Enel Chile S.A.
Annual Report 2018

Plain-text annual report

Annual Report Enel Chile 2018 Santiago Stock Exchange ENELCHILE New 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, 2018 the company´s total subscribed and paid capital amounted to Ch$ 3,954,491,478,786 represented by 70,134,077,818 ¹ 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, 2018, amounted to ThCh$ 7,488,020,164. Enel Chile controls and manages a group of companies that operate in the Chilean electricity market. In 2018, net income attributable to the con- trolling shareholder reached ThCh$ 361,709,937 and operating income was ThCh$ 670,604,721. At year end 2018, a total 2,062 people were directly employed by its subsidiaries in Chile. (¹) : Total shares consider 967,520,599 shares of treasury stock generated by the process of withdrawal right carried out during the Elqui project. Annual Report Enel Chile 2018 2 Annual Report Enel Chile 2018Content > Letter from the Chairman ......................................................................................................... 4 > Open Power ............................................................................................................................. 8 > Milestones 2018 .................................................................................................................... 10 > Main Financial and Operating Data ........................................................................................ 15 > Identification of the Company and Documents of Incorporation ........................................... 19 > Ownership and Control .......................................................................................................... 23 > Management .......................................................................................................................... 29 > People and Organization ........................................................................................................ 43 > Stock Markets Transactions ................................................................................................... 53 > Dividends .............................................................................................................................. 61 > Investment and Financing Policy ........................................................................................... 67 > Historical Background............................................................................................................. 71 > Investments and Financial Activity ......................................................................................... 75 > Risk Factors ........................................................................................................................... 81 > Company Reorganization "Elqui Project" ................................................................................ 95 > Industry Regulation and Electricity Industry Operations ........................................................ 99 > Electricity Generation ........................................................................................................... 109 > Electricity Distribution .......................................................................................................... 125 > Environment and Sustainability ............................................................................................ 133 > Participation in subsidiaries & associates and schematic table ............................................ 143 > Significant Events ................................................................................................................ 149 > Identification of Subsidiaries and Associate Companies ...................................................... 157 > Statement of Responsibility ................................................................................................. 167 Content 3 1. Letter from the Chairman Dear shareholders, We are the most diversified company in the market. The I hereby present the Annual Report and Financial State- reorganization, known as the Elqui Project, was a success. ments of Enel Chile for 2018. You will find a description of The Public Tender (PTO) for Enel Generación, left us with the main activities carried out by the Enel Group during the 93.55% of the capital of Enel Generación. This gave way year through Enel Generación, Enel Green Power (EGP), to a corporate restructuring that meant involving Enel Chile Enel Distribución, and Enel X. in all the projects Enel Green Power Latin America has in I would like to thank the directors, managers, and collab- erations, including both conventional and non-conventional the country. As a result, we now control all generation op- orators who work with us for everything they have done plants. for the company throughout the year. I would also like to thank them for the trust they have placed in the company´s Within the context of the Elqui Project, in June the com- management, and for supporting the new directions we pany issued its first bond in the United States, a one mil- are taking. lion-dollar, 10 year bond, with a 4.875% coupon rate. The demand was over 2.5 times the amount allocated. The During 2018, EBITDA grew 20.6%, reaching Ch$ 891,355 funds will be used to refinance a large portion of the shares million by year end. This growth is mainly due to the that were acquired through the PTO launched for Enel Gen- addition of EGP and to a more efficient generation mix eración. because of greater hydroelectric dispatch. It was a year of growth and changes in the organization, beginning with the In Enel Generación we take on big challenges when it designation of our new CEO, Paolo Pallotti that has been in comes to the environment and sustainability. In January, Enel for almost three decades. He took on this challenge our Bocamina thermoelectric plant became the first gen- following the departure of Nicola Cotugno, who´s commit- erator in the company to participate in a pilot project im- ment to the company was remarkable. plemented by the Government Environmental Agency to 4 Annual Report Enel Chile 2018monitor emissions in real time. Also, in 2018, Bocamina In August, the Enel Distribution Board appointed Ramón finished installing the second dome to store 140,000 tons Castañeda as the new CEO, replacing Andreas Gebhart, of coal in its facility. who worked for the Group for 25 years. I would like to per- sonally thank Andreas for his excellent contribution to the We have reached a good understanding with our power company and wish Ramón a successful administration. plant´s neighboring communities. We took four women from the Cerro Obligado area in Coronel to Italy to share Throughout 2018, the distribution business focused on their eco-construction experiences as part of the Enel improving service standards. As an example, the massive Group´s International Encounter program. In the Antofa- 1,250-kilometer helicopter inspection of medium and high gasta region, located in northern Chile, we inaugurated one voltage lines. This allowed us to detect sensitive spots in of the first sustainable light posts built by the community the network, repair them, and prevent potential future ser- along with the fishermen of Caleta Paposo, Additionally, as vice interruptions. a result of our work with the farmers of the Maule river ba- sin related to water management, the Recyclapolis Foun- We also installed 180 thousand smart meters in the dation gave Enel Generación the National Environmental Metropolitan Region this year, reaching a total of almost Award in the water category of Large Companies. 292 thousand meters installed this far, contributing to the efficiency of the electricity industry in the country. The energy we generated during 2018 reached a total 20,046 GWh, increasing 17% when compared to the previ- We want to be a diversified company that goes beyond ous period. This growth is mainly due to the incorporation electricity generation and distribution by promoting elec- of Enel Green Power´s generation capacity, and due to fa- tromobility, among other things. In February, we launched vorable hydrology. Enel X, the new brand and division of products and services that, with innovative, sustainable and digital solutions, of- EPG´s Cerro Pabellón plant was recognized in the Geolac fers new applications to energy, with four new business Awards with the Latin-American award for the Best Geo- lines: e-City, e-Home, e-Industries, and E-Mobility. thermic Project. The prize was received for being the first plant of its kind in South America in a remote geographical Additionally, seeking to promote technological develop- location, and at the highest altitude in the world. We have ments in infrastructure and electric mobility, we participat- also kept our promise to create job opportunities and sup- ed as the Official Power Partner in the Formula E, which ply local nearby communities with electricity. took place in Santiago for the first time. We inaugurated the first Renewable Energy Control Room, We offered our workers electric vehicles and also inaugu- where all our NCRE power plants, a total 4.7 GW of in- rated the Green Parking Lot, equipped with 20 chargers stalled capacity, are monitored and managed. This is the that can operate simultaneously making us the company biggest control room in the country, and the only one in with the greatest electric car charging ecosystem in the South America to integrate hydroelectric, solar, wind and country. geothermic technologies. 5 Letter from the Chairman We continue to grow in public transportation. Enel X pur- chased the first 100 electric BYD buses that will be oper- ated by Metbus under a leasing arrangement. This fleet of buses operate in the Grecia Avenue corridor since Decem- ber. We also installed Latin-America´s first electrotermi- nals, one in the Peñalolen district and one in Maipu. I have no doubt that these first 100 electric buses we imported with the support of the Government, represent an auspi- cious beginning to a new public transportation system that will integrate the subway and a significant number of bus routes. During 2018, we also expanded into other cities in Chile, other than Santiago. We brought the first electric bus to Concepción, and along with the municipality and the De- partment of Transportation, we inaugurated the first free electric bus route in this city. Such developments have led us to be included in the Dow Jones Sustainability Emerging Markets Index, in the Dow Jones Sustainability MILA 1 Pacific Alliance Index, and in the Dow Jones Sustainability Chile Index for the first time. This recognizes the importance the Company has placed on responsible corporate governance and sustainability. Looking beyond the work we perform on a daily basis, we also aspire to contribute to the community in other ways. This year we were part of the Code Blue Plan and offered our corporate gymnasium in Santiago as a shelter for homeless people on the coldest and rainiest nights of the winter season. We continued to encourage youngsters to participate in sports through the Enel Cup that received more than 150 teams from three regions of the country, making it the most important scholastic soccer tourna- ment in Chile. We are also proud to tell you that Enel Chile participated in the 40th Annual Telethon, an opportunity to contribute to a special cause that also motivates and brings joy to our collaborators. 6 Annual Report Enel Chile 2018Internationally, our brand has strengthened substantially ments in terms of energy efficiency and distribution have and was distinguished with the Brand of the Year Award, no other objective than to satisfy our customers’ needs. National Tier, 2018-2019, as part of the World Branding Fo- Hence, we need to keep moving forward, to implement all rum. innovations available in the market to satisfy our customer. We were recognized by Mujeres Empresarias, an organi- The country is growing and developing at a heady pace, zation that supports women in business, and by Pontifi- accompanied by social changes that indicate the beginning cia Universidad Catolica´s Center for Social Studies in their of a new era, in which service will become a fundamental IMAD ranking, for women participation in the Company. component of business. We also received the Impulsa Female Talent Award in the Utilities category granted by PwC Chile, ChileMujeres Our efforts, and all our organization´s efforts, are directed to- Foundation and Pulso. Both distinctions fill us with pride, wards professionalism and service excellence, contributing because in Enel Chile we value women´s contributions. to the creation of value for all our shareholders. We seek Hence, this year, on International Women’s Day, we recog- to create a good place to work for our collaborators, and of nized those women who stand out in diverse areas, such course, be leaders in energy transformation, caring for our as art, environment, communications, and entertainment, country, our customers, and our communities. with the Woman´s Energy Award. I want to take advantage of this opportunity to highlight port and trust in this administration. I would like to thank the shareholders for their ongoing sup- the permanent contribution we receive from our controlling shareholder in numerous matters. The importance and Sincerely, concern the directors at Enel SpA place on the Company has allowed us to learn and grow from the experience they have gained through their many years in the industry. Enel stands out for being at the forefront of innovation and technology in the field. We have focused on increasing our solar, wind, and geothermic capacity for years. I must mention the construction of our Los Cóndores plant, a hy- droelectric facility that will contribute with more than 150 MW to the system. This balance between different types of generation allows us to be relevant players in an increas- ingly competitive market. Similarly, in distribution, we are working on improving energy efficiency to better respond to the needs of an electro dependent society. I refer to effi- ciency in electricity distribution in a broad sense, including digital metering devices, among other things. The improve- Herman Chadwick Piñera Chairman of Enel Chile 7 Letter from the Chairman 2. Enel Chile is Open Power VALUES ovation n In R e s p o n sibility B e k e e n t o g u a r a n t e e c u s t o m e r C o m m i t t o i n t e g r a t i o n , a c k n o w e d g e l a n d i m p r o v e Q u i c k l y c h a n g e p r i o r i t i e s i f c o n d i t i o n s B e h a v e s a f e l y , p r o m o t e s a f e t y i n d i v i d a n d b e s a t i s u a l d i f f f a e p r o a c K e e p y o u r c o m m i t m S h a r e i n f o r m a t i o n M a k e d e c i s i o n s o n e v e r y c h a n g e e n t s , a n d c o l l a b o r a t i n g w o r k w i t c t i o n , r e n c t i v e e t A s o c d a y t a s k s B E H A V I w i t h a n d O R h o d t h e e t r b e a c c e s o r u m i n a n n t d a P r o p o s e n e w A c k n o w e d g e l t h e s u c c e s s o f p e e r s a n d / o r c o w o r k e r s o l u t i o n s a n d d o n ´ t g i v e u p a n d o f f e r s u g g e s b e h a ( c u l t i m p u r h i e a v e t i o w h v i n r o r n e , v e e s a e b e b l e o p f o r u n n l t s d t o t h e m e g a n g h e f fi e e , c d i i s a l t e h t i o n s t f a c i n g n t l a b i l i t h o y a b t i m s t a n y , p a d , s a f e t y p a s s i o n f o c u s i n g c l e s p r o v e r a p i d l y o r f a e r s o n a n e o d n a l i t y , e w e l l b x c e ll e n c e u l t s t c .) e i n g t h e c o ll a b o r a ti o n o f o t h e r s t h e i r e f f o r t V I S I O N O p e n P o m w ajo e r t r w o f a o rl d c e c h s o a ll e m e n g o f e t s h e T r u s t y g o l o n h c e t w e n o t y g r e n e n e p O s r e m u s n o c r o f y g r e n e e g a n a P r o a ctivity N SIO MIS y to m erg s e s w u e n n e e p s orator b Open energy to n O Open to new colla n e n erg y to m ore people e p O 2. Enel Chile is Open Power VALUES O p e n P o m w V I S I O N ajo r e r t w o f a o rl d c e c h s o a ll e m e n g o f e t s h e T r u s t y g o l o n h c e t w e n o t y g r e n e n e p O ovation n In C o m m i t t o i n t e g r a t i o n , a c k n o w l e d g e a n d B e k e e n t o g u a r a n t e e c u s t o m e r B e h a v e s a f e l y , p r o m o t e Q u i c k l y c h a n g e p r i o r i t i e s i f c o n d i t i o n s a n d / o r c o w o r k e r i m p r o v e s a f e t y i n d i v i d a n d b e s a t i s u a l d i f f f a e p r o a c c h a n g e A c k n o w l e d g e t h e s u c c e s s o f P r o p o s e n e w s o l u t i o n s p e e r s a n d d o n ´ t a n d o f f e r g i v e u p s u g g e s M a k e d e c i s i o n s o n S h a r e i n f o r m a t i o n K e e p y o u r c o m m i t m e n t s , e v e r y d a y c o l l a b o r a a n d w o r k w i t t a s k s t i n g w i t h a n d B E H A V I O R h o d t h e e t r b e a c c e s o r u m i n a n n t d a r e n c t i v e c t i o n , e t A s o c b e h a ( c u l t i m p u r h i e a v e t i o w h v i n r o r n e , v e e s a e e g a u n n n g h d t i o n s t f a c i n g h o y a b e f fi e e , c d i i s a e h a l t , s t l b i l i t l t s f o c n u s i n g a f e t y s t a n y , p a d c l e r a e r s a o n n e o d s n t i m p r o v e b e b l e o p f o r t o t h e p a s s i o n t h e m c o ll a b a l i t w e l l b y , e t c .) e i n g x c e ll e n c e p i d l y t h e i r o r f a u l t s e f f o r t o r a ti o n o f o t h e r s R e s p o n sibility P r o a ctivity N SIO MIS n e n erg y to m ore people e p O s e s w u e y to m erg orator n n e e p O b s Open to new colla Open energy to n s r e m u s n o c r o f y g r e n e e g a n a 3. Milestones 2018 JANUARY SMA and Enel Generación C h i l e s t a r t e d u p t h e continuous emissions monitoring system The Superintendence of the Environment (SMA in its Spanish acronym) implemented a pilot project to obtain real time data of thermal electric power plant emissions. It began operations in Bocamina. Enel Generación Chile took on the challenge to be the first power plant in the country to participate. Women from Coronel travel to Italy to share their bioconstruction experience Four women from the C e r r o O b l i g a d o a r e a w e r e I n v i t e d t o I t a l y t o p a r t i c i p a t e I n a n International event of the Enel Group to share their experience with bioconstruction. These four artisans participated i n E n e l G e n e r a c i ó n C h i l e ´ s p r o g r a m t o p r o m o t e s u s t a i n a b l e entrepreneurship within the communities. Letty N u ñ e z , C l a u d i a a n d L o r e n a S a n d o v a l a n d Elba Gutierrez told their stories and described how their motivation to work for their community encouraged them to learn this new eco carpentry trade that, in addition to being sustainable and profitable, also benefited their neighbors in Coronel. FEBRUARY Chile hosted the third Formula E race and Enel was the Official Power Partner The single seater electric c a r r a c e t o o k p l a c e o n F e b r u a r y 3 i n t h e Parque Forestal streets of Santiago. Enel Chile was the Official Power Partner to promote the d e v e l o p m e n t o f t h e electrical infrastructure of this sport event. Enel presents Enel X Chile, the new division in charge of developing products and services based on innovative, sustainable and digital solutions Enel presented Enel X in Chile to open energy t o n e w u s e s , n e w technologies and new services using a strategy based on digitalization, i n n o v a t i o n a n d sustainability. The purpose of this new global brand and division of Enel is to satisfy customer needs through four new business lines: e-city, e-Home, e-Industries, E-Mobility. Fitch Ratings begins the local rating of Enel Chile S.A. Fitch Rating gave Enel Chile a AA local credit rating with a stable outlook. E n e l b e g a n t h e a e r i a l i n s p e c t i o n o f 1 , 2 5 0 kilometers of medium and high voltage power lines A s p e c i a l l y d e s i g n e d helicopter with state- o f - t h e - a r t t e c h n o l o g y flew over a total 1,250 kilometers of medium and high voltage power lines from 33 districts of the Metropolitan Region of the country to detect the weak spots of Enel Distribución network to anticipate and prevent potential service interruptions during the winter months. Y o u n g s t u d e n t s f r o m Calama and the Innovation formula Three students from the Kamar Mayu elementary school In Calama won the Play Energy Chile 2017 program carried out by Enel Chile to encourage learning about energy. Within this context, the t h r e e s t u d e n t s w e r e invited to the Formula E electric car race in Punta del Este. MARCH Enel Chile declares the Enel Generación PTO a success ending the Elqui Plan successfully E n e l C h i l e s u b m i t t e d a Significant Event to t h e F i n a n c i a l M a r k e t Commission declaring the PTO to purchase the shares of Enel Generación Chile a success, reaching a 93.55% ownership share. The success of this PTO allowed Enel Chile to carry out the corporate reorganization involving the merger of Enel Green Power Latin America S.A. Enel Chile acknowledges 13 Chilean women for their outstanding contribution to the development of the country Within the context of the International Women's Day, the twelfth version of the Women Energy A w a r d a c k n o w l e d g e d t h i r t e e n o u t s t a n d i n g C h i l e a n w o m e n f o r t h e i r c o n t r i b u t i o n i n f i e l d s , s u c h a s , a r t ; music and lyrics; public service; environment; e n e r g y e f f i c i e n c y a n d s u s t a i n a b i l i t y ; education; innovation and new ventures; public d e b a t e ; c o m m u n i t y w o r k ; j o u r n a l i s m a n d social communication; entertainment and sports. 10 Annual Report Enel Chile 2018T h e c o n s t r u c t i o n o f Bocamina´s second dome concludes The south dome of the Bocamina power plant m a y s t o r e u p t o 1 4 0 thousand tons of coal. This south dome is additional to the north dome that was built in 2017. This m a k e s B o c a m i n a t h e first electricity generation facility to implement this type of system to improve coal management. The roof on the south coal field is in addition to the one in the north field built in 2017. The dome is a civil engineering and thermal construction project, a milestone for domestic and regional engineering becausee thay were built in record time and with no one injured. Enel Chile participates in the Blue Code Plan and transforms the corporate gymnasium into a shelter The Company contributed t o t h e G o v e r n m e n t ´ s c a m p a i g n t o p r o t e c t homeless people from the cold and rain during days with critical weather conditions in winter by m a k i n g t h e c o r p o r a t e gymnasium available as a shelter. G a s i s e x p o r t e d t o Argentina for the third consecutive year Natural gas was exported from Chile to Argentina once again after both c o u n t r i e s s i g n e d a n agreement establishing the general terms of the fuel supply transaction to take place during the winter for the following three years. ENAP, Enel Generación Chile and Aprovisionadora Global de Energia S.A. (AGESA) would supply the natural gas using the pipelines of Electrogas and GasAndes. GasAndes has a 450 km pipeline that crosses the Andes Mountains from Chile´s Metropolitan Region Chile to the Mendoza Region in Argentina JULY Enel Chile receives the Brand of the Year Award National Tier 2018-2019 The Company received the Brand of the Year Award National Tier 2018-2019 in a ceremony that took place in the Plaza Hotel in New York. This award is part of the World Branding Forum program that evaluates different brands within three categories :national, r e g i o n a l a n d g l o b a l , based on three criteria: brand valuation, online public vote and market consumption research. Board of Directors of Enel Distribución Chile appoints Ramon Castañeda as new Chief Executive Officer T h e d e c i s i o n w a s a n n o u n c e d t h r o u g h a Significant Event. He took office on August 16, 2018. Ramon Castañeda is a civil engineer from Universidad Catolica de Chile and also holds a masters degree in engineering from the same university and a MBA from Universidad Adolfo Ibañez. He began his career in the Enel group in 1995 and has held positions in Chile and overseas. His previous position was CEO of Enel Distribución Rio. MAY S t a n d a r d & P o o r ’ s maintained Enel Chile´s International Rating T h e i n t e r n a t i o n a l r i s k rating agency gave Enel Chile a “BBB+” rating with a stable outlook, an "Investment grade" rating. M o o d y ´ s b e g i n s International rating of Enel Chile S.A. The company received a "Baa2" rating with a stable outlook. The Company´s leadership position in the generation market and distribution market in Chile was highlighted. JUNE Enel Chile successfully c a r r i e s o u t f i r s t b o n d issuance in the United States The Company issued its first U.S. bond, a 10 year, 1-billion-dollar bond with a 4.875% coupon rate. The funds are primarily to be used to refinance the bridge loan obtained within the context of the Enel Generación PTO of the Elqui Project. Demand for the bond issued was 2.5 times greater than the amount placed. Enel Chile received the Female Talent Promotion A w a r d i n t h e u t i l i t i e s category PwC Chile, Fundación Chile Mujeres and PULSO together offer this award t o a c k n o w l e d g e t h e companies within each category that promote women in the workplace by hiring a significant number of women and offering equal pay. It i s b a s e d o n p u b l i c information to December 2 0 1 7 p r o v i d e d b y t h e CMF´s norm NCG 386. The Legal Department of Enel Chile receives the Silver Award in the "Best Legal Department in Latin America 2018 " category. This award was presented in the eleventh version o f t h e I n t e r n a t i o n a l Legal Alliance Summit & Awards (ILASA 2018). It acknowledges the best l e g a l d e p a r t m e n t s i n the world within three categories, Latin American, North America and Europe. Feller Rate maintains Enel Chile´s risk rating The Company was locally rated "AA" with a stable outlook by Feller Rate in 2017 for the first time. Milestones 2018 11 Cerro Pabellón power plant is recognized as the best Geothermal Project at the 2018 Geolac Awards The geothermal power plant was acknoleged as the ¨Best Project" at the G E O L A C a w a r d s t h a t was organized by the Geothermal Congress for Latin America and the Caribbean. According to the jury, which included a world leading advisory committee, Cerro Pabellón r e c e i v e d t h e a w a r d , among other things, for being the first geothermal plant in Chile and South America, being built in a very remote geographic location, and at the highest altitude in the world and for the commitment to t h e s u r r o u n d i n g l o c a l communities, creating j o b o p p o r t u n i t i e s a n d permamantely supplying electricity to nearby towns. AUGUST Enel X inaugurated "Green Parking", a parking lot with more than 20 electric car chargers and also provided n e w e l e c t r i c c a r s f o r employees. A s a m i l e s t o n e i n e l e c t r i c m o b i l i t y a n d its massification in the country, Enel X provided the employees of the Enel Group in Chile with a new fleet of 100% electric cars and inaugurated a parking lot designed for this type of vehicle named "Green Parking". It has more than 20 chargers that can operate simultaneously. This makes the company the one with the largest e l e c t r i c c a r c h a r g i n g ecosystem in the country. Enel X, the Municipalidad de Concepcion and the Ministry of Transportation, together, inaugurated the first electric bus route in the Bio Bio Region Enel X inaugurated the first bus route to use a 100% electric bus in the capital city of the Bio Bio Region. The electric bus with air conditioning, Wi-Fi and mobile devise charging c o n n e c t i o n s , o f f e r s a free tour to the city´s emblematic locations. SEPTEMBER B o a r d o f D i r e c t o r s o f Enel Chile appoints Paolo P a l l o t t i a s n e w C h i e f Executive Officer of the Company The Board of Directors informed that Paolo Pallotti would become the new Chief Executive Officer on October 1. Paolo Pallotti is an electronic engineer from the Università Degli Studi di Ancona and joined the Enel Group in 1990. He was previously the Chief Finance and Control Officer of Enel Américas. Enel Chile inaugurates the largest renewable energy control room in the country Enel Chile inaugurated the Renewable Control Room in its corporate building, where all the Company´s renewable energy power plants are monitored and managed. The total 4.7 GW of renewable generation c a p a c i t y i s r e m o t e l y operated from this room, the largest of its kind in the country. It Is also the only one in South America with all four renewable energy generation technologies, hydro, solar, wind, and geothermal. OCTOBER Enel Chile's Cerro Pabellón project won first place in the Good Practices contest awarded by Chile´s Electricity Generation Company Association. The goal of this contest, performed for the first time, was to disseminate best practices in electricity use and generation. The companies participating had to quantitatively and qualitatively demonstrate t h e i r c o n t r i b u t i o n t o sustainable development objectives. Cerro Pabellón project won first place for its plan to offer electricity in isolated communities. Teams from Independencia are the champions of Copa Enel 2018 and travel to Italy to face Inter from Milan. T h e t e a m s f r o m Independencia, the girls in the 15 and under category and the boys in the 13 and under, surprised the teams of Inter from Milan in their own field, by winning the "Integration Cup" trophy in exciting and tight matches. They traveled accompanied by the captain of Chile´s team, Ivan Zamorano. Enel Chile announces changes to the Finance, Management and Control Department The Board of Directors appointed Marcelo Antonio De Jesus as Chief Finance, Management and Control Officer of the Company. H e h o l d s a d e g r e e i n Business Management from USCS - Universidad de São Caetano do Sul, 1993, and an MBA from Fundación Dom Cabral. His previous position was CFO and Investor Relations Director in Electropaulo. Enel Chile confirms its leadership position in sustainability by being included in the Dow Jones Sustainability Index. T h e C o m p a n y w a s i n c l u d e d i n t h e D o w J o n e s S u s t a i n a b i l i t y Emerging Markets Index, Dow Jones Sustainability MILA1 Pacific Alliance Index, and the Dow Jones Sustainability Chile Index for the first time. The ranking acknowledges the company´s sustainable e n e r g y m o d e l a n d i t s corporate responsibility practices. Significant participation of non-Metropolitan Regions in Copa Enel 2018 More than 150 teams from three regions in the country participated in this event that is becoming the most important grade school championship in Chile. The famous former captain of Chile´s soccer team, Ivan Zamoramo that continues to be the ambassador of this event, highlighted the participation and second place of the women’s team of the Universidad Católica de Concepcion. For the first time in the seventeen years of existence of Copa Enel a team from outside the Metropolitan Region came in second and won a trip to Brazil. 12 Annual Report Enel Chile 2018DECEMBER Enel Chile confirms its position in FTSE4GOOD After the second semester review, the company was confirmed in its position in the FTSE4GOOD Index S e r i e s , i n c l u d i n g t h e Emerging Markets Index and Latin American Index. FTSE4GOOD is a series of indexes developed to measure the performance of companies that stand out for their environmental, s o c i a l a n d c o r p o r a t e governance practices. It was developed by FTSE Russel that belongs to the London Stock Exchange Group. Enel X, Metbus and BYD presented the first 100 electric buses to become part of Santiago´s public transportation system It is the second largest fleet in one sole city in the world and the first in Latin America. The f i r s t L a t i n - A m e r i c a n electro terminal for the first 100 Chinese BYD electric buses was also inaugurated. These buses were purchased by Enel X and leased to Metbus to be part of Santiago´s public transportation system. SMA and Enel Generación Chile start up the second phase of the continuous monitoring system of emissions Enel Generación Chile successfully connected the continuous monitoring system of emissions of the second unit of Bocamina located in Coronel to the Superintendence of the Environment as a voluntary act of transparency to transmit the raw data registered by the system in real time. Enel Generación Chile is the first electricity generation company to successfully implement this type of system. It exceeds the requirements o f t h e l a w a n d w a s inaugurated with the SMA In January 2018. Enel Generación Chile r e c e i v e s t h e N a t i o n a l E n v i r o n m e n t A w a r d Recyclapolis 2018 T h e R e c y c l a p o l i s Foundation gave Enel G e n e r a c i ó n C h i l e t h e National Environment A w a r d 2 0 1 8 i n t h e w a t e r c a t e g o r y o f l a r g e c o m p a n i e s f o r i m p l e m e n t i n g t h e i r Water Management for Farmers Program in the Maule Region. This fifth edition of the Recyclapolis A w a r d , f o c u s e d o n h i g h l i g h t i n g t h e b e s t projects that foster and promote new sustainable trends, acknowledging companies, institutions or individuals that show t h e i r c o m m i t m e n t t o environmental innovation and improving efficiency. NOVEMBER Enel Chile was recognized f o r h a v i n g w o m e n i n executive positions by the Imad Company Ranking 2018. This initiative is carried out by Mujeres Empresarias jointly with the Social Studies Department of the Pontificia Universidad C a t ó l i c a ( D E S U C i n i t s S p a n i s h a c r o n y m ) to monitor objectives and progress in female participation and promotion to executive and board positions in the country´s most important companies. Liter of Light program illuminates areas of Paposa Community Since November, new light poles began to illuminate Caleta Paposo, located in the Antofagasta Region. T h e s e w e r e t h e f i r s t sustainable poles built by the community itself as part of a project carried o u t j o i n t l y w i t h E n e l Generación Chile and the ideas of the Liter of Light program. Enel Chile contributes to the 40 years of Telethon In 2018, Enel Chile was a n o f f i c i a l s p o n s o r o f t h e T e l e t h o n f o r t h e first time. The slogan used in this 40th version o f t h e t e l e t h o n w a s "Enel, the energy of the Telethon". This was not only an opportunity for the company to contributed with a donation, but also created an environment of motivation and pride a m o n g c o m m i t t e d employees who proactively and responsibly developed s e v e r a l a c t i v i t i e s t o contribute to this crusade. Milestones 2018 13 14 Annual Report Enel Chile 201804 Main financial and operating data 15 Letter from the Chairman 16 Annual Report Enel Chile 2018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) As of As of December 31st of each year (figures in millions of Chilean pesos) (1) 2012 2013 2014 2015 2016 (5) 2017 2018 5,398,711 5,694,773 7,488,020 1,935,717 1,907,811 3,813,856 2,136,041 2,522,978 2,457,161 627,547 317,561 1.13 0.56 739,252 349,383 1.29 0.50 891,355 361,709 0.82 1.04 As of December 31 of each year 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 2018 930 130 7,463 20,046 24,369 As of December 31 of each year Distribution Business Energy sales (GWh) (4) 2012 2013 14,445 15,152 2014 15,690 2015 15,893 2016 15,924 2017 16,438 2018 16,782 Number of customers 1,658,637 1,693,947 1,737,322 1,780,780 1,825,519 1,882,394 1,924,984 Energy losses Number of employees Customers/Employees 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 5.02% 681 2,827 (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 18 Annual Report Enel Chile 201805 Identification of the Company and documents of incorporation 19 Letter from the Chairman Identification of the Company Name Address Company Type Taxpayer ID No Address Zip Code Telephone No P.O. Box Securities Registration No External Auditors Subscribed and paid-in capital (Ch$) Website Email Investor Relations Telephone Ticker in Chilean stock exchanges Ticker in New York stock exchange Custodial Bank-ADR’s Depositary Bank-ADR’s Domestic Risk Rating Agency International Risk Rating Agency Enel Chile S.A. Santiago, 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) 22353 4400 – (56) 22378 4400 1557, Santiago 1,139 Ernst & Young 3,954,491,478,786 www.enel.cl; www.enelchile.cl comunicacion.enelchile@enel.com (56) 22353 4682 ENELCHILE ENIC Banco Santander Chile Citibank N.A. Feller Rate and Fitch Chile Clasiifcadora de Riesgos Limitada Standard & Poor´s and Moody´s Documents of incorporation Enel Chile S.A., formerly “Enersis Chile S.A.”, was created as a consequence of the corporate reorganization that be- gan in April 2015. Enersis S.A. controlled the generation, transmission and distribution business in Chile and four other countries in the region (Argentina, Brazil, Colombia, and Peru). The Extraordinary Shareholders’ Meeting of Enersis S.A. held on December 18, 2015, approved the first phase of the reorganization plan named “the Division,” which cre- ated Enersis Chile S.A. as the only vehicle to control the Group’s generation and distribution assets in Chile. Enersis S.A became Enersis Americas S.A., the vehicle to control all assets of the businesses in other countries in the region. The Division was recorded in a public deed issued on Jan- uary 8, 2016 by the Santiago Notary Public, Mr. Ivan Torre- alba Acevedo, and its extract was registered in the Com- mercial Register (Registro de Comercio del Conservador de Bienes Raíces y Comercio de Santiago) on pages 4,288 No 2,570 of 2016 and published in the Official Gazette on January 20, 2016. Later, on October 4, 2016, the shareholders of Enersis Chile S.A. approved changing the name of the Company to “Enel Chile S.A.” This agreement was recorded in a public deed on October 18, 2016 by the Santiago Notary Public, Mr. Ivan Torrealba Acevedo. Its extract was registered in the Commercial Register (Registro de Comercio del Con- servador de Bienes Raíces y Comercio de Santiago) on pages 79,330 No 42,809 of 2016 and published in the Offi- cial Gazette on October 28, 2016. 20 Annual Report Enel Chile 2018Finally, on December 20, 2017, the shareholders approved as, software, hardware, licenses, software development, amending the bylaws to include the agreements regarding and in general, any product related to the aforementioned the merger of Enel Green Power Latin America S.A. into activities; and consulting services in all subjects related to 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 Raíces y Comercio de Santiago) on pages 1154 No 629 of liquidate companies of any nature that have a corpo- 2018 and published in the Official Gazette on January 5, rate purpose similar to the Company’s corporate pur- 2018. pose. Corporate purpose The corporate purpose of the company appears in the by- law’s 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 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 crite- ria 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. Identification of the Company and documents of incorporation 21 22 Annual Report Enel Chile 201806 Ownership and control 23 Letter from the Chairman Ownership structure Ownership structure The total share capital of the Company was divided into 70,134,077,818¹ 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. During the reorganization process known as the Elqui Project, 967,520,599 company shares were repurchased as a con- sequence of shareholders withdrawal rights and at December 31, 2018 they belong to Enel Chile. As of December 31, 2018, all shares were subscribed and paid, and ownership was distributed as follows: Shareholders Enel S.p.A. Pension Funds (A.F.P) Foreign Investment Funds Stock Brokers, Insurance companies and Mutual Funds Citibank N.A. (Circular 1375 S.V.S) Others Total Outstanding Shares Own shares held by the Company Total Shares Number of shares Ownership share 42,832,058,392 9,808,247,640 7,577,686,633 4,784,113,081 2,707,448,873 1,457,002,600 69,166,557,219 967,520,599 70,134,077,818 61.93% 14.18% 10.96% 6.92% 3.91% 2.11% 100.00% Identification of the Controlling Shareholder as of the date of its presentation, which took place on De- cember 21, 2016. The Board of Directors of Enel Iberoamérica S.R.L., in As defined by Title XV of Law 18,045, Enel Chile S.A. is its session held on April 6, 2017, agreed to divide Enel controlled by Enel SpA., a publicly traded Italian company, Iberoamérica S.R.L. and incorporate, according to Italian that owns 61.93% of the shares issued by Enel Chile S.A. regulation, Enel South América S.R.L. that would become the sole owner of the interests held by Enel Iberoamérica On December 19, 2016, Enel Latinoamérica, S.A. and Enel S.R.L. in Enel Chile and Enel Américas S.A. According to Iberoamérica, S.R.L. agreed to merge by the latter absorb- such agreement, the incorporation of Enel Americas S.R.L. ing the first and therefore dissolving Enel Latinoamérica, was registered in the Company Register of Roma on June S.A., and Enel Iberoamérica, S.R.L. becoming the surviving 8, 2017 and from that date on, Enel SpA controlled Enel entity with all legal rights, obligations, and third-party Chile S.A. through Enel South America S.R.L. relationships. On December 20, 2016, the agreement was formalized and recorded in a public deed granted by the On November 16, 2017, the merger of Enel South Amer- Madrid Notary, Mr. Andrés Domínguez Nafría. The merger ica S.R.L. with and into Enel S.p.A. was registered in the was registered in the Commercial Register of Madrid and Company Register of Roma, Republic of Italy. As a result the Company's Shareholder Registry on February 13, of the merger, Enel SpA was the surviving entity with all 2016, although the registration was retroactively effective legal rights, and obligations of Enel South America S.R.L. 1: Total shares consider 967,520,599 shares of treasury stock generated by the process of withdrawal right carried out during the Elqui project. 24 Annual Report Enel Chile 2018Consequently, as of that date, Enel SpA directly controls Enel SpA was registered in the Company Register of Roma, Enel Chile S.A. (at the time with a 60.62% ownership Republic of Italy on December 12, 2018. share). The merger of Hydromac Energy S.R.L. and Enel Hold- Enel Holding Chile S.R.L with and into Enel SpA, as the ing Chile S.R.L., companies that held 18.62% and 0.02% surviving entity, all legal rights and obligations of Hydromac shareholding in Enel Chile S.A. respectively, with and into Energy S.R.L. and Enel Holding Chile S.R.L are transferred As a result of the merger of Hydromac Energy S.R.L. and to Enel SpA. Consequently, as of December 12, 2018, Enel SpA increases its direct shareholding in Enel Chile S.A. to 61.93%. Shareholders of Enel SpA at December 31, 2018 Ministero dell’Economia e delle Finanze de Italia Other Investors (Institutional or Retail) Total 23.6% 76.4% 100.0% The shareholders of the controlling entity do not have a shareholders’ agreement. Twelve Major Shareholders of the Company at December 31, 2018: Name Enel SpA Banco de Chile on behalf of nonresident third parties Citibank N.A. (Circular 1375 S.V.S.) Banco Itaú Corpbanca on behalf of foreign investors Banco Santander on behalf of foreign investors AFP Habitat S.A. Pension Fund C AFP Provida S.A. Pension Fund C AFP Cuprum S.A. Pension Fund C AFP Capital S.A. Pension Fund C Banchile C DE B S.A. AFP Habitat S.A. Pension Fund A AFP Habitat S.A. Pension Fund B Subtotal 12 shareholders Other 6,290 shareholders* TOTAL 6,302 SHAREHOLDERS Taxpayer ID. 59,243,980-8 97,004,000-5 59,135,290-3 97,023,000-9 97,036,000-K 98,000,100-8 76,265,736-8 76,240,079-0 98,000,000-1 96,571,220-8 98,000,100-8 98,000,100-8 Number of Shares 42,832,058,392 2,938,360,307 2,707,448,873 2,412,256,213 2,036,665,979 1,422,453,411 1,387,032,334 946,846,342 929,478,209 785,741,357 599,585,771 560,370,600 59,558,297,788 Shareholding 61.93% 4.25% 3.91% 3.49% 2.94% 2.06% 2.01% 1.37% 1.34% 1.14% 0.87% 0.81% 86.11% 9,608,259,431 13.89% 69,166,557,219 100.00% *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 Most important changes in ownership share NAME Enel SpA Citibank N.A. (Circular 1375 S.V.S.) Banco de Chile on behalf of non-resident third parties Banco Itau Corpbanca on behalf of Foreign Investors Taxpayer ID. 59,243,980-8 59,135,290-3 N° of shares at 12/31/2017 N° of shares at 12/31/2018 29,762,213,531 42,832,058,392 3,477,135,400 2,707,448,873 97,004,000-5 2,889,586,476 2,938,360,307 97,023,000-9 2,345,100,592 2,412,256,213 Banco Santander on behalf of Foreign Investors 97,036,000-K 1,574,876,510 2,036,665,979 AFP Provida S.A. AFP Cuprum S.A. AFP Capital S.A. AFP Habitat S.A. Banchile C de B S.A. Larraín Vial S.A. Stock Broker AFP Modelo S.A. BTG Pactual Chile S.A. Stock Broker 76,265,736-8 76,240,079-0 98,000,000-1 98,000,100-8 96,571,220-8 80,537,000-9 76,762,250-3 84,177,300-4 Santander Corredores de Bolsa Limitada 96,683,200-2 AFP Planvital S.A. Credicorp Capital S.A. Stock Brokers 98,001,200-K 96,489,000-5 1,379,706,719 2,399,448,619 1,119,912,164 1,953,111,703 1,108,850,445 1,863,888,401 1,016,399,034 2,674,373,869 395,718,609 368,863,381 302,905,090 225,359,878 190,942,944 187,665,115 176,349,167 785,741,357 426,433,848 592,213,839 387,425,204 276,582,649 325,211,209 84,617,434 Variation Shareholding percentage points 1.3015 -3.1684 -1.6377 -1.2893 -0.2634 0.6587 0.5426 0.4361 1.7962 0.3300 -0.1348 0.2392 0.1011 0.0109 0.0879 -0.2369 26 Annual Report Enel Chile 2018 Stock market transactions among related parties during 2018 There were no transactions among related parties during 2018. 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, 2018, 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. 27 28 Annual Report Enel Chile 201807 Management 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. 4 1 5 2 6 3 7 1. CHAIRMAN Herman Chadwick Piñera Graduate of Legal and Social Sciences Pontificia Universidad Católica de Chile Lawyer Taxpayer ID: 4,975,992-4 Since 04.25.2018 2. DIRECTOR Giulio Fazio Graduate of Legal and Social Sciences Universidad de los Estudios de Palermo Lawyer Passport: YA 4656507 Since 04.25.2018 5. DIRECTOR Daniele Caprini Graduate of Economics Università degli Studi di Siena Universidad de LUISS-Rome Passport: YA 9188092 Since 04.25.2018 6. DIRECTOR Gerardo Jofré Miranda Commercial Engineer Pontificia Universidad Católica de Chile Taxpayer ID: 5,672,444-3 Since 04.25.2018 3. DIRECTOR Salvatore Bernabei Industrial Engineer Università degli Studi di Roma “Tor Vergata” Master’s Degree in Business Administration Politécnica di Milano Passport: YB 0600187 Since 04.25.2018 7. DIRECTOR Pablo Cabrera Gaete Graduate of Legal and Social Sciences Pontificia Universidad Católica de Chile Diplomat Academia Diplomática Andrés Bello Taxpayer ID: 4,774,797-K Since 04.25.2018 4. DIRECTOR Fernán Gazmuri Plaza Commercial Engineer Pontificia Universidad Católica de Chile Taxpayer ID: 4,461,192-9 Since 04.25.2018 Over the last few years the following individuals were also directors of Enel Chile: Vincenzo Ranieri Graduate of Business Administration Universidad de LUISS- Rome Passport: YA 7616919 From 04.28.2016 Until: 02.28.2018 30 Annual Report Enel Chile 2018Board of Directors’ and Directors’ Committee Compensation Under Article 33 of Law 18,046, the Chilean Corporations The compensation of the Directors’ Committee is a month- Law, the Ordinary Shareholders’ Meeting held on April 25, ly payment that includes an unconditional amount equal to 2018 approved the compensation of the Board of Directors 72 UF and an additional 26.4 UF per session attended with and Directors’ Committee for 2018. a maximum of 16 sessions in total, either ordinary or ex- traordinary within each fiscal year. The compensation of the Board of Directors consists of a monthly compensation paid to each director. A portion of The total compensation expense during 2018 amounted to such monthly payment is unconditional and equal to 216 Ch$ 547,524,550 and is detailed in the following table. Unidades de Fomento (UF in its Spanish acronym) Chilean inflation-indexed, Chilean peso-denominated monetary unit, and an additional 79.2 UF per session attended with a maximum of 16 sessions in total, either ordinary or ex- traordinary. Board of Directors’ compensation in 2018 Figures in Ch$ Board Member Name Position Fixed Compensation Ordinary and Extraordinary Sessions Committee’s Fixed Compensation Herman Chadwick Piñera Chairman 133,016,070 48,772,559 Giulio Fazio (1) Salvatore Bernabei (1) Vincenzo Ranieri (1) Fernán Gazmuri Plaza Director Director Director Director - - - - - - 66,508,035 24,386,279 22,175,787 8,841,872 Juan Gerardo Jofré Miranda Director 66,508,035 24,386,279 22,175,787 8,841,872 Pablo Cabrera Gaete Director 66,508,035 24,386,279 22,175,787 8,841,872 Total 332,540,174 121,931,397 66,527,362 26,525,616 (1) The Directors waived their compensation for being an executive of the Enel SpA Group Directors Committee Ordinary and Extraordinary Sessions - - - - - - - - Variable Compensation TOTAL 2018 - 181,788,628 - - - - - - - - - - 121,911,974 121,911,974 121,911,974 547,524,550 The total compensation expense for 2017 was Ch$ 530,674,977 and is detailed in the following table. The Board of Direc- tors did not have additional expenses for consulting services. 31 Management 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 Juan Gerardo Jofré Miranda Pablo Cabrera Gaete Total General Director Director Director Director Director Director - - - - - - - - - - - - - - 57,429,439 31,602,988 19,143,146 9,361,134 57,429,439 31,602,988 19,143,146 9,361,134 57,429,439 31,602,988 19,143,146 9,361,134 287,147,196 158,014,940 57,429,439 28,083,402 (1) The Director waived his compensation for being an executive of the Enel SpA Group Incentive plan Director's compensation for 2018 did not include an incen- tive plan. Diversity in the Board of Directors Number of people by gender: Board of Directors' consulting expenses The Board of Directors did not spend on consulting ser- Female Male Total vices in 2018. 32 - - - - - - - - TOTAL 2017 178,064,854 - - - 117,536,707 117,536,707 117,536,707 530,674,977 0 7 7 Annual Report Enel Chile 2018  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 From 3 to 12 years More than 12 years Total Ownership in Enel Chile S.A. 4 3 7 3 0 1 3 7 7 0 0 7 As of December 31, 2018, according to the shareholder's register, none of the Directors in office owned shares of the Company. Directors’ Committee On April 25,2018, the Ordinary Shareholders´ Meeting ap- pointed the members to the Board of Directors. On that same date, after the shareholders´meeting, the Board of Directors designated Mr. Fernán Gazmuri Plaza, Mr. Ge- rardo Jofré Miranda and Mr. Pablo Cabrera Gaete as mem- bers to the Directors' Committee, all independent directors as defined by Article 50 bis of the Chilean Corporations Law 18,046. Mr. Fernán Gazmuri Plaza was appointed fi- nancial expert and 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. Annual Report The Directors’ Committee of the Company held 13 ses- sions during 2018, including the present session, therefore fully complying with the obligations established in Article 50 bis of the Chilean Corporations Law 18,046 and addi- tional applicable regulation. During 2018, the Directors’ Committee addressed the mat- ters that are summarized below: 1.- Financial statements: - During the session held on February 27, 2018, 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, 2017, including its notes, significant events as well as the respective external auditors´ reports and account inspectors´ re- ports. - During the extraordinary session held on May 4, 2018, the Directors’ Committee unanimously declared hav- ing examined the Consolidated Financial Statements of the Company as of March 31, 2018 and its Notes, Income Statement and Significant Events. - During the ordinary session held on May 28, 2018, the Directors’ Committee unanimously declared having examined the Consolidated Financial Statements of the Company as of March 31, 2018 and a limited audit review report, under the PCAOB standard, performed by EY Audit SpA. During the same session, the Directors’ Committee unanimously resolved declaring having examined the Proforma Consolidated Financial Statements of Enel Chile as of December 31, 2017, and its Notes. - During the ordinary session held on July 26, 2018, the Directors’ Committee unanimously declared hav- ing examined the Consolidated Financial Statements of the Company as of June 30, 2018 and its Notes, 33 Management Income Statement and Significant Events, and also Additionally, inform on the company and its subsid- declared having examined the Consolidated Financial iaries´ compliance with tax related obligations. Con- Statements of Enel Green Power Latin America as sequently, EY was still required to inform on internal of March 31, 2018, which merged with and into Enel control issues detected while performing the external Chile S.A. audit. The revocation of the rules did not affect the deadline established by the Financial Market Commis- - During the extraordinary session held October 30, sion (CMF in its Spanish acronym) rule NCG No 30 2018, the Directors’ Committee unanimously de- to submit the Financial Statements and consequent- clared having examined the Consolidated Financial ly it was understood that the internal control report, Statements of Enel Chile as of September 30, 2018, as part of the information to be submitted, should and its respective Notes, Income Statement and Sig- be provided by the external auditors during the first nificant Events and the report regarding related party quarter of each year to be available for the review and transactions prepared by the external auditors. approval of the annual financial statements. During 2. External Auditors’ report on bank transfers and to state that the directors, unanimously, had formally money brokerage: During the session held on Feb- and expressly taken note of the Internal Control Letter ruary 27, 2018, the Directors’ Committee unanimous- dated February 27,2018, prepared by Ernst & Young this same session, the Directors´ Committee agreed ly agreed to acknowledge that they had formally and to comply with regulation. expressly noted the report on money brokerage and bank transfers prepared by Ernst & Young, the ex- 4. Directors’ Committee Budget: On February 27, ternal auditors of Enel Chile S.A., dated February 27, 2018, the Directors' Committee unanimously agreed 2018. to approve the Directors’ Committee 2018 Budget amounting to 10,000 UF for the Committee and its 3. Examination of internal control letter SVS Cir- consultants’ expenses and operations. The members cular 422: The Directors´ Committee examined the of the Directors’ Committee also unanimously decid- subject during the ordinary session held on February ed to submit this 2018 Directors’ Committee Budget 27, 2018. On December 6, 2007, the Financial Market proposal to the approval of the Board of Directors so Commission issued Circular 422, which supplements that, if approved, they submit it to the Ordinary Share- Circular 980 dated December 24, 1990. This Circular holders Meeting for final approval as required. offers specific instructions on internal control proce- dures, providing for the submission of a provisional 5. External auditors’ examination of subjects cov- report and a broad time frame for the external auditors ered by NCG 385: During the ordinary session held to submit a final internal control report, allowing it to on February 27, 2018, the Directors' Committee be delivered until the date in which the Board of Di- unanimously declared having examined the subjects rectors takes note of the Financial Statements at year voluntarily presented, as good corporate governance, end of each fiscal year. The President of the Directors´ included in numeral 1 d) of the SVS General Norm Committee, Mr. Fernán Gazmuri Plaza, stated that the 385 based on the presentation performed by Exter- rules referred to above had been revoked, but even nal Auditors and highlighted that none of the subjects so, Article 246 of the Securities Market Law, among referred to by items ii, iii and v of such numeral had other issues, establishes that the external auditors are taken place. responsible for informing the Board of Directors and the Directors´ Committee on the deficiencies regard- 6. External auditors’ fees in fiscal year 2017: During ing accounting practices, management systems and the ordinary session held on January 30, 2018, the internal auditing practices detected while performing Directors' Committee unanimously agreed to declare the external audit. Also, identify the discrepancies be- having examined the fees paid during 2017 by the tween the accounting practices used by the Compa- Company to the external auditing firms concluding ny in its Financial Statements and the relevant criteria that they had not affected the competence nor the generally applied in the company´s specific industry. independence of such firms. 34 Annual Report Enel Chile 2018Directors' Committee unanimously declared having 7. External auditors’ fees in fiscal year 2017 and es- examined the Related Party Transactions with Enel timate for 2018: During the ordinary session held on Green Power Chile that consist of: (i) the guarantees February 27, 2018, the Directors' Committee unan- granted by Enel Chile to back up Enel Green Power imously agreed to declare having examined the fees Chile and its subsidiaries´ obligations, replacing the paid during 2017 by the Company to the different audit- ones granted by Enel SpA, and (ii) a contract in which ing firms hired and also having analyzed the estimate of Enel Chile S.A. provides Enel Green Power Chile or recurrent auditing service fees for 2018. any of its subsidiaries with credit letters, standby credit letters, comfort letters, corporate guarantees 8.- Supervision and evaluation of external auditors: and bank guarantees to back up its obligations for During the ordinary session held February 27, 2018, up to a total US$ 30 million with a 3 year renewable the Directors' Committee unanimously agreed to eval- credit line. Enel green Power Chile is to compensate uate the work performed in 2017 by the Company´s Enel Chile for each guarantee granted. The Directors´ external auditors, Ernst & Young, as reasonable. Committee declared that the transactions examined contributed to the best interest of the Company and 9.- Services to be rendered by external auditors: adjusted in price, terms and conditions to those pre- During the ordinary session held January 30, Febru- vailing in the market at the time of its approval. ary 27, March 29, May 28, July 26, October 30 and November 29 and in the extraordinary session held 12.- 12. Proposed Private Risk Rating agencies: During May 4, all in 2018, the non-recurrent services to be the ordinary session held on February 27, 2018, the rendered by the external auditors were examined. The Directors’ Committee unanimously agreed to propose Committee unanimously agreed to declare that such to the Company’s Board of Directors to suggest Feller services do not compromise the technical compe- Rate Clasificadora de Riesgo Limitada and Fitch Chile tence nor the independent judgement of the respec- Clasificadora de Riesgo Limitada to the shareholders tive external auditing firms, as stated in Section 202 meeting as the local private risk rating agencies and of the Sarbanes Oxley Act, in the last paragraph of Standard & Poors International Rating Services and Article 242 of the Capital Markets Law 18,045 and in Moody´s as the international private risk rating agen- the Directors´ Committee Regulations. cies for fiscal year 2018. During session held on August 31, 2018, the Direc- 13.- Proposed External Auditors: During the ordinary tors' Committee unanimously agreed to declare hav- session held on March 29, 2018, the Directors’ Com- ing examined the appointment of BDO as the external mittee unanimously agreed to propose to the Com- auditor to provide the calculation of inflation adjust- pany’s Board of Directors to propose to the Ordinary ments to the Gasoducto Atacama Chile Branch. Shareholders’ Meeting the following auditing firms, in the order of preference presented, as the external au- 10.- 10. 20-F Form submitted to the SEC (Securities ditor firm of Enel Chile S.A. for 2018: 1-E&Y; 2-BDO; and Exchange Commission of the United States 3-PKF and 4-RSM. The arguments considered rele- of America): During the ordinary session held on vant in proposing E&Y in first place as external audi- April 25, 2018, the Directors' Committee unanimous- tor of the Company are the following: (i) it presented ly declared having examined the financial statements the most competitive proposal based on the technical under IFRS to be included in the 20-F Form to be pre- and economic evaluations performed on the proposals sented to the Securities and Exchange Commission received; (ii) it is highly qualified in terms of available of the United States of America in compliance with resources and experience in the electricity sector; (iii) the rules and requirements of the SEC regarding se- it is one of the four most important external auditing curities issued in the United States of America. firms on the national and international level; (iv) it is the external auditing firm with greatest synergies with Enel 11.- 11. Examination of related party transactions: Chile S.A. because E&Y is the main external auditing During the ordinary session held on May 4, 2018, the firm of Enel SpA, Enel Chile´s controlling shareholder. 35 Management the Directors' Committee, unanimously declared hav- 14.- 14. Approval of external auditor contracts: During ing examined the compensation plan of senior execu- the extraordinary session held May 4, 2018, the Di- tives, managers and employees of the Company. rectors' Committee unanimously agreed to declare having examined and approved the contract to be sub- 17.- Self-evaluation and Company´s internal control re- scribed between Enel Chile S.A. and external auditors view: During the ordinary session held July 26, 2018, Ernst & Young. the Directors' Committee, unanimously declared having examined the internal controls self-evaluation 15.- 15. Analysis of Ethics Channel complaints: During structure and procedures of Enel Chile S.A. the ordinary session held January 30, 2018, the Di- rectors' Committee, unanimously, gave its opinion on 18.- Various other matters: During the ordinary session each one of the complaints received, offering guide- held March 29, 2018, the Chairman of the Directors´ lines on how to proceed with each complaint and con- Committee Mr. Fernán Gazmuri Plaza proceeded to firming what had been already resolved by the Com- report on his meeting with Enel SpA´s Collegio Sinda- mittee. In this regard, the Chairman of the Directors' cale to discuss the Committee´s main concerns and Committee is to summon an extraordinary session if listen to the matters that concern the Collegio. he considers that it is necessary to resolve a certain complaint. During the ordinary session held July 26, 2018, the Directors' Committee unanimously, agreed to recom- During the same session, the Chairman of the Direc- mend the Board of Directors of Enel Chile S.A. to give tors' Committee, Mr. Fernán Gazmuri Plaza, request- consent to EY, the external auditors, to make all docu- ed that a benchmark analysis be performed with other mentation pertinent to the external audit performed by countries in which the Enel Group has operations to EY to the Consolidated Financial Statements of Enel determine the number of complaints that are normal- Chile S.A. available to the Public Company Account- ly received through the Ethics Channel. The Director, ing Oversight Board (PCAOB) of the United States of Mr. Gerardo Jofré, requested a benchmark analysis America and to answer all the questions they have re- with other companies in the country because he con- garding such documentation, as requested by EY. EY sidered the number of complaints to be low. The re- stated that such documentation would not be distrib- quests were approved by the Committee and were uted nor used for any other purpose, without previous transferred to the Internal Audit Officer of the Compa- explicit approval by the Company and confirmed that ny. the PCAOB is obliged by law to maintain confidential- ity of actions and information. During the ordinary session held August 31, 2018, the Directors´ Committee, unanimously, gave its opinion on every complaint received, as indicated in the pre- vious paragraph. In this same session, the Chairper- son of the Directors´ Committee Mr. Fernán Gazmuri Plaza proposed evaluating the convenience of legally prosecuting the individuals who commit a crime. His proposal was approved by the Committee. Enel Chile S.A. Directors’ Committee Expenses The Directors’ Committee did not spend its operational expense budget approved by the Ordinary Shareholders 16.- 16. Examination of the Company´s compensation Meeting held April 25, 2018. plan for senior executives, managers and employ- ees: During the ordinary session held June 21, 2018, 36 Annual Report Enel Chile 2018 37 ManagementOrganizational structure C h a i r m a n H e r m a n C h a d w i c k P i ñ e r a e m e n t g a n M a P lanning and Control Officer Claudia Navarrete Campos (5) People and Organization Officer Liliana Schnaidt Hagedorn (3) R egulation Officer Mónica de Martino S afety Officer Andrés Pinto Bontá General Counsel Domingo Valdés Prieto Communications Officer José Miranda Montecinos Digital Solutions Officer Angel Barrios Romo Procurement Officer Juan José Bonilla Andrino (4) i v e O f fi c e r t i ( 1 ) x e c u t f E o l o P a ll o t h i e C a P g c a r n M a M a e m e n t e l o D e J e s ú s t i o n a l A f o U r u t i t e r d s I n P S u R a t s e l a n A O f fi c e r ( 2 ) , F i n a n c e a n d C o n t r o l r s O f fi c e r f a i z ú a F r e i t y a n d C o m m u n i t y i l i n a b i O f fi c e r i n i t i o n s P e l l e g r e ll a n o O f fi c e r n D u n s m o r e M o r e i r a s O f fi c e r t a l A u d i i l i g n e l e l e C u t v i c r e o A li s I n e S t t e r n a r f f a R d i n o li n n i o B n o d o l e o d a T a rr e o S t e ll a o n g s a ff a o t u e ll e G r a o n t o (1) Was appointed on 10.01.2018 to re pla c e N ic ola C (3) Was appointed on 02.01.2018 to re pla c e A lain R (2) Was appointed on 10.01.2018 to re pla c e R (4) Was appointed on 01.01.2018 to re pla c e A (5) Was appointed on 08.01.2018 to re pla c e B r u C h a i r m a n H e r m a n C h a d w i c k P i ñ e r a e m e n t g a n M a i v e O f fi c e r t i ( 1 ) c u t e x f E o l o P a ll o t h i e a C P , F i n a n c e a n d C o n t r o l ( 2 ) e m e n t e l o D e J e s ú s g c a r n M a M a r s O f fi c e r O f fi c e r P lanning and Control Officer Claudia Navarrete Campos (5) People and Organization Officer Liliana Schnaidt Hagedorn (3) t y a n d C o m m u n i t y R egulation Officer Mónica de Martino S afety Officer Andrés Pinto Bontá t i t s u r d I n P e S f a i t i o n a l A f z ú a F r e i o U r u R e l a t n s A a t S i n a b i t i o n s e ll a n r o e A li s v i c o i l O f fi c e r P e l l e g r i n i s e O f fi c e r n D u n s m o r e M o r e i r a O f fi c e r t i l i g n e l a l A u d i e l e C u t r n a r f f e a I n t R General Counsel Domingo Valdés Prieto Communications Officer José Miranda Montecinos Digital Solutions Officer Angel Barrios Romo Procurement Officer Juan José Bonilla Andrino (4) Senior Executives 1 6 2 7 3 8 4 9 5 10 11 12 13 14 1. CHIEF EXECUTIVE OFFICER Paolo Palloti Electronic Engineer Universidad de Ancona Leadership for energy executive program Harvard Business School Taxpayer ID: 26,102,661-9 Since 10.01.2018 6. REGULATION OFFICER 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 OFFICER Antonella Pellegrini Marketing and Communications Degree European Design Institute Roma – Italy Taxpayer ID: 23,819,804-6 Since 05.31.2017 2. MANAGEMENT, FINANCE & CONTROL OFFICER Marcelo de Jesús Business Administration USCS/ Brazil Master Business Administration (MBA) Fundação Dom Cabral Taxpayer ID 26,562,488-k Since 11.01.2018 3. PEOPLE 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 7. PROCUREMENT OFFICER Juan Jose Bonilla Andrino Industrial Engineer Escuela Superior Ingenieros Industriales Madrid. Universidad Politecnica/ Technische Universitat Berlin (Germany). 01.09.2003. Master Business Administration MBA. ESERP Business School. 07.01.2010. Master Business Administration. 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 OFFICER 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 Claudia Navarrete Campos Civil Engineer Pontificia Universidad Católica de Chile Master’s in Engineering and MBA Pontificia Universidad Católica de Chile Taxpayer ID: 12,494,825-8 Since 08.01.2018 13. DIGITAL SOLUTIONS OFFICER Ángel Barrios Computer Science Engineer Universidad Federico Santa María Master’s in Information Technology Universidad Federico Santa María Taxpayer ID: 10,761,436-2 Since 01.30.2018 14. SERVICES OFFICER Alison Dunsmore Moreira Civil Engineer Universidad de Santiago de Chile Taxpayer ID: 13,848,428-9 Since 05.01.2018 39 Management 40 Annual Report Enel Chile 2018Severance Payments to Managers and Senior Executives The severance payments for years of service of senior ex- ecutives and managers that left the company amounted to Ch$ 391.4 million in 2018. Shareholdings in Enel Chile Based on the shareholder's register, as of December 31, 2018, no senior executive owned shares of the Company. There are no requirements regarding the ownership of company shares by the chief executive officer or senior ex- ecutives. 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. Management of main subsidiaries Enel Generación Chile Valter Moro Mechanical Engineer Universidad Politécnica de Marche Italia Enel Distribución Chile Ramón Francisco Castañeda Ponce Industrial Engineer Pontificia Universidad Católica de Chile Senior Executive and Manager Compensation During 2018, the compensation and benefits received by the chief executive officer and senior executives of the Company amounted to a fixed compensation of Ch$ 2,734 million and Ch$ 707 million in variable compensation and benefits. This amount included managers and senior executives that held their position in the Company at year-end and also those who left the company during the respective year. Benefits for Senior Executives and Managers The company maintains complementary health insurance and catastrophic insurance coverage for senior executives and their accredited dependents. The company also has life insurance coverage for each senior executive. These benefits are granted according to the management level of each employee at the time executed. In 2018, the amount spent on these benefits was Ch$ 58 million, which is included in the compensation received by senior executives. Incentive Plans 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. 41 Management42 Annual Report Enel Chile 201808 People and Organization 43 Letter from the Chairman Enel Chile 7 2 - - 11 20 Enel Chile 191 260 451 Enel Chile 2 5 423 7 1 1 7 1 4 451 Enel Chile 13 164 167 98 9 451 Enel Chile 85 42 63 59 202 451 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, 2018 are the following: Manage- ment and Senior Execu- tives 20 20 1 16 57 Profes- sionals and tech- nicians Employ- ees and others 393 660 156 622 38 87 6 43 Total 451 767 163 681 1,831 174 2,062 Company Enel Chile Enel Generación (1) Enel Green Power (2) Enel Distribución (3) Total general (1) Includes Pehuenche, GasAtacama Chile and GasAtacama Argentina (2) Includes Electrica Panguipulli and Geotérmica del Norte (3) Includes Empresa Eléctrica de Colina and Luz Andes Diversity Diversity of the Chief Executive Office and other depart- ments that report to the CEO or Board of Directors More than 12 years Total Diversity in the organization Gender Female Male Total Nationality Argentine Brazilian Chilean Colombian Costa Rican Spanish Italian Peruvian Venezuelan 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 Enel Chile Total Gender Female Male Total Nationality Brazilian 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 44 6 14 20 Enel Chile 1 15 1 3 20 Enel Chile - 7 7 5 1 Years of Service Less than 3 years Between 3 and 6 years More than 6 and less than 9 years Between 9 and 12 years More than 12 years Total Average fixed salary of women compared to men within the same professional category Categories Senior Management Professional-Level 1 Professional-Level 2 Professional-Level 3 Administrative-Level 1 20 Administrative-Level 2 Administrative-Level 3 % % % % % % % 80% 102% 91% 79% 90% 93% 117% Annual Report Enel Chile 2018Human resources activities Labor relations The company has continued having periodic meetings with the Unions in 2018, strengthening an open, frank and unre- stricted dialogue with employee representatives and main- taining a good work climate. Safety measures and occupational health Safety and occupational health goals are closely linked to Enel Chile´s business. Given the nature of the business, it is exposed to critical risks. The company, in its ongoing improvement process, plays a leadership role at integrat- ing safety and occupational health into every level and any activity developed. The priority of safety and occupational health is key in corporate management due to its strategic importance. Health dissemination and promotion This program aims to educate and train workers carrying out activities that promote quality of life through massive dissemination efforts, such as posters, graphic material and emailed information. Among each month’s topics are: > March: Anti-stress campaign offering practical rec- ommendations to eliminate its causes. > April: Widespread immunization campaign to prevent the seasonal flu. > May: Anti-tobacco campaign offering advice to pre- vent tobacco consumption. > June: Colon and gastric cancer campaign encourag- ing the population to perform an annual preventive exam to detect these illnesses opportunely. > July: Respiratory disease and viral infections preven- tion campaign. > August: Heart care campaign, advise regarding heart care. > September: Prostate and cervical cancer campaign encouraging preventive exams for timely detection of these diseases. > October: Breast cancer prevention campaign promot- ing early detection and self-examination. > November: Healthy Diet Campaign recommending practical nutrition habits to improve the quality of life. > December: Skin Cancer Campaign with advice re- garding ultraviolet radiation and other harmful agents.. 45 People and OrganizationActivities for Enel Chile Group employees Immunization Program Cardiovascular risk program The objective is to care for employees with cardiovascular risks based on the results of preventive exams, through specific fitness programs and nutritional evaluation con- The immunization of Enel Chile´s employees is a preventive measure that focuses on preventing recurrent contagious trols. Workplace gymnastics program The workplace gymnastics program is an innovative exer- cise program that contributes to prevent workplace illness- es, such as, stress, tendinitis, lumbago, carpal tunnel syn- drome, neck and extremity pain., among others.. illnesses. Seasonal Trivalent Influenza Vaccine: Performed during the first quarter of the year to prevent the outbreak that begins In June. Preventive medical exams program The objective is to perform periodic medical evaluations for the early detection of potential Illnesses. This Initiative focus- es on all Company employees and is carried out following a protocol defined according to gender and age. 46 Annual Report Enel Chile 2018Workplace climate management In Enel Chile, feedback between managers and employ- ees creates closer bonds, increases transparency, aligns expectations, and supports employees’ professional devel- opment. Fostering a culture of continuous feedback devel- ops our employees’ talents and leads the way towards the Work climate management and commitment are funda- formation of high performing teams. mental pillars of Enel Chile´s strategy. In 2018, 93% of em- ployees in Chile participated in the workplace climate and During 2018 the program “Recognizing Ourselves”, con- safety survey, which is performed twice a year. The com- tinued seeking to encourage a culture of recognition within pany’s work environment is a priority due to its close rela- the Company. On the one hand, the “Recognizing People tionship with the company’s human resource. Therefore, Program” offers formal instances for workers to recognize we have continued with initiatives related to leadership, their teammates, and on the other hand, the “Recognizing communication, meritocracy and development, conflict Contributions Program” offers the organization a chance to resolution measures, and good work practices to maintain identify initiatives that have added great value to the com- workers’ motivation, satisfaction and commitment. pany. The company continued with the ceremonies to rec- ognize workers and their professional career path, among The Team Building programs are worth highlighting. They other initiatives. are collaborative work experiences that focus on develop- ing team work competencies to strengthen trust and align The Company also continued the program “Agent of objectives to reach common goals. Change” in 2018, with the participation of a team of more than 50 employees from all Group companies. This team Enel Chile has a program that aims towards promoting and developed cultural change initiatives that facilitate the im- reinforcing the important role of managers in creating or- plementation of projects by promoting collaboration and in- ganizational environments that foster workers’ satisfaction novation. Each team had a company manager as a sponsor, and development. “Leader to Coach” is a program that to support and direct their initiatives, linking the technical was designed to encourage leadership and the role of the project to the cultural change initiatives required to imple- manager in our “Open Power” culture from a strategic and ment projects. active standpoint that focuses on the mobilization of teams and the ability to help the learning process of others. It is a comprehensive coaching program, which builds an individ- ual itinerary for each manager, including 360° evaluation, skill training workshops, and building a network of good practices in human resource management. Enel Chile has implemented a set of communication initia- tives under the title “People & Organization” to guarantee ongoing communication with workers on different matters of interest related to human resource management. Activ- ities include updating and adding value to the website, the manual of good practices, and monthly bulletins for manag- ers and workers, among others. There are several programs that 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 present. Diversity As part of the Company’s Diversity and Inclusion Policy, Enel Chile has developed several practices addressing gen- der, age, nationality, and disability. This policy promotes the principles of non-discrimination, equal opportunities, inclusion and work-life balance as fundamental values. The Policy has established three main principles: 1. Reject any and all forms of arbitrary discrimination and ensure and promote diversity, inclusion, and equal op- portunities. 2. Promote and maintain an environment of respect for people’s dignity, honor and identity. 47 People and Organization3. Ensure the highest confidentiality standards regard- ing any information about worker’s private life that the Company could have access to. Work-Life integration measures and flexibility In terms of gender, a balance is sought out in the initial phase of the recruitment and selection processes and a Regarding conciliation and flexibility, in 2018, the remote relationship with universities and professional institutes is working program “Smart Working” has grown to become established to promote the participation and inclusion of one of the most appreciated conciliation measures in the women. company, providing employees with greater flexibility when it comes to the execution of their work. Today, we Moreover, pregnant women have participated in the “Par- have 360 workers in the program, of which 169 choose enting Program”, which seeks to increase the value of ma- to work from home, or wherever they please, one day a ternity and balance out the needs of parenting with profes- week (from Tuesday to Thursday), but must comply with sional development needs. Actions taken by the program the safety and health measures established by current leg- include activities for women’s healthcare and wellbeing, islation. This initiative contributes to the balance between speeches regarding the impact a child may have on fam- work and family life and improves quality of life. ily dynamics, and the creation of trust between pregnant workers and the Company. Additionally, the following initiatives, among others, were carried out to improve worker’s quality of life: In terms of age and taking advantage of the Company´s digital transformation, this year we implemented a new Sports and Culture Extension Program: traditional sports On-Boarding platform. Every employee of Enel may antic- program that takes place within the Company’s facilities, ipate his or her contact and knowledge of the Company offering workshops and the practice of several sports, such by using this platform and therefore facilitating work and as soccer, baby soccer, basketball, volleyball, and other cultural adaptation. This personal and professional support sports. Other extension activities designed for employees allows Enel employees to understand what his or her daily and their families include artistic workshops, expositions, work dynamics will be. family excursions and trips, among others. Regarding nationality, expatriates are assigned a tutor to There are several activities for employees’ children, both assist and support them throughout the length of their recreational and educational. These include the summer stay. It helps recognize, respect, and manage the cultural and winter camps for youngsters between 6 and 15 years differences between different nationalities and stimulate of age that are offered in January and during winter hol- their integration. idays. There are also training workshops held during the summer for employee family members. Regarding disabilities, we have supported the Company´s disabled employees in obtaining their disability creden- Several events were held to foster the balance between tials as established by law, so as to facilitate recognition, work and family life. The Christmas Party is among the respect and management of different employee disabili- most relevant of these events for workers with children ties. We also continued performing structural adjustment and also the “Come to my birthday party” that is celebrat- to Company facilities (casino, bathrooms, ramps, special ed at the corporate stadium for kids age 12 and under. parking, auditorium entrance ways, elevators with braille, etc.). 48 Other important events include the End of the Year party, a corporate event for all employees consisting of a dinner with contests and dancing, and the “Career Trajectory Award”, an annual corporate celebration that recognizes workers who have been with the Company for at least 20 years. Annual Report Enel Chile 2018Filling job openings Enel Chile´s main goal is to hire the best professionals, those who have the competences needed to face the cul- tural changes that arise as a consequence of the Compa- ny’s digital transformation and Open Power. During 2018, there were 56 job openings, 38% were filled with candidates from within the Company, 43% were as- signed to women. Additionally, of all workers hired from outside the Company in 2018 (54% of the total available positions in Enel Chile), 47% were women. Internships and young talent program This project is worth mentioning because it is a new re- cruitment method to hire young professionals from the best universities in the country. They are offered the op- portunity to consolidate their academic knowledge of Enel Chile´s business as interns and become trainied profession- als 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 2018, 45 interns were part of this Enel Chile program of which 42% were women. In Enel Chile, 47% of internships were offered in the Glob- al Digital Solutions department, 33% in Procurement and 20% in Staff and Services. 49 People and OrganizationDiversity and inclusion To encourage diversity in all of its forms, we highlight the increasing participation of women in internal contests, gradually promoting women’s empowerment and leader- For Enel Chile, diverse work teams and an inclusive work ship. It is worth noting that out of the total external admis- environment are essential to create a culture of innova- sions, 47% were women. tion. Diversity grants the possibility of visualizing different points of view and opinions that enrich the work environ- This year we have implemented the On-Boarding program, ment, adding value to the business. in which each worker hired by Enel Chile must be accom- panied by a tutor who offers professional and personal We value differences and transform them into our compet- support, guidance on the day to day dynamics of the com- itive advantage; by stimulating creativity, flexibility, learning pany, and helps creating networks that will allow feeling and respect we are able to improve our processes. This welcomed and in a trustworthy environment. This program also strengthens our position as employers when search- helps new employees adapt rapidly to the company´s cul- ing for talent in the market. ture and allows the Company to be aware of any sugges- tions made by new employees. 50 Annual Report Enel Chile 2018Educational action Training participated in at least one training activity during the year. The total number of training hours reached 18,649. Technical training is our focus due to the importance of updating technical knowledge and acquiring new manage- ment tools. It represented 46% of total training hours. In terms of developing new abilities, several programs were implemented during 2018 to support the Company´s The Company's training program for 2018 was based on digital transformation, such as training employees in the two main pillars: The first was to achieve a balance between use of Agile to disseminate the use of the new framework training activities focused on developing competences and throughout the organization. Regarding Enel´s commitment those focused on technical knowledge to improve job per- to diversity, training courses on inclusion were offered and formance. The second was to define the training program represented 24% of total ability development programs. based on a mechanism that allows, the employee and the manager, together, to detect the employee´s technical and The training activities for employees included e-learning behavioral gaps that need to be closed to improve individ- courses about the Company’s Criminal Risk Prevention ual job productivity, and also to have access to potential Model. future development opportunities. The mechanism is enti- tled Professional Development Itinerary (IDP in its Spanish Finally, as announced to all levels and categories of per- acronym) and has a two-year implementation period. sonnel within the Company, risk prevention, health and the general safety of every individual is particularly relevant In general terms, Enel Chile's training activities during 2018 and has the Company’s permanent attention. reached 90% coverage, which means that 405 employees 51 People and Organization52 Annual Report Enel Chile 201809 Stock Market Transactions 53 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 2018, a total 12,557 million shares were traded on the Santiago Stock Exchange equivalent to Ch$ 867,342 million. The closing price of the stock at year end December 2018 was Ch$ 66.97. Units traded Amount (Ch$) Average price (Ch$) 1,023,628,419 669,599,795 1,101,274,869 2,794,503,083 982,457,260 948,374,974 1,842,309,584 3,773,141,818 882,382,237 982,435,243 924,907,429 2,789,724,909 1,241,977,361 1,148,464,088 808,778,893 3,199,220,342 12,556,590,152 2,017,485,622 1,768,333,500 2,298,723,478 2,784,128,550 8,868,671,150 No transactions 1,998,658,925 1,926,875,561 1,706,851,142 5,632,385,628 76,153,337,020 49,888,296,687 84,355,089,244 210,396,722,951 75,403,345,096 68,170,637,794 123,704,111,285 267,278,094,175 59,325,245,029 65,037,551,129 61,057,763,280 185,420,559,438 77,944,836,075 72,803,438,941 53,498,769,112 204,247,044,128 867,342,420,692 134,273,018,389 130,511,829,158 168,145,280,227 200,182,874,098 633,113,001,872 157,879,907,720 141,425,350,170 109,800,337,389 409,105,595,279 74.39 74.51 76.61 75.29 76.75 71.88 67.15 70.84 67.23 66.20 66.02 66.47 62.76 63.39 66.15 63.84 66.55 73.80 73.15 71.90 79.92 73.04 64.28 Month 2018 January February March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2016 54 Annual Report Enel Chile 2018 Chilean Electronic Exchange During the year a total 1,256 million shares were traded on the Electronic Stock Exchange, amounting to Ch$ 86,114 mil- lion. The closing price of the stock at year end was Ch$ 66.5. Month 2018 January February March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2016 Units traded Amount (Ch$) Average price (Ch$) 32,249,753 115,176,938 55,374,186 202,800,877 91,870,852 84,249,530 172,425,464 348,545,846 87,262,783 168,378,545 130,843,131 386,484,459 91,732,921 158,552,265 67,941,414 318,226,600 1,256,057,782 215,330,287 141,598,208 131,726,440 186,156,335 674,811,270 No transactions 194,419,919 244,564,668 196,586,979 635,571,566 2,447,223,242 8,555,452,190 4,281,546,857 15,284,222,289 7,089,361,795 6,169,449,266 11,656,485,041 24,915,296,102 5,838,073,045 11,096,768,974 8,622,778,715 25,557,620,734 5,806,438,117 10,064,923,101 4,485,798,286 20,357,159,504 86,114,298,629 14,497,362,796 10,496,584,882 9,494,229,275 13,656,791,178 48,144,968,131 15,318,223,758 18,185,923,824 12,673,446,594 46,177,594,176 75.88 74.59 77.48 68.56 77.11 73.28 67.56 71.48 66.90 66.14 65.99 66.13 64.09 62.90 66.02 63.97 67.33 74.13 72.08 73.36 80.25 74.00 64.96 55 Stock Markets Transactions Valparaiso Stock Exchange During 2018, a total 1.3 million shares were traded on the Valparaiso Stock Exchange, amounting to Ch$ 106 million. The closing price of the stock at year end was Ch$ 66.2. Month 2018 January February March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter October (*) November (*) December (*) 4th Quarter (*) Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2016 Units traded Amount (Ch$) Average price (Ch$) 8,060 1,100,639 1,108,699 2,077 2,077 78,957 76,000 76,000 230,957 1,341,733 776 46,219 46,995 No transactions 14,000 120,460 134,460 No transactions 604,500 90,252,398 90,856,898 No transactions 149,544 No transactions 149,544 5,009,822 5,180,160 5,031,200 15,221,182 No transactions No transactions No transactions No transactions 106,227,624 51,038 No transactions No transactions 3,340,958 3,391,996 1,102,500 8,530,418 No transactions 9,632,918 75.00 82.00 81.95 72.00 72.00 63.45 68.16 66.20 65.90 65.77 72.29 79.00 70.53 (*) On October 5, 2018 the CMF revoked the Valparaiso Stock Exchange´s trading license and therefore from that date on there are no transactions. 56 Annual Report Enel Chile 2018 New York Stock Exchange (NYSE) Enel Chile shares began trading on the New York Stock Exchange (NYSE) on April 27, 2016. One ADS (American Depositary 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 2018, 117 million ADSs were traded in the United States amounting to US$ 626 million. The ADS closing price at year end was US$ 4.93. Month 2018 January February March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2016 Units traded Amount (Ch$) Average price (Ch$) 6,163,471 10,434,316 8,762,591 25,360,378 9,844,306 9,984,325 13,863,262 33,691,893 7,043,516 9,620,403 8,224,341 24,888,260 13,220,970 14,265,499 6,046,326 33,532,795 117,473,326 17,848,377 21,754,110 14,780,786 18,089,148 72,472,421 No transactions 29,710,261 35,620,749 18,802,549 84,133,559 37,847,091 64,154,257 54,828,706 156,830,054 62,502,046 57,489,492 71,681,124 191,672,661 36,008,163 47,725,112 39,685,847 123,419,121 59,783,795 65,100,294 29,026,266 153,910,355 625,832,191 89,764,079 120,477,427 84,238,374 101,069,596 395,549,476 170,930,979 197,716,330 90,538,625 459,185,933 6.15 6.16 6.25 6.19 6.36 5.78 5.21 5.78 5.11 4.97 4.82 4.97 4.61 4.62 4.80 4.67 5.03 5.54 5.70 5.59 5.90 5.45 4.79 57 Stock Markets Transactions 58 Annual Report Enel Chile 2018Market information The level of risk appetite this year was lower than 2017 and investors fled from emerging markets. In general, uncer- tainly increased globally due to the possibility that central banks would reduce liquidity and that the United States would increase the interest rate. Market volatility in 2018 was significant as a consequence of the economic conflict between China and the United States, which resulted from imposing reciprocal trade tariffs on imports. The global re- percussions of this conflict have been difficult for emerging markets to overcome. 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: Variation ENELCHILE IPSA 2017 17.4% 34.0% 2018 -7.7% -8.3% Accumulated 2017 - 2018 8.0% 23.7% New York Stock Exchange (NYSE) In Chile, the Selective Stock Price Index (IPSA in its Spanish The following table shows the behavior of Enel Chile’s acronym) changed its name and it´s methodology. In order ADRs listed on the NYSE (ENIC), compared to the Dow to align the index to international standards, the Santiago Jones Industrial index and the Dow Jones Utilities index Stock Exchange signed an alliance with S&P Dow Jones. over the past two years: Variation ENIC Down Jones Industrial Down Jones Utilities 2017 24.8% 25.1% 9.7% 2018 -13.9% -6.0% -1.4% Accumulated 2017 - 2018 8.8% 17.6% 7.5% As of September 24, 2018, S&P Dow Jones performs the calculations of the relevant Chilean stock market indexes. The IPSA changed its name to SPCLXIPSA as of the same date and it is comprised of the 30 shares with the highest trade volume in Chile. This change in methodology did not affect its score, so that, it is comparable to the score of oth- er periods, both before and after the change in methodolo- gy. The index SPCLXIPSA closed in 2018 at 104.43 points, dropping 8.3% when compared to the previous year. During 2017, the price of Enel Chile stock dropped 7.7%, in line with the performance of the local stock market. The accumulated Enel Chile stock price increase for 2017 and 2018 (January 2, 2017 to December 31, 2018) was 8.0%. The IPSA, measured with the same methodology, increased 23.7% during the same period. The price of the ADR´s of Enel Chile fell 13.9% on the New York Stock Ex- change during 2018 and the accumulated increase for 2017 and 2018 was 8.8%. 59 Stock Markets Transactions 60 Annual Report Enel Chile 201810 Dividends 61 Letter from the Chairman Dividend Policy 2019 General aspects Dividend policy In accordance to General Norm 283, Numeral 5, the Com- The Board of Directors intends to distribute an interim divi- pany’s 2019 and 2018 dividends policies are transcribed dend for fiscal year 2018 of up to 15% of net income as of below. September 30, 2019, as recorded in the consolidated finan- cial statements of Enel Chile S.A. at that date, to be paid in The Board of Directors of the Company, in the session held January 2020. on February 28, 2019, approved the following Dividend Policy and the corresponding procedure for the dividend The Board of Directors intends to propose to the Ordinary payments of Enel Chile S.A. for 2019. Shareholders’ Meeting, to be held during the first four months of 2019, to distribute a final dividend equivalent to 65% of net income for fiscal year 2019. The final dividend will be defined by the Ordinary Shareholders Meeting to be held during the first four months of 2020. 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. 62 Annual Report Enel Chile 2018Dividend payment procedure It should be emphasized that the payment method cho- sen by each shareholder will be used by the centralized securities’ depository, DCV Registros S.A., for all dividend payments unless the shareholder communicates in writing The payment of dividends, whether interim or final and to the intention to change it and record a new option. avoid payment mistakes, Enel Chile offers the following payment methods: 1. Deposit in a bank checking account, whose ac- count-holder is the shareholder. Shareholders who have not registered a payment method will be paid by method No 4 indicated above. If checks or cashier’s checks are returned by the post of- fice to DCV Registros S.A., they will remain in custody until 2. Deposit in a bank savings account, whose ac- collected or requested by the shareholder. count-holder is the shareholder. In the case of deposits in bank checking accounts, Enel 3. Mailing of a check or cashier’s check via certified mail Chile S.A. or DCV Registros S.A. may request, for securi- to the address of the shareholder’s residence record- ty reasons that they be verified by the respective bank. If ed in Enel Chile’s Shareholder Register. there is an objection to the account indicated by a share- holder, whether in the prior verification process or for any 4. The collection of a check or cashier’s check from the other reason, the dividend will be paid according to method offices of DCV Registros S.A., as the registrar of Enel No 4 indicated above. Chile’s shares, or from the bank and branches defined for this purpose and informed in the dividend payment Moreover, the company has adopted and will continue to notice published. adopt all the necessary security measures required by the dividend payment process to safeguard the interests of the For this purpose, bank checking, or savings accounts may shareholders and Enel Chile S.A. be located anywhere in the country. 63 DividendsDividend Policy 2018 The Board of Directors’ intends is to distribute an interim payment mistakes, Enel Chile offers the following payment dividend for the fiscal year 2018, of up to 15% of net in- methods: 1. Deposit in a bank checking account, whose come as of September 30, 2018, as shown in the financial account-holder is the shareholder; 2. Deposit in a bank statements of Enel Chile S.A. at that date, and payable in savings account, whose account-holder is the shareholder; January 2019. 3. Mailing of a check or cashier’s check via certified mail to the address of the shareholder’s residence recorded in The Board of Directors intends to propose to the Ordinary Enel Chile’s shareholder register; and 4. The collection of a Shareholders’ Meeting. to be held during the first four check or cashier’s check from the offices of DCV Registros months of 2019, to distribute a final dividend equivalent to S.A., as the registrar of Enel Chile’s shares, or from the 60% of the fiscal year 2018 net income. The final dividend bank and branches defined for this purpose and informed will be determined by the Ordinary Shareholders’ Meeting in the dividend payment notice published. to be held during the first four months of 2019. Compliance with the aforementioned dividend plan is sub- be located anywhere in the country. ject to the actual net profit earned by the Company during the year, and to the results of the Company’s periodic in- It should be emphasized that the payment method chosen come projections or the existence of certain conditions, as by each shareholder will be used by the centralized depos- For this purpose, bank checking or savings accounts may applicable. itory of securities, DCV Registros S.A. for all dividend pay- ments unless the shareholder communicates in writing the Enel Chile S.A. dividend payment procedure: The pay- intention to change it and record a new option. ment of dividends, whether interim or final and to avoid 64 Annual Report Enel Chile 2018Shareholders who have not registered a payment method will be paid by method No 4 indicated above. If checks or cashier’s checks are returned by the post of- fice to DCV Registros S.A., they will remain in its custody until collected or requested by the shareholder. Distributable net income for fiscal year 2018 The distributable net income for fiscal year 2018 is shown below: In the case of deposits in bank checking accounts. Enel Chile S.A. or DCV Registros S.A. may request, for security reasons, that they be verified by the respective bank. If there is an objection to the account indicated by a share- holder, whether in the prior verification process or for any Net Income * other reason, the dividend will be paid according to method Distributable Net Income No 4 indicated above. * Attributable to the controlling shareholder Moreover, the company has adopted and will continue to adopt all the necessary security measures required by the dividend payment process to safeguard the interests of the shareholders and Enel Chile S.A. Net Income * Distributable Net Income 361,710 361,710 Dividends distributed The following chart shows the dividends per share paid over the past few years: Dividend No Type of Dividend Closing date Payment date Pesos per share Fiscal year 1 2 3 4 5 6 Final Interim Final Interim Final Interim 12-31-2015 09-30-2016 12-31-2016 09-30-2017 12-31-2017 09-30-2018 05-24-2016 01-27-2017 05-26-2017 01-26-2018 05-18-2018 01-25-2019 2.09338 0.75884 2.47546 0.75642 2.24134 0.45236 2015 2016 2016 2017 2017 2018 65 Dividends66 Annual Report Enel Chile 201811 Investment and financing policy 67 Letter from the Chairman The Ordinary Shareholders' Meeting held on April 25, 2018, approved the Investment and Financing Policy described below. Investment Policy 2018 Areas of investment I. Enel Chile will invest, according to its bylaws, in the following: to invest in or to create subsidiaries and af- filiate companies whose activity is aligned, related or linked to energy in any form or type, to 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. The maximum investment limit for each investment area is the following: iii. The management of the subsidiaries and related com- I. Investments in the subsidiaries that operate in the elec- tricity sector, those required for the fulfillment of the iv. The level of debt will be a permanently controlled. panies will be supervised. respective corporate purpose of these subsidiaries, limited to a maximum equivalent to 50% of total equi- ty according to the consolidated balance sheet of Enel Chile as of December 31, 2017; 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 2018Financing policy 2018 Maximum level of debt Enel Chile’s maximum level of debt is determined by the ra- tio Total Financial Debt (calculated as other current financial liabilities plus other noncurrent financial liabilities) to Equity equal to or lower than 2.2 times calculated using the fig- ures in the consolidated balance sheet of Enel Chile as of December 31, 2017; 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 Dividend restrictions may only be agreed with creditors if such restrictions were previously approved by the Share- holders’ Meeting (ordinary or extraordinary); Essential Assets for company operations The shares that enable maintaining control of Enel Gener- ación Chile and Enel Distribución Chile are essential assets to the operations of Enel Chile. The Company may either own the majority shareholding of these companies or con- trol them through a shareholders' agreement. Investment and financing policy 69 70 Annual Report Enel Chile 201812 History of the Company 71 Letter from the Chairman History of the Company Enel Chile S.A. was created as part of the corporate reor- ganization process of Enersis S.A that began in April 2015. Enersis S.A. controlled the generation, transmission and distribution business in Chile and four other countries in the region (Argentina, Brazil, Colombia, and Peru). The Ex- traordinary Shareholders’ Meeting of Enersis S.A. held in December 2015 approved the first phase of the reorgani- zation plan entitled “the Division”, which created Enersis Chile as the only vehicle to control the Group’s generation and distribution assets in Chile. Enersis S.A became Ener- sis Americas S.A., the vehicle to control all assets of the businesses in other countries in the region. On September 28, 2016 the Shareholder’s Meeting of Enersis Américas, Endesa Américas, and Chilectra Américas approved the second phase of the plan called “the Merger” 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. On October 4, 2016, the shareholders of Enersis Chile, Endesa Chile and Chilectra agreed to change their names to Enel Chile, Enel Generación Chile and Enel Distribución Chile respectively. The organizational simplification process of the Group has concluded, and Enel Chile participates in the electricity generation business through its subsidiary Enel Generación Chile. This subsidiary has 111 generation units installed throughout the National Electricity System reaching a total aggregate installed capacity of 6,274 MW, placing it among the most important energy companies in the country. Endesa Chile S.A. and Chilectra S.A. went through a simi- lar division process. Enel Chile participates in the distribution business through the subsidiary Enel Distribución Chile, Empresa Electrica de Colina Ltda. and Luz Andes Ltda. Enel Distribución Chile 72 Annual Report Enel Chile 2018operates a concessions area of more than 2,065.4 square In August 2017, a corporate reorganization of Enel Chile kilometers, covering 33 districts in the Metropolitan Re- was proposed. This plan was entitled “Proyecto Elqui” and gion, representing 43% of total sales of distribution compa- involved the merger of Enel Green Power Latin America S.A. nies in the country. Adding the areas covered by Empresa with and into Enel Chile and a Public Tender Offer (PTO) for Electrica de Colina Ltda. and Luz Andes Ltda.the Company 100% of the shares of Enel Generación Chile. In December reaches a total 2,105.4 square kilometers. This makes the 2017, the respective Extraordinary Shareholders’ Meeting Company the largest electricity commercialization compa- approved the terms of the reorganization. ny in Chile. Enel Chile has also grown by adding new applications to Enel Green Power Latin America merged with and into electricity and by developing new ways to manage elec- Enel Chile and Enel Chile´s shareholding in Enel Generacion tricity. The Company was the first in the country to offer its increased to 93.55%. This operation added 1,196 MW of customers intelligent metering technology in 2016. Also, non-conventional renewable energy (NCRE), mainly wind The Elqui project became effective on April 2, 2018 when along with the Municipality of Santiago, the Company has and solar technology. provided the first electric bus to operate in Santiago’s ma- jor avenues and completely free of charge to passengers. In September 2018, Enel Chile announced the creation of Enel Chile seeks to promote the efficient use of the energy a new subsidiary named Enel X Chile SpA, to develop, im- it supplies through its subsidiary Enel Distribución Chile to plement and sell products and services other than an elec- almost 2 million Chileans and also seeks to collaborate with tricity distribution concession and ancillary services, either the environment. regulated or not, but related to energy that involve innova- tion, cutting edge technology, and future trends. As part of the plan to divest non-strategic assets, in June 2016, Enel Chile sold its 20% share in GNL Quintero S.A. Enel Chile is part of the Enel Group, a global energy compa- to Enagás Chile S.p.A for US$ 200 million and in February ny and one of the main integrated operators in the electric- 2017 sold its shareholding in Electrogas S.A. to Aerio Chile ity and natural gas sectors worldwide. It is present in more S.p.A. for US$ 180 million. than 35 countries and in five continents. It supplies energy to nearly 73 million people and has net installed capacity of more than 89 GW. History of the Company 73 74 Annual Report Enel Chile 201813 Investments and financial activities 75 Letter from the Chairman Relevant projects of the Company’s Investment Plan Enel Chile coordinates the global financing strategy of the Group´s companies, including loans among such companies, in addition to the terms and conditions of financings, to op- timize the Group´s debt management. The subsidiaries gen- erally develop their capital expenditure plans independently, financing them with internally generated funds or direct fi- nancing. One of the objectives is to focus on investments that will provide long-term social and economic benefits, such as, the environmental and sustainability improvement projects of Bocamina 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 par- ticular financing structure has been committed and the in- vestments will depend on the market conditions at the time the cash flows are needed. Generation The main investments developed in Chile during 2018 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 optimization projects of Bocamina II power plant (350 MW). The current priorities include the devel- opment of environmentally and socially responsible hydro- electric and non-conventional renewable energy projects to guarantee adequate levels of electricity supply. Relevant Investments in 2018, 2017 and 2016 The capital investments carried out over the last three The investment policy of Enel Chile S.A. is flexible enough years were mainly related to: to adapt to changing circumstances, prioritizing each project based on profitability and strategic alignment. The Compa- 1. The 350 MW Bocamina II power plant optimization ny expects to disburse Ch$ 1,355 billion, on a consolidated project basis from 2019 to 2021 to finance investment projects cur- rently under development, future projects, maintenance of 2. The 150 MW Los Cóndores project existing power plants and distribution networks. The following table shows the expected capital expenditure for the 2019– 2021 period and the amount incurred by our The capital investments just mentioned, per project, were subsidiaries in 2018, 2017 and 2016. financed as follows: 3. Maintenance of existing installed capacity Investment (1) (in billions of Ch$) Chile Total 2019-2021 1,355 1,355 2018 (1) 301 301 2017 (1) 266 266 2016(1) 157 157 > Optimization of Bocamina II: cash from the Compa- ny´s operations. > Los Cóndores: cash from the Company´s operations (1) The Capex figures represent actual disbursements each year, except for future projections. . 76 Annual Report Enel Chile 2018Projects currently underway Chacabuco, Panamericana, Nueva Lampa, Chena, La De- hesa, Pudahuel, Altamirano and Macul high voltage (HV) substations. In medium voltage (MV) the following new 12 kV lines of Enel Distribución began operations: El Roble feeder to the Recoleta substation, the Mall Independen- The most important projects currently in construction are: cia and Bellavista feeders to the San Cristobal substation, > Optimization of Bocamina II Power Plant: Environ- the Bellavista feeder to the San Cristobal substation. The mental improvements (coal field roofing, biomass fil- lines in the downtown Moneda area (Alameda Tunnel Proj- ters, among others) and sustainability initiatives (relo- ect) were also reinforced. Dublé Almeyda feeder to the Santa Elena substation and cation programs, agreements with fishermen, shared value funds, among others). Regarding service quality, Ch$ 15 billion were invested mainly in reinforcing certain feeders, those determined by > Los Cóndores project: 150 MW hydroelectric power our Medium and Low Voltage Quality Plan, which included plant located in the Maule region. Its construction be- the automation of the MV network by adding 220 new re- gan in 2014. mote-control devices to the medium voltage network and performing the necessary network adjustments to, initial- > NCRE Projects: beginning the construction of three ly, install 100 new devices. This allowed increasing from new plants in 2019, one solar, one wind, and one geo- 1,500 to 1,720 the remote-controlled devices operated thermal plant. from the Network Operations Center. Distribution During 2018, Enel Distribución Chile and its subsidiaries (Colina and Luz Andes) invested Ch$ 96 billion in projects primarily related to satisfying natural demand growth, ser- vice quality. and safety and information systems. Further- more, during 2017, a total Ch$ 91 billion were invested, Ch$ 32 billion in maintenance and Ch$ 59 billion to satisfy natu- ral growth in demand. In 2018 a total Ch$ 21 billion were invested in medium voltage and low voltage networks allowing to connect new customers, both residential and large customers and con- nect real estate projects. A total Ch$ 17 billion were invested on increasing Enel Dis- tribución Chile’s network capacity. Worth highlighting, the Additionally, a total Ch$ 4 billion were invested in relocating public network infrastructure, of which the most relevant were the Independencia and Matta-Quilicura corridors. To comply with regulation, Ch$ 4 billion were invested in legal procedures to normalize lines and substations. Investment in anti-theft projects to shield the network amounted to Ch$ 3 billion, including installing Ananda boxes, turtle anti-theft devices, reinforcing lines and other technical measures to more than 16,500 customers. Nearly Ch$ 3 billion were used to finance corrective main- tenance of transmission lines, and substations. A series of maintenance works also focused on high risk facilities. Finally, one of the greatest achievements of the Company in 2018 was the installation of 190,846 smart meters in Santiago representing a Ch$ 12 billion investment, reaching a total 291,731 smart meters in operation in the 32 districts investments in the Cerro Navia, Santa Rosa Sur, San José, of Santiago. 77 Investment and Financing PolicyFinancial condition Liquidity Hedging Policy Exchange rate 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$) or local As of year-end 2018, the subsidiary Enel Generación Chile currencies, and the levels of assets and liabilities denomi- relied on committed credit lines available for US$ 313 million, nated in such currency. The goal is to minimize cash flow committed credit lines for related companies available for exposure to risk related to exchange rate variations. US$ 400 million and also undisbursed commercial credit lines for a maximum US$200 million. These were regis- tered in the Securities Register of the Superintendence of Securities and Insurance (SVS in its Spanish acronym) in 2009 and expire in 2019. Indebtedness Interest Rate The Enel Chile Group interest rate hedging policy seeks to maintain a balanced debt structure to minimize financial ex- penses and reduce income statement volatility. Hedging instruments are purchased based on market conditions, given the Company’s projections and debt structure objec- The consolidated financial debt of Enel Chile reached US$ tives. 3,634 million with a 7-year average life, mainly comprised of the following: At year-end 2018, consolidated fixed debt to total financial debt was 71%. • US$ 308 million in a bridge loan to finance the Elqui Project • US$ 1,000 million in a Yankee Bond that expires on June 12, 2018 Risk Rating • US$ 1,074 million EGP Chile loan consolidated by the The main events related to risk rating in 2018 are summa- Enel Chile Group since April 2018 rized below: • International and local bonds of Enel Generación Chile Net consolidated debt was US$ 3,280 million at year-end the first time in 2017. The Company was rated “AA” on 2018 and the leverage ratio was 2.4 times. the local scale with a stable outlook and was confirmed Feller Rate maintained its rating of Enel Chile granted for on July 14. Fitch Rating confirmed its “AA” local credit rating of Enel Chile S.A. on February 6, 2019 and improved the outlook to positive. On May 30, 2018, Standard & Poor’s maintained Enel Chile S.A. a “BBB+” international credit rating with a stable out- look. This rating is an “investment grade” rating. 78 Annual Report Enel Chile 2018Moody´s began performing an international rating of Enel Chile S.A. on May 30, 2018. This first rating was “Baa2” with a stable outlook. Trademark The Company’s ratings are based on its diversified asset portfolio, strong credit parameters, adequate debt struc- ture and high liquidity. International rating The Company has registered the trademark “Enersis Chile” for services, products, industrial and commercial facilities. Enel SpA has allowed Enel Chile S.A. to use the "Enel" trade- mark free of charge and allows using it in its legal name, logo and in other ways. Enel Chile Corporate S&P Moody’s The trademark "Enel Chile" is registered legally. BBB+ / Stable Baa2/stable Local rating Enel Chile Feller Rate Fitch Ratings Stocks Bonds 1° class. Level 2 1° class. Level 1 AA / Stable AA / Positive Insurance Suppliers, customers, and relevant competitors 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- 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 ness interruption and legal liability. The insurance policies' operate in the electricity sector. renewal process was carried out through an international bid, where the leading insurance companies worldwide Consequently, the relevant suppliers, customers, and com- were invited to participate. The contracts were renewed petitors are the following: on November 1, 2018 and expire October 31, 2019. Metro, Gerdau Aza, Mall Plaza, AES Gener, Colbún Guacol- da Energía, Engie Energía Chile, CGE Group, SAESA Group, Chilquinta Group, GNL, Transelec, CMC Coal Marketing Company Accenture Chile Asesorías y Servicios Limitada, Sodexo Chile S.A. 79 Investment and Financing Policy80 Annual Report Enel Chile 201814 Risk factors 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: Interest rate risk Interest rate fluctuations modify the fair value of assets and li- abilities that accrue interest at fixed rates, as well as the future flows of assets and liabilities based on a variable interest rate. The objective of interest rate risk management is to achieve a debt structure balance that allows minimizing the cost of debt 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: 12-31-2018 % 71% 12-31-2017 % 92% > Comply with rules of good corporate governance. Fixed Interest Rate > Comply strictly with the Group’s norms and proce- dures. Depending on the Group’s estimates and debt structure > Each business and corporate area defines: objectives, hedging operations are performed by purchas- ing derivatives that mitigate these risks. I. The markets in which it can operate, based on having the sufficient knowledge and abilities to ensure effective risk management II. Criteria on counterparties III. Authorized operators Exchange rate risk Exchange rate risks are primarily related to the following transactions: Each business and corporate area establish, for each mar- ket in which they operate, their position regarding risk, in > Debt incurred by the Group’s companies in currencies accordance to their strategy. different from their respective operational cash flow All operations of businesses and corporate areas are per- currency. formed within the limits approved for each case. > Payments in currencies different from their respective operational cash flow currency, such as payments of The businesses, corporate areas, business lines, and com- project-related materials and corporate insurance pol- panies establish the risk management controls necessary icies. to ensure that market transactions are performed accord- > Revenues in the Group’s subsidiaries that are directly ing to the policies, rules, and procedures of Enel Chile. linked to currencies different than their respective op- erational cash flow currency. To mitigate exchange rate risk, the Enel Chile Group seeks to maintain a balance between flows indexed in US dol- lars or local currencies, should there be any, and levels of assets and liabilities in such currency. The objective is to minimize cash flow exposure to exchange rate fluctuations. The instruments currently used to comply with this policy are currency swaps and exchange rate forwards. 82 Annual Report Enel Chile 2018 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, 2018, the liquidity of the Enel Chile case of regulated customers that are subject to long-term Group amounted to Ch$ 245,175 million in cash and cash tender processes, indexation clauses reduce commodity equivalents, and Ch$ 416,862 million in unconditional com- price exposure. mitted long-term credit lines. As of December 31, 2017, the liquidity of the Enel Chile Group amounted to Ch$ 419,456 Taking g the operating conditions faced by the electrici- million in cash and cash equivalents, and Ch$ 199,271 mil- ty generation market in Chile into consideration, such as lion in unconditional committed long-term credit lines. droughts and commodity price volatility in international markets, the Company is constantly evaluating the conve- nience of hedging to mitigate the impact of price fluctua- Credit risk tions on profits. As of December 31, 2018, there were swap operations out- standing for 432 kton of API2 to be settled in 2019, 994 kBbi of Brent oil to be settled in 2019, and 0.2 TBtu of Hen- ry Hub gas to be settled in 2019 (figures are net position hedged). As of December 31, 2017, the company had outstanding operations for 2.3 MMBtu, to be settled in January 2018. These hedging instruments may be modified or could in- clude other commodities depending on constantly chang- ing operating conditions. The Enel Chile Group conducts a detailed credit risk fol- low-up. 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. 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 qualify 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 measured and monitored. 83 Risk FactorsOur electricity distribution company has the power to dis- The calculated Value at Risk represents a potential loss of connect supply due to contract breaches by our customers. value of the portfolio described above in one quarter, with Disconnection is applied according to current regulation, 95% confidence. To this effect, the company studied the which facilitates the credit risk evaluation and control pro- volatility of variables at risk that affect the value of the port- cess, which is also limited. folio, with respect to the Chilean peso, which includes: Financial assets Investments of cash surpluses are made in first class do- > US dollar Libor Rate. > Exchange rates of currencies included in the calcula- tions. mestic and foreign financial institutions, within limits estab- The calculation of Value at Risk is based on the extrapola- lished for each entity. tion of future market value scenarios (one quarter out) of the variables at risk in scenarios based on real observations Banks considered for investments have investment grade for the same period (quarter), for five years. qualification, considering the three major international rating agencies (Moody’s, S&P and Fitch). The Value at Risk for the next quarter, with 95% confi- dence, is calculated as the percentile of the most adverse Investments may be backed by Chilean Treasury bonds 5% of possible quarterly changes. and securities issued by first-class banks, prioritizing the latter as they offer better returns (always within existing Based on the hypotheses stated above, the Value at Risk investment policy guidelines). for the aforementioned positions, one quarter out, is Ch$ 318,820 million. Risk measurement This value represents the potential increase in the debt and derivatives portfolio, and therefore is intrinsically linked, The Enel Chile Group measures the Value at Risk of its debt among other factors, to the value of the portfolio at the end and financial derivatives to monitor the risk taken by the of each quarter. 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. 84 Annual Report Enel Chile 2018Other risk factors and China were involved in an economic conflict that in- volved protectionist measures. The uncertainly caused by this conflict increased global financial market volatility. The business depends heavily on hydrology; therefore droughts, floods, and other weather conditions may affect the Company's operations and profitability. Economic fluctuations in Chile, as well as certain eco- nomic interventionist measures by government au- About 48% of installed generation capacity in 2018 was thorities and also political and financial events or other hydroelectric. Accordingly, extremely dry hydrological con- crisis in any region, could affect the results of opera- ditions could adversely affect the business, results of oper- tions and financial condition of the company, as well as ations and financial condition. Results have been adversely the value of our securities. affected when hydrological conditions in Chile have been below their historical average. All operations of Enel Chile are located in Chile. Accordingly, its revenues are affected by the performance of the Chilean Although our subsidiary Enel Generación Chile has entered economy. If local, regional, or worldwide economic trends into certain agreements with the Chilean government and adversely affect the Chilean economy, the financial con- local irrigators regarding the use of water for hydroelectric dition and results of operations could be adversely affect- generation purposes, during periods of low reservoir water ed. Moreover, insufficient cash flows for our subsidiaries levels, if drought conditions persist or worsen, increased could result in their inability to meet debt obligations and pressure by the Chilean government or third parties to pro- the need to seek waivers to comply with restrictive debt mote new restrictions on water use could arise. covenants and increasing cost for subsequent financings. The Chilean government has exercised in the past, and Operating expenses increase during periods of drought, continues to exercise, a substantial influence over many as thermal plants are used more frequently. Therefore, the aspects of the private sector, which may result in changes company might have to buy electricity at higher spot prices to economic or other policies. A project to develop a new in order to comply with contractual supply obligations. The tax reform in Chile in 2019 is currently being evaluated by cost of these electricity purchases may exceed the con- Congress. To this date, the outcome of this reform is un- tracted electricity sales prices, thus potentially producing certain. losses in those contracts. Future adverse developments in Chile or changes in pol- Droughts directly affect the operation of our thermal plants, icies regarding controls, regulations and taxation may af- including natural gas, fuel oil and coal fueled facilities, in fect the Company’s ability to implement its business plan, the following ways: and therefore adversely affect its results of operations and financial condition. Inflation, devaluation, social instability • Our thermal power plants require water for cooling, and and other political, economic, or diplomatic developments could also reduce profitability. In addition, Chilean financial and securities markets are influenced by economic and market conditions in other countries and may be affected by events in other countries, which could adversely affect the value of its companies. During 2018, the United States extreme droughts may reduce the availability of water and increase transportation costs. As a result, we have had to purchase water for the San Isidro thermal power plant from agricultural areas that are also experiencing water shortages. These water purchases increase our operating costs and may require negotiation with local communities. 85 Risk Factors• Thermal power plants that burn natural gas generate vironmental standards is a violation to such regulation. The emissions of nitric oxide (NO), carbon dioxide (CO2) and carbon monoxide (CO). Power plants that operate with diesel emit NO, sulfur dioxide (SO2), and particulate mat- ter into the atmosphere. Coal-fired plants generate SO2 and NO emissions. Therefore, thermal plants during pe- requirements of the emissions regulation currently in process and the lack of certification of the original monitoring system in place may lead to fines and penalties or legal proceedings for damages. We are also subject to and annual green tax based on the emissions of the previous year. Such taxes may riods of drought generally increase the risk of producing increase in the future and reduce thermal electricity genera- higher level of pollutants, which also decrease our op- tion incentives. erating income due to the payment of so-called “green taxes”. Regulatory framework changes are frequently issued by reg- ulators and administrative authorities and at times may have A full recovery from the drought that has been affecting the a significant adverse effect on the business, results of opera- regions where most of our hydroelectric plants are located tions, and financial condition of the Company. may take an extended period of time, and new drought pe- riods could recur in the future. A prolonged drought could Regulatory authorities may impose fines on subsidiar- exacerbate the risks described above and have an addition- ies due to operational failures or any breach of regu- al adverse effect on the business, results of operations and lations. financial condition of the Company. Governmental regulations may adversely affect our for any breach in regulations, including energy supply fail- Our electricity businesses are subject to regulatory fines businesses. ures. Such fines may be imposed for a maximum of 10,000 Annual Tax Units (“UTA”, in its Spanish acronym), or Ch$ The Company and the tariffs we charge our customers, 5,800 million using the UTA as of December 31, 2018. Our among other aspects of the business, are subject to exten- electricity generation subsidiaries are supervised by local sive regulation and these regulations may adversely affect our regulatory entities and are subject to these fines in cases profitability. For example, governmental authorities might im- where, in the opinion of the regulatory entity, operational pose material rationing policies during droughts or prolonged failures affecting the regular energy supply to the system failures of power facilities, which may adversely affect our are the fault of the Company, including coordination diffi- business, results or operations and financial condition. Our culties that are considered to be the generators responsibil- subsidiaries are also subject to environmental regulation that ity. Regulation establishes a compensation to end custom- requires, among other things, that future projects present en- ers when energy supply is interrupted for a longer period of vironmental impact studies and obtain building permits and time than the standard time allowed due to events or fail- operation authorizations on a local and national level. Such ures affecting transmission facilities. For generators, the approvals may be withheld by authorities and therefore may compensation is calculated as a proportion of the energy take longer than estimated. not supplied, with a minimum value between 20,000 UTA Governmental authorities may also delay the distribution tariff revenue. Fines are also related to breach of regulation. review process, or tariff adjustments may be insufficient to pass through all costs to our customers. Similarly, electricity The Company depends on payments from subsidiaries (Ch$ 11,600 million) and the previous year’s energy sales regulations issued by governmental authorities in Chile may to meet payment obligations. affect the ability of generating companies to collect revenues enough to offset their operating costs. To pay its obligations, the Company relies on cash from divi- Environmental regulation applicable to future and existing distributions from our subsidiaries. The ability of subsidiaries generation capacity has become more restrictive and require to pay dividends, interest payments, loans and other distribu- higher capital investments. Any delay in complying with en- tions is subject to legal constraints, such as dividend restric- dends, loans, interest payments, capital reductions and other 86 Annual Report Enel Chile 2018tions, fiduciary duties and contractual limitations that may be Market conditions at the time projects are initially approved imposed by local authorities. may differ significantly from those that prevail when proj- ects are completed, which in some cases may make them Contractual constraints. Distribution restrictions included in commercially unfeasible. This has been the case in many some credit agreements of our subsidiaries prevent dividend of our former projects, which were initially planned under payments and other distributions to shareholders if the com- completely different market conditions with higher energy pany is not in compliance with certain financial ratios. Gener- prices prevailing in the market and less competition. De- ally, our credit agreements prohibit any type of distribution if viations from these assumptions, including timing estima- there is an outstanding past due commitment. tions and expenditures related to these projects, may lead to cost over-runs and a completion time widely exceeding Operating results of the Company's subsidiaries. The ability our estimates, which in turn may have negative effects on of subsidiaries to pay dividends, amortize loans, or make oth- our business, results of operations and financial condition. er distributions, is limited by their operating results. To the extent that the cash requirements of any subsidiary exceeds We are currently building the Los Cóndores project, which its available cash, the Company will be unable to rely on re- consists of a 150 MW pass-through hydroelectric power sources from such subsidiary. plant. Any of the situations described above could negatively affect The locations where the Company may develop new proj- our business, results of operations and financial condition. ects are also sometimes highly challenging in terms of geo- graphical topography, in some cases in mountain slopes The Company is involved in litigation proceedings with very limited access. These factors may also lead to significant delays and cost overruns. For example, our 41 Currently, the Company is involved in various litigation MW Cerro Pabellon geothermal power plant was built proceedings, which could result in unfavorable verdicts or 4,500 meters above sea level and we are currently building fines. The Company will continue to be subject to future a third unit that will increase its capacity in 33 MW. We litigation proceedings, which could cause considerable ad- have faced challenges due to the altitude, including health verse consequences to the business. issues and others, that can affect the timing of the con- struction and the related investment amounts. Archeolog- The financial condition or results of operations could be ad- ical risks also arise due to the geography of some project versely if positive results are not obtained in lawsuits and locations. proceedings against the Company. For more information on litigation proceedings, see Note 33.3 of the Notes to the Political events or financial or other crises in any re- Consolidated Financial Statements. gion worldwide can have a significant impact in Chile, and consequently may adversely affect operations, as Power plant projects may encounter significant op- well as liquidity. position that may delay their development, increase costs, damage the reputation and potentially result in Chile is vulnerable to external shocks, including financial impairment of goodwill with stakeholders. and political events, which could cause significant econom- ic difficulties and affect growth. If Chile´s economy goes The construction of our power plants may encounter delays into a recession or the growth rate is lower than expected, in obtaining permits or may face shortages and increases electricity demand will possibly decline, and some cus- in the price of equipment, material or labor, and may be tomers may face difficulties in paying their electricity bill, subject to construction delays, strikes, adverse weather possibly increasing the Company´s uncollectible accounts. conditions, natural disasters, civil unrest, accidents, and Either one of these situations could adversely affect results human error. Any of these events could have an adverse of operations and the financial condition of the Company. effect on our results and financial conditions. 87 Risk FactorsFinancial and political events in other parts of the world tions in the future. The acquisition and integration of in- could adversely affect our business. For example, during dependent companies that the Company does not own is 2018, the United States and China were involved in an eco- generally a complex, costly, and time-consuming process nomic conflict related to protectionism. The instability in that requires significant effort and expenses. If the com- the Middle East or in other oil producing regions could also pany seals an acquisition, it could result in the incurrence lead to higher fuel prices worldwide increasing the operat- of substantial debt and adding unknown liabilities, the po- ing costs of our thermal power plants and adversely affect- tential loss of key employees, amortization expenses relat- ing our results of operations and financial condition. ed to tangible assets, and the diversion of management’s The federal government of the United States shut down delay or difficulty encountered in connection with an ac- three times in 2018. The last time, the longest one in quisition or integration of multiple operations could have a its history, began on December 22 and continued for 35 material adverse effect on our business, financial condition attention from other business concerns. In addition, any days, and affected the Securities and Exchange Commis- and results of operations. sion (SEC) among other federal agencies. On January 4, 2019, President Trump announced that the shutdown The business and profitability could be adversely af- could continue for “months or even years” as a result of fected if water rights are denied or if water conces- the controversy regarding the wall to be built at the border sions are granted with limited duration. between Mexico and the United States, which was one of the most important commitments of his presidential cam- The Company owns water rights granted by the Chilean paign. A temporary shutdown or a threat to shutdown the Water Authority (Dirección General de Aguas) for the sup- Government of the United States affecting the operations ply of water from rivers and lakes near production facilities. of the SEC could have an adverse effect on the timing and Under current law, these water rights are (i) unlimited in costs of the transactions involved in the Company´s reor- duration, (ii) absolute and unconditional property rights, ganization process. and (iii) not subject to further challenge. Chilean genera- tion companies must pay an annual license fee for unused Additionally, an international financial crisis and its disrup- water rights. tive effects on the financial industry could negatively affect the Company’s ability to obtain new bank financing on the New hydroelectric facilities are required to obtain water same historical terms and conditions we have obtained to rights, the conditions of which may impact design, timing, this date. or profitability of a project. Political events or financial or other crises could also dimin- In addition, Chilean Congress is analyzing amendments to ish access to Chilean and international capital markets or the Water Code since 2014 to prioritize the use of water by increase the interest rates. Reduced liquidity could, in turn, defining its access as a human right that must be guaran- negatively affect capital expenditures, long-term invest- teed by the State. The amendment establishes that water ments and acquisitions, growth prospects and dividend use for human consumption, domestic subsistence and policy. sanitation will always take precedence in granting and lim- iting the exercise of rights of exploitation. The restrictions We may be unable to enter into convenient acquisitions imposed to preserve waterflows could reduce the water or successfully integrate the businesses we acquire. available to electricity generators. The Company permanently reviews acquisition prospects Any limitation on the Company’s current water rights, that may increase its market share or add value to existing the need for additional water rights, or the current water businesses, although there can be no assurance that we concessions of unlimited duration could have a material will be able to identify and carry out convenient acquisi- adverse effect on hydroelectric development projects and profitability. 88 Annual Report Enel Chile 2018Foreign exchange risks may adversely affect results nonregulated prices and had chosen regulated prices in the and the U.S. dollar value of dividends payable to ADS past, chose the lower unregulated prices. These custom- holders. ers are tendering their energy needs, either directly or with other customers, because of the price advantage, when The Chilean peso has been subject to devaluations and ap- compared to regulated prices, because regulated prices are preciations against the U.S. dollar and may be subject to based on contracts tendered in the past at higher prices. A significant fluctuations in the future. Historically, a signifi- decrease in market prices could reduce the number of reg- cant portion of the Company's consolidated debt has been ulated customers and could cause customers to choose denominated in U.S. dollars. Although a substantial portion another electricity provider, which would reduce the com- of our operating cash flows is linked to the U.S. dollar (es- pany’s customer base and therefore adversely affect the pecially those from the generation business), it has gener- business, results of operations and financial condition. ally been, and will continue to be, exposed to fluctuations of the Chilean peso against the U.S. dollar because of time The electricity business is subject to risks arising from lags and other limitations to adjusting our electricity tariffs natural disasters, catastrophic accidents, and acts of to the dollar, and the potential difficulty of incurring debt in terrorism that could adversely affect our operations, the same currency as the operating cash flow. earnings and cash flow. Because of this exposure, the U.S. dollar value of cash gen- Our primary facilities are power plants and distribution erated by subsidiaries could decrease substantially due to assets in Chile. They may be damaged by earthquakes, peso devaluations against the U.S. dollar. Future volatility floods, fires, and other catastrophic disasters caused by in the exchange rate of the currency in which the Company nature or by humans, such as acts of vandalism, riots, and receives revenues or incurs expenditures may adversely terrorism. A catastrophic event could cause disruptions affect the business, financial condition and results of op- in the business, significant decreases in revenue due to erations. lower demand or significant additional costs not covered by business interruption insurance. There may be lags be- Long-term energy sale contracts are subject to fluc- tween a major accident or catastrophic event and the final tuations in the market prices of certain commodities, reimbursement from insurance policies, which typically energy and other factors. carry a deductible and are subject to per-event maximum In the conventional generation business, the company is amounts. economically exposed to fluctuations in the market prices The distribution business is also affected by severe of certain commodities as a result of the long-term energy weather conditions. Demand may increase significantly sales contracts the company has entered, and the fact that in a short period of time due to extreme temperatures. currently 97% of expected annual generation is sold under contracts with terms of at least five years. As the selling The company is subject to financing risks, such as party, the company has material obligations under long- those associated with funding new projects and cap- term, fixed-price electricity sales contracts. Prices in these ital expenditures, and risks related to refinancing ma- contracts are indexed according to different commodities, turing debt. It is also subject to covenant compliance, exchange rates, inflation, and the market price of electric- all of which could adversely affect liquidity. ity. Adverse changes to these indices would reduce the rates charged under long-term, fixed-price electricity sales As of December 31, 2018, our consolidated interest-bear- contracts, which could adversely affect the business, re- ing debt totaled Ch$ 2,525 billion. sults of operations and financial condition. The Company’s interest-bearing consolidated debt has the Since 2016, in conformity with Chilean law, some cus- following maturity profile: tomers allowed to choose between either regulated or 89 Risk Factors• Ch$ 339 billion in 2019; The company relies on electricity transmission facili- • Ch$ 339 billion from 2020 to 2021; do not provide an adequate transmission service, we ties that it does not own or control. If these facilities may be unable to deliver the power we sell to our final • Ch$ 218 billion from 2022 to 2023; and customers. • Ch$ 1,629 billion thereafter. To deliver energy, the Company depends on transmis- sion systems that are owned and operated by unaffiliat- Some debt agreements are subject to (1) satisfying finan- ed companies. This dependence exposes several risks. If cial covenants, (2) affirmative and negative covenants, (3) transmission is disrupted, or the transmission capacity is events of default and (4) mandatory prepayments for con- inadequate, it may be impossible to sell and deliver elec- tractual breaches, among other provisions. A significant tricity. If a region’s power transmission infrastructure is portion of the Company’s financial indebtedness is subject inadequate, the recovery of costs of sales and profit may to cross-default provisions, which have varying definitions, be insufficient. If restrictive transmission price regulation is criteria, materiality thresholds and applicability with respect imposed, transmission companies upon whom the Com- to subsidiaries, which may give rise to cross defaults. Be- pany relies may not have sufficient incentives to invest in cause of the 2018 Reorganization, in which we incurred the expansion of their transmission infrastructure, which debt primarily to finance the Enel Generación Chile tender could adversely affect operations and financial results. The offer, we also have our own financial indebtedness at the construction of new transmission lines may take longer holding company level, which is also subject to cross de- than in the past, mainly because of new social and environ- fault provisions. mental requirements that add uncertainty to the probability of completing these projects. If the company or its subsidiaries breach any of these contractual provisions, debtholders may demand immedi- In the past, there have been blackout events due to fail- ate repayment, and a significant portion of debt could be- ure of transmission lines that exposed weaknesses in the come due and payable. The Company could be unable to transmission grid, and the need for expansion and techno- refinance its debt or obtain such refinancing in acceptable logical improvements to increase its reliability. Additional terms. In the absence of refinancing, the Company may be failures may occur in the future. forced to dispose of assets in order to cover debt service payments in conditions that would not favor obtaining the Any disruption or failure in transmission facilities could best price for such assets. Furthermore, selling its assets interrupt the business, whichh could adversely affect the quickly enough or at high enough prices to cover the debt results of operations and financial condition. could be impossible. It may also be impossible to raise the necessary funds re- if the company is unable to reach satisfactory collec- quired to finish projects under development or construc- tive bargaining agreements with unionized employees The business could experience adverse consequences tion. Market conditions prevailing at the time these funds or retain key employees. are required, or other unforeseen project costs could com- promise the Company’s ability to finance projects and ex- A large percentage of employees are members of unions penditures. and have collective bargaining agreements that must be re- newed on a regular basis. The business, financial condition The inability to finance new projects or capital expenditures and results of operations could be adversely affected by a to refinance existing debt could adversely affect results of failure to reach agreement with any labor union represent- operation and financial condition. ing such employees or by an agreement with a labor union 90 Annual Report Enel Chile 2018that contains terms deemed unfavorable. Chilean law pro- We cannot give assurance that the price or the liquidity vides legal mechanisms for judicial authorities to impose a of its shares or ADSs will not be negatively affected by collective agreement if the parties are unable to come to events in Latin American markets or the global economy an agreement, which may increase costs beyond what has in general. been budgeted. In addition, we employ many highly-specialized employees, plaints based on foreign legal concepts may have un- Lawsuits against the Company outside Chile or com- and certain actions such as strikes, walk-outs or work stop- favorable outcomes. pages by these employees could adversely affect the busi- ness, results of operations and financial condition, as well as The Company's investments are all located outside of the the company’s reputation. United States. All directors and officers reside outside the The relative illiquidity and volatility of the Chilean se- the United States as well. If any investor were to sue a curities markets and its dependence on economic con- director, officer, or expert in the United States, it may be ditions in Latin America and other parts of the world difficult for that investor to effect service of legal process could adversely affect the price of ordinary stock and within the United States upon these persons, or to enforce United States and most of their assets are located outside ADS. against them, judgments obtained in the United States courts based upon the civil liability provisions of the federal Chilean securities markets are substantially smaller and securities laws of the United States, in United States or less liquid than the major securities markets in the United Chilean courts. In addition, there is doubt as to whether an States or other developed countries. The low liquidity of action could be brought successfully in Chile on the basis the Chilean market may impair the ability of shareholders of liability solely based upon the civil liability provisions of to sell shares, or holders of ADS to sell shares of ordinary the United States federal securities laws. stock withdrawn from the ADS program, into the Chilean market in the amount and at the price they wish to do Interruption or failure of information technology so. Also, the liquidity and the market for shares or ADSs or communications systems, or external attacks or may be affected by countless factors including variations breaches of these systems could have an adverse ef- in exchange and interest rates, the deterioration and vola- fect on operations and results. tility of markets for similar securities, and any changes in liquidity, financial condition, creditworthiness, results, and The company depends on information technology, commu- profitability. nication and processing systems ("IT Systems") to operate its business, the failure of which could adversely affect the In addition, Chilean securities markets may be affected in business, results of operations and financial condition. many ways by economic and market conditions and de- velopments in Latin American countries, other emerging IT systems are becoming more vital worldwide, and the markets and elsewhere in the world. Even though eco- electricity sector is not an exception. In the generation nomic conditions in such countries may differ significantly business, IT systems are essential in monitoring power from economic conditions in Chile, investors’ reactions to plants’ operations, maintaining generation and network developments in any of these other countries may have performance, adequately generating invoices to custom- an adverse effect on the market value and liquidity of se- ers, achieving operational efficiencies and meeting service curities for Chilean issuers. An increase in perceived risks targets and standards. Our distribution subsidiaries could associated to investing in South American countries and also be affected adversely because they rely heavily on IT elsewhere in the world could lessen capital flows to Chile systems to monitor their grids (known in some countries as and adversely affect the Chilean economy in general, and smart grids, due to the higher digitalization of the market), the interests of investors in our shares or ADSs. 91 Risk Factors92 Annual Report Enel Chile 2018billing processes for millions of customers and customer service platforms. Temporary or long-lasting operational failures in any of these IT systems, either intentional or not, could have a material adverse effect on results of opera- tions. Additionally, cyber-attacks can have an adverse ef- fect on the company’s reputation and relationship with the community. Over the past few years, global cyber-attacks on security systems, treasury operations, and IT Systems have intensified worldwide. We are exposed to cyber-at- tacks aimed at damaging our assets through computer networks, cyber-spying involving strategic information that may be beneficial for third parties, and the cyber-theft of proprietary and confidential information, including custom- er information. The company is exposed to several sorts of cyber-attacks, including denial-of-service attacks that may negatively affect user service accessibility, as well as at- tacks that could affect domain name systems, preventing the use of certain useful web pages and applications. 93 Risk Factors94 Annual Report Enel Chile 201815 Reorganization - Elqui Project 95 Letter from the Chairman Elqui project On August 25, 2017, the Board of Directors proposed a cor- porate reorganization (hereafter the 2018 Reorganization) to the shareholders to consolidate the conventional and nonconventional renewable energy businesses in Chile in one sole company, Enel Chile, that would be the only in- vestment vehicle of Enel in Chile. The 2018 Reorganization involved the following transactions: > A merger of Enel Green Power Latin America S.A. (EGPL) with and into Enel Chile (hereafter the Merger). EGPL is a limited liability corporation incorporated in Chile. Before the 2018 Reorganization, EGPL was a member of the Enel Green Power group. Enel Green Power is a multinational company dedicated to electricity generation with renewable sources controlled by Enel. EGPL is a renewable energy generation holding dedicated to electricity generation in Chile through its wholly owned subsidiary Enel Green Power Chile Ltda. (hereafter EGP Chile). December 20, 2017, the Extraordinary Shareholders’ Meeting of Enel Chile approved the corporate reorganiza- tion process (the “Reorganization”) that includes the fol- lowing phases: According to Chilean law, the 2018 Reorganization was a related party transaction subject to the legal requirements established in Title XVI of Chile´s Corporations Law. There- fore, the following additional requirements were satisfied: > A public tender offer in cash of shares by Enel Chile to purchase all ordinary shares (including American Depository Shares or ADS) of Enel Generación Chile, except those already held by Enel Chile (hereafter Public Tender Offer) The Public Tender Offer was subject to the condition that the shareholders offering their shares and ADS accept to use Ch$ 236 of the Ch$ 590 offered for each Enel Generación share and Ch$ 7,080 of the Ch$ 17,700 for each ADS of Enel Generación to subscribe Enel Chile ordinary shares at an Ch$ 82 subscription price per share (or Ch$ 2,460 per ADS of Enel Chile) (hereafter Enel Chile share/ ADS subscription condition); > A capital increase (hereafter Capital Increase), to make enough ordinary shares available to be delivered to those shareholders and ADS holders of Enel Generación selling their shares and ADS and satisfying the condition to the Public Tender Offer to subscribe shares/ADS of Enel Chile.; and > The board member and executives that had an inter- est in the related party transaction declared such in- terest; > Two thirds of the outstanding shares with voting rights approved the related party transaction in the ESM held on December 20,2017; and > The board resolutions that established the related par- ty transactions and the identity of the board members that approved such transactions were disclosed in the OSM held on December 20, 2017. The following requirements were also satisfied: > The board of directors appointed an independent evaluator to inform shareholders on the conditions, effects, and potential impacts of the operation on the Company; 96 Annual Report Enel Chile 2018> The directors´ committee appointed an additional in- dependent evaluator; > The opinions of independent evaluators were publicly disclosed; and > Each board member publicly disclosed its opinion on whether the related party transaction was in the best interest of the company and disclosed any possible interest in the related party transaction. All phases of the 2018 Reorganization were approved by the shareholders of Enel Chile, Enel Generacion and EGPL in their respective extraordinary shareholders´ meetings, all held on December 20, 2017. The Public Tender Offer took place from February 16, 2018, to March 22, 2018; the pre- emptive rights period related to the Capital Increase took place from February 15, 2018 to March 16, 2018 and the 2018 Reorganization, including all its phases, concluded and became effective on April 2, 2018. The materialization of the 2018 Reorganization increased our shareholding in Enel Generacion from 60.0% to 93.5%. We continue to own 99.1% of Enel Distribucion. We cur- rently consolidate the conventional and renewable electric- ity generation business in Chile through Enel Generacion, the Chilean distribution business through Enel Distribución, and the nonconventional renewable electricity generation business in Chile through EGP Chile. After the materializa- tion of the 2018 Reorganization, Enel continues to be our parent company and controlling shareholder with a 61.9% shareholding with voting rights (excluding the shares owned by the company itself that will be cancelled). . 97 98 Annual Report Enel Chile 201816 Industry regulation and electricity system operations 99 Letter from the Chairman General features a) Regulatory framework: Chile’s electricity sector is regulated by the Chilean Elec- tricity Law 20,218, contained in the Ministry of Mining DFL 1 issued in 1982. Its restated text was established by Min- istry of Economy DFL 4, issued in 2006 (the “Electricity Law”) and its respective regulations contained in D.S. 327 issued in 1998. The main authority in the energy industry is the Ministry of Energy that is the government body responsible for pro- posing and delivering comprehensive public policies as a coordinate effort. It exists since February 1, 2010 as an autonomous entity after being part of the Ministry of Min- ing for many years. The National Energy Commission (”CNE”, in its Spanish acronym) that regulates the electricity industry and the Superintendence of Electricity and Fuel (Chilean “SEC”, in its Spanish acronym) that is the supervising body, are also relevant industry authorities. They report to the Ministry of Energy. Other entities that report to this Ministry are: the Chilean Nuclear Energy Commission (“CChEN”, in its Spanish acronym), the Chilean Sustainable Energy Agency. The CNE is the entity in charge of proposing the regulated tariffs, approving the annual transmission expansion plans, and elaborating the indicative plan for the construction of new electricity generation facilities. The SEC inspects and oversees compliance with the law, rules regulations and technical norms applicable to electricity generation, trans- mission and distribution, liquid fuels and gas. 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. 100 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 security; ii) guarantee the efficient operation of the fa- cilities connected to the system; and iii) guarantee open access to all transmission networks. The main activities of this entity include the coordination of electricity market operations, authorization of connections, supplementary services management, implementation of information sys- tems available to the public, and monitor competition and payments, among others. The Chilean electricity sector is physically divided into three main networks, the National Electricity Network (“SEN” in its Spanish acronym) and two smaller isolated networks; Aysén and Magallanes. The SEN is the outcome of the integration of the Central Interconnected System (“SIC” in its Spanish acronym) and the Norte Grande Interconnected System (“SING” in its Spanish acronym) that took place in November 2017. Until then the SIC was the main grid and extended 2,400 km from Taltal in the north to Quellón on the island of Chiloé to the south. The SING covered the northern part of the country, from Arica to Coloso, and ex- tended 700 km. The electricity industry in Chile is divided into three seg- ments or businesses: generation, transmission, and distri- bution. Operations of the related facilities must be inter- connected and in coordination to supply electricity at the minimum cost within the certain safety and quality stan- dards required by electricity industry regulation. Given the structural characteristics of the transmission and distribution segments, they are considered natural monopolies and are therefore subject to special industry regulation, the network is open access, and tariffs are reg- ulated. The Chilean electricity market trades two products (energy and capacity), and additionally several related services. The National Electricity Coordinator performs the calculation of market balances, determines the transfers among gener- ation companies and calculates the hourly marginal cost, which is the price at which energy transfers are carried out. The CNE determines the price of generation capacity. Annual Report Enel Chile 2018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 In Chile, antitrust legislation along with specific regula- 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: tion applicable to the electricity industry define criteria to • Nonregulated customers, are customers whose avoid certain levels of market concentration and abusive connected capacity is greater than 5,000 kW, main- practices. ly industrial and mining companies and customers whose connected capacity ranges between 500 and Companies are allowed to participate in the different indus- 5,000 kW and choose to be non-regulated for a min- try segments (generation. distribution and commercializa- imum of 4 years in either regime. These customers tion/trading) in so far an adequate level of corporate and may freely negotiate their electricity supply prices accounting separation exists. The transmission sector is with generators or distributors. where most restrictions are imposed, mainly due to the na- ture of the activity and the need to guarantee adequate ac- • Distribution companies, that supply regulated and cess to all players. The Electricity Law defines limits to the non-regulated customers. Distribution companies market share that generation companies and distribution supply their regulated customers through public ten- companies may have of the National Transmission seg- ders regulated by the CNE and supply their nonregu- ment and prohibits National Transmission companies from lated customers through bilateral contracts. participating in the generation and distribution segments. 101 Industry Regulation and Electricity Industry Operations• Other Generation companies. The relationship al Transmission, Development Pole Transmission, Zonal between generation companies may be formalized Transmission, Dedicated Transmission and International through bilateral contracts or on the Spot or short- Interconnection Systems. term market: The latter refers to the transactions of energy and capacity between generation companies Transmission installations are open access to any user that resulting from the efficient operation of the market requests it, without discrimination. The compensation for by the National Electricity Coordinator. The surplus existing transmission installations, either National or Zonal, (deficit) of production after supplying customer com- is determined by a tariff setting process performed every mitments are transferred by selling (buying) to (from) four years. This process determines the Annual Transmis- other generators connected to the system. Electricity sion Value comprised of efficient operations and manage- transfers are priced at the marginal cost of the sys- ment costs and an investment value annuity, determined tem. Capacity transfers are carried out at the corre- by a discount rate (minimum 7% after tax) set by the au- sponding node price, as set every semester by the thority every four years based on a study and the useful authority. life of assets. In Chile, capacity payments to each generator depend on The development of the National and Zonal Transmission the calculation, based on current rules, performed annual- systems is determined by a regulated and centralized pro- ly by the National Electricity Coordinator that determines cess carried out by the National Electricity Coordinator, the firm capacity of each power plant. Firm capacity mainly which presents an expansion plan every year that must be depends on availability of the facilities and of the source of approved by the CNE. generation. Non-conventional renewable energies Law 20,257 enacted in April 2008 creates incentives to use Non-Conventional Renewable Energies (NCRE). This rule determined that by 2014, at least 5% of energy com- mercialized by generators must come from renewable sources and must progressively increase 0.5% every year from 2015 until 2024 to reach 10%. This law was modified in 2013 by Law 20,698, entitled the 20/25 law, establish- ing that by 2025, 20% of the electricity matrix must be covered by NCRE sources. For contracts in force up to July 2013, the withdrawals established by the previous law are to be respected. 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- The expansion of both systems is granted through an open tender process that discriminates new installations from enlargement of existing installations. The tenders carried out for new installations grant the winner ownership of the installation to be built. The expansion of existing in- stallations, on the other hand, belongs to the owner of the original installation, who must tender the construction of the required expansion. The remuneration of the new facilities is determined by the outcome of the bid and represents the income for the first 20 years of operations. The remuneration of new facilities is determined by the investment amount resulting from the bid and the applicable operation and maintenance costs. In both cases from year 21 on, the remuneration of such transmission facilities is determined as existing assets. The regulation currently in force determines that trans- mission remuneration is the sum of tariff revenue and the billings of a fee for the use of transmission lines. Such fee is defined every six months by the CNE as an amount of Ch$ per kWh. 102 Annual Report Enel Chile 2018a.3 Distribution segment Cost (VNR in its Spanish acronym) of facilities adjusted to demand, expected life and a 10% real annual discount rate. 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 serve all customers and provide electricity at regulat- ed prices to regulated customers (customers with under 5,000 kW connected capacity, unless falling within the 500 and 5,000 kW category and chose the nonregulated tar- iff). Nonregulated customers may negotiate their electrici- ty 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-discrim- inatory 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 demand changes unexpectedly, the authority has the power to call 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 cal- culated, the Antitrust Court reviews the services consid- ered to be Related Services and subject to price regulation. The Chilean distribution tariff model is a consolidated mod- el that has carried out nine price-settings processes since the enactment of the Electricity Law in 1982. b) Regulatory issues 2018 CNE 2018 Regulatory Plan a short-term tender and also a regulated procedure to re- Pursuant to Exempt Resolution 20 dated January 12, 2018, munerate noncontracted electricity sales. and according to Article 72-19 of the Electricity Law, the CNE published its 2018 Annual technical regulation development The processes for setting distribution tariffs are carried plan. The document establishes the guidelines and priorities out every four years based on a cost analysis to determine of the CNE´s work relative to regulations during 2018 and the the Distribution Value Added (VAD in its Spanish acronym). definition of the procedures applicable to 2017 rules that are The VAD is based on an efficient model company scheme pending. and 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 CNE 2019 Regulatory Plan Pursuant to Exempt Resolution 790 dated December 10, 2018, and according to Article 72-19 of the Electricity Law, the CNE published its 2019 Annual technical regulation de- velopment plan. The document establishes the guidelines and priorities of the CNE´s work on regulations during 2019 and the definition of the procedures applicable to 2018 rules that are pending. 103 Industry Regulation and Electricity Industry OperationsRules published in 2018 • Expert Panel Rules and Regulations. On January 5, 2018, the Ministry of Energy published the new Expert Panel Rules and Regulations in the Official Ga- zette. The purpose of the document is to establish the Expert Panel´s competencies, operational procedures and how it is financed. • National Electricity Coordinator Rules and Reg- ulations. On April 3, 2018, the Ministry of Energy approved the rules and regulations of the National Electricity Independent Coordinator Rules and Regu- lations. This document establishes the organizational structure of the Coordinator, its composition, opera- tions and procedures to function correctly. 2018 Transmission Expansion Plan As part of the 2018 Annual Transmission Planning pro- cess, the CNE called on all interested parties to present their Transmission Expansion Project Proposals by April 30, 2018 as established by provisions of Article 91 of the Electricity Law. Following the stages of the process, on November 14, 2018, the CNE issued the Preliminary Tech- nical Report on the 2018 Transmission Expansion Plan. 2018-2022 Electricity Expansion Plan On April 10, 2018, the Ministry of Energy published its ap- • Electricity Complementary Services, Storage proval of the Long Term 2018-2020 Electricity Expansion and Distribution Safety Rules and Regulations. Plan in the Official Gazette. This is the first electricity plan- On June 12, 2018, the Ministry of Energy approved ning process to be carried out according to the provisions the Electricity Facility Safety Rules and Regulation ap- introduced by Law 20,936. This non-binding plan must be plicable to electricity production, transportation, com- prepared every five years as established by Article 83 of plementary services, storage and distribution. the Electricity Law. 2017 Transmission Expansion Plan On December 29, 2017, the regulatory authority published Exempt Resolution CNE 770, issued the 2017 Preliminary Technical Report on the Transmission Expansion Plan. As established by Law, those who have an interest (duly registered in the citizen participation registry) in the matter presented their observations regarding the Plan. Once the observations presented were evaluated, the CNE approved the Final Technical Report of the 2017 Annual Transmis- sion Expansion Plan. Those interested submitted their discrepancies with the Plan to the Expert Panel in a public hearing. As required by Law, following all stages of the pro- cess, on November 8, 2018, the Ministry of Energy pub- lished the 2017 Expansion Plan, identifying the expansion plan of the National and Zonal Transmission Systems to be tendered during the following twelve months. Law 21,076 - Obligations regarding Removal and Replacement of Electrical Connection and Meter On February 27, 2018, Law 21,076 is published in the Offi- cial Gazette. It modifies the Electricity Law by making the distribution company finance the removal and replacement of the electricity connection and meter when they are not being used due to force majeure. The only Article of this Law and its provisional articles states that connections and meters are part of the distribution network and the owner- ship of such equipment will change as they are replaced when required by the electricity network. 104 Annual Report Enel Chile 2018Tariff studies ruled by Article 187 of the Electricity Law On October 6, 2017, the CNE issued Exempt Resolution CNE 560 that unanimously approves performing a New Tariff Study as defined by Article 187, final part of the Elec- tricity Law, subscribed by the CNE and the electricity distri- bution companies. Within this context, in December 2017, the CNE requests information regarding the distribution companies´ investment plan and costs required to comply with the Technical Norm on Electricity Distribution Service Quality (approved by Exempt Resolution CNE 706 dated December 7, 2017) not covered by the electricity supply tariffs in force (Ministry of Energy Supreme Decree 11T, 2016). On September 28, 2018, the Ministry of Energy published Decree 5T in the Official Gazette. It updates Electricity Ministry Decree 11T and therefore updates electricity dis- tribution tariffs. These new tariffs will be in force until the next tariff setting process. The enactment of this decree represents the date in which the Service Quality Technical Rule of Electricity Distribution referred to in the previous paragraph becomes effective. Law 21,118 – Amendment to Regulatory Framework of Residential Generators On November 17, 2018, Law 21,118 was published in the Official Gazette. It modifies the Electricity Law to encour- age the development of residential generators. The main changes introduced as incentive worth highlighting is the increase in the maximum capacity of residential generation equipment from 100 kW to 300 kW that allow netbilling. c) Tariff reviews and supply processes c.1 Electricity distribution tariff setting process The tariff setting process for the 2016-2020 period con- cluded with the publication of Decree 11T in the Official Gazette on August 4, 2017, that set the distribution tariff formulas effective, retroactively, from November 4, 2016. On September 28, 2018, Ministry of Energy Decree 5T, which replaces Decree 11T, 2016, became effective updating electricity distribution tariffs until the next tariff setting process. c.2 Tariff setting process of electricity distribution related services On July 24, 2018, the Ministry of Energy published Decree 13T in the Official Gazette. This decree sets the prices of Non-Electricity Supply Services related to electricity distri- bution. Such prices are applicable since the Decree was published and are currently in force. c.3 Tariff setting process of zonal transmission The Ministry of Energy published Decree 6T on October 5, 2018. This decree sets the annual value per section of the zonal and dedicated transmission system, tariffs and indexation formulas for customers subject to regulated prices for the 2018-2019 period. 105 Industry Regulation and Electricity Industry Operationsc.4 Transmission tariff setting process 2020-2023 ber 4, 2018, to invalidate the stages of the process car- ried out to that date, referring back to the publication of the preliminary technical report. Therefore, on October 5, 2018, the CNE published Exempt Resolution CNE 673 with Within the context of the Electricity Transmission Tariff a new Preliminary Technical Report that received the ob- setting process for 2020-2023, the Rating of Transmission servations of interested parties registered in the process. System Installations process, the useful life setting process On November 21, 2018, published Exempt Resolution CNE of transmission facilities, and the Technical and Administra- 761 with the Final Technical Report of Rating Transmission tive Terms required to carry out the Valuation of Transmis- System Installations for the 2020-2023 period. According sion System Installations are currently in progress. to the stages of the process, the interested parties could present their discrepancies to the Panel of Experts. Within the context of the analysis and study of discrepan- cies presented as part of the Transmission System Rating Regarding the process of Setting the Useful Life of Trans- process, the Expert Panel requested the CNE additional mission Facilities, on June 5, 2018, the CNE issued Exempt information. As a result of this request, the CNE detected Resolution CNE 412 approving its Final Technical Report. inconsistencies in the way the methodology to rate instal- lations was being applied and consequently adopted an The formalization of the Final Terms is pending the culmi- administrative action to invalidate the rating process. The nation of the Rating Transmission System Installations pro- CNE published Exempt Resolution CNE 613 on Septem- cess referred to previously. 106 Annual Report Enel Chile 2018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 79.3 US$/MWh. The 2015/01 tender began in May 2015 and concluded in July 2016. It awarded five blocks for a total 12.4 TWh/yr (100%) to 84 companies at a weighted average 47.6 US$/ MWh, adding new players to the market. Enel Generación Chile was awarded the most, 5.9 TWh/ yr., representing 47.6% of the total energy awarded in the 2015/01 tender. The supply tender 2017/01 began with the call in January 2017 and concluded in November 2017. It awarded a total 2,200 GWh/yr. (100%) to 5 companies at a weighted aver- age 32.5 US$/MWh. As in the previous process, Enel Generación Chile was awarded the greatest amount, 1.2 TWh/yr., representing 54% of the total energy awarded. 107 108 Annual Report Enel Chile 201817 Electricity generation 109 Letter from the Chairman Electricity Generation Enel Chile and its subsidiaries have an electricity generation park comprised of 130 units spread out on the National Elec- tricity System. Generation Power Plants of Enel Generación Chile, Enel Green Power and subsidiaries are listed below: Installed capacity (MW) (1)(2) Power plant Los Molles Rapel Sauzal Sauzalito Cipreses Isla Abanico El Toro Antuco Ralco Palmucho Taltal Diego de Almagro Huasco TG Bocamina San Isidro San Isidro 2 Quintero Ojos de Agua Pehuenche Curillinque Loma Alta Pangue Canela Canela II Tarapacá TG Tarapacá carbón Atacama Eólica Los Buenos Aires Eólica Talinay Oriente Eólica Talinay Poniente Eólica Taltal Parque Eólico Renaico Parque Eólico Sierra Gorda Este Valle de los Vientos Cerro Pabellón Pilmaiquén Pullinque Carrera Pinto I Etapa Carrera Pinto II Etapa Chañares Lalackama Lalackama 2 Pampa Solar Norte Parque Solar Finis Terrae Solar Diego de Almagro Solar La Silla Total Company Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile GasAtacama Chile GasAtacama Chile Enel Generación Chile GasAtacama Chile Pehuenche Pehuenche Pehuenche GasAtacama Chile GasAtacama Chile GasAtacama Chile GasAtacama Chile GasAtacama Chile GasAtacama Chile Enel Green Power del Sur SpA Parque Eólico Talinay Oriente S.A. Empresa Eléctrica Paguipulli S.A. Parque Eólico Tal Tal S.A. Enel Green Power del Sur SpA Enel Green Power del Sur SpA Parque Eólico Valle de Los Vientos S.A. Geotérmica del Norte S.A. Empresa Eléctrica Paguipulli S.A. Empresa Eléctrica Paguipulli S.A. Enel Green Power del Sur SpA Enel Green Power del Sur SpA Empresa Eléctrica Paguipulli S.A. Empresa Eléctrica Paguipulli S.A. Empresa Eléctrica Paguipulli S.A. Enel Green Power del Sur SpA Enel Green Power del Sur SpA Almeyda Solar SpA Enel Green Power del Sur SpA Technlogy Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Fuel/Natural Gas Fuel/Natural Gas Fuel/Natural Gas Coal Fuel/Natural Gas Fuel/Natural Gas Fuel/Natural Gas Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Wind Wind Fuel/Natural Gas Coal Diesel /Natural Gas Wind Wind Wind Wind Wind Wind Wind Geothermal Hydroelectric Hydroelectric Hidráulica Solar Solar Solar Solar Solar Solar Solar Solar Solar 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 2018 (3) 18 376 77 12 106 70 136 449 319 689 34 240 24 64 478 379 388 257 9 568 89 40 466 18 60 20 158 732 24 90 61 99 88 112 90 41 41 51 20 77 40 60 18 79 160 36 2 7,463 (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) Enel Chile consolidates the installed capacity of Enel Green Power since April 2, 2018. (3) There have been several changes in installed capacity in 2018 compared to 2017 because of maximum capacity test results of the Tarapacá TG, Atacama, Taltal and San Isidro 2 power plants, among others, performed as determined by Technical Regulation of the National Electricity System operator. 110 Annual Report Enel Chile 2018 In 2018, electricity sales of Enel Chile and its subsidiaries reached 24,369 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. Enel Chile and Subsidiaries' installed capacity, generation and energy sales Installed capacity (MW) (1) Enel Generación Chile Enel Green Power Total Generation (2) Enel Generación Chile Enel Green Power Total Sales Sales to end customers Enel Generación Chile Enel Green Power Spot Market sales Total 6,351 - 6,351 2017 17,073 - 17,073 2018 6,274 1,189 7,463 2018 17,373 2,673 20,046 - 742 603 1,174 23,356 24,369 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 National Electricity System began operations as the in- terconnection of the SIC and SING in November 2017 and therefore has been in operation for a full year for the first time. This interconnection allowed both markets to work as one, both operationally and commercially. The SIC, pri- marily hydroelectric installed capacity, represented 75% of rainfall during the fall and winter months and greater during the last few months of the year, which resulted in overall hydrology and hydroelectric generation to be slightly higher than in 2017. NCRE generation was also higher in the SEN during 2018, particularly solar, wind and biomass, allow- ing thermal generation, mainly oil fueled and to a lesser extent natural gas and coal, to decline. Consequently, the system´s generation costs in 2018 were lower than 2017 despite the higher average fuel prices in 2018 when com- pared to 2017, mainly oil, followed by coal and natural gas that increased less. 111 2017 2018 the system´s total electricity generation and the SING the remaining 25%. Hydroelectricity is therefore relevant to 22,615 22,592 the SEN. In 2018, hydrology was similar to 2017, irregular Electricity GenerationTotal electricity demand picked up when compared to pre- ii) Advantages to develop and operate renewable vious years, increasing 4.2% in 2018 compared to 2.4% generation projects, primarily solar and wind where in 2017. Regulated customer demand decreased (near- they present competitive advantages, such as, in the ly 7%) while non-regulated customer demand increased northern Chile regions for solar energy, and significantly (nearly 15%) because a relevant number of previously regulated customers chose to change to the iii) Integration of two markets that are significant in nonregulated customer category and enter into electricity terms of annual sales (roughly 70 TWh/yr. in 2018) but supply contracts with distributors as authorized by regula- different in terms of typology, that is, large regulated tion. Our subsidiary, Enel Generación Chile, has the highest customer consumption in the SIC and nonregulated number of contracts within this segment of customers that and mining customers in the SING. chose to become non-regulated. The commercial and operational challenge related to the commercial flexibility allowing the Company to offer com- integration of the SIC and SING is worth mentioning. The petitive electricity supply contracts to customers in both role of National Electricity Coordinator that programs and systems, using its entire installed capacity (plants in SIC coordinates the efficient and reliable operation of the sys- and SING), which resulted in a favorable performance in The interconnected system has provided Enel Chile greater tem and the responsibility of the companies that partici- 2018 that is expected to continue. pate in the electricity market to maintain their facilities in operation as instructed by the Coordinator is a greater chal- The business reorganization of Enel resulting from the suc- lenge considering the differences in terms of generation, cess of the Elqui Plan, perceived as favorable by the mar- transmission, and electricity consumption of both systems, ket, concluded on April 2, 2018, and transferred its own- having to offer a continuous and stable supply in the SEN ership share in Enel Green Power Chile (EGP Chile) and that is so extensive, from the Atacama region in northern Enel Generación Chile to Enel Chile, is worth highlighting Chile to the Chiloe island in the south. from a commercial perspective. It offered Enel Chile addi- tional growth opportunities in non-conventional renewable The interconnection of the SIC and SING was accom- energy (NCRE) and also allowed coordinating operational plished with a 1,300 km. 500kV transmission line from the and commercial activities among both subsidiaries, which Changos substation located north of Antofagasta to the has had positive effects on both companies´ commercial Polpaico substation located north of Santiago. By the end margin. The development of EGP Chile´s NCRE projects of 2018, the section that extends up to the Pan de Azucar will offer synergies and strengthen Enel Generación Chile´s substation, near Coquimbo was completed. The remain- commercial standing and leadership position in the Chil- ing section from Pan de Azucar to Polpaico is expected ean electricity industry by offering its supply contracts to be completed in 2019. Once the project is finalized the sustainable and competitive capacity back up. The integra- transmission capacity is expected to reach 1,500 MW by tion of the SIC-SING also makes uploading the electricity 2020. The advantages of the National Electricity System produced by the NCRE power plants of EGP Chile in the that have been pointed out are the following: northern region of the country easier. During 2018, nearly 63% of the roughly 3.5 TWh generated by EGP Chile was i) Greater supply reliability and efficiency by allowing a commercialized by Enel Generación Chile, which optimizes bi-directional exchange of electricity between the SIC the portfolio Enel Chile offers its clients. and the SING 2 Source of demand figures is the December 2018 Coordinator Report submitted to the CNE 112 Annual Report Enel Chile 2018Main events that affected operational and commercial performance Regarding production and market risk, we consider the fol- lowing the most relevant factors: i) Hydrology variability, a risk that is reduced by perma- nently analyzing and designing sales contracts that commit to an optimum level of energy sales. ii) Commodity variability risk, mainly the price of fuels The Company reached high standards of commercial and that directly affect Enel´s thermal production costs operational performance in 2018, as in previous years, and and the sales price indexation clause of some of our maintained its solid leadership position in the Chilean elec- supply contracts. tricity industry. The factors worth highlighting that sub- stantiate this position are: iii) Currency variability risk, mainly the price of the United States dollar that has an impact on the revenue of the i) Significant and technologically diversified, sustainable Company. generation capacity, mainly comprised of efficient hy- droelectric and thermal plants, which allow the com- Commodity (mainly coal, natural gas and oil) and currency pany to be very competitive and generate at low aver- (US dollar) variability risk has been managed by the Com- age operating costs. pany, in coordination with the parent company in Italy, us- ing financial instruments that had a positive impact on the ii) Production processes and maintenance and modern- Company´s margin in 2018. ization policies fully comply with technical and envi- ronmental standards established by the applicable regulation allowing the Company´s generation facili- ties to operate with high availability and reliability lev- els. iii) The commercial policy is defined to be consistent with the production characteristics of the Company’s power plants and is permanently adjusted to the in- creasingly competitive and changing market condi- tions. The goal of such policy has been to combine achieving an attractive return with a low exposure to production and market risk. iv) Innovation is a priority for the Company and therefore it is constantly adapting to new market challenges. For example, the reorganization of its generation busi- ness model previously mentioned (subsidiaries EGP Chile and Enel Generación Chile) allows sustaining fu- ture growth and competitiveness in the industry. Hydrologic condition Hydroelectricity represents a significant portion of Enel Chile´s generation mix and has a significant direct impact on the Company´s margin. Therefore, a detailed discussion on the hydrologic condition is relevant to the Company. Hydrology in 2018 was similar to 2017. Rainfall and water availability were irregular when compared to expectations. The first part of 2018 was quite dry, with rainfall below the normal level during the winter months until august. The Niño phenomena in spring brought a higher amount of rain during the last four months of the year partially reversing the dry trend present in previous months and ending the year with a level of hydrology above 2017. Consequently, the first eight months of the year were dry with low water inflow and high average accumulated exceedance probability, roughly 81%. The last four months of the year, the snow melting season, was better, consistent with an “average” exceedance probability of roughly 65%, which led to a significant recovery of reservoir levels, which resulted in a 75% total accumulated exceedance probability, similar, although slightly better than in 2017 (78%). 113 Electricity GenerationGeneration and electricity supply costs nearly 18% higher than the 9,7 TWh generated in 2017. This additional 1.7 TWh generated had a positive impact on the Company´s margin. Enel Chile´s thermal generation decreased 14% from 7.3 TWh in 2017 to 6.3 TWh in 2018, mainly due to less natural gas fueled generation (nearly -0.8 Electricity generation in the SEN, the integrated SIC and TWh). Own NCRE generation (wind, solar, geothermal) SING, in 2018 was 76.5 TWh, which represents a 3.1% reached 2.3 TWh in 2018 as a consequence of the addition growth rate when compared to 2017. The SIC contributed of EGP Chile power plants to Enel Chile´s generation fleet. 75% of total generation and the SING, the remaining 25%. Hydroelectricity represented 30% of total generation (23.2 During 2018, the average price of fuels increased when TWh), thermal electricity accounted for 53.2% (41 TWh), compared to 2017. Coal was once again the predominant primarily coal (a total 38 %, similar amount from plants fuel in electricity generation in the SEN and its average in SIC and SING), followed by natural gas (15%). A total price, according to authority statistics, increased 11.5% 16.5% came from non-conventional renewable sources from an annual average 117 US$/ton in 2017 to roughly (12.5 TWh); solar (7%), wind (5.1%), biomass (4.1%) and 131 US$/ton in 2018. Regarding the price of natural gas, geothermal (0.3%). although the purchase prices of Enel Chile are confiden- tial, according to information provided by the electricity au- The hydrology during 2018, the availability of NCRE during thority, the henry hub that is the price used in the industry the year and the integration of the SIC and SING allowed for this fuel, increased 5.4% on average in 2018 from 2.97 hydroelectricity and NCRE in the SEN to increase (6.4% or US$/MMBTU in 2017 to 3.13 US$/MMBTU in 2018. Liquid 1.4 TWh and 25% or 2.5 TWh, respectively). Thermal elec- fuel as an electricity generation source was used very little tricity, on the other hand, dropped 3.7% (1.6TWh). for electricity generation in the SIC. Average prices of liquid fuels during 2018 increased significantly, diesel 25% and Worth mentioning is the performance of the SIC and SING fuel oil 29%. separately. Energy supplied by the SIC increased 4.7% (from 55 TWh in 2017 to 57.5 TWh in 2018). On the oth- Despite the drop in thermal generation in the SEN, the in- er hand, energy supplied by the SING decreased 1.2% crease in the price of fuel increased the average cost of (from 19.2 TWh to 19 TWh). Hydroelectricity in the SIC thermal generation and therefore increased the average amounted to 23.1 TWh, 6.4% more than in 2017; thermal price of electricity in 2018. The annual average price of electricity generation reached 24.4 TWh, 3.7% less than energy at the Alto Jahuel, Cerro Navia and Polpaico sub- in 2017; NCRE generation amounted to 9.8 TWh, 25.5% stations, nodes (220 kV) that are representative of the con- more than in 2017. Thermal energy supplied by the SING sumption in the metropolitan area, increased 9.2% from reached 16.2 TWh, 4.6% less than in 2017, mainly because 58.3 US$/MMBTU in 2017 to 63.7 US$/MMBTU in 2018. coal generation fell 1.8 TWh. NCRE generation in the SING The average price at the Charrúa substation, where several amounted to 2.8 TWh, less than the NCRE generation in important Enel Generación power plants connected to the the SIC, but 25% more than in 2017. SIC (Concepcion) inject their generation, increased 10.5% (from 55 US$/MMBTU to 61.2 US$/MMBTU). The oppo- Enel Chile generated 20 TWh, excluding the generation of site occurred in the SING, that is, at the Crucero substa- the Nueva Renca power plant related to the maquila agree- tion, representative of the consumption in such area, the ment, which represents 26% of the SEN´s total generation average annual price decreased roughly 4.5% (from 55.2 and 31% of the SIC and is greater than the 17.1 TWh pro- US$/MMBTU to 52.9 US$/MMBTU) due to greater NCRE duced in 2017. The Company´s Hydroelectric generation generation in 2018, replacing thermal generation. reached 11.4 TWh, representing 14.4% of the SEN and is 114 Annual Report Enel Chile 2018The relevance of liquefied natural gas (LNG) Enel Chile entered the LNG market in 2009 through its subsidiary Enel Generación Chile when the GNL Quinte- ro 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. Enel Generación Chile, Metrogas, and Enap, jointly promot- ed the development of the GNL Quintero Terminal, a facil- ity 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. The electricity generated by the Nueva Renca facility that is considered to be Enel Chile´s generation due to the rental agreements of the thermal power plant Nueva Renca with AES Gener and latter with Empresa Eléctrica de Santiago when it changed ownership to AME (Empresa de Merca- do Eléctrico S.A), amounted to 0.5 TWh and along with the electricity generated by San Isidro and Central Quinte- ro (roughly 3.7 TWh) totaled 4.2 TWh generated by Enel Generación with natural gas. This figure represented 5.5% of the SEN´s annual generation, including all generation technologies. In terms of gas commercialization in 2018, Enel Chile through Enel Generación Chile sold five LNG shipments, including the sale of two shipments of LNG to Enel Trade to be delivered in the United Kingdom, continuing with inter- national trading transactions outside Latin America related to the BG contract to relevant international markets. During 2018, the Quintero terminal unloaded 44 shipments of natural gas, a total 3,523 MMm3. Of that amount 1,096 MMm3 were for Enel Generación Chile, to satisfy its com- mercialization and electricity generation requirements. Roughly 692 MMm3 of gas belonging to other partners of the terminal, were sold to other generators connected to the SEN to generate electricity. Also, Enel Generación Chile along with ENAP and Age- sa (company related to Metrogas) reached a new export agreement Enarsa (with Empresa Nacional de Energia Ar- gentina), to export natural gas from the Quintero terminal to Argentina I 2018. Natural gas exported amounted to 90.6 MMm3. Enel Generación Chile contributed with 55% of such amount. In terms of electricity operations, the availability of LNG provided by the long-term supply contract with BG Global Energy Ltd (BG) was key to compensate for the lower level of hydroelectricity available during most of the year due to the dry conditions present during the winter months. Regarding natural gas supply (NG), a new scenario of co- operation and energy integration among private and public authorities of Chile and Argentina allowed reactivating the import of natural gas from Argentina to Chile that was in- terrupted for eleven years. Within this context, Enel Chile, through its subsidiary Enel Generación Chile, signed an interruptible natural gas supply agreement with YPF and Total Austral and obtained the respective export permits in Argentina to begin to supply the San Isidro power plant on December 28, 2018. In 2018, the Company signed a terminal use agreement, TUA, with GNL Mejillones once again 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 Chile the main industrial gas trader in northern Chile. It also made natural gas available for the generation units of Enel Chile (Taltal and GasAtacama) connected to the northern gas pipeline network. The commercialization of LNG in trucks increased 30% in 2018 when compared to 2017. Agreements were signed to deliver LNG to two new cities, in addition to the 5 existing ones, allowing the company to maintain its relevant posi- tion in this market. Enel Generación Chile has continued consolidating its position as a relevant player in the gas market in Chile, innovating and expanding its activities in the commercial- ization of gas and LNG in the local and international market. 115 Electricity Generation In the commercial front The commercial actions carried out by Enel Chile through its subsidiary Enel Generación Chile in 2018 were consistent with its commercial policy. The commercial policy focuses on accomplishing the following goals: maintain industry leadership; adequately manage risk and return under the ex- isting supply and competitive market conditions; implement plans to strengthen customer loyalty, add additional new customers, increase energy sales and increase commercial management efficiency within the company. The main ac- tions carried out are described below. New electricity supply contracts were signed with important nonregulated industrial customers for nearly 580 GWh/yr. with terms that go from 9 to 15 years. Important contracts were also signed with distribution companies to supply their nonregulated customers for 420 GWh/yr. with a 5 to 8-year term. As a consequence of a change in regulation in Chile allowing smaller customers to choose to be either regulated or non- regulated, Enel Generación Chile signed approximately 150 electricity supply contracts in 2018 with smaller nonregulated customers for a total 800 GWh/yr. for a 5-year term. In November 2018, the Company revealed having signed an electricity back up supply contract with the generator Engie to supply electricity to regulated customers. Enel Generación Chile was awarded a contract with an average 1,200 GWh/yr. for a 12-year period to begin supply in 2019. 116 Annual Report Enel Chile 2018Enel Chile projects under construction and optimization Los Cóndores Project The Los Cóndores hydroelectric power plant project is lo- cated in the San Clemente district, in the Maule river basin in Chile´s seventh region. It is a pass-through hydroelectric power plant with installed capacity of approximately 150 MW, which has 2 vertical axle Pelton units that will utilize water from the Maule lagoon reservoir. The plant will be connected to the national electricity 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 2018, the physical progress of the project was 65.6%, the excavation of the tunnel reached 9.4 km, the civil works of the underground powerhouse cavern had concluded, and the installation of electromechanical equip- ment was advanced. Regarding the transmission lines, 90% of the structure was assembled and 42 km of cable have been installed. The total investment accrued as of December 31, 2018 was Ch$ 419,021 million. Central Sauzal Smart Repowering Project The Smart Repowering project of Central Sauzal involves the modernization and repowering of specific systems and equipment of the Central Hidroléctrica Sauzal. This power plant is located in the Libertador General Bernardo O´Higgins and Region has been in operation since 1948. It has three generation units with vertical axis Francis type turbines. The Smart Repowering project consists in the replacement of two of the existing turbines, to increase the efficiency of the units and add an additional 3MW of capacity and an additional 13.7 GWh/yr. generation. The first unit is programmed to be repowered in 2019 and the second unit in 2020. The major contract was signed with Voith and covers the detail engineering, manufactur- ing, installation and start up of the new equipment of both turbines. The design, purchase and manufacturing of the components of the first unit was performed in 2018. The overall progress on the contract by December 2018 was 37%. The accumulated investment by December 2018 was Ch$ 1,206 million. 117 Electricity Generation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. Main progress in 2018 was the following: • A Temporary Approval Certificate was issued on June 15, 2018, one month before projected. The Final Approval Certificate of the south dome was re- ceived on October 17, 2018. 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. Bocamina´s Landfill Closure Plan Enel Generación Chile submitted a new environmental im- The objective of the Plan is to close the landfill of ashes pact study (EIA in its Spanish acronym) in December 2013, applying worldwide best practices. The first stage involves proposing a technical optimization plan. The EIA was ap- areas 1 and 2 and other improvements to installations and proved on March 16, 2015 and obtained the Environmental operations. These works will allow the company to improve Commitment Resolution (RCA in its Spanish acronym) ap- and comply with standards established by the Environmen- provalon April 2, 2015. tal Permit (Resolution 128, 2015). The technical optimization plan involves the following: The project Is structured in two stages: • Dome on the south field: after completing the dome • Stage 1: Closure of areas 1 and 2 and the wing of area on the north field In 2017, the construction of the south 1, a total 48,000 square meters. dome was completed in 2018, reaching a total 270,000 • Stage 2: Closure of area 3 tons coal storage capacity. The construction of the south dome recorded 1.5 million-man hours without The basic design of the plan has concluded, and the major accidents with many works performed at height. works are currently being tendered. 118 Annual Report Enel Chile 2018Campos del Sol I Project The Campos del Sola I project Is located In the Atacama Region, in the northern part of Chile. It is a 381.9 MW solar power plant that is expected to begin commercial opera- tions in 2021. It has received environmental approval and The Renaico II project includes two wind farms developed separately that will be added to the existing installed ca- pacity in Renaico (currently operational). EGP Chile devel- oped the Las Viñas part of the project. The rest was of the project was developed with Pacific Energy (Parque Eólico Puelche) in an abandoned industrial site and will be sold to EGP Chile. The power plant will be owned and operated by the energy supply contracts have been confirmed for the 2021-2045 period. The project offers potential synergies EGP Chile. with the Carrera Pinto solar project that is already opera- tional. The total investment is expected to be roughly US$ 320.9 million. Renaico II Project The Renaico II project is located In the Araucanía Region, in the southern part of Chile. It is a 133 MW wind farm that is expected to begin commercial operations in 2021. It has received environmental approval and offers potential synergies with the Renaico I wind farm (including the sub- station and the transmission line). The total investment is Cerro Pabellón 3 Project The Cerro Pabellón 3 project is located In the Antofagasta Region, in the northern part of Chile. It is a 33 MW geo- thermal power plant build next to the existing 41 MW Cerro Pabellón plant in operations. It has received environmental approval and is expected to begin commercial operations in 2020. The plant offers potential synergies with the existing Cerro Pabellón facility and will use the existing infrastruc- ture (including the substation and the transmission line). The total investment is expected to be roughly US$ 95.8 expected to be roughly US$ 176 million. million. 119 Electricity Generation Enel Chile projects under study Hydroelectric Project Vallecito The project is located in the Maule Region, specifically on the upper basin of the Maule River. It is a pass-through hydroelectric power plant with nearly 55 MW installed capacity. The energy it produces will be supplied to the interconnected system using the line that is currently in construction to evacuate electricity from the Company´s Los Cóndores Hydroelectric power plant. Since 2015, Vallecito has been developed based on sus- tainable criteria, which consists of defining the technical, economic, environmental and social aspects of the project considering high sustainability standards. This project has included community collaboration processes that have con- tributed to a shared vision of the territory, and to identify the activities to be carried out in each of nine communities of the Pehuenche Route. The basic engineering studies were performed 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. Smart Repowering Projects The Company is currently evaluating repowering projects to increase the installed capacity or generation of power plants already in operations by replacing certain parts or improving the power plant´s hydraulic potential. 120 Annual Report Enel Chile 2018Antuco Smart Repowering Taltal Optimization Project The project is to be developed at the Antuco power plant The project is located in the Antofagasta Region. It is an which is in operations and located in the Bio-Bio Region. The project involves replacing a turbine that was installed in 1981 and has an 88% load factor. The new turbine is expected to reach a 94% load factor generating an addi- tional 21 GWh. The investment is expected to amount to US$ 14.48 million and to begin in 2019. The new turbine is expected to begin operations in 2020. Quintero Combined Cycle Project The project is located in the Valparaiso Region. It involves installing a 130 MW steam turbine and its generator that will use the heat generated by the existing gas turbines (257 MW). In August 2018, the project was postponed, and the environmental studies were discontinued. The final investment decision regarding this project will de- pend, among other things, on the commercial opportunities foreseen for the following years, such as, the prices of future tenders to supply the electricity required by the regulated market and/or existing or new nonregulated customers. Central Taltal Battery Energy Storage System On April 13, 2018, Enel Generación Chile submitted the project entitled," BESS Battery Energy Storage System at Central Termoeléctrica Taltal" to the Environmental Impact Agency (SEA in its Spanish acronym). The project involves the installation of a 12 MW battery that would allow offering services to improve security, quality and efficiency to the SEN, such as, energy arbitrage and compensation of fre- quency variations, among others. On May.25, 2018, the environmental authority referred to above issued Exempt Resolution 106/2018 stating that the project is not to be submitted to the Environmental Impact Evaluation System before its construction because it does not involve a material change to Central Taltal. 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 allows converting the existing Taltal open cycle plant into a gas- fired combined-cycle plant. The environmental permit requested through the Environ- mental Impact Declaration submitted to the authority in December 2013 was approved in January 2017. Any decision related to the construction of this project will depend, among other things, on the commercial opportuni- ties envisioned for the following years, such as, the prices of future tenders to supply the electricity required by the regulated market and/or existing or new nonregulated cus- tomers. 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 opportu- nities foreseen in the upcoming years, e.g., prices in fu- ture tenders for supplying the energy requirements of the regulated market and/or negotiations with existing or new unregulated customers. 121 Electricity Generation Central Tarapacá Battery Energy Storage System Enel Generación Chile is analyzing the installation of a bat- tery energy storage system (BESS) to the Tarapacá thermal power plant to provide the ancillary services that the Nation- al Electricity System could require in upcoming years. The project involves the installation of a BESS with about 14 MW of installed capacity and 7 MWh of energy storage capacity, connected to the 11.5 kV bar of the existing 23 MW capacity turbine installed in the power plant. In December 2017, the SEA of the Tarapacá Region issued a resolution waiving the obligation to submit the project to environmental assessment before its construction. Despite 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, particularly, on the evolution of the regulatory framework for the provision and remuneration of the ancillary services. Land reserved for future projects As of December 2018, Enel Generación Chile held approximately 48.3 hectares of immovable property (or land) to develop future natural gas or hydroelectric projects. These assets are located in the Antofagasta Region (6.3 hectares) and the Los Lagos Region (42 hectares). Azabache The project is located in the Antofagasta Region. It is a 63  MW solar power plant that is expected to begin operations during the last quarter of 2021. The lot and the environmental approvals have already been obtained. The project offers significant synergies with the Finis Terrae plant, owned by Enel Green Power and already in operation, and will use the same transmission infrastructure. Azabache and Valle de los Vientos, together will be the first hybrid, industrial scale, power plant in Chile. The total investment is expected to reach US$ 48.96 million of which US$ 0.34 million have been booked as of December 31, 2018. Valle del Sol The project is located in the Antofagasta Region. It is a 116  MW solar power plant that is expected to begin op- erations during the last quarter of 2023. The lot and the environmental approvals have already been obtained. The project offers significant synergies with the Finis Terrae plant, already in operations, owned by Enel Green Power. The total investment is expected to amount to US$ 91.4 million of which US$ 0.79 million have been booked as of December 31, 2018. Finis Terrae Extension The project is located in the Antofagasta Region. It is a 126 MW solar power plant that is expected to begin operations during the last quarter of 2021. The lot and the environ- mental approvals have already been obtained. The proj- ect offers significant synergies with the Finis Terrae plant, owned by Enel Green Power and already in operation, and will use the same transmission infrastructure. The total investment is expected to amount to US$ 94.4 million of which US$ 0.09 million have been booked as of December 31, 2018. 122 Annual Report Enel Chile 2018Sol de Lila The project is located in the Antofagasta Region. It is a 122  MW solar power plant that is expected to begin operations during the last quarter of 2023. The lot and the environmental approvals have already been obtained. This project will possible connect to the Argentine transmis- sion system. The total investment is expected to amount to US$ 97.9 million of which US$ 0.81 million have been booked as of December 31, 2018. Flor del Desierto The project is located in the Antofagasta Region. It is a 50 MW solar power plant that is expected to begin operations during the last quarter of 2023. The lot and the environ- mental approvals have already been obtained. The total investment is expected to amount to US$ 39.4 million of which US$ 0.31 million have been booked as of December 31, 2018. Los Manolos The project is located in the Antofagasta Region. It is a 50 MW solar power plant that is expected to begin operations during the last quarter of 2023. The lot and the environ- mental approvals have already been obtained. The total investment is expected to amount to US$ 62.6 million of which US$ 0.33 million have been booked as of December 31, 2018. 123 Electricity Generation124 Annual Report Enel Chile 201818 Electricity distribution 125 Letter from the Chairman Enel Chile participates in the distribution business through its subsidiary Enel Distribución Chile. Enel Chile’s has a 99.1% direct interest in Enel Distribución Chile. Enel Distribución Chile’s concession is a high-density consumption area. It concentrates a large proportion of the country’s population, businesses parks, industrial parks, small industry and commercial activities. Other electricity distribution Groups that participate in the electrical system are: Chilquinta Energía, CGE Distribución, Sociedad Austral de Electricidad and Empresa Eléctrica de la Frontera. Enel Distribución Chile Enel Distribución Chile is the largest electricity distribution other matters, the terms of the “Costs Study of Electricity company in Chile in terms of electric energy sales. It oper- Distribution-Related Services” as part of the 2016-2020 tar- ates in 33 districts of the Metropolitan Region and its con- iff setting process. The terms identify five new electricity cession area covers more than 2,105 square kilometers, distribution-related services of which the most significant including the areas covered by its subsidiaries Empresa are “Construction and installment of temporary junctions” Eléctrica de Colina Ltda., Luz Andes Ltda. and Empresa de and “Lease of temporary junctions”. Transmissión Chena S.A. The “Final Electricity Distribution-Related Services Cost In 2018, the Company provided electricity to 1,924,984 Study Report” was published on January 20, 2017. As customers, 2.3% more than in 2017. Of total customers, determined by the established process, Enel Distribución 89.6% are residential customers, 7.7% are commercial Chile presented its observations on the Report. customers, 0.7% are industrial customers and 2.0% are other customers. During 2018, Enel Distribución Chile sold Later, the CNE approved the Technical Report entitled 16,782 GWh to its final customers, which represents a “Tariff Formulas of Non-Electricity Supply Services, related 2.1% increase when compared to 2017. to Electricity Distribution” through Exempt Resolution CNE 213 dated April 27, 2017. To the date of this report, the tariff Enel Distribución Chile successfully fulfilled the objectives decree with the new tariffs is pending. Enel Distribución of its losses Plan to keep losses at economically acceptable Chile also presented its observations on this Report, as es- levels. As of December, the TAM metric was 5.0%. tablished by the rules of the process. Distribution tariffs are set every four years based on cost Decree 5T, issued by the Ministry of Energy, became ef- studies conducted by specialized consulting firms. In late fective September 28, 2018, and updates Decree 11T, 2015, the CNE issued R.E. CNE 699 that informs, among 2016 issued by the same Ministry, adjusting electricity dis- tribution tariffs until the next tariff setting process. 126 Annual Report Enel Chile 2018Infrastructure and network projects Smart Meters Project Enel X Chile Enel X was created as part of the Company´s “Open Pow- er” strategy, to open electricity to new uses, technologies, associations, services and more people. Its businesses are The Enel group has more than 40 million smart meters in segmented in 4 categories: e-City, e-Home, e-Industries y operation in the world, especially in Italy and Spain. This e-Mobility. smart meter solution involves new meters, data concen- trators, telecommunications infrastructure and centralized systems that allow remote and automated (reading, discon- nections, reconnections, and tariff changes) management e-City of meters through a two-way information flow. It also al- It seeks to transform cities to make access to services lows customers to install solar panels and inject their sur- easier for individuals by developing technological solutions plus energy into the distribution network without the need related to lighting, safety and energy efficiency with of any additional equipment. different public bodies. . The Smart Meter Massification Project continued during 2018 and installed a total 190,846 meters and 1,900 con- centrators within 32 districts of the concession area reach- e-Home ing a total accumulated 291,731 meters, 2,300 concentra- It seeks to transform homes by implementing innovative tors and also 1,600 safety inspections. The complaints rate and efficient solutions to increase safety and efficiency of the more than 29,000 quality control inspections was focusing on the specific needs of homes and families such 0.53%. as, air conditioning, water heating, led lighting, among others. It´s goal is also to stand out in the B2C market for its high installation and maintenance standards. 127 Electricity Distributione-Industries It seeks to transform companies through comprehensive projects that include expert services, and the implementa- tion and control of all services within the scope of B2B. It focuses on technologies related to energy efficiency, dis- tributed generation and electricity projects, and demand management, among others. It also intends to differentiate each company. e-Mobility e-Home – Business to Customers Projects Peñalolen FIE Project This initiative is part of the “Energetic District” Program of the Ministry of Energy. This project was made possible by the Strategic Investment Fund, FIE (in its Spanish ac- ronym), which is a public policy tool to finance proposals focused on improving productivity, diversifying la produc- tive base and increase the aggregate value of the economy. The funds were managed by the Chilean Energy Efficiency It seeks to transform the means of transportation by offer- Agency, AChEE (in its Spanish acronym) on a competitive ing products and services that promote the development basis. of electric mobility and supplement such services with private and urban charging infrastructure and new technol- The plan involves the installation of photovoltaic panels in ogies. It also intends to promote electric public transpor- 6 schools in Peñalolen. In one school, traditional lighting tation offering comprehensive solutions to transportation was replaced with led lighting and therefore increased the operators. school´s efficiency. 128 Annual Report Enel Chile 2018School Technology Escuela Tobalaba Photovoltaic panels Centro Educación Valle Hermoso Colegio Likankura de Peñalolén Escuela E-180 Matilde Huici Photovoltaic panels Photovoltaic panels Photovoltaic panels Escuela Juan Bautista Pastén Photovoltaic panels + led lighting Escuela Unión Nacional Árabe Photovoltaic panels Installed Capacity (kWp) 20 20 20 15 20 20 Replacing Wood Heaters with Air Conditioning We have performed 9 replacement projects in industries with significant gas and particle emissions. A total 2,545 wood heaters have been removed in the residential sec- tor to compensate industrial emissions. The contribution to local decontamination is considerable: over 53 tons of particulate matter a year has been removed from the en- vironment Air Conditioning Systems We offer high-end air conditioning solutions to residential customers. It is leading brand, premium equipment that is 100% efficient (Category A) and uses only R-410 ecologi- cal coolant. It offers customers different comfort and ef- ficiency modes, such as, Hot-Cold, Far-Infrared heat, ON- OFF, Inverter with Wi-Fi control, consumption analysis and The pilot project to replace wood heaters with air condi- Wind-free mode with 21,000 micropores that make the air tioning, opens electricity to new uses and contributes to flow almost imperceptible. the decontamination of cities and has consolidated a suc- cessful business, that adds value to the company, to our During 2018, we sold more than 15,000 devices to our cus- customers and the environment. tomers. 129 Electricity Distributione-Industries – Business to Business Projects We have been successful at managing the opportunities and energy needs of our customers through our e-indus- tries business by offering products and services that opti- mize the use and cost of electricity. Hybrid Energy Efficiency Solution –Cumbres Terrafirme Condominium The first condominium of homes with these three tech- nologies, opening the entire real estate market (buildings and condominiums) to these technologies. It is an indi- vidual home solution that includes a vertical heat pump with a hot water tank to cover sanitary consumption, a 1.02  kW photovoltaic installation and automation devices for lighting, security, and sensors. Smart Buildings and Energy Efficiency Luis Valenzuela Building (CIDEPA) This project integrates three electricity generation tech- nologies into a hybrid residential solution that includes a solar photovoltaic system with a solar thermal system con- nected to an aerodynamic heat pump. Each apartment will also have an automated system and the thermal plant is monitored online. Smart and efficient buildings, tech city friendly. SURA-SENCORP Project New Córdova Building This is a façade (138 MW) and rooftop (58.8) On Grid self-consumption solar project. This solar system is moni- tored online using inverters and connected to the Building Management System of the building. 130 Annual Report Enel Chile 2018PEPSICO solar photovoltaic Project The technology of these electro terminals includes unique intelligent load management controls that will be capable of effectively managing the electricity supply of buses in real time therefore optimizing electricity consumption. This is a 210.6 MW rooftop solar photovoltaic solution with multi string inverters to optimize its generation that amounts to approximately 364.6 MWh for self-consumption of the Pepsico plant located in Cerrrillos, Metropolitan Region. Electric Mobility Public Transportation Charging Intraestructure The modernization of the infrastructure is vital and there- fore Enel X built the first electro terminal in the Peñalolen district. It has 63 chargers for buses and solar parking lots. They are structures designed to handle photovoltaic pan- els that generate electricity using renewable sources sup- plying buses and the consumption of the electro terminal itself. Also, 37 additional chargers are available at another electro terminal located in Maipú. Public Transportation Charging Intraestructure for Private Transportation Users During 2018, a total 72 residential chargers were commer- cialized of which 50 were infrastructure and installation projects. These wallboxes are the most convenient and reliable solution for customers and has strengthened the relationship with our partners: BMW, Nissan, Renault, and Mitsubishi by helping them offer their customers a better electro mobile experience. The Company implemented a public charger project with BMW Chile to extend the public charging network by in- stalling 9 new public chargers in Santiago, Viña del Mar and Concepción. 131 Electricity Distribution132 Annual Report Enel Chile 201819 Environment and Sustainability 133 Letter from the Chairman Environmental Management Highlights Environmental protection is a major pillar in Enel´s strategy. Hence, they have directed their efforts towards constant improvement by searching for potential efficiencies in their processes and products, incorporating cutting-edge tech- nology. Their purpose is not just to comply with norms and reduce environmental externalities, but also to take care of their environment. Implementation of the Integrated Model for Environmental Measurements (MIMA) Enel's policy and internal process implementation does not each power plant’s environmental commitments, which is just focus on reducing environmental risks; they also seek being jointly developed by diverse areas of the company, to consolidate the company’s leadership position in the prioritizing the most relevant environmental commitments. This is an internal mechanism that ensures compliance of energy market. Human resource and environmental pro- tection, the struggle against climate change and sustain- able economic growth are all strategic factors considered during the planification, implementation and development of Enel Chile’s activities. Waste Management One of the company’s goals by 2018 was to “Reduce the annual generation of waste by 5%, quantified in its final dis- Among the environmental processes and policies imple- position.” mented during 2018, we highlight: The following actions were taken to achieve this goal: • Enel Green Power SpA’s Quality, Safety and Environ- mental Policy, September 4, 2017. • Pilot Recycling Stations: Installed recycling stations in the Pehuenche and Rapel power plants. • Policy 292, 1st Version: “Risk Evaluation and Environ- mental Impact/Aspect Methodology”, October 23, 2017 • Waste Recovery: During 2018, a contract was signed to sell non-hazardous waste from the Maule, Laja and Biobio hydroelectric power plants. • Organizational Procedure 545 Version: “Waste Man- agement”, February 9, 2018. • Policy 106 Version 3: “Environmental incident classifi- cation, communication, analysis, and report”, July 10, 2018 • Waste Baseline: During 2018, the waste quantification registry was updated (Hazardous - Non-Hazardous and Domestic) in renewable power plants. • Power plants waste management enforcement and ap- propriate waste segregation practices. • Stop Works Policy, which, during 2018, expanded their scope of action from health and safety to archaeology and environment. • "International Recycling Day" diffusion and commemora- tion with speeches and video transmissions. During 2018, several actions were taken to safeguard and optimize environmental management, some of which are • Reusable bags were given to company collaborators to encourage their use and reduce the use of plastic bags. highlighted in the following section. 134 Annual Report Enel Chile 2018Environmental Disputes and Sanctioning Process • The Resolution that approves the "Compliance Pro- gram" was published December 31, 2018. Therefore, during 2019 the company will work towards fulfilling this Program. In August 2018, the SMA presented two charges against the company associated to the Renaico wind farm and the Cerro Pabellón geothermal power plant. Cerro Pabellón Geothermal Power Plant: Renaico Wind Farm: • On August 6, 2018, the SMA issued Exempt Resolu- tion N°1/ Rol D-076-2018, filing charges against Enel Green Power South SpA. • In September 2018, the company submitted a "Com- pliance Program" to the SMA, in response to the charges filed against the Renaico Project. • In November 2018, the SMA gave the company feed- back regarding the "Compliance Program" presented. • In December 2018, Enel answers the feedback re- ceived from authorities regarding the "Compliance Program". • On August 9, 2018, the SMA issued Exempt Resolu- tion N°1/ Rol A-002-2018, filing charges against the North Geothermal Plant S.A. • On September 2018, the company presented a "Com- pliance Program" to the SMA, in response to the charges filed in August. • On December 13, 2018, the SMA issued a resolution rejecting the "Compliance Program" proposed by Enel. • On December 17, 2018, Enel presented an appeal for reversal, which was received by the authority. The company will be presenting its defense during 2019. 135 Environment and SustainabilityWind and Photovoltaic (Solar) Plant Monitoring To comply with Environmental Commitment Resolutions • Improvement of the Drinking Water System: Execu- tion of projects to improve the drinking water system for the Ayin Mapu indigenous community, relocated because of the construction of the Ralco Power Plant. The project benefits 85 indigenous families. (RCA in its Spanish acronym) and mitigate potential envi- • Alto Bíobío Housing Program: Establishment of an ronmental impact, Enel Chile monitors the environment. Environment monitoring is performed with the purpose of getting to know the state of an environmental aspect that agreement with the Alto Bíobío Municipality and con- struction of homes for indigenous families relocated because of the construction of the Ralco Power Plant. The project benefits 54 Indigenous families in the dis- allows us to know its specific condition. trict. During 2018, Bird Wildlife was monitored (Affected Avifau- na Monitoring Program- Avifauna Monitoring, Bird Census- monitoring the bandurria patterns) Flora was monitored; Fauna was monitored (Contingency plan for wildlife- mon- itoring reptiles); Archeological Sites were monitored (Ar- chaeological Follow-up Plan); Vegetation propagation was monitored; Archaeological monitoring at Wind Farms; wind farm noise was monitored and mitigated. Compliance with Environmental Commitment Resolutions (RCA) Well Water and Oil Recovery System In the Sauzal, Sauzalito, Rapel, Cipreses and Isla hydroelec- tric power plants, an oil skimmer system to recover oil from wells are in place, extracting oil that has drained from the units to the drainage ditch. This initiative seeks to minimize the potential impact of contamination to waters under the dam produced by oil leakages and filtrations. Round tables and studies During 2018, the following environmental management ef- The actions taken during 2018 related to the Ralco Power forts are highlighted: Plant to comply with the RCA of renewable power plants are highlighted below: • Completion of the "Environmental Flow Pilot Project" study in the Maule and Laja rivers. • Reforestation agreement with Universidad de Con- cepción: 422 reforested hectares in the Lonquimay • Incorporation of the RECOGE plan from MMA to the area. • Restorations: Completion of the restauration efforts of landfill and deposit sites used during the construc- tion of Ralco Power Plant. multidisciplinary round table for the Huemul Conser- vation Program in the VIII Region. 136 Annual Report Enel Chile 2018Compliance with the Thermoelectric Power Plant Emissions Standard In terms of complying with the demands established by the Green Taxes In April 2018, the thermoelectric power plants reported their emissions according to the emissions quantification method presented and authorized by the SMA to determine green tax payments. A total tax of Ch$ 16,437,440,924 was paid, which considers the atmospheric emissions from the Enel Generación Chile thermal park and its D.S. 13/11 Thermoelectric Power Plant Emissions Standard, GasAtacama S.A. subsidiary. during 2018, Enel Generación Chile's thermal park and its GasAtacama subsidiary carried out several improvements to the Continuous Emissions Monitoring System (CEMS), such as changing the data acquisition systems (DAHS) of the thermal plants and the installation of CEMS to monitor thermal energy flow, installing flow CEMS in the Taltal, San Isidro and Quintero thermoelectric power plants. During 2018, the Environmental Superintendence (SMA) published the verification reports of compliance with the established limits according to the decree, based on the emissions figures in the quarterly reports that each power plant uploaded to the "Thermoelectric Power Plant" website of such Superintendence. The SMA verified that the emis- sions from all the company's electric generation units (UGE) complied with the established limit. New Projects On February 14, 2018, the Environmental Impact Declara- tion (DIA in its Spanish acronym) "San Isidro Power Plant Water Supply and Liquid Waste Disposition Optimization System" was approved by the Antofagasta Region Assess- ment Committee, through the Exempt Resolution N° 016. On May 25, 2018, the Environmental Assessment Service (SEA) of the Antofagasta Region issued Exempt Resolu- tion 0106, indicating that the "Bess Energy Storage System in the Taltal Thermoelectric Power Plant" project is not re- quired to comply with the SEIA in order to begin construc- tion. 137 Environment and Sustainability Sustainability Sustainable business model Enel Chile´s sustainable business model seeks to focus the business itself on sustainability. The Company has played a leading role in the country´s energy transition by having more than 1 GW of non-con- ventional renewable installed capacity; by promoting elec- tric mobility; bringing in 100 electric buses through a pri- vate-public partnership; by promoting electric heating; and by installing almost 300,000 intelligent meters for custom- ers to manage their consumption. This is how Enel Chile intends to have an active role in the sustainable development of Chile. The 2018 sustainability plan focuses on 4 strategic guidelines: • Innovation and asset optimization • Growth in low carbon products and services • Inclusion of local communities • Inclusion of the people we work with In 2018, the milestones of each one of these guidelines involve the investment in digitalization, adding flexibility to the Company´s generation mix, prioritizing renewables and also installing the second dome on the coal field of the Bocamina thermal plant, which today is recognized as a power plant with high environmental standards in the region. Regarding growth in low carbon services and technology, the leadership position of Enel Green Power as the number 1 renewable operator with 1 GW installed capacity is worth highlighting. Enel X invests in decontaminating cities, play- ing a leadership role in electric mobility by providing 100 buses for Santiago, and replacing more than 2,500 tradi- tional heaters with electric ones. With respect to the work with local communities, Enel Chile has employees dedicated to community relations, maintaining a fluent dialog with more than 100 commu- nities, and building and managing long-term agreements with each one of them. In terms of the last strategic guideline, our accomplish- ments are achieved with the daily effort of individuals that are considered the focal point of our strategy. We build challenging routes with these individuals to move towards inclusion and destroying physical and cultural barriers to di- versity. Facilitating the conciliation of work and family life is also part of this goal. In 2018, 16% of Enel Chile collab- orators have become part of the Smart Working and Work Flexibility program. The 2018 and the 2019 plan are based on prioritizing health and occupational safety, solid corporate governance, en- vironmental sustainability, a sustainable supply chain, and the long-term creation of economic value for the sustain- able development of our business. 138 Annual Report Enel Chile 2018Stakeholders and materiality Compliance system and complaint channel The Company has focused its sustainability management Enel Chile has implemented a Penal Risk Prevention Model on inclusion and transparent collaboration with its stake- that builds on the Ethics Code and the Zero Corruption holders. Enel Chile is working on criteria and principles to Tolerance policy. Enel Chile opposes to any form of achieve a fair relationship with all stakeholders, to involve corruption, direct or indirect, within any process of the value them from the beginning of the design stage of a project, chain, any business location and with any stakeholder. assuring equal conditions and equal access to information required for the decision making process. This is performed This model is based on the Global Compliance Program of by identifying the most relevant stakeholders involved in the Enel Group, which is comprised of a series of specific each operation and evaluating potential areas of impact and programs that respond to local legislation and the highest joint opportunities. international standards, such as, ISO 37,001, the Foreign Corrupt Practices Act FCPA (U.S.A) and the Bribery Act The Enel Group participates in Chile promoting private-pub- (United Kingdom). The Group has also incorporated the lic actions to proactively contribute to improve private com- definitions of the Global Compact and the Sustainable De- pany compliance and behavioral standards to strengthen velopment Objectives, both developed by the United Na- a culture inspired in transparency, honesty, and long-term tions. sustainable relationships. Within this context, an agree- ment was formalized with Chile Transparente to strengthen The Penal Risk Prevention Model covers all the requirements and include actions into the Company´s compliance sys- of the Crime Prevention Model defined by Law 20,393. tem. The objective of the Compliance System is to contribute to Enel’s development of a long-term relationship of trust with Local needs are directly related to the Company´s goals in its stakeholders, implementing activities in a responsible materiality matrices that are developed for each territory manner and communicating them transparently. The focus to carry out the projects that are adequate to reach shared on the creation of shared value allows collaborating with the goals and priorities. local industry in defining a common standard to comply with and aligned to international best practices. The significant presence of the company in the territory allows having a constant view of the opportunities and This system has been conceived as the focal point of the instances available to align solutions and add value to all company´s operations and is therefore a guideline on be- stakeholders. These opportunities have fostered the de- havior for all company employees. The Board of Directors velopment of circular economy solutions, i.e., the trans- approves the programs of the compliance system and, with formation of waste, such as, pallets into community eco the support of the Head of Crime Prevention, implements construction material. the programs. The Head of Crime Prevention has the or- ganizational authority and resources to carry out his duties Enel Chile´s business culture is guided by the Open Power adequately. The Board of Directors periodically evaluates Vision, committed to the United Nations Sustainable De- and monitors the implementation and Improvement of the velopment Objectives, the creation of shared value and Company´s programs. complying with the company´s Human Rights Policy. Suppliers and contractors’ employees adhere to the provisions of these programs by means of the general contracting conditions, a set of clauses that stress the im- portance and facilitate the control and proper implementa- 139 Environment and Sustainabilitytion of the compliance system specified in Law 20,393 ap- plicable to Enel Chile and all its subsidiaries. Enel Chile and each subsidiary 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 guaran- tee 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 Sustainable development objectives In 2015, the United Nations adopted the new Sustainable Development Objectives (ODS in its Spanish acronym). This initiative invites companies to use creativity and inno- vation to face sustainable development challenges, such as poverty, gender equality, access to clean water and en- ergy, and climate change among others. At the time, Enel SpA (“Enel”) announced the Group’s commitment to con- tribute to achieving four of the 17 objectives. Particularly, Enel and its companies worldwide have focused on the accessible through the internet, telephone or in writing. following objectives: Open Power Vision Enel Generación Chile has identified the “Open” con- 1. Quality education (ODS 4): cept as the focal point of its business, a cornerstone of In 2018, Enel Chile contributed with scholarships and sup- its strategy and operations. The idea is to Open energy to plementary education for more than 13,500 youngsters, in more people; Open energy to new technologies; offer peo- addition to the 25,000 students that received benefits up ple new ways to manage energy; add new uses to energy; to 2017. and add more contributors to energy. 140 Annual Report Enel Chile 20182. Affordable energy (ODS 7): Enel Chile is committed to promoting affordable and sus- tainable energy for the neighboring communities to its facilities. The Company´s goal for 2020 is to add 70,000 beneficiaries to the ones existing in 2016. In 2018, rough- ly 29,000 beneficiaries were added to the 141,000 exist- ing ones. From 2015-2018, there have been more than 170,000 beneficiaries, nearly 6% of the goal set in the 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 sus- tainability. The document sets out the Company’s com- mitment to all human rights, particularly those that affect corporations and the activities carried out by all Company 2018-2020 plan. employees 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 contin- ues to be constantly monitored and specific plans are im- plemented to minimize related risks. In 2018, the company implemented significant improve- ments to mitigate the risks detected through due diligences performed in the territories in which it has electricity as- sets. 3. Decent job and economic 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. During 2018, nearly 30,700 have had access to local economic development by forming small and medi- um sized companies or participating in training programs. Enel Chile has contributed with approximately 12% of the Group´s goal in 2018-2020 plan regarding this objective, reaching a total 361,500 beneficiaries during the 2015- 2018 period. 4. Action for the climate (ODS 13): Adopt initiatives to fight climate change in order to be car- bon neutral by 2050. The goal is to reduce CO2 (g/kWh) emissions. Enel Green Power Chile has made significant investments in this area and is getting closer to accomplish its objective. 141 Environment and Sustainability142 Annual Report Enel Chile 201820 Ownership share table 143 Letter from the Chairman 144 Annual Report Enel Chile 2018Direct and Indirect Ownership Shares Company Enel Generación Chile Pehuenche Aysén Energía Aysén Transmisión Enel Distribución Chile Transquillota GasAtacama Chile GNL Chile EE Colina Luz Andes Empresa de Transmisión Chena S.A. Cameros Gasoducto Atacama Argentina Enel Green Power Chile Ltda.* Empresa Eléctrica Panguipulli S.A.* Diego de Almagro Matriz SpA* Parque Eólico Tal Tal S.A.* Geotérmica del Norte S.A.* Empresa Nacional de Geotermia S.A.* Parque Eólico Valle de los Vientos S.A.* Parque Talinay Oriente S.A.* Almeyda Solar SpA* Enel Green Power del Sur SpA* Enel X Chile Spa Energía Marina *shareholdings added to Enel Chile on April 2, 2018 Gx: Generation Dx: Distribution Tx: Transmission/Commercialization Ox: Gas pipeline, others Business Ownership Gx Gx Gx Tx Dx Tx Ox Ox Dx Dx Tx Ox Ox Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Ox Ox 93.55% 92.65% 51.00% 51.00% 99.09% 50.00% 100.00% 33.33% 100.00% 100.00% 100.00% 57.50% 100.00% 99.99% 100.00% 100.00% 100.00% 84.59% 51.00% 99.99% 61.37% 100.00% 100.00% 100.00% 25.00% Ownership share table 145 Organization structure ENEL CHILE S.A. 99.99109% ENEL Green Power Chile Ltda. 99.090782% 59.98% 57.50% 93.548092% ENEL X Chile SpA Sociedad Agrícola de Cameros Ltda. ENEL Generación Chile S.A. 0.01% Parque Eólico Valle de los Vientos S.A. 99.99% 84.59% Geotérmica del Norte S.A. 0.01% Parque Eólico Taltal S.A. 99.99% 51% Empresa Nacional de Geotermia S.A. 0.045% Empresa Eléctrica Panguipulli S.A. 99.955% 61.37% Parque Eólico Talinay Oriente S.A. 100% Diego de Almagro Matriz SpA 25% Energía Marina SpA 0.00034% Enel Green Power del Sur SpA 99.99995% 100% Almeyda Solar SpA 100% 99.999% 0.001% 100% 100% 100% Parronal SpA Parque Solar Maipú SpA ABC Solar Dos SpA ABC Solar 10 SpA MSN Solar Tres SpA 146 ENEL Distribución 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. 92.65% Pehuenche S.A. GNL Chile S.A. 33.33% 97.3701% 2.6299% GasAtacama Chile S.A. Aysén Transmisión S.A. 51% 0.03% Gasoducto Atacama Argentina S.A. 99.97% 50.00% Transquillota Ltda. 100% 0.079318% Aysén Energía S.A. 51% Gasoducto Atacama Argentina S.A. Argentine Branch ENEL Argentina S.A. 99.00% Ingendesa do Brasil Ltda. Annual Report Enel Chile 2018ENEL CHILE S.A. 99.99109% ENEL Green Power Chile Ltda. 99.090782% 59.98% 57.50% 93.548092% ENEL Distribución Chile S.A. ENEL X Chile SpA Sociedad Agrícola de Cameros Ltda. ENEL Generación Chile S.A. 0.01% Parque Eólico Valle 99.99% 84.59% Geotérmica del de los Vientos S.A. Norte S.A. 0.01% Parque Eólico 99.99% Taltal S.A. 51% Empresa Nacional de Geotermia S.A. 0.045% Empresa Eléctrica 99.955% Panguipulli S.A. 61.37% Parque Eólico Talinay Oriente S.A. 100% Diego de Almagro Matriz SpA 25% Energía Marina SpA 0.00034% Enel Green Power 99.99995% 100% del Sur SpA Almeyda Solar SpA 100% 99.999% 0.001% 100% 100% 100% Parronal SpA Parque Solar Maipú SpA ABC Solar Dos SpA ABC Solar 10 SpA MSN Solar Tres SpA 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. 92.65% Pehuenche S.A. GNL Chile S.A. 33.33% 97.3701% 2.6299% GasAtacama Chile S.A. Aysén Transmisión S.A. 51% 0.03% Gasoducto Atacama Argentina S.A. 99.97% 50.00% Transquillota Ltda. 100% 0.079318% Aysén Energía S.A. 51% Gasoducto Atacama Argentina S.A. Argentine Branch ENEL Argentina S.A. 99.00% Ingendesa do Brasil Ltda. Schematic Table 147 148 Annual Report Enel Chile 201821 Company’s significant events 149 Letter from the Chairman Consolidated Significant Events In accordance with Articles 9 and 10, section 2, of the Se- mon shares with voting rights, and that as a result of curities Market Law 18,045 and as established under Gen- the exercise of such withdrawal rights, as of the date eral Norm N° 30 of such Superintendence, the following of expiration of the dissenting shareholders’ with- significant events were informed: drawal rights, no shareholder exceeds the 65% maxi- Enel Chile S.A. • On January 22, 2018, it was informed as a significant event that Enel Chile S.A. (hereafter “Enel Chile” or the “Company”) on January 19, 2018, the legal peri- od for dissenting shareholders to exercise their with- drawal rights arising from the merger agreement of Enel Green Power Latin America S.A. into the Com- pany (the “Merger”) approved at the Extraordinary Shareholders’ Meeting held on December 20, 2017 (the “Meeting”) has expired. During such period and based on the information available as of this date, the shareholders that all to- gether represent a total of 1,024,251,979 common shares of the Company, or 2.09% exercised their withdrawal rights. According to the relevant legal pro- visions and regulations and particularly Official Letter No 32,435 issued by the Financial Markey Commis- sion (former Superintendence of Securities and Insur- ance) dated November 7, 2017, the price of the shares of the shareholders that exercised their withdrawal rights will be paid by the Company as of the date the Merger is effective pursuant to the terms and condi- tions agreed upon by the Meeting. The Company will opportunely inform on the aforementioned through a significant event. Consequently, one of the conditions precedent to the Merger has been satisfied, i.e., that the Enel Chile shareholders that exercise their withdrawal rights do not represent more than 5% of the Company’s com- mum shareholding concentration limit established by the Enel Chile bylaws. This percentage is to be cal- culated considering the number of shares in which will be divided the new equity of Enel Chile, to be ap- proved as part of the Merger and the capital increase that is required to have sufficient shares to deliver to Enel Generación shareholders within the context of the Enel Generación Tender Offer. • On February 8, 2018, it was informed as a significant event that, with regard to the Reorganization process approved by the extraordinary shareholders’ agree- ment held on December 20, 2017 (the “Meeting”): 1. The Company will commence the preemptive rights subscription period, both in Chile and in the United States of America, of the 10,000,000,000 new common shares issuance financed with the Ch$8 20,000,000,000 capital increase approved by the Meeting on February 15, 2018. The no- tice of the preemptive rights to subscribe these shares, which sets the beginning of the preemp- tive rights subscription period will be published in the El Mercurio de Santiago newspaper on the previously mentioned date. Pursuant to the ESM’s agreement and the terms and con- ditions of the Reorganization, the shares that remain available once the preemptive rights sub- scription period has ended will be allocated to the shareholders of Enel Generación Chile S.A. (“Enel Generación”) that tender their shares in the Enel Generación Offer of Shares (the “Enel Generación TO”), if it is declared successful, as required by its terms and conditions. 150 Annual Report Enel Chile 2018 The effectiveness of this Capital Increase is sub- 1. In compliance with Article 212 of the Securities ject to the conditions precedent approved by Market Law N° 18,045, Enel Chile published the Meeting. In accordance with such approved in “El Mercurio de Santiago” and “La Tercera” conditions, the share subscription contract of newspapers on March, 25 2018, the Notice in- the shareholders or third parties that decide to forming on the outcome of its offer to purchase exercise their preemptive subscription rights up to the total amount of shares issued by Enel during the preemptive rights subscription period Generación Chile S.A. (“Enel Generación”) not will be conferred on the first business day of the already held by Enel Chile, that is, 3,282,265,786 month following the date in which the Company shares issued by Enel Generación (“Enel Gener- publishes the results notice declaring the Enel ación PTO”) equivalent to 40.02% of such com- Generación PTO successful as determined by pany´s common stock, declaring that such offer article 212 of the Securities Market Law. The has been successful according to its terms and subscribers must pay for their shares on the conditions. A copy of the published notice is at- respective contract subscription date, the same tached to this disclosure. date in which the subscription contracts become effective and the shares are delivered to the Pursuant to the Enel Generación PTO, Enel Chile subscribers. has purchased, on its own behalf, 2,753,096,167 shares issued by Enel Generación (including 2. The Company will commence the Enel Generación the shares represented by American Deposi- PTO, both in Chile and in the United States tary Shares (“ADS”) purchased through a Public of America, to purchase all Enel Generación Tender Offer carried out in the United States of shares that are not owned by Enel Chile and that America), equivalent to 33.6% common shares represent 40.02% of all shares that represent the issued by Enel Generación. As a result, Enel Chile equity of Enel Generacion. As stated by Law, the has become the owner of a total 7,672,584,961 terms and conditions of the Enel Generación PTO shares issued by Enel Generación (including the will be detailed in the tender commencement no- shares represented by the ADSs purchased), tice and prospectus. reaching a total 93.55% shareholding of Enel Generación’s subscribed and paid in capital. The Enel Generación PTO commencement notice will be published in two local newspapers, both Therefore, Enel Chile declares having satisfied on February 15, 2018. The Enel Generación PTO each and every one of the conditions of every will be conducted for a 30-calendar day period to stage of the Reorganization approved by the begin on February 16, 2018. Notwithstanding the Meeting, and, thus, declares the capital increase above mentioned, the Company will extend this of Enel Chile approved by the Meeting, not ful- time frame in five calendar days, reaching a total filled, as a resolutory condition. 35 calendar day term, in accordance with the Se- curities Market Law 18,045, and finally conclude Consequently, every stage of the Reorganization on March 22, 2018. will cause effect on each respective date stated • On March 25, 2018, it was informed as a significant below: event that, with regard to the Reorganization process (a) Merger: The merger by incorporation of Enel Green approved by the extraordinary shareholders’ agree- Power Latin America S.A (“Enel Green Power”) by ment held on December 20, 2017 (the “Meeting” ),: Enel Chile (the “Merger”) will cause effect on Abril 151 Significant Events 2, 2018, that is, the first working day of the month 2. Finally, and in accordance with the Ordinary Of- following Enel Chile’s published Notice on the out- fice No. 32,435 issued by the Superintendency come, pursuant to Article 212 of the Securities of Securities and Insurance, today the Financial Market law declaring the Enel Generación PTO a Market Commission, dated November 7,2017, success. On that date, Enel Chile will acquire all as- the share price of the shareholders dissidents sets and liabilities, capital and shareholders of Enel who exercised their right to withdraw of Enel Green Power and will succeed it in all its rights and Chile as a result of the approval of the Merger, obligations resulting in its full dissolution. will be paid by Enel Chile from the date on which the Merger is effective in accordance with the (b) Capital Increase of Enel Chile: The resolutory con- terms and conditions agreed at the Shareholders' dition applicable to Enel Chile’s capital increase ap- Meeting, that is, since April 2, 2018 with their proved by the Meeting with the purpose, among corresponding readjustments and interests. others, to issue sufficient shares to be delivered to the shareholders of Enel Generación as part • On March 28, 2018, it was informed as a signifi- of Enel Generación PTO if it were not success- cant event that on March 27 and 28, 2018, a group ful. Based on the above mentioned, as of April of Banks have disbursed, in favor of Enel Chile, Ch $ 2, 2018, the shareholders or third parties that 517,680,625,000 and US$ 697,500,000, each respec- exercised their pre-emptive subscription rights tive date, in favor of Enel Chile, in accordance with a during the pre-emptive rights period, which ended "Senior Unsecured Term Loan Credit Agreement", to March 16, 2018, may grant the respective share finance the cash needs arising from the corporate re- subscription contract and proceed to pay for such organization transaction called "Project Elqui” known subscribed shares. by the market. (c) Enel Generación PTO: Pursuant to Article 212 of • At the Enel Chile´s Ordinary Shareholders Meeting the Securities Market Law N° 18,045, the date of held April 25, 2018, the new Board of Directors of the the company’s shareholder’s acceptance of the Company was elected for a three-year period with the Enel Generación PTO and the formalization of the following individuals: shares sold as part of the Enel Generación PTO is the date of the Notice of the outcome of the 1.- Mr. Herman Chadwick Piñera PTO. However, the payment of the price of the 2.- Mr. Giulio Fasio Enel Generación PTO and the subscription of Enel 3.- Mr. Salvatore Bernabei Chile’s common stock will be carried out on April 4.- Mr. Daniele Caprini 2, 2018, according to the terms and conditions de- 5.- Mr. Fernán Gazmuri Plaza scribed in the Enel Generación PTO prospect. 6.- Mr. Pablo Cabrera Gaete 7.- Mr. Gerardo Jofré Miranda (d) Amendment to Enel Generación Bylaws: The amendment to the Enel Generación bylaws ap- • At the Board meeting held April 25, 2018, the Board proved by the company’s Extraordinary Share- of Directors agreed to appoint Mr. Herman Chadwick holder’s Meeting held on December 20, 2017, Piñera as Chairman of the Board of Directors and Mr. became effective on March 25, 2018, date in Domingo Valdés Prieto as the Secretary of the Board which the Notice of the outcome as required by of Directors. Article 212 of the Securities Market Law declares the Enel Generación PTO a success. 152 Annual Report Enel Chile 2018 • Also, at the aforementioned meeting, the Board of • The aforementioned, at the date of the referred Sig- directors proceeded to appoint the Directors Commit- nificant Event, were still pending the subscription and tee, in accordance to the Corporations Law N° 18,046 payment of certain shares corresponding to share- and the Sarbanes Oxley Act, electing Fernán Gazmuri holders or third parties who decided to exercise their Plaza, Pablo Cabrera Gaete and Gerardo Jofré Miran- preemptive subscription rights during the 30 day pre- da. In accordance with the provisions of Circular N° emptive subscription period from February 15, 2018 1,956 of the Superintendence of Securities and Insur- to March 16, 2018; and there were some sharehold- ance, it was duly informed that the aforementioned ers who, despite having exercised their withdrawal members of the Directors Committee are indepen- right, to that date, had not claimed the corresponding dent directors. price. • The Board meeting appointed Mr. Fernán Gazmuri • On June 7, 2018, in accordance with articles 9 and Plaza as the Financial Expert of Enel Chile´s Direc- 10, paragraph 2, under the Securities Market Law tors´ Committee and the Directors´ Committee of the N°18,045, duly authorized, I hereby inform you of the Company appointed Mr. Fernán Gazmuri Plaza as the following significant event, that today, June 07, 2018, Chairman and Mr. Domingo Valdés Prieto as Secre- Enel Chile S.A. has issued bonds pursuant to the tary of the Directors Committee. Form F-3 Registration Statement of the Securities Act of 1933 of the United States of America, submitted • At the ordinary shareholders meeting held April 25, to the U.S. Securities and Exchange Commission on 2018, it was agreed to distribute a minimum manda- May 30, 2018. The above-mentioned bond issuance tory dividend (from which the interim dividend paid in is described in the form referred to in circular letter January 2018 is deducted) and an additional dividend 1,072 of this Financial Market Commission, which is totalizing Ch$192,160,453,281. attached to this letter. • Given that the above-mentioned interim dividend • On September 27, 2018, in accordance with articles 9 has already been paid, the distribution and payment and 10, second subparagraph, of the Securities Mar- of the remnant of the final dividend shall amount to ket Law N° 18,045, and duly authorized, I hereby in- Ch$155,025,509,218. form as a significant event that in the ordinary session of the Board of Directors held today, the Chief Execu- • The extraordinary shareholders´ meeting held May tive Officer of the Company, Mr. Nicola Cotugno, has 14, 2018, informed having agreed to distribute the submitted his resignation. He will remain in his posi- minimum mandatory dividend (from which the inter- tion until September 30, 2018, and then will take on im dividend paid in January 2018 is deducted) and an new tasks within the Enel Group. additional dividend totalizing Ch$192,160,453,281. It was also said that given that the above-mentioned in- In addition, in the same Board meeting of Enel Chile terim dividend has already been paid, the distribution S.A. Board of Directors appointed Mr. Paolo Pallotti as and payment of the remnant of the final dividend shall the new Chief Executive Officer of the Company and amount to Ch$155,025,509,218. will assume this position as of October 1, 2018. • The supplementary information is that, after deduct- • On November 29, 2018, in accordance with articles 9 ing the interim dividend paid in January 2018, the re- and 10, second subparagraph, of the Securities Mar- maining definitive dividend that will be distributed and ket Law N° 18,045, and as established under General paid amounts to $2.24134 per share, calculated based Norm N°30 of the Financial Market Commission, and on the total of shares subscribed by midnight on May duly authorized, I hereby inform as a significant event 12, 2018. As already informed, this dividend will be that the Board of Directors of Enel Chile in its ses- paid as of May 18, 2018. sion held today, has approved the Strategic Plan of the Company for the 2019-2021 period. 153 Significant Events  • The macro elements included in the Strategic Plan for and duly authorized, I hereby inform as a significant the three-year period 2019-2021 have an estimated event that Enel Chile S.A. (hereafter “Enel Chile” or accumulated EBITDA of US$ 5,370 million and an es- the “Company”), in the ordinary session held today timated accumulated CAPEX of US$ 2,200 million. the board of directors unanimously agreed the distri- bution of an interim dividend of Ch$ 0.4523627013 • Considering that the contents of the referred Strategic per share attributable to the 2018 fiscal year to be paid Plan follows and is based on projections and hypoth- January 25, 2019, equivalent to 15% of Enel Chile’s eses that might or might not come true in the future, net income as of September 30, 2018, based on the its effects cannot be established at this date. Company’s Financial Statements at such date. • On November 29, 2018, in accordance with articles 9 As set forth in the Commission´s Circular Letter No and 10, second subparagraph, of the Securities Mar- 660 of 1986, we sent you Form No 1 that provides ket Law N° 18,045, and as established under Gener- information regarding the interim dividend. al Norm N°30 of the Financial Market Commission, 154 Annual Report Enel Chile 2018 155 Significant Events156 Annual Report Enel Chile 201822 Identification of subsidiaries and associate companies 157 Letter from the Chairman AGRÍCOLA DE CAMEROS ENEL DISTRIBUCIÓN CHILE S.A. ENEL GENERACIÓN CHILE Name Sociedad Agrícola de Cameros Limitada Name Enel Distribución Chile S.A. Name Enel Generación Chile S.A. Type of Company Limited Liability Company Type of Company Publicly held Limited Liability Stock Corporation Type of Company Publicly held Limited Liability Stock Corporation 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$) 5,738,046 Corporate Purpose The purpose of the company is the exploitation of agricultural land. Core Business Real estate and agriculture Directors Hugo Alvarez de Araya Sanhueza Ingrid Morales Ävila Manuel Larraín García María Cristina Auad Faccuse Cristián Guadi Imbarack Dagach Alternate Directors Fernando Morey Sampaio Solange Zincke Cavalieri Jose Hernández Flores Jorge Geldres Reyes Andrés Garib Auad Senior Executives Hugo Alvarez de Araya Sanhueza Chief Executive Officer Business Relations Service contract provided by Enel Chile: Provision of internal audit and compliance control services. Price: expressed in UF per hour that Enel Chile’s staff assigns to the contracted services. 158 Taxpayer ID 96,800,570-7 Address 76 Santa Rosa St., 8th floor Santiago, Chile Telephone (56 2) 2675 2000 Taxpayer ID 91,081,000-6 Address 76 Santa Rosa St. Santiago, Chile Telephone N° (56 2) 2630 9000 Subscribed and Paid Capital (ThCh$) 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, 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 Rodolfo Avogadro Di Vigliano (Chairman) Monica Hodor Alessandra Billia Hernán Felipe Errázuriz Correa Senior Executives Ramon Castañeda Ponce Chief Executive Officer Simone Tripepi Andrés González Cerruti 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 Board of Directors Giuseppe Conti (Chairman) Francesco Giorgianni Hernan Cheyre Valenzuela Frabrizio Barderi Julio Pellegrini Vial Antonio Scala Cristiano Bussi Luca Noviello Senior Executives 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: 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. Annual Report Enel Chile 2018CHENA GASATACAMA CHILE GASODUCTO ATACAMA ARGENTINA Name Empresa de Transmisión Chena S.A Name GasAtacama Chile S.A. Name Gasoducto Atacama Argentina S.A. Type of Company Privately held corporation Type of Company Privately held corporation Type of Company Privately held corporation Taxpayer ID 76,722,488-5 Address 76 Santa Rosa St. 8th floor Santiago, Chile Telephone N° (562) 2353 4698 Subscribed and Paid Capital (ThCh$) 250,429 Corporate Purpose Electricity transmission Core Business Electricity transmission Board of Directors Ramon Castañeda Ponce Daniel Gómez Sagner Francisco Messen Rebolledo Senior Executives Victor Hugo Balbontin Artus 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: Monthly amount fixed in Chilean pesos. Taxpayer ID 78,932,860-9 Taxpayer ID 78,952,420-3 Address 76 Santa Rosa St., Santiago, Chile 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 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$) 482,511,131 Directors Raúl Arteaga Errázuriz (Chairman) Sergio Ávila Arancibia Carlo Cavallo Pablo Arnés Poggi Humberto Espejo Paluz Senior Executives Valter Moro Chief Executive Officer Business Relations with Enel Chile S.A. C o m m u n i c a t i o n s , h u m a n r e s o u r c e management, and capital management service contract provided by Enel Chile S.A. Price: monthly amount expressed in UF. Corporate Purpose The transportation of natural gas, either by itself, through or jointly with a third party, in the Chile or abroad, including the construction, location and operation of gas pipelines and other operations directly or indirectly related to this objective. The company has incorporated an agency in Argentina under the name of Gasoducto Cuenca Noroeste Limitada Sucursal Argentina whose purpose is the construction of a gas pipeline between Cornejo, a town in the province of Salta and the Argentina-Chile border in the vicinity of Paso de Jama in Chile’s Second Region. Core Business Gas transportation Subscribed and Paid Capital (ThCh$) 126,309,044 Directors Raúl Arteaga Errázuriz Pablo Arnes Poggi Alex Díaz Sanzana Senior Executives Valter Moro Chief Executive Officer Business Relations with Enel Chile S.A. The company has no business relationships with Enel Chile. GNL CHILE 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, Chile Telephone (562) 2892 8000 Subscribed and Paid Capital (ThCh$) 1,860,332 159 Identification of Subsidiaries and Associate CompaniesCorporate Purpose The purpose of the company is: a) contract the services of GNL Quintero S.A., a liquefied natural gas (“LNG”) regasification company, and utilize its entire natural gas storage, processing, regasification, and delivery capacity and LNG available at its regasification terminal, including its expansions, if any, and any other matter stipulated in the contracts the company might sign for the use of the regasification terminal; b) import LNG from suppliers, as determined by LNG purchase contracts; c) sell and deliver natural gas and LNG, as determined by the natural gas and LNG sales contracts signed by the company with its customers; d) manage and coordinate the schedules and nominations of LNG shipments, as well as the delivery of natural gas and LNG among various customers; and e) fulfill all its obligations and demand the enforcement of all its rights under the previously identified contracts, coordinate all operations under these contracts and, in general, carry out any type of act or enter into any contract that might be necessary, useful or convenient in order to accomplish its purpose. Core Business Import and commercialization of natural gas Directors Juan Oliva Vásquez Yasna Ross Romero Luis Arancibia Yametti Senior Executives Alejandro Palma Rioseco Chief Executive Officer Business Relations The company has no business relationships with Enel Chile. PEHUENCHE Name Empresa Eléctrica Pehuenche S.A. Type of Company Publicly held Limited Liability Stock Corporation, registered in the SVS Corporations Registry under number 293. Taxpayer ID 96,504,980-0 Address 76 Santa Rosa St., Santiago, Chile Corporate Purpose Generate, transport, distribute and supply electricity, and acquire and benefit from the respective concessions. Core Business Electricity generation Subscribed and Paid Capital (ThCh$) 175,774,920 160 Board of Directors Raúl Arteaga Errázuriz Luis Ignacio Quiñones Sotomayor Paula Riveros Pérez Fernando Vallejos Reyes Juan Candia Narvaez Senior Executives Carlo Carvallo Artigas Chief Executive Officer Claudio Toledo Freitas Vicente Villaseca Villalobos Business Relations C o m m u n i c a t i o n s , h u m a n r e s o u r c e 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 N° (56 2) 2634 6310 Subscribed and Paid Capital (ThCh$) 1,224 TRANSQUILLOTA Name Transmisora Eléctrica de Quillota Ltda. Corporate Purpose Distribution and sale of electricity, and sale of household, sports, entertainment and computer appliances. Type of Company Limited liability Company Taxpayer ID 77,017,930-0 Address Route 60, km 25, Lo Venecia, Quillota, V Region of Valparaíso, Chile Corporate Purpose Transportation, distribution, and supply of electricity, either by itself or through a third party. Core Business Electricity transmission Subscribed and Paid Capital (ThCh$) 4,404,446 Representatives Pedro de la Sotta Sánchez (Enel) Joint Manager ( Technical Support Chile) Santiago Bradford Vicuña (Colbún) Joint Manager Goran Nanik(Colbún) Joint Manager Business Relations with Enel Chile S.A. The company has no commercial relations with Enel Chile. Core Business Electricity distribution Joint Administration Claudio Inzunza Díaz Rodrigo Vicente Arévalo Cid Senior Executives Claudio Inzunza Díaz 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. 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 Annual Report Enel Chile 2018Corporate Purpose Distribution and sale of electricity, and sale of household, sports, entertainment and computer appliances. Alternate Directors Adrien Coudurier José Manuel Astudillo Sepúlveda Francesco Tutoli 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. ENEL GREEN POWER CHILE LTDA. Name Enel Green Power Chile Ltda. Type of Company Limited Liability Company Taxpayer ID 96,920,110-0 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Senior Executives Walter Moro Chief Executive Officer Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A services contract with Energia y Servicios South America SpA for legal services, commercial services, management, purchases, business innovation and development. 3. A master services agreement with Enel Generación Chile S.A. governing the engineering services among both companies related to electricity generation and transmission projects. 4. Electricity supply contracts with Enel Generación Chile S.A. 5. A contract to govern the different types of guarantees granted by Enel Chile S.A. to Enel Green Power Chile (comfort letters, corporate guarantees and bank guarantees). 6. A general services contract with Enel Chile S.A. to provide EGP Chile security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 7. A services contract with Enel Generación Chile S.A. to provide EGP Chile management support services, regulatory analysis services, and energy management services. Enel Geen Power Chile also provides business development services and operating and maintenance services of Canela wind farm to Enel Generación Chile S.A. 8. A trade account management contract with Geotérmica del Norte S.A. Subscribed and Paid Capital (US$) 842,086,413.75 ALMEYDA SOLAR SPA Name Almeyda Solar SpA. Type of Company Joint Stock Company Taxpayer ID 76,321,458-3 Corporate Purpose Investment in all types of assets related to electricity generation, transmission, and distribution as well as the installation, operation, exploitation and administration of such assets. Core Business Investment in electricity generation and transmission assets. Administration The bylaws include a Board of Directors Board of Directors Ali Shakhtur Said (Chairman) Antonio Scala James Lee Stancampiano of solar energy or any other non-conventional renewable energy source. Core Business Photovoltaic solar energy generation. Administration Performed by Board of directors, as stated by bylaws. Board of Directors Ali Shakhtur Said (Chairman) Roberto Alhucema Juan Candia Narváez Senior Executives Walter Moro Chief Executive Officer Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación C h i l e S . A . t o p r o v i d e E G P C h i l e management support services, regulatory analysis services, and energy management services. 5. A contract for technical support provided by Enel Green Power SpA. ENEL GREEN POWER DEL SUR SPA Name Enel Green Power del Sur SpA Type of Company Joint Stock Company Taxpayer ID 76,412,562-2 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 3,500.000 Subscribed and Paid Capital (US$) 353,605,313 Corporate Purpose Generation, distribution and commercialization of wind energy or any other non-conventional renewable energy source. Corporate Purpose Generation, distribution and commercialization Core Business NCRE powered electricity generation. 161 Identification of Subsidiaries and Associate CompaniesAdministration The bylaws include a Board of Directors Core Business Electricity generation and distribution and investment in generation measurements, and other research projects to identify geothermal resources. Board of Directors Ali Shakhtur Said (Chairman) James Lee Stancampiano Osvaldo Farías Luke Alternate Directors José Manuel Astudillo Sepúlveda Juan Candia Narváez Adrien Coudurier Senior Executives Walter Moro Chief Executive Officer Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación C h i l e S . A . t o p r o v i d e E G P C h i l e management support services, regulatory analysis services, and energy management services. 5. A contract for technical support provided by Enel Green Power SpA. EMPRESA ELECTRICA PANGUIPULLI S.A. Name Empresa Eléctrica Panguipulli S.A. Type of Company Privately held corporation Taxpayer ID 76,412,562-2 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 48,038,707.05 Corporate Purpose Generation, supply, and distribution of electricity; investment in electricity generation and distribution companies and also the purchase and sale, commercialization, import and export of all types of products, machinery and raw materials. 162 Administration Performed by a Board of Directors, as stated by the Corporations Law. Board of Directors Ali Shakhtur Said (Chairman) James Lee Stancampiano Jaime Toledo Alternate Directors José Manuel Astudillo Sepúlveda Juan Candia Narváez Adrien Coudurier Senior Executives Walter Moro Chief Executive Officer Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación C h i l e S . A . t o p r o v i d e E G P C h i l e management support services, regulatory analysis services, energy management services and operation and maintenance of the company´s Pullinque and Pilmaiquén power plants. 5. A contract for technical support provided by Enel Green Power SpA. E M P R E S A N A C I O N A L D E GEOTERMIA S.A. Name Empresa Nacional de Geotermia S.A. Type of Company Privately held corporation Taxpayer ID 99,577,350-3 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Core Business Exploration of geothermal resources. Administration Performed by a Board of Directors, as stated by the Corporations Law. Board of Directors Walter Moro Ali Shakhtur Said Rodrigo Lobos Roldán Carlos Alberto Reyes Comandari Alternate Directors Liliana Schnaidt Hagedorn Francesco Tutoli Gonzalo Paredes Saieg Senior Executives Guido Cappetti Chief Executive Officer Business Relations A contract with Enel Green Power Ltda. for financial and accounting services. GEOTERMICA DEL NORTE S.A. Name Geotérmica del Norte S.A. Type of Company Privately held corporation Taxpayer ID 96,971,330-6 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 488,236,221.33 Corporate Purpose Research and exploration of geothermal resources; commercialization of all products, byproducts and raw materials that derive from geothermal exploration and the generation, transmission, distribution and commercialization of any type of electricity. Core Business Generation, distribution and commercialization of geothermal electricity. Administration Performed by a Board of Directors, as stated by the Corporations Law. Subscribed and Paid Capital (US$) 23,268,985.7 Corporate Purpose Research and exploration of geothermal g e n e r a t i o n b y p e r f o r m i n g s t u d i e s , Board of Directors Walter Moro (Chairman) Ali Shakhtur Said Pedro Echeverría Faz Giuseppe Di Bello Annual Report Enel Chile 2018Alternate Directors Liliana Schnaidt Hagedorn Francesco Tutoli Jorge Leal Saldivia Adrien Coudirier Senior Executives Guido Cappetti Chief Executive Officer Business Relations 1. A contract with Enel Green Power Chile Ltda. to provide the company engineering s e r v i c e s , t e c h n i c a l i n s p e c t i o n o f construction works, contract management, purchases, public relations, sustainability, safety and environment, IT services, accounting, finance, tax, legal services and other management services related to administration. 2. A contract with Enel Green Power Chile Ltda. for trade accounts management. Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación Chile S.A. to provide the company management support services, regulatory analysis services, and energy management services. 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación Chile S.A. to provide the company management support services, regulatory analysis services, and energy management services. 5. A contract for technical support provided by 5. A contract for technical support provided by Enel Green Power SpA. Enel Green Power SpA. PARQUE EOLICO TALTAL S.A. PARQUE EOLICO VALLE DE LOS VIENTOS S.A. PARQUE TALINAY ORIENTE S.A. Name Parque Eólico Taltal S.A. Type of Company Privately held corporation Taxpayer ID 76,179,024-2 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 8,199,805 Corporate Purpose Construction, operation, and maintenance of wind farm generation projects. Core Business Wind power generation Administration Performed by a Board of Directors, as stated by the Corporations Law. Name Parque Eólico Valle de los Vientos S.A. Type of Company Privately held corporation Taxpayer ID 76,052,206-6 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 1,157,022.84 Corporate Purpose Generation, distribution, and commercialization of wind power or any other source of non- conventional renewable energy. Core Business Wind power generation Administration Performed by a Board of Directors, as stated by the Corporations Law. Name Parque Talinay Oriente S.A. Type of Company Privately held corporation Taxpayer ID 76,126,507-5 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 140,502,351.12 Corporate Purpose Planning, development and exploitation of wind power projects. Core Business Wind power generation. Administration Performed by a Board of Directors, as stated by the Corporations Law. Board of Directors Ali Shakhtur Said (Presidente) James Lee Stancampiano Osvaldo Farías Luke Alternate Directors José Manuel Astudillo Sepúlveda Juan Candia Narváez Adrien Coudurier Senior Executives Walter Moro Chief Executive Officer Board of Directors Ali Shakhtur Said (President) James Lee Stancampiano Osvaldo Farías Luke Alternate Directors José Manuel Astudillo Sepúlveda Juan Candia Narváez Adrien Coudurier Senior Executives Walter Moro Chief Executive Officer Board of Directors Ali Shakhtur Said (Chairperson) James Lee Stancampiano Osvaldo Farías Luke Alternate Directors José Manuel Astudillo Sepúlveda Juan Candia Narváez Adrien Coudurier Senior Executives Walter Moro Chief Executive Officer 163 Identification of Subsidiaries and Associate CompaniesBusiness Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies is subject to an interest rate set at market conditions. 2. A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). 3. A general services contract with Enel Chile S.A. to provide the company security, general services, human resource, organizational services, auditing, finance, communications, legal, sustainability and other services related to administration. 4. A services contract with Enel Generación Chile S.A. to provide the company management support services, regulatory analysis services, and energy management services. 5. A contract for technical support provided by Enel Green Power SpA. DIEGO DE ALMAGRO MATRIZ SPA Name Diego de Almagro Matriz SpA Type of Company Joint Stock Company Taxpayer ID 76,306,985-0 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 5,000,000 Corporate Purpose Construction, exploitation, operation and maintenance of the Diego de Almagro Solar photovoltaic solar electricity generation and transmission project. Core Business Operation of solar power plants. ABC SOLAR 2 SPA Name ABC Solar 2 SpA Type of Company Joint Stock Company Taxpayer ID 76,336,638-3 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. Core Business Development of renewable electricity generation projects. Administration Performed by a Board of Director as established by the company bylaws. Directors Anna Paola Minervini (Chairperson) Valter Moro Sergio Guerra Rojas Senior Executives Walter Moro Chief Executive Officer Business Relations The company has no commercial relationship with Enel Chile. ABC SOLAR 10 SPA Name ABC Solar 10 SpA Type of Company Joint Stock Company Administration Performed by Empresa Eléctrica Panguipulli S.A. as the only administrator according to provisions of the company bylaws Taxpayer ID 76,336,669-3 Senior Executives Walter Moro Chief Executive Officer Business Relations A contract to govern the different types of guarantees granted by Enel Chile S.A. to the company (comfort letters, corporate guarantees and bank guarantees). Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. 164 Core Business Development of renewable electricity generation projects. Administration Performed by a Board of Director as established by the company bylaws. Directors Anna Paola Minervini (Chairperson) Valter Moro Sergio Guerra Rojas Senior Executives Valter Moro Chief Executive Officer Business Relations The company has no commercial relationship with Enel Chile. MSN SOLAR TRES SPA Name MNS Solar Tres SpA Type of Company Joint Stock Company Taxpayer ID 76,349,123-4 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. Core Business Development of renewable electricity generation projects. Administration Performed by a Board of Director as established by the company bylaws. Directors Anna Paola Minervini (Chairperson) Valter Moro Sergio Guerra Rojas Senior Executives Walter Moro Chief Executive Officer Business Relations The company has no commercial relationship with Enel Chile. Annual Report Enel Chile 2018 PARQUE SOLAR MAIPÚ SPA Name Parque Solar Maipú SpA Type of Company Joint Stock Company Taxpayer ID 76,052,135-3 PARRONAL SPA Name Parronal SpA Type of Company Joint Stock Company Taxpayer ID 76,499,496-5 ENEL X SPA Name ENEL X CHILE SpA Type of Company Joint Stock Company Taxpayer ID 76,924,079-9 Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 287,091,109 Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation Core Business Development of renewable electricity generation projects. Administration Performed by a Board of Director as established by the company bylaws. Directors Anna Paola Minervini (Chairperson) Valter Moro Sergio Guerra Rojas Senior Executives Walter Moro Chief Executive Officer Address 76 Santa Rosa Ave., Santiago, Chile Address 76 Santa Rosa Ave., Santiago, Chile Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Development, construction, exploitation and ownership of wind, hydro, and biomass electricity generation projects and purchase, sale and commercialization of energy and capacity. Core Business Development of wind power generation projects. Corporate Purpose Develop, implement, and commercialize innovative, cutting edge technology, products and services related to energy Core Business Commercialize electric goods and services. Subscribed and Paid Capital (ThCh$) 1,400,000 Directors Simone Tripepi Giulio Carone Administration Performed by a Board of Director as established by the company bylaws. Senior Executives Karla Zapata Oballe Directors Anna Paola Minervini (Chairperson) Valter Moro Sergio Guerra Rojas Senior Executives Valter Moro Chief Executive Officer Business Relations with Enel Chile S.A. A contract with Enel Chile to provide the company with communications, human resource management services, among others. Prices of services are in expressed in UF. Business Relations The company has no commercial relationship with Enel Chile. Business Relations The company has no commercial relationship with Enel Chile. 165 Identification of Subsidiaries and Associate Companies 166 Annual Report Enel Chile 201823 Statement of Responsibility 167 Letter from the Chairman 168 Annual Report Enel Chile 2018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 (currently, the Financial Market Commission) CHAIRMAN Herman Chadwick Piñera Taxpayer Id: 4.975.992-4 DIRECTOR Giulio Fazio Passport: YA 4656507 DIRECTOR Salvatore Bernabei Passport: YB 0600187 DIRECTOR Pablo Cabrera Gaete Taxpayer Id: 4.774.797-K DIRECTOR Daniele Caprini Passport: YA 9188092 DIRECTOR Gerardo Jofré Miranda Taxpayer Id: 5.672.444-3 DIRECTOR Fernán Gazmuri Plaza Taxpayer Id : 4.461.192-9 CHIEF EXECUTIVE OFFICER Paolo Pallotti Taxpayer Id: 26.102.661-9 Statement of Responsibility 169 enel.cl - enelchile.cl 

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