Enel Americas
Annual Report 2019

Plain-text annual report

Santiago Stock Exchange ENELAM New York Stock Exchange ENIA Enel Américas was initially established under the name Compañía Chilena Metropolitana de Distribución Eléctrica S.A. On December 1, 2016 the company changed its name to Enel Américas S.A. The Company’s share capital on December 31, 2019 reached US$9,783,875 thousand and was represented by 76,096,311,036 shares. These shares are traded in the Chilean stock exchanges and in the New York Stock Exchange in the form of American Depositary Receipts (ADR). The main business of the Company is the operation, development, generation, distribution, transmission, transforma- tion and/ or sale of energy in any of its forms or nature, directly or through other companies. The Company can also exercise activities in the telecommunications sector, provide engineering advisory in the country and abroad, and also can invest and manage its investments in its subsidiaries and associate companies. Total assets amounted to US$ 29,845,994 thousand on December 31, 2019. Enel Américas controls and manages a group of companies that operates in the electricity markets in four countries in Latin America (Argentina, Brazil, Colombia and Peru). In 2019, net income attributable to the controlling company reached $1,685,063 thousand and operational income was $2,876,484 thousand. By the end of 2019, the Company employed 17,618 people through its subsidiaries companies in Latin America. ANNUAL REPORT ENEL AMÉRICAS 2019 “2020 will have new challenges for our Company, which we will face with enthusiasm, responsibility and transparency” 2 Letter from the Chairman Dear shareholders: During the 2019 financial year, we acomplished a historic US$ 3 billion capital increase, supported by the majority of our in- You are holding the 2019 Annual Report and Financial State- vestors permitting us to lay the foundations for future growth ments of Enel Américas S.A. In this document you will learn and to continue the work on our strategy based on electrifi- about the actions the Company has taken to achieve solid re- cation, digitization and new services in the coming years. sults. 2019 was a special year as we celebrated the 25th anniversary of our first listing on the New York Stock Exchange, closing with the traditional “Ring the bell” on that day. We are proud to say that we have positioned ourselves as an internationally relevant player which, year-to-year, is growing in sustainability promoting a fair energy transition that will help us shape a better future for the region. Results of the period We are the largest private utility company in Latin America nomic environment, Enel Américas´ EBITDA increased by generating and distributing energy to 24.7 million clients and 19% as compared to 2018, reaching US$ 3,994 million, main- are present in the main cities of the subcontinent. ly explained by a significant improvement in the results in During this period, despite the region’s complex macroeco- Brazil, with the consolidation of Enel Distribución São Paulo and the completion of Its tariff review. Also because of an ex- traordinarily positive impact in Argentina stemming from the agreement signed between Edesur and the National State of Argentina. 1. Letter from the Chairman 3 Industrial growth Looking at our industrial growth we evaluate 2019 positively with revenues reaching US$ 14,314 million, thanks to higher operating revenues in Brazil, Peru, and Argentina, which led to a 10.2% increase as compared to the previous year. In Brazil, we had a year marked by higher operating revenues leading to a 37%, increase in EBITDA and we reached US$ 1,644 million at the end of 2019. Enel Distribución São Paulo acomplished the best indices in its history and the best posi- tion of all Brazilian distributors. Beyond our work, in 2019 we decided to take a chance opening energy to new uses during the Innovation and Sustainability Day; we also launched Ur- ban Futurability, a Smart City’s Future lab project to be im- plememnted in São Paulo as part of the Company’s commit- ment that we hope will lead to energy transition. Enel Brasil received the National Innovation Award from the country’s In- dustry Confederation, and Economic Value, the most import- ant business newspaper in Brazil, applauded us for being the most innovative Company in the electricity sector. In Argentina, we invested in technology seeking to improve the supply for all our clients, which led to Edesur improving its service quality by 40% in summer. Other investments we made were the reconstruction of the Brown Substation and Enel X, through agreements signed with different municipali- ties, installed 8,000 new LED lights. We also promoted elec- tromobility in the country by inaugurating 60 new charging stations for electric vehicles, managing to link the whole and vast Argentine territory. And we added the first company to distributed generation, by installing 60 panels in EXO, a tech- nology company. In Peru, we celebrated the 25th anniversary of Enel Distribu- ción in a period marked by large investments that will permit us to improve the electrical service we provide for our clients. The Izaguirre Electric Transmission Substation, with an invest- ment of $42 million soles, began to operate and will directly benefit some 110,000 clients in the San Martín de Porres dis- trict. We put emphasis on generation reconstucting the Cal- lahuanca hydroelectric plant (84.1 MW), damaged by the “El Niño Costero” phenomenon investing US$ 40 million there. And the first electric public transport bus began to roll along the streets of Lima. In Colombia, the most important effort of the last 20 years took place in Girardot and the Alto Magdalena Province in Cundinamarca requiring a $20 billion Colombian peso invest- ment where, seeking to respond to the growth of energy de- mand in the region, we built a medium tension replacement substation between the Mangos and Diamante substations. We invested US$ 6 million in the installation of the country’s first lithium-ion storage battery facility at the Termozipa plant, which will improve reliability within the national electrical sys- tem. LED lights were also installed in different municipalities and cities, and Enel-Codensa launched Enel X, a new line of business aimed at offering innovative, sustainable, and digital products and services. Our future We are proud to see the name of Enel Américas amongst the world’s leading sustainability ratings. We were included in the RobecoSAM’s Sustainability Yearbook in 2019 as one of 4 Annual Report Enel Américas 2019 the highest-scoring companies and, highlighting our sustain- However, the truth is that in this harsh and difficult con- ability strengths, we received the Industry Mover distinction. text, without any precedent, Enel Américas has numerous We were also confirmed in the FTSE4Good Index Series and strengths that make us confident in the future. The intrinsic ratified in Vigeo-Eiris’ Best Emerging Markets Performers list, fundamentals that define our competitive standing not only a ranking that includes the 800 best performing companies in our sector put us in an unrivaled position to try to recover from 31 emerging markets. We received the LatinFinance what this crisis might harm. Project Sponsor of the Year becoming the first winner in this category, a distinction that recognizes our solid work and I sincerely want to thank everyone who has worked for Enel leadership in the region. The Company was also recognized Américas to achieve these results. I am thinking of the Com- by ALAS20 as the best company in Chile and obtained the pany´s Directors, Managers, Executives, Professionals, Tech- first place as a Leading Company in Sustainability in Chile and nicians and Employees who have done a vital job working to- as a Leading Company in Corporate Governance, also in Chile. wards its development. If 2019 was the consolidation year, in 2020 we will seek to We are aware of the challenges existing in the region, so I remain at the forefront, using the best technologies to create would like to invite all of you to continue along this path, mo- new opportunities that will help us grow in electricity genera- tivated and contributing positively to Enel Américas´ future, tion, distribution and transmission. focusing our efforts on electrification, digitalization and new . services that contribute to a fair and sustainable energy transi- As a company, we will facilitate access to progress through tion, strengthening our role in providing an ever better service energy in the communities where we are present, as well as to all the people we serve in the region. establish long-lasting partnerships with our stakeholders to achieve our and their goals. Sustainability is the cornerstone Thank you of our Company, and we shall continue to work on improving the lives of those around us. As I write these words, the world is in the grip of a real, surprising, and truly global threat: COVID-19. The enormous health and humanitarian concerns and sacrifice this global pandemic will cause are long-term. However, the truth is that humanity has never been better prepared to fight a biological threat. This war, because that is what it is, is going to be won by common effort. And like any war, it will have economic effects, the seriousness of which will depend essentially on the duration of the containment measures that governments must necessarily impose, to safeguard the most important issue: human health. Borja Acha Chairman of the Board Enel Américas 1. Letter from the Chairman 5 6 Memoria Anual Enel Américas 2019 CONTENTS Enel Américas 2019 CHAPTER 01. Letter from the Chairman 02. Open Power 03. 2019 Milestones 04. Main financial indicators 05. Identification of the company and constituent documents 06. Property and control 07. Administration 08. People and organization 09. Stock exchange transactions 10. Dividends 11. 2019 Investment and financing policy 12. Businesses of the company 13. Capital increase 14. Investments and financial activities 15. Risk factors 16. Regulatory framework of the electricity industry 17. Description of the electricity business by country 18. Sustainability 19. Summary of shareholdings 20. Identification of subsidiaries and associate companies 21. Significant events 22. Statement of responsibility PAGE 2 8 10 15 19 23 29 45 55 61 67 71 79 83 93 117 145 175 183 189 205 243 7 Enel Américas is Open Power O p e n Po w e r P u r p o s e O p e n p o w e r f o r a b r i g h t e r f u t u r e . We e m p o w e r s u s t a i n a b l e p r o g r e s s . P V CPPo s i t i o n i n g M V i s i o n O p e n p o w e r t o t a ck l e s o m e o f t h e w o rl d ' s b i g g e s t c h a l l e n g e s . Va l u e s Tr u s t P r o a c t i v i t y R e s p o n s i b i I n n o v a t i o n i t y l V P r i n c i p l e s o f C o n d u c t l y a c t i v i t i e s a n d t a k e • M a k e d e c i s i o n s i n d a i i t y f o r t h e m . l r e s p o n s i b i l a b o r a t e a n d i n g t o c o l l l • F o l • S h a r e i n f o r m a t i o n , b e i n g w i o p e n t o t h e c o n t r i b u t i o n o f o t h e r s . l o w t h r o u g h w i t h c o m m i t m e n t s , p u r s u i n g a c t i v i t i e s w i t h d e t e r m i n a t i o n a n d p a s s i o n . • C h a n g e p r i o r i t i e s r a p i d l y i f t h e s i t u a t i o n e v o l v e s . • G e t r e s u l t s b y a i m i n g f o r e x c e l • A d o p t a n d p r o m o t e s a f e b e h a v i o r a n d m o v e p r o - a c t i v e l y t o i m p r o v e c o n d i t i o n s f o r h e a l t h , s a f e t y l , r e c o g n i z i n g a n d l - b e i n g . l e n c e . l a n d w e l d i s a b i i t i e s , e t c . ) . i t i e s , p e r s o n a l • W o r k f o r t h e i n t e g r a t i o n o f a l l e v e r a g i n g i n d i v i d u a l d i v e r s i t y ( c u l t u r e , g e n d e r, a g e , • W o r k f o c u s i n g o n s a t i s f y i n g c u s t o m e r s a n d / o r c o - w o r k e r s , a c t i n g e f f e c t i v e l y a n d r a p i d l y. • P r o p o s e n e w s o l u t i o n s a n d d o n o t g i v e u p w h e n • R e c o g n i z e m e r i t i n c o - w o r k e r s a n d g i v e f e e d b a ck f a c e d w i t h o b s t a c l e s o r f a i t h a t c a n i m p r o v e t h e i r c o n t r i b u t i o n . l u r e . • O p e n a c c e s s t o e l e c t r i c i t y f o r m o r e M i s s i o n • O p e n t h e w o r l d o f e n e r g y t o n e w p e o p l e . • O p e n u p t o n e w u s e s o f e n e r g y. t e ch n o l o g y. • O p e n u p t o n e w w a y s o f m a n a g i n g e n e r g y f o r p e o p l e . • O p e n u p t o n e w p a r t n e r s h i p s . 8 Annual Report Enel Américas 2019 V Va l u e s Tr u s t P r o a c t i v i t y R e s p o n s i b i I n n o v a t i o n i t y l V i s i o n O p e n p o w e r t o t a ck l e s o m e o f t h e w o rl d ' s b i g g e s t c h a l l e n g e s . Enel Américas is Open Power O p e n Po w e r P u r p o s e O p e n p o w e r f o r a b r i g h t e r f u t u r e . We e m p o w e r s u s t a i n a b l e p r o g r e s s . M i s s i o n • O p e n a c c e s s t o e l e c t r i c i t y f o r m o r e • O p e n t h e w o r l d o f e n e r g y t o n e w t e ch n o l o g y. • O p e n u p t o n e w u s e s o f e n e r g y. • O p e n u p t o n e w w a y s o f m a n a g i n g e n e r g y f o r p e o p l e . • O p e n u p t o n e w p a r t n e r s h i p s . p e o p l e . M P V CPPo s i t i o n i n g a n d w e l Open Power • F o l l l l l e n c e . l a b o r a t e a n d l y a c t i v i t i e s a n d t a k e i n g t o c o l P r i n c i p l e s o f C o n d u c t • M a k e d e c i s i o n s i n d a i i t y f o r t h e m . r e s p o n s i b i • S h a r e i n f o r m a t i o n , b e i n g w i o p e n t o t h e c o n t r i b u t i o n o f o t h e r s . l o w t h r o u g h w i t h c o m m i t m e n t s , p u r s u i n g a c t i v i t i e s w i t h d e t e r m i n a t i o n a n d p a s s i o n . • C h a n g e p r i o r i t i e s r a p i d l y i f t h e s i t u a t i o n e v o l v e s . • G e t r e s u l t s b y a i m i n g f o r e x c e l • A d o p t a n d p r o m o t e s a f e b e h a v i o r a n d m o v e p r o - a c t i v e l y t o i m p r o v e c o n d i t i o n s f o r h e a l t h , s a f e t y l , r e c o g n i z i n g a n d l e v e r a g i n g i n d i v i d u a l d i v e r s i t y ( c u l t u r e , g e n d e r, a g e , • W o r k f o r t h e i n t e g r a t i o n o f a l i t i e s , e t c . ) . • W o r k f o c u s i n g o n s a t i s f y i n g c u s t o m e r s a n d / o r i t i e s , p e r s o n a l c o - w o r k e r s , a c t i n g e f f e c t i v e l y a n d r a p i d l y. • P r o p o s e n e w s o l u t i o n s a n d d o n o t g i v e u p w h e n • R e c o g n i z e m e r i t i n c o - w o r k e r s a n d g i v e f e e d b a ck f a c e d w i t h o b s t a c l e s o r f a i t h a t c a n i m p r o v e t h e i r c o n t r i b u t i o n . l - b e i n g . d i s a b i l u r e . l 9 3. 2019 Milestones JANUARY FEBRUARY MARCH Enel Américas becomes the first multinational in Enel Américas is included for the first time in Robe- Colombia: greater facilities to pay for SITP ticket South America certified by ISO37001 Anti-Bribery Certification Enel Américas received the ISO 37001 certification, coSAM’s 2019 Sustainability Yearbook Enel Américas qualified for inclusion in the 2019 with Easy Codensa Credit Card The Codensa Easy Credit card permits to use up to Sustainability Yearbook as one of the best-scoring 4 tickets per day, which are then paid interest-free at which recognizes the effectiveness of its anti-brib- companies in the industry and received the Indus- the end of the month together with the Enel-Coden- ery management system, thus consolidating our try Mover Award. Through this recognition, the sa energy bill. This service, available to Bogotá citi- leadership in ethics and transparency. In 2018, the investment firm RobecoSAM seeks to showcase zens, benefited more than 800,000 people. Company had already obtained the certification of companies that have proven their strengths in sus- its Criminal Risk Prevention Model pursuant to Law tainability. 20.393. Colombia: Launch of an initiative to bring clean wa- ter to Cundinamarca educational institutions Through an agreement between the Enel Colom- bia Foundation and the Siemens Foundation, water treatment filters for human consumption were in- Colombia: Mayor Peñalosa installed 80,000 LED lights to modernize Bogotá ‘s public lighting system Before the end of the Peñalosa administration, Bo- Enel Américas announces its plan for a US$3.5 bil- lion capital increase On February 27, the Company announced its plan to raise capital for up to US$ 3.5 billion, to repay stalled in various educational institutions. The ini- gotá will have 150,000 new LED lights. Through the 2018 Enel Brazil’s debt to purchase Eletropaulo, tiative, called VITAL by its Spanish acronym “Life, Enel-Codensa, its network operator, the municipali- while also keep enough funds to restructure Elet- Innovation, Technology and Clean Water” directly ty invested more than $ 58 billion Colombian pesos ropaulo’s pension fund liabilities and reduce contin- benefits 70 students from San Antonio del Tequen- for the purchase of LED lights. gency provisions in Brazil. dama and 360 from Sibaté. Colombia: Enel Group companies, the country’s Standard & Poor’s, Fitch Ratings, Moody’s and Fell- Peru: Recovery of the Callahuanca Hydroelectric first in anti-bribery certification Enel-Codensa and Enel-Emgesa were certified under ISO 37001 recognizing the effectiveness of er Rate maintain their rating and perspective after capital increase announcement Following the February 27announcement, the four Power Plant commercial operations After more than two years of continuous efforts with the insurance company, the reconstruction of their anti-bribery management system. In 2017, the rating agencies maintained their rating and perspec- the Callahuanca hydroelectric plant (84.1 MW) was companies had already been recognized by the tive for the Company. Presidency’s Transparency Secretariat as “Active Anti-Corruption Enterprise”. Argentina: Brown Substation reconstructed The civil works for the reconstruction of the com- plete Section III of Medium Voltage cells were com- pleted. successfully completed. The plant´s infrastructure was damaged by the “El Niño Costero” phenom- enon in 2017. The investment involved in the recon- struction totaled US$ 40 million. Moody’s confirms Enel Américas´ rating and chang- es perspective to “Stable” On March 4, Moody’s confirmed the “Baa3” rating and changed the perspective from “Negative” to “Stable”, explained primarily by the expectation of a decrease in the Company´s indebtedness level stemming from the capital increase announcement. 10 Annual Report Enel Américas 2019 APRIL MAY JUNE Enel Américas approves capital increase The Extraordinary Shareholders’ Meeting approved Brazil: Enel South America Day and Innovation Day Enel Brasil organized, for the first time, the South a US$ 3 billion capital increase whose aims is to America Enel Day. The event was held in Rio de Enel Américas confirmed in the FTSE4Good Index Series The Company joined this index in September 2017 strengthen the flexibility of the Company’s balance Janeiro on May 2. In addition, on May 6 the Innova- in the Emerging Markets and Latin America Index sheet and to prepare it for new growth. tion Day, Enel’s global Innovation and Sustainability category. The index was created in 2001 by FTSE event was celebrated in the City of São Paulo, also Russell, the Global Index Company, owned by the Argentina: Edesur significantly improves service for the first time in the country. London Stock Exchange Group, and includes more quality In summer 2019, thanks to important investments Colombia: Enel-Codensa presents Enel X, its new into three pillars: environmental, social, and corpo- than 300 indicators on 14 different topics, grouped in the network, Edesur managed to improve its ser- line of business offering innovative, sustainable and rate governance. vice quality by 40%. This continuous improvement is due to the Company’s efforts to equip its network digital products and services This new line of business offers different energy Brazil: Enel Brasil received the 2019 National Inno- with better technology and reliability. service solutions to clients throughout the country, vation Award from the Brazilian Confederation of Colombia: Enel-Emgesa receives energy efficiency with solar panels, electro-mobility projects, lighting, including the development of photovoltaic systems Industry (CNI) The Annual National Innovation Award offered by award The Company received the recognition for promot- ing a better use of energy resources in different efficient street lighting and products and services the Brazilian Confederation of Industry aims to en- for the home, among others. courage and recognize companies that contribute to increase Brazil’s competitiveness, through the operational processes and for contributing to the Colombia: Enel-Emgesa to install Colombia’s first development of innovative methods and practices. country’s energy transition. The award was present- ed at the fifth version of the ANDESCO’s National energy storage battery system This innovative project, involving a US$ 6 million in- Enel Brasil was recognized in the 2019 version of the award as the most innovative company in the Energy Efficiency Awards ceremony. vestment, is a 7 MW/3.9 MWh lithium-ion battery “Innovation in marketing” category among all sec- storage system installed at the Termozipa Plant per- tors of the Brazilian economy. Colombia: LED lights take over the Sibaté and Vil- mitting to increases its capacity and contributing to the reliability of the national electricity system. Colombia: Enel-Codensa is recognized as a sustain- lapinzón public lighting systems More than 3,200 lights were equipped with LED able company The Company received the 2019 Andesco Grand technology in Sibaté and an additional 20,000 in Colombia: Project launched to improve Huila cocoa Villapinzón, improving the quality of life of the municipality´s inhabitants. The work was part of productivity over the next 30 years The Cocoa Effect is a partnership between the U.S. Award for Sustainability, within the framework of the 21st Public Service Congress. The integration of Enel-Codensa’s public lighting contract with local Agency for International Development (USAID), sustainability into business strategy and operational municipalities. Luker Chocolate, The Luker Foundation, Enel-Emge- decisions, creating shared value with its target au- sa Saldarriaga Concha Foundation and Eafit, which diences, was one of the factors of the recognition. Peru: The “Da Vinci Experience” - the immersive is part of the National Government’s Competitive Another factor was the implementation and certi- and digital exhibition comes to Peru The exhibition explores the work of the creator and Partnerships for Equity. More than 400 families fication of the Anti-Bribery Management System, from the Huila department were direct beneficia- once again reinforcing the importance of transpar- visionary artist, Leonardo da Vinci. This exhibition ries. ency in business relationships. employed sensory 4™ technology showing full HD videos with Da Vinci’s best works on the walls. Af- ter two months, the exhibition continued its tour of Latin America. Peru: Successful bond emission by Enel Distribu- ción Perú In May and June, the Company placed local bonds with the value of US$ 38 million and US$ 27 million, Colombia: Enel-Emgesa continues to promote pro- ductive projects in Huila with a $13 billion Colombi- an peso co-financing The resources were secured thanks to an agree- respectively. Both operations set records for the ment between the Huila Governorate, the mayors lowest spread in the Peruvian market. in the El Quimbo area and Enel-Emgesa. The proj- ect seeks to strengthen production chains such as coffee, cocoa, and avocado, as well as the im- provement of rural roads, among others. More than 14,000 families in the region benefitted from the investments. 3. 2019 Milestones 11 JULY AUGUST Enel Américas celebrates 25th anniversary on the Enel Américas receives “Business Generation – Di- Enel Colombia is recognized as the most equitable NYSE The Company closed the Wall Street trading day with the traditional bell-ringing ceremony to cele- ario Financiero” Award for its commitment to ethics and transparency The Group’s companies in Chile, together with Enel company in the utilities sector The Company received the recognition in the 2019 Gender Equity in Organizations PAR Ranking de- brate the 25-year long listing on the New York Stock Américas, received the award from the Fundación veloped by Aequales. In four years, Enel Colombia Exchange. The ceremony also featured Enel Chile, Generación Empresarial and Diario Financiero for managed to increase the number of women en- which was part of Enersis S.A., the company that the systematic promotion, both internally and exter- rolled in the ‘Plan Semilla’, a program that trains originally traded in the NYSE. nally, of ethics and best corporate compliance prac- young people in energy-related careers, from 1% Enel Américas ratified among Best Emerging Mar- participants. The evaluation included the Company’s tices, obtaining one of the 3 best ratings among 49 to 38%. kets Performers by Vigeo-Eiris. In June 2018, the Company entered the Vigeo-Eiris’ Best Emerging Markets Performers list, which in- cludes the 800 best performing companies from 31 emerging markets. formal tools and documents, as well as an assess- Argentina: Edesur is Argentina’s first Pet Friendly ment of ethics and transparency culture. Argentina: Enel X installs LED lights Enel X installed a total of 8,000 new LED lights Company The Company´s commercial office in San José 190 opened its doors to clients’ pets and Edesur became Argentina’s first pet friendly service com- thanks to the agreements reached with municipal- pany. This is a pilot experience that, if evaluated in Argentina: Regulatory Asset Liability signed Edesur and the government of Argentina agreed to ities. a positive way, will be extended to the rest of the offices within the concession area. transfer Edesur’s concession to the jurisdiction of Colombia: Enel-Codensa recognized as an inspiring the City and Province of Buenos Aires. The National State and Edesur signed an Agreement on Liability Company The Company was, for the second consecutive Adjustment to end outstanding reciprocal claims year, recognized as Inspiring Company 2019, award- Peru: Enel Distribución celebrated 25th anniversary with clients and authorities The event brought together the main players in the arising from the 2006-2016 period, thus resolving a ed by the ANDI Foundation, for the “Plan Semilla” Peruvian energy sector and various business lead- challenging long-standing situation. initiative - a program that seeks to create develop- ers. The positive results of the energy sector privat- Brazil: Enel Brasil recognized as the most innovative able populations, providing them with training, in ny’s commitment to investing in the modernization company in the Brazilian electricity sector with the alliance with the SENA. of the sector was renewed. ment opportunities for young people from vulner- ization were shown over the years and the Compa- Inovação Value Award Valor Econômico, Brazil´s most important business newspaper, recognizes, once a year, the main in- SEPTEMBER novative companies. Enel Brasil was ranked as the Fitch Ratings assigns “A-” rating and “Stable” per- spective to Enel Américas On September 9, Fitch Ratings upgraded the Com- most innovative company in the Brazilian electricity Enel Américas successfully concludes US$ 3 billion pany´s international ranking from “BBB+” to “A-”, sector in 2019. capital increase This is the largest capital increase in Latin America maintaining the perspective as “Stable”. The local classification changed from “AA(cl)” to “AA+(cl)”. Colombia: Enel-Emgesa invested $6 billion Colom- in the last five years. Chief Executive Officer, Maur- Fitch has also confirmed the stock rating as “First bian pesos to deliver water to La Guajira The drinking water distribution system will benefit izio Bezzeccheri thanked investors for their support Class Level 1 (cl)”. and explained that the operation would permit to more than 3,000 people in the Maicao municipality, strengthen the Company´s capital structure and cre- in La Guajira. The works model that Enel-Emgesa ate space for new growth. OCTOBER opted for, and which will end in December 2020, is carried out under the tax incentive mechanism. Colombia: The DaVinci Experience, an immersive Brazil: Enel CEO Francesco Starace launches Urban Colombia: El Quimbo’s discarded wood is used in Huila brick production More than 30 micro-enterprises in the Huila depart- arts exhibition arrives in Bogotá The Enel Group companies in Colombia commemo- Futurability project in São Paulo As part of Enel’s commitment to leading the energy rated the 500th anniversary of the death of the Ital- transition, Enel CEO Francesco Starace launched on ian master Leonardo da Vinci through an immersive October 9 the Urban Futurability project, a Smart ment have benefited from wood and biomass deliv- arts exhibition. The exhibition included large-format City’s Future laboratory to be installed by Enel São ered by Enel-Emgesa free of charge. The provided film projections and the display of 10 full-scale ma- Paulo in the Vila Olimpia district. Mr. Starace also at- material was used to produce bricks required for chines, as well as a virtual reality experience. tended one of the Brazilian Investment Forum pan- the construction of 500 average-sized homes. els organized by the Federal Government. The event Colombia: Enel-Codensa and National University is one of the most important in Brazil and highlights inaugurate the country’s first high-voltage and re- investment opportunities in strategic sectors. newable energy innovation laboratory Thanks to the new building, located at the Nation- Enel Américas receives LatinFinance ‘Project Spon- al University of Colombia in Bogotá, a network of knowledge and a space enabling innovation was sor of the year’ award The Company became the first winner under this consolidated, aimed at addressing the sector´s new new category. The award recognizes the Compa- challenges, within the energy transformation frame- ny´s important work and leadership in the region, in work. In 2019 Enel-Codensa invested more than $ 2 a year where it has stood out, among other things, billion Colombian pesos in this laboratory. for the successful US$ 3 billion capital increase. 12 Annual Report Enel Américas 2019 Colombia: Enel-Codensa to buy 873 GWh a year of unconventional renewable energy through long- term contracts The purchase took place at a long-term contracts Brazil: Recognized as a Pro-Ethics Company The recognition was awarded by the Federal Gov- ernment and the Ministry of Transparency, this way Peru: Enel Distribución and Enel Generación recog- nized by ALAS20 in sustainability The first obtained the 3rd place and the second completing 3 consecutive editions for the Company obtained the 2nd place in Leading Companies in auction in which the National Government sought to be identified as one of the firms in Brazil which Sustainability and were placed within the top 3 of to promote Non-conventional Renewable Energy promote and work with high ethical and transpar- the companies that participated in 2019. Companies Sources (NCRE). Through the participation in this ency standards. auction, Enel-Codensa confirms its support for en- which truly stand out in this area are awards the prize for their leadership role in sustainability. ergy transition and transformation happening in the Colombia: Enel-Emgesa´s donation to schools country. in Baraya and Tello, Huila, under the work for tax Brazil: Enel Distribución São Paulo achieves the Colombia: Enel-Codensa modernized the Girardot and Alto Magdalena power grid With a $ 20 billion Colombian peso investment, mechanism The Company allocated more than $ 612 million Co- best quality indicators in its history Enel Distribución São Paulo recorded the best op- lombian pesos for the project that benefited more erational indicators in the company’s history. The than 2,800 children aged 5 to 17. The educational average system outage frequency (SAIFI) was 3.93 Enel-Codensa concluded the most important works establishments received some 1,191 elements for times in October (over a 12-month period), which in the last 20 years in Girardot and the Alto Magda- students at preschool, elementary and high school is the best index among all Brazilian energy distrib- lena Province in Cundinamarca, in order to respond levels, as well as material for teachers. utors, while the average system outage duration to the growth of the region´s energy demand and service quality. A medium-voltage underground substitution was built between the Mango and Dia- mond substations. Peru: SET Izaguirre to benefit 110 thousand clients The Izaguirre Electric Transmission Substation (SET), located in the San Martín of Porres district started to operate. The facility represents an invest- Peru: Enel Group companies, the country’s first in ment of $ 42 million Peruvian soles and will improve (SAIDI) was 6.83 hours, the Company´s best indica- tor and the fourth best in the country. Colombia: Enel-Emgesa started repopulating the Magdalena River with fish The project, which took more than 10 years of re- anti-bribery certification in the electricity sector Enel Generación Peru, Enel Distribución Peru and Chinango SAC received the ISO 37001 certification the electrical service of approximately 110 thousand search, included inserting 200,000 juvenile speci- clients. mens of the Capaz species - a milestone for the country as it is the first time that this species has for the effectiveness of their anti-bribery manage- Peru: Ministry of Labor and Employment Promotion been successfully repopulated in Colombian rivers. ment system. recognizes Enel Peru for Good Labor Practices The recognitions are in the “Work-family balance The entire process will involve planting some 2 mil- lion native species in the upper Magdalena River promotion “ category thanks to the promotion of basin over a 1-year period. NOVEMBER new family life conciliation measures and in the “Prevention of risks in occupational health and Colombia: Enel-Codensa modernized the public Enel Américas participates in the Eighth United Na- safety, sexual harassment and labor harassment” tions Forum in Geneva, Switzerland Enel Américas presented its best practices in the Business and Human Rights Forum at the “Cor- rupting the Human Rights Agenda: How Business category for the policies, procedures and training programs in this area. can leverage anti-corruption practices to strengthen DECEMBER respect for human rights” session. This speaking instance was host to more than 2,000 participants from government agencies, businesses, civil soci- ety, investors, the United Nations, among others; it Enel Américas is recognized by ALAS20as the best company in Chile The recognition was awarded for the Company´s lighting systems of the El Colegio and Lenguazaque municipalities The Company upgraded more than 2,000 lights with LED technology in the municipality of El Co- legio and another 500 in Lenguazaque. This mod- ernization contributes to the progress and develop- ment of local municipalities, promotes the rational and efficient use of energy, and reduces consump- tion by up to 45%. Lenguazaque and El Colegio joined five other Cundinamarca municipalities that, emphasized the importance of anti-corruption expe- leadership, consistency, and excellence in the pub- to date, installed LED technology in 100% of their riences and practices implemented in Enel Améri- lic disclosure of information related to its investor street lighting. cas and its subsidiaries in line with Sustainable relations practices, sustainable development, and Development Goal 16 (Peace, Justice and Strong corporate governance. Institutions). Peru: First public electric bus rolls along Lima streets The Global Sustainable Electricity Partnership (GSEP) and member companies, Enel X and Hy- Enel Américas holds Investor Day Attended by more than 70 investors, Enel Améri- Argentina: First company to join the distributed gen- eration regime Technology Company EXO installed 60 solar panels cas held its Investor Day to present the Company’s dro-Québec, placed the first electric bus into Lima’s 2020-2022 strategic plan. The event, certified as public transport system with the collaboration of to generate the energy it consumes and inject the carbon neutral, presented Enel Américas´ sustain- Protransporte and the Peruvian Ministries of Energy surplus into the grid. It is the first industrial client in able strategy and its commitment to consolidating and Mines, Transport and Communications, and the the city with a bidirectional meter. a zero direct emissions business, which has proven Environment. Argentina: New charging stations for electric vehi- economic spheres, and that will continue to grow Moody’s maintains rating and changes perspective cles Enel X installed 60 charging stations for electric in a region where efficient solutions in the energy market are key to improving life quality in large cit- to “Positive” On December 19, Moody’s reported it was main- to be successful in the social, environmental and vehicles throughout the country, thus managing to ies. link the extensive Argentine territory with the most modern technology in the world. taining the company´s “Baa3” rating and changed its perspective from “Stable” to “Positive”, reflect- ing expectations of better operations and cash flows leading to continuous deleveraging. 3. 2019 Milestones 13 14 Annual Report Enel Américas 2019 04. MAIN FINANCIAL INDICATORS 04. Main financial indicators 15 Main financial indicators Total assets 15,921,322 15,449,154 11,281,556 20,168,991 27,396,356 29,776,384 2014 2015 2016 2017 2018 2019 As of December 31, of each year (1) Total current Liabilities 7,642,104 7,259,346 6,006,307 11,890,484 18,564,456 17,530,198 Operating Revenues 7,253,876 5,301,440 5,197,286 10,438,003 13,184,062 14,314,112 EBITDA Net income (2) Liquidity Ratio Indebtedness ratio (3) Generation Business ARGENTINA Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) BRAZIL Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) COLOMBIA Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) PERU Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) 16 2,300,020 1,615,112 1,643,369 2,947,261 3,357,708 3,994,192 610,158 661,587 383,060 709,043 1,201,381 1,614,085 1.23 0.92 1.01 0.65 1.25 1.14 0.92 1.44 0.66 2.10 0.98 1.43 2014 2015 2016 2017 2018 2019 As of December 31, of each year 645 25 4,522 14,390 15,276 208 13 987 5,225 7,108 589 32 3,059 13,559 15,773 324 27 1,949 9,062 9,916 657 25 4,522 15,204 15,770 194 13 987 4,398 6,541 484 36 3,459 13,705 16,886 292 27 1,983 8,801 9,283 632 29 4,419 13,124 13,312 185 13 974 3,665 9,448 551 36 3,457 14,952 18,015 310 27 1,934 8,698 9,800 578 29 4,419 14,825 14,852 146 17 1,354 4,034 12,587 604 36 3,467 14,765 18,156 320 27 1,979 7,430 10,457 581 29 4,419 13,949 13,952 158 17 1,354 3,755 22,236 615 36 3,499 14,052 18,544 325 30 1,985 8,106 10,597 532 29 4,419 12,974 12,976 183 17 1,354 5,292 30,002 599 36 3,506 15,250 18,376 315 30 1,987 8,244 11,199 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t TOTAL Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) Distribution ARGENTINA Energy sales (GWh) (5) Number of clients (5) Energy losses Number of employees Clients/employees BRAZIL Energy sales (GWh) (5) Number of clients Energy losses Number of employees Clients/employees COLOMBIA Energy sales (GWh) (5) Number of clients Energy losses Number of employees Clients/employees PERU Energy sales (GWh) (5) Number of clients Energy losses Number of employees Clients/employees Total Energy sales (GWh) (5) Number of clients Average Energy losses Number of employees Clients/employees 2014 2015 2016 2017 2018 2019 As of December 31, of each year (1) 1,766 97 10,517 42,236 48,073 1,627 101 10,951 42,108 48,480 1,678 105 10,784 40,439 50,575 1,648 107 11,219 41,053 56,051 1,679 112 11,257 39,863 65,329 1,629 112 11,267 41,760 72,553 2014 2015 2016 2017 2018 2019 As of December 31, of each year 17,972 18,492 18,493 17,736 17,548 16,798 2,464,117 2,479,559 2,504,558 2,529,307 2,529,953 2,490,449 10.75% 12.30% 12.04% 12.04% 14.25% 15.50% 3,823 645 4,142 596 4,290 584 4,251 595 3,760 673 3,511 709 22,842 22,776 22,809 34,876 61,310 80,682 6,500,500 6,754,327 6,943,600 9,974,471 17,143,979 17,233,637 16.42% 17.30% 16.10% 15.22% 2,415 2,732 2,348 2,877 2,244 3,237 3,336 2,990 14.00% 10,632 1,612 14.60% 9,832 1,753 13,660 13,946 13,632 13,790 14,024 14,307 2,772,376 2,865,159 3,248,447 3,340,457 3,438,620 3,526,776 7.19% 1,043 2,658 7.30% 947 2,771 7.10% 1,337 2,430 7.84% 1,376 2,428 7.74% 1,529 2,249 7.67% 1,504 2,345 7,338 7,624 7,782 7,934 8,045 8,211 1,293,503 1,336,610 1,367,044 1,396,966 1,422,608 1,433,638 7.95% 619 2,090 8.30% 570 2,191 7.80% 620 2,216 8.24% 588 2,376 8.09% 590 2,411 8.22% 594 2,414 61,812 62,838 62,715 74,337 100,927 119,998 13,030,496 13,435,655 14,063,649 17,241,201 24,535,160 24,684,500 10.58% 11.30% 10.76% 12.30% 7,900 1,649 8,007 1,678 8,491 1,656 9,551 1,805 10.96% 16,511 1,486 11.50% 15,411 1,599 (1) Accounting figures according to instructions and standards issued by the Financial Markets Committee (CMF). Figures in millions of nominal Chilean pesos for 2014, 2015 and 2016, and figures in thousands of dollars for 2017, 2018 and 2019. Extraordinary Shareholders’ Meeting held on April 27, 2017 approved the change of the Company’s functional currency from the Chilean peso to the US dollar. (2) It corresponds to the Net Income attributable to the parent Company. (3) Total Liabilities/Equity plus Minority Interest. (4) Unlike in previous years, for 2016, 2017, 2018 and 2019 the net installed capacity was considered, whose difference with gross installed capacity lies in the self-consumption discount. (5) Consumption and non-billable clients (CNF) are not included. 04. Main financial indicators 17 18 Annual Report Enel Américas 2019 05. IDENTIFICATION OF THE COMPANY AND CONSTITUENT DOCUMENTS 05. Identification of the company and constituent documents 19 Identification of the Company Name or Company name Enel Américas S.A. Domicile Type of Company Rut Address Postal code Telephone PO box Securities Registration number External auditors Subscribed and paid-in capital (US$) Website Email Santiago, Chile, may establish agencies or subsidiaries in other parts of the country or abroad Publicly Traded Company 94.271.000-3 Santa Rosa Nº 76, Santiago, Chile 833-009 SANTIAGO (56-2) 2353 4400 - (56-2)2 378 4400 1557, Santiago Nº 175 EY Audit SpA 9.783.875.314,4 www.enelamericas.com comunicacion.enelchile@enel.com Investor Relations phone (56-2) 2353 4682 Ticker symbol in Chilean stock exchanges Ticker symbol in NY stock exchanges ENELAM ENIA ADR’s Custodian Bank ADR’s Depositary Bank Banco Santander Chile Citibank N.A. Local credit rating agencies Feller Rate Clasificadora de Riesgo Limitada, Fitch Chile Clasificadora de Riesgo Limitada International credit rating agencies Fitch Ratings, Moody´s Investor Services and Standard & Poor´s International Rating Services Constituent documents Commerce Registry on page 13,099 No. 7,269 in 1981 and were published in the Official Journal on July 23, 1981. The bylaws of Enel Américas S.A. have undergone several modifi- cations ever since. On August 1, 1988, the Company’s name was changed to Enersis S.A. The Company that gave rise to Enel Américas S.A. was initially In April 2015, Enersis S.A. began a corporate reorganization formed under the name of Compañía Chilena Metropolitana process. As part of this process, on December 18, 2015 at the de Distribución Eléctrica S.A. by a public deed dated June 19, Company’s Extraordinary Shareholders´ Meeting shareholders 1981, issued by Patricio Zaldívar Mackenna, Notary Public in approved the first stage of the reorganization process called Santiago, and modified by a public deed on July 13 of the “the Spin-off”. Subsequently, the Company´s Spin-off was ap- same year and by the same notary public. The Company’s in- proved, and the entity called “Enersis Chile S.A.” was created, corporation was authorized, and its bylaws approved by Res- representing the unique vehicle for the control of generation olution 409-S of July 17, 1981 of the Securities and Insurance and distribution assets that the Group owns in Chile. The for- Commission (SVS). The extract of the incorporation authoriza- mer Enersis S.A. was renamed as “Enersis Américas S.A.” tion and approval of the bylaws was registered in the Santiago to control the businesses in the other countries of the region 20 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t (Argentina, Peru, Brazil, and Colombia). The Spin-off was for- October 18, 2016, granted by Iván Torrealba Acevedo, Notary malized in a public deed on January 8, 2016, issued by Iván Public in Santiago, whose extract was registered on pages Torrealba Acevedo, Notary Public in Santiago, whose extract 79,974 No. 43,179, of the Commerce Registry in 2016 of the was registered on pages 4013 No. 2441 of the Commerce Property Registrar in Santiago and was published in the Offi- Registry in 2016 of the Property Registrar in Santiago and was cial Journal on October 29, 2016. published in the Official Journal on January 22, 2016. A sup- plementary extract was registered on pages 10.743 No. 6.073 The company’s purpose is to carry out, either in the country or of the same Registry in 2016 of the Property Registrar and abroad, the exploration, development, operation, generation, was published in the Official Journal on February 10, 2016. distribution, transmission, transformation and/ or sales of en- ergy in any of form and nature, directly or through intermediar- The Extraordinary Shareholders´ Meetings of Enersis Améri- ies, as well as telecommunications activities and engineering cas S.A. and its subsidiaries Endesa Américas S.A. and Chi- consultancy services in the country and abroad. It may also lectra Américas S.A. were held on September 28, 2016. The invest and manage its subsidiaries and associated companies, Meetings approved, among other issues, the second stage of whether generating, transmitting, distributing or trading elec- the corporate reorganization plan denominated “The Merger”. tricity or whose business is any of the following: (i) energy, in Therefore, Enersis Américas S.A., the absorbing entity, ac- any forms or nature, (ii) the supply of public utilities or whose quired all the assets and liabilities of Chilectra Américas S.A. main input is energy, (iii) telecommunications and information and Endesa Américas S.A., the subsidiaries, succeeding them technology, and (iv) internet-based intermediation services. To in every right and obligation and incorporating to Enersis comply with its corporate purpose, the Company will carry out Américas S.A. the entirety of shareholders and equity of Chi- the following functions: lectra Américas S.A. and Endesa Américas S.A. a) Promote, organize, build, modify, dissolve, or sell compa- A Meeting held on December 1, 2016 agreed that, after the nies of any nature, which have similar corporate purposes. Merger, Enersis Américas S.A would change its name to “Enel b) Propose investment, financing, and business policies to Américas S.A.”. The Meeting was formalized in a public deed subsidiaries, as well as accounting criteria and systems dated October 18, 2016, granted by Iván Torrealba Acevedo, that these should follow. Notary Public, whose extract was registered on pages 79,974 c) Supervise the management of subsidiaries. No. 43,179 of the Commerce Registry in 2016 of the Property d) Provide subsidiaries or affiliates with the necessary fi- Registrar in Santiago and was published in the Official Journal nancing so they can carry out their business and provide on October 29, 2016. management services; financial, technical, legal, and au- diting advice; and in general, any type of service deemed The functional currency of the Company was changed from necessary for their best performance. pesos to US dollars at the Extraordinary Shareholders´ Meet- ing held on April 27, 2017, thus modifying the fifth permanent Apart from its main corporate purpose and always acting with- article and the first transitory article of the Company’s bylaws. in the limits established by the Investment and Financing Pol- Corporate purpose The company’s corporate purpose is indicated in the modifi- cation approved by the Extraordinary Shareholders´ Meeting held on September 28, 2016, formalized in a public deed on icy approved by the Shareholders Meeting, The company may invest in: 1. - The acquisition, operation, construction, rental, adminis- tration, intermediation, trading, and transfer of all kinds of movable and immovable assets, either directly or through subsidiaries or affiliates. 2. - All kinds of financial assets, including shares, bonds and debentures, commercial papers and, in general, all kinds of titles or securities and company contributions, either directly or through subsidiaries or affiliates. 05. Identification of the company and constituent documents 21 22 Annual Report Enel Américas 2019 06. PROPERTY AND CONTROL 06. Property and control 23 Ownership structure Controller identification Ownership structure Pursuant to Title XV of Law No. 18.045, Enel Américas S.A. is a publicly traded company directly controlled by Enel S.p.A., an Italian share Company, holding 57.262213% of the shares issued by Enel Américas S.A. Enel S.p.A shareholders Shareholding The Company’s capital is divided into 76,086,311,036 shares, Ministero dell’Economia e delle Finanze de Italia Capital Research and Management Company Other investors (Institutional and Retail) with no nominal value, all the same single series and each Total share representing one voting right, with no state-owned pref- 23.6% 5.03% 71.37% 100.0% erential shares. Controller’s members do not have a joint action agreement. As of December 31, 2019, all shares were subscribed and paid-in, and were distributed as follows: Shareholders Enel S.p.A. Chilean pension funds Number of share 43,568,705,287 10,693,407,523 ADR´S (Citibank N.A. according to circular N°1,375 of the CMF) Foreign Investment Funds 5,063,569,028 1,440,251,353 Shareholding 57.26% 14.05% 6.66% 1.89% Custodian banks 11,408,472,227 14.99% Stockbrokers, insurance companies, mutual funds Other shareholders Total Shares 2,653,045,608 1,258,860,010 3.49% 1.65% 76,086,311,036 100.00% 24 Annual Report Enel Américas 2019 List of the twelve main shareholders of the Company As of December 31, 2019, 22.897 shareholders owned Enel Américas. The twelve main shareholders were: Name or Company Name ENEL SPA CITIBANK N.A. AS PER S.V.S. CIRCULAR 1,375 BANCO ITAU CORPBANCA ON BEHALF OF FOREIGN INVESTORS BANCO DE CHILE ON BEHALF OF NON-RESIDENT THIRD PARTIES BANCO SANTANDER ON BEHALF OF FOREIGN INVESTORS AFP HABITAT S A FOR PENSION FUND C JP MORGAN SECURITIES INC AFP PROVIDA S.A. FOR PENSION FUND C AFP CUPRUM S A FOR PENSION FUND C AFP CAPITAL S A FOR PENSION FUND C AFP HABITAT S A FOR PENSION FUND A BANCO DE CHILE ON BEHALF OF CITI NA NEW YORK CLIE Subtotal twelve major shareholders Other 22,885 shareholders TOTAL 22.897 SHAREHOLDERS ID number 59243980-8 59135290-3 97023000-9 97004000-5 97036000-K 98000100-8 47009201-7 76265736-8 76240079-0 98000000-1 98000100-8 97004000-5 Number of Shares Shareholding 43,568,705,287 57.26% 5,063,569,028 3,826,905,816 3,470,280,340 2,746,735,699 1,636,171,795 1,354,774,697 1,304,096,888 874,378,342 827,524,845 788,829,048 653,683,355 66,115,655,140 9,970,655,896 76,086,311,036 6.66% 5.03% 4.56% 3.61% 2.15% 1.78% 1.71% 1.15% 1.09% 1.04% 0.86% 86.90% 13.10% 100.00% There are no shareholders representing the founding families of the Company and neither are there people related to the gov- ernment or state entities owning shares exceeding 5% of the ownership. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 06. Property and control 25 Most significant changes in ownership In 2019, the most important changes in the ownership of Enel Américas are as follows: Name or Company Name ENEL SPA CITIBANK N.A. AS PER SVS CIR- LETTER 1,375 BANCO DE CHILE ON BEHALF OF NON-RESIDENT THIRD PARTIES ID Number DV 59243980 59135290 97023000 BANCO DE CHILE ON BEHALF OF NON RESIDENT THIRD PARTIES 97004000 AFP HABITAT S A BANCO SANTANDER ON BEHALF OF FOREIGN INVESTORS AFP PROVIDA S.A. AFP CUPRUM S A AFP CAPITAL S A JP MORGAN SECURITIES INC AFP MODELO S.A BANCO DE CHILE ON BEHALF OF CITI NA NEW YORK CLIE BANCHILE C DE B S A AFP PLANVITAL S A BANCO DE CHILE ON BEHALF OF CITI NA LONDON CLIENT 98000100 97036000 76265736 76240079 98000000 47009201 76762250 97004000 96571220 98001200 97004000 BANCO SANTANDER-HSBC BANK PLC LONDON CLIENT ACCOUN 97036000 SANTANDER CORREDORES DE BOLSA LIMITADA LARRAIN VIAL S A CORREDORA DE BOLSA BTG PACTUAL CHILE S A C DE B CREDICORP CAPITAL SA STOCKBROKER BANCHILE ADM GENERAL DE FONDOS S A NEVASA S.A STOCKBROKER 96683200 80537000 84177300 96489000 96767630 96586750 SOC ADM DE FDOS DE CESANTIA DE CHILE II SA FDO CESANTIA 76237243 FONDO MUTUO ETF IT NOW IPSA VALORES SECURITY S A C DE B BCI C DE B S A FONDO MUTUO SECURITY INDEX FUND CHILE MONEDA RENTA VARIABLE CHILE INVESTMENT FUND SANTIAGO STOCK EXCHANGE CHILEAN ELEXTRONIC STOCK EXCHANGE BICE INVERSIONES CORREDORES DE BOLSA S A SECURITY SELECTIVE MUTUAL FUND FONDO MUTUO COMPASS CHILEAN SHARES FONDO MUTUO BTG PACTUAL CHILEAN SHARES MBI ARBITRAGE INVESTMENT FUND 96980650 96515580 96519800 76724796 96684990 90249000 96551730 79532990 76724781 96804330 96966250 76023598 26 Number of shares on 12/31/2018 Number of shares on 12/31/2019 29,762,213,531 43,568,705,287 4,384,417,428 5,063,569,028 2,344,499,854 3,826,905,816 3,210,128,764 3,470,280,340 1,671,887,493 3,415,942,773 2,401,980,484 2,746,735,699 2,247,892,567 2,395,480,947 1,633,734,907 2,041,715,525 1,646,207,724 1,775,188,309 761,063,736 1,354,774,697 485,430,607 664,919,210 0 653,683,355 632,343,103 472,409,018 261,383,565 397,294,871 0 322,252,105 178,732,113 248,522,220 228,911,532 197,920,567 510,591,005 193,658,585 232,602,612 136,785,866 180,711,143 112,049,449 72,148,160 104,989,910 84,173,496 95,153,974 63,857,081 94,432,227 83,225,232 89,037,332 161,924,711 86,559,401 145,365,493 75,077,782 95,163,598 68,648,776 70,409,000 64,766,350 79,450,154 15,248,732 51,307,517 9,859,722 236,490,136 58,129,734 24,198,984 10,501,887 23,061,699 10,101,922 21,900,728 7,236,515 175,518,448 26,692,310 VARIATION PP 0.1815 0.0089 0.0195 0.0034 0.0229 0.0045 0.0019 0.0054 0.0017 0.0078 0.0024 0.0086 -0.0021 0.0018 0.0042 0.0009 -0.0004 -0.0042 -0.0013 -0.0009 0.0004 0.0001 0.0004 0.0001 -0.0010 -0.0009 -0.0003 -0.0001 -0.0008 -0.0005 -0.0023 -0.0002 -0.0002 -0.0002 -0.0020 8 3 9 5 8 K 8 0 1 7 3 5 8 K 5 K 2 9 4 5 6 3 6 9 5 8 6 8 0 8 0 8 7 7 9 Annual Report Enel Américas 2019 Stock Exchange transactions carried out by related individuals in 2019 Type of person Legal Person Legal Person Legal Person ID number DV Name /Comp. name Date transaction Date trans. reported to S.A. Series No. shares Unit price Trans. amount Observations 59,243,980 8 Enel SpA 28/08/2019 08/28/2019 Single 294,771,295 116.97 34,479,111,564 79,880,230 59,243,980 5 8 Inversiones Santa Veronica Ltda 24/07/2019 07/24/2019 Single 1,644,618 112.1 184,376,529 Enel SpA 15/07/2019 07/15/2019 Single 10,639,088,791 110.41 1,174,628,769,683 Company related to director Hernán Somerville Senn. These shares remain in custody of Credicorp Summary of Directors’ Committee and shareholders comments and proposals Enel Américas S.A. received no comments or proposals regarding the Company´s business between January 1 and December 31, 2019 made by the Directors´ Committee or shareholders who own or represent 10% or more of the shares issued with voting rights, pursuant to Article 74 of Law No. 18.046 and 136 of the Regulations of Publicly Traded Companies. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 06. Property and control 27 28 Annual Report Enel Américas 2019 07. ADMINISTRATION 07. Administration 29 C Chairman Francisco de Borja Acha Besga Attorney at Law, Universidad Complutense de Madrid DNI: 05263174-S From 04.28.2016 (1) D DIRECTOR José Antonio Vargas Lleras Attorney at Law Universidad Colegio Mayor del Rosario, Colombia DNI: 79,312,642 From 04.28.2016 Livio Gallo Electronic Engineer Universidad Politécnica de Milán DNI: AV 0246369 From 04.28.2016 Enrico Viale Engineer Degree Universidad Politécnica de Turín MBA Business School Universidad de Santa Clara DNI: AU 2580379 From 04.28.2016 Hernán Somerville Senn Lawyer Universidad de Chile Master of Comparative Jurisprudence University of New York DNI: 4.132.185-7 From 04.28.2016(2) Domingo Cruzat Amunátegui Industrial civil engineer Universidad de Chile MBA The Wharton School of Pennsylvania University ID number: 6,989,304-K From 04.28.2016 Patricio Gómez Sabaini Business Administration Degree George Mason University, Virginia Master of Business Administration George Washington University, Washington DC Passport: 16941675N From 04.28.2016 (1) He was originally appointed Director of the former Enersis Américas S.A. on 06.30.2015, currently Enel Américas. (2) He was originally appointed Director of the former Enersis Américas S.A. on 07.29.2015, currently Enel Américas 30 Annual Report Enel Américas 2019 Board of Directors 1 5 2 6 3 7 4 1. CHAIRMAN Francisco de Borja Acha Besga Attorney at Law, Universidad Complutense de Madrid DNI: 05263174-S From 04.28.2016 (1) 2. DIRECTOR José Antonio Vargas Lleras Attorney at Law Universidad Colegio Mayor del Rosario, Colombia DNI: 79.312.642 From 04.28.2016 3. DIRECTOR Enrico Viale Engineer Degree Universidad Politécnica de Turín MBA Business School Universidad de Santa Clara DNI: AU 2580379 From 04.28.2016 4. DIRECTOR Livio Gallo Electronic Engineer Universidad Politécnica de Milán DNI: AV 0246369 From 04.28.2016 5. DIRECTOR Hernán Somerville Senn Lawyer Universidad de Chile Master of Comparative Jurisprudence University of New York DNI: 4,132,185-7 From 04.28.2016 (2) 6. DIRECTOR Domingo Cruzat Amunátegui Industrial civil engineer Universidad de Chile MBA The Wharton School of Pennsylvania University ID number: 6,989,304-K From 04.28.2016 7. DIRECTOR Patricio Gómez Sabaini Business Administration Degree George Mason University, Virginia Master of Business Administration George Washington University, Washington DC Passport: 16941675N From 04.28.2016 (1) He was originally appointed Director of the former Enersis Américas S.A. on 06.30.2015, currently Enel Américas. (2) He was originally appointed Director of the former Enersis Américas S.A. on 07.29.2015, currently Enel Américas. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 07. Administration 31 Enel Américas is managed by a Board of Directors made up by • The Board periodically meets with the Internal Audit group seven members, who remain in office for a three-year period to analyze the annual audit plan, monitor action plans, and may be re-elected. The Board was appointed at the Ordi- review the effectiveness of the crime prevention model nary Shareholders’ Meeting held on April 30, 2019. According implemented by the Company, as well as other issues de- to the Law on Corporations, should there be a Director’s va- tailed in the Ethics and Transparency section. cancy, the whole board shall be renewed at the next ordinary shareholders’ meeting, and, in the meantime, the Board may • The Board meets with the Sustainability Management on name a substitute. The Company does not consider any sub- a quarterly basis, to discuss, among others, the effective- stitute members. ness of the policies adopted by the Company and related to social responsibility and sustainable development and • In 2019, the Director Training Program was implemented to the existence of goals and development milestones of contribute to improving our Directors’ knowledge through sustainability indicators. training sessions in various subjects. Some of the subjects covered during the 2019 program are related to “Relevant • The Board meets with the External Auditors on a quarterly Aspects of Sustainability: Analysis of Certification Entities basis, complying with the voluntary practice contained in and Monitoring Indicators”, “New Accounting Standards General Standard No.385 issued by the Financial Markets Applicable to the Company”, among others. Committee to review matters related to the audit plan and • The Company, in preparation for the Shareholders’ Meet- others. ing, publishes on its website the resumes of the candi- dates for Directors so that the Company´s shareholders • The Board has an electronic dispatch system, which allows can be informed in a timely manner about the candidates´ directors to securely, remotely and permanently access capabilities, conditions and experience. documentation related to board sessions, made available to directors at least 3 days before each session. It also • The Company’s Risk Policy was approved at a Board ses- aims to achieve a fully paperless management of all docu- sion held on March 23, 2016. The Board meets at least mentation. once every quarter with the Risk Management Commit- tee to analyze the risk matrix, which includes sustainability • The Company has set up an Ethics Channel, governed risks and mitigation measures. by the whistleblowing policy, which has been duly com- municated to the Company’s employees. This channel is • The Company has established an induction procedure for available to employees, contractors, suppliers, clients, new Directors in matters considered necessary for the cor- communities, and other stakeholders, with access avail- rect development of their work that would permit them able via telephone, face-to-face interaction and digital an effective and informed integration into the Company´s means through the Company’s website. Complaints are business. The procedure consists of a dispatch of docu- subsequently investigated by the Audit Management de- mentation related to the Company´s mission, vision, prin- partment and reported to the Directors´ Committee. ciples and corporate values, its businesses and strategic objectives, markets in which it operates, economic and • Since 2017, the Board has implemented at least two annual financial position, inclusion, diversity and sustainability pol- visits to some units or facilities of the Enel Group, to learn icies and risk control, among others. about the status and operation of these units and facilities and the main functions and concerns of those who carry • The Company has established contingency plans to react them out. to critical events or crises, through the formation of ad-hoc committees, made up of experts who can deal with the • The Company’s bylaws do not provide for the appointment crises or the event in question. of Alternate Directors. 32 Annual Report Enel Américas 2019 Compensations of the Board of Directors and the Directors’ Committee Pursuant to Article 33 of Law No. 18,046 on Corporations, the Ordinary Shareholders’ Meeting held on April 30, 2019 approved the compensations for the Board of Directors and the Directors’ Committee for the 2019 accounting period. The compensation for the Board of Directors is a fixed monthly payment, part at any event and the other part per event. The compensation con- sists of 216 UF (development units or Unidades de Fomento) as the fixed monthly remuneration at any event and 79.2 UF as an attendance fee per Board meeting with a maximum of 16 sessions. The compensation of the Chairman of the Board will be twice the compensation of a Director. The compensation of the Directors’ Committee consists of a fixed monthly amount, part at any event and the other part as per event. This compensation consists of 72 UF (development units or Unidades de Fomento ) at any event and 26.4 UF as an attendance fee per Board meeting with a maximum of 16 sessions. All compensation expenses in 2019 reached US$ 621,804 and are shown in the following table. The Board of Directors did not incur any expenses for external consulting services. 2019 Amounts in US$ Name Francisco de Borja Acha (1) José Antonio Vargas Lleras (1) Livio Gallo (1) Enrico Viale (1) Hernán Somerville Senn Domingo Cruzat Amunátegui Patricio Gómez Sabaini Total Position Chairman Director Director Director Director Director Director Ordinary and extraordinary sessions of the Board Committee Fixed compensation Ordinary and extraordinary sessions of the Board Board Fixed compensation Total 2019 102,832 102,832 102,832 308,496 56,552 56,552 56,552 34,277 34,277 34,277 169,656 102,832 13,607 13,607 13,607 40,820 207,268 207,268 207,268 621,804 Total compensation expenses in 2018 reached US$ 642,836 and are shown below. The Board of Directors did not incur any expenses for external consulting services. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 07. Administration 33 2018 Amounts in US$ Name Francisco de Borja Acha (1) José Antonio Vargas Lleras (1) Livio Gallo (1) Enrico Viale (1) Hernán Somerville Senn Domingo Cruzat Amunátegui Patricio Gómez Sabaini Total Position Chairman Director Director Director Director Director Director Ordinary and extraordinary sessions of the Board Committee Fixed compensation Ordinary and extraordinary sessions of the Board Total 2018 Board Fixed compensation 103,798 103,798 103,798 311,394 62,032 62,032 59,253 34,636 34,636 34,636 183,318 103,909 14,739 14,739 14,739 44,216 215,205 215,205 212,426 642,836 (1) Messrs. Francisco de Borja A., José Antonio Vargas Ll., Livio Gallo and Enrico Viale, rejected compensation payments. Social responsibility and sustainable development Board diversity 0 7 7 2 1 1 1 2 7 Number of people by gender: Female Male Total Number of people by nationality: Chilean Spanish Argentinean Colombian Italian Total 34 Number of people by age range: Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Over 70 years old Total Number of people by seniority: Less than 3 years Between 3 and 6 years More than 12 years Total 0 3 3 1 7 0 6 1 7 Review of the Board of Directors´ expenses In 2019, the Board of Directors did not incur any expenses in consultation services.. Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t Property over Enel Américas As of December 31, 2019, according to the Shareholders’ Register, none of the current Directors had any ownership of the Company. However, Director Mr. Hernán Somerville is a controlling shareholder in Inversiones Santa Verónica Limita- da, an entity that owns 5,044,782 of the Company´s shares. Directors’ Committee Committee. At the ordinary session of the Directors’ Com- mittee held on April 30, 2019, Mr. Hernán Somerville Senn was appointed Chairman of the Directors’ Committee and Mr. Domingo Valdés Prieto, Secretary of the Committee. Directors’ Committee annual management report The Directors’ Committee held thirteen sessions in 2019. Pursuant to Article 50 bis of Law No. 18.046 on Corporations, Enel Américas S.A.´s Directors’ Committee is made up by three members, with powers and duties as set forth in said ar- ticle as well as those delegated by the Board and established in the Director’s Committee´s Regulations. At the 2019 sessions, the Director’s Committee addressed subjects within the area of their competence, fully complying with their obligations pursuant to Article 50 bis of Law 18.046 on Corporations and the Sarbanes Oxley Act of the United States of America, as well as other applicable regulations. On June 29, 2005 the Company’s Board of Directors estab- lished an Audit Committee composed by three Directors who are also members of the Board, pursuant to the Sarbanes-Ox- ley Act and corporate governance regulations of the NYSE. Subsequently, on April 22, 2010, the Company’s bylaws were amended at the Extraordinary Shareholders´ Meeting, and the Audit Committee merged with the Directors’ Committee. As of January 1, 2019, the three members of the Directors’ Committee of Enel Américas S.A. were: Messrs. Hernán Somerville (independent), Domingo Cruzat Amunátegui (in- dependent) and Patricio Gómez Sabaini (independent). Mr. Hernán Somerville Senn was Chairman and Financial Expert and Mr. Domingo Valdés Prieto was Secretary of the Direc- tors’ Committee. At the Board of Directors´ ordinary session held on April 30, 2019 Messrs. Hernán Somerville Senn, Patricio Gómez Sa- baini and Domingo Cruzat Amunátegui were appointed as members of the Directors’ Committee. Mr. Hernán Somer- ville Senn was appointed Financial Expert of the Directors’ 1. Consolidated financial statements At the ordinary session held on February 27, 2019, the follow- ing documents were unanimously confirmed as having been reviewed: the Consolidated Financial Statements as of Decem- ber 31, 2018, its Notes, the Income Statements and Significant Events, as well as the External Auditor’s and Account Inspec- tors´ opinions. At the ordinary session held on April 25, 2019, the Directors’ Committee unanimously confirmed as having been reviewed: The Company´s Consolidated Financial State- ments as of March 31, 2019, its Notes, the Income Statement and Significant Events. At the extraordinary session held on April 25, 2019, the Direc- tors’ Committee unanimously confirmed having reviewed the Company´s Income Statement pursuant to NIIF as incorporat- 07. Administration 35 ed into Form 20-F so that it could be filed with the US Securities During the 2019 financial year, the Directors´ Committee did and Exchange Commission (SEC) to comply with the regula- not examine new operations between related parties, notwith- tions and requirements issued by said public authority. standing the analysis of the external auditors’ reports on opera- tions with previously approved related parties. At the extraordinary session held on July 31, 2019, the Direc- tors’ Committee unanimously confirmed having reviewed the Company´s Consolidated Financial Statements as of June 30, 2019, its Notes, Financial Statement Analysis, Income State- ment and Significant Events, as well as the opinions issued by external auditors on July 31, 2018, signed by Mr. Gastón Villar- roel Olivares, partner of EY Audit SpA. At the ordinary session held on October 28, 2019, the Directors’ Committee unanimously confirmed having reviewed the Com- pany´s Consolidated Financial Statements as of September 30, 2019; its Notes, the Income Statement, Significant Events and the report related to the operations between related parties 4. Supervision and evaluation of External Auditors At the ordinary session held on February 27, 2019, the Com- mittee unanimously evaluated as reasonable the work of EY Audit SpA, the Company´s external auditors carried out during prepared by the external auditors. fiscal year 2018. . 2. Review of services to be offered by External Auditors 5. External Auditors´ report on money orders and brokerage At the ordinary session held on February 27, 2019, the Direc- tors’ Committee unanimously agreed to register that they The ordinary sessions held on January 23, February 27, March had formally and expressly received the report on money bro- 27, and November 25, all held in 2019, analyzed the services kerage and money orders prepared by the external auditors, provided by the Company´s external auditors but which were EY Audit SpA issued on February 27, 2019. The Committee not part of a recurring external audit. The committee unani- also indicated that even though the described regulation was mously agreed to declare that they did not compromise the no longer in place, the legal obligation which indicates that technical reliability or the independence of judgment of the re- companies which have not been formally authorized by the spective external auditing companies, pursuant to Section 202 competent public authority may not carry out private commer- of the Sarbanes Oxley Act, article 242, final subsection, of Law cial activity reserved for banks or carry out money brokerage 18.045 of the Securities Market and in the Regulations issued transactions was still valid. by the Directors’ Committee. 3. Review of operations between related parties 36 6. Review of the internal control letter - FMC Official Notification No. 422 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t The Directors’ Committee discussed this issue during the session held on February 27, 2019. On December 6, 2007, the National Stock Market Commission issued Official Notification No. 422, complementing Notification No. 980 issued on December 24, 1990. The Notification provides specific instructions regarding in- ternal control procedures, providing an interim report and extend- ing the period indicated in Notification No. 980 for internal auditors to submit the final internal control report, indicating that it should be handed in no later than the date on which the Board of Direc- tors is informed of the financial statements for the period ending on December 31 of each year. Mr. Hernán Somerville Senn, Chairman of the Directors’ Com- mittee, indicated that these regulations were revoked, however despite the revocation, article 246 of Law on the Securities Mar- ket, among other subjects, established that external audit should inform the Board and the Directors’ Committee of any deficiencies detected in external audits in order to adopt and maintain standard accounting practices, system management and internal audits, identify discrepancies between accounting principles related to financial statements and relevant criteria generally applied in the industry where the Company carries out its business, as well as the compliance with the Company’s and its subsidiaries´ tax covered in the NCG No. 385 At the ordinary session held on February 27, 2019, the Com- mittee unanimously confirmed having reviewed the matters referred to in paragraph 1 d) of the CMF General Standard Norm No. 385 as presented by the External Auditors, who emphasized that none of the hypotheses described in sec- tions ii, iii and v of the numeral had occurred 8. External Auditors´ fees for fiscal year 2018 obligations included in the referred external audit, therefore the At the ordinary session held on January 23, 2019, the Direc- necessity to inform internal control situations detected by EY was tors’ Committee unanimously confirmed having reviewed the still required. payments for the external auditors made by the companies of the Enel Américas Group and to different audit firms in 2018. He added that the aforementioned revocation when it was issued did not affect the submission terms mandated by NCG No. 30 for This way, and as informed in this report, the Directors´ Com- the provision of Financial Statements and, therefore, it was nec- mittee fully complied with the obligations pursuant to Article essary to understand that the internal control report was part of 50 bis of Law No. 18.046 on Corporations. the information to be provided by external auditors during the first quarter of each year, together with the review and the approval of the annual Financial Statements. As such, at the ordinary session held on February 29, 2019, the Directors’ Committee unanimously agreed to register and confirm that they had been formally and expressly informed they had to comply with aforementioned reg- ulation through the Internal Control Letter issued on February 27, 2019., prepared by EY Audit SpA to comply with said regulation. 7. External Auditors´ review of matters 9. External audit contract between Enel Américas S.A. and EY Audit SpA for fiscal year 2019 At the ordinary session held on April,30 2019, the Directors´ Committee acting unanimously confirmed having examined the contract to be signed between Enel Américas S.A. and EY External Auditors. 07. Administration 37 10. Proposal of External Auditors 12. Proposal of private risk rating agencies At the ordinary session held on February 27, 2019, the Di- rectors’ Committee unanimously agreed to ask the Board of Directors to suggest Feller Rate Clasificadora de Riesgo Lim- itada and Fitch Chile Clasificadora de Riesgo Limitada as the national risk classifiers at the respective Shareholders´ Meet- ing; and the firms Fitch Ratings, Moody’s Investors Services and Standard & Poor International Ratings Services as private international risk classifiers, for the 2019 financial year. 13. Analysis of Complaints Filed with the Ethics Channel At the ordinary session held on January 23, 2019 and at the ordinary session held on August 29, 2019 the Directors’ Com- mittee unanimously issued their opinion on each of the pre- sented complaints, providing the guidelines to be followed for each one and confirming what has been resolved by this chan- nel, stating that it is the Chairman of the Directors’ Commit- tee who must call for an extraordinary meeting of the afore- mentioned body should, in the opinion of the Chairman of the Committee, such complain merit a meeting. At the ordinary session held on March 27, 2019, the Directors’ Committee unanimously agreed to ask the Board to suggest the following order of precedence for the nomination of the external auditors´ firms for Enel Américas for 2019 at the Or- dinary Shareholders´ Meeting: 1st EY; 2nd PKF and 3rd BDO. The fundamentals considered relevant to propose EY in the first place as Enel Américas S.A.´s external auditor were as follows: (i) EY presented the most competitive proposal ac- cording to the verified technical and economic evaluations among the proposals received; (ii) It Is highly qualified in terms of available resource quality and it has an extensive ex- perience in the electricity sector; (iii) It is one of the four most important external audit firms both internationally and nation- ally; (iv) It is the external audit company with the highest level of synergy with Enel Américas S.A., since EY is also the main external auditor for Enel S.p.A., Enel Américas S.A.´s control- ler; and (v) The relationship between the Company and EY has been evaluated as reasonable by the Directors´ Committee. 11. Form 20-F presented to the US Securities and Exchange Commission (SEC) At the ordinary session held on April 25, 2019, the Directors´ Committee unanimously confirmed having reviewed the Finan- cial Statements under NIIF as incorporated into Form 20-F, so that it could be presented to the US Securities and Exchange Commission (SEC) to comply with the regulations and require- ments issued by said public authority.. 38 Annual Report Enel Américas 2019 16. Expenditure analysis of 2018 External Audit At the ordinary session held on January 23, 2019 the pay- ments made to the external auditors by Enel Américas and the payments by its subsidiaries to different external audit firms during the 2018 financial year were declared unanimous- ly reviewed making a clear distinction between recurrent and non-recurrent external audit services and services other than external audit services, concluding that they had not affected their independence or suitability. This way, and as informed in this report, the Directors´ Com- mittee has fully complied with the obligations. Therefore, and as informed in this report, the Directors´ Com- mittee has fully complied with the obligations established in Article 50 bis of Law No. 18.046 on Corporations. Expenses of Enel Américas S.A. Directors’ Committee The Directors’ Committee did not make use of the expense budget set aside for the Committee´s ordinary functions as approved by the Ordinary Shareholders Meeting held on April 30, 2019. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 14. Review of the compensation system and compensation plans for the Company´s managers, senior executives and employees At the ordinary session held on June 26, 2019, the Directors’ Committee unanimously confirmed having reviewed the pay- ment systems and compensation plans of the Company’s managers, senior executives, and employees. 15. Directors´ Committee budget proposal for 2019 At the ordinary session of February 28, 2018, the Directors’ Committee unanimously approved the Directors’ Committee budget proposal for 2019 consisting of 10,000 UF or devel- opment units known as Unidades de Fomento for expenses related to the operation of the Committee and its advisors. Similarly, the Directors’ Committee unanimously decided to submit the proposal to the next Ordinary Shareholders’ Meet- ing of Enel Américas S.A. to be held in April 2019 for its ap- proval which will resolve the matter as per the sphere of its competence. 07. Administration 39 C Chairman Francisco de Borja Acha Besga Attorney at Law Universidad Complutense de Madrid DNI: 05263174-S From 04.28.2016 G MANAGEMENTS Internal Audit Officer Raffaele Cutrignelli (1) International Businesses Degree Nottingham Trent University (United Kingdom) Audit and Internal Control Master’s Degree Universitá di Pisa (Italy) Certificate in Strategy, Innovation, Management and Leadership Massachusetts Institute of Technology (MIT) ID number: 25.553.336-3 From 10.01.2016 CEO Maurizio Bezzeccheri Doctor Cum Laude degree in Chemical Engineering Università degli Studi di Napoli R+D Development of Steam Generators Official Professional Qualification for engineering practice ID number: 26.490.357-2 From 08.01.2018 Administration, Finance and Control Manager Aurelio Bustilho de Oliveira Business Administration Universidad de Brasilia MBA de Universidad Federal Rio Janeiro/ COPPEAD ID number: 26.102.661-9 From 10.01.2018 Legal Counsel and Secretary of the Board Domingo Valdés Prieto (1) Lawyer Universidad de Chile Master´s Degree in Law of University of Chicago ID number: 6.973.465-0 From 04.30.1999 Planning and Control Manager Paolo Pescarmona (2) Master´s in Economy and Business Universita degli studi di Torino, Turin Passport YB3239236 From 11.15.2019 Enel X South America Manager Simone Tripepi Engineer Universita Degli studi di Roma “Tor Vergata” ID number: 25.067.660-3 From 08.29.2019 (1) They also hold the same positions in Enel Chile. (2) Paolo Pescarmona took over on November 15, 2019 from Bruno Stella. Francisco Miqueles took office on February 26, 2020 replacing Paolo Pescarmona 40 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t Senior Management 1 4 2 5 3 6 1. CHIEF EXECUTIVE OFFICER Maurizio Bezzeccheri Doctor Cum Laude degree in Chemical Engineering Università degli Studi di Napoli R+D Development of Steam Generators Official Professional Qualification for engineering practice ID number: 26.490.357-2 From 08.01.2018 2. INTERNAL AUDIT OFFICER Raffaele Cutrignelli (1) International Businesses Degree Nottingham Trent University (United Kingdom) Audit and Internal Control Master’s Degree Universitá di Pisa (Italy) Certificate in Strategy, Innovation, Management and Leadership Massachusetts Institute of Technology (MIT) ID number: 25.553.336-3 From 10.01.2016 3. CHIEF FINANCIAL OFFICER Aurelio Bustilho de Oliveira Business Administration Universidad de Brasilia MBA de Universidad Federal Rio Janeiro/ COPPEAD ID number: 26.102.661-9 From 10.01.2018 4. LEGAL COUNSEL AND SECRETARY OF THE BOARD Domingo Valdés Prieto (1) Lawyer Universidad de Chile Master´s Degree in Law of University of Chicago ID number: 6.973.465-0 From 04.30.1999 5. PLANNING AND CONTROL OFFICER Paolo Pescarmona (2) Master´s in Economy and Business Universita degli studi di Torino, Turin Passport YB3239236 From 11.15.2019 6. HEAD OF ENEL X SOUTH AMERICA Simone Tripepi Engineer Universita Degli studi di Roma “Tor Vergata” ID number: 25.067.660-3 From 08.29.2019 (1) They also hold the same positions in Enel Chile. (2) Paolo Pescarmona took over on November 15, 2019 from Bruno Stella. Francisco Miqueles took office on February 26, 2020 replacing Paolo Pescarmona 07. Administration 41 Remunera- tions of managers and senior executives In 2019, the remunerations and benefits received by the Chief Executive Officer and senior executives totaled US$ 2,586 thou- sand as fixed remuneration and US$ 21 thousand as benefits. In 2018, the remunerations and benefits received by the Chief Executive Officer and senior executives totaled US$ 2,586 thousand as fixed remunerations and US$ 99 thousand as benefits. The amounts included compensations for senior managers and executives in office as of December 31 of each year, as well as those who left the Company during the respective period. Benefits for Managers and Senior Executives The Company provides its main executives and their family group recognized as dependents with the benefits of supple- mentary health insurance and a catastrophic insurance. Ad- ditionally, the Company has purchased life insurance for its main executives. These benefits are offered according to the management level corresponding to the employee in any giv- 42 en moment. In 2019, the amount spent on benefits was US$ 5,875, a value that is included in the remunerations received by senior management Incentive plans for managers and senior executives Enel Américas implemented an annual bonus plan for its ex- ecutives for meeting objectives and the level of their individ- ual contribution to the Company´s results. This plan includes bonuses that range according to the executives´ hierarchical position. Bonuses offered to executives are established ac- cording to a specific number of gross monthly salaries. Severance payments for managers and senior executives There were no severance payments for years of services paid to managers and senior executives in 2019. Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t Property over Enel Américas As of December 31, 2018 the shareholders’ register reflected that no main executives held any the Company´s ownership. There are no prohibitions for the Chief Executive Officer and se- nior executives to hold securities issued by the Company; how- ever, they must report such securities and their transactions, both pursuant to the Securities Market Law and the Company’s Information Management Manual of Market Interest. Brazil Enel Brazil Nicola Cotugno Mechanical engineer Università di Roma, La Sapienza Enel Green Power Cachoeira Dourada Fabio Destefani Electrical engineer Universidad Federal Fluminense Enel Generación Fortaleza Raffaele Enrico Grandi Graduate in economic sciences Universidad de Génova (Italy) Enel Cien Guilherme Gomes Lencastre Production/Civil engineer Pontificia Universidad Católica de Río de Janeiro Enel Distribución Río Artur Manuel Tavares Resende Computer Engineer Universidad Simón Bolívar/Venezuela Administra- tion of main subsidiaries Enel Distribución Ceará Charles de Capdeville Electrical engineer Universidad de Santa Úrsula Enel Distribución Goiás José Luis Salas Rincon Electrical engineer Universidad Rafael Urdaneta Enel Distribución São Paulo Max Xavier Lins Electrical engineer Universidad Federal de Pernambuco Argentina Enel Generación Costanera Andrea Biasotto Degree in mechanical - energetic engineering, industrial engineering Università degli Studi di Padova Enel Generación El Chocón Daniel Garrido Electrical engineer Universidad Tecnológica Nacional Edesur Giuseppe Fanizzi Electrical engineer Politecnico di Bari Central Dock Sud Juan José Marcet Electrical engineer Universidad Tecnológica Nacional Master’s in business administration Universidad de Palermo Colombia Emgesa Marco Fragale Mechanical engineer Politecnico de Milán Codensa Bertoli Francesco Mechanical engineer Universidad de Brescia Peru Enel Generación Perú Rigoberto Novoa Velasquez Mechanical engineer Universidad Nacional de Ingeniería - Lima Enel Distribución Perú Simone Botton Electrical engineer Universidad Bologna - Roma 07. Administration 43 44 Annual Report Enel Américas 2019 08. PEOPLE AND ORGANIZATION 08. People and organization 45 Human Resources Distribution Staff distribution in Enel Américas as of December 31, 2019, including information related to the subsidiaries in the four coun- tries where the Enel Group operates in Latin America and the joint control entities, was as follows: Managers and Senior Executives Professionals And Technicians Employees and Others 6 9 - 2 - 1 9 12 4 15 - 1 17 1 1 - 16 22 15 25 156 43 66 76 40 8 27 923 698 1,008 3,090 67 36 1,668 30 53 4 306 582 591 1,473 10,789 4 - 30 21 6 5 181 408 107 3,362 331 11 1,834 - 32 - - - - 2 6,334 Total 53 75 106 63 14 33 1,113 1,118 1,119 6,467 398 48 3,519 31 86 4 322 604 606 1,500 17,279 Enel Américas Enel Brasil Cachoeira Fortaleza Volta Grande Cien Rio Ceará Goias Sao Paulo Costanera Chocón Edesur Enel trading Arg Dock Sud CTM y TESA Gx Perú Dx Perú Emgesa Codensa Total (1) Includes senior executives shared with Enel Chile. (2) Includes Enel X. (3) Includes Enel Generación Piura. 46 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t Social responsibility and sustainable development Diversity among Enel Américas´ senior management Diversity in the rest of Enel Américas Number of people by gender: Female Male Total Number of people by nationality: Chilean Brazilian Italian Total Number of people by age: Less than 30 years old Between 30 and 40 years old Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Total Number of people by seniority: Less than 3 years Between 3 and 6 years More than 6 and less than 9 years Between 9 and 12 years More than 12 years Total Number of people by gender: Female Male Total Number of people by nationality: Brazilian Chilean Spanish Peruvian Romanian Total Number of people by age: Less than 30 years old Between 30 and 40 years old Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Total Number of people by seniority: Less than 3 years Between 3 and 6 years More than 6 and less than 9 years Between 9 and 12 years More than 12 years Total - 6 6 1 1 4 6 - 1 1 3 1 6 3 2 - - 1 6 19 34 53 2 47 2 1 1 53 16 17 10 9 1 53 14 9 8 3 19 53 08. People and organization 47 Women´s average fixed salary in relation to men according to their professional level Human Resources Activities Labor Relations Contents: Senior Management Middle Management - Level 1 Middle Management - Level 2 Middle Management - Level 3 Professionals - Level 1 Professionals - Level 2 Administrative Average 0% 72% 128% 67% 91% 97% 143% 91% 48 In 2019 the Company engaged in collective negotiations with two unions, the first one with the Professionals´ Union held in July to conclude the negotiations related to the Collective Contract in a regulated negotiation, and subsequently in No- vember, in an early negotiation with the Administrative Staff Union. Both processes were concluded successfully and to the satisfaction of the involved parties, in a peaceful atmo- sphere with collective agreements in place for the next three years. In 2019, the Company continued holding regular meetings with the unions, leading to an open dialogue with the employ- ees’ representatives and improving work conditions and the environment at the workplace. Safety and occupational health For Enel Américas, protecting our employees´ health and safe- ty conditions are fundamental elements that respond to our organization’s concern to keep our employees healthy and fit for the work they carry out, as well as to prevent and control accidents and/or work-related diseases. Enel Américas has implemented the following preventive and informative health initiatives: Annual Report Enel Américas 2019 Health Program Dissemination and Promotion The company has organized several activities (posters, mail- ing, graphics, competitions among others) aimed at training, educating, and improving our employees´ life quality. > March: Anti-stress campaign: including practical recommen- dations on how to face the causes of work-related stress. > April: Immunization campaign, a massive invitation to get immunized against influenza. > May: Anti-tobacco campaign, including advice on how to give up smoking. > June: Colon and gastric cancer prevention campaign: rec- ommendations for the timely detection of these diseases through preventive examination. Immunization program The immunization of Enel Américas’ employees is a measure aimed at preventing diseases and a potential mass contagion. The Company provides each employee with vaccines to coun- teract seasonal influenza outbreaks. The Company also plays an active role throughout the year in the Traveler Medicine Program (preventive vaccines for employees who must work abroad). • The influenza prevention campaign takes place during the first quarter of the year, targeting the outbreak that usually starts in early June. Preventive exams program > July: Viral contagion and respiratory diseases prevention: practical recommendations on how to prevent infections. Its purpose is for employees´ to undergo periodic medical evaluations for an early detection of alterations or pathologies > August: Heart disease prevention campaign: practical rec- ommendations on heart disease prevention and self-care which potentially might harm their health. This initiative is ad- dressed to all employees of the Company and is carried out > September: Prostate and cervical cancer prevention cam- through a specific gender and age-appropriate protocol. paign, an invitation to preventive examinations. > October: Breast cancer prevention campaign: an invitation to participate in disease prevention through its early detec- tion and self-examination. > November: Healthy eating campaign: practical recommen- dations on how to improve nutrition, for a healthier lifestyle. > December: Skin cancer prevention campaign: recommen- dations on skin care to protect it from ultraviolet radiation and other agents. Cardiovascular risk preven- tion program It is a preventive program that seeks to create changes in peo- ple´s behaviors and habits through nutritional evaluations and directed fitness exercises, improving altered medical param- eters. This program is aimed at all workers who, according to preventive examination evaluation, have two or more Cardio- vascular Risk factors. s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 08. People and organization 49 People management Work environment manage- ment Work environment management and commitment are funda- mental cornerstones of Enel América’s strategy. Every two years the Company implements the Environment and Safety Survey. In 2018, 93% of the employees in Chile took part In the survey. Enjoyable work environment is the Company´s priority and aimed at achieving friendly relations with our staff members who are part of the Company´s valuable human resources. Therefore, we have continued implementing several initiatives to maintain our employees’ motivation, satisfaction and com- mitment, in the areas of leadership, communication, meritoc- racy and development, conciliation measures and good labor practices. tives under the People & Organization heading, every day in- forming and explaining topics of interest focused on people man- agement. The program even has a radio show, a website, best practice manuals for managers and employees, among others. In 2019, a new and revamped Recognition Program was es- tablished, called Protagonistas Enel. The program focuses on the actions that drive meritocracy and recognition, and it seeks to enhance a culture of recognition within the Com- pany and create formal instances where colleagues promote the achievements of other colleagues, and where the orga- nization identifies high value initiatives for the Company. The tradition of ceremonies organized by the Company was also maintained where, among other initiatives, outstanding em- ployees and their careers were recognized. At Enel Américas, feedback opportunities offered by manager to employees are instances that permit to forge closer rela- tionships, to improve transparency, clarify expectations and support employees´ professional development. Through the Open Feedback program, the continuous feedback culture is encouraged along the entire network, throughout the year, guiding employee development as well as the formation of high-performance teams. In 2019, 82 initiatives were carried out in different manage- ment areas of the Enel Group companies in Chile. They in- cluded setting up labor environment committees aimed at improving working environment with a cross-sectional repre- sentation from different teams. The Company also carried out work aimed at flexible work- ing practices such as remote work and deferred income, as well as a number of collaborative work and companionship-fo- cused activities whose main aim was to develop relational and contributive skills in work teams, to strengthen trust and align common objectives. Enel Américas has implemented a program to promote and strengthen the role of leaders in creating corporate environ- Diversity ments that lead to our employees´ increased satisfaction and development. The “Leader to Coach” program has been de- signed to leverage leadership and the role of Manager in our “Open Power” culture promoting an active and strategic role focusing on enlisting their teams and promoting employee learning. It is a comprehensive program to foster accompa- nied training and education that involves the development of an individual itinerary tailor made for each employee. The activities included in this program are: 360 evaluation, work- shops for skills development, creation of a management net- work based on good practices. To establish a permanent and close contact with employees, Enel Américas has implemented several communication initia- For Enel Américas, diverse work team and inclusive work en- vironments are fundamental to create an innovative culture that makes it possible to hold diverging points of view that improve and enrich workplace dynamics and constantly add value to the company and its employees. Under the Diversity Dimension and Inclusion Policy, Enel Améri- cas has developed, as part of its strategy, a series of practices related to gender, age, nationality, disability and transversality. The policy promotes the principles of no discrimination, equal- ity of opportunities, inclusion, and balance between personal and professional lives, as well as the incorporation of funda- mental values in the activities of the Group´s companies. 50 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t The Policy has established three general principles: established by law and accredit them with State entities as 1. Reject any form of arbitrary discrimination, guarantee and tain structural and necessary adjustments (dining room, bath- promote diversity, inclusion and equality of opportunities. rooms, ramps, marked parking lots, access to the auditorium, 2. Promote and maintain a climate of respect for people´s elevators marked with the braille system, etc.) all around the people with special needs. We also continued to work on cer- dignity, honor and identity. Company’s facilities. 3. Guarantee the highest standards of confidentiality in rela- tion to any information related to employees´ private lives In relation to transversality, the Company promoted awareness that the Company might have access to. workshops and courses about values related to diversity and inclusion and flexible working arrangements. As part of the In relation to gender, the Company is seeking to achieve a R&D Week, we organized four interesting workshops: “Labor balance in the initial stages of the recruitment and selection Inclusion and People with Disabilities”, Gender Equity”, “Sexual processes, and to build relationships with universities and pro- harassment” and “Labor Harassment”. fessional institutes to promote the participation and inclusion of female students, especially in technical areas. We have also In relation to awareness actions, the Enel Group in Chile partic- implemented a Parental Program (for men and women), aimed ipated in the Diversity and Inclusion week, with a play entitled at balancing the needs of parents with their professional de- “With Open Arms”, where different issues related to diversity velopment. The program involves conversations during the pre and inclusion were addressed in a fun way. And the activity and postnatal periods, nutritional support, sports activities for called “In Your Shoes for One Day” let employees experience pregnant women, talks about what it means to be a parent cov- the obstacles disabled people face every day. ering topics such as bullying and cyberbullying, the effects of the use of electronic devices, alcohol and drug use prevention, The Company also signed an alliance with the Inclusive Com- among others, all dictated by specialists. panies Network ran by Sofofa and called ReIN, where some In relation to age, and in the context of the Company´s digi- the Teleton event was suspended until April 2020, a group of tal transformation, this year the Company implemented a new volunteers kept supporting the cause. 30 companies share their best practices every- Even though On-Boarding platform, where each employee who joins the ranks of Enel Américas has a chance to get to know the Com- pany beforehand, get prepared for his/ her duties and acquire all the necessary cultural adjustments. This personal and pro- fessional support for new employees shows what his/her daily work routine will be. It also involves knowledge transfer from older to newer employees. Conciliation measures and labor flexibility As part of the conciliation and labor flexibility measures in 2019 the company consolidated the telework program called “Smart In relation to nationality, a tutor is assigned to foreign workers Working” - one of the most appreciated work options in the who will assist and support them during the expatriation peri- Company, providing more flexibility to working away from the od in order to acknowledge, respect and manage the contrasts office. Currently there are 492 employees in Enel in Chile who between people from different nationalities and to help their are part of the program, 9 of them from Enel Américas. One day integration. This year the Company implemented the celebra- per week, chosen by each one between either Tuesday or Thurs- tion and commemoration of certain festivities of our foreign day, the employees work from their homes or another place they employees and residents of Chile, through a special greeting choose and must comply with the health and safety measures and lunch in the dining room. established by current regulations. This initiative contributes to balancing professional and personal lives as well as improving In relation to disability, to acknowledge, respect and man- employees´ life quality. age employees´ different skills within the Company, this year Enel Américas addresses the issues related to the needs of Additionally, in 2019, the Company undertook the following initia- colleagues’ with disabilities’, helping them get the credential tives to Improve our employees´ quality of life: 08. People and organization 51 Sports and Culture Extension Program: a traditional program of In 2019, there were 9 vacant positions in Enel Américas, of sports activities held in the Company´s venues with workshops which 56% were filled internally. Of the work force that joined and different sports, such as football, baby football, basketball, the Company in 2019 (44% of all vacancies were in Enel Améri- volleyball, among others. Additionally, the Company offers arts cas), 44% were women. workshops, exhibitions, tours, family trips and other extension initiatives for employees and their families to enjoy. There are several initiatives for our employees’ children, both recreational and educational, among which the most popular ones are the summer and winter camps. The camps consist of recreational Internships and Attracting Young Talent trips for our employees’ children aged 4 to 15. They take place In this area, an important project in terms of new recruitment during the first month of the year and during the winter vacation sources included the incorporation of young professionals period. from the country´s top universities as interns and undergrad- uate thesis students. They are offered an opportunity to con- During the year, the Company also organizes various events that solidate theoretical learning in the context of Enel Américas’ help reconcile work and family duties. One of the most import- business, thus getting trained by professionals with an exten- ant is the “Come to my Birthday” celebration held each month at sive knowledge of labor reality and team challenges and they the Company’s stadium for children under 12. The first school day also become an important source of recruitment. activity permits parents to accompany their children on the first day of classes and retake their professional activities later on. This internship program is carried out on a permanent basis The End-of-the-Year Party is a corporate event for all employees, during the whole year. 3 new participants were enrolled in 2019. consisting of a celebration dinner and a party with contests and dancing. The “Work Trajectory Award” is a corporate celebration At a transversal level and considering Enel Américas diverse that each year gives recognition to long-standing employees with lines of business, 67% is concentrated in AFC and the remain- over twenty years of service in the Company. ing 33% in Enel X. Recruit- ment and selection Recruitment and selection Diversity and inclusion For Enel Américas, to provide employees with an inclusive work environment is essential to create and promote an innovation cul- ture and respect for diversity. Diversity offers people the possibility to visualize different points of view and opinions that enrich the work environment, add value to the business, provide new oppor- tunities and facilitate collaboration and team integration. The Company values differences and turn them into compet- itive advantages – it is they only way we can make improve- ments in processes, products and services, through boosting creativity, learning, flexibility and respect. All the above values also reinforce our brand and make us more attractive to the talents available in the market. We accompany new employees via the On-Boarding program in which we offer informative talks about the Company´s strat- The main objective of Enel Américas is to incorporate the best egy and also nominate a tutor who teaches new employees professionals into the Company´s ranks. They must also have all about our Open Power culture and guides them towards their the skills relevant to the cultural changes related to the Compa- integration into the Company. In 2019 the On-Boarding plat- ny´s digital transformation and Open Power. form was used to offer a more friendly and easygoing expe- rience to new arrivals and streamline the process for users. 52 Annual Report Enel Américas 2019 Education Training during the year. Among these, English and Italian were estab- lished as a priority for employees to communicate effectively with their colleagues from other countries. At the same time, the training program provided technical knowledge of the electrical business through courses and especially the Electric Markets internal diploma, provided by Universidad de Chile, under a model specially developed for our needs. Enel América’s training program for 2019 was built and im- plemented on three management principles: the first was We would like to highlight the” Enel Manager “ leadership language training, the second was technical business training program that seeks to develop coaching and leadership skills and the third area was the Company’s leadership training. To in our managers, necessary to guide teams into and along implement the three, we identified, together with the training new challenges of growth and strategic consolidation that area, the Business Partner, the employee and his/her man- drive the Company today. ager, the knowledge gaps and skills necessary to improve productivity in the workplace, as well as develop new skills Finally, approaches such as digital transformation and people’s aligned to the Company’s strategic plan. safety have been some of the areas of special interest that have been part of the training program implemented during In terms of languages, English, Italian and Portuguese were the year. the main language requirements detected and addressed s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 08. People and organization 53 54 Annual Report Enel Américas 2019 09. STOCK EXCHANGE TRANSACTIONS 09. Stock exchange transactions 55 Stock Exchange transactions Below we list the quarterly transactions in the last three years carried out in the stock exchanges where the Enel Américas’ shares are traded: in Chile through the Santiago Stock Exchange, the Electronic Stock Exchange of Chile and the Valparaíso Stock Exchange, and in the United States through the New York Stock Exchange (NYSE). Santiago Stock Exchange In 2019, 23,299 million Enel Américas shares were traded at the Santiago Stock Exchange, equivalent to CLP$ 2,994,363 mil- lion. The closing price of the share in December 2019 was CLP$ 167. Units Amounts (Chilean Pesos) Average Price 2,229,781,463 2,009,919,858 2,356,887,602 2,796,096,892 9,392,685,815 2,771,570,034 3,290,495,998 3,404,682,608 4,862,216,660 273,721,586,257 261,422,184,124 309,180,255,882 366,879,556,230 1,211,203,582,493 383,425,705,091 427,006,940,711 364,271,802,874 541,717,097,465 14,328,965,300 1,716,421,546,141 4,825,385,785 5,267,937,965 6,199,801,001 7,005,472,367 23,298,597,118 612,155,765,545 605,331,164,210 741,799,163,682 1,035,076,977,567 2,994,363,071,004 122.90 130.71 131.24 131.46 129.08 138.45 130.51 107.10 111.99 122.01 126.65 114.48 119.68 149.30 127.53 Period 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 Total 2017 1st quarter 2018 2nd quarter 2018 3rd quarter 2018 4th quarter 2018 Total 2018 1st quarter 2019 2nd quarter 2019 3rd quarter 2019 4th quarter 2019 Total 2019 56 Annual Report Enel Américas 2019 Chilean Electronic Stock Exchange In 2019, Enel Américas traded a total of 718 million shares in the Electronic Stock Exchange equivalent to CLP$ 90,852 million. The closing price of the share in December was CLP$ 164.52 Period 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 Total 2017 1st quarter 2018 2nd quarter 2018 3rd quarter 2018 4th quarter 2018 Total 2018 1st quarter 2019 2nd quarter 2019 3rd quarter 2019 4th quarter 2019 Total 2019 Units Amounts (Chilean Pesos) Average Price 78,056,955 253,547,191 367,188,645 272,011,584 970,804,375 265,640,945 315,617,793 206,898,749 134,618,362 922,775,849 96,739,255 112,668,680 321,016,940 187,247,739 717,672,614 9,660,465,656 32,973,128,058 48,153,275,546 35,937,385,836 126,724,255,096 37,149,674,644 40,051,124,833 21,982,108,385 14,791,542,973 113,974,450,835 12,233,577,575 13,216,085,533 37,641,372,132 27,761,301,991 90,852,337,231 121.16 130.37 130.87 132.97 128.84 139.09 130.94 106.26 110.56 121.71 128.50 114.92 119.55 149.58 128.14 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t 09. Stock exchange transactions 57 New York Stock Exchange (NYSE) The Enel Américas shares began to trade in the New York Stock Exchange (NYSE) on October 20, 1993. At that time, the name of the Company was Enersis and the ticker symbol was ENI. One ADS (American Depositary Share) of Enel Américas rep- resents 50 shares and its current ticker symbol is ENIA. Citibank N.A. acts as the depositary bank and Banco Santander Chile is the custodian in Chile. In 2019, 323 million ADS were traded in the United States, equivalent to US$ 2,962 million. The closing price of an ADS in December was US$ 10.98. Units Amounts (Chilean Pesos) Average Price 55,867,021 66,972,268 59,641,261 54,800,714 237,281,264 47,259,808 65,764,152 61,238,283 97,296,394 271,558,637 93,356,577 50,723,996 84,411,906 94,253,155 322,745,634 532,101,627 653,636,388 603,478,379 564,766,815 2,353,983,209 540,952,152 687,363,196 488,063,068 799,163,804 2,515,542,219 888,587,040 428,879,782 716,122,405 928,306,385 2,961,895,611 9.45 9.81 10.14 10.34 9.94 11.44 10.50 8.08 8.12 9.53 9.67 8.42 8.43 9.92 9.11 Period 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 Total 2017 1st quarter 2018 2nd quarter 2018 3rd quarter 2018 4th quarter 2018 Total 2018 1st quarter 2019 2nd quarter 2019 3rd quarter 2019 4th quarter 2019 Total 2019 58 Annual Report Enel Américas 2019 s r o t a c i d n i l a i c n a n i f n i a M . 4 0 y n a p m o c e h t f o n o i t a c i f i t n e d I . 5 0 s t n e m u c o d t n e u t i t s n o c d n a l o r t n o c d n a y t r e p o r P . 6 0 n o i t a r t s i i n m d A 7. 0 n o i t a z i n a g r o d n a e l p o e P . 8 0 e g n a h c x e k c o t S . 9 0 s n o i t c a s n a r t Market information In 2019, the tendency of the Chilean stock market prices was downward and the S&P/CLX IPSA index fell by 8.5 %. This performance was misaligned with global markets, which mostly performed well. The US Dow Jones Industrial and FTSE 100 in London registered 22.3% and 12.1% increases, respec- tively. Similarly, the stock exchanges of the countries in which Enel Américas operates also showed positive returns: Argenti- na (Merval; +37.6%), Brazil (Bovespa; +31.6%), Colombia (Col- cap; +25.4%) Peru (SPBLPGPT; +6.1%) carried out strongly in 2019. Santiago Stock Exchange The performance of Enel Américas’ shares in the local market during the last two years compared to the Selective Stock Prices Index (S&P/CLX IPSA) (1) is as follows: Variation Enel Américas S&P/CLX IPSA 2018 -10.6% -8.3% 2019 36.3% -8.5% New York Stock Exchange (NYSE) The performance of Enel Américas’ ADRs listed in the NYSE (ENIA) compared to the Dow Jones Industrial Index and the Dow Jones Utilities Index during the last two years is shown below: Variation ENIA Dow Jones Industrial Dow Jones Utilities 2018 -20.1% -5.6% -1.4% 2019 23.1% 22.3% 23.3% Investor relations The Company has an Investor Relations department in charge of providing transparent, timely and quality information to the market on the Company’s main financial, strategic, and oper- ational issues. The main communication channels with the market include our website, the Investor Relations app, conference calls, emails, face-to-face meetings, and participation in local and international conferences. Regarding the documentation available to investors, It in- cludes presentations of quarterly results, annual reports, an- nual sustainability reports, 20-F reports, Press Releases and quarterly financial tables, as well as corporate presentations. Furthermore, as of 2016, each year the Company presents its strategic plan for the next three years showing the main stra- tegic guidelines and financial and business projections. As to the meetings, Enel Américas participated in 10 confer- ences in 2019 in which our IR team participated in more than 100 meetings with investors. In addition, around 50 meetings were held locally and 7 roadshows, both local and internation- al, were organized with visits to 6 countries where 88 meet- ings were held. Our Investor Relations department is always on hand to ad- dress any concerns about the Company, whether in Spanish or in English, through the mail ir.enelamericas@enel.com . 09. Stock exchange transactions 59 60 Annual Report Enel Américas 2019 10. DIVIDENDS 10. Dividends 61 Pursuant to General Norm N°283, Number 5, the dividend four months of 2021. The compliance of said dividend program policies of the Company for the periods 2020 and 2019 are is subject to the results obtained by the Company aiming, at shown below. the same time, to maintain the Company´s financial balance. Dividend Policy for period 2020 General Aspects The Company´s Board of Directors, at the session held on February 27, 2019, approved the following Dividend Policy and Enel Américas S.A.´s dividend payment procedure For dividend payments, whether interim or final, and to avoid in- correct collection, Enel Américas S.A. put in place the following payment methods: 1. Deposit in the shareholder´s current ac- count. 2. Deposit in the shareholder´s savings account. 3. Nom- inative check or bank draft sent by mail to the residence of the shareholders, and 4. Withdrawal of nominative check or bank draft in the offices of DCV Registros S.A., the administrator of Enel Américas S.A’ shareholders, or in a bank or its branches established for such purpose and as informed in a notification to be published about the payment of dividends. the corresponding Procedure for Enel Américas S.A. dividend . payments for the 2020 period. 2020 Dividend Policy The Board of Directors is planning to distribute an interim dividend, charged to the 2020 income of up to 15% of the net income as of September 30, 2020 as shown in the Enel Américas S.A.’s financial statements until such date, to be paid in January 2021. The Board of Directors is planning to propose to the Ordinary Shareholders Meeting to be held during the first four months of 2021, to distribute, as a final dividend, an amount equal to 50% of the 2020 net income. The final dividend will be set by the Ordinary Shareholders’ Meeting to be held during the first For the above-mentioned purposes, current or savings ac- counts can be held at any branch in the country. The payment method chosen by each shareholder will be used by DCV Reg- istros S.A. for all dividend payments, while the shareholder does not express in writing his intention to choose a different payment method. Shareholders who have not registered a pay- ment method will be paid according to point 4 above. Should checks or bank drafts be returned by mail to DCV Reg- istros S.A., these will remain in their custody until the share- holders collect or request them. In the case of bank current accounts, Enel Américas S.A. and/or DCV Registros S.A. may request, for security reasons, that they be verified by the corre- sponding banks. If the accounts indicated by the shareholders are rejected, whether during said verification process or for any other reason, the dividend will be paid according to method 4 above. The Company has also adopted and will continue to do so in the future all the necessary security measures estab- lished in the dividend payment procedure, to protect both our shareholders and Enel Américas S.A. 62 Annual Report Enel Américas 2019 Dividend policy for period 2019 General aspects Dividend Payment Procedure For dividend payments, whether interim or final, and to avoid wrong collection, Enel Américas S.A. considers the following payment methods: 1. Deposit in the shareholder´s current account. 2. Deposit in the shareholder´s savings account. 3. Nominative check or bank draft sent by mail to the resi- dence of the shareholders, and 4. Withdrawal of nominative check or bank draft in the offices At the session held on February 27, 2019, the Company´s of DCV Registros S.A., the administrator of Enel Améri- Board of Directors approved the following Dividend Policy and cas S.A’ shareholders, or in a bank or its branches estab- the payment procedures of Enel Américas S.A. dividends for lished for such purpose and as informed in a notification 2019. to be published about the payment of dividends. Dividend policy The Board of Directors intends to distribute an interim divi- dend, charged to the 2019 income of up to 15% of net income as of September 30, 2019 as shown in the Enel Américas S.A.’s financial statements until such date, to be paid in Jan- uary 2020. The Board of Directors is planning to propose to the Ordinary Shareholders Meeting to be held during the first four months of 2020, to distribute, as a final dividend, an amount equal to 50% of the 2019 net income. The final dividend will be es- tablished by the Ordinary Shareholders’ Meeting to be held during the first four months of 2020. The compliance of said dividend program is subject to the results obtained by the Company aiming, at the same time, to maintain the Compa- ny´s financial balance. For the above-mentioned purposes, current or savings ac- counts can be held at any branch in the country. The payment method chosen by each shareholder will be used by DCV Reg- istros S.A. for all dividend payments, while the shareholder does not express in writing his intention to choose a different payment method. Shareholders who have not registered a payment method will be paid according to point 4 above. Should checks or bank drafts be returned by mail to DCV Reg- istros S.A., these will remain in their custody until the share- holders collect or request them. In the case of bank current accounts, Enel Américas S.A. and/or DCV Registros S.A. may request, for security reasons, that they be verified by the corresponding banks. If the accounts indicated by the share- holders are rejected, whether during said verification process or for any other reason, the dividend will be paid according to method 4 above. The Company has also adopted and will continue to do so in the future all the necessary security mea- sures established in the dividend payment procedure, to pro- tect both our shareholders and Enel Américas S.A. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 10. Dividends 63 Distributable income of 2019 The distributable income in 2019 is shown below: Income * Distributable Income * Attributable to the controlling shareholder. Distributed dividends The following table shows dividends per share paid in the last 7 years: Dividend no. Type of dividend Closing Date Payment Date Pesos/ Dollars per share (1) 86 87 88 89 90 91 92 93 94 95 96 (1) 97 98 99 100 Interim Final Interim Final Interim Final Interim Final Interim Final Interim Final Interim Final Interim 01.19.2013 05.04.2013 01.25.2014 05.10.2014 01.24.2015 05.18.2015 01.23.2016 05.17.2016 01.21./2017 05.202017 01.202018 05.18.2018 01.19/2019 05.11./2019 01.18./2020 01.25.2013 05.10.2013 01.31.2014 05.16.2014 01.31.2015 05.25.2015 01.29.2016 05.24.2016 01.27.2017 05.26.2017 01.26.2018 05.25.2018 01.25.2019 05.17.2019 01.24.2020 1.21538 3.03489 1.42964 5.27719 0.83148 5.38285 1.23875 3.40599 0.94664 2.38705 0.001 0.00517 0.00134 0.00703 0.00162 Thousand US$ 1,614,085 807,043 Year 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 (1) The Extraordinary Shareholders’ Meeting held on April 27, 2017 approved the change of the Company´s functional currency from Chilean Pesos to US Dollars. Therefore, as of 2017 onwards, dividends are shown in dollars per share. 64 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 10. Dividends 65 66 Annual Report Enel Américas 2019 11. 2019 INVESTMENT AND FINANCING POLICY 11. 2019 Investment and financing policy 67 The Ordinary Shareholders’ Meeting held on April 30, 2019 approved the Investment and Financing Policy detailed below. Investments Maximum investment limits Investment areas Enel Américas shall invest, as authorized by its bylaws, in the following areas: i) contributions for investment in or for the creation of subsidiaries or related companies whose activity is aligned with, related or linked to any form or type of energy or the supply of public utilities, or whose main input is ener- gy; ii) investments consisting of the acquisition, exploitation, construction, rental, management, trading and transfer of any class of fixed assets, whether directly or through subsidiaries; and iii) other investments in all kinds of financial assets, titles or securities. The maximum investment limits for each investment area shall be as follows: i) investments in subsidiaries in the electricity sector, those required by the subsidiaries to meet their re- spective corporate purposes, with a maximum amount equal to 50% of Net Equity in Enel Américas S.A.´s consolidated balance sheet of as of December 31, 2018, ii) investments in other companies outside the electricity sector, as long as at least 50.1% of Enel Américas consolidated assets are part of the electricity sector. Participation in the control of investment areas To control the investment areas and pursuant to Enel Améri- cas S.A.’ corporate purpose, the following procedure will be followed whenever possible: i) it will be proposed at the Ordinary Shareholders Meetings of the subsidiaries or relat- ed companies which are publicly traded companies that the Directors of Enel Américas S.A. should be chosen in propor- tion of at least the stake in those companies, and preferably they should be chosen among directors or executives of Enel Américas S.A. or its subsidiaries; ii) investment, financial and commercial policies as well as accounting criteria and system to be followed shall be proposed to the subsidiaries and relat- ed companies; iii) the management of subsidiaries and related companies will be supervised, and iv) the company will per- manently control debt. 68 Annual Report Enel Américas 2019 Financing Maximum Indebtedness level Enel Américas S.A.´s maximum debt level is defined as the relation between the Total Financial Debt (measured as other Current Financial Liabilities and Other Non-Current Financial Liabilities) less or equal to 2.2 times Total Equity, based on Enel Américas S.A.´s Consolidated Statements of Financial Position as of December 31, 2018. Management attributions for agreeing Enel Américas’ dividend payment restriction with lenders Limitations on dividend distribution may be agreed with credi- tors only if such restrictions have previously been approved At A Shareholders’ Meeting (Ordinary or Extraordinary). Management attributions for granting liens to lenders The Extraordinary Shareholders´ Meeting must approves the granting of liens or warranties for third-party obligations, relat- ed to essential assets described below. Assets that are essential for the Company´s normal operations An asset essential for the operation of Enel Américas is the direct and/or indirect participation that permits to control Enel Brasil and Emgesa, by way of holding the majority of shares, agreements or shareholder agreements, s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 11. 2019 Investment and financing policy 69 70 Annual Report Enel Américas 2019 12. BUSINESSES OF THE COMPANY 12. Businesses of the company 71 Business Structure GENERATION DISTRIBUTION Enel Generación Costanera Edesur Enel Generación El Chocón Enel Distribución Rio Central Dock Sud Enel Distribución Ceará Enel Generación Fortaleza Enel Distribución Goiás EGP Cachoeira Dourada Enel Distribución São Paulo EGP Volta Grande Enel Codensa Enel Distribución Perú Enel Cien* Enel Emgesa Enel Generación Perú Enel Generación Piura * Transmission ENEL X Enel X Argentina Enel X Brasil Enel X Colombia Enel X Perú 72 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 Historical background eration and distribution activities carried out in Chile, from those carried out in the rest of the countries. As such, former Enersis S.A. was divided into the following companies: a) Enel Américas S.A., the continuing Company of Enersis with activ- ities in Argentina, Brazil, Colombia and Peru, and b) Enel Chile S.A. which owns the assets related to the activities in Chile. On June 19, 1981, the Compañía Chilena de Electricidad S.A. electricity companies in Latin America, both in terms of con- created a new corporate structure, which gave rise to a parent solidated assets and also in terms of operating revenues, Company and three subsidiaries. One of these was Compañía achieved through steady and balanced growth in the electrici- Chilena Metropolitana de Distribución Eléctrica S.A. In 1985, ty businesses: generation, transmission and distribution. Currently Enel Américas S.A. is one of the largest private under the Chilean government’s privatization program, the company began the process of transferring the share capital of Compañía Chilena Metropolitana de Distribución Eléctrica S.A. to the private sector, ending on August 10, 1987. As part of the process, pension fund management companies (AFPs as per Spanish acronym), the company´s employees, institu- tional investors and thousands of small shareholders joined the Company. Its organizational structure was based on ac- tivities or operative functions whose results were evaluated functionally and their profitability was limited by a tariff struc- ture because of the Company’s exclusive dedication to the electricity distribution business. In 1987, the Company’s Board of Directors proposed to divide the Company’s different activities. The four subsidiaries creat- ed as a result of the division were to operate as business units with their own objectives, thus expanding the Company’s ac- tivities towards other non-regulated activities but linked to the core business. This division was approved at the Extraordinary Shareholders’ Meeting held on November 25, 1987 thus es- tablishing the Company´s new corporate purpose. As a result, Compañía Chilena Metropolitana de Distribución Eléctrica S.A. became an Investment company. On August 1, 1988, as approved by the Extraordinary Share- holders’ Meeting held on April 12, 1988, one of the companies that arose from the division changed its name to Enersis S.A. At the Extraordinary Shareholders’ Meeting held on April 11, 2002, the Company’s corporate purpose was modified, intro- ducing telecommunications activities and investment in and management of companies whose business was telecommu- nications and information technology through the Internet. The Company underwent a corporate restructuring process which started in April 2015 and was completed in December 2016. The process consisted of separating the electricity gen- Expansion and Development Enel Américas began its international expansion in 1992 through different privatization processes in Latin America, thus developing a significant presence in the electricity sec- tors in Argentina, Brazil, Colombia and Peru. 1992 > On May 15, Enel Américas, (Enersis at that time) acquired a 60% shareholding and control of Central Costanera, a gen- eration Company, currently Enel Generación Costanera, located in Buenos Aires, Argentina. > On July 30, the Company was awarded 51% of Empresa Distribuidora Sur S.A., Edesur, a company that distributes electricity in the city of Buenos Aires, Argentina. 1993 > In July, the Company acquired Hidroeléctrica El Chocón, today Enel Generación El Chocón, located in the Neuquén and Río Negro provinces, Argentina. 12. Businesses of the company 73  1994 > In July, Enel Américas acquired for US$176 million, 60% shareholding of Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor (currently Enel Distribución Perú) in Peru. The Company also acquired Edechancay, another electricity distribution Company in that country, which was later absorbed by the former. 1998 > On April 3, Enersis (currently Enel Américas) invested in the Brazilian market once again, this time acquiring 89% and the control of Companhia Energética de Ceará S.A., Coelce (currently Enel Distribución Ceará), a company that distributes electricity in the northeast region of the country, in the Ceará state. The transaction totaled US$ 868 million. 1995 > On December 12, Enel Américas acquired an additional 39% shareholding of Edesur. > The Company also acquired the Peruvian generation Com- pany Edegel (currently Enel Generación Perú). 1996 > On December 20, Enel Américas entered the Brazilian mar- ket with the acquisition of a large portion of shares of the former Companhia de Eletricidade do Río de Janeiro S.A., Cerj, an electricity distribution Company in the cities of Río de Janeiro and Niteroi, Brazil, whose business name was changed to Ampla Energía e Serviços S.A. and currently is called Enel Distribución Río. > On December 20, the Company acquired 99.9% share- holding of Central Hidroeléctrica de Betania S.A. E.S.P, in Colombia. 1997 > On September 5, the Company acquired a 78.9% share- holding of the Brazilian company Centrais Elétricas Cachoe- ira Dourada (currently Enel Green Power Cachoeira Doura- da) for US$ 715 million. > On September 15, Enel Américas (at the time Enersis) successfully participated in the capitalization of Codensa S.A. E.S.P., a company that distributes electricity in the city of Bogotá and the Cundinamarca department in Colombia acquiring a 48.5% shareholding for US$ 1,226 million. The Company also acquired 5.5% of Empresa Eléctrica de Bo- gotá. > On September 15, investing US$ 951 million, the Compa- ny acquired a 75% shareholding of Emgesa, a Colombian generation Company, and an additional 5.5% of Empresa Eléctrica de Bogotá S.A. > Endesa, S.A. (Spain) acquired 32% of Enersis (currently Enel Américas). 1999 > Endesa, S.A. (Spain), took control of Enersis (today Enel Américas). Through a Public Tender Offer, Endesa acquired an additional 32% of Enersis, which, together with the 32% already acquired in August 1997, totaled 64%. This transaction was completed on April 7, 1999 and involved a US$ 1,450 million investment. As a result of the subse- quent capital increase by Enersis in 2003, the shareholding decreased to the current 60.62%. > On May 11, Enersis (currently Enel Américas) acquired 35% of Endesa Chile (today Enel Generación Chile), in addition to the 25% already held, thus reaching 60% of the Compa- ny´s shareholding. The Company therefore consolidated its position as one of the main private electricity companies in Latin America. 2000 > As part of the Genesis Plan strategy, the subsidiaries Transelec, Esval, Aguas Cordillera and real estate assets were sold for US$ 1,400 million. 2001 > The Company carried out large investments: US$364 mil- lion to increase its shareholding in Chilectra (today Enel Dis- tribución Chile), US$150 million for the acquisition of 10% shareholding of Edesur, in Argentina, a stake that was held by the Company’s employees; US$ 132 million to increase its shareholding in the Brazilian distribution Company Am- pla; US$ 23 million to increase by 15% its shareholding in Río Maipo, in Chile, and US$ 1.6 million to increase by 1.7% its shareholding in Distrilima, in Peru. 2002 > In Brazil, the Company acquired Central Termoeléctrica For- taleza, located in the state of Ceará. Additionally, the Com- pany began the second phase of the commercial operation of the electricity interconnection between Argentina and 74 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 Brazil, CIEN, completing a 2,100 MW transmission capaci- ing of its Peruvian subsidiary Enel Generación Perú (for- ty between both countries. 2005 > The subsidiary Endesa Brasil S.A. (currently Enel Brasil) was formed with all the assets held in Brazil by the Enersis Group and Endesa Internacional Cien, Fortaleza, Cachoeira Dourada, Enel Distribución Río, Investluz and Enel Distri- bución Ceará. 2006 > In February, Enersis acquired, for approximately US$17 million, Termocartagena (142 MW) a Colombian combined merly Edegel), 2.72 soles per share. This was purchased from Generalima S.A.C., a Peruvian subsidiary of Enel Lati- noamérica S.A., the parent Company of Enersis. With this transaction, the direct and indirect shareholding of Enersis S.A. in Edelnor rose from 33.53% to 57.53%. 2010 > Enersis (currently Enel Américas) accepted the offer of Graña y Montero S.A.A., to acquire its entire direct and in- direct shareholding in its subsidiary Compañía Americana de Multiservicios Limitada, CAM; and similarly, accepted the offer presented by Riverwood Capital L.P to acquire the entire direct and indirect shareholding in its subsidiary cycle power plant which operates either with fuel oil or gas. Synapsis Soluciones y Servicios IT Ltda. The price offered > In June, Edegel (currently Enel Generación Perú) and Ete- vensa merged, the latter a subsidiary of Endesa Internacio- for CAM and its subsidiaries in Argentina, Brazil, Colombia and Peru reached US$ 20 million. In the case of Synapsis, nal in Peru. the price offered for the Company and its subsidiaries in Ar- gentina, Brazil, Colombia and Peru reached US$ 52 million. 2007 > In September, the merger of Colombian generation compa- nies 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 of Endesa Internacio- 2011 > In August, Endesa, S.A. informed through a Significant Event, that it signed a purchase agreement for which Endesa Latinoamérica S.A. (wholly owned by Endesa, S.A.) nal, S.A. (currently absorbed by Enel SpA.). acquired 7.70% stake owned by EDP Energias de Portu- 2009 > Acciona, S.A. and Enel S.p.A. announced an agreement whereby Acciona, S.A. would directly and indirectly trans- fer to Enel Energy Europe S.L. its 25.01% shareholding in Endesa, S.A. As such, Enel Energy Europe S.L., wholly con- trolled by Enel S.p.A., would hold 92.06% of Endesa, S.A.´s shareholding as of June 25. > On October 9, Endesa Chile (currently Enel Generación Chile) acquired 29.3974% of the Peruvian generation sub- gal S.A. in Endesa’s Brazilian subsidiaries Ampla Energia e Serviços S.A. and Ampla Investimentos e Serviços S.A. for 76 million euros and 9 million euros, respectively. After these acquisitions, Endesa S.A. controlled 99.64% share- holding of both companies. 2012 > The Extraordinary Shareholders´ Meeting held on De- cember 20 approved a capital increase with the vote of 81.94% of the Company´s shareholders with voting rights sidiary Edegel (currently Enel Generación Perú). The shares with the following characteristics: 1) maximum amount of were acquired at market price from Generalima S.A.C., a the capital increase: Ch$ 2,844,397,889,381, divided into company which, in turn, is a subsidiary of Endesa Latino- 16,441,606,297 ordinary nominative payment shares of américa S.A. Endesa Chile thus held directly and indirectly the same series, with no preferences and no par value, 62.46% of the Edegel shares. > On October 15, Enersis S.A. (currently Enel Américas) ac- quired 153,255,366 shares, representing 24% sharehold- 2) value of other than money contributions to be capital- ized: The total issued capital of Cono Sur, Company that would concentrate the activities that were identified in the reports that had been made available to the shareholders 12. Businesses of the company 75 and that would be contributed by Endesa (currently Enel Generación Chile) to Enersis (currently Enel Américas), would reach Ch$ 1,724,400,000,034 corresponding to 9,967,630,058 shares of Enersis S.A. (today Enel Américas) at a price of Ch$ 173 per share, 3) placement share price: a fixed price of Ch$173 for every payment share to be issued as a result of the capital increase. 2013 > Capital increase: With a record result for this type of opera- tion in the local market, shareholders of Enersis (today Enel Américas) subscribed a total of US$ 6,022 million, placing 100% of the shares available for the capital increase. 2014 > Public Tender Offer for the acquisition of shares of Coelce (Enel Distribución Ceará). On January 14, Enersis (currently Enel Américas), which until then controlled 58.87% of its subsidiary Coelce, launched a voluntary Public Tender offer to acquire all the shares issued by Coelce at a price of $49 real per share. With this, Enersis acquired 3,002,812 com- mon shares, 8,818,006 preferred shares type A and 424 preferred shares type B, equivalent to a total investment of approximately US$ 243 million. After the operation, the Company obtained a 74.05% direct and indirect sharehold- ing of Coelce. > In April, Enersis (currently Enel Américas) signed an agreement to purchase all the shares that Inkia Americas Holdings Limited indirectly held in Generandes Perú S.A., equivalent to a 39.01% stake, with an investment of US$ 413 million. The transaction ended in September and, as a result, Enersis (currently Enel Américas) reached a 58.60% shareholding of Edegel (today Enel Generación Perú). > On July 31, 2014, Enel Energy Europe S.R.L., currently Enel Iberoamérica SRL, controller of Endesa S.A. (92.06% shareholding) proposed the acquisition of 100% of Ende- sa Latinoamérica S.A. ´s share capital. The transaction was completed in October 2014 and, as a result, Enel S.A. di- rectly controls Enersis (today Enel Américas) with 60.62%. 2015 > On November 16, 2015, El Quimbo power plant, a 400 MW hydro facility in Colombiaenteres came into operation after five years of construction. > On December 18, 2015, the Company´s Extraordinary Shareholders´ Meeting approved the corporate restructur- ing of Enersis and its subsidiaries Endesa Chile and Chilec- tra (currently Enel Américas). This operation consisted of dividing the generation and distribution activities in Chile from those carried out in the rest of the countries in Latin America both for Enersis and for its subsidiaries Endesa Chile and Chilectra. 2016 > On March 1, the non-material Division of the former En- ersis, Endesa and Chilectra was carried out as a result of which Enel Chile, Endesa Américas and Chilectra Américas were formed. > On April 21, 2016, the division Enersis, Endesa and Chilec- tra share was completed, and the resulting companies - Enersis Américas, Enersis Chile, Endesa Américas, Endesa Chile, Chilectra Américas and Chilectra Chile – began trad- ing on the Santiago Stock Exchange. Similarly, ENIA, ENIC, EOCA and EOCC ADR´s began trading on April 27, 2016 on the New York Stock Exchange. (NSYE). > On September 28, the Extraordinary Shareholders´ Meet- ing approved the Merger of Enersis Américas, Endesa Américas and Chilectra Américas where Enersis Américas absorbed Endesa Américas and Chilectra Américas. > On December 1, the name of Enersis Américas was changed to Enel Américas after the intangible merger with the companies Endesa Américas and Chilectra Américas. > On November 30, the Company announced it had present- ed the best offer for the acquisition of the electricity dis- tribution Company CELG-D (now Enel Distribución Goiás) through a tender process called for by the Brazilian Gov- ernment through Banco Nacional do Desenvolvimento. The offer presented by our subsidiary Enel totaled 2,187 million reais. > On December 29, Endesa Américas and Chilectra Améri- cas ceased trading on the Santiago Stock Exchange and the New York Stock Exchange, in the ADR form. As such, the Company exchanged its shares and the Merger was achieved. 76 Annual Report Enel Américas 2019  2017 > On February 1, the National Electricity Regulatory Entity in Argentina (ENRE) approved the Integral Tariff Review – 2019 > On April 30, the Extraordinary Shareholders’ Meeting ap- proved a US$ 3 billion capital increase. The aim of the cap- known as RTI - defining a structural change in the country´s ital increase was to provide Enel Brasil with funds to pay energy distribution. This new regulation was the result of the debt incurred to acquire Enel Distribución São Paulo extensive work between the government and the distribu- and to restructure Enel Brasil’s pension fund liabilities. tion companies involved in the tariff review process, con- sisting of a gradual tariff increase to make the effect on the > On September 2, the capital increase was successfully concluded with a subscription of approximately 99.49% of end consumer less impactful. the shares and a gross amount of US$ 3.021 billion. > On February 14, Enel Américas completed the acquisition of Celg Distribuição S.A. (currently Enel Distribución Goiás) > On November 21, Enel Brasil acquired 1.48% of Enel São Paulo ‘s shares for 49.39 reais per share, becoming the through its subsidiary Enel Brasil acquiring nearly 94.8% of owner of 95.9% of the shares. On the November 27, the its share capital. This distribution Company has more than Enel São Paulo Shareholders’ Meeting approved the re- 2.9 million clients and operates in the Brazilian region of demption of all shares issued in circulation, equivalent to Goiás. The investment totaled 2,187 million reais (approx- 2.58%, at a price of 49.46 reais per share. imately US$ 640 million). The transaction was financed from the Enel Américas (former Enersis) capital increase approved by the end of 2012. > On October 4, Enel Perú (wholly owned by Enel Américas S.A.) acquired 47,686,651 shares issued by the subsidiary Enel Distribución Perú. The transaction closed at the price of 262,276,580 soles (equivalent to approximately US$ 80 million) and was carried out on the Lima Stock Exchange. > September 27, Enel Brasil was awarded the concession to operate the 380 MW Volta Grande power plant. The total investment was 1,420 million reais (US$ 445 million ap- proximately). The concession is for 30 years. 2018 > On June 4, Enel Américas successfully completed the voluntary offer for the acquisition of Eletropaulo (currently Enel Distribución São Paulo), the principal distribution com- pany in São Paulo, Brazil. The offer was made the same day and the Company acquired 73.4% of the shares. The fol- lowing month, shareholders of Eletropaulo Metropolitana Eletricidade de São Paulo SA were permitted to sell ad- ditional Eletropaulo shares and, on July 4, the transaction was completed with the acquisition of 93.3% of the share- holding of Enel Distribución São Paulo. Later, in Septem- ber, Enel Américas completed a capital increase leading to the final shareholding of 95.88%. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 12. Businesses of the company 77 78 Annual Report Enel Américas 2019 13. CAPITAL INCREASE 13. Capital increase 79 Capital increase On February 27, the Company announced its plan to raise US$ the operation and receive feedback from investors. After more 3.5 billion via a capital increase. The destination of the raised than 200 meetings held by the CEO, CFO and the Investor funds was as follows: Relations managers and considering market opinion, it was decided to reduce the capital increase to US$ 3 billion. > US$ 2,650 million to provide Enel Brasil with funds to pay off the debt incurred because of the purchase of Enel Distribution São This new proposal was approved by the Company’s share- Paulo (at that time Eletropaulo). holders at the extraordinary shareholders´ meeting held on > US$ 850 million to restructure Enel Distribution São Paulo ´s pension fund liabilities and the reduction of contingent funds or April 30, 2019. litigation provisions in Brazil. This permitted the Company to issue 18,729,788,686 new shares, which after two preemptive subscription periods were Following the announcement, the Company conducted an in- subscribed in 99.49%, concluding the operation on Septem- tense financial marketing activity to explain the purpose of ber 2. 80 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 13. Capital increase 81 82 Annual Report Enel Américas 2019 14. INVESTMENTS AND FINANCIAL ACTIVITIES 14. Investments and financial activities 83 Material investments related to the Company’s investment plan The global financing strategy of the Group’s subsidiaries and Our investment plan is flexible enough to adapt to changing intercompany loans is coordinated in such a way so as to opti- circumstances by assigning different priorities to each project mize debt management, in addition to the Company´s funding according to its profitability and strategic consistency. Invest- terms and conditions. ment priorities are currently focused on developing the works plan in Brazil, Colombia and Argentina. The Group’s subsidiaries develop independent capital invest- ment plans that are covered by funds generated internally or For the 2020 - 2022 period, on a consolidated basis, the Com- by direct funding. One of our goals is to focus on those invest- pany expects to spend US$ 5,347 million in investments in di- ments that will yield long-term benefits, such as projects that rectly controlled subsidiaries, in the investments currently be- would permit to reduce energy losses. Additionally, focusing ing implemented, the maintenance of distribution networks, on Enel Group and seeking to provide services to every com- maintenance of the existing generation plants, and studies pany in the group, our goal is to reduce investment at the required to develop other potential generation projects. individual subsidiary level in elements such as procurement systems, telecommunications, and information systems. The table below shows the expected capital expenditure from While we have studied how to finance these investments as 2020 to 2022 and the capital expenditure incurred by our sub- part of the Company´s budget process, no particular financ- sidiaries in 2019, 2018 and 2017. ing structure has been committed and our investments will depend on market conditions at the time they need to secure Investment (1) (million US$) the cash flow. 2020-2022 5,347 2019 1,659 2018 1,541 2017 1,371 (1) Capex figures represent the effective payments for each year, except for forecasts. 84 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 Investments in 2019, 2018, and 2017 In the distribution business, these were the investments: (i) expanding our distribution service to meet the growing energy de- mand, (ii) improving our service quality, (iii) improving safety, and (iv) reducing energy losses, particularly in Brazil. Generation Capital expenditure reached US$ 250 million in 2019, while in 2018 it was US$ 292 million. In Peru, total investments in maintenance reached US$ 54 million in 2019. The main projects are the reconstruction of the Callahuanca power plant, automation and tele-controls In Argentina, maintenance investments focused on the in- spection of TG10 in Dock Sud, and in Costanera improve- ments were made in both the combined cycles with a stop- page of gas Turbine No. 9 of the Combined Cycle II (CCGTII) together with works in the other facilities of the plant, among which one of the most important was the Water Treatment Plant Project and finally, in 2019 all the tasks of the Scheduled Maintenance Plan were concluded as defined, registering a major maintenance in the ARR2 unit of Arroyito; together with the increased maintenance of the T5CH transformer bank and the increased maintenance of the T1CH transformer at the of hydraulic plants, cable replacement in the Huinco cavern, Chocon plant. several maintenance activities and the modernization of civ- il works and hydraulic units, the acquisition of contingency parts for thermal units, major maintenance and inspection of the Ventanilla power plant, environmental projects to re- duce harmful emissions in TG4 in Malacas, digital projects and various maintenance activities in thermal units. In growth investments, the BESS Ventanilla project and the E4E project received an investment of US$ 7 million In Colombia, maintenance investment focused on projects re- lated to the improvement of generation plants, for example the installation of the DeNOX system as part of the environ- mental improvement plan for Termozipa, the maintenance of Unit 2 in the Betania plant (the most complex maintenance in the 32 years of the plant´s existence) and the automation of In Brazil, total investments reached US$ 27 million. Enel Gen- eración Fortaleza carried out a US$ 20 million Investment mainly related to the continuous maintenance of the power plant and the purchase of materials and services for the gas and steam turbines. In the case of Volta Grande and Cachoeira Dourada, investments totaled US$ 7 million, mainly for the repair of the UG1 and UG2 generation turbines repair works and the acquisition of two Stoplogs. Distribution the plants of the Rio Bogota chain leading to the implementa- In 2019, the Company made US$1, 386 million investments tion of a full remote control for the Dario Valencia, Laguneta mainly to meet consumption needs, as a result of the growth and Salto plants from the Guaca Plant. In relation to the ex- of population and the increase in the number of new clients, pansion capex, work was carried out at the El Quimbo Hydro- through investments not only related with the above, but also electric Project, in Termozipa the installation of the first Energy in capacity increases and strengthening the Company´s facil- Storage System (BESS) was initiated and the Life Extension ities in the area of AT, MT and BT. At the same time, in 2018, project as planned. investments reached US$1,432 million. 14. Investments and financial activities 85 In 2018, Edesur in Argentina made investments totaling ects and to improve distribution network quality. The Compa- US$144 million to meet demand growth and to improve ser- ny invested 26% of the total in new connections and 31% in vice quality. These investments made it possible to start op- the maintenance of distribution networks. erating the Glew substation extension incorporating 800 MVA of new AT/MT transformation and where 16 13.2 KV cells Enel Distribución São Paulo invested US$ 218 million of which were added, with a new total of 32 available MT outputs. The 42% was allocated to the maintenance of networks, 35% in last stage of the Sarandi substation was completed, consist- quality projects and 22% in new connections. ing of the installation of two new 13.2kV cell sections, thus incorporating 16 new MT outputs. Additionally, the 104 triple In Colombia, Codensa investments in 2019 reached US$ 256 cabling system is being renovated, power lines currently in op- million, and were mainly focused on service quality and effi- eration, between the Reconquista and Nuevo Puerto substa- ciency (US$ 76 million) to continue maintaining quality indi- tions, the repair of the triple cabling system 103/104/105 in the cators; connections and public lightning (US$ 73 million) and Reconquista Substation and the reconstruction of the Brown capacity expansion (US$ 6 million) to meet new demand; loss substation that permitted to activate all the MT outputs. control (US$ 6 million) and reconnection requirements (US$ 33 million) and normalization (US$ 13 million) in electricity in- Investments in Enel Distribución Perú reached US$ 131 mil- frastructure. lion. Energy demand is related to new requirements from cli- ents, which has led to investments in distribution networks totaling US$ 79 million, US$ 31 million of which were used to extend and reinforce networks to meet the requirements of residential, commercial and industrial clients, US$ 3 million for the electrification of human settlements, US$ 3 million in public lightning and US$ 40 million to guarantee supply quality and safety. With regards to sub transmission, US$ 31 million were invested in capacity expansion and network and in the safety of transmission lines. An additional US$ 7 million was assigned to Energy Loss Control and US$ 14 million to IT ser- vices and infrastructure. In Brazil, total investments reached US$ 760 million. Enel Dis- tribución Río made investments for a total of US$ 178 million. Of this amount, 39% was used to implement new connec- tions, 35% for projects in energy loss reduction, improve- ments in distribution networks quality with a positive impact on the services offered to clients and remote-control systems using technology. The remaining amount was used for the maintenance of distribution networks. Enel Distribución Ceará Investments reached US$ 168 million, 64% of which was allocated to meet the increase in network demand and clients’ connections and support the sustained growth of demand in the State of Ceará, 22% was invested in the maintenance of distribution networks projects and 14% in projects aimed at service quality improvement and loss re- duction. Enel Distribución Goiás carried out investments for a total of US$ 195 million. Of this, 43% was used for energy loss proj- 86 Financial Activities I. Macro-context The international macroeconomic scenario in 2019 was marked by the U.S.-China trade war. The U.S. growth during the year fell below forecasts to only 2.3%, the lowest since 2016 because of the manufacturing crisis. The U.S. Federal Reserve System (EDF) lowered interest rate three times, clos- ing the year at 1.5%. In 2019, South America´s economy was stagnant, with growth barely close to 1%. Among the countries in which Enel Américas operates, one of the best returns in the area was in Colombia with a 3.3% growth, 6 points more than in 2018, marked mainly by higher consumption in households and an increased private investment. Brazil grew by a meagre 1.2% in 2019, less than the previous year with 1.3%. However, the year closed well in terms of expectations, with a significant increase in consumption, a decline in unemployment, recorded at 11.6%, a 4% inflation Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 and under control and the interest rate at its historical low In March, Enel Distribución Ceará issued Promissory Notes in with 4.5%. the local market for $ 200 million reais (US$ 49 million). Addi- tionally, during the year it placed local bonds for $ 650 million Peru’s performance caused an impact in the area given that reais (US$ 159 million) and obtained bank financing of $ 379 it reduced its growth rate from 4% in 2018 to 2.2%, initial- million reais (US$ 93 million). In December, Enel Distribución ly recovered mainly because of the increase in domestic de- Ceará paid off its intercompany loan obtained in December mand, private investment, and consumption. Peru is one of 2018 with Enel Finance International (EFI) for $ 300 million the Region´s main victims of the U.S.-China trade war, mainly reais (US$ 73 million). because of the steep decrease in commodity prices. Finally, the Argentinean economy again experienced a slow- lion reais (US$ 173 million) bank loan. In April, the Company down with a -3.1% of GDP. It was a year marked by the issued Promissory Notes in the local market for $1,080 million During the year, Enel Distribución Goiás obtained a $ 706 mil- change of government, where President-elect Alberto Fernán- reais (US$ 264 million). dez turned to the IMF to request the regularization of the country´s domestic debt which is close to 70%, in addition During the year, Enel Distribución Río issued Promissory the high inflation rate of 49.3% and the reference interest rate Notes in the local market for $ 1 billion reais (US$ 245 million) which stood at 58.8%. and obtained a $600 million reais (US$ 147 million) bank loan. II. Principal completed financial operations Enel Américas In March, Enel Distribución São Paulo issued Promissory Notes in the local market for $ 500 million reais (US$ 122 mil- lion), as well as $ 215 million reais (US$ 53 million) in Septem- ber. The Company also Issued local bonds for $ 1.5 billion reais (US$ 367 million). In December, the Company paid off the intercompany loan with Enel Finance International (EFI) ob- tained the year before for $ 420 million reais (US$ 103 million). Colombia Enel Codensa issued local bonds for $480,000 million Colom- bian pesos (equivalent to US$ 146 million) and obtained a $ 267,043 million Colombian peso (US$ 81 million). bank loan. Enel Américas successfully concluded the US$ 3 billion cap- Peru Enel Distribución Perú issued local bonds for $ 220 million soles (US$ 67 million) and Enel Generación Perú and Enel Pi- ura signed leasing contracts for US$ 5.1 million and US$ 1.1 million, respectively. ital increase. Brazil On August 2, 2019, using the funds raised by Enel Américas through the capital increase, Enel Brasil paid off the debt it issued in July through Promissory Notes for $ 9.3 billion reais (approximately US$ 2.5 billion) to repay the intercompany loan it obtained with Enel Finance International (EFI) for $ 9.4 bil- lion reais (US$ 2.5 billion) in October 2018. These operations were carried out in the context of the acquisition of Enel Dis- tribución São Paulo. 14. Investments and financial activities 87 III. Hedging Policy Below we present a summary of the main rating events that took place in 2019: Exchange Rate On July 3, 2019, Feller Rate reviewed and ratified Enel Améri- cas ´ corporate rating assigning it an “AA-” rating and a stable perspective nationwide. The Group´s exchange rate hedging policy is based on cash Similarly, on July 25, 2019, S&P classified Enel Américas in- flows and seeks to maintain a balance between flows indexed ternationally by ratifying the “BBB” rating and a stable per- to a foreign currency, and the levels of assets and liabilities de- spective. nominated in that currency. The aim is to minimize the risk of exposure of exchange rate variations. As part of this policy, at On September 9, 2019, Fitch Ratings reviewed and increased an individual level, Enel Américas incurred forwards totaling US$ the Company’s rating from “BBB+” to “A-” with a stable inter- 366 million to hedge the flows in the different foreign currencies national perspective. Nationally, Fitch Rating ratified its “AA+” coming from subsidiaries. rating with a stable perspective. Interest rate Interest rates variations change the fair value of those assets and liabilities that accrue variable interest rates, as well as the future flows of asset and liabilities referenced to variable interest rates. Risk management aims to achieve a debt structure balance to minimize the debt costs with a reduced volatility in the income statement. Depending on the Group’s estimates and debt struc- ture objectives, hedging transactions are carried out through derivatives contracts that mitigate those risks. The instruments currently used are interest rate swaps which convert variable rates into a fixed one. On December 19, 2019 Moody’s ratified the “Baa3” rating and changed the perspective from “Stable” to “Positive”, due to expectations of improved operations and cash flow genera- tion leading to continuous deleveraging. Finally, on March 27, 2020, Standard and Poor’s confirmed a BBB rating and decreased perspective from “Stable” to “Negative” due to the macroeconomic situation in Colombia, where the Company has operations. The Company’s ratings are based on the Company’s diversi- fied portfolio of assets, strong credit parameters, adequate debt composition and ample liquidity. At year-end in 2019, the comparative structure of Enel Améri- cas Group´s financial debt according to fixed interest rates and/ or protected interest rates versus gross total debt, after the in- International Rating curred derivatives was 39% of the fixed rate debt. Enel Américas S&P Moody’s Fitch Ratings Corporate BBB / Negative Baa3 / Positive A- / Stable Risk rating Local Rating On November 9, 1994, Standard and Poor’s and Duff & Phelps rated Enersis (currently Enel Américas) for the first time as Enel Américas Feller Rate Fitch Ratings BBB+, that is, as an investment grade Company. Later, in Shares 1st class, Level 2 1st class, Level 1 1996, Moody’s rated the Company’s foreign currency long- Bonds AA- / Stable AA+(cl) / Stable term debt as Baa1. Since then, most credit ratings have varied. Currently, they are all “investment grade”, which is based on the diversified port- folio of assets, liquidity and adequate policies of debt hedging service. 88 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 Properties and facilities The Company established that its main suppliers, clients, and competitors are as follows: Argentina: Clients: AYSA S.A, Telefónica Argentina S.A., Metrovías S.A. y COTO C.I.C. S.A. As a “holding” entity, Enel Américas, does not directly own properties or facilities to develop its business. Competitors: AES, Pampa Energia, YPFENERG, Duke Ener- gy, Petrobras Argentina, SADESA, Albanesi Brands The Company has registered the “Enersis Américas” brand in services, products, industrial and commercial facilities. In July 2016, the Board of Directors of Enel Américas S.A. was notified Suppliers: Argencobra S.A., Rowing S.A., Sistem Melesur Energía Arg. S.A.U., Prysmian Energia Cables y Sistemas, EMA Servicios S.A. Brazil: that Enel S.p.A authorized the free use of the “Enel” brand by Clients: Volkswagen Do Brasil, Grupo Multiplan, FERBASA, Enel Américas S.A., permitting it to be included in its business Rima Industrial – Bocaiúva, Vicunha IV, Cagece, Companhia name, its logo and other forms of use. De Integracao Portuario Do Ce, Ascenty Data Centers e Tele- comunicaoes, Farmace Ind Quim Farmac C Ltda., Fabrical The Enel Américas brand is a registered. Fabrica de Cal S.A., Saneamiento de Goias S.A., Secretaria Municipal De Infraestructura E Servicos Publicos – Goiania, Savoy Industria de Cosmeticos S.A., Granol Industria Comer- cio e Exportacao S.A., OI S.A., Cedae – Estacion de Tratamien- to de Agua, Cedae Estacion de Captacion de Agua Imunana, Base Naval Do Rio De Janeiro, Industrias Nucleares Do Brasil, Prolagos S/A ETA JUTURNAIBA, Universidade de São Paulo, Hospital Clinica Facultad de Medicina USP, Montecchio do Brasil Empreendimentos IMO, Ascenty Data Centers e Tele- comunicacoes, Secretaria de Estado da Saude. Competitors: CHESF, Eletronorte, Furnas, CGTEE, ELETRO- SUL, ELETROBRAS, Norte Energia S/A, Engie Brasil Energia S.A., Petroleo Brasileiro S A, PETROBRAS, Engie Brasil En- ergia Comercializadora Ltda, CEMIG Geracao e Transmissao S.A, EDP, NEOENERGIA, CPFL Energia, Equatorial Energia, and LIGHT, ENERGISA. Suppliers, clients and main com- petitors Enel Américas S.A. as a “holding” Company that mainly oper- ates in electricity generation and distribution in Latin América, considers the following suppliers, clients and competitors as the most relevant ones for its main subsidiaries. 14. Investments and financial activities 89 Colombia: Chile: Clients: Petromil, Carbones San Fernando, Minas y Minerales Suppliers: Travel Security S.A., Ernst & Young Servicios S.A.-Minminer-. Profesionales y Asesorías Limitada y Team Work Recursos Humanos Limitada, Konecta Chile Limitada, Compañia de Competitors: Grupo EPM, Grupo CELSIA, AES, ISAGEN- BRE Leasing Tattersall S A., Accenture Chile Asesorías y Servicios, Colombia, Electricaribe, Emcali: Consorcio M&M, Amec Fos- Ltda., Constructora R2 S.P.A., Sodexo Chile S.A., Carat Chile ter Wheeler Energía, S.L.U. S.A., Sociedad de Tercerización de Servicios Provider Latín América Limitada, Marketing Relacional Upcom Limitada y Suppliers: Andritz Hydro Ltda., CAM Colombia Multiservicios DCV Registros S A. S.A.S., Quanta Colombia Services Colombia S.A.S y Deltec S.A. Peru: Clients: Hipermercados Tottus S.A., Gym Ferrovias S.A., Pes- quera Diamante S.A., Pontificia Universidad Católica del Perú, Cerámica Lima S A, Corporacion Lindley S.A., Centro Comer- cial Plaza Norte S.A.C., Lima Airport Partners S.R.L., AGP Perú S.A.C., Planta de Tratamiento de Aguas, Redondos S A, In- muebles Panamericana S.A, Alicorp SAA, Tiendas por Depar- tamento Ripley S.A., Saga Falabella S A., Minera Las Bambas S.A., Minera Chinalco Perú S.A., Hudbay Perú S.A.C., Shou- gang Hierro Perú S.A.A., Productos Tissue del Perú S.A., Min- era Shouxin Perú S.A., Empresa Siderúrgica del Perú S.A.A. (SIDERPERÚ) Cía. Minera Casapalca S.A., Cía. Minera Ares S.A.C., Open Plaza S.A., Pesquera Exalmar S.A.A.y Creditex S.A.A. Competitors: Engie, Kallpa, Statkraft, Atria Energía, Elec- troperú. 90 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 14. Investments and financial activities 91 92 Annual Report Enel Américas 2019 15. RISK FACTORS 15. Risk factors 93 Risk management policy identify, analyze and evaluate risks (endogenous and exoge- nous), in such a way so as to quantify their probability and impact, within the risk assessment phase , as well as their treatment, through establishing mitigation actions with their respective action plans in joint action with the areas and Risk Owners responsible for the different risks, also working in conjunction with the Risk Management area. In the risk-treat- ment phase, the necessary actions, placed within internal policies and procedures, as well as the strict observation of international standards (ISO and OSHAS) and government provisions requiring evidenced and sustained risk manage- Enel Américas follows Risk Management Control System ment, are considered to guarantee correct governance prac- (SCGR) procedures defined at holding level (Enel SpA), which tices and business continuity. establish the guidelines for risk management through the re- spective standards, procedures, systems, etc., to be applied Each month, the Risk Management area makes a presenta- at the Company´s different levels in the processes of risk iden- tion to the Board to inform them of the Company´s risk man- tification, analysis, evaluation, treatment and communication agement through a risk map (Risk LandScape) clearly showing that the business must continuously face. They are approved all the risks in their respective taxonomies, complying with by the Board of Directors of Enel SpA, via its Control and the calendar defined by the Board for the monthly monitor- Risk Committee, which supports the Board’s evaluation and ing process, within each fiscal year. The calendar consists of decisions regarding internal controls and risk management presenting each quarter all the risks within the risk map with system, as well as those related to the approval of periodic their respective analyses, complying with the Risk Policies, financial documents. ISO31000:2018, internal procedures and regulations that are external to the Group, such as General Standard No. 30, To comply with said guidelines, there is a specific Risk Man- which governs the Annual Reports of companies established agement policy in place within each company, which the Board in Chile, and the Financial Market Commission´s General reviews and approves at the beginning of each year, observing Standard No. 385 to guarantee business continuity in compli- and applying local requirements in terms of risk culture. ance with correct corporate governance practices. In addition to this process, the Risk Management area has implemented Enel Group’s risk management system considers three lines a continuous monitoring process of the main political, eco- of action (defense) to obtain effective and efficient risk and nomic, social, climate, etc. risks, which occur globally and can control management, where business unit control is the first positively or negatively affect the Company’s objectives, each line of defense in risk management; the second line of de- week informing Senior Management of such events. fense is activated by various functions of the internal controls developed to guarantee optimal risk management and moni- The Internal Control management aims to guarantee that re- toring of established compliance and, finally, the third line is lated business activities permit to mitigate the risks related independent assessment. . Each of these three “lines” plays to the compliance with and strict application of all procedures a different role within the organization’s broader governance and standards in force pursuant to the COSO methodology structure. Each line of defense must inform and keep senior (Committee of Sponsoring Organizations of the Treadway management and Directors informed about risk management, Commission). This area meets all the requirements for the Sar- with Senior Management being informed by the first and sec- banes Oxley Act periodic monitoring, including the six-month- ond line of defense and the Board of Directors, in turn, by the ly certification of these controls by an External Audit. It also second and third line of defense. esablishes, in conjunction with Process Owners and Control The Risk Management area is internationally certified under targeted by Independent External Auditors and continuously ISO 31000:2018 (G31000) and acts in accordance with the improve the processes, monitor their impact and communi- current guidelines of this international standard to manage the cate the status to the Board of Directors. Owners, remediation actions to mitigate control deficiencies companies´ risks, where the main objective is to preventively 94 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 The Company’s governing bodies and senior management Sustainability: includes environmental, social, and gover- are the main stakeholders served by the “lines” and are best nance risks implicit in the Company’s business, including: placed to make sure that the Three Lines of Defense mod- el applies to the organization’s risk management and control • Environmental risks: caused by the impact of the Com- processes. pany’s operations on the environment, including biodiver- sity and the use of resources, as well as those arising The Enel Group´s risk management system is subject to reg- from climate change. ular testing and audit checks, taking into account corporate • Social risks: mainly social conflicts or community de- operations and the situation in question, as well as best prac- mands whose intensity may jeopardize the continuity of tices and guidelines issued by internal norms and regulations operations, as well as those related to own and third-par- such as ISO 31000: 2018 (G31000), COSO (Committee of ty employees. Sponsoring Organizations of the Treadway Commission), etc. • Governance risks: which could originate from unlawful The Company has set up a Crisis Committee to guarantee a by own staff members or contractors or anti-competitive conduct, including corruption, lobbying activities, etc., clear, fast and efficient decision-making process and internal/ practices. external communication to manage any event that may com- promise people’s safety, continuity of public and business Reputation/Image: risk of image loss or damage. services, the environment, asset protection, the Company´s image, reputation and management, as well as to minimize Legal: risks related to civil, strategic, consumer, environmen- impacts on stakeholders and guarantee rapid restoration of tal, as well as contractual, labor and tax terminations. normal operating conditions. Cybersecurity: risks related to information security and cy- The Company seeks to hedge all the risks that may affect the berattacks. Company’s objectives, which, among others, are detailed be- low: Emerging risks related to the personal data protection: risk of non-compliance with applicable privacy and data protection Financial: covers market risks (related to changes in the mac- laws or breach of contractual requirements with respect to roeconomic scenario, caused by changes in interest rates, ex- the products and services delivered. change rates and inflation expectations) and credit risks (pos- sibility that counterparts may not meet their commitments). Emerging risks related to digitization, IT efficiency, and service continuity: risks arising from system failures or Regulatory: risks arising from changes promoted by the most weaknesses, as well as cyberattacks. diverse regulators. Business (Market / Commodity): covers risks related to the plete risk assessment process (identification, analysis and uncertainty about the performance of key variables inherent valuation) under ISO31000:2018, clearly reflecting the risks in the business, such as demand characteristics and those of assessed, showing the probabilities and impacts thereof, The risk taxonomy and its management includes the com- the sector in which it operates. quantified before and after mitigation actions are taken. Once the risk assessment process is completed, each responsible Operational: risks stemming from inadequate internal pro- area, in conjunction with the risk management department, cesses or external events. continues to work within the treatment to reduce risk levels through preventive management, always seeking to reduce Strategic: risks related to innovation, investment plans, new the probability and impact of each one, the results of which clients, new players, cybersecurity, staff retention, business are then presented to the Board and the Company´s senior continuity. management every month. The following are the risk groups and how they are treated: 15. Risk factors 95 Financial: The Company follows the Enel Group’s Global Fi- managed by Enel Chile´s Risk Control area through the “Risk nancial Risk Management Policy, which sets parameters to Matrix” that contains strategic, scenario, operational, legal, protect the Company from possible financial operation losses, fiscal, regulatory, cybersecurity, sustainability and reputation as well as failures in the registration, monitoring and evaluation risks. processes. The provisions of the Sarbanes-Oxley Act guide internal controls and the process of preparing and dissemi- Sustainability: Enel Group and Enel Américas are committed nating financial information. Internal controls are monitored to making specific contributions to six of the 17 Sustainable and evaluated every six months through the GRC corporate Development Goals (SDGs): education and quality (SDG 4), system. The Company has set up the South American Risk accessible and clean energy (SDG 7), decent work and eco- Control area, which is responsible for calculating the credit nomic growth (SDG 8), industry, innovation and infrastructure rating of its counterparts in all South American countries (Bra- (SDG 9), sustainable cities and communities (SDG 11) and zil, Argentina, Peru and Colombia), before signing contracts, Climate Action (SDG 13). This commitment was the product using criteria that classify counterparts by risk level and limit of establishing the sustainable business model and is, there- their level of exposure to each counterpart (define the type of fore, incorporated into Enel Américas´ strategic plan. Failure guarantee required for each counterpart according to liquidi- to comply with these commitments is a risk. In addition, the ty level). Furthermore, this exposure is measured every day Company contributes to other sustainable development goals. through daily and projected cash flows, permitting to plan the Within the sustainability risks, those related to climate change correct allocation of available resources. The Company also are particularly relevant because of their environmental, social uses derivative instruments for the sole purpose of protecting and economic impacts. Two types can be distinguished: its financial positions subject to exchange rate and interest rate changes. • Physical risks associated with climate change: related to extreme weather conditions or to gradual but structural Regulatory: To manage these risks, the Company controls changes in climate conditions. Extreme events could ex- parameters that influence the rate in different scenarios, con- pose Enel to more or less prolonged unavailability of as- sidering even the estimated hydrological conditions. sets and infrastructure, delayed recovery costs, inconve- niences to clients, etc. Recurring changes that affect the Business (Market / Commodity): The energy price fluctua- resources needed for electricity generation or demand are, tion risks are managed by specialized teams in the energy for example, drought and temperature increases. market, responsible for assessing demand development and the hydrological scenario over a five-year horizon, using sta- The geographical diversity and technologies used in genera- tistical models. The Company then defines its participation in tion and a good predictive measurement of climate phenom- auctions for energy purchase. Long-term contracts contain ena permit us to mitigate and manage the changes linked to guarantees of compliance with industry regulation, with the climate patterns. lowest sanctions. Operational: Represents operation risks in which the quality network to make us more resilient when faced with these cli- of the energy supply and the rate of loss are the main iden- mate events. All areas of the Group are subject to ISO 14001 tified aspects. These risks are managed through formal, op- certification and, through the application of the internationally erational and execution business standards and procedures. recognized Environmental Management Systems (EMS), po- Additionally, the Company has several operating systems in tential risk sources are monitored so that any critical points Added to this are the large investments in the distribution place that are also used as tools to prevent these risks, as well can be detected promptly. as to guarantee the availability and efficiency of distribution and transmission networks, through our substations to avoid • Risks of transitioning to a low-carbon economy may in- regulatory sanctions in terms of non-compliance with the lim- volve risks related to regulatory, political, legal, techno- its imposed in terms of quality and losses. logical and market changes with short-, medium- and Strategic: Represents the risks that affect an organization’s in managing these risks is that it belongs to a group that business strategy or strategic objectives. These risks are operates in a more mature market that can share correct long-term effects. Enel Américas´ competitive advantage regulatory, technological practices, market, etc. 96 Annual Report Enel Américas 2019 In relation to the management of social risks it is important to well as losses stemming from an unfavorable decision in judi- highlight the following: cial or administrative proceedings (civil, strategic, consumer, contractual terminations, labor and tax procedures). • Social conflicts in countries whose intensity may jeopardize continuity of operations. To address these Cybersecurity: Digitization is a fundamental element in the potential impacts, Enel has put in place contingency plans Enel Group´s growth and development, exposing it increas- and processes. Aware of the strategic role that electrici- ingly to the cyberspace risks and threats. As it is a cross-cut- ty plays for countries, these plans prioritize the system´s ting risk and with the same forms and impacts around the continuity of generation, the supply of electricity to our world, the Company has a specialized area, a unique, central- clients, and the safety of our workers and collaborators. ized and highly prepared area called the Computer Emergency • Conflicts arising from the demands of communities Response Team (CERT), which monitors and supports all the surrounding our plants. Enel maintains an ongoing Group´s companies. Cert is part of the Cybersecurity area, relationship with local communities, through dedicated made up by the Technical Office, which continuously monitors teams at regional level. With its social investment in the and protects (24x7x365) the facilities to prevent the multiple areas in which we operate, the Company aims to cre- attacks to which we are exposed and also a data collection ate the conditions for the socio-economic development area, SOC (Software Operation Center), which analyzes and of communities by co-designing common prospects for studies the different problems that occur in the systems, in long-term growth with them. search of continuous protection improvements throughout • Risks caused by accidents of both our own staff mem- the organization. The Cert is mainly based in Italy and Spain bers and contractors are the risks that Enel mitigates by but it also has a local manager, a focal point in each South promoting the culture of safety, setting up policies, safety American country, which is part of the CERT and is responsi- integration into processes and training, among others. ble for reporting potential local risks and taking the necessary • Related to employee attraction and retention in the measures to guarantee operational continuity. context of energy transition. To meet these challeng- es Enel has diversity policies, along with those of talent Furthermore, the risk matrix includes emerging cross-cutting management and promotion. The Company carries out risks related with: different initiatives to reconcile professional and personal life and also promotes staff members´ education and of- • Personal data protection: The collection and processing fering scholarships and courses. of personal data is one of the biggest challenges in the digitization era and market globalization. Enel Américas In relation to risk management governance, it is important to has taken on this challenge by accelerating the digital highlight the following: transformation processes while increasing the number of clients in the different countries where it operates. This • Those stemming from unlawful conduct, including cor- involves a natural exposure to the risks related to per- ruption, lobbying activities, etc., by our own staff or con- sonal data processing and to the ever-increasing privacy tractors or anti-competitive practices. Enel has put in legislation, whose incorrect implementation may cause place an Internal Control and Risk Management System economic, financial, and reputational loss and damage to based on commercial rules and procedures. both our Group and the holders of such data. To manage • Human Rights violations, risks that are addressed through and mitigate these risks, Enel has adopted a framework due diligence from which action plans are derived to ad- to guarantee that personal data protection of all the peo- dress the gaps. ple with whom we interact, is fully respected. Enel Améri- cas complies with the current legislation on the subject in Reputation and image: risk of negatively affecting the Com- Chile, mainly Law 19.628 on Private Life Protection and is pany’s public image and damaging its relationship of trust with gradually implementing actions consistent with the Euro- shareholders. pean Personal Data Protection Regulation (GDPR), which although not a law in Chile, the Enel Group is complying Legal: These are risks that can be defined as a possibility of as it wants to raise its standards of protection to the re- loss stemming from fines, penalties or compensations arising quirements of this regulation. Therefore, the appointment from actions imposed by supervisory and control bodies, as of the Personal Data Protection Officer (“OPD”) who will s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 97 be responsible for supporting the different areas of the ing out the Company´s business activities and the Company’s business, to make personal data protection a key ele- employees´ corporate actions, whether they are senior man- ment in the various activities of the business is currently agement executives, employees or partners in any way linked in the process. to the Company. • Digitalization, IT efficiency and service continuity: Enel is digitally transforming its entire value chain by develop- ing new business models and digitizing its processes. As a result, it is increasingly exposed to risks related to infor- mation technology (IT) operating systems, implemented throughout the Company, which could lead to data dis- ruptions or loss. To mitigate these risks, the responsible unit, Global Digital Solutions (GDS), has established an Interest Rate Risk Interest rate variations modify the fair value of those assets and liabilities that bear a fixed interest rate, and also the afore- mentioned future asset and liabilities flows at a variable inter- internal control system, which includes checkpoints along est rate. the whole value chain. Enel is also promoting the dissem- ination of digital culture to successfully drive digital trans- formation and minimize the associated risks. The aim of interest rate risk management is to reach a debt structure balance that allows to minimize debt costs due to reduced volatility in the income statement. The Enel Group´s organizational risk management structure has put in place a global risk management committee with the following functions: approving the risk policies proposed by the Holding Risk Controller; approve the proposed exposure limits; authorize breaking the limits; define risk strategies by Depending on the Group´s estimations and debt structure ob- jectives, the Company carries out hedging operations through derivative contracts to mitigate these risks. The instruments currently used are interest rate swaps that set variable rates identifying action plans and tools to mitigate risks and overall to fixed rates. risk management and control monitoring. The risk management process is decentralized within each Company in the group. Each manager responsible for the op- The comparative structure of the Enel Américas Group´s fi- nancial debt according to the fixed interest rate and/or pro- tected over the total gross debt, after incurred derivatives, is erational process in which the risk originates is also responsi- as follows: ble for the treatment and adoption of risk control and mitiga- tion measures. To monitor compliance with the internal policies, including risk-related policies, the Company has established an Inter- nal Audit team, responsible for regularly auditing and verifying that established policies and controls are in operation. In compliance with the global commitments in terms of Sus- tainability (ESG, SDG), the Risk Management Area together with the Sustainability area, developed the methodological foundations to define the process to identify the risks affect- ing compliance with the Company’s commitments and related to this issue, directly involving all responsible units , raising awareness of the relevance of this issue to the Company and the world at large, leading to the sustainability risk matrix. Gross Position Fixed interest rate 12-31-2019 % 12-31-2018 % 39 % 59 % Exchange Rate Risk Exchange rate risks fundamentally correspond to the follow- ing transactions: The Enel Group has implemented a Code of Ethics, which ex- presses ethics commitments and responsibilities while carry- • Debt incurred by the Group’s companies denominated in a different currency from the one the flows are indexed to. 98 Annual Report Enel Américas 2019 • Payments related to the acquisition of materials lined to Considering the operational conditions of electricity genera- projects and corporate insurance policy payments and tion, hydrology, and commodity price volatility in international made in a different currency from the one the flows are markets, the Company permanently reviews if it is convenient indexed to, among others. to hedge positions to reduce the impacts of price variations in • Revenues of the Group´s companies that are directly the Company´s income. linked with the development of currencies not related to the companies’ flows. On December 31, 2018, the Company signed purchase opera- • Flows from foreign subsidiaries abroad to the parent tions of future energy contracts of 5.28 GWh. These purchas- company in Chile, exposed to exchange rate variations. es support energy sale contracts in the wholesale market. On To mitigate exchange rate risks, Enel Américas’ hedging policy sale of 10.92 GWh and 7.2 GWh for the purchase of future December 31, 2018, the Company settled contracts for the for exchange rates is based on cash flows and contemplates energy. maintaining a balance between the flows indexed in US dol- lars or local currencies and the levels of assets and liabilities On December 31, 2018, future contracts for the purchase of denominated in that currency. The aim is to minimize cash energy totaled 5.28 GWh. These purchases supported con- flows exposure to exchange rate variations. tracts for the sale of energy in the wholesale market. As of December 31, 2018, the Company settled 10.92 GWh of sale The instruments currently used to comply with the policy are contracts and 7.2 GWh future energy purchase contacts. currency swaps and exchange rate forwards. Likewise, the policy seeks to refinance debt in the functional currency of each Company. Commodities Risk Liquidity Risk The Group maintains a liquidity policy consisting of incurring committed long-term credit facilities and temporary financial Enel Américas Group is exposed to commodity price variation investments, in sufficient amounts to support the forecast risks, mainly through the following: needs for a period of time related to debt and capital markets • Fuel purchases for electricity generation. • Energy purchase-sale operations that take place in the maturities, after financial derivatives. For further details re- The aforementioned forecast needs include net financial debt local markets. garding the characteristics and conditions of financial debt and financial derivatives see Notes 20 and 22 of Enel Américas´ context and expectations. To reduce risks in severe droughts, the Group has designed Financial Statements. a commercial policy that defines the level of commitment of energy sales according to the generation capacity of power As of December 31, 2019, Enel Américas Group´s liquidity plants in a dry year, including risk mitigation clauses in some stood at US$ 1,939 million in cash and cash equivalents and contracts with free clients. In the case of regulated clients US$ 706 million in available non-committed long-term credit subject to long-term tender processes, indexing polynomials facilities. As of December 31, 2018 Enel Américas Group´s are established that permit to reduce commodity exposure. liquidity stood at US$1,904 million in cash and cash equiva- lents, and US$ 1,269 million in available non-committed long- term credit facilities. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 99 Credit Risk Enel Américas constantly monitors its credit risk in detail. Receivable Commercial Accounts With regards to credit risk related to receivable accounts from commercial activity, this risk is historically very limited given that payments from clients are very short-term so they do not individ- ually accumulate a significant amount. This is applicable to both our electricity generation and distribution businesses. In some countries, in our line of electricity generation, clients in arrears may face energy cuts and also in almost every contract non-payment is a cause for contract termination. That is why credit risk is constantly monitored and the maximum amounts exposed to such risk are measured. In the case of our electricity distribution companies, energy cuts are the Company’s prerogative in case of non-payment by cli- ents. This is implemented according to the existing regulation in each country, which makes the evaluation process and credit risk control easier, which is also limited. Financial Assets Measuring Risk Enel Américas Group develops a Value at Risk measurement for its debt positions and financial derivatives, to monitor the risk taken on by the Company, limiting the volatility of the in- come statement. The portfolio of included positions to calculate the Value at Risk is composed by: • Financial debt • Derivatives to hedge debts The calculated Value at Risk represents the possible variation of the previously described portfolio’s value during one quar- ter with a 95% reliability. To achieve that, the Company carries out a volatility study of the risk variables that affect the posi- tion portfolio’s value, including: • US dollar Libor rate. • The different currencies in which our Company operates, the regular local indices for banking transactions. • Exchange rates of the different currencies considered in Cash surplus investments are made in first-rate national and the calculations. international financial entities, according to limits established by each institution. The Value at Risk calculation is based on the extrapolation of future scenarios (in one quarter) of market values of the risk The Company selects banks with an investment grade cred- variables in terms of the scenarios based on real observations it risk rating, considering the recommendations of the three for the same period (quarter) for five years. main international rating agencies (Moody’s, S&P and Fitch). Placements can be backed up by treasury bonds of the coun- lated as the percentile of the most adverse 5 % of the possi- The Value at Risk of one quarter with a 95% reliability is calcu- try where the operation takes place and/or bank securities ble quarterly variations. issued by first-rate banks, privileging the latter because they offer greater returns (always following the existing placement Considering the hypothesis described above, the Value at Risk policies). in a quarter of the described positions corresponds to US$ 361 million. This value represents the potential increase in the debt and derivatives portfolio, therefore this value at risk is directly re- lated, among other factors, to the value of the portfolio at the end of each quarter. 100 Annual Report Enel Américas 2019 Other Risk Factors In 2019 approximately 55% of the consolidated installed gen- eration capacity was hydroelectric. Therefore, extremely dry hydrological conditions can adversely affect the Company’s business, the operating results and its financial position. The hydrological conditions in the region have been frequently affected by two weather phenomena — the “El Niño” and “La Niña”— which affect rainfall and have caused droughts or flooding, depending on the affected region. Drought could Some South American economies have historically been influence the Company’s ability to distribute energy from its characterized by frequent and, occasionally drastic, inter- hydroelectric facilities. ventionist economic measures imposed by their govern- ments including expropriations, which may adversely af- The “El Niño” phenomenon has affected hydrological con- fect Enel Américas´ business and financial results. ditions in Colombia in the past, where 88% of the installed Governments have modified monetary, credit, tariff, fiscal and capacity is hydroelectric, leading to a fall in precipitations and other policies to occasionally steer the direction of the econ- high temperatures during the period, and, consequently, to an omies of Argentina, Brazil, Colombia and Peru according to increase in energy prices. In March 2017, the “El Niño Coste- their needs. Although Enel Américas has no assets in Chile, ro” phenomenon in Peru caused unusually heavy rainfall that it is a company incorporated under the laws of the Republic flooded the Santa Eulalia River, led to countless landslides of Chile. Therefore, it is subject to changes in fiscal, labor, and and avalanches in the coastal basins, and caused disruptions monetary laws, among others. Other government actions car- in several of the hydroelectric plants, mainly Callahuanca (83 ried out in these South American countries have also included MW) and Moyopampa (69 MW). Each “El Niño” event is dif- wage, process and tariff controls, and other interventionist ferent and, depending on its intensity and duration, the mag- measures such as expropriation and nationalization. nitude of its social and economic effects could be devastating. In the distribution business, if certain service and technical The distribution business is also affected by harsh weather condi- standards are not met, there might exist a risk of losing con- tions, mainly in Argentina. With extreme temperatures, demand cessions. In some concessions, such as the ones in Buenos can increase significantly over a short period of time, which could Aires and Rio de Janeiro, it may be especially difficult to meet affect the service and cause interruptions that could lead to fines. some of the minimum standards required. Should it not be Depending on the weather conditions, the results obtained by possible to comply with these regulatory standards, the local our distribution business may vary from year to year. power regulator might revoke the concession and reallocate it to a competitor. For example, the loss of a concession by Operational expenses tend to increase considerably during a major subsidiary could lead to the loss of a debt liability by drought periods when thermoelectric power plants dispatch that subsidiary, which could trigger a cross-noncompliance, more frequently. Depending on our commercial commit- bankruptcy, or insolvency proceedings. Such events could ments, we may have to purchase electricity from the spot have a significant adverse effect on contractual obligations un- market to comply with all our contractual supply obligations der Enel Américas´ debt covenants. and the cost of these energy purchases may exceed the price at which we must sell the energy we buy, thus leading to For 2020 we expect there will be fiscal reforms and amend- losses under such contacts. ments to tax laws in Chile, Colombia, Brazil, and Peru. The changes in government and monetary policies in relation to Droughts also affect the operations of thermoelectric power duties, exchange controls, regulations and taxation may re- plants, including facilities that use natural gas, diesel, or coal duce the Company’s profitability. Inflation, devaluation, social as fuels, in the flowing ways: instability, and other political, economic, or diplomatic events, including the response to these circumstances by regional • Thermoelectric plants require water for cooling and governments, may also reduce the Company’s profitability. droughts reduce the availability of water. As a result, The Company’s businesses depend, to a large extent, on which are also experiencing water shortages. These wa- hydrological conditions, storms, ocean currents, flooding, ter purchases can increase operational costs and lead to and other weather conditions. negotiations with local communities. water may need to be purchased from agricultural areas, s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 101 • Thermoelectric power plants that burn natural gas gener- in December 2019, the Argentine Congress declared a public ate emissions such as nitrogen oxide (NO), carbon diox- emergency that would last until 31 December 2020 and ap- ide (CO2), carbon monoxide (CO) gases, Sulphur dioxide proved emergency economic measures to stabilize the econ- (SO9) and release particulate material into the atmo- omy and to resolve the increasing social crisis. These mea- sphere. Therefore, greater use of thermal plants during sures included tax increases on certain U.S. dollar exports and drought periods generally increases the risk of producing purchases, subsidies for retirees, and more executive powers higher levels of greenhouse emissions. over finance, taxes, administration, pensions, tariffs, energy, The recovery from droughts that affect the regions where electricity and natural gas tariffs for 180 days and announced most of the hydroelectric power plants of the Company are a new distribution tariff scheme that should be in effect by the health, and social affairs. The Argentine government also froze located can last for a long time and new episodes of drought second half of 2020. may occur in the future. A prolonged drought may exacerbate the risks described above and have an adverse effect on Enel Argentina’s annualized inflation rate has risen significantly Américas business, operating results, and financial position. over the past three years, from 24.8% in 2017, 47.6% in 2018 and 53.8% in 2019, while the Argentine peso has depreciated We are subject to potential financial risks arising from cli- by almost 73.5% against the US dollar over the same peri- mate change legislation and regulation to limit greenhouse od. To combat inflation, the Central Bank of Argentina raised gas (GHG) emissions. the floor of its benchmark interest rate to 78% in Septem- Future climate change legislation and regulation that restricts ber 2019, but subsequently lowered it to 58% in December. or regulates GHG emissions could lead to increased operating Some economists are concerned that the government owes costs and have a significant adverse effect on our business, a substantial amount of short-term debt at high interest rates operating results and financial position. The implementation in both U.S. dollars and Argentine pesos. In December 2019, of any international treaty or any legislation or regulation that the Argentine government postponed payments of US$ 9.1 imposes new or additional reporting obligations, or limits GHG billion in Argentine Treasury bills until August 31, 2020, which emissions from our operations, may mean that we must incur led rating agencies to reassess the credit quality of the Argen- additional costs to meet such requirements and may also re- tine government. quire the reduction or limitation of GHG emissions associated with our operations. These additional compliance costs may In January 2020, S&P Global evaluated Argentina’s credit rat- include additional costs to operate and maintain our equip- ing as “speculative grade”, with a negative perspective, from ment and facilities, install emissions controls, or pay taxes “CCC-”. In August 2019, Moody’s lowered its rating from “B2” and rates related to GHG emissions, which could have a sig- to “Caa2”. Moody’s perspective is still under review as of the nificant adverse effect on our business, operating results, and date of this report. financial position. An economic downturn in Argentina or a sharp depre- Because of the above, as of July 2018, Argentina has been ciation of the Argentine peso would adversely affect the considered a hyperinflationary economy according to the NIIF Company’s businesses. accounting standards. The general price index was used ret- The Argentine peso was one of the world currencies which rospectively in order to present the amounts related to the experienced one of the steepest devaluations against the US Argentine subsidiaries in Enel Américas´ consolidated finan- dollar in 2019 equal to an annual depreciation of 37.1%. On Au- cial statements so as to reflect the purchasing power of the gust 12, 2019, the Argentine peso depreciated 18.6% against Argentine peso according to the provisions described in the the US dollar in a single day, after Alberto Fernandez defeated NIC 29, “Financial Information in Hyperinflationary Econo- President Mauricio Macri in a presidential primary election. mies”. Non-monetary assets and liabilities were restated since On 10 December 2019, Mr. Fernández took up Presidency in February 2003, the most recent date on which inflation adjust- the midst of a two-year economic recession. The country’s ments were applied for accounting effects in the Argentine macroeconomic outlook for 2020 remains risky because of subsidiaries. Our consolidated financial statements have not high interest rates, the threat of government default on ex- been restated to reflect the indexation gain of non-monetary ternal and local debt, rising poverty and unemployment, and assets and liabilities of our Argentine subsidiaries prior to Jan- a high inflationary environment. In response to the situation, uary 1, 2018. 102 Annual Report Enel Américas 2019 A further deterioration of the Argentine economy, a continued The delays or modifications of any proposed project, and the devaluation of the Argentine peso against the US dollar driven laws or rules may change or be interpreted in a way that can by hyperinflation, or the initial freeze and subsequent reduc- adversely affect the operations or plans for the companies in tion in electricity distribution rates may adversely affect the which the Company has investments, which can adversely af- Company´s operating results and financial position. For fur- fect its business, operating results and the financial position. ther information, see the Notes to our Consolidated Financial Statements. Regulatory authorities may impose fines on the Company’s subsidiaries because of operational failures or non-compli- Government regulations may adversely affect the Compa- ance with regulations. ny’s businesses, cause delays, hinder the development of Electricity businesses may be subject to regulatory fines for new projects or increase operating costs and capital expen- any breach of current regulations, including power outages, ditures. in the four countries in which the Company operates. The The Enel Américas´ subsidiaries are subject to extensive regu- Group´s generation subsidiaries are supervised by local reg- lations on tariffs that apply to their clients and other aspects of ulators and may be affected by these fines in cases where, in the business, and these rules may negatively affect profitability. the opinion of the regulator, operational failures that affect the For example, the different governments in the countries where regular supply of energy to the system are the responsibility the Company operates may implement rationing policies during of the Company. Additionally, subsidiaries may be required to droughts or prolonged failures in rationing services, which pay fines or compensate clients if subsidiaries cannot provide could adversely affect the Company’s business, operating re- electricity, even if such non-compliance is due to forces be- sults, and financial position. yond the subsidiaries’ control, or if they do not comply with environmental or other regulations. Electricity regulations issued by governments in the countries where the Company operates may affect the capacity of gen- In 2019, ANEEL imposed $ 13.6 million reais fines on Enel eration companies to raise sufficient revenue to offset their op- Distribución São Paulo because of errors in commercial proce- erating costs, which could adversely affect business, operating dures related to the interruption of the electricity supply, Enel results and financial position. Governments may also delay the Distribución Rio was fined $ 7.4 million reais for a partial viola- distribution tariff review process, or the rate adjustments de- tion of the quality of service indicators, and Enel Distribución fined by regulatory authorities may be insufficient to transfer Ceará was fined with $ 5.2 million reais for technical problems our costs to clients. with the process of maintaining call center data. Our operating subsidiaries are also subject to environmental Enel Américas depends on payments from its subsidiaries regulations that, among other things, require environmental and affiliate companies to meet its payment obligations. impact studies for future projects and they must also obtain To meet its obligations, the Company depends in part on the building and operating permits from local and national regula- cash received from dividends, loans, interest payments, cap- tors. Authorities may withhold or delay the approval of these ital reductions and other payments from its subsidiaries. The permits until the completion of environmental impact studies. ability of the subsidiaries to meet dividend, interest and credit Therefore, the processing time may be longer than expected. payments, and deliver other distributions is subject to legal Environmental regulations for existing and future generation limitations, such as dividend restrictions, fiduciary duties, con- capacity have become stricter and require greater capital in- tractual restrictions that may be imposed by local authorities. vestment. Any delay in compliance with the required emission standards may be a violation of environmental regulations. If Historically, the Company has not always been able to access the original implementation and standard ongoing emissions Its subsidiaries´ cash flows at all times because of certain gov- requirements of monitoring systems are not certified, sanc- ernment regulations, strategic and economic considerations, tions, claims, or legal claims for damages may take place. We and credit restrictions. In the future, it is likely it will not be expect more restrictive emission limits to be set in the future. able to rely on cash flows from the operations of those enti- ties to pay off the Company’s debts. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 103 Limits on dividends and other legal restrictions. Some sub- Enel Américas controls Emgesa and Codensa in Colombia sidiaries are subject to legal reserve requirements and other through a shareholder’s agreement with Grupo Energía Bo- restrictions on dividends payment. Other legal restrictions, gotá S.A. ESP (“GEB” for the Spanish abbreviation). In De- such as currency controls, may limit the ability of subsidiaries cember 2017, the Company was informed that GEB submitted and associates to pay Enel Américas dividends, and amortize to arbitration the differences between the parties related to credits, pay dividends or make other payments. Furthermore, the distribution of new revenues of 2016 of these two Colom- the ability of any of the subsidiaries that are not wholly owned bian subsidiaries. GEB claims that Enel Américas breached by Enel Américas to pay in cash may be limited by the fidu- the requirements of the shareholders agreements that reg- ciary duties of the directors of such subsidiaries to minority ulated the method of income distribution, forcing parties to shareholders. Moreover, some of the subsidiaries may be re- vote in favor of distributing 100% of the benefits that can po- quired by local authorities, pursuant to applicable regulations, tentially be distributed in each period, distributing only 70% to reduce or eliminate dividend payments. As a result of such of the 2016 net income. The claims seek a 100% distribution restrictions, any subsidiary may, under certain circumstances, of the net income obtained in 2016 for each Company. The not be able to deliver cash to Enel Américas. amount in dispute is US$ 21 million for Codensa and US$ 27 Contractual Obligations. The restrictions for dividend distri- that might force Enel Américas to always vote for the distri- bution included in some credit agreements of the subsidiary bution of 100% of net income every year, which would not be Enel Generación Piura and several subsidiaries in Brazil may financially viable for our subsidiaries and our Company. million for Emgesa. An adverse ruling would bring a precedent prevent dividend payments and other distributions to share- holders if they are non-compliant with certain financial ratios. The financial position or the operating results might be affect- In general, credit agreements ban any type of distribution in ed if the defense of this litigation is not successful or other the event of any current non-compliance. claims taken against the Company might arise. For further in- formation regarding lawsuits, see note 34.3 of the Enel Améri- Operating Results of subsidiaries. The capacity of subsidiar- cas’ consolidated Financial Statements. ies and affiliates to pay dividends, credit amortizations or to deliver other distributions to Enel Américas is limited by their Political developments or financial crises or any other crises operating results. If the cash requirements of any subsidiary anywhere in the world may substantially affect the countries are higher than their available cash flow, said subsidiary will where Enel Américas operates and, therefore, might nega- not have cash available to hand over to the Company. tively Impact operations and liquidity. The currency of any dividend paid by our subsidiaries is sub- to external impacts that could cause significant economic dif- ject to depreciation in relation to our functional currency, ficulties and affect growth. If any of these countries should which will have a negative impact on our capacity to pay divi- experience lower-than-expected economic growth or reces- The countries where Enel Américas operates are vulnerable dends to shareholders. sion, consumer demand is likely to decline and some of our clients might find it difficult to pay their electricity bills, possi- Any situation described above could adversely affect the busi- bly increasing the uncollectable bills. Any of these situations ness, the operating results, and the financial position. could adversely affect the Company´s operating results and Enel Américas is involved in litigations. the financial position. Enel Américas is currently involved in several litigations that Political or financial developments in other places in the world may lead to unfavorable outcomes or financial fines for the may also adversely affect the Company’s business. For ex- Company. Enel Distribución Goiás has been involved in a tax ample, since 2018, the United States and China have been litigation for claims that date back to a period prior to its pri- involved in a trade war that involves protectionists measures, vatization, and the claim may not only have an adverse effect thus increasing the volatility of global financial markets be- on the Group, but also exhaust resources and attention for cause of the uncertainties that come from certain political many years. decisions. Instability in the Middle East or in any other import- 104 Annual Report Enel Américas 2019 ant oil-producing region may also increase oil prices therefore economic and market conditions in other countries which, in affecting operating costs of thermal generation power plants turn, might seriously affect the Company´s securities. which, in turn, would have an adverse impact on operating results and the Company´s financial position. Changes in social, political, regulatory and economic condi- tions or in the laws and policies governing foreign trade, man- The US federal government experienced some temporary ufacturing, development and investment, and political crises shutdowns, such as the most recent in 2018-2019 involving and uncertainties in the countries in which we operate and the SEC among many other federal agencies, which was the other South American countries could negatively affect econ- longest in the country’s history and which lasted 35 days. omies in those countries and negatively impact our business, Even the temporary or predicted US government shutdowns operating results and financial position. For example, in De- may have an adverse effect on the implementation and lead cember 2019, Argentina’s new government declared a public to higher costs related to our main international financing ac- state of emergency and established several economic mea- tivities as well as our mergers and acquisitions. sures to stabilize the economy and resolve the social crisis. In Peru, there has been a constitutional crisis since September Additionally, an international financial crisis and its negative 2019 when President Vizcarra dissolved the Peruvian Con- effect on the financial industry may have an adverse impact on gress. The institution initially refused to recognize the action the Company’s capacity to obtain new bank loans according and declared the vice president as interim president, who re- to past terms and conditions. An international public health signed the next day. In Colombia, there were large anti-gov- crisis, such as the one attributable to the COVID-19 virus, ernment protests in November and December 2019. Initially, which became a global health concern in December 2019, the protests were organized by students, trade unions and could seriously affect the countries in which we operate and indigenous groups opposed to the changes proposed for the our trading partners, and these effects could lead to higher Colombian labor and pension laws and grew rapidly to focus costs of goods also in terms of recessions affecting the elec- on economic inequality, corruption and possible austerity tricity demand. measures, as well as increased violence in the countryside. In Chile, widespread protests began in October 2019, leading to Political developments or financial crises or of any other kind a brief declaration of the state of emergency, the introduction may also decrease our capacity to access capital markets in of several social and economic reforms and an agreement to the countries where the Company operates, as well as inter- hold a referendum in April 2020 on the possible replacement national capital markets for other liquidity sources, or lead to of the Chilean Constitution. Although we do not have opera- increases in interest rates offered to the Company. Reduced tions in Chile, our administration and headquarters are located liquidity may affect capital expenses, long-term investments there, and our common shares are listed on the Chilean stock and acquisitions, growth perspectives and dividend policy. exchanges. Demonstrations and civil unrest in these coun- Economic fluctuations in South America may affect the oper- their and negatively affect our business, operating results, fi- ations and the financial position of the Company as well as nancial position, and the value of our stock. tries may continue or worsen, which could negatively affect the value of our securities. All Enel Américas´s operations are located in South Ameri- Insufficient cash flows of our subsidiaries located in the ca. Therefore, consolidated revenues may be affected by the countries with volatile economies have led, in some cases, performance of the South American economies as a whole. to their inability to comply with financial obligations and the If local, regional, or global economic trends adversely affect need to request exemptions to comply with certain financial the economy in any of the four countries where the Company covenants, or at some point, to request collaterals or other has investments or operations, the financial position and op- emergency measures from Enel Américas as shareholder, es- erating results may be negatively affected. Enel Américas has pecially in Brazil and Argentina. investments in Argentina, Brazil, Colombia and Peru, all un- stable economies that have occasionally experienced political Should any future adverse events occur in these economies it instability because of corruption and other scandals involving may hinder our possibility to carry out strategic plans, which high-ranking government officials, among other situations. The eventually would affect adversely operating results and our South American financial and insurance market is affected by financial position. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 105 The construction of power plants may suffer significant de- Reputational damage can exert significant pressures on reg- lays, works stoppages and significant cost over-runs, as well ulators, creditors and other interested parties, and ultimately as the opposition of stakeholders, which can damage the lead to projects and operations that are eventually abandoned, Company’s reputation and potentially deteriorate its good- which may trigger a stock price decrease and also hinder our will. capacity to attract and retain competent employees which Power plants projects can be delayed because of problems could deteriorate our stakeholders’ goodwill. stemming from obtaining regulatory approvals or may face equipment or workforce shortages and may be subject to construction delays, strikes, adverse weather conditions, nat- The Company might not be able to make the appropriate ac- ural disasters, social conflicts, accidents, or human errors. quisitions or successfully incorporate the acquired businesses. Any event of this kind may negatively affect the Company’s The Company always verifies acquisition prospect to increase operating results and our financial position. market coverage or complement existing businesses, al- though it cannot guarantee that appropriate procurement Existing markets conditions in the initial phases of a project’s transactions can be identified and specified in the future. The approval might be totally different to the existing ones when acquisition and integration of independent companies that the project is completed, therefore, in some cases, these are not controlled by Enel Américas is generally a complex, projects might be commercially unviable. Deviation from time-consuming, and expensive process that requires an im- these assumptions, including the forecast of deadlines and portant effort and even greater costs. If an additional acquisi- the estimation of expenses related to such projects, might tion is made, such as the one carried out in Enel Distribución lead to cost overruns and implementation periods which are São Paulo in 2018, the Company might incur important debts longer than the initial estimations, which in turn, could have a and take on unknown liabilities, suffer a potential loss of key negative impact on the business, operating results and finan- employees, incur amortization costs related to tangible as- cial position. sets and the distraction of management from other business concerns. Because of the acquisition of Enel Distribución São The land to develop new projects is sometimes located in ar- Paulo, the Company´s liabilities increased significantly, due to eas that present important challenges in terms of geograph- the new debt needed for the acquisition and the consolidation ical topography (mainly in Colombia and Peru), and, in some of the debt for the purchase of distribution Company. cases, on mountain slopes or in jungles with a very limited access. Moreover, in some cases the geographic location of The integration of the acquired businesses may be hard, slow some of the projects may also represent risks in terms of ar- and expensive, and become a burden on the resources and chaeological heritage. These factors also can lead to signifi- relations with employees and clients. The acquisition might cant delays and excessive costs. not even be successful or might not bring the expected ben- efits. Any delay or difficult related to the acquisition and inte- The operation of Enel Américas´ thermal power plants, espe- gration of its operations might lead to a material effect on the cially those that use coal for generation, may affect the stake- business, the operating results and financial position. holders’ goodwill, because of greenhouse gas emissions, which may negatively affect the environment and the commu- Enel Américas´ business and profitability may be adverse- nity. Additionally, communities might have their own interests ly affected if water rights are rejected or if water conces- and different perceptions than the Company and might be in- sions are granted for a limited time or should their cost fluenced by other interested parties or motivations unrelated increase. with the project. Therefore, if the Company does not commit The Company owns water rights in rivers and lakes located to the relevant stakeholders, it may face opposition that might near its generation facilities, granted by the authorities of the finally negatively affect its reputation, paralyze operations, respective countries. In Colombia, the water rights or water or lead to litigation. The reputation of Enel Américas is the concessions are granted for different periods of time for each foundation of its relationships with the main stakeholders and of our electricity generation plants, in some cases for up to for other groups of interest. If the Company does not effective- 50-year periods. However, these concessions can be revoked, ly manage the real or perceived problems, these might lead for example, when there is a progressive water decrease or to negative consequences and, therefore, cause a negative depletion. In Colombia, access to water for human consump- impact on the business, operating results, and our financial tion is the first priority before any other use. In Peru, water position. 106 Annual Report Enel Américas 2019 concessions are granted for indefinite periods, and can be re- We are subject to incremental risks in increasingly liberalized voked due to scarcity or a decrease in service quality. distribution markets. Any limitation to current water rights, the requirement to ob- requirements of maximum and minimum demand, may freely tain additional water rights, or if the current unlimited water choose non-regulated tariffs. This choice may harm our oper- concessions are shortened might have a material adverse ef- ating revenues. In some cases, clients may choose an alter- fect on our hydroelectric development projects and their prof- native energy supplier which would negatively affect our busi- itability. ness, operating results, and our financial position. In some countries, distribution clients who comply with the The controlling shareholder may have a substantial influ- Exchange risks could adversely affect the results and the val- ence on Enel Américas and may have a different strategic ue of dividends in dollars payable to ADS holders. vision from the minority shareholders when it comes to the Even though the Company’s functional currency is the US Company´s development. dollar, our subsidiaries generate revenues in Argentine Pesos, Enel SpA (Enel) is Enel Américas´ controlling shareholder Nuevos Soles, Brazilian Reais and Colombian Pesos. In gener- with 58.26% of its shareholding as of the date of this report al, Enel Américas has been and shall be exposed in the future and has declared its intention to increase its participation to to the variations of local currencies in relation to the US dollar, 65% via swap agreements that involve ordinary shares and due to temporary differences and other limitations to adjust ADS. tariff rates to the dollar. This exposure might substantially de- crease the cash value generated by the subsidiaries and the Pursuant to Chilean law, Enel SpA may establish the results value of our dividends when indexed to the US dollar if the of almost every important issue that requires the simple local currencies experience a strong devaluation in relation to majority of shareholding vote, such as the appointment of the US currency. For example, the Chilean pesos devalued the majority of the Board of Directors members and, subject by 7.2% in relation to the US dollar in 2019 and continues do- to contract and legal restrictions, also the dividend policy. ing so rather strongly as of the date of this report. The future Enel can also influence in an important way commercial op- exchange rates volatility in currencies in which the Company erations and strategy. However, its interests may, in some receives revenues or in which it incurs expenses, can affect cases, differ from those of the minority shareholders. For the business, operating results and our financial position, es- example, Enel carries out its commercial renewable ener- pecially when expressed in US dollars, the currency that af- gy operations through Enel Green Power S.p.A., where Enel fects ADS holders. Américas has no shareholding participation. Certain conflicts of interest that may affect Enel in these matters could be Long-term energy supply contracts are subject to market solved against Enel Américas or its minority shareholders’ price fluctuations of certain commodities, energy, and other interests. factors. Enel Américas is economically exposed to market price fluctua- The electricity business is exposed to risks arising from tions of certain commodities due to long-term energy sale con- natural disasters and extreme weather phenomena in the tracts. current climate scenario, catastrophic accidents, and acts of terrorism, which could adversely affect our operations, reve- They expose subsidiaries, as selling parties, to material obliga- nues and cash flows. tions and contain indexed prices for different products, exchange The Company’s main facilities include power plants and trans- rates, inflation, and electricity market prices. Adverse changes mission and distribution assets The Company’s facilities might in these indices would reduce the tariffs charged under these be damaged by earthquakes and physical risks that stem from contracts, which could, in turn, adversely affect our business, events such as floods. A catastrophic event could lead to a operating results and our financial position. In the distribution prolonged unavailability of assets, an extended business dis- business, there also exists economic exposure to fluctuations ruption, significant reductions in revenues due to lower de- in energy prices. mand or significant additional costs not covered by insurance clauses for business interruptions and loss of profit. There s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 107 may be delays between a significant accident or a catastroph- A significant portion of financial debts is subject to cross-com- ic event and the final reimbursement under Enel Américas´ pliance provisions, which have different definitions, criteria, insurance policies, which normally involve a deductible and materiality thresholds and applicability with respect to sub- are subject to maximum limits per claim. sidiaries that could lead to cross noncompliance. Debts may also be due and payable immediately in cases of bankruptcy In mid-October 2019, widespread street demonstrations and or insolvency proceedings of a major or material subsidiary. protests erupted in Santiago and spread rapidly throughout Similarly, some debt holders may decide to accelerate debt in the rest of Chile. Since then, the protests have become com- the event of cross noncompliance with significant or import- monplace and have sometimes been accompanied by looting, ant subsidiaries, among other potential pact breaches. arson, and vandalism. Violent clashes between protesters and the police and the armed forces have resulted in significant Enel Américas may not be able to refinance its debts or obtain loss of human life and serious injury. The accumulated dam- such refinancing in terms acceptable to the Company. In the age to public and private property is evaluated at billions of absence of such refinancing, the Company might have to set- dollars. The impact on the country’s economy, growth pros- tle assets at unfavorable conditions to meet due payments. In pects, risk perception and immediate impact in terms of un- addition, it may not be able to sell its assets at the right times employment and loss of productivity is also significant. Our or at the correct prices to obtain income that would permit It corporate headquarters in Santiago suffered an arson attack to make such payments. on October 18, 2019, leading to the transfer of management and employees to a different place for an extended period. It The company may also not be able to raise the funds required is not possible to estimate when such violence will end or the to complete projects under development or construction. final effects on business, but there may be long-term materi- Market conditions or unforeseen project costs that prevail al adverse effects because of this social crisis. Violence has when funds are required could compromise the ability to fi- accompanied these spontaneous acts of civil unrest in many nance these projects and expenses. regions in 2019. In a globalized world connected through the Internet and the media, all the countries where we operate The inability to finance new projects or capital expenditures, are subject to this risk. Any natural or human catastrophic dis- refinancing existing debt, or complying with agreements ruption to our electricity assets in the countries in which we could adversely affect operating results and the Company’s operate could cause significant adverse effects on our operat- financial position. ing results and financial position. If third-party electricity transmission facilities, pipeline infra- The Company is subject to financing risks, such as those re- structure, or fuel supply contracts do not provide adequate lated with the financing of new projects and capital expendi- service, The company may not be able to deliver the electric- tures, and the risks related to refinancing maturities. ity it sells to its end clients. As of December 31, 2019, Enel Américas held US$ 601 mil- To deliver the electricity it sells, the Company depends on lion in SEC-registered bonds issued in the United States and transmission installations that belong to other companies that bank loans under a US$ 350 million senior unsecured revolv- are not related and are operated independently. This depen- ing credit agreement, all governed by the laws of the State of dency exposes the Company to severe risks. If transmission New York. As of the date of this report, Brazil is the country is interrupted or the transmission capacity is inadequate, it can with the highest refinancing risk. On December 31, 2019, the prevent the sale and the delivery of electricity. If the energy debt of our Brazilian subsidiaries totaled US$ 11.45 billion. transmission infrastructure is inadequate in a region, sale cost recovery and profits might not be sufficient. If restrictive regula- Some of the debt contracts are subject to the following provi- tory transmission prices are imposed, transmission companies sions which include: (1) financial covenants, (2) affirmative and that the entity relies on, may not have sufficient incentives to negative covenants, (3) default events, (4) mandatory prepay- invest in infrastructure transmission expansions, which could ment for breach of contracts, and (5) certain control change adversely affect operations and financial position or affect our clauses for significant mergers or divestments, and (6) bank- capacity to develop our whole project portfolio. ruptcy covenants and insolvency procedures , among others. 108 Annual Report Enel Américas 2019 The construction of new transmission lines may take longer Enel Américas might not reach satisfactory agreements in than it did in the past, mainly because of new social and en- the collective negotiation contracts with the unionized work- vironmental demands that are creating uncertainty about the ers and retain key employees should a labor conflict take possibility of completing the projects. As a result, in some of place. the countries in which we operate, renewable energy projects A large percentage of our employees are members of a union are being completed faster than new transmission projects and have collective negotiation contracts that must be regu- creating energy backlogs that can be transmitted through the larly renegotiated. Enel Américas´ business, financial position, current transmission systems. In Argentina, for example, the and operating results could be adversely affected should an lack of investment in transmission lines will reduce incentives agreement not be reached with any of the unions, or if an for the development of renewable energy projects. agreement with the trade unions is reached that contains con- ditions that Enel Américas finds unfavorable. The laws in many The Company also depends on pipelines to obtain natural gas, of the countries where the Company operates establish legal mainly in Peru, where more than 50% of the installed genera- mechanisms for legal authorities to impose collective negotia- tion capacity is thermal. The Peruvian system has occasional- tion contracts if the parties cannot reach an agreement, which ly faced gas and energy shortages due to the lack of installed could lead to a significant cost increase. capacity of gas pipelines and transmission lines, which led to higher spot prices. Depending on the type of facility, our ther- Enel Américas employs people who are highly specialized and moelectric generation plants purchase gas, coal, diesel, and certain actions such as strikes, walk-outs or work stoppages other fuels to generate electricity. Any breach of contract or by those employees could adversely affect our business, op- supply shortage may stop the facilities from producing electric- erating results, financial position, as well as the Company’s ity in a timely manner. reputation. Enel Generación Fortaleza owns and operates a 327 MW nat- The relative lack of liquidity and volatility in the Chilean secu- ural gas combined cycle power plant. Fortaleza maintains a rities market might negatively affect the Company’s ordinary contract with Petrobras, the Brazilian Company that guarantees stock prices and ADS. Fortaleza the supply of natural gas at a fixed price until 2023. Even though Enel Américas does not own assets in Chile, its The main purpose of the contract is to avoid a short-term en- stocks are listed in the Chilean Stock Market, as the Company ergy crisis by guaranteeing thermoelectric generation because, is regulated under the laws of the Republic of Chile as it is lo- as we could see in 2018, hydroelectric plants are vulnerable to cated in that country. The Chilean stock markets are substan- adverse hydrological conditions. tially smaller and less liquid that the main stock markets in the United States or other developed countries. The low liquidity From 2001 to 2017, the Brazilian government provided Fortaleza in the Chilean market can make it harder for shareholders to with all the fuel it needed to operate the plant. However, in sell their ordinary stocks or the ADS holders to sell common September 2017, Petrobras announced a unilateral termination stocks withdrawn from the ADS program, in the quantity, at of the gas supply contract because of an alleged economic im- the price and at moment they choose to do so. balance and excessive burdens, but never formally terminated the contract. Since then, Petrobras has sporadically supplied Lawsuits filed against Enel Américas in the other countries natural gas to Fortaleza under the terms of the agreement, but outside the South American countries where it operates, or the situation is very unstable. In case of interruptions in the the claims against the Company based on foreign legal con- supply of natural gas, Fortaleza was in the past and might be in cepts may not be successful. the future forced to buy electricity at spot market prices, which All of the Company’s operations are located outside of the could be higher than the fixed sale price hired for Clients, such United States. All the directors and all senior executives are as Enel Distribución Ceará, which has entered into a contract to domiciled outside the United States and most of their assets purchase of the entire generation of Fortaleza until 2023. This are also located outside that country. If any investor were to scenario could negatively affect our business, operating results, file a lawsuit in the United States against any of the Com- and the financial position. pany´s directors or senior executives, it might be difficult for s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 109 such an investor to inform such people of a legal process valid sophistication of cybersecurity incidents by international activ- within the United States and might be difficult for them to en- ist organizations, States, and individuals, and are among the force, in the courts of the United States or Chile, a judgment emerging risks identified in the planning process. Cybersecu- rendered in the United States based on the civil liability pro- rity incidents could damage our business by limiting our gen- visions of the United States federal securities laws. It is also eration, transmission, and distribution capabilities, delaying doubtful whether a successful action could be filed in Chile the development and construction of new facilities or capital regarding the liability based solely under the guidance of the improvement projects to existing facilities, disrupting clients’ United States federal securities laws. operations, or exposing the Company to liability. Commercial Interruption or failure of information technology and com- outage caused by the impact of a cybersecurity incident on munications systems or external cyber-attacks or cybersecu- the power transmission network, network infrastructure, fuel rity breaches of these systems could have an adverse effect sources, or operations of third-party service suppliers could systems are part of an interconnected system. Therefore, an on our business, operating results and financial position. also adversely affect our business. Enel América operates in an industry that requires the con- tinued operation of sophisticated information, control, and Moreover, our business requires the collection and storage of communications technology systems (IT systems) and net- personal identification data on clients, employees, and share- work infrastructure. The Company uses its IT systems and holders, who expects it to be properly protected. Cybersecu- infrastructure to create, collect, use, disclose, store, dispose rity breaches may put the Company at risk or might lead to of and process confidential information, including the Compa- the loss or misuse of confidential or protected information. A ny’s and clients’ data, personal information on clients, employ- significant theft, the loss or fraudulent use of information re- ees and their families, contractors and shareholders, among garding personal identification may lead to high costs involved others. In the generation business, IT systems are important in notifying and protecting the affected individuals and/or may to monitor the operations of power plants, maintain power lead to lawsuits, costs, liabilities, fines or important penalties generation and network performance, adequately generate for Enel Américas, which may have a material and adverse clients´ bills, achieve operational efficiency, and meet service impact on operating results as well as the reputation of the goals and standards. The distribution business increasingly group with clients, shareholders and regulators, among oth- depends on IT systems to monitor smart grids, billing pro- ers. Additionally, the Company might be required to incur sig- cesses for millions of clients, and client service platforms. The nificant costs related to government actions, as a response to operation of the generation, transmission and distribution sys- those intrusions or to strengthen information protection and tems not only depends on the physical interconnection of the the electronic control systems. facilities with the electricity grid infrastructure, but also on the communications between the different components of the The cybersecurity threat is dynamic and evolving, and its so- grid. The reliance on IT systems to manage information and phistication, magnitude and frequency are increasing. There communication between these parties has greatly increased is no guarantee that the Company will be able to implement since the deployment of smart meters and smart grids, for adequate preventive measures or accurately assess the like- example in Brazil and Colombia, where the Company has in- lihood of a cybersecurity incident. We cannot quantify the po- stalled a significant number of smart meters. tential impact of cybersecurity incidents on our business and The generation, transmission and distribution facilities, IT ed regulatory action could lead to in a substantial decrease in systems and other infrastructure, as well as the information revenue and high additional costs, including fines, third-party processed by the Company´s IT systems could be affected claims, repair costs, higher insurance costs, litigation costs, by cybersecurity incidents, including those caused by human reporting and remediation costs, security costs, and compli- error. The industry has begun to see a greater volume and ance costs. reputation. These potential cybersecurity incidents and relat- 110 Annual Report Enel Américas 2019 Ethics and transparen- cy Internal control system The Internal Control and Risk Management System (SCIGR by its Spanish acronym) consists of a set of rules, procedures and organizational structures that allow to identify the main corporate risks existing in the Company and then to measure, manage and monitor them. Specifically, the system takes into account the recommendations of the Integrated Framework for Internal Control, a model set up by the Committee of Sponsor- ing Organizations of the Treadway Commission (“COSO”). The system also guarantees the traceability of risk identifica- tion, assessment, management and monitoring activities, con- sidering three different types of activities: • First level of control: consisting of all the control activities that the Company’s operating units implement in their processes to guarantee that operations are carried out correctly. • Second level of control: assigned to specific corporate func- tions and they are supposed to manage and monitor cer- tain risk types. • Third level of control: internal audit activities aimed at verify- ing the structure and operation of the internal control and risk management system, including monitoring of first and second level controls. Internal Audit The Internal Control and Risk Control System, and its alignment with the business model, is one of the main success factors of Enel Américas and its subsidiaries. Internal Audit Management is responsible for objectively and independently guaranteeing the efficiency and effectiveness of the internal control and risk management system. Because of its nature, the Internal Audit Management reports directly to the Board at least once every quarter, including any serious de- ficiencies that have been detected or possible irregularities that must be reported to the auditing bodies or other competent entities, or that affect the Company´s legal situation. The Internal Audit Management department carries out audits to periodically evaluate – under the risk based perspective – the performance of the Company’s operations, identifying the ar- eas of improvement and facilitating – together with the process owners – action plans that would reinforce our Internal Control System, minimize irregularities or cases of potential fraud that may affect the Company. The results of each audit and the mon- itoring of the implementation of the action plans are periodically reported to the Board that directly monitors the proper imple- mentation of the identified improvement actions. Each audit includes control activities linked to the Criminal Risk Prevention Model (MPRP), which contains the requirements of the Crime Prevention Model of Law 20.393, which governs Enel Américas as a Chilean-based Company and that encour- ages the implementation of international best practices to prevent and detect potential risks of illegal, fraudulent and in general any other action that may be in conflict with the ethical principles of the Enel Group. This work methodology is also applied by Enel Américas sub- sidiaries considering the local particularities in terms of ap- plicable regulations and the specific context of each country where the Company operates. In 2019. the Audit Manager and Compliance Officer had access to the Board in the sessions held in January, February, March, July, August and September to report all the issues indicated above, in addition to the man- agement of the Ethics Channel. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 111 Ethical conduct and criminal risk prevention model approves the documents that are part of the compliance sys- tem, including the Criminal Risk Prevention Model, for whose implementation it gets the necessary support from the Crime Prevention Officer. The Crime Prevention Officer has sufficient organizational auton- omy, authority and resources to carry out his functions in the correct manner. Periodically, the Board evaluates and monitors program implementation and improvement at the level of the Enel Américas is fully committed to complying with the Compa- Company’s processes, in sessions where the Crime Prevention ny’s ethics standards and conduct, and the legislation in force in Officer reports the main activities related to the programs´ imple- each of the businesses where it operates, both in the internal mentation and functioning. and external relations with other stakeholders. Transparency and ethical actions are an integral part of the values that lead to trust Enel Américas´ Criminal Risk Prevention Model was officially cer- and responsibility with stakeholders. tified in 2018, where an external entity accredited and objectively The Company and its subsidiaries have implemented a Code of the Company pursuant to the requirements of Law 20.393. The Ethics, approved by their Boards, through which they direct the certification was granted for two years (until mid-2020), during actions of directors, executives, employees and contractors. The which period the company shall be constantly evaluated. document sets out the principles, guidelines, commitments, and ethical responsibilities in business and commercial activities In 2019, the Board approved the upgrade of the Criminal Risk Pre- evaluated the prevention system adopted and implemented by management. vention Model´s contents considering the amendments made to Chilean Law 20.393 at the end of 2018 and the beginning of The Code of Ethics and the main documents that are the frame- 2019, which, in its scope, incorporated the criminal responsibility work for Enel Américas´ ethical culture are available to all employ- of legal persons for crimes of corruption between individuals, un- ees, Directors, suppliers and contractors and area also published fair administration, incompatible negotiation, misappropriation, internally and on the website, so that all stakeholders can easily illegal fishing, pollution, activities related to protected products access their contents. and activities related to the scarcity of fishing resources without the correct accreditation of their legal origin. These offences are The Company strictly adheres to the Law on Publicly Traded additional to the crimes of money laundering, terrorism financing Companies which, within its criteria, establishes the indepen- activities, receiving and handling stolen goods, and bribery, the dence from and inexistence of conflicts of interest. At the same latter being an extraterritorial crime. time, the Board has adopted the voluntary observance of Gen- eral Standard 385. Internal Audit reports the main information on Furthermore, our Crime Prevention Officer coordinated the up- the compliance with this Standard to the Board within its area of grade of specific risks and controls within the scope of the Crim- competence. inal Risk Prevention Model with all of the Company´s areas and processes constantly receiving the support of experts. Enel Américas has implemented a Criminal Risk Prevention Model (MPRP Spanish acronym) based on the Code of Ethics All of Enel Américas subsidiaries have also put in place a com- and the Zero Tolerance with Corruption Plan. Its objective is to pliance program in line with the Company’s practices, including control and prevent crimes within the organization, guaranteeing country-specific regulatory requirements. In the not directly con- compliance with the regulations, and the transparency of actions trolled companies, or which are joint ventures, or related com- in all the companies where Enel Américas holds a majority share- panies or suppliers and contractors, the company encourages holding, exercises control or is responsible for management. This them to develop their own codes that are aligned with local leg- model covers all the requirements of the Crime Prevention Mod- islation and Enel Américas´ standards. el defined in Law 20.393 and its amendments. The Board is the body responsible for overseeing compliance iaries, were recognized by the Fundación Generación Empresar- with ethical standards and the prevention of criminal risks in the ial and El Diario Financiero and awarded the “Generación Em- Company, a task whose monitoring and management is dele- presarial – Diario Financiero” prize for their commitment to the gated to the internal audit management. This way, the Board systematic promotion of ethics and corporate compliance with In 2019, Enel Américas, together with Enel Chile and its subsid- 112 Annual Report Enel Américas 2019 best practices both internally and externally, obtaining one of the three best evaluations among 49 participating companies. In 2019, Enel Américas and its subsidiaries also maintained and operated their communications and training plans, whose aim is to disseminate the main aspects of the compliance program and strengthen employees´ and suppliers´ ethics culture. These plans considered internal and external activities, including inductions for the Company’s new arrivals in which they receive specific training related to Enel Américas ‘ compliance system. ISO37001 anti-bribery management system The same year Enel Américas and its subsidiaries held 145 train- ing courses involving more than 6,000 people, focused on cor- ruption prevention and unethical conduct, the use of the Ethics Channel, the ISO37001 Anti-Bribery Management System and, in general, on knowledge related to the Company’s compliance To comply with the tenth principle of the Global Pact under which companies are committed to combating corruption in all its forms, including extortion and bribery, Enel Américas contributes to meeting this commitment by implementing and maintaining the pillars of the Anti-Bribery Management System, according system. to ISO37001. Another important activity was Enel Américas´ participation at the Eighth United Nations Forum in Geneva, Switzerland on Business and Human Rights in the session entitled “Corrupting the Human Rights Agenda: How Business can leverage anti-cor- ruption practices to strengthen respect for human rights”. The conference was attended by some 2,000 participants from gov- ernments, businesses, civil society, investors, United Nations agencies, among others; Enel Américas presented its anti-cor- ruption experiences and practices implemented in South Ameri- ca in line with Sustainable Development Goal 16 (Peace, Justice The ISO 37001 standard specifies several measures and best practices to help organizations prevent, detect and deal with brib- ery, along with complying with voluntary commitments made by Enel. At Enel Américas , this system focuses on identifying risks, and designing, putting into practice and improving controls and behavioral standards in operations considered risky, such as negotiations and contract implementation with third parties, participation in public and private tenders, financial resource management, gift and hospitality management, personnel selec- tion processes, incentive mechanisms for senior management, and Strong Institutions), which are finally related and integrated among others. into the Enel Group´s sustainability and human rights vision and strategy. Some of the highlighted practices were: Due Diligence of Hu- man Rights applied annually in all countries; initiatives imple- mented with the collaboration of our suppliers and value chain to promote universal respect for human rights; as well as the work we have been doing with Multilateral Organizations, NGOs and government entities from different countries (such as UNODC, Transparency International, Transparency Secretariats) to make important inroads into achieving the Sustainable Development Goals (SDGs). Finally, in 2019, Enel Américas participated and collaborated in other instances with stakeholders and civil society such as Chile Transparente, Fundación Generación Empresarial, the Argentine Association of Ethics and Compliance, among other organiza- tions, to share experiences and promote best practices applied This Anti-Bribery Management System is part of Enel Américas ‘ compliance program where the Board is its highest governing body, and which, together with the Company’s Senior Manage- ment, promote the prevention of any type of bribery in daily ac- tivities and operations. The ISO37001 certification strengthens stakeholder confidence in Enel Américas, which in 2018 became the first South American multinational company listed on the New York Stock Exchange to obtain such certification. As part of Enel Américas ‘ commitment to implementing global best practices, in 2019 Enel Américas , together with its sub- sidiaries Edesur (Argentina), Enel Codensa and Enel Emgesa (Colombia), maintained their Certification of the Anti-bribery Management System under the international ISO 37001:2016 standard. During the same period subsidiaries Enel Distribución Perú, Enel Generación Perú and Chinango S.A.C (Peru) obtained, for the first time, the ISO 37001 Anti-bribery Management Sys- in the Company and outside, in terms of probity, organizational tem certification. culture , and ethical and transparency practices. s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 15. Risk factors 113 Enel Américas has participated in various national activities shar- This complaints channel is available to employees, contrac- ing the Company´s experience in the implementation of this rel- tors, suppliers, clients, communities, and other stakeholders, evant certification, as well as its deployment in the subsidiaries. with access available via telephone, face-to-face and digital means through the intranet and the Company’s website. The complainant can access the channel to provide more infor- mation related to the reported situation, as well as receive feedback and inquiries from those responsible for the man- agement of the case. In 2019, part of the communications management and train- ing focused on improving the use of the Ethics Channel through publications and training, showcasing its usefulness and teaching employees how to use it. The company tried to raise suppliers´ awareness of the channel at events through promotional deliverables and talks. In 2019, the Ethics Channel received a total of 110 complaints in all of Enel Américas and its subsidiaries related to the Code of Ethics. Of these, 23 were insignificant infringements – all duly managed according to the Company’s Code of Ethics, in matters related to contract management, conflicts of interest and work environment. Management of the complaints channel The complaints channel, managed by the Internal Audit de- partment, but run externally, permits anonymous reporting of irregular behavior, contrary to the principles of the Criminal Risk Prevention Model, the Code of Ethics or other issues related to accounting, control, internal audit, or crimes such as money laundering, terrorist financing, bribery, corruption between individuals, reception of stolen goods, misappropria- tion , incompatible negotiation, environmental crimes, among others. This channel is governed by Whistleblowing global pol- icy No. 107, which guarantees the whistleblower´s anonymity and protection in case of retaliation and protection against al- legations of bad faith. ¿Where to report? Web corporativa www.enelamericas.com Right menu/Ethics channel Internet Direct ethics channel https://secure.ethicspoint.eu/domain/media/es/gui/102504/index.html Enel Américas Internal Audit management, Santiago, Santa Rosa N°76, Piso 9. In person or in writing 114 Annual Report Enel Américas 2019 s d n e d i v i D . 0 1 t n e m t s e v n I 9 1 0 2 . 1 1 y c i l o p g n i c n a n i f d n a y n a p m o c e h t f o s e s s e n i s u B . 2 1 e s a e r c n i l a t i p a C . 3 1 d n a s t n e m t s e v n I . 4 1 s e i t i v i t c a l a i c n a n i f s r o t c a f k s i R . 5 1 The Enel Group has a whistleblowing policy to organize the reception, analysis and management of reports concerning suspected violations to Enel Compliance Programs. Channels ensure • Anonymity • Confidentiality • Safety • Protection against retaliation Whistleblowing Policy 107 Report a Concern External Company sends concerns to Internal Audit Internal Audit Response Receipt notice and further i n f o r m a t i o n r e q u e s t a n d evidence of concern Internal Audit performs preliminary analysis • What is your concern? • Who is being reported? • Which principle or ethical behavior is being violated? Internal Audit performs preliminary analysis Internal Audit analysis Relevant violation to Compliance Program Operational concern Concern is sent to the unit for resolution Closure form of concern reported Investigation and review of concern reported Unsubstantiated concern Concern is filed Disciplinary system, implementation of improvement and report to Board of Directors Ethics Channel The Company has put in place an Ethics Channel, governed by the whistleblowing policy and duly communicated to the Compa- ny’s employees. This channel is available to workers, contractors, suppliers, clients, communities, and other stakeholders, with access available via telephone, face-to-face and digital means through the Company’s website. Complaints are subsequently investigated by the Audit Management department and reported to the Directors´ Committee. 15. Risk factors 115 116 Annual Report Enel Américas 2019 16. REGULATORY FRAMEWORK OF THE ELECTRICITY INDUSTRY 16. Regulatory framework of the electricity industry 117 Description of the industrial sector changed substantially in March 2013, when the Ministry of Electricity approved Resolution S.E No. 95/2013, establishing a payment system for generation based on average costs, with companies delivering all generated energy to CAMME- SA. This new compensation model became valid in February of 2013 and was updated through Resolutions SE No. 529, No. 482, No. 22 in 2014, 2015, and 2016, respectively. On Feb- ruary 2, 2017, the Ministry of Electricity published Resolution SEE No. 19/2017 replacing Resolution SEE No. 22/2016 and established new payment guidelines for existing generation power plants, focusing on the power availability of the units. The transmission industry operates under monopoly condi- tions and is composed by several companies which receive Enel Américas and its subsidiaries and jointly controlled com- concessions from the Federal Government. panies participate in electricity generation, transportation, distribution and sale in four countries. Each one has different The distribution sector also operates under monopoly condi- regulatory frameworks, energy matrices, participating com- tions and is operated by companies that have also been grant- panies, and different growth and consumption patterns. The ed concessions. Distribution companies have the exclusive following is a summary of the main legal bodies that regulate responsibility for electricity to be available to end clients with- the activity, the market structure, and the most relevant as- in a specific concession area, without considering if the client pects regarding the agents of each of the countries where the has a contract with the distributor or with a generator. Company operates. Argentina The Argentine electricity sector is governed by, among other regulations, Law No. 15.336/1960, and Law No. 24.065/1992. The Wholesale Electricity Market (MEM by its Spanish acro- nym) has four local agent categories (generators, transmis- sion companies, distributors and large clients) and foreign agents (generation trading companies and demand trading companies), companies that are authorized to buy and sell electricity and related products. Originally, the generation sector was organized on a compet- itive basis (marginalism), with independent generators that sold their energy in the MEM spot market or through private contracts to clients in the MEM contract market, or “Com- pañía Administradora del Mercado Eléctrico Mayorista S.A (CAMMESA by the Spanish acronym) through special trans- actions such as contracts under Resolution S.E. No. 220/2007 and Resolution S.E. No. 724/2008. However, this regime Because of the economic downturn affecting the country in 2002, the government issued an emergency Law No. 25,561. The Law eliminated the American dollar parity and imposed the conversion of liabilities and rights previously acquired in the American currency to the Argentine peso. This obligatory nominal conversion from dollars to pesos seriously affected the whole Argentinian electricity industry. Additionally, the Government approved several regulatory measures that slow- ly interrupted the development of the industry. The Emergen- cy Law has been subject to successive extensions and with regards to the last one, approved through Law No. 26,896, was to be valid until December 31, 2015. The conversion into Argentine pesos and the devaluation of the economy made the renegotiation of all concession contracts necessary. In par- ticular, the distribution sector where “Empresa Distribuidora de Energía del Sur, S.A.” (Edesur) signed in 2006 a Contractual Renegotiation Agreement with the government that subse- quently was ratified through Decree PEN No. 1959/2006. This gradually has permitted them to adapt their tariff revenues in such a way so as to guarantee business sustainability. The im- plementation of this agreement has been stopped since 2008 and until this year, as explained below. 118 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 No generator, distributor, large user, or any other company was created. If the seasonal price is lower than the genera- controlled by any of the latter or under its own control, can be tion, money is withdrawn from the fund to compensate gen- the owner or controlling shareholder of a transportation com- eration; otherwise money is added to the fund in the contrary pany or its controlling companies. At the same time, transmis- situation. Since 2002, the Ministry of Electricity has main- sion companies may not engage in energy generation, distri- tained the average seasonal price without major variations. bution, purchase and/or sale activities. Distribution companies It led to an important deficit in the stabilization fund, which are not allowed to own generation units. has been covered by the Argentinean state through increasing Regulated Clients are supplied by distributors at regulated subsidies. rates unless they have a minimum capacity demand of 30 kW. The resolutions approved and created because of the emer- In such case they are considered “large clients” and can free- gency Law had a significant impact on energy prices. One ly negotiate their prices with generation companies. of the most important implemented measures was Resolu- tion SE 240/2003, which modified the way spot prices are On December 16, 2015, through Decree 134/2015, a national set by separating the calculation of marginal operating costs. state of energy emergency was declared until December 31, The main objective of Resolution SE No. 240/2003 is to avoid 2017, where the Ministry of Energy was instructed to set up price indexation linked to dollar, and despite the fact that the and apply actions in the generation, distribution and transmis- dispatch is still based on the real fuels used, the spot price cal- sion segments in order to adapt service quality and supply culation is based on absolute gas availability to meet demand. security; it also instructed the National Public Administration This occurs even in circumstances where many generators to carry out consumer rationalization programs in the respec- used alternative fuels, such as diesel, because it is difficult to tive entities. obtain natural gas. Regulation of generation companies In December 2004, the Ministry of Electricity via Resolution 1427/2004 approved the Adherence Law for the Rehabilita- tion of the Wholesale Electricity Market. It was signed by the majority of the generators, including the generation compa- The regulation of generation companies has experienced im- nies owned by Enel Américas (former Enersis). Through this portant changes since the introduction of Law No. 24.065 un- Resolution, the Ministry created a fiduciary fund known as til the publication of Resolution S.E.E No. 22/2017. Pursuant to FONINVEMEM, where private generators provided part of the the aforementioned Law, all generation agents of the MEM energy sold from 2004 to 2007 for the construction of two must be connected to the SIN (National Interconnected Sys- new combined cycles. In 2010, apart from this new capacity, tem) and must comply with the dispatch order to generate the generation companies owned by Enel Américas (former and deliver electricity to be sold in the spot market and in the Enersis), together with other companies participated in the forward market (MAT). The distribution and trading companies creation of a trust for the construction of another combined and large clients that have signed private supply contracts cycle, expecting the closure as a combined cycle in October with generating companies, pay the contract price directly to 2016. Part of the credits for the energy sold between 2008 the generator, and also pay a toll to the transmission and dis- and 2011 was also allocated to this new project. tribution companies for the use of their systems. As part of the agreement reached with the Government to To stabilize generation prices when faced with the tariffs re- develop the operations of our subsidiaries in Argentina, on Oc- ceived by clients, the market established a seasonal value tober 12, 2012 Costanera signed an agreement to implement which is the price of energy that distributors pay for their an investment plan for the generation units in the Costanera energy purchases traded in the spot market. This amount is power plant. Its purpose was to optimize equipment reliability adjusted by the Ministry of Electricity every six months, after and availability for a total amount of US$ 304 million within a CAMMESA carries out their spot price projections for the pe- 7-year period. The agreement also contemplated the payment riod in question. To adjust the differences between this price of contractual maintenance obligations (Long-Term Service and the real cost of original generation, a stabilization fund Agreement -LTSA-) of the combined cycle of the power plant. 16. Regulatory framework of the electricity industry 119 Subsequently, Resolution S.E. No. 95/2013 abandoned the In February 2019, Resolution SEES No. 19/2017 was replaced marginal price system and set up an average cost recognition by Resolution SRR and ME No. 1/19 establishing guidelines mechanism. The resolution recognized the payment of fixed, for payments to existing generation plants. variable costs and additional payments. Fixed costs (in ARS$/ MW-hrp) are paid based on technology, scale, and available The new Resolution kept the current payment structure of the power. They are also subject to reaching an established avail- previous resolution with some amendments. ability objective. As for variable costs, operating and mainte- nance costs are paid based on the generated energy (in ARS$/ MWh), the fuel and technology used (generators have no fuel cost as it is provided by CAMMESA). Finally, the additional payment is calculated based on the total energy generated (in ARS$/MWh), considering the technology and the scale of the generator. A part of this payment is deposited in a fund that is used to finance new infrastructure investments in the electricity sector. The resolution covers generators, co-generators, and self-gen- erators except for power plants that became operational as of 2005, nuclear power plants and the generation of bina- tional hydroelectric plants. It reserves for and centralizes in CAMMESA commercial management and dispatch of fuels and suspends bilateral energy contracts between generators and MEM agents. The latter must meet their electricity de- mand with CAMMESA. Resolution SE No. 529/2014 mainly adjusted the values set up by Resolution SE No. 95 and incorporated non-recurring maintenance payments for thermal power plants. Resolution SE No. 482 issued in 2015 adjusted the payment for generators, in force since February 2014. According to Resolution 529/2014, a new charge was created to finance investments but which has not been used and which ex- empts hydroelectric plants from the payment of variable energy collection and established payments for wind, solar photovoltaic, biomass/biogas, and internal combustion engine power plants. On 30 March 2016, the Ministry of Electricity, under the Ministry of Energy and Mining, via Resolution No. 22/2016, adjusted the payments values of Resolution SE No. 482/2015, replacing Annexes I, II, III, IV, V, VI and VII of that resolution. Subsequently, Resolution SE No. 22/2016 was replaced by Resolution Se No. 19/2017, defining a minimum power pay- ment according to technology and scale. In addition, for ther- mal units, the possibility of offering availability commitments with differential foreign currency payments for all thermal technologies was established. 120 Payment for thermal power plant capacity Minimum price (from February 2019) • Large cycles: U$S 3,050 /MW-month • • Large TV: U$S 4,350 /MW-month Large TG: U$S 3,550 /MW-month Base Price for Committed Remunerations • Dec - Feb: U$S 7,000 /MW-month • Jun - Aug: U$S 7,000 /MW-month • Mar - May: U$S 5,500 /MW-month • Sep - Nov: U$S 5,500 /MW-month Payment for energy Generated energy: • Engines Gas: U$S 4 /MWh Liquid: U$S 7 /MWh • Hydroelectric: U$S 3.5 /MWh Operated Energy (linked to rotating power): Thermal and Hy- dro: U$S 1.4 /MWh. Energy values are defined in the Node. First, adjustments were made for the payment decrease for availability and energy of the thermal units. In the case of power availability, the decrease was nearly 10% and for ener- gy it was 20% in relation to the prior resolution. A formula for adjusting availability revenues was also estab- lished based on the historical dispatch of the generating unit. Therefore, units with a dispatch factor in the last mobile year of less than 30%, will be reduced by 30%, if the factor is >70%, there is no effect and if it is between 30% and 70%, the reduction is linear. Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 As far as hydroelectric plants are concerned, the base prices In December 2019, through Resolution 12/2019, the Govern- of the power and energy generated and operated as stipulat- ment decided to repeal Resolution No. 70/2018 of the former ed in Resolution ex SEE No. 19/2017 are maintained, but the Energy Secretariat of the former Ministry of Finance that al- new regulations establish that the hours during which the hy- lowed companies to manage their own fuel supplies, leaving droelectric generator is unavailable for scheduled and agreed Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA) maintenance shall not be considered for the calculation of en- again in charge. ergy payments. Despite the introduced changes, hydroelec- tric power plants did not suffer a significant reduction in their revenue. Continuing with the guidelines established by the SE for CAMMESA in previous years, to bring down gas costs re- Regulation of distribution companies quired for generation, MEGSA held two auctions to purchase The distribution activity is carried out by companies that ob- gas for generation in thermal plants, with satisfactory results. tain concessions. Distribution companies must supply all the The first was held on December 27, 2018. The supplies offered electricity demand in their concession areas according to pric- were interruptible for the period from January to December es (tariffs) and conditions established in the regulation. The 2019. The minimum PIST prices obtained were US$ 2.2107/ concession agreements include penalties for failure to provide MMBTU (summer), US$ 3.2235/MMBTU (winter) and weight- electricity services. The concessions were granted for the ed average prices of US$ 3.0953/MMBTU (summer) and US$ sale of distribution and for retail sales. The concession periods 4.3446/MMBTU (winter). The second auction took place on are divided into “management periods” that permit conces- May 23, 2019. Unlike the previous auction, supply on this oc- sionaires to drop the concession at certain times. casion was strong, with a term ranging from June 2019 to May 2020, inclusive. PIST prices were US$ 2.207/MMBTU Since 2011, there have been two electricity distribution areas and US$ 3.2446/MMBTU for summer and winter respectively, subject to federal concessions. These concessionaires are with a clear gas price decrease in the wellhead from the first Edesur and Edenor, both located in the city of Buenos Aires auction to date. and Greater Buenos Aires. Until 2011, Edelap was also under With regard to the resolution, the contingent liabilities stem- federal jurisdiction. ming from the availability contracts of Enel Costanera´s TV Most of the distribution companies renegotiated their con- units and Combined Cycles that were signed in 2012, Enel tracts in 2005 and 2006, although the tariffs were partially and finally signed an agreement on September 12 with CAMME- temporarily increased until the Integral Tariff Review (RTI) for SA, which essentially confirms Enel’s position, indicating that distribution companies under national jurisdiction was to come there are no outstanding claims and providing the group´s into force. This tariff review process was not accomplished, companies with the benefit of eliminating the risk of fines to and the term for contracts renegotiation was postponed sev- waive part of the future fee for Enel Costanera. eral times through laws enacted by the National Congress, thus postponing the duration of the Economic Emergency. In September 2019, about 50 of the 88 projects approved during the second round of the RenovAr program were vir- The new National Administration changed the paradigm on tually paralyzed mainly because of difficulties on part of the December 16, 2015, when the National Executive Power is- successful bidders to guarantee adequate financing and sued Decree No. 134/2015 declaring the emergency for the warranties. Therefore, on September 11, Sebastián Kind, the National Electricity Sector until December 31, 2017. It also Undersecretary of Renewable Energy and Energy Efficiency, ordered the recently created Ministry of Energy and Mining sent a note to CAMMESA to instruct them to temporarily to develop, release and implement the national program of suspend non-compliance summons with the scheduled dates activities required for the energy generation, transport, and and work progress pursuant to the renewable electricity sup- distribution sectors under national jurisdiction. The purpose of ply contracts. For various reasons, the undersecretary, after these measures was to adjust electricity supply quality and just under 30 days, sent a note fully repealing everything in- security and guarantee that energy utilities services were pro- structed in the first place. vided under adequate technical and economic conditions. 16. Regulatory framework of the electricity industry 121 On September 28, 2016, through Resolution ENRE 0522/2016, category of users for Edenor y Edesur. Similarly, on Septem- the regulator called for a Public Consultation to inform about ber 25, the Ministry of Health through Resolution 1538-E cre- and hear the views on the Tariff Proposals submitted by the ated the “Registry of Electro-dependent patients for Health distribution companies for the next five-year period. This falls Reasons”. Currently, the regulations for operational issues to within the Comprehensive Tariff Review Process (RTI) and pri- guarantee the continuity of supply, and for the compensa- or to defining the rates to be applied by the said concession- tion to distribution companies (Law 27,351 Article 11) are still aires in that five-year period. pending. The Executive Authority will appoint the authority to act upon this law and will assign the budget allocations re- The regulations also set out how to update the distributor’s quired to meet the objectives and liability limits of each of the revenues because of the effect of price variations in the econ- involved parties. omy and all other issues related to service provision quality and the regulation of supply. On November 1, 2017, ENRE published Resolution 525 par- tially establishing the Reconsideration Resource filed by EDE- Once these distribution tariff tables were established, includ- SUR against Resolution ENRE 64/2017, accepting its mea- ing the instruction issued by the MEyM and the provisions of sures regarding the treatment of easements and requesting SEE Resolution No. 20/2017, on seasonal prices effective as of that the company should present, within 60 days, an annual the billing period for February 1, 2017, Edesur’s tariff transition plan for the regularization of easements to be carried out in stage was over. the 2017/2021 period. Additionally, it requested the recogni- tion of CAMMESA expenses, rates and others that might be Pursuant to Article No. 29 of ENRE Resolution No. 64/17 present in the future retroactive adjustments a n d (Physical Follow-up of the Works Plan) on March 20, 2017 Ede- minor modifications to the quality regime and other recogni- sur sent a note ratifying the Investment Plan, informed in a tions. timely manner to be taken into consideration in the RTI (in physical terms). On December 1, through Resolution 602, ENRE approved the new values of Edesur´s Own Cost of Distribution through the On July 26, 2017 ENRE issued Resolution No. 329/2017, de- application of the mechanisms considered in the RTI. Con- fining the procedure for the billing of deferred revenue estab- currently, it issued the tariff structure that reflects seasonal lished by Resolution ENRE No. 64/2017 (Article 4°). It indicates prices (generation and transport) included in the resolution of that “…receivables corresponding to each tariff category, will the Ministry of Electricity 1091/ 2017. It also approved the new be the sum of the monthly accrued revenues, recognized by structure to subsidize social tariffs and the bonus system for tariff category …”; establishing the certainty of payment by consumption savings for residential users. recalculating each year the revenues not recovered deduct- ing the payments from initial credits, and recalculating the Finally, the return to normal conditions in relation to economic remaining installments to cover the balance; and the mecha- emergency and energy emergency situations was declared nism to update the latter “…These charges calculated in such through the decision of the Argentine National Government of way shall be adjusted pursuant to the components of the not to extending the effect of the Electricity Emergency Law CPD, according to the “trigger clause” and in the “Adjustment (in effect until December 31, 2017) and the Economic Emer- Mechanism” …”. gency Law (in effect until January 6, 2018). On May 17, 2017 Law 27.351 on Electro dependent Patients was issued guaranteeing free and continuous electricity sup- On January 31, 2018, ENRE approved the new values effec- ply together with service priority for those clients who, for tive as of February 1, 2018. These tables include a new reduc- health reasons require constant electricity supply and with tion of wholesale price subsidies, lowering them to 90% of adequate tension levels in order to feed the equipment pre- the value of the seasonal price valid in 2017. Moreover, social scribed by a licensed physician and needed to avoid health or tariff subsidies remained unchanged as well as the allowance life risks. On July 26, 2017 through Resolution ENRE 292, this of the stimulation plan stemming from electricity consump- entity established free service and connection cost for this tion reduction. 122 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Regarding the Distribution Added Value, several things were tablish the standards for the technical and safety evaluations Incorporated Into the tariff table including: the third install- that the distributor must make in the distribution network, the ment of the increase of Own Distribution Cost corresponding distributed generation equipment and associated elements. to the RTI , the proportional share of deferred revenue gen- erated by the tranches, the Cost Monitoring Mechanism for On December 4, 2018, Budget Law 27.467 for 2019 was ap- the period and the application of the Efficiency Factor. The last proved. Article No. 124, as part of the approval negotiations, reflected Edesur´s compliance with the Investment Plan com- included the administrative transfer of control and payments mitted in the RTI, each time the forecast value was reached. regarding social tariff subsidies from the National State to On May 31, 2018, the supervisory agency issued Resolution transfer is part of the commitment taken on by the Republic ENRE 0170, approving the sanctioning regime for the separa- of Argentina to reach a balanced budget before debt interests the City of Buenos Aires, effective as of January 1, 2019. This tion of the Investment Plan presented by distribution compa- in 2019. nies at the time of the RTI. In December, several meetings were held to make the trans- On July 19, 2018, the supervisory agency issued Resolution fer of jurisdiction feasible. The meetings involved all the inter- ENRE 0199, increasing the quality control of the current Sec- ested parties: The Ministry of Energy, Edenor, Edesur, CABA tor /Party to the MT Feeder. It penalizes diversions of 2, 3 or and the Province of Buenos Aires. The company also received more times, over the theoretical indicators corresponding to from the authorities the first draft of the transfer. For the trans- each feeder to comply with quality level targets of the RTI. It fer to be valid, the final document must have the consent of all applies when it affects 100 or more Clients, by values of 300 parties involved and must expressly indicate it. kWh and 600 kWh per user. The measure is effective as of se- mester 45 (September 2018-February 2019). Both resolutions In relation with the above, as of January 1, 2019, the authori- led to an increase in quality requirements, forecast at the time ties of the Province of Buenos Aires and the Autonomous City of completing the Comprehensive Tariff Review. of Buenos Aires, accepted to keep the current conditions, for the payments s associated with the Social Tariffs. On July 30, 2018, as part of the Ministry of Energy´s plan to make the tariff increases more gradual, an agreement was The Resolution of the Ministry of Electricity No. 366, published signed between MINE and Edesur where Edesur would re- on December 27, 2018, informed companies of a new supply ceive 50% of the increase of the tariff adjustment mechanism cost. The future Seasonal Prices to be transferred to the tariffs as of August 1, and the remaining 50% in 6 installments as of end users, as part of the changes promoted by the author- of February 1, 2018 while maintaining the Investment Plan ities to reduce subsidies, decreased from approximately 30% agreed in the RTI. Edenor simultaneously signed the same of the subsidy in February to 15% in August 2019. However, commitment. said prices when converted to the local currency, meant an ini- tial 26% increase in February and subsequently a 6% increase As agreed, on August 1, 2018 EMRE applied the first 50% in May and August 2019. (7.925%) of the increase corresponding to the application of the MMC of August 2018 of the Distribution Value Added. To- On February 1, 2019, ENRE resolutions No. 24/2019 and gether with this increase, the entity reinitiated the elimination 26/2019 were published in the Official Journal. The first ap- of the subsidies to wholesale energy prices. The elimination proved the values in the tariff table effective for the billing process had been delayed because of the almost 50% deval- corresponding to meter readings after 00:00 hours of Febru- uation of the Argentine peso. ary 1, 2019, according to the increases in the seasonal price of energy and the reference price of power, established by On November 1, the National Executive Authority issued De- Resolution SGE 366/2019. They also included the increase of cree 986/2018, seeking to reach a total of 1,000 MW of in- the National Electricity Fund (FNEE) from $15.5 Argentinean stalled capacity within a 12-year period. To be authorized for a pesos /MWh to $80 Argentinean pesos /MWh, while the cost connection, the user must comply with several requirements of high-voltage transport (AT) was unchanged. The second established by the Application Authority which would also es- resolution established the new values of the Distribution Add- 16. Regulatory framework of the electricity industry 123 ed Value (VAD), effective as of the same date as the first one, it. On July 7, 2019, the latter approved the agreement issuing establishing that they would apply from March 1, 2019. The Law 6.180, and on July 26, 2019 it was promulgated by the March 2019 VAD increase included the 23.57%, variation of Executive Branch via Decree 263. On October 2, 2019, De- the Cost Variation Monitoring Mechanism (CMM) for the Au- cree No. 1289/2019 was published in the Official Journal of gust 2018 – February 2019 period and the implementation of the Province of Buenos Aires approving the agreement of the the stimulus factor, which reflects an over-consideration of the jurisdiction transfer and other related agreements, as men- investment plan with respect to the pattern that was estab- tioned above. lished in the RTI. Furthermore, it established the recovery of 50% of the VAD increase that was due to have been applied in On 2 May 2019, the new tariff table was published. It con- August 2018 (7.925%), as well as a one-month deferral of this tained the seasonal price adjustment for the May - July 2019 last increase (February to March 2019). The increases granted period established by Resolution No. 14 of the Ministry of as of March 2019 followed the VAD standardization process Renewable Resources and the Electricity Market on April defined by the RTI and published in February 2017. 29, 2019. The resolution set a new differential price for the residential segment to avoid increases. However, to maintain With regard to social tariffs, which ceased to be financed by the schedule of subsidy withdrawals, reported by the National the National State as of January 1, 2019, both the Autono- Government in December 2018, the price of the rest of the mous City of Buenos Aires and the Province of Buenos Aires segments was increased, leading to an average total increase made a commitment to maintaining in force the guidelines of 2%, in addition to a 4% increase in the commercial and of the social tariff regime, also establishing the origin of the industrial segments. Its application is effective for consump- funds. ENRE also instructed Edesur to maintain the social tar- tions as of 00:00 hours of May 1, 2019. iff structure guidelines that were in force until December 31, 2018. On May 10, 2019, the Company signed an Agreement on the Adjustment of Obligations with the Ministry of Energy, acting At the same time, on February 28, 2019 the National State, on behalf of the National State, according to which outstand- the Province of Buenos Aires (the “Province”) and the Auton- ing reciprocal claims arising during the 2006 / January 2017 omous City of Buenos Aires (“CABA”), signed an agreement transition period were terminated. On the one hand, Edesur to start transferring the public electricity distribution service undertakes to: (i) pay penalties to clients within a 3-year pe- granted by the National State in favor of Edesur to the juris- riod adjusted according to active BNA rate; (ii) pay the fines diction of the Province of Buenos Aires and the Autonomous contained in Annex VIII to the 2006 Agreement Law, up to 14 City of Buenos Aires. Edesur has not been party to that agree- six-monthly installments, recalculated up to the date of their ment. cash payment for the average increase registered by the cost of distribution; (iii) in the context of clause 5.4 of the afore- As part of the transfer of the public electricity distribution mentioned Agreement Law, allocate the penalties for periodic service, on May 9, 2019, the National State, CABA and the quality measurements of the transition period, to implement Province signed an Agreement implementing the transfer, no- investments additional to those established in the RTI and tifying Edesur of the agreement which the last signed. The whose aim would be to improve service reliability and safety. Agreement states that the Province and CABA jointly hold the New terms related to the mutual debt with CAMMESA were status of the granting authority of the public service provided also agreed upon, as detailed in footnote 16. On the other by the Company, and that the Company will continue to be hand, the National State promised to compensate the Compa- governed by its concession contract and by the national legal ny´s commercial debts with CAMMESA for energy purchases and regulatory regulations as may apply. in the MEM and incurred before the entry into force of ENRE Furthermore, this agreement created a new regulator: the tination was social spending incurred in 2017 and 2018 and “Ente Metropolitano Regulador del Servicio Eléctrico” (EMSE related to the consumption of settlements with community by its Spanish acronym), a bipartite entity made up by the meters and generated from July 2017 to December, 31 2018, Province and CABA. The agreement became valid after the in the proportion provided for in the New Framework Agree- Provincial Executive Branch and the CABA Legislature ratified ment and its successive extensions, and to the differences resolution No. 1/2016, and National State debts whose des- 124 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 stemming from capping invoices of users who benefitted No. 263 and the Supplementary Resolution No. 161 of June by social tariffs. Additionally, the National State would waive 30, 2019 by the Autonomous City of Buenos Aires ratified, on sanctions whose destination is Public Administration. The ef- part of both Provinces, what was established in the so-called fects of this agreement are set out in the “Other net operating “Fiscal Consensus 2018” and Article 124 of Law No. 27.469. income (outgoings)” line of the company´s income statement The above-mentioned agreements finalize the transfer of the of 12,183, with its corresponding impact in the “Income Tax” service by this Company from the National State jurisdiction line of approximately 3,200. to the jurisdictions of the Province of Buenos Aires and the Autonomous City of Buenos Aires. On 19 September 2019 Edesur signed a Tariff Agreement with the National State where the latter instructs ENRE to, during On December 10, 2019, Dr. Alberto Fernández took over as the six-month period starting on August 1, 2019, maintain in the new President of the Republic of Argentina and Dr. Cris- force the tariff tables prior to the beginning of that period for tina Fernández de Kirchner as Vice-President. On December all tariff categories, which means that EDESUR will continue 12, the ordinary assembly of CAMMESA appointed Esteban to receive the compensation included therein due from prior Kiper as its new general manager. Mr. Kiper had previously recoveries and disputes (ENRE resolution No. 26/19). The dif- been vice-president of CAMMESA between 2014 and 2015, ference in the VAD and the difference in seasonal prices, the during the government of Cristina Kirchner and under the eco- increase of which was ratified by the Resolution of the Minis- nomic management of the then Minister Axel Kicillof (recently try of Renewable Resources and the Electricity Market No. 26 nominated as Governor of the Province of Buenos Aires). And issued on September 3, 2019, for the period from the August by Decree No. 19 of December 19, 2019, the administrative 1, 2019 to December 31, 2019, will be recovered in 7 monthly structures of the National State were modified, nominating installments as of January 1, 2020. Additionally, Edesur un- Sergio Lanziani as the new Minister of Electricity under the dertakes to maintain the quality of service and agrees to post- Ministry of Productive Development led by Matías Kulfas. and pone the payments of any sanctions until March 1, 2020 at Osvaldo Arrúa as Undersecretary of Electricity. their original value plus the adjustments corresponding to the time of payment, in 6 monthly installments. Finally, on Friday, December 20, 2019, the National Congress approved Law No. 27.541 denominated the Law on SOCIAL On September 20, 2019, the National State, as a signatory SOLIDARITY AND PRODUCTIVE REACTIVATION WITHIN on the one hand, and Edesur and Edenor, on the other hand, THE PUBLIC EMERGENCY FRAMEWORK declaring a state subscribed the Extension Agreement of the New Framework of public emergency in economic, financial, fiscal, administra- Agreement, extending it from January 1, 2019 until May 31, tive, planning, tariff, energy, health and social matters until De- 2019. Under this agreement, the National State undertakes cember 31, 2020. The law authorizes the National Executive to pay the corresponding amounts and the percentage of the Branch in article 5 to maintain the electricity and gas rates of economic contribution for the supply of electricity to settle- the federal jurisdiction and to initiate a renegotiation process ments in the Province of Buenos Aires. Additionally, Edenor of the still valid Comprehensive Tariff Review in an extraordi- assigns and Edesur accepts the claims recognized by this nary capacity and for a maximum period of 180 days tend- agreement, and the National State undertakes to instruct ing to a reduction of the current household, commercial and CAMMESA to compensate for the aforementioned amounts industrial tariffs for 2020. And authorizes ENRE to intervene due for Edesur´s mutual debts with CAMMESA. The effects (Article 6) as it will maintain its scope of competence for the of this agreement are set out in the “Service Revenue” line duration of the emergency by suspending the validity of the of the income statement of 209. As of the date of these con- second paragraph of Article 124 of Law No. 27.467 (Article 7). densed interim financial statements, the transfer of Edenor’s debts to Edesur, as well as the CAMMESA compensation are On December 27, 2019, ENRE, under Article 7 of Law No. still pending. 27.541, instructed EDESUR not to amend the current Tariff Table even though it no longer belongs to federal jurisdiction. Furthermore, Regulatory Decree No. 1289 issued on Octo- ber 1, 2019 by the Province of Buenos Aires and the previ- ous sanctions and the publication of Law No. 6180, Decree 16. Regulatory framework of the electricity industry 125 Regulation of Transmission Transmission was designed according to the principles estab- lished by Law 24.065, adapting the activities to the gener- al criteria contained in the concession awarded to Transener S.A., in Decree 2.473/92. For technological reasons, the trans- mission business is related to economies of scale that do not permit competition, therefore it is a monopoly and is subject to a considerable regulation. Just like it did in the distribution segment, in 2016 ENRE car- ried out the Integral Tariff Reviews for transmission compa- nies under the national jurisdiction (Transener S.A., Distrocuyo S.A., Transco S.A., el Ente Provincial de Energía de Neuquén, Transba S.A., Transnea S.A., Transnoa S.A., Transpa S.A.) for the period comprised between 2017 and December 31, 2021 which came into force in 2017. In 2018, ENRE implemented the following tariff reviews: Remuneration of Independent Transporters: • On July 3, 2018 ENRE asked Yacylec to provide informa- tion related to its facilities to carry out the Integral Tariff Review (RTI). Subsequently, an extension was granted until mid-October. • In line with the last tariff review carried out for the Trans- port sector: > The regulator´s technical bodies would carry out the • In September 2019, a letter of complaint was sent to the ENRE to complete the tariff review procedure and estab- lish, as soon as possible, the company’s remuneration for the operation and maintenance of the facilities they over- see. Remuneration of International Transporters: • In a NOTE issued on August 24, 2018, the Undersecre- tary of Electricity instructed CAMMESA to acknowledge, based on the August Economic Transactions TRANSITO- RIA, equal to 70% of the part corresponding to TRAN- SENER, under the concept of Transport Capacity of its facilities (operation and maintenance) • Beginning of RTI – Procedure to Define the Remunera- tion of International Carrier. Through NOTE issued on Au- gust 22, 2018, ENRE requested the information required to establish the remuneration, starting from January 1, 2019. • Reports were sent for the process to establish the remu- neration of International Carriers. • In September 2019, a letter of complaint was sent to the ENRE to complete the tariff review procedure and es- tablish as soon as possible the company’s remuneration for the operation and maintenance of the facilities they oversee. Environmental Regulation tasks. Electricity installations are subject to federal and local environ- > The methodology used was to be cash flows, mental laws and regulations, including Law No. 24.051, or the > The real profitability rate after taxes was 7.7%, Hazardous Waste Law, and other regulations. > The tariff period was from February 1, 2017 to Janu- ary 31, 2021. The electricity sector must inform and monitor certain emis- > The proposal of monetary values as of December 31, sion standards. If companies do not comply with these re- 2016. quirements the government may set penalties, such as the • The presentation must be accompanied by the opinion of suspension of operations which, in the case of public ser- the National Carrier. Reports were sent to establish the vices, might lead to the cancellation of concessions. payment for Independent Carriers. • In May 2019, a request was received for information ex- Law No. 26.190, approved in 2007, declared a matter of na- tension regarding the ENRE investment plan presented tional interest the use of renewable energy sources to pro- by Yacylec in the RTI duce electricity and set the target of market participation for • To respond, the fundamentals of investments were add- renewable energies in a 10-year period at 8%. ed • In August 2019, information additional to the investment On October 21, 2015, Law 27.191 on Renewable Energies in plan presented in the RTI was requested. Argentina was published in the Official Journal, modifying Law 126 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 No. 26.190 in force at the time. The new regulation postponed Transmission works under monopoly conditions. Tariffs are till December 31, 2017, the 8% renewable energies market based on a tender process promoted by the Government with participation target in the national demand establishing, as a the participation of transmission agents, who offer the best second stage objective, a 20% participation by 2025, setting bids at specific auctions for transmission services and whose halfway goals of 12%, 16%, and 18% for the end of 2019, companies sign transmission concession contracts to imple- 2021, and 2023. The Law creates a Fiduciary Fund (FODER) ment the lines with a guaranteed annual income. The trans- to finance projects, grant tax benefits to renewable energy mission charge is fixed, and the transmission revenue does projects, and establish the non-application of specific levies, not depend on the amount of electricity transmitted. national, regional and municipal royalties, until December 31, 2025. Clients categorized as Large Users (>300 Kw) should Distribution is a public service that also works under monop- individually meet the renewables participation targets estab- oly conditions and is provided by companies that have been lishing that the price of these contracts cannot exceed 113 awarded concessions. Distribution companies in the Brazilian US$/ MWh and setting penalties for those who do not meet system may not: (i) develop activities related to electricity these objectives. The law is still pending. generation or transmission; (ii) sell electricity to unregulated Brazil Industry Structure clients, except to those within their concession area and un- der the same conditions and tariffs applicable to their clients from the Regulated Market; (iii) keep, directly or indirectly, eq- uity interest in any other company, corporation or partnership; or (iv) develop activities that are not related to their respective concessions, except those permitted by law or in the rele- vant concession agreement. Generation companies are not authorized to have equity interests above 10% in distribution The Brazilian electricity industry is organized as part of a large companies. interconnected system, the SIN (Sistema Interligado Nacional in Portuguese) which includes most of the Brazilian regions and several other smaller isolated systems. Energy genera- tion, transmission, distribution, and commercialization are ac- tivities legally separated in Brazil. The industry is regulated by the Federal Government through the Ministry of Mines and Energy (MME) and by the National Electric Energy Agency (ANEEL). The regulated price of energy is based on average tender pric- es, with independent tender processes for “existing” ener- gy and “new” energy. The latter include long-term contracts where new generation projects must cover the growth of demand planned by distributors. The “existing” energy ten- ders consider shorter contracting periods and seek to meet the contractual requirements of distributors that arise from the expiration of previous contracts. Each tender process is centrally coordinated, the authority defines maximum prices and, as a result, contracts are signed where all the distributors participating in the process buy in proportion of each of the generation offers. The price at which spot market transactions are settled is called the Difference Settlement Price (PLD), a mathematical calculation model limited on both side by the highest and lowest values. The unregulated market includes the sale of electricity be- tween generation concessionaires, independent producers, self-producers, electricity traders, electricity importers, un- regulated consumers, and special clients. It also includes contracts between generators and distributors existing un- der the old regulatory framework, until their expiration. New contracts must be adjusted to the new regulatory framework. According to the specifications established by Law 9.427/96, unregulated consumers in Brazil are those who: (i) require a capacity of at least 3,000 kW and choose to hire the supply of energy directly with generators or energy traders; or (ii) re- quire a capacity of at least 500 kW and choose to the supply of energy directly with generators or renewable sources of up to 50MW of installed capacity. According to norm No. 514/2018 issued by the Ministry of Mines and Energy, the limit for energy purchases from con- ventional sources will change to 2,500 kW as of July 1, 2019, and to 2,000 kW as of January 1, 2020. On 16 December 2019, the MME published Norm No. 465/2019 which modified Norm No. 514/2018 by changing the limits for: 1500 kW, as of 1 January 2021; 1000 kW, as of 1 January 2022; 500 kW, as of January 1, 2023. 16. Regulatory framework of the electricity industry 127 The Brazilian system is coordinated by the Brazilian Electrical maximum PLD considers variable operation costs of thermo- System Operator (ONS) and is divided into four sub-systems: electric plants. To calculate the minimum PLD, the operation Southeast/Center-West, South, Northeast and North. In ad- and maintenance costs of hydroelectric power plants are con- dition to the Brazilian system there are also some isolated sidered. systems, in other words, systems that are not part of the Bra- zilian system and are generally located in the northern and In relation to market regulation, 100% of the energy demand- northeastern regions of Brazil, and have coal or oil fired ther- ed by distribution companies must be covered through reg- mal power plants as their unique source of energy. ulated contract in the current fully regulated scenario. This Sector modernization The Government is carrying out a sector reform and modern- ization currently in progress under Draft Law No. 232/2016 and 1.917/2015, proposing: (i) end of subsidies for consumers that use renewable energy and the development of the car- bon market; (ii) improvement of the short-term pricing mech- anism, instead of a simple mathematical model; (iii) allocation of system expansion costs to all consumers, both free and captive; (iv) guarantee the liberalization of the electricity mar- ket by removing barriers to free market access; others. Regulation of Generation Companies Generation Agents, who can be public generation concession- aires, IPPs or self-producers, as well as Trading Agents, can sell electricity in two contract environments. First, the Regulated Contract Environment (ACR in Portuguese), where distribu- tion companies operate, in which energy is purchased within the framework of the tender process coordinated by ANEEL; and the other known as the Free Contract Environment (ACL in Portuguese) in which energy is purchased directly between suppliers and their clients. Regardless of whether it is the ACR or ACL, the generators´ sales contracts are registered in the Câmara de Comercialização de Energia Elétrica (CCEE) and form part of the base to quantify and establish difference adjustments in the short-term market. This way, generation companies may sell energy through regulated contracts or in the free market and trade their surplus/ deficit in the spot market, at Price Differences Settlement (PLD in Portuguese). Each year ANEEL validates, by resolution, the minimum and maximum values of the PLD, so that the maximum and min- imum PLD values for 2019 are set at $559.75 reais per MWh and $39.68 reais per MWh, respectively. The calculation of the coverage may have physical guarantees of generation power plants or any other power plant, through an energy or capac- ity purchase contract. The current regulation, among other is- sues, specifies that when these limits are not met, agents are subject to financial penalties. The regulated purchase price for the end-user tariffs setting process is based on the average tender prices, with indepen- dent tendering processes of “new” energy and “existing” energy, carried out to meet the distributors´ market demand. There are also specific tenders for “reserve energy”, which do not make up the average energy price in the ACR, as they are intended to raise the security of energy supply in the SIN, with costs transferred to all consumers, of the ACR and ACL. Additionally, in 2015 and 2017, pursuant to Law No. 12.783/2013, new tender offers for the hydroelectric power plants that have not increased their concession contracts took place. The ten- ders permit part of the energy to be sold through the install- ments model (with a minimum of 70%) and the other part in the market. In the 2015 tender, the winner was the company that offered the lowest tariff for the operation of the power plant, while in the 2017 tender, the winning company was one that paid the highest price for the concession. In the energy tenders that provide for long-term contracts (15- 20-25 years for thermal plants, 30 for hydroelectric plants, 20 for solar and wind) generation projects must cover the de- mand growths expected by distributors. There are also energy tenders that consider shorter contract deadlines and seek to meet the procurement needs of distributors arising from the expiration of previous contracts, so that energy can be sold at lower prices, depending on market conditions. Each tender process is centrally coordinated, the MME defines maximum prices and, as a result, contracts are signed where all distribu- tors involved in the process purchase in proportion from each of the generation bidders. 128 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 l i s g n d o h e r a h s f o Regarding the energy auctions under the regulated regime, Asset through the extent of their current concession contracts to recompose the energy offer, the following tenders were in their balance sheets. The Regulatory Asset should equal the held until December 2019, with energy and price allocated as effects related to the risks transferred to the MRE from 2013 follows: to 2018. As a counterpart, they waive legal proceedings and debt payment in the short-term market. On June 28, 2019, there was an A-4 auction for wind, solar, hydroelectric, PCH, CGH and Biomass sources, with the fol- This agreement is fundamental for the development of the lowing result: 81.10 MW-medium, allocated to Hydro (20.2%), Brazilian energy sector, mainly because it would return liquid- Biomass 5.3%), Wind (23.7%) Solar (50.7%) and average ity to the spot market. It will also be important to discuss price of $ 137.50 /140.82 reais MWh. structural solutions for the “MRE” thus guaranteeing its sus- tainability in the future. In December 2019 ANEEL approved On October 18, 2019, there was a new auction (A-6): for the a Public Consultation to improve the mechanism and agents same sources as the A-4 auction, with the addition of coal may submit contributions until February 17, 2020. ANEEL also and gas-powered thermoelectric plants, where projects with approved the Regulatory Agenda for 2020/2021 period which more than 71GW of power (about 80% of the total registered contains improvements in the regulation of the MRE as a pri- projects) were technically enabled, with the following result: ority activity. It is crucial to guarantee that the risks involved 1155.20 MW-medium, allocated to Hydro (14.94%), Thermo in the mechanism are strictly related to hydrology, preserving 32.35%), Wind (34.92%) Solar (17.79%) and average price its initial objective. $171.84 reais MWh. The Government is carrying out the sector´s reform and mod- ernization currently in progress under Draft Law No. 232/2016 and 1.917/2015, proposing: (i) end of subsidies for consum- Regulation of Distribution Companies y r a m m u S . 9 1 ers that use renewable energy and the development of the In the regulated market, distribution companies purchase carbon market; (ii) improvement of the short-term pricing electricity through tenders supervised by ANEEL and orga- mechanism, instead of a simple mathematical model; (iii) allo- nized by CCEE. Distributors must purchase electricity in public cation of system expansion costs to all consumers, both free tenders. The Government may also call for special tenders for and captive; (iv) guarantee the liberalization of the electricity renewable sources of energy (biomass, mini hydro, solar and market by removing barriers to free market access; others. wind power plants). ANEEL and CCEE hold annual tenders. For the reform to succeed, it is essential to reestablish spot The recruitment system is multilateral, with generating com- market liquidity which has been damaged because of legal panies that sign contracts with all the distributors that attend disputes, and the hydrological risk. the tenders. Over the years, an important mechanism for managing hy- The Concessions Law establishes three types of tariff reviews drological risks (“MRE”) was distorted because of several or adjustments for end consumers: The Tariff Repositioning In- government measures, which transferred risks to generation dex (IRT), which involves an annual tariff adjustment because companies. Because of the lack of regulatory solutions, gen- of inflation; The Ordinary Tariff Review (RTO) to be carried out erators had to take the issue to courts thus avoiding large every four or five years according to each concession con- payments in the short-term market. In 2015, ANEEL offered tract, and the Extraordinary Tariff Review (RTE), carried out a solution to generators with contracts in the captive market. when a relevant event occurs in the sector that significantly However, the proposed solution was not viable for generators affects the value of the tariff. This way, the Law guarantees an with contracts in the free market, so the dispute continued in economic and financial balance for companies should a sub- courts, which damaged the spot market liquidity by approxi- stantial change in their operating costs take place. Should the mately $ 7 billion reais. cost of components for Parcel A, such as energy purchases or taxes, increase significantly within the period of two annual The previous government designed an agreement (including a tariff adjustments, the concessionaire may submit a formal draft bill which is currently in the House of Representatives), request to ANEEL for these costs to be transferred to the end according to which generators would recognize a Regulatory consumer. s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 16. Regulatory framework of the electricity industry 129 All tariff reviews and repositioning processes are approved by concessionaire so as not to allow tariff gains/losses due to ANEEL. the variation of Parcel A costs. ANEEL evaluates the tariffs in response to changes in energy The Securities Compensation Account (“CVA” a Portuguese costs and market conditions in the tariff reviews (RTO and acronym) helps to maintain market stability and permits to RTE). When adjusting distribution tariffs, ANEEL divides the create deferred costs, which is compensated by tariff adjust- Annual Reference Value, that is to say, the costs of the distri- ments based on the necessary rates to compensate for the bution companies into: (i) costs that cannot be managed by deficits from the previous year. the distributor, also called “Parcel A”, and (ii) costs that can be managed by the distributor or “Parcel B”, the latter corre- In December 2014, the Brazilian distributors, including the sponding to what we know as Distribution Added Value (VAD). Enel Américas group, signed an addendum to the concession The ordinary tariff review considers the entire tariff setting ers) to be part of the compensable assets at the end of the structure of the company, including the service provision concession, should it not be possible to compensate through costs, energy purchase costs as well as the return for the tariffs for the rest of the duration of the contract. This way, in investor. Under its concession contracts, Enel Distribución accordance with the NIIF rules, the accounting of these regu- contract that allows these regulatory assets (CVA’s and oth- Ceará and Enel Distribución São Paulo are subject to tariff re- latory assets/ liabilities is permitted. views every four years, and Enel Distribución Río and Enel Distribución Goiás every five years. The basis of the assets To cover the energy surcharge caused by the 2014 drought, to calculate the return allowed to the investor is the replace- the Government created the ACR account through bank loans ment market value, depreciated over its useful life from an for the tariff to be paid within two years. In 2014, the distrib- accounting standpoint, and the rate of return on the distribu- utors used an approximate amount of $ 18 billion reais from tion asset is based on the Weighted Average Capital Cost, or the CR account, however, it was not enough to cover the en- WACC for a model company. The WACC is reviewed in each tire deficit. A new loan for the ACR account was approved in tariff cycle. The WACC value for distribution currently in effect March 2015 to cover the deficits corresponding to November is at 12.26% real pre-tax rate. and December of 2014. An extension of the repayment term for all loans was also approved, which should now be paid The current regulatory framework allows a direct return on in 54 months as of November 2015. The payments from the investments via the Remuneration Base, under the criteria for ACR account finished in September 2019 and the balance was monitoring quality indices and investment prudence, through accredited to distributors in October 2019. control in each tariff cycle following the criteria of Regulatory Compliance of Assets. In this area, Enel Distribución São Pau- Due to the mismatches between the costs recognized in the lo is a benchmarking company in the Electricity Sector - recog- tariffs and the real costs outside the management of the dis- nized by the industry and by the Brazilian regulator. Throughout tributor, and intensified by the implicit costs related to the 2019, Enel Brasil led, through a project that accommodated drought, in January 2015, ANEEL began to implement a sys- 114 collaborators specialized in assets, the integration of best tem (known as Tariff Banners) of additional monthly charges practices in asset management with a regulatory approach. over the consumer rate provided that the marginal cost of the The regulatory mechanisms guarantee the creation of regu- ulator aims to give the consumer an economic signal of gen- latory assets or liabilities, whose tariff recompositing takes eration costs in the following month, providing the distributor place in subsequent tariff adjustments (March 15 for Enel Dis- with an advance payment (by law) that the distributor would system reaches levels above the regulatory standard. The reg- tribución Río, April 22 for Enel Distribución Ceará, July 4 for only collect it in next tariff event. Enel Distribucion São Paulo and October 22 for Enel Distri- bución Goiás). This mechanism has existed since 2001 and is This mechanism, as described below, consists of four banner called the Parcel A Securities Compensation Account (CVA). levels: green, yellow, red level 1 and red level 2. Its objective is to keep constant operating margins for the 130 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Values Applied to the 2019 Tariffs Public Water Sanitation Service and Public Irrigation Service, to be reduced from January 2019, at an annual rate of 20% in relation to the initial value, until the installment is zero. Addi- tionally, the Decree forbids the cumulative application of dis- Until May 2019, the tariff banners were: counts included by the CDE (sector charge), prevailing the one > Green tariff (Favorable conditions for energy generation): that offers the greater benefit to the consumer. Without tariff surcharge. > Yellow tariff (Less favorable generation conditions): $1.00 For the Enel Group the impact of Decree 9.642/18 tends to reais per 100 (kWh) be neutral. Therefore, the elimination of the aforementioned > Red Tariff - level 1 (More expensive generation condi- discounts granted to consumers, will compensate the percep- tions): $3.00 reais per 100 (kWh) tion of higher tariffs each year until the end of the discount > Red Tariff - level 2 (More expensive generation condi- periods. tions): $ 5.00 reais per100 (kWh) From June to October 2018, the tariff values were: sumers, will also be reduced each year due to subsidy reduc- Additionally, the CDE, collected and transferred to end con- > Green tariff (Favorable conditions for energy generation): the weight of the charges in the tariffs for end consumers. The Without tariff surcharge. publication of the decree will not affect the subsidies granted > Yellow tariff (Less favorable generation conditions): $1.5 for renewable sources. tion. This is positive news for the sector because it will reduce reais per 100 (kWh) > Red Tariff - level 1 (More expensive generation condi- Finally, in December 2019, ANEEL called for a Public Consul- tions): $ 4.00 reais per 100 (kWh) tation to discuss the application of the binomial tariff for ev- > Red Tariff - level 2 (More expensive generation condi- ery low voltage client. This is a disruptive regulatory decision, tions): $ 6.00 reais per100 (kWh) because it may change the Brazilian tariff framework for low Since November 2019, the tariff values are: tion of distribution businesses but protects the revenues of voltage clients. This tariff modality would affect the genera- the distribution business. The Public Consultation will be open > Green tariff (Favorable conditions for energy generation): until March 18, 2019. Without tariff surcharge. > Yellow tariff (Less favorable generation conditions): $1.343 reais per 100 (kWh) > Red Tariff - level 1 (More expensive generation condi- tions): $ 4.169 reais per 100 (kWh) > Red Tariff - level 2 (More expensive generation condi- tions): $ 6.242 reais per100 (kWh) In summary, with this mechanism the generation cost that is currently transferred to the client only once a year (when the annual tariff rate adjusted) will have a monthly variation, therefore the client will be able to manage better his electric- ity consumption. In other words, consumers will be aware of a lower tariff readjustment since they are already paying a higher value during the month. Regulation in Transmission Any electricity market agent that produces or consumes en- ergy is authorized to use the Basic Network. Free market con- sumers also have this right, subject to compliance with certain technical and legal requirements. Free access is guaranteed by law and supervised by ANEEL. The operation and management of the Basic Network is the responsibility of the ONS, which is also responsible for man- aging energy dispatch from the plants in optimum conditions, involving the use of the interconnected system, reservoirs and thermal plants. On December 27, 2018 Decree 9,642 was issued defining the discounts granted to consumers from rural areas, as well as the following subclasses Rural Electrification Cooperative, On April 5, 2011, Portuarias Ministeriales 210/2011 and 211/2011 were published in the Official Journal, which equate the two in- terconnecting lines of the Compañía de Interconexión Energéti- 16. Regulatory framework of the electricity industry 131 ca, S.A. (CIEN) with public service concessions, with payments On 20 March 2019, the regulator applied an extraordinary re- according to regulated tolls. The Annual Permitted Payment view for Enel Rio, due to the ANEEL board decision which (hereinafter “RAP” in its Spanish acronym) is adjusted annually authorized the Electric Power Marketing Chamber (CCEE) in June, by the National Broad Consumer Price Index (herein- to conclude the agreement with the group of eight banks to after “IPCA” in its Spanish acronym) with tariff reviews every anticipate the payment of the so-called Conta-ACR CDE for four years. A Gross Payment Base of $ $1,760 million reais was September 2019. established (US $885 million) and a Net Base of $ 1,160 million reais (US$ 585 million). In 2012 ANEEL authorized to imple- This decision was reflected in Enel Distribution Rio’s tariffs, ment reinforcements in the transmission facilities, recognizing whose average effect was 7.59% (before it was 9.70%), while an additional investment of $47 million reais (US$ 23 million), for low-voltage consumers it was 7.49% (before it was 9.72%) in the Payment Base. The applicable payment rate was defined and for High Voltage Clients the approved index was 7.89% pursuant to the current regulation at 7.24% (real after tax). (before it was 9.65%) The 6.81% tariff review was put forward to a Public Consulta- tion which is still open. The authorization period is until June Enel Distribución Ceará 2020, for Line 1, and for Line 2, until July 2022, with compen- sation for unpaid investments. Enel CIEN is still talking to the On 18 April 2019, ANEEL approved the result of Enel Distribu- Federal Government about the direction to be given to the ción Ceará’s fifth periodic tariff review, effective as of April 22, concession after its expiry. Line 1 will most likely run until July 2019, consolidated through contributions made at the Public 2022 and, after a tender process (likely to be held on July 21 or Consultation No. 004/19. December 21) the awardee will start operating the assets as of July 2022 (Compensation of non-depreciated assets to Enel is The result led to an 8.22% average effect perceived by con- guaranteed). However, the Government’s final decision is un- sumers, with 97.87% for consumers connected with High resolved and the subject matter of the point above is only one Voltage - HV and 8.35% for those connected with Low Volt- possibility to be concluded at different meetings with MME and age– LV. ANEEL. 2019 Adjustments Enel Distribución Río On March 13, 2019, ANEEL standardized the provisional result of the Fourth Regular Tariff review for Enel Distribución Río, from March 15, 2019. The result led to a 9.7% average effect perceived by consum- ers, with 9.65% for consumers connected with High Voltage - HV and 9.72% for those connected with Low Voltage– LV. ANEEL approved the provisional points of the 2018 Review in the adjustment: there was a final approval of (i) the Payment Base and (ii) the limits of Regulatory Losses and collectability. The process established the Gross Payment Base at $ 10,022 million reais and the Net Payment Base at $ 6,164 million The process established the Gross Payment Base at $ 7,023 million reais and the Net Payment Base at $ 4,242 million reais. Enel Distribución São Paulo On July 2, 2019, ANEEL approved the result of Enel Distri- bución São Paulo´s fifth periodic tariff review, effective as of July 4, 2019, consolidated through contributions made at the Public Consultation No. 011/19. The result led to a 7.03% average effect perceived by consum- ers, with 8.46% for consumers connected with High Voltage - HV and 6.48% for those connected with Low Voltage– LV. The process established the Gross Payment Base at $ 15,854 million reais and the Net Payment Base at $ 8,574 million reais. reais. 132 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Enel Distribución Goiás On October 22, 2019, ANEEL standardized the result of the annual Tariff Review for Enel Distribución Goiás, valid as of October 22, 2019. The result led to an average effect of -3.90% perceived by consumers and -2.89% for consumers connected with High Voltage - HV and -4.32% for those connected with Low Volt- Transmission and distribution companies must obtain envi- ronmental approval from environmental regulatory authori- ties. Thermal generation plants, in addition to environmental permits, also require a water use concession. Solar and wind power projects have specific licensing rules and licensing competition in Brazil is decentralized, where the responsibility for the license can be assigned to the Union, state, or mu- nicipality according to the licensing criterion. License types are granted according to location, installation, extension, and age– BT. operation. Note: In 2018, during the Tariff Review process, ANEEL ap- proved the Gross Payment Base at $5.6 billion reais and the Net Payment Base at $2.961 billion. Colombia Enel CIEN Industry structure Resolution No. 2408 of June 26, 2018, established the annual permitted payment (RAP) for public service concessionaires in Colombia’s electricity sector was structurally reformed by electricity transmission, in relation to the availability of trans- Home Public Services Law 142 and Electricity Law 143, both mission facilities under their responsibility. of 1994. According to the latter, different economic operators, The Enel Cien values are: Garabi I (RAP: 1780,711,108.53 reais sector and are free to carry out their functions in the context and PA adjusted: 6,391,867.71 reais) and Garabi II (RAP: $ of free market competition. To operate or initiate projects, en- 187,722,462.73 reais and PA adjusted: $ - 6,662,275.47). vironmental, health and water rights permits, as well as those public, private, or mixed, may participate in the activities of the of a municipal nature, must be obtained from the competent The above results are provisional given that ANEEL postponed authorities. the tender of the tariff review till next year as the methodolo- gy has not been defined yet. Therefore, any difference shall be The Ministry of Mines and Energy (MME) defines the Govern- compensated kin the next tariff process. ment’s policies for the energy sector. Other government enti- Environmental regulation The Brazilian Constitution permits both the Federal Govern- ment and the state and local governments to issue laws aimed at protecting the environment. Most environmental regulations in Brazil are issued at the federal and state level. As for environmental permits, these are administrative proce- dures by which the Government, through the competent envi- ronmental agency, grants licenses to companies and activities that use natural resources that might be potentially polluting and/or harmful to the environment. ties that play an important role in the electricity industry include: Superintendence of Home Public Services (SSPD), an entity that monitors and audits all the public services companies; the Energy and Gas Regulation Commission (CREG), which regu- lates electricity, natural gas, liquefied petroleum gas (LPG), and liquid fuels; the Energy Mining Planning Unit (UPME), which is responsible for the planning and expansion of the network and the Superintendence of Industry and Commerce (SIC) which is the national authority for competition protection issues. The CREG can issue regulations that govern technical and com- mercial operations as well as tariffs for regulated activities. The main CERG functions are to establish the conditions for the progressive liberalization of the electricity sector towards an open and competitive market, approve charges for networks 16. Regulatory framework of the electricity industry 133 and transmission and distribution costs for the supply of regu- Distribution is defined as the operation of local distribution net- lated clients, establish methodologies to calculate and set max- works and regional transmission. Any client can have access imum tariffs for the supply of the regulated market, establish to a distribution network in which he pays a connection fee. standards for the planning and coordination of the system´s op- Distribution companies, or network operators, are responsible erations, establish technical requirements for quality, reliability for planning, investing in, operating, and maintaining electricity and security of supply, and to protect clients´ rights. grids with voltages below 220 KV. The Colombian Wholesale Energy Market is based on a com- petitive market model and operates under open access prin- ciples. The operation and administration of the MEM is cen- tralized in a Market Operator made up of the Administrator of the Trade Exchange System (ASIC) and the National Dispatch Center (CND). Regulation of generation companies The Colombian State can participate in the development and implementation of generation projects on the same footing as The generation sector is organized on a competitive basis. the private sector. Law 142 of 1994 established that the public The electricity transactions in the MEM are carried out under services legal regime and Law 143 of 1994 focused, partic- the modalities of the energy spot market (short term or dai- ularly, on the electric power service, established the types ly market); bilateral contracts (long term market) and reliability of entities authorized to provide residential public services charge. Generation companies must participate in the central through the creation of the “Public Service Company” as the dispatch with all their generation plants or units connected to fundamental driver of this provision. the Colombian system whose capacities are equal to 20 MW or higher (plants with capacities between 10 and 20 MW can par- In the short-term energy market, the CND receives every day ticipate optionally). The generation companies that participate the price offers and the declaration of commercial availability in the central dispatch must declare the commercial availability for each hour of the following day, of all the generators partici- of their generation resources and offer the price at which they pating in the wholesale market. Based on this information, the wish to sell it. The National Dispatch Center (CND) centralizes CND carries out an economic dispatch through an optimized all the energy dispatch pursuant to economic optimization cri- procedure for the next 24-hour period of the following day, teria and respecting the electrical and operational restrictions taking into account the electrical and operation restrictions of of the system. the system, as well as other conditions necessary to meet the expected energy demand for the next day in a safe, reliable The sale of energy consists of intermediating between the play- and economic manner from the cost point of view. Unlike the ers that provide electricity generation, transmission and distri- rest of the countries where dispatch is centralized based on bution services, and the users of these services. Commercial- variable production costs, in Colombia, dispatch is based on ization can be carried out with or without other generation or prices offered by the agents. distribution activities. The energy exchange is an adjustment market where the ex- Transmission operates under monopoly conditions with a guar- cess energy is sold or bought against generators´ and retail- anteed fixed annual income, which is established by the new ers´ real energy demand. The energy exchange, the ASIC, es- replacement value of networks and equipment and by the val- tablishes a spot price for energy on the energy exchange after ue resulting from the bidding processes that add new projects the day of the operation via an optimized procedure for the 24- for the expansion of the National Transmission System (STN). hour period called the ideal dispatch, which implies an infinite This value is proportionately divided among all the retailers in transmission capacity in the network and takes into account the market according to their energy demands. The National the initial conditions of the operation, thus establishing which Interconnected System (SIN) supplies 98% of the national de- generators had to be dispatched to satisfy the real demand. mand. Non-interconnected systems serve isolated areas of the The price paid to all generators that are dispatched according country. 134 to price merit is the price of the most expensive generator dispatched every hour under the ideal dispatch. Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Cost differences between the ‘economic dispatch’ and the voirs, thus permitting to use thermal resources necessary to ‘ideal dispatch’ are called ‘restriction costs’. To start with, the secure the reliability of the system. cost of each restriction is allocated to the agent responsible for the restriction and when it is not possible to identify an In 2019, regulatory management related to the electricity agent it is distributed proportionally to all Colombian system market and natural gas evolved around some institutional and traders according to their energy demand, and these costs are market facts, such as the incorporation of unconventional en- transferred to end clients. ergy sources into the energy matrix, the development of the Electricaribe sales process, the legislative agenda with the Generators connected to the Colombian system can also par- analysis, discussion and approval of the 2018-2022National ticipate in the “Reliability charge”, which is a mechanism that Development Plan, progress of the Electricity Sector Transfor- aims to encourage investment in the generating park to guar- mation Mission pushed forward by the Ministry of Mines and antee that the country’s demand is met in the long term. The Energy and, in general , progress of the agendas proposed in charge consists of assigning Firm Energy Obligations (OEF) early 2019. The following 2019 issues are worth highlighting: through a descending auction for new agents interested in developing generation projects, who must guarantee the sys- The Ministry of Mines and Energy through the Energy and tem that amount of energy for a given period. The allocation Mining Planning Unit – UPME moved forward the second auc- for existing generators is made annually and for new projects tion of long-term contracts to October 2019, after the first auc- for up to 20 years. The OEF is a commitment on part of the tion was declared unsold in February. The auction, exclusive generating Company, backed by its physical resources, which to unconventional renewable energy sources, permitted the provide support to that firm energy production. The generator allocation of long-term contracts for 7 generating companies that acquires an OEF will receive fixed compensation during and 22 traders. The auction closed with a weighted average the commitment period, whether or not the obligation is re- allocation price of $95.65 Colombian pesos kilowatt per hour. quired. The price of each KWh hour of the OEF corresponds to for the expansion auction of the Reliability Charge, to allo- the closing value in the auction for firm energy or reliability cate electricity generation projects that may begin in the charge. When this firm energy is required, which occurs when 2022-2023 period. The process highlighted the definition of a the spot price is higher than the shortage price, an agent ful- “closed envelope” auction (with a ticking clock). Here are the Furthermore, the CREG defined the conditions for the call fillment balance is carried out, where the ideal dispatch is ver- main results: ified to see if the agent covered its OEF with its own resourc- es and delivered surplus or another agent covered the OEF, in • Closing price: US$ 15.1/ MWh. which case the differences valued at spot prices are balanced. • Energy allocated in the auction: the total Firm Energy Ob- ligations for the auctioned term was 250.55 GWh/day, of In 2014, the CREG issued the Statute of Shortage Risk - a last which 164.33 GWh/day were allocated in this auction and resort mechanism which enters into action when the hydrol- the remaining 86.22 GWh/day correspond to previous al- ogy conditions are critical, and the market principles do not locations. behave as expected. In general, it consists of implementing • The system´s final additional net effective capacity in the certain market monitoring indicators helping to establish if 2022-2023 period when validating compliance with the the price signals (energy exchange) are coherent with future requirements will be 3,710 MW, distributed as follows: energy estimates and the system´s current hydrological con- 940 MW thermal, 1,372 MW hydraulic, 1,160 MW wind ditions. and 238 MW solar. If monitoring market parameters capture any alert and/or risk In July 2019, the CREG published Resolution 060/ 2019, es- signals, a shortage risk period is declared basically consisting tablishing the following: “implement transitional amendments of energy sale and water storage models that guarantee that and additions to the Operating Regulations to permit the con- the system should have the necessary reserves to meet the nection and operation of photovoltaic and wind solar plants demand. Water storage is achieved through supply price inter- into the SIN and other provisions are issued”. This Resolution vention of hydraulic agents who can store water in their reser- defines the operational requirements and commercial aspects 16. Regulatory framework of the electricity industry 135 for the treatment of unconventional sources in the operational The CREG also issued Resolution 132 on October 15, 2019, dispatch. defining the Reliability Charge taker mechanism for Firm En- ergy Obligations allocations for new plants. Only new plants In July 2019, the Commission issued Resolution 080/2019, which have not been allocated OEF can participate in any al- setting forth general rules of market behavior for agents that location mechanism and their estimated variable fuel costs, carry out activities in home utilities in the electricity and fuel CVCE, must not exceed the current Fuel Part Shortage Price. gas sectors. The CREG considers it necessary to establish a The plants shall be allocated for a period of 10 years and shall regulatory framework that, in addition to the specific market be remunerated at US$ 9/MWh. rules and obligations, should define the general rules of be- havior that promote: free access to networks and facilities that, by their nature, are monopolies; free choice of service providers and the possibility of user migration, transparency, neutrality , economic efficiency; free competition and the pro- hibition to misuse dominant positions. Regulation of distribution companies Distribution charges are set by the CREG based on the new In September 2019, the Commission issued Resolution 096 replacement value of existing distribution assets, capital cost, extending the option of access to the central dispatch system non-electric assets as well as operational and maintenance to plants smaller than 20 MW connected to the National In- costs for each Company. These are defined for four different terconnected System. The Resolution emphasized that plants voltage levels, as follows: level 1, less than 1 kV; level 2, more with less than 1 MW and distributed generators will not be than or equal to 1 kV and less than 30kV; level 3, more than or able to participate in the central dispatch and may sell their equal to 30 kV and less than 57.5 kV and level 4, more than or energy to traders serving the regulated and unregulated mar- equal to 57.5 kV and less than 220 kV. Voltage levels 1, 2 and kets. At the same time, plants between 1 MW and 20 MW 3 are called Local Distribution Systems (SDL) and Level 4 is may opt to participate in the central dispatch. If they choose called the Regional Transmission System (STR by its Spanish not to benefit from the central dispatch, they may sell their acronym). energy to traders serving the regulated and unregulated mar- kets. In 2009, after auditing the information reported by the com- panies, the CREG established the applicable distribution The CREG also published Resolution 098 defining the mech- charges, which are set for a 5-year period and updated each anisms for the incorporation of storage systems to mitigate month according to the producer price index. The method- inconveniences stemming from the lack or the inadequacy ology to calculate distribution charges includes an incentive of energy transport networks in the National Interconnected scheme to manage, operate and maintain the costs based on System. This Resolution was issued given the urgency re- service quality. For energy losses, the regulation establishes quired for Battery Electric Energy Storage Systems (SAEB) recognized loss indices to be included in the tariff. to become operational, with the sole purpose of mitigating existing problems due to the lack or the inadequacy of electric The review of distribution charges began in 2013 with the pub- power transmission networks and will be effective until 31 lication of the payment methodology proposed by Resolution December 2022. CREG No. 043/2013. These articles were complemented by Resolution CREG No. 079/ 2014, which contains the purposes In October 2019, the Commission issued Resolution 117, and guidelines for distribution remuneration and Resolution which called for a Purchase Reconfiguration Auction for the CREGs No. 179/ 2014, 024 and 176 of 2016 and 019/ 2017, 2020-2021 and 2021-2022 periods; the mechanism carried out which contain the methodology proposals. in December 2019 by XM S.A. E.S.P. allocated the amounts per 4,278,410 kWh-day for the 2020-2021period, and 2,152,383 Finally, after four Resolutions which were all put forward for kWh-day for the 2021-2022period. The awarded price for both consultation, on February 2, 2018 the final CREG Resolution amounts is US$ 16.6/ MWh of firm energy. 015 was issued. This norm defines the beginning of a new regulatory period where the regulator incorporated replace- ment incentives, including depreciation as part of the tariff 136 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 calculation formula, incentives for service quality that should The revision of regulated transmission charges began in 2013 improve by at least 8% per year and defined the management with the publication of the pay rate methodology proposed by of regulatory adjustments for remunerations, through tariffs, Resolution CREG 042/2013. These pay rate is complemented for investment plans and the operations related to advanced by the development of the purposes and guidelines for the measurement. transmission remuneration for the 2015-2019period, present- ed in Resolution CREG No. 078/2014 and draft Resolutions Furthermore, on February 5, 2018 the Regulation Commission that have been submitted for consultation, Resolution CREG issued Resolution 016/2018, which defines the return rate No. 178/2014, Resolution CREG No. 023/2016 and Resolution (WACC) for electricity distribution activities within the nation- CREG No. 177/2016 define a remuneration methodology pro- al interconnected system and the maximum revenue model posal. for the new tariff setting process. The tariff value is the result of the application of the methodology approved in Resolution CREG 095/ 2015. Trading regulation The WACC value for 2019 was set at 11.79% real before taxes with a path that incorporates a reduction in income tax for the tariff period. Subsequently, Resolution CREG 085/2018 ,151/2018, 036/2019 and 199/2019 were issued, clarifying and correcting some provisions of Resolution CREG 015, including the ad- justment factor, the revision of the investment plan and the application of the quality scheme. Finally, in December 2019, the Commission published Resolution CREG 189/2019 which approves the variables necessary to calculate the revenues and charges associated with the electricity distribution activ- ity for the commercialization market served by CODENSA, where the Company subsequently submitted a replenishment appeal. Regulation in transmission In Colombia, traders, including those integrated with distribu- tion, are free to acquire their supply. They can define the con- ditions of public tendering processes to acquire the energy they require for the regulated market; they can use market mechanisms approved by the regulator and they can also go to the spot market to buy energy. The price paid by the end user reflects an average purchase price. The trading market is divided into regulated and unregulated clients. Clients in the free or unregulated market can freely hire their electrical supply directly from a generator or a dis- tributor acting as traders, or from a pure trader. The market for non-regulated clients consists of clients with a maximum demand of more than 0.1 MW or a minimum monthly con- sumption of 55 MWh. Generators, distributors, or independent agents that meet certain requirements can commercialize or trade energy. The parties freely agree on transaction prices for unregulated cli- Transmission networks operating at 220 kV or above are part ents. of the National Transmission System (STN). The transmission fee includes a charge that covers the operating costs of the The energy trader is responsible for billing electricity costs to facilities, and a charge for use applied only to traders who end consumers and transferring payments to different agents transfer it directly to end users. in the industry. Regulated client trading is subject to the “Reg- ulated Freedom Regime” where tariffs are set by each trader The CREG guarantees transmission companies a fixed annual using a combination of the general cost formulas established income. This income is established by the reposition value of by the CREG and the individual trading costs approved by the networks and equipment, and by the resulting value of the CREG for each trader. The rates include, but are not limited tender process that have been awarded new projects for the to, costs of energy supply, transmission charges, distribution expansion of STN. This value is attributed STN traders propor- charges and a commercialization margin. Additionally, the final tionately to their energy demand. costs of the service are affected by subsidies or contributions The construction, operation and maintenance of new projects is awarded to the company that offers the lowest present val- Trading charges for regulated clients are established under ue of cash flows necessary to carry it out. Resolution CREG no. 180/2014. The main changes were the applied according to the socioeconomic level of each user. 16. Regulatory framework of the electricity industry 137 creation of a monthly fixed charge that covers operating costs functions of the Ministry of Housing). The same year, Decree plus an income for traders covering credit risk, working capital 3,573 created the National Environmental Licensing Authority subsidies and other trading costs. as the entity responsible for granting and monitoring environ- In January 2017, CREG, the Regulation Commission, approved the Environment and Sustainable Development. the merger of the Codensa and EEC markets. Therefor a unique regulated tariff has been applied as of that date for In 2015, due to an OCDE recommendation, the environmental market users currently served by Codensa. sector regulation was consolidated in Decree 1076/2015. mental licenses, permits and procedures of the Ministry of In 2019, the first long-term contracts auction was convened, During COP21 in Paris in 2015, Colombia made a commitment seeking to diversify, complement and boost the energy matrix to reducing 20% of emissions as of 2030 in relation to the ref- competitiveness and make it more resilient to climate chang- erence baseline. In 2018, Law 1931 was issued establishing es, contribute to the reduction of carbon dioxide emissions the guidelines for Climate Change management in Colombia. and guarantee the country’s energy security. Environmental regulation The framework for environmental regulation in Colombia was established by Law 99/1993, which also created the Ministry of the Environment as the authority that would set up environ- mental policies. The Ministry defines, issues and implements policies and regulations focused on the recovery, conserva- tion, protection, organization, administration and use of re- newable resources. Any entity contemplating projects or activities related to en- ergy generation, interconnection, transmission or distribution which may have an impact, deteriorate and/or introduce signif- icant or notorious changes to the environment, must apply for an environmental license prior to commencing their activities. Law No. 99 established that the generation power plants that were already operating when the law was issued, with a total installed capacity of more than 10 MW, should contribute to the conservation of the environment, transferring a percent- age of their profits linked to energy generation (electricity sec- tor transfers) to municipalities and environmental corporations in the area where the power plants are located. Hydroelectric power plants and thermal power plants should pay, respec- tively, 6% and 4 % of their gross energy sales from their own generation, and according to tariffs set for energy sale blocks as established by the Energy Regulation Commission. In 2011, Decree 3,570 established the new environmental sector structure thus creating the Ministry of the Environment and Sustainable Development (previously, the functions of the Ministry of the Environment were established along with the In 2019, the environmental regulation management of the En- vironment Division focused on participating in joint construc- tion with the different environmental national, departmental and local authorities in setting the regulation for Enel-Emgesa strategic issues for different areas guiding its efforts in incor- porating the proposals to respond to the Company´s interests and needs. An analysis of the most critical aspects of environ- mental regulations issued in 2019 and related to Enel-Emge- sa’s own activities was carried out. It was linked mainly to the following issues: environmental project licensing, environ- mental compensation, conservation incentives, environmen- tal benefits, dam structuring, air quality, archaeology, Territori- al Management Plans, Watershed Management Plans, Water Resource Management Plan , guidelines for the development of pre-consultation processes, waste management (ordinary, electronic and hazardous), electricity sector transfers and cli- mate change; of which the following administrative norms are particularly important. With regard to the licensing processes and environmental im- pacts, Resolution 1107 amending Resolution 1402/2018 was issued in relation to the General Methodology for the Prepara- tion and Presentation of Environmental Studies, establishing that environmental studies prepared pursuant to the method- ology adopted by Resolution 1503/2010 and which have not been submitted , shall not be governed by this administrative act provided that these studies were submitted before Au- gust 2, 2020. Resolution 077 set dates for the submission of Environmental Compliance Reports within the framework of the National Environmental Licensing Authority’s environmen- tal monitoring process for competition projects, establishing annual, semi-annual or quarterly dates so that ANLA may have a better opportunity to review them throughout the year. At 138 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 the same time, it was actively involved in the construction of environmental flows in the Bogotá River. The methodology ap- decree 2106. It seeks to simplify, eliminate and reform unnec- plies to projects subject to environmental licensing and seeks essary procedures and processes in the Public Administra- to establish percentages of the utilization of the flows accord- tion, with particular attention to environmental administrative ing to the water supply pursuant to the provided ecosystem procedures, where it was also proposed that the Government services in different sections of the basin. The management should become part of the prohibition suspension process in of the standard was carried out jointly with the Presidency order to reduce the time of license emissions, a proposal that of the Republic, the Ministries of Mines and Energy and the was approved. Environment and Sustainable Development, IDEAM, UPME, CNO, XM, Andesco, Andi and other companies in the sector. In relation to archaeology, Decree 138 represents a significant This standard poses a risk to Enel-Emgesa and the operation move forward to establish administrative procedures and their of generation chains in the Bogotá River basin because the ap- respective times that the Colombian Institute of Anthropology plication of the methodology could limit the flows available to and History (ICANH) has to rule on the applications submit- the plants, authorized by concessions issued by CAR, regional ted as part of the projects and, is the result of the manage- environmental authority for Cundinamarca, and which must ment carried out for more than two years in collaboration with apply the methodology in the aforementioned basin. Addition- guilds and different entities permitting alternatives to be iden- ally, Resolution 1869 declared the Salto del Tequendama wa- tified to speed up and optimize the procedures presented to terfall, a natural formation near the plants located on the river the ICANH. Similarly, Resolution 297, as part of the regulation and tourism spots in the middle of the basin, as Colombia´s Decree 138, established the way the registration application Natural Heritage. will be presented by any natural or legal person who wants to implement a Preventive Archaeology Program. Our Company also took part in the definition of the National Circular Economy Strategy which seeks to maximize the add- Regarding Watershed Management Plans, Resolution 957 ed value of production and consumption systems in economic approved the adjustment and upgrade of the Bogotá River (return), environmental (climate change) and social (employ- Watershed Management Plan becoming a standard of higher ment) terms, based on material, energy and water flows cir- hierarchy and environmental determinant for the development cularity. We participated, throughout 2019, in events related of the Territorial Management Plans throughout the basin. This to updating sectoral targets (source line and energy use) and was developed through participatory processes that permit- regional workshops related to the Strategy. ted participants to make contributions, clarifications and ad- justments in reference to the existing infrastructure and pos- In relation to Climate Change, we made important inroads into sible future projects. energy transition through the study “Zero greenhouse gas emissions roadmap for Colombia: diagnosis, perspectives and One of the issues with the greatest impact during the 2016- guidelines to define possible strategies for climate change” 2019 period was related to environmental flows, where the aimed at identifying a potential roadmap for the Colombian Ministry of the Environment sought to regulate the use of the energy transition, in an exercise involving different national water resource in the basins by issuing a nation-wide meth- stakeholders. The purpose of this study was to identify how odology. For 2018, this methodology was modified to include to achieve carbon neutrality by 2050. As a result of the work, the Bogotá River basin, seeking compliance with order 4.30 Enel-Emgesa was invited by the Colombian Government to “Environmental and ecological flow of the Bogotá River” pro- be part of the official Colombian delegation at COP25 in Chile, vided by the Cundinamarca Administrative Tribunal, through held in Madrid in December 2019, to present the results of which the Ministry of the Environment and Sustainable De- the study in the Colombia pavilion, in conjunction with the velopment had to develop and adopt a specific methodology Ministry of the Environment and Sustainable Development to evaluate the environmental flows. As a result, Resolution through the Colombian Carbon Low Development Strategy , 2130 was issued adopting the methodology to evaluate the which shares the 2050 carbon neutrality target for Colombia. 16. Regulatory framework of the electricity industry 139 Peru Industry Structure lation. It also manages the short-term market and prepares the Guaranteed System Transmission Plan. The COES incor- porates representatives of generating, transmitting, and dis- tributing companies as well Large Users (free clients whose consumption exceeds 10MW). In rural areas there are small isolated systems that supply The general legal framework applicable to the Peruvian elec- electricity in specific areas representing approximately 6% of tricity industry consists mainly of the Law on Electric Conces- the total national production. sions (Decree Law No. 25844/1992) and its regulatory norms. The general regulatory framework applicable to the Peruvi- (i) the separation of the three activities: generation, transmis- an electricity industry is primarily comprised by the Electric sion, and distribution; (ii) open market for the supply of energy Concessions Law (Decree Law Nº 25,844 from 1992) and its to unregulated clients; (iii) a regulated price system, primarily regulatory norms. based on a long and short-term tender process. The main characteristics of the electric industry in Peru are: The Ministry of Energy and Mining (MINEM) defines energy policies at a national level and, together with the Ministry of the Environment, it regulates all the environmental aspects applicable to the energy sector and is the competent authority Regulation of generation companies to grant or withdraw permits and concessions for activities related to energy generation, transmission and distribution. Generation companies that own or operate a generation plant with an installed capacity that exceeds 500 KW require a con- The Supervising Organism of the Energy and Mining Invest- cession for a set period or an authorization granted by the ments (Osinergmin) is the regulatory entity that controls and MINEM. oversees the enforcement of legal and technical norms re- lated to electricity, hydrocarbons, and mining activities, and The COES oversees the dispatch coordination of electricity enforces the obligations established in concession contracts. operations, establishing the spot prices and the management The Regulating Osinergmin Tariffs Agency (GRT) is the com- of economic transactions that occur in the SEIN. petent authority that establishes regulated tariffs. Osinergmin also controls and supervises tender processes required by Generation companies can sell their energy directly to dis- distribution companies to purchase energy from generation tribution companies and free clients and liquidate their dif- companies. ferences in the spot market at marginal costs. The sales to non-regulated clients are carried out at mutually agreed prices and at agreed conditions, including fees and compensations Meanwhile the Environmental Evaluation and Enforcement for the use of transmission systems, and potentially fees for Organism (OEFA), which depends from the Ministry of the the use of distribution networks. Environment, is responsible for supervising and enforcing environmental obligations contained in the approved environ- The Electric Concessions Law permits to signs bilateral con- mental instruments. tracts at a price not exceeding the Bar Rates, in the case of regulated clients, or at a price agreed by all the parties in the The Economic Operation System Committee (COES) is the case of unregulated clients. In addition to this bilateral meth- operator of the National Electric Interconnected System (SEIN od, Law 28.832 of 2006, known as the Law to Guarantee by the Spanish acronym). It coordinates the dispatch of gen- the Efficient Development of Electricity Generation also es- eration units according to the minimum cost and prepares tablished the possibility for distributors to meet the demand diverse studies that are the base for the annual price calcu- of regulated and unregulated client demands via energy and 140 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 power tender processes supervised by the Osinergmin. The In 2018, the percentage of NCRE was 4.7% of the SEIN de- approval of this mechanism is important for the generators mand. This percentage increased to 5% in 2019. because it permits them to reply on a stable price for the du- ration of the contract which is not set by the regulator and can Peru also established a capacity charge set up according to last up to 20 years. the amount that pays for the development of a gas turbine, as a marginal unit that contributes to the system demand. Like in Due to the introduction of tender mechanisms, a large portion Chile, the capacity payment does not depend on its dispatch of the energy sale contracts to distributing companies to at- and pays for availability if it is placed within the objective effi- tend clients comes from such tenders. Just a small portion of cient margin defined by the corresponding authorities. the electricity bought by distribution companies comes under a bilateral contract model. With regards to the transactions in the wholesale market, the Regulation of the Electricity Wholesale Market (MME Regula- tion) was approved through Supreme Decree No. 026-2016- Regulation of distribution companies EM. The main aspects of the regulation are as follows: The The electricity tariff for regulated clients includes charges for “MME” is made up by the short-term market (“MCP” by its energy and power for generation and the Distribution Added Spanish acronym) and the allocation mechanisms for comple- Value (VAD) that considers a regulated return on investments, mentary services, operational inflexibilities and the allocation fixed operating and maintenance charges, and a standard per- of congestion revenues. The authorized participants that take centage for energy losses during the distribution process. part in the purchasing process in the MCP are: generators to meet their supply contracts, distribution companies to serve In September 2015, Decree No. 1,221 was published. It es- free clients for up to 10% of their maximum demand; and tablished that the VAD (Distribution Added Value) setting pro- large users to serve up to 10% of their maximum demand. cess must take place every four years and must be calculated COES calculates the marginal costs of energy and congestion. for each Company (before this decree the VAD was calculated Participants require payment guarantees of their obligations in for a company representing a group and a typical sector, and the MME. Furthermore, actions from COES are incorporated this VAD was applied to all of the companies that made up in case of a participant´s payment default. the respective group). Additionally, an extra charge for fees in technologically innovative projects and efficient energy proj- Legislative Decree 1002 and its regulation (Supreme Decree ects previously approved by the Osinergmin would be award- 050-2008-EM) created a model to promote non-conventional ed. Incentives would be offered to improve service quality and renewable energy sources (NCRE) through tender offers for the opportunity to extend the concession areas for distribu- specific technologies with a guaranteed income mechanism tion companies in rural areas next to their concession zones. paid according to the demand through a tariff charge included in the connection toll. This decree established a 5% target of The real return on the investment of a distribution company the Interconnected System electricity demand to be supplied depends on its performance with regards to the standards set with NCRE awarded through this model. The authorities may by the Osinergmin for a theoretical model company. The tariff review this 5% target pursuant to the country´s National Plan system means greater returns for distribution companies that for Renewable Energies. The technologies considered as re- are more efficient than the model company. Preliminary tariffs newable sources are the following ones: biomass, wind, tidal, are tested to guarantee that the internal return rates are 12% geothermal, solar and mini hydro (hydroelectric power plants with a +/- 4% variation. with capacity of less than 20 MW are not considered in the 5%). The tariffs are indexed to the exchange rate, the wholesale price index (Spanish acronym IPM), and commodity prices 16. Regulatory framework of the electricity industry 141 such as copper and aluminum, thanks to which Peru does not have to face exchange risks. Environmental Regulation The Distribution Added Value process for the 2018-2022 peri- od for Enel Distribución took place in 2018. The environmental legal framework applicable to activities related to energy in Peru is established by the General En- vironmental Law (Law No. 28,611) and in the Environmental Protection Rules for Electric Activities (Supreme Decree 029- Regulation of transmission 94-EM). Following the aforementioned principles and regulations and Transmission activities are defined under different regimes. additional ones contained in Law 28.245, the Framework Law Facilities built before 2006 are divided into the Primary Sys- for the National System of Environmental Administration, the tem, whose aim is common use permitting energy to flow National Policy of the Environment and the United Nations through the national network, and the Secondary System Framework Convention on Climate Change Law No. 30754 which is mostly unidirectional and is used to evacuate energy or the Framework Law on Climate Change was approved per- from a generation power plant or to take energy to the end mitting the State, through transversal and jointed regulation, consumer. to issue regulations related to the development of the RER generation, electric vehicles and sustainable investments pur- Facilities built after 2006 are divided into: Guaranteed Sys- suant to the Paris Agreement. tem made up by common use lines, part of the Transmission Plan developed by the COES and whose tolls are paid by the whole demand of the network, and the Complementary Sys- tem whose lines are connected to a power plant or to the system´s user and are paid by the beneficiary. The Transmission Plan, prepared by the COES and approved by the MINEM, establishes the development of the Guaran- teed System lines, which are put to tender through a BOOT model with a maximum 30-year duration. The transmission concessions of the Guaranteed System receive an annual fixed income paid under said tenders. The Complementary System lines are developed through investment plans presented by the agents and approved by the Osinergmin, an entity that calculates the average annual cost to pay for each installation, considering the standard in- vestment, operating and maintenance costs, with an updated 12% rate before tax and a 30-year duration. 142 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 16. Regulatory framework of the electricity industry 143 144 Annual Report Enel Américas 2019 17. DESCRIPTION OF THE ELECTRICITY BUSINESS BY COUNTRY 17. Description of the electricity business by country 145 Electricity Generation Electricity distribution In this segment, Enel Américas owns operating subsidiaries in The distribution business is carried out via Edesur in Argenti- Argentina, Brazil, Colombia, and Peru. na, Enel Distribución Río, Enel Distribución Ceará, Enel Distri- bución Goiás and the recently acquired Enel Distribución São The gross installed capacity of Enel Américas Group was 11,267 Paulo (former Eletropaulo) in Brazil, Enel Codensa in Colom- MW in December 2019 and consolidated electricity generation bia, and Enel Distribución Perú in Peru. In 2019, our main dis- totaled 41,760 GWh, while energy sales reaching 72,553 GWh. tribution subsidiaries sold 119,998 GWh. In the electricity industry, business segmentation between hy- Currently, Edesur, Enel Distribución Río, Enel Distribución dro and thermal generation is natural since the variable costs of Ceará, Enel Distribución Goiás, Enel Distribución São Paulo, generation are different for each method of electricity produc- Enel Codensa and Enel Distribución Perú serve the main cities tion. Thermal generation requires fossil fuels and hydroelectric in Latin America, providing electricity services to more than generation requires water from dams and rivers. 24.6 million clients. Generation Transmission Distribution Córdoba Costanera Buenos Aires Dock Sud 55% of Enel Américas’ consolidated generation capacity comes In 2018 the Company launched a new business line: Enel X, a from hydroelectric sources and 45% from thermal sources. global business that is in the lead of the power sector transfor- mation. Enel X seeks to change paradigms, helping clients to Arroyito Mendoza Edesur Hence, the definition of the generation company’s commercial use technology to transform energy into new opportunities, to policy is relevant to correctly manage the generation business. thrive and lead progress worldwide. Enel X is a global compa- The Enel Américas Group generation business is made up of ny with strong roots in the energy sector, with an open strate- the following subsidiaries: Enel Generación Costanera, Enel gy oriented towards digitization, sustainability and innovation. Generación el Chocón and Central Docksud in Argentina, EGP Enel X uses smart simple and fast technologies to help clients Cachoeira Dourada, Enel Generación Fortaleza and EGP Volta discover new ways of using energy globally. Grande in Brazil, Emgesa in Colombia and Enel Generación Perú and Enel Generación Piura. Enel X´s mission is to provide innovative technology solutions and value-added services, to create new value for residential clients (B2C), companies (B2B) and cities (B2G). Motogeneradores El Chocón Neuquén Electricity transmission Enel Américas´ electricity transmission business is mainly car- ried out through the interconnection line between Argentina and Brazil, via Enel Cien, a subsidiary of Enel Brasil, whose transport capacity totals 2,100 MW. 146 *Non-billable consumptions are not included in distribution business. Annual Report Enel Américas 2019 TypeHydroNet Installed Capacity 128 MWTypeHydroNet Installed Capacity 1.200 MWTypeThermoNet Installed Capacity 2,210 MWEnergy Sales16,798 GWhEnergy Losses15.5%Clients2,490,449TypeThermoNet Installed Capacity 34 MWTypeThermoNet Installed Capacity 846 MW Generation Transmission Distribution e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Córdoba Costanera Buenos Aires Dock Sud Arroyito Mendoza Edesur y r a m m u S . 9 1 l i s g n d o h e r a h s f o El Chocón Neuquén Motogeneradores s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 *Non-billable consumptions are not included in distribution business. 17. Description of the electricity business by country 147 TypeHydroNet Installed Capacity 128 MWTypeHydroNet Installed Capacity 1.200 MWTypeThermoNet Installed Capacity 2,210 MWEnergy Sales16,798 GWhEnergy Losses15.5%Clients2,490,449TypeThermoNet Installed Capacity 34 MWTypeThermoNet Installed Capacity 846 MW Argentina Electricity generation In September 2019, about 50 of the 88 projects approved during the second round of the RenovAr program were vir- tually paralyzed mainly because of difficulties on part of the successful bidders to guarantee adequate financing and warranties. Therefore, on September 11, Sebastián Kind, the Undersecretary of Renewable Energy and Energy Efficiency, sent a note to CAMMESA to instruct them to temporarily Enel Américas S.A. participates indirectly in electricity gener- suspend non-compliance summons with the scheduled dates ation through Enel Argentina S.A.’s subsidiaries: Enel Gener- and work progress pursuant to the renewable electricity sup- ación Costanera S.A. (Costanera), Enel Generación El Chocón ply contracts. For various reasons, the undersecretary, after S.A. (Chocón) and Central Dock Sud S.A. (CDS). just under 30 days, sent a note fully repealing everything in- structed in the first place. Costanera, Chocón and CDS together own 4,419 MW net in- stalled capacity. This capacity, by the end of 2019, represent- On June 16, 2019, a complex failure caused the collapse of ed 11.7% of the total capacity of the Argentine SIN (National Argentina’s interconnected system affecting Argentina, Uru- Interconnected System). Electricity generation of these com- guay and certain areas of Paraguay. The demand was normal- panies reached 12,974 GWh as of December 31, 2019, equiv- ized gradually and the balance between generation and the alent to 9.9% of Argentina´s total generation. normalized demand was monitored. The effective recovery process began at 7:11 and finished at 19:23 lasting just over Some of the most important business groups that partic- 12 hours. ipates in the Argentine Electricity Market in the generation sector are the following: AES, SADESA and Pampa Energía In February 2019, SEES Resolution No. 19/2017 was replaced – a company that in 2016 acquired Petrobras Argentina. Other by Resolution SRR and ME No. 1/19, establishing the guide- companies participating in the generation sector are YPF En- lines for the remuneration for existing generation plants. ergía and Pluspetrol Energía, acquired by YPF. Participation in installed capacity and in business groups for ation structure with some changes. The measure, in the first The new Resolution basically maintains the current remuner- 2019 is distributed as follows: place, made a downward adjustment of the payment for avail- ability and for energy from thermal units. In the case of power Participation by installed capacity and in Business Groups in 2019 availability, the reduction totaled 10% and in case of energy, Grupo Enel Pampa Energía SADESA AES National Government Foninvemem Provincial Governments Others 11.70% 11.30% 10.20% 8.60% 15.50% 6.50% 4.70% 31.50% it was 20%. A formula for adjusting availability revenues was also estab- lished based on the historical dispatch of the generating unit. The units that end up with a dispatch factor in the last mobile year of less than 30%, will be reduced by 30%, if this factor is >70%, there is no effect and if it is between 30% and 70%, the reduction is linear. In 2019, 931 MW of renewable capacity was added, of which For hydroelectric plants, the base prices of the power and en- 283 MW correspond to private projects (MATER) and 491 ergy generated and operated are maintained as stipulated in MW to tenders carried out under the RenovAr program. The Resolution ex SEE No. 19/2017 but the new regulations estab- remaining 157 MW belong to the Renewable Energy Promo- lish that the hours during which the hydroelectric generator is tion Project (GenRen). To date, the contributions to RenovAr unavailable for scheduled and agreed maintenance shall not are delayed by 1,410 MW in this year’s schedule. The RenovAr be considered for the calculation of power payments. Despite program is part of Law 27.191, which establishes participa- the introduced changes, hydropower plants did not suffer a tion of this type of energy in the market, and which, by 2025, significant reduction in their revenues. should reach 25%. 148 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Continuing with the precepts instructed by the SE to CAMME- In relation to the Resolution on the contingent liabilities de- SA in previous years, to bring down gas costs required for riving from the availability contracts of the TV units and the generation, MEGSA held two auctions to purchase gas for Costanera Combined Cycles signed in 2012, on September12, generation in thermal plants, with satisfactory results. The 2019, an agreement was signed with CAMMESA establishing first was held on December 27, 2018. The supplies offered there were no outstanding claims thus eliminating Costaner- were interruptible for the period from January to December a´s risk of fines together with waiving a part of future tariffs. 2019. The minimum PIST prices obtained were US$ 2.2107/ MMBTU (summer), US$ 3.2235/MMBTU (winter) and weight- Resolution 2018-70-APN-SGE of November 2018 permitted ed average prices of US$ 3.0953/MMBTU (summer) and US$ generators, co-generators, and self-generating agents to pro- 4.3446/MMBTU (winter). The second auction took place on cure their own fuel for electricity generation and permitted to May 23, 2019. Unlike the previous auction, supply on this oc- manage the fuel - natural gas - for the plant in 2019. Upon the casion was strong, with a term ranging from June 2019 to publication of the Resolution, CAMMESA issued the Decla- May 2020, inclusive. PIST prices were US$ 2.207/MMBTU ration of Variable Production Costs (CVP), which allowed to and US$ 3.2446/MMBTU for summer and winter respectively, prepare a commercial strategy to optimize the costs incurred with a clear gas price decrease in the wellhead from the first and the declared CVP. auction to date. In December 2019, through Resolution 12/2019, the Govern- tion 2019-12- APN-MDP in the Official Journal, Resolution ment decided to repeal Resolution No. 70/2018 of the former 2018-70-APN-SGE was repealed, and the commercial man- Energy Secretariat of the former Ministry of Finance that al- agement was once again centralized in the dispatch agency lowed companies to manage their own fuel supplies, leaving as well as the dispatch of fuels from the MEM plants. As of December 30, 2019, with the publication of Resolu- Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA) again in charge. Enel Generación Costanera S.A. Enel Generación El Chocón S.A. Enel Generación El Chocón SA is a generation Company, op- erating El Chocón and Arroyito hydroelectric power plants, Enel Generación Costanera, located in the city of Buenos located on the Limay River, in the Neuquén and Río Negro Aires, has six steam turbine units totaling 1,062 MW, which Provinces. The total net installed capacity of this hydroelectric can operate either with natural gas or fuel oil. Costanera also complex is 1,363 MW and includes the El Chocón plant, with operates two combined cycles of 851 MW and 297 MW, re- 1,200MW net installed capacity (hydroelectric power plant on spectively. Its net installed capacity is 2,210 MW. an artificial reservoir) and the Arroyito plant, with 128 MW net installed capacity, both plants use the waters of Limay and In 2019, CAMMESA carried out a dispatch of the Argentine Collón Curá Rivers for generation. Interconnected System (SADI acronym In Spanish) pursuant to the Resolutions issued by the Ministry of Electricity. The The Company’s net installed hydro capacity is 1,328 MW, dispatch prioritized the use of natural gas, taking into account thermal net capacity is 34 MW and corresponds to moto-gen- the performance of the units and the use of liquid fuels (gas erators. Its participation in the SADI is 3.7% in relation to the oil and fuel oil) in accordance to the restrictions imposed on total installed capacity. power plants during the season with an increased residential demand. As a result of the operations, net generation of Cos- El Chocón is located in the Comahue region made up by the tanera’s Convectional Units reached 236 GWh, and net gener- Argentinean Provinces of Río Negro, Neuquén and the south- ation of Combined Cycles reached 5,974 GWh. ern areas of Buenos Aires Provinces, on the Limay River, 80 In February 2019, SEES Resolution No. 19/2017 was replaced Arroyito is a compensator dam of the El Chocón plant located by Resolution SRR and ME No. 1/19 establishing the payment on the same river, some 25 km downstream. km upstream from the confluence with the Neuquén River. guidelines for existing generation plants. It is detailed in the previous chapter on Electricity Generation. 17. Description of the electricity business by country 149 The hydrological year In Argentina starts on April 1 and has The implementation of Resolution SEE No. 1/2019 reduced been defined as a dry year according to the contribution of the the payments of thermal and hydraulic generators compared hydrological basins of the Limay and Collón Cura Rivers. Net to the previous regulations, maintaining the same remunera- generation recorded for these power plants during the year tive concepts: a variable production charge depending on the was 2,525 GWh. This generation is made up by 1,981 GWh in type of fuel (which varies by technology and unit size) and an- Chocón (78%), 528 GWh in Arroyito (21%) and 16 GWh from other depending on the available power. These values are set moto-generators (1%). in dollars. It also maintained the possibility of offering guar- anteed availability and additional guaranteed availability com- The Company started 2019 with the reservoir level of 377.71 mitments (DIGO and DIGO ADICIONAL respectively), with m.a.s.l. The reserve in the El Chocón dam was 2,168 GWh and different payments and depending on availability, regardless in the Comahue it was 6,083 GWh. Both were measured in of the technology offered. relation to the minimum level condition of FOE. At the end of 2019, the level of the reservoir reached 377.55 second half of November 2018, generation agents could get m.a.s.l. The energy reserves of the Comahue dams were their own fuel supplies for energy generation. Generation 6,235 of which 2,228 GWh were the El Chocón reserves. costs were valorized according to the mechanism of recog- Subsequently, through Resolution No. 70/2018, and as of the In February 2019, SEES Resolution No. 19/2017 was replaced by Resolution SRR and ME No. 1/19 establishing the payment Central Dock Sud used that option from the first half of De- guidelines for existing generation plants. It is detailed in the cember 2018, until the second half of December 2019, when previous chapter on Electricity Generation. the Ministry of Productive Development issued Resolution nition of Production Variable costs recognized by CAMMESA. Central Dock Sud The Dock Sud power plants are located in the Buenos Aires Avellaneda district. Dock Sud owns and operates a single gen- eration power plant with two units, with a total capacity of 846 MW. The Dock Sud power plant (CDS in Spanish acro- nym) has four gas turbines and one steam turbine. Two of the gas turbines and the steam turbine make up a combined cycle power plant. The energy generated by Dock Sud in 2019 was 4,238 GWh, accounting for 4.5% of thermal generation and covering 2.9% of the SADI demand. On December 31, 2019, Central Dock Sud S.A.´s installed capac- ity represented 2.2% of the total installed capacity of the SIN. In February 2019, the former Ministry of Renewable Resourc- es and Electricity Market, subordinated to the former Ministry of Finance, through Resolution No. 19E/2017 updated the pay- ment values of Resolution SE No. 19/2017. No. 12/2019, which repealed the above-mentioned Resolu- tion No. 70/2018, establishing that, as of December 30, 2019 CAMMESA would once again centralize fuel supply for the power generation of the MEM thermal power plants. Generation Activities and Projects Currently, there are no ongoing projects for the expansion of installed power - combined cycle - in Costanera. Land reserved for future projects Enel Américas has no land reserved for future projects in Ar- gentina. 150 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Electricity Distribution Edesur tract, reestablishing the full validity of the Concession Con- tract, the Tariff and the Service Quality Regime, which were renegotiated pursuant to the principles established by Law 24.065. Edesur distributes and sells electricity in the southern area The validity of the RTI tariff period, established between Feb- of Buenos Aires. This includes two-thirds of the Autonomous ruary 1, 2017 and January 31, 2022, will require an improve- City of Buenos Aires (CABA) and twelve districts of the Bue- ment to the quality of service regime as the expectations of nos Aires Province, covering a 3,309 km2 area, for a period of investment development and operational improvements that 95 years starting from August 31, 1992. EDESUR proposed in the context of RTI will increase. There- This period includes an initial 15-year term and eight additional cost of energy not delivered will increase throughout the peri- periods of 10 years each. On February 5, 2007, the National od, reaching the values established recently in the last semes- fore, the quality guidelines will be more demanding, and the Electricity Regulatory Entity (ENRE) resolved to extend the ter of the period. initial period for five extra years, as of the end of the Integral Tariff Review (RTI) process. At the same time, SAIDI (one of the indices related to service quality) improved in 2019 in relation to 2018, with a reduction On January 27, 2016, the MINEM No. 7/2016 Resolution was of 4.7 hours, reaching 20.23 hours according to Enel criteria. issued which instructed ENRE, among other things, to: adjust the VAD in the company´s tariff charts, on behalf of the RTI (In- The concession contract establishes that Edesur must supply tegral Fees Renegotiation) and the framework of the Transito- energy as required by the owners or inhabitants of the properties ry Tariff Regime established in the Agreement Act and to carry located within its concession area, comply with certain quality our every action required to implement the RTI, which should standards related to the electricity supplied, comply with opera- have come into force before December 31, 2016. The process tional requirements concerning the maintenance of distribution and schedule for the RTI was established through Resolution assets and to bill clients on the basis of effective measurements. ENRE 55 as of April 5, 2016. In December 2017, the Ministry of Energy and Mining (MI- As part of the RTI process, on October 28, 2016 a call for a NEM) presented its proposal and criteria for the treatment of Public Consultation was launched to inform of the project and regulatory liabilities. The first measure was, via a Note issued hear the opinions related to the tariff proposals that the dis- on December 30, 2017, that the Ministry informed CAMME- tribution companies Edesur and Edenor presented to ENRE SA that it took possession of the debt registered by EDESUR according to Resolution ENRE No. 55/2016. with said Company for the purchase of energy, for a period On December 30, 2016, ENRE issued Resolution No. 626, ap- ment. EDESUR continued to work on the agreement in 2018, proving the document denominated Final Public Consultation and the final Resolution regarding these matters was subject of 90 days pending the signing of the aforementioned agree- Resolution in order to inform and answer the opinions made to the change of jurisdiction. in relation to the Tariffs Proposal presented previously by the companies with regards to the definition of tariffs to be ap- On December 4, 2018 Law 27.469 approved the Fiscal Consen- plied, and move for the consideration of the Undersecretary sus signed on September 13, 2018 between the Nation and of Tariffs Policy Coordination of the Ministry of Energy and most of the Provinces. This agreement considers that “elec- Mining of the Nation, those proposed issues subjects planned tricity distribution companies Empresa Distribuidora Norte SA that are not within the sphere of responsibility of said entity. (Edenor) and Empresa Distribuidora Sur SA (Edesur) should be On February 1, 2017 the Integral Tariff Review came into force, Autonomous City of Buenos Aires (CABA), in line with other thus ending the renegotiation process of the concession con- electricity distribution companies in the other jurisdictions”. part of the jurisdiction of the Province of Buenos Aires and the 17. Description of the electricity business by country 151 Similarly, the General Budget for Expenses and Resources of On 19 September 2019 Edesur signed an Agreement on Tariff National Administration Law 27.467 for 2019, published also with the National State where the latter instructs ENRE to, on December 4, 2018, established in article 124, to instruct during the six-month period starting on August 1, 2019, main- the National Executive Authority to “foster those actions tain in force the tariff tables prior to the beginning of that peri- needed for the transfer of jurisdiction of electricity distribution od for all tariff categories, which means that EDESUR will con- companies Empresa Distribuidora Norte S.A. (Edenor) and tinue to receive the compensation included therein due from Empresa Distribuidora Sur S.A. (Edesur) from the Province of prior recoveries and disputes (ENRE resolution No. 26/19). Buenos Aires to CABA” from January 1, 2019, and “once this The difference in the VAD and the difference in seasonal pric- becomes effective, the National Entity for Electricity Regula- es, the increase of which was ratified by the Resolution of the tion (ENRE in its Spanish acronym) created through article 54 Ministry of Renewable Resources and the Electricity Market of Law 24.065 will keep its functions and faculties in all mat- No. 26 issued on September 3, 2019, for the period from the ters not related to the public service of electricity distribution”. August 1, 2019 to December 31, 2019, will be recovered in 7 monthly installments as of January 1, 2020. On 1 February 2019, ENRE Resolutions No. 24/2019 and 26/2019 were published in the Official Journal. The first ap- Edesur also undertakes to maintain service quality and agrees proved the values in the tariff table effective for the billing to postpone the payments of any sanctions until March 1, for meter readings after zero hours on February 1, 2019, ac- 2020 at their original value plus the adjustments correspond- cording to the increases in the seasonal price of energy and ing to the time of payment, in 6 monthly installments. power. The second Resolution defined the new Distribution Added Value (VAD) values, to be applied as of March 1, 2019, The Regulatory Decree No. 1289 issued on October 1, 2019 including deferrals and due compensations. The increases as- by the Province of Buenos Aires and the previous sanctions signed to March 2019 followed the VAD standardization pro- and the publication of Law No. 6180, Decree No. 263 and cess defined by the RTI published in February 2017. the Supplementary Resolution No. 161 of June 30, 2019 by As part of the transfer of the public electricity distribution both Provinces, what was established in the so-called “Fis- service, on May 9, 2019, the National State, CABA and the cal Consensus 2018” and Article 124 of Law No. 27.469. The Province signed an Agreement implementing the transfer, no- above-mentioned agreements finalize the transfer of the ser- tifying Edesur of the agreement which the last signed. The vice by this Company from the National State to the jurisdic- Agreement states that the Province and CABA jointly hold the tions of the Province of Buenos Aires and the Autonomous the Autonomous City of Buenos Aires ratified, on part of status of the granting authority of the public service provided City of Buenos Aires. by the Company, and that the Company will continue to be governed by its concession contract and by the national legal On December 10, 2019, Dr. Alberto Fernández took over as and regulatory regulations as may apply. the new President of the Republic of Argentina and Dr. Cristi- na Fernández de Kirchner as Vice-President. On 2 May 2019, the new tariff table containing the seasonal price update for the May-July 2019 period was published, es- On Friday, December 20, 2019, the National Congress ap- tablished via Resolution No.14 issued on April 29, 2019 by the proved Law No. 27.541 denominated the Law on SOCIAL Secretariat of Renewable Resources and Electricity Market. SOLIDARITY AND PRODUCTIVE REACTIVATION WITHIN THE PUBLIC EMERGENCY FRAMEWORK declaring a state On 10 May 2019, Edesur signed an Agreement on the Regu- of public emergency in economic, financial, fiscal, administra- larization of Obligations with the Secretariat of Energy, on be- tive, planning, tariff, energy, health and social matters until De- half of the National State, according to which any outstanding cember 31, 2020. The law authorizes the National Executive reciprocal claims arising from the 2006 - 2017 transition period Branch in article 5 to maintain the electricity and gas rates of were terminated. This was the solution to the cross claims for the federal jurisdiction and to initiate a renegotiation process the period in question. of the still valid Comprehensive Tariff Review in an extraordi- 152 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 nary capacity and for a maximum period of 180 days tend- ing to a reduction of the current household, commercial and industrial tariffs for 2020. And authorizes ENRE to intervene (Article 6) as it will maintain its scope of competence for the SE Glew expansion from 2x40 MVA to 2x80 MVA duration of the emergency by suspending the validity of the This is a modification and an extension of the current Glew second paragraph of Article 124 of Law No. 27.467 (Article 7). Substation, from 2x40MVA to 2x80 MVA. where 16 cells of 13.2 KV will be added, finally reaching a 32 MT outputs. On Friday, December 27, 2019, ENRE, pursuant to Article 7 of Law No. 27541, instructed Edesur not to modify the current In 2019, this expansion work was at the final stage and is es- Tariff Table even though it no longer belongs to federal juris- timated to be completed and in service during the first half diction. of 2020. In 2019, Edesur delivered electric power to 2,490,449 clients. It will benefit the following sectors: Almirante Brown, Esteban Of the total, 88.1% are residential clients, 11.0% commercial, Echeverría and Presidente Perón. 0.8% industrial and 0.04% others. Energy sales totaled 16,798 GWh, including distribution services (toll) to large users, with a 5.4% decrease as compared to the previous year. Overall, 48.9% energy was distributed to the residential sector, 43% to the commercial segment and 8.1% to the industrial sector. In 2019, the annual mobile loss rate - technical and non-tech- nical - reached 15.50%, a worse result if compared to the 14.2% recorded in 2018. This result is obtained in a scenario of a shrinking demand compared to the previous year (-3.17% 2019 vs 2018) and an increase in aggressiveness, related to energy thefts, confirming the trend of the previous year. This is also related to the increase in the rate. Distribution Activities and Projects With regards to the 2019 Investment Plan, total investment for the year was $ 11,018 million Argentine pesos. The most important projects implemented in 2019 are as follows: Renovation of Triple 104 Reconquista-Nuevo Puerto Expansion of the Sarandí substation with two new MT sections The Extension of the Sarandí 132/13.2 kV substation consist- ed of the installation of two new MT cell sections, an internal service transformer, two 4.8 MVAr capacitor banks at 13.2 kV to complete the reactive power compensation. y r a m m u S . 9 1 l i s g n d o h e r a h s f o 103/104/105 triple cables repair at Reconquista substation New 5-tern AT cable runs were made within the Reconquista substation and new terminals and splices were assembled. Brown substation reconstruction Reconstruction of the full Section III of MT cells was carried out with the corresponding civil works. New High Voltage Clients s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Electricity network currently in operation, with 3.7 km of un- derground 132 KV of 1,200 mm2 cables with XLPE isolation in simple triple cable between the Reconquista and Nuevo In 2019, the feeding work at (132 Kv) of the AYSA water treat- ment plant continued. The plant is in the city of Bernal in the Puerto substations. This work will improve the operation of Quilmes district. the system as faced with cargo transfer needs between the northern and southern areas of the GBA. 17. Description of the electricity business by country 153 MT/BT Client Assistance In 2019, 1,453 clients were attended, including new supplies and power increases, of which 1,411 correspond to T1, T2 and T3 BT rates and the remaining 42 to T3 MT Clients. Among the most relevant cases are the following: • Mugica Educational Center - CABA • Buenos Aires Arena SA (Movistar Arena) - CABA • IVC – Barrio Alvarado - CABA • Buenos Aires Holocaust Museum - CABA • Villa 21-24 / The Triangle - CABA • Bs. As Underground. - CABA • Industrial Parks Parques Industriales S.A. - Florencio Varela • Central Mail (SBASE Linea E) - CABA • Italian Hospital - CABA • Mc Donalds Villa 31 - CABA • Trust Puerto Madero Siete - CABA • Diserglass S.R.L - Quilmes • Rexam Argentina S.A. - Almirante Brown To improve preparedness in case of severe climate events, the transformers and distribution chambers mitigation plan continued to water flooding, thus completing the improve- ments in 25 underground chambers. The Company also continued working on mechanical rein- forcements in the medium voltage transmission grid in the Buenos Aires Province to prevent pylons from falling during severe storms. The Company replaced 299 wooden pylons with concrete pylons. Network technology improvement In 2019 work continued to Improve the SAIDI rates by install- ing 565 additional remote-control pieces of equipment at dif- ferent points along the medium voltage network, with more than 1,500 installed points to achieve more efficient operation of the MT network. Well Cameras This project consists of installing MT/BT underground Trans- formation Centers in areas with critical points and where the use of conventional equipment is difficult. In 2018, 10 new cameras were installed in CABA in the following neighbor- hoods: Flores, La Paternal, Liniers, Mataderos, Parque Avella- neda, San Cristóbal, Villa Devoto and Villa del Parque and one new camera in Lomas de Zamora. Underprivileged Neighborhoods To normalize the connections in all the homes where there were no installed meters, the Company initiated a mass stan- dardization plan in many of the underprivileged neighborhoods and / or settlements. In 2019, 4,108 homes were normalized involving 32 different provincial localities. The cases involved previous social aware- ness programs aimed at explaining the new conditions to- gether with their social inclusion as clients. Infrastructure improvement of MT/BT network The most important is the neighborhood of Las Marinas in Es- teban Echeverría where new networks and a Transformation Center were installed, and 62 new supplies normalized. To improve service quality, in 2019 Edesur expanded and re- In the towns of Guernica and Numancia of the Presidente newed its network by some 317.9 km medium voltage and Perón brough we have installed 1,006 new supplies. 275.7 41 km low voltage networks. Regarding the transfor- mation centers, 238 CT were intervened, including new trans- Together with the Municipality of Lomas de Zamora we formation centers, electro-mechanical equipment renovation worked on the first stage of standardization of the “El Tongui” and installed power increase (including the well cameras as neighborhood also called “17 de Noviembre” where we initial- indicated in the prior sections of the document). ly plan to normalize 321 new supplies. . 154 Annual Report Enel Américas 2019 Finally, the feasibility analysis of the implementation of the Prepaid Meter has been started by updating the software of the Smart Meters equipment, with the implementation of a Pilot Plan in the Piletones neighborhood planned by 2020. Network Digitization In 2019, to improve the quality of service, Edesur completed the installation of the first smart meters to digitize its net- work. The pilot project consisted of installing 20,000 meters within the concession area. The new smart meters include technology that Enel is using around the world and that has Managing network maintenance In 2019, the Company started a project to comprehensively manage the maintenance of AT/MT and BT through inter-re- lated actions to reduce network failures. The most important are failure analyses, the implementation of operational risk analysis, improvement of the CERTA IT system, monitoring and analysis of maintenance plans. One of the most import- ant implemented tools was the use of helicopters equipped with state-of-the-art technology to take photos/ videos, ther- mographs and image detection using a laser (LIDAR) to study AT/MT aerial networks and in BT networks it can carry out Mobile Mapping (obtaining data such as thermography and many advantages: the consumption reading is done remote- photos/ videos). ly and more precisely; network failures are identified in real time, therefore repair times are much shorter; and they permit users to read consumption data constantly, while leading to a more efficient energy consumption. Regarding MT and BT networks, changes of PIMT networks were made and the STM system was incorporated, for more In 2019, in the High Voltage system, the Company started a new comprehensive preventive maintenance plan of its fa- cilities (SSEE) and High Voltage transmission lines. The im- plementation of this preventive maintenance program in the High Voltage system was very important, because any failure of the system might lead to power outages of more than centralized operations. 100,000 clients. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o The point to point integration of the SCADA-STM-SCADA sys- tems was finalized and would lead to an improved operation of the network and the upgrade of the CERTA system, for claims management and the incorporation of new manage- ment tools for the BT network, which is driven by service quality indicators. The Company started to implement the Enel Group´s e-or- der system and the new work programming system (PDL) to manage BT claims and maintenance orders, thus improving employee management and records of the works. Electro-dependent user support In 2019, the new regulatory requirements established that dis- tribution companies must provide alternative energy sources (FAE by its Spanish acronym) for every electricity-dependent user, so that in case of an outage power supply would not be interrupted in homes of this type of users. The Company developed a prototype for alternative energy source and the implementation of technical requirements to initially acquire 150 units. To expand this energy source for a greater num- ber of electricity-dependent users, the Company launched a tender process to acquire a further 1,500 FAE units including their supply, installation, and maintenance. s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 17. Description of the electricity business by country 155 Generation Transmission Distribution Enel Distribución Ceará Central Fortaleza Cachoeira Dourada Volta Grande Enel Distribución Goiás ENEL CIEN Transmission Line 2,100 MW Enel Distribución Rio Enel Distribución São Paulo *Non-billable consumptions are not included in distribution business. 1. Energy sales since June 2018, date of consolidation of the company. 156 Annual Report Enel Américas 2019 Río de JaneiroBelénManausSao PauloGoianaBrasiliaTypeHydroNet Installed Capacity 655 MWTypeHydroNet Installed Capacity 380 MW12,186 GWh3,924,10714.0%TypeThermoNet Installed Capacity 319 MW11,089 GWh2,867,31822.5%14,259 GWh3,114,06312.3%43,148 GWh7,328,1499.6%Energy SalesEnergy LossesClientsEnergy SalesEnergy LossesClientsEnergy SalesEnergy LossesClientsEnergy Sales1Energy LossesClientse h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Brazil Electricity Generation this acquisition, Enel Brasil increased its hydropower capacity in Brazil by 40%, adding 380 MW to its portfolio. The acquisition of this concession was financed in 60% with debt acquisition and in 40% with own equity. Initially a two- year bridge loan (2018-2019) was considered, under the Enel guarantee. In 2019, long-term financing for the asset was Enel Américas participates in electricity generation through structured, with the issuing its first bonds totaling $ 800 mil- Enel Brasil and its subsidiaries Cachoeira Dourada, Volta Grande lion reais for a 10-year term. and Enel Generación Fortaleza. Net generation in 2019 was 1,588 GWh and sales reached These three power plants, two hydroelectric and one thermal, 1,2,270 GWh. have 1,354 MW of total net capacity and represent 0.8% of the Brazilian SIN. Enel Generación Fortaleza The Enel Group´s electricity generation business in Brazil reached 5,292 GWh, or 1% of the country´s total generation (thermal and hydro), with hydroelectric production representing 79% of the Enel Américas Group´s total generation in Brazil. Other generators connected to the Brazilian SIN are: Eletrobras, Cemig, Cesp, Copel, ENGIE, CTG, Iberdrola, CPFL and AES. Cachoeira Dourada Fortaleza, located in the Caucaia municipality, 50 km from the capital of the state of Ceará, is a 319 MW net combined cycle thermal power plant running on natural gas. It can generate one third of the electricity required by Ceará, a state with a population of nearly 9 million inhabitants. Fortaleza was built in a 70,000 m2 area and is part of the infra- structure of the Pecém Industrial and Port Complex and is part of the Thermoelectricity Priority Program (PPT) of the Federal Government. Fortaleza has a strategic location to boost re- Cachoeira Dourada, located in the State of Goias, 240 km gional growth and to facilitate the operation of other indus- south of Goiânia, is a power plant with ten units with 655 MW tries. Its main client is the distribution Company Enel Distribu- of net installed capacity. It is a run-of-the-river power plant and ción Ceará and its most important supplier is Petrobras. uses the waters of the Paranaiba River. Electricity generation in 2019 was 1,128 GWh, while sales Net generation in 2019 was 2,575 GWh and sales reached reached 4,742 GWh. 22,890 GWh. Volta Grande Land reserved for future projects Enel Américas, through its subsidiary Enel Brasil, acquired the rights to operate for a 30-year period the Volta Grande hydro- electric power plant, located in the Rio Grande River, between the Brazilian states of São Paulo and Minas Gerais. The total cost of the concession was $1,420 million reais (approximate- ly US$420 million). Enel Brasil owns 75 hectares in the city of Macaé, the state of Río de Janeiro, reserved for future projects. Electricity Transmission Enel Brasil won the auction for hydroelectric concessions car- mission and sale in Brazil through the interconnected line be- ried out by the Brazilian government on September 27, 2017, in tween Argentina and Brazil, through Enel Cien where it has The Enel Américas Group also participates in electricity trans- an open public session at the São Paulo Stock Exchange. The nearly complete ownership. management of the plant began on November 11, 2017. With 17. Description of the electricity business by country 157 Enel Cien Enel Cien is an energy transmission company in Brazil. The complex consists of two frequency conversion stations, Ga- rabi I and II Garabi II, converting both ways the frequencies in Brazil (60 Hertz) and in Argentina (50 Hertz) and transmission lines. On the Argentinean side, they are managed by two sub- sidiaries: Compañía de Transmission del Mercosur S.A. (CTM) and Transportadora de Energía S.A. (TESA). Enel Cien fully controls the shareholding capital of both companies. The interconnection system consists of two transmission lines whose total length Is 1,006 km, and the Garabi Conver- sion Station, SE STA (Santo Angelo/RS) and SE YTA (Itá/SC). On April 5, 2011 the decrees, published in the Official Journal defined the annual value of the Annual Permitted Payment (RAP) for Enel Cien. With this, the regulator equates Enel Cien (whose assets consist of the Garabi lines 1 and 2) to the concessionaires of public service transmission. The total annual RAP is adjusted annually, and the tariff review processes takes place every four years. As of April 2011, Enel Cien was officially authorized to re- ceive payments under this new business model. Electricity Distribution in Brazil Enel Américas participates in electricity distribution through Enel Brasil and its subsidiaries Enel Distribución Río, Enel Dis- tribución Ceará, Enel Distribución Goiás and Enel Distribución São Paulo. In 2019, Enel Distribución Río supplied electricity to 2,867,318 billed clients. Of that number, 92% are residential clients, 5% are commercial clients and 3% other users. Energy sales in 2019 reached 11,089 GWh, representing a 1% increase in relation to 2018. An important part of this figure is the participation of residential clients, representing 44% of physical sales, followed by commercial clients with 17% of sales, industrial clients with 2% and other clients and tolls representing 37% of sales. Enel Distribución Río emphasizes its fight against energy theft developing projects that make use of modern technology and social activities. However, current energy losses still represent one of Enel Distribución Río´s main challenges. 2019 closed with energy losses of 22,5%. Compared with 2018 it was a 1.5 p.p in- crease mainly due to the upsurge of risk areas and the eco- nomic downturn in the State of Río de Janeiro. Additionally, in 2019 Enel Distribución Río also took certain actions to improve its quality indicators, reducing the SAIDI (time without energy supply) by 7% in relation to 2018 (13,15h vs 14,10h). Enel Distribución Ceará Enel Distribución Ceará is an electricity distribution Company that operates the State of Ceará, in northeastern Brazil, covering a 148,921 km2 concession area. The Company serves a population of over 9 million inhabitants. In 2019, Enel Distribución Ceará supplied energy to 3,924,107 billed clients. Of the total, 79% are residential clients, 5% com- Enel Américas directly and indirectly has 99.7%, 74.1%, 99.9% and 95.88% shareholding of these companies, respec- mercial clients and 17% other users. tively. In Brazil, the main distribution companies in the electricity Energy sales in 2098 reached 12,186 GWh, increasing by 2.9% in relation to the previous year. Residential clients represented 38%, commercial clients 15%, followed by tolls and other clients with system are: CPFL, Cemig, Light, Coelba and Copel. 47%. Enel Distribución Río Enel Distribución Goiás Enel Distribución Río (former Ampla) is an electricity distri- bution Company with operations in 73% of the territory of the Río de Janeiro State, equivalent to a 32,188-km2 area. The population Inhabiting the area is approximately 8 million peo- ple distributed in 66 municipalities. The biggest are Niteroi, São Gonçalo, Petrópolis, Campos and Cabo Frío. Enel Américas, through its subsidiary Enel Brasil, acquired 94.8% of Enel Distribución Goiás (former Celg) shareholding capital, a distribution company operating in the Brazilian State of Goiás. The investment was $ 2,187 million reais (approxi- mately US$ 640 million). 158 Annual Report Enel Américas 2019 In November 2016 Enel Brasil won a public tender for the Energy sales in 2019 totaled 43,148 GWh, a 1% increase in privatization of Celg, carried out by the Brazilian government comparison with 2018. The residential, commercial, and rural through Banco Nacional de Desarrollo BNDES, and took over types of clients grew by 0.9%, 3.3% and 3.2% respectively the asset on February 14, 2017. In May 2017, Enel Brasil ac- while the Industrial and public sectors decreased by 3.4% and quired an additional 5% of Celg (currently Enel Distribución 2.8% respectively. Goiás) for $ 81.7 million reais. Additionally, Enel Brasil carried out a capital increase in Enel Distribución Goiás for $1,600 Enel Distribución São Paulo also took certain actions to im- million reais. By the end of 2017, Enel Brasil´s shareholding in prove quality indicators and in 2019 recorded a 10% decrease Enel Distribución Goiás reached 99.93%. in the SAIDI (time without electricity) compared to 2018 (38 6 The Enel Distribución Goiás acquisition was completely fi- outages) recorded a 16% reduction (3.71 vs 4.39) compared minutes vs 431 minutes), while the SAIFI (frequency of power nanced with the cash from the capital increase of Enel Améri- to 2018. cas, which was approved by the end of 2012. The Company, located in the central western area of Brazil, has plify and optimize its corporate structure, in particular (i) Enel a concession area covering approximately 337 thousand km2 Distribución São Paulo ‘s reverse merger with Enel Brasil In- and serves a population of more than 6 million inhabitants. vestimentos Sudeste, completed in November; (ii) Public Of- fer for Share Acquisition and Conversion of Registration, with In 2019, the Company Implemented some measures to sim- e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Energy sales reached 14,259 GWh in 2019 increasing by 3.7% the subsequent listing in the stock exchange. As a result, Enel as compared to 2018. The distribution of clients is as follows: Brasil ended 2019 with a full control of Enel Distribución São 86% residential clients, 7% commercial clients and 7% oth- Paulo and the Enel Group became the company’s sole share- ers. holder. y r a m m u S . 9 1 i l s g n d o h e r a h s f o In 2019, Enel Distribución Goiás supplied energy services to 3,114,063 billed clients. The classification by type of clients shows that 86% are residential, 7% are commercial, and oth- Distribution Activities and Projects er clients represent 7%. Additionally, Enel Distribución Goiás took certain actions to improve quality indicators and in 2019 reduced SAIDI (time without energy supply) by 11% in relation to 2018 (11,32x vs 15,02x). Enel Distribución São Paulo Energy efficiency Energy efficiency projects involve actions that promote con- scious energy consumption, changes of equipment (refrigera- tors, freezers, lamps) and electrical wiring, with an important impact on energy consumption and home energy efficiency improvement. In 2019, 894,752 people in Enel Distribución Río, Enel Distribución Ceará, Enel Distribución Goiás, and Enel Distribución São Paulo is the largest electricity distribu- recently, Enel Distribución São Paulo, benefited from the tion company in Brazil in terms of energy sales, and operates change of equipment in 136 implemented initiatives. 788,639 in 24 cities in the Metropolitan Region of São Paulo including lamps and 14,942 refrigerators were changed in the initiative the capital, Brazil´s main economic and financial center. and in others. Some 266,892 consumers benefited from the Its concession area covers 4,526km2 and concentrates the conferences and workshops, 71,211 via community agents educational projects for conscious consumption (108,302 via country´s largest domestic GDP and the highest demographic and 87,369 via school program). density, 1,616 consumer units per km2 with 18 million people, equivalent to 9% of the total energy consumed in the country. The projects are supported by touring trucks equipped with In 2019, Enel Distribución São Paulo supplied energy services distribution processes, consumption simulators and interac- to 7.3 million billed clients. Of the total, 94% are residential tive totems with fun units for all ages. As it is a mobile project clients, 6% are commercial clients, and 1% other users. it guarantees access to information for residents and students explanatory models of energy generation, transmission and s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 17. Description of the electricity business by country 159 in areas located far from metropolitan sectors. The program’s results in 2019 were 46,813 (MWh/year) of energy saved and 8, 812 (kW) of avoided demand. This energy saving is enough to supply 26 thousand residences per year, with an average consumption of 150kWh per residence. In 2019, Enel Brasil´s energy efficiency program concentrated its initiatives in the regions with greater impact on commercial losses (electricity theft), promoting responsible energy con- sumption initiatives among the population, especially among low-income consumers. The resources invested by distribu- tion companies are regulated and are equivalent to 0.4% of the companies’ net operational revenues. Enel X Projects in Brazil Claro Photovoltaic project Enel X built Pernambuco’s largest Claro photovoltaic plant. The project included the installation of 15,330 panels that will sup- ply clean energy, avoiding 1,203 tons of CO2 per year. The project was implemented through a Power Purchase Agreement (PPA) business model. Work on the project was completed in October 2019, but the plant will be energized during the first months of 2020, due to some relevant proce- dures with the local distributor (CELPE). Generation Transmission Distribution Codensa Barranquilla Medellín Bogotá Cali Neiva Laguneta Termozipa Cartagena El Paraíso Limonar Tequendama El Salto II Darío Valencia Charquito La Guaca Betania El Quimbo El Guavio 160 *Non-billable consumptions are not included in distribution business. Annual Report Enel Américas 2019 TypeThermoNet Installed Capacity 225 MWTypeHydroNet Installed Capacity 18 MWTypeThermoNet Installed Capacity 184 MWTypeHydroNet Installed Capacity 276 MWTypeHydroNet Installed Capacity 150 MWTypeHydroNet Installed Capacity 18 MWTypeHydroNet Installed Capacity 57 MWTypeHydroNet Installed Capacity 35 MWTypeHydroNet Installed Capacity 19 MWTypeHydroNet Installed Capacity 324 MWTypeHydroNet Installed Capacity 540 MWTypeHydroNet Installed Capacity 1,260 MW14,307 GWh3,526,7767.7%TypeHydroNet Installed Capacity 400 MWEnergy SalesEnergy LossesClientsGeneration Transmission Distribution Codensa e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Barranquilla Medellín Bogotá Cali Neiva Laguneta Termozipa Cartagena El Paraíso Limonar Tequendama El Salto II Darío Valencia Charquito La Guaca Betania El Quimbo El Guavio *Non-billable consumptions are not included in distribution business. 17. Description of the electricity business by country 161 TypeThermoNet Installed Capacity 225 MWTypeHydroNet Installed Capacity 18 MWTypeThermoNet Installed Capacity 184 MWTypeHydroNet Installed Capacity 276 MWTypeHydroNet Installed Capacity 150 MWTypeHydroNet Installed Capacity 18 MWTypeHydroNet Installed Capacity 57 MWTypeHydroNet Installed Capacity 35 MWTypeHydroNet Installed Capacity 19 MWTypeHydroNet Installed Capacity 324 MWTypeHydroNet Installed Capacity 540 MWTypeHydroNet Installed Capacity 1,260 MW14,307 GWh3,526,7767.7%TypeHydroNet Installed Capacity 400 MWEnergy SalesEnergy LossesClients Colombia Electricity Generation because of the effect of the “El Niño Débil” (Weak El Niño) phenomenon in the 2018-2019 period that seriously reduced rainfall in Colombia. In the second quarter, contributions were at a surplus, with no impact on weak ENSO conditions. During the second half, there was a deficit in contributions due to low rainfall during the country´s rainy season, especially in the Antioquia region, mainly because of atmospheric phenomena Enel Américas participates in electricity generation through its that inhibited precipitations such as the subsiding phase of subsidiary Emgesa, where it controls, directly and indirectly, the intra-seasonal MJO (Madden Julian Oscillation). 48.5% of its shareholding (economic participation) and 56.7% of political participation. In 2019, Enel Américas´s electricity Hydrological contributions accumulated in 2019 in the Bogotá generation in Colombia reached 21.7 % of the country´s to- and the Guavio River basins were slightly above historical av- tal generation. Other generators connected to the Colombian erage, Quimbo basin was normal and the Betania River basin electricity system are: Empresa Pública de Medellín, Isagen, showed a deficit in hydro contribution. Gecelca, Celsia and Chivor. Emgesa On September 1, 2007, the Colombian companies Emgesa S.A. E.S.P. and the Central Hidroeléctrica de Betania S.A. E.S.P. completed a merger with the latter being the absorbing com- pany with a subsequent change of name to Emgesa S.A. E.S.P. Emgesa is the largest electricity generation company in Colom- bia given its net installed capacity and generation. Effective maintenance management of generation power plants and production management milestones in 2019 In 2019 net energy generation of Emgesa reached 15,250 It is made up by 17 power plants with 3,506 MW of total in- GWh, showing an 8.5% increase as compared to 2018, main- stalled capacity, among which the most important is El Guavio ly due to a higher hydro generation considering the increased with 1,260 MW of installed capacity, and it is also the largest hydrologic contribution of the Bogotá River in relation to hydroelectric power plant in the country. Of the 17 existing historical average and increased thermal generation due to plants, 15 are hydroelectric and 2 are thermal. Net generation the system´s higher requirement from the plants which po- was 15,250 GWh in 2019. Hydro generation reached 14,620 sitioned Enel Emgesa as the first generator in the country GWh and thermal generation was 630 GWh. with 21.7% of total generated energy. At the same time, this Hydrology Context for Emgesa in 2019 year the historical record generation month was exceeded in two of the hydraulic power plants: Guavio with 849.2 GWh/ month-July and El Quimbo 273.2 GWh/month-August. In addi- tion, the annual generation record in El Quimbo was achieved since it began to operate commercially (2,231 GWh/year). The ENSO (acronym for El Niño Southern Oscillation) condi- tions in the Central Pacific were typical of a weak El Niño ep- The availability of Emgesa’s generation park in 2019 was 90.3 isode, which, according to publications of the Institute of Hy- %, a 0.9% decrease in relation to 2018, due to the Imple- drology, Meteorology and Environmental Studies-IDEAM and mentation of the life extension project and environmental Im- international agencies, began in September 2018 and ended provements in the Termozipa Plant. in June 2019. During the first quarter of 2019 at a national level (SIN) the con- registered in 2019, 7,990 fewer than in 2018. The use factor tributions of the main rivers were at a deficit in the dry season reached 50% as compared to 46% for the year before. A total of 177,461 service hours of the generation units were 162 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Generation activities and projects Land reserved for future projects Improvements in the Termozipa Thermal Power Plant Termozipa, located 40 km from Bogotá, is a thermal power plant owned by Emgesa. This power plant has four units and its total installed capacity is 235 MW. It is fired by coal from the coalmines located nearby. Among other things, the im- provements project in the plant includes, among others, inter- vention of boilers, turbines, generators and water intake. This will permit to increase the plant´s useful life by an additional 15 years or 100,000 hours of operation. In 2019, scheduled maintenance stops took place to install new burners with ultra-low NOx emissions, a change of the main boiler banks in units 3 and 4, compliance with legal emis- sion tests for Units 4 and 5 with satisfactory results following the interventions of the Life Extension project and BEPP (best environmental practices). Furthermore, 2019 also saw the be- ginning of the installation of the first Energy Storage System (BESS) in Colombia. Improvements in the Betania Hydroelectric Power Plant Betania is a hydraulic plant located 30 km south of Neiva with a net installed capacity of 540 MW. In 2019, the largest in- tervention in its 32 years of commercial operation was car- ried out in Unit 2 which included changing the stator winding, modernizing the speed and voltage regulators, recovering profiles in impellers, installing a flow measurement system, among others. With a programmed break that lasted 95 days, more than 170 people involved, 69,000 man hours worked, an investment of $12 billion Colombian pesos, all the goals were reached - the schedule was met, and also the cost and the scope but most importantly, the work was carried out with zero accidents. Enel Américas has no land reserved for future projects in Co- lombia. Electricity Distribution Enel-Codensa Codensa is Enel Américas´ electricity distribution and sale company in Colombia, serving the Bogotá and Cundinamarca markets as well as the thirteen districts of the neighboring departments of Meta, Tolima and Boyacá. By the end of 2019, the Company served more than 3.5 million clients due to the urban dynamics and densification that is char- acteristic of the Cundimarca department and the city of Bogotá. In 2019 Enel Codensa carried out important infrastructure proj- ects centered on current and future demand, service quality and reliability improvements and obtained important mile- stones in development. One of the most important results was the improvement in the average interruption frequency of our clients’ service which was 6.83 (*) times in SAIFI ( SAIFI - System Average Interruption Frequency Index-) and a de- crease in the duration of interruptions of 664 (*) min In SAIDI ( SAIDI -System Average Interruption Duration Index-) pursuant to the approved calculation methodology of the Enel Group. The activities and projects focused on: • Projects to improve service quality. • Telecontrol of the Network • Reposition, normalization and repowering of high and medium voltage infrastructure (substations and lines) • Expansion of installed capacity in power substations and MT networks • Connections to the national transmission system and network extension • Coverage expansion for rural areas • Improvement of energy losses control • Massive connection of clients and generators • Smart measurement • Network digitization 17. Description of the electricity business by country 163 The results described above, showcase Enel-Codensa´s vision from previous months) was 130 GWh year, representing a of how to manage the networks to achieve world-class stan- 41% improvement as compared to the 2018 result. dards in terms of service quality, higher demand, coverage and public lighting systems under scenarios of higher invest- As a network operator, Enel-Codensa distributes power to ments and operations, also implementing actions related to both the Company´s clients and to clients of other companies; our networks, thus obtaining satisfactory results in the above this energy, plus the energy that is lost in the distribution sys- mentioned aspects for all our clients. tem, makes up the energy demand of Enel-Codensa Network Thanks to the technical inspection plan and the management Operator (OR). of actions to reduce energy losses, a 7.67% loss rate was As of December 31, 2019, the Enel-Codensa OR demand was achieved in 2019, reducing non-technical losses by -10 GWh 15,200 GWh-year with a 2.27% annual increase representing compared to December 2018. Total energy recovery (increase an improvement on the 2018 closing rate (1.17%). The figure in post-technical inspection turnover and recovered energy shows the development of demand as a network operator over the past three years. Codensa OR demand (GWh-year) 2017 2018 2019 14,690 14,862 15,200 The breakdown of OR demand is shown in the following chart, in which the market segment of clients commercial- ized by Enel-Codensa had an increase of 0.66%, while the segment of other traders increased by 5,92% OR demand breakdown (GWh-year) Codensa trader Other traders 10,370 4,830 Regarding advanced measurement, 87,083 meters were in- in construction projects and for the first small-scale self-gen- stalled in Bogotá and in some of the Cundinamarca and Toli- eration clients, AGPE. ma municipalities, of which 84,910 are with clients and 2,173 as macro meters in distribution transformers. Furthermore. During the first quarter of 2019, the advanced measurement advanced measurement was improved as a complementary management system was upgraded to ePlus SMM, which technology for the control of energy losses, with the instal- streamlined the process of activating meters and commercial lation of 1,838 meters in neighborhoods with high levels of operations, achieving remote billing of more than 50,000 cli- energy loss and in areas of difficult periodic access such as ents during the month of November and more than 4,300 sus- Hacienda los Molinos and El Peñón; facilities were also built pension and remote reconnection operations during the year. 164 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 As part of the lighting and street lighting plan for 2019, con- tinuing Bogotá´s illumination system modernization project, more than 75,000 LED lights were installed of a total accu- mulated 144,000 LED lights in the city. Additional 4,318 lights Artistic Christmas Lighting Project in Bogotá and Ibagué, Colombia were installed in Bogotá’s public lighting system. The city of Bogotá, Colombia once again chose our energy to illuminate its streets and create a magical atmosphere Enel-Codensa continued the so-called Metro Program where during the Christmas season. Thanks to the collaboration of three fundamental projects are grouped together to guaran- Enel-Codensa and the Bogotá Mayor´s Office, our Company tee the start of construction works and the supply of energy renewed its commitment to illuminating the festive season for the first Metro line in the Colombian capital. In 2019, the in the Colombian capital. Working with a team of more than Company´s tendering and contracting department shall carry 450 people, we designed an efficient and low-energy lighting out the early transfer of networks while in the energy supply project for “The Christmas Route”, a project organized by the project the structuring was completed and the process of ob- Mayor of Bogotá with Enel – Codensa since 2005, which per- taining the relevant permits and property management was mitted us to illuminate almost 12 km of streets and a 150,000 initiated. m2 area including plazas and parks. “Christmas closer to the stars” was this year´s motto and it also included ornamenting Furthermore, Enel-Codensa started the planning phase of the the El Tunal city Christmas tree in a park. The tree was 56 me- works necessary to clear the Western Tramway corridor trans- ters high and was ornamented by some 160,000 LED bulbs ferring and removing networks and assets that might interfere which connected two trees with the same technology, each with the infrastructure layout of the Regiotram Project that will 15 meters high, joined by light curtains. be carried out by the Cundinamarca Department Governorate. Enel-Codensa reiterates its commitment and willingness to of Ibagué, where we contributed to illuminating 18 sectors continue contributing to the construction of the vision of the working with a team of more than 50 people. The project illu- region and the city facing the challenges that in the short and minated parks, avenues and shopping malls and included the medium term impose the needs of the Department of Cundi- construction of an interactive snow ramp 25-m long. More namarca and the city of Bogotá. than 500 thousand inhabitants and visitors were able to enjoy Christmas was magical not only in Bogotá, but also in the city the illuminated metropolis. Enel X projects in Colombia Comestibles Italo PV Project Comestibles Italo signed an agreement with Enel X to install 1,080 photovoltaic panels on the roofs of their factory, in an industrial area of Bogotá. It will be the largest solar installation in the city, with a 490 MWh per year of generated energy and will cover 13% of the company’s electricity demand. In a second phase, the facility will install 2,500 more panels, which will allow the company to generate a surplus of elec- tricity in relation to its demand permitting it to sell to the sur- plus to the national grid. Thanks to the energy savings and tax incentives offered under Colombian law, the company esti- mates it will achieve the return on investment in just 10 years. LED Public Lighting Modernization in Bogotá Among the main projects developed in the city, the following are the most Important: Bogotá Localities: As part of the public Illumination system Improvement or- dered by the Mayor of Bogotá, UAESP and Enel – Codensa installed more than 74,000 lights in the towns of Bosa, Usme, Fontibon, Puente Aranda, Engativa and Usaquen. 17. Description of the electricity business by country 165 Main Bogotá Motorways: As part of the modernization through the use of LED public lighting technology, the project of the Bogota Mayor, ran by Enel-Codensa in coordination with UAESP, the North Highway, Avenida NQS and Calle 13 were intervened with the installa- tion of more than 3,000 lights. The avenues now have a new public lighting system with LED technology and have better il- lumination offering visual comfort, road safety for citizens and renovated lighting along these roads. Public Lighting Management in Cundinamarca Municipalities Two contracts were signed to manage, modernize, operate and maintain the public lighting systems in the municipalities of El Colegio (2,130 LED lights) and Lenguazaque (500 LED lights) providing continuity of the Company´s involvement with these municipalities and the maintenance and genera- tion of new revenues through modernizing LED systems, im- proving the lighting conditions in the area and the quality of life for Its inhabitants. Incorporation of the sewage business model into the Enel X product portfolio In Colombia, sewage services are charged through anoth- er public service and in the Enel Codensa concession area this service was historically collected via the aqueduct ser- vice. However, since 2018, Codensa began to approach some government-approved operators to incorporate the sewage service invoicing into the energy bill, thus managing to in- corporate It into the Enel X portfolio in 2019, implementing a joint billing service with the sewage service via two operators in the city of Bogotá and one in Cundinamarca. More than 960,000 clients are currently billed under this system and their payments collected through our Enel Codensa invoice, which contributed in EUR 1 million to the 2019 revenue and EUR 3 million are expected in 2020 thanks to the incorpora- tion of a new operator in September. 166 Generation Transmission Distribution Enel Distribución Perú Edelnor Cuzco Arequipa Chiclayo Trujillo Lima Malacas Moyopampa Callahuanca Huinco Matucana Huampani Santa Rosa Ventanilla Yanango Chimay *Non-billable consumptions are not included in distribution business. Annual Report Enel Américas 2019 8,211 GWh1,433,6388.2%Energy SalesEnergy LossesClientsTypeHydroNet Installed Capacity 69 MWTypeThermoNet Installed Capacity 336 MWTypeHydroNet Installed Capacity 83 MWTypeHydroNet Installed Capacity 276 MWTypeHydroNet Installed Capacity 133 MWTypeHydroNet Installed Capacity 31 MWTypeThermoNet Installed Capacity 400 MWTypeThermoNet Installed Capacity 460 MWTypeHydroNet Installed Capacity 42 MWTypeHydroNet Installed Capacity 151 MWe h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Generation Transmission Distribution Enel Distribución Perú Edelnor Cuzco Arequipa Chiclayo Trujillo Lima Malacas Moyopampa Callahuanca Huinco Matucana Huampani Santa Rosa Ventanilla Yanango Chimay *Non-billable consumptions are not included in distribution business. 17. Description of the electricity business by country 167 8,211 GWh1,433,6388.2%Energy SalesEnergy LossesClientsTypeHydroNet Installed Capacity 69 MWTypeThermoNet Installed Capacity 336 MWTypeHydroNet Installed Capacity 83 MWTypeHydroNet Installed Capacity 276 MWTypeHydroNet Installed Capacity 133 MWTypeHydroNet Installed Capacity 31 MWTypeThermoNet Installed Capacity 400 MWTypeThermoNet Installed Capacity 460 MWTypeHydroNet Installed Capacity 42 MWTypeHydroNet Installed Capacity 151 MW Peru Electricity Generation The Company owns seven hydroelectric power plants, five in Lima and two in Junín. Callahuanca hydro power plant has been under reconstruction and out of service since June 15, 2017 be- cause of the damage caused by flooding that occurred in March of that year caused by the “El Niño Costero” phenomenon. The hydroelectric power plants in Lima are located in the Rí- Enel Américas S.A., through Enel Perú S.A.C. holds 83.60% mac River basin. The Huinco Power Plant is located in the Santa of Enel Generación Perú´s shareholding and 96.50% of Enel Eulalia River basin, a tributary of the Rímac River. Its installed Generación Piura, also through Enel Perú S.A.C., of which it is capacity is 277.9 MW and the Matucana Power Plant is located the owner of 100% of its shareholding capital. in the Rímac River basin, with capacity of 137 MW. A large part Other generators connected to the electrical system in Peru town of Barba Blanca, where the Callahuanca Power Plant is are: Electroperú, Engie Energía Peru and Kallpa Generación. located, with an 84 MW capacity. The Moyopampa (68.7 MW) of these rivers Is diverted through tunnels and channels to the Enel Perú S.A.C. Enel Perú S.A.C. is a company incorporated in Peru, whose corporate purpose is to make investments in other compa- nies, mainly in those dedicated to the exploitation of natural resources and, especially, those related to electricity genera- tion, production and sale; develop engineering projects for the construction of power plants; activities related to the supply, assembly and commissioning of equipment, facilities and / or services for electricity production. Additionally, any other ac- tivity related to the energy and water sectors. Enel Generación Perú S.A.A. and Huampaní (30.7 MW) power plants are located down- stream. The total capacity of these six power plants is 593 MW. The Callahuanca Hydraulic Power Plant re-entered the system on March 30, 2019, after about 2 years of reconstruction, re- habilitation and testing, because of the damage caused by “huaycos” or the rain effect related to the “El Niño Costero” phenomenon that took place in the month of March 2017. The Company also owns 21 lagoons with 282,35 hm3 capacity which permits it to regulate the energy generation flow and to supply water to the city of Lima. The two hydroelectric power plants are in the department of Junín: Yanango with 42.4 MW, on the Tarma River; and Chimay, with 151.3 MW installed capacity, on the Tulumayo River. Their Enel Generación Perú S.A.A, is one of the main private electric- total installed capacity is 193.7 MW. These two power plants ity generation companies in Peru which operates through eight are part of the Chinango subsidiary. power plants, both thermoelectric and hydroelectric, located in the departments of Lima and Junín. Enel Generación Perú also owns three thermal power plants with installed capacity of 224.3 MW, 187.8 MW and 469.4 MW, The Company´s net installed capacity is 1,652 MW, (13% of the respectively. The first one, Santa Rosa is located in the Cercado total of the National Interconnected Electric System – herein- de Lima, and is comprised by UTI units with 104.3 MW, TG7 after “SEIN”) where 47% corresponds to hydraulic generation of 120 MW and Santa Rosa 2, also located in the Cercado de and 53% to thermal generation, considering the Yanango (43 Lima and is made up by a TG8 unit with 187.8 MW. Ventanilla, MW) and the Chimay (155 MW) plants, which since May 31, the third power plant is in the Callao province, and consists of 2009 were divided to become part of Chinango S.A.C. three combined cycle generation units. The Ventanilla thermal Enel Generación Perú’s shareholding as of December 31, 2019 and is currently one of the six combined cycles in the system. is as follows: 83.60% corresponds to Enel Perú S.A.C. (wholly owned by Enel Américas), Prima AFP S.A. owns 5.92% of the Our thermal power plants use natural gas from the Camisea de- company´s shareholding and other shareholders hold the re- posits as their first fuel option and main fuel, and the alternative maining 10.48%. fuel is diesel oil. power plant was the first combined cycle installed in the SEIN 168 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 In May 2019, new natural gas supply contracts were signed in “natural gas mode”, in addition to its diesel fuel operation. between the Ventanilla and Santa Rosa thermal power plants Currently, it has an effective power of 127.78 MW. with Camisea, following a negotiation with the Pluspetrol con- sortium that began at the end of 2018. The duration of the new Enel Generación Piura´s generation reached 658 GWh in contracts is for a 10-year period and they were renewed after 15 20198, representing a 9.2% improvement as compared to the years of continuous operation (2004-2019). previous year. Energy sales totaled 658 GWh in December 2019, a 9.2% increase in relation to the same period of the Total generation of Enel Generación Perú reached 7,586 GWh in previous year. 2019, 1.1% more than the previous year. Energy sales totaled 10,541 GWh as of December 2019, representing a 5.5 % in- crease as compared to the year before. Enel Generación Piura S.A. Generation Activities and Projects Enel Generación Piura carries out activities related to electri- cal energy generation and sale and maintains its participation in the natural gas business. Activities and projects in hydroelectric plants The power plant is in the city of Talara, in northeastern Peru, and the administrative area is in Lima. Its operations are car- ried out within the concession area. The current legislation permits the company to carry out any civil, industrial, com- mercial activities and of any other nature related or that lead to the main corporate purpose. As of December 31, 2019, the Enel Generación Piura share- holding was as follows: 96.50% controlled by Enel Perú S.A.C. (Company wholly owned by Enel Américas) and other share- holders own the remaining 3.5%. Enel Generación Piura has three open cycle thermoelectric generation plants, located in the Talara province, Piura depart- ment, northern Peru. The first one, Malacas, consists of a Siemens brand genera- tion unit, SGT-800 model called TG6 whose effective power is 50.77 MW. This unit began its operating on February 25, 2017. Malacas 2 consists of an ABB-brand generation unit, called TGN-4 whose effective power is 105.38 MW. That unit began operating in February 1998. Finally, Malacas 3 consists of a Siemens-branded generation unit, called TG-5, operating on B5 diesel fuel in an open cycle as a Cold Reserve. On 4 July 2018, a new effective power of 187.46 MW of the unit was approved for diesel mode oper- ation. Since August 2017, Coes Sinac approved its operation Reconstruction of Callahuanca After more than two years of continuous activities, in which the technical criterion for the early recovery of the plant pre- vailed, we successfully concluded the reconstruction of the Callahuanca Hydroelectric Power Plant (83.3 MW), after its in- frastructure was damaged by the “El Niño Costero” phenom- enon in 2017. The company Invested more than 146 million soles and managed to complete the activities with zero on site accidents. The plant, located in the Huarochirí province, was built in 1938 and produces about 600 GWh of clean ener- gy per year, equivalent to the consumption of 450,000 homes. Automation and telecontrol In line with our digitization strategy, we have taken on the challenge of automating our hydropower plants, whose aver- age age is 50 years. The evaluation of the economic, technical, and operational feasibility of this project has been carried out in recent years with the overall support of the Enel Group, and has considered the risks we face, the benefits for our compa- ny and general operational synergies. The automation and telecontrol project consists of three phases: (i) constructing and implementing a new control cen- ter located in the Moyopampa Hydroelectric Power Plant, from where the operation of our hydroelectric plants will be con- trolled, (ii) the automation of four hydroelectric plants (Huinco, 17. Description of the electricity business by country 169 Matucana, Moyopampa and Huampaní); and (iii) developing which lasted approximately 30 continuous days and the par- the appropriate connectivity of our hydroelectric plants with ticipation of local and foreign companies, we extended the the control center. life of our generation unit by 25,000 hours and managed to improve its reliability. This major maintenance was completed In 2019, we completed the implementation of the control cen- successfully and with zero on site accidents. With the partici- ter, and the connectivity of automated power plants (Chimay, pation of the Enel Group´s local and global areas we complied Yanango and Callahuanca). At the end of 2019, the Company with the safety and quality standards according to the estab- made an investment of 19 million soles and we hope to com- lished work plan. plete the project in 2021. Activities and projects in thermoelectric plants Construction of the first Energy Storage System (BESS) in the Ventanilla Thermal Power Plant In 2019, we started the construction of a battery-based energy storage system known as “Battery Energy Storage System” (BESS), which permits to perform the primary frequency reg- ulation (complementary service to keep energy under qual- ity standards required by the electrical system). This project seeks to explore new technologies in the complementary ser- vices market and will make us the first company to implement this type of state-of-the-art technological solutions in the Peru- vian electrical system. The system consists of eight Lithium-Ion battery banks, spe- cially designed to provide a total capacity of 14.6 MW, and its estimated investment is 29 million soles. It is considered one of the most representative projects of the Enel Group’s portfolio in Peru today. Change of combustor to Dry Low NOx (DLN) technology in TG4 Our commitment to reducing gas emissions and reducing wa- ter usage in energy generation led us to exploring sustainable initiatives to combat greenhouse gas emissions. In 2019, we started a project aimed at changing our combustion chamber in unit TG4, which currently uses a water injection system for the reduction of emissions, for another using the so-called Dry Low NOx (DLN) technology. This technology does not use wa- ter and involves replacing the main burner and its auxiliary com- ponents. These changes will lead to lower emission levels of around 15-25 NOx in baseload generation, representing one of the lowest levels obtained by current technologies which is in line with Enel’s global policy to promote compliance with global legal standards, as well as the use of cutting-edge technologies to exceed the levels required in different countries. This project will also significantly reduce water consumption in power generation. Currently, the TG4 uses demineralized water to control emissions, a consumption that will be reduced to zero once the new combustor is installed. In addition to this project, a Fogging System will be installed in the air intake system, which will allow to recover active power This energy storage system will be the first of this type to be in the same unit. implemented in the Peruvian electrical system. Mayor maintenance in the Ventanilla Thermal Power Plant We hope to conclude the project in 2022 with a total invest- ment of 29 million soles, which is part of the Company´s short- term high-impact initiatives portfolio and will directly benefit the neighboring communities of Malacas and Talara. With an investment of more than 13 million soles the Compa- ny completed the 125,000-hours maintenance of the TG3 unit in the Ventanilla Thermal Power Plant. It was the fifth largest maintenance service carried out during the life of the unit. It Land reserved for future projects included changing critical turbine parts, as well as inspecting burners and the electric generator. With this maintenance, Enel Américas has no land reserved for future projects in Peru. 170 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Electricity Distribution Enel Américas S.A. through Enel Perú S.A.C. has an 83.15% shareholding of Enel Distribución Perú. Other distributors participating in the electrical system in Peru are: Luz del Sur, Electrosur, and Grupo Distriluz. Enel Distribución Perú S.A.A. Enel Distribución Perú is the concessionaire of the public electricity utility in the northern area of Metropolitan Lima. Its concession area covers about 1,550 km2, extending over the northern area of Metropolitan Lima, the constitutional prov- ince of Callao and the provinces of Huaura, Huaral, Barranca and Oyón, covering exclusively 52 districts of the above-men- tioned provinces and another 5 in shared with the distribution Company of the south area. In 2019, our client base grew by 0.8% as compared to 2018, reaching 1,433,638 clients. The distributed energy, including tolls for 2019 totaled 8,211 GWh, 2.1% higher than the pre- vious year. Activities and projects in dis- tribution At the Enel Group, we constantly strive to improve our pro- cesses and operations through digitization and technological innovations. In 2019 , the second phase of the LIDAR (Light Imaging, De- tection, and Ranging) network was digitized permitting us to simulate an image of our medium and low voltage networks, and facilitate the identification of support poles of third-party communication networks and home issues, avoiding potential risks in the networks. Taking advantage of the knowledge transfer available thanks to the fact that we belong to a multinational group, we have locally developed digital tools that improve the security and efficiency of our processes, such as Smart Detect and SEDs 360 degrees. Enel X projects in Peru ON Energy Storage Project In May 2019, Enel X Peru signed the Memorandum of Un- derstanding (MoU) with ON Energy, a company dedicated to designing, implementing, operating and maintaining battery systems with operations in several countries around the con- tinent. The document lays the foundations for cooperation for the development of energy storage solutions in Peru, combin- ing operational capacity and localized experience. It is the first step in implementing such large-scale projects with a great potential for the entire region. This MoU gives Enel X Peru the opportunity to position itself as an early leader in the Peruvian market. The Peruvian market requires this type of service as some clients have an energy demand of monthly peaks of up to 30-40% of their bills. Peru´s first electric bus: The Global Sustainable Electricity Partnership (GSEP) and member companies, Enel X and Hydro-Québec, inaugurated the first electric bus in Lima with the collaboration of Protrans- porte and the Peruvian Ministries of Energy and Mines, Trans- port and Communications, and the Environment. Transport electrification can play an important role in meeting Peru’s commitment to reduce its carbon footprint by 30% by 2030. The 80-passenger electric bus will be operated by the Allin Group, one of Protransporte’s local operators, along the Red Corridor line (Main Avenue of Lima: Faucett-La Marina-Javier Prado), one of the busiest urban arteries. Over the next two years, the three partners will be responsible for maintaining the cargo infrastructure that has been specifically designed and built to permit the operation of this vehicle taking into account the country´s and the city´s requirements. The pilot project will collect for six months real-time information on factors such as speed, occupancy, battery behavior, environ- mental impact, comparisons with vehicles using diesel or gas, among other parameters. This data will permit to create the baselines and provide the necessary knowledge to adopt and implement a massive electric transport system in Peru. 17. Description of the electricity business by country 171 First contract to improve public lighting system for the San Miguel Municipality: It is a project that will improve public illumination in the San Miguel district through an agreement signed in June 2019 to install 138 LED lights. This is how Enel X’s B2G (Business to Government) business line signed with the San Miguel Mu- nicipality the first stage of the plan to install smart lights in the district including main roads and parks in the district and which are located in the proximity of the Municipality. The proj- ect was implemented within a 60-day period as of September. Seguros CHUBB becomes a commercial partner and IGS an assistance partner In April 2019, the Swiss insurance company CHUBB with op- erations in 53 countries, became a commercial partner. The commercial relation began with the sale of three types of in- surance: accidents, home, and life with 2,665 insurance pol- icies sold. At the same time, IGS became a healthcare partner and the two companies designed dental, medical and funeral assis- tance products at affordable prices for the Enel X client seg- ment, selling 5,582 services in 2019. Electric taxi project Thanks to the cooperation between Enel X, the Chinese car manufacturer BYD and the Peruvian Company Taxi Directo, a pilot project was launched to implement two electric taxis in Lima, the Peruvian capital. The taxis will run for six months to collect all the necessary information about the performance of the vehicles and then evaluate the inclusion of 30 more electric cars into the fleet of the taxi company. Enel X will install the charging stations, a Juicebox Pro 32 and a Fast Charge while BYD will supply the two electric vehicles that Taxi Directo will run and manage. 172 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 17. Description of the electricity business by country 173 174 Annual Report Enel Américas 2019 18. SUSTAINABILITY 18. Sustainability 175 Context The current framework within which our business is run is dynamic and challenging and incorporates additional factors to the traditional ones such as the climate crisis, new social demands, demographic changes, and the digital revolution. To meet these challenges and expectations of their stakehold- ers, companies have had to rethink their strategies, innovate, Sustainable business strategy and put environmental, social and governance (ESG) aspects For Enel, sustainability is synonymous with the creation of at the center of their thoughts and actions. Consequently, value developed through a model that integrates economic, modern investors require a more holistic look at the invest- environmental, social and governance objectives into the busi- ment processes, increasingly evaluating companies´ ESG per- ness plan and creates long-term value for all its stakeholders. formance in their search for stable and long-term returns. Given that the ESG variables have a lasting impact on busi- able Development Goals (SDGs) that guides the management ness, international entities such as IPCC and COPs see global of all areas of the Company and its subsidiaries through spe- warming as a priority because of their interconnected impacts cific indicators. This model is then embedded in a plan linked to the Sustain- on the economic and social horizons as well as the environ- mental one. Demographic changes pose challenges because of an increasing urbanization and the need to develop sus- tainable cities that improve the life quality of their inhabitants, especially in Latin America, where 80% of people live in urban areas. As stated by the United Nations, the urban population growth requires paying more attention to such aspects of modern life as accommodation, transport, energy, education and health services and employment to meet citizens´ neces- sities. From this point of view, electricity plays a crucial role as an enabling factor for sustainable growth and progress. These changes, coupled with the exponential development of digital technologies, have redefined the purpose of the elec- trical industry, called to be a major player in energy transition. As a way of leading this transition, Enel Américas has focused its investments on digitization with the development of eco- systems and platforms, as a way of both giving new uses to energy and overcoming energy poverty, which mainly affects the outlying areas of large cities. Sustainabi- lity in business Dimension Aware of the role that the Company plays through its busi- ness, in contributing to resilience to climate change and social phenomena related to urbanization, Enel Américas bases its services on low carbon services through the electrification of cities, quality services and network digitization, as well as on electricity generation mainly from renewable sources, leading the transition to low carbon economies in the countries where it operates. 176 Annual Report Enel Américas 2019 Growth through low carbon technologies and services: the role of electrification and power generation Enel Américas’ investments have been focused on increasing the efficiency of its assets and operating standards, mainly the expansion of distribution networks and on clients through new connections and more services. Total capex Total capex by business Total capex by country 34% 29% 2% 6% 11% 21% US$ 5.3 bn US$ 5.3 bn US$ 5.3 bn 10% e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 37% Asset Development Asset Management Customers 81% Gx I&N Retail Enel X 56% Argentina Brazil Colombia Peru 14% y r a m m u S . 9 1 l i s g n d o h e r a h s f o Enel Américas has focused its operations on power generation based on hydroelectric technologies accounting for 55% of its total capacity. This energy industry transformation process must place the client in the center and encourage new electricity uses in a more effi- cient and accessible way. With this in mind, Enel Américas is driving electro-mobility, energy efficiency and greater grid resilience, as a way forward in the decontamination of cities. Performance measurement indicators in low carbon technologies ODS 7,13 7, 13 13 7, 11 7, 11 7, 13 9, 11 Indicator % of installed capacity with renewables % of generation with renewable sources Reduction of specific emissions gCO2/Kwheq Number of clients (million)) MW demand response Installed photovoltaic systems (MWp Managed light points (thousands) 9, 11, Innovation & Infrastructure, through Charging Points (#PoC) 18. Sustainability 2019 55 61 162 24.7 29 12 417 357 Results 2018 56 59 170 24.5 - 5 411 221 2017 48 55 192 17.2 - 3 N/A N/A 177 s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 In 2019, 61% of Enel Américas’ power generation came from renewable technologies, where the geographical diversifica- tion of our generation plants allows us to take advantage of the differences in hydrology, affected, to varying degrees, by climate change. At the same time, to capitalize on the opportunities of electri- fication of cities, the Company, through Enel X, invests in solu- tions and services for new and efficient energy uses, in the infrastructure necessary to develop electro-mobility and elec- trical services for clients, whose base has increased steadily with the incorporation of Enel Distribución São Paulo in 2018. Operative improvement for quality service Network development is critical to increasing the resilience and reliability of power supply and delivering quality services. Therefore, the Company has focused its investments on the digitization of networks and assets. In the generation area, Enel Américas continuously makes im- portant investments to incorporate the latest advances in in- novation, digitization, robotization, automation, different data driven and predictive maintenance technologies in its gener- ating park. This has permitted us to use resources more effi- ciently and to improve the management of our assets, while maintaining excellent performance. Indicators to measure service quality Value chain One of the pillars of our business sustainability is a sustain- able supply chain. That is why we share a common purpose with our suppliers to create value from the same long-term perspective. We constantly reduce the risks related to social, environmental, and occupational safety breaches, also re- warding best practices. Sustainability measurement indicators in the supplier chain Results ODS Indicator 2019 2018 2017 Evaluation of health and safety suppliers. Evaluation of suppliers in environmental performance. Evaluation of suppliers in human rights. 12 12 12 100% 100% N/A 100% 100% N/A 100% 100% N/A Sustainabi- lity in the social dimension ODS Indicator 9 11 Number of clients (million)) 9, 11, Total Loss index 1 9, 11 SAIDI (minutes) 9, 11 SAIFI (times) . Results 2018 24.5 11 787 7 2019 24.7 12 747 6 2017 17.2 12 1,085 9 Involving our people At the time of energy transition and the resulting transforma- tion of the business model, people in companies play a key role in tackling technological and innovation challenges. That 1 Total loss corresponds to high, medium, and low voltage and include commercial losses and those caused by theft. 178 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 % of employees involved in digital skills dissemination activities Gender diversity (% of women)2 Participation of women in selection short lists (% of all candidates) Work environment survey (employee participation)3 Employees referring to colleagues with disabilities Work flexibility – Smart Working4 (Number of employees) 8 5, 10 5, 10 8 10 8 is why training employees in new skills, overcoming barriers to achieve a more inclusive company and providing tools for a new role in the energy market are vital instruments to create long-term value. Indicators to measure initia- tives focused on local devel- opment Indicators to measure sus- tainable development in the work environment ODS Indicator 2019 2018 2017 Results 47 18 N/A N/A 18 21 ODS Indicator 2019 2018 2017 Results Access to clean and affordable energy (thousands of beneficiaries accumulated since 2015) Economic development and decent work (thousands of beneficiaries accumulated since 2015) Inclusive, equitable and quality education (thousands of beneficiaries accumulated since 2015) 7 8 4 4,042 2,995 1,575 522 354 288 383 345 316 42 N/A N/A 100% N/A 81% Health and Safety 6 6 6 1.108 810 466 assets seeking to reduce accident rates in all the countries Enel Américas considers people´s health and safety its most Involving local communities Enel Américas considers the constant relationship with com- munities a pillar of its business sustainability. Permanent di- alogue, symmetry of information and transparency are nec- essary foundations to reach consensuses with stakeholders. where we operate in the case of both our own and third-party employees. With this in mind, we develop and promote safety culture by highlighting both self-care and the definition of pol- icies, integration of safety in processes, training, quality con- trol, accident analysis and exchanges of best practices. More details in the Occupational Health and Safety section. Health and safety measure- ment indicators ODS Indicator 2019 2018 2017 Results Enel Américas operates in territories where it works with ded- icated community relations teams. Lost-Time Injury Frequency Rate (LTIFR) own employees and contractors 3 0.69 0.99 1.00 Focusing on local development, the Company implements in- clusive and participatory projects that seek to bridge the gaps in multidimensional poverty investing in improving people´s access to clean and affordable energy, economic develop- ment, and quality education. This way, synergies between so- cial progress and corporate performance can be forged. 2 The decrease is explained by the incorporation of Enel Distribución São Paulo in 2018. 3 It takes place every two years. 4 Smartworking is a program that allows Enel Chile´s and its subsidiaries´ employees to select one day per week, either Tuesday or Thursday, to work remotely from their home or any physical place that offers good internet connection and complies with security standards. 18. Sustainability 179 ESG analysis methodology (environmental, social and governance) Materiality analysis and stakeholder prioritization Enel Américas acts according to the methodology adopted by the Enel Group that complies with GRI international standards (Global Reporting Initiative). One of the main focuses of these standards is to put stakeholders at the center of both actions and Ideas when establishing the Company’s strategic issues. Therefore, the company caries out the process of their identi- fication and prioritization directly Involving the entire Company and its subsidiaries. The result of this work is the identification of the relevant groups that are consulted about their priorities and expectations regarding the Company. The Company es- tablishes its strategic priorities in the same way. Based on the above, the Company´ defines its materiality which, in turn, governs our strategic planning which we inform in the different public reports. Enel Américas´ Materiality Matrix 5. i s e g e t a r t S s ´ y n a p m o C n i s e u s s I f o y t i r o i r P Economic and financial value creation Costumer engagement Sound governance andfair corporate conduit Energy distribution Engaging the local communities New technologies and solutions Environmental management Decarbonization of the energy mix Occupational health and safety Employees management, development & motivation Sustainable supply chain Innovation and digital transformation Priority of Issues for Stakeholder 5 The final materiality matrix indicates which issues are a priority for our stakeholders and at the same time strategic for the Company. The information it provides serves as an input for the formulation of the sustainability plan, which is updated annually. 180 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 ESG Risk Analysis ESG risks are an integral part of the risk management policy, as described in the Risk Factors section, and are identified with the following references: • Most rlevant issues to consider in materiality, identified accord- ing to the 2020 Global Risk Report, implemented by the World Economic Forum (WEF). • Risk assessments carried out in the context of the human rights due diligence process and integrated management systems (environmental, quality and safety) among others. • Analysis carried out by the most prestigious international sus- tainability rating agencies, which use specific risk assess- ment systems to define the Company´s performance levels in terms of ESG. Due Diligence in Human Rights The Enel Group is committed to the principles that safeguard and promote the protection of human rights, a fact that is re- flected in the policy approved by the Board in 2013. In line with the UN guidelines, Enel Américas has been con- ducting a fundamental human rights due diligence process since 2017 which involves the entire value chain and seeks to identify potential violation risks within the scope of its opera- tions and to establish redress mechanisms to bridge potential gaps. Creating Long- term economic value The value created by our sustainable business strategy is re- flected in the economic indicators by which we measure our performance. Low carbon products and services EBITDA (MM$) Low carbon products and services CAPEX (MM$) Ratio of Low carbon products and services Capex in relation to total (%) Shareholder Remuneration (US$ per share) 2019 2018 2017 2,490 2,954 3,510 1,524 1,556 1,498 90 89 90 0.0106 0.0084 0.0062 Market recognition - rating and sustainability indices Analysts specializing in sustainable investment evaluate com- panies according to their ESG performance or, more general- ly, in sustainability. These assessments are key tools for the Company to improve or reorient the management of its core business while allowing investors to integrate non-financial information (ESG) into their business decisions. In 2019, Enel Américas improved its position in most ratings and sustainability indices, including: • We are part of the 10% of the best electric utility com- panies in the world, according to the Dow Jones Sus- tainability Index (DJSI) which ranked us in 11th position in the DJSI Chile, DJSI MILA Pacific Alliance and DJSI Emerging Markets indices. We were also included for the second time in the RobecoSAM Sustainability Yearbook and recognized in the bronze category as the only Chil- ean Company, together with Enel Chile, to receive these distinctions and be present in three indices. • For the third consecutive year, Enel Américas was con- firmed in the FTSE4Good “Emerging Markets Index” and “Latin America Index” categories. • Enel Américas was included for the second consecutive year in the Best Emerging Markets Performers ranking in the utilities sector, evaluation carried out by Vigeo Eiris. • In 2019, Enel Américas was ranked AA by MSCI, as part of the various sustainability stock indices offered by this entity. • Enel was placed in the 70th percentile under the new Sustainalytics risk methodology. 18. Sustainability 181 182 Annual Report Enel Américas 2019 19. SUMMARY OF SHAREHOLDINGS 19. Summary of shareholdings 183 Direct and Indirect Economic Participation Business Ownership Gx Tx Dx Gx, Dx Tx Gx Gx Tx Tx Tx Gx Gx Gx 40.25% 100.00% 72.09% 99.92% 99.96% 75.62% 65.69% 100.00% 36.04% 33.33% 16.98% 16.98% 25.37% Business Ownership Dx Gx Gx Tx Dx Gx, Dx, Tx OX Dx Dx Gx GX OX OX OX 99.73% 99.75% 100.00% 100.00% 74.05% 100.00% 100.00% 99.93% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Argentina Central Dock Sud S.A. Compañía de Transmisión del Mercosur S.A. Empresa Distribuidora Sur S.A. Enel Argentina S.A. Enel Trading Argentina S.R.L. Enel Generación Costanera S.A. Enel Generación El Chocón S.A. Transportadora de Energía S.A. Sacme S.A. Yacylec S.A. Central Térmica Manuel Belgrano Central Térmica San Martin Central Vuelta Obligado S.A. Brasil Enel Distribución Río S.A. EGP Cachoeira Dourada S.A. Enel Generación Fortaleza S.A. Enel Cien S.A. Enel Distribución Ceará S.A. Enel Brasil S.A. Enel X Brasil S.A. Enel Distribución Goias S.A. Enel Distribución Sao Paulo S.A. Enel Green Power Proyectos I (Volta Grande) Central Generadora Fotovoltaica Sao Francisco Ltda. Enel Tecnología de Redes S.A.* Enel Trading Brasil S.A. ** Nuxer Trading S.A. 184 Annual Report Enel Américas 2019 Colombia Compañía Distribuidora y Comercializadora de Energía S.A. Emgesa S.A. E.S.P. Enel X Colombia S.A.S Perú Enel Perú S.A.C. Chinango S.A.C. Enel Generación Perú S.A. Enel Distribución Perú S.A. Enel Generación Piura S.A. Compañía Energética Veracruz S.A.C. Enel X Perú S.A.C. **** Gx: Generation Dx: Distribution Tx: Transmission / Commercialization Ox: Gas pipelines and others e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Business Ownership Dx Gx OX Business Gx, Dx Gx Gx Dx Gx Gx OX 48.30% 48.48% 48.30% Ownership 100.00% 66.88% 83.60% 83.15% 96.50% 100.00% 100.00% y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 19. Summary of shareholdings 185 Perimeter of Enel Américas’ corporate shareholdings ENEL AMÉRICAS S.A. 48.481619% 5.049462% 48.302608% Emgesa S.A 94.94084% Sociedad Portuaria Central Cartagena S.A. Inversora Codensa S.A.S. 100% Codensa S.A. Enel Generación Chile S.A. 100% ENEL Perú S.A.C. 99.999967% Compañía Energética Veracruz S.A.C. ENEL X Colombia S.A.S. 100% Central Dock Sud S.A. 0.2509% 69.9925% ENEL Generación Costanera S.A. 75.6813% 57.141692% Inversora Dock Sud S.A. 33.33333% Yacilec S.A. 1.42% Termoeléctrica Manuel Belgrano S.A. 5.326% 1.42% Termoeléctrica José de San Martín S.A. 6.40% Central Vuelta de Obligado S.A. 5.326% 1.3% 18.85% 18.85% 33.2% 8.674093 % ENEL Generación El Chocón S.A. 59.00% 41.941145% Hidroinvest S.A 54.757107% Chile Argentina Brazil Peru Colombia Uruguay 186 0.079318% ENEL Argentina S.A. 99.920682% 44.996467% 55.003533% ENEL Trading Argentina S.R.L. ENEL Generación Perú S.A. 80% Chinango S.A.C. 83.151796% 83.597016% 96.496857% ENEL Distribución Perú S.A. ENEL Generación Piura S.A. 100% Compañía Energética Veracruz S.A.C. Distrilec Inversora S.A. 51.50% 99.999999% ENEL Brasil S.A. 99.926465% Enel Distribución Goiás S.A. 56.357697% 74.051061% 99.734188% ENEL Distribución Ceará S.A. 43.097063% Edesur S.A. 50% SACME S.A. 0.001% TESA S.A. 99.999% CTM S.A. 99.999% ENEL Distribución Río S.A. ENEL Generación Fortaleza S.A. 0.0001% ENEL X Brasil S.A. 100% EGP Cachoeira Dourada S.A. 99.754055% 100% Enel Distribución São Paulo S.A. 100% 99.9999% EGP PROJETOS I (Volta Grande) 100% Central Geradora Fotovoltaica Sao Francisco Ltda. ENEL CIEN S.A. 100% 100% Enel Tecnología de Redes S.A. Nuxer Trading S.A. 100% 100% Enel Trading Brasil S.A. Annual Report Enel Américas 2019 Perimeter of Enel Américas’ corporate shareholdings 48.481619% 5.049462% 48.302608% Emgesa S.A 94.94084% Sociedad Portuaria Central Cartagena S.A. Inversora Codensa S.A.S. 100% Codensa S.A. ENEL X Colombia S.A.S. 100% Central Dock Sud S.A. 0.2509% 69.9925% ENEL Generación Costanera S.A. 75.6813% 57.141692% Inversora Dock Sud S.A. 33.33333% Yacilec S.A. 1.42% Termoeléctrica Manuel Belgrano S.A. 5.326% 1.42% Termoeléctrica José de San Martín S.A. 5.326% 1.3% 6.40% Central Vuelta de Obligado S.A. 18.85% 18.85% 33.2% ENEL 8.674093 % Generación El Chocón S.A. 59.00% 41.941145% Hidroinvest S.A 54.757107% Chile Argentina Brazil Peru Colombia Uruguay ENEL AMÉRICAS S.A. Enel Generación Chile S.A. 100% ENEL Perú S.A.C. 99.999967% Compañía Energética Veracruz S.A.C. 0.079318% ENEL Argentina S.A. 99.920682% 44.996467% ENEL Trading Argentina S.R.L. 55.003533% ENEL Generación Perú S.A. 80% Chinango S.A.C. 83.151796% 83.597016% 96.496857% ENEL Distribución Perú S.A. ENEL Generación Piura S.A. 100% Compañía Energética Veracruz S.A.C. Distrilec Inversora S.A. 51.50% 99.999999% ENEL Brasil S.A. 99.926465% Enel Distribución Goiás S.A. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o 56.357697% 43.097063% Edesur S.A. 50% SACME S.A. 0.001% TESA S.A. 99.999% CTM S.A. 99.999% s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 ENEL Distribución Ceará S.A. 74.051061% 99.734188% EGP Cachoeira Dourada S.A. 99.754055% 100% Enel Distribución São Paulo S.A. 100% 99.9999% ENEL Distribución Río S.A. ENEL Generación Fortaleza S.A. 0.0001% ENEL X Brasil S.A. 100% EGP PROJETOS I (Volta Grande) 100% Central Geradora Fotovoltaica Sao Francisco Ltda. ENEL CIEN S.A. 100% 100% Enel Tecnología de Redes S.A. Nuxer Trading S.A. 100% 100% Enel Trading Brasil S.A. 19. Summary of shareholdings 187 188 Annual Report Enel Américas 2019 20. IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 20. Identification of subsidiaries and associate companies 189 CENTRAL DOCK SUD S.A. Company Name Central Dock Sud S.A. Type of Company Limited Liability Company Address Avenida Debenedetti 1636 Dock Sud Avellaneda Phone 4229-1000 Subscribed and paid-in capital (US$ thousand) 356,221 Human Resources and General Services Manager Leonardo Limoli Commercial Manager Fabián Mario Cabana Operations Manager Graciela Babini Planning and Control Manager Sebastián Ortiz Acquisitions and Stores Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. - 1.22% Subscribed and paid-in capital (Thousand US$) 20,560,67 Company Name Central Vuelta Obligado S.A. CENTRAL VUELTA OBLIGADO S.A. Corporate purpose The company’s purpose is electricity generation and its block sale. It may carry out any supplementary and additional activities linked to its corporate purpose and has full legal capacity to acquire rights and commit obligations and carry out all actions not forbidden by law, by these by-laws, the Document of the International Public Tender for the Sale of Central Dock Sud S.A’s Shares, or by any other applicable regulation. Core activities Electricity generation Héctor Martín Mandarano Chairman Santiago Matías Sajaroff Vice-president Regular directors Juan Carlos Blanco Michele Siciliano Mónica Diskin Jorge Esteban Ravlich Andrea Biasotto Rodolfo Eduardo Berisso Rodolfo Heriberto Freyre Alternate Directors Alejandro Aníbal Avayu Patricio Javier Cipollone Nicola Melchiotti Rodrigo Quesada Sebastián Torres Claudio César Weyne da Cunha Juan Manuel Alfonsin Maria Elizabeth Thouldjian Senior Management Juan José Marcet General Manger Verónica Susana Balletto Finance Manager Natalia Nicali 190 Type of Company Limited Liability Company Address Av. Thomas Edison 2701 Buenos Aires, Argentina Phone (5411) 5533 0200 Subscribed and paid-in capital (Thousand US$) 8.35 Corporate purpose The company’s purpose is rlectricity generation and its block commercialization particularly equipment purchases, construction, operation and maintenance of a thermal power plant named Vuelta de Obligado complying with “Management and Operation of Projects, Increase of Thermal Generation Availability and Generation Compensation Adaptation 2008- 2011 Agreement” signed on November 25, 2010 by the National State and the subscribing generation companies. Core activities Construction of a thermal power plant called Central Vuelta de Obligado. Regular Directors Leonardo Pablo Katz (Chairman) Adrián Gustavo Salvatore (Vice-president) Michele Siciliano Mónica Diskin Alternate Directors Leonardo Marinaro Ignacio Villamil Andrea Biasotto Juan Carlos Blanco Senior Management Leonardo Pablo Katz General Manager Commercial relations The company has no commercial relations with Enel Américas S.A CHINANGO S.A.C. Company name Chinango S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas N° 201, Urb. Maranga, San Miguel Lima, Perú Subscribed and paid-in capital (Thousand US$) 80.333,00 Corporate purpose The company’s purpose is electricity generation, sale and transmission, The company may carry out any activity and may also enter Into all contracts permitted under Peruvian law for such purposes. Core activities Electricity generation. General Manager Enel Generación Perú S.A.A., represented by Eugenio Calderón López Commercial relations The company has no commercial relation with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.02% CODENSA S.A. E.S.P. Company name CODENSA S.A. E.S.P. NIT: 830.037.248-0 Type of Company Limited Liability Company– Residential public utility company. Address Carrera 13 A No. 93-66 Bogotá D.C, Colombia Telephone (57 1) 601 6060 Subscribed and paid-in capital (Thousand US$) 4,106,10 Corporate purpose The company’s main purpose is the distribution and sale of energy, as well as other similar, connected, complementary and related Annual Report Enel Américas 2019 activities in electricity distribution and sale; the implementation, design and consultancy of electrical engineering works, sale of products for the benefit of clients. The company may also carry out other activities related to the supply of public services in general, manage and operate other utility companies, sign and Implement special management agreements with other utility companies and sell or loan goods or services to other economic agents related with utilities, in or out of the country and related to public services. . The company may also participate in other utility companies as a partner or a shareholder, directly or in partnerships with other persons, or in joint ventures. Core activities Electricity distribution and sale Regular Directors Andres Caldas Rico Jose Antonio Vargas Lleras Lucio Rubio Diaz Andrés Baracaldo Sarmiento Felipe Castilla Canales Gustavo Moreno Montalvo Andrés López Valderrama Alternate Directors Carlos Mario Restrepo Leonardo Lopez Vergara Michele Di Murro Gloria Astrid Álvarez Hernández Freddy Iván Ussa Lizarazo Daniel Rodríguez Ríos Mario Antonio Cajiao Pedraza Senior Management Francesco Bertoli General Manager Francesco Bertoli Infrastructure and Networks Manager Andres Caldas Rico Legal and Corporate Affairs Manager Carlos Mario Restrepo Enel X Manager Michele Di Murro Administration, Finance and Control Manager Maria Celina Restrepo Santamaría Communications Manager Rafael Carbonell Blanco Human Resources and Organization Manager Diana Marcela Jimenez Regulations and Institutional Relations Manager Eugenio Belinchon Audit Manager Raúl Fernando Vacca Ramírez Procurement Manager Ana Patricia Delgado Meza Digital Solutions Manager Ana Lucia Moreno Moreno General Services and Security Manager Gian Paolo Daguer Sustainability Manager COMPAÑÍA ENERGÉTICA VERACRUZ S.A.C. Company name Compañía Energética Veracruz S.A.C. Type of Company Limited Liability Company Alternate Directors Nicola Melchiotti Claudio Cesar Weyne Da Cunha Jorge Lemos Senior Management Sandro Ariel Rollan General Manager Address Calle César López Rojas N° 201, Urb. Maranga, San Miguel Lima, Perú Commercial relations The company has no commercial relations with Enel Américas S.A. Subscribed and paid-in capital (Thousand US$) 870.06 Shareholding of Enel Américas S.A. 0.03% Corporate purpose Develop and operate hydroelectric projects in any river basin in Peru. Company name Distrilec Inversora S.A. DISTRILEC INVERSORA S.A. Core activities Holder of the Veracruz hydroelectric project. Type of Company Limited Liability Company General Manager Claudio Helfmann Soto Address San José 140 Buenos Aires, Argentina Commercial relations The company has no commercial relations with Enel Américas S.A. Telephone (54 11) 4370 3700 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Shareholding of Enel Américas S.A. 0.07% CTM Compañía de Transmisión del Mercosur S.A. Company name Compañía de Transmisión del Mercosur S.A. Type of Company Publicly Traded Company incorporated in the city of Buenos Aires, Argentina Address Bartolomé Mitre 797, piso 11, Ciudad Autónoma de Buenos Aires, Argentina Subscribed and paid-in capital (Thousand US$) 1.669,87 Corporate purpose The purpose of the company is to supply high- tension electricity transmission services, both for national and international electrical systems under current legislation. The company may participate in national or international tenders, become a high-tension electricity transmission concessionaire, locally or abroad, and engage in such activities as may be deemed necessary for its corporate purpose. Core activities International interconnected electricity transmission. y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Subscribed and paid-in capital (Thousand US$) 8.309,49 Corporate purpose The company´s exclusive purpose is to invest capital in established companies or ones to be established whose main activity is electricity distribution or which directly or indirectly participate in companies whose principal activity is electricity distribution by carrying out all kinds of financial and investment activities, except for those provided for by laws of financial entities, the purchase and sale of public and private securities , bonds, stocks, negotiable bonds and loans, and the placement of funds in bank deposits of any kind. Core activities Investment company Regular Directors Nicola Melchiotti Chairman Mónica Diskin Leonel Sánchez Claudio Da Cunha Guillermo P. Reca Andrés L. Vittone Gonzalo Péres Moore Victor J. Díaz Bobillo Rubén López Alternate Directors Sandro Rollan M. Victoria Ramirez Hernán Alberto Rey Fernando Boggini Juan Manuel Pazos Rubén Vázquez Pablo Javier Viboud Patricio Jorge Richards Leonardo Marinaro Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 7.41% Regular Directors Juan Carlos Blanco Chairman Mónica Diskin 20. Identification of subsidiaries and associate companies 191 Commercial relations The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 0.03% Emgesa S.A. E.S.P. Company name Emgesa S.A. E.S.P. NIT 860.063.875-8 EDESUR Empresa Distribuidora Sur S.A. Company name Empresa Distribuidora Sur S.A. Type of Company Private Commercial Corporation. Public Utilities Company Address Carrera 11 N°82-76, piso 4 Bogotá, D.C. Colombia Procurement Manager Ana Patricia Delgado Meza Digital Solutions Manager Ana Lucia Moreno Moreno General Services and Security Manager Gian Paolo Daguer Sustainability Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 9.34% Type of Company Publicly Traded Company Address San José 140 (1076) Capital Federal, Argentina Telephone (54 11) 4370 3700 Subscribed and paid-in capital (Thousand US$) 15,005.23 Corporate purpose Electricity distribution and sale and similar operations. Subscribed and paid-in capital (Thousand US$) 199,473.42 Corporate purpose The company’s purpose is electricity generation and sale and the sale of fuel gas, as well as other activities that are similar, connected, supplementary and related to its main corporate purpose, including liquid fuels produced from petrol for energy generation purposes, and also imports of natural gas for energy generation and/or its commercialization and (ii) participation in energy commodities financial derivatives markets. ENEL ARGENTINA S.A. Company name Enel Argentina S.A. Type of Company Publicly Traded Company Address Av. España 3301 Buenos Aires, Argentina Telephone (5411) 4307 3040 Core activities Electricity distribution Regular Directors Juan Carlos Blanco Chairman Nicola Melchiotti Vice-president Claudio César Weyne Da Cunha Gonzalo Peres Moore Victor José Díaz Bobillo Mónica Diskin Ernesto Pablo Badaraco Jaime Barba Alternate Directors To be filled To be filled Hernán Alberto Rey Andrés L. Vittone Ruben Omar López Mauricio BarretoTo be filled María Victoria Ramirez Jorge Lemos Senior Management Gianluca Palumbo Fanizzi General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 5.85% 192 Core activities Electricity generation and sale and fuel gas sales Subscribed and paid-in capital (Thousand US$) 38,368.88 Corporate purpose The company’s purpose is to invest in companies dedicated to electrical energy production, transmission and distribution of electricity and its sale, as well as financial activities except those prohibited to banks under valid legislations. Core activities Investment company Regular Directors Juan Carlos Blanco Chairman Mónica Diskin Alternate Directors Nicola Melchiotti Jorge Lemos María Victoria Ramírez Commercial relations The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 4.21% Regular Directors Andrés Caldas Rico Lucio Rubio Diaz Jose Antonio Vargas Lleras Gloria Astrid Álvarez Hernandez Álvaro Villasante Losada Luis Fernando Alarcón Mantilla Luisa Fernanda Lafaurie Rivera Alternate Directors Diana Marcela Jiménez Rodríguez Fernando Javier Gutierrez Medina Michele Di Murro Andrés Baracaldo Sarmiento Felipe Castilla Canales Rodrigo Hernán Galarza Naranjo Maria Paula Camacho Rozo Senior Management Marco Fragale General Manager Marco Fragale Power Generation Manager Andres Caldas Rico Legaland Coporate Affairs Manager Fernando Javier Gutierrez Medina Energy Management Manager Michele Di Murro Administration, Finance and Control manager Maria Celina Restrepo Santamaría Communications Manager Rafael Carbonell Blanco Human Resources and Organization Manager Diana Marcela Jimenez Rodriguez Regulations and Institutional Relations Manager Eugenio Belinchon Audit Manager Raúl Fernando Vacca Ramírez Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 ENEL BRASIL S.A. Company name: Enel Brasil S.A. ENEL CIEN S.A. Company name: ENEL CIEN S.A. Type of Company: Privately Held Corporation Type of Company: Privately Held Corporation Address: Praça Leoni Ramos, N°1, 7° andar, bloco 2 Parte, Niterói, Río de Janeiro, Brasil Address: Praça Leoni Ramos, N° 1, piso 6, Bloco 2, São Domingos, Niterói Rio de Janeiro, Brasil Telephone: (55 21) 3607 9500 Subscribed and paid-in capital (Thousand US$): 70,858.87 Corporate purpose: The company´s purpose is to participate in the production, industrialization, distribution, and marketing of electricity, including importing and exporting activities. To achieve its purpose, the company will promote the study, planning and construction of the facilities related to energy production, transmission, conversion and distribution systems, making and capturing the necessary investments for the development of the works aimed at providing such services. The company may also promote the implementation of associated projects, such as activities inherent, additional, or complementary to the company´s services and work. To achieve its purposes, The company may participate in other companies. Core activities: Energy transport Company without a management committee (board) Senior Management: Guilherme Lencastre (General Manager) Raffaele Grandi Anna Paula Hiotte Pacheco Déborah Meirelles Rosa Brasil José Nunes de Almeida Neto Janaina Savino Vilella Carro Margot Frota Cohn Pires Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.89% Telephone: (5521) 3607 9500 Subscribed and paid-in capital (Thousand US$): 4,143,033.84 Corporate purpose: The company’s purpose is to participate in the shareholding of other companies, in any segment of the electricity or gas sectors, including commercial companies or the supply of services to companies operating in those sectors, in Brazil or abroad; the supply of transmission, distribution, generation or marketing services for electricity and related activities, as well as imports, exports and trading of natural gas in any physical condition for own or third-party use; and to participate, individually or through joint venture, company, consortium or other similar forms of partnership, in tenders, projects and ventures for the development of the services and activities mentioned above. Core activities: Investment company Board: Mario Fernando de Melo Santos Chairman Antonio Basilio Pires de Carvalho e Albuquerque Vice-president Aurelio Ricardo Bustilho de Oliveira Senior Management: Nicola Cotugno General Manager Raffaele Grandi Antonio Basilio Pires de Carvalho e Albuquerque Alain Rosolino Anna Paula Hiotte Pacheco José Nunes de Almeida Neto Janaina Savino Vilella Carro Flávia da Silva Baraúna Margot Frota Cohn Pires Márcia Massotti de Carvalho Luis Alonso Campos Rivas Guilherme Gomes Lencastre Cristine de Magalhães Marcondes Carlos Omar Arriagada Retamal Roberto Zanchi André Osvaldo dos Santos Bruno Franco Cecchetti Commercial relations: The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 59.38% ENEL DISTRIBUCIÓN CEARÁ S.A. COELCE (Companhia Energética do Ceará S.A.) Company name: Companhia Energética do Ceará Type of Company: Publicly Traded Company Address: Rua Padre Valdevino, 150 - Centro Fortaleza, Ceará, Brasil Telephone: (55 85) 3453-4082 Subscribed and paid-in capital (Thousand US$): 200,920.99 Corporate purpose: The company´s purpose is the production, transmission, distribution and trading of electricity, implementation of correlated services granted or authorized to them and the development of activities associated with services, such as related commercial activities. It may also carry out studies, planning, projects, construction and operation of energy production, transformation, transport and storage, distribution and trading systems of any origin or nature, in the form of concessions, authorizations and permits granted to them under the jurisdiction in the territorial area of the State of Ceara, and other areas defined by the granting authority. The company may also carry out studies, projects and implementation of plans and program to research and develop new energy sources, in particular renewables and the study, development and implementation, in the energy sector, of economic and social development plans and programs in the regions of the company´s and community interest. Core activities: Distribution and sale of electricity and related services in the State of Ceará, Brazil Regular Directors: Mário Fernando de Melo Santos Chairman Nicola Cotugno Vice-president Teobaldo José Cavalcante Leal Guilherme Gomes Lencastre Cristine de Magalhães Marcondes Francisco Honório Pinheiro Alves Fernando Augusto Macedo de Melo João Francisco Landim Tavare Alternate Directors: José Nunes de Almeida Neto Márcia Massotti de Carvalho Monica Hodor Maria Eduarda Fischer Alcure Michelle Rodrigues Nogueira Dilma Maria Toledo Artur Teixeira Neto 20. Identification of subsidiaries and associate companies 193 Senior Management: Charles de Capdeville (General Manager) José Távora Batista Teobaldo José Cavalcante Leal José Nunes de Almeida Neto Janaina Savino Vilella Carro Luiz Antônio Corre Gazulha Junior Margot Frota Cohn Pires Cristine de Magalhães Marcondes Fernando Andrade Márcia Sandra Roque Vieira Silva ENEL DISTRIBUCIÓN PERÚ S.A.A. Company name Enel Distribución Perú S.A.A. Type of Company Publicly Traded Company Address Calle César López Rojas 201 Urb, Maranga, San Miguel Lima, Perú Commercial relations: The company has no commercial relations with Enel Américas S.A. Telephone (51 1) 561 2001 Shareholding of Enel Américas S.A. 7.57% ENEL DISTRIBUCIÓN GOIÁS S.A. CELG DISTRIBUIÇÃO S.A. - CELG-D Company name: CELG DISTRIBUIÇÃO S.A. - CELG-D Type of Company: Limited Liability Company Address: Rua 2, Quadra A-37, nº 505, Jardim Goiás, Goiânia, Goiás. Telephone: (62) 3243 1771 Subscribed and paid-in capital (Thousand US$): 1.261.756,22 Corporate purpose: The company’s purpose is to explore electricity distribution technically and commercially. Core activities: Electricity distribution Board of Directors: Mario Fernando de Melo Santos (Chairman) Nicola Cotugno (vice-president) Déborah Meirelles Rosa Brasil Guilherme Gomes Lencastre Aurelio Ricardo Bustilho de Oliveira Márcia Sandra Roque Vieira Silva Senior Management: Jose Luis Salas Rincon Marcia Sandra Roque Vieira Silva Michelle Rodrigues Nogueira Cristine de Magalhães Marcondes Flavia da Silva Baraúna Rosana Rodrigues dos Santos Margot Frota Cohn Pires Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 10.14% Subscribed and paid-in capital (Thousand US$) 192.512,48 Corporate purpose Activities specific to the supply of electricity services distribution, transmission and generation, as per current legislation. In addition, The company may engage in the sale of goods in any form, as well as the supply of advisory and financial services, among others, except for those services for which an express authorization is required under current legislation. Core activities Electricity distribution Board of Directors José Manuel Revuelta Mediavilla Chairman Guillermo Lozada Pozo Vice-president Carlos Alberto Solis Pino Patricia Teullet Pipoli Martín Pérez Monteverde Rafael Llosa Barrios Daniel Abramovich Ackerman Senior Management General Manager Ricardo Lama (until March 26, 2019) Simone Botton (from March 26, 2019) Guillermo Martin Lozada Pozo Administration, Finance and Control Manager Carlos Alberto Solis Pino Commercial Manager Soraya Ahomed Chávez Legal Affairs Manger Milagritos Tatiana Lozada Gobea Regulations Manager Rocío Pachas Soto Organization and Human Resources Manager María Alicia Martínez Venero Communications Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 4.90% ENEL DISTRIBUCIÓN RÍO S.A. AMPLA ENERGÍA (Ampla Energía e Serviços S.A.) Company name: Ampla Energia e Serviços S.A. Type of Company: Publicly Traded Company Address: Praça Leoni Ramos, N° 01, São Domingos, Niteroi Río de Janeiro, Brasil Telephone: (55 21) 2613 7000 Subscribed and paid-in capital (Thousand US$): 621,031.69 Corporate purpose: The company’s corporate purpose is to study, plan, build and explore electricity production, transmission, transformation, distribution and trade systems as well as provide related services that have been or may be granted in the future; conduct research in the energy sector; participate in regional, national and international organizations in the electricity sector and participate in other companies related to the energy sector as a shareholder, including in privatization programs in Brazil. Core activities: Electricity distribution Board of Directors (regular directors): Mario Fernando de Melo Santos Monica Hodor Roberto Zanchi Deborah Meirelles Rosa Brasil Luiz Carlos Franco Campos Otacilio de Souza Junior Board of Directors (Alternate Directors): José Nunes de Almeida Neto Michelle Rodrigues Nogueira Márcia Massotti de Carvalho Cristine de Magalhães Marcondes Luiz Carlos Franco Campos Senior Management: Artur Manuel Tavares Resende (Chairman) Raffaele Grandi José Nunes de Almeida Neto Janaina Savino Vilella Carro Anna Paula Hiotte Pacheco Cristine de Magalhães Marcondes Margot Frota Cohn Pires Déborah Meirelles Rosa Brasil Fernando Andrade Marcia Sandra Roque Vieira Silva Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 9.02% 194 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 ENEL DISTRIBUCIÓN SÃO PAULO S.A. ELETROPAULO METROPOLITANA ELETRICIDADE DE SÃO PAULO S.A. ENEL GENERACIÓN COSTANERA S.A. Company name Enel Generación Costanera S.A. Company name: Eletropaulo Metropolitana Eletricidade de São Paulo S.A. Type of Company: Public Limited Company Type of Company: Publicly Traded Company. Address Avda, España 3301, Buenos Aires, Argentina Address: Avenida Dr. Marcos Penteado de Ulhôa Rodrigues, nº 939, lojas 1 e 2 (térreo) e 1º ao 7º andar, Bairro Sítio Tamboré, Torre II do Condomínio Castelo Branco Office Park, Barueri, São Paulo Telephone (5411) 4307 3040 Subscribed and paid-in capital (Thousand US$) 11,722.32 ENEL GENERACIÓN EL CHOCÓN S.A Company name Enel Generación El Chocón S.A. Type of Company Public Limited Company Address Avda, España 3301 Ciudad Autónoma de Buenos Aires, Argentina Subscribed and paid-in capital (Thousand US$) 4,985.98 Corporate purpose The company’s purpose is the production and block sales of electricity Telephone: (21) 2716-1113 Corporate purpose The company’s purpose is the production and block sales of electricity Core activities Electricity generation. Subscribed and paid-in capital (Thousand US$): 765.534,91 Core activities Electricity generation. Corporate purpose: The company aims to: exploit public energy services, mainly electricity services, in the areas referred to in the Concession Contract and in others where, under applicable law, it is authorized to act, study, develop, design, execute, explore or transfer research and development plans and programs related to any type or form of energy; participate in electricity distribution and trade in electricity distribution and sale; supply technical services for the operation, maintenance and planning of third-party electrical installations; provide services for optimizing consumers´ energy processes and electrical installations; onerous transfer of right of way passage tracks of exploitable lines and land areas of plants and deposits. Other public or private services, including IT services through the operation of infrastructure, in order to produce additional alternative revenue; contribute to the preservation of the environment, as well as participate in community interest social programs; participate in ventures that permit to make use of real estate assets; and participate in other companies as a partner, part owner or shareholder. Regular Directors Juan Carlos Blanco Chairman Michele Siciliano Vice-president Nicola Melchiotti Claudio Cesar Weyne Da Cunha Mónica Diskin Jorge Piña Matías Maria Brea Marcelo Luis Diez Alternate Directors To be filled María Victoria Ramirez Jorge Lemos Fernando Boggini Rodrigo Quesada To be filled Mariano Pessagno Hernan Castro Giovanni Senior Management Pablo Gutiérrez General Manager Regular Directors Juan Carlos Blanco Chairman Claudio César Weyne Da Cunha Vice-president Mónica Diskin María Victoria Ramírez Daniel Garrido Alex Daniel Horacio Valdez Néstor Hugo Martín Alberto Eduardo Mousist Alternate Directors Jorge Lemos Fernando Boggini Rodrigo Quesada Nicola Melchiotti Sebastián Eduardo Guasco Oscar Horacio Carvalho Senior Management Daniel Garrido General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 1.40% Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 1.29% Core activities: Electricity distribution Board of Directors: Britaldo Pedrosa Soares Nicola Cotugno Antonio Basilio Pires de Carvalho e Albuquerque Aurelio Ricardo Bustilho de Oliveira Bernardino Jesus de Brito Guilherme Gomes Lancastre Helio Lima Magalhães Marcia Sandra Roque Vieira Silva Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 26.07% 20. Identification of subsidiaries and associate companies 195 ENEL GENERACIÓN FORTALEZA S.A. CGTF - CENTRAL GERADORA TERMELÉCTRICA FORTALEZA S.A. Company name: CGTF - Central Geradora Termeléctrica Fortaleza S.A. Type of Company: Privately Held Corporation Address: Rodovia 422, Km 1 s/n, Complexo Industrial e Portuário de Pecém Caucaia, Ceará, Brasil Telephone: (55 85) 3464-4100 Subscribed and paid-in capital (Thousand US$): 37,769.51 Corporate purpose: The company’s purpose is to study, plan, construct and explore electricity production, transmission, distribution and trading systems, awarded, permitted or authorized by any title, as well as any other activity related to the aforementioned activities; acquire, obtain and explore any right, concession or privilege related to the aforementioned activities, as well as the practice of all other actions and businesses necessary to achieve its purpose; and participate in the shareholding of other companies, as shareholder, partner or participant,, whatever the purpose. Core activities: Electricity generation. Board of Directors: (N/A) Senior Management: Raffaele Grandi Pedro Werbest Alves Silva Ana Claudia Gonçalves Rebello Anna Paula Hiotte Pacheco Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 1.05% ENEL GENERACIÓN PERÚ S.A.A. ENEL GENERACIÓN PIURA S.A. Company name Enel Generación Perú S.A.A. Type of Company Publicly Traded Company Company name Enel Generación Piura S.A. Type of Company Public Limited Company Address Calle César Lopez Rojas N° 201, Urb. Maranga, San Miguel Lima, Perú (cambio Address memo 2015) Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Perú Subscribed and paid-in capital (Thousand US$) 824.878,00 Subscribed and paid-in capital (Thousand US$) 24,590.00 Corporate purpose In general, the company’s purpose is electricity generation activities. It may also carry out actions of any other nature related or leading to the company’s main purpose. Corporate purpose The company´s main purpose is electricity generation, sale and all the actions and agreements allowed under current legislation. Core activities Electricity generation and sale of natural gas Directors José Manuel Revuelta Mediavilla Chairman Guillermo Martin Lozada Pozo Vice-president Marco Raco Senior Management Rigoberto Novoa Velásquez (representative of Enel Generación Perú S.A.A.) General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.86% Core activities Electricity generation. Directors José Manuel Revuelta Mediavilla (Chairman) Guillermo Martín Lozada Pozo (Vice-president) Daniel Abramovich Ackerman Ernesto Villanueva Roca Francisco García Calderón Portugal Carlos Rojas Perla Elena Conterno Martinelli Senior Management Marco Raco (Hasta 17 de diciembre 2019) Rigoberto Novoa Velásquez (A partir del 17 de diciembre de 2019) General Manager Pedro Cruz Vine Energy Management and Sales Manager Daniel Abramovich Ackerman Legal Counsel Guillermo Marín Lozada Pozo Administration, Finance and Control Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 4.49% 196 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o ENEL GREEN POWER CACHOEIRA DOURADA S.A. Company name: ENEL GREEN POWER CACHOEIRA DOURADA S.A. ENEL GREEN POWER VOLTA GRANDE S.A (anteriormente ENEL GREEN POWER PROJETOS I S.A) Company name: Enel Green Power Volta Grande S.A ENEL PERÚ S.A.C. Company name Enel Perú S.A.C. Type of Company: Limited Liability Company Type of Company: Privately Held Corporation Type of Company: Limited Liability Company. Address: Rodovia GO 206, Km 0, Cachoeira Dourada Goiânia Goiás, Brasil Telephone: (55 62) 3434 9000 Subscribed and paid-in capital (Thousand US$) 15,994.15 Corporate purpose: The company´s purpose is to carry out studies, planning, construction, installation, operation and exploitation of electricity generation plants, and the trade related to these activities. The company may also promote or participate in other companies whose purpose is the production of electricity, in or out of the Sate of Goiás. Address: Praça Leoni Ramos, nº 1, 5º andar - parte, bloco 1, São Domingos. Niterói, Rio de Janeiro. Telephone: (21) 2716-1100 Subscribed and paid-in capital (Thousand US$): 140.640,64 Corporate purpose: The company’s purpose is electricity generation as granted, allowed, and authorized by the Granting Authority. The company may also trade energy in any form and in any market. Core activities: Electricity generation. Company without a board of directors Senior Management: Fabio Destefani Campos Margot Frota Cohn Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Perú Subscribed and paid-in capital (Thousand US$) 1,687,048.00 Corporate purpose The company´s corporate purpose is to invest in other companies, preferably in those involved in the exploitation of natural resources, and especially those related to electricity distribution, transmission, and generation. Engineering services for the construction of power plants; activities related to the supply, assembly, and commissioning of equipment and/ or services for the electricity generation industry. Additionally, the company may carry out any other activity related to the electricity and water sectors. The company may also make equity investments in any kind of property including stocks, bonds and any other type of transferable securities, as well as the administration of such investments. The activities deemed to fall within the purpose of the company may be carried out in Peru and abroad. Core activities: Electricity generation. Board of Directors (regular directors) Nicola Cotugno Francesco Tutoli Anna Paula Pacheco Senior Management: Fabio Destefani Campos (Gerente Interino) Raffaele Enrico Grandi Javier Florencio Alonso Perez Janaina Savino Vilella Carro Ana Claudia Gonçalves Rebello José Nunes de Almeida Neto Anna Paula Hiotte Pacheco Margot Frota Cohn Pires Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 1.05% Commercial relations: The company has no commercial relations with Enel Américas S.A. Core activities Investment company Shareholding of Enel Américas S.A. 1.30% SEnior Management José Manuel Revuelta Mediavilla General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 10.46% s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 20. Identification of subsidiaries and associate companies 197 ENEL TECNOLOGIA DE REDES S.A (anteriormente ENEL BRASIL INVESTIMENTOS SUDESTE 82 S.A) ENEL TRADING BRASIL S.A (anteriormente ENEL BRASIL INVESTIMENTOS NORDESTE 86 S.A) trading of various products, and services in general for the electricity sector and others. Company name: Enel Brasil Tecnologia de Redes S.A Company name: Enel Trading Brasil S.A Type of Company: Limited Liability Company. Type of Company: Limited Liability Company. Address: Praça Leoni Ramos, nº 1, 7º andar, bloco 2, São Domingos. Niterói, Rio de Janeiro. Address: Praça Leoni Ramos, nº 1, 7º andar, bloco 2, São Domingos. Niterói, Rio de Janeiro. Telephone: (21) 2716-1138 Telephone: (21) 2716-1138 Subscribed and paid-in capital (Thousand US$): 2.49 Subscribed and paid-in capital (Thousand US$): 248,59 Corporate purpose: The company’s purpose is to plan, develop, Implement energy generation, distribution, transmission or /or marketing activities. In addition, the shareholding of other companies operating or established to operate in the electricity generation, distribution, transmission and/or marketing segments as a shareholder; distribution of appliances, instruments and equipment for electricity distribution, measuring and control and the sale of devices to measure, distribute and control energy. Corporate purpose: The company’s purpose is wholesale and retail trading of energy and other unspecified products, import and export activities, management activities, as well as related products and services, and participation in other enterprises. Core activities: Electricity generation. Company without a board of directors Core activities: Distribution of appliances, instruments, and equipment for electricity distribution, measuring and control and the sale of devices to measure, distribute and control energy. Senior Management: Antonio Basilio Pires de Carvalho e Albuquerque (General Manager) Raffaele Grandi Company without a board of directors Senior Management: Antonio Basilio Pires de Carvalho e Albuquerque (General Manager) Aurelio Ricardo Bustilho de Oliveira Commercial relations: The company has no commercial relations with Enel Américas S.A. ENEL X BRASIL S.A (anteriormente ENEL SOLUÇÕES S.A.) Commercial relations: The company has no commercial relations with Enel Américas S.A. Company name: ENEL X BRASIL S.A. Type of Company: Limited Liability Company incorporated under the laws of the Federal Republic of Brazil. Address: Praça Leoni Ramos nº 01 Parte, São Domingos, Niterói, Rio de Janeiro, Brasil. Telephone: (55 21) 2613 7000 Subscribed and paid-in capital (Thousand US$): 28.665,65 Core activities: General services for the electrical energy sector and others. Company without a board of directors Senior Management: Carolina Farinas Pinheiro Carlos Eduardo Cardoso de Souza Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.11% Enel Trading Argentina S.R.L. Type of Company Limited Liability Company Address San José 140, piso 6, CABA Buenos Aires, Argentina Telephone (5411) 4124-1600 Subscribed and paid-in capital (Thousand US$) 233,98 Corporate purpose The company´s corporate purpose is wholesale purchase and sale of power and electricity produced by third parties and/or to be consumed by third parties, including the import and export of power and electricity and the sale of royalties, as well as the supply and/or development both at home and abroad of services related to computer services and/or control of the operation and/or telecommunications. Also, transactions for the sale or purchase of natural gas, and/or its transport, including the imports and/or exports of natural gas and/or the sale of royalties, as well as the supply and/or development of related services. Commercial activities and transactions for the sale or purchase of liquid fuels and crude oil, and/or lubricants and/or transport of such elements, including the imports and/or exports of liquid fuels and the sale of royalties, as well as the supply and/or development of related services. Core activities Sale of electrical energy, gas, and derivatives. Computer operations and/or control services and/or telecommunications. Corporate purpose: The company’s purpose is to participate in the shareholding capital of other companies, in Brazil or abroad, production, industrialization, assembly and trade in general, including import and export activities, for own or third-party Regular Manager Nicola Melchiotti Claudio Cesar Weyna Da Cunha Deputy Managers Mónica Diskin Fernando Boggini 198 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 Senior Management Livio Filippo Colasanto General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.08% HIDROINVEST S.A. Company name Hidroinvest S.A. Type of Company Public Limited Company Address Avda, España 3301 Buenos Aires, Argentina Telephone (5411) 4307 3040 Subscribed and paid-in capital (Thousand US$) 923,64 Corporate purpose The company’s purpose is to acquire and maintain a majority shareholding in Hidroeléctrica Alicura S.A. and/or Hidroeléctrica El Chocón S.A. and/or Hidroeléctrica Cerros Colorados S.A. (“the concessionaires”) created by the National Executive Power decree 287/93 and manage such investments. Core activities Investment company Regular Directors Nicola Melchiotti Chairman Claudio Cesar Weyne Da Cunha Vice-president Juan Carlos Blanco Alternate Directors Mónica Diskin Fernando Carlos Luis Boggini María Victoria Ramírez Commercial relations The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 0.27% INVERSORA CODENSA S.A.S. Company name Inversora Codensa S.A.S. NIT 900.351.013-6 Type of Company Simplified Joint Stock Company Address Carrera 13 No. 93-66 Bogotá, Colombia Telephone (571) 601 6060 Subscribed and paid-in capital (Thousand US$) 1.52 Corporate purpose The company´s purpose is to invest in in residential public electric utility services, especially the acquisition of shares in any public electric utility company or in any other company that also invests in utilities whose main purpose is residential electrical energy services under Law 142 of 1994, or in any other company that invests in utilities whose main purpose is residential public electric utility services. Core activities Investment company Senior Management David Felipe Acosta Correa Manager Leonardo Lopez Vergara First deputy manager Juan Manuel Pardo Gómez Second deputy manager consortiums and any other kind of association, and in general, the purchase, sale and negotiation of securities, shares and all other kinds of securities and credit documents in any of the systems or methods created or to be created. Core activities Investment company Regular Directors Juan Carlos Blanco Chairman Michele Siciliano Vice-president Mónica Diskin Héctor Martín Mandarano Santiago Matías Sajaroff Jorge Esteban Ravlich Alternate Directors Nicola Melchiotti Claudio Cesar Weyne Da Cunha Patricio Javier Cipollone Sebastián Torres Alejandro Aníbal Abayu Commercial relations The company has no commercial relations with Enel Américas S.A. Share of the investment of Enel Américas’ assets. 0.05% SACME S.A. Company name Sacme S.A. Type of Company Limited Liability Company Commercial relations The company has no commercial relations with Enel Américas S.A. Address Avda, España 3251 Ciudad Autónoma de Buenos Aires, Argentina INVERSORA DOCK SUD S.A. Company name Inversora Dock Sud S.A. Type of Company Limited Liability Company Address Avenida Debenedetti 1636 Dock Sud Avellaneda Telephone 4229-1000 Subscribed and paid-in capital (Thousand US$) 13,842.28 Corporate purpose The company’s purpose is to participate in companies of any nature, by creating shareholding companies, transitory company ventures, collaboration groups, joint ventures, Telephone (5411) 4361 5107 Subscribed and paid-in capital (Thousand US$) 0,20 Corporate purpose The company´s purpose is to conduct, supervise and control the operation of electricity generation, transmission and sub transmission system of the Federal Capital and Greater Buenos Aires, and the interconnections with the Argentine Interconnected System (SADI by its Spanish acronym). Represent Distribuidora Edenor S.A. and Edesur S.A. in terms of operations before the Wholesale Electricity Market Management Entitiy (Compañía Administradora del Mercado Mayorista Eléctrico CAMMESA in Spanish). In general, carry out all the actions necessary to manage the business correctly, established for that purpose by the concessionaires in the electricity distribution and trading in the Federal Capital and Greater Buenos Aires, as established In the international public tender for the sale of 20. Identification of subsidiaries and associate companies 199 withdraw, accept, endorse, insure, deduct, and in general negotiate, securities or any kind of individual or collective loans; j) enter into any kind of public or private contracts; k) become part of , as permitted by law and by-laws, other companies, to expand or supplement The company’s purpose, either by subscribing or acquiring quotas or shares to remain part of or merge with them; l) enter into contracts to participate, either actively or passively, in consortia, temporary companies, joint ventures and any other legal way of business collaboration; m) enter into or implement, in general, any action or contract required to develop the company’s purpose. Regular Directors Lucio Rubio Díaz Carlos Mario Restrepo Molina Michele Di Murro Alternate Directors Andrés Caldas Rico Diego Rolando Valderrama Cecilia Inés del Toro Senior Management Carlos Mario Molina General Manager Diego Rolando Valderrama First deputy of the Manager Cecilia Inés del Toro Second Deputy of the Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.01% Class A shares in Edenor S.A. and Edesur S.A. and applicable regulations. Core activities Management, supervision, and control of the operation of a part of the Argentine electricity system Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.01% Regular Directors Emilio Jiménez Giuseppe Fanizzi Daniel Flaks Eduardo Maggi Alternate Directors Fabio Canosa Vincenzo Ruotolo Miguel Patricio Farrell José Luis Marinelli Senior Management Francisco Cerar General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. SOCIEDAD PORTUARIA CENTRAL CARTAGENA S.A. Company name Sociedad Portuaria Central Cartagena S.A. Type of Company Public Limited Company NIT 900.325.249-7 Address Carrera 13 A No. 93-,66, piso 2 Bogotá, D.C. Colombia Subscribed and paid-in capital (Thousand US$) 27.31 Corporate purpose The company’s main purpose is to invest, construct, and maintain docks and private and public ports, their management and operations and the development and operation of multipurpose ports pursuant to current laws, among others. Regular Directors To be filled from June 2019 Leonardo Lopez Vergara María Yolanda Cortés Macias Alternate Directors Fernando Javier Gutierrez Medina Luis Fernando Salamanca Francesco Cirillo Senior Management Gustavo Gómez Cerón General Manager Oswaldo Rafael Novoa Arroyo First deputy of General Manager José Arturo López Rodriguez Second deputy of General Manager 200 ENEL X COLOMBIA S.A.S. Company name Enel X Colombia S.A.S. Type of Company Simplified Joint Stock Company NIT 901.176.579-6 Address Carrera 13 A No. 93-,66, piso 2 Bogotá, D.C. Colombia Subscribed and paid-in capital (Thousand US$) 1.522,17 Corporate purpose The company´s corporate purpose is to carry out any legal commercial or civil activity. In particular, The company may : a) Implement public lighting projects to modernize, manage, operate and maintain, expansions, teleprocessing, collection of inventories, photometric designs, auditing, among others; under the different contract modalities with the state such as concessions, individually or jointly building strategic alliances; b) develop electricity engineering projects of low, medium and high voltage, special lighting projects, architectural illumination and Christmas lighting, energy storage projects and renewable energies through the participation in public and private tender processes, enter into contracts with government entities or companies, of mixed economies or fully private; c) design, develop, maintain, build all types of electric installations in industrial and/or commercial areas and/or free zones. d) commercialize electric materials, provide basic and detailed conceptual engineering services, such as advisory services, studies, auditing and project supervision; development and sale of renewable energy projects, energy intelligence software, operation and maintenance of public service systems; e) develop and implement new products and services related to public and private sectors need, through the following: 1) use of existing public lighting infrastructure to leverage innovation and technology projects (Smart Cities); 2) urban development projects such as the installation and maintenance of traffic lights, traffic signals, bus stops, advertising and parks among other urban spaces. 3) implementation of Energy as a Service model, respond to the demand, increase reliability of industrial users in the country; f) carry out every legal action and operation required for the development of The company’s purpose; g) acquire and develop goods of any nature, either movable or immovable properties, corporeal or incorporeal, required for the development of the Company´s businesses; h) sell, lease, tax and manage the Company´s assets; i) issue, Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Company name Transportadora de Energía S.A. Type of Company Public Limited Company Address Bartolomé Mitre 797, piso 11 Buenos Aires, República de Argentina Telephone (5411) 4394 1161 Subscribed and paid-in capital (Thousand US$) 1.67 Corporate purpose The company´s purpose is high tension electricity transmission services linked to both national and international electrical systems. For this purpose, the company may participate in national and international tenders, become a high-tension electricity transmission utilities concessionaire, locally or abroad, and carry out any kind of activity deemed necessary to reach Its purpose. Core activities Electrical energy transmission Regular Directors Juan Carlos Blanco (Chairman) Paolo Giovanni Pescarmona (Vice-president) Mónica Diskin y r a m m u S . 9 1 i l s g n d o h e r a h s f o Alternate Directors Jorge Lemos Nicola Melchiotti Claudio Cesar Weyne Da Cunha Senior Management Sandro Ariel Rollan General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.03% s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 TERMOELÉCTRICA JOSÉ DE SAN MARTÍN S.A. TERMOELÉCTRICA MANUEL BELGRANO S.A. TESA Company name: Termoeléctrica José de San Martín S.A. Company name: Termoeléctrica Manuel Belgrano S.A. Type of Company: Public Limited Company Type of Company: Public Limited Company Address: Maipú 757, Piso 9° Ciudad Autónoma de Buenos Aires, Argentina Address: Azopardo 1487, Ciudad Autónoma de Buenos Aires, Argentina Telephone: (54 11) 4117-1011/1041 Telephone: 011 3221-7950 Subscribed and paid-in capital (Thousand US$): 8,35 Subscribed and paid-in capital (Thousand US$): 8.35 Corporate purpose The company´s purpose electricity generation and its block sale, and particularly the management of equipment, construction, operation and maintenance of a thermal plant as defined in “Final agreement for the management and operation of projects for the re-adaptation of the MEM as established by Resolution SE No. 1427/2004”, approved by Resolution SE No. 1193/2005. Corporate purpose. The company’s purpose is electricity generation and its block sale and particularly the management of equipment, construction, operation and maintenance of a thermal plant of a thermal plant as defined in “Final agreement for the management and operation of projects for the re-adaptation of the MEM as established by Resolution SE No. 1427/2004”, approved by Resolution SE No. 1193/2005. Core activities Electricity generation. Management services (purchase of equipment, construction, operation and maintenance of a thermal power plant) Core activities Electricity generation. Management service (purchase of equipment, construction, operation, and maintenance of a thermal power plant) Regular Directors: Jorge Rauber Chairman Adrián Salvatore Vice-president Michele Siciliano Mónica Diskin Guillermo Giraudo Julián Mc Loughlin José Manuel Tierno Gerardo Carlos Paz Ruben Turienzo Alternate Directors: Leonardo Katz Leonardo Marinaro Juan Carlos Blanco Andrea Biasotto Diego Gabriel Baldassarre Juan I Castellanos Mon Sergio Raúl Sánchez Luis Agustín León Longombardo Rodrigo Leonardo Garcia Senior Management Fernando Rabita General Manager Regular Directors: Andrea Biasotto Chairman Mónica Diskin Vice-president Julián Mc Loughlin Guillermo Giraudo Adrián Gustavo Salvatore José Manuel Pazos Gerardo Carlos Paz Rubén Turienzo José Manuel Tierno Alternate Directors: Juan Carlos Blanco Michele Sicialiano Luciano Palombella Juan I Castellanos Mon Leonardo Marinaro Leonardo Katz Luis Agustín León Longombardo Rodrigo Leonardo García Sergio Raúl Sánchez Senior Management Francisco Monteleone General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. Commercial relations The company has no commercial relations with Enel Américas S.A. 20. Identification of subsidiaries and associate companies 201 YACYLEC S.A. Company name Yacylec S.A. ENEL X PERÚ S.A.C. Company name Enel X Perú S.A.C. Type of Company Limited Liability Company Type of Company Limited Liability Company Address Bartolomé Mitre 797, piso 11º; Ciudad Autónoma de Buenos Aires, Argentina Address Calle César López Rojas 201 Urb, Maranga, San Miguel Lima, Perú Telephone (51 1) 561 2001 CENTRAL GERADORA FOTOVOLTAICA SÃO FRANCISCO LTDA Company name: Central Geradora Fotovoltaica São Francisco Ltda Type of Company: Limited Liability Company incorporated under the laws of the Federal Republic of Brazil Address: Praça Leoni Ramos nº 01 Parte, São Domingos, Niterói, Rio de Janeiro, Brasil. Subscribed and paid-in capital (Thousand US$) 905,94 Telephone: (55 21) 2613 7000 Corporate purpose The company participates in trade, production, industrialization, assembly, even imports and exports, for the sale of its own or third -party products, and services, in general, for the electricity sector and others. Core activities Electricity distribution Senior Management General Manager Alejandro Barragán Osorio Commercial relations The company has no commercial relations with Enel Américas S.A. Shareholding in Enel Américas S.A. (Indirect) 99,999967% Subscribed and paid-in capital (Thousand US$): 188.67 Corporate purpose: The company’s purpose is any kind of activities related to the rental and management of equipment to produce solar energy, energy efficiency, electrical infrastructure and others. Core activities: Rental and management of equipment to produce solar energy, energy efficiency, electrical infrastructure, and others. Company without a board of directors Senior Management: Rafael Felipe Coelho da Silva Commercial relations: The company has no commercial relations with Enel Américas S.A. Shareholding of Enel Américas S.A. 0.01% Telephone (5411) 4587 4322/4585 Subscribed and paid-in capital (Thousand US$) 333.97 Corporate purpose The company´s purpose is the construction, operation, and maintenance of the first electrical link between Yacyretá Hydroelectric Plant and the Resistance Transformation Station, and electricity transmission services, including the exploitation under concession as independent carrier. Core activities Electrical energy transport Regular Directors Juan Carlos Blanco Marcelo Daniel Meritano Juan M. Pereyra Guillermo Osvaldo Diaz Eduardo Martin Albarracin Raffaele Sardella Luis Juan Bautista Piatti Santiago Acosta Mónica Diskin Oscar Arturo Quihillalt Sebastian Luis Ferreyra Alternate Directors Carlos Fernando Bergoglio Juan José Arena Nicola Melchiotti Claudio Cesar Weyne Da Cunha Mateo Nazzari Matteo Milanesi Debora Paula Ureta Dzeno Schio Sergio Alejandro Vestfrid Jorge Alberto Lemos Robert Ortega Alberto Esteban Verra Senior Management Sandro Ariel Rollan General Manager Commercial relations The company has no commercial relations with Enel Américas S.A. 202 Annual Report Enel Américas 2019 ENEL TECNOLOGIA DE REDES S.A (anteriormente ENEL BRASIL INVESTIMENTOS NORDESTE 82 S.A) Company name: Enel Brasil Tecnologia de Redes S.A Type of Company: Limited Liability Company. Address: Praça Leoni Ramos, nº 1, 7º andar, bloco 2, São Domingos. Niterói, Rio de Janeiro. Telephone: (21) 2716-1138 Subscribed and paid-in capital (Thousand US$): 2,49 Corporate purpose: The company’s purpose is to plan, develop and implement energy generation, distribution, transmission or /or marketing activities. In addition, the shareholding of other companies operating or established to operate in the electricity generation, distribution, transmission and/or marketing segments as a shareholder; distribute appliances, instruments and equipment for electricity distribution, measure and control and sell devices to measure, distribute and control energy. Core activities: Distribution of appliances, instruments and equipment for the distribution, measurement and control of energy and trading of devices to measure, distribute and control energy. Company without a board of directors Senior Management: Antonio Basilio Pires de Carvalho e Albuquerque (General Manager) Aurelio Ricardo Bustilho de Oliveira Commercial relations: The company has no commercial relations with Enel Américas S.A. NUXER TRADING S.A (URUGUAY) Company name: Nuxer Trading S.A Type of Company: Limited Liability Company. Address: Avenida Luis Alberto de Herrera, n. 1248, Torre II, Piso 15, OF 11300, Montevideo, Uruguay. Telephone: N/A Subscribed and paid-in capital (Thousand US$): 2.14 Corporate purpose: The company’s purpose is to a) industrialize and trade in all kinds of goods, leases of goods, works and services in the areas of: food, household and office items, automotive, bar, bazaar, rubber, communication, construction, cosmetics, leathers, sports, publishing, electronics, electrotechnical, education, shows, pharmacy, hardware, photography, hotel, printing, IT, jewelry, toys, wool, laundry, books, cleaning, wood, machines, maritime , mechanics, metallurgy, mining, music, engineering works, optics, paper, perfumery, fishing, plastics, press, advertising, chemistry, professional, technical and administrative services, tobacco, television, textile, transport, tourism, securities, clothing, veterinary, glass; (b) imports, exports, representations, commissions and appropriations; (c) purchase and sale, leasing, administration, construction and any kind of real estate transactions; (d) agricultural development, afforestation, fruit farming, citriculture and its derivatives; (e) participation, incorporation or acquisition of companies operating in the aforementioned areas. Core activities: The company’s activities are indicated above Company without a board of directors Senior Management: Jorge Manuel Cernadas Rivarola Commercial relations: The company has no commercial relations with Enel Américas S.A. Notes: 1. There are no actions or contracts celebrated by Enel Américas with its subsidiaries or associate companies that might significantly influence its operations and results. 2. With regard to commercial relations, the future projected links with subsidiaries or associate companies are part of The company’s purpose, in particular to provide its subsidiaries with the financial resources necessary for the development of their businesses and, additionally, to provide the subsidiaries with management, financial, commercial, technical and legal advisory services; and, in general, services of any kind that are deemed necessary for their performance, notwithstanding that none of these future links are expected to significantly influence the operations. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 20. Identification of subsidiaries and associate companies 203 204 Annual Report Enel Américas 2019 21. SIGNIFICANT EVENTS 21. Significant events 205 2019 Relevant or Significant Events 7. Appointing an external audit firm pursuant to Title XX- VIII of Law 18.045. 8. Appointing two Regular and Two Alternate Account In- spectors and establishing their remuneration. 9. Appointing Private Risk Rating Agencies. 10. Approving the Company´s Investment and Financing Policy. 11. Dividend Policy Proposal and information on the pro- cedures to be used in dividend distribution. 12. Information on Board agreements related to actions or contracts under Title XVI of Law No. 18.046. 13. Information about the costs of processing, printing and Pursuant to articles 9 and 10, paragraph 2 under Securities dispatch of information required under Circular No. Market Law No. 18,045, and as established under General 1.816 of the Superintendency of Securities and Insur- Norm No. 30 of the Superintendency of Securities and Insur- ance. ance (SVS, currently the Financial Market Commission, CMF) 14. Other matters of corporate interest and competence of we hereby report the following Significant Events: the Ordinary Shareholders’ Meeting and, 15. Accepting other agreements necessary for the ade- • On 27 February 2019, the following was reported as a quate implementation of adopted decisions. Significant Event: The Extraordinary Shareholders´ Meeting will be held im- The Board of Enel Américas S.A. (“Enel Américas” or the mediately after the Ordinary Shareholders’ Meeting, and “Company”), in a session held on February 27, 2019, re- In the same place, putting to vote the capital increase solved, by the unanimous vote of its members, to sched- of up to US$ 3,500,000,000 (three billion U.S. dollars), ule the Company´s Ordinary Meeting and Extraordinary whose aim is to seize investment opportunities through Shareholders´ Meeting both to be held on April 30, 2019, mergers and acquisitions and the purchase of minority in San Isidro street, No. 74, Borough of Santiago, Santia- shares as well as provide funds to the subsidiary Enel go. Brasil S.A., through a further capital increase in the latter and/or one or more loans, to permit Enel Brasil S.A. to The Ordinary Shareholders’ Meeting was scheduled to repay Enel Finance International N.V. the loan which re- be held at 9:00 a.m., proposing the following matters to placed Enel Brasil S.A.´s debts related to the acquisition be submitted and discussed: of the Brazilian company Eletropaulo Metropolitana Elet- ricidade de São Paulo S.A., as well as the restructuring of 1. Approval of the Annual Report, Balance Sheets, Fi- the Company´s pension funds liabilities and the reduction nancial Statements, and the reports prepared by Ex- of contingent funds. ternal Auditors and Inspectors corresponding to the accounting year ended on December 31, 2018. 2. Profit distribution and dividend distribution for the Specifically, the matters to be submitted to the knowl- year. edge and decision of the Extraordinary Shareholders’ 3. Complete renewal of Board members. Meeting shall be as follows: 4. Establishing Directors’ remuneration. 5. Establishing the remuneration of the members of 1) Capital increase. The increase of Enel Américas´ cap- the Directors´ Committee and setting their respective ital by up to US$ 3,500,000,000 ( three point five bil- budgets for 2019. lion US dollars), by issuing the corresponding new 6. The Board´s Expenditure Report and the Annual Re- payment shares, all of the same series and without port on the Activity and Expenditure Management of par value, at the price and other conditions approved the Directors´ Committee. by the Extraordinary Shareholders’ Meeting. 206 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 The placement price will be calculated based on the mission and on the local stock exchanges, as well weighted average price of Enel Américas stock trans- as the registration of the new shares and the new actions on the Chilean stock exchanges, correspond- American Depositary Shares with the Securities and ing to the five trading days prior to the start date of Exchange Commission of the United States of Amer- the first pre-emptive subscription period, with a 5% ica and New York Stock Exchange (NYSE) of that discount. For this purpose, the Extraordinary Meet- country, carry out the appropriate actions to com- ing shall ask the Company’s Board to calculate the plete the capital increase and, in general, refine all placement price, applying the above formula, provid- other actions related to the capital increase, adopting ed that the placement is initiated within 180 days of other agreements necessary to formalize and imple- the date of the Meeting, pursuant to Article 23 of the ment the corporate changes in Enel Américas as in- Law on Joint-stock Companies. dicated above , with broad powers. It shall also be established that the offer to place 4) Other matters related to the capital increase. Agree shares must be made first within the pre-emptive on other aspects of the described capital increase subscription period pursuant to Article 25 of the operation that the shareholders’ meeting should Law on Joint-stock Companies. The shares not sub- deem convenient to approve and that are necessary scribed during this first pre-emptive subscription pe- or additional to said transaction. riod and those corresponding to fractions produced in the apportionment among shareholders, shall be The fundamentals, terms and conditions related to offered in a second pre-emptive subscription pe- the capital increase shall be made available to share- riod intended only for those shareholders or third holders on the Company’s website: www.enelameri- parties who have subscribed shares during the first cas.com within the time limits established by law. pre-emptive subscription period, on a pro rata basis for the shares they have subscribed and paid during • On March 1, 2019, the following was reported as a Signif- the said first pre-emptive subscription period , and at icant Event: the same price at which they are offered during the first pre-emptive subscription period. On March 1, the Significant Event issued on February 27, 2019 received additional information as to the following 2) By-law amendment. Modify Enel Américas´ by-laws background: to reflect the agreement related to the capital in- crease, replacing for this purpose Transitory Articles 1) The amount or percentage of the capital increase Fifth and First of the by-laws. to be allocated to investment opportunities through merger and acquisition operations and the purchase 3) The authority of the Enel Américas´ Board of Direc- of minority shares. tors to register new shares in the Securities Register of the Financial Market Commission and in the lo- The use of the funds collected via the proposed cap- cal stock exchanges, to register new shares and the ital increase Is as follows: new American Depositary Shares with the Securities and Exchange Commission of the United States of • US$ 2,650 million will be allocated to provide funds America and New York Stock Exchange (NYSE) of to the subsidiary Enel Brasil S.A. through a further that country, and other powers related to the capital capital increase in the latter and/or one or more loans increase. Permit the Enel Américas´ Board to Imple- to permit Enel Brasil S.A. to repay Enel Finance In- ment all necessary actions related to the capital in- ternational N.V. the loan which replaced Enel Brasil crease, including requesting the registration of the SA.´s debts with banks, related to the acquisition new shares representative of the capital increase in of the Brazilian Company Eletropaulo Metropolitana the Securities Register of the Financial Market Com- Eletricidade de São Paulo S.A. (Eletropaulo). 21. Significant events 207 • US$850 million to restructure Eletropaulo’s pension The main Pension Fund risks that affect Eletropaulo are fund liabilities and the reduction of contingent funds those related to discount rates, mortality tables, and ex- or litigation provisions in Brazil. pected rates of return on assets. Actuarial liabilities as of December 31, 2018 reached US$ 3.3 billion and the In view of the above, the resources raised through deficit was US$ 1.0 billion. the capital increase are not intended to be used in potential mergers and acquisitions and the purchase To verify the impact on actuarial obligations in this actuar- of minority shares, but should this capital increase ial liability, the table below illustrates a sensitivity analysis take place, its aim shall be to seize investment op- of actuarial premises, considering a 0.25% variation in portunities by strengthening the Enel Américas S.A the discount rate. The quantitative result on December balance sheets. 31, 2018 is shown as follows: 2) Type of mergers and acquisitions and the purchase of mi- nority shares referred to in the Significant Event. Sensitivity Impact on the established benefit Total liability of the established benefit Discount rate +0.25% -0.25% -0.07 Bi USD +0.07 Bi USD 3.2 Bi USD 3.3 Bi USD Should the current conditions of the plans be maintained without taking any action, the deficit will grow because of increased life expectancy and/or the reduction of the discount rate of the pension fund’s liability. To mitigate this exposure, Eletropaulo develops a voluntary migration plan of the Established Benefit plans that Eletropaulo cur- rently has for Established Contribution plans, mitigating deficit risk to increase by actuarial premises in the future, and the possible restructuring of Eletropaulo’s debt con- tracts with FUNCESP. This Plan shall be evaluated by the competent bodies in the coming months. The contingent funds or litigation provisions in Brazil: the distributors controlled by Enel Américas S.A. in Brazil, through Enel Brasil S.A. — Eletropaulo, Enel Distribuicao Rio, Enel Distribuicao Goias and Enel Distribuicao Ceará - are engaged in approximately 70,000 litigation cases as of December 2018. The corporate balance sheets make provisions for some US$ 600 million. These liabilities, according to Brazilian rules, are mostly subject to a 1% monthly upgrade plus inflation-reflecting rates or those that approach inflation, leading to an excessive financial burden, and thus they significantly reduce the compa- nies´ net profit and the distribution of dividends to share- holders , draining the companies´ cash flows. Based on the use of “analytics” of the behaviors of the parties active in mass litigation, a system that can identi- fy potential agreements with such active parties is being put in place, and for future cases, aimed at avoiding fur- ther litigation. This plan requires funding of some US$150 As part of the capital increase purpose indicated in the Significant Event issued on February 27, 2019, this opera- tion would place Enel Américas S.A. in a financial position that would allow it to finance mergers and acquisitions and to purchase minority shares. Therefore, the potential mergers and acquisitions and the purchase of minority shares to be assessed are as fol- lows: • Purchases of minority shares in any of the current subsidiaries of Enel Américas S.A., which today rep- resent opportunities for up to US$ 2 billion. • Potential acquisitions of companies in the electricity sector in the markets in which Enel Américas S.A. participates through its subsidiaries (Argentina, Bra- zil, Colombia, and Peru). 3) The restructuring of pension funds liabilities and the re- duction of contingent funds in Brazil. The restructuring of pension fund liabilities: Eletropaulo contributes to additional retirement and pension benefit plans for its current and former employees and benefi- ciaries, with FUNCESP being the entity responsible for managing such benefit plans. FUNCESP is Brazil’s largest private pension fund (the fourth largest, including govern- ment-controlled pension funds), it has multiple contribu- tors and manages assets of approximately US$ 7.5 billion of nearly 50,000 people, of whom 17,000 people are from Eletropaulo. 208 Annual Report Enel Américas 2019 million which will be allocated to manage agreements The four risk rating agencies unanimously agreed to rate and to implement technological platforms. This would this operation as “credit positive” for Enel Américas, S.A provide an expected initial benefit of a 30% reduction in highlighting, among others, the following: the provided value, and a reduction in the volume of new litigation cases based on the latest pilot plans implement- • “Proposed capital increase of up to US$3.5 billion ed in 2018. is credit positive and will help solidify its investment grade rating”. 4) Financial effects that such capital increase may have. We can foresee the following financial effects as a result overall positive impact on Enel SpA’s and Enel Améri- of the proposed capital increase: cas’ credit metrics.” • “Once completed, the transaction is likely to have an • Improved cash flow and profit in Enel Américas S.A.: • “Enel Américas’ Potential $3.5 Billion Capital in- By repaying the debt that Enel Brasil S.A. incurred crease is Consistent With its Aim to Maintain Strong with Enel Finance International N.V., restructuring Financial Profile.” the liabilities of pension funds and reducing the con- tingency funds or litigation provisions in Brazil, the • “We consider the proposed transaction to be a favor- financial burden would significantly decrease leading able development for Enel Américas’ credit quality to lower financial spending and thus to a greater prof- because it should strengthen the Company’s short- it and improved cash flows , both in Brazil and in Enel term credit metrics.” Américas, which consolidates the latter. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 • Higher dividends to be received by Enel Américas: in- Américas as it will reduce leverage”. creasing profits and improving the cash flow in Enel Brasil could increase dividend distribution, which, in • “This injection of funds is positive for the Company, turn, would allow Enel Américas S.A. to receive high- especially for the subsidiary Enel Brasil S.A., which er dividends. would lead to greater efficiencies and the deleverage y r a m m u S . 9 1 • “Proposed capital increase is credit positive for Enel l i s g n d o h e r a h s f o • Increased creditworthiness: By lowering debt levels, Enel Américas S.A.’s credit indicators would improve For further information, the four Press Releases cited above of the financial profile”. considerably, allowing it to have greater flexibility to are attached. incur debt in financial markets. (5) Any other information deemed relevant for the correct understanding and evaluation of the Significant Event. To complete other information considered relevant to bet- ter understand the operation, we would like to indicate that on February 27, 28 and on March 1, the three interna- tional credit rating agencies covering Enel Américas S.A. as well as the local agency published their corresponding Press Releases commenting the operation in question. The above rating agencies are as follows: - International: S&P, FITCH Ratings and Moody’s. - National: Feller Rate s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 209 Bulletin: Enel Americas' Potential $3.5 Billion Capital Increase Is Consistent With Its Aim To Maintain Strong Financial Profile Primary Credit Analyst: Candela Macchi, Buenos Aires (54)-11-4891-2110; candela.macchi@spglobal.com BUENOS AIRES (S&P Global Ratings) Feb. 27, 2019--S&P Global Ratings said today that its rating and outlook on Chile-based electric power integrated utility, Enel Americas S.A. (BBB/Stable/--), were unaffected following the announcement of a $3.5 billion capital increase. Overall, we view the proposed transaction as a favorable development for the rating, because the capitalization should alleviate the group's short-term credit metrics that deteriorated in fiscal 2018 following the acquisition and integration of Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A. (Eletropaulo), the largest electric power distributor in Brazil in terms of revenues and energy distributed. We consider the capital raise to be in line with the group's commitment to maintaining a healthy financial profile. Our base-case scenario previously assumed a gradual improvement in the group's main credit metrics thanks to higher EBITDA, particularly at the newly acquired entities due to gains in efficiency, but we now expect the recovery to occur sooner. Our updated forecast indicates that pro forma after the capitalization, adjusted debt to EBITDA should trend down to around 1x by the end of 2019, a similar level prior to Eletropaulo's acquisition, from 2.3x in 2018. This expected level is now more comfortably aligned with our expected range for the rating. Previously, we expected this to occur only by 2021. In addition, we expect the capitalization and a less leveraged balance sheet to allow Enel Americas to seek new investment opportunities in the region in the upcoming years through either buyouts of minority investors or privatizations WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2019 1 210 Annual Report Enel Américas 2019 Bulletin: Enel Americas' Potential $3.5 Billion Capital Increase Is Consistent With Its Aim To Maintain Strong Financial Profile and consolidations. Given that we consider the capital increase to be in line with the group's strategy and our updated forecast for metrics to be aligned with historical levels, there's no impact on our current assessment of Enel Americas' credit quality. However, if the group further deleverages in the following years and continues to consolidate its asset base, an upgrade is possible. The capitalization will be discussed during an extraordinary shareholders' meeting on April 30, 2019, and if approved, it will likely be completed during the second half of 2019. According to the group's information, it will use proceeds to repay a $2.65 billion short-term intercompany loan from Enel Finance International that was used to acquire Eletropaulo and to repay some other obligations at the Brazilian subsidiaries, including pension liabilities at Eletropaulo and other contingencies for around $850 million. As a result of the plans for proceeds, we expect a significant deleveraging and optimization of the Brazilian assets that should bolster dividend distributions to the ultimate holding company starting in the third quarter of 2019. The group announced the capital increase in conjunction with its 2018 results, which highlighted Enel Americas' continued robust operating performance, including a 14% rise in EBITDA over the prior comparable period. This report does not constitute a rating action. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2019 2 21. Significant events 211 Copyright © 2018 by Standard & Poor’s Financial Services LLC. All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2019 3 212 Annual Report Enel Américas 2019 2/28/2019 Fitch Connect - Fitch Solutions 28 Feb 2019 Comment Fitch Ratings: Enel Americas' Proposed USD3.5B Capital Increase a Credit Positive Fitch Ratings-New York-28 February 2019: Fitch Ratings believes Enel Americas'(BBB+/Stable) proposed capital increase of up to USD3.5 billion is a credit positive and will help solidify its investment grade rating. Proceeds from the proposed capital increase, to be executed as a rights offering, will be used to provide Enel Brasil S.A. with funds to prepay the USD2.65 billion intercompany loan between Enel Brasil and the funding vehicle of the parent Enel S.p.A. (A-/Stable), Enel Finance International NV. The company expects to use the approximately USD850 million remaining for pension obligations and other contingencies in Brazil. Fitch believes the completed transaction will solidify Enel Americas investment grade credit profile. It will also ratify Enel S.p.A.'s very strong commitment toward Enel Americas, demonstrating the strategic importance of Enel Americas to the overall group. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Fitch estimates that successful completion of the capital increase would result in pro-forma Net debt to EBITDA for 2019 of approximately 1.0x for Enel Americas. We believe a successful issuance will provide the company greater flexibility to continue exploring its inorganic growth initiative, which includes acquiring minority interest in y r a m m u S . 9 1 its existing operations. i l s g n d o h e r a h s f o Fitch expects Enel S.p.A will maintain at least its existing 51.8% stake in Enel Americas and will contribute cash to the capital increase. At a consolidated level, the transaction will bring a cash inflow related to the equity injected by Enel Americas' minority shareholders. Although Fitch does not expect a sizeable benefit to Enel America's consolidated ratios (up to 0.1x reduction for FFO net adjusted leverage), the transaction reinforces our view of the company's strategy as well balanced between pursuing growth and keeping a moderate leverage for the main subsidiaries and the whole group. Based on Enel S.p.A.'s latest business plan, their total activities in Latin America should increase their contribution to the group's EBITDA to 35% in 2021 from 29% in 2018. On Feb. 27, 2019, Enel Americas announced a capital increase of up to USD3.5 billion to be executed as a rights offering in the Santiago Stock Exchange, Electronic Stock Exchange and CMF, concurrent with the U.S. SEC registration of American depositary shares (ADS), which trades on the NYSE. The price setting mechanism is a risk offer price equal to a five-day volume weighted average price of common shares minus a 5% discount. The transaction will proceed upon the approval by shareholders in the scheduled extraordinary shareholders meetings on April 30, 2019. Upon approval, a mandatory pre-emptive rights period (PRP) will be held for 30 days in Chile, followed by an extended PRP to American depositary receipts (ADR) holders, which is expected to start in June ending in August 2019, and the rump placement will end in September. s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 https://app.fitchconnect.com/search/research/article/PR_10064966 21. Significant events 1/4 213 2/28/2019 Fitch Connect - Fitch Solutions Contact: Enel Americas Saverio Minervini Director +1-212-908-0364 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Jose Ramon Rio Associate Director +56-2-2499-3316 Enel S.p.A/ Enel Finance International NV Principal Analyst Pilar Auguets Senior Director +34 93 467 8747 Supervisory Analyst Antonio Totaro Senior Director +39 02 879 087 297 Fitch Italia S.p.A. Via Morigi 6 20123 Milan Media Relations: Elizabeth Fogerty, New York, Tel: +1 212 908 0526, Email: elizabeth.fogerty@thefitchgroup.com Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING https://app.fitchconnect.com/search/research/article/PR_10064966 2/4 214 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 2/28/2019 Fitch Connect - Fitch Solutions DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. 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These disclosures are updated on a daily basis. https://app.fitchconnect.com/search/research/article/PR_10064966 4/4 216 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 217 218 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 219 Ante el anuncio de un eventual aumento de capital por US$ 3.500 millones en Enel Américas, Feller Rate ratifica sus clasificaciones de riesgo. ENEL AMERICAS S.A. COMUNICADO DE PRENSA Solvencia Perspectivas Dic. 2018 AA- Estables Feb 2019 AA- Estables Contacto: Nicolás Martorell / nicolas.martorell@feller-rate.cl; Camila Sobarzo / camila.sobarzo@feller-rate.cl SANTIAGO, CHILE – 28 DE FEBRERO DE 2019. Ante un eventual aumento de capital, Feller Rate ratificó en “AA-” las clasificaciones de la solvencia, los bonos y las líneas de bonos de Enel Américas S.A. A la vez, confirmó la clasificación de sus acciones en “Primera Clase Nivel 2” y la de sus líneas de efectos de comercio en “Nivel 1+/AA-”. Las perspectivas de la clasificación se mantienen “Estables”. El 27 de febrero de 2019, a través de un Hecho Esencial, Enel Américas convocó a una Junta Extraordinaria de Accionistas -a realizarse el día 30 de abril- para votar por un nuevo aumento de capital de US$ 3.500 millones, mediante nuevas acciones de pago. Este tiene como objetivo prepagar cerca de US$ 2.650 millones de deuda con empresa relacionada (Préstamo financiero otorgado por Enel Finance International usado para la adquisición de Electropaulo y el prepago de deuda de filial brasileña) y subsanar contingencias ligadas al pago de pensiones en Brasil por US$ 850 millones. Cabe destacar que, si este aumento de capital fuese aprobado, la operación se llevaría a cabo hacia el segundo semestre de este año. Feller Rate ve como positiva esta inyección de fondos para la compañía, en especial para la filial Enel Brasil S.A., lo que resultaría en mayores eficiencias y en un desapalancamiento del perfil financiero, el cual se ha visto presionado en 2018 ante de adquisición de Electropaulo y mayores costos financieros ligados al encarecimiento de créditos en ese país. De hecho, el indicador deuda financiera neta / ebitda alcanzó 2,1 veces a diciembre de 2018 (1,2 veces en 2017), a pesar del aumento del ebitda de un 15%. Asimismo, este aumento de capital es consistente con el compromiso de la firma de mantener un perfil crediticio equilibrado, donde el indicador deuda financiera neta / ebitda llegaría a 1,0 veces después de la operación. No obstante, a pesar de una mejora relativa de los indicadores crediticios en plazos menores a los esperados inicialmente, la compañía mantiene la intención de potenciar el negocio en la región, aprovechando nuevas oportunidades de fusiones, adquisiciones y compras de minoritarios. De esta forma, Feller Rate espera que el financiamiento de estas eventuales operaciones sea a través de nuevo endeudamiento y fondos propios, manteniendo la expectativa que la compañía mantendrá un indicador de deuda financiera neta / ebitda con un máximo de 2,5 veces, en línea con la categoría asignada. Además, será relevante la materialización de las expectativas de mejora económica tanto en Brasil como en Argentina, países con importantes desafíos que se encuentran clasificadas en “B/Estables” y “BB-/ Estables” por agencias internacionales, donde para Enel Américas tienen una importancia relevante. El significado detallado de todas las categorías de clasificación está disponible en www.feller-rate.cl en la sección Nomenclatura Las clasificaciones de riesgo de Feller Rate no constituyen, en ningún caso, una recomendación para comprar, vender o mantener un determinado instrumento. El análisis no es el resultado de una auditoría practicada al emisor, sino que se basa en información pública remitida a la Comisión para el Mercado Financiero en aquella que voluntariamente aportó el emisor, no siendo responsabilidad de la clasificadora la verificación de la autenticidad de la misma. www.feller-rate.com 220 Annual Report Enel Américas 2019 • On April 10, 2019, the “Comunicato Stampa” by our parent Company, Enel SpA. was issued reporting having increased its shareholding in Enel Américas S.A. by 4.62% and having reached 56.42% of the Company. The same “Comunicato Stampa” and in relation to the current capital increase, announced in a Significant Event issued on February 27, 2019, supplemented by a Significant Event issued on March 1, 2019, that Enel S.p.A reported its intention to vote in favor of its approval at the Extraordinary Shareholders’ Meeting to be held on April 30, 2019; Enel S.p.A also stated its intention to approve the capital increase and subject to market conditions, to subscribe the shares issued by Enel Américas, in proportion to its current shareholding, i.e. 56.42%, through the exercise of the pre-emptive subscription rights. More details in the “Comunicato Stampa” as attached: e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 221 222 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 • On April 25, 2019, the following was reported as a Signif- dred and four thousand four hundred and twenty-four US icant Event: dollars) divided into 76,182,430,202 common, nominative shares, all of the same series and without par value. The Enel Américas´ Board, in a session held on April 25, 2019, unanimously resolved to suggest the following All the new payment shares will preemptively be offered adjustments in relation to the capital increase to be dis- to shareholders on a pro rata basis for the shares they cussed at the Company´s Extraordinary Shareholders’ hold in their name in the Enel Américas Shareholders Meeting to be held on April 30, 2019, at San Isidro Street, Register at midnight on the fifth business day prior to No. 74, the Borough of Santiago, Santiago , immediately the date of publishing the notification that initiates the after the Ordinary Shareholders’ Meeting. pre-emptive subscription period. After intense financial market activity and having ob- We therefore inform that by communication dated April tained sufficient information from the market, to secure 10, 2019, reported In a Significant Event issued on the the greatest possible support for the transaction, we same date, the Company’s controlling shareholder, Enel suggest that shareholders should agree on the sum of SpA, expressed its intention, subject to market condi- US$3,000,000,000 (three billion US dollars), as the cap- tions, to subscribe all the corresponding shares according ital increase amount whose aim Is to permit Enel Bra- to their shareholding. sil S.A. to repay the Enel Finance International N.V. loan which replaced Enel Brasil S.A.´s debts with banks, relat- The shares not subscribed during this first pre-emptive ed to the acquisition of the Brazilian Company Eletropau- subscription period and those corresponding to frac- lo Metropolitana Eletricidade de São Paulo S.A., as well tions produced in the apportionment among sharehold- as to restructure the Company´s pension funds liabilities. ers, shall be offered for a period of 24 days in a second The resulting improvement of the Company’s wealth pre-emptive subscription period intended only for those structure will permit it to seize investment opportunities shareholders or third parties who have subscribed shares through mergers and acquisitions and to purchase minori- during the first pre-emptive subscription period, on a pro ty holdings. rata basis at the same price at which they are offered during the first pre-emptive subscription period and on a • On April 30, 2019, the following was reported as a Sig- pro rata basis for the shares which they have subscribed nificant Event: and paid for during that first pre-emptive subscription pe- The Extraordinary Shareholders’ Meeting of Enel Améri- riod. cas S.A. (“Enel Américas” or the “Company”) held on The new shares issued under this capital increase must April 30, 2019, approved the US$3,000,000 (three billion be fully subscribed and paid within one year from the U.S. dollars) capital increase by issuing 18,729,788,686 date of the Extraordinary Meeting and the Board of Enel new payment shares with the same characteristics as Américas shall be authorized to refrain from the collec- the existing ones tion of the amounts due at said expiration, in which case the capital will be reduced in full right from the amount The purpose of the referred to capital increase is to per- actually paid at the expiration of the indicated period. mit the subsidiary Enel Brasil S.A. to repay the Enel Fi- nance International N.V. loan which replaced Enel Brasil • On April 30, 2019, the following was reported as a Signif- S.A.´s debts with banks, related to the acquisition of the icant Event: Brazilian Company Eletropaulo Metropolitana Eletricidade de São Paulo S.A., as well as to restructure the Compa- The Ordinary Shareholders’ Meeting held on April 30, ny´s pension funds liabilities. The resulting improvement 2019, agreed to distribute the mandatory minimum div- of the Company’s wealth structure will permit it to seize idend ( from which the interim dividend paid in January investment opportunities through mergers and acqui- 2019 will be deducted) and an additional dividend, which sitions and to purchase minority holdings. This way, the jointly totals US$ 480,552,341 (four hundred and eighty Company’s capital shall reach US$9,763,204,424 (nine million five hundred and fifty-two thousand three hundred thousand seven hundred and sixty-three million two hun- and forty-one US dollars) equivalent to US$0.008364 per share. 21. Significant events 223 Since the above-mentioned Provisional Dividend No. of the Board of Directors, the Company´s Directors´ 98 has already been paid, the remaining Final Dividend Committee appointed Mr. Hernán Somerville Senn No. 99 totaling US$ 403,652,031.5 equivalent to US$ as Chairman of that corporate body and Mr. Domingo 0.007026 per share shall be distributed and paid. Said div- Valdés Prieto as Secretary. idend will be paid in Chilean pesos, legal tender currency, according to the exchange rate of the Observed Dollar • On May 16, 2019, the following was reported as a Signif- published in the Official Journal on May 10, 2019. icant Event: • On April 30, 2019, the following was reported as a Signif- The Board of Directors of Argentina’s subsidiary Empresa icant Event: Distribuidora Sur S.A. (“Edesur”) has decided to call for an Extraordinary General Shareholders´ Meeting for June 1. At the Ordinary Shareholders’ Meeting of Enel 14, 2019, to ratify the following agreements reached by Américas S.A. held on April 30, 2019, the Company´s that subsidiary with the Argentine National State: new Board of Directors was elected for a three-year period and consists of the following persons: 1. As part of the transfer of the public electricity dis- Mr. Francisco de Borja Acha Besga Mr. José Antonio Vargas Lleras Mr. Livio Gallo Mr. Enrico Viale tribution service granted by the National State in fa- vor of Edesur to the jurisdiction of the Province of Buenos Aires (the “Province”) and the Autonomous City of Buenos Aires (“CABA”), as of May 10, Edesur signed an Agreement implementing such transfer Mr. Hernán Somerville Senn (Independent proposed (“the Agreement”), which must be ratified by the by the controlling entity) Shareholders’ Meeting. The Agreement indicates Mr. Patricio Gómez Sabaini (Independent proposed that the Province and the CABA would jointly take on by the controlling entity) the status of the Granting Power of the public service Mr. Domingo Cruzat Amunátegui (Independent pro- provided by the Company, and that it would continue posed by the AFPs). to be governed by its concession contract and by the applicable national legal and regulatory norms. The 2. At the ordinary session of Enel Américas S.A.´s Board agreement also provides for the creation of the new of Directors also held on April 30, 2019 and following regulator: Metropolitan Electrical Service Regulator the aforementioned meeting, Mr. Francisco de Borja (Ente Metropolitano Regulador del Servicio Eléctrico Acha Besga was elected as Chairman of the Board - EMSE), as a bipartite body made up of the Province of Directors and of the Company and Mr. Domingo and the CABA. The Agreement shall enter into force Valdés Prieto was elected Secretary of the Board of once ratified by the Provincial Executive Branch and Directors. the CABA Legislature. 3. Furthermore, said Board of Directors appointed the Directors´ Committee pursuant to Law 18.046 on 2. Edesur also signed an agreement on the Regulariza- Joint Stock Companies and the Sarbanes-Oxley Act, tion of Liabilities, with the Ministry of Energy – act- whose members are as follows: Directors Hernán ing on behalf of the National State – under which all Somerville Senn, Patricio Gómez Sabaini and Do- outstanding reciprocal claims from the 2006-2016 mingo Cruzat Amunátegui. Pursuant to Circular No. transition period shall be considered terminated. Ac- 1.956 of the Financial Market Commission we hereby cording to this agreement, which must be ratified by report that all members of said Committee are inde- Edesur´s Shareholders’ Meeting, Edesur must, on pendent directors. The Company´s Board of Direc- the one hand, pay outstanding debts arising during tors appointed Mr. Hernán Somerville Senn as Enel the above-mentioned transition period; and, at the Américas S.A Directors´ Committee Financial Expert. same time, must implement investments addition- al to those established in the Comprehensive Tariff 4. At the same time, during the regular session held Review, aimed at contributing to the improvement, today and following the above mentioned session reliability and security of the service. 224 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 The total amount committed by Edesur under this At the same time, the economic and financial im- Agreement will be approximately $9.5 billion Argen- pacts of the agreement will be extended for the peri- tine pesos. At the same time, the National State will od of five to seven years, as relevant. compensate the Company, for debts for mutual loans and energy purchases, social debts Incurred in 2017 3. Items of assets and liabilities involved in said agree- and 2018, and forgo the sanctions whose destination ment and their respective amount as of March 31, was Public Administration. The total amount com- 2019. mitted by the National State under this Agreement is approximately $10.2 billion Argentine pesos. As The liabilities involved in the agreement present a a result of the consolidation of assets and balance balance of $ 20.2 billion of Argentine pesos as of sheets that the latter agreement involves, Edesur March 31, 2019. shall accept the payment of the corresponding taxes of approximately $2.8 billion Argentine pesos. 4. Financial effects that such agreement will have on Once these agreements have been ratified by Ede- sur´s Extraordinary General Shareholders Meeting, it Edesur undertakes, on the one hand, to pay off the will be reported in due time in a relevant Significant remaining debts stemming from the 2006-2016 tran- profit and cash flows. Event. sition period and, at the same time, to implement investments additional to those established in the • On May 20, 2019, the following was reported as a Signif- Comprehensive Tariff Review, aimed at improving icant Event: service reliability and security for the amount of ap- proximately $ 9.5 billion Argentine pesos. The following information supplements the Significant Event issued on May 16, 2019 with the following informa- At the same time, the National State shall compen- tion: sate the Company, for debts for mutual loans and en- ergy purchases and social liabilities incurred in 2017 1. The amount to be allocated for additional invest- and 2018, and forgo the sanctions whose destination ments and the nature of such investments. is the Public Administration. The amount committed by the National State under this agreement is approx- The amount allocated to investments is approximate- imately $ 10.2 billion Argentine pesos. ly $ 4.2 billion Argentine pesos to be invested in up to 5 years. The plan is focused on improving the reliabil- Furthermore, as a result of the consolidation of as- ity and safety of the system as a whole, improving sets and balance sheets that the latter agreement high, medium and low voltage facilities, change of involves, Edesur will accept the payment of the cor- technology, such as the implementation of smart me- responding taxes for the amount of approximately $ ters (pilot project), as well as improving commercial 2.8 billion Argentine pesos. and technical physical facilities, the implementation of new commercial, technical and administrative-fi- 5. Any other information deemed relevant to correctly nancial systems of Empresa Distribuidora Sur S.A. understand and evaluate the Significant Event. (“Edesur”) and finally , the expansion of the opera- tional fleet of heavy vehicles, among others. The agreements to be ratified by Edesur’s Extraor- dinary General Shareholders´ Meeting, according to 2. Estimated timeframe for the “Agreement on Liability preliminary estimates, will have a positive impact on Regularization”. its 2019 operational income of approximately $ 9.98 billion of Argentine pesos. The completion of the formal aspects of the agree- ment will be done throughout June 2019, with the ratification of the agreement by the Extraordinary Shareholders´ Meeting of the subsidiary Edesur. 21. Significant events 225 • On June 11, 2019, the following was reported as a Signif- installments of $ 300 reais million, the first one 12 icant Event: months after the payment of the first installment; and (iii) the last payment of $ 250 million reais, 48 On June 10, 2019, the Brazilian subsidiary Eletropaulo months after the date of the first payment; Metropolitana Eletricidade de São Paulo S.A. (“Enel Dis- tribuição São Paulo”) published the attached Press Release (b) Payments to the legal counsel: (i) 50% after judicial for the market, in addition to a Significant Event issued by approval of the agreements with Eletrobras and the that Company on March 9, 2018 in the Republic of Brazil, legal counsel, whichever occurs last; and (ii) payment where it reports the agreements signed by that subsid- of the balance at the end of 60 months from the first iary and Eletrobras Centrais Elétricas S.A. (“Eletrobras”) payment; And and their legal counsel (the “Agreements”) , in order to terminate a dispute (case No. 001002119.1989.8.19.0001 c) Payments will be adjusted according to CDI (inter-fi- - “the Litigation”) involving Eletrobras, Companhia de nancial deposit rate) + 1% as of January 31, 2018, to Transmissão de Energia Elétrica Paulista (“CTEEP”) and the effective date of payment of each installment. Enel Distribuição São Paulo. As reported in the attached Press Release, pursuant to and June 10, 2019, respectively, the conditions to initiate the Agreements and notwithstanding any appeal actions the payments were met and Enel Distribuição São Paulo against CTEEP, Enel Distribuição São Paulo undertook to paid the first installment under said agreements and duly Once the agreements were approved on April 25, 2019 disburse $ 1.5 billion reais, to pay off the debt associated adjusted on June 10, 2019. with the litigation, of which $ 1.4 billion reais are to be paid in favor of Eletrobras and $100 million reais in legal The above-indicated agreements are duly provisioned in costs, according to the following conditions: the Consolidated Financial Statements of Enel Américas from the date on which it was acquired and in control of (a) Payments to Eletrobras: (i) $ 250 million reais after Enel Distribuição São Paulo. judicial approval of the Agreements with Eletrobras and the lawyers, whichever occurs last; (ii) 3 annual 226 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 227 • On June 18, 2019, the following was reported as a Significant Event: The Press Release addressed to the National Securities Commission of the Republic of Argentina, issued on June 18, 2019 by the Argentine subsidiary Empresa Distribuidora Sur S.A. (“Edesur”). As indicated in that Press Release said subsidiary concluded its Extraordinary Shareholders Meeting in which the agreements reached by that subsidiary with the Argentine National State were ratified and subsequently informed in detail to the market by Enel Américas S.A. as a Significant Event via Press Releases issued on May 16 and May 20, 2019. 228 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 229 230 Annual Report Enel Américas 2019 • On June 26, 2019, the following was reported as a Signif- • On June 26, 2019, the following was reported as a Signif- icant Event: icant Event: At the Company´s Board of Directors meeting held on On June 26, 2019, our subsidiary, Enel Brasil S.A., filed June 26, 2019, this corporate body, in use of the author- with the Comissáo de Valores Mobiliários (“CVM”) of ity conferred by the Board, agreed that the subscrip- Brazil a request for the registration of the public offer for tion price of each of the 18,729,788,686 new shares the acquisition of shares of the subsidiary Eletropaulo to be offered pre-emptively to the Company´s share- Metropolitana Eletricidade de Sáo Paulo S.A. (“Eletro- holders, both in the first and second periods , shall be paulo”), to cancel the registration of that Company as a US$0.162108214203236 per share. Publicly Traded Company under category A (for shares and liabilities) , and to be registered with the CVM under Pursuant to the Board’s resolution, the 18,729,788,686 category B (liabilities only). The destination of the offer new shares must be paid in cash at the time of subscrip- shall be ordinary shares issued by Eletropaulo in circula- tion, in US dollars or, its equivalent in Chilean pesos, legal tion, corresponding to 4.056% of the total shareholding tender currency, according to the exchange rate of the capital of that Company, that is to say, for all the ordinary “Observed Dollar” as published by the Central Bank of shares of Eletropaulo issuance, which are not directly or Chile in the Official Journal on the date of the respective indirectly owned by Enel Brasil, or related persons, and payment. different from its own shares in the treasury. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 Further details of the operation are described in the Fato Relevante issued by Eletropaulo, as attached. The financial effects of such a transaction are not quanti- fiable as of this date. y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 231 232 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 233 • On June 28, 2019, the communication issued as a Sig- the local and in the US markets, a total of 18,224,843,129 nificant Event by our parent Company Enel SpA where shares were subscribed and paid, 97.3% of the total new the Company informed the market about its plans to in- shares issued and related to the aforementioned capital crease its stake in Enel Américas S.A. (“Enel Américas”) increase, for a total amount of US$2,954,396,773, with by up to 5%, in addition to its current shareholding, to- 504,945,557 new shares, for the total amount of approx- taling 56.8%. Therefore, Enel SpA has entered into two imately US$81,855,822 remaining and awaiting subscrip- swap agreements with a financial institution to acquire tion and payment. common shares and American Depositary Shares (ADS) issued by Enel Américas, including the acquisition and ex- As authorized by the Board, the Company shall carry out ercise of preemptive rights corresponding to the Compa- a second pre-emptive subscription period, in which it will ny’s ongoing capital increase. Further details can be found offer the shares not subscribed during the first pre-emp- in the aforementioned communication, as attached. tive subscription period and those corresponding to the The financial effects of such a transaction are not quanti- shareholders. The second pre-emptive subscription peri- fractions resulting from the apportionment among the fiable as of this date. od in Chile will last for 24 days and the new shares will be offered at the same price at which they were offered • On July 30, the following was reported as a Signifi- during the first pre-emptive subscription period, that is to cant Event: say, at a price of US$0.162108214203236 per share. July 26, 2019 was the final day of the first preemptive op- These new shares must be paid in cash at the time of tion period to subscribe the 18,729,788,686 new payment subscription, in US dollars or, in their equivalent in Chil- shares issued from the capital increase agreed at the ean pesos, legal tender currency, according to the ex- Company’s Extraordinary Shareholders´ Meeting held on change rate of the “Observed Dollar” published by the April 30, 2019 (the “Meeting”). During said period, both in Central Bank of Chile in the Official Journal on the date of the respective payment. 234 Annual Report Enel Américas 2019 The second pre-emptive subscription period in Chile shall Company´s shareholders will be offered 504,945,557 start on August 6, 2019, in which only those shareholders new payment shares and will be entitled to subscribe or their assignees will be entitled to participate who have 0.0277064418840738 new shares for each share they subscribed and paid shares during the first pre-emptive have subscribed and paid for during the first pre-emptive subscription period and are shareholders of the Company subscription period. at midnight on the fifth business day preceding the start of the second pre-emptive subscription period in Chile. • On August 5, 2019, the following was reported as a Sig- Within the second pre-emptive subscription period, the nificant Event: e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 235 On August 2, 2019, Enel Américas subscribed and paid On September 12, 2019, the following was reported as a a capital increase in its subsidiary Enel Brasil S.A. (“Enel Significant Event: Brasil”), for the amount of up to $9,475,000,000 reais equivalent to approximately US$ 2,516,266,100, thus At an extraordinary session of the Company’s Board of permitting Enel Brasil to pay off the short-term loans Directors held on September 12, 2019, this corporate the Company Incurred from financiers, to repay the debt body agreed to refrain from placing the 96,119,166 shares that Enel Brasil incurred with Enel Finance International issued in the Capital increase up to approximately 0.51% N.V. With this transaction one of the uses of the funds of the total shares issued and which were pending sub- obtained from the capital increase has been met as ap- scription and payment after the end of the second pre- proved by the Extraordinary Shareholders’ Meeting held emptive offer period. Thus, as agreed by the Board, once on April 30, 2019. the 1-year deadline as of April 30, 2019 is met, the Com- pany´s capital will be reduced to the amount actually paid Because of the repayment of Enel Brasil’s debt, the at the expiration of the period indicated above. Company´s financial burden will be significantly eased, leading to lower financial expenses and thus increased • On November 25, 2019, the following was reported as a profits and possible improvements in cash flow, both in Significant Event: Enel Brasil and Enel Américas that consolidates the latter. • On September 2, 2019, a Significant Event reported held on November 25, 2019, unanimously agreed to pay a capital increase agreed at the Company’s Extraordinary a Provisional Dividend of US$ 0.00161991859562863 per Shareholders’ Meeting held on April 30, 2019 (the “Meet- share, corresponding to the 2019 financial year profits, ing”) and registered in the CMF Securities Register under payable on January 24, 2020. This amount corresponds The Board of Enel Américas S.A, in a regular session No. 1083 (the “Capital increase”): to 15% of Enel Américas’ net profits as of September 30, 2019, established on the basis of the Company’s Financial Between August 6 and 29, 2019, the Company de- Statements on that date. clared the second preemptive period aimed at subscrib- ing 504,945,557 shares issued in the Capital increase. Said dividend shall be paid in Chilean pesos, legal tender During that period, both in the local and US markets, a currency, according to the exchange rate of the Observed total of 408,826,391 shares, representative of approxi- Dollar as published in the Official Journal on January 17, mately 80.96% of the total shares offered in that peri- 2020. od, were subscribed, and paid raising approximately US$ 66,274,116. • On November 26, 2019, the following was reported as a Significant Event: This way, the Company has successfully completed the first and second Capital increase preemptive offer peri- The Company’s Board of Directors, held on November 25, ods having subscribed a total of 18,633,669,520 shares, 2019, approved Enel Américas´ 2020-22 Strategic Plan. representative of 99.49% of the total shares issued in the capital increase, for a total amount of approximately The macro elements of the Strategic Plan provide a cu- US$3,020,670,890, reaching the amount approved by the mulative EBITDA of approx. US$ 15.2 billion and a cu- Board. mulative CAPEX of approximately US$ 5.3 billion for the After the end of the first and second preemptive offer periods, a total of 96,119,166 new shares were left un- Given that the contents of the aforementioned Strategic subscribed. As authorized by the Board, the remaining Plan obey and are based on hypothetical projections that shares may be offered by the Company’s Board to share- may or may not be verified in the future, their effects are holders or third parties, under conditions and prices other not quantifiable as of this date. 2020 – 2022 triennium. than those of the first preemptive subscription offer, pro- vided that these offers to shareholders or third parties are carried out in Chilean stock exchanges, which, if any, will be informed to the market in a timely manner. 236 Annual Report Enel Américas 2019 • On November 27, 2019, the following was reported as a (b) Redemption Price: the price to be paid per share shall Significant Event: be $ 49.46 reais, an amount equal to the per-share price paid in the Public Offer for the Acquisition of As part of the public offer to acquire shares submitted Shares updated by the SELIC rate published by the by our subsidiary, Enel Brasil S.A., related to the shares Central Bank of Brazil as of the date of the auction of the subsidiary Eletropaulo Metropolitana Eletricidade until the effective payment date of the redemption de São Paulo S.A. (“Eletropaulo”) said shares were auc- price. tioned on November 21. At the auction Enel Brasil ac- quired 2,959,302 shares corresponding to 1.48% of the (c) Date of Payment: December 5, 2019. Company’s total shareholding equity making Enel Brasil the owner of 192,282,847 shares (equivalent to 95.9% These transactions will permit Eletropaulo to remain reg- of Eletropaulo´s total shares). The settlement of this istered with the Securities and Commission (CVM) ex- transaction was verified on November 25, at the value of clusively in Category B (reserved for debt issuance) and $49.39 reais per share. The total transaction was $ 146.2 to cancel its registration in Category A (for shares and million reais. debts). On November 27, 2019, at the General Shareholders´ Enel Brasil has financed the above-mentioned operations Meeting and pursuant to the corporate rules of the Re- with the Company´s available cash. public of Brazil, Eletropaulo approved the redemption of all the Company’s shares issued and in circulation, in ac- Further details of the operation described above can be cordance with the following terms and conditions: found in the Fato Relevante issued by Eletropaulo yester- (a) Share Redemption: all of the Company’s 5,174,050 day as attached. outstanding shares, representing 2.58% of its share- The financial effects of such a transaction are not quanti- holding capital. fiable as of this date. e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 i l s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 237 238 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 239 240 Annual Report Enel Américas 2019 e h t f o k r o w e m a r f y r o t a l u g e R . 6 1 y r t s u d n i y t i c i r t c e l e e h t f o n o i t p i r c s e D 7. 1 y r t n u o c y b s s e n i s u b y t i c i r t c e l e y t i l i b a n i a t s u S . 8 1 y r a m m u S . 9 1 l i s g n d o h e r a h s f o s e i r a i d i s b u s f o n o i t a c i f i t n e d I . 0 2 s e i n a p m o c e t a i c o s s a d n a s t n e v e t n a c i f i n g S i . 1 2 21. Significant events 241 242 Annual Report Enel Américas 2019 22. STATEMENT OF RESPONSIBILITY 22. Statement of responsibility 243 244 Annual Report Enel Américas 2019 f o t n e m e t a t S . 2 2 y t i l i b i s n o p s e r Statement of Responsibility The Directors of Enel Américas S.A. and the General Manger, signatories of this statement, are responsible under oath for the veracity of the information provided in this Annual Report, in compliance with the General Norm No. 30, issued by the Financial Market Commission. CHAIRMAN Borja Acha Besga DNI: 05263174-S DIRECTOR José Antonio Vargas Lleras CI: 79.312.642 DIRECTOR Hernán Somerville Senn ID number: 4.132.185-7 DIRECTOR Patricio Gómez Sabaini Passport: 16941675N DIRECTOR Livio Gallo DNI: AV 0246369 DIRECTOR Domingo Cruzat Amunátegui ID number: 6.989.304-K DIRECTOR Enrico Viale DNI: AU 2580379 CHIEF EXECUTIVE OFFICER Maurizio Bezzeccheri ID number: 26.490.357-2 22. Statement of responsibility 245 246 Annual Report Enel Américas 2019 Management and Senior Executives CHAIRMAN Francisco de Borja Acha Besga Phone (56) 2 2263 4631 DIRECTOR José Antonio Vargas Lleras Phone (56) 2 2353 4631 DIRECTOR Enrico Viale Phone (56) 2 2353 4631 DIRECTOR Livio Gallo Phone (56) 2 2353 4631 DIRECTOR Hernán Somerville Senn Phone (56) 2 2353 4631 DIRECTOR Domingo Cruzat Amunátegui Phone (56) 2 2353 4631 DIRECTOR Patricio Gómez Sabaini Phone (56) 2 2353 4631 CHIEF EXECUTIVE OFFICER Maurizio Bezzeccheri Phone (56) 2 2263 9130 INTERNAL AUDIT OFFICER Raffaele Cutrignelli Phone (56) 2 2353 4647 CHIEF FINANCIAL OFFICER Aurelio Bustilho de Oliveira Phone (56) 2 22353 4510 PLANNING AND CONTROL OFFICER Paolo Pescarmona Phone (56) 2 2353 4510 GENERAL COUNSEL AND CORPORATE GOVERNANCE Domingo Valdés Prieto Phone (56) 2 2630 9227 HEAD OF ENEL X SOUTH AMÉRICA Simone Tripepi Investors and Shareholders Relations HEAD OF INVESTOR RELATIONS Rafael De La Haza Casarrubio Phone (56) 2 2353 4682 CITIBANK NY Teresa Loureiro-Stein Phone (1-212) 816 6814 Design & Production: LEADERS enelamericas.com 

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