Annual Report Enel Chile2016Annual Report Enel Chile 2016 Santiago Stock Exchange
ENELCHILE
Nueva York Stock Exchange
ENIC
Enel Chile S.A. was initially incorporated as Enersis Chile S.A. on March 1st, 2016 and changed to Enel
Chile S.A. on October 18th, 2016. As of December 31st, 2016, the total share capital of the Company was
Th$ 2,229,108,975 represented by 49,092,772,762 shares. Its shares trade on the Santiago Stock Exchange
and the New York Stock Exchange as American Depositary Receipts (ADR).
The main business of the Company is the development, operation, generation, distribution, transformation,
or sale of energy in any form, directly or through other companies.
Total assets of the Company amount to Th$ 5,398,711,012 as of December 31st, 2016. Enel Chile controls
and manages a group of companies that operate in the Chilean electricity market. Net profit attributable to
the controlling shareholder in 2016 reached Th$ 317,561,121 and operating income reached Th$ 457,202,938.
At year-end 2016 the Company directly employed 2,010 people through its subsidiaries in Chile.
Annual Report
Enel Chile 2016
Summary
> Letter from the Chairman
> Open Power
> Highlights 2016
> Main Financial and Operating Data
> Identification of the Company and Documents of Incorporation
> Ownership and Control
> Management
> Human Resources
> Stock Markets Transactions
> Dividends
> Investment and Financing Policy
> History of the Company
> Investments and Financial Activity
> Risk Factors
> Corporate Reorganization
> Industry Regulation and Electricity Industry Operations
> Electricity Generation
> Electricity Distribution
> Environment and Sustainability
> Participation in subsidiaries & associates and schematic table
> Significant Events
> Identification of Subsidiaries and Associate Companies
> Statement of Responsibility
> Consolidated Financial Statements
> Management Analysis of Consolidated Financial Statements
> Subsidiaries’ Summarized Financial Statements
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Letter from
the Chairman
Dear shareholders,
We have been able to achieve the goals set for the company
for 2016 thanks to everyone’s work and dedication. In
The first Annual Report and Financial Statement of Enel
March, we formally created Enersis Chile S.A., one of the
Chile S.A., company created as part of the reorganization
forty companies that comprise the IPSA in the Chilean
of Enersis S.A. that began in 2015, is now in your hands.
market, and one of the companies in the MSCI index of
The company is engaged in electricity generation and
the New York Stock Exchange (NYSE). We also faced the
distribution in Chile through its subsidiaries Enel Generación
public electricity tenders carried out in August and with
Chile and Enel Distribución Chile.
satisfactory results. In December, we finished installing
I would like to thank the Board of Directors members of
a reflective process in which we asked ourselves what
Enel Chile, whom, this past April 29th, trusted me with the
kind of company we want to be and considering the new
responsibility of leading this company. During these months,
challenges in the electricity sector, we decided to change
we have worked openly and have obtained excellent results
the Group´s philosophy and brand name in Chile.
over 50,000 smart meters in the city of Santiago. Following
thanks to the dedicated effort of the Group´s executives,
professionals, and technicians. I would also like to recognize
Nicolas Cotugno, CEO of Enel Chile, who joined the
company in August 2016. He has been crucial in facing the
challenges we have set as a company: to be open, focusing
on sustainability and our relationship with customers and
the service we provide, and creating value that is transparent
to shareholders. I appreciate the dedication of the Board,
Generation
alongside Enel
Generación Chile
including members that have been chosen by the controlling
During 2016, we witnessed a strong and rapid change in
shareholder as well as independent members, and the work
the electricity sector. This change is not just happening in
carried out by the secretary and general counsel, Domingo
Chile it’s happening all over the world. Costs of electricity
Valdés.
generation have dropped thanks to new and different
4
Annual Report Enel Chile 2016
technologies. The USD 47.59 average price per MWh in the
August 2016 public electricity tenders represents a historic
minimum since the tender system was implemented in
Chile. Through Enel Generación Chile, and thanks to the
Company’s solid and diversified energy matrix, we obtained
excellent results. We were awarded 5,950 GWh, 48% of the
12,430 GWh tendered.
There is more electricity generation in the world today than
customers, and Chile has been following this same trend.
I am convinced that building new power plants just for the
sake of building them does not make sense in the world
today. However, this doesn´t mean that we will disregard the
development of new projects when growth opportunities
for the Group arise.
We hope to have the Los Cóndores hydroelectric power
plant, being built in El Maule region, operating by 2018. We
also welcome the idea of entering the gas business. Today
we have six satellite regasification plants located in Talca,
Coquimbo, La Serena, Los Andes, San Antonio, and Temuco.
I would like to highlight the work that we have been doing
with local communities. Today, we should be open to listening
to our neighbors and must care for our environment. If the
Annual Report Enel Chile 2016
5
previous strategy was to ask for forgiveness, our approach
Metropolitan Region where Enel Distribución operates. We
today is to ask for permission. With this in mind, we have
were the first to introduce smart metering in Latin America,
made significant progress regarding our relationship with
a technology that is not new to the world, but that we have
communities in Paposo, who live close to our Taltal power
successfully brought to Chile with the endorsement and
plant in the north, and with several Pehuenche communities
experience of our parent company, Enel. Enel has already
in Alto Biobio, among others.
implemented this technology in over 40 million homes in
Electric Distribution
through Enel
Distribución Chile
Europe, mainly in Italy and Spain.
Regarding electric mobility, we took a significant leap into
the future. I am very satisfied with what was accomplished
during 2016, although the task must continue in 2017
with even more strength. In the short term, we see great
opportunities to incorporate zero emissions mobility to the
streets of Santiago, considering Transantiago´s next public
2016 was a year of important changes in the distribution
tender, and the country´s decontamination plans. We are
sector. New uses for electricity prompted us to change the
focused on supporting and promoting these projects through
traditional metering system to a digital two-way metering
electric mobility, to offer clean and efficient transportation
system that keeps our customers permanently connected
for the country. We will also continue to expand our network
to the company. We finished the first phase of this project,
of public charging stations in Santiago and the rest of the
replacing 50,000 meters within the 33 districts of the
country. You will start seeing more and more “Electrolineras.”
6
Annual Report Enel Chile 2016
Enel Chile Kick-off
Dear shareholders, I want to close this letter reassuring my
commitment to the challenges that we have taken on as a
Group. I am convinced that the projects we have designed for
Another highlight during 2016 was the kick-off of our
Enel Chile, and the subsidiaries Enel Generación Chile and
new corporate image. Even though the company was
Enel Distribución Chile, are ambitious but commensurate to
incorporated in March as Enersis Chile S.A., on October 4th,
the future of the electricity sector in Chile.
2016 we presented a proposal to change that name. We
are convinced that we must make clear to our customers,
We will focus on increasing the number of customers and
authorities, and all citizens, our determination to work with
digitalizing our relationship with customers. I completely
tenacity not to forget the past, but to face future challenges.
agree with Enel CEO Francesco Starace´s vision regarding
Our initiative was welcomed by the shareholders of Enersis
the importance of focusing on having more customers
Chile, Endesa Chile, and Chilectra, who approved changing
rather than more generation. I believe this equation is a
the name to Enel.
very efficient one when it comes to managing the Group´s
equity.
As I stated while launching the new brand in December,
Enel Chile was created to contribute to the development of
the country with an open power vision. With collaborative
and global vocation, we seek to create, grow, and lead the
new energy era.
Herman Chadwick Piñera
Chairman
Annual Report Enel Chile 2016
7
Corporate Building. 76 Santa Rosa Ave.
New Brand Kick-off, November 30th, 2016
ENEL CHILE IS
Over the last decades, Enel has offered the world
energy, innovation, and progress. It has touched the
lives of thousands of people by changing the way in
which they relate to energy. Today, understanding that
the world has changed and the way things are done has
changed, Enel Chile takes on the responsibility to lead
the changes in the energy industry to change the world
into a new, sustainable world and with the support of
local communities.
This new philosophy is Open Power and requires Enel
Chile, and its subsidiaries Enel Generación Chile and
Enel Distribución Chile to be open. Today the challenge
is to open electricity to more people, partners, and add
new applications to electricity. It implies opening it to
new technologies and management methods.
Open Power involves creating a new shared culture,
with a long-term vision and a mission defined by five
aspects and four principles that define the DNA of the
Enel Group.
MISSION
Open energy
to more people
a y s
w w
O pen energy to
ne w technologies
O ffer p e o ple n e
a n a g e e n er g y
t o m
e C
p
e
n t h
t o m o r e s t a
O
y
n
o l d
e r s
a
h
o m p
e
k
i o n s
t
a
c
r g y
O p e n e n e
t o n e w a p p l i
VISION
Open Power to solve relevant global challenges
VALUES
Responsibility
Each one of us is responsible for the success of the group, at every level.
We place our energy at the service of people to improve their live
and make them more sustainable.
We live and work curiously, we make efforts to go beyond the ordinary
and we overcome our fears, in order to open the energy to new uses,
technologies and people. We learn from our mistakes and from our successes.
Innovation
Trust
We act in a skilled, honest and transparent way, in order to gain our
colleagues, clients and stakeholders’ confidence, and we also value
the individual differences. At the same time, we trust in their ability
to create and share value.
Proactivity
We take care of our job in first person. We interpret permanently
the scenarios and global challenges to anticipate changes, thus redefining
our priorities when needed.
MISSION
w w
a y s
to more people
Open energy
ne w technologies
O pen energy to
O ffer p e o ple n e
a n a g e e n er g y
o m p
e
k
t o m o r e s t a
r g y
O p e n e n e
t o n e w a p p l i
t o m
n t h
e C
O
a
e
h
p
y
n
o l d
e r s
i o n s
t
a
c
VISION
Open Power to solve relevant global challenges
VALUES
Responsibility
Each one of us is responsible for the success of the group, at every level.
We place our energy at the service of people to improve their live
and make them more sustainable.
Innovation
We live and work curiously, we make efforts to go beyond the ordinary
and we overcome our fears, in order to open the energy to new uses,
technologies and people. We learn from our mistakes and from our successes.
Trust
We act in a skilled, honest and transparent way, in order to gain our
colleagues, clients and stakeholders’ confidence, and we also value
the individual differences. At the same time, we trust in their ability
to create and share value.
Proactivity
We take care of our job in first person. We interpret permanently
the scenarios and global challenges to anticipate changes, thus redefining
our priorities when needed.
11
Highlights 2016
JANUARY
FEBRUARY
MARCH
Standard & Poor´s ratifies
the BBB+ rating of Enel
Generación Chile
The risk rating agency
Standard & Poor’s confirmed
the “BBB+” with a stable
outlook international rating
of Enel Generación Chile on
February 3rd, 2016.
The Hydraulic Works
Authority, the Maule
Surveillance Board, and
Enel Generación Chile reach
an agreement to optimize
the use of water for both
irrigation and hydroelectric
generation
On January 4th, 2016,
the Hydraulic Works
Authority (DOH in its
Spanish acronym), which
reports to the Ministry of
Public Works, and Enel
Generación Chile, signed
an agreement that offers
flexibility to the operation of
the Maule Lagoon reservoir,
the La Invernada Lagoon,
and the Maule River. It
is supplementary to the
agreement in force since
1947 and ensures the use
of water for farming and
electricity generation.
Enel Generación Chile and
Universidad de Concepcion
signed an Agreement for
the Reforestation of 700
hectares with native species
This agreement is an
environmental initiative that
is among the responsibilities
of the Company as part of
the construction of the Ralco
hydroelectric power plant
located in the Alto Biobio
district. It was formalized
on January 20th, 2016 and
leads to roughly 3 million 200
thousand trees to be planted
within a four-year period.
Enel Chile is created
According to the decision
adopted by the Extraordinary
Shareholders Meeting held
on December 18th, 2016, Enel
Chile S.A. was incorporated
on March 1st, 2016 as a
privately held limited liability
stock corporation which
arises from the division of
Enersis S.A. (currently Enel
Américas S.A.).
Also, as of March 1st, 2016,
Enel Generación Chile and
Enel Distribución Chile
became subsidiaries of the
new company Enel Chile S.A,
which controls all generation
and distribution assets
located in Chile.
Woman’s Energy Award
celebrates ten years of
existence
Within the context of the
International Women’s Day,
Enel Chile and its subsidiaries
Enel Generación Chile and
Enel Distribución Chile
acknowledged 13 outstanding
women for their contribution
to the social development of
the country. Each one was
awarded for her contribution
to her particular field, such as
art, music and lyrics, public
service, environment, energy
efficiency and sustainability,
education, innovation and
new ventures, public debate,
community work, journalism,
entertainment, social
communication, and sports.
Enel Generación Chile and
Energas distribute natural gas
to Coquimbo and La Serena
Máximo Pacheco, the
Secretary of Energy at the
time, led the inauguration
ceremony of the new LNG
regasification satellite plant
(PSR in its Spanish acronym)
APRIL
Enel Chile begins trading on
the Santiago and the New
York Stock Exchange.
On April 21st, 2016, after
registering Enel Chile in the
securities’ registers, the
Company’s shares began
trading on the Chilean and
the United States securities’
markets.
Enel Chile was included
in the IPSA Index and the
Morgan Stanley Capital
International Index
Enel Chile was included in
the IPSA of the Santiago
Stock Exchange on April 21st,
2016. Its inclusion represents
the market’s recognition of
the Company’s solvency,
considering that since the
Company was created in
March of 2016 and therefore
was lacking trading history
to support the decision.
Consequently, the most
relevant index of the Santiago
Stock Exchange began to
include 42 companies. Also,
on April 22nd, the Morgan
Stanley Capital International
Index (MSCI) added Enel
Chile to its index as Large
Cap.
of Enel Generación Chile.
This plant allows natural gas
and its many benefits for
commercial and household
users to become a reality in
Coquimbo and La Serena.
This plant responds to an
agreement between Enel
Generación Chile that owns
the plant, and GasValpo
– through Energas. It
represents a new highly
efficient energy alternative,
environmentally friendly and
at increasingly competitive
prices.
Fitch Ratings ratifies the AA
rating of Enel Generación
Chile
On March 2nd, 2016, Fitch
Rating ratified its “BBB+,”
rating in the local and foreign
currency of Enel Generación
Chile and also its “AA (cl)”
long-term local rating. Also,
outlooks were upgraded to
“Positive.”
Enel Distribución Chile begins
changing the traditional
meters of 50 thousand
customers replacing them
with smart meters
Maximo Pacheco, the
Secretary of Mining at
the time, and the Chief
Executive Officer of Enel
Distribución Chile, Andreas
Gebhardt, presented the
new smart metering system
for the La Florida district.
This innovative technology
allows customers to manage
their electricity consumption
directly. The smart meter
offers customers relevant
information about the
electricity use of their home
enabling them to change
habits in order to use
electricity more efficiently.
12
Annual Report Enel Chile 2016
JUNE
Enel Generación Chile sold
its stake in GNL Quintero
Enel Generación agreed to
sign a sales contract to sell
its 20% ownership share
of GNL Quintero to Enagás
Chile, a subsidiary wholly
owned by the Spanish
company Enagás.
Enel Generación Chile
decided to sell its interest
in GNL Quintero because it
was not strategically relevant
to develop the electricity
business nor the natural
gas trading business of the
Company. Financially, the
transaction represented
approximately US$ 139
million in net income for Enel
Generación Chile.
JULY
Nicola Cotugno is appointed
Chief Executive Officer of
Enel Chile
The Board of Directors
of Enel Chile appointed
Mr. Nicola Cotugno as
Chief Executive Officer
of the Company after the
resignation of Mr. Luca
D´Agnese and informed that
the resignation would take
effect on August 16th, 2016.
From that date on Mr. Luca
D´Agnese will continue as
Chief Executive Officer of
Enel Américas.
Feller Rate confirms rating of
Enel Generación Chile
On July 8th, 2016. Feller Rate
confirmed the domestic “AA”
stable outlook rating on local
bonds, shares, and trade bills.
The Santiago Municipality
and Enel Distribución Chile
inaugurated the first electric
bus in the country and will be
free of charge for passengers
in the downtown area of
the city.
The first 100% electric bus
will cover the downtown
area of the city free of charge
for the residents, workers,
students, tourists and others.
The goal is to take them
closer to their destinations in
a sustainable and responsible
way, and spending 70%
less than in a similar fuel
charged vehicle. Passengers
will enjoy free Wi-Fi and
cellular phone chargers in
every seat. The bus has 250
kilometers autonomy. Its
battery has nearly 15 years of
useful life, it may be charged
in 5 hours, and emits no
pollutants. The full charge
of the BYD K9 battery costs
a bit more than 20 thousand
Chilean pesos, and runs 1
km per kWh, therefore costs
approximately 80 Chilean
pesos per kilometer.
Herman Chadwick was
elected Chairman of the
Board of Directors of Enel
Chile
On April 29th, 2016, the
Board of Directors of Enel
Chile appointed Mr. Herman
Chadwick Piñera, formal head
of Copsa, the infrastructure
trade association, and former
Chairman of the National
Television Council, as
Chairman of the Company.
Mr. Giulo Fazio was
appointed Vice Chairman.
Fazio. The independent
Directors Gerardo Jofré,
Pablo Cabrera, and Fernán
Gazmuri were appointed as
members of the Directors’
Committee, and Mr. Gazmuri
was appointed Chairman of
the Committee.
Enel Chile is rated “AA” by
Feller Rate and Fitch Rating
Feller Rate and Fitch Rating’
gave Enel Chile a local rating
“AA” with a stable outlook.
This rating was ratified in
July.
MAY
Enel Chile signs and
agreement with Anglo
American Sur
Enel Generación Chile
signed a contract to supply
electricity to all operations
of Anglo American Sur (Los
Bronces, El Soldado, and
Chagres). The estimated
consumption of these
operations is 2 TWh per
year and is one of the two
largest industrial customers
of the Central Interconnected
System (SIC in its Spanish
acronym). This agreement
with Anglo American Sur has
a ten-year term beginning
in 2021 and represents a
milestone regarding the
Company’s relationship with
the country’s nonregulated
customers.
Enel Generación Chile,
Enap, and Metrogas sign an
agreement to export gas to
Argentina
Within the context of the
Energy Convention between
Chile and Argentina which
took place in early 2016,
on May 12th, 2016, Enel
Generación Chile, Enap,
and Metrogas, signed an
agreement to export gas to
Argentina. The additional 3
million m3/day of gas were
delivered from the central
region of Chile between
June 1st and August 31st.
The volume exported by
Metrogas, Enap and Enel
represented 14%, 29% and
57% of the total volume
considered by the Convention
between both countries.
Annual Report Enel Chile 2016
13
AUGUST
Enel Generación Chile
relinquish the water rights
of five projects
After carefully analyzing
the profitability of the
projects and the social and
environmental impacts, the
board of directors of Enel
Generación Chile decided to
relinquish the water rights
related to hydroelectric
projects Bardón; Chillán
1 and 2; Futaleufú; Puelo
and Huechún. The total
investment in these projects,
which amounted to USD 52
million, was written-off in
2016.
Enel Distribución Chile
installs the first photovoltaic
system at a public hospital in
the city of Parral in Chile.
The project is part of the
Solar Public Roof Project
of the Energy Agenda
that focuses on installing
photovoltaic systems on
public building roofs. The
investment of the project
exceeded ch$ 57 million and
will allow the hospital to save
more than ch$ 5 million a
year on electricity.
Enel Chile is rated “BBB+”
by Standard & Poor’s
The risk rating agency
Standard & Poor’s began the
international rating of Enel
Chile on July 22nd, 2016. The
Company was rated “BBB+”
with a stable outlook.
Enel Distribución Chile was
awarded the Photovoltaic
project for the Antofagasta
Region
In October 2016, Enel
Distribución Chile won the
bid “Purchase and installation
of photovoltaic systems for
the Chilean Army’s Motorized
Squad No1 in Calama,
Antofagasta as part of the
Solar Roof Program “. The
building awarded to Enel
Distribución Chile is located
in Calama where a 100 kWh
photovoltaic system will be
installed.
SEPTEMBER
The Minister of Energy at
the time, Maximo Pacheco
informs on construction
progress of the Los Cóndores
hydroelectric project
The power plant will allow
supplying nearly 150 MW to
the Central Interconnected
System (SIC In its Spanish
acronym). One of the
highlights of this project is its
underground cabling, having
practically no infrastructure
at sight, and consequently
causing a minimum
environmental impact. The
land on the surface will
return to its original state
once the power plant begins
operations towards the end
of 2018.
Bike Santiago and Enel
Distribución Chile began a
new era in bike sharing in the
Lo Barnechea district with
the electric e-bike.
The new electric e-bike was
primarily conceived as a
bike for steep terrain. It is
equipped with a 250 KW/hr.
electric motor with a sensor
that determines when the
bike rider needs “help”
pedaling to reach a maximum
speed of 25 km/hr. The bike
has 100 kilometers autonomy
and it takes 4 hours to charge
the battery.
OCTOBER
Shareholders’ Meetings
approve changing the
Companies’ names
The Shareholders’ Meetings
of Enersis Chile, Endesa
Chile and Chilectra on
October 4th, 2016, approved
changing the names of the
three companies to Enel
Chile, Enel Generación Chile,
and Enel Distribución Chile,
respectively. The decision
responds to the new strategy
of the Group consisting in
getting ahead of the new
worldwide energy industry
scenario.
Enel Distribución begins
testing social network self-
service
By using hashtag #luz in
Twitter when facing an
electricity emergency,
the customers of Enel
Distribución located in the
Metropolitan Region of Chile
receive a quicker response
from the Company. This
service responds to the
new instant messaging
self-service platform named
“Chattigo.” Chattigo was one
of the three startups selected
in 2015 by the “Energy Start”
program of Enel Distribución.
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Annual Report Enel Chile 2016
Enel Distribución Chile
releases its new image on its
electricity bill
On December 1st, 2016, Enel
Distribución Chile presented
its new electricity bill to its 1.8
million customers, including
residential, commercial
and industrial customers
located within the Company
concession area comprised
by 33 districts of the
Metropolitan Region
DECEMBER
Enel Generación Chile and
Taltal power plant rebuild their
relationship with the territory
Eight social institutions,
Paposo community
representatives, and
Enel Generación Chile
signed a Memorandum of
Understanding representing a
new phase in the relationship
between the Company and
the neighbors of the Taltal
power plant. The MOU was
suggested by the Ministry of
Energy as part of the approval
process of the Taltal power
plant’s optimization project.
It enables opening a work
environment to deal with
community and company
concerns.
Moody´s confirms rating of
Enel Generación Chile
The risk rating agency
Moody’s Rating Services
ratified the Baa2 corporate
rating of Enel Generación
Chile and with a stable
outlook.
NOVEMBER
Enersis Chile begins to trade
as Enel Chile
On November 7th, 2016, the
shares of Enel Chile S.A.
began to trade under the
new stock market ticker
ENELCHILE.
Vreni Häussermann, director
of the Huinay Scientific
Center, receives the Rolex
Award for Enterprise 2016 for
exploring Chilean Patagonia
Waters
On November 16th, 2016,
the Rolex Awards for
Enterprise acknowledged
Vreni Häussermann, the
Director of the Huinay
Scientific Center owned by
Enel Generación Chile and
the Pontificia Universidad
Católica de Valparaíso. The
center is fully financed by
Enel, and its purpose is to
discover, explore and protect
the Chilean Patagonia Fiords
through a marine investigation
program. The goal of the
program is the sustainable
use and preservation of the
fiords. Thanks to this award,
Vreni Häussermann will be
able to continue exploring the
sea using a submersible that
can reach 500 meters deep
underwater. Until now her
investigations could not go
deeper than 30 meters.
Enel Distribución Chile
completed the installation of
50 thousand smart meters
On November 28th, 2016,
Enel Distribución completed
the first phase of the smart
meter replacement plan for
residential customers in the
Metropolitan Region. As a
result, Enel Chile becomes the
first company, domestically,
to install new technology
that will: allow remote
reading; generate a two-way
communication mechanism
between the company and
its customers; promote
self-generation of electricity
by using photovoltaic
panels enabling customers
to consume the energy
generated or feed it to the
distribution network.
Enel Chile presents its new
corporate image
On November 30th, 2016,
the new corporate image of
Enel Chile was presented at
the Company’s headquarters
located at 76 Santa Rosa
Ave. The employees of the
Company and important
authorities from both public
and private sectors attended
the event. The Chief Executive
Officer of the Company Nicola
Cotugno said, “We strive to
be a company that is more
and more transparent, flexible,
dynamic and collaborative.”
Annual Report Enel Chile 2016
15
Main Financial
and Operating
Data
Annual Report Enel Chile 2016
17
18
Annual Report Enel Chile 2016
Total Assets
Total Liabilities
Operating Revenue
Ebitda
Net Income (2)
Current Ratio
Debt Ratio (3)
Generation Business
Number of employees
Number of Generation units
Installed capacity (MW)
Electricity generated (GWh)
Energy sales (GWh)
Distribution Business
Energy sales (GWh) (4)
Number of customers
Energy losses
Number of employees
Customers/Employees
As of December 31st of each year (figures in millions of Chilean pesos)(1)
2010
2011
2012
2013
2014
2015
2016 (5)
5,398,711
1,935,717
2,136,041
627,547
317,561
1.13
0.56
As of December 31st of each year
2010
107
5,611
20,914
21,847
2011
1,155
107
5,611
20,722
22,070
2012
1,141
105
5,571
19,194
20,878
2013
1141
105
5,571
19,432
20,406
2014
1261
111
6,351
18,063
21,157
2015
995
111
6,351
18,294
23,558
2016
15,924
111
6,351
17,564
23,689
As of December 31st of each year
2010
13,098
1,609,652
5.80%
719
2,239
2011
13,697
1,637,977
5.50%
712
2,301
2012
14,445
1,658,637
5.40%
734
2,260
2013
15,152
1,693,947
5.30%
745
2,274
2014
15,690
1,737,322
5.32%
690
2,518
2015
15,893
1,780,780
5.31%
686
2,596
2016
15,924
1,825,519
5.33%
688
2,653
(1) Accounting figures as determined by the instructions and regulations issued by the SVS.
(2) Net earnings attributable to the controlling shareholder.
(3) Total Liabilities/Equity plus Minority Interest.
(4) Due to changes in the criteria, non-billable consumption (CNF in Spanish acronym) is not included in 2014 and 2015.
(5) Only ten months since its creation (March 1st, 2016).
Annual Report Enel Chile 2016
19
20
Annual Report Enel Chile 2016
Identification of the
Company and Documents
of Incorporation
Annual Report Enel Chile 2016
21
21
Identification of the Company
Name
Address
Company Type
Taxpayer ID No
Address
Zip Code
Telephone No
P.O. Box
Securities Registration No
External Auditors
Subscribed and paid-in capital (M$)
Website
Email
Investor Relations Telephone
Ticker in Chilean stock exchanges
Ticker in New York stock exchange
Custodial Bank ADR’s
Depositary Bank ADR’s
Domestic Risk Rating Agency
International Risk Rating Agency
Enel Chile S.A.
Santiago, Chile, although able to establish branches or agencies in
other parts of the country or abroad
Publicly held Limited Liability Stock Company
76,536,353-5
76 Santa Rosa Ave., Santiago, Chile
833-0099 SANTIAGO
(56) 2353 4400 – (56-2) 2378 4400
1557, Santiago
1,139
Ernst & Young
2,229,108,975
www.enelchile.cl
comunicacion.enelchile@enel.com
(56-2) 2353 4682
ENELCHILE
ENIC
Banco Santander Chile
Citibank N.A.
Feller Rate and Fitch Chile Clasiifcadora de Riesgos Limitada
Standard & Poor´s
22
Annual Report Enel Chile 2016
Documents
of Incorporation
Enel Chile S.A., formerly named “Enersis Chile S.A.”, was created as a consequence of the corporate reorganization that
began in April 2015. Enersis S.A. controlled the generation, transmission and distribution business in Chile and four other
countries in the region (Argentina, Brazil, Colombia, and Peru).
The Extraordinary Shareholders’ Meeting of Enersis S.A. held on December 18th, 2015, approved the first phase of the
reorganization plan named “the Division,” which created Enersis Chile S.A. as the only vehicle to control the Group’s
generation and distribution assets in Chile. Enersis S.A became Enersis Americas S.A., the vehicle to control all assets of
the businesses in other countries in the region. The Division was recorded in a public deed issued on January 8th, 2016 by
the Santiago Notary Public, Mr. Ivan Torrealba Acevedo, and its extract was registered in the Commercial Register (Registro
de Comercio del Conservador de Bienes Raíces y Comercio de Santiago) on pages 4,288 No 2,570 of the year 2016 and
published in the Official Gazette on January 20th, 2016.
Later, on October 4th, 2016, the shareholders of Enersis Chile S.A. approved changing the name of the Company to “Enel
Chile S.A.” This agreement was recorded in a public deed on October 18th, 2016 by the Santiago Notary Public, Mr. Ivan
Torrealba Acevedo. Its extract was registered in the Commercial Register (Registro de Comercio del Conservador de Bienes
Raíces y Comercio de Santiago) on pages 79,330 No 42,809 of the year 2016 and published in the Official Gazette on October
28th, 2016.
Annual Report Enel Chile 2016
23
Corporate
Purpose
The corporate purpose of the company appears in the
statutory modification approved by the Extraordinary
Shareholders Meeting held on October 4th, 2016. It was
recorded in a public deed on October 18th, 2016 granted by
the Santiago Notary Public Mr. Iván Torrealba Acevedo, and
its extract was registered on pages 79,330 N° 42,809 of the
Commercial Register in 2016 and published in the Official
Gazette on October 28th, 2016.
The Company’s purpose is to perform the exploration,
development,
operation,
generation,
distribution,
transmission, transformation and sales of energy in any
of its forms and nature, directly or through intermediate
companies, and also telecommunications activities and
the provision of engineering consulting services within
the country and abroad. It may also invest and manage its
subsidiaries and associate companies, whether generators,
transmitters, distributors or traders of electricity or whose
business is any of the following: (i) energy, in any of its forms
or nature, (ii) the supply of public utilities or whose main raw
material is energy, (iii) telecommunications and information
technology, and (iv) trading over internet. In complying with
its main objects, the company will carry out the following
functions:
a) Promote, organize, build, modify, dissolve or liquidate
companies of any nature which have similar corporate
objects to its own.
b) Propose investment, financing and business policies to
subsidiary companies, as well as accounting criteria and
systems that these should follow.
c) Supervise subsidiary management
24
Annual Report Enel Chile 2016
d) Provide subsidiary or associate companies with the
necessary financing for their business development
and provide management services; financial, technical,
legal and auditing advice; and in general any service that
appears necessary for their best performance.
In addition to its main purpose and always acting within
limits established by the Investment and Financing Policy
approved by the Shareholders Meeting, the Company may
invest in:
First, the acquisition, operation, construction, rental,
administration, intermediation, trading, and disposal of all
kinds of movable and immovable assets, either directly or
through subsidiaries or associate companies.
Second, all kinds of financial assets, including shares, bonds
and debentures, commercial paper and in general all kinds
of titles or securities and company contributions, either
directly or through subsidiaries or affiliate companies.
Annual Report Enel Chile 2016
25
Ownership and
Control
Annual Report Enel Chile 2016
27
27
Ownership
Structure
The total share capital of the Company was divided into
49,092,772,762 shares of a single series with no par value.
As of December 31st, 2016, all shares were subscribed and
paid, and ownership distributed as follows:
Shareholders
Enel Latinoamérica S.A.
Enel Iberoamérica S.R.L.
Chilean Pension Funds
Citibank N.A.(per SVS Letter 1,375)
Foreign investment funds
Banco de Chile on behalf of third parties
Stockbrokers, insurance companies & mutual funds
Others
Total Shares
Number of shares
19,794,583,473
9,967,630,058
5,854,145,757
3,818,628,500
3,339,410,693
2,689,380,833
2,517,961,498
1,111,031,950
49,092,772,762
Shareholding
40.32%
20.30%
11.92%
7.78%
6.80%
5.48%
5.13%
2.26%
100.00%
28
Annual Report Enel Chile 2016
Identification of
the Controlling
Shareholder
As defined by Title XV of Law No 18,045, Enel Chile S.A. is
controlled by Enel S.p.A., an Italian company, through the
Spanish company Enel Iberoamérica S.R.L, with 60.62% of
the shares issued by Enel Chile S.A.
On December 19th, 2016, Enel Latinoamérica, S.A. and Enel
Iberoamérica, S.R.L. agreed to merge by the latter absorbing
the first and therefore dissolving Enel Latinoamérica, S.A.,
and Enel Iberoamérica, S.R.L. becoming the surviving entity
with all legal rights, obligations, and third party relationships.
On December 20th, 2016 the agreement was formalized and
recorded in a public deed granted by the Madrid Notary,
Mr. Andrés Domínguez Nafría. The merger was registered
in the Commercial Register of Madrid and the Company’s
Shareholder Registry on January 13th, 2017, although the
registration was retroactively effective as of the date of its
presentation, which took place on December 21st, 2016.
Enel S.p.A controls 100% of Enel Iberoamérica.
Annual Report Enel Chile 2016
29
Shareholders of Enel S.p.A.
as of December 31st, 2016
Ministero dell’Economia e delle Finanze de Italia
Institutional Investors
Retail Shareholders
Total
23.6%
54.0%
22.4%
100.0%
Source: https://www,enel,com/en-gb/investors/shareholders
The shareholders of the controlling entity do not have a shareholders agreement.
The Company’s Twelve Major
Shareholders
As of December 31st, 2016, Enel Chile S.A. was owned by 6,639 shareholders. The twelve shareholders with
the largest stake are the following::
Name
Enel Latinoamérica S.A.
Enel Iberoamérica S.R.L.
Citibank N.A. per SVS Letter 1,375
Banco de Chile on behalf of non-resident third parties
Banco Itaú on behalf of Foreign Investors
Banco Santander on behalf of Foreign Investors
AFP Provida S.A. Pension Fund C
AFP Hábitat S A Pension Fund C
AFP Capital S A Pension Fund C
AFP Cuprum S A Pension Fund C
AFP Provida S.A. Pension Fund B
AFP Cuprum S A Pension Fund A
Subtotal 12 shareholders
Other 6,627 shareholders
TOTAL 6,639 SHAREHOLDERS
Taxpayer ID
59,072,610-9
59,206,250-K
59,135,290-3
97,004,000-5
97,023,000-9
97,036,000-K
76,265,736-8
98,000,100-8
98,000,000-1
76,240,079-0
76,265,736-8
76,240,079-0
Number of Shares
Shareholding
19,794,583,473
9,967,630,058
3,818,628,500
2,689,380,833
1,953,577,727
1,298,404,727
1,013,706,040
730,932,853
653,921,137
587,712,159
346,537,072
324,269,504
40.32%
20.30%
7.78%
5.48%
3.98%
2.64%
2.06%
1.49%
1.33%
1.20%
0.71%
0.66%
43,179,284,083
5,913,488,679
87.95%
12.05%
49,092,772,762
100.00%
Most Important Changes in
Ownership Share
There were no changes in Enel Chile’s ownership during 2016 because the Company did not exist on
December 31st, 2015.
30
Annual Report Enel Chile 2016
Stock Market
Transactions among
Related Parties
during 2016
There were no transactions among related parties during 2016.
Summary of Comments
and Proposals by
the Directors Committee
and Shareholders
Enel Chile received no comments regarding the progress of corporate businesses between March 1st and
December 31st, 2016, from the Directors’ Committee or shareholders that own or represent 10% or more
of the shares issued with voting rights, in accordance with the provisions of Article 74 of Law No 18,046 and
Articles 136 of the Rules and Regulations to the Chilean Companies Law.
Annual Report Enel Chile 2016
31
32
Annual Report Enel Chile 2016
Management
Annual Report Enel Chile 2016
33
1
5
2
6
3
7
4
Board of Directors
1. CHAIRMAN
Herman Chadwick Piñera
Lawyer
Pontificia Universidad Católica de Chile
Taxpayer ID: 4.975.992-4
Since 06.30.2015
2. VICE CHAIRMAN
Giulio Fazio
Lawyer
Universidad de los Estudios de Palermo
Passport: YA 4656507
Since 04.28.2016
3. DIRECTOR
Salvatore Bernabei
Industrial Engineer
Università degli Studi di Roma “Tor Vergata”
Master’s Degree in Business Administration
Politécnica di Milano
Taxpayer ID: 24.220.743-2
Since 04.28.2016
4. DIRECTOR
Pablo Cabrera Gaete
Lawyer and Diplomat
Pontificia Universidad Católica de Chile and Academia
Diplomática Andrés Bello
Taxpayer ID: 4.774.797-K
Since 04.28.2016
5. DIRECTOR
Vincenzo Ranieri
Bachelor in Business Administration
Universidad de LUISS in Italy
Passport: YA 7616919
Since 04.28.2016
6. DIRECTOR
Gerardo Jofré Miranda
Commercial Engineer
Pontificia Universidad Católica de Chile
Taxpayer ID: 5.672.444-3
Since 04.28.2016
7. DIRECTOR
Fernán Gazmuri Plaza
Commercial Engineer
Pontificia Universidad Católica de Chile
Taxpayer ID: 4.461.192-9
Since 04.28.2016
34
Annual Report Enel Chile 2016
Board of Directors’ Compensation
and Directors’ Committee
Under Article 33 of Law No 18,046 the Chilean Companies
The compensation of the Directors’ Committee consists of a
Act, the Ordinary Shareholders’ Meeting held on April 28th,
variable amount equal to 0.11765 thousandths of the annual
2016 approved the compensation of the Board of Directors
net profit. Any advance payment is equal to one monthly
and Directors’ Committee for 2016.
compensation. A part of such monthly compensation is
unconditional, and another part is conditional. Advances are
The compensation of the Board of Directors consists of a
deducted from the yearly variable compensation.
variable annual amount equal to 0.001 thousandths of the
annual net profit. Any advance payment is equal to one
The total compensation expense during 2016 amounted to
monthly compensation. A part of such monthly compensation
$441,917,998 and it is detailed in the following table. The
is unconditional, and another part is conditional. Advances
Board of Directors did not have additional expenses for
are deducted from the yearly variable compensation.
consulting services.
Annual Report Enel Chile 2016
35
Variable
Compensation
TOTAL 2016
-
129,577,699
-
-
-
-
-
-
-
-
-
106,113,433
106,113,433
106,113,433
441,917,998
2016
Figures in $
Board Member Name
Position
Fixed
Compensation
Ordinary and
Extraordinary
Herman Chadwick Piñera
Chairman
84,744,306
44,833,393
Giulio Fazio (1)
Vice Chairman
Salvatore Bernabei (1)
Vincenzo Ranieri (1)
Pablo Cabrera Gaete
Juan Gerardo Jofré
Miranda
Director
Director
Director
Director
Committee’s
Fixed
Compensation
Directors
Committee
Ordinary and
Extraordinary
Sessions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,643,865
29,219,885
17,214,472
8,035,211
51,643,865
29,219,885
17,214,472
8,035,211
Fernán Gazmuri Plaza
Director
51,643,865
29,219,885
17,214,472
8,035,211
Total
239,675,900
132,493,048
51,643,417
24,105,633
(1) The Director waived his compensation for being an executive of the Enel SpA Group
Incentive Plan
Director’s compensation for 2016 did not include an incentive plan.
Board of Directors’
consulting expenses
The Board of Directors did not spend on consulting services
in 2016.
36
Annual Report Enel Chile 2016
Social
responsibility
and sustainable
development
Ownership
in Enel Chile
S.A.
As of December 31st, 2016, according to the shareholder’s
registry, none of the Directors in office had an ownership
share of the Company.
Diversity in the
Board of Directors
Number of people by gender:
Female
Male
Total
Number of people by nationality:
Chilean
Italian
Total
Number of people by age group:
Between 41 and 50
years
Between 51 and 60
years
Between 61 and 70
years
More than 70
Total
Number of people by years of service:
Less than 3 years
More than 12 years
Total
0
7
7
4
3
7
3
0
2
2
7
6
1
7
Annual Report Enel Chile 2016
37
Directors’
Committee
Enel Chile S.A., formerly named “Enersis Chile S.A.”, was
created as a consequence of the Division of Enersis S.A.
Directors’
Committee
Annual Report
approved by the Extraordinary Board Meeting of the
The Directors’ Committee of the Company held fourteen
company held on December 18th, 2015. On February 29th,
sessions during 2017, fully complying with Article 50 bis of
2016, the Board of Directors appointed the members to
the Chilean Companies Act Law No 18,046 and additional
the Company’s first Directors’ Committee. The Directors
applicable regulation.
appointed to compose the Directors’ Committee were Pablo
Cabrera Gaete, Gerardo Jofré Miranda, and Fernán Gazmuri
During 2016, the Directors’ Committee addressed the
Plaza. On February 29th, 2016, the Board of Directors, after
matters that are summarized below:
the Ordinary Shareholders Meeting held on April 28th, 2016
that appointed the members to the Board of Directors,
designated the same gentlemen Cabrera Gaete, Jofré
Miranda and Gazmuri Plaza as members to the Directors’
Committee. Mr. Fernán Gazmuri Plaza was appointed
Chairman of the Directors’ Committee during the ordinary
session of the Directors’ Committee held on February
29th, 2016 and Mr. Domingo Valdés Prieto was appointed
Secretary to the Directors’ Committee during the session of
the Directors’ Committee held on April 29th, 2016.
38
Annual Report Enel Chile 2016
1.- PRESENTATION OF DIRECTORS’ COMMITTEE AND
ETHICS CHANNEL POLICIES: On February 29th, 2016,
3.- EXTRAORDINARY SESSION SUMMON PROCEDURE
During the ordinary session held on February 29th, 2016,
the Directors’ Committee, unanimously agreed (i) to
the Directors’ Committee unanimously agreed that the
take note of the functions of the Directors’ Committee
Directors’ Committee extraordinary session summon be
determined by the Board of Directors during the session
carried out by an electronic mail sent by the Chairman or the
held that same day and assume responsibility for such
Secretary of the Directors’ Committee or their delegates and
functions immediately (ii) to approve policies regarding
a telephone call to each committee member. This summon
employment of former members of the external auditing
must be performed at least 24 hours in advance.
firm according to the terms pointed out by the Chairman
of the Directors’ Committee and (iii) to approve the
Ethics Channel Rules and its immediate implementation.
2.- DIRECTORS’ COMMITTEE BUDGET : On February
4.- ELECTRONIC DELIVERY: During the ordinary session
held on February 29th, 2016, the Directors’ Committee
unanimously agreed to authorize the electronic delivery
project to summon the members of the Committee and that
29th, 2016, the Directors’ Committee, unanimously
all measures be taken to implement the project correctly.
agreed to approve the Directors’ Committee 2016
Budget amounting to 10,000 Unidades de Fomento
5.- ELECTRONIC PARTICIPATION
IN DIRECTORS’
(Chilean inflation-indexed, Chilean peso-denominated
COMMITTEE SESSIONS: During the ordinary session
monetary unit) for the Committee and its consultants’
held on February 29th, 2016, the Directors’ Committee
expenses and operations. The members of the Directors’
unanimously agreed to approve communicating electronically
Committee also unanimously decided to submit this 2016
with Committee members that are not physically present
Directors’ Committee Budget proposal to the approval of
in the meeting room. Members may participate in the
the Board of Directors so that, if approved, they submit it
Directors’ Committee session via Conference call or video
to the Ordinary Shareholders Meeting for final approval.
conference as long as the electronic communication allows
all the members, those physically present and those not
physically present, to be simultaneously and permanently in
communication during the session.
6. RATIFICATION OF DIRECTORS’ COMMITTEE LEGAL
ACTIONS: During the ordinary session held on March 22nd,
2016, the Directors’ Committee unanimously agreed to:
6.1. Take note of the Clarification Deed signed by Enersis
Américas S.A., currently Enel Américas S.A, on March
21st, 2016 at the Santiago Notary Public Mr. Roberto
Antonio Cifuentes Allel. The deed refers to the division
of Enersis S.A., today Enel Américas S.A., formerly
named Enersis Américas S.A. as the divided company
and the legal incorporation of Enersis Chile S.A., today
Enel Chile S.A., as the new company created from the
division as of March 1st, 2016.
Annual Report Enel Chile 2016
39
6.2 Take the above into consideration, and take note that
firm according to the terms pointed out by the Chairman
during the formation stage of the Company that took
of the Directors’ Committee and (iii) approve the Ethics
place before such date, the Directors’ Committee
Channel Rules and its immediate implementation;
reached several agreements to advance in making
the new company operational. These agreements are
c. Directors’ Committee Budget. Agreement No 3/2016;
identified in the minute of the Directors’ Committee
ordinary session number 1/2016 held on February 29th,
d. Financial Statements of the Company to be submitted
2016. The Committee agrees that the minute was
to the Superintendence of Securities and Insurance.
completely reproduced in the present session and is
Agreement No 4/2016;
therefore included in the minute of the present session.
Furthermore, the Committee states that the following
e. Financial Statements (20-F) of the Company to be
agreements are approved:
submitted to the SEC and the NYSE. Agreement No
a. Appointment of the Chairman and Secretary of the
5/2016;
Directors’ Committee. Agreement No1/2016;
f. Evaluation of the services to be provided by External
Auditor. Agreement No 6/2016;
b. Presentation of the Directors’ Committee and the Ethics
Channel Policies. Agreement No 2/2016. This agreement
g. Proposal of Private Risk Rating Agencies. Agreement No
resolved to: (i) take note of the responsibilities delegated
7/2016;
by the Board of Directors; (ii) approve the policies regarding
employment of former members of the external auditing
h. Service contracts between the Company and Enersis
Americas, Enel Americas S.A. today. Agreement No
8/2016;
i. Service contracts to be provided by Enersis Americas S.A.,
Endesa Americas S.A., and Chilectra Americas S.A. The
last two companies have merged with Enel Americas S.A.
Agreement No9/2016;
j. Extraordinary sessions summon procedure. Agreement
No 11/2016;
k. 2016 Ordinary sessions’ calendar. Agreement No 12/2016;
l. Electronic delivery. Agreement No 13/2016;
m. Participation by using electronic means of communication.
Agreement No 14/2016.
40
Annual Report Enel Chile 2016
6.3 As stated previously, certain actions performed by
7. CALENDAR OF THE DIRECTORS’ COMMITTEE’S
the Company during its incorporation stage are all
MAIN ACTIVITIES IN 2016: In the session held on
known by the Directors’ Committee and are efficient
April 29th, 2016, the Directors’ Committee, unanimously,
regarding improving the operations and development
agreed to take note of the presentation covering the main
of the Company’s activities. The main objective of these
subjects the Committee should examine and the time
actions has been the organization of the Company
frame within 2016 to perform the examinations.
and also comply with the agreements adopted by the
Extraordinary Shareholders Agreement of Enersis S.A.
8. FINANCIAL STATEMENTS: The financial statements
held on December 18th, 2015, in which the Division was
of the Company and its shares, to be submitted to the
agreed.
SVS, were analyzed during the session held February
29th, 2016. The Combined Financial Statements as of
6.4 Consider convenient
for
the Company and
its
December 31st, 2015, including relevant supplementary
Shareholders that each action carried out its effects be
information, and the respective audit report performed by
fully undertaken by the company.
the firm Ernst & Young were unanimously approved. The
Directors’ Committee also recommended that the Board
6.5 Approve, ratify, confirm, convert, validate, and undertake
of Directors approve such financial statements.
every action previously referred to without exception,
having reproduced every agreement, one by one, in the
- During the same session held on February 29th, 2016, the
same terms recorded in its respective minute, including
Company’s financial statements to be submitted to the
the actions carried out by Company delegates.
SEC and the NYSE as the “Registration Statement” were
analyzed. The Directors’ Committee unanimously agreed
to declare the Financial Statements prepared according to
the NIIF standards included in the Regsistration Statement
as examined and therefore eligible to be submitted to the
Security Exchange Commission of the United States of
America (SEC) to comply with the rules and regulations
of such Authority related to the securities issued in the
United States.
- In the extraordinary session held on May 6th, 2016, the
Directors’ Committee declared having reviewed the
Consolidated Financial Statements of the Company as
of March 31st, 2016, its Notes, Income Statement and
Significant Events.
- In the ordinary session held on July 27th, 2016, the
Directors’ Committee declared having examined the
Consolidated Financial Statements of the Company as
of June 30th, 2016, its Notes, Management’s Perfomance
Analysis, Income Statement and Significant Events and
also the external auditor’s opinion dated July 27th, 2016,
and signed by Mr. Emiliano Ramos Colmenar, partner of
Ernst & Young, which states that the financial statements
of the Company are free from material misstatement.
Annual Report Enel Chile 2016
41
- In the extraordinary session held November 3rd, 2016,
11. EXAMINATION OF INTERCOMPANY CONTRACTS
the Directors’ Committee declared having examined the
- During the session held on February 29th, 2016, the
Consolidated Financial Statements of the Company as of
Directors’ Committee agreed to declare having examined
September 30th, 2016, its Notes, Income Statement and
the service contract between Enersis Americas S.A., Enel
Significant Events and agreed to recommend that they be
Americas S.A. today, and Enersis Chile S.A., Enel Chile
approved by the Board of Directors.
S.A. today, in which Enersis Americas S.A. received the
service and Enersis Chile S.A. rendered the service. The
- In every case, the agreements were adopted unanimously,
Committee also declares that the transaction contributed
by all members of the Directors’ Committee.
to the best interest of the Company and that prices, terms,
and conditions of the contract were at arm’s length at
9. FORM 20-F FILING TO THE SEC IN THE UNITED
the time of its approval according to the report prepared
STATES OD AMERICA: In the ordinary session held on
by PricewaterhouseCoopers, and presented during the
April 29th, 2016, the Directors’ Committee declared having
session. Endesa Americas S.A. and Chilectra Americas
reviewed the Form 20-F and the Consolidated Financial
S.A. at the time, currently merged into Enel Americas S.A.,
Statements of the Company included in the Form, to
also received the contracted service.
be submitted to the SEC to comply with the rules and
regulations of such Authority related to the securities
- During the same ordinary session held on February 29th,
issued in the United States.
2016, the Directors’ Committee declared having examined
the service contract between Enersis Americas S.A., Enel
10. EXAMINATION OF SERVICES TO BE PROVIDED BY
Americas S.A. today, and Enersis Chile S.A., Enel Chile
EXTERNAL AUDITORS: The services to be rendered by
S.A. today, in which Enersis Americas S.A. rendered the
the external auditors, different from the external audit and
service and Enersis Chile S.A. received the service. The
non-recurring audit services, were analyzed during ordinary
Committee also declares that the transaction contributed
sessions held on February 29th, March 22nd, August 30th,
to the best interest of the Company and that prices, terms,
September 27th, and December 16th, all in 2016, and during
and conditions of the contract were at arm’s length at
the extraordinary session held May 6th, 2016. The Committee
the time of its approval according to the report prepared
agreed to declare that the services do not compromise the
by PricewaterhouseCoopers, and presented during the
auditing company’s technical proficiency nor independence
session.
as required by Section 202 of the Sarbanes-Oxley Act and by
Article 242 last paragraph of Law No 18,045, the Securities
- During the session held on September 27th, 2016, the
Market Law and by the Directors’ Committee Rules.
Directors’ Committee declared having examined the
service contract between Enersis Chile S.A., Enel Chile
These agreements were adopted unanimously.
S.A. today, and Enel Green Power Chile Limitada, in which
42
Enel Green Power Chile Limitada received the service. The
Annual Report Enel Chile 2016
Committee also declares that the transaction contributed
- During the session held on June 30th, 2016, the Directors’
to the best interest of Enersis Chile S.A., Enel Chile today,
Committee unanimously agreed to request the Chief
and that prices, terms, and conditions of the contract
Financial Officer to hire the External Auditors to review
were at arm’s length at the time of its approval according
the transactions among related parties, lawsuit provisions
to the report prepared by PricewaterhouseCoopers, and
and the status of derivatives every six months. They also
presented during the session.
agreed to perform a historical analysis of related party
- During the session held on October 27th, 2016, the Directors’
nature, amount, and parties involved in such transactions.
transactions for the Committee to form an opinion on the
Committee declared having examined the service contract
between Enersis Chile S.A., Enel Chile S.A. today, and its
12. PROPOSED RISK RATING AGENCIES
subsidiary Endesa Chile S.A., Enel Generación Chile S.A.
- During the session held on February 29th, 2016, the Directors’
today, in which Endesa Chile S.A. received the service. The
Committee unanimously agreed to recommend to the
Committee also declares that the transaction contributed
Board of Directors to propose Feller Rate Clasificadora de
to the best interest of Enersis Chile S.A., Enel Chile today,
Riesgo Limitada and Fitch Chile Clasificadora de Riesgo
and that prices, terms, and conditions of the contract were
Limitada to the Shareholders Meeting as the local risk
at arm’s length at the time of its approval.
rating agencies and Fitch Ratings, Moody’s Investors
Service and Standard & Poors International Rating Services
- During the session held on March 22nd, 2016, the Directors’
as the international risk rating agencies.
Committee unanimously agreed to take note of the Chief
Financial Officer’s, Mr. Raffaele Grandi presentation on the
intercompany contracts costs informed in the previous
session.
Annual Report Enel Chile 2016
43
13. PROPOSED EXTERNAL AUDITING FIRMS
14. APPROVAL OF EXTERNAL AUDITING CONTRACTS
During the session held on March 22nd, 2016, the Directors’
- During the session held on March 22nd, 2016, the Directors’
Committee unanimously agreed to propose to the Board of
Committee unanimously agreed to declare the contract
Directors to propose to the Ordinary Shareholders Meeting
or letter of intent between Enersis Chile S.A., Enel Chile
the following order of precedence in appointing the external
S.A. today, and external auditors Ernst & Young to have
auditing firm for Enersis Chile S.A., Enel Chile S.A. today, for
been examined and approved. Ernst & Young has been
2016. First E&Y, second PKF, third RSM and fourth KPMG.
contracted to perform auditing reports regarding the new
The fundamentals considered relevant to this proposal are
Enersis Chile S.A., Enel Chile S.A. today, as of December
that E&Y (i) presented the most competitive offer, based on
31st, 2015. At that time, the Financial Statements of
the technical and economic evaluation of the offers received;
the Company and its subsidiaries included the assets
(ii) has high-quality resources and extensive experience in
and liabilities of Chilean operations of Enersis S.A. as a
the electricity sector; (iii) is one of the four most important
consequence of the Division of Enersis S.A.
auditing firms both domestically and internationally and (iv)
is the auditing firm with greatest synergies with Enersis
- During the session held on May 30th, 2016, the Directors’
Chile S.A., Enel Chile S.A. today, because the parent and
Committee unanimously agreed to declare the contract or
controlling entities of the Company also have E&Y as their
letter of intent between Enersis Chile S.A., Enel Chile S.A.
main auditing firm.
today, and the external auditors Ernst & Young as External
Auditors appointed by the Ordinary Shareholder Meeting
held April 28th, 2016, to have been examined and approved.
44
Annual Report Enel Chile 2016
15. ANALISIS OF ETHICAL CHANNEL COMPLAINTS
18. RISKS
- During the extraordinary session held on July 29th, 2016,
During the ordinary session held on March 22nd, 2016,
the Directors’ Committee gave its opinion on each of the
the Directors’ Committee unanimously agreed to take
complaints received, offering guidelines as to how to
note of the Chief Financial Officer’s, Mr. Raffaele Grandi
proceed with each complaint and confirming what had
presentation on the Company’s methodology to manage
been already resolved by the Committee. In this regard,
asset impairment risk. They also agreed that the Chief
the Chairman of the Directors’ Committee is to summon
Financial Officer is to inform the Directors’ Committee on
an extraordinary session if he considers it to be necessary
the methodology applied in every period’s closing and that
to resolve a certain complaint.
in a future session he is to deepen the explanation of the
financial methodology.
16. PRESENTATION OF INSURANCE POLICIES FOR
DIRECTORS AND SENIOR EXECUTIVE
- During the session held on May 30th, 2016, the Directors’
- During the ordinary session held on March 22nd, 2016,
Committee unanimously agreed to declare the Company’s
the Directors’ Committee noted the presentation on the
Risk Matrix as examined from the business and internal
insurance policies for the Company’s directors and senior
auditing perspective.
executives.
17. INTERNAL CONTROL SELF-EVALUATION
Committee unanimously took note of the presentation
- During the session held on July 29th, 2016, the Directors’
on the Group’s policies regarding (i) risk management;
Committee unanimously agreed
to declare having
(ii) financial derivatives; and (iii) expense capitalization, in
- During the session held on June 30th, 2016, the Directors’
examined the Internal Control self-evaluation methods
Chile.
and procedures and the Internal Control Independent
Monitoring Assessment.
Annual Report Enel Chile 2016
45
- During the session held on August 30th, 2016, the
19. ANALYSIS OF EMPLOYEES’, MANAGERS’ AND
Directors’ Committee unanimously agreed to approve the
SENIOR EXECUTIVES’ COMPENSATION PLAN
Material Risk Analysis Schedule presented by the Chief
- During the session held on August 30th, 2016, the Directors’
Financial Officer adding the subjects proposed by the
Committee unanimously declared having analyzed the
Directors. The Directors’ Committee also agreed to declare
compensation system and plans for employees, managers,
having analyzed the risks related to a potential change to
and senior executives of the Company.
the Agreement, which would be discussed again as it
progresses, as requested by the Chief Executive Officer.
20. VARIOUS OTHER MATTERS
- During the session held on September 27th, 2016, the
- During the session held on June 30th, 2016, the Director,
Directors’ Committee agreed to declare having analyzed
Mr. Gerardo Jofré Miranda informed that he had recently
risks related to the Company’s Purchasing Process.
received the interests’ statement that is requested from
Directors. He requested that the Compliance Department
- During the session held on October 27th, 2016, the
be proactive by periodically sending the Directors and
Directors’ Committee agreed to declare having analyzed
senior managers their respective interests’ statement as a
the risk related to a potential Natural Disaster that could
reminder to update it if necessary or to confirm amounts.
exceed the Insurance Coverage Limit, which would be
The Chairman of the Directors’ Committee Mr. Fernán
discussed again as it progresses, as requested by the
Gazmuri Plaza agreed with the idea, indicating that sending
Chief Executive Officer. This matter will be included in the
the statement to the Directors once a year would be
calendar of material risks to be analyzed by the Directors’
enough to remind them.
Committee during the following months.
46
Annual Report Enel Chile 2016
- During the session held July 27th, 2016, the Director, Mr.
Mr. Gerardo Jofré also expressed his interest in analyzing
Gerardo Jofré Miranda expressed the need to analyze how
the General Norm N° 385 issued by the Superintendence
the Committee dealt with Transactions among Related
of Securities and Insurance in detail make a proposal on the
Parties. He requested that Mr. Domingo Valdés Prieto,
matter to the Company’s Board of Directors. The Director
General Counsel of the Company, make a presentation
Mr. Pablo Cabrera stated that it was very important that the
on the respective legislation. The Committee resolved to
proposal be presented by the Chief Executive Officer, who
continue analyzing the subject to make a proposal to the
has had the time and necessary background information to
Board of Directors.
make and an adequate proposal to the Board of Directors.
- During the session held September 27th, 2016, the Director,
Mr. Gerardo Jofré Miranda stated that the days of accounts
payables to small and medium-sized companies (Pymes in
its Spanish acronym) is a sustainability matter, and from
a social perspective, it is very sensitive because it tends
to absorb the Pymes’ working capital by extending the
payment date. The Chairman of the Committee expressed
sharing Mr. Gerardo Jofré Miranda’s concern considering
that extending the payment date contributes to the
insolvency and bankruptcy of Pymes making their services
more expensive and difficult to manage. Therefore Mr.
Fernán Gazmuri proposed analyzing what the Company is
doing about the matter and particularly if it has established
a policy in this regard. He proposed that the Board of
Directors, as the competent body, examine the subject.
The members of the Committee then expressed the
convenience to proceed to analyze the Transactions among
Related Parties so as to propose to the Board of Directors
the evaluation and adoption of a framework to govern such
transactions.
- During the session held October 27th, 2016, the Director,
Mr. Gerardo Jofré Miranda referred to the convenience of
deeply looking into the renewal of insurance considering
that Cautiva is a reinsurance company of the insurance firm
to be contracted by the Company. Cautiva is owned by
the controlling shareholder of the Company, and therefore
Mr. Jofré considers that the Directors’ Committee should
analyze the insurance being contracted because in his
opinion it is a Related Party Transaction. Mr. Gerardo Jofré
expressed the matter to be a complex one and required
extensive analysis, lacking the time for such analysis. The
Chief Financial Officer stated that the contract was not
presented by Cautiva but by Mapfre Chile, that reinsured
with Mapfre España and Mapfre España then reinsured with
several other companies, including Cautiva. Mr. Gerardo
Jofré stated that he did not agree with such reasoning.
Annual Report Enel Chile 2016
47
Enel Chile S.A.
Directors’
Committee
Expenses
to the best interest of Enersis Chile S.A., Enel Chile today,
and that prices, terms, and conditions of the contract were
at arm’s length at the time of its approval.
4. During the session held on October 27th, 2016, the Directors’
Committee declared having examined the service contract
between Enersis Chile S.A., Enel Chile S.A. today, and its
subsidiary Endesa Chile S.A., Enel Generación Chile S.A.
today, in which Endesa Chile S.A. received the service. The
The Directors’ Committee did not spend its operational
Committee also declares that the transaction contributed
expense budget approved by the Ordinary Shareholders
to the best interest of Enersis Chile S.A., Enel Chile today
Meeting held April 28th, 2016.
and that prices, terms, and conditions of the contract were
In 2016, the Directors’
Committee analyzed the
following related party
transactions (OPR)
at arm’s length at the time of its approval.
5. During the session held on November 25th, 2016, the
Directors’ Committee declared having examined the
new service contract that includes in one sole contract
all the operational services rendered by Enel Chile S.A.
to each of its subsidiaries, that is, Servicios Informáticos
1. On February 29th, 2016, the Directors’ Committee agreed
e Inmobiliarios Ltda. (SIEI), Enel Generación Chile S.A.,
to declare having examined the service contract between
formerly Endesa Chile S.A., Enel Distribución Chile S.A.,
Enersis Americas S.A., Enel Americas S.A. today, and
formerly Chilectra S.A. and the subsidiaries of these last
Enersis Chile S.A., Enel Chile S.A. today, in which Enersis
two companies. The Committee also declares that the
Americas S.A. received the service and Enersis Chile S.A.
transaction contributed to the best interest of Enersis
rendered the service. The Committee also declares that the
Chile S.A., Enel Chile today, and that prices, terms, and
transaction contributed to the best interest of the Company
conditions of the contract were at arm’s length at the
and that prices, terms, and conditions of the contract
time of its approval, based on the report prepared by
were at arm’s length at the time of its approval according
PricewaterhouseCoopers, that performed the market
to the report prepared by PricewaterhouseCoopers, and
analysis of the existing services in addition to reviewing
presented during the session. Endesa Americas S.A. and
the terms and conditions of the contracts.
Chilectra Americas S.A. at the time, currently merged into
Enel Americas S.A., also received the contracted service.
2. During the same session, the Directors’ Committee declared
having examined the service contract between Enersis
Americas S.A., Enel Americas S.A. today, and Enersis Chile
S.A., Enel Chile S.A. today, in which Enersis Americas S.A.
rendered the service and Enersis Chile S.A. received the
service. The Committee also declares that the transaction
contributed to the best interest of the Company and that
prices, terms, and conditions of the contract were at arm’s
length at the time of its approval.
3. During the session held on September 27th, 2016, the
Directors’ Committee declared having examined the
service contract between Enersis Chile S.A., Enel Chile
S.A. today, and Enel Green Power Chile Limitada, in which
Enel Green Power Chile Limitada received the service. The
Committee also declares that the transaction contributed
48
Annual Report Enel Chile 2016
Organizational Structure
CHAIRMAN
Herman Chadwick Piñera
CHIEF EXECUTIVE OFFICER
Nicola Cotugno
INTERNAL AUDIT
Raffaele Cutrignelli
CHIEF FINANCIAL
OFFICER
Raffaele Grandi
COMMUNICATIONS
OFFICER
José Miranda
Montecinos
GENERAL COUNSEL
Domingo Valdés Prieto
REGULATION
Mónica de Martino
SAFETY
Andrés Pinto Bontá
HUMAN RESOURCES
OFFICER
Alain Rosolino
INSTITUTIONAL
AFFAIRS
Pedro Urzúa Frei
SUSTAINABILITY
AND COMMUNITY
RELATIONS
Antonella Pellegrini
PROCUREMENT
OFFICER
Antonio Barreda
Toledo
SERVICES
Francisco Silva Bafalluy
Annual Report Enel Chile 2016
49
Senior Executives
3
4
1
5
2
6
6. INSTITUTIONAL AFFAIRS OFFICER
Pedro Urzúa Frei*
Journalist
Universidad de Artes y Ciencias de la
Comunicación
Taxpayer ID: 11,625,161-2
Since 02.29.2016
1. CHIEF EXECUTIVE OFFICER
Nicola Cotugno*
Mechanical Engineer
Universidad La Sapienza de Roma
Taxpayer ID: 25,476,277-6
Since 08.16.2016
2. CHIEF FINANCIAL OFFICER
Raffaele Grandi*
Economist
Universidad de Génova (Italy)
Taxpayer ID 24,950,967-1
Since 05.06.2016
3. HUMAN RESOURCE OFFICER
Alain Rosolino*
Business Management Degree
Universidad LUIS de Roma
Taxpayer ID: 24,166,243-8
Since 10.01.2016
4. INTERNAL AUDIT OFFICER
Raffaele Cutrignelli*
International Business Degree
Nottingham Trent University (United
Kingdom).
Master in Auditing and Internal Controls
Universidad de Pisa (Italy)
Diploma in Strategy, Innovation,
Management and Leadership
Massachusetts Institute of Technology (MIT).
Taxpayer ID: 25,553,336-3
Since 10.01.2016
5. COMMUNICATIONS OFFICER
José Miranda Montecinos*
Audiovisual Communicator with a degree
from DUOC UC
Management Diploma, Universidad de Chile
Taxpayer ID: 15,307,846-7
Since 02.29.2016
(*) Corresponds to senior executive of Enel Chile.
50
Annual Report Enel Chile 2016
7
11
8
9
10
12
7. GENERAL COUNSEL
Domingo Valdés Prieto*
Lawyer
Universidad de Chile
Master of Law
University of Chicago
Taxpayer ID: 6.973.465-0
Since 02.29.2016
8. SUSTAINABILITY AND COMMUNITY
RELATIONS
Antonella Pellegrini
Marketing and Communications Degree
European Design Institute
Roma – Italy
Taxpayer ID: 23,819,804-6
9. REGULATION
Mónica de Martino
Political Science Degree
Universidad Luis LUISS Guido Carli, Roma
Executive MBA Columbia Business School,
NY. and London Business School, London
Taxpayer ID: 25,629,782-5
11. SAFETY
Andrés Pinto
Industrial Engineer
Pontificia Universidad Católica de Chile
Diploma in Chemical Engineering
Pontificia Universidad Católica de Chile
Taxpayer ID: 13,686,119-0
10. PROCUREMENT OFFICER
Antonio Barreda Toledo*
Electrical Engineer
Universidad de Santiago de Chile
Diploma in Business Administration (ESAE)
P. Universidad Católica de Chile
Master of Business Administration
P. Universidad Católica de Chile
Taxpayer ID: 7,625,745-0
Since 05.06.2016
12. SERVICES
Francisco Silva
Public Management Degree
Universidad de Chile
Post graduate degree in Business
Administration
Escuela de Negocios Universidad Adolfo
Ibáñez
Taxpayer ID: 7,006,337-9
(*) Corresponds to senior executive of Enel Chile.
Annual Report Enel Chile 2016
51
Senior Executives’ and
Managers’ Compensation
During 2016, the compensation and benefits received by the Chief Executive Officer and senior executives of
the Company amounted to a fixed compensation of $1,487 million and $637 million in variable compensation
and benefits.
This amount included managers and senior executives that held their position in the Company at year-end and
also those who left the company during the respective year.
Benefits for Senior
Executives and Managers
The company maintains complementary health insurance and catastrophic insurance coverage for senior
executives and their accredited dependents. The company also has life insurance coverage for each senior
executive. These benefits are granted according to the managerial level of each employee at the time executed.
In 2016, the amount spent on these benefits was $19,310 million, which is included in the compensation
received by senior executives.
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Annual Report Enel Chile 2016
Incentive Plans for
Managers and
Senior Executives
Enel Chile has an annual bonus plan for its executives based on achieving objectives and the level of individual
contribution to the company’s results. This plan defines a bonus range for each management or hierarchical
level. Executive bonuses are expressed as a specific number of monthly gross salaries.
Severance
payments
The company made severance payments to senior executives and managers that left the company amounting
to $503,886,063 in 2016.
Shareholdings in Enel Chile
Based on the shareholder’s register, as of December 31st, 2016, no senior executive owned shares of the
Company.
Management
of Main Subsidiaries
Enel Generación Chile
Valter Moro
Mechanical Engineer
Universidad Politécnica de Marche Italia
Enel Distribución Chile
Andreas Gebhardt Strobel
Hydraulic Engineer
Pontificia Universidad Católica de Chile
Annual Report Enel Chile 2016
53
54
Annual Report Enel Chile 2016
Human Resources
Annual Report Enel Chile 2016
55
Workforce
The following table includes total employees of Enel Chile and its subsidiaries and jointly controlled entities as
of December 31st, 2016:
Company
Enel Chile
Enel Generación (1)
Enel Distribución (2)
Servicios Informáticos e Inmobiliarios Ltda.
Total
(1) Includes Pehuenche and GasAtacama
(2) Includes Empresa Eléctrica de Colina and Luz Andes
Managers
& Senior
Executives
Professionals
& Technicians
Other
employees
22
18
7
4
51
245
812
574
94
1,725
69
53
107
5
234
Total
336
883
688
103
2,010
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Annual Report Enel Chile 2016
Diversity
Diversity of the Chief Executive Office and
other Departments that report to CEO or
Board of Directors
NUMBER OF EMPLOYEES BY GENDER
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Female
Male
Total
3
19
22
-
4
4
NUMBER OF EMPLOYEES BY NATIONALITY
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Chilean
Spanish
Italian
Total
16
-
6
22
2
2
-
4
NUMBER OF EMPLOYEES BY AGE GROUP
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Less than 30 years
Between 30 and 40 years
Between 41 and 50 years
Between 51 and 60 years
Between 61 and 70 years
Total
4
9
9
-
22
-
3
1
-
4
NUMBER OF EMPLOYEES BY YEARS OF SERVICE
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
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
9
1
-
2
10
22
Annual Report Enel Chile 2016
2
-
-
-
2
4
57
Diversity in the Organization
NUMBER OF EMPLOYEES BY GENDER
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Female
Male
Total general
143
171
314
25
74
99
NUMBER OF EMPLOYEES BY NATIONALITY
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Argentine
Brazilian
Chilean
Colombian
Spanish
Panameña
Rumanian
Total
-
2
307
2
1
1
1
314
5
2
90
2
-
-
-
99
NUMBER OF EMPLOYEES BY AGE GROUP
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
Less than 30 years
Between 30 and 40 years
Between 41 and 50 years
Between 51 and 60 years
Between 61 and 70 years
Total general
10
130
102
69
3
314
2
33
32
27
5
99
NUMBER OF EMPLOYEES BY YEARS OF SERVICE
ENEL CHILE
SERVICIOS INFORMÁTICOS E
INMOBILIARIOS LTDA.
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 general
22
60
31
48
153
314
7
24
12
10
46
99
Average fixed salary of women compared
to men within the same professional
category
CATEGORY
Senior Management
Middle Management
Administrative Staff
Average
64.44%
80.06%
96.89%
80.46%
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Annual Report Enel Chile 2016
Human
Resources
Activities
Labor Relations
Health Dissemination
and Promotion
This program aims to educate and train workers about
activities that promote quality of life through massive
dissemination efforts, such as posters, graphic material and
emailed information titled “Advice that gives Life.” Among
each month’s topics are:
> March: Anti-stress
campaign
offering
practical
The program of periodic meetings with the Unions continued
recommendations to eliminate its causes.
in 2016, strengthening dialogue with the representatives of
> April:
Immunization campaign
inviting
to
receive
the workers and improving work conditions and climate.
vaccination to prevent seasonal flu.
Safety Measures
and Occupational
Health
> May: Anti-tobacco campaign offering advice to prevent
tobacco consumption.
> June: Cervix and prostate cancer campaign inviting to the
annual preventive exam.
> July: Respiratory disease and viral infections prevention
campaign.
> August: Heart care campaign.
> September: Gastric and colon cancer campaign offering
In Enel Chile, safety and occupational health are goals closely
preventive exams for timely detection of these diseases.
linked to the business. Given the nature of the business, it
> October: Breast cancer prevention campaign.
is exposed to critical risks. Leadership in safety integration
> November: Boost your energy campaign recommending
and occupational health is particularly important throughout
practical nutrition habits to improve the quality of life.
the continuous improvement process, at every level and any
> December: Year round skincare campaign.
activity developed by the company, strengthening its priority
in corporate management due to its strategic importance.
Activities for Enel Chile
Group’s employees
1. Immunization Program
2. Cardiovascular Risk Program
3. Preventive Medical Exams Program
4. Work Safety Programs
5. Implementing New Safety Standards
6. Safety Training
7. Emergency and First Aid Training Programs
Annual Report Enel Chile 2016
59
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Annual Report Enel Chile 2016
Human Resource
Management
Workplace Climate
Management
A work climate of excellence is a priority for Enel Chile and
its subsidiaries. The Company understands that people are
the core of the Company.
We have developed several initiatives that focus on climate
to support both managers and employees:
1. Manager strengthening program
2 “RHO with You” Program
3. Interact Program
4. Personal Development Itinerary (IDP in its Spanish
acronym) is a system to detect development needs, in
which an employee and his or her manager, together,
identify present and future developmental needs that are
used to elaborate the employee’s annual training program.
5. “One on One” interviews
6. A behavioral evaluation and goal accomplishment model
entitled Performance Appraisal (PA)
7. “Recognizing Ourselves,” Program
Diversity
Enel Chile has developed a new diversity policy addressing
subjects such as gender, age, nationality, and disability. This
policy promotes the principles of non-discrimination, equal
opportunities, inclusion and balance between personal
life and work life, as fundamental values in the activities
performed by the companies of the Group.
Annual Report Enel Chile 2016
61
Work-Life Integration
Measures and Flexibility
Recruitment and
Selection
Enel Chile fosters a balanced work life for its employees
For Enel Chile, the main objective is to hire the best people,
and their families. Therefore, the Company has developed
and the core principle is to give internal candidates the
initiatives that aim in that direction.
opportunity first.
1. The Telework Program: began in 2012 and is one of the
Company’s most valued programs. Today, there are 85
teleworkers in the program, 36 are Enel Chile employees
Filling Job Openings
and work from their homes one day a week, reaching a
During 2016, 16 positions were available in Enel Chile S.A.
balanced work and family life.
of which 19% were filled with applicants from within the
Company. Of that number, 67% were filled by women
2. Sport and Culture Extension Program
competing for the job. Of the external applicants that
joined in 2016 (81% of all job openings), 13% were filled
3. Summer and winter camps for employees’ kids.
by women.
4. The Summer Training workshops for workers’ families.
5. Universidad de Chile’s Summer School, an initiative that
aims to improve employees’ high school kids’ academic
performance.
6. Other initiatives such as Christmas Party, Senses
Workshop, Family Day, End of the Year Party, the Olympics,
and the Work Trajectory Award.
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Annual Report Enel Chile 2016
Internships and Young
Diversity and Inclusion
Talent Attraction Program
For Enel Chile, having diverse work teams and an inclusive
work environment is essential. It translates into a permanent
Enel Chile has implemented a project to attract young talent.
search for new ways to create awareness and to facilitate
It consists in recruiting interns and thesis students from
building a diverse workforce and a work environment in
the best universities in the country. In 2016, there were 46
which individual differences are respected and appreciated.
students working as interns or thesis students.
As such, the Entrance Program seeks to incorporate interns
Furthermore, in 2016 Enel Chile, subsidiary of the Enel
The company implemented this program by forming alliances
Group, participated in the Job Fair of the Business
with the Ministry of Education and various foundations.
from technical and professional careers with different skills.
Administration and Economics School of the University of
Chile, and in the Job Fair of the Engineering School of the
Universidad Católica de Chile. Our stand received students
from Industrial Engineering, Electrical Engineering, and
Commercial Engineering.
Educational Action
Training
The Company’s training program for 2016 was built and
Itinerary (IDP In its Spanish acronym) and has a two-year
executed on two main management principles.
implementation period. During 2016, the percentage of
employees that had access to at least one of the three
The first principal was to reach the right balance between
activities identified in their IDP reached 52%.
training activities focused on developing skills and critical
technical knowledge to improve the performance of our
In general terms, Enel Chile’s training activities during 2016
employees at their job, and also behavioral skills training
reached 83% coverage, which means that 281 employees
to enable our employees to increase their possibilities of
participated in at least one training activity during the year.
development within the Group.
The total number of training hours reached 17,782, resulting
in a 1.9 % training rate (training hours for every 100 hours
The second principle was to justify the training program by
worked).
offering the employee and his or her manager a mechanism
to identify together, the technical and behavioral gaps the
employee needs to close, regarding individual productivity,
to access potential development opportunities in the future.
The mechanism is entitled Professional Development
Annual Report Enel Chile 2016
63
64
Annual Report Enel Chile 2016
Stock Markets
Transactions
Annual Report Enel Chile 2016
65
Stock Market
Transactions
Quarterly transactions during 2016 of Enel Chile shares in Chile, on the Santiago Stock Exchange, the Electronic Stock
Exchange and the Valparaíso Stock Exchange, as well as in the United States of America on the New York Stock Exchange
(NYSE) are detailed below.
Santiago Stock Exchange
During 2016, a total 5,632 million shares were traded on the Santiago Stock Exchange, equivalent to $409,105 million. The
closing price of the stock in December 2016 was $62.01.
Month
January
February
March
1° Quarter
April
May
June
2° Quarter
July
August
September
3° Quarter
October
November
December
4° Quarter
Total 2016
Units traded
Amount ($)
Average price ($)
No Transactions
No Transactions
No Transactions
No Transactions
189,438,882
1,060,670,974
748,549,069
1,998,658,925
544,329,032
862,353,691
520,192,838
1,926,875,561
505,024,616
712,779,896
489,046,630
1,706,851,142
5,632,385,628
15,723,107,849
84,113,666,262
58,043,133,609
157,879,907,720
41,846,874,988
64,424,188,210
35,154,286,972
141,425,350,170
33,370,359,554
45,852,083,519
30,577,894,316
109,800,337,389
409,105,595,279
82.96
79.3
77.51
79.92
76.88
74.7
67.55
73.04
66.06
64.26
62.51
64.28
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Annual Report Enel Chile 2016
Chilean Electronic Stock Exchange
During 2016, a total 635 million shares were traded on the Electronic Stock Exchange, amounting to $46,177 million. The
closing price of the stock in December 2016 was $61.5.
Month
January
February
March
1° Quarter
April
May
June
2° Quarter
July
August
September
3° Quarter
October
November
December
4° Quarter
Total 2016
Units traded
Amount ($)
Average price ($)
No Transactions
No Transactions
No Transactions
No Transactions
427,903,221
6,434,240,391
8,456,080,146
15,318,223,758
7,943,890,284
6,155,602,250
4,086,431,290
18,185,923,824
3,688,953,794
3,401,355,879
5,583,136,921
12,673,446,594
46,177,594,176
5,131,460
80,298,645
108,989,814
194,419,919
103,517,612
82,298,616
58,748,440
244,564,668
54,719,188
53,515,720
88,352,071
196,586,979
635,571,566
83.39
80.19
77.17
80.25
76.63
75.39
69.98
74.00
67.13
64.80
62.95
64.96
Annual Report Enel Chile 2016
67
Valparaiso Stock Exchange
During 2016, a total 134 million shares were traded on the Valparaiso Stock Exchange, amounting to $9.6 million. The closing
price of the stock in December 2016 was $70.5.
Month
January
February
March
1° Quarter
April
May
June
2° Quarter
July
August
September
3° Quarter
October
November
December
4° Quarter
Total 2016
Units traded
14,000
14,000
28,000
92,460
120,460
134,460
Amount ($)
No Transactions
No Transactions
No Transactions
No Transactions
No Transactions
No Transactions
1,102,500
1,102,500
No Transactions
1,960,000
6,570,418
8,530,418
No Transactions
No Transactions
No Transactions
No Transactions
9,632,918
Average price ($)
78.75
79.00
70.00
71.06
70.53
New York Stock Exchange (NYSE)
Enel Chile shares began trading on the New York Stock Exchange (NYSE) on April 27th, 2016. One ADS (American Depository
Share) represents 50 shares, and the ticker is ENIC. Citibank N.A. acts as a depositary bank and Banco Santander Chile as
the custodian in Chile. During 2016, 84 million ADS’ were traded in the United States, amounting to US$459 million. The ADS
closing price in December was US$4.55.
Month
January
February
March
1° Quarter
April
May
June
2° Quarter
July
August
September
3° Quarter
October
November
December
4° Quarter
Total 2016
Units traded
2,148,930
16,283,943
11,277,388
29,710,261
17,572,843
11,522,424
6,525,482
35,620,749
7,960,528
5,191,180
5,650,841
18,802,549
84,133,559
Average price ($)
Amount (US$)
No Transactions
No Transactions
No Transactions
No Transactions
13,565,841
93,756,894
63,608,244
170,930,979
100,186,380
64,654,142
32,875,808
197,716,330
39,521,886
24,640,286
26,376,453
90,538,625
459,185,933
6.31
5.76
5.64
5.90
5.70
5.61
5.04
5.45
4.96
4.75
4.67
4.79
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Annual Report Enel Chile 2016
Market Information
The global economic scenario in 2016 experienced moderate
Santiago Stock
Exchange
growth, in line with market projections and showing a slight
The following table shows the changes in the price of the
improvement or stabilization of emerging economies. The
share of Enel Chile and the Selective Stock Price Index
elections in the United Stated have increased the possibility
(IPSA) on the local stock market over the past two years:
of a more active fiscal policy and has lowered expectations of
inflation which eventually leads to a stronger dollar and also
limits the economic growth perspectives for Latin America.
Similarly, Great Britain’s decision to leave the European
Variation (04/21/2016 – 12/31/2016)
Enel Chile*
IPSA
2016
-27.8%
4.1%
Union along with the weak performance of significant
(*) Enel Chile begins trading on April 21st, 2016
economies, such as China and Brazil, have increased market
volatility. Although the financial conditions for the emerging
market economies in the region have adjusted, they are still
attractive from a historical perspective.
In Chile, the Selective Stock Price Index, IPSA (in its Spanish
New York Stock
Exchange (NYSE)
acronym), which groups the 40 main shares traded in
The following table shows the behavior of Enel Chile’s ADRs
Chile(1) increased 12.8% in 2016.
listed on the NYSE (ENIC), compared to the Dow Jones
Industrial index and the Dow Jones Utilities index over the
This performance was mainly due to the re-allocation of
past two years:
portfolios, responding to greater interest in assets from
mature markets and led to capital outflows from emerging
markets to equity instruments in mature markets. This
situation explains the capital inflows to the United States
given the better market expectations resulting from the
Variation (04-27-2016 – 12-31-2016)
ENIC
Dow Jones Industrial
Dow Jones Utilities
2016
-24.5%
9.5%
1.0%
reforms that the new government administration elected in
(1) Exceptionally, the IPSA in 2016 included 43 shares. This number was
November 2016 is expected to implement.
adjusted in 2017 to include 40 shares once again.
The price of the share of Enel Chile has fallen 27.8% since
In accordance to General Norm No 283, Numeral 5), the
April 21st, 2016, due to the market’s reaction to the latest
Company’s 2015 and 2016 dividends policies are transcribed
electricity tender process ended in August 2016.
below.
Moreover, in spite of the devaluation of the Chilean peso
against the US Dollar, the ADR’s of Enel Chile on the New
York Stock Exchange fell 24.5% since April 27th, 2017.
Annual Report Enel Chile 2016
69
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Annual Report Enel Chile 2016
Dividends
Annual Report Enel Chile 2016
71
Dividend
Policy
2017
General Aspects
Dividend Payment
Procedure
The payment of dividends, whether interim or final and to
avoid payment mistakes, Enel Chile offers the following
payment methods:
1. Deposit in a bank checking account, whose account-
The Board of Directors of the Company, in the session held
holder is the shareholder.
on February 28th, 2017, approved the following Dividends
Policy and the corresponding procedure for the dividend
2. Deposit in a bank savings account, whose account-holder
payments of Enel Chile S.A. for 2017.
is the shareholder.
Dividend Policy
3. Mailing of a check or cashier’s check via certified mail to
the address of the shareholder’s residence recorded in
Enel Chile’s shareholders’ register.
The Board of Directors’ intention is to distribute an interim
4. The collection of a check or cashier’s check from the
dividend for fiscal year 2017, of up to 15% of net income
offices of DCV Registros S.A., as the registrar of Enel
as of September 30th, 2017, as shown in the consolidated
Chile’s shares, or from the bank and branches defined for
financial statements of Enel Chile S.A. at that date, payable
this purpose and informed in the dividend payment notice
in January 2018.
published.
The Board of Directors will propose to the Ordinary
For this purpose, bank checking or savings accounts may be
Shareholders’ Meeting, to be held during the first four
located anywhere in the country.
months of 2017, to distribute a final dividend equivalent to
55% of net income for fiscal year 2017. The final dividend will
It should be emphasized that the payment method chosen
be defined by the Ordinary Shareholders Meeting to be held
by each shareholder will be used by the centralized
during the first four months of 2018.
depository of securities, DCV Registros S.A. for all dividend
Compliance with the aforementioned dividend plan is
the intention to change it and record a new option.
subject to the actual net profit earned by the Company
during the year, and to the results of the Company’s periodic
Shareholders who have not registered a particular payment
income projections or the existence of certain conditions, as
method will be paid by method four indicated above.
payments unless the shareholder communicates in writing
applicable.
If checks or cashier’s checks are returned by the post office
to DCV Registros S.A., they will remain in its custody until
collected or requested by the shareholder.
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Annual Report Enel Chile 2016
In the case of deposits in bank checking accounts, Enel
Chile S.A. or DCV Registros S.A. may request, for security
reasons, that they be verified by the respective bank. If there
is an objection to the account indicated by a shareholder,
whether in the prior verification process or for any other
reason, the dividend will be paid according to method No 4
indicated above.
Dividend
Policy
2016
Moreover, the company has adopted and will continue to
dividend for the fiscal year 2016, of up to 15% of net income
adopt in the future all the necessary security measures
as of September 30th, 2016, as shown in the financial
required by the dividend payment process to safeguard the
statements of Enel Chile S.A. at that date, and payable in
interests of the shareholders and Enel Chile S.A.
January 2017.
The Board of Directors’ intention is to distribute an interim
The Board of Directors intends to propose to the Ordinary
Shareholders’ Meeting, to be held during the first four
months of 2017, to distribute a final dividend equivalent to
50% of the fiscal year 2016 net income. The final dividend
will be determined by the Regular Shareholders’ Meeting,
to be held during the first four months of 2017.
Compliance with the aforementioned dividend plan is
subject to the actual net profit earned by the Company
during the year, and to the results of the Company’s periodic
income projections or the existence of certain conditions,
as applicable
Dividend Payment Procedure: The payment of dividends,
whether interim or final and to avoid payment mistakes,
Enel Chile offers the following payment methods: 1.
Deposit in a bank checking account, whose account-holder
is the shareholder; 2. Deposit in a bank savings account,
whose account-holder is the shareholder; 3. Mailing of a
check or cashier’s check via certified mail to the address
of the shareholder’s residence recorded in Enel Chile’s
shareholders’ register; and 4. The collection of a check or
cashier’s check from the offices of DCV Registros S.A., as
the registrar of Enel Chile’s shares, or from the bank and
branches defined for this purpose and informed in the
dividend payment notice published.
For this purpose, bank checking or savings accounts may be
located anywhere in the country.
Annual Report Enel Chile 2016
73
It should be emphasized that the payment method chosen
by each shareholder will be used by the centralized
depository of securities, DCV Registros S.A. for all dividend
payments unless the shareholder communicates in writing
the intention to change it and record a new option.
2016 Final Dividend
Proposal
Shareholders who have not registered a particular payment
expressed the convenience of approving that the final
method will be paid by method 4 indicated above.
dividend distribution proposal of 2016 fiscal year’s net
income be resolved by the Ordinary Shareholders Meeting
Mr. Herman Chadwick, Chairman of the Board of Directors,
If checks or cashier’s checks are returned by the post office
of Enel Chile S.A.
to DCV Registros S.A., they will remain in its custody until
collected or requested by the shareholder.
To do so, the Chief Financial Officer, Mr. Raffaele Grandi,
noted that net income to be distributed according to the
In the case of deposits in bank checking accounts, Enel
dividend policy was calculated considering the following:
Chile S.A. or DCV Registros S.A. may request, for security
i) the Company’s net income for the Fiscal year 2016; and
reasons, that they be verified by the respective bank. If there
ii) net income already distributed by the Company as the
is an objection to the account indicated by a shareholder,
interim dividend last January equal to 15% of net income
whether in the prior verification process or for any other
as of September 30th, 2016. Consequently, Mr. Grandi
reason, the dividend will be paid according to method No 4
informed that Enel Chile’s net income for the fiscal year
indicated above.
2016 ascended to Th$ 317,561,122. Therefore the dividend
distribution equivalent to 50% of net income according
Moreover, the company has adopted and will continue to
to the Company’s dividend policy would amount to
adopt in the future all the necessary security measures
Th$ 158,780,561. After discounting the Th$ 37,253,417
required by the dividend payment process to safeguard the
interim dividend paid in January 2017, the amount of net
interests of the shareholders and Enel Chile S.A.
income pending distribution was Th$ 121,527,144.
Therefore, the suggestion is to propose to the Ordinary
Shareholders’ Meeting of Enel Chile S.A. the distribution of
a final dividend equal to $ 3.23430 per share, representing
50% of the Company’s net income for the fiscal year 2016.
After deducting the interim dividend paid in January 2017,
the amount to be distributed to shareholders in May 2017
would be $ 2.475459 per share.
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Annual Report Enel Chile 2016
Distributable Net
Income for Fiscal
Year 2016
The distributable net income for the fiscal year 2016 is
shown below:
Millions of $
317,561
317,561
Net Income *
Distributable Net Income
* Attributable to controlling shareholder
Dividends
Distributed
The following chart shows the dividends per share paid over
the past two years:
Dividend No
1
2
Type of
Dividend
Final
Interim
Closing date
12/31/2015
09/30/2016
Payment date
05/24/2016
01/27/2017
Pesos
per share
2.09338
0.75884
Fiscal year
2015
2016
Annual Report Enel Chile 2016
75
76
Annual Report Enel Chile 2016
Investment and
Financing Policy
Annual Report Enel Chile 2016
77
The Ordinary Shareholders Meeting, held on date April 28th, 2015, adopted the policy of investment and financing which is
designated below.
Investment Policy
2016
Areas of Investment
I. Enel Chile will invest, according to its bylaws, in the
following areas: contributions to invest in or create
subsidiaries and affiliate companies whose activity is
aligned, related or linked to energy in any form or type,
Participation in the
Control of
Investment Areas
the supply of public utilities, or whose main input is
Pursuant to Enel Chile S.A. corporate purpose, the following
energy.
procedure will be applied, whenever possible, to control the
II. Investments related to the acquisition, exploitation,
investment areas:
construction, lease, administration, trading and disposal
i.
It will be proposed at the Ordinary Shareholders’
of any class of fixed assets, whether directly or through
Meetings of our subsidiaries and affiliated companies
subsidiaries.
the appointment of Directors related to the Enel Chile’s
stake in that company, preferably directors or executives
III. Other investments in all kinds of financial assets, titles
of the Company or its subsidiaries.
or securities.
ii. The investment, financial and commercial policies will
be proposed to the subsidiaries and affiliate companies,
as well as the accounting criteria and systems to be
followed.
iii. The management of the subsidiaries and related
companies will be supervised.
iv. There will be a permanent control of the level of debt.
Maximum
Investment Limits
The maximum investment limits for each investment area
are the following:
I.
Investments in the subsidiaries that operate in the
electricity sector, those required for the fulfillment of
the respective corporate purposes of these subsidiaries,
with a maximum amount equivalent to 50% of the total
equity of the consolidated balance sheet of Enel Chile as
of December 31st, 2016.
II. Investments in other subsidiaries, insofar at least 50.1%
of total consolidated assets of Enel Chile are electricity
sector assets.
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Annual Report Enel Chile 2016
Financing
Policy
2016
Maximum Level of
Debt
Management
Powers to Agree
with Lenders on
Granting Guarantees
The Extraordinary Shareholders’ Meeting is required to
approve granting hard assets or personal guarantees to
secure third party obligations when referring to the essential
The maximum debt level of Enel Chile is determined by a
assets identified below:
Total Financial Debt to Equity ratio equal to or lower than
Essential Assets for Company Operations
2.20 times based on figures in the consolidated balance
The essential assets for the operation of Enel Chile are the
sheet of Enel Chile as of December 31st, 2016.
shares that enable, as a majority shareholder or through
shareholders agreements, the control of Enel Generación
Chile and Enel Distribución Chile.
Management
Powers to Agree
with Lenders
Restrictions related
to Dividends’
Distribution
Dividend restrictions may only be agreed with creditors
if such restrictions were previously approved by the
Shareholders’ Meeting (ordinary or extraordinary).
Annual Report Enel Chile 2016
79
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Annual Report Enel Chile 2016
History of the Company
Annual Report Enel Chile 2016
81
82
Annual Report Enel Chile 2016
History of the Company
Enel Chile S.A., formerly named “Enersis Chile S.A.”, was
placing it among the most important energy companies in
created as part of the corporate reorganization process that
the country.
began in April 2015. Enersis S.A. controlled the generation,
transmission and distribution business in Chile and four
Enel Chile participates in the distribution business through
other countries in the region (Argentina, Brazil, Colombia,
Enel Distribución Chile that operates a concessions area of
and Peru). The Extraordinary Shareholders’ Meeting of
more than 2,000 square kilometers, covering 33 districts in
Enersis S.A. held on December 18th, 2015, approved the first
the Metropolitan Region, representing 40% of total sales
phase of the reorganization plan named “the Division,” which
of distribution companies in the country, making Enel
created Enersis Chile S.A. as the only vehicle to control the
Chile the largest electricity distribution company in Chile.
Group’s generation and distribution assets in Chile. Enersis
The Company has also grown by adding new applications to
S.A became Enersis Americas S.A., the vehicle to control all
electricity and developing new ways to manage electricity.
assets of the businesses in other countries in the region.
Enel Chile was the first company in the country to offer its
Endesa Chile S.A. and Chilectra S.A. went through this
the first and only electric bus to operate in the downtown area
customers intelligent metering technology. Also, it has placed
same division process.
of Santiago and completely free of charge to passengers. Enel
Chile seeks to promote the efficient use of energy supplied
On September 28th, 2016 the Shareholder’s Meeting of
by Enel Distribución Chile to its almost 2 million residential
Enersis Américas S.A, Endesa Américas S.A and Chilectra
customers in Chile and thus to collaborate with its environment.
Américas S.A approved the second phase of the plan called
“the Merger” in which Enersis Américas S.A absorbed the
In June 2016, Endesa Chile (Enel Generación Chile today)
businesses of Endesa Américas S.A and Chilectra Américas
sold its 20% share in GNL Quintero S.A. to Enagás
S.A. During the same meeting, shareholders agreed to
Chile S.p.A for US$ 200 million. This decision to sell its
change the name of Enersis Américas S.A to Enel Américas
shareholding in GNL Quintero was based on the fact that it
S.A.
did not represent a strategic asset for the development of
the electricity business or the natural gas trading business
On October 4th, 2016, the shareholders of Enersis Chile,
of the Company.
Endesa Chile and Chilectra agreed to change their names
to Enel Chile, Enel Generación Chile and Enel Distribución
Enel Chile is part of the Enel Group, a global energy
Chile respectively.
company and one of the main integrated operators in the
electricity and natural gas sectors worldwide. It is present
Now that the organizational simplification process of
in 30 countries and four continents and supplies energy to
the Group has concluded, Enel Chile participates in the
nearly 61 million people and has net installed capacity of
electricity generation business through its subsidiary Enel
more than 90 GW.
Generación Chile. This subsidiary has 103 generation units
installed throughout the Central Interconnected System
(SIC in its Spanish acronym) and eight units in the Northern
Interconnected System (SING in its Spanish acronym)
reaching a total aggregate 6,300 MW installed capacity,
Annual Report Enel Chile 2016
83
84
Annual Report Enel Chile 2016
Investments and
Financial Activities
Annual Report Enel Chile 2016
85
Relevant projects
of the Company’s
Investment Plan
The Group’s global financing strategy and intercompany
The investment policy of Enel Chile S.A. is flexible enough
loans are coordinated to optimize debt management in
to adapt to changing circumstances, prioritizing each project
addition to the terms and conditions of financing. The
differently, based on profitability and strategic alignment.
subsidiaries generally develop their capital expenditure
plans independently, financed by internally generated
From 2017 to 2019, $888 billion is expected to be disbursed,
funds or direct financing. One of the objectives is to
on a consolidated basis, relating to investments currently
focus on investments that will provide long-term benefits,
underway, maintenance of our distribution network,
such as energy-loss reduction projects. Additionally, with
maintenance of existing installed capacity, and studies
the purpose of reducing the investment in areas such as
related to the development of other potential generation
acquisition systems, telecommunications, and information
projects.
technology, these services are centralized and provided
for all Enel Chile Group companies. Although the form of
The following table shows the expected capital expenditure
financing these investments has been considered as part
for the 2017 – 2019 period and the amount incurred by our
of the company’s budgeting process, no particular financing
subsidiaries in 2016, 2015 and 2014:
structure has been committed. The investments will depend
on market conditions at the time cash flows are needed.
Chile
Total
(1) The figures represent actual disbursements each year, except for future
projections (gross amounts)
Investment (1) (in billions of $)
2017-2019
888
888
2016 (1)
157
157
2015 (1)
310
310
2014 (1)
197
197
86
Annual Report Enel Chile 2016
Annual Report Enel Chile 2016
87
Generation
In Chile, the main investments developed during 2016
focused on the construction of the 150 MW Los Cóndores
pass through hydroelectric power plant, which began in
2014 and also the investments related to finishing the 350
MW Bocamina II power plant.
Projects Currently
Underway
The most important projects currently underway are:
Relevant
Investments in 2016,
2015 and 2014
> Optimization of Bocamina II Power Plant: Environmental
improvements (coal field roofing, biomass filters, among
others) and sustainability initiatives such as eradication
programs, agreements with fishermen, shared value
funds, among others.
> Los Cóndores project: 150 MW hydroelectric power
The capital investments carried out over the last three years
plant located in the Maule region of Chile that began
were mainly related to:
construction in 2014.
(i) The 350 MW Bocamina II power plant optimization project
(ii) The 150 MW Los Cóndores project
(iii) Maintenance of existing installed capacity
The capital investments just mentioned and related to
specific projects were financed as follows:
> Optimization of Bocamina II: cash from operations
> Los Cóndores: cash from operations
88
Annual Report Enel Chile 2016
Distribution
During 2016, Enel Distribución Chile and its subsidiaries
Finally, one of the greatest achievements of the Company
(Colina and Luz Andes) invested $81 billion in projects
in 2016 was the installation of 55,257 smart meters in
primarily related to satisfying natural growth of our
Santiago, a $5 billion investment. This project represents a
customers, service quality, safety and information systems.
milestone and the beginning of a new paradigm in electricity
Furthermore, during 2015, a total $90 billion were invested,
distribution in Chile and South America. This technology has
$67 billion to satisfy electricity consumption needs related
allowed customers to perceive the main benefits of the
to demographic growth and $23 billion to extraordinary
program such as, more convenient and safe remote reading;
investments.
electricity consumption self-management offering access
to flexible and hourly rates; and two-way meters offering
In 2016 a total $22 billion were invested in Medium and
customers that have a self-generating photovoltaic solar
Low Voltage networks, allowing to connect new customers,
panel system the possibility to sell their household excess
both residential and large customers, and also connect real
energy to the system. This technology also allows improving
estate projects.
the quality of the electricity service received by being able
to monitor the service and receive alerts from the central
Focusing on increasing Enel Distribución Chile’s network
administration system.
capacity, a total $13 billion were invested in the start-up of
three new HV/MV transformation units: Lo Boza Substation,
Andes Substation, and Chacabuco substation. Regarding
sub transmission lines, two lines were reinforced: the 110
kV Altamirano line and the 110 kV Espejo-Ochagavia line.
Regarding medium voltage (MV) lines, four new feeders
were added: Monkeberg feeder –La Reina Substation (12
kV), Talladores feeder – Macul Substation (12 kV), Angamos
feeder – Cisterna Substation (12 kV) and Neruda feeder –
Bicentenario Substation (12 kV).
Regarding service quality, $13 billion were
invested
mainly in reinforcing certain feeders, those determined
by our quality plan. Worth highlighting is the automation
of the MV network that involved adding 500, from 700
to 1,200, new remote control devices, to the medium
voltage network, and the necessary network adjustments.
This plan condensed in one year the activities that would
normally take six years to implement. At the same time, the
second phase of the Medium Voltage SCADA Platform was
implemented, named “MV Remote Control System,” STM
in its Spanish acronym. Regarding telecommunications
infrastructure, the first Digital Mobile Radio (DMR) platform
and equipment was installed, and the first stage of the 3G
update took place. The focus is to increase coverage and
availability of communication links between MV equipment
and the Control Center. The DMR platform was the first to
be installed and operational in Chile and the rest of the Enel
Group companies in Latin America.
Annual Report Enel Chile 2016
89
Financial
Activities
Liquidity
Hedging Policy
As of year-end 2016, the subsidiary Enel Generación Chile
relies on committed credit lines available for US$ 512 million.
Also, undisbursed commercial credit lines available for a
Exchange Rate
maximum US$200 million. These were registered in the
The exchange rate hedging policy of the Enel Chile Group
Securities Register of the Superintendence of Securities and
is based on cash flows and seeks to maintain a balance
Insurance (SVS in its Spanish acronym) in January 2009 and
between flows indexed to foreign currency (US$) and the
expire in 2019.
levels of assets and liabilities denominated in that currency.
The goal is to minimize cash flow exposure to risk related to
In addition to the liquidity instruments mentioned above, the
exchange rate variations.
Company and its subsidiaries ended 2016 with available cash
amounting to US$367 million.
Interest Rate
Indebtedness
The goal of the Group’s interest rate hedging policy is to
maintain a balanced debt structure to minimize financial
expenses and reduce income statement volatility. Hedging
The consolidated financial debt of Enel Chile reached US$
instruments are purchased based on market conditions, the
1,273 million, mainly international bonds, and local bonds
Company’s projections and debt structure objectives.
with 11 years average life.
At year-end 2016, consolidated fixed debt to total financial
Net consolidated debt was US$ 906 million at year-end
debt was 92%.
2016, and 1.0 was the leverage ratio(1)
Main Financial
Operations
Risk Rating
Regarding risk rating, the main events that took place in
2016 are summarized below:
During 2016 the subsidiary Enel Generación Chile obtained
Enel Chile was rated for the first time by Feller Rate on April
a new international four-year term committed credit line for
20th, 2016. The Company was rated “AA” on the local scale
US$200 million and renewed a three-year term US$ 112
with a stable outlook. This rating was later confirmed on July
million domestic committed credit line. The disbursements
8th.
of these credit lines have no restrictions.
Enel Generación Chile also completely amortized a US$250
Chile S.A.. On April 21st, 2016 the local rating assigned to
million intercompany loan with Enel Americas.
the Company was “AA” with a stable outlook.
Fitch Rating also began assigning a credit rating to Enel
1 Calculated as Net Financial Debt over Gross Operating Income (EBITDA)
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Annual Report Enel Chile 2016
Furthermore, on July 22nd, 2016, Standard & Poor’s assigned
Enel Chile S.A. a “BBB+” international credit rating with a
stable outlook. This rating is an “investment grade” rating.
Insurance
The Company’s ratings are based on its diversified portfolio
the Metropolitan Region. These assets are covered by a
of assets, strong credit parameters, adequate debt structure
global insurance program centralized by its parent company
Enel Chile owns equipment and substations located in
and high liquidity.
International Rating
Enel Chile
Corporate
S&P
BBB+ / Stable
Local Rating
Enel that covers material damage, terrorism, business
interruption and legal liability. The insurance policies’ renewal
process was carried out through an international bid, where
the leading insurance companies worldwide were invited to
participate. The contracts were renewed on November 1st,
2016 and expire October 31st, 2017.
Enel Chile
Stocks
Bonds
Feller Rate
1° class, Level 2
AA / Stable
Fitch Ratings
1° class, Level 1
AA / Stable
Brands
The company has registered the brand “Enersis Chile” for
services, products, industrial and commercial facilities. The
brand name “Enel Chile” is going through the registration
process.
Suppliers,
Customers,
and Main
Competitors
Considering that Enel Chile S.A. is a Holding Company that
operates primarily in the electricity generation and distribution
sectors in Chile, the suppliers, customers, and competitors
are those relevant to the Company’s main subsidiaries.
Based on the above, the suppliers, customers, and
competitors are the following:
Cencosud Group, Gerdau Aza, Metro S.A., CGE Distribución
SA., SAESA, Chilquinta Energía S.A., Colbún S.A., AES Gener
S.A., Engie Energía Chile S.A. (Suez), Empresa Eléctrica
Guacolda S.A., Ferrovial Agroman Chile S.A., Echeverría
Izquierdo Montajes Industriales, Abengoa Chile, Cables de
Energía y Telecomunicaciones, FAE Lumisistemas Ltda.,
Ernst & Young.
Annual Report Enel Chile 2016
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Annual Report Enel Chile 2016
Risk factors
Annual Report Enel Chile 2016
93
Risk
Management
Policy
The companies of Enel Chile are exposed to certain risks,
(ii) Criteria on counterparties
which are managed through the application of identification,
measurement,
limit of concentration and supervision
(iii) Authorized operators
systems.
The basic principles defined by the Group in establishing its
market in which it operates, its position regarding risk
risk management policy include the following:
based on the strategy defined.
• Each business and corporate area establishes, for each
• Comply with rules of good Corporate Governance
• All business operations and corporate areas are
performed within limits approved for each case.
• Comply strictly with the Group’s norms and procedures
• Each business and corporate area defines:
companies establish the risk management controls
• The businesses, corporate areas, business lines, and
(i) The markets in which it can operate based on having
performed according to policies, rules, and procedures
necessary to ensure that market transactions are
sufficient knowledge and abilities to ensure effective risk
of Enel Chile.
management
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Annual Report Enel Chile 2016
Interest Rate
Risk
Interest rate fluctuations modify the fair value of assets
and liabilities that accrue interest at fixed rates, as well as
the future flows of assets and liabilities based on a variable
interest rate.
The objective of interest rate risk management is to achieve
a debt structure balance that allows minimizing the cost of
debt with reduced income statement volatility.
As of December 31st, 2016, 92% of total gross debt has a
fixed or hedged interest rate.
Depending on the Group’s estimates and debt structure
objectives, hedging operations include derivatives that
mitigate these risks. The instruments to mitigate interest
rate risks currently in use include swaps that transform
variable rates into fixed rates.
Annual Report Enel Chile 2016
95
Exchange Rate
Risk
Commodities
Risk
Exchange rate risks are primarily related to the following
The Enel Chile Group is exposed to certain commodity price
transactions:
fluctuations, primarily through:
- Debt incurred by the Group’s companies in currencies
- Fuel purchases in the process of generating electricity
different from their respective operational cash flow
currency.
- Energy trading operations in local markets
- Payments of project-related materials and corporate
To reduce risk in situations of extreme drought, the
insurance policies made in currencies different from their
Group has designed a commercial policy that defines sale
respective operational cash flow currency.
commitments, consistent with its power plant’s generation
capacity in a dry year, as well as risk-mitigation clauses
- Revenues in the Group’s subsidiaries that are directly linked
in some contracts with nonregulated customers. In the
to currencies different from their respective operational
case of regulated customers that are subject to long-term
cash flow currency.
tender processes, indexation clauses are included to reduce
commodity price exposure.
To mitigate exchange rate risk, Enel Chile aims to maintain
an equilibrium between flows indexed in American dollars
Considering the operating conditions faced by the electricity
and levels of asset and liabilities in such currency. The
generation market in Chile, such as droughts and commodity
objective is to minimize cash flow exposure to exchange
price volatility in international markets, the company
rate fluctuations.
is constantly evaluating the convenience of hedging
instruments to mitigate the impact of price fluctuations on
The instruments currently used to comply with this policy
profits. As of December 31st, 2016, swap operations for 3
are currency swaps and exchange rate forwards.
mill Brent oil barrels and 3.3 mill MBTU Henry Hub gas, to
be liquidated between January and November 2017, were in
place. As of December 31st, 2015, the company held swaps
for 133 thousand Brent oil barrels.
Because of constantly changing operating conditions, these
hedging measures may be modified or could include other
commodities.
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Annual Report Enel Chile 2016
Liquidity
Risk
Credit
Risk
The Group maintains its liquidity through committed long-
The Enel Chile Group conducts a detailed follow-up of credit
term credit facilities and temporary financial investments,
risk.
for amounts sufficient to fund the projected needs of a
period, calculated as a function of the overall situation and
expectations in the debt and capital markets.
These projected needs include net financial debt maturities;
or in other words, maturities after financial derivatives.
For more information on characteristics and conditions of
financial debt and financial derivatives, see Note 17, 19 and
Annex No 4.
Trade
Accounts
Receivables
As of December 31st, 2016, the Enel Chile Group had a
The credit risk associated with accounts receivables
liquidity of M$ 245,999,125 in cash and cash equivalents,
stemming from commercial activity has historically been
and M$ 342,827,047 in unconditionally available long-term
limited, mainly due to short-term payment deadlines that
committed credit lines. As of March 1st, 2016, the Enel Chile
prevent clients from accumulating significant individual
Group had a liquidity of $M 161,018,932 in cash and cash
credit. This applies to the generation and distribution
equivalents and M$ 277,668,000 in unconditionally available
businesses.
long-term committed credit lines.
In some of our generation business contracts with
nonregulated customers, in events of non-payment, we
can interrupt such customer’s electricity supply. Contracts
also stipulate that payment defaults qualify as a cause for
contract termination. For this reason, and although the risk
is limited, credit risk and maximum amounts exposed to
payment risk are constantly being measured and monitored.
Regarding our distribution business, supply disruption
is included in the company’s powers against defaulting
clients, as determined by industry regulation and enables
the evaluation and control of the limited credit risk.
Annual Report Enel Chile 2016
97
Financial
Assets
Risk
Measurements
Investments of cash surpluses are made in first class
The Enel Chile Group measures the Value at Risk of its debt
domestic and foreign financial entities (with investment
and financial derivatives to monitor the risk assumed by the
grade credit ratings when possible) within established limits
company, thus limiting income statement volatility.
for each entity.
The positions included in the portfolio used to calculate the
Investments may be backed by Chilean treasury bonds and
present value at risk is composed of:
securities issued by first-class banks, prioritizing the latter as
they offer better returns (always within existing investment
- Financial debt
policy guidelines).
- Debt hedging derivatives
Derivative instruments are entered into with entities with
solid creditworthiness; all derivative transactions are
The calculated value at risk represents a potential loss of
performed with entities with investment grade ratings.
value of the portfolio in one trimester, with 95% confidence.
To determine the value at risk, we take the volatility of
the risk variables affecting the value of the portfolio into
consideration including:
- US dollar LIBOR interest rate
- Exchange rates of currencies included in the calculations
The calculation of Value at Risk is based on the extrapolation
of future market value scenarios (one-quarter out) of the
risk variables according to the scenarios based on real
observations for the same period (quarter) for five years.
The Value at Risk for the next quarter, with 95% confidence,
is calculated as the percentile of the most adverse 5% of
possible quarterly changes.
Considering the hypotheses stated above, the Value at Risk
for the next quarter is M$73,197,508.
This value represents the potential increase in the debt
derivatives portfolio and is therefore intrinsically linked,
among other factors, to the value of the portfolio at the end
of each quarter.
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Annual Report Enel Chile 2016
Other Risk
Factors
Economic fluctuations in Chile, as well as certain
interventionist economic policies proposed by the
governmental authorities, can affect operational results
and financial condition, as well as the value of our
A financial crisis, or any other type of crisis, in any
securities.
region of the world, could have a significant impact on
Chile, and consequently, adversely affect the company’s
All operations are in Chile. Therefore, consolidated revenues
operations and liquidity.
could be affected by the performance of the Chilean economy.
If local, regional, or global economic trends negatively affect
Chile is vulnerable to external impacts, including financial
the Chilean economy, the Group’s financial condition and
and political events, which can cause significant economic
operating results could be adversely affected. Additionally,
difficulties and affects its growth. If the Chilean economy
generating insufficient cash flow for subsidiaries could result
achieves unexpectedly low growth rates or enters a
in their incapacity to fulfill obligations and necessity to ask
recession, customers are likely to reduce their electricity
for dispensation for certain restrictive financial conditions.
demands, and some might face difficulties paying their bills,
which would possibly increase the company’s uncollectible
The government of Chile has and continues to exercise
accounts. Any of these situations could adversely affect the
considerable influence on many aspects of the private
company’s operational results and financial condition.
sector, which may result in changes to economic policies and
other policies. For example, in September 2014, the Chilean
Financial and political crisis in other parts of the world could
government approved the gradual increase in corporate
also adversely affect the business. For example, instability
taxes and a change to the tax system, which could have
in the Middle East, or in other oil-producing regions,
an additional negative effect on non-Chilean stockholders
could result in higher oil prices worldwide, which in turn
or ADSs. On February 8th, 2016, Law 20,899 was enacted,
could increase fuel costs in thermal generation plants and
which made some amendments to this tax system reform.
adversely affect the company’s operational results and
Other governmental decisions could include wage, price,
financial condition.
and tariff controls, as well as other interventionist measures
such as expropriation or nationalization.
Additionally, the negative impacts of a financial crisis on
the finance industry could have an adverse impact on our
Future adverse events in Chile or changes in tariff policies,
ability to obtain new bank financing on historical terms and
exchange rate controls, regulations or taxation could
conditions.
hinder the ability to execute strategic plans, which could
negatively affect the company’s operational results and
Political events or a financial crisis could also reduce access
financial condition. Inflation, devaluation, social unrest and
to capital markets in Chile, as well as other international
other political, economic or diplomatic events, including the
capital markets for additional sources of liquidity, or
response of regional governments to these circumstances,
increase the interest rates available. Reduced liquidity
could affect the profitability of Enel Chile. Also, financial
could affect capital expenditures, long-term investments,
and securities markets are influenced by economic and
and acquisitions, in addition to the company’s development
market conditions of other countries and could be adversely
projections and dividend policy.
affected by events in other countries, which could adversely
affect the company’s securities.
Annual Report Enel Chile 2016
99
The electricity business is exposed to risks caused by
In the distribution business, on May 6th, 2015, a fire damaged
natural disasters, catastrophic incidents and acts of
and affected the Alonso de Córdoba substation in Santiago,
terrorism, which can adversely affect operations, profits,
leaving 50,000 consumers without power throughout
and cash flows.
eastern Santiago, place where a significant amount of
commercial and financial activity occurs. A short circuit
The core facilities of Enel Chile
include generation
produced the massive blackout. Damages ascended to
power plants and distribution assets. These facilities can
US$ 5.8 million. Chilean authority fined Chilectra (now Enel
sustain damage from earthquakes, floods, fires and other
Distribución, 6,000 monthly tax units (UTM, in its Spanish
catastrophic disasters, either natural or humanmade, as
acronym), almost $ 277.1 million as of December 31st, 2016.
well as vandalism, mutinies, and terrorism.
A catastrophic event could cause interruptions in the
to financing new projects and capital expenditures and
business and significant reductions to revenues due to
those associated to refinancing maturing debt; we are also
reduced demand or significant additional costs not covered
subject to debt obligations, which could affect the liquidity
We are subject to financing risks, such as those associated
by insurance clauses regarding business interruptions.
of Enel Chile.
There might be delays between a significant accident or
catastrophic event and final reimbursements covered by
As of December 31st, 2016, the combined debt of Enel Chile
the insurance policies in place at Enel Chile, which usually
amounted to $ 820 billion.
include a deductible and maximum amount per claim.
The maturity profile is as follows:
• $ 18 billion in 2017;
• $ 16 billion from 2018 to 2019;
• $ 15 billion from 2020 to 2021; and
• $ 771 onwards.
Some of the debt contracts are subject to (1) compliance
with financial ratios, (2) covenants, (3) events of default, (4)
events of acceleration of debt due to non-compliance with
contractual conditions, among others. A sizable portion of
the subsidiaries’ financial debt is subject to cross-default
clauses with different definitions, criteria, materiality limits
and applicability for subsidiaries that may give rise to cross-
defaults.
If the subsidiaries fail to comply with any of these contractual
obligations, creditors and bondholders may demand
immediate repayment, and a considerable portion of debt
could become payable on demand.
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Annual Report Enel Chile 2016
It is possible that we do not have the ability to refinance debt
Because the generation business heavily relies on
or are unable to obtain refinancing on terms acceptable for
hydrological conditions, droughts and climate change
Enel Chile. In the absence of said refinancing, the company
can adversely affect operations and profitability.
might be compelled to dispose of assets at unfavorable
prices to make the accrued debt payments. Moreover, Enel
Approximately 55% of combined generation installed
Chile may not sell these assets quick enough or for as much
capacity in 2015 was hydroelectric. Therefore, extreme
as needed to make such payments.
hydrologic conditions and climate change could negatively
affect the business, as well as operational results and
The company might also not have the ability to obtain
financial condition of Enel Chile. In the previous years,
funds required to complete projects under construction or
results have been affected by hydrologic conditions in
development. Also, market conditions at the time funds are
Chile, since they have been below the historical average.
required, or other unforeseen extra costs could compromise
the ability of Enel Chile of financing these projects and
Below-average hydrological conditions not only reduce
investments.
the ability to operate the hydroelectric plants entirely but
also increase the costs of water and water transportation
Enel Chile’s inability to finance new projects and capital
for cooling purposes to the San Isidro thermal plant.
investments or refinance existing debt could adversely
Enel Generación Chile has signed agreements with the
affect its operational results and financial condition.
Chilean government and local farmers regarding the use
Enel Chile may not be able to make appropriate
periods of drought. If drought conditions persist or
of water in hydroelectric generation, especially during
acquisitions.
worsen, pressure from the Chilean government or third
parties to further restrict the use of water may increase.
The company continuously verifies
the perspective
(For more information on water rights agreements, see
of acquisitions that may
increase market share or
“Item 4. Company Information – B. Business Summary –
complement existing business units, but cannot guarantee
Water Rights). Droughts may also affect the performance
that appropriate acquisition deals will be identified and
of thermal plants, including facilities that use coal, diesel,
carried out in the future. The acquisition and integration of
or natural gas as fuel, in the following ways:
independent companies not controlled by Enel Chile are
generally a complex, costly, and time-consuming process,
• During periods of drought, thermal plants are used
which requires considerable effort and expenses. If an
more frequently. Since operating expenses in thermal
acquisition is completed, the company may incur substantial
plants can be considerably higher than in hydroelectric
debt and assume unknown obligations, potentially lose
plants, operating expenses could increase during these
key employees, depreciation expenses related to tangible
periods. Also, depending on commercial commitments,
assets, and the distraction of management from other
electricity might have to be purchased in the spot
business concerns. Additionally, any delay or difficulty found
market to comply with contractual obligations. The
that relates to the acquisition or integration of multiple
purchase price may exceed the sale price stipulated
operations could have adverse effects on Enel Chile’s
in the agreements, thus creating losses in those
financial condition or operational results.
contracts. For more information on how hydrology
affects the business and financial results, see “Item 5:
Operational and Financial Revision and Perspectives- A.
Operating Results – 1. Analysis of the Main Factors that
Affect Operational Results and Financial Condition” –
A. Generation Business”.
Annual Report Enel Chile 2016
101
• Thermal plants require water for cooling purposes,
Government regulations can adversely affect the
and droughts not only reduce water availability but also
business of Enel Chile.
increases the concentration of chemicals, such as sulfates,
in water. High chemical concentration in water destined
Enel Chile is subject to a wide range of regulations on
for cooling purposes increases the risk of damage to the
the rates it charges its customers. These regulations can
plant’s equipment, as well as the risk of violating important
adversely affect the company’s profitability. For example,
environmental regulations. As a result, water must
the Chilean government may impose electricity rationing
be bought from farmlands that also experience water
during periods of droughts or prolonged plant failure, which
shortages. These water purchases may increase operating
could adversely affect the business, operating results and
costs and force negotiations with local communities.
financial condition of Enel Chile.
• Thermal plants that burn gas generate emissions such as
Chilean governmental authorities can delay the distribution
sulfur dioxide (SO2) and nitrogen oxide (NO) gases. When
tariff revision process, or rate adjustments may be
operating on diesel fuel, plants also emit particulate matter
insufficient to overcome all the company’s expenses.
into the atmosphere. Plants that operate on coal emit SO2
Electricity regulations issued by the Chilean government
and NO. Therefore, increased use of thermoelectric power
may affect the ability of Enel Chile’s generation companies
plants in periods of drought increases the risk of emitting
of raising enough revenue to cover operating costs.
higher levels of pollutants.
The droughts affecting the regions where most of the
revenue to cover its consolidated operating expenses, it
hydroelectric plants are located can last for a prolonged
may affect the Company’s operations and could negatively
period, and new drought situations may occur in the future.
affect the business, financial and operational results in Enel
If any of the Group’s companies are unable to obtain enough
A prolonged drought exacerbates the risks mentioned above
Chile.
and will have an additional adverse impact on the business,
operational results and financial condition of the company.
Also, legislators and administrative authorities often receive
proposals for changes in the regulatory framework, and some
The distribution business is also affected by climate
of these changes could have a material adverse impact on
conditions: such as average temperature, which may
the business, and affect Enel Chile’s results. For example, an
modify heating or air conditioning, which affects energy
amendment to the Chilean water rights law in 2005 forces
consumption. Even with extreme temperatures, demand
the payment of exclusive unused water rights, increasing
may significantly increase in a short period, which could
the annual cost of maintaining water rights for hydroelectric
affect services and may result in service disruptions, which
projects that are not technically or economically feasible. In
the additional risk of being subject to fines. Depending on
August 2016, Enel Generación Chile relinquished its unused
climate conditions, Enel Generación Chile’s results may
water rights, registering a loss of $ 35.4 billion.
significantly vary year to year.
In 2015, the CDEC-SING audited the GasAtacama Thermal
plant for the Superintendence of Electricity and Fuel (SEC,
in its Spanish acronym). In August 2016, the SEC fined
GasAtacama 120,000 monthly tax units (UTMs, in its Spanish
acronym, approximately $ 5.5 billion as of December 31st,
2016) alleging inexact information provided to the CDEC-
SING relating to minimum times and technical minimums
required to operate, which implied greater operating
expenses in the system. More audits and changes to the
minimum operating times and technical minimums may
occur in the future. This and any future regulatory changes
could affect the company.
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Annual Report Enel Chile 2016
These changes could adversely affect the business,
Regulatory authorities may impose fines on subsidiaries,
operational results and financial condition of Enel Chile.
which may adversely affect the operational results and
financial condition of Enel Chile.
The business and profitability of Enel Chile could be
negatively affected if water rights are denied or if water
In Chile, fines can be incurred for a maximum of 10,000 Annual
concessions are granted for a limited time.
Tax Units (UTA, in its Spanish acronym) or $ 5.4 billion, using
the UTA as of December 31st, 2016. Generation subsidiaries
Enel Chile’s water rights are granted by the General
are supervised by local regulation authorities and are subject
Directorate of Water (DGA, in its Spanish acronym) for the
to these fines if, in the opinion of the regulatory entity, the
supply of water from rivers and lakes near the production
operational failures that affect the normal supply of energy
facilities of the company. Under current Law, these rights
to the system are the responsibility of the Company; for
are (i) unlimited in duration (ii) absolute, and unconditional
example, when different agents do not coordinate properly
property rights and (iii) are not subject to further dispute.
with the system operator. Also, the new transmission law
Chilean generation companies must pay an annual license
establishes compensation for final customers when power
fee for unused water rights. New hydroelectric facilities are
supply is interrupted beyond the standard time allowed.
required to obtain water rights, whose conditions may affect
Compensation is a part of the energy not supplied, with a
the design, scheduling, or profitability of a project.
minimum value between 20,000 UTA ($ 11.1 billion as of
December 31st, 2016) and revenue from energy sales from
Also,
the Congress of Chile
is currently analyzing
the previous year, in the case of generators.
amendments to the Water Code to prioritize the use of
water by defining its access as a human right that must
be guaranteed by the State. The amendment states that
the use of water for human consumption, domestic
subsistence and sanitation will always take precedence,
in both granting and limiting the use of exploitation rights.
Under this proposal: (i) concessions in the use of water
would be limited to 30 years, extendable in relation to water
rights effectively used during the 30-year period, unless the
DGA can prove that the water rights have not actually been
used, (ii) new non-consumptive water rights would expire if
the holder does not exercise the rights within eight years;
(iii) unused existing non-consumptive water rights would
expire within eight years from the date of enactment of the
new Water Code; and (iv) towards the end of 2015, a new
requisite was added regarding the existence of an ecological
flow for current and future water rights for consumptive
and non-consumptive water usage, which would reduce
water availability for generation purposes. Any limitations
on current water rights, the need for additional water rights
or water concessions of unlimited duration could have an
adverse effect on the Company’s hydroelectric projects
under development and profitability.
Any limitations on the current water rights of Enel Chile or
any need for additional water rights or water concessions
of unlimited duration could have an adverse effect on the
Company’s hydroelectric projects under development and
profitability.
Annual Report Enel Chile 2016
103
As of December 31st, 2016, Enel Distribución Chile has five
Operating Results of Subsidiaries. The ability of subsidiaries
outstanding fines from the SEC amounting to $ 1.8 billion,
to pay dividends or make
loan payments or other
mainly due to regulation infractions related to the quality
distributions to Enel Chile is limited by its operational results.
and continuity of services during previous years and failures
If any subsidiary’s cash needs exceed its cash available, the
in two substations. The fines have not been paid yet, as
combined entity cannot deliver cash to Enel Chile.
appeals were submitted to the Electricity Authority and
Courts of justice. For more information on fines, see Note
Any of the situations described above can adversely affect
35 of Notes to Consolidated Financial Statements.
the business, operational results and financial condition of
Enel Chile.
The Company depends on payments from subsidiaries,
jointly-controlled entities, and affiliated companies to
meet payment obligations.
The company is partially dependent on cash received as
dividends, loans, interest payments, capital reductions and
other payments from subsidiaries to pay its obligations.
The ability of subsidiaries to pay dividends, loans and other
distributions to Enel Chile is subject to legal limitations such
as dividend restrictions, fiduciary duties and contractual
restrictions that may be imposed by local authorities.
In the past, Enel Chile has been able to access subsidiaries’
cash flows, but future political and economic uncertainties,
such as government regulations, economic conditions, and
credit restrictions could affect future operational results, and
Enel Chile may not be able to rely on the cash flows of these
operations to pay the Company’s debt.
Limits on dividends and other legal restrictions. The ability
of any subsidiary that is not 100% owned by Enel Chile to
deliver cash payments to the Company may be limited by
fiduciary duties of Directors to the minority shareholders
of these entities. Moreover, some subsidiaries may be
required by law and applicable regulations to decrease or
eliminate dividend payments. Because of these restrictions,
subsidiaries may, under certain conditions, be prevented
from delivering cash payments.
Contractual Restrictions. Restrictions on dividend distribution
included in some of the subsidiaries’ credit agreements
may prevent dividends or other payments to shareholders
if certain financial ratios are not met. In general, the credit
agreements of Enel Chile prohibit any distribution if the
company is in default.
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Annual Report Enel Chile 2016
Exchange rate risks can adversely affect results and the
The financial condition or operational results could be
U.S. dollar value of dividends payable to ADS holders.
adversely affected if Enel Chile does not achieve a positive
outcome in the defense of these litigation cases or other
The Chilean peso has been subject to devaluations and
claims and proceedings against the Company. For more
appreciations against the dollar and may have significant
information on litigation, see Note 33.3 of “Notes to
fluctuations in the future. Historically, a significant portion
Combined Financial Statements.
of combined debt has been denominated in U.S. dollars.
Even though a substantial part of income is linked to the
Long-term energy supply contracts of subsidiaries
dollar (mainly in the generation business), the Company
are subject to market price fluctuations of certain
generally has and will continue to be considerably exposed
commodities and other factors.
to fluctuations in the peso against the U.S. dollar because
of time lags and other limitations on adjusting rates to the
In the generation business, the Company is economically
dollar.
exposed to fluctuations in the market price of determined
products, because of the long-term energy sales contracts
An important portion of operational cash flow is tied to
signed. Currently, 83% of annual expected generation is sold
the dollar. Therefore, Enel Chile aims to keep debt, in
under contracts with a duration of at least 5 years at least.
the Company and its subsidiaries, in one same currency;
The company also has material obligations under long-term,
however, due to market conditions, this may not be possible.
fixed-price electricity contracts, such as the sale of parts.
Because of this exposure, cash generated by subsidiaries
Prices in these contracts are indexed to the price of different
could materially decrease as the local currency depreciates
raw materials, exchange rates, inflation and the market price
against the U.S. dollar. Future volatility in the exchange rate
for electricity. Any adverse changes to these indices would
of the currencies in which we receive revenues or incur
reduce the rates the Company charges in its long-term,
expenditures may affect our business, operational results
fixed price electricity sales contracts could adversely affect
and financial condition.
the business, operational results and financial condition of
We are involved in various litigation proceedings.
Enel Chile.
In the distribution business, the company is also exposed
Enel Chile
is currently
involved
in various
litigation
fluctuations in the price of energy. During 2016, some
proceedings that may result in unfavorable decisions or
customers were capable of choosing their rate, under
financial penalties against the company. The company will
Chilean law, and even though they chose regulated rates
continue to be subject to future litigations that could have
in the past, opted for unregulated rates. These customers,
negative consequences for the business.
either directly or in association with other customers, are
tendering their energy needs given current rates, which
are comparatively lower than regulated rates, which have
generally been based on tendered contracts in the past
at higher rates. Lower prices in the market could reduce
the number of customers that choose regulated rates,
and could opt for an energy provider, which would reduce
the number of customers. This could adversely affect the
business, operational results and financial condition of the
Company.
Annual Report Enel Chile 2016
105
The controlling shareholder could have substantial
Environmental regulations for current and future generation
influence over the Company and could have differing
capacity may become more stringent, which would require
strategic visions with minority shareholders regarding
increased capital investments. For example, Decree No
the company’s development.
13/2011 of the Ministry of the Environment, enacted in
January 2011 and published in June 2011, set stricter emission
Enel owns 60.6% of the Company’s share capital. As the
standards for existing thermoelectric plants which must be
controlling shareholder, Enel may determine the outcome of
met between 2014 and 2016, and even stricter standards
almost all important matters that require shareholder voting,
for new facilities or additional capacity. This regulation
such as the election of Board members, and, subject to legal
also requires the establishment of a continuous emission
and contractual obligations, the dividend policy. Enel can
monitoring system, under which thermoelectric plants must
also exert influence over operations and business strategy.
carry out a monitoring system abiding by protocols and
Enel’s interests may in some cases differ from the interest
guidelines issued by the Environmental Superintendence.
of minority shareholders. For example, Enel conducts its
In abiding by new environmental regulation, all
its
commercial operations in the field of renewable energy
thermoelectric plants must invest incrementally to install
sources in Chile through Enel Green Power S.p.A., in which
reduction systems to control their emissions. For example,
the Company holds no capital interest. Any present or future
the Company is adapting the Tarapacá thermoelectric plant
conflict of interest affecting Enel could be resolved against
by installing a desulphurizer and measures to reduce nitrous
the company’s interest in these matters. Therefore, growth
oxide emissions.
may be limited, which could adversely affect the business
and operational results of Enel Chile.
Environmental regulations and other factors can cause
delays, prevent the development of new projects or
increase operating expenses and capital expenditures.
Subsidiaries are subject to environmental regulations,
which, among other things, require environmental impact
studies for future projects and permits from both local and
national regulatory entities. Approval of these environmental
impact studies may take longer than originally planned,
and may also be retained by government authorities. Local
communities, ethnic groups, or environmental activists,
among others, could intervene in the approval process to
delay or prevent the development of projects. They can also
seek legal or other actions, with adverse consequences if
they are successful.
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Annual Report Enel Chile 2016
Any delay in complying with environmental standards
The Company could incur additional expenses to remedy
constitutes a violation of regulations that establish effective
and implement an asbestos sanitation and control policy, or
emission limits on June 23rd, 2015 or June 23rd, 2016,
otherwise be subject to legal actions against the Company,
depending on the plant’s location; failure to certify the correct
which could have an adverse effect on the operational
implementation of these monitoring systems can result in
results and financial condition of Enel Chile.
penalties. For example, during 2016, Enel Generación paid
fines of $ 1.1 billion related to exceeding emission limits or
Besides environmental concerns, other factors that could
failing to send reports for the Bocamina, Huasco and Diego
affect the Company’s ability to build new facilities or
de Almagro plants in previous years.
complete existing projects in time exist, which include
Currently, the Ministry of Environment is working on a new
increases in the price of equipment, materials, or labor;
prevention and decontamination plan and new mitigation
strikes; adverse climatic conditions and natural disasters,
plans to comply with the Paris Treaty on climate change,
and accidents and other unforeseen events. Any such
which could modify Decree 13/2011, and even further
event can adversely impact operational results and financial
delays in obtaining regulatory authorization, shortages or
restrict emission standards for thermoelectric plants, which
condition.
could mean additional investments in the future.
Delays or modifications to any project and changes in laws
In September 2014, the Chilean government enacted Law
and regulations or their interpretations can adversely affect
No 20,780 (fiscal law reform) which established an annual
operations or plans for companies of vested interest to Enel
tax on conventional electricity generators, such as thermal
Chile, which could adversely affect the Company’s business,
generators, based on their polluting emissions from the
operational results and financial condition.
previous year, which will be in force by 2018. In December
2016, the Ministry of Environment published a list of all
Our business may be adversely affected by judicial
thermal generators to be affected by this tax, and it includes
decisions on environmental qualification resolutions for
all the Company’s thermal plants. These plants must report
electricity projects in Chile.
their emissions during 2017 and will have an additional tax
in 2018. The cost of this tax could increase in the future,
The time required to obtain an environmental qualification
discouraging thermal generation as the costs of operation
resolution for an electricity generation or transmission
increase.
project in Chile has increased significantly, mainly due to
legal actions against this type of projects, environmental
In December 2016, Enel Generación Chile recorded a
opposition, public criticism, and government delays. This
penalty of $ 1 billion for the Tames 2 and Totoralillo thermal
may cast doubt on the ability of a project to obtain such
projects, given that their technology (coal-fueled steam
approval and increase the uncertainty of investment in power
turbine) have increased costs due to stricter regulation and
generation and transmission projects in Chile. Uncertainty
uncertain profits, among other reasons.
forces companies to reevaluate their business strategies.
Annual Report Enel Chile 2016
107
Power plant projects can face significant opposition
Current operations in thermal plants may affect the
from different groups that may delay their development,
Company’s reputation with stakeholders because of
increase costs, and tarnish, or potentially damage, the
reputation and image of Enel Chile the in the eyes of its
particulate matter, SO2 and NO2 emissions, which could be
detrimental to the environment.
stakeholders.
Reputation is the foundation of the relationships the
pressure on regulators, creditors, and other stakeholders,
Company has with its stakeholders and other interested
and may ultimately lead to projects and operations not being
Damage to the Company’s reputation may put considerable
parties.
optimally developed, leading to a decrease in stock value,
causing difficulties in attracting or retaining talent, which
If the company cannot effectively manage problems or
may result in damage to the Company’s name with these
identify those that could negatively affect public opinion
stakeholders.
towards the Company, and adversely affect the operational
results or financial condition of Enel Chile.
The development of existing and new generation plants may
encounter opposition from various interest groups, such as
ethnic and environmental groups, landowners, farmers,
local communities and political parties, among others, which
may affect the reputation of the Company in charge of the
plant and its image. For example, since December 2013,
the Bocamina II plant power has encountered considerable
opposition from local fishermen unions, who claim that
generation plants damage marine life and cause pollution,
which led to the interruption of operations for more than one
year. On July 1st, 2015, Bocamina II resumed operations,
after the approval of a new RCA in April 2015. Also, between
November 23rd, 2015 and January 7th, 2016, a new group
of fishermen illegally occupied the first high voltage tower,
which supports the 154 kV and 220 kV circuits owned by
Transelec S.A., which feed power plants Bocamina I and
Bocamina II. As a consequence, Bocamina I and Bocamina
II ceased operations temporarily. This group asserted that
they should receive the same benefits package that Endesa
Chile (now Enel Generación Chile) granted to the rest of
the zone’s fishermen. The financial outcome of temporary
interruption in electricity supply and illegal occupation
amounted to US$3.8 million, ($ 2.3 billion, using end-of-
year 2016 exchange rate) of the loss of contribution margins
between November 23rd, 2015, and January 7th, 2016. At the
electricity system level, this incident affected the increasing
global costs of supplying demand and increased the spot
price and expected use of hydroelectric reserves. These
groups and other similar groups could block the plants and
directly affect the results of Enel Chile.
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Annual Report Enel Chile 2016
The business may experience adverse consequences if
the Company is unable to reach satisfactory collective
bargaining agreements with workers.
A significant percentage of employees are unionized and
have collective bargaining agreements, which must be
renewed on a regular basis. The Company’s business,
financial condition, and operational results may be adversely
affected if agreements with any of the unions that represent
employees fail, or if an agreement with a workers’ union
contains conditions deemed unfavorable by the Company.
Chilean Law establishes legal mechanisms so that judicial
authorities impose labor agreements if the parties are
incapable of reaching agreements on their own, which may
increase costs beyond what is budgeted.
Also, many employees have highly specialized skills, and
certain incidents such as strikes, abandonment of duties
or suspensions by employees may adversely affect the
Company’s operational performance and financial condition,
as well as reputation.
Interruption or failure of the information technology
and communication systems or external attacks or
invasions to these systems could have an adverse effect
In recent years, global cyber-attacks on security systems,
on operations and results.
IT systems, and financial operations have intensified.
Enel Chile is exposed to cyber-terrorist attacks that aim to
Enel Chile relies on information technology, communication
damage the Company’s assets through computer networks,
and process systems (“IT systems”) to operate the
cyber-espionage in search of strategic information that may
business, so any failures in these systems could adversely
be beneficial for third parties, and cyber-theft of confidential
affect the Company’s businesses, financial condition, and
information, including information of Enel Chile’s customers.
operational results.
The company is exposed to several types of cyber-attacks,
including massive attacks that cause services to become
IT systems are essential for generation subsidiaries’
unavailable to users and attacks that target domain systems
ability to monitor the operations of power plants, maintain
which can prevent access to certain useful websites.
generation and network performance, properly generate
invoices for customers, achieve operational efficiency
Enel Chile has suffered cyber-attacks by cyber-terrorists in
and meet operational objectives and service standards.
the past, which resulted in service interruptions. More cyber-
Distribution subsidiaries can also be affected as they heavily
attacks can occur and may adversely affect the Company in
rely on IT systems to monitor networks, bill millions of
the future.
customers and maintain its customer service platforms.
Temporary or long-term operational failures in any of these
IT systems could have material adverse effects on operating
results. Additionally, cyber-attacks could have an adverse on
the company’s image and relationship with the community.
Annual Report Enel Chile 2016
109
The Company trusts electricity transmission services it
Also, increases in new non-conventional renewable energy
does not own or control. If these facilities do not provide
(ERNC, in its Spanish acronym) projects is congesting
an adequate transmission service, delivering energy
current transmission systems, as these projects are built
sold to end customers may not be possible.
relatively quickly, while construction of new transmission
projects may take longer. In May 2014, the government of
To deliver the energy it sells, Enel Chile depends on
Chile announced the Energy Agenda, a plan that establishes
transmission systems belonging
to other unrelated
the creation and implementation of a long-term energy
companies and operated by them. This dependency exposes
policy, which includes amendments to the legal framework
the Company to several risks. If transmission is interrupted
of energy transmission, mainly the interconnection between
or transmission capacity is inadequate, recovering the cost
the Central Interconnected System (“SIC”) and the Norte
of sales and profits may be insufficient. If restrictive pricing
Grande Interconnected System (“SING”).
regulation is imposed on transmission, the transmission
companies that Enel Chile relies on may not have sufficient
On September 24th, 2011, approximately 10 million people
incentives to invest in expanding transmission infrastructure,
in central Chile experienced a blackout (affecting more than
which may adversely affect operations and financial results.
half the inhabitants of Chile) due to a failure in Transelec’s
Currently, construction of new transmission lines is delaying
220 kV Ancoa substation, which produced an interruption
more than in the past, mainly due to new social and
in the SIC 500 kV double circuit line and the subsequent
environmental requirements that are creating uncertainty
failure of the remote recovery computer software used by
regarding the probability of completing the projects.
the Economic Cargo Dispatch Center (CDEC, in its Spanish
acronym) to operate the grid. This blackout, which lasted two
hours, exposed the transmission system’s fragility, and the
need to increase investment in expansion and technological
improvements to increase the transmission grid’s reliability.
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Annual Report Enel Chile 2016
Chilean securities markets may also be affected, to different
degrees, by the economy and market conditions in other
Latin American countries, other emerging markets and the
rest of the world. Even though economic conditions in these
countries may differ significantly with conditions in Chile,
investors’ reactions to evolution in any of these countries
may have an adverse effect on the market’s value and liquidity
of Chilean issuing instruments. An increase in perceived
risk associated with investment in Latin American countries
may discourage capital inflow to Chile and negatively affect
the Chilean economy in general, but investors’ interests in
stock of Enel Chile or ADSs in particular.
No guarantees exist in any potential market for shares and
ADSs on liquidity or price.
Lawsuits presented against the Company outside Chile
or claims against Enel Chile based on foreign legal
concepts may be unsuccessful.
All the Company’s assets are located outside the United
States. All board members and all senior executives reside
outside the United States, and most of its assets are located
outside the United States. If any shareholder were to file
a lawsuit in the United States against any board member,
Any similar interruption or failure in transmission facilities
senior executive or expert of Enel Chile, pursuing legal
could disrupt the business, adversely affect operational
process within the United States against such persons, or
results and financial condition.
enforce a judgment rendered in the courts of the United
States or Chile based on civil liability provisions of federal
The relative liquidity and volatility of the Chilean
securities laws in the United States, it could be hard to
securities market could negatively affect the price of
achieve. Also, there is doubt as to whether an action could
stock and ADS.
be brought successfully in Chile on the basis of liability
based solely upon the civil liability provisions of the United
Chilean securities markets are substantially smaller and
States federal securities laws.
illiquid than major securities markets in the United States.
Also, Chilean markets may be affected by incidents in other
emerging markets. Illiquidity may impair ADS holders’ ability
to sell common stock withdrawn from the ADS program to
the Chilean market in the amount, price and time of their
convenience.
Annual Report Enel Chile 2016
111
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Annual Report Enel Chile 2016
Corporate
Reorganization
Annual Report Enel Chile 2016
113
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Annual Report Enel Chile 2016
Corporate
Reorganization
The reorganization proposal, which concluded with the
this first stage, Enersis was also divided creating a
creation of Enel Chile, began in April 2015 when the
new company named Enersis Chile S.A. (currently Enel
Board of Directors of Enersis S.A. informed its intention
Chile). The existing Enersis changed its name to Enersis
to study a reorganization process with the purpose of
Américas S.A. (currently Enel Americas S.A.) to control
separating generation and distribution activities carried
Enel Group’s businesses in other countries in the region.
out in Chile from those conducted in the rest of the
region. The Boards of Empresa Nacional de Electricidad
On March 1st, 2016, having complied with the conditions
S.A (Endesa Chile, currently Enel Generación Chile)
precedent, the Division of Enersis S.A. took place, and
and Chilectra S.A (currently Enel Distribución Chile) in
on that same day, Enersis Chile S.A. (currently Enel Chile)
April 2015, also agreed to begin studies to analyze the
was created.
potential reorganization that would later determine the
spin-off of each company, Endesa Chile and Chilectra
The objective of the reorganization is, on the one hand,
Chile, respectively.
to differentiate the geographical areas that currently have
different growth drivers allowing to offer a service that
Both the Board of Directors and the Directors’ Committee
focuses on the problems and opportunities of each region.
reviewed the background information and, by a majority of
On the other hand, continue simplifying the structure of
its members, resolved that the reorganization operation,
the Group in Latin America reducing the consolidation of
as it was proposed, would contribute to the best interest
minority shareholdings and improving the alignment with
of the Company.
strategic interests; and finally, implement a strategy that
allows increasing operational efficiency, business growth
The Reorganization was performed in two stages: first,
and also have a differentiated shareholder return policy.
separating the Chilean activities from the activities
performed in other countries by dividing Endesa Chile
Later, during the second stage, on December 1st, 2016,
and Chilectra, and creating two new companies (Endesa
these three companies with assets outside Chile merged
Américas S.A. and Chilectra Américas S.A.). During
into Enersis Américas S.A. (currently Enel Americas).
Annual Report Enel Chile 2016
115
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Annual Report Enel Chile 2016
Industry Regulation
and Electricity System
Operation
Annual Report Enel Chile 2016
117
Enel Chile,
its subsidiaries and
jointly controlled
From a physical point of view, the electricity sector in Chile
companies participate in the generation, transmission,
is divided into four interconnected electricity systems: the
distribution, and trading of electricity in Chile. The
Central Electricity Grid (SIC in its Spanish acronym), the
following is a summary of the main legal bodies that
Northern Electricity Grid (SING in its Spanish acronym),
regulate the industry, its structure, and operations.
and two medium-sized isolated systems in Aysén and
Regulatory
Framework
Magallanes. The SIC is the main grid and extends 2,400
km from Taltal in the north to Quellón on the island of
Chiloé to the south. The SING covers the northern part of
the country, from Arica to Coloso, and extends 700 km.
The interconnection of the SIC and the SING is currently
under development.
The electricity industry in Chile is divided into three
Chile’s electricity sector is regulated by the Chilean
segments or businesses: generation, transmission,
Electricity Law, included in the Ministry of Mining
and distribution. Operations are interconnected and in
DFL No 1, 1982, whose restated and coordinated text
coordination. The main objective is to supply electricity
was determined by the Ministry of the Economy DFL
at the minimum cost with certain safety and quality
No 4, 2006 (the “Electricity Law”) and its corresponding
standards required by electricity regulation. Transmission
regulations
included
in DS No 327, 1998. Three
and distribution activities are considered natural
government entities are responsible for the application
monopolies and are therefore regulated as such. The
and compliance with the Electricity Law: the National
industry regulation determines free access to electricity
Energy Commission (CNE in its Spanish acronym),
networks and regulated tariffs.
which has the authority to propose regulated tariffs and
to prepare indicative plans for the construction of new
According to the Electricity Law, the Chilean electricity
generating units; the Superintendence of Electricity
market is coordinated by an independent public entity,
and Fuels (SEC in its Spanish acronym), which controls
the National Electricity Coordinator whose purpose is
and monitors compliance with the laws, regulations
to operate the existing Central Interconnected System
and
technical standards
for electricity generation,
and Northern Interconnected System, soon the National
transmission and distribution, liquid fuels and gas; and
Interconnected System, efficiently and safely. The
lastly, the Ministry of Energy, which is responsible for
National Electricity Coordinator is also responsible for
proposing and conducting public policies regarding
the calculation of the marginal hourly cost, which is the
energy and oversees the SEC, CNE and the Chilean
price of energy transfers between electricity generation
Nuclear Energy Commission (CChEN in its Spanish
companies.
acronym), strengthening coordination and allowing for an
overall view of the sector.
The Ministry of Energy also oversees the Energy
Efficiency Agency and the National Center for Innovation
and Development of Sustainable Energies
(CIFES
in its Spanish acronym) that replaced the Center for
Renewable Energies (CER in its Spanish acronym) in
November 2014. The law also establishes the existence
of a panel of experts whose primary objective is to
solve the discrepancies between the different electricity
market players: electricity companies, system operator,
and regulatory entities, among others.
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Annual Report Enel Chile 2016
Limits to
integration and
concentration
(ii) Distribution companies: They supply their regulated
customers through public tenders regulated by the CNE,
and supply their free or nonregulated customers through
bilateral contracts.
(iii) Spot or short-term market: It refers to the transactions
of energy and capacity between generation companies
In Chile, competitive market legislation along with specific
resulting from the efficient operation of the system which
regulation applicable to the electricity industry, define
is coordinated by the National Electricity Coordinator. The
criteria to avoid certain levels of market concentration
surplus (deficit) of production after supplying customer
and abusive practices.
commitments are transferred by selling (buying) to (from)
other generators connected to the system. Electricity
Companies are allowed to participate in the different
transfers are priced at the marginal cost of the system.
industry
segments
(generation, distribution
and
Capacity transfers are carried out at the corresponding
commercialization) in so far an adequate level of corporate
node price, as set every semester by the authority.
and accounting separation exists. The transmission sector
is where most restrictions are imposed, mainly due to the
In Chile, capacity payments to each generator depend
nature of the activity and the need to guarantee adequate
on the calculation performed annually by the National
access to all players. The electricity law defines limits to
Electricity Coordinator, which determines
the firm
the market share of the domestic transmission business
capacity of each power plant. Firm capacity does not
that generation companies and distribution companies
depend on power plant dispatch.
may have and prohibits transmission companies from
participating in the generation and distribution segments.
Electricity
Generation Segment
The operations of generation companies are conditioned
by the system coordinator’s Operations Plan, although
they may freely decide whether to sell their energy to
either regulated or nonregulated customers. Any surplus
or deficit between sales and production is sold to or
bought from other generators at the spot market price.
A generation company may have the following types of
customers:
(i) Free or nonregulated customers: They are customers
whose connected capacity is greater than 5,000
kW, mainly industrial and mining companies. These
customers may freely negotiate their electricity supply
prices with generators or distributors. Customers
whose connected capacity ranges between 500 and
5,000 kW may choose to negotiate prices with their
suppliers or be subject to regulated tariffs, for a
minimum of 4 years in either regime.
Annual Report Enel Chile 2016
119
Non-conventional
renewable energies
Law No 20,257 enacted in April 2008 creates incentives
to use non-conventional renewable energies (NCRE).
Electricity
Transmission
Segment
This rule determines that by 2014, 5% of energy
Transmission systems are comprised of
lines and
commercialized by generators must be renewable and
substations that are not distribution installations. They
must increase 0.5% every year from 2015 until 2024 to
are divided into five segments: National Transmission,
reach 10%. This law was modified in 2013 by Law No
Development Pole Transmission, Zonal Transmission, and
20,698, called the 20/25 law, establishing that by 2025,
Dedicated Transmission. International Interconnection
20% of the electricity matrix must be covered by NCRE
Systems also belong to the transmission segment and
sources. For contracts in force up to July 2013, the
are ruled by specific regulation.
withdrawals established by the previous law are to be
respected.
Transmission installations are open access to any user
that requests it, without discrimination. The compensation
for existing transmission installations, either national
or zonal, is determined through a tariff setting process
performed every four years. This process determines the
Transmission Value Added, based on efficient operations
and management costs and an annual charge to cover the
investment, determined by a discount rate (minimum 7%
after tax) set by the authority every four years based on a
study and the useful life of assets.
The development of the national and zonal transmission
systems is determined by a regulated and centralized
process carried out by the National Coordinator, which
presents an expansion plan every year, and that must
be approved by The National Energy Commission. The
expansion of both systems is implemented through open
bids. It discriminates between new transmission facilities
that are awarded through open bids to any supplier and
expansion projects of existing facilities that have an owner
and therefore the expansion belongs to such owner. The
remuneration of the expansion of existing facilities is
determined by the outcome of the bid and represents
the income for the first 20 years of operations. From year
21 on the remuneration of such transmission facilities is
determined as existing assets.
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Annual Report Enel Chile 2016
Electricity
Distribution
Segment
regulated by law. The conditions of service provided
to unregulated customers are freely negotiated and
agreed upon in bilateral contracts between the customer
and the electricity company (generation or distribution
companies).
Regarding the electricity service to regulated customer,
For regulatory purposes, the distribution segment is
the law determines that distribution companies must
defined as all electricity supplied to end customers, at
permanently provide electricity and through open, non-
a voltage not exceeding 23kV. Distribution companies
discriminatory, and transparent public tenders. These
operate under the framework of a public service
tenders are designed by the CNE and are carried out
concession, having the obligation to provide electricity to
at least five years in advance to award 20-year term
regulated customers at regulated tariffs.
contracts. If demand changes unexpectedly, the authority
Consumers are classified according to the size of their
regulated procedure
to
remunerate non-contracted
has the power to call a short term tender and also a
demand into regulated customers and nonregulated
electricity sales.
customers. Regulated customers are those whose
connected capacity is under 5,000 kW. Customers with
The processes for setting distribution tariffs are carried
connected capacity from between 500 and 5,000 kW
out every four years to establish the distribution value
may choose between a regulated price scheme and an
added based on the fixed costs, average energy losses,
unregulated price scheme.
and standard distribution costs of model companies. The
Distribution companies supply electricity
to both
to the characteristics of their service area, hire an
regulated and unregulated customers. Service
to
independent consultant to carry out studies to determine
regulated customers
is provided under conditions
the distribution value added. The final distribution value
CNE and the distribution companies, grouped according
added is determined as a weighted average, one-third
of the value estimated by the study of the companies
and two-thirds by the CNE. The CNE then determines the
basic tariffs and verifies that the aggregate return of the
industry is within the 10% plus/minus 4% range.
Additionally, every four years, when the distribution
value added is being calculated, the related services, as
determined by the Antitrust Court to be subject to price
regulation, are reviewed.
The Chilean distribution model is a consolidated model,
because to this date, eight price-settings processes have
been carried out since the privatization of the sector.
Annual Report Enel Chile 2016
121
Regulatory
Issues
2016
National Energy
Policy
Law No 20,928 -
Tariff Equality Law
On May 15th, 2014, the Minister of Energy released
On June 22nd, 2016, the Ministry of Energy published
the “Energy Agenda,” a document outlining general
Law No 20,928 in the Official Gazette, establishing
guidelines for the energy policy of the new government.
tariff equality mechanisms for electricity services,
In this context, on February 29th, 2016, the Ministry of
amending the Electricity Law (DFL No 4) of 2006. This
Energy published in the Official Gazette the approval of
law states that the maximum tariffs that distribution
the National Energy Policy contained in the document
companies may charge to residential customers must
entitled “Energía 2050: Política Energética de Chile”
not exceed the average national tariff by more than
(the “National Energy Policy”), establishing a long-term
10%. The differences arising from the application of this
strategy for the electricity sector. The National Energy
mechanism will be progressively absorbed by the rest of
Policy is based on four pillars: Safety and Quality of Supply,
the customers subject to regulated prices that are under
Energy as a Development Engine, Compatibility with the
the aforementioned average, except for those residential
Environment, and Efficiency and Energy Education.
customers whose monthly average consumption of
energy in the prior calendar year was lower than or equal
to 200 kWh.
The Law also establishes a discount on the energy
component of the node price that distribution companies
supply to regulated customers located in districts with
intensive energy generation and that are part of a grid
with more than 200 MW of installed capacity.
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Law No 20,936 –
Transmission Law
Distribution Law
On September 29th, 2016, the Seminar entitled “The
Future of Electricity Distribution” took place formally
On July 20th, 2016,
the Transmission Law was
opening the discussion on the new national electricity
published
in the Official Gazette, restructuring the
distribution law.
electricity system operation model, introducing a single
The process was led by the Secretary of Energy in
independent national operating agent (without prejudice
collaboration with the university Pontificia Universidad
to the continued existence of some medium and isolated
Católica de Chile. During November and December 2016,
electricity systems)that replaces the Economic Dispatch
and until late January 2017, workshops were carried out
Center, CDEC (in its Spanish acronym). Also, the Law
discussing the following issues: “Development of the
assigns the government a key role in transmission
distribution network”, “Financing the Network of the
planning and subsequent bidding and awarding of new
Future and its Tariff Structure”, “Electricity Distribution
projects and expansion projects. Open access is granted
Business Model”, and “Services offered by the Network
to all transmission facilities. The Law, among other
of the Future”.
relevant aspects, unifies all transmission segment’s
qualification processes in a single process and modifies
the remuneration scheme by applying a stamped rate to
the demand side.
Annual Report Enel Chile 2016
123
Tariff
Revisions
and Supply
Processes
Transmission Tariff
Setting
and the terms for the “Cost Study of Services related to
Electricity Distribution”.
The CNE defines six Typical Areas, each with separate
tariffs, and Enel Distribución Chile was categorized within
Typical Area No 1, as in the prior tariff process, reflecting
the higher density of its network and, therefore, lower
costs as compared to other companies in the industry.
The subsidiaries Empresa Eléctrica de Colina and Luz
Andes were categorized, as in the prior tariff process,
within Typical Areas No 4 and No 2, respectively. In
February 2016, the CNE published in the Official Gazette,
Exempted Resolution No 83 containing the list of the
qualified independent consulting firms eligible to be
chosen by the distribution companies to carry out the
tariff studies. In April 2016, Enel Distribución Chile
In 2012, the tariff setting process for distribution and
selected Consultor Systep Ingeniería y Diseños S.A. to
distribution-related services to be applied for the 2012 –
carry out the Distribution Value Added 2016 – 2020 Study.
2016 period was carried out. The results of the process
were published in the Official Gazette through Decree No
On September 5th, 2016, Enel Distribución Chile submitted
1T. As determined by the regulation, such tariffs were
the tariff study to the government authority as required
effective until November 3rd, 2016.
by Law.
In late 2015, the National Energy Commission (CNE in its
The 2016-2020 tariff setting process is currently in
Spanish acronym) began the 2016 – 2020 tariff setting
progress and will conclude once the tariff decree is
process by publishing Exempted Resolution No 699
released and applicable, retroactively, as of November
communicating the definition for Typical Areas, the terms
4th, 2016.
for the “Distribution Value Added 2016 – 2020 Study”,
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Annual Report Enel Chile 2016
The tariffs applicable in 2016 to end customers were
•
On May 23rd, 2016, the Ministry of Energy
determined based on the following decrees:
published in the Official Gazette, Decree No
4T, setting the node prices for energy supply,
i)
Decree No 1T published in the Official Gazette on
retroactively applied from March 1st, 2016.
April 2nd, 2013, set the tariff formulas applicable to
•
On June 17th, 2016, the Ministry of Energy
regulated customers. Tariffs were retroactively applied
published in the Official Gazette, Decree No
as of November 4th, 2012 until November 3rd, 2016.
7T, setting the node prices for energy supply,
ii) Decree No 14 published in the Official Gazette on
retroactively applied from April 1st, 2016.
April 9th, 2013, set the tariffs and indexation formulas
•
On August 6th, 2016, the Ministry of Energy
applicable to the sub transmission and additional
published in the Official Gazette, Decree No
transmission systems. Tariffs were
retroactively
8T, setting the node prices for energy supply,
applied as of January 1st, 2011 until December 31st,
retroactively applied from May 1st, 2016.
2015. Subsequently, Decree No 7T extended the
•
On September 1st, 2016, the Ministry of Energy
effective date until December 31th, 2015.
published in the Official Gazette, Decree No 9T,
iii) Tariff Decrees:
a) Average Node Prices:
setting the node prices for electricity supply as
part of Law No 20,928 on Tariff Equality in relation
•
On January 4th, 2016, the Ministry of Energy
to the Local Generation Acknowledgement,
published in the Official Gazette, Decree No
retroactively applied from August 1st, 2016.
22T, setting the node prices for energy supply,
b) Short-Term Node Prices:
retroactively applied from September 1st, 2015.
•
On July 2nd, 2016, the Ministry of Energy
•
On January 21st, 2016, the Ministry of Energy
published in the Official Gazette, Decree No 5T,
published in the Official Gazette, Decree No
setting the short-term node prices for energy
24T, setting the node prices for energy supply,
supply, retroactively applied from May 1st, 2016.
retroactively applied from November 1st, 2015.
•
As of this date, the decree applicable to
•
On March 4th, 2016, the Ministry of Energy
December 2016 has not been published.
published in the Official Gazette, Decree No
1T, setting the node prices for energy supply,
retroactively applied from January 1st, 2016.
Annual Report Enel Chile 2016
125
Sub Transmission
Tariff Setting
Notwithstanding the above, on July 20th, 2016, Law
No 20,936 was published, setting the new regulatory
framework for electricity transmission systems, including
sub transmission. According to Article eleven of the
transitory provisions of Law No 20,936, the effective date
The sub transmission tariffs are set every four years. The
was extended again (Decree No 14 of 2012) to December
sub transmission entities, grouped by system based on
31st, 2017.
the qualification of their facilities as ruled by the National
Energy Commission, are subject to a tariff setting
Regarding the 2016 – 2017 tariff period, on December
process to determine the Sub transmission System’s
29th, 2016 Exempted Resolution No 940 was published,
Annual Value, which allows to set the tariffs applicable to
which defined the necessary adjustments to Decree No
the use of the sub transmission systems.
14 to extend its effective date to include 2016 and 2017.
On January 29th, 2015, Law No 20,805 was published in
generation power plants from paying for using sub
the Official Gazette, which, among other matters, entitled
transmission systems if they inject their generation into
the Ministry of Energy to extend in one more year the
the system through sub transmission lines.
The main adjustment is related to exempting electricity
effective date of Decree CNE No 14 of 2012, which set
the sub transmission tariffs for the 2011 – 2014 period
The 2016 – 2019 tariff setting process will continue its
(i.e., such decree would be effective for the 2011 – 2015
progress, and in accordance with Article eleven of the
period), and also to extend in one more year the effective
transitory provisions of Law No 20,936, the results will
date of the tariff setting process for the period 2015 –
be used for the tariffs to be applied to the 2018 – 2019
2018 (i.e., 2016 – 2019).
period.
Consequently, on April 22nd, 2015, the Ministry of Energy
published in the Official Gazette, Decree No 7T, extending
the effective date of the sub transmission tariff decree
and expressly stating the tariffs to be applicable as of
January 1st, 2016.
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Annual Report Enel Chile 2016
Tariff Setting of
Electricity
Distribution-Related
Services
Electricity Tenders
Under the new tender’s law, two processes have been
carried out: Supply Tender No 2015/01 and Supply Tender
No 2015/02.
The 2015/02 process began in June 2015 and ended in
October 2015. The outcome resulted in three energy
On March 14th, 2014, the Ministry of Energy published in
blocks awarded for a total of 1,200 GWh per year (100%).
the Official Gazette, Decree No 8T, that sets the prices for
The weighted average price of the tender was US$ 79.3
electricity distribution-related services. These prices are
per MWh, representing a 30% reduction as compared
applicable from the date the decree was published, not
to the prices of prior tenders, which indicates that the
retroactively, and they are currently still effective.
amendments to the Law have effectively reduced
prices by increasing competition and reducing risks for
During late 2015, the CNE through Exempted Resolution
generators.
No 699 communicated, among other matters, the terms
for the “Cost Study of Services related to Electricity
The 2015/01 process began in May 2016 and ended in
Distribution Supply” as part of the 2016 – 2020 tariff
July 2016. The outcome resulted in five energy blocks
setting process.
awarded for a total of 12,430 GWh per year (100%) to 84
companies, including new market players, at a weighted
The terms identify five new electricity distribution-related
average price of US$ 47.6 per MWh.
services, of which the most significant are “Construction
and installment of temporary junctions” and “Lease of
Enel Generación Chile was awarded 5,918 GWh per year,
temporary junctions”.
which represents 47.6% of the total energy awarded.
As of year-end 2016, the decree to set new tariffs has not
been published.
Annual Report Enel Chile 2016
127
128
Annual Report Enel Chile 2016
Electricity
Generation
Annual Report Enel Chile 2016
129
The electricity generation business is mainly carried out
Hydroelectric sources represent 55% of the Company’s
through our subsidiary Enel Generación Chile.
consolidated installed capacity, thermal electric sources
represent 44% and non-conventional renewable sources
The total installed capacity of Enel Generación Chile was
1%.
6,351 MW as of December 2016, consolidated electricity
generation amounted to 17,564 GWh, and electricity sales
Therefore, the commercial policy defined is relevant to
reached 23,689 GWh.
manage the Company correctly.
The segmentation of the business into hydroelectric and
thermal electric generation is natural because the variable
costs for each type of generation are different. Thermal
generation requires the purchase of fossil fuels and
hydroelectricity requires water reservoirs and rivers.
Electricity
Generation
Operations
Enel Generación Chile and its subsidiaries have a generating
park comprised by 103 units spread out on the Central
Interconnected Grid (SIC in its Spanish acronym) and 8 units
on the Northern Interconnected Grid (SING in its Spanish
acronym).
130
Annual Report Enel Chile 2016
Generation Power Plants of Enel Generación Chile
and Subsidiaries
Installed capacity (MW) (1)
Power Plant
Los Molles
Rapel
Sauzal
Sauzalito
Cipreses
Isla
Abanico
El Toro
Antuco
Ralco
Palmucho
Taltal
Diego de Almagro
Huasco TG
Bocamina
San Isidro
San Isidro 2
Quintero
Ojos de Agua
Pehuenche
Curillinque
Loma Alta
Pangue
Canela
Canela II
Tarapacá TG
Tarapacá carbón
Atacama
Total
Company
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
Enel Generación Chile
GasAtacama Chile
GasAtacama Chile
Enel Generación Chile
GasAtacama Chile
Pehuenche
Pehuenche
Pehuenche
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
Technology
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Fuel/Natural gas
Fuel/Natural gas
Fuel/Natural gas
Coal
Fuel/Natural gas
Fuel/Natural gas
Fuel/Natural gas
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Wind
Wind
Fuel/Natural gas
Coal
Diesel /Natural gas
2015
18
377
77
12
106
70
136
450
320
690
34
245
24
64
478
379
399
257
9
570
89
40
467
18
60
24
158
781
6,351
2016
18
377
77
12
106
70
136
450
320
690
34
245
24
64
478
379
399
257
9
570
89
40
467
18
60
24
158
781
6,351
(1) These figures result from the maximum capacities determined by Enel Generación Chile’s Operational Norm No 38 “Regulation for defining maximum
capacity in the hydroelectric and thermal plants of Enel Generación Chile, as of December 31st each year. They are the maximum design capacity of the
generating units, corroborated with contractual satisfaction guaranteed tests made by the manufacturer of the generating equipment, in most cases. In
some cases, the figures of maximum capacity may differ from the capacity declared to the regulatory authority and customers in each country, due to
criteria defined by these entities and compliance to the corresponding contractual frameworks.
In 2016, electricity sales of Enel Generación Chile and
its subsidiaries in the SIC reached 21,588 GWh, which
represents a 43% share of total sales on the SIC, including
sales to customers and net sales on the spot market. Sales
to regulated customers represented 86% of total sales,
non-regulated customer sales represented 14% and net
spot market sales represented 1%. Also, electricity sales
in the SING reached 2,101 GWh in 2016, which represents a
12% share of total sales on the SING.
Annual Report Enel Chile 2016
131
Enel Generación Chile and Subsidiaries’ Installed
Capacity, Generation and Energy Sales
Installed capacity (MW) (1)
Installed capacity (MW) (1)
Enel Generación Chile
Pehuenche S.A.
Celta S.A. (3)
GasAtacama
Total
Generation (2)
Enel Generación Chile
Pehuenche S.A.
Celta S.A. (3)
GasAtacama (3)
Total
Sales
Sales to end customers
Enel Generación Chile
Pehuenche S.A.
Celta S.A. (3)
GasAtacama (3)
Spot market sales
Total
2015
3,757
699
1,115
781
6,351
2015
10,450
2,959
3,624
1,270
18,294
2015
20,490
281
981
189
1,618
23,558
2016
3,757
699
1,115
781
6,351
2016
11,538
2,369
2,429
1,229
17,564
2016
21,105
340
930
463
852
23,689
(1) These figures result from the maximum capacities determined by Enel Generación Chile’s Operational Norm No 38 “Regulation for defining maximum
capacity in the hydroelectric and thermal plants of Enel Generación Chile, as of December 31st each year. They are the maximum design capacity of the
generating units, corroborated with contractual satisfaction guaranteed tests made by the manufacturer of the generating equipment, in most cases. In
some cases, the figures of maximum capacity may differ from the capacity declared to the regulatory authority and customers in each country, due to
criteria defined by these entities and compliance to the corresponding contractual frameworks.
(2) Refers to total generation after deducting own consumption and transmission losses.
(3) Celta S.A. was absorbed by GasAtacama Chile S.A. on November 1st, 2016.
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Annual Report Enel Chile 2016
Operational
and
Commercial
Scenario
Overall scenario
The operations of Bocamina unit 2 were interrupted from
December 2013 until 2015 due to legal issues. Later, towards
the end of 2014, a Supreme Court ruling set a condition to
restarting the operations of the power plant. The condition
was to develop an optimization project consisting of techno-
environmental improvements. Specifically the installation of
advanced technology filters in the water suction process of
cooling, a real time air quality control monitoring system and
covering the coal fields. The high load factor of the power
plant in 2016 is proof that the Company has fully complied
with its commitment. The first two projects concluded
in 2015 and in 2016 were operational all year. With regard
The hydrology in the Central Interconnected System (SIC)
to installing a roof on the coal fields, the largest of its
was, on average, drier than 2015. This has been the trend
kind in Latin America, the north field roofing concluded in
over the past seven years, since 2010, experiencing a slight
December 2016 and the administrative process with the
improvement in 2014 and 2015, which led to a reduction in
municipality should authorize operations as of March 2017.
the hydroelectric contribution to the system and an increase
The construction of the south field roof will begin as soon as
in thermal generation in 2016 when compared to 2015.
the municipal permission is received. These improvements
Notwithstanding the above, generation costs and prices
that represents an important portion of the Company’s
on the SIC were, on average, lower than in 2015 mainly
production and operating margin, particularly in a dry year
because: i) fuel prices remained low, even lower than 2015;
such as 2016.
contribute to the sustainability of Bocamina, a power plant
ii) 700 MW of new generation capacity entered the SIC, of
which slightly more than 90% was renewable energy with
zero variable generation costs, and iii) as in 2015, electricity
consumption maintained its slow trend growing less than
2% compared to the previous year.
Regarding thermal generation, the greater generation of
Bocamina’s units I and 2 contributed to the lower cost of
thermal generation in 2016. Bocamina restarted operations
towards the end of the first semester of 2015, reached a
high load factor from March through December of 2016
and was operational year round. Despite the fact that coal
generation is the lowest cost thermal generation source of
the system.
Annual Report Enel Chile 2016
133
Main events that
affected operational
and commercial
performance
Due to the drought that had continued to affect the SIC, Enel
Generación Chile signed an agreement with the hydraulic
works authority (DOH in its Spanish acronym) overseen by
the Ministry of Public Works and with the approval of the
agricultural trade associations of the Laja basin, regarding
the use of Laja reservoir water, similar to the agreements
signed in previous years. This agreement refers to sharing
the Laja reservoir when water is scarce due to drought
conditions. Although this implies limitations for that both
The successful participation of Enel Generación Chile in
parties when compared to the original agreements, it offers
the power supply bid for distribution companies is worth
flexibility to water extraction during critical times (months).
highlighting. The Company was awarded most of the energy
The advantage of this agreement, is that on the one hand,
tendered in the process, which concluded during the second
it allows reducing conflict among users when scarcity is
semester of 2016. As of today, two tender processes have
due to dry conditions and also has a positive impact on Enel
been carried out since the new law (Law No 20,805 passed
Generación Chile’s generation in the region and therefore on
in 2015) applicable to power bids was enacted. The first one
the operating margin of the Company.
was carried out in 2015 and concluded in October awarding
3 blocks amounting to 1,200 GWh/yr., all renewable energy,
The situations Enel Generación Chile has faced, both in the
at a weighted average price of 79.3 US$/MWh. This price
bidding process previously described as well as the persistent
was 30% lower than that the price of the previous tenders.
dry weather conditions since 2010 and other unfavorable
The invitation to participate in the second bidding process,
situations, have allowed to confirm the Company’s strength
a considerably larger one, was in May 2015 requesting
to successfully perform its operational and commercial
offers to be presented in 2016. The process ended in July
activities. This is due to the following abilities that deserve
2016, having awarded 100% of the energy tendered in 5
highlighting: i) The Company has very significant generation
blocks amounting to a total 12,430 GWh/yr. The contracts
capacity, technologically diversified, mainly comprised by
have a 20 year term, beginning with 42.5% in 2021 and the
efficient hydroelectric and thermal power plants, and high
remaining 57.5% in 2022.
availability allowing its generation to be highly competitive;
ii) The Company’s commercial policy has been designed and
A total of 84 companies presented an offer in the 2016
is constantly updated to be coherent with the characteristics
bidding process. The companies awarded, including Enel
of its power plant’s electricity generation and with an
Generación Chile, bid at an average price of about 50 US$/
increasingly competitive market and also aligned with
MWh, with a significant participation of renewables, wind
electricity industry regulation requirements. The objective
and solar, which were awarded a bit more than 50% of total
of such policy has been to achieve an attractive return, along
energy tendered. Enel Generación Chile was the company
with low exposure to hydrology risk and facing significant
awarded with the most contracts amounting to a total
market competition and supply surplus due to the market
5,918 GWh/yr., almost half (47.6%) of the energy tendered,
penetration of NCRE in base generation, and iii) The power
to begin supplying in 2022. The advantages of the above
plant management policy considers ongoing permanent
are two-fold. It allows the Company to renew its contracts
optimization to attain high standards of quality, availability,
with distribution companies whose contracts were expiring
and sustainability by applying operations procedures and
during that period and therefore avoiding to be exposed
maintenance and modernization programs that fully comply
to the spot market where prices are expected to be low
with technical and environmental requirements established
due to the supply surplus projected for the short and long
by environmental and electricity sector regulation.
term, particularly for generation technology using renewable
sources. It also allows Enel Generación Chile to maintain
l,
its leadership position in the market, and proving as such,
its ability to adapt to the new market scenario, a more and
more competitive one with a significant number of new
entrants, particularly NCRE generators.
134
Annual Report Enel Chile 2016
Hydrologic condition
of the SIC
SIC generation and
supply costs
Year 2016 may be characterized as a dry year, with very
The hydrologic condition of 2016 was drier than 2015,
little snow melt at the beginning of the year and a low
and resulted in higher thermal generation in 2016. Energy
level of rainfall the rest of the year. Although the first two
supplied by the SIC in 2016 reached 53,799 GWh, 58%
quarters had slightly more rainfall than the year before, the
thermal and greater than the 49% in 2015. Hydroelectricity
accumulated exceedance probability of rivers was just as
represented 36%, falling significantly compared to the
high, roughly 89% and 87% respectively. This condition
45% the previous year. Regarding thermal generation, coal
worsened during the third quarter, and therefore the
kept the leading position representing 32% of total SIC
recovery of seasonal reservoirs was lower. Consequently,
generation, higher than the 27% in 2016. LNG represented
the exceedance probability reached 90% that quarter. The
18% compared to 16% in 2015, and diesel and biomass
last quarter of the year, the snow melting season, was
had a 4% and 3% share, respectively, of total electricity
very dry, about 98%, which added to the conditions of the
generation.
previous quarters, resulted in a 93% average exceedance
probability of rivers for 2016, which is the reflection of a
In terms of renewable solar and wind electricity generation,
much drier year than 2015 and one of the driest years since
they maintain their 6% share of total SIC electricity
statistics exist.
generation, 4% for wind and 2% for solar.
Annual Report Enel Chile 2016
135
Electricity generation of Enel Generación Chile represented
33% of the SIC’s total, and was slightly lower than the
34% the previous year. Hydroelectricity amounted to
9,084 GWh, 17% of total generation, lower than the 23%
in 2016. Thermal electricity generation of Enel Generación
Chile reached 8,724 GWh, which is equal to 16% of total
generation and greater than the 5,919 GWh generated in
2016 (11%), to a great extent, due to great coal and natural
gas generation. The Company’s coal generation went from
956 GWh in 2015 to 2,995 GWh in 2016. Therefore, the
Company’s coal generation represented 6% of the system’s
total generation, and natural gas represented 11%. Far
behind comes wind generation reaching 110 GWh (0.2%)
and fuel oil generation almost null (16 GWh).
Enel Generación Chile maintained its leadership position
in hydroelectricity reaching 48% of total hydro generation
(51% in 2015). The Company also made the greatest LNG
generation contribution to the system, representing 58%
of total LNG generation. Wind generation of the company
reached 110 GWh, 6% of total wind generation on the SIC.
During 2016, the average price of fuels decreased when
compared to 2015. Coal was the predominant fuel. The price
of coal declined 12% from the 93 US$/ton average price
in 2015 to roughly 82 US$/ton in 2016. The price of LNG,
which followed coal as major fuel in the SIC and the main
fuel used by Enel Generación Chile, declined nearly 5%
from 240 US$/Dm3 to 191 US$/ Dm3 in 2016. Liquid fuel
as an electricity generation source was used very little on
the SIC. Its price declined significantly again in 2016, diesel
approximately 19% and fuel oil dropped 27%.
The average cost of generation and the average price
of energy declined again in 2016 when compared to the
previous year. With regard to energy, the spot market price
at a relevant node in terms of consumption, such as the 220
kV Alto Jahuel Substation, dropped 36% compared to 2015.
The annual average price went from 92US$/MWh in 2015 to
59 US$/MWh in 2016.
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Annual Report Enel Chile 2016
The relevance of
liquefied natural gas
(LNG)
In terms of gas commercialization, Metrogas, Enap and Enel
Generación Chile, together exported natural gas to Argentina
during the winter season using the existing transportation
infrastructure that goes from the Quintero Terminal towards
Argentina. This represents an unprecedented event and a
significant milestone for Enel Generación Chile in the gas
commercialization business. The Company contributed
Enel Generación Chile entered the LNG market in 2009 when
with 58% of the total 277 MMm3 of gas exported through
the GNL Quintero regasification plant began operations,
Chile’s central region.
which was a project of national interest that required
significant public and private commitment to ensure the
With regard to the Northern Interconnected System (SING
country a supply of natural gas since the Argentine supply
in its Spanish acronym), the Company signed a contract
had been interrupted.
with GNL Mejillones to use the Terminal (TUA) to unload a
shipment of LNG. This transaction allowed renewing natural
Metrogas, Enap and Enel Generación Chile,
jointly
gas sales contracts with industrial customers located in
promoted the development of the GNL Quintero Terminal,
northern Chile and using natural gas for the generation
a construction that has played a crucial role in the supply of
units of Enel Generación Chile (Taltal and GasAtacama)
energy to the central region of Chile for both residential and
connected to the northern gas pipeline network. This has
industrial customers and also for the electricity system.
enabled the Company to currently be the main industrial gas
commercialization firm in northern Chile.
In 2016 Enel Generación Chile sold its entire 20% ownership
share of GNL Quintero to Enagás, a leader in natural gas
infrastructure, for US$ 197 million. This sales agreement
with Enagás does not compromise Enel Generación Chile’s
contracted regasification rights which amount to 5.4
MMm3/d (37% of the total capacity of the regasification
terminal), in force until 2035 that allow the Company to
satisfy the gas requirements of its power plants and also to
commercialize.
In terms of electricity operations, the availability of LNG
allowed to compensate for the lower level of hydroelectricity
available due to the extremely dry conditions during the
year. The rental contracts signed in 2016 with AES-Gener
regarding the Nueva Renca thermoelectric power plant were
also a contribution allowing this unit to supply the SIC with
natural gas fueled electricity in addition to San Isidro and
Quintero plants. Total generation of Enel Generación Chile
using natural gas (including operations of Nueva Renca) was
5.7 TWh throughout the year, which represented 11% of the
SIC’s total annual generation, 16% more than in 2015.
Annual Report Enel Chile 2016
137
Regarding LNG commercialization by using trucks as the
means of transportation, four satellite regasification plants
In the commercial front
(PSR in its Spanish acronym) began operations, all related
The commercial actions of Enel Generación Chile in 2016
to long term contracts signed by Enel Generación Chile
were consistent with its commercial policy whose purpose
with the GasValpo gas distribution companies (to supply
was to align the joint achievement of the following objectives:
La Serena-Coquimbo and Los Andes, in addition to Talca,
maintain industry leadership; manage risk properly and the
inaugurated towards the end of 2015), Intergas (to supply
company’s return facing the unfavorable conditions in the
Temuco) and GasStream to supply an industrial customer.
SIC during 2016; carry out actions that strengthen customer
Enel Generación Chile is pioneer in delivering gas to cities
loyalty, search for additional customers and increase internal
not connected to a gas pipeline. These events consolidate
commercial management efficiency. The main actions taken
the Company’s position as a LNG supplier.
are described below.
In terms of LNG trading activities, Enel Generación Chile
With regard to customer contract management, new
sold shipments of LNG.
electricity supply contracts were signed with important
mining and industrial customers, such as, Anglo American
During 2016, the Quintero terminal unloaded 39 shipments
and others.
of natural gas, a total 3,976 Mm3. Of that amount 1,322
Mm3 were for Enel Generación Chile, to satisfy its electricity
In August 2016, the results of the electricity supply bidding
generation requirements, and also to commercialize. Of the
LIC2015/01 for regulated customers in Chile was announced.
remaining amount, 870 Mm3 of gas were destined to other
Enel Generación Chile was awarded approximately 5,900
partners of the terminal, for electricity generation by other
GWh/yr. for a 20 year period between 2022 and 2041.
generators connected to the SIC.
Within this context, Enel Generación Chile continues
consolidating as a relevant player in the gas market in Chile,
and a pioneer in developing new activities in gas and LNG
commercialization.
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139
Main progress in 2016:
• The Raise Borer machine began the first digging phase of
the vertical pique in March.
• The excavation of the adduction tunnel downstream in the
intake area of the project began in May 2016.
• The distributor and the shield of unit 1 were received in
June 2016.
• The installation of the distributor and shield of unit 1 began
in July 2016.
• The installation of the structure to install the transmission
line began in September 2016.
• In November 2016 the tunnel boring machine (TBM)
finished the excavation of Ventana Lo Aguirre and began
digging the adduction tunnel downstream Ventana Lo
Aguirre.
Enel
Generación
Chile Projects
under
Construction
and
Optimization
Los Cóndores
Project
The Los Cóndores hydroelectric power plant project is
located in the San Clemente district, in the Maule basin and
Maule region. The project involves the construction of a pass
through power plant with a nominal installed capacity of
approximately 150 MW, through 2 vertical axle Pelton units,
that will use water from the Maule dam through a 12 km
adduction tunnel. The plant will be connected to the national
network (SIC) by an 87 km transmission line (2x220kV) to
the Ancoa substation.
The Environmental Qualification Resolution (RCA in its
Spanish acronym) of the optimization project of the power
plant and of the transmission line was obtained in November
2011 and May 2012 respectively. In November 2014, Chilean
Water Authority (DGA in its Spanish acronym) approved the
hydraulic works plan.
In late 2016, voluntary easement agreements were reached
for 93.2% of the total infrastructure required to connect
the power plant to the Central Interconnected System
(SIC). The final electricity concession process is underway
simultaneously to be used if necessary.
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• The construction crane has been operational since
• The installation of the Johnson filter to unit 1 finished in April.
November 2016.
The project is being primarily financed with funds generated
in June and phase 2 finished in July.
internally by the Company. The total investment is estimated
to be $407,928 million and $172,479 million were disbursed
• The construction of the geodesic structure on the north
by December 31st, 2016.
coal field finished in December, and should be operational
• The improvements to the existing landfill phase 3 finished
by 1/31/2017.
Optimization of
Bocamina Plant’s
Second Unit
The Bocamina is a coal fired generation power plant
located in the Coronel district (Concepción, southern Chile)
comprised by two units, 128 MW and 350 MW.
Bocamina unit 2 began commercial operations in October
2012, but was interrupted in December 2013 due to a judicial
order issued by the Concepcion Court.
Enel Generación Chile submitted a new environmental
impact study (EIA in its Spanish acronym) in December
2013, proposing a technical optimization plan. The EIA
was approved on March 16th, 2015 and obtained the
Environmental Qualification Resolution, RCA, approval on
April 2nd, 2015.
The plan involves the performing the following works:
• Installation of Johnson filters to both units to mitigate the
suction of microbiological organisms.
• Installation of a geodesic structure on the north and south
coal fields.
• Improvement of the landfill for ashes.
• Evaluation of a new landfill for ashes.
• Installing a rainwater treatment plant.
Main progress achieved in 2016:
• The installation of the Johnson filter to unit 2 finished in
January.
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141
As of December 31st, the Municipal Works Department
• Construction and startup of Lime silos;
(DOM in its Spanish acronym) of Coronel has not authorized
the construction of the dome on the south coal filed. On
• Construction and startup of sea water desalination system;
June 10th, 2016 the Comptroller Generals Office of Chile
issued a letter to the Coronel’s DOM indicating that it must
• Change the landfill for ashes to improve the manipulation
issue the permit as soon as possible. The DOM’s response
and elimination of waste resulting from the desulphurating
is pending.
process
If the construction permit to build the dome on the south coal
Main progress achieved in 2016:
field is issued by the Dom in January 2017, the construction is
expected to finish in 2018. The total estimated investment is
• Desalination plant: operational since June 15th, 2016.
$62,645 million. As of December 31st, 2016 a total $42,320
million had been disbursed.
• Ash management system: operational since June 16th,
Tarapacá DeSox &
DeNOx
environmental
equipment project
2016.
• Electric system: operational since June 24th, 2016.
• SDA and ancillaries: operational since August 1st, 2016.
• On November 4th, 2016 a provisional minute stating that
the project had become operational was signed.
• The performance tests with positive results of the
desalinization plant were completed on November 15th,
Tarapacá power plant is a 158 MW coal-fired thermal unit,
2016.
whose average annual generation is 1,100 GWh, connected
to the Northern Interconnected System (SING).
• On December 15th, 2016 the company announces that the
On June 23rd 2011, DS No 13 was issued to regulate the
emissions of thermal power plants, forcing the reduction
• The start-up of works that are pending will take place once
of SO2 and NOx emissions by June 23rd 2016. This above
the power plant can operate at full capacity, not needing to
implied adapting the Tarapacá power plant to comply with
stop the power plant again.
power plant is commercially operational.
the decree by installing a desulphurization system (DeSox)
and adopting methods to reduce NOx emissions(DeNOx).
The project is in its final stage, buy is still pending because
the power plant is currently limited to 70 MW capacity.
The scope of the activities to be developed is the following:
• Preliminary activities (removal of electrostatic precipitator,
demolition of foundations, demolition and construction of
new electro mechanic workshop at the power plant);
• Construction and startup of Desulphurating equipment;
• Installation of new
low NOx emission burners,
improvement of coal mills and installation of new OFA
(Over Air Force) systems;
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Annual Report Enel Chile 2016
The project is expected to finish in March 2017. The total
Therefore, although Enel Generación Chile has not reached
investment estimate is $68,350 million. As of December
a final decision regarding the cancellation of this project, it
31st 2016, $65,718 million have been disbursed.
will not continue developing the project as it is defined now
Enel Chile
Projects in
the Feasibility
Study Stage
due to current electricity market conditions and the impact
of such conditions on the profitability of the project.
After carrying out a consultation process with the indigenous
community, the Environmental Impact Study (EIA in its
Spanish acronym) of the Neltume hydroelectric project was
withdrawn on December 29th, 2015 to explore different
design alternatives taking the community’s proposals into
consideration.
During 2016, the Company worked on a new design for
the potential project including technical and environmental
aspects. This process continues and creating opportunities
for collaboration and common views, as far as possible,
In Enel Generación Chile, different growth opportunities
with communities and local authorities. Enel Generación
that respond to market requirements are continuously
Chile’s purpose is to achieve the development of the
analyzed. Since 2015, our projects’ portfolio has been
project in a harmonious way with the geographic, social
modified to increase flexibility by having options when
and environmental surroundings, in line with the energy
making investment decisions. The focus is placed on a
requirements of the region and the country.
portfolio with projects that are sustainable from a technical,
environmental, social and economic perspective. Expected
dates of commissioning of each of the projects are
constantly reviewed and are defined based on commercial
opportunities and on the Company’s capacity to carry out
these projects.
Taltal Converting to
a Combined Cycle
The projects currently being developed are the following:
The Taltal power plant is located in the Antofagasta Region. It
Neltume
Hydroelectric Project
is an energy efficiency project that uses the heat generated
by the existing gas turbines to produce steam. This is done
by installing a steam turbine and its generator, which allow
converting the existing Taltal open cycle plant into a gas-
fired combined-cycle plant. The Taltal power plant currently
has two 120 MW gas turbines. The additional capacity to
be added by the steam turbine would be approximately 130
The Neltume project is located in Los Ríos region, on the
MW and therefore, the Taltal power plant would achieve a
upper basin of the Valdivia River. It is a 490 MW installed
total capacity of 370 MW. The energy produced would be
capacity pass through hydroelectric plant to be connected
supplied to the SIC through the existing 220 kV double
to the SIC through 220 kV transmission line, 42 kilometers
circuit Diego de Almagro – Paposo transmission line.
long from Neltume to Pullinque.
Any generation project developed by the Company must
(DIA) of the optimization project was submitted to the
be supported by communities affected, must be technically
Environmental Evaluation Authority, SEA, for approval. The
viable and economically sustainable.
main modification relates to a change in the cooling system,
In December 2013, an Environmental Impact Declaration
which was originally designed as a wet system (using
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143
sea water) and is being modified to a dry cooling system
more than 500 people from the areas nearby the Pehuenche
using air condensers. The Company decided to suspend
Route.
the environmental approval process voluntarily in 2016 in
order to work on a memorandum of understanding, which
The next steps involve finishing the technical designs, and the
reached important agreements with the community. They
basic environmental studies to prepare the environmental
agreed on eliminating the maritime works and the maritime
impact study and begin to work with the communities to
concession application submitted to the Ministry of
develop the projects and initiatives developed together to
Defense. On Tuesday, January 17th, 2017 the Environmental
create shared value in the territory.
Qualification Resolution, RCA issued by the members of the
Antofagasta Region Environmental Evaluation Commission
Within the context of renewable energy in the country,
(CEA in its Spanish acronym) was a unanimous approval of
Vallecito wants to represent a sustainable contribution to
the project.
the growth of Enel Generación Chile.
The Company currently continues
implementing
its
community relations plan with Paposo and Taltal specifically
working on defining a proposal to develop the community.
Hydroelectric Project
Vallecito
Quintero Converting
to a Combined Cycle
The project is located in the Valparaiso Region. It is an energy
efficiency project that consists in using the heat generated
by the existing gas turbines to produce steam. This is done
by installing a steam turbine and its generator, which allow
The project is located in the Maule Region, specifically on
converting the existing open cycle Quintero plant into a gas-
the upper basin of the Maule River. It is a pass through
fired combined cycle. The facility currently has two gas fired
hydroelectric power plant with nearly 70 MW installed
turbines with a total 250 MW capacity. The steam turbine
capacity. The energy it produces is to be supplied to the
would add approximately 130 MW capacity to the Quintero
Interconnected System using the line that is currently in
power plant and therefore total capacity would reach 380
construction to evacuate electricity from the Los Cóndores
MW. The energy generated would be delivered to the SIC
Hydroelectric power plant.
through the existing Quintero-San Luis simple circuit 220 KV
line built to evacuate the combined cycle.
Vallecito has been designed using sustainable development
criteria, which consists
in developing the technical,
Considering that the area where the project is located is an
economic, environmental and social aspects of the project
industrial one, the Company has decided to strengthen its
considering high sustainability standards. This is why it
global strategy by developing projects that are sustainable
has included community collaboration processes that have
and involve the collaboration of neighboring communities
contributed to having a shared vision of the territory. Along
in order to reduce the environmental impact, and link the
with nine Pehuenche communities, the Company as another
local industry supply to the demand of port operations
member of the territory, have identified action plans that
companies, diversify productive activities, promote tourism
include aspirations, abilities and projects that aim towards
and local development.
the future they envision.
Technical feasibility studies of the project were performed
and also environmental campaigns and the implementation
during 2016, culminating in a series of field studies (drilling,
of the sustainable development plan by contributing to the
soil testing, and geophysical prospecting, among others);
shared vision activities identified for the territory.
Feasibility studies of the project were performed in 2016,
environmental campaigns and the implementation of the
sustainable development plan. Support was given to the
more than 45 workshops carried out with the participation of
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Annual Report Enel Chile 2016
Ttanti Combined
Cycle Power Plant
Project
The Ttanti Project is located near the Company’s existing
Atacama Power Plant, in Mejillones, a city in the Antofagasta
Public Land
Concessions for
Thermal Electric
Projects
Region. The project consists in building a gas-fired combined
On March 10th, 2014, Enel Generación Chile and the
cycle comprised of three blocks with approximately 1,290
National Asset Ministry signed a concession contract for
MW installed capacity to be implemented in stages.
the development of thermal electric projects on two lots.
The cooling system of the power plant is based on air
One of them is located in the Antofagasta Region north of
condensers. The electricity generated will be delivered to
Mejillones and the other in the Atacama Region, north of
the Interconnected System through a 220 kV double circuit
Caldera.
line about 0.5 kilometers long to the Atacama Substation.
The project is currently in the environmental evaluation
economically viable projects, and given the current market
stage. On February 4th, 2016, the Environmental Authority
conditions and the ongoing analysis of projects, Enel
issued ICSARA No 2, with observations to the project’s
Generación Chile decided to suspend these projects.
Within
the context of developing sustainable and
Addenda presented by the Company in December 2015.
During 2016, answers to the ICSARA questions were
prepared to be presented in March 2017.
Land Reserved for
Future Projects
As of December 2016, Enel Generación Chile has
approximately 78.8 hectares of immovable property (land),
for natural gas fired thermal plants and hydroelectric plants.
These assets are located in the Antofagasta Region (36.8
hectares.) and the Los Lagos Region (42 hectares).
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145
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Electricity
Distribution
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147
Enel Chile participates in the distribution business through
tariff setting process. The terms identify five new electricity
its subsidiary Enel Distribución Chile. Enel Chile’s has a
distribution-related services, of which the most significant
99.1% direct interest in Enel Distribución Chile.
are “Construction and installment of temporary junctions”
and “Lease of temporary junctions”.
Enel Distribución Chile’s concession is a high-density
consumption area, since it concentrates a large proportion
As of this date, the decree to set the new tariffs has not
of the country’s population, businesses parks, industrial
been published.
parks, small industry and commercial activities.
Other groups of electricity distribution companies that
participate in the electrical system are: Chilquinta Energía,
CGE Distribución, Sociedad Austral de Electricidad and
Empresa Eléctrica de la Frontera.
Infrastructure and
Networks Project
Enel
Distribución
Chile
Smart Meters Project
During 2016, Enel Distribución Chile completed the first
phase of the Smart Meter Project involving the replacement
of 50,000 meters. This solution that involves new meters,
data concentrators,
telecommunications
infrastructure
and centralized systems, allows remote and automated
management of meters through a two-way information
Enel Distribución Chile is the largest electricity distribution
flow. It contributes to the reliability, safety/security and
company in Chile in terms of electric energy sales. It
quality of the service and therefore benefits all electricity
operates in 33 districts in Metropolitan Region and its
industry players but particularly customers.
concession area covers more than 2,105 square kilometers,
including the areas covered by its subsidiaries Empresa
The Enel group has had more than 40 millions smart meters
Eléctrica de Colina Ltda. and Luz Andes Ltda.
installed and operational, especially in Italy and Spain,
for more than 15 years. This technological renovation in
In 2016, the Company provided electricity service to
Chile implied replacing 55,257 meters, installing 435 data
1,825,519 customers, 2.5% more than in 2015. Out of
concentrators and a Control Room where to centralize
the total, 89.5% are residential customers, 7.8% are
the operations of the ten districts selected: La Florida,
commercial customers, 0.7% are industrial customers and
Independencia, Macul, Ñuñoa, Providencia, Vitacura,
2.0% other customers. Likewise, during 2016, Chilectra
Santiago, Las Condes, La Reina and Estación Central.
sold 15,924 GWh to its final customers, a 0.2% increase
when compared to 2015.
During the year, Enel Distribución Chile successfully fulfilled
the Losses Plan developed and implemented to keep losses
at economically acceptable levels, recording as of December
a TAM indicator of 5.33%.
Distribution tariffs are set every four years based on cost
studies conducted by specialized consulting firms. In
late 2015, the National Energy Commission (CNE in its
Spanish acronym) issued R.E. N 699 that informs, among
other matters, the terms of the “Costs Study of Electricity
Distribution-Related Services” as part of the 2016-2020
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Annual Report Enel Chile 2016
Solar Energy
Projects
Solar Photovoltaic
During 2016, a program to significantly increase the sale of
photovoltaic kits to residential customers was implemented
and was very successful. By adopting a strategy that
integrated employees, training them in the use of this
technology, the Company was able to reach a price level
similar to that in Germany for kits between 1 and 5 kWp
capacity.
Throughout the year and particularly during the last quarter,
a pilot kit was launched among residential customers
reaching record sales. Sets of 1, 2 and 3 KWp were offered
including equipment and installation at very convenient
prices. In three months, 40 kits were sold, the highest sale
amount since the Net billing law began, adding 92 kWp to
residential customers.
Enel Distribución Chile also, for the second year in a row,
won two tenders of the Ministry of Energy’s Solar Public
Roof Program in Peñaflor and Calama.
The Implementation of the Cauquenes and Parral Solar
Public Roof Program projects also concluded in 2016 and
were inaugurated by Maximo Pacheco, the Secretary of
Energy.
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149
Energy Efficiency
Projects
Full Electric
The implementation of Enel Chile’s Full Electric system,
in addition to the application of the Hourly Residential
Plus Rate (THR Plus) that includes different kWh prices/
values offering the possibility to obtain discounts of up to
30% at certain times of the day. During 2016, Full Electric
apartments represented 41% of the all new apartments
built in Santiago. Consequently, by December, 2016,
“Full Electric” projects refers to the use of only electric
there are roughly 110,500 Full Electric apartments in the
equipment in an apartment, using high tech and efficient
country’s Metropolitan Region mainly in the central and
devices. “Full Electric” apartments
include kitchen
east central districts.
appliances, hot water solutions and heating systems. On
the other hand, “Solar Electric” refers to heating water
and fluids using a solar-electric mix solution, both energy
sources environmentally friendly.
Energy efficiency
projects for hospitals
During 2016, several “Full Electric’ agreements were signed
Enel Distribución Chile was awarded two highly complex
with real estate companies, such as, SuKsa, Hogares, Euro,
hospital projects through the tender organized by the
Ictinos, Cidepa, Sinergia and Fundamenta. Sales of this
Chilean energy efficiency agency, Agencia Chilena de
real estate product reached approximately $ 2,500 millions
Eficiencia Energética (ACHEE). Both projects involved
during the same period.
thermal power plants as requested by each hospital, the
Hospital in Castro and the Regional Hospital Dr. Guillermo
Grant Benavente
in Concepcion. This
represented
approximately $75 millions in revenues.
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Annual Report Enel Chile 2016
Innovation Projects
Chispers
Flex Energy Home
The Chispers project had an ambitious plan for 2016: enter
critical retail locations, public areas and significantly increase
its customer base. New charging locations were installed
The Flex Energy Home project seeks to develop an
in busy places within the Metropolitan region. A pilot was
automated tool to manage renewable energy generated by
installed in Transvip offering passengers going to the airport
at home.
to enjoy this mobile electric mobile service. A new modern
image of the product and application was released including
To achieve this, the system has a local means of storing
new user experiences.
energy and monitoring consumption that allows the
automation of energy management according to the users
need and market sign.
Electric Mobility
The Flex Energy Home product consists in photovoltaic
generation, battery
storage, energy management/
optimization and maintenance and assistance service. In
2016, the results of the quantitative study of the Flex Energy
Electric Bus
Home product were presented.
The Initiative developed and promoted by the Innovation
Chile team is already operating in Chile. The bus has been
The results: very high perception of the attributes and
approved by the transportation authority and has standards
differentiation of the concept proposed (above 90%), some
that are compatible with Transantiago, the urban public
challenges regarding the financial formula offered to final
transportation system that operates in the metropolitan
customers due to the amount of the investment required
area. This will allow verifying how this type of vehicle
and some commercialization challenges.
adapts to the current public transportation system that will
be tendered between 2018 and 2020 and will renew more
Significant commercial milestones of this product/service
than 6,000 buses. This is the first 100% electric vehicle.
are expected for 2017, which already has real estate
It reduces the energy cost by 70% when compared to a
companies interested in incorporating them into their
conventional bus, has free Wi-Fi and Chispers in each seat
residential projects.
(to charge cellular phones).
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Environment
and Sustainability
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153
During 2016 the Company implemented a multi-location
regarding the valuation of plaster and consequently allowing
Integrated Management System (SGI in its Spanish acronym)
its commercialization. This is additional to the sanitary
covering the operations of all facilities in Chile and obtained
authorizations obtained to perform the valuation of ashes
ISO 14,001, OHSAS 18,001 and ISO 9,001 certification for its
and plaster of the Thermoelectric Power Plant.
entire generation park. Consequently, as of December 31st,
2016, 100% of Enel Generación Chile’s installed capacity has
In 2016, the Tarapacá power plant implemented specific
a management system that monitors environmental, safety,
actions determined by the Clean Production Agreement
occupational health and quality conditions.
(APL in its Spanish acronym) of Tarapacá Region Shoreline.
Environmental
Management
Highlights
In July, 2016, progress was audited and 100% of specific
goals and actions were
reached by predetermined
deadlines. Also, during 2016, the employees of the Tarapacá
power plant participated in monthly workshops offered by
the Industrials Association that presented the power plant’s
progress in terms of environmental issues.
Regarding the commitments related to the Environmental
Qualification Resolution (RCA) of the Ralco hydroelectric
power plant, 2016 highlights are the following:
The San Isidro power plant, located in the Valparaiso Region,
continues working on the implementation of its plan to add
• As part of the power plant construction mitigation program,
an additional water supply for cooling purposes due to the
in January, Enel Generación Chile and Universidad de
deteriorated quality of its well water, which has limited
Concepción signed an agreement regarding reforestation
its electricity generation. The supply of water from wells
with native species. The University will be in charge of
located at a distance of the power plant were reduced 50%
implementation, planting from 2016 until 2020, a total 700
and therefore the truck trips needed to transport water
hectares with native trees.
were reduced. The Company has also continued working on
diversifying the possible solutions to this situation. Progress
• The activities to restore the lots used as dumps and
in 2016 was related to the technical and environmental
deposits during the contraction began in January. The goal
feasibility studies of the ZLD (Zero Liquid Discharge) project.
is to recuperate the land by planting native trees.
This project involves installing a well water treatment
plant that would allow extracting sulphate from the water
• In March, Enel Generación Chile officially handed over
before it begins the cooling process. Additionally, the
the cemetery to the El Barco community. The Bio-Bio
environmental authority responded favorably to the inverse
regional director of the National Indigenous Development
osmosis system, used to maximize the water available for
Corporation, (Conadi in its Spanish acronym) performed
reutilization after the cooling process, which was submitted
the honor. Building this cemetery was a commitment of
for approval to the Environmental Impact Evaluation System
Enel Generación Chile related to the construction of the
(SEIA in its Spanish acronym). The General Water Authority
Ralco Power plant.
(DGA) also determined the flow rate available for dilution at
the discharge area of the Aconcagua River.
• In March, a thematic map identifying the location of
heritage sites in the district was presented to the mayor
Regarding progress in the environmental management of
of the Alto Bio-Bio district, Nivaldo Piñaleo, to be exhibited
thermal plant Bocamina, the construction of the roof on the
in the local museum. Three thousand brochures written in
north coal field had been completed.
three languages (English, Spanish and Chedungun) were
During 2016, the environmental authority resolved in favor
of the project “Identifying and Protecting Heritage Sites”,
of the questions we submitted to the SEIA relative to
which Is one of the five compensatory measures defined
the use of coal from small local coal producers and also
by the environmental authority in 2006.
also donated to promote these sites. This activity is part
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Annual Report Enel Chile 2016
• The construction of the Lonquimay Bridge, one of the
compensatory measures related to the construction of the
Ralco Power plant, concluded in April. It is the access to
Green taxes
the New Barrio community in Lonquimay.
The entire thermal park of Enel Generación and GasAtacama
proposed a methodology to quantify emissions according to
• Within the context of Ralco’s RCA, the implementation
resolution SMA No 1,053. As of December 30th, 2016, all
proposal of the Long-Term Development Plan for the Ayin
proposals had been approved and therefore the Company
Mapu and El Barco communities that were relocated
will report emissions based on such methodology and taxes
was prepared in 2016. The proposal was defined by the
for 2017 will be paid based on such report.
New Projects
In November 2016 a memorandum of understanding was
signed by the Paposo community and Enel Generación
Chile as part of the Environmental Impact Study process
of the DIA for the thermoelectric Taltal combined cycle that
began in December 2013. This agreement allowed reaching
an agreement with the community that involve changes to
the project and a greater relationship with the community.
This protocol was included in Addendum 3 of the project’s
evaluation presented in December.
members of the communities, and their leaders through
workshops in which they Identified their Interests, and
opportunities for Improvement, by defining the activities
and projects they expect to begin developing in 2017.
Thermoelectric
power plant
emission standard
compliance
The thermoelectric park of Enel Generación Chile and its
subsidiary GasAtacama S.A. continue working to comply
with the latest versions of protocols and guides defined by
D.S No 13/11 Thermoelectric Power Plant Emission Standards
issued by the Environment Superintendence. During 2016,
the power plants also concluded the projects necessary to
comply with the MP, SO2, and NOx standards established by
the regulation. Consequently, the Tarapacá Thermoelectric
Power Plant has a semi dry type desulphurizer and a low NOx
burner system to reduce NOx emissions. The Taltal power
plant has implemented a demineralized water injection system
that ensures compliance with the NOx standards applicable to
diesel operations.
In October 2016, the SMA published the standards compliance
verification report informing on the compliance of most power
plants to standards in force in 2015. This report is based on
the emissions data uploaded quarterly by each plant to the
“Thermoelectric Power Plant” portal of the SMA. Based on
this verification, on December 31st, 2016, the report states that
most of the Electricity Generation Units (UGE in its Spanish
acronym) of the Company comply with required standards.
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155
Sustainability
Responsible growth is the guideline of the Sustainability
Policy of Enel Chile. Establishing a responsible relationship
with the community is one of the main pillars to reach its
goal to position the strategic concept of Open Power and
also to create shared value in the societies in which it
operates.
During 2016, the Company consolidated its structure
geographically, organizing teams in different locations.
It also defined criteria and principles to create righteous
relationships, in which stakeholders are involved since the
design stage of the project, assuring equal opportunities
of dialogue and guaranteeing access to the information
required to make decisions.
The objective is to develop long-term relationships of trust
with the stakeholders present in the respective territory, to
maintain continuous and consistent relationships in order
to minimize and mitigate the risks related to the company’s
integration into a certain territory.
Enel Chile focuses its sustainability plan on the vision
of Open Power, on complying with the Sustainable
Development Objectives of the United Nations, on creating
shared value and complying with its Human Rights Policy.
Open Power Vision
Enel Generación has identified the central aspect of its
business to be the “Open” concept, a cornerstone of its
strategy and operations: Open energy to more people;
Open energy to new technologies; offer people new ways
to manage energy; add new uses to energy; add more
alliances to energy.
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Objectives of
Sustainable
Development
• Decent job and economic growth: Promote sustainable,
inclusive job opportunities and economic growth for
500,000 people.
• Action for the climate: Adopt initiatives to fight climate
change to reach the goal to carbon neutral by 2050.
In 2015, the United Nations adopted the new Sustainable
Development Objectives (ODS in its Spanish acronym).
This initiative invites companies to use creativity and
innovation to face sustainable development challenges,
such as poverty, gender equality, clean water and energy,
and climate change.
Shared Value as a
long-term strategy
At the time, Enel announced the Group’s intention to
relevant social matters into business opportunities that lead
contribute to achieving four of the 17 objectives. Particularly,
to benefits for society and the Company.
Enel Generación Chile’s long-term vision is to transform
Enel and its companies worldwide have focused on the
following objectives:
• Quality education: Support educational activities for
400,000 people by 2020, similar to those already underway,
such as the scholarship program in Latin America.
• Affordable energy: Commit to promoting affordable,
sustainable, and modern energy through the initiative
Enabling Electricity that is to benefit three million people,
mainly in Africa, Asia and Latin America.
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157
Human Rights Policy
Sustainability Plan
The Company approved its Human Rights Policy in 2013.
The guidelines of the Sustainability Plan of Enel Chile 2016-
It represents Enel Chile’s commitment and responsibility
2020 are consistent with the sustainable development
regarding social and corporate sustainability. The document
pillars adopted by the Company: occupational health and
sets out the Company’s commitment to all human rights,
safety, economic and financial value creation, solid corporate
particularly those that affect corporations and the activities
governance and environment. The specific approach of
carried out by all Company employees in Chile.
this plan in based on five implementation perspectives:
Within this framework, the company performed a Human
relationship with local communities, customer relations
Rights diagnosis (Due Diligence) in Chile to identify situations
management, personnel motivation and development,
at risk and prevent them. The results of the diagnosis were
decarbonization of the energy matrix.
innovation
and
operational
efficiency,
responsible
disclosed to the stakeholders.
Along with these guidelines and perspectives, another core
element that contributes to the plan is the identification
of the stakeholders’ priorities. The identification of these
priorities is achieved by performing a materiality matrix.
This materiality study identified demographic changes and
a growing middle class in the country. Consequently, new
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Annual Report Enel Chile 2016
customer demands arise, such as, access to information
technology, digitalization of information and decentralized
energy management.
The work carried out according to these guidelines led Enel
Generación Chile to focus its social and environmental
investments on projects related to electricity access,
operational
efficiency,
environmental
improvements
and local economic development. Regarding personnel
motivation and development, several programs related to
inclusion and diversity have been launched. In power plant
operational efficiency and environmental improvements,
some emblematic projects have been implemented, such as
the dome covering the coal field of Bocamina power plant.
Finally, regarding the energy matrix, hydroelectricity has
reached 50% of Enel Generación’s total matrix. With regard
to the relationship with the community, the Company has
developed projects in energy access, education and social
and economic development involving 600,000 beneficiaries.
Regarding the performance of Enel Distribución Chile in
2016, we want to highlight its perspectives of “Customer
Relations Management”, “Innovation and Operational
Efficiency”, and “Responsible Community Relations”.
Customer relations management achieved increasing the
number of customers 2.4% and installing 50,000 smart
meters. From the perspective of innovation and operational
efficiency, the company introduced the first electric bus
to offer transportation to the residents of Santiago. This
initiative is related to the Atmospheric Prevention and
Decontamination Plan (PPDA in its Spanish acronym) of
the Metropolitan Region. To contribute to this plan, Enel
Distribución Chile also Introduced 10 electric cars to its
corporate transportation fleet and has promoted electric
vehicles among its employees favoring the replacement of
traditional cars. Within the scope of responsible relations
with communities, Enel Distribución Chile continues
developing the “Enel in your Neighborhood” program. This
program seeks sensitizing customers to the efficient use of
energy and streamline the normalization of customers’ past
due electricity bills. This initiative is being carried out in 33
districts of the concession area and has benefitted 120,000
people.
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159
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Participation in
Subsidiaries &
Associates and
Schematic table
Annual Report Enel Chile 2016
161
Direct and
Indirect
Economic
Interest
Company
Enel Generación Chile
Eólica Canela
Pehuenche
HidroAysén
Aysén Energía
Aysén Transmisión
Enel Distribución Chile
Transquillota
GasAtacama Chile
Electrogas
GNL Chile
EE Colina
Luz Andes
SIEI
Cameros
Gasoducto Atacama Argentina
Gx: Generation
Dx: Distribution
Tx: Transmission
Ox: Gas pipeline, others
Business Segment
Gx
Gx
Gx
Gx
Gx
Tx
Dx
Tx
Ox
Ox
Ox
Dx
Dx
Ox
Ox
Ox
Ownership Share
59.98%
45.77%
55.57%
30.59%
30.59%
30.59%
99.09%
30.52%
61.03%
25.49%
19.99%
99.09%
99.09%
100.0%
57.50%
61.03%
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Annual Report Enel Chile 2016
Organizational
Structure
ENEL CHILE S.A.
99.8967%
99.09062105%
59.98%
SERVICIOS
INFORMATICOS
E INMOBILIARIOS LTDA,
57.50%
SOC, AGRICOLA DE
CAMEROS LTDA,
0.1033%
ENEL DISTRIBUCIÓN
CHILE S.A.
ENEL GENERACIÓN
CHILE S.A.
2.6299%
97.3701%
GASATACAMA
CHILE S.A.
0.10%
99.90%
LUZ ANDES LTDA,
0.0002%
99.9998%
EMPRESA
ELECTRICA DE
COLINA LTDA,
Annual Report Enel Chile 2016
163
164
Annual Report Enel Chile 2016
Significant
Events
Annual Report Enel Chile 2016
165
Significant
Events or
Essential Facts
Chile and its shares in the Securities Registry, according
to a certificate issued by this entity, and that it has made
the respective listings in the Santiago Stock Exchange,
the Valparaíso Stock Exchange, the Chile Electronic Stock
Exchange and the New York Stock Exchange of United
States of America, all in accordance with the decision made
at the Extraordinary Shareholders’ Meeting of Enersis
In accordance with Articles 9 and 10, section 2, of the
Américas S.A. (formerly Enersis S.A.) held on December
Securities Market Law N° 18,045 and as established under
18th, 2015. Therefore, the shares of the divided equity of
General Norm N° 30 of the Superintendence of Securities
Enersis Chile should be distributed free of any payment
and Insurance, the following significant events were
to the shareholders of Enersis Américas S.A. entitled to
informed:
receive them.
Enel Chile S.A.
(Ex – Enersis Chile S.A.)
2. The Board of Directors of Enersis Chile agreed to carry out
the distribution and delivery of a total of 49,092,772,762
shares issued by Enersis Chile, all nominative, of a unique
and single series and without nominal value, on April 21st,
2016, to the shareholders of Enersis Américas that were
listed in its shareholders’ registry at midnight the day
• On March 22nd, 2016 the following was informed as a
before April 21st, 2016.
significant event:
Pursuant to what was resolved by the Extraordinary
Shareholders’ Meeting held January 29th, 2016, that
approved the spin-off of Enersis S.A. as of December 18th,
2015, the spin-off has become legally effective as of March
1st, 2016, at which time Enersis Chile S.A. (‘Enersis Chile”)
began to exist and the former Enersis S.A. became “Enersis
Américas S.A.”
As agreed by
the above-mentioned Shareholders’
Meeting, Enersis Chile applied to be registered in the
Securities Register of the Superintendence of Securities
and Insurance and in the stock exchanges for it and its
corresponding shares, in which the shares of Enersis
Américas S.A. are currently traded. The distribution and
physical delivery of the shares of stock issued by Enersis
Chile shall take place on the date resolved by the Board of
Directors of Enersis Chile, following the registration of the
Company and its shares in the Securities Register of the
Superintendence of Securities and Insurance and stock
exchanges of the country and following the compliance of
all legal and regulatory requirements to that effect.
• On April 14th, 2016 the following was informed as a
significant event:
1.- To announce that, on April 13th, 2016, the Superintendence
of Securities and Insurance proceeded to record Enersis
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Annual Report Enel Chile 2016
3. This distribution to the shareholders of Enersis Américas
A new Board of Directors has been appointed for a three-
S.A. will be carried out by exchanging one share of
year period, comprised by the following members:
Enersis Chile for each share of Enersis Américas S.A.
registered under the shareholders name in the registry at
Mr. Herman Chadwick Piñera
midnight the day before April 21st, 2016. From April 21st,
2016 onwards, the shares issued by Enersis Chile may be
Mr. Giulio Fazio
officially quoted in the stock markets mentioned above.
Mr. Vicenzo Ranieri
4. Representative titles of the shares in Enersis Chile will
be available for shareholders of Enersis Américas S.A.
Mr. Salvatore Bernabei
to be withdrawn on April 21st, 2016 at DCV Registros
S.A. offices, located at 770 Huérfanos Ave., 22nd floor, in
Mr. Fernán Gazmuri Plaza
Santiago, from Monday through Thursday from 9:00 am
to 5:00 pm, and Friday from 9:00 am to 4:00 pm.
Mr. Pablo Cabrera Gaete
• On April 26th, 2016 the following was informed as a
Mr. Gerardo Jofré Miranda.
significant event:
The Securities and Exchange Commission of the United
29th, 2016 appointed Mr. Herman Chadwick Piñera as
States of America declared the Registration Statement
Chairman of the Board, Mr. Giulio Fazio was appointed
on Form F-6 effective, which was filed to register the
Vice Chairman of the Board of Directors and Mr. Domingo
American Depositary Receipts program issued by the
Valdés Prieto was appointed Secretary of the Board of
The Board of Directors of Enersis Chile held on April
Enersis Chile S.A., and to register the Company as
Directors.
an issuer of American Depositary Shares (“ADS”) in
accordance with the aforementioned program. Therefore,
Similarly, in the aforementioned meeting, the Directors’
as of such date, Enersis Chile S.A has carried out the
Committee, in accordance to the Chilean Companies
physical distribution of its ADRs.
Act Law N° 18,046 and the Sarbanes - Oxley Act, was
appointed. The Directors’ Committee is composed of
A copy of the Form F-6 and its annexes will be available to
Directors Fernán Gazmuri Plaza, Pedro Pablo Cabrera
the shareholders and the general public beginning today
Gaete and Gerardo Jofré Miranda. As required by the
on the Company’s website, www.enersischile.cl.
provisions of Circular N° 1,956 of the Superintendence
of Securities and Insurance, the three aforementioned
The Ordinary Shareholders Meeting held Abril 28th, 2016,
members are declared to be independent directors.
agreed to distribute a minimum obligatory dividend (that is
reduced by the pro-forma interim dividend paid in January
The Board of Directors of the Company has appointed
2016) and an additional dividend of $ 125,919,205,080,
Mr. Fernán Gazmuri Plaza as the Financial Expert and the
equivalent to $ 2.56492 per share.
Directors’ Committee has appointed Mr. Fernán Gazmuri
Since the interim dividend has already been paid, the
Domingo Valdés Prieto as Secretary of the Directors’
Plaza as Chairman of the Directors’ Committee and Mr.
remaining definitive dividend for $ 102,769,943,963,
Committee.
equivalent to $2.09338 per share dividend will be
distributed and paid.
Annual Report Enel Chile 2016
167
• On May 5th, 2016 the following was informed as a
results. The financial effects of these contracts on Endesa
significant event:
Chile will depend on factors that will have an influence on
the behavior of the electricity market during the 10 year
Empresa Nacional de Electricidad S.A. (“Endesa Chile”) has
life span of the contracts, such as, but not limited to, the
informed that on this day it has signed with Anglo American
price of fuel, hydrology, growth of demand, and international
Sur S.A. (“Anglo American Sur”) three electricity supply
inflation indexes, which to date cannot be determined for
contracts for Anglo American Sur operations, whose annual
that period.
consumption is estimated to amount to 2 TWh. Supply will
begin in January 2021 for a 10 year term.
• On June 9th, 2016, the following was informed as a
The price and indexation conditions of the contract are
significant event:
consistent with long-term contract market conditions. As
Empresa Nacional de Electricidad S.A. (“Endesa Chile”)
referential information, and order-of-magnitude estimate of
agreed and signed a contract for the sale of its shares in
the amount that such supply contracts could involve, the
GNL Quintero S.A., equivalent to 20% of the equity of such
expected average annual sales of these contracts would be
company, to Enagás Chile S.p.A (“Enagás Chile”), which is a
equivalent to 8% of Endesa Chile’s total contractual sales
subsidiary 100% controlled by the Spanish company Enagás
expected for that time period.
S.A. for US$ 200 million, to be paid on the closing date of
At this time it is not possible to reasonably quantify the
the transaction.
financial effects these contracts will have on the Company’s
The sale of this stake to Enagás Chile is subject to the
compliance with standard conditions for this type of
transaction,
including that other GNL Quintero S.A.
shareholders’ not exercise their pre-emptive right.
The financial effect of the transaction for Enersis Chile would
be a net income of approximately US$ 83 million.
• On July 27th, 2016, the following was informed as a
significant event:
During the Meeting held July 27th, 2016, the Board of
Directors of the Company unanimously appointed Mr. Nicola
Cotugno as Chief Executive Officer, replacing Mr. Luca
D’Agnese who submitted his resignation during the same
session. Mr. D’ Agnese’s resignation, and the appointment
of Mr. Cotugno, will become effective on August 16th, 2016.
• On August 2nd, 2016, the following was informed as a
significant event:
In accordance with Article 63 of the Chilean Corporations
Law N° 18,046, the Board of Directors of Enersis Chile
S.A. (“Enersis Chile” or the “Company”), pursuant to
the Company’s by-laws has summoned an Ordinary
Shareholders’ Meeting to be held on October 4th, 2016 at
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Annual Report Enel Chile 2016
10:00 a.m. at the Enersis Group Stadium located at 858
2. Modification of Article Four in order to insert a comma (,)
Carlos Medina Ave., Independencia District, in Santiago.
in the first paragraph between the words “abroad” and
The issues to be discussed at the Extraordinary Meeting of
with “related companies, subsidiaries and affiliates” in
Shareholders will be the following:
letter d), resulting in the text of Article Four reading as
“the exploration” and to replace the words “subsidiaries”
1. The modification of Article One in order to change the
follows:
Company’s name from Enersis Chile S.A., to Enel Chile
“Article Four: The purpose of the Company shall be, in the
S.A., and to add the term “public” before the expression
country or abroad, the exploration, development, operation,
“ limited liability stock ccorporation”, resulting in the text
generation, distribution, transmission, transformation or
of Article One reading as follows:
sale of energy, in any of its forms, directly or through other
“Article One: An public limited liability stock corporation
providing engineering consulting services, in the country
which is to be named “Enel Chile S.A.” (“the Company”),
or abroad. An additional purpose shall be to invest and
and shall be governed by these by-laws and, in their
manage its investments in subsidiaries and affiliates such
absence, by legal and regulatory norms that apply to this
as generators, transmission companies, distributors, or
companies, as well as telecommunications activities and
type of company.”
electricity traders or whose business activity corresponds
to any of the following: (i) energy in any of its forms or
nature, (ii) providing utility services or services whose main
input is energy, (iii) telecommunications and information
technology services, and (iv) business intermediation
via the Internet. In order to comply with its purpose, the
Company will carry out the following activities:
a) Promote, organize, establish, modify, dissolve or liquidate
companies of any kind, whose corporate purpose is
related to the purposes of the Company.
b) Propose investment, financing and trade policies to its
subsidiaries, as well as the accounting systems and
principles to which they must adhere.
c) Oversee the management of its subsidiaries.
d) Loan its related companies, subsidiaries and affiliates the
financial resources necessary to develop their businesses
and,
furthermore, provide management services
including financial, commercial, technical and legal, and
audit services to its related companies, subsidiaries and
affiliates; and, in general, services of any nature that may
be necessary to improve their performance.
Annual Report Enel Chile 2016
169
In addition to its main purpose and always acting within the
“Article 43: In all matters that are not expressly addressed
limits established by the Investment and Financing Policy
within these by-laws, the provisions of Law 18,046, its
approved at the Shareholders’ Meeting, the Company may
amendments and regulations applicable to public limited
invest in:
liability stock corporations and those contained within
Decree 3,500 Article 111.”
First. The acquisition, development, construction, rental,
management, intermediation, trading and disposal of all
4. Delete the following transitory provisions: Transitory
kinds of movable and immovable assets, either directly or
Article Two, Transitory Article Four, Transitory Article Five,
through subsidiaries and affiliates.
Transitory Article Six, Transitory Article Seven, Transitory
Article Nine and Transitory Article Ten, and
Second. All types of financial assets, including stocks,
bonds and debentures, trade bills, and, in general, all kinds
5. The adoption of agreements that are necessary to
of transferable securities and contributions to companies,
carry out the proposed by-law reform, under the terms
either directly or through subsidiaries and affiliates”
and conditions that shall ultimately be approved by the
Shareholders Meeting, and also to grant the necessary
3. Modification of Article 43 to insert the phrase “applicable
powers of attorney, especially to legalize, complete
to the public limited liability stock corporations” between
and execute agreements adopted by said Shareholders
the expressions “Regulations” and “and the ones
Meeting.
relevant”, resulting in the text of the Article 43 reading as
follows:
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Annual Report Enel Chile 2016
• On October 4th, 2016, the Extraordinary Shareholders’
Ordinary Shareholders’ Meeting of Enersis Chile S.A,
Meeting, in compliance with the quorum required by
currently Enel Chile S.A., held on April 28th, 2016, with
law and the Company’s by-laws, resolved to change the
respect to the Company’s 2016 Dividend Policy. The
Company’s current name from Enersis Chile S.A., to “Enel
Company will distribute an interim dividend of up to 15%
Chile S.A.”.
of the net income as of September 30th, 2016 as shown in
the Financial Statements of Enel Chile S.A. on that date,
• On November 25th, 2016, the approval by the Board of
to be paid in January 2017.
Directors of Enel Chile S.A. of the Industrial Plan of the
Enel Chile Group for the period of 2017-2019 was informed
Pursuant to what has been stated before, the Board has
as a significant event.
also unanimously agreed to pay an interim dividend of
$0.75884 per share, attributable to the 2016 fiscal period, to
A copy of the aforementioned Industrial Plan of the Enel
be paid on January 27th, 2017. This amount is equal to 15%
Chile Group for the period of 2017-2019 can be obtained
of the net income of Enel Chile as of September 30th, 2016,
from the Company’s website, www.enelchile.cl.
considering the Financial Statements of the Company on
Taking into consideration that the content of the referred
that date.
to Industrial Plan follows and is based on projections and
Pursuant to the Bulletin N° 660 of 1986, issued by this
hypotheses that might or might not come true in the future,
Superintendence, we are hereby sending Form N° 1 that
its effects cannot be determined at this date.
confirms the information related to the agreed upon interim
• On November 25th, 2016 the Company in formed as a
significant event that the Board of Directors of Enel Chile
S.A. (“Enel Chile” or the “Company”), has unanimously
resolved, to augment the information related to the
dividend.
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171
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Annual Report Enel Chile 2016
Identification of
Subsidiaries and
Associate Companies
Annual Report Enel Chile 2016
173
AGRÍCOLA DE CAMEROS
Telephone N°
(562)2713 5000
Telephone N°
(562) 2713 5000
Name
Sociedad Agrícola de Cameros Limitada
Type of Company
Limited Liability Company
Taxpayer ID
77,047,280-6
Address
Camino Polpaico a Til-Til, S/N Til-Til, Chile
Telephone N°
(56 2) 2378 4700
Subscribed and Paid Capital (Th$)
5,738,046
Corporate Purpose
The purpose of the company is the exploitation
of agricultural land.
Core Business
Real estate and agriculture
Administration
By-laws include a Board of Directors:
Directors
Hans Knoop Frick
Francisco Silva Bafalluy
Hugo Ayala Espinoza
María Cristina Auad Faccuse
Cristián Guadi Imbarack Dagach
Alternate Directors
Solange Zincke Cavalieri
Ingrid Morales Ávila
Jorge Geldres Reyes
Andrés Garib Auad
Senior Executives
Hugo Ayala Espinoza
Chief Executive Officer
Business Relations
Services Contract by Enel Chile: Provision of
Internal Audit and Compliance Control Services,
Price: amounts expressed in per working hour
that Enel Chile’s staff assign to the contracted
services.
Enel Chile’s Stake (Direct and indirect)
57.50% - Unchanged
AYSÉN ENERGÍA
Name
Aysén Energía S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,091,595-5
Address
383 Miraflores, office 1302, Santiago, Chile.
Subscribed and Paid Capital (Th$)
4,900
Subscribed and Paid Capital (Th$)
22,368
Corporate Purpose
Comply with the ruling of the Free Competition
Defense Tribunal in the first article of Resolution
No 30 dated May 26th, 2009; to fulfill the
commitment made by HidroAysén S.A. with the
community of the XI Region of Aysén, within
the framework of the development of the Aysén
Hydroelectric Project, to provide the region
with an electricity supply at a cost below the
current value, through the development, funding,
ownership and operation of projects that
generate and transmit electricity in that region.
In order to comply with the above, the company
may develop the following activities, among
others: a) produce, provide and commercialize
electricity, by any means of generation; b)
electricity transportation; c) provide services
related to its Corporate Purpose; and d) to
request, obtain or acquire and benefit from
the concessions, rights and permits that are
required.
Core Business
Electricity generation and transmission (project)
Directors
Carlo Carvallo Artigas
Bernardo Larrain Matte
Luis Ignacio Quiñones Sotomayor
Juan Eduardo Vasquez
Ramiro Alfonsín Balza
Luis Felipe Gazitúa Achondo
Alternate Directors
Claudio Helfmann Soto
Eduardo Lauer Rodríguez
Bernardo Canales Fuenzalida
Sebastián Moraga Zúñiga
Rodrigo Pérez Stiepovic
Rodrigo Paredes Barría
Senior Executives
Camilo Charme Ackermann
Chief Executive Officer
Business Relations
The company does not have business
relationships with Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
30.59% - Unchanged
AYSÉN TRANSMISIÓN
Name
Aysén Transmisión S.A.
Type of Company
Privately held corporation, registered in the
Securities Register of the SVS.
Taxpayer ID
76,041,891-9
Address
383 Miraflores, office 1302, Santiago, Chile.
Corporate Purpose
Develop and alternatively or additionally manage
electricity transmission systems required
in the hydroelectric generation project that
HydroAysén plans to build in the Aysén Region.
In order to fulfill its purpose, its business
activities include the following: a) the design,
development, construction, production,
ownership, maintenance and operation of
electricity transmission systems, b) electricity
transportation, and c) providing services related
to its Corporate Purpose.
Core Business
Electricity transmission
Directors
Carlo Carvallo Artigas
Bernardo Larraín Matte
Ignacio Quiñones Sotomayor
Juan Eduardo Vasquez
Luis Felipe Gazitúa Achondo
Ramiro Alfonsín Balza
Alternate Directors
Claudio Helfmann Soto
Eduardo Lauer Rodríguez
Bernardo Canales Fuenzalida
Sebastián Moraga Zúñiga
Rodrigo Pérez Stiepovic
Rodrigo Paredes Barría
Senior Executives
Camilo Charme Ackermann
Chief Executive Officer
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
30.59% - Unchanged
CELTA (Merged with
GasAtacama Chile)
Name
Compañía Eléctrica Tarapacá S.A.
Type of Company
Privately held corporation
Taxpayer ID
96,770,940-9
Address
76 Santa Rosa Ave.
Santiago, Chile
Telephone N°
(562) 2630 9000
Subscribed and Paid Capital (Th$)
331,770,543
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Annual Report Enel Chile 2016
Corporate Purpose
Exploitation of electricity production,
transmission, distribution and supply, both locally
and abroad, for which it may obtain, acquire
and benefit from the respective concessions
and grants. Additionally, its purpose shall
also be: the purchase and sale of natural gas,
liquefied natural gas and diesel oil; to promote
and develop renewable energy projects; to
identify and develop Clean Development
Mechanisms (Mecanismos de Desarrollo
Limpio: MDL) and to act as depositary and
trader of Emissions’ Reduction Certificates
obtained from said projects. Additionally, the
company will make or participate in all kinds of
investments, especially related to the electrical
business. It may particularly make, maintain
and manage investments in energy projects
linked to the companies Gasoducto Atacama
Compañía Limitada, Gasoducto Cuenca
Noroeste Limitada and Nor Oeste Pacífico
Generación de Energía Limitada; as well as in
Administradora Proyecto Atacama S.A. or in
its legal successors. Likewise, the Corporate
Purpose shall cover the renting, purchase, sale,
administration and exploitation of all kinds of
movable property, real estate, securities and
other negotiable instruments, through its own
account or through third parties. In addition,
the Corporate Purpose includes carrying out
studies and consultancies, and providing all
kinds of services including: engineering services,
work inspections, inspections of materials
and equipment, the reception of materials and
equipment, laboratory services, lending expert
opinion, extending business management
services for the company’s several fields,
providing environmental consultancies --such
as carrying out environmental impact studies--,
and providing other consultancy services in
general. Likewise, its purpose shall also be the
catchment, extraction, treatment, desalination,
transportation, distribution, trade, delivery and
supply of sea water in every state, be it natural,
potable, desalinated, or else treated, which can
be carried out by its own account or through
third parties.
Core Business
Electricity Generation
Board of Directors
Humberto Espejo Paluz
Mario Enero Bravo
Raúl Arteaga Errazuriz
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
(i)
(ii)
Contract for Service Provision by Enel Chile:
Internal audit and compliance control. Price:
UF amount per worked hour that Enel Chile’
staff dedicated for the provision of services.
Contract for Service Provision by Enel
Chile: Communication, Global Services,
Human Resources Administration and
Equity Management. Price: monthly amount
expressed in U.F.
Senior Executives
Camilo Charme Ackerman
Chief Executive Officer
Business Relations
The Company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
30.59% - Unchanged
ENEL DISTRIBUCIÓN
CHILE S.A.
Name
Enel Distribución Chile S.A.
Type of Company
Publicly Traded Company
Taxpayer ID
96,800,570-7
Address
76 Santa Rosa, 8th floor. Santiago, Chile
Telephone No
(56 2) 2675 2000
Subscribed and Paid Capital (Th$)
230,137,980
Corporate Purpose
Operate the distribution and sale of electric,
hydraulic, thermal or any other kind of energy
in Chile or abroad, as well as the distribution,
transport and sale of fuels of any kind, thus
supplying this energy or fuel directly or through
other companies to as many customers as
possible.
Core Business
Electricity distribution.
Board of Directors
Gianluca Caccialupi (Chairman)
Francesca Romana Napolitano (Vice Chairman)
Monica Hodor
Iris Boeninger von Kretschmann
Hernán Felipe Errázuriz Correa
Senior Executives
Andreas Gebhardt Strobel (Chief Executive
Officer)
Simone Tripepi
Andrés González Cerruti
Francisco Miqueles Ruiz
Daniel Gómez Sagner
Pietro Corsi Misle
Horacio Aránguiz Pinto
Enel Chile’s Stake (Direct and Indirect)
61.49%
Proportion on Enel Chile’s Assets
0.17%
GasAtacama Chile S.A. acquired Compañía
Eléctrica Tarapacá S.A. on November 1st, 2016.
CENTRALES
HIDROELECTRICAS DE
AYSÉN
Name
Centrales Hidroeléctricas de Aysén S.A.
Type of Company
Privately held corporation, incorporated in
Santiago, Chile, registered in the Securities
Register of the SVS.
Taxpayer ID
76,652,400-1.
Address
In Santiago, Chile: 383 Miraflores, office 1302
In Coyhaique, Chile: 260 Baquedano
In Cochrane, Chile: 324 Teniente Merino
Telephone No
(562) 2713 5000
Subscribed and Paid Capital (Th$)
185,045,662
Corporate Purpose
The development, finance, property and
exploitation of a hydroelectric project in the XI
Region of Aysén, of an estimated capacity of
2,750 MW through five hydroelectric power
plants, collectively Named “Aysén Project”. To
fulfill its purpose, the company may engage
in the following activities: a) generate and
transport electricity; b) supply and commercialize
electricity to its shareholders; c) manage,
operate and maintain hydraulic infrastructure,
electricity systems and hydroelectric power
generating plants.
Core Business
Electricity generation (project).
Directors
Carlo Carvallo Artigas
Bernardo Larraín Matte
Luis Ignacio Quiñones Sotomayor
Juan Eduardo Vasquez
Luis Felipe Gazitúa Achondo
Ramiro Alfonsín Balza
Alternate Directors
Bernardo Canales Fuenzalida
Eduardo Lauer Rodríguez
Claudio Helfmann Soto
Rodrigo Pérez Stiepovic
Sebastián Moraga Zúñiga
Rodrigo Paredes Barría
Annual Report Enel Chile 2016
175
Business Relations
(i) Contract for services provision by Enel Chile:
Comprehensive Supply Service; Materials
Procurement Management; Contracting
of Works, Services and Consultancies;
Reception, Storage and Supply of Recurrent
and Non-recurrent Materials; Sales Agent.
Price: Mark-up over average price of
consumed materials.
Contract for services provision by Enel
Chile: Financial Management, management
and corporative services. Price: monthly
amount fixed in UF.
(ii)
(iii) Contract for utilization of Lo Sáez
Stadium, located at 858 Carlos Medina,
Independencia. Price: Monthly amount fixed
in UF per Chilectra worker.
(iv) Trade accounts receivable
(v)
Contract for administration services
provision by Enel Chile. Price: Monthly
amount fixed in UF.
Alternate Directors
Andrés Opazo Irarrázaval
Patricio Pérez Cotapos
Luis Le Fort Pizarro
Juan Oliva Vásquez
Rodrigo Bloomfield Sandoval
Alex Díaz Sanzana
Senior Executives
Alan Fischer Hill
Chief Executive Officer
Business Relations
The Company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
25.49% - Unchanged
Enel Chile’s Stake (Direct and Indirect)
99.09% - Unchanged
EMPRESA ELÉCTRICA DE
COLINA
Proportion of Enel Chile Assets
16.57%
Name
Empresa Eléctrica de Colina Ltda.
ELECTROGAS
Name
Electrogas S.A.
Type of Company
Privately held corporation
Taxpayer ID
96,806,130-5
Address
5900 Alonso de Córdova, Office 401, Las
Condes, Santiago, Chile.
Telephone N°
(562) 2299 3400
Subscribed and Paid Capital (Th$)
14,222,060
Corporate Purpose
Provide transportation services for natural
gas and other fuels, personally or for a third
party, for which it can build, operate and maintain
gas pipelines, oil pipelines, multipurpose
pipelines and complementary facilities.
Core Business
Gas Transportation
Directors
Humberto Espejo Paluz
Juan Eduardo Vásquez Moya
Ricardo Santibáñez Zamorano
Eduardo Lauer Rodríguez
Marco Arróspide Rivera
Pedro de la Sotta Sánchez
Type of Company
Limited Liability Company
Taxpayer ID
96,783,910-8
Address
31 Chacabuco, Colina Santiago, Chile
Telephone N°
(56 2) 2844 4280
Subscribed and Paid Capital (Th$)
82,222
Corporate Purpose
Distribution and sale of electricity and various
electrical and computational appliances for
home, sports, and entertainment.
Core Business
Electricity distribution.
Pooled Administration
Francisco Javier Evans Miranda
Rodrigo Vicente Arévalo Cid
Senior Executives
Francisco Javier Evans Miranda
Chief Executive Officer
Business Relations
(i)
Contract for service provision by Enel Chile:
Comprehensive Supply Service; Materials
Procurement Management; Contracting
of Works, Services and Consultancies;
Reception, Storage and Supply of Recurrent
and Non-recurrent Materials; Sales Agent.
Price: Mark-up over average price of
consumed materials.
Contract for service provision by Enel Chile:
Provision of internal audit and compliance
control services. Price: Amount of UF per
hour worked that Enel Chile’ staff dedicates
to the contracted services.
(ii)
(iii) Contract for management services provision
by Enel Chile Price: monthly amount in UF.
Enel Chile’s Stake (Direct and Indirect)
99.09% - Unchanged.
ENEL GENERACIÓN
CHILE
Name
Enel Generación Chile S.A.
Type of Company
Publicly Traded Company
Taxpayer ID
91.081.000-6
Address
76 Santa Rosa Ave. Santiago, Chile
Telephone N°
(56 2) 2630 9000
Subscribed and Paid Capital (Th$)
552,777,321
Corporate Purpose
Generation and supply of electricity; provision
of engineering and consulting services; and
construction and exploitation of infrastructure
projects in Chile and abroad.
Core Business
Electricity Generation
Board of Directors
Giuseppe Conti (Chairman)
Francesco Giorgianni (Vice Chairman)
Francesco Buresti
Julio Pellegrini Vial
Mauro Di Carlo
Umberto Magrini
Luca Noviello
Enrique Cibié Bluth
Jorge Atton Palma
Senior Executives
Valter Moro (Chief Executive Officer)
Raúl Arteaga Errázuriz (Deputy Executive Officer)
Luis Ignacio Quiñones Sotomayor
Bernardo Canales Fuenzalida
Humberto Espejo Paluz
Claudio Helfmann Soto
Jorge Burlando Bonino
Luis Vergara Adamides
Business Relations
(i)
Contract for services provision by
Enel Chile: Supply Services; Materials
Procurement Management; Contracting of
Works, Services and Consultancies. Price:
Directly proportional to costs associated to
staff list and to operational and maintenance
expenses. Every year, value for next annual
period is determined, introducing the proper
improvements and efficiencies.
Contract for services provision by Enel
Chile: Money desk and treasury service.
Price: Monthly amount expressed in UF.
(ii)
176
Annual Report Enel Chile 2016
Claudio Betti Pruzzo
Rodrigo Arias Suarez
Senior Executives
Carlo Carvallo Artigas
Chief Executive Officer
Business Relations
(i)
(iii) Contract for services provision by Enel
Chile: Accounting Services. Price: Monthly
amount expressed in UF.
(iv) Contract for services provision by Enel
(v)
Chile: Service provision of internal audit and
compliance control. Price: UF amount per
worked hour that Enel Chile staff dedicates
to contracted services.
Agreement for the use of the Stadium
Lo Sáez located at 858 Carlos Medina,
Independencia. Price: Monthly amount
expressed in UF per Endesa Chile’s
employee.
(vi) Trade accounts receivable
(vii) Loan from Enel Chile for $250 million dated
December 16, 2015, due on December 15,
2016. As of December 31, 2015, the balance
was $250 million.
(ii)
Contract for services provision by Enel
Chile: Provision of Internal Audit and
Compliance Control Services, Price:
amounts expressed in per working hour that
Enel Chile’ staff assign to the contracted
services.
Contract for management services by Enel
Chile. Price: monthly amount expressed in
U.F.
(viii) Administration services provision
agreement by Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
45.77% - Unchanged
Enel Chile’s Stake (Direct and Indirect)
59.98% - Unchanged
Proportion on Enel Chile’ Assets
63.67%
GASATACAMA (merged
with GasAtacama Chile)
EÓLICA CANELA
Name
Central Eólica Canela S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,003,204-2
Address
76 Santa Rosa, Santiago, Chile
Telephone N°
(562) 2630 9000
Subscribed and Paid Capital (Th$)
12,284,743
Corporate Purpose
Promote and develop renewable energy projects,
mainly in wind-powered energy; identify and
develop Clean Development Mechanism (MDL
in its Spanish acronym) projects, and act as a
depositary and trader of Emission Reduction
Certificates resulting from such projects. It may
also generate, transport, distribute, supply and
commercialize electricity, allowing the company
to acquire and benefit from the corresponding
concessions.
Core Business
Electricity Generation
Directors
Raúl Arteaga Errázuriz (Chairman)
Carlo Carvallo Artigas
Claudio Helfmann Soto
Bernardo Canales Fuenzalida
Juan Cristóbal Pavez Recart
Alternate Directors
Carlos Peña Garay
Ariel González Rogget
Name
GasAtacama S.A.
Type of Company
Privately held corporation
Taxpayer ID
96,830,980-3
Address
76 Santa Rosa, Santiago, Chile.
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
176,857,970
Corporate Purpose
The company has the following purposes:
a) managing and directing the companies
Gasoducto Atacama Chile Limitada, Gasoducto
Atacama Argentina Limitada, GasAtacama
Generación Limitada, and other companies the
partners agree on; b) investing on resources,
either through its own account or through
third parties, of all kinds of movable property,
real estate, securities and other negotiable
instruments.
Core Business
Investment company
Directors
Raúl Arteaga Errázuriz (Chairman)
Sergio Ávila Arancibia
Pablo Arnes Poggi
Humberto Espejo Paluz
Alternate Directors
Bernardo Canales Fuenzalida
Carlo Carvallo Artigas
Rodrigo Paredes Barría
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company does not have any business
relationships with Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
61.03%
GasAtacama S.A. merged with Compañía
Eléctrica Tarapacá S.A., and then Compañía
Eléctrica Tarapacá S.A. merged with Gasatacama
Chile S.A. on November 1st, 2016.
GASATACAMA CHILE
Name
GasAtacama Chile S.A.
Type of Company
Privately held corporation
Taxpayer ID
78,932,860-9
Address
76 Santa Rosa, Santiago, Chile.
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
482,511,131
Corporate Purpose
The company has the following purposes:
a) develop the generation, transmission,
purchase, distribution and commercialization
of electricity or energy of any other source; b)
purchase, extract, operate, process, distribute,
commercialize and sell solid, liquid and gaseous
fuels; c) sell and provide engineering services;
d) acquire, purchase, transfer, lease, charge
and develop, in any form, the concessions
referred to in the General Law on Electricity
Services, maritime concessions and water
usage rights of any nature; e) transport natural
gas, through its own means or jointly with third
parties within the territory of Chile or abroad,
including the construction, siting and operation
of gas pipelines and other activities directly
or indirectly related to such operations; f) the
capture, extraction, treatment, desalination,
transportation, distribution, commercialization,
delivery and supply of seawater, in all its forms,
including natural, drinkable, desalinized or
with any other treatment, either personally or
through a third party; g) invest in all types of
assets, tangible or intangible, movable or fixed;
h) organize and create all kinds of companies
whose objectives are related or linked to the
energy industry in any form, or use electricity
as their main input, or that relate to any of
the aforementioned activities. To achieve its
purpose, the company may carry out all acts
and enter into all contracts contributing to its
business activities, including the purchase, sale,
acquisition or disposal, on any account, of all
kinds of assets, tangible or intangible, movable
or fixed, and may enter existing companies or
join in their formation, whatever their kind.
Annual Report Enel Chile 2016
177
Core Business
Electricity generation and gas transportation
Directors
Raúl Arteaga Errázuriz (Chairman)
Pablo Arnés Poggi
Humberto Espejo Paluz
Sergio Ávila Arancibia
Alternate Directors
Rodrigo Paredes Barría
Bernardo Canales Fuenzalida
Carlo Carvallo Artigas
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company does not have any business
relationships with Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
61.03%
Proportion on Enel Chile’s Assets
0.68%
GASODUCTO ATACAMA
ARGENTINA
Name
Gasoducto Atacama Argentina S.A.
Type of Company
Privately held corporation
Taxpayer ID
78,952,420-3
Address
76 Santa Rosa, Santiago, Chile.
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
126,309,044
Corporate Purpose
The transportation of natural gas, either
personally, through or jointly with a third party,
within the Chilean territory or abroad, including
the construction, siting and operation of gas
pipelines and other operations directly or
indirectly related to this objective. The company
has incorporated an agency in Argentina under
the Name of Gasoducto Cuenca Noroeste
Limitada Sucursal Argentina, whose purpose is
the construction of a gas pipeline between the
locality of Cornejo, province of Salta and the
Argentina-Chile border in the vicinity of Paso de
Jama, in Chile’s second Region.
Core Business
Gas transportation
Directors
Raúl Arteaga Errázuriz (Chairman)
Alex Díaz Sanzana
Pablo Arnes Poggi
Alternate Directors
Bernardo Canales
Ricardo Santibáñez Zamorano
Rodrigo Paredes Barría
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
61.03%
GASODUCTO TALTAL
(Merged with GasAtacama
Chile)
Name
Gasoducto Taltal S.A.
Type of Company
Privately held corporation
Taxpayer ID
77,032,280-4
Address
76 Santa Rosa, Santiago, Chile.
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
14,255,421
Corporate Purpose
Transporting natural gas, either personally,
through or jointly with a third party, within the
Chilean territory or abroad, especially between
the localities of Mejillones and Paposo in Chile’s
second region, including the construction,
siting and operation of gas pipelines and other
operations directly or indirectly related to this
objective.
Core Business
Gas transportation
Directors
Juan Oliva Vásquez
Alex Díaz Sanzana
Ricardo Santibañez Zamorano
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
60.74%
This company was absorbed by GasAtacama
Chile S.A. on September 1st, 2016
GNL CHILE
Name
GNL Chile S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,418,940-K
Address
532 Rosario Norte, office 1303, Las Condes,
Santiago.
Telephone No
(562) 2892 8000
Subscribed and Paid Capital (Th$)
2,023,789
Corporate Purpose
To a) hire the services of GNL Quintero S.A.,
a liquefied natural gas (“LNG”) regasification
company, and utilize all its storage, processing,
regasification, and delivery capacity of natural
gas and LNG available at its regasification
terminal, including its expansions, if any, and
any other matter stipulated in the contracts
the company might sign for the use of
the regasification terminal; b) import LNG
from suppliers, complying with LNG sales
contracts; c) sell and deliver natural gas and
LNG, complying with the natural gas and LNG
sales contracts signed by the company with
its customers; d) manage and coordinate the
schedules and nominations of LNG cargoes,
as well as the delivery of natural gas and LNG
among various customers; and e) fulfill all its
obligations and demand the enforcement of
all its rights under the previously identified
contracts, coordinate all operations under these
contracts and, in general, carry out any type
of act or enter into any contract that might be
necessary, useful or convenient in order to
accomplish its purpose.
Core Business
Importing and commercializing natural gas
Directors
Andres Alonso Rivas
Alex Díaz Sanzana
Klaus Lürhmann Poblete
Alternate Directors
Luis Arancibia Yiacometti
Yasna Ross
Humberto Espejo Paluz
Senior Executives
Alejandro Palma Rioseco
Chief Executive Officer
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
19.99% - Unchanged
178
Annual Report Enel Chile 2016
Senior Executives
Antonio Bacigalupo Gittins
Chief Executive Officer
Business Relations
The company has no Business Relations with
Enel Chile.
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’ Stake (Direct and Indirect)
60.74%
GNL QUINTERO (Sold,
no longer part of the Enel
Group)
Name
GNL QUINTERO S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,788,080-4
Address
532 Rosario Norte, office 1604, Las Condes,
Santiago, Chile
Telephone N°
(562) 2499 0900
Enel Chile’s Stake (Direct and Indirect)
12.00% - Unchanged
On September 14th, 2016, the shareholding held
by Enel Generación Chile of GNL Quinteros was
sold and therefore from that date on it is no
longer a subsidiary.
GNL NORTE (Merged with
GasAtacama Chile)
Subscribed and Paid Capital (Th$)
80,953,329
Name
GNL Norte S.A.
Corporate Purpose
The development, financing, design,
engineering, supply, construction, startup,
operation and maintenance of a liquefied natural
gas (GNL in its Spanish acronym) storage and
regasification plant, and its corresponding
maritime terminal for GNL loading and
unloading and its expansions, if any, including
all necessary installations and connections
needed to deliver GNL through the freight yard
with trucks and/or one or more pipeline delivery
points (“Regasification Terminal”); as well as
any other activity that is conducive or related
to said purpose, including, but not limited to,
managing and directing all necessary trade
agreements required to receive or deliver GNL
to customers, GNL regasification, natural gas
delivery, offering services and storage capacity,
processing, regasification, and loading and
unloading in the Regasification Terminal and
GNL delivery (“the Project”) and its expansions,
if any; and b) provision of management services
and administrative advice in general necessary
for the company’s proper operation. This term is
defined in section 13.4 of the Thirteenth Article
of the bylaws, which stipulates that GNL Chile
S.A. will have the ability to carry out any act
or sign any contract that might be necessary,
useful or convenient in order to fulfill its purpose.
Core Business
Unloading, storing, regasification, and delivering
liquefied natural gas and natural gas.
Directors
Marco Arróspide Rivera
Víctor Turpaud Fernández
Juan Oliva Vásquez
José Antonio de las Heras
Sultán Al Bartami
Alternate Directors
Ricardo Santibáñez Zamorano
Jorge Beytía Moure
Rafael González Rodríguez
Hilal Al Kharusi
Type of Company
Privately held corporation
Taxpayer ID
76,676,750-8
Address
76 Santa Rosa Ave.
Santiago, Chile
Subscribed and Paid Capital (Th$)
1,000
Corporate Purpose
The Corporate Purpose of the company is the
production, transportation, distribution, storage
and supply of any kind of energy and fuel, to
the effect of which it may obtain, purchase and
benefit from the respective concessions and
grants. The purpose shall also be to acquire,
design, construct, maintain and exploit all types
of civil and infrastructure works related to energy
and fuel, especially those related to its maritime
reception, processing and transportation. For a
better and proper compliance with its Corporate
Purpose, the company may constitute, purchase,
enter as partner, shareholder or in any other
direct way or with third parties or subsidiary
companies, societies, institutions of any kind or
nature, both in Chile and abroad, and in general,
celebrate any acts or agreements and develop
any activity related directly or indirectly with said
purposes.
Core Business
Production, transportation and storage of all
kinds of energy and fuels
Directors
Alex Díaz Sanzana
Juan Oliva Vásquez
Ricardo Santibañez Zamorano
Senior Executives
Valter Moro
Chief Executive Officer
This company was absorbed by GasAtacama
Chile S.A. as of September 12th, 2016.
INVERSIONES
GASATACAMA HOLDING
(Merged with GAT Chile)
Name
Inversiones GasAtacama Holding Limitada
Type of Company
Limited Liability Company
Taxpayer ID
76,014,570-K
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
202,362,770
Corporate Purpose
The company’s purpose is to a) participate,
either directly or indirectly, in companies whose
purpose includes one or more of the following
activities: i) the transportation of natural gas
in any form; ii) the generation, transmission,
purchase, distribution and sale of electricity;
iii) the funding of the operations mentioned
in i) and ii), developed by related third parties,
and b) the reception and investment of assets
for investment, including the related for-profit
activities already mentioned.
Core Business
Investments
Directors
Vacant
Raúl Arteaga Errázuriz
Pablo Arnes Poggi
Humberto Espejo Paluz
Rodrigo Paredes Barría
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
60.74%
This company was absorbed by CELTA and then
CELTA was absorbed by GasAtacama Chile S.A.
as of November 1st, 2016.
Annual Report Enel Chile 2016
179
LUZ ANDES
Name
Luz Andes Limitada
Type of Company
Limited Liability Company
Taxpayer ID
96,800,460-3
Address
76 Santa Rosa, Santiago, Chile
Telephone N°
(56 2) 2634 6310
Subscribed and Paid Capital (Th$)
1,224
Corporate Purpose
Distribution and sale of electricity, and sale of
household, sports, entertainment and computer
appliances
Core Business
Electricity distribution.
Joint Administration (must act jointly)
Claudio Inzunza Diaz
Jaime Manríquez Kemp
Senior Executives
Claudio Inzunza Díaz
Chief Executive Officer
Business Relations
(i)
Contract for services provision by Enel
Chile: Procurement Integral Services:
Comprehensive Supply Service, Materials
Procurement Management, Contracting
of Works, Services and Consultancies,
Reception, Storage and Supply of Recurrent
and Non recurrent Materials, Sales Agent.
Price: Mark-up over average price of
consumed materials.
Contract for services provision by Enel
Chile: Provision of internal audit and
compliance control services. Price: UF
amount per worked hour that Enel Chile’
staff dedicates to contracted services.
(iii) Administration service provision agreement
by Enel Chile. Price: Monthly amount
expressed in UF.
(ii)
Enel Chile’ Stake (Direct and Indirect)
99.09% - Unchanged
PEHUENCHE
Name
Empresa Eléctrica Pehuenche S.A.
Type of Company
Publicly held corporation.
Taxpayer ID
96,504,980-0
Address
76 Santa Rosa, Santiago, Chile.
Telephone N°
(562) 2630 9000
Subscribed and Paid Capital (Th$)
175,774,920
Core Business
Gas supply
Board of Directors
Alex Díaz Sanzana
Ricardo Santibañez Zamorano
Juan Oliva Vásquez
Corporate Purpose
Generate, transport, distribute and supply
electricity, for which the company may acquire
and benefit from the respective concessions.
Senior Executives
Valter Moro
Chief Executive Officer
Core Business
Electricity generation
Board of Directors
Raúl Arteaga Errázuriz (Chairman)
Luis Ignacio Quiñones Sotomayor
Jorge Burlando Bonino
Claudio Helfmann Soto
Fernando Vallejos Reyes
Senior Executives
Carlo Carvallo Artigas
Chief Executive Officer
Business Relations
(i)
Contract for Service Provision by Enel
Chile: Communication, Global Services,
Human Resources Administration and
Equity Management. Price: monthly amount
expressed in U.F.
Enel Chile’s Stake (Direct and Indirect)
55.57% - Unchanged
Business Relations
The company has no business relationships with
Enel Chile.
Enel Chile’ Stake (Direct and Indirect)
60.74%
Progas was absorbed by GasAtacama Chile S.A
as of September 1st, 2016.
SERVICIOS
INFORMÁTICOS E
INMOBILIARIOS LTDA.
Name
Servicios Informáticos e Inmobiliarios Limitada
Type of Company
Limited Liability Company
Taxpayer ID
76,107,186-6
PROGAS (Merged with
GasAtacama Chile)
Address
76 Santa Rosa, floor 9. Santiago, Chile
Name
Progas S.A.
Type of Company
Privately held corporation
Taxpayer ID
96,905,700-K
Address
3356 Isidora Goyenechea, 8th floor, Santiago,
Chile.
Telephone N°
(562) 2366 3800
Subscribed and Paid Capital (Th$)
1,154
Corporate Purpose
Develop the following businesses in the 1st, 2nd
and 3rd regions of the country: the acquisition,
production, storage, transportation, distribution,
transformation and trading of natural gas and
other oil derivatives and fuels in general, the
supply of services, manufacture, trading of
equipment and materials, and carrying out
works related to the above purposes or those
necessary for their execution and development,
any other activity necessary or leading to comply
with the aforementioned purposes.
Telephone N°
(562) 2353 4606
Subscribed and Paid Capital (Th$)
61,948,674
Corporate Purpose
The purpose will be to carry out on its
own or through third parties, the following
activities: 1) Consultancy services provision
in matters related to information technology
and computing, telecommunications and data
transmission; management, consultancy,
advisory and administration of the company’s or
a third party’s contracts that are related to said
matters; establishing, managing and exploiting
data base centers; creation, development,
design, management, operation, marketing,
purchase, sale, import, and export of all kinds
of software; contracts’ management and
administration and projects’ development and
execution, 2) To acquire and sell all kinds of
corporeal or incorporeal property related to
its object; to provide services and to obtain
representations for the best compliance of its
purpose; organize, constitute, participate and
be part of all kinds of companies, associations
or joint accounts; to make all kinds of money,
service and property contributions, whichever
its sort and to sign service and consultancy
provision agreements, either in Chile or abroad,
3) Administration and exploitation of own or third
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Annual Report Enel Chile 2016
parties’ businesses and, in general, development
of any activity connected or supplementary to
the aforementioned purposes, and those the
partners deem mutually convenient, 4) Purchase,
alienation, parceling, subdivision, lot division,
sale and exploitation at any title of all kinds of
real estate, on its own account or through third
parties, to invest the corporate funds in all kinds
of property, immovable or movable, corporeal or
incorporeal and rights in societies; to manage
them and to receive its fruits and rents.
Core Business
Consultancy services in information technology;
computing, telecommunications, data
transmission, purchase and alienation of all kinds
of property within the Corporate Purpose; and
real estate services
Senior Executives
Tomás Blásquez de la Cruz (Chief Executive
Officer and Trustee Administrator)
Francisco Javier Galán
Ángel Barrios Romo
Hans Richard Knoop Frick
TRANSQUILLOTA
Name
Transmisora Eléctrica de Quillota Ltda.
Type of Company
Limited liability Company
Taxpayer ID
77,017,930-0
Address
Route 60, km 25, Lo Venecia, Quillota, V Region
of Valparaíso, Chile.
Telephone N°
(562) 2630 9000
Subscribed and Paid Capital (Th$)
4,404,446
Corporate Purpose
Transportation, distribution, and supply of
electricity, either personally or through a third
party.
Business Relations
(i)
(ii)
Professional service agreement for ICT’s
Management. Price: Operation cost plus
margin.
Agreement for the use of Lo Sáez
Stadium located at 858 Carlos Medina St.,
Independencia. Price: Monthly amount
expressed in UF, per ICT’s worker.
(iii) Contract for services provision by Enel
Chile: Supply Services. Management
of Materials’ Procurement and Works
Contracting, Services and Consultancy.
Price: Directly related to associated staff’s
costs and to operational and maintenance
expenses. Every year the annual value
for the next period is determined annually,
introducing the proper improvements and
efficiencies.
(iv) Contract for services provision by Enel
Chile: Provision of internal audit and
compliance control services. Price: UF
amount per worked hour that Enel Chile’
staff dedicates to contracted services.
(v) Trade accounts receivable.
(vi) Administration services’ provision by Enel
Chile. Price: Monthly amount expressed in
UF.
Enel Chile’s Stake (Direct and Indirect)
100.00%
Proportion on Enel Chile’ Assets
0.50%
Core Business
Electricity transmission
Representatives
Vacant
Ricardo Santibáñez Zamorano
Juan Eduardo Vásquez Moya
Mauricio Cabello
Business Relations
The company has no commercial relations with
Enel Chile.
Enel Chile’s Stake (Direct and Indirect)
30.52% - Unchanged
Notes
1.
2.
There are no contracts or acts signed by
Enel Chile S.A. with its subsidiaries or
associate companies that significantly
influence its operations or outcomes.
Regarding business relations, the future
connections with subsidiary or associated
companies are to be aligned with the
Corporate Purpose; especially when
providing financial resources necessary for
the development of a subsidiary companies’
business and trade; and also when
providing management services; financial,
commercial, technical and legal consultancy
services; audit services, and in general, any
service that seems necessary to improve its
business performance.
Annual Report Enel Chile 2016
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Annual Report Enel Chile 2016
Statement of
Responsibility
183
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Annual Report Enel Chile 2016
Statement
of Responsability
The Directors of Enel Chile S.A. and its Chief Executive Officer, signatories of this statement, are
responsible under oath of the veracity of the information provided in this Annual Report, in compliance
with the General Norm N°30, issued by the Superintendence of Securities and Insurance.
CHAIRMAN
Herman Chadwick Piñera
Taxpayer Id.: 4,975,992-4
VICECHAIRMAN
Giulio Fazio
Passport: YA4656507
DIRECTOR
Salvatore Bernabei
Taxpayer Id.: 24,220,743-2
DIRECTOR
Pablo Cabrera Gaete
Taxpayer Id.: 4,774,797-K
DIRECTOR
Vicenzo Ranieri
Passport: YA7616919
DIRECTOR
Gerardo Jofré Miranda
Taxpayer Id.: 5,672,444-3
DIRECTOR
Fernán Gazmuri Plaza
Taxpayer Id. : 4,461,192-9
CHIEF EXECUTIVE OFFICER
Nicola Cotugno
Taxpayer Id.: 25,476,277-6
Annual Report Enel Chile 2016
185
Consolidated
Financial
Statements
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Annual Report Enel Chile 2016