Annual Report
Enel Chile
2017
Santiago Stock Exchange
ENELCHILE
Nueva York Stock Exchange
ENIC
Enel Chile S.A. was initially incorporated as Enersis Chile S.A., on March 1, 2016. On October 18, of the same year,
the company changed its name to Enel Chile S.A. As of December 31, 2017 the company´s total subscribed and
paid capital amounted to Ch$ 4,120,836,253 represented by 49,092,772,762 shares. These shares are traded on
the Santiago Stock Exchange and, as American Depository Receipts (ADR) on the New York Stock Exchange.
The company’s business is to exploit, develop, operate, generate, distribute, transform and/or sell energy, in any
form and nature, directly or through other companies.
Total assets as of December 31, 2017, amounted to ThCh $5,694,773,008 . Enel Chile controls and manages a
group of companies that operate in the Chilean electricity market. In 2017, net income attributable to the controlling
shareholder reached ThCh$ 349,382,642 and operating income was ThCh $578,630,574 . At year end 2017, a total
1,948 people were directly employed by its subsidiaries in Chile.
Annual Report
Enel Chile
2017
2
Annual Report Enel Chile 2017 Contents
> Letter from the Chairman ....................................................................4
> Open Power ........................................................................................8
> Highlights 2017 ................................................................................10
> Main financial and operating data .....................................................14
> Identification of the Company and documents of incorporation .......18
> Ownership and control ......................................................................22
> Management .....................................................................................28
> Human Resources ............................................................................44
> Stock Market Transactions ................................................................54
> Dividends ..........................................................................................60
> Investment and financing policy .......................................................66
> History of the Company ...................................................................70
> Investments and financial activities .................................................. 74
> Risk factors .......................................................................................80
> Reorganization - Elqui Project............................................................96
> Industry regulation and electricity system operations ....................102
> Electricity generation ...................................................................... 112
> Electricity distribution......................................................................126
> Environment and sustainability ......................................................132
> Ownership share table ....................................................................140
> Company’s significant events ..........................................................144
> Identification of subsidiaries and associate companies ..................160
> Statement of Responsibility ............................................................168
Content
3
Letter from the Chairman
Dear shareholders,
It is my pleasure to present the Annual Report and Financial
Statements of Enel Chile for 2017. In the following chapters
you will find a description of our operations in the electricity
generation and distribution markets through our subsidiaries
Enel Generación Chile and Enel Distribución Chile.
First, I would like to thank the directors, officers, and every-
one who works in our company, for the job they have done
this year, for the trust they have placed on this administra-
tion and, above all, for supporting the new direction we are
taking as a Company.
During 2017, in addition to achieving good economic re-
sults, we have carried out one of the most important re-
organizations that the Chilean market has seen in recent
times. The Elqui plan was conceived as the means to face
the changes in the electricity industry. It became essential
to incorporate the non-conventional renewable energy as-
sets in Chile owned by Enel Green Power Latinoamérica
into Enel Chile and it was accomplished through a merger.
The Enel Generación Chile PTO was also carried out suc-
cessfully and offered minority shareholders of Enel Gener-
ación Chile the opportunity to become a part of Enel Chile.
The Elqui plan represents the beginning of a clear and
sustainable path that will allow us to successfully face
well-deserved growth in a very different energy market. It
is with pride that we can say that today we are the most
diversified company in this sector in Chile. In Generación
we rely on a total installed capacity of 7.5 GW, of which
4.7 GW are renewable energies and 2.8 GW are thermal.
4
Annual Report Enel Chile 2017 In Distribución we serve 1.9 million customers, 40% of the
As you know, Enel Generación Chile’s Board of Directors put
domestic market.
an end to their 51% interest in the HidroAysén project, return-
ing the water rights to the State. Colbún, our partner holding
The Company obtained important achievements during
the remaining 49%, followed. We believe that this project
2017. Enel Generación Chile was the winner of the electric-
wasn’t economically or environmentally feasible, hence it was
ity tender that took place in October of last year, for being
impossible to continue. The electricity expected to be gen-
awarded over 50% of the auctioned energy. This success
erated by HidroAysén power plants has been replaced with
responded to the mix of conventional and renewable en-
energy from non-conventional renewable power plants.
ergies, achieved thanks to an agreement with Enel Green
Power Latinoamérica.
One of the basic principles that inspires all our projects is
that they be approved and accepted by the community. The
Another important step was taken in the Bocamina pow-
decision to end the Neltume and Choshuenco projects, in
er plant, in the Biobío Region, where the roof of one of
the Los Ríos Region, and return the respective water rights
the two coal fields in the power plant was completed, and
to the State, was based on this same principal.
work on the second roof began. The purpose of this proj-
ect is to improve the way we handle coal and provide a
Ethics and transparency are among the Company´s values
more effective palliative to improve the environment. This
and commitment with all its stakeholders, seeking to in-
is the first thermal power plant to implement this sort of
spire trust and maintain long-term sustainable and inclu-
standard.
sive relationships.
In terms of the generation projects, the construction of
In terms of sustainability, we have revitalized our positive
the Los Cóndores hydroelectric power plant, in the Maule
relationship with communities in the territories where we
Region, has kept moving forward. By the end of 2017,
are present. This year we have reached important agree-
this power plant, which will have an installed capacity of
ments with families from Coronel to overcome the impacts
150 MW, was over 60% complete.
of the eradication of the families that began in 2010. In
terms of environmental sustainability, we began a refor-
The availability of natural gas for electricity generation in
estation project in the Biobío Region, together with Con-
2017 is also worth highlighting. Enel Generación Chile was
cepción University, planting over 2 million native species in
able to provide a greater amount of natural gas fueled elec-
700 hectares of land. Further north, in the Quintero Region,
tricity to the SIC, supplementing the production of San
we began a sustainability plan along with the communi-
Isidro and Quintero plants in the Valparaiso Region.
ty that involved implementing development initiatives de-
fined by them.
5
Letter from the Chairman In the distribution business, new short and medium-term
people the continuous supply of electricity in the event of
challenges lie ahead. The enactment of the new Technical
a prolonged outage.
Distribution Norm last year established greater require-
ments in electricity supply quality and must be monitored
We want to be an active player in the solutions to the im-
by district. The necessary investments and operation costs
portant problems that cities face, especially in terms of
to perform these measurements are included in a new tar-
contamination. To contribute to a cleaner environment,
iff decree that will hopefully be enacted as soon as possible
we are promoting electric mobility. We have promoted
so we can close the gap between our clients’ expectations
and arranged for the purchase of electric cars for company
and current regulatory standards. This will require an enor-
personnel, and based on our our concern for clean public
mous investment effort that Enel is committed to carry out.
transportation, we are actively promoting the addition of
electric buses to the Transantiago system.
Improving the standards and quality of our customer ser-
vice is perhaps one of the broadest challenges addressed
Fundamental to electric mobility is charging and re-charging
in this Technical Norm. Increasingly specific measurement
electric vehicles. We currently have 20 charging stations,
and information requirements are defined, including the
and with Universidad Católica de Chile, we are studying
installation of a smart measurement system for all our cli-
the feasibility of installing 350 more charging stations in La
ents within a 7-year period. This regulatory framework is
Serena, Santiago and Concepción.
aligned with Enel Group’s vision regarding the evolution of
this industry towards a more digital, efficient and flexible
I would like to take advantage of this opportunity to high-
operation and therefore very motivating.
light the valuable contributions, in all subject matters, of
our controlling shareholder, Enel S.p.A.’s, but particularly in
We can’t forget the challenges we are currently undertak-
those areas that require innovation and technology. With
ing in terms of distributed generation, infrastructure to at-
the guidance and care of the CEO, Mr. Francesco Starace,
tend to the needs of electric mobility, new energy efficient
Enel S.p.A is constantly concerned that we adequately
technologies, and demand management that will change
adapt to face the new challenges in the electricity industry,
several of the current business rules and logic.
in which they participate and know very well.
As you have been properly informed, in July 2017 we faced
I would also like to thank our minority shareholders for the
a big climatic event that challenged Enel Distribución S.A.
permanent support they give us, and the trust they place
and allowed us to review our procedures in great detail
in our management team, which we hope to always recip-
to take all of the necessary measures to modify them for
rocate.
a future extreme weather condition event. We also made
several commitments with our clients and with the gov-
I believe we have entered this new scenario with the nec-
ernment. We subscribed, along with other distribution
essary anticipation and preparation to be able to success-
companies, a protocol that guarantees electro-dependent
fully participate in an ever-more competitive market.
6
Annual Report Enel Chile 2017 The renovation of Enel Chile’s companies has no other pur-
pose but to make the adequate adjustments to prepare us
for this new energy world, and to obtain the economic and
social results that shareholders, our employees, and the
country expect.
Sincerely,
Herman Chadwick Piñera
Chairman
7
Letter from the Chairman Enel Chile is Open Power
Openness to the outside world, to technology and, inter-
realities of the Group, we have identified a ‘galaxy’ com-
nally, between colleagues. This is the strategic concept of
posed of a Vision - for the first time in Enel- that represents
Open Power. But to completely transmit to customers,our
the great long-term goal, a 2025 Mission expressed in five
interlocutors, the essence of a new and innovative Enel, it
points, of values that represent the Enel DNA and ten be-
is important to share this attitude of openness within the
haviors that should inspire all the people who work in the
company. To create a common culture between all different
company. Lets discover the galaxy Open Power together.
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Milestones 2017
Enel Chile crime pre-
vention model certifi-
cation
Enel Chile and Its subsid-
iaries, Enel Generación
Chile and Enel Distribu-
ción Chile received cer-
tification for their crime
prevention model accord-
ing to Law 20,393 that
establishes criminal re-
sponsibility for legal en-
tities in asset laundering,
financing terrorism and
bribery. Certification was
obtained after two years,
the maximum period de-
fined by law.
FEBRUARY
agreement
Historic
signed with the families
from Alto Bio-Bio
The representatives of
Enel Generación Chile
a histor-
experienced
ic event along with 25
families from the Aukin
Wal Mapu Pehuenche
Community, signing an
agreement to collaborate
with the families in the
development of projects
for their community. The
represents
agreement
significant progress
in
improving the relation-
ship between the Com-
pany and the communi-
ties in the area because
it resolves the families´
demands related to the
Panteón Quepuca or Lot
53, flooded with water
for the Ralco Hidroelec-
tric plant dam.
Sale of the entire Elec-
trogas shareholding
Enel Generación Chile
sold its 42.5 % interest
in Electrogas for US$180
million to the Chilean
company, Aerio Chile, a
subsidiary of REN-Redes
Energaticas Nacionais.
JANUARY
Enel Distribución creat-
ed the first NCRE certi-
fication process in the
Chilean market, certi-
fying whether electric-
ity is entirely supplied
from NCRE sources
This new tool contributes
to the minimization of the
environmental impact of
business operations be-
cause it allows assuring
nonregulated customers
that the electricity they
receive is entirely from
non-conventional
re-
newable energy (NCRE)
sources.
to
Enel Chile supports ar-
eas affected by the for-
est fires
Enel Gneración offered
volunteers,
food
equipment to remove the
debris, and water tank
trucks with the driver to
support to communities
located in the areas af-
fected by the forest fires
in the city of Concepcion
and also, along with the
authorities of the Maule
and O´Higgins Regions,
contributed to controlling
the fires in the area. Con-
tributions were made,
through SOFOFA, to pro-
vide homes for the fami-
lies affected by the fires.
10
Inauguration of Radio
System connecting the
Bio Bio electricity gener-
ation power plants and
Municipalities
A radio system that al-
lows
communication
between the Ralco and
Pangue power plants that
belong to Enel Gener-
ación Chile, the Angostura
power plant that belongs
to Colbun, and the Qui-
laco and Santa Barbara
municipalities was imple-
mented by ONEMI and
the Ministry of Energy to
improve communication
during potential emer-
gencies and make timely
decisions. This initiative
supplements an existing
contingency communica-
tion system project.
Fitch Ratings ratifies the
AA credit rating of Enel
Chile
Fitch Rating maintained
Enel Chile’s credit rating.
It reflects asset diver-
sification and also that
operations in Chile’s take
place within a construc-
tive
frame-
work and also stresses
the Company’s strong
financial condition and re-
spective financial ratios.
The outlook is positive.
regulatory
MARCH
Enel Chile acknowledg-
es 13 Chilean women
for
their outstanding
contribution to the de-
velopment of the coun-
try
For the eleventh consec-
utive year, and within the
context of the International
Women’s Day, Enel Chile
acknowledged
thirteen
outstanding Chilean wom-
en for their contribution to
the social development of
the country. Each one was
awarded for her significant
contribution in her specific
field, such as, art, music
and lyrics; public service;
environment, energy effi-
ciency and sustainability;
education; innovation and
new ventures; public de-
bate; community work;
journalism and social com-
munication; entertainment
and sports.
Ministry of Energy and
Enel Distribución launch
energy efficiency pro-
gram and present first
“Solar Flower” in South
America.
The Ministry of Energy and
Enel Distribución present-
ed the campaign “#soy-
multieficiente, I make the
best use of my energy”.
This initiative seeks to cre-
ate a conscience among
citizens on making good
use of energy. The Com-
pany showed
its com-
mitment to this goal by
connecting the first “Solar
Flower” or “Smart Flower”
in South America to supply
Enel’s corporate building in
Santiago with photovoltaic
electricity generation.
Annual Report Enel Chile 2017 APRIL
Fitch Ratings rates Enel
Generación Chile AA
The
risk
international
rating agency gave Enel
Generación Chile a lo-
cal and foreign currency
“BBB+” rating. The long-
term rating given on the
local scale was “AA(cl)”.
Enel Generación Chile
and Coronel
families
sign a Memorandum of
Understanding to over-
come housing prob-
lems
The agreement signed
by Enel Generación Chile
and the Huertos Famili-
ares Residents´ Associ-
ation from the Coronel
area represents a mile-
stone of the new road-
map defined to solve the
housing difficulties of the
residents that were relo-
cated in 2010.
Cipreses Hydroelectric
power plant opens its
doors to the communi-
ty to celebrate Cultural
Heritage Day
Over 300 people visited
the facility and learned
about the history of the
power plant that exists
since 1955, one of Enel
Generación Chile´s old-
est facilities. The Gover-
nor of the Maule region,
Pablo Meza, expressed
his appreciation for the
contribution to identity of
the region.
MAY
A year since the first
electric bus
free of
charge for passengers
in the downtown area
of the Santiago began
operations
It has been a year since
the first demo bus, pro-
moted by the Santiago
Municipality and Enel
Distribución Chile to cov-
er the downtown area of
the city free of charge
for the residents, began
operations. The Minister
of Transportation, Paola
Tapia, announced
that
this type of electric bus
would be included in the
public transportation sys-
tem, Transantiago, during
the second semester of
2017.
the
Enel Chile and Nissan
delivered
largest
fleet of electric cars In
Latin America
The Enel Group in Chile
provided 30 electric cars
with 250 kilometers of
autonomy to Its employ-
ees. The beneficiaries
participated in an open
contest carried out with-
in the company. The pro-
cess allowed Importing
the vehicles directly, with
significant
discounts,
with a guaranteed main-
tenance and repurchase
price.
Chile and Argentina
signed a natural gas
supply for a second
consecutive year
ENAP, Enel Generación
Chile and Aprovisionado-
ra Global de Energia S.A.
(AGESA) supplied natural
gas using the pipelines of
Electrogas and GasAnd-
es located in the central
region of the country. The
gas supplied by Enel Gen-
eración Chile was equiva-
lent to a shipment of 90
million m3 of gas. This
business model allows
the Company to manage
its gas supply efficiently
and also represents an
opportunity to maintain
and potentially increase
this type of transaction
with Argentina, offering
flexibility to the Compa-
ny´s operations.
JUNE
Enel Generación Chile
and Universidad de
Concepcion began the
first large scale refor-
estation program in the
country
The CEO of Enel Gener-
ación Chile, Mr. Walter
Moro, and the Dean of
Universidad de Concep-
cion, Mr.Sergio Lavanchy,
began the reforestation
of 700 hectares of land
within the framework of
the agreement signed
by both entities in 2016.
This agreement involves
planting more than 2 mil-
lion native tree species,
an unparalleled
large-
scale project in Chile.
in
Recovery of the con-
the
dors rescued
foothills in the Maule
Region
Enel Generación Chile
offered immediate assis-
tance and collaboration
to the Chilean Agricul-
tural Inspection Service
(“SAG” in its Spanish ac-
ronym) in the city of Talca
after finding two Andean
condors
in the Maule
foothills. The Company
facilities
the
provided
and professional
team
available in the area for
wildlife
related contin-
gencies.
Milestones 2017
11
Milestones 2017
The dome of Bocamina
Power Plant begins op-
erations
Enel Generación Chile
began the operation of
the dome on the north
coal field of the Bocam-
ina power plant, becom-
ing the first electricity
to
generation
implement this type of
system to improve coal
management. The roof
on the south coal field is
also under construction.
Both projects
involve
an investment of nearly
US$50 million.
facility
Standard and Poor’s
confirms rating of Enel
Chile and Enel Gener-
ación Chile at BBB+
On July 13, the rating
the
agency confirmed
rating of both compa-
nies, highlighting the sol-
id financial condition re-
sulting from an adequate
commercial policy that
mitigates the operation-
al risk of the generation
business. They also high-
lighted the stable and
consistent
distribution
business regulation.
The Board of Directors of
Enel Chile, unanimously
by the members present
at the session, agreed to
consider the operation
previously described a
related party transaction
(OPR in its Spanish ac-
ronym) and to therefore
be subject to the proce-
dures and requirements
established by Title XVI
of the Chilean Corpora-
tions Law, a mechanism
to protect minority share-
holder.
SEPTEMBER
Coronel families sign
an agreement with Enel
Generación Chile
Nearly 144
relocated
families, from the Huer-
tos Familiares area of
Coronel, and Enel Gen-
eración Chile signed an
involving a
agreement
compensation
financial
for the
inconveniences
of receiving homes with
construction
deficien-
cies. The agreement
also considered building
an outdoor recreational
field and developing a
method to determine the
house repairs needed.
These activities seek to
implement solutions that
are consensual and con-
tribute to the new char-
acteristics being given to
the neighborhood.
AUGUST
Enel Chile proposed
merger with Enel Green
Power in Chile and PTO
for 100% of Enel Gx
Chile
Enel Chile presented
a proposal to add the
non-conventional renew-
able generation assets
of Enel Green Power in
Chile by merging with the
company. This merger
would lead to all conven-
tional and non-conven-
tional renewable gener-
ation operations of Enel
in Chile to be executed
by Enel Chile through its
subsidiaries. The propos-
al conditions this merg-
er to the success of the
PTO (Public Tender Offer)
to be carried out by Enel
Chile to purchase up to
100% of the shares of
its subsidiary Enel Gen-
eración Chile held by mi-
nority shareholders.
12
Annual Report Enel Chile 2017 Moody´s confirms rat-
ing of Enel Generación
Chile
The international agency
ratified the rating of Enel
Generación Chile and
with a stable outlook.
DECEMBER
Shareholders´ Meeting
of Enel Chile approved
the Group´s Reorgani-
zation in the country
The Extraordinary Share-
holders Meeting of Enel
Chile approved
imple-
menting the Elqui Oper-
ation, which consists of
reorganizing the compa-
ny, merging Enel Green
Power Latin America S.A.
into Enel Chile. As a con-
sequence, all convention-
al and nonconventional
renewable
generation
operations of the Group
in the country will be
developed by Enel Chile
though its subsidiaries.
OCTOBER
Enel Generación Chile
is awarded 54% of the
electricity tender
Enel Generación Chile
was the real winner of
the 2017 electricity sup-
ply tender. The Compa-
ny was awarded 54% of
the electricity tendered,
2,200 GWh a year begin-
ning in 2024 for regulated
customers for 20 years.
An agreement between
Enel Generación Chile
and Enel Green Power
made this possible by
allowing the company to
present a competitive of-
fer in the tender.
NOVEMBER
Enel Distribución inau-
gurated the first office
in Concepcion and pre-
sented the first electric
car charging station in
the Bio Bio Region
This is the first commer-
cial office outside of the
company’s
concession
area. The goal is to of-
fer several personalized
solutions to companies,
institutions and homes,
increasing market share
in different markets. The
main business lines to
develop are: electricity to
nonregulated customers;
efficient street lighting;
energy efficiency proj-
ects and spreading the
use of electric mobili-
ty. The first electric car
charging station in the re-
gion was installed in the
parking lot of the building
where
the company’s
new office is located.
Transantiago received
the first electric buses
The vehicles were pur-
chased by Enel and were
leased to Metbus for the
next ten years. They were
added to bus route 516.
Enel Distribución also
designed a model so that
the different bus opera-
tors that want to partici-
pate in the next Transan-
tiago bid (that will require
at least 90 electric buses
for the different routes)
have a defined and con-
venient alternative to in-
corporate zero emission
technology in their fleet.
The MOP and Enel Gen-
eración Chile signed a
permanent agreement
to operate and maintain
the Laja reservoir
The agreement, which
was ratified by the asso-
ciations of the farmers
in the area, supplements
the agreement signed
in 1958 and guarantees
satisfying the water re-
quirements of farmers,
and adds flexibility to the
use of water for electrici-
ty generation.
Milestones 2017
13
04Main financial and operating data
14
Annual Report Enel Chile 2017 Rapel hydro power plant
15
Letter from the Chairman 16
Annual Report Enel Chile 2017 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 As of December 31st of each year (figures in millions of Chilean pesos)(1)
2011
2012
2013
2014
2015
2016 (5)
2017
5,398,711
5,694,773
1,935,717
1,907,811
2,136,041
2,529,347
627,547
317,561
1.13
0.56
739,252
349,383
1.29
0.50
As of December 31 of each year
2011
1,081
104
5,221
19,296
20,315
2012
1,141
105
5,571
19,194
20,878
2013
1,141
105
5,571
19,432
20,406
2014
1,261
111
6,351
18,063
21,157
2015
995
111
6,351
18,294
23,558
2016
883
111
6,351
17,564
23,689
2017
848
111
6,351
17,073
23,356
As of December 31, of each year
2011
13,697
2012
2013
14,445
15,152
2014
15,690
2015
15,893
2016
15,924
2017
16,438
1,637,977
1,658,637
1,693,947
1,737,322
1,780,780
1,825,519
1,882,394
5.50%
712
2,301
5.40%
734
2,260
5.30%
745
2,274
5.32%
690
2,518
5.31%
686
2,596
5.33%
690
2,653
5.10%
669
2,814
(1) Accounting figures as determined by the instructions and regulations issued by the SVS (currently Financial Market Commission or “CMF”).
(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 1, 2016).
Main financial and operating data
17
05Identification of the Company
and documents of incorporation
18
Annual Report Enel Chile 2017 Chena substation
19
Letter from the Chairman Identification of the Company
Name
Address
Company Type
Taxpayer ID No
Address
Zip Code
Telephone No
P.O. Box
Enel Chile S.A.
Santiago, although able to establish branches or agencies in other parts of the country or abroad
Publicly held Limited Liability Stock Corporation
76,536,353-5
76 Santa Rosa St., Santiago, Chile
833-0099 SANTIAGO
(56) 2353 4400 – (56-2) 2378 4400
1557, Santiago
Securities Registration No
1,139
External Auditors
Ernst & Young
Subscribed and paid-in capital (ThCh$)
4,120,836,253,206
Website
Email
www.enelchile.cl
comunicacion.enelchile@enel.com
Investor Relations Telephone
(56-2) 2353 4682
Ticker in Chilean stock exchanges
ENELCHILE
Ticker in New York stock exchange
ENIC
Custodial Bank ADR’s
Banco Santander Chile
Depositary Bank ADR’s
Citibank N.A.
Domestic Risk Rating Agency
Feller Rate and Fitch Chile Clasiifcadora de Riesgos Limitada
International Risk Rating Agency
Standard & Poor´s
Documents of incorporation
Enel Chile S.A., formerly “Enersis Chile S.A.”, was created
Torrealba Acevedo, and its extract was registered in the
as a consequence of the corporate reorganization that be-
Commercial Register (Registro de Comercio del Conser-
gan in April 2015. Enersis S.A. controlled the generation,
vador de Bienes Raíces y Comercio de Santiago) on pages
transmission and distribution business in Chile and four
4,288 No 2,570 of the year 2016 and published in the Offi-
other countries in the region (Argentina, Brazil, Colombia,
cial Gazette on January 20, 2016.
and Peru).
Later, on October 4, 2016, the shareholders of Enersis
The Extraordinary Shareholders’ Meeting of Enersis S.A.
Chile S.A. approved changing the name of the Company to
held on December 18, 2015, approved the first phase of
“Enel Chile S.A.” This agreement was recorded in a public
the reorganization plan named “the Division,” which cre-
deed on October 18, 2016 by the Santiago Notary Public,
ated Enersis Chile S.A. as the only vehicle to control the
Mr. Ivan Torrealba Acevedo. Its extract was registered in
Group’s generation and distribution assets in Chile. Enersis
the Commercial Register (Registro de Comercio del Con-
S.A became Enersis Americas S.A., the vehicle to control
servador de Bienes Raíces y Comercio de Santiago) on
all assets of the businesses in other countries in the re-
pages 79,330 No 42,809 of the year 2016 and published in
gion. The Division was recorded in a public deed issued
the Official Gazette on October 28, 2016.
on January 8, 2016 by the Santiago Notary Public, Mr. Ivan
20
Annual Report Enel Chile 2017 Finally, on December 20, 2017, the shareholders approved
as, software, hardware, licenses, software development,
amending the bylaws to include the agreements regard-
and in general, any product related to the aforementioned
ing the merger of Enel Green Power Latin America S.A.
activities; and consulting services in all subjects related to
into Enel Chile, its capital increase and other agreements
the previously mentioned subjects. It may also invest and
adopted during said Shareholders’ Meeting, replacing the
manage its subsidiaries and associate companies, whether
articles referring to its capital, and corporate purpose to
generators, transmitters, distributors or traders of electric-
include information technology and communications ,
ity or whose business is any of the following: (i) energy, in
among other amendments, and agreeing to the rewritten
any of its forms or nature, (ii) the supply of public utilities or
and updated text of the bylaws, subject to the conditions
whose main input is energy, (iii) telecommunications and
approved at the Meeting. The minute of said Shareholders’
information technology, and (iv) intermediation over the in-
Meeting was recorded as a public deed dated December
ternet. In complying with its main purpose, the company
28, 2017, by the Santiago Notary Public, Mr. Ivan Torrealba
will carry out the following functions:
Acevedo, and its extract was registered in the Commercial
Register (Registro de Comercio del Conservador de Bienes
a) Promote, organize, incorporate, modify, dissolve or liq-
Raíces y Comercio de Santiago) on pages 1154 No 629 of
uidate companies of any nature that have a corporate
the year 2018 and published in the Official Gazette on Jan-
purpose similar to the Company’s corporate purpose.
uary 5, 2018.
Corporate
purpose
The corporate purpose of the company appears in the
bylaws amendment approved by the Extraordinary Share-
holders Meeting held on December 20, 2017 and recorded
as a public deed dated December 28, 2017 granted by the
Santiago Notary Public Mr. Iván Torrealba Acevedo, and its
extract was registered on pages 1154 No 629 of the year
2018 and published in the Official Gazette on January 5,
2018.
The Company’s purpose is to perform the exploration, de-
velopment, operation, generation, distribution, transmis-
sion, transformation and sales of energy in any of its forms
and nature, directly or through other companies, and also
research, development, operation, commercialization, pur-
chase, sale, imports and maintenance of any goods related
to information technology and telecommunications, such
b) Propose investment, financing and business policies
to subsidiary companies, as well as accounting criteria
and systems that these should follow.
c) Supervise the management of subsidiaries.
d) Provide subsidiaries or associate companies with the
necessary financing to develop their business and pro-
vide them management services; financial, technical,
legal and auditing advice; and in general, any service
that appears necessary to improve their 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, ad-
ministration, 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, ei-
ther directly or through subsidiaries or affiliate companies.
21
Identification of the Company and Documents of Incorporation 06Ownership and control
22
Annual Report Enel Chile 2017 23
Letter from the Chairman Ownership structure
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 in which
each share represents the right to one vote. No shares give the state the right to veto.
As of December 31, 2017, all shares were subscribed and paid, and ownership was distributed as follows:
Shareholders
Enel S.p.A.
Foreign Investment Funds
Pension Funds (A.F.P)
Citibank N.A. (Circular 1375 S.V.S)
Stock Brokers, Insurance companies and Mutual Funds
Others
Total Shares
Number of shares
Ownership share
29,762,213,531
6,875,434,501
5,115,438,567
3,477,135,400
2,610,789,444
1,251,761,319
60.62%
14.00%
10.42%
7.08%
5.32%
2.55%
49,092,772,762
100.00%
Identification of the
Controlling Shareholder
On December 20, 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 Share-
holder Registry on February 13, 2016, although the registra-
tion was retroactively effective as of the date of its presenta-
As defined by Title XV of Law 18,045, Enel Chile S.A. is con-
tion, which took place on December 21st, 2016.
trolled by Enel S.p.A., a publicly traded Italian company, that
owns 60.62% of the shares issued by Enel Chile S.A.
The Board of Directors of Enel Iberoamérica S.R.L., in its ses-
On December 19, 2016, Enel Latinoamérica, S.A. and Enel
S.R.L. and incorporate, according to Italian regulation, Enel
Iberoamérica, S.R.L. agreed to merge by the latter absorbing
South América S.R.L. that would become the owner of the
the first and therefore dissolving Enel Latinoamérica, S.A.,
interests held by Enel Iberoamérica S.R.L. in Enel Chile and
sion held on April 6, 2017, agreed to divide Enel Iberoamérica
and Enel Iberoamérica, S.R.L. becoming the surviving entity
Enel Américas S.A.
with all legal rights, obligations, and third-party relationships.
24
Annual Report Enel Chile 2017 On November 16, 2017, the merger of Enel South America S.R.L. with and into Enel S.p.A. was registered in the Company
Register of Roma, Republic of Italy. As a result of the merger, Enel S.p.A. was the surviving entity with all legal rights, and obli-
gations of Enel South America S.R.L. Consequently, as of that date, Enel S.p.A. directly controls Enel Chile S.A. (with a 60.62%
ownership share).
Shareholders of Enel S.p.A at December 31, 2017
Ministero dell’Economia e delle Finanze de Italia
BlackRock Inc.
Other Investors (Institutional or Retail)
Total
The shareholders of the controlling entity do not have a shareholders’ agreement.
23.6%
5.6%
70.8%
100.0%
Twelve Major Shareholders of the
Company at December 31, 2017:
Name
Enel S.p.A.
Taxpayer ID
Number of
Shares
Shareholding
59,243,980-8
29,762,213,531
60.62%
Citibank N.A. per SVS Letter 1,375
Banco de Chile on behalf of nonresident third parties
Banco Itaú Corpbanca on behalf of foreign investors
59,135,290-3
97,004,000-5
97,023,000-9
3,477,135,400
2,889,586,476
2,345,100,592
Banco Santander on behalf of foreign investors
97,036,000-K
1,574,876,510
7.08%
5.89%
4.78%
3.21%
1.55%
1.27%
1.15%
1.10%
0.81%
0.75%
0.65%
76,265,736-8
98,000,000-1
98,000,100-8
76,240,079-0
96,571,220-8
80,537,000-9
76,240,079-0
762,820,688
622,421,137
564,376,246
542,274,465
395,718,609
368,863,381
319,159,851
43,624,546,886
88.86%
AFP Provida S.A. Pension Fund C
AFP Capital S.A. Pension Fund C
AFP Hábitat S.A. Pension Fund C
AFP Cuprum S.A. Pension Fund C
BANCHILE C DE B S.A.
LARRAIN VIAL S.A. Stock Broker
AFP CUPRUM S.A. Pension Fund A
Subtotal 12 shareholders
Other 6,447 shareholders*
5,468,225,876
11.14%
TOTAL 6,459 SHAREHOLDERS
49,092,772,762
100.00%
* No current shareholders belong to families of the Company´s founders. The government nor any state-owned entity holds more than 5%
ownership of the Company.
Ownership and control
25
Twelve Major Shareholders of the
Company at April 2, 2018:
As a consequence of the success of the corporate reorganization entitled Elqui Plan and our PTO for the shares of the
subsidiary Enel Generación Chile S.A. the following are the twelve major shareholders of the Company as of April 2, 2018:
Name
Enel S.P.A.
TAXPAYER ID.
Address
59,243,980-8
Santa Rosa 76
District
City
Santiago
Santiago
HIDROMAC ENERGY S.R.L.
59,148,080-4
Ave. Presidente Riesco 5335 Floor 15
Las Condes Santiago
CITIBANK N.A. SEGÚN CIRCULAR 1375 S.V.S.
59,135,290-3
Bandera 140 Floor 4
Banco de Chile on behalf of non-resident third parties
97,004,000-5
Ahumada 251
Banco Itau Corpbanca on behalf of Foreign Investors
97,023,000-9
Ave. Apoquindo 3457
Banco Santander on behalf of Foreign Investors
97,036,000-k
Matías Cousiño 167 Floor 1
AFP PROVIDA S.A PENSION FUND C
76,265,736-8
Agustinas 640 Floor 18
AFP HABITAT S.A. PENSION FUND C
98,000,100-8
Ave. Providencia 1909 Floor 9
Enel Chile S.A. withdrawal rights
76,536,353-5
Ave. Santa Rosa 76 Floor 16
AFP CAPITAL S.A. PENSION FUND C
98,000,000-1
Ave. Suecia 211 Floor 10
AFP CUPRUM S.A. PENSION FUND C
76,240,079-0
Bandera 236 Floor 7
Banchile C. de B. S.A.
96,571,220-8
Agustinas 975 Floor 209
Santiago
Santiago
Santiago
Santiago
Santiago
Santiago
Santiago
Santiago
Santiago
Santiago
Providencia
Santiago
Santiago
Santiago
Providencia
Santiago
Santiago
Santiago
Santiago
Santiago
Shares at
04/02/2018
29,762,213,531
13,057,995,999
3,825,516,073
3,449,134,209
2,775,513,159
1,902,281,157
1,414,032,334
1,145,115,714
963,762,272
959,953,370
911,760,855
620,675,873
26
Annual Report Enel Chile 2017 Most important changes in ownership share
NAME
TAXPAYER ID.
N° OF SHARES
AT 12/31/2016
N° OF SHARES
12/31/2017
VARIATION
%
Citibank N.A. según circular 1375 S.V.S.
59,135,290-3
3,818,628,500
3,477,135,400
-0.6956%
Banco de Chile on behalf of non-resident third parties
97,004,000-5
2,689,380,833
2,889,586,476
Banco Itau Corpbanca on behalf of Foreign Investors
97,023,000-9
1,953,577,727
2,345,100,592
0.4078%
0.7975%
AFP Provida S.A.
76,265,736-8
1,753,517,650
1,379,706,719
-0.7614%
Banco Santander on behalf of Foreign Investors
97,036,000-K
1,298,404,727
1,574,876,510
0.5632%
AFP Capital S.A.
AFP Habitat S.A.
AFP Cuprum S.A.
98,000,000-1
1,278,113,973
1,108,850,445
-0.3448%
98,000,100-8
1,239,643,962
1,016,399,034
-0.4547%
76,240079-0
1,201,123,076
1,119,912,164
-0.1654%
Banchile Corredores de Bolsa S.A.
96,571,220-8
322,970,265
395,718,609
BTG Pactual Chile S.A. Stock Broker
84,177,300-4
246,523,559
225,359,878
-0.0431%
80,537,000-9
307,280,681
368,863,381
96,519,800-8
266,424,196
146,850,110
-0.2436%
98,001,200-K
191,339,568
187,665,115
-0.0075%
76,762,250-3
190,407,528
302,905,090
0.1482%
0.1254%
0.2292%
0.0437%
0.0441%
Larraín Vial S.A. Stock Broker
Bci Corredores de Bolsa S.A.
AFP Planvital S.A.
AFP Modelo S.A.
Santander Corredores de Bolsa Limitada
96,683,200-2
169,490,609
190,942,944
Santiago Stock Exchange
90,249,000-0
166,004,740
122,824,128
Stock market transactions among
related parties during 2017
There were no transactions among related parties during 2017.
Summary of comments and proposals by
the Directors Committee and shareholders
Enel Chile received no comments or proposals regarding the progress of corporate businesses between January 1 and
December 31, 2017, 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 18,046 and Articles 136 of the Rules and
Regulations to the Chilean Corporations Law.
Ownership and control
27
07Management
28
Annual Report Enel Chile 2017 29
Letter from the Chairman Board of Directors
Enel Chile is managed by a Board of Directors comprised of seven members for a three-year term and may be reelected.
The Board of Directors was elected at the Ordinary Shareholders’ Meeting held on April 28, 2016. As stated by the Chilean
Corporations Law, in the event of a vacancy, the Board must be totally renewed at the Company’s forthcoming Ordinary
Shareholders’ Meeting, and the Board may appoint a substitute in the interim. The Board does not have alternate mem-
bers.
1
5
4
2
6
3
7
1. CHAIRMAN
Herman Chadwick Piñera
Lawyer
Pontificia Universidad Católica de Chile
Taxpayer ID: 4,975,992-4
Since 04.28.2016
2. DIRECTOR
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
Fernán Gazmuri Plaza
Commercial Engineer
Pontificia Universidad Católica de Chile
Taxpayer ID: 4,461,192-9
Since 04.28.2016
Over the last few years the following
Individuals were also directors of
Enel Chile:
Vincenzo Ranieri
Undergraduate degree in Business
Management
Universidad de LUISS- Italy
Passport: YA 7616919
From 04.28.2016
Until: 02.28.2018
30
5. DIRECTOR
Daniele Caprini
Undergraduate degree in Economics
Università degli Studi di Siena
Master in Business Administration
Universidad de LUISS-Rome
Passport: YA9188092
Since 03.01.2018
6. DIRECTOR
Gerardo Jofré Miranda
Commercial Engineer
Pontificia Universidad Católica de Chile
Taxpayer ID: 5,672,444-3
Since 04.28.2016
7. 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
Annual Report Enel Chile 2017 Board of Directors’ and Directors’
Committee Compensation
Under Article 33 of Law 18,046, the Chilean Corporations
The compensation of the Directors’ Committee consists of
Act, the Ordinary Shareholders’ Meeting held on April 26,
a variable amount equal to 0.11765 thousandths of the an-
2017 approved the compensation of the Board of Directors
nual net income. An advance payment equal to one month-
and Directors’ Committee for 2017.
ly compensation is paid to each director. A portion of such
The compensation of the Board of Directors consists of a
conditional. Advances are deducted from the yearly vari-
variable annual amount equal to one thousandths of the an-
able compensation equal to a fixed monthly amount equal
nual net income. An advance payment equal to one month-
to 60 UF and an additional 22 UF per session attended with
ly compensation is paid to each director. A portion of such
a maximum of 15 sessions in total, either ordinary or ex-
monthly advance payment is unconditional and a portion is
monthly advance payment is unconditional and a portion is
traordinary.
conditional to the annual variable amount referred to above.
Advances are deducted from the yearly variable compensa-
The total compensation expense during 2017 amounted
tion equal to a fixed monthly amount equal to 180 UF and
to Ch$ 530,674,977 and is detailed in the following table.
an additional 66 UF per session attended with a maximum
The Board of Directors did not have additional expenses for
of 15 sessions in total, either ordinary or extraordinary.
consulting services.
Board of Directors’ compensation in 2017
Figures in Ch$
Board Member Name
Position
Fixed
Compensation
Ordinary and
Extraordinary
Sessions
Committee’s
Fixed
Compensation
Directors
Committee
Ordinary and
Extraordinary
Sessions
Variable
Compensation
Herman Chadwick Piñera
Chairman
114,858,878
63,205,976
Giulio Fazio (1)
Salvatore Bernabei (1)
Vincenzo Ranieri (1)
Fernán Gazmuri Plaza
Director
Director
Director
Director
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57,429,439
31,602,988
19,143,146
9,361,134
Juan Gerardo Jofré Miranda
Director
57,429,439
31,602,988
19,143,146
9,361,134
Pablo Cabrera Gaete
Director
57,429,439
31,602,988
19,143,146
9,361,134
Total
287,147,196
158,014,940
57,429,439
28,083,402
(1) The Director waived his compensation for being an executive of the Enel SpA Group
TOTAL 2017
178,064,854
-
-
-
117,536,707
117,536,707
117,536,707
530,674,977
-
-
-
-
-
-
-
-
The total compensation expense for 2016 was Ch$441,917,998 and is detailed in the following table. The Board of Directors
did not have additional expenses for consulting services.
31
Management
TOTAL 2016
129,577,699
-
-
-
106,113,433
106,113,433
106,113,433
441,917,998
-
-
-
-
-
-
-
-
Board of Directors’ compensation in 2016
Figures in Ch$
Board Member Name
Position
Fixed
Compensation
Ordinary and
Extraordinary
Sessions
Committee’s
Fixed
Compensation
Directors
Committee
Ordinary and
Extraordinary
Sessions
Variable
Compensation
Herman Chadwick Piñera
Chairman
84,744,306
44,833,393
Giulio Fazio (1)
Vice Chairman
Salvatore Bernabei (1)
Vincenzo Ranieri (1)
Fernán Gazmuri Plaza
Director
Director
Director
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,643,865
29,219,885
17,214,472
8,035,211
Juan Gerardo Jofré Miranda Director
51,643,865
29,219,885
17,214,472
8,035,211
Pablo Cabrera Gaete
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
32
Annual Report Enel Chile 2017
Incentive plan
Ownership in Enel
Chile S.A.
As of December 31, 2017, according to the shareholder’s
register, none of the Directors in office owned shares of
the Company.
Directors’ Committee
Enel Chile S.A., formerly Enersis Chile S.A., was created
as a consequence of the Division of Enersis S.A. approved
by the Extraordinary Shareholders’ Meeting of the compa-
ny held on December 18, 2015. On February 29, 2016, the
Board of Directors appointed the members to the Compa-
ny’s first Directors’ Committee. The Directors appointed to
compose the Directors’ Committee were Fernán Gazmuri
Plaza, Gerardo Jofré Miranda and Pablo Cabrera Gaete. On
February 29, 2016, the Board of Directors, after the Ordi-
nary Shareholders Meeting held on April 28, 2016 that ap-
pointed the members to the Board of Directors, designat-
ed the same gentlemen Gazmuri Plaza, Jofré Miranda and
Cabrera Gaete as members to the Directors’ Committee,
all independent directors as defined by Article 50 bis of the
Chilean Corporations Law 18,046. Mr. Fernán Gazmuri Pla-
za was appointed Chairman of the Directors’ Committee
during the ordinary session of the Directors’ Committee
and Mr. Domingo Valdés Prieto was appointed Secretary
to the Directors’ Committee.
Director’s compensation for 2017 did not include an incen-
tive plan.
Board of Directors’
consulting expenses
The Board of Directors did not spend on consulting ser-
vices in 2017.
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
7
0
7
33
Management Annual Report
The Directors’ Committee of the Company held seventeen
sessions during 2017, including the present session fully
complying with the obligations established in Article 50 bis
of the Chilean Corporations Act 18,046 and additional ap-
plicable regulation.
During 2016, the Directors’ Committee addressed the mat-
ters that are summarized below:
1.- Financial statements
- During the session held on February 28, 2017, the Di-
rectors’ Committee analyzed the financial statements
to register the Company and its shares in the SVS and
unanimously agreed to approve the Combined Finan-
cial Statements as of December 31, 2015, including
relevant supplementary information as well as the re-
spective auditors report by Ernst & Young. The directors
of the committee also recommended that the board
of directors approve said financial statements. The Di-
rectors’ Committee also agreed to request the Chief
Administration, Finance and Control Officer to have
the External Auditors, Ernst & Young, make a specific
presentation in the forthcoming Directors’ Committee
session on the related party transactions taken place
during March and September of every year as well as a
review of the lawsuit and derivatives provisions.
- During the session held on March 30, 2017, the Direc-
tors’ Committee examined the modifications to the In-
ternational Financial Reporting Standards to be in force
beginning January 1, 2018.
- During the same session held on March 30, 2017, the
Directors Committee unanimously agreed to declare
having reviewed the equity accounts of the Company
in the Consolidated Financial Statements of Enel Chile
as of December 31, 2016, based on the presentation
performed by the Chief Administration Officer, Mr.
Paolo Pirri.
- During the extraordinary session held on May 4, 2017,
the Directors’ Committee unanimously declared hav-
ing examined the Consolidated Financial Statements
of the Company as of March 31, 2017 and its Notes,
Income Statement and Significant Events.
- During the ordinary session held on September 28,
2017, the Directors’ Committee unanimously declared
having examined the Consolidated Financial State-
ments of the Company as of June 31, 2017 audited
under IFRS norm by Ernst & Young “without exception”
and also performed a limited review under the PCAOB
standard by the same auditors. During the same ses-
sion, the Directors’ Committee resolved declaring
having examined the Proforma Consolidated Financial
Statements of the Company as of June 30, 2017 and
December 31, 2016 issued with Ernst &Young´s attes-
tation report.
- During the ordinary session held on November 3, 2017,
the Directors’ Committee unanimously declared having
examined the Consolidated Financial Statements of
the Company as of September 30, 2017 and its Notes,
Income Statement and Significant Events, and also the
opinion of the external auditors issued “without excep-
tion” dated November 3, 2017 and signed by Mr. Emir
Rahil, partner of Ernst & Young agreeing to recommend
the Board of Directors of the Company to approve
them.
- During the extraordinary session held November 2017,
the Directors’ Committee unanimously declared hav-
ing examined the proforma combined financial state-
ments of Enel Chile as of September 30, 2017, and its
respectives notes. The Directors’ Committee declared
having examined these financial statements subject
to the condition that the Board of Directors validate
the asumptions underlying such financials. During the
same session, and also unanimously, the Directors’
Committee resolved to declare having examined the
consolidated financial statements of the Company as
of September 30, 2017, and the report on the limited
review performed by Ernst & Young and their limited
review under PCAOB standards.
34
Annual Report Enel Chile 2017 2. External Auditors report on bank transfers and
mit it to the Ordinary Shareholders Meeting for final
money brokerage: During the session held on Feb-
approval.
ruary 28, 2017, the Directors’ Committee unanimous-
ly agreed to acknowledge that they had formally and
5. External auditors’ examination of subjects covered
expressly noted the report on money brokerage and
by NCG 385: During the ordinary session held on Feb-
bank transfers prepared by Ernst & Young, the external
ruary 28, 2017, the Directors’ Committee unanimous-
auditors of Enel Chile S.A., dated February 28, 2017.
ly declared that the External Auditors had examined
subjects voluntarily presented as good corporate gov-
3. Examination of internal control letter SVS Circular
ernance included in numeral 1 d) of the SVS General
422: On December 6, 2007, the Superintendence of
Norm 385 and declared that none of the subjects re-
Securities and Insurance issued Circular 422, which
ferred to by items ii, iii and v of such numeral had taken
supplements Circular 980 dated December 24, 1990.
place.
This Circular offers specific instructions on internal con-
trol procedures, providing for the submission of a pro-
6. External auditors’ fees in fiscal year 2016: During the
visional report and a broad time frame for the external
ordinary session held on February 28, 2017, the Direc-
auditors to submit a final internal control report, allow-
tors’ Committee unanimously agreed to approve the
ing it to be delivered until the date in which the Board
fees paid during 2016 by the Company to the different
of Directors takes note of the financial statements at
auditing firms hired.
year end of each fiscal year.
Thus, in ordinary session of February 28, 2017 the Di-
During the ordinary session held on February 28, 2017,
rectors’ Committee, unanimously agreed to record that
the Directors’ Committee unanimously agreed to grade
it had taken formal knowledge of the Internal Control
the work performed in 2016 by the Company´s external
Letter dated February 28, 2017, prepared by Ernst &
auditors, Ernst & Young, as reasonable.
7. Supervision and evaluation of external auditors:
Young, to comply with the regulations issued by the
Superintendence of Securities and Insurance (SVS), on
8. Services to be rendered by external auditors: During
this matter. In ordinary session of November 28, 2017,
the ordinary session held on February 28, April 26,
the Directors’ Committee unanimously agreed to re-
June 27, July 25 and August 30 (extraordinary) Septem-
cord that it had examined and taken knowledge of the
ber 28, October 26, and December 20, all in 2017, the
Internal Control Letter referred to Enel Chile S.A., dated
non-recurrent services to be rendered by the external
November 28, prepared by the external auditors of the
auditors were examined. The Committee agreed to de-
Company, Ernst & Young.
clare that such services do not compromise the techni-
cal competence nor the independent judgement of the
4. Directors’ Committee Budget: On February 28,
respective external auditing firms, as stated in Section
2017, the Directors’ Committee unanimously agreed
202 of the Sarbanes Oxley Act 2017, in the last para-
to approve the Directors’ Committee 2017 Budget
graph of Article 242 of the Capital Markets Law 18,045
amounting to 10,000 Unidades de Fomento (Chilean
and in the Directors´ Committee Regulations.
inflation-indexed, Chilean peso-denominated monetary
unit) for the Committee and its consultants’ expenses
- During session held on November 28, 2017, the Direc-
and operations. The members of the Directors’ Com-
tors’ Committee unanimously agreed to declare having
mittee also unanimously decided to submit this 2017
examined the presentation on non-recurrent external
Directors’ Committee Budget proposal to the approval
auditor services performed by the Chief Administration
of the Board of Directors so that, if approved, they sub-
Officer, Mr. Paolo Pirri. The Directors’ Committee also
35
Management
noted that the information presented covered the mat-
ters that the Directors’ Committee had in fact examined
- During the ordinary session held on February 28, 2017,
during the year and that the cost of the services men-
the Directors’ Committee declared having examined
tioned had increased along with the Elqui Operation in
the Related Party Transaction regarding the staff func-
process, but that it had, by no means, compromised
tion services provided by Enel Chile to the subsidiaries
the independence of the Company’s external auditors.
of Enel green Power. The Directors’ Committee also
declared having examined the resolution of the sus-
9. 20-F Form submitted to the SEC (Securities and Ex-
tainability and institutional relations services contract in
change Commission of the United States of Ameri-
force between Enel Chile and EGP Chile. The Commit-
ca): During the ordinary session held on April 26, 2017,
tee declared that the contract for such services contrib-
the Directors’ Committee unanimously declared having
uted to the best interest of Enel Chile S.A. and adjusted
examined the financial statements under IFRS to be
in price, terms and conditions to those prevailing in the
included in the 20-F Form with the changes proposed
market at the time of its approval.
by the Director Mr. Gerardo Jofré, to comply with the
rules and requirements of the SEC regarding securities
- During the ordinary session held on August 25, 2017,
issued in the United States of America.
the Directors’ Committee unanimously declared having
examined the Related Party Transaction regarding the
10. 2017 External Auditor Plan: During the extraordinary
investor relations services provided by Enel Green Pow-
session held on May 31, 2017, the Directors’ Commit-
er North America, in the United States of America juris-
tee unanimously declared having analyzed the presen-
diction, to Enel Chile S.A. declaring that the transaction
tation by the partner of Ernst & Young, Emil Rahil, on
contributed to the best interest of Enel Chile S.A. and
the 2017 External Auditor Plan.
adjusted in price, terms and conditions to those prevail-
11. Examination of related party transactions: During
by the report issued by the Administration, Finance and
the ordinary session held on January 23, 2017, the Di-
Control department of the Company.
ing in the market at the time of its approval, as stated
rectors’ Committee unanimously declared having ex-
amined the Related Party Transaction with Enel Italia
- During the ordinary session held on October 26, 2017,
SrL related to the investment project (Capex) to imple-
the Directors’ Committee declared having examined
ment the new Sap information system, Enel Chile´s
the Related Party Transaction regarding the services
E4E program, for an estimated total 2.2 million Euros
provided by Enel SpA to Enel Chile S.A. declaring that
of which a maximum 700,000 Euros was paid to Enel
the transaction contributed to the best interest of the
Italia SrL, and declaring the transaction contributed to
Company and adjusted in price, terms and conditions
the best interest of the Company and adjusted in price,
to those prevailing in the market at the time of its ap-
terms and conditions to those prevailing in the market
proval, as stated by the report issued by Pricewater-
at the time of its approval, as stated by the report is-
houseCoopers and the presentation prepared by the
sued by PricewaterhouseCoopers.
representative of the consulting firm.
- During the same ordinary session held on January 23,
12. Proposed private risk rating agencies: During the
2017, the Directors’ Committee declared having exam-
ordinary session held on February 28, 2017, the Direc-
ined the Related Party Transaction regarding the legal
tors’ Committee unanimously agreed to propose to the
services provided by Enel Chile to Enel Generación
Company’s Board of Directors to suggest Feller Rate
Chile and Enel Distribución Chile and the direct sub-
Clasificadora de Riesgo Limitada and Fitch Chile Clas-
sidiaries of each one of them, declaring that the trans-
ificadora de Riesgo Limitada as local private risk rating
action contributed to the best interest of the Company
agencies and Standard & Poors International Rating
and adjusted in price, terms and conditions to those
Services as the international private risk rating agency
prevailing in the market at the time of its approval.
for fiscal year 2017.
36
Annual Report Enel Chile 2017
plaints received through the ethics channel and there-
13. Proposed External Auditors: During the ordinary
fore proposed that the Internal Audit Department verify
session held on March 30, 2017, the Directors’ Com-
if the employees of the Company and its subsidiaries
mittee unanimously agreed to propose to the Com-
know how the Ethics Channel works and requested an
pany’s Board of Directors to propose to the Ordinary
industry benchmark on the subject and a benchmark
Shareholders’ Meeting the following auditing firms, in
of other Enel Group companies. The Head of Internal
the order of preference presented, as the external au-
Audit explained the different diffusion activities carried
ditor firm of Enel Chile S.A. for 2017: 1-E&Y; 2-BDO;
out highlighting that the activities included employees
3-RSM and 4-PKF. The arguments considered relevant
and suppliers of Enel Chile and Its subsidiaries.
in proposing E&Y in first place as external auditor of
the Company are the following: (i) it presented the
Mr. Gerardo Jofré emphasized the importance of hav-
most competitive proposal based on the technical and
ing a benchmark by industry and of other Enel Group
economic evaluations performed on the proposals re-
companies and stated that he was surprised that there
ceived; (ii) it is highly qualified in terms of available re-
were no complaints related to the situations caused by
sources and experience in the electricity sector; (iii) it
extreme wind and snow conditions.
is one of the four most important auditing firms on the
national and international level; (iv) it is the auditing firm
16. Corporate reorganization of Enel Chile: The Di-
with greatest synergies with Enel Chile S.A. because
rectors´ Committee appoints independent evaluator:
E&Y is the external auditing firm of Enel S.p.A., Enel
During the extraordinary session held August 30, 2017,
Chile´s controlling shareholder.
the Directors’ Committee, unanimously approved ap-
pointing Econsult Capital as the independent evaluator
14. Approval of external auditor contracts: During the or-
of the corporate reorganization entitled Elqui Project,
dinary session held May 31, 2017, the Directors’ Com-
as a related party transaction, and to inform the share-
mittee unanimously agreed to declare having examined
holders on the terms and conditions of the operation,
and approved the contract to be subscribed between
its effects and potential impact on the Company.
Enel Chile S.A. and external auditors Ernst & Young.
15. Analysis of ethics channel complaints: During the
Directors’ Committee, unanimously, declared having
- During the ordinary session held August 30, 2017, the
ordinary session held January 23, 2017, the Directors’
examined the preliminary report of Econsult Capital,
Committee, unanimously, gave its opinion on each of
the independent evaluator the Committee appointed,
the complaints received, offering guidelines on how
within the context of the corporate reorganization of
to proceed with each complaint and confirming what
Enel Chile. Through the same vote, the Directors’ Com-
had been already resolved by the Committee. In this
mittee agreed to request that the Chairman, Mr. Fernán
regard, the Chairman of the Directors’ Committee is
Gazmuri Plaza, make the preliminary report available to
to summon an extraordinary session if he considers it
the Chairman of the Board of Directors to be public-
necessary to resolve a certain complaint. The director,
ly disclosed. During the same session, the Directors’
Mr. Gerardo Jofré, expressed the importance of having
Committee, unanimously, agreed to declare having ex-
a specific protocol in the Procurement Department to
amined the draft of the Enel Chile Directors’ Commit-
separate the technical area from the “procurement”
tee Collective Report and convene a meeting to work
area.
on the subject.
- During the ordinary session held August 25, 2017, the
- During the extraordinary session held November 3,
Directors’ Committee, unanimously, gave its opinion
2017, the Directors’ Committee, unanimously declared
on each of the complaints received, as was indicated
having examined and received the final independent
in the previous paragraph. The Director, Mr. Gerardo
evaluation report prepared by Econsult Capital regard-
Jofré, expressed his concern regarding the few com-
ing the corporate reorganization of Enel Chile. Through
37
Management the same vote, the Directors’ Committee agreed to
18. Various other matters: During the ordinary session
request that the Chairman, Mr. Fernán Gazmuri Plaza,
held February 28, 2017, when the financial statements
make the report available to the Chairman of the Board
of the Company were being presented, the Chairman
of Directors, for him to make it available to the share-
of the Directors’ Committee, Mr. Gerardo Jofré Miran-
holders of the Company and the public, as required by
da stated that it would be useful to have a presentation
regulation. During the same meeting, the Directors’
on the equity account of the Company during the next
Committee, unanimously declared having examined
ordinary session. The other Directors agreed.
and complemented the draft of the Enel Chile Direc-
tors’ Committee Collective Report, and proceeded to
- During the ordinary session held March 30, 2017, the
fix the schedule of meetings to work on the subject.
director, Mr. Gerardo Jofré Miranda, recalled that the
In the same meeting, the Chairman of the Directors’
Committee had agreed to contract the services of the
Committee, Mr. Fernán Gazmuri Plaza stated that after
external auditors regarding related party transactions
receiving and analyzed the final report of the Indepen-
and lawsuits and derivatives provisions and a presenta-
dent evaluator, Econsult, it was to be delivered to the
tion on the matter by the Chief Administration, Finance
Chairman of the Board of Directors of the Company for
and Control Officer, had been requested. Mr. Raffaele
him to submit it to the Board of Directors for review
Grandi explained that the services had been included in
and then make it available to the shareholders, in time
the contract to be subscribed once the Shareholders’
and form established by the Chilean Corporations Law.
Meeting appointed the external auditors for 2017.
- During the extraordinary session held November 14,
- During the ordinary session held April 26, 2017, the
2017, the Directors’ Committee, unanimously approved
Chairman of the Directors’ Committee, Mr. Fernán
the Enel Chile Directors’ Committee Collective Report.
Gazmuri Plaza congratulated the Chief Executive Offi-
17. Examination of the Company´s compensation plan
the excellence and success of the Ordinary Sharehold-
for principal executives, managers and employees:
ers Meeting of Enel Chile. The other Directors agreed
cer, Legal Counsel and the Chief Financial Officer for
During the ordinary session held May 31, 2017, the
with the Chairman.
Directors’ Committee, unanimously declared having
examined the compensation plan of principal execu-
- During the ordinary session held October 26, 2017, the
tives, managers and employees of the Company. The
director, Mr. Gerardo Jofré, said he considered rele-
director, Mr. Gerardo Jofré, highlighted the importance
vant that the Committee examine a consolidated list
of analyzing the compensation that is paid as benefits,
of all non-recurrent contracts and payments to Ernst &
considering that employees frequently prefer receiving
Young. He stressed that it was critical to the adequate
benefits than the equivalent amount in cash.
control of such contracts. The Chairman of the Direc-
tors’ Committee and Mr. Pablo Cabrera Gaete agreed.
38
Annual Report Enel Chile 2017 - During the ordinary session held November 28, 2017,
the director, Mr. Gerardo Jofré, stated that considering
that the internal controls performed under the Securi-
ties and Exchange Commission of the United States of
America only focuses on significant matters, it would
be convenient that Ernst & Young present all other mat-
Enel Chile S.A. Directors’
Committee Expenses
ters not considered to be as relevant during the next
The Directors’ Committee did not spend its operational
session. The other directors agreed with his proposal.
expense budget approved by the Ordinary Shareholders
Mr. Gerardo Jofré Miranda also stated that it would be
Meeting held April 26, 2017.
convenient to have the external auditors make a pre-
sentation on the accounting status of Argentina and
also analyze collections. The other directors agreed
with this proposal.
39
Management Organizational structure
Board of
Directors
H
CHAIR M A N
erman Chadw i c k P i ñ
e r a
R
E
FIC
N A L AUDIT OF
R affaele Cutrignelli
E R
L O
O
F FIC E R
C
O
M
M
IN
S
TIT
U
TIO
R
E
T
I N
CHIEF EXECUTIVE O F F I C E R
Nicola Cotug n o
F
U
A
NIC
FI C
L O
d i
NTIONS OFFICER C H I E F F I N A N C I A
José Miranda Montecinos R a f f a e l e G r
NAL AFFAIRS OFFICER PL A N N I N G A N D C O N
Pedro E. Urzua Frei Bru n o S t e l
REGULATION SAF E T Y
Mónica De Martino And r é s E .
P i n t o B o n t
l a
n
a
R
á
T
SERVICES SUSTA I N A B I L I T Y A N D C O M M U
i n i
Nicola Cotugno (a.i.) Anto n e l
PROCUREMENT OFFICER ICT OF F I C E R
Juan José Bonilla Andrino (2) Ángel Ba r r i o s ( 3 )
l a P e l
l e g r
N S
A TI O
L
E
Y R
N I T
R
E
F I C
F
T I O N O
A
D
R
A
O
E B
H
HUMAN R E S O U R C E S A N D O R G A N I Z
Liliana S ch n a i d t H a g e d o m
GENERA L C O U N S E L A N D S E C R E T A R Y T O T
( 1 )
Domingo Va l d é s P r i e t o
(1) Was appointed to this position on 02.01.2018 replacing
Alain Rosolino
(2) Was appointed to this position on 01.01.2018 replacing
Antonio Barreda Toledo
(3) Was appointed to this position on 01.31.2018.
40
Annual Report Enel Chile 2017
Board of
Directors
CHAIR M A N
H
erman Chadw i c k P i ñ
e r a
R
E
FIC
N A L AUDIT OF
R affaele Cutrignelli
E R
F FIC E R
L O
O
R
T
R
E
T
I N
FI C
F
L O
d i
C
O
M
M
U
NIC
IN
S
TIT
U
TIO
CHIEF EXECUTIVE O F F I C E R
Nicola Cotug n o
A
NTIONS OFFICER C H I E F F I N A N C I A
José Miranda Montecinos R a f f a e l e G r
n
a
NAL AFFAIRS OFFICER PL A N N I N G A N D C O N
Pedro E. Urzua Frei Bru n o S t e l
l a
REGULATION SAF E T Y
Mónica De Martino And r é s E .
SERVICES SUSTA I N A B I L I T Y A N D C O M M U
i n i
á
P i n t o B o n t
Nicola Cotugno (a.i.) Anto n e l
l e g r
l a P e l
PROCUREMENT OFFICER ICT OF F I C E R
Juan José Bonilla Andrino (2) Ángel Ba r r i o s ( 3 )
N S
A TI O
L
E
Y R
N I T
R
E
F I C
F
T I O N O
A
D
R
A
O
E B
H
HUMAN R E S O U R C E S A N D O R G A N I Z
Liliana S ch n a i d t H a g e d o m
GENERA L C O U N S E L A N D S E C R E T A R Y T O T
( 1 )
Domingo Va l d é s P r i e t o
Senior Executives
1
6
2
7
3
8
4
9
5
10
11
12
13
14
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 RESOURCES AND ORGANIZATION
OFFICER
Liliana Schnaidt Hagedorn
Industrial Engineer
Pontificia Universidad Católica de Chile
Taxpayer ID: 13.903.626-3
Since 02.01.2018
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. GENERAL COUNSEL AND SECRETARY TO
THE BOARD
Domingo Valdés Prieto
Lawyer
Universidad de Chile
Master of Law
University of Chicago
Taxpayer ID: 6,973,465-0
Since 02.29.2016
6. 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
Since 05.31.2017
10. SUSTAINABILITY AND COMMUNITY
RELATIONS
Antonella Pellegrini
Marketing and Communications Degree
European Design Institute
Roma – Italy
Taxpayer ID: 23,819,804-6
Since 05.31.2017
7. PROCUREMENT OFFICER
Juan José Bonilla Andrino
Industrial Engineer
Escuela Superior Ingenieros Industriales Madrid.
Universidad Politecnica/ Technische Universitat
Berlin (Germany). 01.09.2003.
Master in Business Administration MBA. ESERP
Business School. 07.01.2010.
Master in International Business. San Pablo CEU
University. 07.01.2014.
Master in Executive Business. Massachusetts
Institute of Technology. Boston. USA
Taxpayer ID: 25,566,577-4
Since 01.01.2018
8. COMMUNICATIONS OFFICER
José Miranda Montecinos
Audiovisual Communicator with a degree from DUOC UC
Management Skills Diploma. Universidad de Chile
Corporate Entrepreneurship and Open Innovation,
Berkeley University.
Taxpayer ID: 15,307,846-7
Since 02.29.2016
9. 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
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
Since 05.31.2017
12. PLANNING AND CONTROL OFFICER
Bruno Stella
Degree in Economics and Business
Universitá degli studi di Messina (Italia)
Taxpayer ID: 25,524,957-6
Since 01.23.2017
13. ICT OFFICER
Ángel Barrios
Computer Science Engineer
Universidad Federico Santa María
Master in Information Technology
Universidad Federico Santa María
Taxpayer ID: 10,761,436-2
Since 01.30.2018
14. SERVICES
Interim: Nicola Cotugno
41
Management
Senior Executive and
Manager Compensation
During 2017, the compensation and benefits received by
the chief executive officer and senior executives of the
Company amounted to a fixed compensation of Ch$ 2,959
million and Ch$ 341 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.
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.
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 bene-
fits are granted according to the management level of each
employee at the time executed.
Severance payments
The company made severance payments for years of ser-
vice to senior executives and managers that left the com-
pany amounting to Ch$ 377 million in 2017.
Shareholdings in
Enel Chile
In 2017, the amount spent on these benefits was Ch$ 30
million, which is included in the compensation received by
senior executives.
Based on the shareholder’s register, as of December 31,
2017, no senior executive owned shares of the Company.
There are no requirements regarding the ownership of
company shares by the CEO or senior executives. What is
mandatory by the Securities Market Law and the Manual
of Information of Interest to the Market, is that the CEO
and senior executives inform their share position and the
respective transactions.
42
Annual Report Enel Chile 2017 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
43
Management 08Human Resources
44
Annual Report Enel Chile 2017 45
Letter from the Chairman ENEL CHILE
9
2
-
-
9
20
ENEL CHILE
170
241
411
ENEL CHILE
4
4
390
8
1
1
1
1
1
411
ENEL CHILE
10
164
145
87
5
411
ENEL CHILE
53
59
44
69
186
411
Workforce
Years of Service
Less than 3 years
Between 3 and 6 years
More than 6 and less than 9 years
The employees per category of Enel Chile and its subsidiar-
Between 9 and 12 years
ies and jointly controlled entities as of December 31, 2017
More than 12 years
are the following:
Company
Enel Chile (1)
Enel Generación (2)
Enel Distribución (3)
Total
Manage-
ment and
Senior
Executives
Profes-
sionals
and techni-
cians
Employ-
ees and
others
370
806
616
41
29
45
Total
431
848
669
1,792
115
1,948
20
13
8
41
(1) Includes Servicios Infromáticos e Inmobiliarios Ltda. (absorbed on
September 1, 2017)
(2) Includes Pehuenche, GasAtacama Chile and GasAtacama
Argentina
(3) Includes Empresa Eléctrica de Colina and Luz Andes
Diversity
Total
Diversity in the organization
Gender
Female
Male
Total
Nationality
Argentine
Brazilian
Chilean
Colombian
Costa Rican
Italian
Panamanian
Rumanian
Venezuelan
Total
Age
Less than 30 years
Diversity of the Chief Executive Office and other Depart-
Between 30 and 40 years
ments that report to CEO or Board of Directors
Gender
Female
Male
Total
Nationality
Chilean
Spanish
Italian
Total
Age
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
46
ENEL CHILE
3
17
20
Between 41 and 50 years
Between 51 and 60 years
Between 61 and 70 years
Total
Years of Service
Less than 3 years
ENEL CHILE
Between 3 and 6 years
12
1
7
20
More than 6 and less than 9 years
Between 9 and 12 years
More than 12 years
Total
ENEL CHILE
Average fixed salary of women compared to men within
-
5
8
7
-
the same professional category
Categories
Senior Management
Professional-Level 1
20
Professional-Level 2
Professional-Level 3
Administrative-Level 1
Administrative-Level 2
Administrative-Level 3
%
%
%
%
%
%
%
75%
86%
98%
76%
93%
97%
123%
Annual Report Enel Chile 2017 Human
resources
activities
Labor relations
The program of periodic meetings with the Unions con-
tinued in 2017, strengthening dialogue with the represen-
tatives of the workers and improve work conditions and
climate.
> May: Anti-tobacco campaign offering advice to prevent
tobacco consumption.
> June: Cervix and prostate cancer encouraging the annu-
al preventive exam.
> July: Respiratory disease and viral infections prevention
campaign.
> August: Heart care campaign.
> September: Gastric and colon cancer campaign encour-
aging preventive exams for timely detection of these
diseases.
> October: Breast cancer prevention campaign.
> November: ”Boost your energy” campaign recommend-
ing practical nutrition habits to improve the quality of life.
> December: “Year-round skincare” campaign.
Safety measures and
occupational health
Activities for Enel Chile
Group employees
Immunization Program
In Enel Chile, safety and occupational health are goals
The immunization of all Enel Chile employees is a preven-
closely linked to the business. Given the nature of the busi-
tive measure that focuses on all employees to prevent re-
ness, it is exposed to critical risks. Leadership in safety
current contagious illnesses.
integration and occupational health is particularly important
throughout the continuous improvement process at every
The vaccine of the Seasonal Trivalent Influenza: Performed
level and any activity developed by the company. Its pri-
during the first quarter to prevent the outbreak that begins
ority is key in corporate management due to its strategic
In June.
importance.
Health dissemination and
promotion
Preventive medical exams
program
The objective is to perform periodic medical evaluations for
This program aims to educate and train workers about
the early detection of potential Illnesses. This Initiative fo-
activities that promote quality of life through massive dis-
cuses on all employees of the company and Is carried out
semination efforts, such as posters, graphic material and
following a protocol defined according to gender and age.
emailed information titled “Advice that gives life.” Among
each month’s topics are:
> March: Anti-stress campaign offering practical recom-
mendations to eliminate its causes.
> April: Immunization campaign to prevent the seasonal flu.
47
Human Resources Cardiovascular
gram
risk pro-
of others. It is an integral coaching program, which builds
an individual itinerary for each manager, including skill train-
ing workshops, individual coaching, guided meetings, and
building a network of good practices in human resource
The objective is to care for employees with cardiovascular
management.
risks, based on the results of preventive exams, through
specific fitness programs and nutritional evaluation con-
Enel Chile has implemented a set of communication initia-
trols.
Workplace gymnastics pro-
gram
tives under the name “RHO With You” to guarantee con-
stant communication with workers on different matters of
interest related to human resource management. Activities
include a weekly radio show, a website, a manual of good
practices, and monthly bulletins for managers and work-
ers, among others.
The workplace gymnastics program is an innovative ex-
Additionally, we have also continued with the Human Re-
ercise program that contributes to prevent workplace ill-
sources initiative “Interact”, which involves holding meet-
nesses, such as, stress, tendinitis, lumbago, carpal tunnel
ings that make human resources permanently present in
syndrome, neck and extremity pain.
the agenda. These meetings are focused on employees
interacting with Human Resources to learn about the Com-
pany’s employee policies and good practices, and for the
Company to learn about the developing needs of employ-
ees.
The program “Areas are Presented” was implemented
during 2017, in which employees deepen the roles, func-
tions and challenges in the different areas of the company.
The importance of this program lies in promoting a col-
laborative culture among separate areas of the company,
transforming, guiding and projecting different teams into
a culture based on the question: “¿How can I help you?”
Additionally, several programs aim towards meritocracy
and development. Professional development is managed
by offering promotions based on merit, and job opportuni-
ties both locally and abroad, wherever the Group is pres-
ent.
Another initiative that has been maintained is the “One on
One”. It is a personalized conversation program that allows
learning about employees’ motivations and aspirations,
strengthening our relationship with our internal clients.
In Enel Chile, feedback occasions between managers and
employees are opportunities to create closer bonds, in-
crease transparency, align expectations, and support em-
ployees’ professional development. Fostering a culture of
constant feedback develops our employees’ talents and
leads the way towards the formation of high performing
teams.
Workplace climate
management
Work climate is a priority for Enel Chile. Therefore, a work-
place climate and safety survey is performed twice a year,
with widespread employee participation. An action plan is
drawn from the results of this survey to strengthen and
enrich the company’s work environment. Work climate
management and commitment are fundamental pillars of
the company’s strategy, due to their close relationship with
the people that make up the company’s human resource.
During 2017, we have continued with initiatives that main-
tain workers’ motivation, satisfaction and commitment
regarding leadership, communication, meritocracy and de-
velopment, conflict resolution measures, and good work
practices.
Regarding leadership, Enel Chile has a program that aims
to promote and reinforce the important role of managers in
creating organizational environments that foster workers’
satisfaction and development. “Leaving Traces” is a pro-
gram that was designed to encourage leadership and the
role of the manager in our “Open Power” culture, from a
strategic and active standpoint that focuses on the mobili-
zation of teams and the ability to help the learning process
48
Annual Report Enel Chile 2017 During 2017 we have renewed the program “Recognizing
The Policy has established three main principles:
Ourselves”, which seeks to encourage a culture of recogni-
tion within the Company. On the one hand, the “Recogniz-
1. Reject any and all forms of arbitrary discrimination and
ing People Program” generates formal occasions in which
ensure and promote diversity, inclusion, and equal op-
workers can recognize their teammates, and on the other
portunities.
hand, the “Recognizing Contributions Program” in which
the organization identifies initiatives that have added great
2. Promote and maintain an environment of respect for
value to the company. Additionally, the company carries out
people’s dignity, honor and identity.
ceremonies to recognize workers and their professional ca-
reer path, among other things.
3. Ensure the highest confidentiality standards regard-
ing any information about worker’s private life that the
In terms of work-life integration measures and best prac-
Company could have access to.
tices, smart work spaces have been implemented to
strengthen teamwork, foster knowledge exchange rela-
In terms of gender, a balance is sought out in the initial
tionships, collaboration, and integration. These work spac-
phase of the recruitment and selection processes and a
es stimulate the use of technology and time efficiency in
relationship with universities and professional institutes
an informal and creative environment.
is established to promote the participation and inclusion
Regarding Enel Chile´s new challenges, it is necessary to
of women.
lead a culture of permanent change within the organization.
Moreover, twenty-two women have participated in the Par-
Along this line, throughout 2017 we created the program
enting Program, which seeks to increase the value of ma-
“Agent of Change”, with a team of approximately 50 em-
ternity and balance out the needs of parenting with profes-
ployees. This team has developed cultural change initia-
sional development needs. Actions taken by the program
tives that facilitate the implementation of projects. Each
include activities for women’s healthcare and wellbeing,
team has a company manager as a sponsor, who supports
speeches regarding the impact a child may have on fam-
and directs their initiatives, linking the technical project to
ily dynamics, and the creation of trust between pregnant
the cultural change initiatives that the implementation in-
workers and the Company.
volves.
Diversity
In terms of age, there are several tutoring programs that
support employees during important transition periods
(such as, external recruitment, personnel close to retire-
ment, Millennial Youths and Zeta Generation Youths).
As part of the Company’s strategy and Diversity and In-
assist and support them throughout the length of their stay
clusion Policy, Enel Chile has developed several practices
in order to recognize, respect, and manage the cultural dif-
addressing gender, age, nationality, and disability. This pol-
ferences between different nationalities and stimulate their
Regarding nationality, expatriates are assigned a tutor to
icy promotes the principles of non-discrimination, equal op-
integration.
portunities, inclusion and work-life balance as fundamental
values in the activities performed by the companies of the
Regarding disabilities, this year a shared value agreement
Group.
was signed with the Teletón Foundation, through which the
participation of young disabled people will be promoted.
Additionally, an e-learning course about consciousness
and workplace inclusion was co-developed with this same
foundation.
49
Human Resources
Work-Life integration
measures and flexibility
summer for family members of employees, and the Uni-
versidad de Chile Summer School, an initiative destined to
improve the academic level of employees’ high schoolers.,
Every year the Academic Excellence award is granted to
employees’ children with high academic performance in
grade school.
With regard to conciliation and flexibility, we began a new
form of telecommuting during 2017, evolving from the Tele-
This year, several events were held to foster the bal-
work Program that began in 2012. “Smart Working” has
ance between work and family life. The Christmas Party
consolidated one of the most appreciated conciliation mea-
is among the most relevant of these events designed for
sures within the company, providing employees with great-
workers with children born after the year 2004 and also the
er flexibility when it comes to the execution of their work.
“Come to my birthday party” celebration held monthly in
Today, we have 256 workers in the program, of which 102
the corporate stadium for kids age 12 and under.
choose one day a week to work from home or wherever
they please, but must comply with the safety and health
Other important events are the End of the Year party, a cor-
measures established by current legislation. This initiative
porate event for all employees consisting of a dinner with
contributes to workers’ quality of life, and the balance be-
contests and dancing, and the “Career Trajectory Award”,
tween work and family life.
an annual corporate celebration that recognizes workers
who have been with the company for at least 20 years.
Additionally, the following other initiatives were carried out
to improve worker’s quality of life:
Sport and Culture Extension Program: traditional sports
program performed within the company’s facilities and in
third party facilities, offering workshops and the practice
Filling job openings
of several sports, such as soccer, baby soccer, basketball,
For Enel Chile, the main goal is to incorporate the best pro-
volleyball, and others, as well as sports classes for employ-
fessionals, those who have the competences needed to
ees’ children in soccer, tennis and figure skating. Other
face the cultural change that comes with the company’s
extension activities designed for employees and their fam-
digital transformation.
ilies include artistic workshops, expositions, family excur-
sions and trips, among others.
During 2017, a total of 20 positions opened, 55% were filled
with internal candidates. In turn, 54.5% of these were as-
There are several activities for employees’ children, both
signed to women who either won the internal contests or
recreational and educational. These include the summer
were re-assigned directly. Additionally, out of the external
and winter camps for youths between 6 and 15 years of
workers that entered the company in 2017 (45% of the to-
age that are offered in January and during winter holidays
tal available positions in the company), 77% correspond to
in July. There are also training workshops held during the
external processes won by women.
50
Annual Report Enel Chile 2017 Internships and young
talent program
This project is worthy of being mentioned because it rep-
resents a new recruitment method that offers candidates
that have experienced our organizational culture. It involves
incorporating young professionals from the best universi-
ties in the country as interns. They are given the opportu-
nity to consolidate their theoretical knowledge in the Enel
Chile business, shaping professionals who are familiar with
the Group’s reality and challenges.
This internship program is carried out permanently through-
out the year, although the greatest number of interns are
received during the summer. During 2017, a total of 55 in-
terns were part of this Enel Chile program.
To generate bonds with universities and attract the greatest
number of students, during 2017 Enel Chile participated in
Job Fairs held in the School of Physical Sciences and Math-
ematics of Universidad de Chile, and in the Engineering
School of Universidad Católica de Chile. Our stand received
students studying industrial engineering, electric engineer-
ing, mechanical engineering and hydraulic engineering.
51
Human Resources
Diversity and inclusion
For Enel Chile, diverse work teams and an inclusive work
environment is essential to create a culture of innovation. Di-
versity grants the possibility of visualizing different points of
view and opinions that enrich the work environment, adding
value to the business.
In our company we value differences and transform them
into our competitive advantage; by stimulating creativity,
flexibility, learning and respect we are able to improve our
processes. This also strengthens our position as employers
when searching for talent in the market.
To encourage diversity in all its forms, we highlight the in-
creasing participation of women in internal contests, grad-
ually promoting women’s empowerment and leadership. It
is worthy of noting that out of the total external admissions,
77% were women.
This year we have implemented the On-Boarding program,
in which each worker that enters Enel Chile must be accom-
panied by a tutor who offers professional and personal sup-
port, guiding in the day to day dynamics of the company, and
helping to create networks that will allow feeling welcomed
and in a trustworthy environment. This program helps the
rapid adaptation into the company´s culture and also offers
the Company exposure to any suggestions made by new
employees.
52
Annual Report Enel Chile 2017 Educational
action
Training
The Company’s training program for 2017 was based on
two main pillars: The first is to achieve the balance between
training activities focused on developing competences and
those focused on the technical knowledge to improve job
performance. The second is to define the training program
based on a mechanism that allows, the employee and the
manager, together, to detect the technical and behavioral
gaps the employee needs to close, regarding individual job
productivity, and also to have access to potential future de-
velopment opportunities. The mechanism is entitled Profes-
sional Development Itinerary (IDP In its Spanish acronym)
and has a two-year implementation period.
In general terms, Enel Chile’s training activities during 2017
reached 89% coverage, which means that 379 employees
In terms of developing new behavioral and management
abilities, several programs were implemented during 2017.
Among these, we highlight the activities related to the de-
velopment of leadership skills, particularly the program for
every manager to identify his/her leadership gap and create
a specific plan according to his/her individual needs. During
participated in at least one training activity during the year.
2017, 22 managers participated in this program.
The total number of training hours reached 20,596, resulting
in a 1.9 % training rate (training hours for every 100 hours
worked).
The training activities included e-learning courses about the
Company’s Criminal Risk Prevention Model for workers. This
training program was extended to the directors of Enel Chile
Technical training, which is critical due to the importance of
and its subsidiaries in 2017.
updating technical knowledge and acquiring new manage-
ment tools, reached 46% of total training hours. Within the
technical training activities carried out, we highlight those
related to knowledge management- that is, the implemen-
tation of activities in which there is a transmission of knowl-
edge and experience from workers who have a greater ex-
pertise in specific subjects towards others who are learning.
This reaffirms our commitment to employee development,
recognition and dissemination of knowledge within the
company.
Finally, and as it has been declared to everyone, in very lev-
el and segment within the company, risk prevention, health
and the general safety of every person is particularly rele-
vant and has he Company’s permanent attention.
53
Human Resources 09Stock Market Transactions
54
Annual Report Enel Chile 2017 55
Letter from the Chairman Quarterly transactions of Enel Chile shares in Chile during the year, on the Santiago Stock Exchange, the Electronic Stock
Exchange and the Valparaíso Stoc k Exchange, as well as in the United States of America on the New York Stock Exchange
(NYSE) are detailed below.
Santiago Stock Exchange
During 2017, a total 8,869 million shares were traded on the Santiago Stock Exchange equivalent to Ch$633,113 million. The
closing price of the stock at year end December 2017 was Ch$ 72.81.
Units traded
Amount (Ch$)
Average price (Ch$)
2017
677,370,600
502,037,453
838,077,569
43,674,147,600
32,191,453,680
58,407,417,109
2,017,485,622
134,273,018,389
641,050,942
577,423,483
549,859,075
46,728,903,353
43,119,722,121
40,663,203,684
1,768,333,500
130,511,829,158
740,035,245
833,920,099
724,768,134
54,290,664,739
59,630,406,679
54,224,208,809
2,298,723,478
168,145,280,227
697,938,952
879,691,338
1,206,498,260
2,784,128,550
8,868,671,150
2016
1,998,658,925
1,926,875,561
1,706,851,142
5,632,385,628
53,047,610,528
62,778,443,019
84,356,820,551
200,182,874,098
633,113,001,872
No transactions
157,879,907,720
141,425,350,170
109,800,337,389
409,105,595,279
64.48
64.12
69.75
66.55
72.89
74.68
74.00
73.80
73.36
71.51
74.83
73.15
76.00
71.36
69.92
71.90
71.39
79.92
73.04
64.28
Month
January
February
March
1st Quarter
April
May
June
2nd Quarter
July
August
September
3rd Quarter
October
November
December
4th Quarter
Total 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total 2016
56
Annual Report Enel Chile 2017 Chilean Electronic Exchange
During the year a total 675 million shares were traded on the Electronic Stock Exchange, amounting to Ch$ 48,145 million.
The closing price of the stock at year end was Ch$ 70.5.
Amount (Ch$)
Average price (Ch$)
Month
January
February
March
1st Quarter
April
May
June
2nd Quarter
July
August
September
3rd Quarter
October
November
December
4th Quarter
Total 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total 2016
Units traded
2017
45,242,313
50,342,500
119,745,474
215,330,287
44,107,916
66,103,278
31,387,014
141,598,208
11,785,776
90,533,747
29,406,917
131,726,440
74,128,543
49,680,000
62,347,792
186,156,335
674,811,270
2,912,707,430
3,252,115,802
8,332,539,564
14,497,362,796
3,216,128,742
4,954,427,839
2,326,028,301
10,496,584,882
872,575,405
6,416,807,980
2,204,845,890
9,494,229,275
5,679,073,870
3,561,604,565
4,416,112,743
13,656,791,178
48,144,968,131
2016
No transactions
194,419,919
244,564,668
196,586,979
635,571,566
15,318,223,758
18,185,923,824
12,673,446,594
46,177,594,176
64.07
64.44
69.15
67.33
73.22
74.72
74.30
74.13
74.04
71.07
74.66
72.08
76.92
71.83
69.81
73.36
80.25
74.00
64.96
Valparaiso Stock Exchange
During 2017, a total 47 thousand shares were traded on the Valparaiso Stock Exchange, amounting to Ch$ 3.4 million. The
closing price of the stock at year end was Ch$ 71.8.
Month
January
February
March
1st Quarter
April
May
June
2nd Quarter
July
August
September
3rd Quarter
October
November
December
4th Quarter
Total 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total 2016
Units traded
2017
776
776
5,885
40,334
46,219
46,995
2016
14,000
120,460
134,460
Amount (Ch$)
Average price (Ch$)
No transactions
51,038
No transactions
51,038
No transactions
No transactions
No transactions
No transactions
No transactions
No transactions
No transactions
No transactions
441,375
No transactions
2,899,583
3,340,958
3,391,996
No transactions
1,102,500
8,530,418
No transactions
9,632,918
65.7777
65.77
75.00
70.99
72.29
79.00
70.53
57
Stock Markets Transactions
New York Stock Exchange
(NYSE)
Enel Chile shares began trading on the New York Stock Exchange (NYSE) on April 27, 2016. One ADS (American Deposi-
tory Share) of Enel Chile 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 2017, 72 million ADSs were traded in the United States amounting to
US$396 million. The ADS closing price at year end was US$5.68.
Month
January
February
March
1st Quarter
April
May
June
2nd Quarter
July
August
September
3rd Quarter
October
November
December
4th Quarter
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total 2016
Units traded
Amount (Ch$)
Average price (Ch$)
2017
6,419,009
4,571,747
6,857,621
17,848,377
5,795,630
4,856,897
11,101,583
21,754,110
6,145,736
4,570,744
4,064,306
14,780,786
4,124,731
5,211,790
8,752,627
18,089,148
31,631,768
22,814,460
35,317,851
89,764,079
32,088,831
26,725,069
61,663,527
120,477,427
34,462,262
25,744,446
24,031,666
84,238,374
24,914,782
29,020,584
47,134,231
101,069,596
2016
No transactions
29,710,261
35,620,749
18,802,549
84,133,559
170,930,979
197,716,330
90,538,625
459,185,933
4.93
4.99
5.15
5.03
5.54
5.50
5.55
5.54
5.61
5.63
5.91
5.70
6.04
5.57
5.39
5.59
5.90
5.45
4.79
Market
information
With regard to Chile, the Selective Stock Price Index, IPSA
(in its Spanish acronym), which groups the 40 main shares
in the country regarding transaction volume, closed at
5,564.6 points equivalent to a 34.0% increase when com-
pared to the year before.
The perspective of the global economic scenario in 2017
Capital has continued flowing to emerging markets and the
has been showing improvements. In general, developed
prices of several risk assets are high. The prices of com-
economies and several emerging markets have reached
modities have also performed better than expected.
higher growth rates than previous years. Additionally, glob-
al financial conditions have been favorable, to a certain ex-
The main external risks continue to be linked to the mone-
tent, due to the cautious and austere management of the
tary policy of the developed world and the fiscal policy of
main international economies, which has contributed to
the United States of America, and its impact on the global
maintain reasonably low interest rates.
economy and financial conditions, in addition to the geopo-
58
Annual Report Enel Chile 2017
litical risks mainly from China and Latin America. Notwith-
standing the aforementioned, since the beginning of the
year, currencies have been appreciating with respect to the
US Dollar and the ten-year nominal rate of several econo-
mies has fallen, with the exception of China and India.
During 2017, the price of Enel Chile stock increased 17.4%,
which may be explained by the expectations regarding the
Elqui operation combined with a moderate impact of the
Santiago Stock Exchange
The following table shows the changes in the price of the
share of Enel Chile and the Selective Stock Price Index
(IPSA) on the local stock market over the past two years:
lower long-term price level expectation for the electricity
Variation
industry.
ENELCHILE
IPSA
04-21-2016 -
12-31-2016
-29.6%
4.1%
2017
17.4%
34.0%
Accumulated
2016 - 2017 (1)
-17.4%
39.6%
The accumulated stock price variation in 2016 and 2017,
was a 17% reduction (April 21, 2016, through December
30, 2017). The IPSA, measured the same way, increased
39.6% during the same period. This is significantly ex-
plained, once again, by the negative perspectives for the
industry as a consequence of the dry hydrology, the price
of the latest electricity tenders combined with a low in-
crease in electricity demand over las last few years.
(*) The shares of Enel Chile began trading on April 21, 2016.
New York Stock
Exchange (NYSE)
Despite the devaluation of the Chilean Peso with respect
The following table shows the behavior of Enel Chile’s
to the US dollar, the price of the ADR´s of Enel Chile in-
ADRs listed on the NYSE (ENIC), compared to the Dow
creased 25% in the New York Stock Exchange during 2017,
Jones Industrial index and the Dow Jones Utilities index
and the accumulated variation between 2016 and 2017 was
over the past two years:
-8%.
Variation
ENIC
Down Jones Industrial
Down Jones Utilities
04-21-2016 -
12-31-2016
-26.4%
9.5%
1.0%
2017
24.8%
25.1%
9.7%
Accumulated
2016 - 2017 (1)
-8.1%
37.0%
10.7%
1.The shares of Enel Chile began trading on April 27, 2016.
In accordance to General Norm 283, Numeral 5, the Com-
pany’s 2018 and 2017 dividends policies are transcribed
below.
59
Stock Markets Transactions 10Dividends
60
Annual Report Enel Chile 2017 61
Letter from the Chairman Dividend
Policy 2018
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:
The Board of Directors of the Company, in the session held
1. Deposit in a bank checking account, whose ac-
on February 27, 2018, approved the following Dividend Pol-
count-holder is the shareholder.
icy and the corresponding procedure for the dividend pay-
ments of Enel Chile S.A. for 2018.
2. Deposit in a bank savings account, whose ac-
Dividend policy
count-holder is the shareholder.
3. Mailing of a check or cashier’s check via certified mail
to the address of the shareholder’s residence record-
ed in Enel Chile’s Shareholder Register.
The Board of Directors intends to distribute an interim div-
4. The collection of a check or cashier’s check from the
idend for fiscal year 2018 of up to 15% of net income as
offices of DCV Registros S.A., as the registrar of Enel
of September 30, 2018, as recorded in the consolidated
Chile’s shares, or from the bank and branches defined
financial statements of Enel Chile S.A. at that date, to be
for this purpose and informed in the dividend payment
paid in January 2018.
notice published.
The Board of Directors will propose to the Ordinary Share-
For this purpose, bank checking or savings accounts may
holders’ Meeting, to be held during the first four months
be located anywhere in the country.
of 2019, to distribute a final dividend equivalent to 60% of
net income for fiscal year 2018. The final dividend will be
It should be emphasized that the payment method cho-
defined by the Ordinary Shareholders Meeting to be held
sen by each shareholder will be used by the centralized
during the first four months of 2019.
securities’ depository, DCV Registros S.A., for all dividend
payments unless the shareholder communicates in writing
Compliance with the aforementioned dividend plan is sub-
the intention to change it and record a new option.
ject to the actual net profit earned by the Company during
the year, and to the results of the Company’s periodic in-
Shareholders who have not registered a payment method
come projections or the existence of certain conditions, as
will be paid by method four indicated above.
applicable.
62
Annual Report Enel Chile 2017 If checks or cashier’s checks are returned by the post office
to DCV Registros S.A., they will remain in custody until
collected or requested by the shareholder.
In the case of deposits in bank checking accounts, Enel
Chile S.A. or DCV Registros S.A. may request, for securi-
Dividend
Policy 2017
ty reasons that they be verified by the respective bank. If
The Board of Directors’ intends is to distribute an interim
there is an objection to the account indicated by a share-
dividend for the fiscal year 2017, of up to 15% of net in-
holder, whether in the prior verification process or for any
come as of September 30, 2017, as shown in the financial
other reason, the dividend will be paid according to meth-
statements of Enel Chile S.A. at that date, and payable in
od No 4 indicated above.
January 2018.
Moreover, the company has adopted and will continue to
The Board of Directors intends to propose to the Ordinary
adopt all the necessary security measures required by the
Shareholders’ Meeting. to be held during the first four
dividend payment process to safeguard the interests of the
months of 2017, to distribute a final dividend equivalent to
shareholders and Enel Chile S.A.
55% of the fiscal year 2017 net income. The final dividend
will be determined by the Regular Shareholders’ Meeting
to be held during the first four months of 2018.
Compliance with the aforementioned dividend plan is sub-
ject to the actual net profit earned by the Company during
the year, and to the results of the Company’s periodic in-
come projections or the existence of certain conditions, as
applicable.
Dividendos
63
Enel Chile S.A. dividend payment procedure: The pay-
Shareholders who have not registered a payment method
ment of dividends, whether interim or final and to avoid
will be paid by method 4 indicated above.
payment mistakes, Enel Chile offers the following payment
methods: 1. Deposit in a bank checking account, whose
If checks or cashier’s checks are returned by the post office
account-holder is the shareholder; 2. Deposit in a bank
to DCV Registros S.A., they will remain in its custody until
savings account, whose account-holder is the shareholder;
collected or requested by the shareholder.
3. Mailing of a check or cashier’s check via certified mail
to the address of the shareholder’s residence recorded in
In the case of deposits in bank checking accounts. Enel
Enel Chile’s shareholder register; and 4. The collection of a
Chile S.A. or DCV Registros S.A. may request, for security
check or cashier’s check from the offices of DCV Registros
reasons, that they be verified by the respective bank. If
S.A., as the registrar of Enel Chile’s shares, or from the
there is an objection to the account indicated by a share-
bank and branches defined for this purpose and informed
holder, whether in the prior verification process or for any
in the dividend payment notice published.
other reason, the dividend will be paid according to meth-
od No 4 indicated above.
For this purpose, bank checking or savings accounts may
be located anywhere in the country.
Moreover, the company has adopted and will continue to
It should be emphasized that the payment method chosen
dividend payment process to safeguard the interests of the
by each shareholder will be used by the centralized depos-
shareholders and Enel Chile S.A.
adopt all the necessary security measures required by the
itory of securities, DCV Registros S.A. for all dividend pay-
ments unless the shareholder communicates in writing the
intention to change it and record a new option.
64
Annual Report Enel Chile 2017 Distributable net income
for fiscal year 2017
The distributable net income for fiscal year 2017 is shown
Dividends distributed
The following chart shows the dividends per share paid
over the past few years:
below:
Net Income *
Distributable Net Income
* Attributable to controlling shareholder
Dividend
No
Type of
Dividend
Closing
date
Payment
date
Pesos
per share Fiscal year
Millions of Ch$
349,383
349,383
1
2
3
4
Final
12-31-2015 05-24-2016
2.09338
Interim
09-30-2016 01-27-2017
0.75884
Final
12-31-2016 05-26-2017
2.47546
Interim
09-30-2017 01-26-2018
0.75642
2015
2016
2016
2017
Dividendos
65
11Investment and financing policy
66
Annual Report Enel Chile 2017 67
Letter from the Chairman The Ordinary Shareholders’ Meeting held on April 26, 2017, approved the Investment and Financing Policy described below.
Investment Policy 2017
Areas of investment
I. Enel Chile will invest, according to its bylaws, in the
following: to invest in or to create subsidiaries and
affiliate companies whose activity is aligned, related
or linked to energy in any form or type, the supply of
public utilities, or whose main input is energy;
II.
Investments related to the acquisition, exploitation,
construction, lease, administration, trading and dis-
posal of any class of fixed assets, whether directly or
through subsidiaries;
III. Other investments in all kinds of financial assets, fi-
nancial papers or securities.
Maximum
investment limits
Participation in the control
of investment areas
Pursuant to Enel Chile S.A. corporate purpose, the follow-
ing procedure will be applied, when possible, to control the
investment areas:
i.
The appointment of the number of directors to at least
represent the ownership share of Enel Chile S.A.’s
stake in subsidiaries and affiliated companies will be
proposed at the Ordinary Shareholders’ Meetings of
each respective subsidiary and affiliate company. The
directors proposed will be chosen preferably from
among directors or executives of Enel Chile or its sub-
sidiaries.
ii. The investment, financial and commercial policies, as
well as the accounting criteria and systems, will be
proposed to the subsidiaries and affiliate companies.
iii. The management of the subsidiaries and related com-
panies will be supervised.
The maximum investment limits for each investment area
are the following:
iv. The level of debt will be a permanently controlled.
I.
Investments in the subsidiaries that operate in the
electricity sector, those required for the fulfillment of
the respective corporate purpose of these subsidiar-
ies, limited to a maximum equivalent to 50% of total
equity according to the consolidated balance sheet of
Enel Chile as of December 31, 2016;
II.
Investments in other subsidiaries, insofar at least
50.1% of total Consolidated Assets of Enel Chile are
electricity sector assets.
68
Annual Report Enel Chile 2017 Financing policy 2017
Maximum level of debt
Enel Chile’s maximum level of debt is determined by a Total
Financial Debt (calculated as other current financial liabili-
ties plus other noncurrent financial liabilities) to Equity ratio
equal to or lower than 2.20 times based on the figures in
the consolidated balance sheet of Enel Chile as of Decem-
ber 31, 2016;
Management powers to
agree with lenders on
granting guarantees
The Extraordinary Shareholders’ Meeting is required to ap-
prove granting hard assets or personal guarantees to se-
cure third party obligations when referring to the essential
assets identified below;
Management powers
to agree with lenders
restrictions related to
dividend distributions
Essential Assets for
company operations
Dividend restrictions may only be agreed with creditors if
such restrictions were previously approved by the Share-
holders’ Meeting (ordinary or extraordinary);
The shares that enable maintaining control of Enel Gener-
ación Chile and Enel Distribución Chile, either for owning
the majority shareholding or through a shareholders’ agree-
ment, are essential assets to the operations of Enel Chile.
Investment and financing policy
69
12History of the Company
70
Annual Report Enel Chile 2017 71
Letter from the Chairman History of the
Company
er” in which Enersis Américas absorbed the businesses
of Endesa Américas and Chilectra Américas. During the
same meeting, shareholders agreed to change the name
of Enersis Américas S.A to Enel Américas S.A.
Enel Chile S.A. was created as part of the corporate reor-
Endesa Chile and Chilectra agreed to change their names
ganization process of Enersis S.A that began in April 2015.
to Enel Chile, Enel Generación Chile and Enel Distribución
On October 4, 2016, the shareholders of Enersis Chile,
Enersis S.A. controlled the generation, transmission and
Chile respectively.
distribution business in Chile and four other countries in
the region (Argentina, Brazil, Colombia, and Peru). The Ex-
Now that the organizational simplification process of the
traordinary Shareholders’ Meeting of Enersis S.A. held in
Group has concluded, Enel Chile participates in the elec-
December 2015 approved the first phase of the reorgani-
tricity generation business through its subsidiary Enel Gen-
zation plan entitled “the Division”, which created Enersis
eración Chile. This subsidiary has 103 generation units in-
Chile as the only vehicle to control the Group’s generation
stalled throughout the Central Interconnected System (SIC
and distribution assets in Chile. Enersis S.A became Ener-
in its Spanish acronym) and eight units in the Northern In-
sis Americas S.A., the vehicle to control all assets of the
terconnected System (SING in its Spanish acronym) reach-
businesses in other countries in the region.
ing a total aggregate installed capacity of over 6,300 MW,
placing it among the most important energy companies in
Endesa Chile S.A. and Chilectra S.A. went through a similar
the country.
division process.
On September 28, 2016 the Shareholder’s Meeting of En-
the subsidiary Enel Distribución Chile that operates a con-
ersis Américas, Endesa Américas, and Chilectra Américas
cessions area of more than 2,000 square kilometers, cov-
approved the second phase of the plan called “the Merg-
ering 33 districts in the Metropolitan Region, representing
Enel Chile participates in the distribution business through
72
Annual Report Enel Chile 2017 40% of total sales of distribution companies in the country,
In February 2017, Enel Generación Chile sold its sharehold-
making Enel Chile the largest electricity distribution com-
ing in Electrogas S.A. to Aerio Chile S.p.A. for US$180 mil-
pany in Chile.
lion as part of the plan to divest non-strategic assets.
The Company has also grown by adding new applications
In August 2017, a corporate reorganization of Enel Chile
to electricity and developing new ways to manage elec-
was proposed. This plan involved the merger of Enel Green
tricity. Enel Chile was the first company in the country to
Power Latin America with and into Enel Chile and launching
offer its customers intelligent metering technology in 2016.
a Public Tender Offer (PTO) for 100% of the shares of Enel
Also, along with the Municipality of Santiago, the Compa-
Generación Chile.
ny has placed the first and only electric bus to operate in
Santiago’s major avenues and completely free of charge to
In December 2017, the respective Extraordinary Sharehold-
passengers. Enel Chile seeks to promote the efficient use
ers’ Meeting approved the terms of the reorganization to
of energy supplied by Enel Distribución Chile to its almost
take place during 2018.
2 million residential customers in Chile and collaborate
with the environment.
In June 2016, Endesa Chile (Enel Generación Chile today)
ny and one of the main integrated operators in the electric-
sold its 20% share in GNL Quintero S.A. to Enagás Chile
ity and natural gas sectors worldwide. It is present in more
S.p.A for US$ 200 million. This decision to sell its share-
than 30 countries and in four continents. It supplies energy
holding in GNL Quintero was based on the fact that it did
to nearly 61 million people and has net installed capacity of
Enel Chile is part of the Enel Group, a global energy compa-
not represent a strategic asset for the development of the
more than 86 GW.
electricity business or the natural gas trading business of
the Company.
History of the Company
73
13Investments and financial activities
74
Annual Report Enel Chile 2017 Quintero thermal power plant
75
Letter from the Chairman Relevant projects of the
Company’s Investment Plan
The Group’s global financing strategy and intercompany
loans, in addition to the terms and conditions of financ-
ing, are coordinated by Enel Chile to optimize debt man-
agement. The subsidiaries generally develop their capital
expenditure plans independently, financing them with in-
ternally generated funds or direct financing. One of the
objectives is to focus on investments that will provide
long-term social and economic benefits, such as, the envi-
ronmental and sustainability improvement projects of Bo-
camina II. Other examples are projects that adjust medium
and low voltage networks to connect new customers and
also real estate projects.
The funds required to finance these investments have
been analyzed and included in the Company’s budget, but
no particular financing structure has been committed and
Generation
In Chile, the main investments developed during 2017
focused on the construction of the Los Cóndores pass
through hydroelectric power plant (150 MW) that began
construction in 2014 and also the investments related to
finishing the Bocamina II power plant (350 MW).
Relevant Investments
in 2017, 2016 and 2015
the investments will depend on the market conditions at
The capital investments carried out over the last three
the time the cash flows are needed.
years were mainly related to:
The investment policy of Enel Chile S.A. is flexible enough
1. The 350 MW Bocamina II power plant optimization
to adapt to changing circumstances, prioritizing each proj-
project
ect based on profitability and strategic alignment.
2. The 150 MW Los Cóndores project
From 2018 to 2020, Ch$ 768 billion is expected to be dis-
bursed, on a consolidated basis, on investments currently
3. Maintenance of existing installed capacity
under development, maintenance of our distribution net-
work and existing installed capacity, and on studies re-
The capital investments just mentioned and related to specific
quired to develop other generation projects.
projects were financed as follows:
The following table shows the expected capital expendi-
> Bocamina II: cash from the Company´s operations
ture for the 2018– 2020 period and the amount incurred by
> Los Cóndores: cash from the Company´s operations and
our subsidiaries in 2017, 2016 and 2015.
also third-party debt.
Investment (1) (in billions of Ch$)
2018-2020
2017 (1)
2016 (1)
2015(1)
Chile
Total
768
768
266
266
157
157
310
310
(1) The Capex figures represent actual disbursements each year,
except for future projections (gross amounts)
76
Annual Report Enel Chile 2017 Projects currently
underway
the Chena interconnection substation and Nueva Lampa
facility.
Regarding service quality, Ch$11 billion were invested
mainly in reinforcing certain feeders, those determined by
our quality plan, which included the automation of the MV
The most important projects currently in construction are:
network involving the addition of 320 new remote-control
devices to the medium voltage network and performing
> Optimization of Bocamina II Power Plant: Environmental
the necessary network adjustments to condense, in one
improvements (coal field roofing, biomass filters, among
year, the activities that would normally take six years to
others) and sustainability initiatives (relocation programs,
implement. This allowed increasing from 1200 to 1500 re-
agreements with fishermen, shared value funds, among
mote devices being controlled from the Network Opera-
others).
tions Center. At the same time, the operation of field equip-
ment was integrated to the SCADA Platform (“MV Remote
> Los Cóndores project: 150 MW hydroelectric power
Control System”, STM, in its Spanish acronym), having all
plant located in the Maule region. Its construction began
medium voltage feeders digitalized in this new platform.
in 2014.
Distribution
The operational capacity (coverage and availability) of the
telecommunications infrastructure was reinforced by in-
creasing the radio base of the DMR (Digital Mobile Radio)
platform from 3 to 5 and updating the communications de-
vices installed in the MV remote control equipment to 3G
or radio DMR. The management and monitoring tools of
the 3G (ATLAS) and DMR (Shiny Server) links were also
During 2017, Enel Distribución Chile and its subsidiaries
improved.
(Colina and Luz Andes) invested Ch$91 billion in projects
primarily related to satisfying natural demand growth, ser-
Additionally, a total Ch$9 billion were invested in relocating
vice quality. and safety and information systems. Further-
public network infrastructure, of which the most relevant
more, during 2016, a total Ch$81 billion were invested,
were the freeway Autopista del Aconcagua and section 3
Ch$33 billion in maintenance and Ch$48 billion in invest-
of Vicuña Mackenna avenue.
ments to satisfy growth in demand.
In 2017 a total Ch$18 billion were invested in Medium Volt-
legal procedures to normalize lines and substations.
age and Low Voltage networks allowing to connect new
customers, both residential and large customers and also
Investment in anti-theft projects to shield the network
connect real estate projects.
amounted to Ch$ 2 billion, including installing Ananda box-
To comply with regulation, Ch$ 6 billion was invested in
es to more than 7,500 customers.
A total Ch$14 billion was invested on increasing Enel Dis-
tribución Chile’s network capacity. Worth highlighting, the
Nearly Ch$ 6 billion were used to finance corrective main-
Alonso de Córdoba, Renca, La Cisterna and Club Hípico
tenance of transmission lines, and substations. A series
substations. The high voltage (HV) Santa Elena-Macul 110
of maintenance works also focused on high risk facilities.
kV line was reinforced and four new medium voltage (MV)
12 kV lines of Enel Distribución began operations: Algar-
Finally, one of the greatest achievements of the Compa-
robal line to the Chicureo substation, Honduras feeder to
ny in 2017 was the installation of 45,628 smart meters in
the Los Dominicos substation, Dublé Almeyda feeder to
Santiago representing a Ch$4 billion investment, reaching
the Santa Elena substation and the Bellavista feeder to the
a total 100,865 smart meters in operation in the 11 districts
San Cristobal substation. Works were also developed at
of Santiago.
77
Investments and Financial Activity Financial
condition
Liquidity
As of year-end 2017, the subsidiary Enel Generación Chile
relied on committed credit lines available for US$ 324 mil-
lion and also undisbursed commercial credit lines for a
maximum US$200 million. These were registered in the
Securities Register of the Superintendence of Securities
and Insurance (SVS in its Spanish acronym) in 2009 and
expire in 2019.
Indebtedness
The consolidated financial debt of Enel Chile reached US$
1,272 million, mainly international bonds and local bonds
with a 10-year average life.
Interest Rate
The Enel Chile Group interest rate hedging policy seeks
to maintain a balanced debt structure to minimize financial
expenses and reduce income statement volatility. Hedging
instruments are purchased based on market conditions,
given the Company’s projections and debt structure objec-
tives.
At year-end 2017, consolidated fixed debt to total financial
debt was 92%.
Risk Rating
The main events related to risk rating in 2017 are summa-
rized below:
Enel Chile was rated for the first time by Feller Rate on
June 19, 2017. The Company was rated “AA” on the local
scale with a stable outlook. This rating was later confirmed
on July 8.
Net consolidated debt was US$ 590 million at year-end
2017 and the leverage ratio was 0.5 times.
Fitch Rating began assigning a credit rating to Enel Chile
S.A. on April March 15, 2017. The local rating given to the
Company was “AA” with a positive outlook.
Hedging Policy
Exchange rate
Furthermore, on July 31, 2017, Standard & Poor’s gave Enel
Chile S.A. a “BBB+” international credit rating with a sta-
ble outlook. This rating is an “investment grade” rating.
The Company’s ratings are based on its diversified asset
portfolio, strong credit parameters, adequate debt struc-
ture and high liquidity.
The exchange rate hedging policy of the Enel Chile Group
is based on cash flows and seeks to maintain a balance
between flows indexed to foreign currency (US$) or local
currencies, and the levels of assets and liabilities denom-
inated in such currency. The goal is to minimize cash flow
exposure to risk related to exchange rate variations.
International rating
Enel Chile
Corporate
S&P
BBB+ / Stable
1 Calculated as Net Financial Debt over Gross Operating Income (EBITDA)
78
Annual Report Enel Chile 2017 Local rating
Enel Chile
Feller Rate
Fitch Ratings
Stocks
Bonds
1° class. Level 2
1° class. Level 1
AA / Stable
AA / Stable
Insurance
Enel Chile owns equipment and substations located in the
Metropolitan Region. These assets are covered by a global
insurance program centralized by its parent company, Enel.
The insurance covers physical damages, terrorism, busi-
ness 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 1, 2017 and expire October 31, 2018.
Trademark
The Company has registered the trademark “Enersis Chile”
for services, products, industrial and commercial facilities.
Enel S.p.A. has allowed Enel Chile S.A. to use the “Enel”
trademark free of charge and allows using it in its legal name,
logo and in other ways.
The trademark “Enel Chile” is registered legally.
Suppliers,
customers,
and relevant
competitors
Enel Chile S.A. is a Holding Company that operates primar-
ily in the electricity generation and distribution sectors in
Chile, therefore the suppliers, customers, and competitors
are those relevant to the Company’s main subsidiaries that
operate in the electricity sector.
Consequently, the relevant suppliers, customers, and com-
petitors are the following:
CGE Group, SAEZA Group, Chilquinta Group, GNL Chile,
Transelec, Ferrovial Agroman Chile S.A., CMC Coal Mar-
keting Company Ltda., AES Gener, Colbún, Engie, Guacol-
da Energía S.A., Pacific Hydro Chacayes, Hidroeléctrica la
Higuera, Hidroeléctrica la Confluencia, Gerdau Aza S.A.,
Mall Plaza Group, Metro S.A., Cencosud Group, SCA Chile
S.A. Pacific Hydro Chile, Ducati Energía SPA, Industrial y
Comercial Guzmetal Ltda., Shenzhen Star Instrument Co.
Ltda., Cearca S.A., Baterías Tubular S.A..
79
Investments and Financial Activity 14Risk factors
80
Annual Report Enel Chile 2017 81
Letter from the Chairman Risk
management
policy
All Enel Chile Group companies are exposed to certain
risks that are managed through the application of systems
of identification, measurement, limit of concentration and
supervision.
The basic principles defined by Group in establishing its
risk management policy include the following:
The objective of interest rate risk management is to achieve
a debt structure balance that allows minimizing the cost of
debt and maintain low income statement volatility.
The comparative financial debt structure of the Enel Chile
Group, regarding fixed and hedged interest rate to total
debt, net of derivatives, is the following:
Fixed Interest Rate
92%
92%
12-31-2017
12-31-2016
Depending on the Group’s estimates and debt structure
objectives, hedging operations are performed by purchas-
ing derivatives that mitigate these risks.
> Comply with rules of good corporate governance.
> Comply strictly with the Group’s norms and procedures.
> Each business and corporate area defines:
Exchange rate risks
I.
The markets in which it can operate, based on having
the sufficient knowledge and abilities to ensure effec-
Exchange rate risks are primarily related to the following
transactions:
tive risk management
II. Criteria on counterparties
III. Authorized operators
> Each business and corporate area establish, for each
market in which they operate, their position regarding
risk, in accordance to the strategy they have defined.
> All operations of businesses and corporate areas are per-
formed within the limits approved for each case.
> The businesses, corporate areas, business lines, and
companies establish the risk management controls nec-
essary to ensure that market transactions are performed
according to the policies, rules, and procedures of Enel
Chile.
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
> Debt incurred by the Group’s companies in currencies
different from their respective operational cash flow cur-
rency.
> Payments in currencies different from their respective
operational cash flow currency, such as payments of
project-related materials and corporate insurance poli-
cies.
> Revenues in the Group’s subsidiaries that are directly
linked to currencies different than their respective opera-
tional cash flow currency.
To mitigate exchange rate risk, the Enel Chile Group seeks
to maintain a balance between flows indexed in US dollars
or local currencies, should there be any, and levels of as-
sets and liabilities in such currency. The objective is to mini-
mize cash flow exposure to exchange rate fluctuations.
The instruments currently used to comply with this policy
are currency swaps and exchange rate forwards.
interest rate.
82
Annual Report Enel Chile 2017
Commodities risk
Liquidity risk
The Enel Chile Group is exposed to certain commodity
The Group’s liquidity is provided by sufficient committed
price fluctuations, primarily through:
long-term credit facilities and short-term financial invest-
ments to finance projected needs for a certain period of
> Fuel purchases in the process of generating electricity.
time, which is calculated as a function of the overall situa-
> Energy trading operations in local markets.
tion and expectations regarding debt and capital markets.
Said projected needs include net financial debt maturities,
To reduce risk in situations of extreme drought, the Group
in other words, after financial derivatives. For further detail
has designed a commercial policy, defining levels of sale
regarding characteristics and conditions of financial debt
commitments, in accordance to its power plant’s genera-
and financial derivatives, see Notes 18, 20 and Appendix 4.
tion capacity in a dry year, including risk-mitigation clauses
in some contracts with non-regulated customers. In the
As of December 31, 2017, the liquidity of the Enel Chile
case of regulated customers that are subject to long-term
Group amounted to ThCh$ 419,456,026 in cash and cash
tender processes, indexation clauses reduce commodity
equivalents, and ThCh$ 199,271,103 in unconditional
price exposure.
committed long-term credit lines. As of December 31,
2016, the liquidity of the Enel Chile Group amounted to
Taking g the operating conditions faced by the electrici-
ThCh$ 245,999,192 in cash and cash equivalents, and
ty generation market in Chile into consideration, such as
ThCh$ 342,827,047 in unconditional committed long-term
droughts and commodity price volatility in international
credit lines.
markets, the Company is constantly evaluating the conve-
nience of hedging to mitigate the impact of price fluctua-
tions on profits.
As of December 31, 2017, the company had outstanding
operations for 2.3 million MMBtu, to be settled in January
Credit risk
2018.
The Enel Chile Group conducts a detailed credit risk fol-
low-up.
As of December 31, 2016, there were swap operations
outstanding for 3 million barrels of Brent oil to be settled
between January and November 2017, and 3 million MMB-
TU of Henry Hub gas to be settled between January and
September 2017.
These hedging instruments may be modified or could in-
clude other commodities because of constantly changing
operating conditions.
Trade accounts
receivables
Credit risk associated to accounts receivables stemming
from commercial activity has historically been limited,
mainly due to short-term payment deadlines that prevent
clients from accumulating significant individual amounts.
This is applicable to our generation business as well as our
electricity distribution business.
83
Risk Factors In the generation business, supply disruption is a possi-
bility in the event of non-payment in some non-regulated
customer contracts and payment defaults also may qual-
ify as a cause for contract termination. For this purpose,
and although the risk is limited, credit risk and maximum
amounts exposed to payment risk are constantly mea-
sured and monitored.
Our electricity distribution company has the power to dis-
connect supply due to contract breaches by our custom-
ers. Disconnection is applied according to current regula-
tion, which facilitates the credit risk evaluation and control
process, which is also limited.
Financial assets:
Investments of cash surpluses are made in first class do-
mestic and foreign financial institutions, within limits es-
tablished for each entity.
Banks considered for investments have investment grade
qualification, considering the three major international rat-
ing agencies (Moody’s, S&P and Fitch).
Investments may be backed by Chilean Treasury bonds and
securities issued by first-class banks, prioritizing the latter
as they offer better returns (always within existing invest-
ment policy guidelines).
Risk measurement:
The Enel Chile Group measures the Value at Risk of its debt
and financial derivatives to monitor the risk taken by the
company, thus limiting income statement volatility.
The positions included in the portfolio used to calculate the
present Value at Risk include:
> Financial debt.
> Debt-hedging derivatives.
The calculated Value at Risk represents a potential loss of
value of the portfolio described above in one quarter, with
95% confidence. To this effect, the company studied the
volatility of variables at risk that affect the value of the port-
folio, with respect to the Chilean peso, which includes:
> US dollar Libor Rate.
> Exchange rates of currencies included in the calculations.
The calculation of Value at Risk is based on the extrapola-
tion of future market value scenarios (one quarter out) of
the variables at risk in scenarios based on real observations
for the same period (quarter), for five years.
The Value at Risk for the next quarter, with 95% confi-
dence, is calculated as the percentile of the most adverse
5% of possible quarterly changes.
Based on the hypotheses stated above, the Value at Risk
for the aforementioned positions, one quarter out, is ThCh$
66,890,686.
This value represents the potential increase in the debt and
derivatives portfolio, and therefore is intrinsically linked,
among other factors, to the value of the portfolio at the
end of each quarter.
84
Annual Report Enel Chile 2017 Other risk
factors
About 55% of installed generation capacity in 2017 was
hydroelectric. Accordingly, extremely dry hydrological con-
ditions could adversely affect the business, results of oper-
ations and financial condition. Results have been adversely
affected when hydrological conditions in Chile have been
below their historical average.
Economic fluctuations in Chile, as well as certain eco-
nomic interventionist measures by government au-
Below average hydrological conditions not only reduce the
thorities could affect our results of operations and fi-
ability to operate hydroelectric plants at full capacity, but
nancial condition of the company, as well as the value
also may result in increased transportation costs of water
of our securities.
for cooling purposes in the San Isidro thermal power plant
(778 MW). Although our subsidiary Enel Generación Chile
All operations of Enel Chile are located in Chile. Accord-
has entered into certain agreements with the Chilean gov-
ingly, its revenues are affected by the performance of the
ernment and local irrigators regarding the use of water for
Chilean economy. If local, regional, or worldwide economic
hydroelectric generation purposes, especially during peri-
trends adversely affect the Chilean economy, the financial
ods of low water levels, if drought conditions persist or
condition and results of operations could be adversely af-
worsen, increased pressure by the Chilean government or
fected. Moreover, insufficient cash flows for our subsidiar-
third parties to further restrict water use could arise.
ies could result in their inability to meet debt obligations
and the need to seek waivers to comply with restrictive
Thermal plant operating costs can be considerably high-
debt covenants and increasing cost for subsequent financ-
er than those of hydroelectric plants. Operating expens-
ings.
es increase during periods of drought, as thermal plants
are used more frequently. Also, the company might have
The Chilean government has exercised in the past, and
to buy electricity at higher spot prices in order to comply
continues to exercise, a substantial influence over many
with contractual supply obligations, and the cost of these
aspects of the private sector, which may result in changes
electricity purchases may exceed the contracted electrici-
to economic or other policies.
ty sales prices, thus potentially producing losses in those
Future adverse developments in Chile or changes in pol-
contracts.
icies regarding exchange controls, regulations and taxa-
Droughts also affect the operation of thermal plants, in-
tion may affect the company’s results of operations and
cluding facilities that use natural gas, fuel oil or coal as fuel,
financial condition. Inflation, devaluation, social instability
in the following ways:
and other political, economic, or diplomatic developments
could also reduce profitability. In addition, Chilean financial
•
Thermal power plants require water for cooling, and
and securities markets are influenced by economic and
droughts not only reduce the availability of water, but
market conditions in other countries and may be affected
also increase the concentration of chemicals, such as
by events in other countries, which could adversely affect
sulfates, in the water. High concentration of chemi-
the value of securities.
cals in the water used for cooling increases the risk
of damaging the thermal plant’s equipment, as well as
Because the business depends heavily on hydrology,
the risk of violating environmental regulations. As a
droughts, floods, and other weather conditions may
result, water has been purchased from agricultural ar-
adversely affect the Company’s operations and profit-
eas that are also experiencing water shortages. These
ability.
water purchases may increase operating costs and
may require negotiation with local communities.
85
Risk Factors •
Thermal power plants that burn natural gas generate
including payments related to damage compensation (legal
emissions, such as nitric oxide (NO), carbon dioxide
and voluntary), fines (see hereafter), line maintenance and
(CO2) and carbon monoxide (CO). Power plants that
tree trimming plans.
operate with diesel emit NO, sulfur dioxide (SO2),
and particulate matter into the atmosphere. Coal-fired
Governmental regulations may adversely affect our
plants generate SO2 and NO emissions. Therefore,
businesses.
greater use of thermal plants during periods of drought
generally increases the risk of producing higher level
The Company and the tariffs we charge our customers,
of pollutants, which would also decrease our operat-
among other aspects of the business, are subject to ex-
ing income due to the payment of so-called “green
tensive regulation and these regulations may adversely af-
taxes” (see “Environmental regulations may cause
fect our profitability. For example, governmental authorities
delays, impede the development of new projects, or
might impose material rationing policies during droughts or
increase costs of operations and capital expenditures”
prolonged failures of power facilities, which may adverse-
below).
ly affect our business, results or operations and financial
A full recovery from the drought that has been affecting the
condition.
regions where most of our hydroelectric plants are located
Governmental authorities may also delay the distribution
may take an extended period of time, and new drought pe-
tariff review process, or tariff adjustments may be insuffi-
riods could recur in the future. A prolonged drought could
cient to pass through all costs to our customers. Similarly,
exacerbate the risks described above and have an addition-
electricity regulations issued by governmental authorities
al adverse effect on the business, results of operations and
in Chile may affect the ability of generating companies to
financial condition.
collect revenues sufficient to offset their operating costs.
The distribution business is also affected by weather con-
The inability of any company in our consolidated group to
ditions. Moderate temperatures, for instance, might de-
collect revenues sufficient to cover operating costs may
crease heating or air conditioning use, which would affect
affect the ability of that company to operate normally and
energy consumption. Even with extreme temperatures,
may otherwise have an adverse effect on our business,
demand can increase significantly within a short period of
financial results and operations.
time, which would affect service and result in stoppages
which may be subject to fines. Depending on weather con-
The former government initiated a review of the country’s
ditions, results obtained by our distribution business may
energy policies, and in 2014, announced the Energy Agen-
vary significantly from year to year. During 2017, we faced
da. One of the objectives of the Energy Agenda was the in-
rainstorms and the most damaging snowstorm in Santia-
corporation of non-conventional renewable energy (NCRE)
go in the last 47 years, leaving parts of Santiago without
sources to reduce the cost of electricity. Solar and wind
power for more than a week. The first inclement weather
sources are currently the NCRE technologies most widely
front was in June 2017, where gusts of winds of 80 km/h
used. NCRE facilities are able to dispatch energy to the
and precipitations of 63 mm were recorded. Trees, blasting
system at very low marginal costs, and substitute sourc-
of roofs, billboards and other objects fell on the electric-
es that are more expensive, such as conventional thermal
ity networks. As a result, 125 thousand customers were
plants. However, wind and solar sources have higher inter-
affected (7% of our total customer base as of December
mittency, since they can only generate electricity when the
2017). One month later, in July 2017, a snowstorm affected
wind blows or the sun shines. The National Electric Coor-
the Metropolitan Region where up to 50 cm of snow fell in
dinator (“CEN”, which replaced the former CDEC-SIC and
some areas of Santiago, causing massive damage to elec-
CDEC-SING) coordinates the dispatch from all sources.
trical infrastructure, affecting approximately 342 thousand
The balance of production not supplied by hydro and NCRE
customers (18% of our total customer base as of Decem-
plants comes from thermal plants, which are among the
ber 2017) and 17% of our feeders. These situations signifi-
most expensive energy sources, and in some cases, have
cantly increased our costs due to emergency responses,
restrictions on their operating power levels. Therefore, au-
86
Annual Report Enel Chile 2017 thorities are requesting thermal plant operators to reduce
fected if water rights are denied or if water concessions
their technical minimum power capacity, understood as
are granted with limited duration” below). In August 2016,
the minimum capacity at which a power plant should be
Enel Generación Chile relinquished its unused water rights
safely and permanently operated, and its minimum operat-
in the Bardón Chillán 1, Chillán 2, Futaleufú, Huechún and
ing time as recommended by the turbine manufacturer. A
Puelo projects, booking a Ch$ 35.4 billion write-off.
turbine that operates for less than the manufacturers’ rec-
ommended minimum time, or less than the technical min-
Regulatory authorities may impose fines on subsidiar-
imum power capacity, will have higher maintenance costs.
ies due to operational failures or any breach of regula-
This situation could increase the cost of the unit and would
tions.
need to be covered by every generator, thereby reducing
results of operations, until being recognized by the CEN.
The electricity businesses may be subject to regulatory
Producing below the technical minimum power capacity
fines for any breach in current regulations, including ener-
may also have environmental consequences and represent
gy supply failures.
an obstacle to meeting environmental standards. The CEN
has the authority to audit technical parameters of any pow-
In Chile, such fines may be imposed for a maximum of
er plant, and in case of discrepancies, power plants are
10,000 Annual Tax Units (“UTA”, in its Spanish acronym), or
exposed to fines or injunctions.
Ch$ 5.5 billion using UTA as of December 31, 2017. Elec-
tricity generation subsidiaries are supervised by local reg-
In August 2016, the Superintendence of Electricity and Fu-
ulatory entities and may be subject to these fines in cases
els (“SEF” in its Spanish aronym) fined GasAtacama Ch$
where, in the opinion of the regulatory entity, operational
5.5 billion for allegedly providing inaccurate information to
failures affecting the regular energy supply to the system
the CDEC-SING, specifically for overestimating its techni-
are the fault of the Company, such as when agents are not
cal minimum power capacity and its operating time, which
coordinated with the system operator. In addition, current
resulted in higher operating costs to the system. In 2017,
legislation establishes a compensation fee to end custom-
AES Gener S.A., a competitor, requested Enel Generación
ers when energy supply is interrupted for a longer period
a US$ 65.8 million compensation payment for their alleged
of time than the standard time allowed due to events or
overpayments to GasAtacama. The alleged overpayments
failures affecting transmission facilities. The compensation
were tied to the technical minimum power capacity in-
is calculated as a proportion of the energy not supplied,
formed by GasAtacama at 310 MW with a 30h minimum
with a minimum value between 20,000 UTA (Ch$ 11.3 bil-
operation time that was later estimated by the CEN at
lion) and the previous year’s energy sales revenue, in case
118 MW and a 2h minimum. Authorities may audit any of
of generators. Due to extreme weather events occurred
our technical thermal plant standards and any discrepan-
during 2017, the Company paid Ch$2 billion in legal com-
cy with our own calculations or assumptions could lead to
pensation because of energy supply interruptions, and Ch$
fines and claims and adversely affect the business, operat-
3.4 billion in voluntary compensation to those clients who
ing results and financial condition.
were without electricity for more than 24 hours, with a
In addition, changes in the regulatory framework are often
tomers’ average monthly consumption amount (240 KWh/
maximum of Ch$ 25,000 per customer, equivalent to cus-
submitted to legislators and administrative authorities, and
month).
some of these changes could have a material adverse im-
pact on the business, results of operations and financial
Further fines imposed on our power plants could adverse-
condition. For instance, in 2005 there was a change in the
ly affect our business, results of operations and financial
water rights law in Chile to require the payment of unused
condition.
water rights, increasing the annual cost to maintain unused
water rights for hydroelectric projects that are neither eco-
As of December 31, 2017, Enel Distribución had four un-
nomically nor technically feasible. (for further information,
resolved fines imposed by the SEF for a total amount of
see “Our business and profitability could be adversely af-
15,000 UTA (Ch$8.5 billion) due to various claims related
87
Risk Factors to the extreme weather conditions in June and July 2017,
fines. The Company will continue to be subject to future
which are being appealed. For further information on fines,
litigation proceedings, which could cause considerable ad-
please refer to Note 35 of the Notes to our consolidated
verse consequences to the business.
financial statements.
The financial condition or results of operations could be ad-
We depend on payments from subsidiaries and joint-
versely if positive results are not obtained in lawsuits and
ly-controlled entities to meet payment obligations.
proceedings against the Company. For more information
on litigation proceedings, see Note 33.3 of the Notes to
To pay its obligations, the Company relies on cash from
the consolidated financial statements.
dividends, loans, interest payments, capital reductions
and other distributions from our subsidiaries. The ability of
Environmental regulations may cause delays, impede
subsidiaries to pay dividends, interest payments, loans and
the development of new projects, or increase the costs
other distributions is subject to legal constraints, such as
of operations and capital expenditures.
dividend restrictions, fiduciary duties and contractual lim-
itations that may be imposed by local authorities.
Operative subsidiaries are subject to environmental regula-
Dividend limits and other legal restrictions. The ability of
projects and permits from both local and national regula-
any subsidiary that is not wholly-owned to distribute cash
tors, among other procedures. The approval of these envi-
may be limited by the directors’ fiduciary duties of such
ronmental impact studies may be withheld by governmen-
subsidiaries to minority shareholders. Furthermore, some
tal authorities, and therefore their processing time may be
tions that require environmental impact studies for future
subsidiaries may be forced by law, in accordance with ap-
longer than initially expected.
plicable regulation, to diminish or eliminate dividend pay-
ments. Because of such restrictions, subsidiaries might be,
Projects that require consultation with local interest groups
under certain circumstances, unable to distribute cash.
in their evaluation process may be rejected, or their de-
velopment impeded or slowed down. Interest groups may
Contractual constraints. Distribution restrictions included
also seek precautionary measures or other relief, which
in some credit agreements of our subsidiaries that prevent
could cause a negative impact if successful. Moreover,
dividend payments and other distributions to shareholders
projects that do not require consultation with local interest
if the company is not in compliance with certain financial
groups may be subject to intervention or suffer continu-
ratios. Generally, our credit agreements prohibit any type
ous resistance, delaying their approval process or devel-
of distribution if there is ongoing default.
opment.
Operating results of the Company’s subsidiaries. The ability
Environmental regulations for existing and future power
of subsidiaries to pay dividends, amortize loans, or make
plants may become stricter, which would require increased
other distributions, is limited by their operating results. To
capital investments. For example, Decree 13/2011 of the
the extent that the cash requirements of any subsidiary
Chilean Ministry of the Environment, published in June
exceeds its available cash, the Company will be unable to
2011, established stricter emission standards for existing
rely on resources from such subsidiary.
thermoelectric plants that were required to be met between
Any of the situations described above could negatively af-
additional capacity. As of December 31, 2017, the estimat-
fect our business, results of operations and financial con-
ed total investment in reducing emissions was Ch$ 68,240
2014 and 2016, and stricter standards for new facilities or
dition.
million. Decree 13/2011 also required the establishment of
a system of continuous emission monitoring, pursuant to
The Company is involved in litigation proceedings.
which thermoelectric plants must implement a monitoring
Currently, the Company is involved in various litigation
issued by the Superintendence of the Environment. All
proceedings, which could result in unfavorable verdicts or
thermoelectric plants made incremental investments in-
system in accordance with the guidelines and protocols
88
Annual Report Enel Chile 2017 stalling abatement systems to control pollutant emissions
Delays or modifications to any proposed project, and laws
to comply with these environmental regulations. Any delay
or regulations that may change or be interpreted in a man-
in meeting standards constitutes a violation of these reg-
ner that could adversely affect operations or plans for firms
ulations, which established emission limits effective June
in which the Group holds investments, could adversely af-
23, 2015, or June 23, 2016, depending on the power plant’s
fect the business, results of operations, and financial con-
location. Failure to certify the implementation of such mon-
dition.
itoring system may result in penalties and sanctions.
Stricter emission limits. Any deviation from the environ-
tion that may delay their development, increase costs,
mental license to operate could result in significant sanc-
damage the reputation and potentially result in impair-
tions from authorities.
ment of goodwill with stakeholders.
Power plant projects may encounter significant opposi-
The Chilean Ministry of the Environment modified Decree
The Company’s reputation is the foundation of the relation-
13/2011 and made emission standards for thermoelectric
ship with key stakeholders. If the Company is unable to
plants more restrictive, which will require additional in-
effectively manage real or perceived issues that could im-
vestments in the future. In June 2016, Law 20920, known
pact the Company negatively, the business, results of op-
as the recycling law, established the legal framework for
erations or financial situation could be adversely affected.
the recovery of waste in Chile. The Ministry of the Envi-
ronment must establish recycling objectives for different
In 2015, the Chilean Ministry of the Environment enacted
products. The Company expects the first objectives to
Law 20,500, setting the procedures for stakeholder partic-
be established no later than 2019 and will force regulat-
ipation in the preliminary phase of the evaluation process,
ed companies to finance recycling management systems.
to avoid conflicts of interest and minimize the project’s im-
This may lead towards a need to recycle batteries in the
pact. Power plants built before the adoption of these rules
generation business, or street lights in the distribution
and that were not submitted to local consultation may
business, as well as electronic waste, such as discarded
face opposition from several stakeholders, such as ethnic
computers, telephones, etcetera.
groups, environmental groups, land owners, farmers, lo-
cal communities and political parties, among others, any
The 2014 tax reform law, established an annual green tax
of whom may impact the sponsoring company’s reputa-
on stationary power generators, such as thermal genera-
tion and goodwill. For example, between 2013 and 2016,
tors, based on their emission of pollutants in the previous
the Bocamina II power plant encountered substantial op-
year. This provision came into effect in 2018. In December
position from local fishermen’s unions that claim that the
2016, the Chilean Ministry of Environment published the
facility negatively affects marine life and causes pollution,
list of thermal generators subject to this tax, including all
which resulted in the interruption of the power plant’s op-
the Company’s thermoelectric plants in the country. These
eration for more than a year. On July 1, 2015, Bocamina
plants have reported their emissions during 2017 and will
II resumed operations, after the approval of a new Envi-
book an additional tax liability in 2018. The tax will be paid
ronmental Qualification Resolution (RCA in its Spanish ac-
in 2018, based on 2017 emissions. In addition, during 2017,
ronym) in April 2015. Later, between November 23, 2015
the Superintendence of the Environment established new
and January 7, 2016, a second group of fishermen illegally
measurement, monitoring and reporting requirements nec-
occupied the first high-tension pylon, which supports the
essary to comply with the green tax, which are also appli-
154 kV and 220 kV circuits owned by Transelec S.A., which
cable to requirements under Decree 13/2011. During 2017,
serves Bocamina I and II. As a consequence, both Bocam-
partially due to the Ch$ 17.3 billion higher thermal emission
ina I and II were temporarily shut down. This second group
taxes on thermoelectric plants, which will be paid in April
claimed that they should receive the same benefits that
2018. Tax expense may increase in the future, increasing
Enel Generación granted to the first group of fishermen
costs of operation and therefore discouraging thermal elec-
in the area. The financial effects of this illegal occupation
tricity generation.
and interruption of electricity transmission amounted to
89
Risk Factors Ch$ 2.8 billion in losses. This situation increased the spot
We are currently building the Los Cóndores project, which
prices and anticipated use of hydroelectric reserves in the
consists of a 150 MW pass-through hydroelectric power
electricity market. Such groups and other similar groups
plant.
may have the ability to block power plants and directly af-
fect results.
The locations where the Company may develop new
projects are also sometimes highly challenging in terms
The operation of thermoelectric plants, especially coal
of geographical topography, in some cases in mountain
power plants, may also affect the company’s reputation
slopes with very limited access. These factors may also
among stakeholders, due to greenhouse gas emissions,
lead to significant delays and cost overruns.
which could adversely affect the environment.
Damage to reputation may exert considerable pressure
worldwide can have a significant impact in Chile, and
on regulators, creditors, and other stakeholders, and ulti-
consequently may adversely affect operations, as well
Political events or financial or other crises in any region
mately lead to the abandonment of projects or operations,
as the Company’s liquidity.
which would cause the share price to drop, and hinder
our ability to attract and retain valuable employees, any of
Chile is vulnerable to external shocks, including financial
which could result in an impairment of goodwill with stake-
and political events, which could cause significant eco-
holders.
nomic difficulties and affect growth. For example, the 2016
presidential election in the United States considerably in-
Power plant construction may encounter delays or sig-
creased the volatility of financial markets worldwide, due
nificant cost overruns.
to the uncertainty of political decisions. New policies ad-
opted by the United States could affect world markets and
Our power plant projects may be delayed in obtaining reg-
global trade, and result in renewed volatility, especially in
ulatory approvals, may face shortages or increases in the
commodity prices. Similarly, instability in the Middle East,
price of equipment, material or labor, and may be subject to
or any other major oil producing region, could also result in
construction delays, strikes, adverse weather conditions,
higher fuel prices worldwide, which in turn could increase
natural disasters, civil unrest, accidents, and human error.
the cost of fuel for thermoelectric power plants, and ad-
versely affect the results of operations and financial condi-
Market conditions at the time projects are initially approved
tion. Even temporary U.S. government shut-downs, such
may differ significantly from those that prevail when proj-
as those that took place in early 2008, and were threat-
ects are completed, which in some cases may make them
ened to begin on February 8, 2018, can have a very adverse
commercially unfeasible. This has been the case in many
effect on the timing, execution, and increased expense as-
of our former projects, which were initially planned under
sociated with main transactions and reorganizations involv-
completely different market conditions with higher energy
ing ADS holders and the U.S. SEC.
prices prevailing in the market and less competition, that
has now been enhanced by NCRE. Deviations from these
An international financial crisis and its disruptive effects on
assumptions, including timing estimations and expendi-
the financial industry could negatively affect the Compa-
tures related to these projects, may lead to cost over-runs
ny’s ability to obtain new bank financing on the same his-
and a completion time widely exceeding our estimates,
torical terms and conditions we have obtained to this date.
which in turn may have negative effects on our business,
results of operations and financial condition. Over the last
Political events or financial or other crises could also dimin-
two years, the Company has recorded more than Ch$ 90
ish access to Chilean and international capital markets, or
billion in impairment losses and write-offs due to abandon-
increase the interest rates. Reduced liquidity could, in turn,
ment of such projects.
negatively affect capital expenditures, long-term invest-
90
Annual Report Enel Chile 2017 ments and acquisitions, growth prospects and dividend
other assumptions upon which the offer consideration may
policy.
prove to be incorrect.
We may be unable to enter into suitable acquisitions.
Under any of these circumstances, the business growth
opportunities, revenue benefits, cost savings, or other ben-
The Company permanently reviews acquisition prospects
efits we anticipated from the 2018 Reorganization may not
that may increase its market share or supplement existing
be achieved as expected, or at all, or may be delayed. If we
businesses, though there can be no assurance that we will
incur greater integrations costs or achieve lower revenue
be able to identify and carry out suitable acquisitions in the
benefits or fewer cost savings than expected, the results
future. The acquisition and integration of independent com-
of operation and financial condition will suffer.
panies that the Company does not own is generally a com-
plex, costly, and time-consuming process that requires sig-
The potential integration of Enel Chile and EGPL.
nificant efforts and expenditures. If the company seals an
acquisition, it could result in the incurrence of substantial
The merger with EGPL involves the integration of a mature
debt and assumption of unknown liabilities, the potential
business, as is the case with our conventional energy busi-
loss of key employees, amortization expenses related to
ness, which we develop through Enel Generación Chile,
tangible assets, and the diversion of management’s atten-
with EGPL’s non-conventional renewable energy business.
tion from other business concerns. In addition, any delay
The objective of integrating operations is to increase reve-
or difficulty encountered in connection with an acquisition
nues and earnings of the businesses combined, and as a
or integration of multiple operations could have a material
combined company, increase our ability to satisfy the de-
adverse effect on our business, financial condition and re-
mands of our customers. In doing so, the Company may
sults of operations.
encounter significant difficulties integrating operations,
and could even incur in substantial costs due to, among
The Company may be unable to seize the business growth
other things, the following reasons:
opportunities, revenue benefits, cost savings, or other pro-
jected benefits from the 2018 Reorganization, or, converse-
• Differences in standards, controls, procedures and
ly, may incur in unanticipated costs related to it, and there-
policies, business cultures and compensation struc-
fore affect the results of operation, financial condition, and
tures between us and EGPL, and the need to imple-
stock price.
ment, integrate, and harmonize various business-spe-
cific operating procedures and systems, as well as our
In August 2017, the corporate reorganization (the “2018
financial, accounting, information, and other systems
Reorganization”) process was started, which involved (i) a
and those of EGPL;
tender offer by Enel Chile of all outstanding shares of com-
mon stock (including ADSs) of Enel Generación that were
• Diversion of management attention from their respon-
not owned by Enel Chile; (ii) a capital increase, required in
sibilities to deal with integration issues;
order to have a sufficient number of shares of common
stock of Enel Chile available to deliver to tendering holders
•
Failure to retain our customers and suppliers, and
of Enel Generación shares and ADSs, and (iii) a merger, in
those of EGPL; and
which Enel Green Power Latin America S.A. (“EGPL”) was
merged into Enel Chile (the “Merger”).
• Difficulties in achieving full utilization of our assets and
The 2018 Reorganization, which will conclude on Abril 2,
2018, may not result in the business growth opportunities,
The diversion of management attention, and difficulties
revenue benefits, cost savings, or other benefits that have
that may arise from the merger could increase costs or
been projected. These benefits may not materialize and
reduce revenues, earnings and operating results after the
resources and those of EGPL.
91
Risk Factors process is complete. Any delays encountered in the inte-
Foreign exchange risks may adversely affect results
gration process could have an adverse effect on revenues,
and the U.S. dollar value of dividends payable to ADS
level of expenses, operating results and financial condition,
holders.
which may adversely affect the value of our securities.
The Chilean peso has been subject to devaluations and ap-
The business and profitability could be adversely af-
preciations against the U.S. dollar and may be subject to
fected if water rights are denied or if water concessions
significant fluctuations in the future. Historically, a signifi-
are granted with limited duration.
cant portion of the Company’s consolidated debt has been
denominated in U.S. dollars. Although a substantial portion
The Company owns water rights granted by the Chilean
of our operating cash flows is linked to the U.S. dollar (es-
Water Authority (Dirección General de Aguas) for the sup-
pecially those from the generation business), it has gener-
ply of water from rivers and lakes near production facilities.
ally been, and will continue to be, exposed to fluctuations
Under current law, these water rights are (i) unlimited in
of the Chilean peso against the U.S. dollar because of time
duration, (ii) absolute and unconditional property rights,
lags and other limitations to adjusting our electricity tariffs
and (iii) not subject to further challenge. Chilean genera-
to the dollar, and the potential difficulty of incurring debt in
tion companies must pay an annual license fee for unused
the same currency as the operating cash flow.
water rights. New hydroelectric facilities are required to
obtain water rights, the conditions of which may impact
Because of this exposure, the U.S. dollar value of cash gen-
design, timing, or profitability of a project.
erated by subsidiaries could decrease substantially due to
In addition, Chilean Congress is analyzing amendments
the exchange rate of the currency in which the Company
to the Water Code since 2014 to prioritize the use of wa-
receives revenues or incurs expenditures may adversely
ter by defining its access as a human right that must be
affect the business, financial condition and results of op-
peso devaluations against the U.S. dollar. Future volatility in
guaranteed by the State. The amendment establishes that
erations.
water use for human consumption, domestic subsistence
and sanitation will always take precedence in granting and
Long-term energy sale contracts are subject to fluctua-
limiting the exercise of rights of exploitation. Under this pro-
tions in the market prices of certain commodities, ener-
posal, (i) new water use concessions would be limited to
gy and other factors.
30 years, which would be extendable with respect to wa-
ter rights actually used during the 30-year period, unless
In the generation business, the company is economical-
the Chilean Water Authority demonstrates the water rights
ly exposed to fluctuations in the market prices of certain
have not been used effectively; (ii) new non-consumptive
commodities as a result of the long-term energy sales con-
water rights would expire if the holder does not exercise the
tracts the company has entered, and the fact that currently
rights within eight years, (iii) existing non-consumptive wa-
97% of expected annual generation is sold under contracts
ter rights that have not been used would expire within eight
with terms of at least five years. As the selling party, the
years from the enactment date of the new Water Code; and
company has material obligations under long-term, fixed-
(iv) the preservation of environmental water flows to pro-
price electricity sales contracts. Prices in these contracts
tect the ecosystem for future water rights was added for
are indexed according to different commodities, exchange
both consumptive and non-consumptive and empowers the
rates, inflation, and the market price of electricity. Adverse
Chilean Water Authority to mandate an environmental flow
changes to these indices would reduce the rates charged
requirement for existing water rights. The latter point would
under long-term, fixed-price electricity sales contracts,
reduce water availability for generation purposes. Any lim-
which could adversely affect the business, results of oper-
itations on the Company’s current water rights, the need for
ations and financial condition. In the distribution business,
additional water rights, or the current water concessions of
we are also exposed to fluctuations in energy prices.
unlimited duration could have a material adverse effect on
hydroelectric development projects and profitability.
In 2016, in conformity with Chilean law, some customers
allowed to choose between either regulated or nonregu-
92
Annual Report Enel Chile 2017 lated prices and had chosen regulated prices in the past,
• Ch$ 16 billion from 2021 to 2022; and
chose the lower unregulated prices. These customers are
tendering their energy needs, either directly or with other
• Ch$ 730 billion thereafter.
customers, because of the price advantage, when com-
pared to regulated prices, because regulated prices are
Some debt agreements are subject to (1) satisfying finan-
based on contracts tendered in the past at higher prices. A
cial covenants, (2) affirmative and negative covenants, (3)
decrease in market prices could reduce the number of reg-
events of default and (4) mandatory prepayments for con-
ulated customers and could cause customers to choose
tractual breaches, among other provisions. A significant
another electricity provider, which would reduce the com-
portion of the Company’s financial indebtedness is sub-
pany’s customer base and therefore adversely affect the
ject to cross-default provisions, which have varying defini-
business, results of operations and financial condition.
tions, criteria, materiality thresholds and applicability with
The electricity business is subject to risks arising from
faults. Because of the 2018 Reorganization, in which we in-
natural disasters, catastrophic accidents, and acts of
curred debt primarily to finance the Enel Generación Chile
terrorism that could adversely affect our operations,
tender offer, we also have our own financial indebtedness
earnings and cash flow.
at the holding company level, which is also subject to cross
respect to subsidiaries, which may give rise to cross de-
Our primary facilities include power plants and distribution
default provisions.
assets in Chile. They may be damaged by earthquakes,
If the company or its subsidiaries breach any of these
floods, fires, and other catastrophic disasters caused by
contractual provisions, debtholders may demand immedi-
nature or by humans, such as acts of vandalism, riots, and
ate repayment, and a significant portion of debt could be-
terrorism. A catastrophic event could cause disruptions
come due and payable. The Company could be unable to
in the business, significant decreases in revenue due to
refinance its debt or obtain such refinancing in acceptable
lower demand or significant additional costs not covered
terms. In the absence of refinancing, the Company may be
by business interruption insurance. There may be lags be-
forced to dispose of assets in order to cover debt service
tween a major accident or catastrophic event and the final
payments in conditions that would not favor obtaining the
reimbursement from insurance policies, which typically
best price for such assets. Furthermore, selling its assets
carry a deductible and are subject to per-event maximum
quickly enough or at high enough prices to cover the debt
amounts.
could be impossible.
The company is subject to financing risks, such as
It may also be impossible to raise the necessary funds re-
those associated with funding new projects and capital
quired to finish projects under development or construc-
expenditures, and risks related to refinancing maturing
tion. Market conditions prevailing at the time these funds
debt. It is also subject to covenant compliance, all of
are required or other unforeseen project costs could com-
which could adversely affect liquidity.
promise the Company’s ability to finance projects and ex-
As of December 31, 2017, our consolidated interest-bearing
penditures.
debt totaled Ch$ 778 billion.
The inability to finance new projects or capital expenditures
to refinance existing debt could adversely affect results of
The Company’s interest-bearing consolidated debt has the
operation and financial condition.
following maturity profile:
• Ch$ 17 billion in 2018;
that it does not own or control. If these facilities do not
The company relies on electricity transmission facilities
• Ch$ 15 billion from 2019 to 2020;
unable to deliver the power we sell to our final cus-
provide an adequate transmission service, we may be
tomers.
93
Risk Factors To deliver energy, the Company depends on transmis-
In addition, we employ many highly-specialized employ-
sion systems that are owned and operated by unaffiliat-
ees, and certain actions such as strikes, walk-outs or work
ed companies. This dependence exposes several risks. If
stoppages by these employees could adversely affect the
transmission is disrupted, or the transmission capacity is
business, results of operations and financial condition, as
inadequate, it may be impossible to sell and deliver elec-
well as the company’s reputation.
tricity. If a region’s power transmission infrastructure is in-
adequate, the recovery of costs of sales and profit may
Following the merger with EGPL, the Company may not
be insufficient. If restrictive transmission price regulation is
be able to retain key employees or efficiently manage the
imposed, transmission companies upon whom the Com-
larger and broader organization, which could negatively af-
pany relies may not have sufficient incentives to invest in
fect its operations and financial condition. Our post-merg-
the expansion of their transmission infrastructure, which
er success will depend in part on our ability to retain key
could adversely affect operations and financial results. The
employees of both Enel Chile and EGPL, and successfully
construction of new transmission lines may take longer
manage the larger and broader organization resulting from
than in the past, mainly because of new social and environ-
the merger. In this context, key employees may depart
mental requirements that add uncertainty to the probability
because of issues relating to the uncertainty and difficul-
of completing these projects.
ty of the integration process, or general discontent. Fur-
thermore, the Company will face challenges inherent in
In the past, there have been blackout events due to fail-
efficiently managing an increased number of employees.
ure of transmission lines that exposed weaknesses in the
Accordingly, no assurance can be given that key employ-
transmission grid, and the need for expansion and techno-
ees will be retained or that the management of a larger
logical improvements to increase its reliability. Additional
and more diverse, combined organization will be success-
failures may occur in the future.
ful, which could result in an interruption of its combined
business and negatively affect its combined operation and
Any disruption or failure in transmission facilities could
financial condition.
interrupt the business, with could adversely affect the re-
sults of operations and financial condition.
The relative illiquidity and volatility of the Chilean se-
The business could experience adverse consequences
ditions in Latin America and other parts of the world
if the company is unable to reach satisfactory collective
could adversely affect the price of ordinary stock and
curities markets and its dependence on economic con-
bargaining agreements with unionized employees or
ADS.
retain key employees.
Chilean securities markets are substantially smaller and
A large percentage of employees are members of unions
less liquid than the major securities markets in the United
and have collective bargaining agreements that must be re-
States or other developed countries. The low liquidity of the
newed on a regular basis. The business, financial condition
Chilean market may impair the ability of shareholders to sell
and results of operations could be adversely affected by a
shares, or holders of ADS to sell shares of ordinary stock
failure to reach agreement with any labor union represent-
withdrawn from the ADS program, into the Chilean market
ing such employees or by an agreement with a labor union
in the amount and at the price they wish to do so. Also, the
that contains terms deemed unfavorable. Chilean law pro-
liquidity and the market for shares or ADSs may be affect-
vides legal mechanisms for judicial authorities to impose a
ed by countless factors including variations in exchange and
collective agreement if the parties are unable to come to
interest rates, the deterioration and volatility of markets for
an agreement, which may increase costs beyond what has
similar securities, and any changes in liquidity, financial con-
been budgeted.
dition, creditworthiness, results, and profitability.
The share price could also decrease as a result of the 2018
Reorganization.
94
Annual Report Enel Chile 2017
In addition, Chilean securities markets may be affected in
Interruption or failure of information technology or
many ways by economic and market conditions and devel-
communications systems, or external attacks or breach-
opments in Latin American countries, other emerging mar-
es of these systems could have an adverse effect on
kets and elsewhere in the world. Even though economic
operations and results.
conditions in such countries may differ significantly from
economic conditions in Chile, investors’ reactions to devel-
The company depends on information technology, commu-
opments in any of these other countries may have an ad-
nication and processing systems (IT Systems) to operate
verse effect on the market value and liquidity of securities
its business, the failure of which could adversely affect the
for Chilean issuers. An increase in perceived risks asso-
business, results of operations and financial condition.
ciated to investing in South American countries and else-
where in the world could lessen capital flows to Chile and
IT systems are becoming more vital worldwide, and the
adversely affect the Chilean economy in general, and the
electricity sector is not an exception. In the generation
interests of investors in our shares or ADSs in particular.
business, IT systems are essential in monitoring power
We cannot give assurance that the price or the liquidity
performance, adequately generating invoices to custom-
of its shares or ADSs will not be negatively affected by
ers, achieving operational efficiencies and meeting ser-
events in Latin American markets or the global economy
vice targets and standards. Our distribution subsidiaries
plants’ operations, maintaining generation and network
in general.
could also be affected adversely because they rely heav-
ily on IT systems to monitor their grids (known in some
Lawsuits against the company outside Chile or com-
countries as smart grids, due to the higher digitalization
plaints based on foreign legal concepts may have unfa-
of the market), billing processes for millions of customers
vorable outcomes.
and customer service platforms. Temporary or long-lasting
operational failures in any of these IT systems, either in-
The Company’s investments are all located outside of the
tentional or not, could have a material adverse effect on
United States. All directors and officers reside outside the
results of operations. Additionally, cyber-attacks can have
United States and most of their assets are located outside
an adverse effect on the company’s reputation and rela-
the United States as well. If any investor were to sue a
tionship with the community. Over the past few years,
director, officer, or expert in the United States, it may be
global cyber-attacks on security systems, treasury opera-
difficult for that investor to effect service of legal process
tions, and IT Systems have intensified worldwide. We are
within the United States upon these persons, or to enforce
exposed to cyber-attacks aimed at damaging our assets
against them, judgments obtained in the United States
through computer networks, cyber-spying involving strate-
courts based upon the civil liability provisions of the federal
gic information that may be beneficial for third parties, and
securities laws of the United States, in United States or
the cyber-theft of proprietary and confidential information,
Chilean courts. In addition, there is doubt as to whether an
including customer information. The company is exposed
action could be brought successfully in Chile on the basis
to several sorts of cyber-attacks, including denial-of-service
of liability solely based upon the civil liability provisions of
attacks that may affect user service accessibility, as well as
the United States federal securities laws.
attacks that could affect domain name systems, preventing
the use of certain useful web pages.
95
Risk Factors 15Reorganization - Elqui Project
96
Annual Report Enel Chile 2017 Enel Chile corporate building
97
Letter from the Chairman Elqui project
On December 20, 2017, the Extraordinary Shareholders’
Meeting of Enel Chile approved the corporate reorganiza-
tion process (the “Reorganization”) that includes the fol-
lowing phases:
(1) A merger of Enel Green Power Latin America S.A.
with and into Enel Chile (hereafter the “Merger”) that
will require a capital increase in Enel Chile to pay the
shareholders of Enel Green Power for the shares they
have a right to according to the exchange ratio agreed
to as part of the Merger, and that is conditioned to the
success of Enel Chile´s PTO of Enel Generación Chile,
among other conditions.
(2) A Public Tender Offer of Shares to be carried out by
Enel Chile to purchase up to 100% of the shares and
American Depository Shares (“ADS”) issued by Enel
Generación Chile held by its minority shareholders
(“Enel Generación PTO”) and that will be subject to
the condition, among others, that Enel Chile reach at
least a 75% shareholding of Enel Generación Chile
and that the minority shareholders that agree to sell
their shares and ADSs, also agree to subscribe either
shares or ADSs, as the case may be, issued by Enel
Chile provided by the capital increase identified in nu-
meral (3) below, and to pay for those Enel Chile shares
with part of the price of their Enel Generación Chile
shares sold in the Enel Generación PTO.
(3) A capital increase (“Capital Increase”), to be paid in
cash, of Enel Chile to provide for sufficient shares and
ADSs to deliver to the shareholders of Enel Gener-
ación that accept to sell their shares in the Enel Gen-
eración PTO.
(4) The success of the Enel Generación PTO is subject to
the amendment of the company´s bylaws that would
eliminate the restrictions imposed by Title XII of D.L
3,500/1980, which limit the possibility for a sole share-
holder to concentrate more that 65% of the capital
with voting rights of Enel Generación Chile (the “Enel
Generación Bylaw Amendment”).
All operations described are instrumental to carry out the
Reorganization and it makes no sense to consider them
individually, separate from each other. Within this context,
the Shareholders´ Meeting approved the Reorganization
assuming that each and every one of these event is part
of the Reorganization. The Reorganization will be subject
to compliance with the conditions indicated hereafter, that
are all related to each other, so that, the success of the
Reorganization depends on the materialization of them all.
The Reorganization will not be carried out if the Enel Gen-
eración PTO is not declared a success or if the conditions
precedent to the Merger are not fulfilled. Therefore, every
phase of the Reorganization will be subject to the following
conditions (“Conditions of the Reorganization”):
(1) Merger: It was approved subject to fulfilling all the fol-
lowing conditions:
a. That the shareholders of Enel Generación agree
to the Amendment of the Enel Generación By-
laws.
b. That Enel Chile declare the PTO a success.
c. That the withdrawal rights the shareholders of
Enel Chile exercise related to the Merger do not
exceed 5% of the company’s common stock with
voting rights, and that the withdrawal rights of the
shareholders of Enel Chile do not lead a share-
holder to exceed the 65% maximum shareholding
concentration limit of Enel Chile at the withdrawal
expiration date. The number of shares considered
is the number the new capital of Enel Chile will
be divided into once the Merger and the Capital
Increase of Enel Chile are approved.
d. That no court ruling or resolution with the intent to
object, sew or demand action or judicial process
is pending at the effective date of the Merger that
would reasonably result in the following conse-
quences: (i) prohibit or impede the materialization
of the Merger, or (ii) impose material limitations
on Enel Chile to exercise its ownership rights of
Enel Green Power assets that are assigned to
Enel Chile as the result of the Merger; (iii) impose
limitations on Enel Chile to continue developing
98
Annual Report Enel Chile 2017 or operating any project owned by Enel Green
b. That when the applicable Capital Increase pre-
Power; and in general any other action by a court,
emptive subscription period concludes, the total
superintendence, agency or any other competent
number of shares of Enel Chile needed to deliver
authority that would lead to any of the conse-
to the shareholders of Enel Generación that sell
quences identified in items (i) to (iii) above.
their shares in the Enel Generación PTO be avail-
able, as stated by the terms and conditions of the
(2) Enel Generación PTO: Beginning the PTO process
transaction.
was approved subject to fulfilling all the following sus-
pensive conditions:
c. That as a consequence of : (i) the Enel Gener-
ación PTO acceptances received and therefore
a. That the shareholders of Enel Chile and Enel Gen-
the number of shares of Enel Chile needed to be
eración Chile had approved the Merger and that
subscribed by the shareholders of Enel Gener-
none of the conditions to the Merger described
ación that sell their shares in the Enel Generación
above had failed at the commencement date of
PTO (as agreed by the Shareholders’ Meeting and
the PTO; however, the fulfilment could be pend-
informed through the initial Enel Generación PTO
ing at that date.
Prospectus Notice) and (ii) the Merger exchange
ratio, Enel S.p.A. not lose its Enel Chile controlling
b. That the shareholders of Enel Generación had
shareholder status at any time, having to maintain
agreed on the Enel Generación Bylaw amend-
a shareholding of over 50.1% of Enel Chile shares
ment, although the materialization of the amend-
with voting rights at all times.
ment may still be pending awaiting the fulfilment
of its respective conditions precedent.
d. That no court ruling or resolution with the intent to
c. That the shares issued as part of the Capital In-
be pending that would reasonably result in the
crease be registered in the Securities Register of
following consequences: (i) prohibit or impede
the SVS (currently the Financial Market Commis-
the materialization of the Enel Generación PTO,
object, sew or demand action or judicial process
sion).
or (ii) impose material limitations on Enel Chile
to purchase some or all Enel Generación shares,
The success of the Enel Generación PTO will be subject to
including any material restriction regarding the
satisfying the following suspensive conditions, among oth-
Amendment to the Enel Generación bylaws; or
er conditions that the Board of Directors of Enel Chile could
(iii) impose limitations on Enel Chile to continue
establish. Enel Chile could waive any of these conditions,
developing or operating any project owned by
and the Board would be empowered by the Shareholders’
Enel Green Power; and in general any other action
Meeting to carry out such action:
by a court, superintendence, agency or any other
competent authority that would lead to any of the
a. That the Enel Generación PTO had been accepted
consequences identified in items (i) to (iii) above.
and received from the shareholders representing
the number of shares necessary for Enel Chile to
e. That no court ruling or resolution with the intent
reach more than 75% ownership of Enel Gener-
to object, sew or demand action or judicial pro-
ación after the PTO and that these shareholders
cess be pending that would reasonably result in
acceptance also include their commitment to
the following consequences: (i) prohibit or im-
use part of the price in cash they receive for their
pede the materialization of the Enel Generación
Enel Generación Shares tendered to purchase the
PTO, or (ii) impose material limitations on Enel
shares of Enel Chile within the terms agreed by
Chile to purchase some or all Enel Generación
the Shareholders’ Meeting to be informed in the
shares, including any material restriction regard-
initial Enel Generación PTO Prospectus Notice.
ing the Amendment to the Enel Generación by-
99
Reorganization - Elqui Project laws; or (iii) impose material limitations on Enel
(4) Enel Generación Bylaw Amendment: FThe amend-
Chile to exercise the ownership rights of its Enel
ment to the bylaws of Enel Generación was approved
Generación shares, including its voting rights of
under the suspensive condition that Enel Chile would
such shares, and in general any other action by
have declared the Enel Generación PTO a success.
a court, superintendence, agency or any other
competent authority that would lead to any of the
All conditions to the Reorganization will be understood
consequences identified in items (i) to (iii) above.
as fulfilled, or not fulfilled if referring to the Condition
Subsequent to the Capital Increase, if on December
f.
That no material adverse change had occurred in
31, 2018 or before, Enel Chile publishes the notice
Enel Generación Chile. Within this context, a ma-
declaring the success of the Enel Generación PTO,
terial adverse change is any event, fact or circum-
notice that is required by Article 212 of the Securi-
stance that results in or causes a material damage
ties Market Law. This must be disclosed opportunely
to the businesses, property, assets, obligations,
to the SVS (currently CMF) and the market through a
results or operations of Enel Generación. Such
significant event of Enel Chile. The conditions to the
materiality and exclusions will be determined ob-
Reorganization will be understood as not fulfilled, or
jectively hereafter.
fulfilled if referring to the condition subsequent to the
Capital Increase, if on December 31, 2018 or before,
(3) Capital Increase: The Shareholders’ Meeting agreed
Enel Chile has not published the notice declaring the
that the Capital Increase would be effective on the
Enel Generación PTO a success as established by the
date the Shareholders Meeting Minute is formalized
terms and conditions of the PTO.
as a public deed. Although, such Capital Increase will
be void if the condition subsequent is fulfilled. If it is
Consequently, having fulfilled the conditions to the Re-
fulfilled, it is legally to be understood that the Capi-
organization as indicated previously, or not fulfilling the
tal Increase agreement was never adopted, and the
Condition Subsequent to the Capital Increase, each
Board of Directors is to establish such fact by public
phase of the Reorganization will become effective on
deed and an extract of such deed must be registered
different dates, as indicated below for each event:
in the Santiago Trade Register, and to the side of the
company’s incorporation registration in the same Reg-
(1) The Merger will become effective on the first
ister and be published in the Official Gazette.
business day of the month following the date in
Also, if any of the conditions are satisfied, the compa-
required by Article 212 of the Securities Market
ny´s Board of Directors must give timely notice to the
Law, is published by Enel Chile declaring it a suc-
which the notice of the outcome of the PTO, as
SVS (currently Financial Market Commission) and the
cess.
stock exchanges and carry out all other necessary ac-
tions to note before such organizations that the agree-
(2) The capital increase will become effective on the
ment to increase capital by Ch$ 820,000,000,000 by
date the Shareholders Meeting Minute is formal-
issuing 10,000,000,000 new common shocks is no
ized as a public deed, notwithstanding being sub-
longer in force.
ject to the Condition Subsequent.
100
Annual Report Enel Chile 2017
(3) The acceptance date of the shareholders and the
the Enel Generación PTO price, will be the first
formalization of the sale of their shares tendered
business day of the month following the date in
in the Enel Generación PTO will be the date in
which the notice of the outcome of the PTO, as
which the notice of the outcome of the PTO, as
required by Article 212 of the Securities Market
required by Article 212 of the Securities Market
Law, is published by Enel Chile declaring it a suc-
Law, is published by Enel Chile declaring it a suc-
cess.
cess.
(4) The payment date of the Enel Generación PTO,
effective the date in which the notice of the out-
the delivery date of the new shares of Enel Chile
come of the PTO, as required by Article 212 of the
to the shareholders of Enel Generación that ac-
Securities Market Law, is published by Enel Chile
cepted to sell their shares in the Enel Generación
declaring it a success.
(5) The Enel Generación Bylaw Amendment will be
PTO and the payment paid for such new Enel
Chile shares by such shareholders with part of
101
Reorganization - Elqui Project 16Industry regulation and electricity
system operations
102
Annual Report Enel Chile 2017 103
Letter from the Chairman General
features
a) Regulatory framework:
Additionally, the law provides for a Panel of Experts, com-
prised of professional experts, whose main responsibility
is to acts as a court, issuing enforceable resolutions in dis-
putes related to subjects referred to by the Electricity Law
and other electricity related laws.
According to the Law, the operation and coordination of
the Chilean electricity system is to be carried out by a Na-
tional Electricity Coordinator. It is an independent entity
in charge of coordinating the operation of the electricity
system with the following objectives: i) maintain service
Chile’s electricity sector is regulated by the Chilean Elec-
security; ii) guarantee the efficient operation of the facili-
tricity Law 20,218, contained in the Ministry of Mining DFL
ties connected to the system; and iii) guarantee open ac-
1 issued in 1982, whose restated text was determined by
cess to all transmission networks. The main activities of
Ministry of Economy DFL 4, issued in 2006 (the “Electric-
this entity include the coordination of electricity market
ity Law”) and its respective regulations contained in D.S.
operations, authorization of connections, supplementary
327 issued in 1998.
services management, implementation of information sys-
tems available to the public, and monitor competition and
The main authority in the energy industry is the Ministry
payments, among others.
of Energy that is the government body responsible for pro-
posing and delivering comprehensive public policies as a
The Chilean electricity sector is physically divided into three
coordinate effort. It exists since February 1, 2010 as an au-
main networks, the National Electricity Network (“SEN” in
tonomous entity after being part of the Ministry of Mining
its Spanish acronym) and two smaller isolated networks;
for many years.
Aysén and Magallanes. The SEN is the outcome of the
integration of the Central Interconnected System (“SIC” in
The National Energy Commission (”CNE”, in its Spanish
its Spanish acronym) and the Norte Grande Interconnected
acronym) that regulates the electricity industry and the
System (“SING” in its Spanish acronym) that took place
Superintendence of Electricity and Fuel (Chilean “SEC”, in
in November 2017. Until then the SIC was the main grid
its Spanish acronym) that is the supervising body, are also
and extended 2,400 km from Taltal in the north to Quellón
relevant industry authorities. They report to the Ministry of
on the island of Chiloé to the south. The SING covered the
Energy. Other entities that report to this Ministry are: the
northern part of the country, from Arica to Coloso, and ex-
Chilean Nuclear Energy Commission (“CChEN”, in its Span-
tended 700 km.
ish acronym), the Chilean Energy Efficiency Agency that
is in charge of promoting energy efficiency, and the Cen-
The electricity industry in Chile is divided into three seg-
ter for Innovation and Promotion of Sustainable Energies
ments or businesses: generation, transmission, and distri-
(”CIFES”, in its Spanish acronym), which in 2014, replaced
bution. Operations of the related facilities must be inter-
the Renewable Energies Center (“CER””, in its Spanish ac-
connected and in coordination to supply electricity at the
ronym).
minimum cost within the certain safety and quality stan-
dards required by electricity industry regulation.
The CNE is the entity in charge of proposing the regulated
Given the structural characteristics of the transmission and
tariffs, approving the annual transmission expansion plans,
distribution segments, they are considered natural monop-
and elaborating the indicative plan for the construction of
olies and are therefore subject to special industry regula-
new electricity generation facilities. The Chilean SEC in-
tion, the network is open access, and tariffs are regulated.
spects and oversees compliance with the law, rules regu-
lations and technical norms applicable to electricity gener-
The Chilean electricity market trades two products (energy
ation, transmission and distribution, liquid fuels and gas.
and capacity), and additionally several related services. The
104
Annual Report Enel Chile 2017 National Electricity Coordinator performs the calculation of
nature of the activity and the need to guarantee adequate
market balances, determines the transfers among gener-
access to all players. The Electricity Law defines limits to
ation companies and calculates the hourly marginal cost,
the market share that generation companies and distribu-
which is the price at which energy transfers are carried out.
tion companies may have of the National Transmission seg-
The CNE determines the price of generation capacity.
ment and prohibits National Transmission companies from
participating in the generation and distribution segments.
Customers are classified according to their demand as
regulated or unregulated. Regulated customers are those
whose connected capacity is below 5,000 kW. Customers
with connected capacity between 500 kW and 5,000 kW
may choose to be regulated or unregulated, subject to the
respective price regime.
Limits to integration
and concentration
a.1 Generation segment
The operations of generation companies are conditioned
by the operations plan of the System Coordinator, although
they may freely decide whether to sell their energy to ei-
ther 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:
In Chile, antitrust legislation along with specific regulation
applicable to the electricity industry define criteria to avoid
• Nonregulated customers: They are customers
certain levels of market concentration and abusive prac-
whose connected capacity is greater than 5,000 kW,
tices.
mainly industrial and mining companies. These cus-
tomers may freely negotiate their electricity supply
Companies are allowed to participate in the different indus-
prices with generators or distributors. Customers
try segments (generation. distribution and commercializa-
whose connected capacity ranges between 500 and
tion/trading) in so far an adequate level of corporate and
5,000 kW may choose to negotiate prices with their
accounting separation exists. The transmission sector is
suppliers or be subject to regulated tariffs for a mini-
where most restrictions are imposed, mainly due to the
mum of 4 years in either regime.
105
Industry regulation and electricity system operations • Distribution companies: They supply their regulated
customers through public tenders regulated by the
CNE and supply their nonregulated customers through
bilateral contracts.
• Generation companies on the Spot or short-term
market: It refers to the transactions of energy and
capacity between generation companies resulting
from the efficient operation of the system which is
coordinated by the National Electricity Coordinator.
The surplus (deficit) of production after supplying cus-
tomer commitments are transferred by selling (buying)
to (from) other generators connected to the system.
Electricity transfers are priced at the marginal cost of
the system. Capacity transfers are carried out at the
corresponding node price, as set every semester by
the authority.
In Chile, capacity payments to each generator depend on
the calculation, based on current rules, performed annually
by the National Electricity Coordinator that determines the
firm capacity of each power plant. Firm capacity mainly de-
pends on availability, of the facilities and of the source of
generation.
Non-conventional
energies
renewable
a.2 Transmission segment
Transmission systems are comprised of lines and substa-
tions that form an electric system that are not distribution
installations. They are divided into five segments: Nation-
al Transmission, Development Pole Transmission, Zonal
Transmission, Dedicated Transmission and also Internation-
al Interconnection Systems.
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 by a tariff setting process performed every
four years. This process determines the Annual Transmis-
sion Value comprised of efficient operations and manage-
ment costs and an investment value annuity, determined
by a discount rate (minimum 7% after tax) set by the au-
thority 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 pro-
cess carried out by the National Electricity Coordinator,
which presents an expansion plan every year that must be
approved by the CNE.
The expansion of both systems is granted through an open
tender process that discriminates new installations from
enlargement of existing installations. The tenders carried
Law 20,257 enacted in April 2008 creates incentives to use
out for new installations grant the winner ownership of the
Non-Conventional Renewable Energies (NCRE). This rule
installation to be built. The expansion of existing installa-
determined that by 2014, at least 5% of energy commer-
tions, on the other hand, belongs to the owner of the orig-
cialized by generators must come from renewable sourc-
inal installation, who is obliged to tender the construction
es and must progressively increase 0.5% every year from
of the required expansion.
2015 until 2024 to reach 10%. This law was modified in
2013 by Law 20,698, entitled the 20/25 law, establishing
The remuneration of the expansion of existing facilities is
that by 2025, 20% of the electricity matrix must be cov-
determined by the outcome of the bid and represents the
ered by NCRE sources. For contracts in force up to July
income for the first 20 years of operations. From year 21
2013, the withdrawals established by the previous law are
on, the remuneration of such transmission facilities is de-
to be respected.
termined as existing assets.
106
Annual Report Enel Chile 2017 a.3 Distribution segment
Distribution Value Added (VAD in its Spanish acronym). The
VAD is based on an efficient model company scheme and
For regulatory purposes, the distribution segment is de-
fined as all electricity supplied to end customers at a volt-
age of up to 23kV.
Distribution companies operate under the framework of
a public service concession. They have the obligation to
provide electricity at regulated prices to regulated custom-
ers (customers with under 5,000 kW connected capacity,
unless falling within the 500 and 5,000 kW category and
chose the nonregulated tariff). Nonregulated customers
may negotiate their electricity supply with any generation
or distribution company, but must pay a regulated toll for
using the distribution network.
Regarding electricity supply to regulated customers, the
law determines that distribution companies must perma-
nently have electricity available to supply its customers
and it must obtain such electricity through open, non-dis-
criminatory and transparent public tenders. These tenders
are designed by the CNE and are carried out at least five
years in advance to award 20-year term contracts. If de-
mand changes unexpectedly, the authority has the power
to call a short-term tender and also a regulated procedure
to remunerate noncontracted electricity sales.
The processes for setting distribution tariffs are carried out
every four years based on a cost analysis to determine the
the typical area concept.
To determine the VAD, the CNE classifies the companies
with similar distribution costs into groups named “typical
areas”. For each typical area, the CNE and the distribution
companies hire independent consultants to carry out stud-
ies to determine the costs of an efficient model company,
considering fixed costs, average energy and capacity loss-
es, and standard investment, maintenance, and operations
costs related to electricity distribution. The annual invest-
ment costs are calculated based on the Net Replacement
Cost (VNR in its Spanish acronym) of facilities adjusted to
demand, expected life and a 10% real annual discount rate.
The VAD is then 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 VAD is being calcu-
lated, the Antitrust Court reviews the services considered
to be Related Services and subject to price regulation.
The Chilean distribution model is a consolidated model that
has carried out eight price-settings processes since the pri-
vatization of the sector.
107
Industry regulation and electricity system operations b) Regulatory issues 2017
Law 20,928 - Tariff equality
law
On June 22, 2016, the Ministry of Energy published Law
20,928 in the official gazette. This Law establishes “elec-
tricity tariff equality mechanisms” and modifies the Elec-
tricity Law D.F.L. 4/2006. This law states that the maximum
tariffs that distribution companies may charge residential
customers must not exceed the average national tariff by
more than 10%. The differences arising from the appli-
The process was led by the Secretary of Energy in collab-
oration with the university Pontificia Universidad Católica
de Chile. During November and December of 2016 and
until late January of 2017, workshops were carried out dis-
cussing the following issues: “Development of the distri-
bution network”, “Financing the Network of the future and
its tariff structure”, “Electricity distribution business model”,
and “Services offered by the network of the future”. This
first diagnostic stage of the distribution sector concluded
on April 13. The results are expected to be disclosed by the
authorities of the next government.
CNE 2017 Regulatory Plan
cation of this mechanism will be progressively absorbed
Pursuant to Exempt Resolution 23 dated January 13, 2017,
by the remaining customers subject to regulated prices
and according to Article 72-19 of the Electricity Law, the
that are under the mentioned average, except for those
CNE published its 2017 Annual technical regulation devel-
residential users whose monthly average consumption of
opment plan. The plan included modifying the Technical
energy in the prior calendar year is lower than or equal to
Service Safety and Quality Regulations, and the prepara-
200 kWh. It also establishes a discount to be applied to
tion of the technical annexes and rules applicable to elec-
the energy component of the node price that distribution
tricity generation, transmission and distribution facilities.
companies pass through to regulated customers that be-
long to districts that are intensive in electricity generation
and located in electricity systems with over 200 MW of
installed capacity.
Notwithstanding the above, the law empowers the regu-
lator to incorporate certain services that are not electricity
distribution supply into the VAD.
Within this context, in January 2017, the Ministry of En-
ergy, the CNE and the Chilean SEC announced that the
cost of the “interruption and reconnection” service due
to non-payment would no longer be charged as a distri-
bution-related service, but to be included in the electricity
distribution tariff for 2016 – 2020.
Distribution Law
Rules published in 2017
Several rules related to the Transmission Law (Law 20,936)
were published in 2017. The rules enacted to this date are:
Long term Electric Energy Planning Rules; Rule setting the
requirements and procedures applicable to international
trade of electric services; Rules to determine the prelimi-
nary sections of new transmission system works; Rules to
determine and pay compensation for unavailability of elec-
tricity supply and the Rules to dictate the technical norms
governing technical aspects, such as, safety, coordination,
electricity information and figures regarding electricity sec-
tor operations. In December, the Rules on Complementary
Services were submitted to the Government Comptroller
Office. It is expected to be published in early 2018.
The work carried out regarding the Transmission Law was
published through Exempt Resolution 659: Technical provi-
On September 29, 2016, the seminar entitled “The Future
sions to implement Article 8 of Law 20,870 that regulates
of Electricity Distribution” took place formally opening the
the tax payments for thermal electric power plant emis-
discussion on the new national electricity distribution law.
sions as indicated in the Tax Law Reform.
108
Annual Report Enel Chile 2017 Technical service quality
norm applicable to distri-
bution systems
Exempt Resolution CNE 706 that set the technical service
quality norm for distribution systems was published on De-
cember 18, 2017. The preparation of this norm was part of
the CNE 2017 Regulatory Plan. It was carried out by form-
ing an advisory committee and then submitting the text to
public consultation.
The new regulation increases electricity distribution tech-
nical and commercial requirements. The aspects worth
highlighting among the new rules are: Reliability indicators
(includes SAIDI, SAIFI, TIC and FIC indicators); product
quality; measurement; monitoring and control; and com-
mercial quality.
2017 Transmission expan-
sion plan
The Electricity Law includes a procedure that must be
carried out every year to plan for new transmission facili-
ties. Within this context, on December 29, 2017, the CNE
published Exempt Resolution 770 that defined the new
projects and expansion projects resulting from this annual
planning process. According to the stages identified by the
Law, those interested (duly registered in the citizen par-
ticipation register) may present their observations to the
expansion plan during the first days of January 2018.
c) Tariff reviews and
supply processes
c.1 Electricity distribution
tariff setting process
The tariff setting process for the 2016-2020 period conclud-
ed with the publication of tariff decree 11T in the Official
Gazette that sets the distribution tariff formulas effective,
retroactively, from November 4, 2016.
109
Industry regulation and electricity system operations c.2 Tariff setting process of
electricity distribution re-
lated services
The “Final Electricity Distribution-Related Services Cost
Study Report” was published on January 20, 2017. The
CNE approved the technical report entitled “Tariff Formu-
las of Non-Electricity Supply Services, related to Electricity
Distribution” through Exempt Resolution 213 dated April
27, 2017. To the date of this report, the tariff decree with the
new tariffs is pending.
c.3 Tariff setting process of
zonal transmission
As determined by Article 20 of the transitory provisions of
Law 20,936, the results of the tariff process carried out
for the 2016-2019 period are applicable to the 2018-2019
period.
The “Preliminary Technical Report on the Annual Value of
the Zonal System and the Dedicated Transmission System
2018-2019” was published on February 10, 2017 through
CNE Exempt Resolution 83. The Final Technical Report
was published on March 28, 2017 through CNE Exempt
Resolution 149. To the date of this report, the tariff decree
that will set the new tariffs is pending.
c.4 Transmission tariff set-
ting process 2020-2023
Within the context of the Electricity Transmission Tariff
setting process for 2020-2023, the regulator issued the
preliminary technical report “Rating of Transmission Sys-
tem Installations” through CNE Exempt Resolutions 771
dated December 29, 2017. Also, through Exempt Reso-
lutions 769 the CNE issued the Preliminary Technical and
Administrative Terms required to carry out the Valuation of
Transmission System Installations. According to the stag-
es identified by the Law, those interested (duly registered
in the citizen participation register) may present their ob-
servations to these documents during the first days of Jan-
uary 2018.
110
Annual Report Enel Chile 2017 c.5 Electricity tenders
Three tenders have been carried out under the new ten-
der’s law: Supply Tender 2015/01, Supply Tender 2015/02,
and Supply Tender 2017/01.
The 2015/02 tender began in June 2015 and concluded in
October 2015. It awarded three blocks for a total 1.2 TWh/
yr (100%) at an average 79.3US$/MWh.
The 2015/01 tender began in May 2015 and concluded in
July 2016. It awarded five blocks for a total 12.4 TWh/yr
(100%) to 84 companies at a weighted average 47.6US$/
MWh, adding new players to the market.
Enel Generación Chile was awarded 5.9 TWh/yr. represent-
ing 47.6% of the total energy awarded in the 2015/01 ten-
der.
The supply tender 2017/01 began in January 2017 and con-
cluded in November 2017. It awarded a total 2,200 GWh/
yr (100%) to 5 companies at a weighted average 32.5 US$/
MWh.
As in the previous process, Enel Generación Chile was
awarded the most with 1.2 TWh/yr. representing 54% of
the total energy awarded.
111
Industry regulation and electricity system operations 17Electricity generation
112
Annual Report Enel Chile 2017 113
Letter from the Chairman Enel Generación Chile and its subsidiaries have a generating park comprised of 103 units spread out on the Central Inter-
connected Grid (SIC in its Spanish acronym) and 8 units on the Northern Interconnected Grid (SING in its Spanish acronym).
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
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
Technlogy
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Enel Generación Chile
Fuel/Natural Gas
Diego de Almagro
Enel Generación Chile
Fuel/Natural Gas
Huasco TG
Bocamina
San Isidro
San Isidro 2
Quintero
Enel Generación Chile
Fuel/Natural Gas
Enel Generación Chile
Coal
GasAtacama Chile
GasAtacama Chile
Fuel/Natural Gas
Fuel/Natural Gas
Enel Generación Chile
Fuel/Natural Gas
Ojos de Agua
GasAtacama Chile
Pehuenche
Curillinque
Loma Alta
Pangue
Canela
Canela II
Tarapacá TG
Tarapacá carbón
Atacama
Total
Pehuenche
Pehuenche
Pehuenche
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
GasAtacama Chile
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Hydroelectric
Wind
Wind
Fuel/Natural Gas
Coal
Diesel /Natural Gas
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
2017
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 31 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 2017, electricity sales of Enel Generación Chile and its subsidiaries reached 23,356 GWh, which represents a 34% share
of total sales on the National Electricity System (SEN in its Spanish acronym) including sales to customers and net sales
on the spot market.
114
Annual Report Enel Chile 2017
Enel Generación Chile
and Subsidiaries’ installed
capacity, generation
and energy sales
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
2016
3,757
699
1,115
781
6,351
2016
11,538
2,369
2,429
1,229
17,564
2017
3,757
699
1,115
781
6,351
2017
10,859
2,443
-
3,655
17,073
2016
2017
Enel Generación Chile
21,105
20,924
Pehuenche S.A.
Celta S.A. (3)
GasAtacama (3)
Ventas mercado spot
Total
340
930
463
852
23,689
344
-
1,347
742
23,356
(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 31 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.
Operational
and
commercial
scenario
General view of
the operational and
commercial scenario
The hydrology in the SIC was, on average, better than 2016
(one of the driest in statistical history) but maintained the
dry trend present over the last nine consecutive years
since 2010, experiencing only some relief in 2014, 2015 and
towards the end of 2017. This led to an increase in the hy-
droelectric contribution to the system when compared to
2016, and a slight reduction in thermal generation dispatch.
Generation costs were, on average, higher during the first
semester and gradually declined during the second semes-
ter and more significantly during the last quarter, because
hydrology intensified towards the last quarter of 2017 and
fuel prices increased when compared to 2016. A moderate
increase in consumption, which was 2.4% in the SIC, and
the greater generation of renewable solar and wind power
contributed to containing generation costs. The renewable
solar and wind generation capacity increased 1,460 MW in
2017, which represents a 91% increase when compared to
the solar and wind capacity that was added to the system
(3) Celta S.A. was absorbed by GasAtacama Chile S.A. on November
in 2016.
1, 2016.
Enel Generación Chile increased its hydroelectric contribu-
tion following the trend in the SIC, but maintained its level
of thermal generation when compared to 2016. Coal fueled
power plants, Bocamina I and II, reduced generation, but
were compensated by greater natural gas fueled genera-
tion.
115
Electricity Generation The integration of the SIC and SING began in November
A total 24 generation companies presented offers, a high
2017 with the start-up of operations of a 1,500 MW trans-
number of participants, reaching an aggregate 20,700
mission line extending 3,100 km. that allows integrating
GWh/yr., slightly more than nine times the energy ten-
the production and consumption of the country’s two most
dered, which reflects a high level of competition in this bid
important electricity systems. This integration will become
, which was also the case in previous bids.
more significant in 2018 when the works still under con-
struction conclude. The interconnection offers a joint pro-
As a result of the tender, the total (2,200 GWh/yr) sup-
duction amounting to 74 TWh/yr and annual sales amount-
ply tendered was awarded to 5 companies at a weighted
ing to 71 TWh/yr, of which the SIC represents 75%. The
average 32.5 US/MWh to be effective in the future. This
main implications are:
price was significantly lower than the price of previous ten-
ders. The 2016 tender awarded a total 12,430 GWh/yr. at a
i) Greater supply reliability by allowing to exchange
weighted average 47.6US$/MWh that will be effective in
(bi-directional flow) generation between a system
2022, and the 2015 tender awarded three blocks for a total
with a high concentration of hydroelectricity (SIC) and
1,200 GWh/yr. at an average 79.3US$/MWh (effective in
a system that is completely thermal (SING).
2021). Enel Generación Chile was at the top of the win-
ning company list of the 2017 bid for being awarded 54%
ii) Advantages to develop and operate renewable gener-
(1,180 GWh/yr.) of the bid, followed by renewable energy
ation projects, primarily solar and wind.
companies: Energía Renovable Verano Tres SpA award-
ed 25% of the tender (540 GWh/yr.), Atacama Solar S.A.
iii)
Integration of two markets that are significant in terms
awarded 10% (20 GWh/yr.), Cox Energía SpA awarded 6%
of sales but different in terms of typology (large num-
(120 GWh/yr.) and Atacama Energy Holdings S.A. awarded
ber of regulated customers in the SIC and nonregu-
5% (120 GWh).
lated and mining customers in the SING). This rep-
resents a significant source of business opportunities
Given the level of competition and the lower prices of the
for Enel Generación Chile, to develop projects, and to
previous supply tenders, Enel Generación performed a
provide operational and commercial management ser-
very thorough and extensive analysis of market conditions
vices.
Main events that
affected operational and
commercial performance
to present a competitive offer (price and energy blocks) in
the 2017 tender process and also obtain an attractive future
profit margin (20 years beginning in 2024). Consequently,
the offer presented was based on very low cost solar and
wind renewable generation technologies, backed up by the
existing diversified generation portfolio and consistent with
the Company’s previously signed supply commitments.
As a result, we were awarded more than half of the tender
at an average 34.7 US$/MWh to become effective in 2024,
a price that is higher than the total bid price average equal
In the commercial front, Enel Generación Chile repeated
to 32.5 USS/MWh. These price levels reflect the market
its successful participation in the power supply bid for
conditions to be in place in the future, when the respective
distribution companies. The Company was awarded more
contracts come into effect (2024 in this case). There is a
than half (54%) of the 2,200 GWh/yr. tendered in the 2017
clear trend in the industry to operate with renewable ener-
process as the result of an agreement with Enel Green
gy with very low generation costs that allow Enel Gener-
Power. The supply contracts signed have a 20-year term
ación Chile to forecast attractive margins for the electricity
beginning in 2024.
supply already awarded. Enel is actively participating in the
development and operation of renewable projects, which is
The 2017-1 tender auctioned hourly blocks for 1,700 GWh/
facilitated by the integration of the SIC and SING because
yr. and seasonal blocks (quarterly) for 500 GWh/yr, to reach
it allows the use of renewable resources available in north-
a total 2,200 GWh/yr. and concluded in November 2017.
ern Chile.
116
Annual Report Enel Chile 2017 On November 16, 2017, the Ministry of Public Works and
ii) Generation facilities are managed focusing on high
Enel Generación Chile signed the Laja Reservoir Operation
quality, availability and sustainability goals, which re-
and Maintenance Agreement that supplements the Agree-
quire operational procedures and maintenance and
ment signed in 1958. The agreement was accomplished
modernization programs that fully comply with tech-
after four years of studies and dialogue with the different
nical and environmental standards established by the
parties that use the water from the Laja basin. It was also
electricity and environmental rules and regulations.
signed by the communities and authorities involved. It in-
cludes the following main commitments:
iii) The commercial policy is defined to be consistent with
i)
Secure water requirements of farmers in the area, giv-
er plants and is permanently adjusted to the increas-
ing them priority to use the water when the level of
ingly competitive and changing market conditions. The
the reservoir is low, which is also used for generation.
goal of such policy has been to combine achieving an
the production characteristics of the Company’s pow-
attractive return with a low exposure to production and
ii) Maintain the level of water required for the Laja Falls,
market risk.
a well-known tourist attraction in the area, to maintain
its beauty.
The production and market risk relate mainly to the follow-
iii)
Increase flexibility in the use of the annual water vol-
ing:
ume to manage it more efficiently, based on irrigation
i) Hydrology variability, a risk that is permanently re-
and generation needs.
duced by analyzing and designing sales contracts that
commit to an optimum level of energy sales.
This agreement is extremely significant because it nor-
malizes the use and operations of the water in this basin,
ii) Commodity variability risk, mainly the price of fuels
putting an end to recurrent conflicts and lawsuits that took
that directly affect thermal production costs.
place in drought periods and were being solved with tem-
porary solutions that did not allow the parties involved to
iii) Currency variability risk, mainly the price of the United
plan and manage their use of this water efficiently.
States dollar that has an impact on the revenue of the
Company. This risk has been managed successfully by
The events previously mentioned reflect the Company’s
our parent company in Italy using financial instruments
solid position to reach very high levels of operational and
that have provided important revenue to our Company.
commercial performance as a consequence of the follow-
ing strengths that deserve to be highlighted:
It is important to highlight the natural gas supply agree-
i)
Significant and technologically diversified generation
ner. This agreement allowed the natural gas available to
capacity, mainly comprised of efficient hydroelectric
Enel Generación to be used by Nueva Renca in 2017, and
and thermal plants, which allow the company to be
consequently optimize natural gas electricity generation
very competitive and generate at low average operat-
and manage production risk and margins.
ment with Nueva Renca power plant, owned by AES Ge-
ing costs.
117
Electricity Generation Hydrologic condition
in the SIC
increase when compared to the previous year. Electrici-
ty generation from solar and wind renewable sources in-
creased a significant 45% when compared to 2016, repre-
senting almost 10% of the system’s total generation.
Hydroelectricity represents a significant portion of Enel
position representing 26% of total SIC generation, but low-
Generación Chile´s generation mix and therefore it influ-
er than the 31% share in 2016. LNG followed with 19%
ences operational and commercial matters making hydro-
of total generation, similar to the year before. Generation
logic conditions relevant to the Company. Although 2017
with diesel and biomass slightly declined from 6% to 5%
Regarding thermal generation, coal maintained its leading
was moderately less dry than 2016, hydrology was quite
of total generation.
irregular when compared to the rainfall and water availabil-
ity expected for a typical year. The year began with a very
Electricity generation of Enel Generación Chile in the SIC
dry ice melt season and this dry condition continued until
reached 16.5 TWh, which represents a 31% share of the
September, and rainfall was below expectations during the
SIC’s total generation, slightly less than the 32% share in
winter months. Rainfall increased during the last quarter
2016. Hydroelectricity amounted to 9.7 TWh, 18% of the
of the year, reversing the dry trend present in previous
SIC’s total, compared to 17% in 2016. Thermal electrici-
months and ending the year with a level of hydrology above
ty generation of Enel Generación Chile reached 6.7 TWh,
the level in 2016. When compared to 2016, the first two
12% of the SIC’s total and lower than the 7.4 TWh generat-
quarters of the year were slightly drier with very high aver-
ed in 2016. Bocamina power plant coal generation fell from
age accumulated exceedance probability of rivers, roughly
3.0 TWh in 2016 to 2.3 TWh in 2017. Far behind comes wind
96% and 85% respectively. This dry condition remained
generation reaching 0.1 TWh (0.2% of the total) and fuel oil
stable during the third quarter of 2017, at 86% exceedance
generation with 0.06 TWh.
probability, which resulted in a lower recovery of season-
al reservoir levels. The last quarter of the year, spring, the
Enel Generación Chile maintained its leadership position
snow melting season, was quite favorable, consistent
in hydroelectricity reaching 45% of total hydro generation
with an “average” exceedance probability of roughly 51%,
(48% in 2016) and also made a significant LNG generation
which led to a significant recovery of reservoir levels and
contribution to the system, representing 45% of total LNG
turning 2017 into a year that was moderately less dry than
generation. Regarding LNG, the agreement signed with
2016 with a 78% total accumulated exceedance probability
AES Gener previously mentioned, allowed the Nueva Ren-
compared to 93% in 2016.”
Generation and electricity
supply costs of the SIC
Hydrology of 2017, when compared to 2016, was less dry
and therefore resulted in lower thermal generation than
in 2016. Energy supplied by the SIC reached 54.9 TWh of
which 51% was thermal, lower than the 57% in 2016 and
equivalent to a 10% reduction. Hydroelectricity increased
from 36% in 2016 to 39% in 2017, representing a 12.5%
ca power plant to generate about 1.7 TWh during 2017, pos-
itively adding to the commercial margin of both companies.
During 2017, the average price of fuels increased when
compared to 2016. Coal was the predominant fuel in elec-
tricity generation and its price increased a significant 42%
from an average 82 US$/ton in 2016 to roughly 117 US$/ton
in 2017. Regarding the price of LNG, although the purchase
prices of Enel Generación Chile are confidential, according
to information provided by the electricity authority, the av-
erage price increased 19% from 2.49 US$/MMBTU in 2016
to 2.97 US$/MMBTU in 2017. Liquid fuel as an electricity
generation source was used very little for electricity gen-
eration in the SIC. Average prices of liquid fuels increased
significantly, diesel 23% and fuel oil 42%.
118
Annual Report Enel Chile 2017 Despite the increase in the price of fuel mentioned, the
purchased in the spot market was key to compensate for
average price of electricity in 2017 was similar to 2016.
the lower level of hydroelectricity available due to the ex-
The average annual spot market price of energy at the Alto
tremely dry conditions during the year.
Jahuel node (220 kV), which is representative of the con-
sumption in the metropolitan area, declined slightly (3%)
The rental contracts signed in 2017 with AES-Gener regard-
from 60 US$/MMBTU in 2016 to 58.4 US$/MMBTU in
ing the Nueva Renca thermoelectric power plant allowed
2017, without pronounced variations throughout the year.
this unit to supply the SIC with natural gas fueled electric-
Average prices increased moderately (7%) during the first
ity in addition to San Isidro and Quintero plants. Total gen-
semester when compared to the same semester of the
eration of Enel Generación Chile using natural gas (includ-
previous year, and declined significantly (-15%) during the
ing operations of Nueva Renca) was 6.0 TWh throughout
last two quarters, meaning that the greater cost of thermal
the year, which represented 10.9% of the SIC’s total annual
generation was compensated by the greater contribution
generation, 5% more than in 2016.
of hydroelectric generation and renewable energies with a
variable cost equal to zero.
During the first quarter of 2017, Enel Generación Chile par-
The relevance of liquefied
natural gas (LNG)
Enel Generación Chile entered the LNG market in 2009
when the GNL Quintero Regasification Terminal began
operations, which was a project of national interest that
required a significant public and private effort to ensure the
country a supply of natural gas since the Argentine supply
had been interrupted.
Metrogas, Enap and Enel Generación Chile, jointly promot-
ed the development of the GNL Quintero Terminal, a facility
that has played a crucial role in the supply of energy to
the central region of Chile for both residential and industrial
customers and also for the electricity system as a whole.
In 2017, Enel Generación Chile sold its entire 42.5% owner-
ship share of Electrogas to Aerio Chile, a subsidiary of the
Portuguese company REN-Redes Energeticas Nacionais
for US$ 180 million. This sales contract does not affect the
use of Electrogas´ pipeline to transport the gas required by
Enel to supply electricity generation power plants.
In terms of electricity operations, the availability of LNG
provided by the long-term supply contract with BG Global
Energy Ltd (BG) in addition to the two shipments of LNG
tially unloaded the first LNG shipment transported from
the Quintero terminal to the Mejillones terminal since both
power plants began operations. This allowed providing a
greater amount of LNG to the central region to face the
existing drought conditions.
In terms of LNG trading activities, there were no significant
events during 2017.
Enel Generación Chile sold three LNG shipments, includ-
ing the sale of two shipments of LNG to Enel Trade to be
delivered in the United Kingdom. This was the first interna-
tional trading transaction outside Latin America related to
the BG contract.
Also, the Company, along with ENAP and Agesa (compa-
ny related to Metrogas) reached a new export agreement
Enarsa (with Empresa Nacional de Energia Argentina), to
export natural gas from the Quintero terminal to Argentina.
Natural gas exported amounted to 277 million cubic me-
ters. Enel Generación Chile contributed with 32% of such
amount.
In 2017, the Company once again signed a terminal use
agreement, TUA, with GNL Mejillones that allowed unload-
ing an LNG shipment. This transaction allowed renewing
natural gas sales contracts with mining and industrial cus-
tomers located in northern Chile making Enel Generación
Chile the main industrial gas trader in northern Chile. It also
makes natural gas available for the generation units of Enel
Generación Chile (Taltal and GasAtacama) connected to
the northern gas pipeline network.
119
Electricity Generation
The main satellite regasification plant built to this date,
The main actions carried out are described below.
located in Teno, began operations in 2017 and is supplied
with Enel Generación Chile LNG transported in trucks.
New electricity supply contracts were signed with import-
ant industrial customers, such as: Occidental Chemical
During 2017, the Quintero terminal unloaded 50 shipments
Chile Ltda. (170 GWh/yr. for 10 years) and CMPC (606 GWh/
of natural gas, a total 3,947 MMm3. Of that amount 1,451
yr. for 10 years). Important contracts were also signed with
MMm3 were for Enel Generación Chile, to satisfy its com-
distribution companies to supply their nonregulated cus-
mercialization and electricity generation requirements.
tomers, such as: SAESA, 280 GWh/yr. for 5 years; Chilquin-
Roughly 720 MMm3 of gas belonging to other partners of
ta ,170 GWh/yr. for 5 years; CGE Group, 230 GWh/yr. for 4
the terminal, were sold to other generators connected to
years; and Enel Distribución ,600 GWh/yr. for 9 years.
the SIC to generate electricity.
Enel Generación Chile continued consolidating as a rele-
in Chile, Enel Generación Chile signed supply contracts in
vant player in the gas market in Chile in 2017, expanding its
2017 with approximately 100 nonregulated customers for
activities in the commercialization of gas and LNG in the
a total 500 GWh/yr. for 5 years. These are groups of new
local and international market.
smaller customers that decided to become nonregulated
As a result of the changing trends in the electricity industry
In the
commercial
front
customers after being regulated customers, as allowed by
current electricity industry regulation.
In August 2016, the results of the electricity supply bid
LIC2015/01 for regulated customers in Chile was an-
nounced. Enel Generación Chile was awarded approxi-
mately 5,900 GWh/yr for a 20-year period between 2022
and 2041. This process continued during 2017, formalizing
26 contracts, which involved reviewing and signing the
supply contracts with all the distribution companies in
Chile that participated in the bid.
In November 2017, the results of the electricity supply
The commercial actions carried out by Enel Generación
bidding 2017/01 for regulated customers in Chile was an-
Chile in 2017 were consistent with its commercial policy.
nounced. Enel Generación Chile was awarded approxi-
The commercial policy focuses on the following objectives:
mately 1,180 GWh/yr. for a 20-year period beginning in Jan-
maintain industry leadership; adequately manage risk and
uary 2024. Within this context, the customer management
return under the existing supply and competitive market
area of Enel Generación Chile has continued the subscrip-
conditions; implement plans to strengthen customer loyal-
tion process with the distribution companies and the CNE
ty, add additional new customers and increase commercial
that is expected to conclude in 2018. The process involves
management efficiency within the company.
writing up the contacts and reviewing the required docu-
mentation to sign over twenty supply contracts resulting
from the electricity tender.
120
Annual Report Enel Chile 2017
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 hydroelectric power plant with installed
capacity of approximately 150 MW, using 2 vertical axle
Pelton units that will utilize water from the Maule lagoon
reservoir. The plant will be connected to the national elec-
tricity network by an 87 km transmission line to the Ancoa
substation.
The environmental qualification resolutions required for
the power plant and the transmission line were obtained
in 2011 and 2012 respectively. In 2014, the hydraulic works
plan of the project was approved.
By the end of 2017, the physical progress of the project
was 61%, the excavation of the tunnel reached 7.2 km, the
civil works of the underground powerhouse cavern had
concluded and the installation of electromechanical equip-
ment was in progress. Regarding the transmission lines,
60% of the structure was assembled and 4.6 km of cable
have been installed.
The total investment accrued as of December 31, 2017 was
Ch$ 274,958 million. Based on the information available up
to the date of this report, the investment is estimated to
exceed the nominal amount approved for the development
and construction stage, in 20% to 25%. The power plant is
expected to begin operations during the second semester
of 2020.
121
Electricity Generation Tarapacá DeSox &
DeNOx environmental
equipment project
The Tarapacá power plant is a 158 MW coal fired thermal
unit whose average annual generation is 1,100 GWh, and is
connected to the Northern Interconnected System (SING).
On June 23, 2011, DS 13 was issued to regulate the emis-
sions of thermal power plants, forcing the reduction of
SO2 and NOx emissions by June 23, 2016. This rule im-
plied adapting the Tarapacá power plant to comply with the
decree by installing a desulphurization system (DeSox) and
adopting methods to reduce NOx emissions (DeNOx).
Main progress achieved in 2017:
• Since December 15, 2016 the power plant became
available to operate commercially and is mitigating its
environmental impact.
• During 2017 the works pending were concluded and
the principal contracts related to the project were
closed.
The estimated total investment is Ch$ 68,240 million, of
which Ch$ 67,696 million was accrued as of December 31,
2017.
Optimization of
Bocamina´s second unit
Bocamina is a coal fired generation power plant located
in the Coronel district (Concepción. southern Chile) com-
prised of two units, 128 MW and 350MW.
Bocamina unit 2 began commercial operations in October
2012, but was interrupted in December 2013 due to a judi-
cial order issued by the Concepcion Court.
Enel Generación Chile submitted a new environmental im-
pact study (EIA in its Spanish acronym) in December 2013,
proposing a technical optimization plan. The EIA was ap-
proved on March 16, 2015 and obtained the RCA approval
on April 2, 2015.
The plan involves 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 2017 was the following:
•
The Municipal Works Department (DOM in its Spanish
acronym) of Coronel approved the dome built on the
north coal field on July 12, 2017, and it became opera-
tional on July 17.
•
The construction permit of the dome for the south
coal field was granted by the Coronel DOM on January
27, 2017.
•
The installation of the metallic structure on the south
coal field concluded on December 21, 2017, 62 days
before the programmed date. The construction is ex-
pected to conclude in 2018.
The total estimated investment is Ch$ 62,026 million. As
of December 31, 2017, a total Ch$ 53,695 million had been
disbursed.
122
Annual Report Enel Chile 2017
Enel Chile
projects under
evaluation
Neltume and Choshuenco
Hydroelectric Project
Taltal optimization project
The project is located in the Antofagasta Region. It 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.
In December 2013, an Environmental Impact Declaration
(“DIA” in its Spanish acronym) of the optimization project
was submitted to the authority and was approved in Jan-
In January 2018, after a very comprehensive analysis, the
uary 2017.
Board of Directors of Enel Generación informed their de-
cision to abandon the Neltume and Choshuenco projects
Any decision related to the construction of this project will
located in the Region de Los Rios and booked a Ch$ 25,106
depend, among other things, on the commercial opportuni-
million loss, which affected fiscal year 2017 results. The
ties envisioned for the following years, such as, the prices
water rights for these projects were returned to the state.
of future tenders to supply the electricity required by the
regulated market and/or existing or new nonregulated cus-
tomers.
123
Electricity Generation
Hydroelectric
Project Vallecito
Quintero combined
cycle project
The project is located in the Maule Region, specifically on
The project is located in the Valparaiso Region. It is an en-
the upper basin of the Maule River. It is a pass through
ergy efficiency project that will use the heat generated by
hydroelectric power plant with nearly 55 MW installed
the existing gas turbines to produce steam. This is done
capacity. The energy it produces is to be supplied to the
by installing a steam turbine and its generator, which al-
Interconnected System using the line that is currently in
low converting the existing open cycle Quintero plant into
construction to evacuate electricity from the Los Cóndores
a gas-fired combined cycle.
Hydroelectric power plant.
Since 2015, Vallecito has been developed based on sus-
vironmental impact study and the implementation of the
During 2017, the company continued working on the en-
tainable criteria, which consists of defining the technical,
sustainability plan.
economic, environmental and social aspects of the proj-
ect considering high sustainability standards. This project
The final investment decision regarding this project will de-
has included community collaboration processes that have
pend, among other things, on the commercial opportunities
contributed to a shared vision of the territory, and to identi-
foreseen for the following years, such as, the prices of fu-
fy the activities to be carried out in each of nine communi-
ture tenders to supply the electricity required by the regulat-
ties of the Pehuenche Route.
ed market and/or existing or new nonregulated customers.
The basic engineering studies were carried out in 2017,
the environmental campaigns concluded and the imple-
mentation of the sustainable development plan began by
supporting the activities defined as a shared vision for the
territory.
Based on the commercial opportunities envisioned for
Vallecito, the next step will be the preparation of the en-
vironmental studies to present to the authority, once the
design of the project, defined along with the community,
has concluded.
124
Ttanti Combined
Cycle Project
The Ttanti project is to be developed in the Antofagasta
Region, on land adjacent to the existing Atacama power
plant that is located in the industrial zone of the city of Me-
jillones. The project involves the construction of a natural
gas combined-cycle power plant with an installed capacity
of 1,290 MW (three units with 430 MW each).
On December 28, 2017, the Environmental Evaluation
Commission of the Antofagasta Region voted in favor of
the power plant’s environmental approval.
Any decision related to the construction of the project will
depend, among others, on the commercial opportunities
foreseen in the upcoming years, e.g., prices in future ten-
ders for supplying the energy requirements of the regulat-
ed market and/or negotiations with existing or new unreg-
ulated customers.
Annual Report Enel Chile 2017 Tarapacá Battery Energy
Storage System
Land reserved for
future projects
Enel Generación Chile is analyzing the installation of a bat-
As of December 2017, Enel Generación Chile has approxi-
tery energy storage system (BESS) to the Tarapacá thermal
mately 48.3 hectares of immovable property (land) to devel-
power plant to provide the ancillary services that the Na-
op natural gas fired thermal plants and hydroelectric plants.
tional Electricity System could require in upcoming years.
These assets are located in the Antofagasta Region (6.3
hectares) and the Los Lagos Region (42 hectares).
The project involves the installation of a BESS with about
14 MW of installed capacity and 7 MWh of energy stor-
age capacity, connected to the 11.5 kV bar of the existing
23 MW turbine installed in the Tarapacá thermal power
plant.
In December 2017, the Environmental Impact Agency (SEA
in its Spanish acronym) of the Tarapacá Region issued a
resolution waiving the obligation to submit the project to
environmental assessment before its construction. De-
spite this fact, any decision related to the construction of
the project will depend, among others, on the commercial
opportunities foreseen in the upcoming years and, particu-
larly, on the evolution of the regulatory framework for the
provision and remuneration of the ancillary services.
125
Electricity Generation 18Electricity distribution
126
Annual Report Enel Chile 2017 127
Letter from the Chairman Enel Chile participates in the distribution business through
2015, the CNE issued R.E. 699 that informs, among other
its subsidiary Enel Distribución Chile. Enel Chile’s has a
matters, the terms of the “Costs Study of Electricity Dis-
99.1% direct interest in Enel Distribución Chile.
tribution-Related Services” as part of the 2016-2020 tariff
Enel Distribución Chile’s concession is a high-density con-
tribution-related services of which the most significant are
sumption area. It concentrates a large proportion of the
“Construction and installment of temporary junctions” and
country’s population, businesses parks, industrial parks,
“Lease of temporary junctions”.
setting process. The terms identify five new electricity dis-
small industry and commercial activities.
Other electricity distribution Groups that participate in the
Study Report” was published on January 20, 2017. As
electrical system are: Chilquinta Energía, CGE Distribución,
determined by the established process, Enel Distribución
Sociedad Austral de Electricidad and Empresa Eléctrica de
Chile presented its observations on the Report.
The “Final Electricity Distribution-Related Services Cost
la Frontera.
Enel
Distribución
Chile
Enel Distribución Chile is the largest electricity distribution
company in Chile in terms of electric energy sales. It oper-
ates in 33 districts of the Metropolitan Region and its con-
cession area covers more than 2,105 square kilometers,
including the areas covered by its subsidiaries Empresa
Eléctrica de Colina Ltda. and Luz Andes Ltda.
In 2017, the Company provided electricity to 1,882,394
customers, 3.1% more than in 2016. Of total customers,
89.6% are residential customers, 7.7% are commercial
customers, 0.7% are industrial customers and 2.0% are
other customers. During 2017, Enel Distribución Chile sold
16,438 GWh to its final customers, which represents a
3.2% increase when compared to 2016.
Enel Distribución Chile successfully fulfilled its Losses Plan
for 2017, developed and implemented to keep losses at
economically acceptable levels. As of December, the TAM
indicator was 5.1%.
Later, the CNE approved the Technical Report entitled “Tar-
iff Formulas of Non-Electricity Supply Services, related to
Electricity Distribution” through Exempt Resolution 213
dated April 27, 2017. To the date of this report, the tariff
decree with the new tariffs is pending. Enel Distribución
Chile also presented its observations on this Report, as es-
tablished by the rules of the process.
As of this date, the decree to set the new tariffs has not
been published.
Infrastructure and
network projects
Smart Meters Project
The Enel group has more than 40,000 smart meters in
operation, especially in Italy and Spain. This smart meter
solution involves new meters, data concentrators, tele-
communications infrastructure and centralized systems
that allow remote and automated (reading, disconnections,
reconnections, and tariff changes) management of meters
through a two-way information flow. It also allows custom-
ers to install solar panels and inject their surplus energy
into the distribution network without the need of any addi-
tional equipment.
Distribution tariffs are set every four years based on cost
studies conducted by specialized consulting firms. In late
The first phase of the Smart Meter Massification Project
has been developed successfully since August 2017. It con-
128
Annual Report Enel Chile 2017 sidered replacing 40,000 meters throughout 11 districts of
our concession area (Santiago, Las Condes, Providencia,
La Cisterna, Estación Central, Nuñoa, Maipú, La florida,
Vitacura, La Reina, y Lo Barnechea). A team of in house
and outsourced employees was formed and have installed
45,628 Smart Meters and 451 data concentrators in 2017,
reaching more than 100,000 Smart Meters installed during
Energy efficiency projects
Full Electric
2016 and 2017 in Santiago. This enables performing more
In 2017, Enel Distribución Chile continued developing proj-
than one million remote operations a year.
ects with equipment for Full Electric buildings and Energy
Solar energy projects
Solar photovoltaic
In 2017, we defined and developed photovoltaic products
for residential use, which along with a strategy defined
with our employees, allowed us to become leaders in our
concession area exceeding a 60% share of the solar photo-
voltaic market. One of our goals for 2018 will be to expand
our presence outside our concession area. The office we
opened in Concepcion contributes to this goal.
Our success in the residential segment and our eagerness
to continue developing this industry has led us to develop
products for Small and Medium Sized Companies (“PYME”
in its Spanish acronym). This sector demands more energy
and are clearly interested in these products. We therefore
developed 5, 7, and 10 kWp three-phase kits to add to our
photovoltaic product line.
We have also developed a 500 Wp kit (may be increased to
3 kWp) to be installed by us following the same procedure
applicable to the rest of our products. We are confident
that this kit will allow other types of customers to have ac-
cess to this technology thanks to the financing options we
offer our customers to purchase these products.
In addition, we have installed more than 110 photovoltaic
systems for residential customers and PYMEs within the
framework of the Distributed Electricity Generation Law
20,571, which represents an important milestone in the
massification of this type of technology.
Efficienct Buildings and consolidating its position in the
market.
It is worth noting that these businesses are an important
contribution to the sale of value-added services, since they
provide an important contribution of electric installed ca-
pacitydisplacing combustible energies, and also consoli-
date Enel Distribución as a leader in the country in solu-
tions regrading renewable energy and energy efficiency.
Enel Distribución Chile has consolidated its position in the
renewable energy market, with efficiency, profitability, and
providing high value innovative solutions.
“Full Electric” projects refers to the use of only electric
equipment in an apartment, using high tech, efficient de-
vices. “Full Electric” apartments include kitchen applianc-
es, hot water solutions and heating systems.
During 2017, “Full Electric” apartments represented 37%
of the new apartments built in Santiago. Consequently, at
December 2017, approximately 117,972 apartments in the
country´s Metropolitan Region are full electric, mainly in
the central and east districts.
129
Electricity Distribution
Energy efficiency projects
for hospitals
Enel Distribución Chile was awarded three highly complex
Projects that were
expanded in 2017
hospital projects through the tender organized by the Chil-
The #LUZ project was successfully implemented in 2016
ean energy efficiency agency, (ACHEE in its Spanish acro-
at the company level and was therefore expanded in 2017.
nym). These projects involved the construction of thermal
power plants as requested by each hospital.
This is a self-service emergency service through social
networks for customers that works by typing “#Luz” on
The Hospital in Castro and the Regional Hospital Dr. Guill-
Twitter or Facebook. Once the message is received, the
ermo Grant Benavente in Concepcion, and the Concepción
platform activates an automatic response and confirms the
Hospital. This represented approximately Ch$878 million
customer number, address, telephone number and cus-
in revenue.
tomer service status (programmed service interruption,
disconnection due to nonpayment or other situations in the
Enel grid), and if necessary, will generate a service order to
be attended by a field technician, by integrating with Sales
Innovation projects
Force.
Employee program
The process works through Chattigo, the startup selected
in 2015 by Enel Distribución´s “Energy Start” program.
In May 2017, the largest fleet of 100% electric cars in Latin
America was delivered to Enel Chile employees. This pro-
gram offered employees the opportunity to apply for either
Chispers
Nissan, Hyundai or BMW cutting edge electric vehicles.
The Chispers project evolved implementing technical de-
More than 65 applications were received, which exceeded
velopments and commercial events in 2017.
the 30 available.
A development plan was executed improving functional-
After 7 months and over 300,000 kilometers of use, em-
ity, the installation system and adding new formats. The
ployees qualify the overall experience as very positive, so
application was improved by, trading Chispers for Likes in
that, we believe the second version, to be carried out in
Facebook and adding tutorials; and developing manage-
2018, will also be a success.
ment capabilities in the backend platform (dashboard with
operation status of stores, report automation and status
The implementation of this program in 2018 will consol-
alerts). A new design of the charging location was devel-
idate Enel as a leader in electric mobility in the country
oped for a new transportation format, with a systematic
and a strategic partner of the automotive brands that have
installation process. This new design was adapted to the
begun offering vehicles that are 100% electric.
traditional installation format used at shopping malls and
for the HORECA segment.
From the commercial standpoint, in 2017 the Chispers
team was involved in adding a total 120 new locations at 30
university campuses, and also installed additional locations
in Los Dominicos Shopping Mall, Bar Las Tejas and Café If.
130
Annual Report Enel Chile 2017
Regarding operations, the costs for the transportation
company are 70% lower than conventional buses, costing
Ch$70 per kilometer compared to Ch$ 300 for diesel ve-
hicles.
These buses have a charging system, installed by Enel,
that has the capacity to cover 250 kilometers after charging
for two to three hours.
Electric Transantiago
The first two 100% electric buses began operations as part
of the Transantiago fleet of the 516 Metbus route on Tues-
day, November 14, benefitting eight districts in Santiago.
The vehicles provided by Enel under a leasing contract are
BYD and may accommodate 81 passengers. The seats are
padded, there is air conditioning, wifi, USB cellular char-
gers, and a safe and separate cabin for the driver.
The business model offered by Enel to Metbus consists of
a monthly fee that includes the bus, energy and charging
infrastructure. Maintenance is provided directly by the
manufacturer of the bus to Metbus.
131
Electricity Distribution 19Environment and sustainability
132
Annual Report Enel Chile 2017 133
Letter from the Chairman Environmental
management
highlights
Regarding the San Isidro thermal power plant, during 2017
a new flow rate available for dilution to discharge into the
river was approved and new alternative wells to supply wa-
ter to the plant were identified. On December 20, 2017,
the General Water Authority (DGA in its Spanish acronym)
authorized changing the location of the underground water
intake, providing the power plant with flexibility regarding
fresh water supply. On that same day, the DGA approved
the request presented by Enel Generación Chile to in-
crease the months available for dilution, which also adds
flexibility to comply with the discharge limits of waste to
the Aconcagua River.
Regarding progress in environmental management of ther-
mal plant Bocamina, on June 5, 2017, the construction of
the roof on the north coal field was approved and the con-
struction of the roof on the south coal field began. Also
worth mentioning is Bocamina´s pilot project of real time
data transmission to the Superintendence of the Environ-
ment (SMA in its Spanish acronym)). Bocamna is the first
power plant to make this connection in the country.
In 2017, the environmental authority also resolved in favor
of the questions we submitted to the SEIA relative to new
locations for Bocamina to dispose of coal ashes. This pro-
vides flexibility in managing coal ashes avoiding the need
to build a new landfill.
As part of the Environmental and Social Recovery Program
of Coronel (CRAS Coronel), the company, with the com-
munity, regional authorities and other companies defined
a plan of environmental and social measures to be perma-
nently developed in the district.
With regard to the environmental management activities
of the hydroelectric power plant´s Action Plan, the con-
struction of the new storage room to store hazardous sub-
stances at the Laja power plants was completed, which
allows satisfying the requirements of D.S. 43/2016 issued
by the Ministry of Health. The new Hazardous Waste Man-
agement Plan for the Maule power plants was approved by
the Health authority, which allows satisfying the require-
ments of D.S. 148 “Health Regulation on Hazardous Waste
Management” (Seremi de Salud Res 0764).
Regarding the commitments related to the RCA of the Ral-
co hydroelectric power plant, 2017 highlights are the fol-
lowing:
•
In January, Enel Generación Chile and Universidad de
Concepcion implemented the reforestation plan to plant
a total 700 hectares with native trees as part of the Ral-
co power plant construction mitigation program. Several
members of the indigenous community of the Bio Bio
and Araucania Region were trained to collect the seeds
of the native trees.
•
The activities to recuperate the lots used as dumps and
deposits during the construction of the Ralco power
plant began in January. The goal is to recuperate the land
by planting native trees.
•
In March, Enel Generación Chile officially handed over
the cemetery to the El Barco community. The Bio Bio re-
gional director of the National Indigenous Development
Corporation, (Conadi in its Spanish acronym) performed
the honor. Building this cemetery was a commitment of
Enel Generación Chile related to the construction of the
Ralco Power plant.
•
In March, a thematic map identifying the location of her-
itage sites in the district was presented to the mayor of
the Alto Bio Bio district, Nivaldo Piñaleo, to be exhibited
in the local museum. Three thousand brochures written
in three languages (English, Spanish and Chedungun)
were also donated to promote these sites. This activity
is part of the project “Identifying and Protecting Heritage
Sites”, which Is one of the five compensatory measures
defined by the environmental authority in 2006.
•
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 the New Barrio community in Lonquimay.
134
Annual Report Enel Chile 2017
• Within the context of Ralco’s RCA, the implementation
proposal of the Long-Term Development Plan for the
Ayin Mapu and El Barco communities that were relo-
cated was prepared in 2016. The proposal was defined
by the members of the communities, and their leaders
through workshops in which they Identified their Inter-
ests, and opportunities for Improvement, by defining the
activities and projects they expect to begin developing in
2017.
Green taxes
The SMA approved the proposed methodology to quantify
emissions the entire thermal park of Enel Generación and
its subsidiary GasAtacama, as defined by resolutions of the
Superintendence. During 2017, the power plants reported
their emissions based on the approved methodology and
taxes for 2017 will be paid in 2018 based on such reports.
Compliance with
thermoelectric power
plant emission standard
The thermoelectric park of Enel Generación Chile and its
subsidiary GasAtacama continue working to comply with
the latest versions of protocols and guidelines defined by
D.S 13/11 issued by the Superintendence of the Environ-
ment.
In July 2017, the SMA published the reports verifying com-
pliance with the limits established by D.S No 13/11 based
on the quarterly reports uploaded by each power plant to
the SMA´s “Thermal Power Plant” website. The SMA ver-
ified that all Electricity Generation Units (UGE in its Span-
ish acronym) of the company complied with the emissions
limits.
New projects
The hydroelectric power plant Pehuenche was chosen as
the “Sustainable Pilot Power Plant”. This initiative seeks to
develop projects with shared value that additionally con-
tribute to the operational efficiency of the plants.
On January 17, 2017, the Evaluation Commission of the
Antofagasta Region approved the DIA of the Optimization
Project to transform the TalTal power plant into a combined
cycle that began in December 2013. The Environmental
Qualification Resolution was Res. Ex. 24/2017.
On December 28, 2017, the Evaluation Commission of An-
tofagasta approved the Environmental Impact Study of the
Ttanti Thermal power plant (1,290 MW combined cycle lo-
cated in Mejillones). The Environmental Qualification Reso-
lution 13/2018 was issued on January 11, 2018.
135
Environment and Sustainability On December 27, 2017, the SEA of the Tarapacá Region
gency channel for such customers, on and off line, and a
issued Resolution 90 stating that the project “Bess Ener-
specialized service registration system was implemented.
gy Storage System to the Tarapacá power plant” does not
Emergency measures for this type of customer also includ-
need to be submitted to the SEIA in order to be implement-
ed the temporary installation of a household generator if
ed. During 2018, a similar project for the Tal Tal power plant
necessary. We have also been experimenting with a pho-
is expected to be submitted to the opinion of the authority.
tovoltaic pilot project with two customers. A systemat-
Sustainability
ic pruning plan to reduce the risk of vegetation affecting
distribution lines has also commenced as a consequence
of these extreme weather events. Within the context of
environmental care, the wood from pruning has been used
at a biomass power plant avoiding the 98 tons of CO2 if it
were treated conventionally.
Sustainable
business model
Stakeholders and
materiality
Sustainability is considered an essential principle of Enel
Chile´s business and is part of the company´s value chain.
The Company has focused its sustainability management
The 2017 sustainability plan has focused on five pillars that
on inclusion and transparent collaboration with its stake-
represent the grounds of sustainable development: health
holders. Enel Chile is working on criteria and principles to
and workplace safety, solid governance, environmental
achieve a fair relationship with all stakeholders, to involve
sustainability, sustainable supply chain and creation of fi-
them from the beginning of the design stage of a project,
nancial and economic value. The goals for 2017 are geared
assuring equal conditions and equal access to information
towards building a strong relationship with the community,
required for decision making. This is performed by identi-
implementing plans that consider workforce diversity and
fying the most relevant stakeholders involved in each op-
inclusion, seek operational efficiency and innovation, and
eration and evaluating potential areas of impact and joint
an energy matrix that includes environmentally sustainable
opportunities.
technologies.
The investment in digitalization is critical to the sustain-
lic actions to proactively contribute to improve private com-
ability of the business, particularly in terms of power plant
pany compliance and behavioral standards to strengthen
operational efficiency and improving products and services
a culture inspired in transparency, honesty, and long-term
The Enel Group participates in Chile promoting private-pub-
for our customers.
sustainable relationships. Within this context, an agree-
ment was formalized with Chiletransparente to strengthen
During 2017, our distribution business was affected by
and include actions into the Company´s compliance sys-
very severe and extraordinary weather conditions that af-
tem.
fected a large number of customers. The company set up
a contingency plan that focused on improving customer
Local needs are directly related to the Company´s goals in
service tools by expanding service channels, particularly
materiality matrices that’s are developed for each territory
for the more vulnerable customers such as those whose
to carry out the projects that are adequate to reach shared
life depends on the electricity supply. A dedicated emer-
goals and priorities.
136
Annual Report Enel Chile 2017 The significant presence of the company in the territory
focus on the creation of shared value allows collaborating
allows having a constant view of the opportunities and
with the local industry in defining a common standard to
instances available to align solutions and add value to all
comply with and aligned to international best practices.
stakeholders. These opportunities have fostered the de-
velopment of circular economy solutions, i.e., the trans-
This system has been conceived as the focal point of the
formation of waste, such as, pallets into community eco
company´s operations and is therefore a guideline on be-
construction material.
havior for all company employees.
The business culture of Enel Chile is guided by the Open
The Board of Directors approves the programs of the com-
Power Vision, committed to the United Nations Sustainable
pliance system and, with the support of the Head of Crime
Development Objectives, the creation of shared value and
Prevention, implements the programs. The Head of Crime
complying with the company´s Human Rights Policy.
Prevention has the organizational authority and resources
Compliance system
and complaint channel
Enel Chile has implemented a Penal Risk Prevention Mod-
el that builds on the Ethics Code and the Zero Corruption
Tolerance policy. Enel Chile opposes to any form of cor-
ruption, direct or indirect, within any process of the value
chain, any business location and with any stakeholder.
This model is based on the Global Compliance Program
of the Enel Group, which is comprised of a series of spe-
cific programs that respond to local legislation and the
highest international standards, such as, ISO 37,001, the
Foreign Corrupt Practices Act FCPA (U.S.A) and the Brib-
ery Act (United Kingdom). The Group has also incorporated
the definitions of the Global Compact and the Sustainable
Development Objectives, both developed by the United
Nations.
The Penal Risk Prevention Model covers all the require-
ments of the Crime Prevention Model defined by Law
20,393.
The objective of the Compliance System is to contribute
to Enel’s development of a long-term relationship of trust
with its stakeholders, implementing activities in a respon-
sible manner and communicating them transparently. The
to carry out his duties adequately.
Suppliers and contractors’ employees adhere to the provi-
sions of these programs by means of the General Contract-
ing Conditions, a set of clauses that stress the importance
and facilitate the control and proper implementation of the
Compliance System specified in Law 20,393 applicable to
Enel Chile and all its subsidiaries. Enel Chile and each sub-
sidiary has its own specific compliance system.
If a potential or real action that opposes the principles of the
Penal Risk Prevention Model were to take place, any stake-
holder may present a complaint through the Complaints
Channel managed by the Internal Audit Department. This
channel has specific management procedures that guar-
antee confidentiality and no retaliation to the complainant.
This channel is managed with an external platform that
uses industry standards in terms of confidentiality and is
accessible through the internet, telephone or in writing.
Open Power Vision
Enel Generación Chile has identified the “Open” concept as
the focal point of its business, a cornerstone of its strategy
and operations. The idea is to Open energy to more people;
Open energy to new technologies; offer people new ways
to manage energy; add new uses to energy; and add more
contributors to energy.
137
Environment and Sustainability Sustainable development
objectives
1. Quality education
(ODS 4):
Support educational activities for 400,000 people by 2020,
through projects similar to those already underway, such
In 2015, the United Nations adopted the new Sustainable
as the scholarship program in Latin America. In 2017, the
Development Objectives (ODS in its Spanish acronym).
Group has already reached the 400,000 goal, and therefore
This initiative invites companies to use creativity and inno-
the goal has doubled for 2020. In Chile, the goal is to add,
vation to face sustainable development challenges, such as
by 2020, 150,000 people to the beneficiaries existing in
poverty, gender equality, access to clean water and energy,
2016.
and climate change among others.
At the time, Enel SpA (“Enel”) announced the Group’s
commitment to contribute to achieving four of those objec-
tives. Particularly, Enel and its companies worldwide have
2. Affordable energy
(ODS 7):
focused on the following objectives:
Commit to promoting affordable, sustainable, and modern
energy through the initiative Enabling Electricity that is to
benefit 3 million people, mainly in Africa, Asia and Latin
America. Enel Chile has proposed to add 70,000 people
to the beneficiaries existing in 2016 as the goal for 2020.
138
Annual Report Enel Chile 2017 3. Decent job and econom-
ic growth (ODS 8):
Promote sustainable, inclusive job opportunities and eco-
nomic growth for 500,000 people. Enel Chile expects to
add 150,000 people to the beneficiaries existing in 2016
by 2020.
4. Action for the climate
(ODS 13):
Adopt initiatives to fight climate change in order to be car-
bon neutral by 2050.
Human Rights Policy
The Company approved its Human Rights Policy in 2013.
It represents Enel Chile’s commitment and responsibility
towards this critical aspect of social and corporate sustain-
ability. The document sets out the Company’s commitment
to all human rights, particularly those that affect corpora-
tions and the activities carried out by all Company employ-
ees in Chile.
Within this framework, the company performed a Human
Rights diagnosis (Due Diligence) in Chile to identify situa-
tions at risk and prevent them. The results of the diagnosis
were disclosed to the stakeholders. This process continues
to be constantly monitored and specific plans are imple-
mented to minimize related risks.
During 2017, no human rights complaints were received
through this platform.
139
Environment and Sustainability 20Ownership share table
140
Annual Report Enel Chile 2017 San Isidro thermal power plant
141
Letter from the Chairman Direct and Indirect Ownership
Shares
Company
Enel Generación Chile
Pehuenche
HidroAysén
Aysén Energía
Aysén Transmisión
Enel Distribución Chile
Transquillota
GasAtacama Chile
GNL Chile
EE Colina
Luz Andes
Empresa de Transmisión Chena S.AS
Cameros
Gasoducto Atacama Argentina
Gx: Generation
Dx: Distribution
Tx: Transmission / Trading
Ox: Gas pipeline, others
Business
Ownership
Gx
Gx
Gx
Gx
Tx
Dx
Tx
Ox
Ox
Dx
Dx
Tx
Ox
Ox
59.98%
55.57%
30.59%
30.59%
30.59%
99.09%
30.52%
61.03%
19.99%
99.09%
99.09%
99.09%
57.50%
61.03%
142
Annual Report Enel Chile 2017 Organizational Structure
ENEL CHILE S.A.
99.09%
ENEL
Distribución
Chile S.A.
57.50%
59.98%
Sociedad Agrícola
de Cameros Ltda.
ENEL Generación
Chile S.A.
0.10%
99.90%
Luz
Andes Ltda.
99.9998%
99.90%
0.0002%
Empresa
Eléctrica de
Colina Ltda.
0.10%
Empresa de
Transmisión
Chena S.A.
2.6299%
97.3701%
GasAtacama
Chile S.A.
Centrales
Hiidroeléctricas
de Aysén S.A.
0.00005%
50.99995%
0.03%
99%
Aysén
Transmisión S.A.
0.51%
99%
Aysén
Energía S.A.
0.51%
99.97%
Gasoducto
Atacama
Argentina S.A.
100%
Gasoducto
Atacama
Argentina S.A.
Sucursal Argentina
99.00%
Ingendesa do
Brasil Ltda.
0.1153%
ENEL
Argentina S.A.
GNL
Chile S.A.
33.33%
Transquillota
Ltda.
50.00%
Pehuenche S.A.
92.65%
Ownership share table
143
21Company’s significant events
144
Annual Report Enel Chile 2017 Rapel hydro power plant.
145
Letter from the Chairman Consolidated
Significant
Events
In accordance with Articles 9 and 10, section 2, of the Se-
curities Market Law 18,045 and as established under Gen-
eral Norm N° 30 of such Superintendence, the following
significant events were informed:
Enel Chile S.A.
• On April 28, 2017, it was informed as a significant event
that the Ordinary Shareholders Meeting held on April
26, 2017, agreed to distribute a minimum mandatory
dividend (from which the interim dividend paid in Janu-
ary 2017 is to be deducted) and an additional dividend
totalizing Ch$158,780,560,797 equal to Ch$3.23430
per share.
Given that the above-mentioned interim dividend
has already been paid, the distribution and pay-
ment of final dividend No 3 shall amount to a total
Ch$121,527,144,216, or Ch$2.47546 per share.
• On August 25,2017, it was informed as a significant
event that the Board of Directors of Enel Chile S.A.
(hereafter “Enel Chile” or the “Company”), in its ex-
traordinary session held August 25, 2017, analyzed a let-
ter sent to the Company by its controlling shareholder,
Enel SpA, (the “Enel SpA Letter”) in which Enel SpA
favorably viewed the non-binding proposal sent by Enel
Chile to Enel SpA on July 3, 2017 (the “Enel Chile Let-
ter”).
The proposal contained in the Enel Chile Letter consists of
a corporate reorganization within the Enel Group, through
which Enel Chile S.A. would merge with Enel Green Power
Latin America Ltda., adding the latter’s non-conventional
renewable energy generation assets in Chile to Enel Chile
S.A.. The Enel Chile Letter was sent to the Superinten-
dence of Securities and Insurance (“SVS”) on July 4, 2017
as a Confidential Event and a copy is being made available
to all shareholders and the market in general through this
filing. As indicated in the Enel Chile Letter, the proposal
also implies that the merger is conditioned to the success
of a Public Tender Offer (“PTO”), to be carried out by Enel
Chile to acquire up to 100% of the common shares issued
by its subsidiary, Enel Generación Chile S.A. owned by mi-
nority shareholders. The aforementioned PTO would be a
mixed tender offer, that is, partly payable in cash and partly
in common shares issued by Enel Chile, and subject to the
condition precedent that after the PTO, Enel Chile must
own at least 75% of Enel Generación Chile’s issued capital.
For the PTO to be possible, Enel Chile must carry out a
capital increase so as to incorporate Enel Generación
Chile’ shareholders who tender their shares. Likewise,
the success of such PTO will be subject to the execution
of an amendment to Enel Generación Chile’s bylaws, to
eliminate the restrictions imposed by Title XII of Decree
3,500/1980, on stock concentration and other restrictions.
In accordance with the response contained in the Enel SpA
Letter, a copy of which accompanies this filing, the Compa-
ny’s Board of Directors has unanimously resolved to initiate
all work, analysis and steps leading to the execution of the
referenced corporate reorganization project, in the terms
described in the Enel SpA Letter, and in accordance with
the procedures and requirements of Title XVI under The
Chilean Corporations Law, regarding related party transac-
tions.
A copy of Enel Chile’s original presentation to Enel SpA,
and a copy of the response letters are attached, as well as
additional communications between both companies, duly
informed to the SVS as Confidential Events.
146
Annual Report Enel Chile 2017
147
Company’s significant events 148
Annual Report Enel Chile 2017 149
Company’s significant events 150
Annual Report Enel Chile 2017 151
Company’s significant events • On August 30, 2017, it was informed as a significant
Enel Chile’s Board of Directors will analyze the re-
event that the Board of Directors of Enel Chile S.A.
sponse received during the forthcoming session.
(hereafter “Enel Chile” or the “Company”), in its ex-
traordinary session held August 30, 2017, unanimously
• On October 26, 2017, it was informed as a significant
agreed to appoint Mr. Oscar Molina H. as independent
event that the Board of Directors of Enel Chile S.A.
expert and Larraín Vial Servicios Profesionales Limita-
(hereafter “Enel Chile” or the “Company”), in its ordi-
da as independent appraiser with regard to the corpo-
nary session held October 26, 2017, examined the Of-
rate reorganization described in the Significant Event
ficial Letter N° 27,562 of the Superintendence of Secu-
dated August 25, 2017.
rities and Insurance and the Official Letter N° 24,211 of
the Superintendence of Pensions, through which each
Also, the Directors’ Committee, in its extraordinary
of these public authorities have issued their respective
session held immediately after the aforementioned
responses to the inquiries of Enel Chile regarding cer-
Board of Directors’ meeting, within its legal authority
tain aspects of the corporate reorganization informed
unanimously agreed to appoint Econsult Capital as an
by the Company to the market through a Significant
additional independent appraiser.
Event dated August 25, 2017.
Such independent appraisers will evaluate the integ-
Copies of the said responses were made available to
rity of the operation described in the aforementioned
the market through the Significant Events dated Oc-
Significant Event.
tober 13 and October 24, 2017, respectively. These
responses confirmed that Enel Chile may include in
• On October 13, 2017, it was informed as a significant
the terms and conditions of the Public Tender Offer
event that Enel Chile S.A. (hereafter “Enel Chile” or
on the shares of its subsidiary Enel Generación Chile
the “Company”), has taken note of the response is-
S.A, (the “PTO”), a subsequent condition for the suc-
sued by the Superintendence of Securities and Insur-
cess of the PTO, consisting of all the shareholders
ance through its Official Letter No 27,562 dated Octo-
that agree to tender their shares, must use part of
ber 13, 2017, to the Confidential Consultation filed by
the cash consideration that they receive for each Enel
the Company on that same date.
Generación share tendered to subscribe Enel Chile’s
The Board of Directors of Enel Chile will analyze the re-
shares will be paid with part of the cash consideration
first issue shares, thus the subscription price of those
sponse received at a forthcoming session and will duly
of the PTO.
inform the SVS and the market in general, through a
significant event, on the impact of the SVS response
The Board of Directors of Enel Chile has unanimously
on the design of the operation whose scheme was
agreed to review the structure of the reorganization in
informed by a significant event dated August 25, 2017.
progress, as described through the Significant Event
dated August 25, 2017, specifying that the PTO for the
• On October 24, 2017, it was informed as a significant
shares issued by Enel Generación Chile S.A. shall be
event that Enel Chile S.A. (hereafter “Enel Chile” or
payable exclusively in cash. However, the PTO will
the “Company”), has taken note of the response letter
include in its terms and conditions as a subsequent
issued by the Superintendence of Pensions through
condition that the shareholders that agree to tender
the Official Letter N° 24,211 dated October 24, 2017,
their shares of Enel Generación Chile S.A. apply part
to the Inquiry submitted by Enel Chile on September
of the cash consideration they receive to subscribe for
26, 2017 (Gen.Ger letter N°022/2017) supplemented
Enel Chile’s first issue shares, thus the subscription
by the Inquiry dated October 19, 2017 (Gen.Ger letter
price of those shares will be paid with part of the cash
N°028). Such Official Letter and the Inquiries referred
consideration of the PTO.
to have an impact on the transaction, which was in-
formed by the Company in the Significant Event dated
August 25, 2017.
152
Annual Report Enel Chile 2017
Finally, at the aforementioned session the Board
• On November 9, 2017, it was informed as a significant
examined the preliminary report issued by the inde-
event of Enel Chile S.A. (hereafter “Enel Chile” or the
pendent appraiser Mr. Óscar Molina, the preliminary
“Company”),that Enel Chile received the Directors’
report issued by the independent evaluator appoint-
Committee’s report, issued in accordance with ar-
ed by the Board, Larraín Vial Servicios Profesionales
ticle 50 bis of the Chilean Corporations Act, Law No
Limitada, and the preliminary report issued by the in-
18,046, regarding the corporate reorganization made
dependent evaluator appointed by the Directors’ Com-
public through significant events dated August 25,
mittee, Econsult Capital, which was also previously
2017 and October 26, 2017.
examined by the latter corporate body. Copies of the
aforementioned preliminary reports will be available to
The aforementioned report will be available to the
such Superintendence and to the market in general on
shareholders on the Company’s website, www.
the Company’s web site, www.enelchile.cl.
enelchile.cl. Likewise, shareholders of the Company
may obtain a copy of these documents at our main
• On November 3, 2017, it was informed as a significant
office, located at 76 Santa Rosa St. 15 Floor (Inves-
event that the Board of Directors of Enel Chile S.A.
tor Relations Department), Santiago, Chile, as of this
(hereafter “Enel Chile” or the “Company”), in its ex-
date.
traordinary session held November 3, 2017, examined
the following documents regarding the corporate reor-
• On November 14, 2017, it was informed as a signifi-
ganization informed to the market through the Compa-
cant event that the Board of Directors of Enel Chile
ny´s Significant Events dated August 25 and October
S.A. (hereafter “Enel Chile” or the “Company”), in
26, 2017:
its extraordinary session held November 14, 2017, re-
ceived and analyzed the individual statements issued
a) Final report issued by the independent apprais-
by Messrs. Herman Chadwick Piñera, Chairman of the
er appointed by the Board, Larraín Vial Servicios
Board of Directors, Giulio Fazio, Vice-Chairman of the
Profesionales Limitada, within the context of the
Board of Directors and Directors Salvatore Bernabei,
Corporate Reorganization process;
Vicenzo Ranieri, Fernán Gazmuri Plaza, Pablo Cabrera
b) Final report issued by the independent appraiser
porate reorganization as a related party transaction,
appointed by the Directors’ Committee, Econsult
in accordance to the rules of Title XVI of the Chilean
Gaete and Gerardo Jofré Miranda regarding the cor-
Capital, within the context of the Corporate Reor-
Corporations Act.
ganization process;
c) Final report issued by the independent expert
tive declaration in favor of the operation, in accordance
appointed by the Board of Directors, Mr. Oscar
with the corporate bylaws and the United States of
The Board of Directors unanimously issued a collec-
Molina, to report on the value of the merging
America legislation.
companies, Enel Chile and Enel Green Power Lat-
in America and the merger exchange ratio of the
All the aforementioned documents will become public
aforementioned companies and corresponding
and available, as of this date, on the Company web-
pro-forma balance sheet.
site: www.enelchile.cl. Copy of the above-mentioned
documents are also available for the Shareholders at
The aforementioned reports will be available as of
our main office located at 76 Santa Rosa St. 15 floor
this date to shareholders on the Company’s website,
(Investor Relations Department)] in Santiago, Chile, as
www.enelchile.cl. Likewise, a copy of these docu-
of this date.
ments may be obtained at our main office, located 76
Santa Rosa St., 15 Floor (Investor Relations Depart-
ment), Santiago, Chile.
153
Company’s significant events
Likewise, the Board of Directors unanimously agreed
cess of the Enel Generación PTO, mentioned in
to summon an Extraordinary Shareholders’ Meeting
(ii); and (iv) as a success condition for the Enel
to take place at Enel Chile’s Stadium, located at 858
Generación PTO, that Enel Generación agrees to
Carlos Medina St., Independencia, Santiago, on De-
amend its bylaws so as to eliminate limitations
cember 20, 2017 at 10:00 a.m.
and restrictions established by Title XII of Decree
Law 3,500/1980 in particular, but not limited to,
The following topics will be submitted to the decision
the shareholding concentration limit which states
of the Extraordinary Shareholders Meeting:
that no shareholder shall hold more than 65% of
the capital with voting rights of Enel Generación
1. Related Party Transaction. Approve a corporate
(the “Amendment to Enel Generación Bylaws”),
reorganization (the “Reorganization”) as a relat-
which is conditioned to the success of the Enel
ed party transaction, in accordance to the rules
Generación PTO, aforementioned in (ii). The Re-
of Title XVI of the Chilean Corporations Act, Law
organization includes all the above-mentioned
N°18,046. Such Reorganization involves the fol-
stages, which are bundled and tied together,
lowing: (i) the merger by incorporation of Enel
meaning that the Reorganization shall be consid-
Green Power Latin America S.A. (“Enel Green
ered successfully approved, only if all of them are
Power”) by Enel Chile (the “Merger”), which will
approved.
require a capital increase in Enel Chile in order
to pay the Enel Green Power’ shareholders the
For the approval of the Related Party Transaction,
shares to which they are entitled under the ex-
the following information has been made avail-
change rate agreed for the Merger, and which is
able to the shareholders: (i) the document “Gen-
conditioned to the success of Enel Generación´s
eral Basis of the Reorganization”, which includes
PTO, mentioned below; (ii) a Public Tender Of-
a detailed description of the grounds, terms and
fer to be carried out by Enel Chile to acquire up
conditions of the Reorganization, and that will
to 100% of the shares and American Deposi-
be subject of the approval by the shareholders
tary Shares (“ADS”) of Enel Generación Chile
as part of this related party transaction; (ii) the
S.A. (“Enel Generación”) owned by the minority
reports from the independent appraisers desig-
shareholders of the latter (The “Enel Generación
nated by the Board of Directors of Enel Chile and
PTO”) and that will have, among other objective
Enel Generación and their respective Directors’
requirements, the condition that the Enel Gener-
Committee; (iii) the reports from the independent
ación shareholders that accept Enel Generación
experts designated as a result of the Merger be-
PTO for such a number of shares that allow Enel
tween Enel Chile and Enel Green Power; (iv) the
Chile to achieve an ownership of more than 75%
audited statement of financial position of Enel
of the shares issued by Enel Generación, such ac-
Chile and Enel Green Power, as entities that par-
ceptances must contemplate the commitment of
ticipate in the Merger; (v) Enel Chile Directors’
the shareholders of Enel Generación that agree to
Committee Report; and (vi) Individual opinions is-
sell their shares and ADS, to subscribe shares and
sued by Messrs. Herman Chadwick Piñera, Chair-
ADS issued by Enel Chile in the capital increase
man of the Board, Giulio Fazio, Vice Chairman of
mentioned in (iii). These shares and ADS will be
the Board and by Directors Salvatore Bernabei,
paid by the shareholders of Enel Generación with
Vincenzo Ranieri, Fernan Gazmuri Plaza, Pablo
part of the price of their respective shares that
Cabrera Gaete and Gerardo Jofré Miranda. Share-
they agree to sell in the Enel Generación PTO;
holders may obtain, as of this date, a complete
(iii) a capital increase of Enel Chile to reach suf-
copy of all the information previously referred to
ficient number of shares and ADS to deliver to
at our main office located at 76 Santa Rosa St.
the shareholders of Enel Generación that decide
15 floor (Investor Relations Department) in San-
to sell their shares in the Enel Generación PTO,
tiago, Chile and on the Company website: www.
which will be paid in cash (the “Enel Chile Capital
enelchile.cl.
Increase”) and which is conditioned to the suc-
154
Annual Report Enel Chile 2017
2. Merger. Approve, in accordance to the rules of
6. Dully empower Enel Chile’s Board of Directors to
title IX of the Chilean Corporations Act and title
register the new shares in the Superintendence
IX of the Chilean Corporations Regulations: (i) the
of Securities and Insurance Register and the new
proposed Merger by means of which Enel Chile
ADSs before the Securities and Exchange Com-
will absorb Enel Green Power, which will be dis-
mission and other faculties required for the Re-
solved without liquidation. Enel Chile will succeed
organization. Confer broad powers to Enel Chile’s
to all rights and obligations; and (ii) the exchange
Board of Directors to perform all actions required
ratio for the Merger, the audited Financial State-
to carry out the Reorganization including request-
ments of Enel Chile and Enel Green Power, as
ing the registration of the shares resulting from
entities to be merged; a Capital Increase in Enel
the Capital Increase in the Superintendence of
Chile to assign and distribute the issued shares
Securities and Insurance Register (or its succes-
to the Enel Green Power shareholders, in order to
sor the Financial Market Commission), as well
apply the exchange ratio for the Merger.
as the registration of the American Depository
Shares in the Securities and Exchange Commis-
3. Enel Chile Capital Increase. Increase Enel Chile’s
sion of the United States of America, perform
capital by Ch$ 1,891,727,278,668, through the is-
the Enel Generación PTO in accordance with the
suance of 23,069,844.,62 new shares, all of the
terms and conditions approved by the Extraordi-
same series and without par value, at the price
nary Shareholder Meeting, carry out the actions
and other conditions to be determined by the Ex-
required to consummate the Merger and, in gen-
traordinary Shareholders Meeting.
eral, to develop all other pertinent actions related
4. Enel Chile´s Extraordinary Shareholders Meeting
ments that are convenient to legalize and make
vote on the Amendment to the Bylaws of Enel
effective the above-mentioned Enel Chile bylaw
to the Reorganization, adopting the other agree-
Generación Chile. Duly authorize Enel Chile’s
amendments.
Chairman of the Board of Directors, Mr. Herman
Chadwick, or whoever he appoints, to attend the
7.
Information regarding Other Related Party Trans-
corresponding extraordinary shareholders’ meet-
actions. Inform shareholders on the agreements
ings of Enel Generación and vote in favor of the
associated to Other Related Party Transactions re-
Amendment to Enel Generación Bylaws.
ferred to by Title XVI of the Chilean Corporations
Act, Law N°18,046, other than the Reorganiza-
5. Amendment to Enel Chile Bylaws. (a) Amend Enel
tion, that have adopted since the last Enel Chile
Chile’s bylaws to include the agreements regard-
shareholders’ meeting and until the date of the
ing the Merger, the Capital Increase of Enel Chile
session summoned and identifying the Board
and other agreements adopted by this Extraordi-
members that approved them.
nary Shareholders’ Meeting, and replace Article
Five and First Transitory Article for this purpose.
• On November 17, 2017, it was informed as a significant
(b) Expand Enel Chile´s corporate purpose, in or-
event that Enel Chile S.A. received the Directors’ Com-
der to include information and communications
mittee’s Report on November 17, 2017, in accordance
technology activities, and modify for this purpose,
with Article 50 bis of the Chilean Corporations Act, re-
Article Fourt of the bylaws. (c) Modify Articles Fif-
garding the corporate reorganization, which was made
teen and Sixteen, in order to eliminate the Vice
public through the significant events dated August 25
Chairman position from the Board of Directors
and August 26 of 2017.
and any references to such position. (d) Eliminate
the Second Transitory Article and the Tenth Transi-
• On November 17, 2017, it was informed as a signifi-
tory Article because they are no longer in force,
cant event that Enel Chile S.A. (hereafter “Enel Chile”
and (e) Provide an amended text of the bylaws of
or the “Company”), received a letter from its con-
Enel Chile S.A.
trolling shareholder, Enel SpA (the “ Enel SpA Letter”)
155
Company’s significant events
through which the company confirms what was stated
the holding company of the Enel Group, to develop
in the Collective Declaration of the Board of Directors
and manage the nonconventional renewable energies
of Enel Chile S.A regarding the Corporate Reorgani-
in Chile exclusively through subsidiaries of Enel Chile
zation Transaction of the Company (Elqui Project) dis-
S.A.
closed through Significant Event dated November 14,
2017 and made available to shareholders and the pub-
• On December 20, 2017, it was informed as a signifi-
lic through its publication on the Enel Chile´s website
cant event that Enel Chile S.A. (hereafter “Enel Chile”
www.enelchile.cl.
or the “Company”), in its Extraordinary Shareholders
Meeting held today, complying with the quorum re-
A copy of the Enel SpA Letter is attached to this Sig-
quirements established by law and the Company by-
nificant Event and confirms the Collective Declaration,
laws, has approved the following:
establishing the explicit commitment of Enel SpA, as
156
Annual Report Enel Chile 2017
(a) Carry out the Corporate Reorganization (the
established as a condition precedent to the suc-
“Reorganization”) as a Related Party Transaction
cess of the Enel Generación PTO mentioned in
in accordance with the provisions of Title XVI of
numeral (ii).
the Chilean Corporations Law No 18,046, which
involves the following stages: (i) the merger by
(b)
In accordance with Title IX of the Chilean Corpo-
incorporation of Enel Green Power Latin America
rations Law and Title IX of Corporations Regula-
S.A (“Enel Green Power”) by Enel Chile S.A. (here-
tions, carry out: (i) the proposed Merger in which
inafter the “Merger”), that is subject to the suc-
Enel Chile will absorb Enel Green Power taking
cess of the Enel Generación PTO as a condition
on its rights and responsibilities. Enel Green
precedent as mentioned in the following numeral,
Power would dissolve without liquidation; and
and which will require a capital increase in Enel
(ii) approve the exchange ratio of the Merger, the
Chile to pay Enel Green Power shareholders for
audited financial statements of each merging
their shares, according to the Merger’s exchange
company, Enel Chile and Enel Green Power, a
ratio; (ii) a Public Tender Offer by Enel Chile to pur-
capital increase in Enel Chile with the purpose to
chase up to 100% of the shares and the American
distribute its shares to Enel Green Power share-
Depository Shares (“ADS”) issued by Enel Gen-
holders according to the Merger’s exchange ratio.
eración Chile S.A. (“Enel Generación”) held by
the minority shareholders of the latter (the “Enel
(c) A Ch$ 1,891,727,278,668 capital increase in Enel
Generación PTO”). This tender offer will be sub-
Chile through the issuance of 23,069,844,862
ject to a series of conditions, including that Enel
new shares, belonging to one same series, with-
Chile reach an ownership share of more than 75%
out par value, at the price and other terms to be
of Enel Generación’s common stock as a result
determined by the Extraordinary Shareholders
of the Enel Generación PTO and that the share-
Meeting.
holders that accept to sell their shares in the PTO
also accept to subscribe Enel Chile shares and
(d) Empower Mr. Herman Chadwick Piñera, the
ADS, as the case may be, issued as part of the
Chairman of Enel Chile’s Board of Directors, or
capital increase process as mentioned in numeral
whom he may have empowered to represent
(iii) hereafter. Such shares and ADS will be paid
him, to attend the Enel Generación Extraordinary
for by Enel Generación shareholders with part of
Shareholders Meetings and vote in favor of the
the price they receive for selling their shares in
Amendment to Enel Generación Bylaws.
the Enel Generación PTO; (iii) a capital increase
in Enel Chile that is subject to the success of the
(e) Amend Enel Chile bylaws: (a) substitute Transito-
Enel Generación PTO, as mentioned in numeral
ry Article One and Five of the Company Bylaws
(ii) above and that is needed to have sufficient
in order to capture the agreements regarding the
shares and ADS to deliver to the shareholders of
Merger, the Enel Chile Capital Increase, and other
Enel Generación that accept to sell their shares
agreements adopted by the Shareholders Meet-
in the Enel Generación PTO, which is payable in
ing, (b) replace the Fourth Article of bylaws to add
cash (the “Enel Chile Capital Increase”); and (iv)
information and communications technology to
an amendment to the Enel Generación bylaws to
Enel Chile’s purpose, (c ) modify Article Fifteen
eliminate all limitations and restrictions imposed
and Sixteen to eliminate the Board of Directors’
by the provisions of Title XII of Decree Law No
Vice-chairperson position and all references to
3,500/1980, particularly that no shareholder may
such position, (d) eliminate Transitory Article
concentrate more than 65% of Enel Generación’s
Two and Transitory Article Ten that are no longer
equity with voting rights (the “Amendment to
applicable, (e) deliver a revised version of Enel
Enel Generación Bylaws”). This amendment is
Chile S.A. Bylaws.
157
Company’s significant events
(f) Empower Enel Chile’s Board of Directors to per-
Finally, I inform that, notwithstanding what ac-
form all actions necessary to carry out the Reor-
cording to the law and applicable regulation will
ganization, including requesting the registration
be informed opportunely, the shareholders that
of the shares issued as part of the capital increase
disagree with the Merger have the right to with-
in the Register of the Superintendence of Securi-
draw as stated by current legislation.
ties and Insurance (or its successor, the Financial
Market Commission) as well as the registration
• On December 20, 2017, it was informed as a signifi-
of American Depository Shares in the United
cant event that the Board of Directors of Enel Chile
States Securities and Exchange Commission,
S.A. (hereafter “Enel Chile” or the “Company”), in its
carry out the Enel Generación PTO according to
session held today, unanimously agreed to distribute
the terms and conditions approved by the Share-
an interim dividend of Ch$ 0.75642 per share on Jan-
holders’ Meeting, perform activities necessary to
uary 26, 2018, attributable to the 2017 fiscal period,
complete the Merger and all other activities re-
corresponding to 15% of Enel Chile’s net income as of
quired to complete the Reorganization, adopting
September 30, 2017, based on the Company’s Finan-
all agreements required to legalize and put Enel
cial Statements at such date.
Chile Bylaw amendments previously mentioned
into effect.
• As set forth in Superintendence Circular Letter No 660
of 1986, we enclose herein Form No 1 that provides
It is hereby noted that the Extraordinary Share-
information regarding the interim dividend.
holders’ Meeting of Enel Generación Chile S.A.
held today has agreed to approve the Amend-
ment to Enel Generación Bylaws required to
carry out the Operation, and the Extraordinary
Shareholders’ Meeting of Enel Green Power Latin
America S.A. held today has agreed to approve
the Merger by absorption of Enel Green Power
Latin America S.A by Enel Chile S.A.
158
Annual Report Enel Chile 2017
159
Company’s significant events 22Identification of subsidiaries
and associate companies
160
Annual Report Enel Chile 2017 Canela I wind farm
161
Letter from the Chairman AGRÍCOLA DE CAMEROS
ENEL DISTRIBUCIÓN
CHILE S.A.
ENEL GENERACIÓN
CHILE
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
(56 2) 2378 4700
Subscribed and Paid Capital (ThCh$)
5,738,046
Corporate Purpose
The purpose of the company is the
exploitation of agricultural land.
Core Business
Real estate and agriculture
Administration
Bylaws include a Board of Directors:
Directors
Francisco Silva Bafalluy
Hugo Ayala Espinoza
Manuel Larraín García
María Cristina Auad Faccuse
Cristián Guadi Imbarack Dagach
Alternate Directors
Hans Knoop Frick
Solange Zincke Cavalieri
Ingrid Morales Ávila
Jorge Geldres Reyes
Andrés Garib Auad
Senior Executives
Hugo Ayala Espinoza
Chief Executive Officer
Business Relations
Service contract provided by Enel Chile:
Provision of internal audit and compliance
control services. Price: expressed in UF per
hour that Enel Chile’s staff assigns to the
contracted services.
162
Name
Enel Distribución Chile S.A.
Name
Enel Generación Chile S.A.
Type of Company
Publicly held Limited Liability Stock
Corporation
Type of Company
Publicly held Limited Liability Stock
Corporation
Taxpayer ID
96,800,570-7
Address
76 Santa Rosa St., 8th floor
Santiago, Chile
Telephone
(56 2) 2675 2000
Taxpayer ID
91,081,000-6
Address
76 Santa Rosa St.
Santiago, Chile
Telephone
(56 2) 2630 9000
Subscribed and Paid Capital (ThCh$)
230,137,980
Subscribed and Paid Capital (ThCh$)
552,777,321
Corporate Purpose
Distribution and sale of electricity, either
hydraulic, thermal or any other source of
electricity in Chile or abroad, as well as the
distribution, transportation, and sale of fuels
of any kind, and 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 (Presidente)
Rodolfo Avogadro Di Vigliano
Monica Hodor
Iris Boeninger von Kretschmann
Hernán Felipe Errázuriz Correa.
Senior Executives
Andreas Gebhardt Strobel
Chief Executive Officer
Simone Tripepi
Andrés González CerTaxpayer ID i
Daniel Gómez Sagner
Horacio Aránguiz Pinto
Victor Tavera
Yanett Henríquez Zamora
Rodrigo Vargas Gómez
Business Relations
(I) Service contract provided by Enel Chile:
Comprehensive procurement service; Materials
purchasing; 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. (ii) Service contract
provided by Enel Chile: Financial management,
management and corporative services. Price:
monthly amount fixed in UF. (iii) Trade accounts
receivable (iv) Administration services provided
by Enel Chile. Price: monthly amount fixed in
UF.
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
Directorio
Giuseppe Conti (Chairman)
Francesco Giorgianni
Frabrizio Barderi
Julio Pellegrini Vial
Mauro Di Carlo
Umberto Magrini
Luca Noviello
Enrique Cibié Bluth
Jorge Atton Palma
Principales ejecutivos
Valter Moro
Chief Executive Officer
Raúl Arteaga Errázuriz
Luis Ignacio Quiñones Sotomayor
Bernardo Canales Fuenzalida
Humberto Espejo Paluz
Claudio Helfmann Soto
Luis Vergara Adamides
Michele Siciliano
Claudio Órdenes Tirado
Juan Alejandro Candia
Carlo Carvallo Artigas
Business Relations
(i)Service contract provided by Enel Chile:
Procurement services; Materials Purchasing;
Contracting of works, services and
consultancies. Price: Directly proportional to
costs associated to staff and to operating
and maintenance expenses. Every year, the
amount for next annual period is determined,
introducing the proper improvements and
efficiencies. (ii) Service contract provided by
Enel Chile: Money desk and treasury services.
Price: Monthly amount expressed in UF.
(iii) Service contract provided by Enel Chile:
Annual Report Enel Chile 2017 Accounting services. Price: Monthly amount
expressed in UF. (iv) Service contract provided
by Enel Chile: Internal audit and compliance
control services. Price: UF amount per hour
that Enel Chile staff dedicates to contracted
services. (v) Trade accounts receivable (vi)
Administration services provided by Enel
Chile.
SERVICIOS
INFORMÁTICOS E
INMOBILIARIOS LTDA. *
Name
Servicios Informáticos e Inmobiliarios
Limitada
Type of Company
Limited Liability Company
Taxpayer ID
76.107.186-6
Address
76 Santa Rosa St. 9th floor
Santiago, Chile
Telephone
(562) 2353 4606
Subscribed and Paid Capital (ThCh$)
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 own or third party
contracts that are related to said matters;
establishing, managing and exploiting data
base centers; creation, development, design,
management, operation, commercialization,
purchase, sale, import, and export of all
kinds of software; contract management
and administration and project development
and execution. 2) Acquire and sell all kinds
of corporeal or incorporeal property related
to its object; provide services and obtain
representations to accomplish its purpose;
organize, constitute, participate and be
part of all kinds of companies, associations
or joint accounts; make all types of cash,
service and kind contributions, and to sign
service or consultancy contracts, either
in Chile or abroad. 3) Administration and
exploitation of own or third party businesses
and, in general, the development of any
activity connected or supplementary to the
aforementioned purposes, and any other
partners deem mutually convenient. 4)
Purchase, divest, parcel, divide, lot division,
commercialize and exploit at any title of
all kinds of real estate, on its own account
or for third parties, invest the corporate
funds in all kinds of property, immovable or
movable, corporeal or incorporeal and rights
in societies, manage them and receive its
proceeds and returns. On September 1,
2017, Enel Dsitribución Chile S.A.
* On September 1, 2017, Enel Dsitribución
Chile S.A. sold its economic interest in To
its only partner Enel Chile S.A. Therefore
Servicios Informáticos e Inmobiliarios Ltda.
dissolved without the need of a liquidation
process and its assets were entirely
absorbed by Enel Chile S.A.
AYSÉN ENERGÍA *
Name
Aysén Energía S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,091,595-5
Address
383 Miraflores St. office 1302
Santiago, Chile.
Telephone
(562) 2713 5000
Corporate Purpose
Comply with the first article of Resolution 30
dated May 26, 2009, issued by the antitrust
government agency, Tribunal de la Libre
Competencia, to fulfill the commitment made
by HidroAysén S.A. with the community of
the XI Region of Aysén, within the framework
of the Aysén Hydroelectric Project to provide
the region with a lower cost electricity supply
when compared to 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, supply and commercialize
electricity using any source 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.
*During the Extraordinary Shareholders’
Meeting of Aysén Energía held December
22, 2017, the dissolution of the company was
agreed.
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.
*During the Extraordinary Shareholders’
Meeting of Aysén Transmissión held
December 22, 2017, the dissolution of the
company was agreed.
CHENA
Name
Empresa de Transmisión Chena S.A
Type of Company
Privately held corporation registered in the
securities register of the SVS.
Taxpayer ID
76,722,488-5
Address
76 Santa Rosa St. 8th floor
Santiago, Chile
Telephone
(56 2) 2353 4698
Subscribed and Paid Capital (ThCh$)
250,429
Corporate Purpose
Electricity transmission
Core Business
Electricity transmission
Board of Directors
Andreas Gebhardt Strobel
Daniel Gómez Sagner
Francisco Messen Rebolledo
163
Identification of Subsidiaries and Associate Companies Senior Executives
Miguel Eduardo Readi Pizarro
Chief Executive Officer
Business Relations
(i) Network planning service contract
provided by Enel Distribución Chile
: supervision and remote operation,
supervision, and coordination of connections
and disconnections, planning and control
of maintenance program, local operations
, maintenance and emergency service,
network planning, operations of facilities.
Price: monthly amount fixed in UF. (ii) legal
counsel service contract provided by Enel
Distribución Chile: topo management, legal
services, and secretary to the board. Price:
Monthy amount fixed in Chilean pesos.
ELECTROGAS *
Name
Electrogas S.A.
Type of Company
Privately held corporation
Taxpayer ID
96,806,130-5
Corporate Purpose
Provide transportation services for natural gas
and other fuels, on behalf of the Company and
third parties, for which it can build, operate
and maintain gas pipelines, oil pipelines,
multipurpose pipelines and complementary
facilities.
* In December, 2016, Enel Generación
Chile S.A. sold its entire economic interest in
Electrogas to a third party (Aerio Chile SpA). The
shares of Electrogas held by Enel Generación
Chile were transferred on February 7, 2017 and
therefore ceased to be a subsidiary of Enel Chile
S.A.
fuels; c) sell and provide engineering services;
d) acquire, purchase, transfer, lease, charge and
develop, in any form, the concessions referred
to in the Electricity Law, maritime concessions
and water rights of any nature; e) transport
natural gas, by itself or jointly with third parties
in Chile or abroad, including the construction,
location, and operation of gas pipelines and
other activities directly or indirectly related to
such operations; f) catchment, extraction,
treatment, desalination, transportation,
distribution, commercialization, delivery and
supply of seawater, in all its forms, including
natural, drinking, desalinized or treated in any
way, either by itself 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 that use electricity as the 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
that contribute 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 into whatever kind of existing companies
or join in their formation.
Core Business
Electricity generation and gas transportation
Subscribed and Paid Capital (ThCh$)
482,511,131
Directors
Raúl Arteaga Errázuriz, Presidente
Sergio Ávila Arancibia
Pablo Arnés Poggi
Humberto Espejo Paluz
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations con Enel Chile S.A.
Communications, human resource
management, and capital management
service contract provided by Enel Chile S.A.
Price: monthly amount expressed in UF.
EÓLICA CANELA *
Name
Type of Company
Privately held corporation
Taxpayer ID
76,003,204-2
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
Promote and develop renewable energy
projects, mainly wind-powered energy
projects, and 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, and
acquire and benefit from the corresponding
concessions.
Core Business
Electricity Generation
Capital Suscrito y Pagado
(M$) 12,284,743
*During the Extraordinary Meeting held on
November 30, 2017, shareholders agreed to
dissolve the company.
GASATACAMA CHILE
Name
GasAtacama Chile S.A.
Type of Company
Privately held corporation
Taxpayer ID
78,932,860-9
Address
76 Santa Rosa St.
Santiago, Chile
Corporate Purpose
The company has the following purpose:
a) develop the generation, transmission,
purchase, distribution and commercialization
of electricity or energy of any other source; b)
purchase, extract, operate, process, distribute,
commercialize and sell solid, liquid and gas
164
Annual Report Enel Chile 2017 GASODUCTO ATACA-
MA ARGENTINA
Name
Gasoducto Atacama Argentina S.A.
Type of Company
Privately held corporation
Taxpayer ID
78,952,420-3
Address:
76 Santa Rosa St.
Santiago, Chile
Corporate Purpose
The transportation of natural gas, either
by itself, through or jointly with a third
party, in the Chile or abroad, including the
construction, location and operation of
gas pipelines and other operations directly
or indirectly related to this objective. The
company has incorporated an agency in
Argentina under the name of Gasoducto
Cuenca Noroeste Limitada Sucursal
Argentina whose purpose is the construction
of a gas pipeline between Cornejo, a town in
the province of Salta and the Argentina-Chile
border in the vicinity of Paso de Jama in
Chile’s Second Region.
Core Business
Gas transportation
Subscribed and Paid Capital (ThCh$)
126,309,044
Directors
Raúl Arteaga Errazuriz
Pablo Arnés Poggi
Alex Díaz Sanzana
Senior Executives
Valter Moro
Chief Executive Officer
Business Relations
The company has no business relationships
with Enel Chile.
GNL CHILE
HIDROAYSÉN *
Name
GNL Chile S.A.
Type of Company
Privately held corporation
Taxpayer ID
76,418,940-K
Address
532 Rosario Norte St. office 1303
Las Condes, Santiago
Telephone
(562) 2892 8000
Subscribed and Paid Capital (ThCh$)
1,860,332
Corporate Purpose
The purpose of the company is: a) contract
the services of GNL Quintero S.A., a liquefied
natural gas (“LNG”) regasification company,
and utilize its entire natural gas storage,
processing, regasification, and delivery
capacity 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, as determined by LNG purchase
contracts; c) sell and deliver natural gas and
LNG, as determined by the natural gas and
LNG sales contracts signed by the company
with its customers; d) manage and coordinate
the schedules and nominations of LNG
shipments, 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
Import and commercialization of natural gas
Directors
Juan Oliva Vásquez
Yasna Ross Romero
Luis Arancibia Yametti
Senior Executives
Alejandro Palma Rioseco
Chief Executive Officer
Business Relations
The company has no business relationships
with Enel Chile.
Name
Centrales Hidroeléctricas de Aysén S.A.
Type of Company
Privately held corporation, incorporated in
Santiago, Chile and registered in the Securities
Register of the SVS.
Taxpayer ID
76,652,400-1.
Corporate Purpose
The development, funding, ownership and
exploitation of a hydroelectric project in
the XI Region of Aysén with 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) generation and transportation of
electricity; b) supply and commercialization
of electricity to its shareholders; c) manage,
operate and maintain hydraulic infrastructure,
electricity systems and hydroelectric power
generating plants.
*During Extraordinary Meeting held on
December 7, 2017, the shareholders agreed
to dissolve the company.
PEHUENCHE
Name
Empresa Eléctrica Pehuenche S.A.
Type of Company
Publicly held Limited Liability Stock
Corporation, and registered in the Securities
Register of the SVS under the number 293
Taxpayer ID
96,504,980-0
Address
76 Santa Rosa St.
Santiago, Chile
Corporate Purpose
Generate, transport, distribute and supply
electricity, and acquire and benefit from the
respective concessions.
Core Business
Electricity generation
Subscribed and Paid Capital (ThCh$)
175,774,920
165
Identification of Subsidiaries and Associate Companies Board of Directors
Raúl Arteaga Errázuriz
Ignacio Quiñones Sotomayor
Claudio Helfmann Soto
Fernando Vallejos Reyes
Juan Candia Narvaez
Senior Executives
Carlo Carvallo Artigas
Chief Executive Officer
Business Relations
Communications, human resource
management, and capital management
service contract provided by Enel Chile S.A.
Price: monthly amount expressed in UF.
LUZ ANDES
Name
Luz Andes Limitada
Type of Company
Limited Liability Company
Taxpayer ID
96,800,460-3
Address
76 Santa Rosa St.
Santiago, Chile
Telephone
(56 2) 2634 6310
TRANSQUILLOTA
Name
Transmisora Eléctrica de Quillota Ltda.
Type of Company
Limited liability Company
Taxpayer ID
77,017,930-0
Subscribed and Paid Capital (ThCh$)
1,224
Corporate Purpose
Distribution and sale of electricity, and sale
of household, sports, entertainment and
computer appliances.
Core Business
Electricity distribution
Address
Route 60, km 25, Lo Venecia
Quillota, V Region of Valparaíso, Chile
Joint Administration
Claudio Inzunza Diaz
Rodrigo Vicente Arévalo Cid.
Corporate Purpose
Transportation, distribution, and supply of
electricity, either by itself or through a third
party.
Senior Executives
Claudio Inzunza Díaz
Chief Executive Officer
Core Business
Electricity transmission
Subscribed and Paid Capital (ThCh$)
4,404,446
Representatives
Santiago Bradford Vicuña
Goran Nekik
Gastón Zepeda Carrasco
Sergio Ávila Arancibia
Pedro de la Sotta Sánchez
Business Relations
The company has no commercial relations
with Enel Chile.
Business Relations
(i) Service contract provided by Enel Chile:
Comprehensive procurement services,
materials purchasing, contracting 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. (ii) Service contract provided by
Enel Chile: Internal audit and compliance
control services. Price: UF amount per hour
that Enel Chile’ staff dedicates to contracted
services. (iii) Administration service contract
provided by Enel Chile.
EMPRESA ELÉCTRICA
DE COLINA
Name
Empresa Eléctrica de Colina Ltda.
Type of Company
Limited Liability Company
Taxpayer ID
96,783,910-8
Address
31 Chacabuco St., Colina
Santiago, Chile
Telephone
(56 2) 2844 4280
Subscribed and Paid Capital (ThCh$)
82,222
Corporate Purpose
Distribution and sale of electricity, and sale
of household, sports, entertainment and
computer appliances.
Core Business
Electricity distribution
Joint Administration
Francisco Javier Evans Miranda
Rodrigo Vicente Arévalo Cid.
Senior Executives
Francisco Javier Evans Miranda
Chief Executive Officer
Business Relations
(i) Service contract provided by Enel Chile:
Comprehensive procurement services,
materials purchasing, contracting 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. (ii) Service contract provided by
Enel Chile: Internal audit and compliance
control services. Price: UF amount per hour
that Enel Chile’ staff dedicates to contracted
services. (iii) Administration service contract
provided by Enel Chile. Price: Monthly
amount expressed in UF.
166
Annual Report Enel Chile 2017 167
Identification of Subsidiaries and Associate Companies 23Statement of Responsibility
168
Annual Report Enel Chile 2017 169
Letter from the Chairman Pangue hydro power plant
170
Annual Report Enel Chile 2017 Statement of Responsibility
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
DIRECTOR
Giulio Fazio
Passport: YA4656507
DIRECTOR
Salvatore Bernabei
Taxpayer Id: 24,220,743-2
DIRECTOR
Pablo Cabrera Gaete
Taxpayer Id: 4,774,797-K
DIRECTOR
Daniele Caprini
Passport: YA9188092
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
Statement of Responsibility
171