matters, in March 2013 The hydroelectric development of El Chocón is located in the region known as the government formalized by means Comahue, formed by the Argentinean provinces of Rio Negro, Neuquén and the of the publication of the ruling of the southern part of the province of Buenos Aires. El Chocón is on the Limay River, Secretariate of Energy No. 95 of 2013, a about 80 km upstream of its confluence with the Neuquén river. Arroyito is the number of changes to the payment of compensator dam of El Chocón and is located on the same river, 25 kilometers Generators, Co generators and Self- downstream. Generator agents of the MEM with the exceptions provided for in Article 1 of The hydrological year starting April 1, 2013 was characterized as dry (fourth the Ruling (“Committed Generators”). consecutive dry year) therefore hydrological contributions of the basins of the rivers Limay and Collon Cura were scarce, which is why the operational approach 129 of the agency in charge of dispatch, In the development of the activities of our own staff and was to restrict the use of accumulated the contractors there have been no accidents. Indicators strategic reserves. This approach of IFG and IGG = 0 confirm a very good year regarding the resulted in the recovery of energy safety of our staff and contractors. It should be noted that reserves of the Comahue in respect to in the second half of the year contractor personnel greatly 2012. increased over normal staffing for the execution of the As a result of the dispatch of The El refurbishing work at El Chocón. Chocón reservoir at the closure of the In the area of finance, the company paid part of its debt for year 2013, net generation of the El an amount of $ 21 million. Chocón / Arroyito complex was 2,317 GWh, the level of the reservoir reaching Additionally, the securing of a new syndicated loan for 379,63 masl (meters above sea level). an amount of $ 149.39 million in June 2013 is worthwhile The stored energy in the Comahue mentioning, at a corrected private Badlar +6%, payable in reservoirs was 5,994 GWh, of which quarterly installments, growing and consecutive, the first 2,409 GWh reserves of El Chocón, both being due on December 2013. The funds received were used were measured values regarding the to repay in full the short-term loans in local currency and for condition of minimum altitude of the the prepayment of existing syndicated loans II and III. minimum extraordinary operation band (FOE). Regarding the loan for $ 6.8 million obtained under the framework of Ruling 146/02 of the Ministry of Energy for the Regarding the operational side, the execution of works on the 6 units of the El Chocón power accumulated availability of The Chocón- plant (Refurbishing, Automation & Retrofitting works) - Arroyito complex in 2013 was 92.14%, awarded by Cammesa, on favorable terms for the Company, having fulfilled satisfactorily Scheduled it is to be mentioned that on December 31, 2013, the amount major Maintenance of Turbo group received for this concept was around $ 12.1 million. No.3 of the Arroyito power plant. This major maintenance involved a The main investment projects to be undertaken in 2014 are: i) check and general maintenance of the To Complete the Protection System, Excitation and Sequence turbine, generator, excitation systems, Start / Stop of Units 3 and 4 and the T3CH main transformer protections, electrical and mechanical refurbishing of the El Chocón power plant, ii) complete auxiliaries and main transformer. Also, further improvements of hydrocarbons separators in cooling a vibration monitoring system was water system of the 3 units of the Arroyito power plant and installed in units No. 1 and 6 of the El replacement of mineral oil with biodegradable oil in the Chocón plant, the Protection, Excitation Arroyito dam gates as part of the Technological Upgrade and Sequence Start / Stop Systems of Project of the telecommand system of the Arroyito Dam, units No.1, 2, 5 and 6 and the t1ch and stage 3, which was approved by the Secretary of Energy. t5ch main transformers of El Chocón were updated. 130 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISNew Scheme of Generation Cost Remuneration - Ruling S.E. N°95/13 In March 2013, the government established by ruling of the Ministry of Energy No. 95 of 2013, a number of changes to the payment of Generators, Co generator and Self-Generators agents of the MEM, with the exceptions provided for in the 1st Article of the ruling (“Committed Generators”). This ruling states that the new conditions have retroactive effect as to the economic transactions of February 2013, after a prior commitment of each generator to withdraw all claims submitted against the Federal Government, The Ministry of Energy and/ or Cammesa regarding the Generation agreement 2008-2011 and ruling SE N º 406/2003, and to resign to submitting administrative claims and/or lawsuits against the Federal Government, The Ministry of Energy and/or Cammesa regarding the aforementioned Agreement and Ruling. Dock Sud Power Plant Located in the district of Avellaneda The scheme provides remuneration for a number of concepts from which in Buenos Aires, Dock Sud owns and electricity and/or the energy committed to the forward market or other operates a power plant with two arrangements for the same concepts must be discounted. generators with a total capacity of 870 MW. The Dock Sud power plant has four I. Remuneration of Overhead: by means of pricing for the available power (PPAD) gas turbines and one steam turbine. by technology and based on compliance with availability goals. Two of the gas turbines and the steam turbine compose a combined cycle. II. Non Fuel Variable Costs Compensation: fixed in terms of the energy generated The energy generated by Dock Sud by fuel type. between April and December 2013 was III. Additional Compensation: a portion is paid directly and the other portion is 3,582 GWh, while energy sales totaled destined to a trust to be reinvested in financing new infrastructure projects in the 4,195 GWh, accounting for 3.4% of the electricity sector. The Ruling provides that the Secretary of Energy timely specifies total sales in the country. the destination of the raised funds. Up to December 31, 2013, the installed The ruling also sets a new priority order for payments (eliminates the application capacity of Dock Sud accounted for of Ruling SE No. 406/03 for that purpose), with the following order of priority: (i) 02.8% of the total installed capacity in first order, overhead generation costs are paid, own fuel costs, along with non- the SIN. fuel variable costs, and (ii) in second order additional compensation will be paid. The ruling also provides that the supply of fuels to the power plants of the MEM, the commercial management and shipping of fuel, be centralized in the Agency in charge of shipping (OED). Land Reserved for Future Projects Currently, there is no reserved land for future projects in Argentina. 131 Also, this Ruling temporarily suspends the addition of new contracts in the term market and states that after completion of the pre-existing contracts before the issuance of the Ruling, It will be mandatory for the MEM Large Users to purchase their energy demand from the OED, under the conditions established for this purpose by the Department of Energy. Between May 30 and 31 the Group companies submitted the requested withdrawal. In the specific case of Endesa Costanera the ministry of energy should have defined certain remunerative aspects because of the coexistence of the new regime established by the Ruling and the Contracts regarding steam turbine and combined cycle Equipment Availability in the MEM. At the closing of the Annual Report, the company was awaiting a Power Distribution in Argentina response from the Secretary of Energy Enersis takes part in the power distribution through its regarding applications submitted under subsidiary Edesur, which directly or indirectly owns, 71.6% of Ruling. the property. The market share of our subsidiary in Argentina in terms of physical sales, was approximately 20%. Other power distributors in the Argentinean system are: Empresa Jujeña de Energía (EJESA) Empresa de Distribución de Energía de Tucumán (EDET), Empresa de Distribución de Energía de Santiago del Estero (EDESE), Empresa Distribuidora y Comercializadora Norte (EDENOR) and Empresa de Distribución de la Plata (EDELAP). 132 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISEdesur The main purpose of Edesur is the distribution and sale of electricity in the south of the Greater Buenos Aires area, servicing two-thirds of the city of Buenos Aires and twelve districts of the province of Buenos Aires, covering 3,309 km2, for a period of 95 years beginning August 31, 1992. This term includes an initial one of 15 years and eight additional 10 years terms. On February 5, 2007, the National Electricity Regulatory Entity (ENRE) decided to extend the initial term for an additional five years from the completion of the Company rate Renegotiation (RTI). The concession contract establishes the obligation to supply electricity to Edesur on request of the owners or residents of property within its concession area, meet certain quality standards for the electricity supplied, meet operational requirements with respect to maintaining distribution assets and bill customers based on actual metering. In 2013, Edesur provided electric service to 2,444,013 customers, a figure that remained virtually unchanged from the previous year. Of the total, 87.6% were residential, 11.1% commercial, 1.0% industrial and 0.3% other users. Energy sales amounted to 18,137 GWh, an increase of 2.2% over the previous year. This was distributed 43.3% to residential, 24.4% commercial, 7.8% industrial and 24.5% to other customers. The energy loss rate reached 10.8% in 2013. 133 Generation Transmission Distribution Coelce Fortaleza Power plant Cachoeira Dourada CIEN Ampla 134 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISRío de JaneiroBelénManausSao PauloGoianaBrasiliaTypeHydroelectricInstalled Capacity665 MWInstalled Capacity2,100 MWEnergy sales10,718 GWhClientsEnergy losses3.5 millones12.5%TypeHydroelectricInstalled Capacity322 MWEnergy sales11,049 GWh ClientsEnergy losses2.8 millones19.8%Brazil Endesa Fortaleza Power generation It is located in the municipality of Caucaia, 50 km from the state capital of Ceará. It is a combined cycle power plant of 322 MW using natural gas, and it has the capacity to generate a third of the electricity needs of Ceará, which has a Enersis takes part in power generation through Endesa Brazil population of about 8.2 million people. and its subsidiaries Endesa Fortaleza and Endesa Cachoeira. These two plants, one hydroelectric and the other a thermal the infrastructure of the Pecém Port and Industrial Complex, power plant have a total capacity of 987 MW, amounting to in the municipality of Caucaia, and integrates the Programa about 1% of the capacity of the Brazilian SIN. Prioritario de Termoeletricidade (PPT) of the federal Built on an area of 70 thousand square meters, it is part of The power generation of the Group in Brazil reached 4,992 growth and facilitate the establishment of other industries. GWh, amounting to about 1% of the total generated in the Its main customers are Coelce and Petrobras. country, with a hydroelectric production of 48% of the total generated by the Enersis Group in Brazil. Power generation in 2013 was 2,588 GWh, while sales government. The location is strategic to boost regional In turn, the physical sales reached 6,827 GWh, about 1.5% of total sales in the Brazilian system. Land reserved for future projects totaled 3,262 GWh. Other generators connected to the Brazilian SIN are: CHESF, In the city of Caucaia, state of Ceará, a plot of land of Furnas, Cemig, Electronorte, Cesp, Copel, Eletrobras and 34 hectares is reserved for the development of the UTE Eletropaulo. Endesa Cachoeira Carnaúba. The land is owned by Endesa Fortaleza, which assigned use rights to Endesa Brazil under a loan, with a term of 30 years beginning in 2013. It is located in the State of Goias, 240 km south of Goiania. It Furthermore, in the city of Macaé, state of Rio de Janeiro, has ten units with a total installed capacity of 665 MW. It is there is a 75 hectare plot of land, owned by Endesa Brazil, for a run-of-the-river hydroelectric plant and uses the waters of a new thermoelectric project. the river Paranaiba. Net generation in 2013 was 2,404 GWh, while sales totaled Electrical Transmission 3,564 GWh. The Enersis Group is also involved in the transmission and sale of electricity in Brazil through the interconnection line between Argentina and Brazil, by means of the CIEN company, which has a 54.30% ownership. 135 Electrical Distribution in Brazil Enersis takes part in the distribution through Endesa Brazil and its subsidiaries Ampla and Coelce. Enersis directly and indirectly owns 91.6% and 49.2% of the property of these companies, respectively. The market share of our subsidiaries in Brazil, in terms of physical sales, was approximately 6%. In Brazil, the distributors that make up the electrical system total 64 companies, including: CPFL, Brasiliana de Energía, AES Elpa, Cemig, Light, Coelba y Copel. Endesa CIEN La Compañía de Interconexión Energética S.A. (CIEN) is a power transmission company Ampla in Brazil. Its complex consists of two Ampla is a power distribution company with operations in frequency conversion stations, Garabi I and 73.3% of the territory of the State of Rio de Janeiro, which Garabi II, which convert both directions corresponds to an area of 32,613 km2. The population is Brazil frequencies (60 Hertz) and Argentina about 8 million people, divided into 66 municipalities, which (50 Hertz), and the transmission lines. On include: Niteroi, São Gonçalo, Petrópolis, Campos and Cabo the Argentinean side, these are managed Frío. by two subsidiaries: the Compañía de Transmisión del Mercosur SA (CTM) and During 2013, Ampla provided electric service to 2,801,427 Transportadora de Energía S.A (TESA) in customers, 3.3% more than in 2012. Total, 90.5% are both, Endesa maintains control of 100.0% of residential, 6.1% commercial, and 3.4% other users. the capital. The company distributed 11,049 GWh to its end customers, The interconnection system consists of two representing an increase of approximately 2.2% over transmission lines with a total length of 2012. Of the total distributed energy, 40.8% corresponded 1,000 kilometers, and the Garabi Conversion to residential customers, 19.3% to commercial, 8, 3% to plant. industrial customers and 31.6% to other users (including toll On April 5, 2011 the official gazette customers 14.4%). published the power transports which Since 2003, Ampla acts with great emphasis on fighting the define the annual value of the Annual theft of energy, reducing this indicator by 4.01 percentage Allowable Remuneration (RAP) for CIEN. points (from 23.64% to 19.8%). Sustainable reduction is Thus, the regulator equates CIEN (whose only possible due to the set of positive results of the projects assets consist of Garabi lines 1 and 2) to the developed by Ampla (use of technology and social action). public service transmission concessionaire. For several years, the company has won a number of awards The total annual RAP is adjusted annually that indicate the excellence of its projects. and processes rate revisions to be conducted every 4 years. Since April 2011 However, energy losses remain one of the major challenges therefore, CIEN was officially authorized to of Ampla. In 2013 it ended with a slight increase of 0.02 receive payments under this new business percentage points, from 19.6% to 19.8%. approach. 136 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISDuring the Abradee awards of 2013 Coelce was chosen for the 8th consecutive year Best Power Distribution Company of the Northeast. In addition, the company was the 3rd Best of Brazil and is among the top 5 in the country in Social Responsibility, and Operational, Financial and Economic Management. Coelce Is the electric distribution company of the State of Ceará, in northeastern Brazil, and covers a concession area of 149 000 km2 . The company provides services to a population of more than 8 million. Remarkably, Coelce was awarded the Social Energy Project Award (COGE) in 2013 in the Social Responsibility At the end of 2013, customers reached 3,500,155, representing a 4.9% increase in category. In its 13th edition, there were the number of existing customers when compared with same time the previous 66 projects involving 32 companies in year. Classification by type of customers indicates that 77.7% are residential, 6.4% the Brazilian electricity sector. The aim are commercial customers, and the remaining 15.9% consist of other customers of the event is to disseminate projects which include rural. The energy sold in 2013 was 10,718 GWh, representing and best practices of the sector. Created a growth of 8.5% when compared with 2012 sales. The consumer classes in 2006, the Coelce Social Energy Project influencing this growth were: residential customers with a growth of 34.6%, due conveys to the communities of the State to shortage of rain during that year that caused the use of electric pumps for of Ceará, the valuing of local culture and irrigation. Then customers Tolls with a 12.5% growth, being 18.2% commercial, art. The objective is income generation 10.9% industrial and other customers with a 23.8% and improvement of life conditions in communities by means of training and professionalization of the work of our artisans. 137 Tarapacá Power Plant Taltal Power Plant Huasco Power Plant Generation Transmission Distribution Diego de Almagro San Isidro Power Plant Los Molles Power Plant Chilectra Parque Canela I y II Quintero Power Plant Rapel Power Plant Sauzalito Power Plant Sauzal Power Plant Maule Power Plant Curillinque Power Plant Loma Alta Power Plant Pehuenche Power Plant Ojos de Agua Power Plant Cipreses Power Plant Bocamina I y II Isla Power Plant Biobío Power Plant Ralco Power Plant Palmucho Power Plant Laja Power Plant Antuco Power Plant Abanico Power Plant El Toro Power Plant 138 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISAntofagastaTypeThermoelectricInstalled Capacity182 MWTypeThermoelectricInstalled Capacity64 MWTypeHydroelectricInstalled Capacity18 MWTypeEolicInstalled Capacity78 MWTypeThermoelectricInstalled Capacity257 MWTypeHydroelectricInstalled Capacity377 MWTypeHydroelectricInstalled Capacity12 MWTypeHydroelectricInstalled Capacity77 MWTypeHydroelectricInstalled Capacity690 MWTypeHydroelectricInstalled Capacity34 MWTypeThermoelectricInstalled Capacity245 MWTypeThermoelectricInstalled Capacity24 MWTypeThermoelectricInstalled Capacity1,245 MWTypeHydroelectricInstalled Capacity89 MWTypeHydroelectricInstalled Capacity40 MWTypeHydroelectricInstalled Capacity570 MWTypeMini hydroInstalled Capacity9 MWTypeHydroelectricInstalled Capacity106 MWTypeHydroelectricInstalled Capacity70 MWTypeHydroelectricInstalled Capacity320 MWTypeHydroelectricInstalled Capacity136 MWTypeHydroelectricInstalled Capacity450 MWEnergy sales15,152 GWhClientsEnergy losses1.7 millones5.3%478 MWTypeThermoelectricInstalled Capacity478 MWChile Operational and Commercial Scenario Power generation Events influencing the operational and commercial performance. Enersis takes part in the electricity generation sector During 2013, the Central Interconnected System (SIC) adds through Endesa Chile and its subsidiaries, becoming the its fourth consecutive year of drought, with a persistence, company’s most important country in terms of installed as in previous years, of high prices of the fuels used for power generation capacity, in which Enersis directly holds electricity generation, which meant that high costs electricity 60% ownership. generation continue to be recorded, although the income of 969 MW from coal plants in the second half of 2012 and Endesa Chile, its subsidiaries and jointly-controlled 2013 (Santa Maria, Campiche, and Bocamina II) allowed to companies in Chile have a generating capacity which partially alleviate the supply situation of the system, because comprises 103 units distributed along the Central these are units of low production costs and high capacity Interconnected System (SIC), and 2 units in the Norte factor (constant output, in the case of the Bocamina II which Grande Interconnected System (SING). involves injecting 8,400 MWh / day to the system). Also Electricity generation in Chile by the Enersis Group reached growth in consumption, which was found to be 3.5% when 19,675 GWh in 2013, with 51% of it being hydroelectric. compared with 2012 consumption, the growth rate was The physical energy sales totaled 20,406 GWh in Chile, lower than in 2013, which was around 5.6%. contributed to not pushing upwards the cost of a moderate an equivalent to 29% of total sales of the Group in Latin America. Undoubtedly, this sequence of dry years has had an impact on the profits of the company during 2013, but it is In Chile, other generators are: AES Gener, Colbún, EC-L y important to point out the operational strengths Endesa Norgener. Endesa Chile Chile has to face this adverse situation, namely: i) It has a large size generating capacity,, varied and competitive, composed mainly of hydropower and efficient thermal plants, allowing to keep a low average operating costs Endesa Chile, its subsidiaries and jointly-controlled profile; ii) the commercial policy of the company, which companies in Chile have a generating capacity which has always been designed and implemented according comprises 103 units distributed along the Central to its generating facilities and the current and forecasted Interconnected System (SIC), and 2 units in the Norte reality for the national electricity market. This has meant a Grande Interconnected System (SING). constant concern for Endesa Chile to establish a balanced type commercial policy, which aims to combine a condition Power sales by Endesa Chile and its subsidiaries in the SIC of low hydrological risk exposure with an adequate return; Reached 19,387 GWh in 2013. This volume represents a for which this policy contemplates to commit contracts with 41% share of the total sales of the SIC, including customer an energy level according to the size and composition of the sales and net sales in the spot market. Sales to regulated generating capacity, maintaining a diversified portfolio of customers Represent 76%, sales to deregulated customers clients and implementing a pricing policy which allowed it amount to 17%, and 7% Were net transactions in the to sustain profitability even in situations of dry hydrology spot market. In Addition, sales of electric energy of the and high marginal costs in the spot market, as have been Celta subsidiary in the SING, totaled, 1,019 GWh in 2013, observed during 2013; and iii) a policy of exploitation representing a 7% increase in the overall sales of the whose aim has been to permanently maintain high quality electrical system. standards and operational readiness of the facilities of the company, along with designing and implementing those modernization plans necessary to maintain the operating conditions of the equipment at optimum levels and up to date. 139 Hydrological Condition in the Generation and supply costs in the SIC SIC The dry condition was repeated in 2013, again involved 2013 began with a thaw without a system of supply with a high proportion of thermal precipitation, of dry characteristics generation which corresponded to 59.6% of the total supply until early May, when a very brief of the SIC, a percentage which was higher than the 57.4% period of high intensity began, which of 2012. In this thermal generation, the predominant fuel lasted until early June. Later, occasional was coal, which represented 37.3% of the SIC total, well low intensity rainfall was recorded, above the 29.1% of the previous year, due to the entry of the all of which configured a year of dry new coal power plants mentioned above. LNG production characteristics. The first two quarters of followed, with 19.5% and finally, with a smaller share, oil 2013 were the driest, with probabilities with 2.8% of the total. of accumulated excess from tributaries of 93% and 82%, an improvement Meanwhile, hydroelectric generation continued to decline in the third quarter due to rainfall in its participation in the production of the SIC, representing September, warm characteristics and only 39.4% of its total generation, compared to the 41.9% high zero isothermal, which produced in 2012 and the 44.7% in 2011. This because the reservoirs an unusual thawing of the snow, which were kept operating with low elevation, with slight recovery caused a significant increase in the in the months when rainfall occurred. Particularly, annual inflow in that period, and as a result regulation reservoirs such as Lake Laja and Laguna del Maule, of this, leaving very little for the next continued to operate much of the year in the zone of highest thaw. Consequently, as a result of the extraction restriction. hydrological conditions it should be noted that 2013 was configured as a dry Wind generation represented a percentage of 1.1%, slightly year, with a cumulative probability of higher than the 0,8% of 2012. excess in tributaries of close to 84%. Regarding the energy production of the SIC, Endesa Chile had a participation of 39% of the total, with a 52% contribution of hydroelectric and a thermal generation contribution of 30%. In the thermal production, the company had a major participation of LNG, which accounted for 60% of the total, its contribution being less than coal generation (16%) and oil (9%). In wind power, the contribution of Endesa Chile was 29% relative to the total wind system. The High levels of the generation costs in 2013 due to the increased participation of thermal generation in the production matrix, resulted in turn in higher energy prices in the spot market, although lower, on average, than those observed in 2012. It is noteworthy that although the annual average hourly marginal cost at the Alto Jahuel - 220 kV node recorded a decrease of 21% (from an average of 195 U.S. $/ MWh in 2012 to a value of 154 U.S. $/MWh in 2013), the 140 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISdecline is largely explained by increased be achieved gradually by 2024, a new set value of 20 % to be attained gradually hydroelectric generation occurred by 2025. Moreover a mechanism of annual and exclusive public tenders for NCRE during the last four months of the in order to comply with the annual obligation to supply NCRE is established. The year, due to the higher flow available Ministry of Energy will be in charge of Such tenders and NCRE participants will following the warm thaws that occurred compete with price (energy) for blocks that are tendered, allowing them to sell in that period. Indeed, until the month at a stabilized price, with a maximum defined in the law itself. This new standard of August, the cumulative average value allows encouraging the incorporation of these generation technologies and to do of the marginal cost of 2013 displayed it more competitively. a rather minor decrease (6%) than the average value during the same period The legislative debate on the power Highway Project continues, which provides in 2012. measures for facilitating development in the trunk transmission systems and additional branchings, which include design with higher output gaps and which Regulatory issues associated with the power sector: bills costs will be paid on shared among different users who benefit from it. The main purpose of this project is to encourage the future development of poles of generation or demand in different parts of the country, mainly of renewable and regulations energy, including hydropower. Two laws of significance for the power During 2013, the bill for power interconnection also passed, which allows sector were enacted in 2013: to include in the planning of the trunk transmission system, the power The power Concessions Law (Law No. regulation, which required an agreement between stakeholders in a process of 20,701) which was enacted on October open negotiation of private agents to do so. In late 2013, the project was in an interconnection between two systems such as the SIC and SING, unlike the current 14, its application aims to expedite the advanced stage of approval in Congress. processing and deadlines associated with power concessions in the different Moreover, within the rules of the regulatory range during 2013, the following stages covered in the process of regulations were approved: i) On April 24, the regulations of node prices, which processing the power generation are explicit and detailed on the calculation and provision procedures of the projects. This law provides measures information required for determining the selling prices for regulated customers that make procedures for granting and ii ) on August 5, a modification to the rules of the Center for Economic concessions more expedite, thereby Load Dispatch ( CDEC ) was issued, which aims to strengthen the autonomy and a reduction of construction time of operational areas of this entity to exercise its functions, for which changes have transmission projects was expected, been made mainly on the composition of the board of this organization (10 to 5 and delays would hamper the economic members) and the manner of choosing its members (independent of participating operation and the flow of power supply companies); a redefinition of the segments of generation and the creation of a between the different parts of the new operating unit (Planning and Development) in order to support the analysis country. and coordination of power projects being developed in the system. On October 22, Law No. 20,698 which amends Law No. 20,257 on the NCRE was published. In its core, it defines a new supply obligation with the NCRE involving a 10% increase of required NCRE supply of marketed energy, to 141 Actions of Endesa Chile during • Under the Reservoirs Law, which declared the Ralco dam 2013 In the operation of the facilities as flood control, a flood simulation was conducted (August 23 to 30), this requirement is present in the communication protocol between Endesa Chile and ONEMI. In the simulation, which involved ONEMI, DGA and Endesa Chile, • Indices associated with risk management the communication systems, information transfer and continue to improve. Regarding 2012, decision making process were tested. the frequency rate decreased by 0.56%, the frequency and severity decreased by • The generation of the two combined cycles together of 1.15%, displaying a 50% decrease in the the San Isidro power plant was the highest in its history, number of accidents with lost days. reaching a production of 5,607 GWh. This thanks to the record generation achieved by cycle No. 1, with 2,591 • On December 22, the bag house of the GWh, and a high generation of cycle No.2 of 3,016 GWh. Tarapacá power plant entered service. This allowed meeting the new emissions In the commercial area standard regarding particulate matter, which came into force on December 23. Commercial operations by Endesa Chile during 2013 were The emission level reached a third of the in line with its commercial policy, whose purpose was to regulation limit. reconcile the achievement of all of the following objectives, maintain industry leadership, adequately manage risk and • In the month of July, a 100% compliance profitability of the company in the worst condition of 2013 with the committed actions involved in for the SIC, comply with the actions of its permanent client the Clean Production Agreement, (APL) fidelization policy and achieve greater efficiency in the of the Puchuncaví-Quintero industrial internal commercial management. area was verified by the third of four external audits. Regarding customer contract management: • In December, the construction of • Under the framework of the tender Process for the the 5000 m2 pilot cooling pond was Supply of the SIC 2013/01 conducted in November 2013, finalized in San Isidro, built by Crystal Endesa Chile was awarded 3,500 GWh/year, which aim Lagoons. This pond is intended to to ensure the supply of energy to regulated customers of verify the feasibility of applying this the distribution companies of the SIC for the period from technology to improve the efficiency of December 2013 to December 2024 The awarding referred the thermal power plant cooling. to will result in a series of supply contracts with bidders (in preparation) for a period of 11 years at an indexed price of • During the year, continuous emissions U.S. $ 129/MWh. monitoring was put into service in all thermal power plants of the system • According to what was contractually agreed, during 2013 (CEMS) required by the new emissions the following supplies were completed: i) March 31, the standard for thermoelectric plants. The contract with Codelco, Salvador Division and with EMELAT systems are being validated for further to supply their customer Kozan; ii) December 31, contracts certification by the Environmental with customers Mantoverde (a subsidiary of Anglo- Service. American) , CMPC (for its plants: Laja, Santa Fe, Pacific and Inforsa) CMPC Cartulinas (Valdivia), and with Río Maipo (for the variable block) and iii) with CGE to supply its customer EFE. 142 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISRegarding the 2013 milestones of the Customer area: • In November the “IX Seminar with Endesa Clients and Subsidiaries” was held, which had a high participation of different clients of the group companies. Talks Related to the following issues were conducted: i ) supply situation; ii ) Punta Alcalde Project and iii ) Energy Matrix and Shale Gas. • During August and September, • During the month of November, the customer satisfaction survey 2013 was Customer Seminars were conducted conducted. The end result of the ISC was 16.8, indicating a favorable perception in La Serena, Concepción and of our customers when compared to the result of the previous year (ISC 16,6) . Valdivia, which were well received by The best evaluated aspects, as in previous years, were the commercial staff and the customers. the billing process. Good customer feedback regarding the client executives and the overall commercial. The Same for the operations team for the billing process • In October, a visit to the Canela wind is becoming ever more complex and cumbersome, and despite the change of farm was conducted with customers. professionals it has maintained a very good level of efficiency. • Progress was made in the development of the implementation of the new billing system to SAP-ISU customers. 143 Projects under study by Endesa Chile Los Condores Hydroelectric Plant The Los Condores Hydroelectric plant Project will be located in the Maule Region, Province of Talca, Municipality of San Clemente. It includes the construction of a run-of-the-river hydroelectric plant of about 150 MW of installed capacity, with an average annual generation of 560 GWh, which will use the water of the Laguna del Maule reservoir by a 12 kilometer uptake. The plant will connect to the SIC by a 220 kV double circuit link between Los Condores power plant and the Ancoa S / E, with a length of approximately 90 kilometers. The project has the basic engineering and environmental assessment process by the Environmental Evaluation Service The generation project has had an (SEA) of the Region de los Rios completed. In November and environmental approval since November December 2013, respectively, the Addendum No. 4 to the draft 2011. Regarding the transmission line, of the EIA of the generation project and Addendum No. 4 to the a modification of the environmental draft of the EIA of the transmission lines were submitted. approval for the line connecting the power plant to the SIC was obtained Also, during the second semester of 2013, the SEA began the in May 2013. In November 2013, the process of consultation with the indigenous communities Water Works Permit authorizing territorially present in the area, both for the plant as well as for the intervention of basins for the the transmission line, in order to know their position regarding construction of the plant was obtained. both projects and comply with ILO Convention 169. Neltume Hydroelectric power Punta Alcalde Thermal Power Plant plant The Punta Alcalde thermoelectric plant project will be located in the Atacama Region, Province and Municipality The Neltume Hydroelectric power of Guasco, 13 kilometers south of the city. The initiative plant project will be located in the provides for the construction of a power plant that will use Los Ríos Region, in the Province of bituminous coal as its main fuel. It will have two blocks, Valdivia, Municipality of Panguipulli. The with an installed capacity of 370 MW each. The plant will be initiative includes the construction of a connected to the trunk Maitencillo substation by means of a hydroelectric power plant of 490 MW of double circuit 220 kV transmission system of 40 km in length. installed capacity, with an average annual generation of 1,885 GWh, which would In 2009, Endesa Chile submitted the project to the use the energy potential existing between Environmental Impact Assessment Service. A regulatory the Neltume and Pirehueico lakes. The change occurred in June 2011 in the emissions requirements, plant will be connected to the SIC in the which led to incorporate changes in the project. On June 25, Pullinque area, by a 220 kV double circuit 2012, the EAC (Environmental Assessment Committee) of transmission line. the Atacama Region rejected the project, after which Endesa Chile submitted an Appeal to the Committee of Ministers. 144 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISOn December 3, 2012, by unanimous Taltal, Closure of Combined Cycle vote, the Committee of Ministers decided to reverse the decision of This project is located in the town of Paposo, Taltal in the 2nd Region. It consists the EAC of the Region of Atacama, of the installation of a steam turbine to complete the Taltal power plant combined environmentally approving the project. cycle, which is currently operating. The operation of the combined cycle of this In early 2013, four court claims were power plant has a favorable RCA. filed (protection resource) against the ruling of the Committee of Ministers, which were received by the Court of Appeals in August 2013. Up to December 2013, the case was in the Supreme Court, awaiting a ruling. Moreover, in early July 2013, the transmission project that will connect the power plant to the Maitencillo substation of the SIC underwent environmental assessment. The project for the closure of the combined cycle will use the two existing gas turbines of 123 MW each, and add a steam turbine of about 120 MW. Thereby, the Taltal power plant will have a net power of the order of 370 MW and an efficiency increase from the current 35% to approximately 50%. In December 2013, an Environmental Impact Statement (EIS) that environmentally optimizes the project was submitted, replacing the seawater cooling system that was originally considered with a dry air cooled system. The injection of power of the plant to the combined cycle will be through the existing 220 kV Paposo-Diego de Almagro double-circuit line. Land reserved for future projects In December 2013, Endesa Chile holds real estate property (land) for a total area of approximately 250 hectares, to be used in thermoelectric and hydroelectric projects. These assets are located in the Atacama Region (208.9 hectares) and in the region of Los Lagos (42 hectares). 145 Projects of associated companies HidroAysén the Supreme Court, with only that the Committee of Ministers meets and rule on the claims by the company and opponents. In this context, the company also announced a restructuring of the organization to adjust to the challenges of the new stage of development. By the end of 2013, and having far exceeded HidroAysén, partnership in which Endesa Chile owns 51% legal the limits for this, the Committee of Ministers had not yet equity and the remaining 49% is owned by Colbún, is been called to rule on the complaint resources submitted. developing a project for the construction and operation of five hydroelectric dams on the Baker and Pascua rivers in the The successful experience of “House to House” dialogue of Aysen Region. 2012 led to deepening the process during 2013. And in July, the project visited 60% of all households in Cochrane, Tortel The plants will have a total installed capacity of 2,750 MW and Villa O’Higgins in the Capitán Prat Province; during August, and an annual average generation capacity of 18,430 GWh, 70% of the households in Puerto Río Tranquilo, Puerto Guadal, equivalent to 36% of the consumption in the central grid Bahia Murta, Puerto Bertrand and Cerro Castillo, in the General during 2013, thereby transforming the HidroAysén project Carrera Lake; and by the end of 2013, households in Puerto in the most important hydroelectric initiative that has Ibáñez were visited, plus a deepening in the city of Coyhaique, been developed in Chile. The total area of the reservoir, allowing to cover 91% of households to date. considering the five power plants will be of 5,910 hectares, bringing the hydroelectric complex to qualify as one of the Continuing with its policy of community relations during 2013, most efficient in the world in terms of energy produced per HidroAysén maintained its commitment with education in the unit of surface flooded. region, delivering more than 100 annual technical education scholarships to young people in the region of Aysen and the As provided by Law No. 19,300, the HidroAysén project Capitán Prat Province, achieving to benefit about 227 students submitted its Environmental Impact Assessment (EIA) during the last five years. for approval in August 2008 and after three years of a comprehensive assessment, obtained a favorable In August 2008, HidroAysén submitted an Environmental Environmental Qualification Ruling in May 2011. during 2012, Impact Study to the appropriate authority to begin processing the company completed a long court proceeding initiated of the project. On May 9, 2011, HidroAysén received a favorable by opponents to the project, which tried in this way to stop environmental qualification Ruling, with certain conditions. In the initiative. In April 2012 the Supreme Court ruled in favor June 2011, HidroAysén appealed to the Committee of Ministers, of HidroAysén, rejecting appeals by environmental groups, which consists of six members of the Cabinet and is chaired by which had previously been received and ruled upon by the Minister of Environment for the review of certain conditions the Court of Appeals of Coyhaique and then its similar at set forth in the ruling. In parallel, the project opponents filed 34 Puerto Montt, ruling in favor of the company. With this, the complaints, adding to the request to the Committee a total of country’s highest court validated the environmental approval 35 complaints. of HidroAysén. On January 30, 2014, the Committee of Ministers met to review During 2012, HidroAysén restructured its executive staff and the claims. The Committee requested additional information created the Community and Communications Management, and studies on certain item, ruling on only part of the claims. In based in the Aysen region, in order to strengthen the March of 2014, and now under the administration of President company’s ties with the community and promote a policy of Michelle Bachelet a new Committee of Ministers, which ordered transparency, dialogue and direct communication with the the institution of proceedings for invalidation concerning what neighbors. was agreed by the Committee of Ministers at its meeting of January 30, 2014 under the administration of former President In April 2013, HidroAysén informed the public that it Sebastián Piñera. The new Committee stated that it would had successfully completed the first stage of the project review and rule on complaints within the 60 working days development, obtaining the environmental approval of provided by law. Currently, HidroAysén is awaiting the Ruling of the five stations, the technical and engineering studies the Committee. necessary for this phase, and positive and definitive ruling of 146 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISChilectra Chilectra is the largest distribution company in Chile in terms of sales of electrical power. It operates in 33 communes of the Metropolitan Region and its concession area covers over 2,118 km2, including the areas covered by its subsidiaries, Empresa Eléctrica de Colina Ltda. and Luz Andes Ltda. The company provided electric service to 1,693,948 customers, 2.1% more than in 2012. Of this total, 89.5% are residential, 7.8% commercial, 0.7% industrial and 2.0 % others. Also, in 2013, Chilectra sold 15,152 GWh to end customers, representing an increase of 4.9% over 2012. During the exercise, Chilectra satisfactorily fulfilled the Loss Plan developed and implemented for this purpose, achieving the best result in the last 9 years, reducing losses by 0.05 percentage points compared to 2012, recording up to December 1st a TAM indicator of 5.31%. Due to the above, Chilectra is positioned as the company with the lower level of losses within the Group in South America. Power Distribution in Chile Enersis takes part in the distribution The distribution rates are established every four years, on the basis of cost studies of power through its subsidiary by specialized consulting firms. The National Energy Commission (CNE) established Chilectra, of which directly holds 99.1% typical distribution areas, and of each typical area of each company, it selects a ownership. The market consolidated reference from which the consultants must design an efficient business model. participation of our distribution subsidiaries in Chile, Chilectra, Luz The last distribution rate established is in force since November 2012 for the 2012- Andes and Colina, was of approximately 2016 period. 40%. According to the rate regulations governing the activities of power distribution, the Chilectra service area is defined as a high density area and includes all residential, commercial, industrial, government, and those who pay tolls, among other clients. The metropolitan area is the most densely populated area of Chile and has the highest concentration of business activities, industrial parks and commercial facilities in the country. Another group of power distributors involved in the electrical system are: Chilquinta Energía, CGE Distribución, Sociedad Austral de Electricidad, Empresa Eléctrica de la Frontera and minor distributors and / or electric cooperatives. 147 Generation Transmission Distribution Codensa (Consolidada) Termozipa Power Plant Cartagena Power Plant Paraíso Power Plant Limonar Power Plant Barranquilla Medellín Bogotá Tequendama Power Plant Cali San Antonio Power Plant Neiva Darío Valencia Charquito Power Plant La Guaca Power Plant Betania Power Plant El Guavio Power Plant 148 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISTypeThermoelectricInstalled Capacity236 MWTypeThermoelectricInstalled Capacity208 MWTypeHydroelectricInstalled Capacity277 MWTypeHydroelectricInstalled Capacity50 MWTypeHydroelectricInstalled Capacity15 MWTypeHydroelectricInstalled Capacity20 MWTypeHydroelectricInstalled Capacity20 MWTypeHydroelectricInstalled Capacity20 MWTypeHydroelectricInstalled Capacity325 MWTypeHydroelectricInstalled Capacity541 MWTypeHydroelectricInstalled Capacity1,213 MWEnergy sales13,342 GWhClientsEnergy losses2.7 millones7.0%Colombia Projects under construction Power Generation El Quimbo Project Enersis takes part in power generation through its subsidiary of Huila, to the southeast of Bogota, Colombia and feeds Endesa Chile and Emgesa, of which it controls, directly and of the flow of the Magdalena River. It contemplates the indirectly, 37.7% of the property. construction of a 400 MW installed capacity hydroelectric The El Quimbo project is located south of the department This company has an installed capacity which in 2013 represented 20% of the power generation capacity of the On February 25, 2013, the Administration Board approved dam and an average annual generation of about 2,216 GWh. country. the awarding of the contract “Alternate routes and Bridges construction” to the Consortium Quimbo Works, formed The power generation of the Enersis group in Colombia by the PCM, CSS, Sonacol and CASS companies, which was reached 22% of the total generated in that market. For its subsequently approved by the Board of Emgesa. Moreover, part, the physical power sales represented 18% of the total on May 7 2013, the National Environmental Licenses sales. Authority (ANLA) reported the approval of the amendment to the Environmental License for the “Construction of Other generators connected to the Colombian power system alternate Roads and Bridges” allowing Emgesa to grant are: Empresa Pública de Medellín, Isagen, Corelca, EPSA and the Notice to proceed to the Quimbo works Consortium to Chivor. Emgesa initiate activities. In early June 2013, the land required to begin work was delivered to the contractor. Between August 16 and September 9, 2013, there was a On September 1, 2007 Colombian companies Emgesa national agricultural strike, where neighboring communities SA E.S.P. and Central Hidroeléctrica de Betania S.A. E.S.P were mobilized to the project causing roadblocks and land merged, the latter remained as absorbing company, which seizures, which forced the company to prepare a contingency changed its name to Emgesa SA E.S.P. plan aimed at not stopping the critical works of the project (fillings for the dam, assembly of the bridge crane assembly It is the largest electricity generation company in Colombia, of the Powerhouse) and prevent supplies shortages to the located in the vicinity of the city of Bogotá. It is composed project. Moreover, negotiations were maintained with the by eleven plants with a total capacity of 2,925 MW, among main contractors to achieve a program that unifies the which is The Guavio of 1,213 MW, the largest hydroelectric programs corresponding to the Main Civil Works and the facility in the country. Of the eleven plants, nine are Supply and Installation of Electromechanical Equipment hydroelectric and two thermal. Contracts. Net generation was 12,811 GWh, while total sales reached During the year and according to the commitments of 16,090 GWh. the Environmental License of El Quimbo, there have been projects associated with the resettlement nuclei and their respective irrigation and urbanization districts, directly linked to the conditions accepted by the people affected by the project and the needs expressed by the local authorities. 149 Salaco Project During this project, the San Antonio, Limonar and La tinta-La junca plants will undergo major maintenance and upgrading, to operate as a plant dispatch center at the edge of water, like Salto II, Dario Laguneta and Valencia, respectively. This will represent a growth in installed capacity of 144.8 MW for Emgesa and an additional average increase in expected generation of 482 GWh. The plants will be operating with their original name, Salto II (from 19.4 MW to 35 MW); Laguneta (from 18 MW to 36 MW) and Dario Valencia (from 38.8 MW to 150 MW). The project has duration of 24 months. On November 6, 2013, the first upgraded unit of the Salaco project, Land reserved for future projects corresponding to unit 2 of the edge In Colombia, currently there is no land reserved for future of water plant Darío Valencia Samper projects. entered into service, with an installed capacity of 50 MW. This unit generated 46.3 GWh from the date of its commissioning to December 31. 150 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISPower Distribution in Colombia Codensa Distributes and sells electricity in Bogota and 103 municipalities in the departments of Cundinamarca, Boyacá and Tolima, in an area of 14.087 km2. Since 2001, Codensa focuses primarily on providing services to regulated customers but also serves some industrial, commercial and municipal public lighting customers. Provided electrical service to 2,616,909 customers, 2.7% more than last year. Of the total, 88.6% are residential, 9.6% commercial, 1.6% industrial and 0.2% others. Enersis takes part in the distribution of This was distributed as follows: 33.7% to residential, 16.1% commercial, 6.5% Power sales reached 13,342 GWh, representing an increase of 2.9% over 2012. power through its subsidiary Codensa, industrial and 43.7% others. of which it holds, directly or indirectly, 48.4% of the property. As for the power losses, this indicator recorded, again in 2013, a decrease from 7.3% to 7.0%. Management to control losses has focused on the incorporation The market share of our subsidiary in of new technologies and techniques for identifying losses as well as in the Colombia in terms of physical sales, strengthening of a customer / business relationship based on technical was approximately 16%. In Colombia, knowledge and the transparency of our actions. there are 31 other distributors involved in the power system, among which are: As part of the rate review process, which is conducted every five years, during EEPP Medellín, Empresa Distribuidora August 2008 by ruling 093, the CREG published the rate of return applied to the del Pacífico y Electrificadora del Caribe. remuneration of the activity of power distribution, which was set at 13% for sub transmission assets and 13.9% for medium and low voltage assets. In October 2009, the CREG issued ruling No.100 establishing the Codensa distribution charges for the period 2009-2013. This ruling led to a decrease of 4.2%. in the Distribution Added Value (VAD). 151 Generation Transmission Distribution Moyopampa Power Plant Callahuanca Power Plant Huinco Power Plant Matucana Power Plant Eepsa Power Plant Huampani Power Plant Santa Rosa Power Plant Ventanilla Power Plant Yanango Power Plant Chimay Power Plant Chiclayo Trujillo Lima Edelnor Edelnor Cuzco Arequipa 152 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISEnergy sales7,045 GWhClients Energy losses1.3 millones7.9%TypeHydroelectricInstalled Capacity66 MWTypeHydroelectricInstalled Capacity80 MWTypeHydroelectricInstalled Capacity247 MWTypeHydroelectricInstalled Capacity133 MWTypeThermoelectricInstalled Capacity302 MWTypeHydroelectricInstalled Capacity30 MWTypeThermoelectricInstalled Capacity304 MWTypeThermoelectricInstalled Capacity485 MWTypeHydroelectricInstalled Capacity43 MWTypeHydroelectricInstalled Capacity151 MWPeru Power Generation Empresa Eléctrica de Piura Eepsa has three power plants, located in the province of Talara, Piura, in northern Peru. these are: • Malacas power plant, with an open cycle Mitsubishi unit Enersis takes part in the power generation through Endesa operating on natural gas. Chile and its subsidiary Edegel, of which it controls directly and indirectly, 37.5% of the property. Additionally, Enersis • Malacas 2 power plant, with an ABB open cycle unit which directly controls 96.5% of the Empresa Eléctrica de Piura can operate with or without water injection, with natural (EEPSA). gas. Through its two subsidiaries, Enersis has an installed capacity • Malacas 3, power plant, with a SIEMENS open cycle unit in of 1,842 MW in Peru, which represented 24% of the installed cold reserve condition, with B5 Diesel fuel. capacity of Peru, which totals 7,814 MW. In terms of power generation, the Enersis Group reached 21.4% of the total generated in the country. PRODUCTION CENTERS In Peru, other generators connected to the power grid are: Power plant Unit Manufacturer Electroperú, Enersur y Kallpa Generación. Edegel Malacas Malacas 2 Malacas 3 Total TG1 TGN4 TG-5 RF MHI ABB SIEMENS Declared fuel Natural Gas Natural Gas B5 Diesel Effective power (MW) 11.698* 103.39 ** 186.6 *** 301.688 It is located in the vicinity of the city of Lima. It is composed of seven hydroelectric plants and two thermal plants with a total capacity of 1,540 MW. The thermal plants use natural Valid since August 09, 2013. * ** Valid since August 09, 2013. *** Valid since August 12, 2013. Still not approved by the COES. gas as the main fuel and diesel as an alternative fuel. With Eepsa-GC-113-2013 letter dated on July 11, 2013, Eepsa requests certification of Commercial Operation of unit TG-5 The net generation of Edegel totaled 8,605 GWh, a decrease RF which was accepted by the COES with COES/D/DP-723- of 1.5% when compared to 2012 and physical sales totaled 2013 letter with an effective date of July 13, 2013. 8,904 GWh, a decrease of 7.1% from the previous year. During 2013, the production of electricity of Eepsa was 137.78 GWh (of which 24.09 GWh were generated by the Malacas power plant, 108.32 GWh by Malacas 2 power plant and 5.37 GWh by Malacas 3 power plant lower by 72.8% than the production of the previous year. 153 Projects under study Curibamba Hydroelectric power plant This power plant will be located upstream of the uptake of the Chimay power plant, in the department of Junín and will use the flow of the Uchubamba and Comas rivers. The project includes the construction of a run-of-the-river power plant with 192 MW capacity, a design flow of 86 m3/s, a production of 1,013 GWh/year, and a single triplet 220 kV 135 miles long transmission line to the Pachachaca substation, During 2013 the tender process for the Project main contracts for Civil, Equipment, Electrical Transmission Line and Interconnection System Works began the necessary studies for the Land reserved for future projects preparation of pre-construction permits 10 hectares of land belonging to the company Siderperu was for the project. The approval of the Pre- purchased, located in the province of Santa, department of Operability Study by the system operator Ancash with the aim of analyzing a proposed thermal power (COES) was obtained. The basic designs of the plant. transmission line are completed for 100% of the layout. Moreover, in April 2013, the approval of the Environmental Impact Assessment (EIA) of the first section of the transmission line and the second stretch was received to undergo the evaluation process, the project has Certificates of Absence of Archaeological Remains (CIRA) and approved generation and transmission. Finally in December 2013 began the process to obtain the final Generation concession. 154 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISPower Distribution in Peru Edelnor The concession area granted to Edelnor covers a total of 1,517 km2 which correspond mostly to the north of Lima and Callao. Edelnor is the concessionaire of the public electricity service for the north of Lima and Callao, and the provinces of Huaura, Huaral, Barranca and Oyon. It serves 52 districts exclusively and shares an additional 5 districts with the distributor of the south. In the metropolitan area, the Edelnor concession comprises mainly the industrial area of Lima and some highly populated districts of the city. Edelnor delivered electric service to 1,254,624 customers, an increase of 4.3% over 2012. Of these, 94.5% are residential, 3.3% commercial, 0.1% industrial and 2.1% other customers. Enersis takes part in the power The growth in sales is explained by an increased consumption in the residential and Physical energy sales totaled 7,045 GWh, representing an increase of 2.7% over 2012. distribution through its subsidiary commercial sectors. Edelnor, in which it controls, directly and indirectly, 75.5% of the property. In the case of the power loss indicator, it was significantly lower when compared to The market share of our subsidiary 2013, decreasing from 8.2% to 7.9%. in Peru in terms of physical sales was Regarding the establishing of distribution rates, through Ruling No. 137-2011-OS/CD around 18%. (27-7 - 2011) the Osinergmin conducted some price fixing at the generation level, and In Peru, other distributors involved to the unitary charges by rate, additional generation and unitary toll for compensation in the power distribution system are: that is added to the corresponding secondary Transmission Systems Tolls. Ruling No. 138-2011-OS/CD (27-7-2011) which made an adjustment of the update factor Luz del Sur, Electro Sur, Electrocentro, ENOSA, Hidrandina and ENSA. Also, Osinergmin by means of ruling Nº140-2011-OS/CD (27-07-2011) made an adjustment to the surcharge factor is performed in the social power compensation fund (FOSE). During 2013, Edelnor had its rate review by Ruling No. 203-2013-OS/CD the OSINERGMIN fixed the added Distribution values, fixed charges and rate calculation parameters for the period from November 2013 to October 2017. Results show an increase of 1.2% of Distribution Added Value (VAD) in the range of Edelnor, when compared to the rate previously in force, so that the negative effect of the pre- publication of OSINERGMIN which calculated a -4.9% with respect to the base of Dec- 12. This was confirmed by Rulings No. 255 and No. 256-2013-OS/CD of December 20, giving answer to the Resources for Reconsideration filed by the distribution companies of Lima. 155 Other businesses Manso de Velasco Inserted into the ENEA project is the Aguas Santiago Poniente SA Company, which provides sanitary services related to real estate development. Product of major new housing and industrial buildings in ENEA, the company had to expand its sanitary infrastructure which serves to date Manso de Velasco focuses on the development of major to more than 3,489 residential and industrial customers real estate projects primarily in the management of the real and treats 100% of the effluents of the project. In this estate assets of the group in South America, in all matters perspective, Aguas Santiago Poniente is in a phase of relating to the purchase, sale and development of assets. increasing its economic value, being certain of the existence of clients requiring the services offered by the company Its main project, named ENEA, corresponds to the real estate associated with the development of ENEA. development of a property, originally of 1,041 hectares, strategically located in the west of Santiago, commune Within its real estate business, Manso de Velasco also of Pudahuel. Adjacent to the Arturo Merino Benitez manages a total of 13,009 m2 of construction corresponding International Airport, the project is being developed and to office buildings, which are mostly rented to related urbanized to sell lots to business, industrial, commercial, companies and third parties. residential, services, educational and other requirements. Revenues of Real estate Manso de Velasco, consolidated for The road connectivity of the project, each year is 2013 were $ 15,442 million complemented by the construction of new linking roads, streets, side roads and new accesses to highways. These works allow ENEA to improve its already excellent connection to the centers of the city, resulting in a significant value ICT increase for this Business Park. ICT Computer Services Limited is a consulting, management, contract administration and operation company in matters Currently phases II and III and west are under development related to the field of information systems, information and marketing, which respond to the concept of Industrial technology, telecommunications and control systems for and Business Park. The project has a complete infrastructure, Chile and South America, of which Enersis directly and which has increased this past year, with new equipment indirectly owns 100%. and landscaping works, providing better service to the subdivision and its users. At a strategic level, the function of ICT aims to constantly push, to provide better services in line with the new During fiscal year 2013, ENEA advanced on the commercial technological trends, managing the successful integration of level. Major companies were integrated to the Business Park, technological solutions in order to drive strategic initiatives the sale made to the HJ ltda. Import and Export company of of the Enersis group. ICT consistently makes contributions 4 hectares and Profit Summit for 1 hectare stand out, as do to improved operational efficiency, helping boost the the sales in Phase II to the following customers: Distribuidora competitive advantage of the Group companies in the Santa Barbara, Quinta S.A. and Empresas JR S.A. among region, based on global best practices and standards in others. The total sales during the year were $ 12,489,000,000. technology matters. 156 DESCRIPTION OF THE ELECTRICAL BUSINESS BY COUNTRY 2013 ANNUAL REPORT ENERSISDuring 2013 ICT focused its efforts on improving the customers new communication media. Additionally, the continuous operation of information systems, at the same implementation of projects which allow Chilectra to reduce time it worked on the development and implementation of operational costs in the billing and collection processes was new projects in South America that will allow the Enersis conducted. Group to have cutting edge technology to meet new strategic challenges. Additionally, initiatives such as Web Pay and Pay buttons were implemented; both initiatives incorporate Regarding Generation Systems, this year we have worked improvements in collection channels, enabling greater in terms of the implementation of Phase I of the SCADA functionality according to the trends, which aim to provide systems of generators of Chile and Colombia. The region has the best contact channels for Chilectra customers also continued with the roll out of the SIVY system project which allowing web payments. will allow generators to integrate measurements from the generation plants in each country. Additionally, there have Regarding the Holding Systems, the update of web been advances in SIGO and PGIS systems where a number of systems and institutional platforms has been promoted, improvements were implemented, limiting security risks and implementing solutions that provide greater robustness and limiting undue access to the data network and systems. flexibility, allowing the incorporation of new technologies. On matters of Telecommunications of Endesa Chile, intense In generation systems in Chile, there have been technological work has been conducted to ensure operational continuity upgrading activities of the Meridian and GEMA platforms. of services in generation plants in Chile, with the goal of Particularly in Chile all the necessary technological providing improved communications and the availability and infrastructure for the beginning of the last phase of the performance of the systems. SCADA Generation project have been incorporated. In terms of distribution systems at the regional level advances have been made in the implementation of strategic projects like GCORE which is successfully being implemented in Colombia and Brazil, it is estimated that this initiative will be launched during 2014 in Chile. In a similar scenario, the regional SCADA distribution project, this has been implemented successfully in countries such as Chile, Colombia and Brazil. In Chile, during the current year, improvement projects were implemented in substation maintenance systems along with improvements in the SIGMA platform related to the management of public lighting. innovative projects like the new MOBILE APP platform for smart phones have been implemented, aimed at improving communication channels with our customers according to global trends by providing 157 Ownership structure 158 OWNERSHIP STRUCTURE 2013 ANNUAL REPORT ENERSISDirect and Indirect economic shareholdings ARGENTINA Costanera El Chocón Docksud Edesur CTM TESA CEMSA Gasoducto Atacama Argentina CHILE Endesa Chile Celta Pehuenche Canela HidroAysén GasAtacama Chilectra Transquillota Túnel el Melón GasAtacama Chile Gasoducto Tal Tal Electrogas GNL Chile GNL Quintero BRAZIL Endesa Brasil Fortaleza Cachoeira Dourada Ampla Coelce CIEN COLOMBIA Emgesa Codensa PERU Edegel Edelnor EEPSA Notes Gx: Generation Dx: Distribution Tx: Transmission / Commercialization Ox: Gas pipelines, others (*) Considers Enersis Group operational companies. Business Gx Gx Gx Dx Tx Tx Tx Ox Business Gx Gx Gx Gx Gx Gx Dx Tx Ox Ox Ox Ox Ox Ox Business Gx, Dx, Tx Gx Gx Dx Dx Tx Business Gx Dx Business Gx Dx Gx Ownership 45.40% 39.21% 39.99% 71.61% 83.54% 83.53% 81.99% 30.75% Ownership 59.98% 61.49% 55.57% 46.12% 30.59% 30.75% 99.09% 30.75% 59.98% 30.75% 30.75% 25.49% 19.99% 12.00% Ownership 83.54% 83.54% 83.33% 91.63% 49.18% 83.54% Ownership 37.72% 48.39% Ownership 37.46% 75.54% 96.50% 159 Perimeter of Enersis’ Shareholding 99.99997% 99% Inmobiliaria Manso de Velasco Ltda. ICT Servicios Informaticos Ltda. 1% 0.00003% 57.50% Soc. Agrícola de Cameros Ltda. 25.82% Aguas Santiago Poniente S.A. 53.06% 99.998243% 55.00% Const. y Proyectos Los Maitenes S.A. Chilectra Inversud S.A. 0.001757% Deca S.A. 82.34% (*) 94.95 % Emgesa 48.997% Sociedad Portuaria Central Cartagena S.A. 4.90% Inversora Codensa S.A.S. 100% 99.90% Luz Andes S.A. 0.10% Central Dock Sud S.A. 69.992 % 0.0002% 99.9998% Empresa Eléctrica de Colina S.A. Generalima S.A. 100 % 20 % Empresa Electrica Caboblanco S.A. 80 % 60% 36.50 % Empresa Electrica De Piura S.A. Termoeléctrica Manuel Belgrano S.A. 1.42% Termoeléctrica José de San Martín S.A. 1.42% Central Vuelta de Obligado S.A. 6.40% Argentina Brazil Chile Colombia Peru 160 OWNERSHIP STRUCTURE 3.781705% Compañía Eléctrica Tarapaca S.A. 96.214172% 21.60% Emgesa S.A. 26.873987 % (*) 94.95 % sobre Sociedad Portuaria Central Cartagena S.A. 0.0127644% 99.0778566% 59.98% EEC S.A. Codensa S.A. Yacilec S.A. 9.35% 39.13% 22.22% Inversora Dock Sud S.A. 57.1417 % 55 % Endesa Cemsa S.A. 45% EASA 100% 27.1941% 23.4184% 22.2548 % 20.8477% Distrilec Inversora S.A. 0.8875 % 56.3577% Edesur S.A. Generandes Perú S.A. 60.99845% 50.00% 54.19961% Sacme S.A. Edegel S.A. 29.3974% Edelnor S.A. 24.00% 51.684% Inversiones Distrilima S.A. 69.846% 30.154% 50.093666 % 5.328342 % Endesa Brasil S.A. (Holdco) 3.996592% 34.640090% 5.941306% 0.0001% Comercio e Serviços S.A. Endesa Brasil 99.9999% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 10.344606% 21.383694% 21.022414% 46.886283% Ampla Energia S.A. 0.975 % EGP Modelo I Eólica 0.975 % EGP Modelo II Eólica 58.867455 % 100% 100% 99.754055 % Coelce S.A. CIEN S.A. C.G.T Fortaleza S.A. Cachoeira Dourada S.A. 2013 ANNUAL REPORT ENERSIS99.99997% 99% Inmobiliaria Manso de Velasco Ltda. ICT Servicios Informaticos Ltda. 1% 0.00003% 57.50% Soc. Agrícola de Cameros Ltda. 25.82% Aguas Santiago Poniente S.A. 55.00% Const. y Proyectos Los Maitenes S.A. 53.06% 99.998243% 3.781705% Compañía Eléctrica Tarapaca S.A. 96.214172% 21.60% Emgesa S.A. 26.873987 % (*) 94.95 % sobre Sociedad Portuaria Central Cartagena S.A. 0.0127644% 99.0778566% 59.98% Deca S.A. 82.34% (*) 94.95 % Emgesa 48.997% Sociedad Portuaria Central Cartagena S.A. 4.90% Inversora Codensa S.A.S. 100% 99.90% Luz Andes S.A. 0.10% Central Dock Sud S.A. 69.992 % Chilectra Inversud S.A. 0.001757% 0.0002% 99.9998% Empresa Eléctrica de Colina S.A. Generalima S.A. 100 % 20 % Empresa Electrica Caboblanco S.A. 80 % 60% 36.50 % Empresa Electrica De Piura S.A. Termoeléctrica Manuel 1.42% Belgrano S.A. Termoeléctrica José de San Martín S.A. 1.42% Central Vuelta de Obligado S.A. 6.40% EEC S.A. Codensa S.A. Yacilec S.A. 9.35% 39.13% 22.22% Inversora Dock Sud S.A. 57.1417 % 55 % Endesa Cemsa S.A. 45% EASA 100% 27.1941% 23.4184% 22.2548 % 20.8477% Distrilec Inversora S.A. 0.8875 % 56.3577% Edesur S.A. Generandes Perú S.A. 60.99845% 50.00% 54.19961% Sacme S.A. Edegel S.A. 29.3974% Edelnor S.A. 24.00% 51.684% Inversiones Distrilima S.A. 69.846% 30.154% 50.093666 % 5.328342 % Endesa Brasil S.A. (Holdco) 3.996592% 34.640090% 5.941306% 0.0001% Endesa Brasil Comercio e Serviços S.A. 99.9999% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 10.344606% 21.383694% 21.022414% Ampla Energia S.A. 46.886283% 0.975 % EGP Modelo I Eólica 0.975 % EGP Modelo II Eólica 58.867455 % 100% 100% 99.754055 % Coelce S.A. CIEN S.A. C.G.T Fortaleza S.A. Cachoeira Dourada S.A. Argentina Brazil Chile Colombia Peru 161 Perimeter of Endesa Chile Shareholding 2.4803% 18.85% 1.42% 18.85% 1.42% 33.2% 6.40% 41.9411% Hidroinvest S.A. 54.1535% 59.00% Hidroeléctrica El Chocón S.A. 6.1938% Endesa Argentina S.A. 99.657366% 0.342634% Southern Cone Power Argentina S.A. 98% 2.0% 5.5% Termoeléctrica Manuel Belgrano S.A. 5.326% 49.6843% Endesa Costanera S.A. 24.8458% Termoeléctrica José de San Martín S.A. 5.326% Distrilec S.A. 0.887466% Central Vuelta de Obligado S.A. 1.3% Central Dock Sud S.A. Chinango S.A.C. 1.00% Ingendesa do Brasil Ltda. 99.00% Endesa Cemsa S.A. 55.00% 60.99845% 80.00% 34.640090% 26.873987% Generandes Perú S.A. 3.996592% Endesa Brasil S.A. (Holdco) 29.3974% 54.19961% Edegel S.A. Emgesa S.A. 26.873987% 21.60% 100% Emgesa Panamá S.A. Ampla S.A. 46.886283% 2.273448% Coelce S.A. CIEN S.A. 100% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 94.95% Sociedad Portuaria Central Cartagena S.A. 4.90% Inversora Codensa S.A.S. 0.001% 99.999% Transportadora de Energía del Mercosur S.A. (Tesa) 99.999993% Cía. de Transmisión del Mercosur S.A. (CTM) 100% C.G.T Fortaleza S.A. 0.01% 99.99% EN - Brasil Comercio e Servicios S.A. 99.754055% Cachoeira Dourada S.A. 0.975610% EGP Modelo I Eólica 0.975610% EGP Modelo II Eólica 162 OWNERSHIP STRUCTURE 99.9911% Túnel el Melón S.A. 96.214172% 0.00886% Compañía Eléctrica 3.781705% Tarapaca S.A. 50.00% Inversiones Gas Atacama Holding Ltda. Atacama Finance Co. 99.90% 0.1% 0.1% Progas S.A. 0.05% 0.03% Gas Atacama Chile S.A. 99.90% 42.71% 0.1226% Gasoducto Atacama Argentina S.A. 57.23% 99.9% 99.877% Gasoducto Taltal S.A. 100% Energex Co. 100% Gasoducto Atacama Argentina S.A. Sucursal Argentina Consorcio Ara-Ingendesa Ltda. 50.00% Central Eólica Canela S.A. 75% Transquillota Ltda. 0.057198% 50.99995% Centrales Hidroeléctricas de Aysén S.A. 0.00005% 0.51% 99% Aysén Transmisión S.A. 99% Aysén Energia S.A. 0.51% 99.997706% 0.001147% Gas Atacama S.A. 92.65% Pehuenche S.A. 33.33% GNL Chile S.A. 20% GNL Quintero S.A. 42.50% Electrogas S.A. Argentina Brazil Chile Colombia Peru Islas Caymán 2013 ANNUAL REPORT ENERSIS41.9411% 54.1535% Hidroinvest S.A. 59.00% Hidroeléctrica El Chocón S.A. 6.1938% 2.4803% 18.85% 1.42% 18.85% 1.42% 33.2% 6.40% Central Vuelta de Obligado S.A. 1.3% Central Dock Sud S.A. Termoeléctrica Manuel Belgrano S.A. 5.326% 49.6843% Endesa Costanera S.A. 24.8458% Termoeléctrica José de San Martín S.A. 5.326% Distrilec S.A. 0.887466% Endesa Argentina S.A. 99.657366% 0.342634% Southern Cone Power Argentina S.A. 98% 2.0% 5.5% 1.00% Ingendesa do Brasil Ltda. 99.00% Endesa Cemsa S.A. 55.00% 60.99845% 80.00% 34.640090% 26.873987% Chinango S.A.C. 3.996592% Endesa Brasil S.A. (Holdco) Emgesa S.A. 26.873987% 21.60% 100% Emgesa Panamá S.A. 29.3974% 54.19961% Generandes Perú S.A. Edegel S.A. Ampla S.A. 46.886283% 2.273448% Coelce S.A. CIEN S.A. 100% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 94.95% Sociedad Portuaria Central Cartagena S.A. 4.90% Inversora Codensa S.A.S. 100% C.G.T Fortaleza S.A. 0.01% 99.99% EN - Brasil Comercio e Servicios S.A. 0.001% 99.999% Transportadora de Energía del Mercosur S.A. (Tesa) 99.999993% Cía. de Transmisión del Mercosur S.A. (CTM) 99.754055% Cachoeira Dourada S.A. 0.975610% EGP Modelo I Eólica 0.975610% EGP Modelo II Eólica 99.9911% Túnel el Melón S.A. 96.214172% 0.00886% Compañía Eléctrica Tarapaca S.A. 3.781705% 50.00% Inversiones Gas Atacama Holding Ltda. 99.90% Atacama Finance Co. 0.1% 0.1% Progas S.A. 0.05% 0.03% Gas Atacama Chile S.A. 99.90% 42.71% 0.1226% Gasoducto Atacama Argentina S.A. 57.23% 99.9% 99.877% Gasoducto Taltal S.A. 100% Energex Co. 100% Gasoducto Atacama Argentina S.A. Sucursal Argentina Consorcio Ara-Ingendesa Ltda. 50.00% Central Eólica Canela S.A. 75% Transquillota Ltda. 0.057198% 99.997706% 0.001147% Gas Atacama S.A. 50.99995% Centrales Hidroeléctricas de Aysén S.A. 0.00005% 0.51% Aysén Transmisión S.A. 99% 99% Aysén Energia S.A. 0.51% 92.65% Pehuenche S.A. 33.33% GNL Chile S.A. 20% GNL Quintero S.A. 42.50% Electrogas S.A. Argentina Brazil Chile Colombia Peru Islas Caymán 163 Significant events of the entity 164 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSISEnersis 2013 In accordance with Articles 9 and 10°, second paragraph, of Law No. 18,045 on the Securities Market, and the provisions of General Rule No. 30 of the Superintendence, the following essential facts are reported: • On January 8, 2013, it was reported that Empresa Nacional de Electricidad SA (Endesa Chile), has accepted the terms of the final and definitive amount to compensate for the losses related to the effects of the earthquake on February 27, 2010 reported by the liquidator Becket SA Insurance Adjusters in a letter dated on January 7, 2013. Such terms have also been accepted by all the insurance companies. Regarding the facilities of the Bocamina 1 power plant owned by Endesa Chile, a compensation agreement has been reached for U.S. $ 85,665,673 for loss of profits and damages (U.S. $ 66,165,673 and U.S. $ 19,500,000 respectively) following the aforementioned earthquake. Our subsidiary has received cash advances due to the event in the amount of U.S. $ 42,665,673. Regarding Bocamina 2, also owned by Endesa Chile, the agreement involves compensations in the amount of U.S. $ 112,999,528, of which U.S. $ 2,953,306 correspond to property damage and U.S. $ 110,046,222 correspond to lost profits as a result of the incident (ALOP). As of December 31, 2012, our subsidiary Endesa Chile registered an amount of U.S. $ 114,711,895 in operating income as compensation for lost profits. This represents a profit for Enersis in the amount of U.S. $ 55,043,356 after taxes and minorities. • On January 22, 2013, it was reported that in connection with the communication of material fact dated December 21, 2012, which accounts for the Capital Increase approved at the Extraordinary Shareholder Meeting held on December 20, 2012, Enersis SA (“Enersis”) has taken steps in order to study the placement of shares in Chile and in foreign markets through an ADR program (as such term is defined in the communication), with the following investment banks / underwriters: J.P. Morgan, BTG Pactual / Celfin, Bank of America Merril Lynch, Banchile, BBVA, Crédit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Larraín Vial, Morgan Stanley, Santander, Bank of Tokyo, Mitsubishi UFJ Securities, BNP Paribas y Crédit Agricole. 165 It is stated that Enersis SA will provide the information • On February 15, 2013, it is reported that in the Special required under section II. 1b) of the communication, as Board Meeting of Enersis held on this date, the following soon as it becomes aware of it. agreements were reached: Nothing of what was informed by means of this essential 1) To report the registration of shares for payment in fact constitutes an offer to sell securities in the United the register of securities of the superintendence of States of America. The securities may not be offered securities and insurance under No. 971 dated February or sold in the United States without registration or 13, 2013. exemption from registration. Enersis intends to register 2) Initiate the preferential subscription period for securities for public sale in the United States of America in 16.441.606.297 new payment shares issued by the connection with its announced Capital Increase. Company due to the Capital Increase approved at the Extraordinary Shareholder Meeting of the Company Any public offering of securities to be made in the United held on December 20, 2012 (the “Meeting”) beginning States will be made by means of a prospectus that may be on February 25, 2013 and ending on March 26, 2013. obtained from the issuer or the depositary of securities for the Board agreed to approve in due course how the sale and will contain detailed information about Enersis shares which are not subscribed during the period and its administration, as well as its financial statements. of preferent option will be offered, as well as those corresponding to fractioning of shares resulting from • On January 29, 2013, our subsidiary Endesa Chile reported the apportionment among shareholders in a bid period that under the international arbitration proceedings related remaining under the terms and conditions set forth by to the differences between the parties of the turnkey the Board. Relevant publications were made in the El construction contract of the Bocamina II Thermal Power Mercurio newspaper. Plant owned by Endesa Chile and was initiated by a request 3) The placement price at which such shares will be for arbitration filed by our Company in October 2012 at preferentially offered to shareholders of the Company the International Chamber of Commerce in Paris (CII), during the preferent option period is the sum of $ 173 Endesa Chile has been notified by the Technical Secretariat per share, which corresponds to the price set by the of the International Chamber of Commerce in Paris that Board. the Consortium SES-TECNIMONT separately proceeded 4) Approval of documents called Form F-3, Prospectus to respond to the request for arbitration of Endesa Chile Supplement, F-6 and 8-A and its entry into the containing their claims and along with that, have sued Securities and Exchange Commission (SEC) in the United Endesa Chile reconvenctionally in the amount of U.S. $ States of America for the preferred offering on the New MM1.294, in the case of Tecnimont and U.S. $ MM15, in the York Stock Exchange. The Board has delegated to the case of SES. General Manager of the Company to determine the onset of the preferential offering period in the United Our subsidiary, Endesa Chile believes that the States once all the necessary arrangements for this have counterclaims are unsubstantiated, therefore our been perfected. Company will defend its position in this arbitration proceeding, believing that it has the law and the facts in • On February 25, 2013, the following is reported as an this dispute and that this has justified the collection of essential matter of fact: bank guarantee bonds due to serious breaches by the Consortium. That the necessary documentation has been registered before the Securities and Exchange Commission (SEC) In consideration of the foregoing, and bearing in mind of the United States to begin the subscription period the lack of grounds for the claims of the plaintiffs of the Capital Increase approved by the Extraordinary counterclaims, to date there is no recorded financial Shareholder Meeting of the Company on 20 December impact on the assets, liabilities or results of Enersis SA or 2012 in the market its subsidiary Endesa Chile. 166 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSIS The documents entered before the SEC include Form F-3, SA, equivalent to 9,967,630,058 options for a total by which the issuance of these securities is recorded, and acquisition value of $ 32,783,535,261 has been registered. the prospectus supplement to the register as well as other The value paid by Endesa SA to Endesa Latinoamérica SA related documents. Copies of these documents were is equivalent to $ 3.289 per option, value at which the admitted today to the Superintendence of Securities and options were trading at the closing on March 12, 2013. Insurance pursuant to the provisions of Circular No. 1375 of February 12, 1998. This has no financial effect on the assets, liabilities or results of Enersis SA. Citibank, NA, as Depositary Bank for the American Depositary Shares (ADSs) of Enersis. Distributed to holders • On March 21, 2013, the following is reported as an of ADSs (each such ADSs representing 50 ordinary shares) essential matter of fact: rights to subscribe ADSs at a rate of 0.504 per ADS owned by such holders at 17:00 hrs. New York City Time on On today, Endesa, SA (Endesa Spain), comptroller of February 25, 2013. The options about fractions of ADSs Enersis SA, exercised all of the preferential subscription will not be distributed, and any option on fractions will rights that were granted by its subsidiary Endesa be assembled and sold by Citibank, NA and the amount Latinoamérica, SA, through the holding of a share raised will be distributed to holders of ADSs which would subscription agreement with Enersis SA. The contract have been entitled to such fractions. accounts for the subscription of 9,967,630,058 ordinary shares for the ongoing Capital Increase of Enersis SA at The subscription price for each ADS will be U.S. $ 19.19 a value of 173 pesos per share, corresponding to a total per ADS, which equals $ 8,650 Chilean pesos plus an subscription value of 1,724,400,000,034 Chilean pesos, in additional 5% of that amount in order to cover potential legal tender. exchange rate fluctuations, the fee of the Trustee bank, expenses and certain taxes. The subscription period The total subscription value will be paid by Endesa Spain for shares in the United States of America will begin on by transferring all of its social rights in the Southern February 26, 2013 and will end on March 21, 2013 at 14:15 Cone Holdings Ltd. partnership, which were approved hrs. New York City time. as a contribution of noncash property by the Enersis Extraordinary Shareholder Meeting on December 20, Preferred ADS options will trade on the New York Stock 2012. That contribution was valued by that corporate Exchange under the symbol “ENI RT”. The beginning of body in the sum of $ 1.724.400.000.034 indicated above. the transaction is expected on February 26, 2013 and will continue until March 15, 2013. Until the suspension condition which is affecting the said Capital Increase is not verified, the conclusion of that J. P. Morgan, BTG Pactual and BofA Merrill Lynch have contract to subscribe for shares has no financial impact on been hired as Global Coordinators and Joint Bookrunners the assets, liabilities or results of Enersis SA. for the offering. Banchile, BBVA, Credit Suisse, Deutsche Bank Securities, Goldman, Sachs & Co., HSBC, Larrain Vial, • On March 22, 2013, the following is reported as an Morgan Stanley and Santander have been contracted as essential matter of fact: underwriters (“Bookrunners”) and BNP Paribas, Credit Agricole CIB and Mitsubishi UFJ Securities have been On today, Citibank NA, in its capacity as Depositary Bank contracted as Co-Managers. for ADR holders of Enersis SA, has communicated that at the end of the preferred offering in the market of • On March 14, 2013, the following is reported as an the United States of America, which ended on Thursday essential matter of fact: March 21 2013 at 12:15 (Time of the City of New York) preemptive rights for a total of 33,508,834 American On today, the transfer to Endesa Latinoamérica SA, Depositary Shares have been exercised, equal to the controlling shareholder of Enersis SA and holder of 1.675.441.700 ordinary shares for the ongoing Capital 60.62% of the share capital of the Company made to Increase of Enersis SA, with a total subscription value of $ Endesa, SA (Endesa Spain) of all of its options of preferent 624,939,754.10 of the United States of America Dollars. subscription in the ongoing Capital Increase of Enersis 167 Until the suspension condition which is affecting the said 3. Authorize the General Manager, Don Ignacio Capital Increase is not verified, the above subscriptions Antoñanzas Alvear, to report compliance with the ADR lack financial impact on the assets, liabilities or results Condition and to publish the notice of the result to the of Enersis SA. Central Securities Depository and to the Santander Also note that Enersis SA and its subsidiary Empresa Given that the aforementioned Capital Increase Eléctrica de Colina Limitada, dated yesterday formed a operation is ongoing, the financial impact on the company called “INVERSIONES SUDAMÉRICA LIMITADA”, assets, liabilities or results of Enersis SA will be timely based in Santiago de Chile, which will aim to develop and communicated on completion of the said Capital Bank. carry out, at home or abroad, all the investments and / or Increase. businesses, especially investment in the power sector and related industries, for itself or their parties, either directly • On March 27, 2013, it is reported that in the Special Board or through subsidiaries or affiliated companies. The Meeting of the Company held on this date, the following capital of this new subsidiary is the amount of 10,000,000 agreements were adopted: Chilean pesos, which will be contributed and paid in cash by the partners as follows: Enersis SA, 99.99999%, i.e. 1. Make known the result of the placement of the shares 9,999,999 Chilean pesos; and Empresa Eléctrica de Colina of the ongoing Capital Increase during the preferential Limitada, 0.00001%, this is 1 Chilean peso. offer ended on March 26, 2013 at midnight, in which a total of 16.284.562.981 shares were subscribed, a total • On March 25, 2013, it is reported that on the Special Board of 16.441.606.297 shares, which represents a placement Meeting of the Company held on this date, the following of 99.04% of the shares authorized for issuance. agreements were adopted: Consequently, there is a balance of 157.043.316 shares yet to be placed. The amounts shown above include the 1. Declare fulfilled the condition precedent to which is the shares subscribed in the local market and abroad. Capital Increase of the company is subject to, agreed by 2. Making the offer of the remnant 157,043,316 shares, Extraordinary Shareholder Meeting held on December this will be conducted by an auction in the Santiago 20, 2012, in connection with the public offering of Stock Exchange, to be held on Thursday, March 28, 2013 16.441.606.297 payment shares. The fulfillment of the Given the aforementioned Capital Increase operation precedent condition is in line with the terms approved is ongoing, the financial impact on the assets, liabilities by the aforementioned Shareholders. or results of Enersis SA will be timely communicated on Under this condition, all contracts for shares that were completion of the above mentioned Capital Increase subject to subscription and payment by shareholders and / or third parties either in the preferent • On March 27, 2013, the following is reported as an subscription period or the remnant subscription essential matter of fact: period, at least 3,169,224,294 shares so as to allow the Company controller to subscribe and pay 9,967,630,058 That on Thursday March 28, 2013 at 12:30 pm, the auction shares, not exceeding the legal and statutory maximum of 157,043,316 shares of Enersis SA will be held on the concentration limit of 65% of the voting capital of the Santiago Stock Exchange. Those shares were not those Company. which were placed in the preferent subscription period of 2. Approve the text of the notice to be published in the the ongoing Enersis Capital Increase El Mercurio newspaper on April 26, 2013, which will inform the public on the compliance with this precedent The auction will be divided into 15 lots of 10,000,000 condition, as a result of which all share subscription shares each and a lot of 7,043,316 shares. Only ordinary contracts will produce the integrity of its legal effects shares will be offered. No ADRs will be auctioned. and, therefore proceed to the registration of the shares on behalf of the respective holder in the register of The minimum price of the auction will be 178 Chilean shareholders of Enersis and will be regarded as the date pesos per share. of subscription of the shares, the date on which the shareholder or third party has subscribed the contract to subscribe the shares. 168 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSIS • On March 28, 2013, the following is reported as an • On April 16, 2013, Enersis SA reported that at the Ordinary essential matter of fact: Shareholders Meeting held today, a new Board of Directors was appointed for the company for a period of three years, On today, Thursday March 28, 2013 at 12:30 pm via Celfin made up of the following persons: Capital SA Brokers and Merrill Lynch SpA Stock Brokers we proceeded to sell at auction in the Santiago Stock Sr. Pablo Yrarrázaval Valdés Exchange a total of 157,043,316 shares of first issuance of Sr. Borja Prado Eulate Enersis SA at a price of 182.3 Chilean pesos per share. The Sr. Andrea Brentan total amount raised by the auction amounted to a total of Sr. Luigi Ferraris 28,628,996,507 Chilean pesos. Sr. Hernán Somerville Senn Sr. Leonidas Vial Echeverría The above mentioned auction ends the offer of the Sr. Rafael Fernández Morandé remnant of the Enersis Capital Increase which was approved by the extraordinary shareholder meeting on In a board meeting held following the above ordinary December 20, 2012, with a subscription of 100% of the shareholder meeting, Mr. Pablo Yrarrázaval Valdés was total shares placing. elected as Chairman of the board and, Mr. Borja Prado Eulate as Vice Chairman, and as secretary of the Board, Mr. This is the largest Capital Increase conducted in Chile and Domingo Valdés Prieto. positions Enersis SA as the only vehicle for expansion in South America for the Enel-Endesa Group in the field of Also at the aforementioned board meeting the board conventional energy, being given the necessary resources proceeded to the appointment of the Directors Committee to undertake its growth in the region. governed by Law 18,046 of stock trading corporations and the Sarbanes Oxley Act, which was composed of the The Capital Increase has allowed the incorporation of all the Directors: Hernán Somerville Senn, Leonidas Vial Echeverria assets that make up the equity of Cono Sur Participaciones and Rafael Fernández Morandé. In accordance with the S.L, provided by Endesa Spain and brings equity interests provisions of Bulletin No. 1,956 of the Superintendence of the generation, transmission and distribution sectors of Securities and Insurance, reported that the three of Chile, Peru, Colombia, Brazil and Argentina and in turn, aforementioned directors are independent directors. allow to raise the sum of 1,121,458,392,186 Chilean pesos, which includes a premium of placement of shares of Finally, it is communicated that the Board of Enersis has 1,460,502,839 Chilean pesos. appointed director Hernán Somerville Senn as Financial Expert of the Directors Committee. Finally, note that once the periods of Preferential Offer and the Capital Increase Remnant ended, a • On May 16, 2013 and in accordance with the provisions of total of 16,441,606,297 shares, corresponding to Articles 9 and 10 °, second paragraph, of Law 18,045, on the 2,845,858,392,220 Chilean pesos, so which the total capital Securities Market and the provisions of General Rule No. 30 Enersis will amount to 5,669,280,724,381 Chilean pesos has of the Superintendence it is reported as an essential matter been fully subscribed and is in the process of being fully of fact that, on May 15, 2013 in the Republica Argentina paid. Ruling SE No. 250/13 of the Ministry of Energy, Ministry of Federal Planning, Public Investment and Services (the • On April 16, 2013, Enersis SA reported that in the Ordinary “Ruling” ) was published, which authorizes compensation Shareholder Meeting held today, it has been agreed for the debt that our subsidiary Empresa Distribuidora Sur to distribute a minimum mandatory dividend (partly SA (“EDESUR”) recorded regarding income derived from composed of Interim Dividend No. 86), and an additional the implementation of the Program for the Rational Use dividend, amounting to a total of $ 188,675,260,500. of Electric Energy until February 2013, with the credit for it Given that the said Interim Dividend No. 86 has already arising from the recognition that the same Ruling makes of been paid, it shall distribute and pay the remainder of the the Cost Monitoring Mechanism for the six-month periods Final Dividend No. 87, amounting to $ 148,991,647,050, included between May 2007 and February 2013. equivalent to $ 3,03489 per share. 169 Additionally, the aforementioned Ruling instructed the • On July 4, 2013 the merger by absorption has been perfected Compañía Administradora de Mercado Mayorista Eléctrico between Inversiones Sudamérica Limitada (subsidiary at Sociedad Anónima (“CAMMESA”) to issue Liquidations of 99,99999% of Enersis) and Cono Sur Participaciones, S.L.U. Sales with a due date to be defined (the “liquidations”) (100% subsidiary of Enersis), the latter becoming extinct. This for the excess compensation values mentioned and merger has produced all its effects retroactively as of July 1, authorized Cammesa to receive such Liquidations as 2013. part-payment of debts by economic transactions in the Wholesale Electricity Market (“MEM”) and other debts Cono Sur Participaciones, S.L.U. was the corporation by EDESUR maintains with it. Finally, it instructs EDESUR to which Endesa Spain, controller of Enersis, made the payment give the surplus to the Trust consisting of ENRE Ruling corresponding to its shareholding proportion in the Capital No. 347 of November 23, 2012 and its withdrawal of Increase approved by the Enersis Extraordinary Shareholder administrative claims filed by requesting recognition of Meeting dated in December 2012. higher costs in excess of the Cost Monitoring Mechanism stated in the Ruling and the comprehensive rate review. • On November 26, 2013, Enersis SA reported that at its board meeting today, the Board of Enersis SA, agreed by Flat rate, the financial effects of the Ruling on the unanimous vote, to pay on January 31, 2014, an interim consolidated results of Enersis SA are estimated at the dividend of $ 1.42964 per share, charged to the income equivalent of about USD $ 398 million in EBITDA and in statement of 2013, corresponding to 15% of the net approximately the equivalent of $ 327 million in the result profits calculated as of September 30, 2013, in accordance line, Net of Minorities. • On May 29, 2013 and in accordance with the provisions of Articles 9 and 10 °, second paragraph, of Law 18,045, on the Securities Market and the provisions of General with the 2012 Rule No. 30 of the Superintendence it is reported as an By means of Essential Fact submitted on January 31, 2012, essential matter of fact in regular Session of the board Enersis S.A. informs that Enersis S.A. has recorded a provision of directors of Enersis SA held as of May 29, 2013, has to assets of its subsidiaries Empresa Distribuidora Sur S.A., agreed to propose the relevant corporate bodies to their and Central Costanera S.A., whose impact on the results of subsidiaries Inversiones Sudamérica Limitada (99.99999% Enersis S.A. amounted to MM$106,750. Officer) and Cono Sur Participaciones, S.L.U. extinguishing the latter. Cono Sur Participaciones, S.L.U. is the company The above has been included in the Consolidated Financial through which Endesa Spain, controller of Enersis SA, paid Statements as of December 31, 2011, approved by the Board in kind corresponding to its shareholding proportion in of Directors in the meeting held today. If such adjustments the Capital Increase approved by the Extraordinary Enersis has not been recorded, the results of Enersis S.A. would have SA Shareholder meeting on December 20, 2012. been similar to those for year 2010. Also it was authorized, that once the aforementioned On February 2, 2012, the Company informs that the merger by absorption, Enersis SA advanced with the information contained in Essential Fact sent on January acquisition of the minority shareholding of 0.00001% its 31, 2012, disclosing the provisions to assets of subsidiaries subsidiary Empresa Eléctrica de Colina limitada owns in Empresa Distribuidora Sur S.A. (Edesur) and Endesa Inversiones Sudamérica Limitada. Due to this acquisition Costanera S.A. (Central Costanera), recorded and that all Property of Inversiones Sudamérica in Enersis SA, will impacted the results of Enersis S.A. in MM$106,750, is being be gathered at that time, as the direct owner of all the complemented. shares in South America that were contributed by Endesa Spain during the Capital Increase. 170 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSIS With this respect, it is worth mentioning that such amount This will represent a distribution of $ 139,880,862 thousand responds to the effect on Enersis of the following: of the results at December 31, 2011. • A provision for losses recorded as an impairment This modifies the current dividend policy which determined account related to Property, Plant and Equipment of the distribution of a 55% dividend payout of the Edesur totaling $ 69,607 million, net of non-controlling distributable net income of the Company. shareholdings (see note 15 d) vii) of the Consolidated Financial Statements as of December 31, 2011). In the Ordinary Shareholders’ Meeting of Enersis S.A. held on April 26, 2012, the shareholders agreed to distribute a • The reversal of tax credits on taxes paid out by Edesur and minimum mandatory dividend (partially paid by Provisional Endesa Costanera for $ 17,220 million and $ 7,723 million, Dividend No. 84) and an additional dividend, for a total of respectively, net of non-controlling shareholdings. $ 5.74970. Given that the above mentioned Provisional • Finally, a provision for losses recorded as an impairment the remaining amount of the Definitive Dividend No. 85, for $ Dividend No. 84 was already paid, we will distribute and pay account was made on existing goodwill balances in Edesur 4.28410 per share. and Endesa Costanera, amounting to $ 8,931 million and $ 3,269 million, respectively, net of non-controlling On July 13, 2012, Enersis informs that through ENRE shareholdings (see note 14 of the Consolidated Financial Resolution N° 183/2012, dated July 12th 2012, from the Statements as of December 31, 2011). Argentine electric regulatory entity, Mr. Luis Miguel Barletta was designated as supervisor of our Argentine subsidiary, In the case of Edesur, the measures above are attributable Empresa Distribuidora Sur S.A. (Edesur). This designation to the uncertainties generated by the delays in the does not replace the company’s current management, nor recognition of tariff adjustments via the semi-annual Cost does it represent a type of joint management. Monitoring System (MMC, in its Spanish acronym) and the implementation of an Integral Tariff Review (RTI, in its In its meeting held today, July 25, 2012, Enersis S.A.’s Spanish acronym). Board of Directors agreed to summon an Extraordinary Shareholders Meeting to be held on September 13, 2012 With respect to Endesa Costanera, the situation is at 10:30 a.m., at The Marriott Hotel, Av. Kennedy N° 5741, attributable to the difficulties in obtaining adjustments to Las Condes, Santiago, Chile with the purpose to address the revenue sufficient to cover real generation costs, working following issues: capital deficits, due to difficulties in the collection of the system operator’s sales, all of which factors have an impact 1. Increase capital for the amount, equivalent in Chilean on the company’s short-term financial stability. pesos, of US$ 8,020 million or In the amount determined by the Extraordinary Shareholders Meeting, through the On February 29, 2012, the Board of Directors of Enersis S.A., issuance of a certain number of common shares to be unanimously agreed to propose to the Enersis Ordinary determined by the Meeting, to be paid in cash and/or in Shareholders Meeting, to maintain the same dividend kind. The shares to be issued will be nominative, all of payout ratio paid for the previous period; namely, 50% of the same special issuance, without any preference, and the Company’s distributable net income. For this period, without a nominal value. such percentage is equivalent to $ 5.7497 per share, from which the interim dividend of Ch$ 1.46560 per share paid in 2. Approve each and every contribution in kind subject to January 2012 must be deducted. Therefore, the amount to be being capitalized, as well as their respective estimated distributed as a final dividend to shareholders would be Ch$ appraisals carried out by the independent expert 4.2841 per share. appraiser, Mr. Eduardo Walker Hitschfeld, whose report 171 will be made available today to the shareholders on resolution of the ESM at the company’s headquarters, the company’s web site at www.enersis.cl. The report located in Santa Rosa 76, 15 th Floor, Santiago, Chile, fifteen estimates the total value of the contribution in kind in US$ days prior to the Meeting. The complete information will 4,862 million. also be made available on the Company’s web site. 3. Agree on a value or price of issuance for the shares which On August 3, 2012, Enersis S.A. informs that it was notified will correspond to the capital increase that is agreed upon by the Ordinary Official Letter 18,684 issued by the or delegate the determination of such value upon the Superintendence of Securities and Insurance that it must Board of Directors. submit the capital increase operation proposed by the 4. Modify the company’s bylaws in accordance to the to operations among related parties. agreements adopted in connection with the capital increase and authorize the Company’s Management to The company takes note of the administrative interpretation submit a consolidated and updated version of the bylaws. and will evaluate, within the Board of Directors, what should controlling shareholder to Title XVI of Law N°18,046, related be done, as a result of this new situation. 5. Adopt all necessary agreements that may be needed and convenient for the full execution of the respective Notwithstanding the above, it is important to reaffirm decisions adopted at the Meeting including, but not Enersis S. A and its Board of Directors have the conviction limited to, the determination, timing, and procedure that they have acted in good faith, strictly according to for the issuance of shares corresponding to the capital the applicable legislation, highlighting that they had increase, the registration of such shares in the Registry been particularly careful to search for the advice with due of Securities, the period for issuance, subscription anticipation, consulting with, and obtaining from, prestigious and payment of the shares; the establishment of the local legal firms legal reports that, categorically confirmed procedure for the issuance of any follow on shares left that they were proceeding correctly. over after a preemptive rights’ issuance; or the full empowerment of the Board of Directors for each of these The Board of Directors of Enersis S.A., in its Extraordinary items, or for the adoption of any other agreement that Session held on August 9, 2012, has decided the following: may be needed to supplement or grant compliance to whatever may be resolved at the Meeting, or to satisfy 1. Notwithstanding its opposition with the legal arguments any legal, regulatory, or administrative requirement of the contained in Ordinary Official Letter 18,684 issued by the Superintendence of Securities and Insurance, the Chilean Superintendence of Securities and Insurance on August Tax Authority or, in general, any other publicly competent 3, 2012, the Board declared its intention to continue with entity, and delegating powers for such purposes on the the capital increase process which had been proposed by Chief Executive Officer, the Deputy Chief Executive Officer the controlling shareholder, supplementing such process and the Company’s Counsel so that any of them, acting with procedures that may be deemed appropriate for the on an individual manner, may carry out all the actions and purpose of compliance with the dispositions contained in legal steps that may be required or convenient to fully Title XVI of the Corporations’ Act. bring about what has been hereby described. 6. Information on all agreements relating to related party summons to an Extraordinary Shareholders’ Meeting operations referred to in Title XII of Law 18,046 and any which had been planned for September 13, 2012, until others that may have been subsequent to those informed such date as may be determined opportunely. 2. As a consequence, the Board decided to postpone the in the last Extraordinary Shareholders Meeting, if any. Shareholders may obtain a copy of all the documentation 22, 2012, with the purpose of adopting the decisions that that explains and backs the items submitted for the may be deemed appropriate in compliance with these 3. Finally, the Board decided to summon a session for August referenced procedures. 172 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSISThe Board of Directors of Enersis S.A. (the “Company”) in We also inform that the Directors Committee is searching for its Ordinary Meeting held August 31, 2012, has decided an independent appraiser in compliance with article 147 of the following regarding the capital increase in place (the the LSA. operation): The Directors Committee of Enersis S.A. in its extraordinary 1. Inform that the since Directors Pablo Yrarrázaval Valdés meeting held September 7, 2012, decided to engage Claro (Chairman), Andrea Brentan (Vice chairman), Rafael y Asociados Ltda. as independent appraiser in connection Miranda Robredo, Hernán Somerville Senn, Leónidas Vial with the capital increase, based on the firm’s independence, Echeverría and Eugenio Tironi Barrios, had been elected absence of conflicts of interest, and technical and with the votes of the controlling shareholder of the professional competence. The above in compliance with the Company had declared having interests in the operation in formalities established by Title XVI of the Corporations Law terms of Article 147 of the Corporations Law, considering (LSA) the dispositions of the Memorandum N° 21,001, issued August 29m 2012 by the SVS. On September 20, 2012, the controlling shareholder, Endesa S.A. (Spain) has disclosed, as a Significant Event the attached 2. Inform that the Chief Executive Officer, Mr. Ignacio presentation, in Spanish and in English. A copy of such Antoñanzas Alvear, for having a position in Endesa presentations are also available on the Endesa, S.A. website Latinoamérica, S.A., controlling shareholder of the (www.endesa.es) and will soon be available on Enersis S.A. Company, has declared that he also has interests in the website (www.enersis.cl). operation in terms of Article 147 of the Corporations Law. Therefore, the Board defined the parameters required for On October 24, 2012 the Company informed that the Enersis the Chief Executive Officer to be able to act with respect Directors’ Committee officially received in its extraordinary to the operation. session officially received the report from Claro y Asociados, independent appraisers designated by the aforementioned 3. Inform that the Board has agreed to continue with the committee on September 7 th in relation to the Enersis’ referred operation and that in order to do so has begun proposed capital increase operation. the process of seeking an independent consultant for purposes of the provisions in article 147 of the The Company also informs that Enersis’ Board of Directors, at Corporations Law, regardless of what is to be resolved by its extraordinary meeting formally received the report from the Directors Committee. IM Trust, independent appraisers designated by the Board on September 5 th in relation to the capital increase operation 4. Inform that the Board is aware of the letter received in progress. by the controlling shareholder of the Company by means of which it confirms its interest In continuing In accordance with legal requirements, these reports the capital increase process proposed and requests refer to the conditions of the in progress capital increase calling, when appropriate, a shareholder meeting, operation, to its effects and potential impact on Enersis, and taking into consideration the dispositions of Title XVI of to additional issues subject to evaluation which have been the Corporations Law and in such terms and with the expressly raised by the Board of Directors, the Directors’ anticipation necessary for all Enersis S.A. shareholders, Committee, and by its members. including ADR holders, to participate in such Meeting. As of this date, copies of these reports will be at the The Board of Directors of Enersis S.A., in its extraordinary shareholders’ disposal at Enersis’ headquarters, and on the meeting held September 5, 2012, has decided to contract company’s website at www.enersis.cl. IM Trust, as independent appraiser of the capital increase, due to its high technical and professional competence These reports are added to the report of Mr. Eduardo Walker and its renowned prestige on these matters as well as H., which is already in the above-mentioned website. its independence, in compliance with Title XVI of the Corporations Law (LSA). 173 On October 30, 2012, the Company informs that at its The Board of Directors of Enersis stated during its session extraordinary meeting which began yesterday, and ended held October 31, 2012, that Endesa’s proposal contributes to early this morning, the Enersis Directors’ Committee officially the best interest of Enersis and that a future board meeting, issued its report in connection with the capital increase will adopt the measures deemed appropriate to protect such operation of Enersis S.A. in progress, and in compliance with best interests of Enersis and of those who would participate the norms set forth in article 50 bis of the Corporations Law. in the aforementioned capital increase. As of this date, copies of this report is at the shareholders’ On November 6, 2012, the company informs that at its disposal at Enersis’ headquarters, located in Santa Rosa meeting held today, the Enersis Board of Directors agreed 76, 15 th Floor, Santiago, Chile (Investor Relations and Risk to summon an Extraordinary Shareholders Meeting in Department), and on the company’s website at www.enersis. order to give an announcement about the capital increase cl. in progress, in the same terms that was proposed by our parent company Endesa, S.A. (“Endesa España”) as a single On October 31, 2012 the company informs that Enersis’ operation. In such meeting, shareholders would be informed Directors have officially delivered, within the deadline about other subjects not related to the capital increase. prescribed by the Corporations Law, their individual opinions Such Extraordinary Shareholders Meeting will be held on for the purposes of provisions in numbers 5 and 6 of article December 20, 2012, at 12:30 p.m. (Santiago time), in the “Las 147 of the Corporations Law, in connection with the capital Américas” room of the Intercontinental Hotel, located in increase operation in progress. Vitacura Avenue 2885, Las Condes, Santiago. As of this date, a copy of the above mentioned opinions The issues that will be submitted to the knowledge and will be at the shareholders’ disposal at the company’s decision of the ESM are the following, which may be headquarters, located in Santa Rosa 76, 15 th Floor, discussed in the order determined by the Extraordinary Santiago, (Investor Relations and Risk Department), and on Shareholders Meeting, therefore the agreements to be the company’s website at www.enersis.cl. adopted will be duly consistent: On October 31, 2012 the company informs that Enersis S.A 1. Approve, in accordance with the terms of Title XVI of Law has received a letter from Endesa S.A. (Endesa Spain or 18,046 of the Chilean Companies Act (“LSA”, in its Spanish Endesa) dated October 30, 2012, presenting a conditionality acronym), the related parties transaction, which consists proposal regarding the Enersis’ capital increase ongoing of the capital increase described in the following points of process. The letter is attached to this form. this notification, taking into consideration the information Through this letter, Endesa formally requests to Enersis’ Company’s headquarters and on the Company’s website: that for this effect is available to shareholders at the Extraordinary Shareholder Meeting, which will address to www.enersis.cl. the capital increase, that the subscription and payment of the issued shares as a result of the operation be subject 2. Increase the issued capital by an amount in Chilean Pesos, to a conditional clause consisting in that those minority the legal currency of Chile, which will not be lower than shareholders subscribe and pay, either in one or more US$ 5,915 million nor higher than US$ 6,555 million at preemptive rights’ subscription periods a minimum number an exchange rate of Ch$ 482.29 per US Dollar, or by the of shares that would allow Endesa to subscribe at least its amount that the Extraordinary Shareholder Meeting right to shares without exceeding the aforementioned legal determines. This capital increase will be accomplished and by-law 65% threshold of shares issued with voting rights. via the issuance of the number of shares that will be If the total number of shares subscribed and paid implies that determined for this effect. All the shares that will be Endesa exceeds such limit, the condition shall automatically issued will be nominative and ordinary from a single be deemed not satisfied and the subscription contracts of special series without preference and without nominal shares would have no legal effect, returning the amounts value, to be called Series B. This Series B will have exactly delivered for the shares to the subscribers. the same rights as the shares already issued, with the only 174 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSISone exception of their exchange rights. Series B will be 6. Approve that all the share subscription contracts are created with the single purpose of differentiating these subject to the fulfillment of a conditional clause whereby new shares from those already issued, since all of the the interested parties should subscribe and pay, whether latter are governed by the Exchange Convention agreed during the preemptive subscription period or during to on September 24, 2008 between Enersis S.A. (the the remaining subscription period, at least a quantity “Company”), Citibank N.A. and the Chilean Central Bank. of shares that makes it possible for the parent company Endesa España to subscribe and pay for the total amount 3. Approve those non-monetary contributions that may of shares that corresponds to it in accordance with be capitalized and their respective contribution values, the pro-rata, without exceeding the legal and by-laws submitting to discussion for the effects of articles 15 threshold of 65% of the outstanding issued shares with and 67 No. 6 of the LSA the estimations included in the voting rights. In the event that the total amount of independent appraisal reports issued by Mr. Eduardo shares subscribed and paid implied that Endesa España Walker Hitschfeld,, by IM Trust and by Claro y Asociados. exceeded this threshold, the clause would be understood These reports are available to shareholders on the automatically failed and all the share subscription Company’s website: www.enersis.cl and at the Company’s contracts would not produce any legal effect and would headquarters. Therefore, the shares that are issued as be returned to the subscribers their amounts. part of the capital increase will be paid in cash and with the contribution of ownership of all the equity interests 7. Approve the use of proceeds arising from the capital of Cono Sur Participaciones S.L., a company that will increase. group together the shares detailed in the aforementioned reports. 8. Amend articles fifth permanent and second transitional of the Company’s by-laws according to the agreements 4. Agree on a subscription’s price of the shares that are adopted in the present Shareholders Meeting on issued or establish a formula and, in the latter case, the capital increase and to authorize the Company’s delegate the final decision about such price, to the Board management to provide a consolidated and updated text of Directors, as long as the subscription starts within the of by-laws. 180 days following the date of the Meeting, in accordance with article 23 of the Corporations Rule. Bearing in mind 9. Agree on those other aspects of the described capital the resulting subscription’s price, the Board of Directors increase operation that the Shareholders Meeting deem must offer the quantity of shares corresponding to the the case to approve, being accessories or functional to number of shares that is strictly necessary so that, in the aforementioned operation. relation to such price, the amount of the capital increase is obtained. Information will be made available about 10. Adopt all necessary agreements conducive and the treatment that will be given to the issuing and convenient for the development and implementation subscription cost of the shares issued, as well as the of the respective decisions adopted by the Meeting, amount of the shares issued. including, but not limited to determine the form, time and method of subscription of shares for the capital 5. Establish that the first Instance of the share subscription increase; registration of the issue of shares in the offer must be made within the preemptive subscription Securities Registry; term issue, subscription and payment period established in article 25 of the LSA, and the of shares; establish the procedure for the subscription of remaining shares not subscribed within that period must the remaining shares that are not subscribed within the be offered in a remaining subscription period, at values preemptive subscription period; or broadly empower not lower, nor in more advantageous conditions, than the Board of Directors to all these effects, as well as to those offered in the preemptive subscription period. enable it to take any agreements required to complete Additionally, agree on the deadlines within which the or comply with decisions reached by the Meeting, or to shares must be issued, subscribed and paid. meet any legal, regulatory or administrative provision 175 or requirement of the Superintendence of Securities and On November 6, 2012, the Company informs that the Board of Insurance, the Securities and Exchange Commission of Directors of Enersis S.A. agreed on several matters of interest the United States of America, Internal Revenue Service, to shareholders with respect to the capital increase operation or in general, any other public authority, authorizing to proposed by the controlling shareholder Endesa, S.A. (“Endesa the CEO, the Deputy CEO and Attorney of the Company España”). to any one individual acting they make all the measures, proceedings and legal acts which are necessary or First of all, the Board gave Its opinion in terms of the use of convenient to carry out the aforementioned. proceeds, indicating that funds obtained by the Company, If the capital increase operation in progress was consummated, 11. Ratify the Third Private Rating Agency Designated by the would be mainly used for the following: purchase shareholdings Board of Directors of the Company. in companies that Enersis S.A. already consolidates, and 12. The following information not related to the capital S.A. currently operates, that contribute to the best interest acquisitions in the region and in activities in which Enersis increase: of the Company because they add value and allow taking advantage of market opportunities. The above mentioned, 12.1. Request from Public Company Accounting Oversight notwithstanding that the Board must approve each and every Board (PCAOB) Of the United States of America to the one of the analyzed operations, which must be evaluated external auditors of the Company Ernst & Young. individually, specifically and with detail according to the administration powers assigned to the Board. 12.2. Agreements on operations with related parties governed by Title XVI of the LSA, adopted after the Also, the Company’s Board of Directors approved Endesa Spain’ last Ordinary Shareholders’ Meeting and other Board’s s contribution in kind of its shareholdings described by the agreements that must be reported. independent reports issued by the experts Eduardo Walker Hitschfeld and the evaluators IM Trust and Claro y Asociados None of the aforementioned propositions prevent the ESM, and stated that the value of such contribution in kind should in its full powers, from accepting, rejecting, modifying them fall within a range not lower than US$ 3,586 million and not or from agreeing to something different, as the case may be. higher than US$ 3,974 million or in the amount equivalent in pesos, legal currency, that finally is determined by the The shareholders are informed that the Board of Directors Extraordinary Shareholders Meeting. The Board of Directors has agreed that the qualification of Powers of Attorney will officially noted that with this approval, the dispositions of take place on December 17, 18 and 19, 2012 at the Company’s article 14 Bis of the by-laws were being fulfilled, and that, by headquarters, located at Santa Rosa 76, Downtown Santiago, no means, could this be considered an opinion within the terms from 9:30 to 12:30 and from 15:30 to 18:00 (Santiago time), of Title XVI of the Corporations Law 18,046, and therefore has and on the same day as the ESM, between 11:30 and 12:30, no relation with what finally will be resolved by Extraordinary at the same place as the meeting will be held. The day of the Shareholders Meeting that will express its opinion with respect ESM, the Powers of Attorney will only be received until 12:30 to the capital increase in compliance with the dispositions of p.m., when the reception of these will be closed; therefore, such Title and articles 15 and 67 of the Corporations Law. The only Powers of Attorney received before that time will Board noted that such value range was approved by six of the qualify. seven members of such corporate body, complying with the special quorum established by article 14 Bis, which requires the The shareholders may obtain a complete copy of the approval of at least two thirds of the Board of Directors, and, documents that explain and detail the matters that are considering that the arguments to support such decision were submitted for the information and decisions of the ESM at contained in the respective individual opinions that each of the the Company’s headquarters, located at Santa Rosa 76, 15 concurring Directors issues with respect to this operation and th Floor (Investments and Risk Department), Santiago, Chile, that are available to the Company shareholders in the respective fifteen days before the meeting is held, as well as at the Website and at the main office. Company’s website. 176 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSISAdditionally, with respect to the Significant Event dated On November 12, 2012 the Company informs that on October 31, 2012, regarding the capital increase in progress, November 21, 2012 the Company received a communication the Board of Enersis S.A. has proceeded to analyze the from pension fund administration companies AFP Habitat different measures to safeguard the Company’s equity, and S.A., AFP Planvital S.A., AFP Provida S.A., AFP Capital of those that subscribe the capital increase, which will be duly S.A., AFP Cuprum S.A. and AFP Modelo S.A., all of them published and brought to the knowledge of the market and shareholders of Enersis S.A. altogether representing the shareholders. 13.63% of the Company’s voting shares. Through this communication, (which is enclosed to this letter), the above- Finally, the Board agreed to request that Endesa España mentioned shareholders request the summoning of an give its opinion with respect to the following matters, additional Extraordinary Shareholders’ Meeting of Enersis regarding the capital Increase in progress: (i) offer certain S.A. to be held before the Extraordinary Shareholders’ representations warranties with respect to Piura, Yacylec and Meeting already summoned by the Board of Directors for Central Dock-Sud; (ii) Commitment In terms of Enersis S.A. December 20, 2012 at 12: 30 hours. being the only investment vehicle of the Enel Group in South America, with the exception of the activities currently being Likewise, the Company informed that given the request developed through Enel Green Power and those that may submitted by the above-indicated shareholders, and developed in the future by the latter In the renewable energy in accordance with the provisions of article 58 N°3 of field; and (iii) the commitment to protect Enersis, regarding Corporations Law 18,046, the Enersis Board of Directors in tax contingencies derived from the structure of the and (iv) an extraordinary meeting held this afternoon, agreed to maintain the commitment to not promote an extraordinary summon to an Extraordinary Shareholders’ Meeting “to be distribution of dividends as a consequence of the capital duly apprised about the reasons of the Board of Directors increase in progress. and of each one of its members, with regard to the decision of summoning to an Extraordinary Shareholders’ Meeting On November 8, the Company informs that it has received to approve a capital increase payable in kind and in cash, as additional information from the controlling Shareholder, proposed by the controlling shareholder Endesa S.A. (Spain) Endesa S.A. regarding its position with respect to certain and, in particular, to inform the following: specific aspects of the referred Capital Increase proposed. a) which will be the proposal of the Board of Directors or of On November 9, the Company informs that the controlling each of its members with respect to the exchange ratio Shareholder, Endesa S.A. has begun an investor road show in between the Enersis’ new shares representing the capital connection with the proposed Enersis S.A. capital increase. increase and the package of assets to be contributed by Attached you will find a copy of the presentation, in English the controlling shareholder, as well as the reasons that and Spanish, disclosed as part of such road show. Copies of would justify the convenience of such proposals, both for these presentations are also available on Endesa, S.A.’s web the Company and for all its shareholders, as well as the page (www.endesa.es) and will be soon available on Enersis manner in which such proposals would allow compliance S.A.’s web page (www.enersis.cl) with the provisions of article 30 of Law No 18,046; On November 12, the Company informs that the controlling b) the reasons for which Board Members have had to Shareholder, Endesa S.A. has submitted a Significant Event propose a floor or minimum value of the assets with which to the National Securities Market Commission of Spain, the controlling shareholder intends to contribute to the attaching an enlarged presentation for its investor road show capital increase; in connection with the proposed capital increase in Enersis. Attached to this letter is a copy of this presentation in English c) the reasons of the Board of Directors and its members that and Spanish. Copies of these presentations are also available would justify the convenience of materializing a capital on Endesa, S.A.’s web page (www.endesa.es) and will be increase that would exceed the amount of assets that soon available on Enersis S.A.’s web page (www.enersis.cl) the controlling shareholder intends to contribute to the Company; and, 177 d) to inform and explain the provisions of the ADR Deposit Finally, attached herewith is a copy of Enersis S.A.’s Board Agreement on the use of non-voting ADRs and the of Directors response to Official Letter No. 28,292 dated manner in which to exercise the votes of the referred ADR December 3, 2012, issued by the Superintendence of holders. Securities and Insurance, regarding the enquiries made by the AFPs and the SVS itself. Such Extraordinary Shareholders’ Meeting will be held on December 14, 2012 at 12:30 p.m. at the Enersis On December 18, 2012, the Company informs that the Group’ Stadium located in Carlos Medina Street No 858, Directors’ Committee has reviewed and by unanimity of its Independencia, Santiago. members, has referred to the Board of Directors without observations the subscription contract of shares to be held On November 29, 2012 the Company informs that the Board between Enersis S.A. and its controller, Endesa, S.A., for of Directors of Enersis S.A., in a meeting held yesterday, has its distribution to the shareholders. The contract will be unanimously agreed to distribute on January 25, 2013, an submitted for approval at the Extraordinary Shareholders’ interim dividend of Ch$1.21538 per share attributable to Meeting which shall decide upon the capital increase of the fiscal period of 2012, corresponding to 15% of liquid net Enersis S.A., to be held on December 20 this year. The draft income as of September 30, 2012, in accordance with the of such contract, without its descriptive exhibits, will be Company’s dividend policy. available for shareholders consideration in the Investments and Risks Department of Enersis S.A., located at Santa Rosa On December 7, 2012 the Company informs that it has 76, floor 15, Santiago, and in the company’s website: www. received a copy of the press release issued by Endesa, S.A., enersis.cl. relating to the capital increase of Enersis S.A. On December 13, 2012 the Company informs that the Board the Citibank Depositary has notified that it will not grant the of Directors of the Company has decided to propose to the Chairman of the Board the discretionary vote of those ADR Extraordinary Shareholders’ Meeting summoned to make holders that have not expressed their intention to voted. In addition, the Company informs as a significant event that a decision on the ongoing capital increase of Enersis S.A, to be held on December 20, of the present year, a range for the On December 18, 2012, the Company informs that on subscription price of new shares from Ch$ 160 to Ch$ 187 per December 20, 2012 the Extraordinary Shareholders´ Meeting share. was held which decided upon the capital increase of Enersis S.A. In such Meeting, a very large majority, almost 86% In addition, the Board, by the unanimity of its members, of all shareholders present with voting rights, equivalent agreed to declare that the capital increase amount, the to 81.94% of the total shares with voting rights of the value of the assets and the maximum number of shares Company, approved the capital increase with the following to be issued contained in the press releases published characteristics: on December 7 by Endesa, S.A. and five Pension Fund Administration companies: AFP Capital S.A., AFP Cuprum 1) Maximum amount of the capital increase: Ch$ S.A., AFP Habitat S.A., AFP Plan Vital S.A. and AFP Provida 2,844,397,889,381, divided into 16,441,606,297 ordinary S.A., are within the parameters referred to in the reports nominative payment shares of the same series, with no issued by the independent evaluators and by the Company’s preemptive rights and no par value. Directors’ Committee. The Board of Directors considers that the terms contained in the above mentioned press releases 2) Value of non-cash contributions to be capitalized: The are consistent with the approaches made to date by the total equity of Cono Sur, Company that will concentrate Board and the Directors’ Committee. the shares that are identified in the reports that have 178 SIGNIFICANT EVENTS OF THE ENTITY 2013 ANNUAL REPORT ENERSISbeen made available to the shareholders and that would be contributed by Endesa to Enersis S.A., will amount to Ch$ 1,724,400,000,034 corresponding to 9,967,630,058 shares of Enersis S.A. at a price of Ch$ 173 per share. This represents a reference value of US$ 3,634,754,015.5 at an observed exchange rate of Ch$ 474.42 per dollar of the United States of America as of December 20, 2012. 3) Placement share price: A fixed price of Ch$173 for every payment share to be issued as a result of the capital increase. Shareholders approved the terms of the capital increase described above, as a related party transaction within market conditions and in the best interest of the Company, thus complying with the requirements of Article 147 of Law 18,046. Additionally, the commitments of the controlling shareholder, which had been previously reported through significant event dated November 8, were voted, ratified and approved. 179 Identification of subsidiaries and associate companies 180 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISAGRÍCOLA DE CAMEROS Name Sociedad Agrícola de Cameros Limitada Type of entity Limited partnership TAX ID 77,047,280-6 Address Camino Polpaico a Til-Til, S/N Til-Til Phone number (56 2) 2378 4700 Subscribed and paid capital (Th$) 5,738,046 Corporate purpose The exploitation of agricultural land Core business Real estate and agriculture Main executives Hugo Ayala Espinoza CEO Enersis stake (direct and indirect) 57.50% - No variation. AGUAS SANTIAGO PONIENTE Name Aguas Santiago Poniente S.A. Type of entity Private company, subject to the regulations for publicly-held companies TAX ID 96,773,290-7 Address Boulevard Aeropuerto Norte 9623, local 4, Parque Industrial Enea, Pudahuel Phone number (56 2) 2601 0601 Subscribed and paid capital (Th$) 6,601,121 Corporate purpose Exclusively to establish, construct and exploit public utilities for water production and distribution; sewage collection, treatment and disposal, and other functions expressly authorized by Law 382 of 1988 and its amendments. Core business Water and related services. Board of Directors Víctor M. Jarpa Riveros Andrés Salas Estrades Luis F. Edwards Mery José M. Guzmán Nieto Fernando Gardeweg Ried Main executives Roberto Alcalde Eyzaguirre CEO Enersis stake (direct and indirect) 55.00% - No variation. AMPLA ENERGÍA Name Ampla Energia e Serviços S.A. Type of entity Publicly held Limited Liability Company Address Praça Leoni Ramos, N° 01, São Domingos, Niteroi, Río de Janeiro, Brasil Phone number (55 21) 2613 7000 Subscribed and paid capital (Th$) 288.837.437 Corporate purpose Study, plan, project, build and explore electricity production, transmission, transformation, distribution and sale systems, and provide related services that have been or may be conceded; carry out research in the energy sector, participate in regional , national or international organizations dedicated to the planning, operation, technical Exchange and business development related to the electricity industry and participate as a shareholder in other companies in the energy sector, even within the framework of Brazil´s privatization program. Core business Distribution of electricity. Board of Directors Mario Fernando de Melo Santos (Chairman) Antonio Basilio Pires e Albuquerque (ViceChairman) Nelson Ribas Visconti Luciano Galasso Samaria Ramón Francisco Castañeda Ponce José Távora Batista José Alves de Mello Franco Cristián Fierro Montes Otacilo de Souza Junior Main executives Marcelo Llévenes Rebolledo Director Presidente José Alves de Mello Franco Bruno Golebiovsky Carlos Ewandro Naegele Moreira Claudio Rivera Moya Déborah Meirelles Rosa Brasil Teobaldo Jose Cavalcante Leal Janaina Savino Vilella Carr Enersis stake (direct and indirect) 91.63 % Proportion of Enersis assets de Enersis 1.92% ARA – INGENDESA Name Consorcio Ara – Ingendesa Limitada Type of entity Limited partnership Tax ID 77,625,850-4 Address Santa Rosa 76, Santiago, Chile. Phone number (562) 2630 9000 Corporate purpose Engineering services supply, including the projection, planning and implementation of engineering studies and projects, advice and consultancy, assistance and technical supply and management information, inspection and development of projects and works. Also, for itself or others, all types of projects, set up the site, start up, all establishments, industrial or not, commercializing for it or others, the goods and services produced. Core business Engineering services. Subscribed and paid capital M$500 Attorneys-in-fact Alejandro Santolaya de Pablo Juan Benabarre Benaiges Attorneys-in-fact Alternate Daniel Barría Cristián Araneda Valdivieso Fernando Armijo Scotti Nelson Hernández Pérez Enersis stake (direct and indirect) 29.99%- No variation. ATACAMA FINANCE Name Atacama Finance Co. Type of entity Exempt company Address Caledonian House P.O. Box 265 G, George Town, Grand Cayman, Cayman Islands 181 Phone number (562) 2630 9000 Subscribed and paid capital (Th$) 3,305,043 Corporate purpose Money borrowing in the financial market through loans or bonds or other instruments issuance, and cash loans to other companies, particularly those related to the Atacama project. Core business Investments. Board of Directors Horacio Reyser Ingrid Morales Ávila (International Finance, Enersis S.A.) Gonzalo Alende Serra Eduardo Escaffi Johnson (CFO Enersis S.A.) Ramiro Alfonsín Balza Carlos Martín Vergara Claudio Iglesis Guillard Juan Eduardo Vásquez Alternate Directors Sebastián Fernández Cox Eduardo Lauer Rodríguez Cristián Morales Jaureguiberry Enrique Donoso Moscoso Main executives Jorge Andrés Taboada Rodriguez CEO Enersis stake (direct and indirect) 30.59% - No variation. AYSÉN ENERGÍA Enersis stake (direct and indirect) 30.75% AYSÉN TRANSMISIÓN Name Aysén Transmisión S.A. Type of entity Private company recorded at the Securities Registry of the SVS TAX ID 76,041,891-9 Address Miraflores 383, Of. 1302, Santiago, Chile Phone number (562) 2713 5000 Subscribed and paid capital (Th$) 22,368 Corporate purpose Develop, and alternatively or additionally manage, the electricity transmission systems required by the hydroelectric generation project that Hidroaysén is planning to build in the 11th Region of Aysén, del general Carlos Ibáñez del Campo. In order to do so, the following activities are Included in its corporate purpose: a) the design, development, construction, operation, ownership, maintenance and exploitation of electricity transmission systems, b) electricity transportation, and c) procurement of services related to Its corporate purpose Core business Electricity transmission Board of Directors Joaquín Galindo Vélez (Chairman) Juan Benabarre Benaiges Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Name Aysén Energía S.A. Type of entity Private company. TAX ID 76,091,595-5 Address Miraflores 383, Of. 1302, Santiago, Chile Phone number (562) 2713 5000 Subscribed and paid capital (Th$) 4,900 The purposes of this company are the following: I.-Comply with obligations derived from the Free- Market Competition Tribunal (TDLC in its Spanish acronym). II.-Fulfill Centrales Hidroeléctricas de Aysén S.A. commitments with the community of the XI Region, Aysén, del General Carlos Ibáñez del Campo, within the framework of the development of the Aysen Hydroelectric Project, to provide such region with a supply of electricity at a cost below the current one, by developing, financing, ownership and exploitation of electricity generation and transmission projects in the region. In order to do so, the company may develop, among others, the following activities: a) the generation of electricity by using any generation means, its procurement and commercialization, b) electricity transportation, and c) procurement of services related to its corporate purpose, d) request, obtain or acquire and use the concessions, rights and permits that may be required. Core business Electricity generation (project) Board of Directors Joaquín Galindo Vélez (Chairman) Juan Benabarre Benaiges Ramiro Alfonsín Balza Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Juan Eduardo Vásquez Alternate Directors Carlos Martín Vergara Sebastián Fernández Cox Claudio Iglesis Guillard Eduardo Lauer Rodríguez Cristián Morales Jaureguiberry Enrique Donoso Moscoso Main executives Daniel Fernández Koprich CEO Enersis stake (direct and indirect) 30.59% CELTA Name Compañía Eléctrica Tarapacá S.A. Type of entity Private company TAX ID 96,770,940-9 Address Santa Rosa 76, Santiago, Chile Phone number (562) 2630 9000 Subscribed and paid capital (Th$) 331,770,543 Corporate purpose The company´s main purpose is the production, transport, distribution and supply of electricity, in Chile and internationally, for which it may obtain, acquire and exploit the respective concessions and grants. Core business Electricity Generation. Board of Directors Alejandro García Chacón (Chairman) Alan Fischer Hill Humberto Espejo Paluz Main executives Eduardo Soto Trincado CEO Enersis stake (direct and indirect) 61.49% Proportion of Enersis assets de Enersis 0.17% 182 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISCore business Electricity generation (proyect). Board of Directors Joaquín Galindo Vélez Juan Benabarre Benaiges Ramiro Alfonsín Balza Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Juan Eduardo Vásquez Alternate Directors Carlos Martín Vergara Sebastián Fernández Cox Claudio Iglesis Guillard Eduardo Lauer Rodríguez Cristián Morales Jaureguiberry Enrique Donoso Moscoso Main executives Daniel Fernández Koprich Vicepresidente Ejecutivo Enersis stake (direct and indirect) 30.59% - No variation. CHILECTRA Name Chilectra S.A. Type of entity Publicly held Limited Liability Company CENTRAL DOCK SUD S.A. Name Central Dock Sud S.A. Type of entity Private company maintenance of a thermal power plant named Vuelta Obligado complying with “ Management and Operation of Projects, Increase of Thermal Generation Availability and Generation Compensation Adaptation 2008-2011 Agreement” agreed upon November 25, 2010 by the National State and the signing Generation companies. Address Pasaje Engineer Butty 220 Piso 16 Ciudad Autónoma de Buenos Aires Core business Construction of a thermoelectric power plant named Vuelta Obligado. Board of Directors José Miguel Granged Bruñen Fernando Claudio Antognazza José María Vázquez Eduardo Nitardi Alternate Directors Leonardo Marinaro Juan Carlos Blanco Roberto José Fagan Adrian Salvatore Main executives Eduardo Nitardi CEO Enersis stake (direct and indirect) 16.17% CENTRALES Phone number 4229-1000 Subscribed and paid capital (Th$) M$ 12,272,405 Corporate purpose Electricity Generation. Core business Electricity Generation Board of Directors Martin Mandarano Alejandro Héctor Fernández Rodolfo Berisso José Miguel Granged Bruñen Joaquín Galindo Vélez José María Hidalgo Martín-Mateos Paula María García Kedinger María Inés Justo Borga Pablo Vera Pinto Alternate Directors Juan Carlos Blanco Julián Matías Ferreiro Daniel Gustavo Ciaffone Gerardo Zmijak Sebastián Ortiz Jorge Norberto Peña Fernando Claudio Antognazza Fernando Boggini Rodrigo Quesada Enersis stake (direct and indirect) 39.99% CENTRAL VUELTA OBLIGADO Name Central Vuelta Obligado S.A. Type of entity Private company HIDROELÉCTRICAS DE AYSÉN Name Centrales Hidroeléctricas de Aysén S.A. Type of entity Private company incorporated in Santiago, Chile, recorded in the Securities Registry of the SVS TAX ID 96,800,570-7 Address Santa Rosa 76, piso 8, Santiago, Chile Phone number (56 2) 2675 2000 TAX ID 76,652,400-1 Address In Santiago, Chile, calle Miraflores 383, oficina 1302. In Coyhaique, Chile, calle Baquedano 260. In Cochrane, Chile, calle Teniente Merino 324. Phone number (562) 2713 5000 Subscribed and paid capital (Th$) 168,945,662 Address Av. Thomas Edison 2701, Ciudad Autónoma de Buenos Aires, Argentina Phone number (5411) 4117 1077 Subscribed and paid capital (M$arg) 500 Corporate purpose Generation of electricity and its commercialization by blocks and particularly, equipment purchasing management, construction, operation and Corporate purpose The development, financing, ownership and exploitation of a hydroelectric project, the “Aysén Project”, in the 11th Region of Aysén, which contemplates an estimated capacity of 2,750 MW distributed between five hydroelectric plants. In order to comply with its purpose, the following activities form part of its purposes: a) the production and transport of electricity; b) the supply and sale of electricity to its shareholders; c) the administration, operation and maintenance of hydraulic works, electrical systems and hydroelectric generating plants. Subscribed and paid capital (Th$) 367,928,682 Corporate purpose Exploit in Chile or abroad the distribution and sale of hydraulic, thermal, heat or any kind of electricity, as well as the distribution, transport and sale of fuels of any kind, supplying this energy or fuel directly or through other companies to as many customers possible. Core business Distribution of electricity. Board of Directors Juan María Moreno Mellado Marcelo Llévenes Rebolledo Livio Gallo Hernán Felipe Errázuriz Correa José Luis Marín López-Otero Elena Salgado Méndez Main executives Cristián Fierro Montes CEO Gianluca Caccialupi Deputy CEO Gonzalo Vial Vial Andreas Gebhardt Strobel Daniel Gómez Sagner 183 Enrique Fernández Pérez Ramón Castañeda Ponce Jaime Muñoz Vargas Gloria Salgado Rubilar Héctor Villouta Sanhueza Luciano Galasso Samaria Jean Paul Zalaquett Falaha Enersis stake (direct and indirect) 99.09% - No variation. CHINANGO Name Chinango S.A.C. Type of entity Private company Address Avda. Víctor Andrés Belaúnde 147, Edificio Real 4, piso 7, San Isidro, Lima, Perú Proportion of Enersis assets de Enersis 6.75% Subscribed and paid capital (Th$) 50,042,423 CHILECTRA INVERSUD Name Chilectra Inversud S.A. TAX ID 99,573,910-0 Type of entity Private company Address Santa Rosa 76, piso 8, Santiago, Chile Phone number (56 2) 2675 2000 Corporate purpose The main purpose of the company is electricity generation, trading and transmission, being able to perform all acts and hold all contracts that the Peruvian law allows for such purposes. Core business Electricity Generation. CEO Edegel S.A.A. represented by Julián Cabello Yong Enersis stake (direct and indirect) 29.97% (No variation) Roberto José Fagan Fernando Carlos Boggini Orlando Adalberto Díaz Alejandro Nagel Main executives Fernando Claudio Antognazza CEO Fernando Carlos Luis Boggini CFO Néstor Srebernic Gerente de Producción Cristian Vargas Gerente Comercial Rodolfo Silvio Bettinsoli Gerente de Recursos Humanos Enersis stake (direct and indirect) 39.21% - No variation. CODENSA Name Codensa S.A. E.S.P. Type of entity Private company Address Carrera 13 A #93-66, Bogotá, Colombia Subscribed and paid capital (Th$) 265,306,226 CHOCÓN Phone number (57 1) 601 6060 Corporate purpose Exploit abroad, for its own or through third parties, the distribution and sale of electricity. It may make investments in foreign companies and make all kind of investments in all kind of financial instruments, such as; bonds, debentures, debt titles, credits, negotiable securities or other financial or commercial documents, all with to the objective of obtaining their natural and civil returns. In order to do so, it may constitute, amend, dissolve and liquidate companies in foreign countries and develop all other activities that are complementary and/or related to the above mentioned businesses. Core business Investments. Board of Directors Ramón Castañeda Ponce Francisco Miqueles Ruz Gonzalo Vial Vial Main executives Francisco Miqueles Ruz CEO Enersis stake (direct and indirect) 99.09% - No variation. Name Hidroeléctrica El Chocón S.A. Type of entity Corporation Address Avda. España 3301, Buenos Aires, Argentina Subscribed and paid capital (Th$) 24,073,993 Corporate purpose Electricity Generation and its block comercialization . Core business Electricity Generation. Board of Directors Joaquín Galindo Vélez José Miguel Granged Bruñen José María Hidalgo Martín Mateos Eduardo Escaffi Johnson (CFOEnersis S.A.) Vacant Alex Daniel Horacio Valdez Juan Carlos Nayar Sergio Maschio Alternate Directors Jorge Raúl Burlando Bonino Francisco Domingo Monteleone Juan Carlos Blanco Subscribed and paid capital (Th$) 3,593,166 Corporate purpose The company´s main purpose is the distribution and sale of electricity and all related activities, complementary and related activities to the distribution and sale of electricity, carrying out of works, designs and consultancy in electrical engineering and the sale of products to the benefit of its customers. The company shall be also entitled to execute other activities related to providing public utility services, in general, manage and operate other public utility companies, sign and execute special management contracts with other public utility companies and sell or lend assets or services to other economic agents in and out of the country in relation to public utility services. The Company shall be also entitled to become a partner or shareholder of another public utility company, directly or in partnership with other persons, or setting up a consortium with them. While pursuing the above-indicated main business purpose, the Company shall be entitled to promote and establish entities or agencies in Colombia or abroad; acquire under any concept whatsoever any kind of personal or real estate properties, lease them, sell them, encumber and pledge them as guarantee; assume any form of associative or collaborative enterprise with natural or juridical third parties to advance activities related, connected and complementary to its main business purpose; develop brand names, commercial names, patents, inventions or any other 184 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISintangible good, provided that they are consistent with its main business purpose; draw, accept, endorse, collect and pay all kind of value certificates, negotiable instruments, shares, executive titles and others; participate in public and private bidding contests; give to, or receive money on loan from its shareholders, parent/matrix companies, subsidiaries, and third parties; execute insurance policy contracts, transportation, participation accounts, and contracts with banks and/or financial institutions. Core business Distribution of electricity. Board of Directors Cristian Fierro Montes José Antonio Vargas Lleras Lucio Rubio Díaz Sandra Stella Fonseca Arenas Ricardo Roa Barragán Ricardo Bonilla González Orlando José Cabrales Martínez Alternate Directors Gustavo Gómez Cerón Leonardo López Vergara David Felipe Acosta Correa Ernesto Moreno Restrepo Álvaro Torres Macías José Alejandro Herrera Lozano Antonio Sedán Murra Main executives David Felipe Acosta Correa CEO Andrés Caldas Rico Jaime A. Vargas Barrera Juan Manuel Pardo Gómez María Celina Restrepo Leonardo López Vergara Rafael Carbonell Blanco Omar Serrano Rueda Mauricio Carvajal Raúl Puentes Barrera Enersis stake (direct and indirect) 48.39% Proportion of Enersis assets de Enersis 11.02% COELCE Name Companhia Energética do Ceará Type of entity Publicly held Limited Liability Company Address Rua Padre Valdevino, 150 - Centro, Fortaleza, Ceará, Brasil Phone number (55 85) 3453-4082 Subscribed and paid capital (Th$) 98,549,260 Corporate purpose a) Generation, transmission, distribution and commercialization of electricity, and related services; b) Performing studies, planning, projects, construction and operating production systems, transformation, transportation and storage, distribution and sale of any type of energy, as a concession, authorization or permit that may be granted in the State of Ceará, and other areas defined by the granting authority. c) The study, project and implementation of plans and programs of research and development of new sources of energy, particularly renewable ones, developed directly or in cooperation with other institutions; d) The study, preparation and implementation, in the energy sector, of economic and social development plans and programs in regions of interest to the community, and the company, either directly or collaborating with state or private bodies, being able to also supply information and technical assistance to public or private initiatives that intend to implement economic and social activities necessary for development; e) Perform other activities that could become necessary from a corporate purpose perspective, such as participating In the ownership of other companies in Brazil or in other countries, whose purpose is the development of public electricity services, including generation, transmission and distribution. Core Business Electricity distribution Board of Directors Mario Fernando de Melo Santos (Chairman) Marcelo Llévenes Rebolledo (ViceChairman) Gonzalo Vial Vial José Alves de Mello Franco Jorge Parente Frota Júnior Cristián Eduardo Fierro Montes Francisco Honório Pinheiro Alves Renato Soares Sacramento Nelson Ribas Visconti Joao Francisco Landim Tavares Claudio Manuel Rivera Moya Alternate Directors Antonio Basilio Pires de Carvalho e Albuquerque Luciano Alberto Galasso Samaria Teobaldo José Cavalcante Leal José Caminha Alencar Aripe Júnior José Távora Batista Carlos Ewandro Naegele MoreiraVládia Viana Regis José Nunes de Almeida Neto Bruno Golebiovsky Robson Figueiredo de Oliveira Main executives Abel Alves Rochinha Chairman David Augusto de Abreu Teobaldo José Cavalcante Leal José Nunes de Almeida Neto Carlos Ewandro Naegele Moreira José Távora Batista Olga Jovanna Carranza Salazar José Alves de Mello Franco Cristine de Magalhães Marcondes Nelson Ribas Visconti Enersis stake (direct and indirect) 49.18% CONSTRUCCIONES Y PROYECTOS LOS MAITENES Name Construcciones y Proyectos Los Maitenes S.A. Type of entity Private company TAX ID 96,764,840-K Address Américo Vespucio 100, Pudahuel, Santiago, Chile Phone number (56 2) 2601 0601 Subscribed and paid capital (Th$) 41,742,265 Corporate purpose a) The construction for its own or for third parties’, on its own land or other land, urbanized or not, of all kind of civil works, facilities, buildings, housing, offices and others; b) the sale or disposal in any form of such building works; c) the study and development of projects for such buildings, including engineering, architecture, financing, commercialization, and others. In order to do so, it may act for its own or third parties, either directly or forming part of associations, communities, companies and legal entities of any kind, in which it may also assume the management. Core business Real Estate. Board of Directors Fernando Gardeweg Ried Andrés Salas Estrades Luis Felipe Edwards Mery José Manuel Guzmán Nieto Victor Jarpa Riveros Main executives Roberto Alcalde Eyzaguirre CEO Rodrigo Sánchez Cubric Fernando Krebs Labarca Enersis stake (direct and indirect) 55.00% - No variation. CTM Name Compañía de Transmisión del Mercosur S.A. Type of entity Corporation Address Bartolomé Mitre 797, piso 11, Ciudad Autónoma de Buenos Aires, Argentina Subscribed and paid capital (Th$) 1,142,971 185 Corporate purpose Provide high-voltage electricity transmission services both in relation to national and international electricity systems, in accordance with current legislation, for which it may participate in national or international tenders, become an electric-utility concession holder in local or international high voltage transmission systems and carry out all activities necessary to meet its purposes, included but not limited to, be a part in construction contracts, operating and maintenance, both when beginning or expanding electricity transmission lines, participating in financing projects directly or indirectly related to such initiatives as a creditor and /or borrower and/ or guarantee, allowing to offer guarantees third parties. All activities expressly identified as being rules by the Financial Institutions Law are excluded and any other that requires applying government financing. Core business International electricity transmission Board of Directors José María Hidalgo Martín-Mateos Guilherme Gomes Lencastre Arturo Miguel Pappalardo Alternate Directors José Venegas Maluenda Juan Carlos Blanco Roberto José Fagan Main executives Arturo Miguel Pappalardo CEO Enersis stake (direct and indirect) 83.54% DISTRIBUIDORA ELÉCTRICA DE CUNDINAMARCA Name Distribuidora Eléctrica de Cundinamarca S.A. E.S.P. Type of entity Private company Tax ID 900,265,917-0 Address Carrera 9 N° 73-44 Piso 5 Subscribed and paid capital (Th$) 57,871,689 Corporate purpose The company’s main purpose is the distribution and commercialization of electricity, and the execution of all associates, complementary and related activities to distribution and commercialization of electricity, public works, designs and electrical engineering consulting, and the commercialization of products for the benefit of its customers. Core business Distribution and commercialization of electricity Board of Directors Catalina Velasco Campusano David Felipe Acosta María Cristina Toro Restrepo Alternate Directors Iván Pinzón Amaya Leonardo López Vergara Fabiola Leal Castro Main executives Álvaro Torres Macías CEO Enersis stake (direct and indirect) 23.71% Héctor Sergio Falzone José María Saldungaray Osvaldo Alejandro Pollice Leonardo Marinaro Justo Pedro Saenz Main executives Antonio Jerez CEO Enersis stake (direct and indirect) 50.93% - No variation. Proportion of Enersis assets de Enersis 0.01% EDEGEL Name Edegel S.A.A. DISTRILEC INVERSORA Name Distrilec Inversora S.A. Type of entity Private company Type of entity Publicly held Limited Liability Company Address Avda. Víctor Andrés Belaúnde 147, Edificio Real 4, piso 7, San Isidro, Lima, Perú Address San José 140, Buenos Aires, Argentina Subscribed and paid capital (Th$) 423,750,467 Phone number (54 11) 4370 3700 Subscribed and paid capital (Th$) 40,756,974 Corporate purpose Mainly, and in general, electricity generation activities, also the civil, industrial, commercial and any other act or operation relating or leading to the principal purposes. Corporate purpose Exclusively to invest in companies constituted or to be constituted whose main activity is the distribution of electricity or that directly or indirectly participate in companies with that principal business through all kind of financial and investment activities, except those in the laws of financial entities, the purchase and sale of public and private debt paper, bonds, shares, negotiable instruments and the granting of loans, and the placement of its funds in bank deposits of any kind. Core business Electricity Generation. Board of Directors Ignacio Blanco Fernández (Chairman) Alberto Briand Rebaza Torres (ViceChairman) Joaquín Galindo Vélez Rafael Fauquié Bernal Reynaldo Llosa Barber Claudio Herzka Buchdahl Gerardo Rafael Sepúlveda Quezada Core business Investments. Board of Directors José María Hidalgo Martín Mateos (Chairman) Cristián Fierro Montes María Inés Justo Juan Carlos Blanco Rafael Fauquié Bernal Gonzalo Alejandro Pérez Moore Juan Carlos Bledel José María Vásquez Fernando Bonnet Edgardo Licen Alternate Directors Fernando Antognazza Rodrigo Quesada Roberto Fagan Mariana Marine Gonzalo Vial Vial Alternate Directors Julián Cabello Yong Raffaele Enrico Grandi Arrate Gorostidi Aguirresarobe Mariano Paz Soldán Franco Alberto Triulzi Mora Sebastián Fernández Cox Eric Andrés Añorga Müller Main executives Francisco Pérez Thoden Van Velzen (CEO) Julián Cabello Yong (Gerente de Explotación) Carlos Rosas Cedillo (Gerente de Gestión de Energía y Comercialización) Eric Añorga Müller (CFO) Daniel Abramovich Ackerman (Gerente de Asesoría Legal) Enersis stake (direct and indirect) 37.46% (No variation) 186 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISEDELNOR Phone number (54 11) 4370 3700 Name Empresa de Distribución Eléctrica de Lima Norte S.A.A. Subscribed and paid capital (Th$) 69,224,794 and, especially, in the related to the generation, production, and marketing of electric power; as well as activities of generation, transmission, Distribution and commercialization of electricity in a direct way. Type of entity Publicly held Limited Liability Company Corporate purpose Distribution and commercialization of electricity and related activities Core business Investments. Address Jr. Teniente Cesar López Rojas 201 Urb. Maranga, San Miguel, Lima, Perú Core business Distribution of electricity. Phone number (51 1) 561 2001 Subscribed and paid capital (Th$) 99,904,810 Corporate purpose Engage in the activities of distribution, transmission and generation of electricity in accordance with the provisions of current legislation. Additionally, the company may engage in the sale of goods in any form, as well as providing consulting and financial services, among others, except those services which require specific authorization in accordance with current law. Core business Distribution of electricity Board of Directors Reynaldo Llosa Barber (Chairman) Ignacio Blanco Fernández Paolo Giovanni Pescarmona María Cecilia Blume Cilloniz Cristian Eduardo Fierro Montes Fernando Fort Marie Claudio Eduardo Helfmann Soto José María Hidalgo Martín Mateos Main executives Ignacio Blanco Fernández CEO Carlos Solís Pino Walter Sciutto Brattoli Rocío Pachas Soto Raffaele Enrico Grandi Luis Salem Hone Pamela Gutiérrez Damiani Alfonso Valle Cisneros Enersis stake (direct and indirect) 75.54% Proportion of Enersis assets 1.52% EDESUR Name Empresa Distribuidora Sur S.A. Type of entity Corporation Board of Directors José María Hidalgo Martin Mateos (Chairman) Juan Carlos Blanco Cristian Fierro Montes Marcelo Silva Iribarne Gonzalo Vial Vial Marco Fadda (Gerente Regional Planificación y Control Enersis S.A.) Ernesto Pablo Badaraco José María Vásquez Alternate Directors Roberto Fagan José Miguel Granged Fernando Antognazza María Inés Justo Rodrigo Quesada Mariana Marine Fernando Bonnet José María Saldungaray Main executives Antonio Jerez Agudo CEO Silvia Migone Díaz Legal Affairs Director Enersis stake (direct and indirect) 71.61% Proportion of Enersis assets de Enersis 0.05% ELÉCTRICA CABO BLANCO S.A.C. Name Cabo Blanco S.A.C. Type of entity Private company Address Calle César López Rojas N° 201, Urbanización Maranga, Distrito de San Miguel, Provincia y Departamento de Lima Phone number (051) 517-2993 Subscribed and paid capital (Th$) 8,723,363 Address San José 140 (1076), Capital Federal, Argentina Corporate purpose Investments in other companies, mainly those engaged in the exploitation of natural resources Main Executives Manuel Cieza Paredes (CEO) Enersis stake (direct and indirect) 100% Proportion of Enersis assets de Enersis 0.40% ELECTROGAS Name Electrogas S.A. Type of entity Private company TAX ID 96,806,130-5 Address Alonso de Córdova 5900, Oficina 401, Comuna de Las Condes Santiago, Chile Phone number (562) 2299 3400 Corporate purpose The purpose of the company is the transportation services for natural gas and other fuels, for its own or third party’s account, for which it may construct, operate and maintain gas, oil and multi-use pipelines and complementary facilities. Core business Gas transportation. Subscribed and paid capital (Th$) 11,176,162 Board of Directors Juan Eduardo Vásquez Moya (Chairman) Alan Fischer Hill (ViceChairman) Pedro Gatica Kerr Eduardo Lauer Rodríguez Fernando Promis Baeza Alternate Directors Andrés Opazo Irarrázaval Gastón Schofield Lara Cristian Morales Jaureguiberry Juan Oliva Vásquez Ricardo Santibáñez Zamorano Main executives Carlos Andreani Luco CEO Enersis stake (direct and indirect) 25.49% - No variation. 187 EMGESA Name Emgesa S.A. E.S.P. Type of entity Public utility Corporation EMGESA PANAMÁ, S.A. Name Emgesa Panamá, S.A. Type of entity Private company. Board of Directors Manuel Guillermo Camargo David Alfredo Riaño María Cristina Toro Alvaro Cruz Vargas Paulo Jairo Orozco Díaz Omar Serrano Rueda Martha Catalina Velasco Campuzano Address Carrera 11 N°82-76, piso 4, Santa Fe de Bogotá, D.C. Colombia Address Ciudad de Panamá, Panamá Subscribed and paid capital (Th$) 165,215,801 Corporate purpose The main purpose of the company is generation and commercialization of electricity and associated, connected, complementary and related activities. Core business Electricity generation and commercialization. Board of Directors Joaquín Galindo Vélez Lucio Rubio Díaz José A. Vargas Lleras Sandra Stella Fonseca Arenas Ricardo Roa Barragán Ricardo Bonilla González Luisa Fernanda Lafaurie Rivera Alternate Directors Omar Serrano Rueda Carlos Luna Cabrera Juan Manuel Pardo Ernesto Moreno Sánchez Álvaro Torres Macías Jose Alejandro Herrera Lozano Andrés López Valderrama Main executives Lucio Rubio Díaz CEO Carlos Luna Cabrera Andrés Caldas Rico Juan Manuel Pardo Gómez Fernando Gutiérrez Medina Gustavo Gómez Cerón María Celina Restrepo Leonardo López Vergara Rafael Carbonell Blanco Omar Serrano Rueda Mauricio Carvajal García Raúl Puentes Barrera Ana Patricia Delgado Meza Javier Blanco Fernández Enersis stake (direct and indirect) 37.72% Proportion of Enersis assets de Enersis 2.90% Corporate purpose Purchase, sale, import, export of electricity. Also, the company may perform other industrial and commercial activities in general, it is able to celebrate all transactions, operations, business, events and activities that are permitted by the Panamanian law to corporations even if they are not expressly mentioned in this corporate purpose. Core business Purchase, sale, import, export of electricity. Subscribed and paid capital (Th$) 5,255 Directors Lucio Rubio Díaz Andrés Caldas Rico Omar Serrano Rueda Main executives Fernando Gutiérrez Medina Andrés Caldas Rico Elizabeth Laverde Enciso Enersis stake (direct and indirect) 37.72% Alternate Directors Javier Botero Álvarez Claudia Niño Cubides Fabiola Leal Castro Luis Fernando Ayala David Feferbaum Gutfraind Aurelio Bustilho de Oliveira Javier Ortíz Muñoz Main executives Carlos Mario Restrepo Molina Alberto Duque Ramírez Olga Pérez R. Alba Marina Urrea Gómez Diego Mauricio Muñoz Hoyos Nidia Ximena León Corredor Enersis stake (direct and indirect) 19.52% EMPRESA ELÉCTRICA DE COLINA Name Empresa Eléctrica de Colina Ltda. Type of entity Sociedad de Responsabilidad Limitada EMPRESA DE ENERGÍA DE CUNDINAMARCA TAX ID 96,783,910-8 Name Empresa de Energía de Cundinamarca S.A. Address Chacabuco 31, Colina, Santiago, Chile Type of entity Private company Tax ID 860,007,638-0 Address Carrera 11 N° 93-52 Bogotá D.C. Phone number (571) 7051800 Subscribed and paid capital (Th$) 10,798,989 Corporate purpose Electricity generation, commercialization and distribution utility in the Cundinamarca district and its surroundings. It owns an electricity generation power plant in Río Negro. Core business Electricity generation, commercialization and distribution. Phone number (56 2) 2844 4280 Subscribed and paid capital (Th$) 82,222 Corporate purpose Distribution and sale of electricity and home, sports, entertainment and computer electrical appliances. Core business Distribution of electricity. Main executives Leonel Martínez Garrido CEO Enersis stake (direct and indirect) 99.09% - No variation. 188 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISEMPRESA ELECTRICA DE PIURA S.A. Name Empresa Eléctrica de Piura S.A Type of entity Corporation Address Calle César López Rojas N° 201, Urbanización Maranga, Distrito de San Miguel, Provincia y Departamento de Lima Phone number (051) 517-2993 Subscribed and paid capital (Th$) M$ 15,318,148 Corporate purpose Electricity generation and commercialization. Core business Electricity generation and commercialization Directors Manuel Muñoz Laguna Fernando Prieto Plaza (Chairman) Claudio Helfmann Soto (ViceChairman) Main Executives CEO: Manuel Vicente Cieza Paredes Gerente de Planificación y Control: Juan Martín Sabogal Carrillo Enersis stake (direct and indirect) 96.50% ENDESA ARGENTINA Name Endesa Argentina S.A. Type of entity Sociedad Anónima Address Suipacha 268, piso 12, Buenos Aires, Argentina Phone number (5411) 4307 3040 Corporate purpose Invest in companies dedicated to the production, transmission and distribution of electricity and its commercialization, as well as financial activities except those limited by the law to banks. Core business Investments. Subscribed and paid capital (Th$) 56,314,705 Board of Directors José María Hidalgo Martín Mateos José Miguel Granged Bruñen Maria Inés Justo Phone number (5521) 3607 9500 Subscribed and paid capital (Th$) 210,254,158 Alternate Directors Rodrigo Quesada Mariana Cecilia Mariné María Julia Nosetti Enersis stake (direct and indirect) 59.98% - No variation. EN - BRASIL COMÉRCIO E SERVIÇOS S.A. Name En- Brasil Comércio e Serviços S.A. Type of entity Private company incorporated according to Brazilian Federal Law. Address Praça Leoni Ramos nº 01 – parte, São Domingos, Niterói, Rio de Janeiro, Brasil. Phone number (55 21) 2613 7000 Subscribed and paid capital (Th$) 222,486 Corporate purpose The company aims to participate in the capital of other companies in Brazil or abroad, trade in general, even imports and exports, through retail or wholesale transactions of various products, and to provide general services for the electric sector and others. Core business Services in general to the electricity industry and others Main executives Albino Motta da Cruz CEO Rafael de Bessa Sales Enersis stake (direct and indirect) 83.54% ENDESA BRASIL Name Endesa Brasil S.A. Type of entity Private Company Address Praça Leoni Ramos, N°1, 7° andar, bloco 2 - Parte, Niterói, Río de Janeiro, Brasil Corporate purpose Participate in the capital of other companies in any segment of the electricity sector, including companies that provide services to companies in that sector, in Brazil or abroad;; transmission, distribution, generation or commercialization of electricity and related activities and participation, individually or through joint ventures, consortia or other similar forms of association, in tenders, projects and enterprises for the supply of services and activities previously mentioned. Core business Investments. Board of Directors Mario Fernando de Melo Santos (Chairman) Ignacio Antoñanzas Alvear (ViceChairman) (CEO de Enersis S.A.) Massimo Tambosco (SubCEO de Enersis S.A.) Antonio Basilio Pires de Carvalho e Albuquerque Ramiro Diego Alfonsín Balza Cristián Eduardo Fierro Montes Joaquín Galindo Velez Main executives Marcelo Llévenes Rebolledo CEO Nelson Ribas Visconti (Vice CEO) Luis Larumbe Aragón Antonio Basilio Pires de Carvalho e Albuquerque José Alves de Mello Franco Carlos Ewandro Naegele Moreira Teobaldo José Cavalcante Leal Janaina Savino Vilella Carro Enersis stake (direct and indirect) 83.54% Proportion of Enersis’ assets 8.15% ENDESA CACHOEIRA Name Centrais Elétricas Cachoeira Dourada S.A. Type of entity Private Company Address Rodovia GO 206, Km 0, Cachoeira Dourada Goiania, Goiás, Brasil Phone number (55 62) 3434 9000 Subscribed and paid capital (Th$) 14,314,684 189 sell crude petroleum, and/or lubricants and/or to transport such elements, including the importation and/or exportation of liquid fuels and the marketing of regalia/privileges, as well as to provide and/or execute services related to the abovementioned activity. Core business Trading of electricity and gas Board of Directors José María Hidalgo Martín-Mateos José Venegas Maluenda Fernando Claudio Antognazza Main executives Joaquín Galindo Vélez CEO Ramiro Alfonsín Balza Deputy CEO Carlos Fernando Gardeweg Ried Federico Poleman Francisca Moya Moreno Fernando Prieto Plaza Paulo Domingues Fernando Lafuente Sebastian Fernandez Cox José Venegas Maluenda Ignacio Quiñones Sotomayor Corporate purpose The company´s corporate purpose is to perform the studies, planning, construction, installation, operation and exploitation of electricity generation power plants and the businesses related to these activities. Also, the company may promote and participate in other companies created to generate electricity within or outside the State of Goiás. Core business Electricity Generation. Board of Directors Marcelo Llévenes Rebolledo Ana Cláudia Goncalves Rebello Luis Larumbe Aragón Main executives Guilherme Gomes Lencastre CEO Manuel Herrera Vargas José Ignácio Pires Medeiros Carlos Ewandro Naegele Moreira José Alves de Mello Franco Ana Cláudia Goncalves Rebello Teobaldo José Cavalcante Leal Janaina Savino Vilella Carro Enersis stake (direct and indirect) 83.33% ENDESA CEMSA Name Endesa Cemsa S.A. Type of entity Corporation Address Pasaje Ing. E. Butty 220, piso 16, Buenos Aires, Argentina Alternate Directors Arturo Pappalardo Roberto José Fagan Pedro Cruz Viné Main executives Juan Carlos Blanco CEO Enersis stake (direct and indirect) 81.99% Proportion of Enersis assets 0.05% ENDESA CHILE Name Empresa Nacional de Electricidad S.A. Type of entity Publicly held Limited Liability Company TAX ID 91,081,000-6 Address Santa Rosa 76, Santiago, Chile Phone number (5411) 4875 0600 Phone number (56 2) 2630 9000 Subscribed and paid capital (Th$) 1,129,748 Subscribed and paid capital (Th$) 1,331,714.085 Corporate purpose The purpose of the company is the wholesale purchase and sale of electricity capacity and energy produced and/or consumed by third parties, including the import and export of electricity power and energy and the marketing of royalties, and the supply and/or performing of services related to the above activity, both in the country as well as abroad of information technology services and/or of control of the operation and/ or of telecommunications. Likewise, the Company shall be entitled to execute buy/sell operations or to purchase and sell natural gas, and/or its transportation, including the importation and/or exportation of natural gas and/or the marketing of regalia/privileges, as well as to provide and/or execute services related to the abovementioned activity. Also, the Company shall be entitled to execute buy/sell operations or to purchase and Corporate purpose Generation and supply of electricity, engineering and consulting services in Chile and abroad and the construction and exploitation of infrastructure works. Core business Electricity Generation Board of Directors Jorge Rosenblut (Chairman) Paolo Bondi (ViceChairman) Francesco Buresti Vittorio Corbo Loi Felipe Lamarca Claro Jaime Bauzá Bauzá Enrique Andrés Cibié Bluth Manuel Moran Casero Alfredo Arahuetes García Commercial relations Trading current accounts, accounting, trading desk and treasury services. Enersis stake (direct and indirect) 59.98% - No variation. Proportion of Enersis assets 30.43% ENDESA CIEN Name CIEN - Compañía de Interconexión Energética S.A. Type of entity Private Company Address Praça Leoni Ramos, N° 1, piso 6, Bloco 2, São Domingos, Niterói, Río de Janeiro, Brasil Phone number (55 21) 3607 9500 Subscribed and paid capital (Th$) 63,418,309 Corporate purpose The purpose of the company is the production, industrialization, distribution and commercialization of electricity, including the import and export activities. In view of achieving the purposes mentioned above, the company will promote the study, planning and construction of facilities for production systems, transmission, conversion and distribution of electricity by capturing the necessary investment to develop the activities and by providing services. Beyond the purposes referred to, the company may promote the implementation of associated products, as well as inherent, ancillary or complementary activities to services and jobs that cometh to provide. To carry out the activities necessary to achieve its goals, the company may participate in other societies. Core business Electricity transmission. Board of Directors Marcelo Andrés Llévenes Rebolledo Ana Claudia Gonçalves Rebello José Augustín Venegas Maluenda 190 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISMain executives Guilherme Gomes Lencastre CEO Manuel Herrera Vargas José Ignácio Pires Medeiros Carlos Ewandro Naegele Moreira Teobaldo José Cavalcante Leal José Alves de Mello Franco Ana Cláudia Goncalves Rebello Janaina Sabino Vilella Carro Enersis stake (direct and indirect) 83.54% ENDESA COSTANERA Name Endesa Costanera S.A. Type of entity Corporation Address Avda. España 3301, Buenos Aires, Argentina Phone number (5411) 4307 3040 Subscribed and paid capital (Th$) 58,560,092 Corporate purpose The production of electricity and its block commercialization. Enersis stake (direct and indirect) 45.40% ENDESA FORTALEZA Name Central Geradora Termeléctrica Fortaleza S.A. Type of entity Private Company Address Rodovia 422, Km 1 s/n, Complexo Industrial e Portuário de Pecém Caucaia – Ceará, Brasil Phone number (55 85) 3464-4100 Subscribed and paid capital (Th$) 33,803,508 Corporate purpose Study, project, build and explore production, transmission, distribution and commercialization systems of electricity under concessions, permits or authorizations under any title, and other activities related to services supply of any kind related to the above activities; the acquisition, obtaining and exploration of any right, concession or privilege related to the above activities and the carrying out of all the other acts and business necessary for achieving its purposes; and participation in the capital of other companies as shareholder or partner, whatever their purposes. Core business Electricity Generation. Core business Electricity Generation. Board of Directors Joaquín Galindo Vélez (Chairman) Máximo Luis Bomchil José María Hidalgo Martín Mateos Eduardo Escaffi Johnson (CFO of Enersis) María Inés Justo César Fernando Amuchástegui Matías Maria Brea Damián Camacho Alternate Directors Roberto José Fagan Francisco Domingo Monteleone Fernando Carlos Boggini Claudio Iglesis Guillard Jorge Raúl Burlando Bonino Rodrigo Quesada Fernando Claudio Antognazza Main executives Jose Miguel Granged Bruñen CEO Roberto José Fagan Director de Explotación Fernando Carlos Luis Boggini Gerente Financiero Rodolfo Silvio Bettinsoli Gerente de Recursos Humanos Francisco Domingo Monteleone Gerente de Producción Rodrigo Quesada Legal Affairs Director Board of Directors Marcelo Andrés Llévenes Rebolledo Ana Claudia Gonçalves Rebello Luis Larumbe Aragón Main executives Manuel Herrera Vargas CEO Raimundo Câmara Filho Teobaldo José Cavalcante Leal José Ignácio Pires Medeiros José Alves de Mello Franco Ana Cláudia Goncalves Rebello Janaina Savino Vilella Carro Enersis stake (Direct and indirect) 83.54% ENERGEX Name Energex Co. Type of entity Exempt company, incorporated in Cayman Islands, BWI Address Walker House, 87 Mary Street, George Town, Grand Cayman, Cayman Islands Subscribed and paid capital (Th$) 5,246 Corporate purpose The purpose of the Company is to participate in any business or activity according to the laws of the Cayman Islands. In terms of businesses or activities in the financial area, those reserved for banks are not permitted. It is also forbidden to do business with firms or persons that are Cayman Islands residents. Core business Investments. Board of Directors Horacio Reyser Gonzalo Alende Serra Ingrid Morales Ávila (International Finance, Enersis S.A.) Eduardo Escaffi Johnson (CFO Enersis S.A.) Enersis stake (direct and indirect) 30.75% ENEL GREEN POWER MODELO I EÓLICA S.A. Name Enel Green Power Modelo I Eólica S.A. Type of entity Private company. Address Praça Leoni Ramos, Nº 1, 5º andar, bloco 2, Niterói, RJ, Brasil. Subscribed and paid capital R$ 66,125,000 Corporate purpose Wind Electricity generation Core business Electricity Generation. Main Executives Newton Souza de Moraes Enrique de las Morenas Moneo CEO Enersis stake (direct and indirect) 0.81% 191 ENEL GREEN POWER MODELO II EÓLICA S.A. Name Enel Green Power Modelo II Eólica S.A. Type of entity Private company. Alternate Directors Claudio Betti Pruzzo Juan Cristóbal Pavéz Recart Marcelo Álvarez Ríos Alejandro García Chacón Main executives Wilfredo Jara Tirapegui CEO Address Praça Leoni Ramos, Nº 1, 5º andar, bloco 2, Niterói, RJ, Brasil. Enersis stake (direct and indirect) 46.12% Corporate purpose Wind Electricity generation Core business Electricity Generation. Subscribed and paid capital R$ 75,295,000 Main Executives Newton Souza de Moraes Enrique de las Morenas Moneo CEO Enersis stake (direct and indirect) 0.81% EÓLICA CANELA Name Central Eólica Canela S.A. Type of entity Private company TAX ID 76,003,204-2 Address Santa Rosa 76, Santiago, Chile Phone number (562) 2630 9000 Subscribed and paid capital (Th$) 12,284,743 Corporate purpose Promote and develop renewable energy projects, mainly wind energy, identify and develop clean development mechanism (MDL in its Spanish acronym) projects and act as depository and trader in emission reduction certificates originated from these projects. The generation, transport, distribution, supply and sale of electricity, for which it may acquire and exploit the respective concessions and grants. Core business Wind farm electricity generation. Board of Directors Juan Benabarre Benaiges Jesús Espadas Misioné Sebastián Fernández Cox Cristóbal García-Huidobro Ramírez Bernardo Canales Fuenzalida 192 EÓLICA FAZENDA NOVA Name Eólica Fazenda Nova o Geraçãoa e Comercialização de Energia S.A. Type of entity Private company Address Rua Felipe Camarão, nº 507, sala 104, Ciudad de Natal, Rio Grande do Norte, Brasil Phone number (5521) 3607 9500 Subscribed and paid capital M$ 409,151 Corporate purpose Generation, transmission, distribution and commercialization of energy, participation in other companies as a partner, shareholder, or quota holders and import machinery and equipment related to the generation, transmission, distribution and commercialization of wind energy. Core business Electricity Generation. Main Executives Marcelo Llévenes Rebolledo Chairman Guilherme Gomes Lencastre Vacant Enersis stake (direct and indirect) 83.49% GASATACAMA Name GasAtacama S.A. Type of entity Private company TAX ID 96,830,980-3 Address Avenida Isidora Goyenechea 3365, piso 8, Santiago, Chile Phone number (562) 2366 3800 Subscribed and paid capital (Th$) 152,915,467 Corporate purpose The purpose of the company is: a) the administration and management of the companies Gasoducto Atacama Chile Limitada, Gasoducto Atacama Argentina Limitada, GasAtacama Generación Limitada and other companies agreed to by the partners; b) investment of its own or third party’s resources, in all kinds of assets, corporeal or incorporeal, securities, shares and commercial paper. Core business Investments. Board of Directors Raúl Sotomayor Valenzuela (Chairman) Joaquín Galindo Vélez Gonzalo Dulanto Letelier Ramiro Alfonsín Balza Alternate Directors Juan Benabarre Benaiges Eduardo Ojea Quintana Fernando Gardeweg Ried Gonzalo Alende Serra Main executives Rudolf Araneda Kauert CEO Enersis stake (direct and indirect) 30.75% GASATACAMA CHILE Name GasAtacama Chile S.A. Type of entity Private company TAX ID 78,932,860-9 Address Avenida Isidora Goyenechea 3365, piso 8, Las Condes, Santiago, Chile Phone number (562) 2366 3800 Subscribed and paid capital (Th$) 97,066,063 Corporate purpose The company purpose includes a) exploit the generation, transmission, purchase, distribution and sale of electric or any other energy; b) the purchase, extraction, exploitation, processing, distribution, commercialization and sale of solids, liquids and gas fuels; c) the sale and engineering services supply; d) obtain, purchase, transfer, rental, charging and exploitation in any way of the IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISconcessions referred to in the General Electrical Services Law, maritime concessions and water usage rights of any kind; e) the transport of natural gas, through its own means or together with other parties within Chile or other countries, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it; f) invest in all kinds of assets, corporeal or incorporeal, movable or fixed; g) the organization and constitution of all kind of companies whose purposes are related or linked to energy in any of its forms or that have electricity as their principal input, or correspond to any of the activities mentioned above. Core business Electricity generation and gas transportation. Board of Directors Raúl Sotomayor Valenzuela Joaquín Galindo Vélez Gonzalo Dulanto Letelier Vacant Alternate Directors Juan Benabarre Benaiges Eduardo Ojea Quintana Fernando Gardeweg Ried Gonzalo Alende Serra Main executives Rudolf Araneda Kauert CEO Enersis stake (direct and indirect) 30.75% GASODUCTO ATACAMA ARGENTINA Name Gasoducto Atacama Argentina S.A. Type of entity Private company TAX ID 78,952,420-3 town of Cornejo, Salta province and the Argentine- Chilean border in the vicinity of the Jama border crossing located in the second region of Chile. Enersis stake (direct and indirect) 30.75% Core business Gas transportation. Board of Directors Rafael Zamorano Chaparro Gustavo Venegas Castro Pedro de la Sotta Sánchez Alternate Directors Luis Cerda Ahumada Mario Guevara Esturillo Alejandro Sáez Carreño Main executives Rudolf Araneda Kauert CEO Enersis stake (direct and indirect) 30.75% GASODUCTO TALTAL Name Gasoducto Taltal S.A. Type of entity Private company TAX ID 77,032,280-4 Address Avenida Isidora Goyenechea 3365, piso 8, Las Condes, Santiago, Chile. Phone number (562) 2366 3800 GENERALIMA S.A.C. Name Generalima S.A.C. Type of entity Private company Address Calle César López Rojas N° 201, Urbanización Maranga, Distrito de San Miguel, Provincia y Departamento de Lima Phone number (051) 561-0466 Subscribed and paid capital (Th$) 27,523,467 Corporate purpose Investments in other companies, mainly those engaged in the exploitation of natural resources and, especially, in the related to the generation, production, and marketing of electric power. Core business Investments. Main Executives Claudio Helfmann Soto (CEO) Enersis stake (direct and indirect) 100% Proportion of Enersis assets de Enersis 0.30% Corporate purpose Transportation, commercialization and distribution of natural gas, through its own means or together with other parties within Chile, especially in the towns of Mejillones and Paposo in the 2nd Region, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it. GENERANDES PERÚ Name Generandes Perú S.A. Type of entity Sociedad Anónima Address Avenida Isidora Goyenechea 3365, piso 8, Las Condes, Santiago, Chile Core business Gas transportation. Address Avda. Víctor Andrés Belaúnde 147, Edificio Real 4, piso 7, San Isidro, Lima, Perú Phone number (562) 2366 3800 Subscribed and paid capital (Th$) 109,209,703 Corporate purpose The company´s purpose is the transportation of natural gas, through its own means or together with other parties within Chile or other countries, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it. The company has an Agency based in Argentina, “Gasoducto Cuenca Noroeste Limitada Sucursal Argentina”, and its purpose is the execution of a pipeline between the Subscribed and paid capital (Th$) 19,085,847 Phone number (511) 215 6300 Board of Directors Rafael Zamorano Chaparro Gustavo Venegas Castro Pedro de la Sotta Sánchez Alternate Directors Luis Cerda Ahumada Mario Guevara Esturillo Alejandro Sáez Carreño Main executives Rudolf Araneda Kauert CEO Subscribed and paid capital (Th$) 186,325,266 Corporate purpose The company has the purpose to develop activities related to electricity generation, directly, or through companies created for that purpose. Core business Investments. 193 of act or contract that may be necessary, useful or convenient for meeting its purposes. Core business Import and commercialization of natural gas and that Is currently known as GNL Chile S.A. The company may carry out all kinds of acts or contracts that are necessary, useful or convenient for meeting this purpose. Board of Directors Ignacio Blanco Fernández (Chairman) Alberto Briand Rebaza Torres (ViceChairman) Joaquín Galindo Vélez Raffaele Enrico Grandi José Agustín Venegas Maluenda Rafael Fauquie Bernal Gerardo Rafael Sepúlveda Quezada Alberto Triulzi Mora Alternate Directors Guillermo Lozada Pozo Rafael Alcázar Uzátegui Julían Cabello Yong Carlos Rosas Cedillo José María Hidalgo Martín-Mateos Gonzalo Adolfo De las Casas Salinas Sebastián Fernández Cox Eric Andrés Añorga Müller Enersis stake (direct and indirect) 36.59% - No variation. GNL CHILE Name GNL Chile S.A. Type of entity Private company TAX ID 76,418,940-K Board of Directors José Agustín Venegas Maluenda Marc Llambias Bernaus Klaus Lührmann Poblete Alternate Directors Víctor Turpaud Fernández Juan Oliva Vásquez Mario Basualto Vergara Main executives Alejandro Palma Rioseco CEO GNL QUINTERO Name GNL Quintero S.A. Type of entity Private company TAX ID 76,788,080-4 Main executives Francisco Pérez Thoden Van Velzen (CEO) Eric Andrés Añorga Müller (CFO) Enersis stake (direct and indirect) 19.99% - No variation. Core business Unloading, storing and re-gasifying liquefied natural gas and natural gas. Board of Directors José Agustín Venegas Maluenda Julio Bertrand Planella Francesco Gazmuri Schleyer Jesús Saldaña Sultán Al Bartamani Main executives Juan Oliva Vásquez Fernando Promis Baeza Victor Turpaud Fernández Rafael González Hilal Al Kharusi Principales ejecutivos Antonio Bacigalupo Gittins CEO Enersis stake (direct and indirect) 12% - No variation. HIDROINVEST Name Hidroinvest S.A. Dirección Rosario Norte 532, oficina 1604, Las Condes, Santiago, Chile Type of entity Corporation incorporated in Buenos Aires, Argentina Address Rosario Norte 530, oficina 1303, Las Condes, Santiago, Chile Phone number (562) 2499 0900 Address Avda. España 3301, Buenos Aires, Argentina Phone number (562) 2892 8000 Subscribed and paid capital (Th$) 1,590,361 Corporate purpose The company purpose is to a) contract the services of the liquefied natural gas (LNG) regasification company GNL Quintero S.A. and use all the natural gas and LNG storage, processing, re-gasification and delivery capacity of its re-gasification terminal, including its expansions if any and any other matter stated in the contract that the Company signs to use of the re-gasification terminal; b) import LNG under the delivered on ship (DES) mode from LNG suppliers according to LNG purchase agreements; c) the sale and delivery of natural gas according to contracts signed by the company with its customers; d) manage and coordinate the programming and nominations of LNG loads, as well as the delivery of natural gas among the different customers; e) comply with all its obligations and demand compliance with all its rights according to the contracts mentioned above and coordinate all activities included in such contracts, and in general carry out any type Subscribed and paid capital (Th$) 59.941.639 Phone number (5411) 4307 3040 Corporate purpose a) the development, financing, design, engineering, supply, construction, start up, operation and maintenance of an liquefied natural gas (“LNG”) storage and re-gasification plant and its corresponding sea terminal for loading and unloading LNG and its expansions, if any, including the installations and connections necessary to deliver the LNG through a truck-loading yard and/ or one or more LNG pipeline delivery points (the “Re-gasification Terminal”); and any other activity leading or related to such purpose, including, but not limited to, the provision of management and administrative services of all commercial agreements needed to receive LNG or to deliver it to customers, re-gasification of LNG, delivery of natural gas and sale of services and storage, processing, re-gasification-loading and unloading at the LNG Regasification and delivery Terminal (the “Project”) and its expansions, if any, and b) offer general management and administrative consulting in general necessary for the correct operation of the company, the Trading Company according to how it is defined in numeral thirteen four of article thirteen of the social agreement Subscribed and paid capital (Th$) 4,459,651 Corporate purpose Acquire and maintain a majority shareholding in Hidroeléctrica Alicura S.A. and/or Hidroeléctrica El Chocón S.A. and/or Hidroeléctrica Cerro Colorado S.A. (“the concessionaire companies”) created by National Executive Power decree 287/93 and manages such investments. Core business Investments. Board of Directors Joaquín Galindo Vélez (Chairman) José Miguel Granged Bruñen José María Hidalgo Martín Mateos Fernando Claudio Antognazza Eduardo Escaffi Johnson (CFOEnersis S.A.) Juan Carlos Blanco Roberto José Fagan Carlos Martín Vergara 194 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSIS Alternate Directors Francisco Monteleone Jorge Raúl Burlando Bonino Daniel Garrido Rodolfo Bettinsoli Fernando Boggini Rodrigo Quesada Sergio Camps Oscar Rigueiro Enersis stake (direct and indirect) 57.64% - No variation. ICT Name ICT Servicios Informáticos Limitada Type of entity Limited partnership TAX ID 76,107,186-6 Address Santa Rosa 76, piso 9 Phone number (562) 2353 4606 Subscribed and paid capital (Th$) 500,000 Corporate purpose The provision of consulting services in matters related to information technology and computing, telecommunications and data transmission. Core business Consulting services in information and computing technology, telecommunications, and data transmission; acquire and dispose of all assets related to the company´s business. Main Executives Pedro Carrizo Polanco CEO Enersis stake (direct and indirect) 99.99% Proportion of Enersis assets 0.01% INGENDESA DO BRASIL (en liquidación) Name Ingendesa do Brasil Ltda. Type of entity Sociedad de responsabilidad limitada. Address Praça Leoni Ramos, Nº 1, parte, São Domingos, Niterói - RJ, Brasil. Corporate purpose The corporate purpose includes offering services in engineering, studies, projects, technical consulting, management, inspection and supervision of works supply, inspection and reception of materials and equipment for laboratories, appraisals, commercial representation of local and foreign engineering companies, as well as other services that the legal powers permit in the practice of the professions of engineering, architecture, agronomy, geology and meteorology in all their specialties. INVERSIONES DISTRILIMA Name Inversiones Distrilima S.A.C. Type of entity Private company Address Jr. Teniente César López Rojas 201, Maranga, San Miguel, Lima, Perú. Core business Engineering services. Subscribed and paid capital M$48,203 Representative Bruno César Vasconcelos INMOBILIARIA MANSO DE VELASCO Name Inmobiliaria Manso de Velasco Ltda. Type of entity Sociedad de Responsabilidad Limitada TAX ID 79,913,810-7 Address Miraflores 383, piso 29, Santiago, Chile Phone number (562) 2378 4700 Corporate purpose Acquisition, disposal, commercialization and exploitation of real estate and investment companies. Core business Real estate. Subscribed and paid capital (Th$) 25,916,800 Attorneys-in-fact Andrés Salas Estrades Fernando Gardeweg Ried Main executives Andrés Salas Estrades CEO Hugo Ayala Espinoza Jorge Carnevali Flores Commercial relations Property rentals, trading desk services, accounting, tax and other services supply. Commercial accounts trading. Phone number (511) 561 1604 Subscribed and paid capital (Th$) 37,694,885 Corporate purpose Make investments in other companies, most preferably in those Involved in the exploitation of natural resources, and especially those related to the distribution, transmission and generation of electricity. In order to perform according to its purpose and practice the activities related to it, the company may perform all actions and enter into all contracts that the Peruvian laws allow to corporations. The company may also make equity investments in any kind of property including stocks, bonds and any other class of transferable securities, as well as the administration of such investments within the limits set by the board and ordinary shareholders meeting. The activities that are considered within the purpose of the company may be carried out in Peru and abroad. Core business Investments. Board of Directors The Ordinary shareholders meeting that met 03/29/2011 agreed to change the entity Into a Private Company without Board of Directors. Main executives Ignacio Blanco Fernández CEO Enersis stake (direct and indirect) 99.73% Proportion of Enersis assets 2.01% INVERSIONES GASATACAMA HOLDING Name Inversiones Gasatacama Holding Limitada Type of entity Sociedad de Responsabilidad Ltda. Enersis stake 100% - No variation. TAX ID 76,014,570-K Proportion of Enersis assets de Enersis 0.12% Address Avenida Isidora Goyenechea 3365, piso 8, Santiago, Chile 195 Phone number (562) 2366 3800 Core business Investments. Phone number (56 2) 2634 6310 Corporate purpose The company purpose is a) the direct or indirect participation through any kind of association in companies whose purpose include one or more of the following: i) the transportation of natural gas in any of its forms; ii) the generation, transmission, purchase, distribution and sale of electricity, and iii) financing the activities stated in i) and ii) above that are carried out by related third parties, and b) the perception and investment of the assets invested, including lucrative activities related to the ones mentioned. Core business Investments. Subscribed and paid capital (Th$) 174,967,716 Board of Directors Raúl Sotomayor Valenzuela Joaquín Galindo Vélez Eduardo Escaffi Johnson (CFO Enersis S.A.) Gonzalo Dulanto Letelier Alternate Directors Juan Benabarre Benaiges Claudio Iglesis Guillard Eduardo Ojea Quintana Pedro Pablo Errázuriz Main executives Rudolf Araneda Kauert CEO Enersis stake (direct and indirect) 30.75% INVERSORA CODENSA S.A.S. Name Inversora Codensa S.A.S. Type of entity Sociedad por acciones simplificada Address Carrera 11 N°82-76, Piso 4, Bogotá, Colombia Phone number (571) 601 6060 Subscribed and paid capital (Th$) M$ 1,360 Corporate purpose Investment in residential public electric utility services, especially the acquisition of shares in any public electric utility or in any other company that also invests in utilities whose main purpose is residential electricity service according to the definition in Law 142 of 1994, or in any other company that also invests in utilities whose main purpose is residential public electric utility services. Legal Representative David Felipe Acosta Correa Subscribed and paid capital (Th$) 1,224 Enersis stake (direct and indirect) 48.39% Corporate purpose Distribution and commercialization of electricity and the sale of home, sports, entertainment and computers electrical appliances. INVERSORA DOCK SUD S.A. Core business Distribution of electricity. Name Inversora Dock Sud S.A. Type of entity Private company Address Pasaje Engineer Butty 220 Piso 16 Ciudad Autónoma de Buenos Aires Phone number 4229-1000 Subscribed and paid capital (Th$) 20,613,502 Corporate purpose Sole object of capital investment in companies. Core business Investments Board of Directors José M. Hidalgo Martín-Mateos Joaquín Galindo Velez Maria Inés Justo Jorge Norberto Peña Martin Mandarano José Miguel Granged Bruñen Pablo Vera Pinto Alternate Directors Sebastián Ortiz Gerardo Zmijak Juan Carlos Blanco Alejandro Fernández Fernando Claudio Antognazza Enersis stake (direct and indirect) 57.14% LUZ ANDES Name Luz Andes Limitada Type of entity Limited liability company TAX ID 96,800,460-3 Address Santa Rosa 76, Santiago, Chile Main executives Claudio Inzunza Díaz CEO Enersis stake (direct and indirect) 99.09% - No variation. PEHUENCHE Name Empresa Eléctrica Pehuenche S.A. Type of entity Publicly held Limited Liability Company TAX ID 96,504,980-0 Address Santa Rosa 76, Santiago, Chile Phone number (562) 2630 9000 Corporate purpose The company purpose is the generation, transmission, distribution and supply of electricity, for which it may acquire and use the respective concessions, permits and rights. Core business Electricity Generation. Subscribed and paid capital (Th$) 200,319,020 Board of Directors Alan Fischer Hill Alejandro García Chacón Humberto Espejo Paluz Fernando Gardeweg Ried Fernando Prieto Plaza Main executives Lucio Castro Márquez CEO Enersis stake (direct and indirect) 55.57% - No variation. 196 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISPROGAS Name Progas S.A. Type of entity Private company TAX ID 77,625,850-4 Address Avenida Isidora Goyenechea 3365, piso 8, Santiago, Chile Phone number (562) 2366 3800 Corporate purpose Develop the following businesses in the 1st, 2nd and 3rd regions of the country, the acquisition, production, storage, transportation, distribution, transformation and commercialization of natural gas and other oil derivatives and fuels in general, the supply of services, manufacture, commercialization of equipment and materials, and carrying out works related to the above purposes or those necessary for their execution and development, any other activity necessary or leading to comply with the above mentioned purposes. Core business Gas supply. Subscribed and paid capital (Th$) 1,563 Board of Directors Rudolf Araneda Kauert Luis Cerda Ahumada Pedro De La Sotta Sánchez Main executives Alejandro Sáez Carreño CEO Enersis stake (direct and indirect) 30.75% SACME Name Sacme S.A. Type of entity Private company Corporate purpose Conduct, supervise and control the operation of the electricity generation, transmission and sub transmission system of Capital Federal and Gran Buenos Aires, and the interconnections with the Argentine Interconnection System (SADI in its Spanish acronym). Represent the companies Distribuidora Edenor S.A. and Edesur S.A. in terms of operations, before the wholesale market administrator, Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA in its Spanish acronym. In general, adopt all actions necessary to allow it to carry out the administration of the business correctly, as being constituted for this purpose by the concessionaire companies of the electricity distribution and commercialization in Capital Federal and Gran Buenos Aires, all in accordance with the international public tender for the sale of Class A shares in Edenor S.A. and Edesur S.A. and applicable regulations. Core business Conduction, supervision and control of operations of part of the Argentine electricity system. Board of Directors Osvaldo Ernesto Rolando Leandro Ostuni Daniel Flaks Eduardo Maggi Alternate Directors Abel Cresta Leonardo Félix Druker Alberto Rica José Luis Marinelli Main executives Francisco Cerar CEO Enersis stake (direct and indirect) 35.80% Board of Directors Carlos Alberto Luna Cabrera Juan Manuel Pardo Leonardo López Vergara Alternate Directors Fernando Gutiérrez Medina Alba Lucía Salcedo Luís Fernando Salamanca Main executives Fernando Gutiérrez Medina CEO Enersis stake (direct and indirect) 38.19% SOUTHERN CONE POWER ARGENTINA Name Southern Cone Power Argentina S.A. Type of entity Sociedad Anónima Address Avda. España 3301, Buenos Aires, Argentina Phone number (54 11) 4307 3040 Subscribed and paid capital (Th$) 34,670 Corporate purpose Wholesale electricity buying and produced by third parties and to be consumed by third parties. It may also hold participations in companies dedicated to electricity generation. SOCIEDAD PORTUARIA CENTRAL CARTAGENA Name Sociedad Portuaria Central Cartagena S.A. Type of entity Corporation Address Carrera 13 A Nº 93-.66, piso 2 Bogotá, D.C. Colombia. Core business Investments Board of Directors José María Hidalgo Martín Mateos José Miguel Granged Bruñen Roberto José Fagan Alternate Directors Fernando Claudio Antognazza Enersis stake (direct and indirect) 60.01% Address Avda. España 3251, Ciudad Autónoma de Buenos Aires, Argentina Phone number (5411) 4361 5107 Subscribed and paid capital ($Argentinos) 12,000 Subscribed and paid capital (Th$) 1,578 TERMOELÉCTRICA JOSÉ DE Corporate purpose The company’s main purpose is the following: 1. Investment, construction and maintenance of docks and private and public ports, their management and operations and the development and operation of a multipurpose port, according to the law, among others. SAN MARTÍN Name Termoeléctrica José de San Martín S.A. Type of entity Sociedad Anónima Address Elvia Rawson de Dellepiane 150, piso 9, Buenos Aires, República de Argentina 197 Phone number (511) 561 0386 Subscribed and paid capital (Th$) 40,314 Corporate purpose The generation of electricity and its block commercialization, and particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE N° 1427/2004”, approved by Resolution SE N° 1193/2005. Core business Electricity Generation. Board of Directors José María Vázquez Claudio O. Majul José Miguel Granged Bruñen Fernando Claudio Antognazza Patricio Testorelli Martín Genesio Gerardo Carlos Paz José Manuel Tierno Jorge Ravlich Alternate Directors Juan Carlos Blanco Roberto José Fagan Adrián Gustavo Salvatore Leonardo Pablo Katz Iván Durontó Emiliano Chaparro Luís Agustín León Longobardo Sergio Raúl Sánchez Rigoberto Orlando Mejía Aravena Main executives Claudio Omar Majul CEO - Gerente de Main Executives y Finanzas Fernando Rabita - Gerente Operativo de Planta Guillermo Paillet - Gerente Comercial Enersis stake (direct and indirect) 10.38% TERMOELÉCTRICA MANUEL BELGRANO Name Termoeléctrica Manuel Belgrano S.A. Corporate purpose The purpose of the company is the generation of electricity and its block commercialization, and particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE N° 1427/2004”, approved by Resolution SE N° 1193/2005. Core business Electricity Generation. Board of Directors Patricio Testorelli Martín Genesio Adrián Gustavo Salvatore José María Vásquez Fernando Claudio Antognazza José Miguel Granged Bruñen Gerardo Carlos Paz José Manuel Tierno Jorge Ravlich Alternate Directors Rigoberto Orlando Mejía Aravena Juan Carlos Blanco Roberto José Fagan Leonardo Marinaro Leonardo Pablo Katz Emiliano Chaparro Luis Agustín León Longobardo Sergio Raúl Sánchez Iván Diego Durontó Main executives Gabriel Omar Ures CEO Gustavo Manifesto Gerente Técnico Óscar Zapiola Gerente de Main Executives y Finanzas Sergio Schmois Gerente Comercial Enersis stake (direct and indirect) 10.38% TESA Name Transportadora de Energía S.A. Type of entity Sociedad Anónima Type of entity Corporation Address Bartolomé Mitre 797, piso 11, Buenos Aires, República de Argentina Address Suipacha 268, piso 12, Buenos Aires, Argentina Phone number (5411) 4394 1161 Phone number (511) 561 0386 Subscribed and paid capital (Th$) 40,314 Subscribed and paid capital (Th$) 8,063 Corporate purpose Supply high voltage electricity transmission services in relation to national and international electricity systems, according to current legislation, for which it may take part in national or international tenders, become a public utility concessionaire in local or international high-voltage electricity transmission, and perform all activities necessary for these purposes, including but not limited to, becoming a part of construction, operation and maintenance for the start up or expansion of electricity transmission lines, participate in financing of projects directly or indirectly related to such endeavors as borrower and/or lender and/or guarantor, and allowed to give guarantees in favor of third parties. All activities considered in the Financial Institutions Act and any other that requires the assistance of government funds are excluded. Core business Electricity transmission. Directores José María Hidalgo Martín-Mateos Guilherme Gomes Lencastre Arturo Miguel Pappalardo Alternate Directors José Venegas Maluenda Juan Carlos Blanco Roberto José Fagan Main executives Arturo Pappalardo CEO Enersis stake (direct and indirect) 83.53% TRANSQUILLOTA Name Transmisora Eléctrica de Quillota Ltda. Type of entity Sociedad de Responsabilidad Limitada TAX ID 77,017,930-0 Address Tax IDa 60, km 25, Lo Venecia, Comuna de Quillota, V Región de Valparaíso Phone number (562) 2630 9000 Subscribed and paid capital (Th$) 4,404,446 Corporate purpose Transmission, distribution and supply of electricity, by itself or through third parties. Core business Electricity transmission. Attorneys-in-fact Juan Eduardo Vásquez Moya Gabriel Carvajal Menególlez Ricardo Santibáñez Zamorano 198 IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 2013 ANNUAL REPORT ENERSISAttorneys-in-fact Alternate Eduardo Calderón Avilés Carlos Ferruz Bunster Ricardo Sáez Sánchez Enersis stake (direct and indirect) 30.75% TÚNEL EL MELÓN Name Sociedad Concesionaria Túnel El Melón S.A. Type of entity Private company TAX ID 96,671,360-7 Address Santa Rosa 76, Santiago, Chile Phone number (562) 2690 5081 Subscribed and paid capital (Th$) 19,028,480 Corporate purpose Execution, construction and exploitation of the public highway tunnel called Tunnel El Melón and the supply of complementary services, authorized by the Ministry of Public Works. Core business Infrastructure concessionaire Board of Directors Eduardo Escaffi Johnson (CFO of Enersis S.A.) Sebastián Fernández Cox Vacant Main executives Maximiliano Ruiz Ortíz CEO Enersis stake (direct and indirect) 59.98% - No variation. YACYLEC S.A. Name Yacylec S.A. Type of entity Private company Subscribed and paid capital (Th$) 1,612,544 Corporate purpose Construction, operation and maintenance of the electrical link between the hydroelectric Yacyreta (Corrientes Province), and the transformer station resistance (Chaco province), and the provision of services of transport of electricity. Core business Electricity transmission. Board of Directors Jorge Neira (Chairman) Juan Manuel Pereyra (ViceChairman) José María Hidalgo Martín-Mateos Juan Carlos Blanco Gerardo Luis Ferreyra Osvaldo Acosta Guillermo Díaz Eduardo Martín Albarracin Miguel Angel Sosa Luis Juan Bautista Piatti Arturo Pappalardo Patricia Liliana Díaz Alternate Directors Ricardo Repetti Javier Elgueta María Inés Justo Roberto José Fagan Pecollo Gianfranco Catrini Massimo Villa Roberto Leonardo Maffiolli Darío Ballaré Sergio Vestfrid Daniel Garrido Robert Ortega Alberto Verra Main executives Arturo Pappalardo (CEO) Alberto Funes Alberto Ledesma Jessica Chelén Enersis stake (direct and indirect) 22.22% Proportion of Enersis assets de Enersis 0.02% Notes: 1. There are no acts or contracts subscribed by Enersis S.A. with its subsidiaries or associates that significantly influence Enersis S.A. operations. 2. In subsidiaries and associates that do not include the item Proportion of Enersis assets, Enersis does not hold a direct Investment. Address Bartolomé Mitre 797, piso 11º; Ciudad Autónoma de Buenos Aires. 3. In subsidiaries and associates that do not include the item commercial relations, Enersis does not have a commercial relations. Phone number (5411) 4587 4322 199 Declaration of responsibility 200 DECLARATION OF RESPONSIBILITY 2013 ANNUAL REPORT ENERSISDeclaration of responsibility The members of the board of directors and chief executive officer of Enersis, the signatories to this declaration, swear to accept responsibility for the accuracy of all the information contained in this document, in compliance with general rule N°30 of the Superintendence of Securities and Insurance. CHAIRMAN Pablo Yrarrázaval Valdés Tax ID: 5,710,967-K VICECHAIRMAN Borja Prado Eulate Passport: AAC809697 DIRECTOR Andrea Brentan Passport: YA0688158 DIRECTOR Luigi Ferraris Passport: YA2600789 DIRECTOR Hernán Somerville Senn Tax ID: 4,132,185-7 DIRECTOR Leonidas Vial Echeverría Tax ID: 5,719,922-9 DIRECTOR Rafael Fernández Morandé Tax ID: 6,429,250-1 CEO Ignacio Antoñanzas Alvear Tax ID: 22,298,662-1 201 Santiago Stock Exchange ENERSIS New York Stock Exchange ENI Madrid Stock Exchange XENI Enersis S.A. was incorporated, initially, with the name Compañía Metropolitana de Distribución Eléctrica S.A., and changed its name to Enersis S.A. on August 1, 1988. Its corporate capital is ThCh$5,669,280,725, divided into 49,092,772,462 shares. Its shares are quoted on the Chilean exchanges, on the New York Stock Exchange in the form of American Depositary Receipts (ADR) and on the Latin American Securities Exchange of the Madrid Stock Exchange (Latibex). Its main business is the exploitation, development, operation, generation, distribution, transmission, transformation and/or sale of energy in any of its forms or nature, directly or through other companies, and also businesses in telecommunications and engineering consultancy services, in Chile and abroad, in addition to investing and managing its investments in subsidiaries and associate companies. Its total assets amounted to ThCh$15,177,664,307 as of December 31, 2013. Enersis controls and manages a group of companies that operate in the electricity markets of five countries in Latin America (Argentina, Brazil, Chile, Colombia and Peru). In 2013, net income attributable to the dominant company amounted to MCh$658,514 and operating income amounted to MCh$1,741,138. At the end of 2013, it provided direct jobs to 11,574 people through its subsidiaries in South America. Directors and Executive Officers CHAIRMAN Pablo Yrarrázaval Valdés PHONE NUMBER (56-2) 2353 4663 VICE CHAIRMAN Borja Prado Eulate PHONE NUMBER (56-2) 2353 4631 DIRECTOR Andrea Brentan PHONE NUMBER (56-2) 2353 4631 DIRECTOR Luigi Ferraris PHONE NUMBER (56-2) 2353 4631 DIRECTOR Hernán Somerville Senn PHONE NUMBER (56-2) 2353 4631 DIRECTOR Leonidas Vial Echeverría PHONE NUMBER (56-2) 2353 4631 DIRECTOR Rafael Fernández Morandé PHONE NUMBER (56-2) 2353 4631 CEO Ignacio Antoñanzas Alvear PHONE NUMBER (56-2) 2353 4510 DEPUTY CEO Massimo Tambosco PHONE NUMBER (56-2) 2353 4613 COMMUNICATIONS OFFICER Daniel Martini PHONE NUMBER (56-2) 2353 4666 INTERNAL AUDIT OFFICER Alain Rosolino PHONE NUMBER (56-2) 2353 4647 ADMINISTRATION, FINANCE AND CONTROL OFFICER Eduardo Escaffi Johnson PHONE NUMBER (56-2) 2353 4682 PLANNING AND CONTROL OFFICER Marco Fadda PHONE NUMBER (56-2) 2353 4684 LEGAL COUNCEL AND SECRETARY OF THE BOARD Domingo Valdés Prieto PHONE NUMBER (56-2) 2353 4631 HUMAN RESOURCES OFFICER Carlos Niño Forero PHONE NUMBER (56-2) 2675 2780 PROCUREMENT OFFICER Eduardo López Miller PHONE NUMBER (56-2) 2353 4635 SHARED SERVICES OFFICER Jaime Sánchez-Cano PHONE NUMBER (56-2) 2353 5159 Investor Relations INVESTOR RELATIONS DIRECTOR Pedro Cañamero González PHONE NUMBER (56-2) 2353 4682 CITIBANK NY Teresa Loureiro-Stein PHONE NUMBER (1-212) 816 6814 SANTANDER INVESTMENT Ignacio Algora PHONE NUMBER (34-91) 289 3951 Design and Production LEADERS Annual Report s i s r e n E t r o p e R l a u n n A 3 1 0 2 Enersis es una empresa del Grupo Enel www.enersis.cl Annual Report and Financial Statements of Enersis 2013 @ABCDEF) GA!A

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