Enel Chile S.A.
Annual Report 2019

Plain-text annual report

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, 2019, the company´s total subscribed, and paid capital amounted to Ch$ 3,882,103,470 represented by 69,166,557,220 shares. These shares are traded on the Santiago Stock Exchange and, as American Depositary Shares (ADS) 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, 2019, amounted to ThCh$ 7,857,988,164. Enel Chile controls and manages a group of companies that operate in the Chilean electricity market. In 2019, net income attributable to the controlling sharehold- er reached ThCh$ 296,153,605 and operating income was ThCh$ 526,054,835. At year-end 2019, a total 2,148 people were directly employed by its subsidiaries in Chile. ENEL CHILE ANNUAL REPORT 2019 “Year 2020 will have new challenges for the Company, that we will enthusiastically tackle, with responsibility and transparency” 2 Letter from the Chairman Dear shareholders, been able to grasp entirely. As a country, we have a new challenge and I hope that everyone- politicians, executives, I hereby present to you the Annual Report and Financial businessmen, social leaders, and citizens- will have the Statements of Enel Chile for the year 2019. Here, you will necessary wisdom, each according to their own realities, to find a description of what motivates us- working hard to help dialogue and reach agreements and understandings that will people and companies prosper and open the energy sector to allow Chile to become a better country for everyone. new technologies- and the main developments made in Enel Generación Chile, Enel Green Power Chile (EGP Chile), Enel Aside from the peaceful protests, there have also been Distribución Chile, and Enel X, the companies that make up episodes of unprecedented violence, unacceptable for a Enel Chile. state of democracy. Chile does not deserve this. This violence directly affected and us put a strain on our team. On the Before going into detail regarding the Company´s evening of October 18, after a march that was surpassed by accomplishments, I would like to share a reflection with all of turmoil and chaos, hooded protesters burned the emergency you. 2019 was a particularly challenging year, not just for Chile, staircase of our corporate building. Luckily, the people who but also for our Company. As a country, we lived through a were working there at that time were not injured. period of protests and social movements in which thousands of fellow citizens raised their voices to demand profound We composed ourselves and carried on with job, with teams changes in the way we organize our society. distributed throughout different parts of the city. We continued to work in order to ensure our service to customers. I would Those of us who have payed close attention to this movement, like to thank each and every one of our collaborators for have heard the voices of adults and youngsters aiming to their commitment. They have made their strongest efforts to advance towards a more equal, fair, and dignified society. We deliver electricity to every single family in the city. We know stand before a movement to which we cannot be indifferent. that we provide a fundamental public service for all homes, On the contrary, it invites us to reflect. Over the past few schools, businesses and industries, which is why we have not months, the realities and problems of many Chileans have failed to generate and distribute the energy that supplies their been exposed; problems we were unaware of, or we hadn’t daily operations. 1. Letter from the Chairman 3 I would like to thank the members of the Board, for the trust Additionally, Geotérmica del Norte, a joint venture undertaken they have placed in us to manage the Company and for their by Enel Green Power and ENAP, began the construction of a support in all the endeavors we have set forth. third 33 MW electricity generation unit in the Cerro Pabellón In terms of our performance in 2019, financial results were geothermal facility. positive. The Company´s EBIDTA increased 18.2% when The energy we generated during 2019 reached a total compared to 2018, totaling Ch$ 1,053,492 million, attributable 21,041 GWh, representing a 5% increase when compared to to an improvement in our operating business characterized by the previous period. This is primarily a consequence of greater growth in renewable and nonrenewable electricity generation, wind and solar electricity generation, combined with the and an increase in electricity distribution, mainly to the greater dispatch of traditional, nonrenewable energy sources. residential sector. The market is welcoming our clean energy supply. The For Enel Generación Chile, 2019 was a year marked by contracts signed with large customers to supply 7 TWh per sustainability, a fundamental challenge for Enel, and a year of 100% renewable energy in 10 to 15-year periods, to contribution to the country’s development. We signed the begin in 2021 is proof of such interest. National Decarbonization Plan that aims towards progressively reducing the coal fueled generation units. We fulfilled this During 2019, Enel Distribución Chile moved forward in terms year’s commitment on December 31 with the early retirement of improving the quality of our service, focusing on the of our Tarapacá Plant, which represents 25% of our total coal installation of telecontrol units, reaching 2,148 units installed fueled generation capacity. this far. We worked on implementing different technologies to monitor our networks, such as aerial inspections, which The year 2019 was also a distinct year due to the development are focused on reducing the amount of time spent on various of renewable energies. In August, Enel Green Power Chile, tasks, and more precisely detecting anomalies in higher Enel Chile’s subsidiary for renewable energies, began the density areas. Energy losses in 2019 decreased from 5.02% construction of a new photovoltaic solar park, Campos de Sol. to an unprecedented 4.99%, thanks to the implementation of It is currently the largest solar power plant under construction a predictive analysis model. in Chile, with an installed capacity of nearly 382 MW and is located about 60 km northeast of Copiapó, in the Atacama In terms of Enel X, alongside Metbus and BYD, we inaugurated the first electric corridor in Latin America, a sustainable transportation system with 285 buses that are 100% Region. 4 Enel Chile Annual Report 2019electricity powered. This makes Chile the region’s leader in electric mobility, and Santiago the city with the second greatest proportion of electric public transportation vehicles in the world. Additionally, we once again acknowledged women´s contribution to our country by granting the Woman’s Energy Award to 12 extraordinary Chilean women in diverse areas such as arts, public service and education. Our solid, responsible investment practices in terms of social and environmental matters allowed us to maintain our position in the FTSE4 Good Index Series in the Emerging Markets Index and Latin America Index categories, which promote ethical investments in stock markets. The year 2020 presents new challenges, some related to the COVID-19 emergency that today reaches unknown limits, which the Company will face with enthusiasm, responsibility and transparency, prioritizing the safety and health of our people and building on our digitalization strategy. Enel Chile, Enel Generación Chile, Enel Distribución Chile, Enel Green Power Chile and its subsidiaries received the Criminal Risk Prevention Model (MPRP in its Spanish acronym) certification. Also, Enel Chile and Enel Generación Chile obtained the ISO37001 certification, an international standard that recognizes the existence of an effective antibribery We do not forget that our role is to satisfy the needs of our country and its population. To achieve this goal, we will continue to work on improving our service, taking electricity to new areas, digitalizing the distribution network, promoting renewable energies and taking the lead in electric mobility. management system. Both certifications reflect the ethics Sincerely, and transparency in our daily endeavors and engage us to move forward. We have continued to support children through sports with the Enel Cup, promoting a healthy lifestyle, and values such as integration and self-improvement. In terms of culture, we loaned the National Library nearly 20,000 historic photographs for an unprecedented exhibition of images that capture when electricity was introduced in Santiago. We inaugurated Parque La Isla-Salto La Olla, a six hectares pristine forest park in Pilmaiquén that preserves the biodiversity of flora and fauna, and the Mapuche culture. Herman Chadwick Piñera Chairman of Enel Chile 1. Letter from the Chairman 5 6 Enel Chile Annual Report 2019 Enel Chile 2019 CHAPTER 01. Letter from the Chairman 02. Open Power 03. Milestones 2019 04. Main financial and operational metrics 05. Identification of the Company 06. Ownership structure 07. Management 08. People and organization 09. Stock market transactions 10. Investor relations 11. Dividends 12. Investment and financing policy 13. History of the Company 14. Business of the Company 15. Strategy, investments and financial activities 16. Industry regulation and electricity system operation 17. Risk factors 18. Ethics and transparency 19. Sustainability 20. Environment 21. Innovation culture in the Company 22. Ownership share table 23. Identification of subsidiaries and associate companies 24. Significant Events 25. Statement of responsibility CONTENTS PAGE 2 8 10 13 17 21 27 41 51 57 61 65 69 73 85 99 109 129 135 145 151 155 161 173 181 7 Enel Chile is Open Power O p e n Po w e r P u r p o s e O p e n p o w e r f o r a b r i g h t e r f u t u r e . We e m p o w e r s u s t a i n a b l e p r o g r e s s . P V CPPo s i t i o n i n g M V i s i o n O p e n p o w e r t o t a ck l e s o m e o f t h e w o rl d ' s b i g g e s t c h a l l e n g e s . Va l u e s Tr u s t P r o a c t i v i t y R e s p o n s i b i I n n o v a t i o n i t y l V P r i n c i p l e s o f C o n d u c t l y a c t i v i t i e s a n d t a k e • M a k e d e c i s i o n s i n d a i i t y f o r t h e m . l r e s p o n s i b i l a b o r a t e a n d i n g t o c o l l l • F o l • S h a r e i n f o r m a t i o n , b e i n g w i o p e n t o t h e c o n t r i b u t i o n o f o t h e r s . l o w t h r o u g h w i t h c o m m i t m e n t s , p u r s u i n g a c t i v i t i e s w i t h d e t e r m i n a t i o n a n d p a s s i o n . • C h a n g e p r i o r i t i e s r a p i d l y i f t h e s i t u a t i o n e v o l v e s . • G e t r e s u l t s b y a i m i n g f o r e x c e l • A d o p t a n d p r o m o t e s a f e b e h a v i o r a n d m o v e p r o - a c t i v e l y t o i m p r o v e c o n d i t i o n s f o r h e a l t h , s a f e t y l , r e c o g n i z i n g a n d l - b e i n g . l e n c e . l a n d w e l d i s a b i i t i e s , e t c . ) . i t i e s , p e r s o n a l • W o r k f o r t h e i n t e g r a t i o n o f a l l e v e r a g i n g i n d i v i d u a l d i v e r s i t y ( c u l t u r e , g e n d e r, a g e , • W o r k f o c u s i n g o n s a t i s f y i n g c u s t o m e r s a n d / o r c o - w o r k e r s , a c t i n g e f f e c t i v e l y a n d r a p i d l y. • P r o p o s e n e w s o l u t i o n s a n d d o n o t g i v e u p w h e n • R e c o g n i z e m e r i t i n c o - w o r k e r s a n d g i v e f e e d b a ck f a c e d w i t h o b s t a c l e s o r f a i t h a t c a n i m p r o v e t h e i r c o n t r i b u t i o n . l u r e . • O p e n a c c e s s t o e l e c t r i c i t y f o r m o r e M i s s i o n • O p e n t h e w o r l d o f e n e r g y t o n e w p e o p l e . • O p e n u p t o n e w u s e s o f e n e r g y. t e ch n o l o g y. • O p e n u p t o n e w w a y s o f m a n a g i n g e n e r g y f o r p e o p l e . • O p e n u p t o n e w p a r t n e r s h i p s . 8 Enel Chile Annual Report 2019V Va l u e s Tr u s t P r o a c t i v i t y R e s p o n s i b i I n n o v a t i o n i t y l V i s i o n O p e n p o w e r t o t a ck l e s o m e o f t h e w o rl d ' s b i g g e s t c h a l l e n g e s . Enel Chile is Open Power O p e n Po w e r P u r p o s e O p e n p o w e r f o r a b r i g h t e r f u t u r e . We e m p o w e r s u s t a i n a b l e p r o g r e s s . M i s s i o n • O p e n a c c e s s t o e l e c t r i c i t y f o r m o r e • O p e n t h e w o r l d o f e n e r g y t o n e w t e ch n o l o g y. • O p e n u p t o n e w u s e s o f e n e r g y. • O p e n u p t o n e w w a y s o f m a n a g i n g e n e r g y f o r p e o p l e . • O p e n u p t o n e w p a r t n e r s h i p s . p e o p l e . M P V CPPo s i t i o n i n g a n d w e l l - b e i n g . Open Power • F o l l l l l l e n c e . l a b o r a t e a n d l y a c t i v i t i e s a n d t a k e i n g t o c o l P r i n c i p l e s o f C o n d u c t • M a k e d e c i s i o n s i n d a i i t y f o r t h e m . r e s p o n s i b i • S h a r e i n f o r m a t i o n , b e i n g w i o p e n t o t h e c o n t r i b u t i o n o f o t h e r s . l o w t h r o u g h w i t h c o m m i t m e n t s , p u r s u i n g a c t i v i t i e s w i t h d e t e r m i n a t i o n a n d p a s s i o n . • C h a n g e p r i o r i t i e s r a p i d l y i f t h e s i t u a t i o n e v o l v e s . • G e t r e s u l t s b y a i m i n g f o r e x c e l • A d o p t a n d p r o m o t e s a f e b e h a v i o r a n d m o v e p r o - a c t i v e l y t o i m p r o v e c o n d i t i o n s f o r h e a l t h , s a f e t y l , r e c o g n i z i n g a n d l e v e r a g i n g i n d i v i d u a l d i v e r s i t y ( c u l t u r e , g e n d e r, a g e , • W o r k f o r t h e i n t e g r a t i o n o f a l i t i e s , e t c . ) . • W o r k f o c u s i n g o n s a t i s f y i n g c u s t o m e r s a n d / o r i t i e s , p e r s o n a l c o - w o r k e r s , a c t i n g e f f e c t i v e l y a n d r a p i d l y. • P r o p o s e n e w s o l u t i o n s a n d d o n o t g i v e u p w h e n • R e c o g n i z e m e r i t i n c o - w o r k e r s a n d g i v e f e e d b a ck f a c e d w i t h o b s t a c l e s o r f a i t h a t c a n i m p r o v e t h e i r c o n t r i b u t i o n . d i s a b i l u r e . 9 3. MILESTONES 2019 JANUARY APRIL JUNE Formula E Championship returns The race took place in Santiago on January 26 at Green Label for AB InBev Chile brewery The brewery AB InBev Chile received Enel Green National Decarbonization Agreement Enel Chile, through its subsidiary Enel Generación Parque O’Higgins. Enel participated as the Official Power Chile´s Green Label, the first beer company Chile, became part of the Chilean government´s Power Partner. to receive this label It means that AB InBev Chile National Decarbonization Agreement led by the Housing program for El Barco indigenous commu- they consume to make their beer into the electricity the three coal fueled power plants in Chile; Central nity The construction of 34 homes for the indigenous system using only non-conventional renewable Tarapacá by May 2020, Bocamina 1 by December energy (NCRE) from the Diego de Almagro solar 31, 2023, and Bocamina 2 by December 31, 2040. will generate or inject the same amount of energy Ministry of Energy. The Company agreed to close families of the El Barco community, relocated be- power plant. cause of the construction of the Ralco Power Plant, began in January. The construction reached 80% progress by year-end. MAY Criminal Risk Prevention Model Certification The criminal risk prevention model (MPRP in its Enel Generación Chile signs agreement with Colla- huasi mining company for 100% renewable energy Enel Generación Chile, a subsidiary of Enel Chile, signed an energy supply agreement with Collahua- si to provide the mining company with 1 TWh per FEBRUARY Spanish acronym) implemented by Enel Chile, Enel year of 100% renewable energy. This agreement is Fitch Ratings confirmed the rating of Enel Chile S.A. Generación, Enel Distibución Chile, and Enel Green in line with the company´s commitment of to be and modified its outlook On February 6, 2019, the risk rating agency Fitch Power Chile and all subsidiaries, was certified for the main promotor of the transition of Chile’s ener- 2 years (until December 31, 2020). This certifica- gy matrix from a traditional one to a renewable one. Rating maintained the “AA” local credit rating of tion evaluates the effectiveness of the MPRP in Enel Chile S.A. and improved the outlook from sta- preventing and detecting bribery, terrorism funding, Enel Chile maintains its position in the FTSE4Good ble to positive. money laundering, handling stolen goods and other crimes within the company and in any interaction Index Series The Company maintains its rank in the first semes- Enel Chile and Enel Generación became the first with third parties. electricity companies in the country to certify their antibribery system The effectiveness of the antibribery management Let there be light! Enel Chile provided 20,000 historical photographs system implemented by Enel Chile and Enel Gen- to Chile´s Biblioteca Nacional library under a loan for ter review of the Emerging Market Index and the Latin American Index, which classifies companies worldwide according to their environmental, social and governance practices (ESG). eración Chile was recognized with the international use agreement. This historical archive that belongs standard ISO37001 certification. This international to Enel Distribución, was exhibited at the Biblioteca Feller Rate maintains Enel Chile’s risk rating The Company was locally rated “AA” with a stable standard recognizes the companies that have a sol- Nacional admission free. outlook by Feller Rate for the first time in 2017. id antibribery management system and strength- ens the transparency commitment of Enel Chile and its subsidiaries. Blue Code Enel Chile participated in the Blue Code Plan and transforms the corporate gymnasium into a shelter Moody´s confirmed the international rating of Enel Chile S.A. on June 28, 2019 The Company received a “Baa2” rating with a sta- Parque La Isla-Salto La Olla Inauguration It is a 6-hectare pristine forest located in Pilmaiquén to contribute to the Government´s campaign to pro- ble outlook. tect homeless people from the cold and rain during Permission for early retirement of Central Tarapacá Enel Generación Chile formally requested the Na- tional Energy Commission (CNE in its Spanish Ac- ronym) for permission to remove, disconnect and shutdown the operations of Central Tarapacá as of December 31, 2019. The retirement was initially scheduled to take place in May 2020. that protects the biodiversity of the flora and fauna days with critical weather conditions in winter. that inhabits the area and contributes to the conser- vation of the Mapuche culture. MARCH Women Energy Award The twelfth version of the Women Energy Award took place as part of the International Women’s Day celebration. Twelve outstanding Chilean women were acknowledged in arts, public service, envi- ronment, sustainability, education, innovation and entrepreneurship, community work, journalism or news hit of the year, entertainment and sports. 10 Enel Chile Annual Report 2019JULY NOVEMBER 100 New electric buses As part of the second phase of the electric mobility Cerro Pabellón Expansion Project Geotérmina del Norte, a joint venture undertaken by Contract signed with mining company BHP Billiton Enel Chile, through its subsidiary Enel Generación project led by Enel X, Metbus and BYD Chile within Enel Green Power, the renewable energy subsidiary Chile, signed an agreement to provide BHP Billiton the context of the public-private partnership with of Enel Chile, and ENAP, began the construction of 3 GWh/year of 100% renewable energy to begin the Ministry of Transportation and Telecommunica- the third 33 MW generation unit of the Cerro Pa- supply in 2021. This agreement allows BHP to tions, 100 new electric buses arrived in Chile to be bellón geothermal power plant. have an entirely green electricity supply matrix and added to the public transportation system of the is proof of the efforts of Enel Generación Chile to Metropolitan Region. Enel Chile receives the “Commitment to Integrity” promote the transition from the traditional energy The CNE authorizes the retirement of Central Tara- pacá (158 MW) The Company is authorized to perform the final award The 3rd version of the Generación Empresarial and Diario Financeiro award recognized Enel Chile for matrix to a renewable based matrix. its systematic commitment to promoting ethics DECEMBER shutdown as of December 31, 2019. This milestone and corporate best practices, both internally and was initially scheduled to take place in May 2020, externally. but the company formally requested to do it sooner. Enel Generación Chile and Anglo American sign SEPTEMBER an electricity supply contract to provide the mining company with up to 3 TWh/year The agreement is the largest 100% renewable en- Potable water system improvement The improvement projects of the drinking water systems of the Ayin Mapu and El Barco indigenous ergy contract in Chile to be signed with an unregu- communities reached 100% progress. lated customer. AUGUST Enel Chile and subsidiaries receive the “Generación Empresarial - Diario FInanciero” Award for their commitment to ethics and transparency The companies that belong to the Group in Chile OCTOBER First electric corridor in Latin America Enel X, Metbus and BYD inaugurated the first elec- tric vehicle corridor in Latin America, an integral, Copa Enel Enel Chile crowns the men’s team from Calama and the women’s team from Lo Prado as champions of the 18th version of the Enel Cup winning a trip to Italy to play against the lower division teams of Inter from Milan. Retirement of Central Tarapacá Enel Generación Chile disconnected, and shutdown operations of Central Tarapacá on December 31, 2019 as formally requested. This milestone was ini- tially scheduled to take place in May 2020. Reforestation Plan with native species A total 515.5 hectares have been reforested since sustainable transportation system exclusively for 2016 within the framework of the reforestation were recognized by the foundation Fundación buses that are 100% electric. This milestone puts agreement signed with Universidad de Concepción Generación Empresarial and the newspaper Diario Chile in the lead regarding electric mobility in the on December 19, 2015. Financiero with this award for systematically pro- region, the first country to implement a sustainable moting corporate compliance ethics and best prac- electric corridor for 285 zero emission buses. tices, both internally and externally. The companies received one of the three highest ratings among the Standard & Poor’s maintained Enel Chile’s Interna- 49 participants. tional Rating on October 28, 2019 The Company was rated “BBB+” with a stable out- Enel Chile announces changes in the Administra- look, an “Investment grade” rating. tion, Finance and Control Department The Board of Directors of Enel Chile appointed Enel Distribución Chile y Empresa Eléctrica Colina Giuseppe Turchiarelli as the Company´s new Admin- first distribution companies in Chile to certify their istration, Finance and Control Manager (CFO). Mr. Turchiarelli was the CFO of Enel SpA for Europe and Northern Africa. Antibribery management system Enel Distribución Chile y Empresa Eléctrica Colina concluded the ISO37001 standard certification process. It recognizes the effectiveness of Campos del Sol Enel Green Power Chile, subsidiary of Enel Chile, the management system and the companies’ leadership in terms of ethics and transparency. The began the construction of Campos del Sol. It is a management system was evaluated by an external new photovoltaic solar power plant with nearly 382 examiner during the last quarter of the year and the MW installed capacity, the largest solar plant cur- certification of the system was obtained in October. rently under construction in Chile. The project is lo- cated 60 km. northeast of Copiapó, in the Atacama Region. 3. Milestones 2019 11 12 Enel Chile Annual Report 201904. MAIN FINANCIAL AND OPERATIONAL METRICS 4. Main financial and operational metrics 13 Main financial and operational metrics 14 Enel Chile Annual Report 2019d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 As of As of December 31 of each year (figures in millions of Chilean pesos)(1) 20131 20141 20151 2016 (5) 2017 2018 2019 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) 2013 1,141 105 5,571 2014 1,261 111 6,351 5,398,711 5,694,773 7,488,020 7,857,988 1,935,717 1,907,811 3,813,856 4,110,704 2,136,041 2,522,978 2,457,161 2,770,834 627,547 739,252 891,355 1,053,492 317,561 349,383 361,709 296,154 1.13 0.56 1.29 0.50 As of December 31, of each year 2015 995 111 2016 883 111 2017 848 111 0.82 1.04 2018 930 130 0.98 1.10 2019 924 129 6,351 6,351 6,351 7,463 7,303 Electricity generated (GWh) 19,432 18,063 18,294 17,564 17,073 20,046 21,041 Energy sales (GWh) 20,406 21,157 23,558 23,689 23,356 24,369 23,513 As of December 31, of each year Distribution Business 2013 2014 2015 2016 2017 2018 2019 Energy sales (GWh) (4) 15,152 15,690 15,893 15,924 16,438 16,782 17,107 Number of customers 1,693,947 1,737,322 1,780,780 1,825,519 1,882,394 1,924,984 1,972,216 Energy losses 5.30% 5.32% 5.31% 5.33% 5.10% 5.02% 4.99% Number of employees Customers/Employees 745 2,274 690 2,518 686 2,596 690 2,653 669 2,814 681 2,827 743 2,654 (1) Accounting figures available since the incorporation of the Company (March 1, 2016) and 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 its Spanish acronym) is not included in 2014 and 2015. (5) Only ten months since its creation (March 1, 2016). 4. Main financial and operational metrics 15 16 Enel Chile Annual Report 201905. IDENTIFICATION OF THE COMPANY 05. Identification of the Company 17 Identification of the Company Name Address Company Type Taxpayer ID No Address Zip Code Telephone Nº P.O. Box Securities Registration Nº External Auditors 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 Subscribed and paid-in capital (Ch$) 3,882,103,470,184 Website Investors web address Email www.enel.cl ; www.enelchile.cl https://www.enel.cl/es/inversionistas/inversionistas-enel-chile.html comunicacion.enelchile@enel.com Investor Relations Telephone Nº Ticker in Chilean stock exchanges (56) 22353 4682 ENELCHILE Ticker in New York stock exchange ENIC Custodial Bank-ADS’s Depositary Bank-ADS’s Banco Santander Chile Citibank N.A. Domestic Risk Rating Agency Feller Rate and Fitch Chile Clasiifcadora de Riesgos Limitada International Risk Rating Agency Standard & Poor´s y Moody’s Documents of incorporation Enel Chile S.A., formerly “Enersis Chile S.A.”, was created as a consequence of the corporate reorganization that began in April 2015. Enersis S.A. controlled the generation, transmis- sion and distribution business in Chile and four other coun- tries 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 reorga- nization plan named “the Division,” splitting Enersis S.A. and created Enersis Chile S.A. as the only vehicle to control the Group’s generation and distribution assets in Chile. Enersis S.A became Enersis Americas S.A. (currently Enel Américas S.A.), the vehicle to control all assets of the businesses in other countries in the region. The Division was recorded in a public deed issued on January 8, 2016 by the Santiago Notary 18 Enel Chile Annual Report 2019Public, Mr. Ivan Torrealba Acevedo, and its extract was regis- The Company’s purpose is to perform the exploration, de- tered in the Commercial Register (Registro de Comercio del velopment, operation, generation, distribution, transmission, Conservador de Bienes Raíces y Comercio de Santiago) on transformation and sales of energy in any of its forms and na- pages 4,288 No 2,570 of 2016 and published in the Official ture, directly or through other companies, and also research, Gazette on January 20, 2016. development, operation, commercialization, purchase, sale, imports and maintenance of any goods related to information Later, on October 4, 2016, the shareholders of Enersis Chile technology and telecommunications, such as, software, hard- S.A. approved changing the name of the Company to “Enel ware, licenses, software development, and in general, any Chile S.A.” This agreement was recorded in a public deed on product related to the aforementioned activities; and con- October 18, 2016 by the Santiago Notary Public, Mr. Ivan Tor- sulting services in all subjects related to the previously men- realba Acevedo. Its extract was registered in the Commercial tioned subjects. It may also invest and manage its subsidiaries Register (Registro de Comercio del Conservador de Bienes and associate companies, whether generators, transmitters, Raíces y Comercio de Santiago) on pages 79,330 No 42,809 of distributors or traders of electricity or whose business is any 2016 and published in the Official Gazette on October 28, 2016. of the following: (i) energy, in any of its forms or nature, (ii) On December 20, 2017, the shareholders approved amending (iii) telecommunications and information technology, and (iv) the bylaws to include the agreements regarding the merger of intermediation over the internet. In complying with its main Enel Green Power Latin America S.A. into Enel Chile, its capi- purpose, the Company will carry out the following functions: the supply of public utilities or whose main input is energy, tal increase and other agreements adopted during said Share- holders’ Meeting, replacing the articles referring to its capital, a) Promote, organize, incorporate, modify, dissolve or and corporate purpose to include information technology and liquidate companies of any nature that have a corporate communications , among other amendments, and agreeing to purpose similar to the Company’s corporate purpose. the rewritten and updated text of the bylaws, subject to the b) Propose investment, financing and business policies to conditions approved at the Meeting. The minute of said Share- subsidiary companies, as well as accounting criteria and holders’ Meeting was recorded as a public deed dated Decem- systems that these should follow. ber 28, 2017, by the Santiago Notary Public, Mr. Ivan Torrealba Acevedo, and its extract was registered in the Commercial Reg- c) d) Supervise the management of subsidiaries. Provide subsidiaries or associate companies with the ister (Registro de Comercio del Conservador de Bienes Raíces necessary financing to develop their business and pro- y Comercio de Santiago) on pages 1154 No 629 of 2018 and vide them management services; financial, technical, le- published in the Official Gazette on January 5, 2018. gal and auditing advice; and in general, any service that Corporate purpose 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, admin- istration, intermediation, trading, and disposal of all kinds of movable and immovable assets, either directly or through The corporate purpose of the Company appears in the bylaw’s subsidiaries or associate companies. amendment approved by the Extraordinary Shareholders Meeting held on December 20, 2017 and recorded as a pub- Second, all kinds of financial assets, including shares, bonds lic deed dated December 28, 2017 granted by the Santiago and debentures, commercial paper and in general all kinds of Notary Public Mr. Iván Torrealba Acevedo, and its extract was titles or securities and Company contributions, either directly registered on pages 1154 No 629 of 2018 and published in the or through subsidiaries or affiliate companies. Official Gazette on January 5, 2018. d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 05. Identification of the Company 19 20 Enel Chile Annual Report 201906. OWNERSHIP AND CONTROL 06. Ownership and control 21 Ownership structure Ownership structure The total share capital of the Company was divided into 69,166,557,220 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, 967,520,598 Company shares resulted from the shareholders withdrawal and exchange rights. The shares resulting from withdrawal rights were eliminated by means of a capital reduction legalized in public deed dated May 13, 2019. As of December 31, 2019, all shares were subscribed and paid, and ownership was distributed as follows: Shareholder Enel SpA Pension Fund Administration Companies (A.F.P) Foreign Investment Funds Stockbrokers, Insurance companies and Mutual Funds Citibank N.A. as stated in S.V.S. Circular 1375 (ADS´s) (*) Other 6,044 shareholders Total Outstanding Shares Remaining shares resulting from exchange Total Shares (*) S.V.S. is currently the Financial Market Commission “CMF” (in its Spanish acronym). Number of shares Ownership share 42,832,058,392 10,345,459,507 8,315,070,942 3,847,094,025 2,714,732,273 1,112,142,080 61.93% 14.96% 12.02% 5.56% 3.92% 1.61% 69,166,557,219 100.00% 1 69,166,557,220 22 Enel Chile Annual Report 2019Controlling Shareholders On November 16, 2017, the merger of Enel South America S.R.L. with and into Enel S.p.A. was registered in the Com- pany Register of Roma, Republic of Italy. As a result of the merger, Enel SpA was the surviving entity with all legal rights, and obligations of Enel South America S.R.L. Consequently, as of that date, Enel SpA directly controls Enel Chile S.A. (with As defined by Title XV of Law 18,045, Enel Chile S.A. is con- a 60.62% ownership share). trolled by Enel SpA., a publicly traded Italian company, that owns 61.93% of the shares issued by Enel Chile S.A. The merger of Hydromac Energy S.R.L. and Enel Holding On December 19, 2016, Enel Latinoamérica, S.A. and Enel holding In Enel Chile S.A. respectively, with and into Enel SpA Iberoamérica, S.R.L. agreed to merge by the latter absorbing was registered in the Company Register of Roma, Republic of Chile S.R.L., companies that held 18.62% and 0.02% share- the first and therefore dissolving Enel Latinoamérica, S.A., Italy on December 12, 2018. and Enel Iberoamérica, S.R.L. becoming the surviving entity with all legal rights, obligations, and third-party relationships. As a result of the merger of Hydromac Energy S.R.L. and Enel On December 20, 2016, the agreement was formalized and Holding Chile S.R.L with and into Enel SpA, as the surviving recorded in a public deed granted by the Madrid Notary, Mr. entity, all legal rights and obligations of Hydromac Energy Andrés Domínguez Nafría. The merger was registered in the S.R.L. and Enel Holding Chile S.R.L are transferred to Enel Commercial Register of Madrid and the Company’s Share- SpA. holder Registry on February 13, 2016, although the registra- tion was retroactively effective as of the date of its presenta- Consequently, as of December 12, 2018, Enel SpA increased tion, which took place on December 21, 2016. its direct shareholding in Enel Chile S.A. to 61.93%. The Board of Directors of Enel Iberoamérica S.R.L., in its ses- Shareholders of Enel SpA at December 31, 2019 Shareholding sion held on April 6, 2017, agreed to divide Enel Iberoamérica Ministero dell’Economia e delle Finanze de Italia S.R.L. and incorporate, according to Italian regulation, Enel Other Investors (Institutional and Retail) South América S.R.L. that would become the sole owner of Total the interests held by Enel Iberoamérica S.R.L. in Enel Chile 23.6% 76.4% 100.0% and Enel Américas S.A. According to such agreement, the The shareholders of the controlling entity do not have a share- incorporation of Enel Americas S.R.L. was registered in the holders’ agreement. Company Register of Roma on June 8, 2017 and from that date on, Enel SpA controlled Enel Chile S.A. through Enel South America S.R.L. d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 06. Ownership and control 23 Twelve major shareholders of the Company as of December 31, 2019: Name Enel SpA Citibank N.A. as stated in S.V.S. Circular 1375 (ADS´s) Banco Itaú Corpbanca on behalf of foreign investors Banco Santander on behalf of foreign investors Banco de Chile on behalf of nonresident third parties AFP Habitat S.A. for Pension Fund C AFP Provida S.A. for Pension Fund C AFP Cuprum S.A. for Pension Fund C AFP Capital S.A. for Pension Fund C Banchile C de B S.A. AFP Habitat S.A. Pension Fund B AFP Habitat S.A. Pension Fund A Subtotal 12 shareholders Taxpayer ID 59,243,980-8 59,135,290-3 97,023,000-9 97,036,000-K 97,004,000-5 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 Shareholding 42,832,058,392 61.93% 2,714,732,273 2,612,670,297 2,398,326,103 2,226,587,203 1,606,075,838 1,435,599,052 974,696,344 876,068,794 713,463,345 549,131,351 534,474,273 3.92% 3.78% 3.47% 3.22% 2.32% 2.08% 1.41% 1.27% 1.03% 0.79% 0.77% 59,473,883,265 85.99% Other 6,181 shareholders* 9,692,673,954 14.01% TOTAL 6,193 SHAREHOLDERS 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. 24 Enel Chile Annual Report 2019d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 Most important changes in ownership share Name Taxpayer ID. N° of shares at 12/31/2018 N° of shares at 12/31/2019 Shareholding Variation in percentage points Banco de Chile on behalf of non-resident third parties 97,004,000-5 2,938,360,307 2,226,587,203 Banco de Chile on behalf of Citi NA New York Clie 97,004,000-5 0 458,239,595 Banco Santander on behalf of Foreign Investors 97,036,000-K 2,036,665,979 2,398,326,103 AFP Habitat S.A. 98,000,100-8 2,674,373,869 3,005,808,747 Banco Itau Corpbanca on behalf of Foreign Investors 97,023,000-9 2,412,256,213 2,612,670,297 Banco de Chile on behalf of Citi NA London Client 97,004,000-5 0 190,308,275 AFP Provida S.A. 76,265,736-8 2,399,448,619 2,509,406,123 Bice Inversiones Corredores de Bolsa S.A. Investment Fund MBI Arbitrage 79,532,990-0 76,023,598-9 260,627,799 153,652,663 207,262,027 111,351,674 Cía de Seguros de Vida Consorcio Nacional de Seguros S.A. 99,012,000-5 249,595,832 159,383,221 BTG Pactual Chile S.A. Stock Broker Mutual Fund BTG Pactual Chile Acción 84,177,300-4 96,966,250-7 387,425,204 297,757,112 389,663,908 304,156,655 -0.0103 0.0066 0.0052 0.0048 0.0029 0.0028 0.0016 -0.0015 -0.0014 -0.0013 -0.0013 -0.0012 Stock market transactions among related parties during 2019 There were no transactions among related parties during 2019 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 De- cember 31, 2019, 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. 06. Ownership and control 25 26 Enel Chile Annual Report 201907. MANAGEMENT 07. Management 27 D DIRECTORS 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 Daniele Caprini Graduate of Economics Università degli Studi di Siena Universidad de LUISS-Rome Passport: YA9188092 Since 04.25.2018 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 C 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 Giulio Fazio Graduate of Legal and Social Sciences Universidad de los Estudios de Palermo Lawyer Passport: YA 4656507 Since 04.25.2018 Fernán Gazmuri Plaza Commercial Engineer Pontificia Universidad Católica de Chile Taxpayer ID: 4,461,192-9 Since 04.25.2018 Gerardo Jofré Miranda Commercial Engineer Pontificia Universidad Católica de Chile Taxpayer ID: 5,672,444-3 Since 04.25.2018 Over the past two years the following individual was also a director of Enel Chile: Vincenzo Ranieri Graduate of Business Administration Universidad de LUISS- Rome Passport: YA 7616919 From 04.28.2016 Until: 02.28.2018 28 Enel Chile Annual Report 2019d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 Board of Directors 1 5 2 6 3 7 4 4. DIRECTOR Fernán Gazmuri Plaza Commercial Engineer Pontificia Universidad Católica de Chile Taxpayer ID: 4,461,192-9 Since 04.25.2018 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: YA9188092 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 Enel Chile is managed by a Board of Directors comprised of During 2019, the Company began a Board of Directors Training seven members for a three-year term and may be reelected. Program to support board members in updating their skills The Board of Directors was elected at the Ordinary Sharehold- and knowledge on several subjects, such as “Relevant Sus- ers’ Meeting held on April 25, 2018. As stated by the Chilean tainability Topics: Analysis of Certification Entities and Follow Corporations Law, in the event of a vacancy, the Board must Up Indices”, “ New Accountings Standards applicable to the be totally renewed at the Company’s forthcoming Ordinary Company”, among others. Shareholders’ Meeting, and the Board may appoint a substi- tute in the interim. The Board does not have alternate mem- Before the shareholders ‘meeting takes place, the Company bers. posts the resumes of the candidates to the Board on the web- site for shareholders to review the candidates´ abilities and experience. 07. Management 29 The Company’s Risk Policy was approved by the Board in the The Company has a whistleblowing tool titled Ethic Channel meeting held May 31, 2017. The Board of Directors meets with that is known by all employees. All reports received are inves- the Risk Management Department at least once every three tigated and informed to the Directors’ Committee. It is avail- months to analyze the risk matrix, which includes sustainabili- able to employees, shareholders, customers, suppliers and ty risks and the respective mitigation measures. third parties on the Company´s website. The Company has implemented a board member induction Since 2018, the Board of Directors has made at least to visits process to contribute to the effectiveness of the integration to an Enel group facility, being informed on the status and process, which includes subjects considered to be necessary operations of such facilities and also the main activities and for members to perform their duties adequately. The induc- concerns of the individuals that work there. tion process involves providing new board members with the following documents, among others: bylaws, board meeting The bylaws of the Company do not refer to alternate board minutes and Directors´ Committee minutes to those that members. are also a member of such committee, shareholders’ meet- ing minutes for the last two years, significant events, annual reports, sustainability reports, audited financial statements and quarterly financial statements, risk reports, human rights policy, and others. The content of this material also includes information regarding the Company´s business, strategies and risks. This process provides new board members access to extensive, not only the most relevant, information on the Company. The Company´s contingency plans have been designed to react to material critical events or crises by forming ad-hoc committees of experts to face the specific situation. The Board of Directors met with the Internal Audit Depart- ment periodically to analyze the annual audit plan, monitor ac- tion plans, examine the effectiveness of the Company´s crime detection model, in addition to other matters detailed in the Ethics and Transparency section of this Annual Report. The Board of Directors meets with the Sustainability Depart- ment quarterly to analyze the effectiveness of the Company´s social responsibility and sustainable development policies and also the goals and performance of sustainability indexes. The Board of Directors meets with the External Auditors quarterly to examine audit plan issues and other matters, in compliance with the voluntary business practice established by General Norm 385 issued by the Financial Market Com- mission. The Board of Directors is provided with an electronic doc- ument delivery system that allows members to have safe, remote and permanent access to board meeting documenta- tion at least 3 days before each session. The objective of the system is also paperless management of all documentation available to the members of the Board. 30 Board of Directors’ and Directors’ Committee compensation Under Article 33 of Law 18,046, the Chilean Corporations Law, the Ordinary Shareholders’ Meeting held on April 25, 2018 approved the compensation of the Board of Directors and Directors’ Committee for 2018. The compensation of the Board of Directors consists of a monthly compensation paid to each director. A portion of such monthly payment is unconditional and equal to 216 Unidades de Fomento (UF in its Spanish acronym) Chilean inflation-in- dexed, Chilean peso-denominated monetary unit, and an ad- ditional 79.2 UF per session attended with a maximum of 16 sessions in total, either ordinary or extraordinary. The compensation of the Directors’ Committee is a month- ly payment that includes an unconditional amount equal to 72 UF and an additional 26.4 UF per session attended with a maximum of 16 sessions in total, either ordinary or extraordi- nary within each fiscal year. The total compensation expense during 2019 amounted to Ch$ 616,818,797 and is detailed in the following table. Enel Chile Annual Report 2019Board of Directors’ compensation in 2019 Figures in Ch$ Board Member Name Herman Chadwick Piñera Giulio Fazio (1) Salvatore Bernabei (1) Daniele Caprini (1) Fernán Gazmuri Plaza Juan Gerardo Jofré Miranda Pablo Cabrera Gaete Total General Position Chairman Director Director Director Director Director Director Fixed Compensation Ordinary and Extraordinary Sessions Committee’s Fixed Compensation 144,511,517 61,838,829 - - - - - - - - - - Directors Committee Ordinary and Extraordinary Sessions - - - - 72,255,758 72,255,758 72,255,758 30,919,415 30,919,415 30,919,415 361,278,792 154,597,073 24,085,253 24,085,253 24,085,253 72,255,758 9,562,391 9,562,391 9,562,391 28,687,173 Variable Compensation (2) TOTAL 2019 - 206,350,346 - - - - - - - - - - 136,822,817 136,822,817 136,822,817 616,818,797 (1) Mr. Giulio Fazio, Salvatore Bernabei and Daniele Caprini waived their compensation for being executives of the Enel SpA Group. (2) Variable compensation is no longer considered board member compensation The total compensation expense for 2018 was Ch$ 547,524,550 and is detailed in the following table. Board of Directors’ compensation in 2018 Figures in Ch$ Board Member Name Herman Chadwick Piñera Giulio Fazio (1) Salvatore Bernabei (1) Daniele Caprini (1) Fernán Gazmuri Plaza Juan Gerardo Jofré Miranda Pablo Cabrera Gaete Total General Position Chairman Director Director Director Director Director Director Fixed Compensation Ordinary and Extraordinary Sessions Committee’s Fixed Compensation 133,016,070 48,772,559 - - - - - - - - - - Directors Committee Ordinary and Extraordinary Sessions - - - - 66,508,035 24,386,279 22,175,787 66,508,035 24,386,279 22,175,787 66,508,035 24,386,279 22,175,787 8,841,872 8,841,872 8,841,872 332,540,174 121,931,397 66,527,362 26,525,616 Variable Compensation - - - - - - - - TOTAL 2018 181,788,628 - - - 121,911,974 121,911,974 121,911,974 547,524,550 (1) Mr. Giulio Fazio, Salvatore Bernabei and Daniele Caprini waived their compensation for being executives of the Enel SpA Group. Incentive plan Director’s compensation for 2019 did not include an incentive plan. Board of Directors’ consulting expenses The Board of Directors did not spend on consulting services in 2019. d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 07. Management 31 Diversity in the Board of Directors Directors’ Committee Number of people by gender: Female Male Total Number of people by nationality: Chilean Italian Total Number of people by age group: Between 41 and 50 years Between 51 and 60 years Between 61 and 70 years More than 70 Total Number of people by years of service: Less than 3 years From 3 to 12 years More than 12 years Total 0 7 7 4 3 7 3 0 0 4 7 2 5 0 7 Ownership in Enel Chile S.A. As of December 31, 2019, according to the shareholder’s register, none of the Directors in office owned shares of the Company. 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. Gerardo Jofré Mi- randa and Mr. Pablo Cabrera Gaete as members to the Direc- tors’ Committee, all independent directors as defined by Arti- cle 50 bis of the Chilean Corporations Law 18,046. Mr. Fernán Gazmuri Plaza was appointed financial expert and Chairman of the Directors’ Committee during the ordinary session of the Directors’ Committee held on April 25, 2018, and Mr. Domin- go Valdés Prieto was appointed Secretary to the Directors’ Committee. Annual management report The Directors’ Committee of the Company held 13 sessions during 2019, therefore fully complying with the obligations established in Article 50 bis of the Chilean Corporations Law 18,046 and additional applicable regulation. During 2019, the Directors’ Committee addressed the matters that are summarized below: 1. Financial Statements: - During the session held on February 28, 2019, the Di- rectors’ Committee analyzed the Consolidated Financial Statements of the Company as of December 31, 2018, including its Notes, Income Statement and Significant Events as well as the respective External Auditors’ re- ports and Account Inspectors’ reports. 32 Enel Chile Annual Report 2019- During the extraordinary session held on May 7, 2019, During the ordinary session held on June 27, 2019, the the Directors’ Committee unanimously declared having Directors’ Committee unanimously declared having ex- examined the Consolidated Financial Statements of the amined the Related Party Transactions with Enel Green Company as of March 31, 2018 and its Notes, Income Power Chile del Sur (EGP del Sur) that consist of the guar- Statement and Significant Events and the report on antees and hedges granted by Enel Chile regarding (i) related party transactions. EGP del Sur obligations with Enel Finance International NV (EFI) for up to approximately US$ 700 million, and (ii) - During the ordinary session held on July 30, 2019, the EGP del Sur interest rate and/or exchange rate hedging in- Directors’ Committee unanimously declared having ex- struments required to manage financial risk for up to US$ amined the Consolidated Financial Statements of the 700 million, considering such guarantees may allow EGP Company as of June 30, 2019 and its Notes, Manage- de Sur to renegotiate its loan to obtain better financial ment´s Financial Statement Analysis, Income Statement conditions, namely, reduce the spread and consequently and Significant Events. reduce the Company’s financial cost significantly. Since EGP del Sur is an indirect subsidiary, wholly owned by - During the ordinary session held on October 30, 2019, Enel Chile, the substantial reduction of its financial cost the Directors’ Committee unanimously declared hav- also has a positive impact on Enel Chile’s financial results. ing examined the Consolidated Financial Statements of the Company as of September 30, 2019 and its Notes, The Directors’ Committee declared that the Related Party Management´s Financial Statement Analysis, Income Transactions contributed to the best interest of the Com- Statement and Significant Events, and the external audi- pany and were carried out under terms and conditions tor’s report on related party transactions. currently prevailing in the market. 2. Examination of services to be rendered by External The above notwithstanding the previously approved ex- Auditors. ternal auditor´s report on related party transactions. During the ordinary session held on July 30, the non-re- current services to be rendered by the external auditors 4. Supervision and Evaluation of External Auditors. were examined. The Committee unanimously agreed to During the ordinary session held February 28, 2019, the declare that such services do not compromise the tech- Directors’ Committee unanimously agreed that the work nical competence nor the independent judgement of the performed in 2018 by the Company’s external auditors, respective external auditing firms, as stated in Section EY Audit SpA, was reasonable. 202 of the Sarbanes Oxley Act, in the last paragraph of Article 242 of the Capital Markets Law 18,045 and in the 5. External Auditors’ Report on Bank Transfers and Directors’ Committee Regulations. Money Brokerage. During the session held on February 28, 2019, the Direc- 3. Examination of Related Party Transactions. tors’ Committee unanimously agreed to acknowledge During the ordinary session held on March 28, 2019, that they had formally and expressly noted the report the Directors’ Committee unanimously declared having on money brokerage and bank transfers prepared by EY examined Related Party Transactions including the addi- Audit SpA the external auditors of Enel Chile S.A., dat- tional more flexible, revolving, senior, unsecured revolv- ed February 28, 2019. They also stated that although the ing bank loans obtained by Enel Chile, to replace Enel respective rule had been revoked, an entity that has not Generación Chile S.A. credit lines, provided by a group been authorized by the competent government authority of financial institutions that include Enel Finance Interna- to carry out activities defined as banking or money bro- tional (EFI), a subsidiary of Enel SpA, to finance general kerage, may not legally do so. corporate needs for up to US$ 200 million in dollars, or the equivalent in Chilean pesos or Unidades de Fomento 6. Examination of Internal Control Letter CMF Circular 422. (UF in its Spanish acronym), a Chilean inflation-indexed, The Directors´ Committee examined this subject during Chilean Pesos denominated monetary unit. the ordinary session held on February 28, 2019. On De- d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 07. Management 33 cember 6, 2007, the Financial Market Commission issued by External Auditors and highlighted that the subjects re- Circular 422, which supplements Circular 980 dated De- ferred to by items ii, iii and v of such numeral had not cember 24, 1990. This Circular offers specific instructions taken place. on internal control procedures, providing for the submis- sion of a provisional report and a broad time frame for 8. External auditors’ Fees in fiscal year 2018 and esti- the external auditors to submit a final internal control mate for 2019. report, allowing it to be delivered until the date in which During the ordinary session held on January 22, 2019, the Board of Directors takes note of the financial state- the Directors’ Committee unanimously agreed to declare ments at year end of each fiscal year. The Chairman of the having examined the fees paid by the Company to the Directors’ Committee, Mr. Fernán Gazmuri Plaza, stated different auditing firms in 2018 and also having analyzed that the rules referred to above had been revoked, but the estimate of recurrent auditing service fees for 2019. even so, Article 246 of the Securities Market Law, among other issues, establishes that the external auditors are 9. Enel Chile S.A. External Auditor contract with EY Au- responsible for informing the Board of Directors and the dit SpA for 2019. Directors’ Committee on the deficiencies regarding ac- During the extraordinary session held May 7, 2019, counting practices, management systems and internal the Directors’ Committee unanimously agreed to de- auditing practices detected while performing the external clare having examined and approved the contract to be audit. Also, identify the discrepancies between the ac- subscribed between Enel Chile S.A. and external auditors counting practices used by the Company in its Financial EY. Statements and the relevant criteria generally applied in the company´s specific industry. Additionally, they must 10. External Auditors Proposed. inform on the compliance with tax related obligations of During the ordinary session held on March 28, 2019, the the Company and its subsidiaries included in the respec- Directors’ Committee unanimously agreed to propose tive external audit. Consequently, the External Auditor to the Company’s Board of Directors to propose to the was still required to inform on internal control issues de- Ordinary Shareholders’ Meeting the following auditing tected while performing the external audit. The revoca- firms, in the order of preference presented, as the external tion of the rules did not affect the deadline established auditor firm of Enel Chile S.A. for 2019: 1-EY; 2-BDO; by the Financial Market Commission (CMF in its Spanish 3-PKF. The arguments considered relevant in proposing acronym) rule NCG 30 to submit the Financial Statements EY in first place as external auditor of the Company and consequently it was understood that the internal con- are the following: (i) it presented the most competitive trol report, as part of the information to be submitted, proposal based on the technical and economic evaluations should be provided by the external auditors during the performed on the proposals received; (ii) it is highly first quarter of each year to be available for the review qualified in terms of available resources and experience and approval of the annual financial statements. During in the electricity sector; (iii) it is one of the four most this same session, the Directors´ Committee agreed to important external auditing firms on the national and state that the directors, unanimously, had formally and international level; (iv) it is the external auditing firm with expressly taken note of the Internal Control Letter dated greatest synergies with Enel Chile S.A. because EY is February 28,2019, prepared by EY Audit SpA to comply the main external auditing firm of Enel SpA, Enel Chile´s with such regulation. controlling shareholder, and (v) the Directors’ Committee has evaluated the relationship between the Company and 7. External Auditors’ Examination of subjects covered EY and considers it to be reasonable. by NCG 385. During the ordinary session held on February 28, 2019, 11. 20-F Form submitted to the Securities and Exchange the Directors’ Committee unanimously declared having Commission of the United States of America (SEC). examined the subjects voluntarily presented as good cor- During the ordinary session held on April 29, 2019, the Di- porate governance, included in numeral 1 d) of the SVS rectors’ Committee unanimously declared having examined General Norm 385 based on the presentation performed the financial statements under IFRS to be included in the 34 Enel Chile Annual Report 2019 20-F Form to be presented to the Securities and Exchange 15. Directors’ Committee Budget for 2019. Commission of the United States of America in compliance During the ordinary session held on February 28, 2019, with the rules and requirements of the SEC. the Directors’ Committee unanimously approved the 2019 Directors’ Committee Budget amounting to 10,000 12. Private Risk Rating Agencies Proposed. Unidades de Fomento (UF in its Spanish acronym) During the ordinary session held on February 28, 2019, the for the Committee and its consultants’ expenses and Directors’ Committee unanimously agreed to propose to operations. The members of the Directors’ Committee the Company’s Board of Directors to suggest Feller Rate also unanimously decided to submit this 2019 Directors’ Clasificadora de Riesgo Limitada and Fitch Chile Clasifi- Committee Budget proposal to the approval of the Board cadora de Riesgo Limitada to the shareholders meeting of Directors so that, if approved, they submit it to the as the local private risk rating agencies and Fitch Ratings, Ordinary Shareholders Meeting to take place in April 2019 Moody´s Investors Services and Standard & Poor’s Inter- for final approval. national Rating Services s as the international private risk rating agencies for fiscal year 2019. 16. Analysis of External auditors’ fees for fiscal year 2018. During the ordinary session held on January 22, 2019, 13. Analysis of Ethics Channel complaints. the Directors’ Committee unanimously agreed to declare During the ordinary session held January 22, 2019, the having examined the external auditor fees of recurrent, Directors’ Committee unanimously gave its opinion on non-recurrent and other services paid during 2018 by the complaints received, offering guidelines on how to Enel Chile and subsidiaries separately concluding that proceed with each complaint and confirming what had they had not affected the competence nor the indepen- been already resolved by the Committee. In this regard, dence of such firms. the Chairman of the Directors’ Committee is to summon an extraordinary session if he considers it necessary to resolve a certain complaint. During the ordinary session held August 28, 2019, the Directors´ Committee unanimously gave its opinion on every complaint received, as indicated in the previous paragraph. 14. Examination of the Company´s remuneration and compensation plan for senior executives, managers and employees. During the ordinary session held on June 27, 2019, the Directors’ Committee, unanimously, declared having examined the remuneration and compensation plan for se- nior executives, managers and employees of the Company. Enel Chile S.A. Directors’ Committee expenses The Directors’ Committee did not spend its operational bud- get approved by the Ordinary Shareholders Meeting held April 29, 2019. d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 07. Management 35 C Chairman Herman Chadwick Piñera M MANAGEMENT CEO Chief Executive Officer(*) Paolo Pallotti Administration, Finance and Control Officer (*) Giuseppe Turchiarelli(1) Audit Officer(*) Raffaele Cutrignelli(2) Communications Chile Officer Claudio Vera Acuña People and Organization Officer(*) Liliana Schnaidt Hagedorn Institutional Affairs Officer Pedro Urzua Frei General Counsel and Corporate Affairs(*) Domingo Valdés Prieto Regulation Officer Mónica de Martino Services Officer Alison Dunsmore Procurement Officer Raúl Puentes Barrera Safety Officer Andrés Pinto Sustainability Officer Antonella Pellegrini Digital Solutions Officer Ángel Barrios (*) Key Executive (1) Was appointed on 11.15.2019 to replace Marcelo de Jesús (2) Eugenio Belinchon Gueto replaced Mr. Cutrinelli on 03.01.2020 Note: During 2019, the following positions were no longer Key Executives: Pedro Urzúa (until 09.24.2019) Mónica De Martino (until 09.24.2019) Alison Dunsmore Moreira (until 09.24.2019) Angel Barrios (until 09.24.2019) Antonella Pellegrini (until 09.24.2019) Andrés Pinto Bontá (until 09.24.2019) Raúl Puentes Barrera (until 09.24.2019) Claudia Navarrete (until 09.24.2019) 36 Enel Chile Annual Report 2019Key executives 1 4 2 5 1. CHIEF EXECUTIVE OFFICER Paolo Pallotti Electronic Engineer Universidad de Ancona Leadership for energy executive program Harvard Business School Taxpayer ID: 26,102,661-9 Since 10.01.2018 2. MANAGEMENT, FINANCE AND CONTROL OFFICER Giuseppe Turchiarelli Economist Universidad de Cagliari Executive MBA at “LUISS” Business School Taxpayer ID 27,101,372-8 Since 11.15.2019 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 From 10.01.2016 to 02.29.2020 (*) Replaced by Eugenio Belinchon Gueto on 03.01.2020 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 3 d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 07. Management 37 Key executives and managers compensation Incentive plans and key executives During 2019, the compensation and benefits received by the Enel Chile has an annual bonus plan for its executives based chief executive officer and key executives of the Company on achieving objectives and the level of individual contribution amounted to a fixed compensation of Ch$ 2,357 million and to the Company’s results. This plan defines a bonus range for Ch$ 209 million in benefits. each management or hierarchical level. Executive bonuses are expressed as a specific number of monthly gross salaries. During 2018, the compensation and benefits received by the chief executive officer and key executives of the Company amounted to a fixed compensation of Ch$ 2,734 million and Ch$ 707 million in benefits. These amounts include remuneration and benefits of managers and key executives that held their position in the Company at year-end and also those who left the Company during the respective year. Benefits for key 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 em- ployee at the time executed. In 2019, the amount spent on these benefits was Ch$ 9 million, which is included in the compensation received by key executives. Severance payments to managers and key executives There were no severance payments for years of service in 2019. Ownership of Enel Chile Based on the shareholder’s register, as of December 31, 2019, no executive owned shares of the Company. There are no requirements regarding the ownership of Com- pany shares by the chief executive officer or main executives. What is mandatory by the Securities Market Law and the Manual of Information of Interest to the Market, is that the CEO and main executives inform their share position and the respective transactions. 38 Enel Chile Annual Report 2019 d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 1 2 3 4 Management of main subsidiaries 1. Enel Generación Chile Michele Siciliano Chief Executive Officer Mechanical Engineer Università della Calabria 2. Enel Distribución Chile Ramón Francisco Castañeda Ponce Chief Executive Officer Civil Industrial Engineer Pontificia Universidad Católica de Chile 3. Enel Green Power Chile James Lee Stancampiano Chief Executive Officer Environmental Economist Università degli Studi di Siena 4. Enel X Chile Karla Zapata Chief Executive Officer Industrial Engineer Universidad Ricardo Palma, Perú 07. Management 39 40 Enel Chile Annual Report 201908. PEOPLE AND ORGANIZATION 08. People and organization 41 Workforce The employees per category of Enel Chile and its subsidiaries and jointly controlled entities as of December 31, 2019 are the following: Company Enel Chile Enel X (1) Enel Generación (2) Enel Green Power (3) Enel Distribución (4) Total Managers and Key Executives Professionals and Technicians Employees and Others 5 1 11 1 7 25 434 4 616 210 705 1,969 36 1 83 3 31 154 Total 475 6 710 214 743 2,148 Note: 1. Enel X: Key Executive Karla Zapata 2. Enel Generación includes: Gas Atacama Argentina and Empresa Eléctrica Pehuenche 3. Enel Green Power includes: Eléctrica Panguipulli and Geotérmica del Norte 4. Enel Distribución includes: Eléctrica de Colina and Luz Andes 42 Enel Chile Annual Report 2019Diversity Diversity of the Chief Executive Office and other departments that report to the CEO or Board of Directors Nationality Brazilian Chilean Argentinean Italian Peruvian Colombian Venezuelan Enel Chile Total d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 Enel Chile 4 453 2 4 1 6 5 475 Enel Chile 19 165 172 107 12 0 475 Enel Chile 106 38 69 37 225 475 79% 93% 86% 91% 94% 89% 117% 91% Age Group Less than 30 Between 30 and 40 Between 41 and 50 Between 51 and 60 Between 61 and 70 More than 70 Total Years of Service Less than 3 years Between 3 and 6 years More than 6 years less than 9 years Between 9 and 12 years More than 12 years Total 1 4 5 Enel Chile 2 3 5 Enel Chile 0 2 1 2 0 5 Enel Chile 3 1 0 0 1 5 Categories Senior Management Middle Management – Level 1 Middle Management – Level 2 Middle Management – Level 3 Enel Chile 196 279 475 Professionals – Level 1 Professionals – Level 2 Administrative Average Average fixed salary of women compared to men within the same professional category Gender Female Male Total Nationality Chilean Italian Total Age Group Less than 30 Between 30 and 40 Between 41 and 50 Between 51 and 60 Between 61 and 70 Total Years of Service Less than 3 Between 3 and 6 More than 6 less than 9 Between 9 and 12 years More than 12 years Total Diversity in the Organization Gender Female Male Total 08. People and organization 43 People and organizational activities Labor relations The collective bargaining process was carried out with the three unions of the Company during 2019. The negotiations with the Professional Workers Union concluded in July and the two early negotiation processes with the ICT Union and the Administrative Workers´ Union ended in September and November, respectively. All processes culminated to the satisfaction of all parties with collective labor contracts to be in force for the next three years. The periodical meetings program with the Company’s unions remains in place, strengthening open dialogue with employee representatives and maintaining a healthy work climate. Safety measures and occupational health For Enel Chile S.A., safeguarding the Health and Safety of its workers are fundamental elements that respond to the Orga- nization’s concern for keeping people healthy and fit for the activities they perform, as well as avoiding and controlling in- cidents and/or illnesses arising in the workplace. Given the above, the following preventive and informative health programs and initiatives stand out: Health dissemination and pro- motion A set of activities such as postcards, posters, mailings, graphics, contests, among others, which aim to train, educate and improve workers’ quality of life and health. > March: Anti-stress campaign: practical recommendations for dealing with stressful situations in the workplace. > April: Immunization Campaign: Massive invitation for vacci- nation against Influenza > May: Anti-tobacco Campaign: Tips to prevent and avoid its consumption > June: Colon Cancer and Gastric Cancer Campaign: Recom- mendations for the timely detection and prevention of these diseases through a Preventive Health Exam. > July: Viral and Respiratory Disease Prevention Campaign: practical recommendations to prevent possible infections. > August: Heart Care Campaign: Set of recommendations that aim to promote self-care. > September: Cervical and Prostate Cancer Campaign: Tips for its detection by taking a preventive health exam. > October: Breast Cancer Prevention Campaign: Invitation to participate in the prevention of this disease through early detection/self-examination. > November: Healthy Eating Campaign: Tips for a better diet and lifestyle. > December: Skin Cancer Campaign: Tips for skin care against ultraviolet radiation and other agents. 44 Enel Chile Annual Report 2019Activities for Enel Chile Group employees Human resource management Immunization program Immunization of Enel Chile’s employees is a preventive mea- sure that focuses on preventing recurrent contagious illness- es. The Company provides seasonal Influenza vaccines to all its employees, in addition to having the Traveler’s Medicine Program operational throughout the year (access to preven- tive vaccines for employees who must work in other coun- tries). > Seasonal Influenza vaccine: Performed during the first quarter of the year to prevent outbreaks that begin in early 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 workers and is carried out following a pro- tocol defined according to gender and age. Cardiovascular risk program It is a program that seeks to change habits and behavior through nutritional and targeted physical condition evaluations to improve medical parameters. This program is for all work- ers who, according to preventive examinations, display two or more Cardiovascular Risk factors. The management of workplace climate and workplace com- mitment are fundamental pillars of Enel Chile’s strategy. The Workplace Climate and Safety Survey is carried out every two years. Its latest version, performed in 2018, had a 93% participation rate among employees in Chile. Workplace climate is a priority due to its close relationship with the people that make up the Company’s human resource. Therefore, the Company continues to work on countless ini- tiatives related to leadership, communication, meritocracy and development, conflict resolution measures and best workplace practices to maintain workers’ motivation, satisfac- tion and commitment. During 2019, 82 initiatives were implemented in the various departments within Enel Group’s companies in Chile. The for- mation of climate committees stands out as an action that aims to improve workplace climate by working with cross-sec- tional teams. Enel Chile has a program that seeks to promote and reinforce the important role of leaders in creating organizational envi- ronments that foster workers’ satisfaction and development. The “Leader to Coach” program was designed to encourage leadership and managers´ role in the “Open Power” culture from an active and strategic standpoint, focusing on team mobilization and the ability to contribute to the learning pro- cess of others. It is a comprehensive coaching program that defines an individual itinerary for each manager including a 360° evaluation, skill training workshops, and a set of best practices in human resource management. d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 08. People and organization 45 Enel Chile has implemented communication initiatives titled The policy has established three main principles: “People & Organization” to guarantee ongoing communica- tion with workers on different matters of interest related to 1. Reject any and all forms of arbitrary discrimination and human resource management. Activities include updating and ensure and promote diversity, inclusion, and equal oppor- adding value to the website, manuals of best practices, and tunities. monthly bulletins for managers and workers, among others. 2. Promote and maintain an environment of respect for peo- In 2019, in terms of meritocracy and reward, a new version of 3. Ensure the highest confidentiality standards regarding the Recognition program was established, named Enel´s Pro- any information the Company has access to about a ple’s dignity, honor, and identity. tagonists, which seeks to encourage a culture of recognition worker’s private life. within the Company, and create formal instances in which, on one hand, peers recognize peers, and on the other, the In terms of gender, the Company aims to create a balance in Organization identifies initiatives that have proven valuable to the initial phase of recruitment and selection processes and the Company. Ceremonies attended by the entire Company generate relationships with universities and professional insti- to acknowledge outstanding employees, career paths, among tutes that promote the participation and inclusion of women, other initiatives continue to take place. especially in technical areas. Additionally, the Parental Pro- gram is geared towards balancing parental needs with career In Enel Chile, feedback between managers and employees helps development, and includes interviews during prenatal and create closer bonds, increase transparency, align expectations, postnatal periods, nutritional support, and physical activities and support workers’ professional development. Open Feedback for pregnant women. Other initiatives include talks by parent- promotes a culture of continuous feedback throughout the ing experts on subjects, such as, bullying and cyberbullying, Company year-round, steering workers’ development as well as the effects of the use of electronic devices, and alcohol and the formation of high performing teams. drug prevention, among others. The Company has provided training to strengthen work flexibility In terms of age, and given the Company’s ongoing digital practices, such as remote work and deferred income options, as transformation process, the On-Boarding platform allows ev- well as numerous collaborative work and camaraderie activities ery new Enel Chile employee to anticipate his or her contact whose main focus was to develop relational and collaborative and knowledge of the Company, facilitating the adaptation of competencies in work teams to strengthen trust and alignment new employees to the work and culture of the Company. This in the achievement of common goals. personal and professional support to new employees allows Diversity and inclusion For Enel Chile, having diverse work teams and cultivating an inclusive work environment is essential in fostering a culture of innovation, which allows opening to different points of view that enrich the workplace environment and add ongoing value. As part of the Diversity and Inclusion Policy, the Company has developed several initiatives addressing gender, age, nation- ality, disability, and cross-sectional practices. This policy pro- motes the principles of non-discrimination, equal opportuni- ties, inclusion and work-life balance as fundamental values. them to better understand their daily work dynamics. This platform also allows transferring knowledge from senior em- ployees to younger employees. Regarding nationality, expatriates are assigned a tutor to assist and support them in recognizing, respecting, and managing cultural differences among different nationalities throughout their time abroad contributing to their integration. This year, the Company began the commemoration and celebration of the national holidays of foreign employees residing in Chile with a greeting and a special luncheon in the cafeteria. In order to recognize, respect, and manage the different skill- sets of employees, Enel Chile handles matters related to the 46 Enel Chile Annual Report 2019 d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 needs of employees with disabilities, by aiding them in obtain- workshops and the practice of several sports including soccer, ing the disability credentials established by law. Additionally, basketball, volleyball, among others. Other extension activi- the Company continues to perform structural adjustments ties designed for employees and their families include artistic to its facilities (cafeteria, restrooms, ramps, special parking workshops, expositions, family excursions, among others. space, auditorium entrance ways, elevators with braille, among others) for employees with disabilities. A variety of activities, both recreational and educational, are carried out for employees’ children. These include recreational In terms of management’s cross-cutting approach, the Com- summer and winter camps for children between 4 and 15 pany offers courses and workshops to raise awareness on years of age that are offered in January and during the win- behavior and values related to diversity, inclusion and work ter holidays. In addition, several events that foster work-life flexibility. Within this context, the Company celebrated the balance are offered throughout the year, such as “Come to D&I week, where 4 interesting talks on “Inclusion of Persons my birthday party”, held in the corporate stadium for kids up to with Disabilities”, “Gender Equality”, “Sexual Harassment” age 12, and “First day of Class”, where parents are allowed to and “Workplace Harassment” took place. join their kids during their first day of school, and arrive later to Enel Chile also participates in a partnership with Sofofa’s In- celebration that acknowledges workers who have been with clusive Companies Network, ReIN (in its Spanish acronym), the Company for at least 20 years. work. Also, the “Career Path Award” is an annual corporate where more than 30 companies share their best practices on a monthly basis. For the second consecutive year, Enel Chile participated in the Telethon campaign, which although postponed until April 2020, received the support of a group of volunteers. Work-life balance measures and flexibility Regarding work-life balance and flexibility, in 2019, the re- mote working program “Smart Working” has grown to be- come one of the Company’s most appreciated programs. It provides employees with greater flexibility when it comes to the execution of their work. Today, there are 492 Enel Group workers participating in the program in Chile, 200 of them are employees of Enel Chile. Those participating may choose one day of the week (from Tuesday to Thursday) to work from home, o from wherever they please, insomuch as they comply with the safety and health measures established by current legislation. This initiative contributes to the balance between work and family life of employees improving their quality of life. Other initiatives to improve the quality of life of employees carried out during 2019 are the following: Sports and Culture Extension Program: traditional sports pro- gram that takes place within the Company’s facilities, offering Recruit- ment and selection Recruitment and selection The Company’s main objective is to hire the best profession- als that have the competences needed to face the cultural changes related to the Company’s ongoing digital transforma- tion and also Open Power competences. During 2019, there were 55 job openings in Enel Chile S.A., of which 24% were filled with candidates from within the Com- pany. Of all external workers hired in 2019 (76% of all available positions in Enel Chile S.A.), 48% were women. 08. People and organization 47 Internship and young talent attraction programs This new recruitment method is utilized to hire future young professionals from the best universities in the country as in- terns. They are offered the opportunity to consolidate their academic knowledge in the context of Enel Chile’s business environment, which creates professionals that are familiar with the reality and the challenges the Group faces. This con- stitutes an important and significant source of recruitment. This internship program is carried out permanently throughout the year. In 2019, 54 students were hired as interns, of which 53% were women. In Enel Chile, 44% of internship positions were offered in the People & Organization Department, and 19 % in the Adminis- tration, Finance and Control Department (AFC). Educational action Training Enel Chile’s 2019 training program was developed to address training needs in three fundamental areas: First, technical education; second, behavioral skills; and third, specialization. The training and development department, along with busi- ness partners, workers, and managers, jointly identify the knowledge gaps and skills that are in line with the Company’s strategic plan and are necessary to improve workplace pro- ductivity. In terms of technical education, digital transformation knowledge was the main concern and was addressed throughout the year. The training sessions taught throughout the year mainly addressed digital themes, such as scrum master and coach agile, which provided workers with skills and knowledge required to improve performance in several projects associated with digital transformation. In addition, training programs also addressed the development of a diverse set of behavioral skills associated with the value and behaviors defined in the Company’s leadership model. The “Enel Manager” leadership program is worth highlighting. Its goal is to develop leadership coaching skills among the Company’s managers that are necessary to guide work teams through the new growth and strategic consolidation challenges the Company is facing today. Finally, technical specialization had an important role in the development of knowledge in key aspects of the business this year. One highlight worth mentioning is the electricity market training program, taught by Universidad de Chile, and customized to address Enel Chile’s specific needs. 48 Enel Chile Annual Report 2019 d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 08. People and organization 49 50 Enel Chile Annual Report 201909. STOCK MARKET TRANSACTIONS 09. Stock market transactions 51 Quarterly transactions of Enel Chile shares in Chile on the Santiago Stock Exchange, the Electronic Stock Exchange, as well as in the United States of America on the New York Stock Exchange (NYSE) during 2019 are detailed below. Santiago Stock Exchange During 2019, a total 14,739 million shares were traded on the Santiago Stock Exchange, equivalent to Ch$ 974,990 million. The closing price of the stock at year end December 2019 was Ch$ 70.50. Units Amount (Ch$) Average Price (Ch$) 3,304,283,206 3,039,741,757 2,512,771,762 5,882,374,059 14,739,170,784 2,794,503,083 3,773,141,818 2,789,724,909 3,199,220,342 12,556,590,152 2,017,485,622 1,768,333,500 2,298,723,478 2,784,128,550 8,868,671,150 230,741,305,701 197,501,843,483 156,505,596,387 390,241,676,204 974,990,421,775 210,396,722,951 267,278,094,175 185,420,559,438 204,247,044,128 867,342,420,692 134,273,018,389 130,511,829,158 168,145,280,227 200,182,874,098 633,113,001,872 69.83 64.97 62.28 66.34 66.15 75.29 70.84 66.47 63.84 69.07 66.55 73.80 73.15 71.90 71.39 Year 2019 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2019 2018 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 52 Enel Chile Annual Report 2019Chilean Electronic Exchange During the year, a total 1,283 million shares were traded on the Chilean Electronic Exchange, amounting to Ch$ 85,578 million. The closing price of the stock at year-end was Ch$ 71.87. Year 2019 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2019 2018 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 Units Amount (Ch$) Average Price (Ch$) 726,016,830 139,478,209 149,611,975 267,690,366 1,282,797,380 202,800,877 348,545,846 386,484,459 318,226,600 1,256,057,782 215,330,287 141,598,208 131,726,440 186,156,335 674,811,270 48,768,642,184 9,219,489,806 9,411,582,124 18,178,585,900 85,578,300,014 15,284,222,289 24,915,296,102 25,557,620,734 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 67.17 66.10 62.91 67.91 66.71 68.56 71.48 66.13 63.97 68.56 67.33 74.13 72.08 73.36 71.35 d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 09. Stock market transactions 53 New York Stock Exchange (NYSE) Enel Chile shares began trading on the New York Stock Exchange (NYSE) on April 27, 2016. One ADS (American Depository Share) of Enel Chile represents 50 shares, and its ticker is ENIC. Citibank N.A. acts as the depositary bank and Banco Santander Chile as the custodian in Chile. During 2019, 88 million ADSs were traded in the United States, amounting to US$ 403 million. The ADS closing price at year- end was US$ 4.75. Units Amount (US$) Average Price (US$) 16,131,454 21,723,139 17,210,522 33,039,833 88,104,948 25,360,378 33,691,893 24,888,260 33,532,795 117,473,326 17,848,377 21,754,110 14,780,786 18,089,148 72,472,421 84,147,249 103,055,237 75,180,791 140,634,274 403,017,550 156,830,054 191,672,661 123,419,121 153,910,355 625,832,191 89,764,079 120,477,427 84,238,374 101,069,596 395,549,476 5.22 4.80 4.39 4.32 4.57 6.19 5.78 4.97 4.67 5.33 5.03 5.54 5.70 5.59 5.46 Year 2019 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2019 2018 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2018 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 2017 54 Enel Chile Annual Report 2019 Market information Santiago Stock Exchange During 2019, the Chilean economy was influenced by inter- nal and external factors that affected its performance. The in- crease in trade tensions between China and the United States deepened fears in investors worldwide, who sought refuge in assets with lower volatility, migrating from emerging econo- mies to economies with lower levels of risk. In general terms, during the first months of 2019, the world economy was weakened due to decreased dynamism in trade. However, during the last quarter, indications of a trade truce between China and the United States led to a gradual upswing in in- vestor optimism. In Chile, during the month of October, the greatest social and political crisis since the country’s return to democracy in 1990 was unleashed. The consequences of this social uprising in- cluded a sharp drop in the national stock market, as well as a significant devaluation of the Chilean peso, reaching all-time highs in terms of the dollar. These consequences translated into an 8.5% drop in the SPCLXIPSA, closing at 4,669.9 points in December 2019 and becoming the first year since 1990 that the Santiago Stock Exchange registered two consecutive years of negative variation. The price Enel Chile´s shares, on the other hand, increased 5.3% for the year 2019. Cumulatively, the price variation of Enel Chile shares between 2018 and 2019 decreased 3.2%, while the SPCLXIPSA (formerly known as IPSA), comparative- ly, took a 16.1% fall. 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 2018 -8.0% -8.3% 2019 5.3% -8.5% Cumulative 2018 – 2019 -3.2% -16.1% New York Stock Exchange (NYSE) The following table shows the behavior of Enel Chile’s ADS listed on the NYSE (ENIC), compared to the Dow Jones In- dustrial Index and the Dow Jones Utilities Index over the past two years: Variation ENIC Down Jones Industrial Down Jones Utilities 2018 -12.9% -5.6% -1.4% 2019 -4.0% 22.3% 23.3% Cumulative 2018 – 2019 -16.4% 15.5% 21.5% d n a l a i c n a n i f n i a M . 4 s c i r t e m l a n o i t a r e p o f o n o i t a c i f i t n e d I . 5 y n a p m o C e h t e r u t c u r t s p h s r e n w O i . 6 t n e m e g a n a M 7. n o i t a z i n a g r o d n a e l p o e P . 8 s n o i t c a s n a r t t e k r a m k c o t S . 9 09. Stock market transactions 55 56 Enel Chile Annual Report 201910. INVESTOR RELATIONS 10. Investor relations 57 Investor relations 58 Enel Chile Annual Report 2019Enel Chile’s Investor Relations department is responsible for Statement Analysis and Tables, and corporate presentations. providing transparent, timely, and quality information to the Additionally, and since the Company’s creation in 2016, the market regarding the Company’s main financial, strategic, and 3-year Strategic Plan, which presents the Company’s main operational issues. This department is the unit authorized to strategic guidelines and financial and business projections, respond to inquiries by shareholders and investors. has been presented on an annual basis. The main channels of communication with the market include In terms of meetings, Enel Chile held more than 150 meetings our website, the Investor Relations app, conference calls, with investors and participated in 7 conferences and 6 road- e-mails, face-to-face meetings, and local and international shows, both local and international, in 2019. conferences. Available documentation for investors includes quarterly questions concerning the Company, whether in Spanish, En- results presentations, annual reports, annual sustainabili- glish, French, or Portuguese by e-mail at ir.enelchile@enel.com ty reports, 20-F reports, quarterly Management’s Financial Our Investor Relations department is available to answer any Isabela Klemes Investor Relations Manager Investor Relations Team Catalina González Claudio Ortiz Pablo Contreras Gonzalo Juarez Download App iOS Android Follow us Contact Information E-mail: ir.enelchile@enel.com Telephone Number: +56 2 2630 9606 Communication channels: Website: https://www.enel.cl/ s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 10. Investor relations 59 60 Enel Chile Annual Report 201911. DIVIDENDS 11. Dividends 61 2019 dividends distribution During the 2019 fiscal year, and in line with the 2019 Dividend Policy set forth in the Ordinary Shareholders’ Meeting held on April 26, 2019, the Board of Directors agreed to distribute an interim dividend equal to 15% of the Company’s net income, as presented in the Company’s Financial Statements as of September 30, 2019, which was paid in January 2020. Concerning the final dividend distribution for the 2019 fiscal year, the Board of Directors, in its 2019 Dividend Policy, proposed to distribute a final dividend equivalent to 65% of net income, which will be determined by the Ordinary Shareholders’ Meeting, to be held during the first four months of 2020. However, on February 24, 2020, the Board of Directors reevaluated its final dividend proposal reducing it from 65% to 60% of net income of the 2019 fiscal year, which will be determined by the Ordinary Shareholders’ Meeting, to be held during the first four months of 2020. 2020 dividend policy Dividend policy The Board of Directors intends to distribute an interim dividend for fiscal year 2020 of up to 15% of net income, as presented in the Financial Statements of Enel Chile S.A. as of September 30, 2020, to be paid in January 2021. The Board of Directors intends to propose to the Ordinary Shareholders’ Meeting, to be held during the first four months of 2021, to distribute a final dividend equivalent to 60% of net income for the 2020 fiscal year. The final dividend to be distributed will be defined by the Ordinary Shareholders’ Meeting to be held during the first four months of 2021. Compliance with the aforementioned dividend program is subject to the actual net income of the Company for that specific year, and also subject to the Company’s periodic income projections or the existence of certain conditions, as applicable. 62 Enel Chile Annual Report 2019s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f Dividend payment procedure that they be verified by the respective bank. If there is an objec- tion to the account indicated by a shareholder, whether in the prior verification process or for any other reason, the dividend will be paid according to method 4 indicated above. The dividend payment methods offered by Enel Chile S.A., for interim and final dividends alike, seek to avoid wrongful claims. They are the following: 1. Deposit in a bank checking account, whose account-holder is the shareholder; 2. Deposit in a bank savings account, whose account-holder is the shareholder; 3. Mailing of a check or cashier’s check via certified mail to the address of the shareholder’s residence recorded in Enel Chile’s Shareholder Register; 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. Distributable net income for 2019 The distributable net income for fiscal year 2019 is shown below: 4. The collection of a check, or cashier’s check from the offic- es of DCV Registros S.A., registrar of Enel Chile’s shares, or from the bank and branches defined for this purpose and informed in the dividend payment notice published. Net Income * Distributable Net Income * Attributable to the controlling shareholder Ch$ millions 296,154 296,154 For this purpose, bank checking, or savings accounts may be lo- cated anywhere in the country. It should be emphasized that the payment method chosen by each shareholder will be used by the centralized securities’ de- pository, DCV Registros S.A., for all dividend payments, unless the shareholder communicates, in writing, his or her intention to change it and record a new option. Dividends distributed The following chart shows the dividends per share paid since 2016: Shareholders who have not registered a payment method will be paid by method 4 indicated above. Dividend No Type of Dividend Closing date Payment date Ch$ per share Fiscal year If checks or cashier’s checks are returned by the post office to DCV Registros S.A., they will remain in custody until collected or requested by the shareholder. In the case of deposits in bank checking accounts, Enel Chile S.A. or DCV Registros S.A. may request, for security reasons, 1 2 3 4 5 6 7 8 Final Interim Final Interim Final Interim Final Interim 12-31-2015 05-24-2016 09-30-2016 01-27-2017 12-31-2016 05-26-2017 09-30-2017 01-26-2018 12-31-2017 05-18-2018 09-30-2018 01-25-2019 12-31-2018 05-17-2019 09-30-2019 01-31-2020 2.09338 0.75884 2.47546 0.75642 2.24134 0.45236 2.68537 0.44723 2015 2016 2016 2017 2017 2018 2018 2019 11. Dividends 63 64 Enel Chile Annual Report 201912. INVESTMENT AND FINANCING POLICY 12. Investment and financing policy 65 The Ordinary Shareholders’ Meeting held on April 29, 2019, approved the Investment and Financing Policy described below. 2019 investment policy corporate purpose, limited to a maximum equivalent to 50% of total equity according to the consolidated balance sheet of Enel Chile as of December 31, 2018; II. In its other subsidiaries, investments are limited to a maximum equivalent to 50% of total equity according to the consolidated balance sheet of Enel Chile as of December 31, 2018, inasmuch as at least 50.1% of total Consolidated Assets of Enel Chile are electricity sector assets. Investment areas I. Enel Chile will invest, according to its bylaws, in the fol- lowing areas: creating or investing in subsidiaries and affiliate 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 disposal of any type of real estate, whether directly or through subsidiaries; III. Other investments in all types of financial assets and in- struments, or transferable securities. Maximum investment limits The maximum investment limit for each investment area is the following: I. In its subsidiaries that operate in the electricity sector, in- vestments required for the fulfillment of their respective 66 Participation in the control of investment areas Pursuant to Enel Chile S.A.’s corporate purpose, the following procedure will be applied, when possible, to control the in- vestment areas: i. The appointment of the number of directors to represent, at least, the ownership share of Enel Chile S.A.’s stake in subsidiaries and affiliate companies will be proposed at the Ordinary Shareholders’ Meetings of each respec- tive subsidiary and affiliate company. The directors pro- posed will be chosen preferably from among directors or executives of Enel Chile or its subsidiaries, while strictly complying with Resolution 667/2002 of the H. Resolutive Commission. ii. Investment, financing, and commercial policies, in addi- tion to accounting criteria and systems, will be proposed to subsidiaries and affiliate companies. iii. The management of the subsidiaries, affiliate, and related companies will be supervised. iv. The level of debt will be permanently controlled. Enel Chile Annual Report 2019 Management powers to agree with lenders on granting guarantees The Extraordinary Shareholders’ Meeting is responsible for approving real or personal guarantees to secure third-party obligations, when referring to the essential assets identified below. Essential assets for Company operations The shares that enable maintaining control of Enel Generación 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 control them through a shareholders’ agreement. Financing policy 2019 Maximum level of debt Enel Chile’s maximum level of debt is determined by the ratio of Total Financial Debt (calculated as other current financial liabilities plus other noncurrent financial liabilities) to Equity, and must equal to or lower than 2.2 times, calculated using the figures in the consolidated balance sheet of Enel Chile as of December 31, 2018; Management powers to agree with lenders on restrictions related to dividend distributions Dividend restrictions may only be agreed with creditors if such restrictions were previously approved by the Shareholders’ Meeting (Ordinary or Extraordinary); s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 12. Investment and financing policy 67 68 Enel Chile Annual Report 201913. HISTORY OF THE COMPANY 13. History of the Company 69 History of the Company Enel Chile participates in the distribution business through the subsidiary Enel Distribución Chile that operates a 2,105 km2 concessions area, regarded as a densely populated area in terms of tariff regulation. The concession was granted by the Chilean government, for an unlimited period of time, to trans- mit and distribute electricity throughout 33 counties in the Metropolitan Region, including the areas serviced by Empre- sa Electrica de Colina Ltda., Luz Andes Ltda. and Empresa de Transmisión de Chena S.A., making the Company the largest electricity commercialization company in Chile. Enel Chile S.A. was created as part of the corporate reorgani- Enel Chile has also grown by adding new uses to electricity zation process of Enersis S.A that began in April 2015. Ener- and by developing new ways to manage electricity. Along with sis S.A. controlled the generation, transmission and distribu- the Municipality of Santiago, the Company has provided the tion business in Chile and four other countries in the region first electric bus to operate in Santiago’s major avenues and (Argentina, Brazil, Colombia, and Peru). The Extraordinary completely free of charge to passengers. Enel Chile seeks to Shareholders’ Meeting of Enersis S.A. held in December 2015 promote the efficient use of the energy it supplies through its approved the first phase of the reorganization plan entitled subsidiary Enel Distribución Chile to almost 2 million Chileans “the Division”, which created Enersis Chile as the only vehicle and also seeks to collaborate with the environment. to control the Group’s generation and distribution assets in Chile. Enersis S.A became Enersis Americas S.A., the vehicle As part of the plan to divest non-strategic assets, in June to control all assets of the businesses in other countries in 2016, Enel Chile sold its 20% share in GNL Quintero S.A. to the region. Enagás Chile S.p.A for US$ 200 million and in February 2017 sold its shareholding in Electrogas S.A. to Aerio Chile S.p.A. Endesa Chile S.A. and Chilectra S.A. went through a similar for US$ 180 million. division process. In August 2017, a corporate reorganization of Enel Chile was On September 28, 2016 the Shareholder’s Meeting of Ener- proposed. This plan was entitled “Proyecto Elqui” and in- sis Américas, Endesa Américas, and Chilectra Américas ap- volved the merger of Enel Green Power Latin America S.A. proved the second phase of the plan called “the Merger” in with and into Enel Chile and a Public Tender Offer (PTO) for which Enersis Américas absorbed the businesses of Endesa 100% of the shares of Enel Generación Chile. In December Américas and Chilectra Américas. During the same meeting, 2017, the respective Extraordinary Shareholders’ Meetings ap- shareholders agreed to change the name of Enersis Américas proved the terms of the reorganization. S.A to Enel Américas S.A. On October 4, 2016, the shareholders of Enersis Chile, Ende- Green Power Latin America merged with and into Enel Chile sa Chile and Chilectra agreed to change their names to Enel and Enel Chile´s shareholding in Enel Generación increased to Chile, Enel Generación Chile and Enel Distribución Chile 93.55%. This operation added 1,196 MW of non-conventional respectively. renewable energy (NCRE), mainly wind and solar technology. The Elqui Project became effective on April 2, 2018 when Enel The organizational simplification process of the Group has In September 2018, Enel Chile announced the creation of a concluded. Enel Chile participates in the electricity generation new subsidiary named Enel X Chile SpA. to develop, imple- business through its subsidiary Enel Generación Chile that ment and sell products and services other than an electricity has 110 generation units installed throughout the National distribution concession and ancillary services, either regulated Electricity System reaching a total aggregate installed capaci- or not, but related to energy that involve innovation, cutting ty of 6,114 MW, placing it among the most important energy edge technology, and future trends. companies in the country. 70 Enel Chile Annual Report 2019In line with the Group´s strategic plan and sustainability strategy, in June 2019 Enel Chile, through its subsidiary Enel Generación Chile, signed a decarbonization agreement with the Ministry of Energy to progressively retire the coal power plants Tarapacá, located in the Coquimbo county and Bocami- na 1 and Bocamina 2, located in the Coronel county with 158 MW, 128MW and 350 MW installed capacity, respectively. The agreement established that Central Tarapacá was to retire no later than May 31, 2020, and Bocamina 1 no later than De- cember 31, 2023. Enel Generación Chile is expected to retire Bocamina 2 no later than December 31, 2040. As part of the Enel Chile Group´s goal to simplify its corporate matrix, in September 2019, Enel Chile concluded the sale of its 2.63% shareholding in GasAtacama to Enel Generación Chile. On December 31, 2019, Enel Chile disconnected and shut- down Central Tarapacá. The Company formally requested the authority´s permission to anticipate the retirement of this power plant that was originally scheduled to take place in May 2020 making Central Tarapacá the first operational coal fueled power plant to disconnect from the National Electricity Sys- tem. Enel Chile is part of the Enel Group, a global energy company and one of the main integrated operators in the electricity and natural gas sectors worldwide. It is present in 33 countries and in five continents. It supplies energy to nearly 73 million people and has net installed capacity of more than 89 GW. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 13. History of the Company 71 72 Enel Chile Annual Report 201914. BUSINESS OF THE COMPANY 14. Business of the Company 73 Company business description Enel Chile is the largest electric holding company in Chile. It participates in the electricity generation and distribution busi- ness segments and offers other services related to the trans- formation and expansion of the electricity market. The Com- pany´s operations in Chile are conducted by its subsidiaries Enel Generación Chile and Enel Green Power Chile (EGP Chile) in the generation business, by Enel Distribución Chile in the distribution business and activities in new businesses are conducted by Enel X. The Company’s 7,303 MW total gross installed capacity places us in the lead in terms of electricity generation in Chile, representing 30% of the National Electricity System´s total installed capacity as of December 31, 2019. Our assets in the generation business are diversified. Renewable energies represent 65% of our total installed capacity. The Company has 3,548 MW hydroelectric capacity, 2,580 MW thermal capacity fueled by gas, coal, or fuel oil, 642 MW wind farm capacity, 492 MW solar generation capacity and 41 MW geothermal installed capacity. Electricity generation Enel Chile and its subsidiaries operate a total 129 electricity generation units throughout the National Electricity System. The Company´s total gross installed capacity reached 7,303 MW as of December 2019, 65% renewable energy, including hydroelectric, solar, wind and geothermal power plants. Con- solidated net electricity generation amounted to 21,041 GWh and energy sales reached 23,513 GWh in 2019. The segmentation of the electricity industry into hydroelec- tric generation and thermoelectric generation is intrinsic to its means of production. Thermoelectric generation requires fossil fuels and hydroelectric generation requires water from rivers and reservoirs, which therefore lead to different variable Enel Distribución Chile is the largest electricity distribution production costs. utility in Chile in terms of regulated customers, distribution assets, and electricity sales. It operates a concession, granted by the Chilean government for an unlimited period of time, to transmit and distribute electricity in 33 counties of the Metropolitan Region including the areas serviced by its sub- sidiaries Empresa Eléctrica de Colina Ltda., Luz Andes Ltda. and Empresa de Transmisión Chena S.A. covering more than 2,105 square kilometers. During 2019, Enel Distribución Chile distributed a total 17,017 GWh of electricity, which represents 44% of the total electricity sales of distribution companies in the country. 74 Enel Chile Annual Report 2019s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f Generation power plants of Enel Generación Chile, Enel Green Power and subsidiaries are listed below: Gross 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(4) Atacama Eólica Los Buenos Aires Eólica Talinay Oriente Eólica Talinay Poniente Eólica Taltal Company Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Pehuenche Pehuenche Pehuenche Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Generación Chile Enel Green Power del Sur SpA Parque Eólico Talinay Oriente S.A. Empresa Eléctrica Paguipulli S.A. Parque Eólico Tal Tal S.A. Parque Eólico Renaico Enel Green Power del Sur SpA Parque Eólico Sierra Gorda Este Enel Green Power del Sur SpA 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 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 Technology Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Fuel/Natural Gas Fuel/Natural Gas Fuel/Natural Gas Coal Fuel/Natural Gas Fuel/Natural Gas Fuel/Natural Gas Hydroelectric Hydroelectric Hydroelectric Hydroelectric Hydroelectric Wind Wind Fuel/Natural Gas Coal Diesel /Natural Gas Wind Wind Wind Wind Wind Wind Wind Geothermal Hydroelectric Hydroelectric Solar Solar Solar Solar Solar Solar Solar Solar Solar 2018 18 2019(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 79 376 77 12 106 70 136 449 319 689 34 240 24 64 476 379 388 257 9 568 89 40 466 18 60 20 - 732 24 90 61 99 88 112 90 41 41 51 20 77 40 60 18 79 160 36 2 7,463 160 36 2 7,303 (1) These figures result from the maximum capacities determined by Enel Generación Chile’s Operational Norm No 38 “Rule to define 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 2019 compared to 2018 based on results of the maximum capacity test performed as determined by Technical Regulation of the National Electricity System operator. (4) On December 31, 2019, coal-fired power plant central Tarapacá shutdown operations and was disconnected as agreed within the context of the national decarbonization plan signed in June 2019. 14. Business of the Company 75 In 2019, electricity sales of Enel Chile and its subsidiaries reached 23,513 GWh, 4% less than the previous year and is mainly due to the migration of regulated customers to the Operational and commercial scenario unregulated electricity market and also lower regulated cus- tomer sales during the fourth quarter of the year. This figure represents 33% of the SEN’s total sales, including customer sales and net spot market sales. 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 Purchases Enel Generación Chile (3) Enel Green Power Total Sales Sales to end customers Enel Generación Chile Enel Green Power Ventas mercado spot Total 2018 6,274 1,189 7,463 2018 17,373 2,673 20,046 2018 5,970 151 4,323 2019 6,114 1,189 7,303 2019 17,548 3,943 21,041 2019 4,684 171 2,473 2018 2019 22,592 603 1,174 24,369 21,953 662 899 23,513 General view of operational and commercial scenario The start-up of the new Pan de Azúcar - Polpaico line (2 x 500 kV) in late May 2019 completed the 500-kV integration of the National Electricity System, making the transmission of wind and photovoltaic renewable energy to the major consumption areas a reality. The integration of the SEN also allows supple- menting these intermittent renewable energy sources located in northern Chile with the more flexible reservoir electricity generation sources located in southern Chile and additionally making the decarbonization process of Chile´s energy matrix possible. The contribution of renewable and thermoelectric energy lo- cated in northern Chile allowed facing the extreme drought conditions of 2019 in a better manner, particularly in the terri- tory north of the Maule region where precipitation was similar to the level in 1998/1999, among the driest years ever record- ed, which caused extensive electricity rationing. Natural gas imports from Argentina resumed in 2019 as a con- sequence of new oil fields being exploited with Shale Gas technology in Argentina. Natural Gas imports had been inter- rupted for almost a decade and replaced by liquified natural gas LNG. This new natural gas arrived in Chile at competitive prices, similar to the price of coal. 1) These figures result from the maximum capacities determined by Enel Generación Chile’s Operational Norm No 38 “Rule to define 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. 3) Includes the 2,382 GWh purchased by Enel Generación Chile from EGP Chile in 2019 and 1,798 GWh GWh purchased by Enel Generación Chile from EGP Chile in 2018. The beginning of the decarbonization process of the energy matrix in Chile represents another 2019 milestone. Engie withdrew its U12 and U13 generation units located in Toco- pilla, with a total 170 MW capacity, in June. We shut down and disconnected the Tarapacá 158 MW Turbo gas unit lo- cated south of Iquique in December, originally scheduled to take place in May 2020. The retirement of Central Tarapacá has significant social and environmental benefits that are well-known, but it is important to highlight that it does not have an adverse impact on the Company´s commercial mar- gin because the electricity not supplied by Central Tarapacá is efficiently compensated by the renewable energy electricity 76 Enel Chile Annual Report 2019generation capacity added in northern Chile and boosted by Electricity demand remained stable increasing 0.7% when the integration of the SEN. Additionally, Enel Generación Chile compared to last year, partially due to the lower level of de- has important renewable energy purchase contracts with Enel mand during October and November, which were the most Green Power Chile (EGP Chile), and Enel Green Power Chile critical months of the social uprising. The annual electric- built and owns the NCRE power plants, and both companies ity consumption of regulated customers in 2019 declined are subsidiaries of Enel Chile. It is also worth keeping in mind 5.85% while unregulated customers increased electricity that the Company owns the main reservoirs in southern Chile, consumption 5.83% when compared to 2018. This behavior which as noted earlier, supplement the intermittent electricity is explained by the relevant number of previously regulated supply of the NCRE power plants in the north. customers that chose to change to the unregulated customer category and enter into electricity supply contracts with dis- Although there were no regulated customer electricity supply tributors, as permitted by the industry´s regulation. auctions in 2019 (postponed to 2020), Enel Generación played a major role in the two previous bids (2016 and 2017) being awarded nearly 8,300 GWh/yr. In 2019, the Company was successful in signing medium term and long terms contracts with unregulated customers to supply roughly 8,500GWh/yr, 85% to copper mining companies. Committing a significant Main events that affected operational and commercial performance amount of energy to unregulated customers under favorable The Company reached high standards of commercial and terms, despite being the main regulated customer supplier operational performance in 2019, as in previous years, and in the country, increases and diversifies the Company´s maintained its solid leadership position in the Chilean electric- customer portfolio and is therefore a highlight among the ity industry. The factors worth highlighting that substantiate Company´s commercial activities in 2019. this position are: The publication of Law 21185, “Temporary Regulated Cus- i) Significant and technologically diversified, sustainable tomer Rate Stabilization Mechanism” on November 2, 2019, generation capacity mainly comprised of efficient hydro- is also worth mentioning. This law, when compared to other electric and thermal plants, which allow the Company to alternative ones presented, may be viewed as an adequate be very competitive and generate at low average operat- solution to ease the demands raised during the social upris- ing costs. ing related to the disapproval of the scheduled electricity rate increases. This Law temporarily freezes the regulated rate ii) Production processes, maintenance and modernization of current supply contracts, and establishes a maximum rate policies that fully comply with technical and environmental named PEC (equal to the rate in 2018 Decree 20 T). This re- standards established by the applicable regulation allow- striction is imposed until 2021, when the contracts resulting ing the Company´s generation facilities to operate with from the latest bids at prices below the PEC become effec- high availability and reliability levels. tive. It is important to note that this Law provides a compen- sation mechanism by means of which the lower regulated iii) The commercial policy defined to be consistent with the rates of the 2021-2026 period would be adjusted according production characteristics of the Company’s power plants to the PEC price, and recorded in a credit/debit account, so and is permanently adjusted to the increasingly compet- as to gradually compensate the cash flow resulting from the itive and changing market conditions. The goal of such indexation clauses of current contracts (2019-2021) that were policy has been to combine achieving an attractive return frozen. Although this Law has a negative economic effect on along with a low exposure to production and market risk. the Company, the compensation mechanism provided signifi- cantly reduces the impact within the specified time frame. iv) Innovation is a priority for the Company and therefore it is The negative economic impact is also lessened by the greater constantly adapting to new market challenges. For exam- level of diversification resulting from the unregulated custom- ple, the reorganization of its generation business model er contracts signed in 2019 mentioned earlier. previously mentioned (subsidiaries EGP Chile and Enel Generación Chile) allows sustaining future growth and competitiveness in the industry. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 14. Business of the Company 77 Regarding production and market risk management, the fol- (20.8 TWh), thermal electricity accounted for 56% (43.2 TWh), lowing are the most relevant factors we take into consider- primarily coal 37%, followed by natural gas, 18%. A total 17% ation: of total electricity generation came from non-conventional re- newable sources (13.1 TWh); solar represented 8%, wind 6%, i) Hydrology variability, a risk that is covered by permanently biomass 2% and geothermal 0.3%. analyzing and designing sales contracts that commit to an optimum level of energy sales. Enel Chile´s power plants generated 27% of the SEN´s total electricity generation amounting to 21.0 TWh, excluding the ii) Commodity variability risk, mainly the price of fuels that di- generation of the Nueva Renca power plant related to the rectly affect Enel´s thermal production costs and the sales maquila agreement, which is slightly higher than the 20.0 price indexation clause of some of our supply contracts. TWh produced in 2018. The Company´s Hydroelectric gener- iii) Currency variability risk, mainly the price of the United and nearly 7% less than the 11.4 TWh generated in 2018. Enel States dollar that has an impact on the revenue of the Chile´s thermal generation increased 15% from 6.3 TWh in ation was roughly 10.6 TWh, representing 51% of the SEN Company. 2018 to 7.2 TWh in 2019, mainly due to greater gas and coal fueled generation. The Company´s NCRE generation (wind, Commodity (mainly coal, natural gas and oil) and currency (US solar, geothermal) reached 3.2 TWh in 2019 greater than the dollar) variability risks have been managed by the Company in 2.4 TWh for 2018, although the figure for 2018 represents coordination with the parent company in Italy using hedging NCRE generation from April to December, when EGP Chile instruments, which had a positive impact on the Company´s power plants became part of Enel Chile´s generation fleet. margin in 2019. Hydrologic conditions 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. Rain- fall was uneven throughout the territory. Hydrology from the Maule Region north was similar to the extreme drought con- ditions of 1998/1999, the driest year ever recorded. Rainfall south of the Maule Region was similar to 2018, described as semi-dry, allowing to partially mitigate the situation. Overall, the exceedance probability relevant to Enel Chile was 83%, in other words, dry. Generation and electricity supply costs Electricity generation in the SEN in 2019 reached 77.3 TWh, which represents a 0.9% growth rate when compared to 2018. Hydroelectricity represented 27% of total generation The average price of fuel in 2019 decreased when compared to 2018. Coal was once again the predominant fuel used to generate electricity in the SEN. According to authority sta- tistics, the average price of coal decreased 21.6% from an annual average 131 US$/ton in 2018 to roughly 102 US$/ ton in 2019. Regarding the price of natural gas, although the purchase prices of Enel Chile are confidential, according to market information provided by the electricity authority, the henry hub dropped 19.5% on average in 2019 from 3.13 US$/ MMBTU in 2018 to 2.52 US$/MMBTU in 2019. Liquid fuel rep- resented a very low share of the SEN´s generation in 2019. The average Brent oil price dropped 9%. The drought that affected the SEN, the lower price of fuel, the gas imports from Argentina, and the greater supply of non-conventional renewable energy, boosted by the intercon- nection of the entire former SIC and SING electricity systems, allowed reducing the average annual marginal electricity costs. The average price at the 220 kV Quillota node dropped from 63.6 US$/MMBTU in 2018 to 52.0 US$/MMBTU in 2019 (-18%). At the Crucero node, which represents the former SING electricity system, the price fell from 53.0 US$/MMBTU to 45.4 US$/MMBTU (-14.3%). 78 Enel Chile Annual Report 2019The relevance of liquefied natural gas (LNG) transactions outside Latin America to relevant international markets. The Company sold three LNG shipments to Enel Global Trading to be delivered to the United Kingdom and Brazil. The Company was also very active in negotiating more Enel Chile entered the LNG market in 2009 through its subsidiary flexible conditions with the long-term LNG supplier so as to Enel Generación Chile when the GNL Quintero Regasification incorporate Argentine NG operations. Terminal began operations. The regasification terminal was a project of national interest that required a significant public and In 2019, the Company signed a terminal use agreement, TUA, private effort to ensure the country a supply of natural gas since with GNL Mejillones once again. This agreement allowed our the Argentine supply had been interrupted. Company to unload LNG shipments and therefore enabled Enel Generación Chile, Metrogas, and Enap, jointly promoted trial customers located in northern Chile making Enel Chile the development of the GNL Quintero Terminal. This facility the main industrial gas trader in northern Chile. It also made that has played a crucial role in the supply of energy to the natural gas available for the generation units of Enel Chile (Tal- central region of Chile for both residential and industrial cus- tal and GasAtacama) connected to the northern gas pipeline tomers and also for the electricity system as a whole. network. renewing natural gas sales contracts with mining and indus- During 2019, Enel Generación Chile consumed 441 MMm3 of Regarding the commercialization of LNG in trucks, our LNG to satisfy its commercialization and electricity generation operations increased to 60 MMm3 in 2019. The Company requirements, 40% less than the amount needed in 2018, be- signed agreements to deliver NG to cities, such as Temuco, cause of the abundance of Argentine natural gas at competi- which allowed Enel Chile to maintain its relevant position in tive prices. this market. The reactivation of the Argentina natural gas (NG) supply Within this context, Enel Chile has continued consolidating its during the last quarter of 2018, a significant milestone after position as a relevant player in the gas market in Chile, inno- being interrupted for 11 years, enabled Enel Generación Chile vating and expanding its activities in the commercialization of to sign new interruptible NG supply contracts with important gas and LNG in the local and international market. Argentine natural gas producers. The price of Argentine well- head NG reached nearly 3 US$/MMBtu, affected by the com- petitiveness of the Chilean electricity market. Enel Chile im- ported 667 MMm3 of NG during 2019, which represents 60% of Chile´s total gas consumption (to produce electricity and supply customers), and 23% of the total amount of natural gas supplied to generators in the National Electricity System. In 2019, the rental agreements of the thermal power plant Nueva Renca with Generadora Metropolitana allowed Nueva Renca to provide the SEN with electricity fueled with argen- tine natural gas and was recorded as electricity generated by Enel Chile. In the commercial front The commercial actions carried out by Enel Chile through its subsidiary Enel Generación Chile in 2019 were consistent with its commercial policy, which focuses on accomplishing the following goals: maintain industry leadership, adequately manage risk and return under the existing supply and com- petitive market conditions, implement plans to strengthen customer loyalty, add new customers, increase energy sales, and increase commercial management efficiency within the Company. In terms of gas commercialization, Enel Chile, through Enel Generación Chile, continued to perform international trading The main commercial actions carried out in 2019 are described below. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 14. Business of the Company 79 New electricity supply contracts were signed with customers for over 8,500 GWh/year, which improved the Company´s con- tract profile making 2019 an exceptional year. Particularly, agreements were signed with important unregu- lated customers in the mining industry to supply nearly 7,200 GWh/year for 7 and up to 15-year terms. Also, worth mentioning is the positive impact in 2019 of a reg- ulatory change in Chile that allows small customers to choose to be either regulated or unregulated. A large number of small customers decided to change to the unregulated category and sign new supply contracts directly with Enel Generación Chile. Electricity distribution 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 area is considered a high-density consumption area. It concentrates a large propor- tion of the country’s population, and also businesses parks, industrial parks, small industry and commercial activities. The Company also had access to the smaller customer mar- ket indirectly through contracts signed with distribution com- panies to supply electricity to their unregulated customers, amounting to 700 GWh/year with 5 to 15-year terms. Back up Other electricity distribution Groups that participate in the electrical system are: Chilquinta Energía, CGE Distribución, Sociedad Austral de Electricidad and Empresa Eléctrica de la electricity supply contracts have been signed by Enel Gener- Frontera. ación Chile with other generation companies to provide elec- tricity to their unregulated customers, which represented 500 GWh/year with 4 to 15-year terms beginning in 2019. Among the achievements of 2019, the three new contracts signed with Anglo American Sur are worth highlighting. Enel Generación Chile was awarded 3,000 GWh/year of electricity to begin supply in January 2021 for a 10-year period. In No- vember 2019, the Company also signed two electricity supply contracts with BHP Billiton for 3,000 GWh/year for 15 years beginning in the second semester of 2021. Enel Distribución Chile is the largest electricity distribution company in Chile in terms of electric energy sales. It operates in 33 counties of the Metropolitan Region and its concession area covers over 2,105 square kilometers, including the areas covered by its subsidiaries Empresa Eléctrica de Colina Ltda., Luz Andes Ltda. and Empresa de Transmisión Chena S.A. In 2019, the Company provided electricity to 1,972,218 cus- tomers, 2.4% more than in 2018. Of total customers, 89.62% are residential customers, 7.69% are commercial customers, 2.65% are industrial customers and 0.04% corresponds to tolls. During 2019, Enel Distribución Chile sold 17,107 GWh to its final customers, which represents a 1.9% increase when compared to 2018. Enel Distribución Chile successfully accomplished the goals of its Energy Losses Plan to keep losses at economically ac- ceptable levels. As of December, the TAM index was 4.99%. 80 Enel Chile Annual Report 2019Distribution tariffs are set every four years based on cost stud- ies conducted by specialized consulting firms. In late 2015, the CNE issued R.E. CNE 699 that informs, among other matters, the terms of the “Costs Study of Electricity Distribution-Relat- ed Services” as part of the 2016-2020 tariff setting process. The study identifies five new electricity distribution-related services. The most significant are “Construction and install- ment of temporary junctions” and “Lease of temporary junc- tions”. The “Final Electricity Distribution-Related Services Cost Study Report” was published on January 20, 2017. As determined by the established process, Enel Distribución Chile presented its observations on the Report. Enel X Chile Enel X was created as part of the Company´s “Open Power” strategy, to open electricity to new uses, technologies, as- sociations, services and more people. Its businesses are segmented in 4 categories: e-City, e-Home, e-Industries and e-Mobility. e-City Later, the CNE approved the Technical Report titled “Tariff For- It seeks to transform cities to improve people’s access to mulas of Non-Electricity Supply Services, Related to Electric- services by developing technological solutions, jointly with ity Distribution” through Exempt Resolution CNE 213 dated government bodies, related to lighting, safety and energy ef- April 27, 2017. Enel Distribución Chile also presented its ob- ficiency. servations on this Report, as established by the rules of the process. On September 28, 2018, Decree 5T, issued by the Ministry of Energy, became effective. This decree updates Decree 11T, 2016 issued by the same Ministry, adjusting electricity distri- bution tariffs until the next tariff setting process. Resolution 15699/2019 issued by the Superintendence of Electricity and Fuel (SEC in its Spanish acronym) on July 26, 2019, presented an action plan to make the adjustment informed by the National Energy Commission (CNE in its Spanish acronym) in Resolution 490/2019, regarding Decree 5T/2018 issued by the Ministry of Energy, effective. The e-Home It seeks to transform homes by implementing innovative and efficient solutions to increase safety and efficiency focusing on the specific needs of homes and families such as, air con- ditioning, 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. e-Industries adjustment went into effect, retroactively, on September 28, It seeks to transform companies through comprehensive proj- 2018. ects that include expert services, and the implementation and control of all services within the scope of B2B. It focuses on technologies related to energy efficiency, distributed genera- tion, electricity projects, and demand management, among others. It also seeks to contribute to the differentiation of each company. e-Mobility It seeks to transform the means of transportation by offering products and services that promote the development of elec- tric mobility and supplement such services with private urban charging infrastructure and new technologies. It also intends to promote electric public transportation offering comprehen- sive solutions to transportation operators. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 14. Business of the Company 81 e-Home – Business to Cus- tomers projects e-Industries – Business to Business projects Efficient climatization for municipal schools Enel X installed 430 air conditioners in 12 schools in the Peñalolen municipality and 448 in 14 schools in the Renca municipality. The installation of these 900 cutting edge air conditioners also involved the necessary adjustments to the electrical system of the educational facilities. The project seeks to improve the quality of life and academic performance of the students while they are at school by con- trolling extreme temperatures in winter and summer. The municipalities that manage the educational facilities joint- ly financed the implementation of this large-scale project and contributed in the design and execution of the project to re- duce the impact of the works on the daily school routine. Electrification for isolated areas providing self-generation and energy storage devices to isolated families Hybrid Energy Efficiency Solution –Cumbres Terrafirme Condominium Enel X promotes projects that add value to its customers by integrating efficient solutions that provide attractive differen- tiation when compared to other housing developments and also have lower operating costs. This project involved the construction of a photovoltaic sys- tem combined with a sanitary water heating system using a heat pump in addition to an automation system for 20 homes in a condominium. These customers received an energy effi- cient system that improves their carbon footprint. Energy Efficiency Project Colegio Dunalastair, Valle Norte Chicureo, Colina Enel X and the Dunalastair School created an efficient sys- tem to heat sanitary water, minimizing the use of electricity and allowing to reduce the emission of greenhouse gases, by adding a photovoltaic system on the roof of a thermal power With the purpose of increasing access to electricity, Enel X plant. participated in this project that additionally gives individuals access to technology, training, and employability offering Participating in this type of project, along with educational in- them the possibility to stay in their hometown. stitutions, provides Enel X the opportunity to participate in the formation of future generations’ views on renewable energy, This project benefitted 50 families from the Putre municipality which is a fundamental pillar of our Company. and contributed to the country’s fight against poverty. Enel X was responsible for presenting this solution to the So- needed by the heat pump to heat water for the school´s locker cial Development Division of the Ministry of Energy and then rooms and also enable storing the excess solar energy in the carried out the project along with local authorities and local buffer to be used when demand is at its peak. The solar electricity generation will provide part of the energy This project benefits students when engaging in sports activities. The school has more than 1,500 students, from nursery school to 12th grade, in a 12.5-hectare campus that is estimated to daily consume 4,800 liters of hot sanitary water. workers. 82 Enel Chile Annual Report 2019Electric mobility Electric Mobility Operator (EMO) in alliance with Nissan Chile The negotiations between Enel X and Nissan Chile concluded successfully in 2019. They reached an agreement, the first of its kind, making Enel X, Nissan’s official supplier and installer of electric vehicle chargers. This alliance allows our Company to directly contact the cus- tomers that have bought an electric vehicle to offer them an efficient and intelligent charging system, including its installa- tion and support on its use and benefits to ensure quality in both installation and after-sale service. As of the date of this report, more than 30 chargers have been installed, including those for Nissan branches and their cus- tomers. RED Santiago public trans- port fleet and infrastructure – Grecia electric corridor With the purpose of improving the travelling experience of passengers, other related infrastructure was added to the electric corridor, such as cutting-edge bus stops with LED lighting, information panels, USB chargers, in addition to bicy- cle parking, among others. The Grecia electric corridor project includes 40 fully featured bus stops, similar to the above ground subway stations. The project is expected to benefit more than 15,000,000 pas- sengers annually without CO2 emissions and annually reduc- ing 31 tons of CO per bus. This and other Enel X initiatives carried out in 2018, have al- lowed adding a total 285 electric buses to Santiago´s public transportation system. The success of this project has been acknowledged world- wide by the International Association of Public Transport, UITP (in its French acronym), and the Sustainable Energy Agency. ElectroRuta Enel X, 1st Na- tional electric route connect- ing Chile One of our main goals is to be Chile’s major clean energy sup- plier. Therefore, Enel X played a crucial role in the planification and implementation of the first public transportation electric ElectroRuta Enel X is the first national electric route to con- nect Chile from Arica to Punta Arenas offering 1,200 electric vehicles chargers. It will allow electric vehicles to travel 5,000 kilometers from north to south guaranteeing autonomy and corridor for in the Metropolitan Region. It provides the country no interruptions. with cleaner and more efficient public transportation. The project is being developed in alliance with METBUS and BYD in three stages. It involves the construction of charging and servicing infrastructure in addition to providing clean energy. The last stage of the project involving the addition of 183 electric buses to the fleet, took place in late 2019 and transformed the Grecia corridor in the Metropolitan Region into a 100% electric corridor. This project will be carried out in 5 years and will cover over 50% of the energy charging infrastructure needs of over 81,000 electric vehicles expected to exist in Chile by 2025. The goal is to provide the number of charging stations re- quired to make travelling within the country, producing less air and acoustic contamination, a reality. A total 68 chargers were installed in 2019, reaching a total 104 throughout the country to the date of this report. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 14. Business of the Company 83 84 Enel Chile Annual Report 201915. STRATEGY, INVESTMENTS AND FINANCIAL ACTIVITIES 15. Strategy, investments and financial activities 85 Relevant investments related to the strategic plan of the Company Decarbonization is one of the fundamental pillars of Enel Chile’s strategy, followed by renewable energy development and expansion, electrification, and infrastructure and platform development. Within this framework, the Company’s business is focused on reaching the U.N.’s Sustainable Development Goals (SDGs). Decarbonization & Renewable Energy Electrification Provide Infrastructure Ecosystems & Platforms Sustainable Value and Growth 86 Enel Chile Annual Report 2019Our commitment to decarbonization and an increasingly cleaner energy matrix was reflected in the historic decarbonization agreement signed in 2019, in which we committed to retire the Tarapacá, Bocamina I and Bocamina II power plants. Reinforcing such commitment, we voluntarily requested the early retirement of the Tarapacá power plant, which was completed on De- cember 31, 2019. Coal fueled power plant retirement schedule Installed capacity 178 MW 128 MW 128 MW 350 MW 350 MW 350 MW Zero Coal fueled installed capacity Early retirement of Tarapacá December 31, 2019 Bocamina I by December 2023 Bocamina II by December 2040 By 2040 As a result of the decarbonization strategy, the Company announced a new sustainable strategic plan in December 2019, which increases renewable energy capacity by approximately 2 GW by 2022. As a result, the Company’s installed capacity will increase by 24%, to a total 9.2 GW in 2022, and will consolidate the portion of renewable energy sources in its energy matrix. The Company's will grow nearly 24%, to a total 9.2 GW in 2022 27% 40% 27% Thermal 5% Coal 9% 1% 9.2 GW 23% 73% Renewable Hydroelectric Solar Geothermal Wind Thermal s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 15. Strategy, investments and financial activities 87 Electrification, ecosystems and platforms In addition, and through an alliance with Metbus, Enel X in- troduced electric buses into Chile’s public transport system in 2018 and 2019, reaching a total of 285 electric buses in Santiago. They have replaced conventional, combustion-based buses, and have therefore helped reduce these carbon emis- sions. Furthermore, and as a part of this strategy, on January 17, 2020, Enel X unveiled the first national electric route, which The energy transition process is affecting all aspects of the will connect Chile from Arica to Punta Arenas by installing value chain and is creating substantial value-creating opportu- 1,200 public charging points, with more than 1,800 electric nities for those who can operate with the required scale and vehicle charging connections. As mentioned earlier, “Electro- Ruta Enel X” will allow covering over 5,000 kilometers, from north to south, guaranteeing the autonomy and continuity of electric vehicle circulation. Enel X will benefit from greater demand for value-added ser- vices as a result of the transition towards electrification, as well as trends regarding greater concern for low-emission, highly efficient energy consumption and electromobility. flexibility. Enel X Within this new context, Enel X, Enel Chile’s services subsid- iary, is a fundamental figure in our clients’ energy transition, for promoting more environmentally friendly sources of elec- tric heating for example as opposed to inefficient, high-carbon thermal heating such as firewood. First National ElectricRoute Will connect Chile from Arica to Punta Arenas (to cover 5,000 km) 1,200 charging points and 1,800 electric vehicle charging connections US$ 15 million initial investment Will reduce urban pollution through more efficient everyday energy use 88 Enel Chile Annual Report 2019 s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f Network infrastructure 2020 - 2022 investment plan Guaranteeing and accelerating the electrification process, re- The Company’s strategic plan announced in December 2019 silience, and electrical network availability are crucial aspects involves a Ch$ 1,585 billion investment plan for the 2020 - of the energy distribution business. Therefore, Enel Distribu- 2022 period, aimed at maintaining our position as leaders ción Chile’s main objective is to continue improving service in the Chilean electricity industry, focusing primarily on in- quality and efficiency to meet customers’ needs, which will creasing renewable energy capacity by approximately 2 GW, also allow for the integration of new services. increasing digitalization, and promoting the development of new ways to utilize clean energy. Over the last 3 years, Enel Distribución Chile has almost dou- bled the number of remote-controlled devices in its network. Enel Chile’s investment plan is flexible enough to adapt to This technology, along with process improvements, has re- changing circumstances, prioritizing each project according to duced the duration of service interruptions. The Company will its profitability and strategic objectives. Current investment continue its network modernization and digitalization process priorities involve the studies of new and existing environmen- to further improve the service it provides and enable the con- tally friendly, socially responsible generation projects and dis- nection of new clients and real estate projects. tribution network maintenance projects, focused on guaran- teeing an adequate level of electricity supply reliability. Enel Chile coordinates the global financing strategy of the Group’s companies, optimizing the financial terms and con- ditions of debt at a consolidated level. Subsidiaries develop capital expenditure plans independently, financing them with internally generated funds or through intercompany financing. One of the Company’s goals is to focus on investments that offer long-term economic and social benefits. Financing these investments is considered during the Com- pany’s budget process, but no specific financing structure has been defined, and investments will depend on market condi- tions at the time the cash flows are needed. The following table shows expected capital expenditures between 2020 and 2022, as well as capital expenditures in- curred in 2019, 2018 and 2017. Investment (1) (Ch$ billion) Chile Total 2020-2022 1,585 1,585 2019 300 300 2018 301 301 2017 266 266 (1) CAPEX figures represent cash payments each year, except for future projections. 15. Strategy, investments and financial activities 89 Generation The main investments developed in Chile during 2019 were fo- cused on the construction of the Los Cóndores pass-through hydroelectric power plant (150 MW), the Campos del Sol solar power plant (382 MW), and the expansion of Cerro Pabellón III geothermal power plant (33 MW), as well as sustainabil- ity-related activities in the Bocamina thermal power plant. Current investment priorities include the development of envi- ronmentally friendly and socially responsible hydroelectric and non-conventional renewable energy projects that guarantee adequate levels of electricity supply. Relevant investments in 2019, 2018 and 2017 Capital expenditures carried out over the last three years were mainly related to: 1. The 350 MW Bocamina II power plant optimization project 2. The 150 MW Los Cóndores project 3. Installed capacity expansion (600 MW under construc- tion in 2020, with projections of increasing the Compa- ny’s renewable installed capacity by 2 GW by 2022). 4. Maintenance of existing installed capacity. The capital expenditures mentioned, per project, were fi- nanced as follows: > Optimization of Bocamina II power plant: internally generated funds. > Los Cóndores: internally generated funds. Enel Chile projects under construction and optimization Los Cóndores project The Los Cóndores hydroelectric power plant is located on the Maule river basin in the San Clemente county of the Maule region, Chile’s seventh region. It is a pass-through hydroelec- tric power plant with an installed capacity of approximately 150 MW, equipped with 2 vertical axle Pelton units that will utilize water from the Laguna del Maule reservoir. The plant will connect to the national electricity network through an 87 km transmission line to the Ancoa substation. The project received favorable environmental qualification resolutions for the power plant and the transmission line in 2011 and 2012, respectively. In 2014, the hydraulic works con- struction plans were approved. By the end of 2019, the project had reached 82% physi- cal progress of the current construction program, having completed the downstream tunnel and the installation of electromechanical equipment in the cavern. The pressure spike, balance chimney and the upstream tunnel will follow. The transmission line, on the other hand, had reached 93% physical progress by the end of 2019. The total investment accrued as of December 31, 2019, was Ch$ 510.66 billion. 90 Enel Chile Annual Report 2019s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f Central Sauzal smart repowering project The Sauzal plant Smart Repowering Project considers the mod- ernization and repowering of specific systems and equipment in the Sauzal hydroelectric power plant. The Sauzal plant is located in the Libertador Bernardo O’Higgins region of Chile, has been operational since 1948, and is equipped with three generation units with vertical axis Francis type turbines. The Smart Repowering project considers replacing two existing tur- bines to increase generation by an additional 13.7 GWh/ year. The general contract was signed with VOITH HYDRO, and covers the detail engineering, manufacturing, assembling, and launching of new equipment for both turbines. During 2019, works related to the first generating unit were carried out, while the works of the second generating unit will take place in 2020. The overall progress of the VOITH contract, as of December 2019, was 87.8%, with an accumulated invest- ment of Ch$ 3,850 million. Central Antuco smart repowering project Closure of Bocamina ash landfill areas 1, 2 and wing The Bocamina thermoelectric plant utilizes an authorized land- fill to dispose of combustion residue (bottom ash and fly ash) from its electric generation process. The landfill was evaluated through the Environmental Impact Assessment System (SEIA, in its Spanish acronym) by means of the Environmental Impact Declaration (DIA, in its Span- ish acronym) “Bocamina Thermoelectric Power Plant Landfill Expansion” and duly qualified as environmentally favorable, as dictated in the Exempt Resolution (RCA, in its Spanish acronym) 017/2010 published by the Regional Environmental Commission (COREMA, in its Spanish acronym) of the Bio- bio region of Chile. This RCA details the procedure for the fa- cility’s closure and decommission, which mainly consists of establishing the necessary conditions for vegetation repopu- lation and landscape recovery. Enel initiated the closure of areas 1,2 and wing of the landfill and intends to improve the standards set by the RCA. The work to be done considers the following: • Incorporate a waterproofing package, with geosynthetic material, for the final closure of the landfill. Not mandated by the RCA. • Increase excavation material coverage to 1 meter. RCA demands 50 centimeters. The Antuco plant Smart Repowering Project considers the • Maintain the final vegetation coverage of 20 centimeters, modernization and repowering of certain systems and equip- as established in the RCA. ment in the Antuco hydroelectric power plant. The plant is lo- • Implement a vegetation plan with higher standards than cated in the Biobío region of Chile, has been operational since those set in the RCA. To do so, different irrigation sys- 1981, and is equipped with two generations units with verti- tems are being tested on native species in a Pilot Plan cal axis Francis type turbines. The Smart Repowering project that spans over half a hectare of the landfill’s site. considers replacing Turbine N°1 to increase generation by an • Extend the closure to include the wing area of the land- additional 204 GWh/year. fill with the aforementioned standards, which is not The general contract was signed with ANDRITZ, and cov- • Incorporate an underground water monitoring system, ers the detail engineering, manufacturing, assembling, and not included in the RCA. considered in the RCA. launching of new equipment in Unit N°1. The overall progress of the ANDRITZ contract, as of December 2019, was 53%, with an accumulated investment of Ch$ 2,400 million. 15. Strategy, investments and financial activities 91 Renaico II project Reinaco II includes two wind farms, Las Viñas (58.5 MW) and Puelche (85.5 MW), with a total installed capacity of 133 MW. It is located in Renaico, in the Araucanía region, next to the currently operational Renaico I wind farm. The Renaico II wind project consists of 32 wind turbine gen- erators, interconnected to the “Central Interconnected Sys- tem” through the existing, 220 kV Renaico I substation, which will need a new bay with a 165 MVA main transformer. Cerro Pabellón expansion project The Cerro Pabellón III Project considers the construction of a 33 MW geothermal energy power plant. It is located in lots adjacent to the Cerro Pabellón I and II power plants, in the Antofagasta region of northern Chile. The project has received environmental approval. A new bay will be built in the existing lifting substation to con- nect the expansion project to the National Electric System. The evacuation process will utilize the existing high-voltage line. Construction began in August 2019. In summary, waterproofing materials, which include a con- ductive geomembrane; the greater thickness of fillers and substrates; the selection of native species; high specimen / hectare density, and a planting design according to referential ecosystems in the area, created with direct support from the Universidad de Concepción, make this a unique project within the industry. The project’s progress in 2019 involved the following: • On January 21, the Health SEREMI granted the project’s Sanitary Permit • On February 15, the SEA granted the Environmental Per- mit through resolution 022/2019. • On July 2, the coverage contract for areas 1, 2 and wing was approved. • On July 19, the Revegetation Pilot Plan was completed. • As of December 31, 2019, the project’s overall progress was 60%. Campos del Sol project The “Campos del Sol Sur” Project considers an installed ca- pacity of 382 MW and was one of the chosen projects of the 2016 Tender Process in Chile. The Project is located in Chile’s third region of Atacama, ap- proximately 60 km northeast of Copiapó. Campos del Sol is a photovoltaic project that consists of 974,400 crystalline bifa- cial photovoltaic modules with trackers, interconnected to the “Central Interconnected System” through the Carrera Pinto substation. It will be Chile’s largest photovoltaic park, with ap- proximately 1,700 hectares of surface area. The interconnection includes two main transformers, a 7.5 km, 220 kV transmission line and an point of interconnection (POI) in the Carrera Pinto substation, owned by Transelec. Construction began on August 23, 2019. 92 Enel Chile Annual Report 2019Enel Chile projects under evaluation Quintero combined cycle closing Project Central Taltal battery energy storage system Enel Generación Chile is analyzing the installation of a Bat- tery Energy Storage System (BESS) in its Taltal thermal power plant in order to provide the auxiliary services the National Electric System (SEN, in its Spanish acronym) may require in the coming years. The project would have an installed capacity of 12 MW and 12 MWh of energy storage capacity, connected to the 15-kV bar of one of the existing 120 MW turbines in the Taltal plant. In May 2018, the SEA of the Antofagasta waived the Com- pany’s obligation to submit this project to an environmental evaluation prior to its construction. The Project is located in the Valparaíso region of Chile and consists of an energy efficiency project that uses the heat of gas generated by existing turbines (257 MW) to produce steam, by installing a steam turbine and a generator. This will allow converting the existing open circuit into a combined cy- cle gas power plant, for which projections consider the instal- Any decision related to the construction of the project will depend primarily on the commercial opportunities foreseen for the coming years, and, particularly, on the evolution of the regulatory framework regarding the provision and remunera- tion of complementary services, as well as the annual esti- mate the operator must make on the required volume of such lation of an additional boiler and a 130 MW steam turbine. In services. August 2018, the project was postponed indefinitely, and all environmental impact studies were suspended. The final investment decision regarding this project will de- pend, among other things, on the socio-environmental condi- tions in the area and the commercial opportunities foreseen for the coming years, such as the prices of future tenders to supply the electricity required by the regulated market and/or existing or new unregulated customers. Taltal optimization project The project is located in the Antofagasta region of northern Chile and consists of an energy efficiency project that uses the heat of gas generated by existing turbines (240 MW) to produce steam. This is done by installing a steam turbine and a generator, which will allow converting the existing Taltal open cycle plant into a combined-cycle gas power plant, increasing production by 120 MW. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 15. Strategy, investments and financial activities 93 The environmental permit, requested through the Environ- mental Impact Declaration, was submitted to the authorities Azabache in December 2013 and was approved in January 2017. Any decision related to the construction of this project will depend, among other things, on the business opportunities envisioned for the coming years, such as the prices of future tenders to supply the electricity needs of the regulated mar- ket and/or existing or new unregulated customers. Central Tarapacá battery energy storage system The Azabache solar project involves the construction of a new 63 MW photovoltaic power plant to be located in Calama county, in the Antofagasta region. The project will be built on the land where our Valle de los Vientos Wind Park is located, so it is expected to be the first industrial scale hybrid power plant in Chile. The project has received its environmental approval. Valle del Sol Enel Generación Chile is analyzing the installation of a Battery sists of a 163 MW solar power plant. The land is available, and Energy Storage System (BESS) in its Tarapacá thermal power the project has received environmental approval. The project plant in order to provide the auxiliary services the National will have strong operational synergies with the Finis Terrae Electric System (SEN, in its Spanish acronym) may require in plant, owned by Enel Green Power Chile. This project, located in the Antofagasta region of Chile, con- the coming years. The project involves the installation of a BESS with about 14 MW of installed capacity and 14 MWh of energy storage ca- pacity, connected to the 11.5 kV bar of the existing 23 MW turbine installed in the Tarapacá plant. Finis Terrae expansion In December 2017, the SEA of the Tarapacá region issued a resolution waiving the Company’s obligation to submit the project to environmental assessment prior to construction. This project, located in the Antofagasta region of Chile, con- Any decision related to the construction of this project will de- and the project has received environmental approval. The proj- pend, among other things, on the business opportunities that ect will have strong operational synergies with the Finis Ter- may arise in the coming years, and, particularly, the evolution rae plant, owned by Enel Green Power Chile and currently in of the regulatory framework for the provision and remunera- operation, and will utilize existing infrastructure, including the sists of a 126 MW solar power plant. The land is available, tion of complementary services, as well as the estimate the substation and transmission line. operator must make on the required volume of such services. 94 Enel Chile Annual Report 2019 Sol de Lila This project, located in the Antofagasta region of Chile, con- sists of a 163 MW solar power plant. The land is available, and the project has received environmental approval. This project will possibly connect to the Argentine transmission system. Domeyko This project, located in the Antofagasta region of Chile, con- sists of a 204 MW solar power plant. The land is available, and the project has received environmental approval. Sierra Gorda Solar This project, located in the Antofagasta region of Chile, con- sists of a 375 MW solar power plant. The land is available, and the project has received environmental approval. The project will have strong operational synergies with the Sierra Gorda wind farm, owned by Enel Green Power Chile and currently in operation, and will utilize existing infrastructure, including the substation and transmission line. Campos del Sol II This project, located in the Antofagasta region of Chile, con- sists of a 398 MW solar power plant. The land is available, and the project has been approved environmentally. The project will have strong operational synergies with the Campos del Sol solar park currently in operation, owned by Enel Green Power Chile and currently in operation, and will utilize the existing infrastructure, including the substation and transmis- sion line. Land reserved for future projects As of December 2019, Enel Chile, through its Enel Generación Chile subsidiary, held approximately 318.3 hectares in real es- tate or land to develop future natural gas and hydroelectric projects. These assets are located in the Antofagasta region (30.8 hectares), the Valparaíso region (245.5 hectares) and the Los Lagos region (42 hectares). Distribution During 2019, Enel Distribución Chile and its subsidiaries (Colina and Luz Andes) invested Ch$ 106 billion in projects primarily related to satisfying organic growth, service quality, safety and information systems. During 2018, a total Ch$ 96 billion were invested, of which Ch$ 29 billion were destined to maintenance, Ch$ 31 billion to growth investments, and Ch$ 36 billion to connectivity activities. In 2019, a total Ch$ 26 billion were invested in adapting me- dium voltage (MV) and low voltage networks (LV) to allow the connection of new residential and large customers, as well as real estate projects. A total Ch$ 23 billion were invested in increasing Enel Distri- bución Chile’s network capacity. In high voltage (HV), invest- ments were made in the following substations: Nueva Lampa, Chena, Pudahuel, Macul, Cerro Navia, Quilicura, A. Córdova, Chicureo, San Cristóbal, Los Dominicos, and San Joaquín. Re- garding medium voltage (MV) networks, the Apoquindo sub- station is being restructured, and new feeders were installed in the Aeropuerto and Parque Arauco substations. To improve low voltage (LV) network quality, works in reinforcement, ex- tension, and line relocations were executed. s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f 15. Strategy, investments and financial activities 95 In addition, Ch$ 17 billion were invested in improving service quality. A specific group of feeders were reinforced, as deter- mined by the Medium and Low Voltage Quality Plan. Auto- mation improvements in the MV network included adding 414 new remote-controlled devices and adapting the networks accordingly. This allowed increasing the remote-controlled Indebtedness Gross consolidated financial debt of Enel Chile reached US$ 3,585 million, with a 7-year average life, mainly comprised of devices operated from the Network Operations Center from the following: 1,500 to 1,720. A total Ch$ 3 billion were invested in relocating public net- work infrastructure. To comply with regulation, Ch$ 9 billion were invested in legal procedures to normalize lines and substations. Nearly Ch$ 9 billion were invested in technical and financial systems, focused on digitalizing processes. • US$ 400 million in related company debt. • US$ 1,000 million in a Yankee bond outstanding since June 12, 2018, for 10 years. • US$ 1,020 million EGP Chile loan consolidated by the Enel Chile Group since April 2018, of which US$ 644 thousand is related company debt. • International and local bonds of Enel Generación Chile. Net consolidated debt as of year-end 2019 was of US$ 3,271 million, and the debt ratio was 2.2 times. Additionally, Ch$ 2 billion were invested in anti-theft mea- sures, such as shielding networks by installing Ananda boxes and turtles, technical measures and RED reinforcements. Hedging policy Nearly Ch$ 7 billion were used to finance corrective mainte- nance of transmission lines and substations. A series of main- tenance works also focused on high-risk facilities. Exchange rate Financial position Liquidity The Enel Chile Group manages the financial risk in its balance sheet, income statement and cash flow by reducing its expo- sure to exchange rate variations. The Group’s exchange rate hedging policy is based on cash flows and seeks to maintain a balance between flows indexed to a foreign currency (US$) and the cash flows assets and liabilities generate in said cur- rency. The goal is to minimize cash flow and income state- ment exposure to currency-related risk. At year-end 2019, 97% of consolidated financial debt is de- nominated in US dollars or has been converted to US dollars through derivatives. At year-end 2019, Enel Chile relied on committed credit lines available for US$ 195 million, of which US$ 50 million correspond to related party committed credit lines. Interest rate In addition to liquidity instruments, the total amount of cash available at year-end 2019 was US$ 314 million. 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 in- struments are purchased based on market conditions, given the Company’s projections and debt structure objectives. At year-end 2019, consolidated fixed debt to total financial debt was 98%. 96 Enel Chile Annual Report 2019 s n o i t a l e r r o t s e v n I . 0 1 s d n e d i v i D . 1 1 d n a t n e m t s e v n I . 2 1 y c i l o p g n i c n a n i f y n a p m o C e h t f o y r o t s i H . 3 1 y n a p m o C e h t f o s s e n i s u B . 4 1 d n a s t n e m t s e v n i , y g e t a r t S . 5 1 s e i t i v i t c a l a i c n a n i f Risk rating The main events related to risk rating in 2019 are summarized below: Feller Rate maintained its rating of Enel Chile granted for the first time in 2017. The Company was rated “AA” on the local scale with a stable outlook. This rating was confirmed on June 20, 2019. Moody´s confirmed the international rating of Enel Chile S.A. on June 28, 2019. The Company received a “Baa2” rating with a stable outlook. On October 28, 2019, Standard & Poor’s maintained the Com- pany’s “BBB+” international credit rating with a stable outlook. On January 28, 2020, Fitch Ratings improved its local credit rating of Enel Chile S.A. from “AA(cl)” to “AA+(cl)”. Fitch also ratified its “First Class Level 1 (cl)” rating of Enel Chile stock, and modified its outlook from positive to stable. The Company’s ratings are based on its diversified asset port- folio, strong credit parameters, adequate debt structure and high liquidity. International rating Enel Chile Corporate S&P Moody’s BBB+ / Estable Baa2 / stable Local rating Trademarks The Company has registered the trademark “Enersis Chile” for services, products, industrial and commercial facilities. Enel SpA has granted Enel Chile S.A. the use of the “Enel” trademark free of charge, and allows its use in the legal name, logo and in other ways. The trademark “Enel Chile” is registered legally. Suppliers, customers, and relevant competitors Enel Chile S.A. is a holding company that operates primarily in the electricity generation and distribution sectors in Chile, therefore the suppliers, customers, and competitors are those relevant to the Company’s main subsidiaries that operate in the electricity sector. Enel Chile Feller Rate Fitch Ratings Stocks Bonds 1° class. Level 2 1° class. Level 1 Consequently, the Company’s relevant suppliers, customers, AA / Stable AA+/ Stable and competitors are the following: Insurance Enel Chile S.A. is covered by a global insurance program centralized by its parent company, Enel SpA. The insurance covers physical damages, terrorism, business interruptions and legal liability. The insurance policies’ renewal process was carried out through an international bid, where the leading in- surance companies worldwide were invited to participate. The contracts were renewed on November 1, 2019 and expire on October 31, 2020. Suppliers: GNL Chile, Transelec, Total Austral, Coal Marketing Company, AES Gener, Engie Energía Chile, Hidroeléctrica La Higuera, Travel Security S.A., Ernst & Young Servicios Profe- sionales y Asesorías Limitada, Team work Recursos Humanos Limitada, Sodexo Chile S.A. Customers: CGE Group, Saesa, Chilquinta Group, Gerdau Aza S.A., Metro S.A., Mall Plaza. Competitors: AES Gener S.A., Colbún S.A., Engie S.A., Guacolda Energía. 15. Strategy, investments and financial activities 97 98 Enel Chile Annual Report 201916. INDUSTRY REGULATION AND ELECTRICITY SYSTEM OPERATION 16. Industry regulation and electricity system operation 99 General features a) Regulatory framework: to acts as a court, issuing enforceable resolutions in disputes related to subjects referred to by the Electricity Law and other electricity related laws. According to the Law, the operation and coordination of the Chilean electricity system is to be carried out by a National Electricity Coordinator (“CEN” in its Spanish acronym). It is an independent entity in charge of coordinating the operation of the electricity system with the following objectives: i) main- tain service security; ii) guarantee the efficient operation of the facilities 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 oper- ations, authorization of connections, supplementary services management, implementation of information systems avail- Chile’s electricity sector is regulated by the Chilean Electrici- able to the public, and monitor competition and payments, ty Law 20,018, contained in the Ministry of Mining DFL 1 is- among others. sued in 1982. Its restated text was established by Ministry of Economy DFL 4, issued in 2006 (the “Electricity Law”) and its The Chilean electricity sector is physically divided into three respective regulations contained in D.S. 327 issued in 1998. main networks, the National Electricity Network (“SEN” in its Spanish acronym) and two smaller isolated networks; Aysén The main authority in the energy industry is the Ministry of and Magallanes. The SEN is the outcome of the integration of Energy that is the government body responsible for proposing the Central Interconnected System (“SIC” in its Spanish acro- and delivering comprehensive public policies as a coordinate nym) and the Norte Grande Interconnected System (“SING” effort. It exists since February 1, 2010 as an autonomous en- in its Spanish acronym) that took place in November 2017. tity after being part of the Ministry of Mining for many years. 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 Ministry of Energy oversees the National Energy Com- the south. The SING covered the northern part of the country, mission (”CNE”, in its Spanish acronym) that regulates the from Arica to Coloso, and extended 700 km. electricity industry and the Superintendence of Electricity and Fuel (Chilean “SEC”, in its Spanish acronym) that is the super- The electricity industry in Chile is divided into three segments vising body. Other entities that report to this Ministry are the or businesses: generation, transmission, and distribution. Op- Chilean Nuclear Energy Commission (“CChEN”, in its Spanish erations of the related facilities must be interconnected and in acronym), the Chilean Sustainable Energy Agency. coordination to supply electricity at the minimum cost within the certain safety and quality standards required by electricity The National Energy Department is the entity in charge of pro- industry regulation. posing the regulated tariffs, approving the annual transmis- sion expansion plans, and elaborating the indicative plan for Given the structural characteristics of the transmission and the construction of new electricity generation facilities. The distribution segments, they are considered natural monopo- Superintendence of Electricity and Fuel inspects and over- lies and are therefore subject to special industry regulation, sees compliance with the law, rules regulations and technical the network is open access, and tariffs are regulated. norms applicable to electricity generation, transmission and distribution, liquid fuels and gas. The Chilean electricity market trades two products (energy Additionally, the law provides for a Panel of Experts, com- National Electricity Coordinator performs the calculation of prised of professional experts, whose main responsibility is market balances, determines the transfers among generation and capacity), and additionally several related services. The 100 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C companies and calculates the hourly marginal cost, which is A generation company may have the following types of cus- the price at which energy transfers are carried out. The CNE tomers: determines the price of generation capacity. • Unregulated customers are customers whose connect- Customers are classified according to their demand as regu- ed capacity is greater than 5,000 kW, mainly industrial lated or unregulated. Regulated customers are those whose and mining companies and customers whose connected connected capacity is below 5,000 kW. Customers with con- capacity ranges between 500 and 5,000 kW and choose nected capacity between 500 kW and 5,000 kW may choose to be unregulated for a minimum of 4 years in either re- to be regulated or unregulated, subject to the respective price gime. These customers may freely negotiate their elec- regime. tricity supply prices with generators or distributors. Limits to integration and concentration In Chile, antitrust legislation along with specific regulation applicable to the electricity industry define criteria to avoid certain levels of market concentration and abusive practices. Companies can participate in the different industry segments (generation, distribution and commercialization) in so far, an adequate level of corporate and accounting separation exists. The transmission segment is where most restrictions are im- posed, mainly due to the nature of the activity and the need to guarantee adequate access to all players. The Electricity Law defines limits to the market share that generation com- panies and distribution companies may have of the National Transmission segment and prohibits National Transmission companies from participating in the generation and distribu- tion segments. a.1 Generation segment • Distribution companies that supply regulated and un- regulated customers. Distribution companies supply their regulated customers through public tenders regulated by the CNE and supply their unregulated customers through bilateral contracts. • Other Generation companies. The relationship between generation companies may be formalized through bilat- eral contracts or on the Spot or short-term market: The latter refers to the transactions of energy and capacity between generation companies resulting from the effi- cient operation of the market by the National Electricity Coordinator. The surplus (deficit) of production after sup- plying customer commitments are transferred by selling (buying) to (from) other generators connected to the sys- tem. Electricity transfers are priced at the marginal cost of the system. Capacity transfers are carried out at the corresponding node price, as set every semester by the authority. In Chile, capacity payments to each generator depend on the calculation, based on current rules, performed annually by the National Electricity Coordinator that determines the firm ca- pacity of each power plant. Firm capacity mainly depends on availability of the facilities and of the source of generation. Non-conventional renewable energies The operations of generation companies are conditioned Law 20,257 enacted in April 2008 creates incentives to use by the operations plan of the System Coordinator, although Non-Conventional Renewable Energies (NCRE). This rule de- they may freely decide whether to sell their energy to either termined that by 2014, at least 5% of energy commercialized regulated or unregulated customers. Any surplus or deficit be- by generators must come from renewable sources and must tween sales and production is sold to or bought from other progressively increase 0.5% every year from 2015 until 2024 generators at the spot market price. to reach 10%. This law was modified in 2013 by Law 20,698, entitled the 20/25 law, establishing that by 2025, 20% of the electricity matrix must be covered by NCRE sources. For con- tracts in force up to July 2013, the withdrawals established by the previous law were to be respected 16. Industry regulation and electricity system operation 101 a.2 Transmission segment a.3 Distribution segment Transmission systems are comprised of lines and substations The distribution segment is defined as all electricity facili- that form an electric system that are not distribution instal- ties employed in supplying electricity to end customers at a lations. They are divided into five segments: National Trans- voltage of up to 23kV. mission, Development Pole Transmission, Zonal Transmission, Dedicated Transmission and International Interconnection Distribution companies operate under the framework of a Systems. public service concession. They have the obligation to serve all customers and provide electricity at regulated prices Transmission installations are open access to any user that to regulated customers (customers with under 5,000 kW requests it, without discrimination. The compensation for ex- connected capacity, except customers that fall within the isting transmission installations, either National or Zonal, is 500-5,000 kW category and chose the unregulated tariff). determined by a tariff setting process performed every four Unregulated customers may negotiate their electricity supply years. This process determines the Annual Transmission Value with any generation or distribution company but must pay a comprised of efficient operations and management costs and regulated toll for using the distribution network. an investment value annuity, determined by a discount rate (minimum 7% after tax) set by the authority every four years Regarding electricity supply to regulated customers, the law based on a study and the useful life of assets. determines that distribution companies must permanently have electricity available to supply its customers and it must obtain The development of the National and Zonal Transmission sys- such electricity through open, non-discriminatory and transparent tems is determined by a regulated and centralized process public tenders. These tenders are designed by the CNE and are carried out by the National Electricity Coordinator, which carried out at least five years in advance to award 20-year term presents an expansion plan every year that must be published contracts. If demand changes unexpectedly, the authority has by the CNE for interested parties to present their proposals. the power to call a short-term tender. There is also a regulated Participating parties may present their observation to the ex- procedure to remunerate noncontracted electricity sales. pansion plan before it is finally approved by the CNE. The expansion of both systems is granted through an open every four years based on a cost analysis to determine the tender process that discriminates new installations from ex- Distribution Value Added (“VAD” in its Spanish acronym). pansions of existing installations. The tenders carried out for The VAD calculation is based on an efficient model company The processes for setting distribution tariffs are carried out new installations grant the winner ownership of the installa- scheme and a typical area concept. tion to be built. The expansion of existing installations, on the other hand, belongs to the owner of the original installation, On December 21, 2019, the Ministry of Energy issued Law who must tender the construction of the required expansion. 21,194 (Short Law) that reduces Distribution Companies’ Rate The National Electricity Coordinator in is charge of managing of Return and improves the electricity distribution tariff setting both new and existing installations. process. Consequently, the 2020-2024 distribution tariff set- ting process considers the changes established by this Law. The remuneration of the new facilities is determined by the outcome of the bid and represents the income for the first To determine the VAD, the CNE classifies the companies with 20 years of operations. The remuneration of new facilities is similar distribution costs into groups named “typical areas”. determined by the investment amount resulting from the bid For each typical area, the CNE hires independent consultants and the applicable operation and maintenance costs. In both to carry out a study to determine the costs of an efficient cases, from year 21 on, the remuneration of such transmis- model company, considering fixed costs, average energy and sion facilities is determined as existing assets. capacity losses, and standard investment, maintenance, and operations costs related to electricity distribution, including The regulation currently in force determines that transmission certain restrictions that distribution companies face in reality. remuneration is the sum of tariff revenue and the usage The annual investment costs are calculated based on the Net charge revenue, for use of the transmission system. This Replacement Cost (VNR in its Spanish acronym) of facilities usage charge is defined (Ch$/kWh) every six months by the adjusted to demand, expected life and a discount rate calcu- CNE. 102 lated by the CNE every four years that may not be less than 6% nor greater than 8% a year after tax. Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C The CNE then determines the resulting tariffs and verifies that methodology that involved weighing the results of the VAD the after-tax economic rate of return is not more than 2 per- study performed by the CNE and the VAD study performed centage points higher or 3 percentage points lower than the by distribution companies with a ratio of 2:3 and 1:3, respec- rate calculated by the CNE. tively, and replaces it by using only the CNE’s study. The dis- count rate in the calculation of the annual investment cost Additionally, every four years, when the VAD is being calculat- was also modified. The previous 10% real annual pre-tax dis- ed, the Antitrust Court reviews the supplementary services count rate was replaced by an annual after-tax discount rate considered to be related to the supply of electricity and sub- to be calculated by the CNE every four years that may not be ject to price regulation. less than 6% nor greater than 8%. This new methodology is to be applied in the following tariff setting process to begin The Chilean distribution tariff model is a consolidated model November 4, 2020. Also, as of January 2021 electricity distri- that has carried out nine price-settings processes since the bution companies may participate exclusively in the electricity enactment of the Electricity Law in 1982. distribution business. b) Regulatory issues 2019 Laws enacted in 2019 The Ministry of Energy published Law 21,185 (hereafter the “Tariff Stabilization Mechanism Law”) in the Official Gazette on November 2, 2019. This Law creates a Temporary Regulated Customer Tariff Stabilization Mechanism that states that the price to charge regulated customers for electricity from July 1, CNE 2019 Regulatory Plan Pursuant to Exempt Resolution 790 dated December 10, 2018, and according to Article 72-19 of the Ley General de Servicios Eléctricos, the CNE published its 2019 Regulatory Work Plan. The document defines the general guidelines and the program priorities of the CNE’s Regulatory Work Plan 2019 and the pending regulatory procedures of the 2018 Plan, the preparation of which will continue being performed during 2019. Regulations published in 2019 2019 through December 31, 2020 is to be equal to the prices Regulation of Supplementary Services. On March 27, 2019, in force during the first semester of 2019 (Decree 20T/2018). the Ministry of Energy approved Decree 113/2017, to become This stabilized price was named the “Stabilized Regulated effective January 1, 2020, which is the Supplementary Ser- Customer Price” PEC (in its Spanish acronym). From January vices Regulation referred to in article 72-7 of the Ley General 1, 2021 until the stabilization mechanism is suspended, the de Servicios Eléctricos. prices will be those defined in the tariff setting processes carried out every six months as established in Article 158 of the Electricity Law, but not to exceed the PEC adjusted by inflation according to the Consumer Price Index as of January 1, 2021, using the same date as base. The billing differences until 2023 are to be recorded as an accounts receivable in favor 2017 Transmission Expansion Plan of generation companies, limited to a maximum US$ 1,350 On November 8, 2018, the Chilean Ministry of Energy million. The balance of these accounts is to be recovered by published Exempt Decree 293/2018 establishing the specific December 31, 2027. Expansion Works of the National and Zonal Transmission Systems to begin the tender process within the following On December 21, 2019, the Ministry of Energy issued Law twelve months, in accordance with the stages of the pro- 21,194, effective as of that date, that reduces Distribution cess established by Law. On August 13, 2019, the Ministry Companies’ Rate of Return and improves the electricity of Energy published Exempt Decree 202/2019 which modifies distribution tariff setting process. This Law eliminates the the prior decree regarding the Expansion Works. 16. Industry regulation and electricity system operation 103 On January 9, 2019, the Ministry of Energy published Exempt On December 23, 2019, the CNE issued Exempt Resolution Decree 4/2019 establishing the specific New Works of the Na- 801 updating the Citizen Participation Registry of the respec- tional and Zonal Transmission Systems that must begin their tive Annual Transmission Planning Process, in accordance tender process within the following twelve months. with the provisions of article 90 of the Ley General de Servi- cios Eléctricos and included a consolidated list of participants and interested parties. 2018 Transmission Expansion Plan The CNE issued the Final Technical Report through Exempt Resolution 14 on January 11, 2019, in accordance to the stages of the Transmission Expansion Plan. Subsequently, interest parties filed their discrepancies before a Panel of Ex- perts in a public hearing. As a result, the CNE issued the De- finitive Technical Report by means of Exempt Resolution 334 dated May 29, 2019. On September 24, 2019, the Ministry of Energy published Exempt Decree 231/2019 that identifies the specific new works of the National and Zonal Transmission Systems to be- gin their tender process or study of the allocated capacity, as necessary, during the following twelve months, in accordance with the stages of the process by law. On August 10, 2019, the Ministry of Energy published Exempt Decree 198/2019 establishing the specific expansion works of the 2018 Expansion Plan regarding the National and Zonal Transmission Systems to begin their tender process during the following twelve months. 2019 Transmission Expansion Plan c) Tariff reviews and supply processes c.1 Electricity distribution tariff setting process The tariff setting process for the 2016-2020 period concluded with the publication of Decree 11T in the Official Gazette on August 4, 2017, that set the distribution tariff formulas to be effective, retroactively, as of November 4, 2016. On June 27, 2018, the Ministry of Energy published the De- cree 2T/2018, which sets the capacity adjustment factor of the tariff formulas applicable to supplies subject to regulated prices for the four-year period from November 2016 through November 2020. On September 28, 2018, the Ministry of Energy Decree 5T/2018, which replaces Decree 11T, 2016, came into effect, updating electricity distribution tariffs until the following tariff According to article 91 of Law 20,936/2016, which establish- es the Transmission Planning Procedure, the CEN is respon- setting process. On July 26, 2019, through Resolution 15699/2019, the Su- perintendence of Electricity and Fuel implemented an action plan to make the adjustment indicated in CNE Resolution 490/2019, with respect to Decree 5T/2018 effective, retroac- tively, as of September 28, 2018. The tariffs applicable to end customers in 2019 were deter- mined based on the following decrees and resolutions: sible for sending the CNE the expansion plan proposal of the different sections of the transmission system. This proposal was presented on January 22, 2019. The CNE summoned all interested parties to submit proposals for Transmission Expansion projects by April 22, 2019, in ac- cordance with the provisions of article 91 of the Electricity Law. 104 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C i) Decree 11T/2016 published in the Official Gazette on Au- resulting from the application of the Residential Tariff Equality gust 24, 2017, which set the tariff formulas applicable to Mechanism, as of July 1, 2019. On November 2, 2019, the the supply of electricity subject to regulated prices to be Ministry of Energy published Law 21,185 that creates a tran- in force, retroactively, as of November 4, 2016. sitional mechanism to stabilize the price of electricity for regu- ii) Decree 2T/2018 published in the Official Gazette on June and extends the enforcement of Decree 20T/2018 until the 27, 2018, which sets the capacity adjustment factor of the publication of the average regulated node price decree to tariff formulas applicable to the electricity supply subject come after the Law becomes effective. lated customers. Article 5 of this Law repeals Decree 7T/2019 to regulated prices for the four-year period from Novem- ber 2016 to November 2020. iii) Decree 5T/2018, published in the Official Gazette on Sep- tember 28, 2018, which sets the tariff formulas applicable to the electricity supply subject to regulated prices listed in Ministry of Energy Decree 11T/2016, effective as of its publication date. iv) Superintendence of Electricity and Fuel Resolution 15699/2019, which provides an action plan to make the adjustment indicated in CNE Resolution 490/2019, with respect to Decree 5T/2018 effective, retroactively, from September 28, 2018 to November 3, 2020. v) Decree 6T/2017, published by the Ministry of Energy in the Official Gazette on October 5, 2018, which sets the Annual Value per Tranche of the Zonal and Dedicated Transmission Facilities for regulated customers, tariffs and indexing formulas for the two-year period 2018-2019, to be in force from January 1, 2018 to December 31, 2019. vi) Tariff Decrees: Average node prices: Short-term node prices: On June 28, 2018, the Ministry of Energy published Decree 1T/2018, which set the node prices of electricity to be in force, retroactively, as of April 1, 2018. On February 8, 2019, the Ministry of Energy published Decree 12T/2018, which sets the regulated prices of electricity to be in force, retroactively, as of October 1, 2018. On June 5, 2019, the Ministry of Energy published Decree 1T/2019, which sets the regulated prices of electricity to be in force, retroactively, as of April 1, 2019. On October 23, 2019, the Ministry of Energy published the Decree 9T/2019, which sets the regulated prices of electricity to be in force, retroactively, as of October 1, 2019. c.2 Tariff setting process of electricity distribution supplementary services On September 28, 2018, the Ministry of Energy published De- cree 7T/2018 in the Official Gazette, which sets the regulated prices for electricity and sets the adjustments and surcharges resulting from the application of the Residential Tariff Equality Mechanism to be in force, retroactively, as of July 1, 2018. On July 24, 2018, the Ministry of Energy published Decree 13T/2018 in the Official Gazette, which sets the prices of Non-Electricity Supply Services, supplementary to electricity distribution. Such prices are applicable since the Decree was published and are currently in force. On May 6, 2019, the Ministry of Energy published Decree 20T/2018 in the Official Gazette, which sets the regulated prices for electricity and sets the adjustments and surcharges resulting from the application of the Residential Tariff Equality Mechanism to be in force, retroactively, as of January 1, 2019. c.3 Tariff setting process of zonal transmission . 1 2 On October 5, 2019, the Ministry of Energy published De- cree 7T/2019 in the Official Gazette, which sets the regulated prices for electricity and sets the adjustments and surcharges On October 5, 2018, the Ministry of Energy published Decree 6T, which sets the annual value per tranche of the zonal and dedicated transmission system, tariffs and indexation formu- las for regulated customers for the 2018-2019 period. 16. Industry regulation and electricity system operation 105 c.4 Transmission tariff setting process 2020-2023 Within the framework of the Electricity Transmission Tariff Setting Process for 2020-2023, the Transmission System Fa- cilities Qualification process, the Transmission Facilities Use- ful Life Setting process, and the Technical and Administrative Terms required to carry out the Valuation of Transmission Sys- tem Facilities are currently in progress. In this context, for the purposes of the Qualification Process of Transmission System Facilities for the period 2020-2023, in late 2017 the CNE issued the preliminary technical report defining which transmission facilities correspond to each transmission segment (National, Zonal and Dedicated). In compliance with the stages established by regulations, on April 9, 2019, the CNE through Exempt Resolution 244, issued the Definitive Technical Report. Also, on June 5, 2018, by means of Exempt Resolution 412, the CNE approved the Definitive Technical Report specifying the Useful Life of Transmission Facilities. Finally, in late 2017, the CNE published the Technical and Ad- ministrative Preliminary Terms for the Valuation of Transmis- sion Facilities, which in general terms, identifies two studies to be commissioned: one for National facilities and another for Zonal and Dedicated facilities. The document regulates the contracting process of the tariff study and defines the rules to carry out the tariff study of the entire transmission system. On April 26, 2019, and in compliance with the stages established by the Law, the CNE, through Exempt Resolu- tion 272, approved the Definitive Technical and Administra- tive Terms for conducting the Valuation Studies of the Trans- mission Systems. On December 11, 2019, the CNE issued Exempt Resolution 766 that revises the previous resolution. On April 26, 2019, through Exempt Resolution 271 and in compliance with the stages established by the Law, the CNE also formed a committee to award and supervise the valua- tion studies of the Transmission facilities. Additionally, through Exempt Resolution 678 dated October 24, 2019, the CNE approved the contract for the National Transmission Study. c.5 Electricity tenders Three tenders have been carried out under the new law for electricity tenders: Supply Tender 2015/01, Supply Tender 2015/02 and Supply Tender 2017/01. In addition, the CNE be- gan the fourth process named Supply Tender 2019/01. Supply Tender 2015/02 was launched in June 2015 and finalized in October 2015. The outcome of the process resulted in three energy blocks awarded for a total of 1.2 TWh/year (100%) at a weighted average price of 79.3 US$/MWh. Supply Tender 2015/01 was launched in May 2015 and finalized in July 2016. The outcome of the process resulted in five en- ergy blocks awarded for a total 12.4 TWh/year (100%) to 84 companies, including newcomers, at a weighted average price of 47.6 US$/MWh. Enel Generación Chile was awarded 5.9 TWh/year of the 2015/01 tender, which represents 47.6% of total energy awarded. Supply Tender 2017/01 was launched in January 2017 and finalized in November 2017. A total 2,200 GWh/year were awarded (100%) to five companies at a weighted average price of 32.5 US$/MWh. Enel Generación Chile was awarded with 1.2 TWh/year, which represents 54% of the total energy awarded. During 2019, Supply Tender 2019/01 was launched for a total amount of 5.8 TWh/year to be supplied from 2026 to 2040. The closing date for the presentation of bids is May 27, 2020, as announced by the CNE. c.6 Electricity industry rules applicable to Enel Distribución Enel Distribución, as a zonal transmission company and elec- tric utility concessionaire, is governed by the following rules and regulations: • The Ley General de Servicios Eléctricos DFL 4 enacted by the Ministry of Economy, Development and Reconstruction (the restated DFL 1/ 1982) published in 2006, and its amendments. 106 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C • Supreme Decree D.S. 327/1997 Rules and Regulations of the Ley General de Servicios Eléctricos enacted by the Ministry of Economy, Development and Reconstruction. Price decrees: • Law 18,410 that governs the Superintendence of Electricity and Fuel. • Law 20,936 published by the Ministry of Energy in 2016, that established the regulatory framework for the new electricity transmission system in Chile and creates the independent National Electricity System Coordinator. • Decree 11T published in the Official Gazette on August 24, 2017, which set the tariff formulas applicable to the supply of electricity subject to regulated prices to be in force, retroactively, as of November 4, 2016. • Decree 2T/2018 published in the Official Gazette on June 27, 2018, which sets the capacity adjustment factor of the tariff formulas applicable to electricity subject to regulated prices for the four-year period from November • Supreme Decree D.S. 11/2017 enacted by the Ministry of 2016 to November 2020. Energy that approved the rules and regulations applicable to dictating technical standards regarding the operations of the electricity sector, including security, coordination, quality, information and economic aspects. • Exempt Resolution 321 published by the CNE on July 21, 2014 that dictates the technical rules and regulations re- garding service quality and safety of the Northern Inter- connected System and the Central Interconnected Sys- tem and amendments. • Decree 5T published in the Official Gazette on Septem- ber 28, 2018, which sets the tariff formulas applicable to the electricity supply subject to regulated prices listed in Ministry of Energy Decree 11T/2016 effective as of its publication date until November 3, 2020. • Decree 4T published in the Official Gazette by the Min- istry of Energy on September 8, 2018, which sets the electricity distribution tolls applicable to electric utility concessionaires. • Exempt Resolution 299 published by the CNE on April 26, 2018 that approves the technical rules and regulations re- garding service quality and safety in accordance to article 34 of Supreme Decree 11/2017 issued by the Ministry of Energy. • Decree 13T/2017 published in the Official Gazette by the Ministry of Energy on July 24, 2018 that sets the prices of services other than electricity but associated to elec- tricity distribution. • Decree 14 published in the Official Gazette on April 9, 2014 that sets sub transmission tariffs and indexation for- mulas for the 4-year period from 2011 through 2015. • Decree 7T published by the Ministry of Energy on April 22, 2015 that extends Decree 14 for a year. • Decree 1T/2017 published by the Ministry of Energy that • Node price and average node price decrees published by the Ministry of Energy. • Set of technical rules and regulations specified by the CNE and the Superintendence of Electricity and Fuel. The effect of this legal and regulatory framework on Enel Dis- tribución’s activities, is that the Company must adjust its per- adjusts Ministry of Energy Supreme Decree 14 /2012. formance to said regulations. • Decree 6T/2017, published by the Ministry of Energy in the Official Gazette on October 5, 2018, which sets the Annual Value per Tranche of the Zonal and Dedicated Transmission Facilities, tariffs and indexing formulas for regulated customers for the two-year period 2018-2019, to be in force from January 1, 2018 to December 31, 2019. 16. Industry regulation and electricity system operation 107 108 Enel Chile Annual Report 201917. RISK FACTORS 17. Risk factors 109 Risk management policy Enel Chile follows the guidelines of the Internal Control The Risk Management department has ISO 31000:2018 Management System (SCGR in its Spanish acronym) defined (G31000) International Certification and manages the by the Holding company (Enel SpA), which establishes Company´s risk according to the current guidelines of this a set of risk management guidelines through standards, international norm. The main objective is to preemptively procedures, systems, etc. to be applied at all Company levels identify risks (endogenous and exogenous) and analyze, in their risk identification, analysis, evaluation, treatment and evaluate, and quantify their probability of occurrence and communication processes, which the Company is constantly impact, known as the risk valuation phase. In the risk performing. These are approved by the Board of Directors treatment phase, the Risk Management department defines of Enel SpA, which houses a Controls and Risk Committee mitigation plans along with the different departments and the that supports its evaluations and decisions regarding internal Risk Owners, as the responsible parties of the various risks. controls and risk management systems, as well as those The risk treatment phase considers all necessary actions related to the approval of periodic financial statements. that are consistent with the Company’s policies and internal To comply with these guidelines, each company has a specific and OSHAS), and governmental regulations, which require Risk Management policy, which is reviewed and approved at risk management to be carried out in a transparent and the beginning of each year by the respective Board of Directors, sustainable manner to guarantee best governance practices identifying and applying local requirements regarding risk. and ensure business continuity. procedures, and that strictly follow international norms (ISO The Enel Group’s risk management system considers three On a monthly basis, the Risk Management department defense mechanisms to effectively and efficiently manage presents each companies risk management to the Board of risk. The implementation of internal controls is the first Directors using a Risk Landscape that clearly identifies all the defense mechanism in risk management, which involves companies’ risks in their respective taxonomies, complying developing various internal control processes to guarantee with the schedule defined by the Board every year. The optimal risk management. The supervision of the business schedule considers a quarterly presentation and analysis unit’s compliance with internal controls is the second of all risks identified in the Risk Landscape, in accordance defense mechanism, and the evaluation of compliance by to Risk Policies, ISO 31000:2018, internal procedures, and an independent party is the third defense mechanism. Each external norms, such as General Norm 30, which governs mechanism plays a different role within the organization’s Annual Reports of Chilean companies, and the Financial broader governance structure. Those responsible for each Markets Commission General Norm 385 to ensure business defense mechanism must report and keep senior management continuity and guarantee best governance practices. In and the Board of Directors updated on the Company’s risk addition to this process, the Risk Management department management performance. Senior management must be must continuously monitor and inform senior management informed on the first and second defense mechanisms, while about the main political, economic, social, and climate risks the Board of Directors must be informed on the second and worldwide that may either positively or negatively affect the third defense mechanisms. Company’s ability to achieve its goals. 110 Enel Chile Annual Report 2019The objective of internal controls management is to guarantee Regulatory: risks arising from changes promoted by that business activities allow mitigating risks related to the regulatory bodies. observation and strict application of all current procedures and norms included in the COSO (Committee of Sponsoring Business (Market / Commodities): covers risks related to the Organizations of the Treadway Commission) methodology. uncertainty of certain key variables inherent to the business, The Risk Management department complies with all the such as the characteristics of demand and the industry. periodic monitoring requirements of the Sarbanes-Oxley Act, including the certification of these controls by the External Operational: risks arising from inadequate internal processes Auditors every six months and establish actions, along with or external events. the Process Owners and Control Owners, to mitigate control deficiencies pointed out by independent external auditors, Strategic: risks related to innovation, investment plans, new and continuously improve processes, as well as monitor the customers, new players, cybersecurity, employee retention, implementation of such actions and notify the Board on the and business continuity. status of such actions. Governing bodies and senior management are the parties governance risks, including: best served by the defense mechanisms and are in the best position to help guarantee that the three defense mechanism Environmental risk: originated by the impact of Company model is applied to all control and risk management processes operations on the environment, including biodiversity and in the Company. resource exploitation, as well as climate change related Sustainability: environmental, social, and implicit business The Enel Group’s risk management system is subject to risk. periodical tests and audits, accounting for the performance Social risk: social conflicts or community-driven of corporate operations, best practices and internal and demands whose intensity may jeopardize the continuity international guidelines, such as ISO 31000:2018 (G31000) or operations, and risk related to own employees or third- and COSO (Committee of Sponsoring Organizations of the party employees. Treadway Commission), etc. The Company has a Crisis Committee whose purpose is to behavior, such as corruption or lobbying activities by guarantee clarity, speed, and efficiency in decision-making Company personnel or contractors and anticompetitive Governance risk: risks that could arise from illicit and internal and external communications on matters that practices. may compromise people’s safety, the continuity of the public service and the business, the environment, asset protection, Image/Reputation: risks concerning a deterioration in the and the Company’s image and reputation, as well as minimize Company’s image. the impact on stakeholders and guarantee that normal operations will be rapidly restored. Legal: risks related to civil, strategic, consumption, environmental lawsuits, as well as contract terminations, The Company seeks protection from all risks that may affect labor and fiscal lawsuits. its ability to accomplish its objectives, which, among others, d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C are detailed below: Cybersecurity: risk related to information security and . 1 2 Financial: covers market risk (related to changes in the cyberattacks. macroeconomic environment caused by changes in interest Risk emerging from personal information protection: risk rates, exchange rates, and inflation expectations) and credit arising from not complying with privacy and data protection risk (the possibility that counterparties do not fulfill their laws, or contract breaches regarding delivered products or commitments). services. 17. Risk factors 111 Risk arising from digitalization, IT system efficacy and Business (Market/Commodities): Energy price fluctuation system continuity: risk derived from system failures or risk is managed by teams that specialize on energy markets, weaknesses, including cyberattacks. responsible for evaluating the evolution of demand and the hydrological scenario over a five-year horizon using statistical According to ISO 31000:2018, risk taxonomy and management models. Based on such information, they define the Company’s involves the entire risk evaluation process (identification, participation in electricity tenders. Long-term contracts include analysis, and valuation), clearly identifying the risks under regulatory compliance assurance, minimizing penalties. evaluation and respective probabilities and impacts, quantified before and after the implementation of mitigation measures. Operational: The most relevant risks related to operations Once the risk evaluation process is finalized, each department are energy supply quality and energy losses. These risks is responsible, along with the risk management department, are managed through formal commercial and operational of treating such risks to reduce the level of risk, probability standards and procedures. The Company has several of occurrence and impact through preemptive management, operating systems that are also used to prevent these risks which is presented to the Board of Directors and Senior and to guarantee availability and transmission and distribution management on a monthly basis. network efficiency passing through our substations to avoid regulatory sanctions due to failure in complying with limits Risk groups and treatment are presented below: imposed on quality and losses. Financial: The Company follows Enel Group’s global Financial Strategic: Represents the risks affecting an organization’s Risk Management policy, which establishes parameters business strategy or strategic objectives. These risks are to protect the Group from potential loss from financial managed by Enel Chile’s Risk Control department using operations, as well as failure in recording, monitoring and the “Risk Matrix”, which includes risks related to strategy, evaluation processes. The Sarbanes-Oxley Act guides scenarios, operations, legal, government, regulation, internal controls and the financial information preparation and cybersecurity, sustainability, and reputation. communication process. Internal controls are monitored and evaluated twice a year through the GRC corporate system. Sustainability: The Enel Group and Enel Chile have The Company relies on the South American Risk Control committed to make specific contributions to six of the 17 department to calculate the credit score of its counterparties Sustainable Development Goals (SDGs): quality education in all South American countries (Brazil, Argentina, Peru, and (SDG 4), affordable and clean energy (SDG 7), decent work Colombia) before entering into contracts, utilizing criteria that and economic growth (SDG 8), industry, innovation, and classifies the counterparty’s risk level to limit the Company’s infrastructure (SDG 9), sustainable cities and communities exposure to each counterparty (collateral is defined case by (SDG 11), and climate action (SDG 13). This commitment case depending on the counterparty’s liquidity level). Also, responded to the Company´s sustainable business model, this type of exposure is measured on a daily basis through and therefore, are part of Enel Chile’s strategic plan. Not real and projected daily cash flows and allows planning for fulfilling these commitments represents a risk. an adequate allocation of available resources. The Company also utilizes derivatives with the sole purpose of protecting The Company also contributes to achieving other sustainable its financial positions exposed to exchange rate and interest development goals. rate variations. Regulatory: To manage these risks, the Company monitors change are especially relevant not only due to their the parameters that influence electricity tariffs in different environmental impacts, but social and economic ones as well. scenarios, including projected hydrological conditions. Two types are distinguishable: Within the sustainability category, risks related to climate 112 Enel Chile Annual Report 2019• Physical risk related to climate change: risks related to • Conflicts originating in communities nearby generation the appearance of extreme climate conditions, or gradual plants. Enel is continuously communicating with local but structural changes in climate conditions. Extreme communities through regional specialized teams. The weather events may expose Enel to prolonged asset and Company aims to create conditions that allow for long- infrastructure unavailability, recovery costs, customer term socioeconomic development by making social dissatisfaction, etc. Recurrent changes that impact investments in their operating areas and co-designing the resources required to generate electricity or those common growth perspectives with communities. that affect demand, such as droughts and increased temperature. • Risk caused by work-related accidents affecting employees and contractors. Enel mitigates these risks Geographical and technological diversity used in the by promoting a safety culture including highlighting policy generation process and proper predictive measurements definitions and integrating safety into processes and of climate phenomena allow managing and mitigating training, among others. changes caused by climate patterns. • Risk related to attracting and retaining employees through Also, large investments have been made in making the energy transition period. To face these challenges, Enel distribution networks resilient to inclement weather. relies on diversity, management, and talent promotion All Group departments have ISO 14001 certification, policies. The Company carries out different initiatives that and through the internationally known Environmental aim to harmonize work life and personal life and promote Monitoring Systems (EMS), potential sources of risk are employee education and growth through scholarships monitored to detect any critical condition promptly. and courses. • Low carbon economy transition risk may involve Regarding governance risk, it is important to highlight: risk related to regulation, political, legal, technological and market changes, with short-, medium-, and long- • To manage risk arising from employees or contractors’ term effects. Enel Chile’s competitive advantage in risk illicit behavior, including corruption, lobbying activity, and management is belonging to a Group that operates in a anticompetitive practices, among others, Enel relies on more mature market, allowing to share best practices in its Internal Control and Risk Management System based regulation, technology, market, etc. on norms and business procedures. In terms of managing social risks, it is important to highlight: • Human rights violations are properly raised and addressed • Social conflicts in countries where their intensity could jeopardize the continuity of operations. To face Image and Reputation: Risk of negatively impacting the these potential impacts, Enel has created contingency Company’s public image and damaging its trust relationship with action plans to solve breaches. management plans and processes. The Company is with shareholders. aware of the strategic role of energy in the country, and therefore prioritizes the continuity of electricity Legal: Risk related to potential losses due to fines, penalties, generation, supply of electricity to customers, and or compensation as a result of supervision and control d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C employees and contractor personnel safety. authorities, as well as losses stemming from unfavorable . 1 2 judicial or administrative (civil, strategic, consumption, contract termination, labor and fiscal) proceedings. 17. Risk factors 113 Cybersecurity: Digitalization is a fundamental aspect of of the GDPR. Therefore, it is currently in the process of growth and development in the Enel Group, which also appointing a Data Protection Officer (DPO) who will be increasingly exposes the Company to cyberspace risk and responsible for making data protection a key element in threats. As this is a transversal risk with similar forms and the business activity of all departments. impacts throughout the world, the Company has a specialized department named Computer Emergency Response Team • Digitalization, IT efficacy and service continuity: Enel (CERT) that monitors and supports all Group companies, is currently undertaking a digital transformation process and is unique, centralized, and highly prepared. The CERT of the entire management value chain, developing new is part of the Cybersecurity department, composed of the business models and digitalizing its processes. Therefore, Technical Office, which continuously (24x7x365) monitors and it is increasingly exposed to risk related to the operation protects facilities from a wide array of attacks to which the of information technology (IT) systems throughout the Company is exposed, the Software Operation Center (SOC), Company, which may cause interruptions or data loss. which analyzes and studies the different problems that affect To mitigate this risk, the Global Digital Solutions (GDS) systems in its search to continuously improve the Company’s unit has established an internal control system that has protection on all fronts. The CERT is headquartered in Italy set controls throughout the value chain. Enel is also and Spain and relies on a local manager and an office in every promoting a digital culture throughout its companies to South American country responsible for informing potential successfully drive the digital transformation process and local risks and taking all measures necessary to guarantee mitigate associated risk. operational continuity. The organizational risk management structure in the Enel Additionally, the risk matrix includes transversal risk related to: Group relies on a global risk management committee that has the following duties: approve the risk policy proposed by the • Personal data protection: Gathering and dealing with Holding’s Risk Controller, approve proposed exposure limits; personal data is one of the most important challenges authorize limit breaches; define risk strategies by identifying of the market digitalization and globalization era. Enel action plans and instruments to mitigate risk, and supervise Chile faced this challenge by accelerating its digital overall risk management and control. transformation process as the number of customers increases. This implies a natural exposure to risk related Within each Group company, the risk management process to managing personal data and broader data privacy is decentralized. The manager responsible for the operational legislation. Mishandling data may cause losses and process where a specific risk exists is also responsible for economic, financial, and reputational damage to the such risk’s treatment, mitigation and control measures. Group and to individuals. To manage and mitigate this risk, Enel has adopted a framework to guarantee personal To monitor compliance with internal policies, including those data protection of all people with whom it interacts. related to risk, the Company relies on its Internal Audit To do so, Enel Chile complies with current legislation department, responsible of periodically auditing and verifying in Chile, mainly Law 19,628 on Private Life Protection, that established controls and policies are fully functional. and is gradually implementing the European General Data Protection Regulation (GDPR). Even though this In complying with the global commitments regarding regulation is not law in Chile, the Enel Group intends sustainability (ESG, Dow Jones Sustainability Index, SDG), the to elevate its protection standards to the requirements Risk Management department, along with the Sustainability 114 Enel Chile Annual Report 2019department, developed a methodology to identify the risks that affect the Company’s compliance with these commitments, directly involving all responsible units, raising awareness on the importance of sustainability to the Company and the world in general, the sustainable risk matrix. The Enel Group enforces an Ethics Code that contains all the ethical commitments and responsibilities to be followed while executing business activities and corporate operations by all employees of the Company, including senior management, employees, or partners related in some way to the Company. Exchange rate risk Exchange rate risks are primarily related to the following transactions: > Debt incurred by the Group’s companies in currencies dif- ferent from their respective operational cash flow currency. > Payments in currencies different from their respective operational cash flow currency, such as payments of project-related materials and corporate insurance policies, among others. Interest rate risk > Revenues in the Group’s subsidiaries that are directly linked to currencies different from their respective opera- tional cash flow currency. Interest rate fluctuations modify the fair value of assets and liabilities that accrue interest at fixed rates, as well as 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 maintaining 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: To mitigate exchange rate risk, the Enel Chile Group seeks to maintain a balance between flows indexed in US dollars or local currencies, should there be any, and levels of assets and liabilities in such currencies. 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. Commodities risk Fixed Interest Rate 98 % 71% fluctuations, primarily through: : 12-31-20191 % 12-31-2018 % The Enel Chile Group is exposed to certain commodity price Depending on the Group’s estimates and debt structure ob- jectives, hedging operations are performed by purchasing de- > Fuel purchases in the electricity generation process. > Energy trading operations in local markets. rivatives that mitigate these risks. d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C . 1 2 1 On September 30, 2019, EGP del Sur and EFI agreed to modify the Credit Contract once more, on the following terms: (i) modify the interest rate, from variable to fixed, to 2.82% per annum, paying interest semiannually. Modify the semiannual amortization schedule, as of June 30, 2024, maintaining the prepaid voluntary cost of bankruptcy (modifying the cost of bankruptcy definition); and maintaining the maturity date, December 31, 2027. The balance of debt, as of December 31, 2019, amounts to US$ 644 million, equivalent to ThCh$ 482,466,643 (US$ 644 million as of December 31, 2018 and 2017 equivalent to ThCh$ 447,431,880 and ThCh$ 395,899,000, respectively). This is a bullet loan, guaranteed by Enel Chile S.A. 17. Risk factors 115 To reduce risk in situations of extreme drought, the Group has As of December 31, 2019, the liquidity of the Enel Chile Group designed a commercial policy, defining levels of sale commit- amounted to Ch$ 235,685 million in cash and cash equiva- ments, in accordance to its power plants’ generation capacity lents, and Ch$ 146,269 million in unconditional committed during a dry year, including risk-mitigation clauses in some long-term credit lines. As of December 31, 2018, the liquidity contracts with non-regulated customers. Sales to regulated of the Enel Chile Group amounted to Ch$ 245,175 million in customers that are subject to long-term tender processes, cash and cash equivalents, and Ch$ 416,862 million in uncon- include indexation clauses that reduce commodity price ex- ditional committed long-term credit lines. posure. Considering the operating conditions faced by the electricity generation market in Chile such as droughts and commodity price volatility in international markets, the Company is constantly evaluating the convenience of hedging to mitigate the impact of price fluctuations on profits. As of December 31, 2019, there were swap operations out- standing for 1,412 kTon of API2 to be settled in 2020, 1,059 KBbl of Brent oil to be settled in 2020, and 4.79 of Henry Hub to be settled in 2020. As of December 31st, 2018, there were swap operations out- standing for 432 kTon of API2 to be settled in 2019, 994 KBbl of Brent oil to be settled in 2019, and 0.2 TBtu of Henry Hub gas to be settled in 2019 (figures are net position hedged). Liquidity risk Credit risk The Enel Chile Group conducts a detailed credit risk follow-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 ac- cumulating significant individual amounts. This is applicable to the generation business as well as the distribution business. In the generation business, supply disruption is a possibility in the event of non-payment in some non-regulated customer The Group’s liquidity is provided by sufficient committed long- contracts, and payment defaults are included in contracts as a term credit facilities and short-term financial investments to cause for contract termination. For this purpose, and although finance projected needs for a certain period of time, which is the risk is limited, credit risk and maximum amounts exposed calculated as a function of the overall situation and expecta- to payment risk are constantly measured and monitored. tions regarding debt and capital markets. These projected needs referred to above include net financial have the authority to disconnect supply due to contract debt maturities, in other words, after financial derivatives. For breaches by customers. Disconnection is applied according to further detail regarding characteristics and conditions of finan- current regulation, which facilitates the credit risk evaluation cial debt and financial derivatives, see Notes 21 and 23. and control process, which is also limited. In the case of the distribution business, Group companies 116 Enel Chile Annual Report 2019Financial assets The positions included in the portfolio used to calculate the present Value at Risk include: Investments of cash surpluses are made in first class domestic and foreign financial institutions, within the limits established for each entity. Banks considered for investments have investment grade qualification, considering the three major international rating agencies (Moody’s, S&P and Fitch). Investments may be backed by Chilean Treasury bonds and securities issued by first-class banks, prioritizing the latter as they offer better returns (always within existing investment policy guidelines). Risk measurement > Financial debt. > Debt-hedging derivatives. The calculated Value at Risk represents the potential loss of value of the portfolio described above in one quarter, with 95% confidence. To this effect, the Company studied the volatility of variables at risk that affect the value of the portfolio, with respect to the Chilean peso, which includes: > US dollar Libor Rate > Exchange rates of currencies included in the calculations. The calculation of Value at Risk is based on the extrapola- tion of future market value scenarios (one quarter out) of the variables at risk in scenarios based on real observations for the same period (quarter), for five years. The Value at Risk for the next quarter, with 95% confidence, is calculated as the percentile of the most adverse 5% of pos- sible quarterly changes. The Enel Chile Group measures the Value at Risk of its debt and financial derivatives to monitor the risk taken by the Com- pany, thus limiting income statement volatility. Based on the hypotheses above, the Value at Risk for the aforementioned positions, one quarter out, is Ch$ 237,095 million. This amount represents the potential increase in the debt and derivatives portfolio and is therefore intrinsically linked to the value of the portfolio at the end of the quarter, among other factors. d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C . 1 2 17. Risk factors 117 Other risk factors capital markets, or increase available interest rates. Reduced liquidity, in turn, could adversely affect capital expenditures, investments, and long-term acquisitions, growth projections and dividend payout policy. Insufficient cash flows could result in the inability to meet debt covenant restrictions, increasing subsequent financings. The Chilean government exerts its influence over several Economic fluctuations in Chile, as well as certain economic aspects of the private sector, which may result in changes in measures by government authorities, policies and the economy or other policies. Future negative developments financial events, or other crises in Chile or abroad could in Chile, including political and financial events, other crises, affect the results of operations and financial condition of changes to policies regarding foreign exchange controls, the Company, as well as the value of our securities. regulations, and taxation may impair the Company’s ability All operations of Enel Chile are situated in Chile. Therefore, to execute its business plan, and could adversely affect its revenues are affected by the performance of the Chilean its operational results and financial condition. Inflation, economy. In addition, Chile is also vulnerable to external devaluation, social instability, and other political, economic, or shocks, including financial and political events, which could diplomatic events, including the way in which governments cause significant economic difficulties and affect growth. If may react to different circumstances, could also reduce Chile’s economy goes into a recession, or the growth rate is profitability. Chilean financial and securities markets are lower than expected, electricity demand will possibly decline, influenced by economic and market conditions in other and some customers may face difficulties in paying their countries and may be affected by international events, which electricity bill, possibly increasing the Company´s uncollectible could unfavorably affect the value of the Company’s securities. accounts. Either one of these situations could adversely affect results of operations and the financial condition of the The Company is exposed to economic and political volatility, Company. Financial and political events in other parts of the as well as civil unrest in Chile. Changes in social, political, world can adversely affect the business. For example, since regulatory, or economic conditions, or in laws and policies 2018, the United States and China have been involved in a that govern foreign trade, manufacturing, or development and trade war involving protectionist measures that has increased investment in Chile, in addition to other crises and political the volatility of financial markets worldwide due to the uncertainty, could negatively affect the country’s growth. uncertainty of political decisions. Instability in the Middle East, In October and November 2019, Chile began to experience or in any other major oil-producing region, could also result in social turmoil in Santiago and other cities across the country, higher fuel prices worldwide, increasing the operating cost triggered by a public transportation fare increase. As a result, for our thermal generation plants, unfavorably affecting the on October 19, the government decided to declare a state of Company’s operational results and financial condition. emergency. Additionally, it launched various political, social, and economic reforms, including a guaranteed minimum An international financial crisis and its disruptive effects on wage, increase in pensions, stabilization of electricity costs, the financial industry could negatively affect the Company’s a higher tax bracket for high-income earners, a new health ability to obtain new financings under the same historical insurance program, pay cuts for the members of the Chilean terms and conditions it has secured in the past. Political Congress and certain civil employees, as well as the beginning and financial events, or other crises, could also diminish of a process to create a new Constitution. the Company’s ability to access Chilean and international 118 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C In response to the massive demonstrations and riots occurred Our operating expenses also increase during drought periods during October and November of 2019, the government when thermal power plants, which have higher operating costs approved calling for a national referendum in April 2020 to relative to hydroelectric power plants, are dispatched more decide whether to create a new Chilean Constitution, and if frequently. The Company may have to buy electricity at higher so, whether a popularly elected assembly or a combination spot prices to comply with contractual supply obligations. The of current legislators and a popularly elected assembly would cost of these electricity purchases may exceed the contractual draft the new Constitution. The existing Constitution has been electricity sale prices, potentially producing losses in those in place since 1980, and any new Constitution could alter the contracts. Chilean political situation, potentially change existing rights, including rights to exploit natural resources, water rights or Droughts also affect the operation of thermal power plants, property rights, which could affect the Chilean economy and including facilities that use coal, diesel, or natural gas, in the its business outlook as well as the Company’s operational following ways: results and financial condition. • Thermal power plants require water for cooling, and These reforms may not be enough to reduce the protests, droughts in extreme conditions may reduce the availability which could increase or worsen. The continuity of massive of water and therefore increase its transportation costs. protests and civil unrest in Chile, and the government’s As a result, water had to be purchased for the San response to these actions, could have an adverse effect on the Isidro power plant from areas that are also experiencing economic conditions of Chile and the Company’s business, water shortages. These water purchases may increase operational results, and financial position. operating costs and may require negotiations with local communities. The Company’s businesses depend heavily on hydrology and are affected by droughts, flooding, and other • meteorological conditions, which have become more frequent and severe due to climate conditions. Approximately 49% of the Company’s installed capacity Thermal power plants generate emissions such as nitrogen monoxide (NO), carbon dioxide (CO2), carbon monoxide (CO), sulfur dioxide (SO2), and particulate matter into the atmosphere. Therefore, greater use of in 2019 was hydroelectric. Accordingly, arid hydrological thermal power plants during droughts increases the risk conditions could negatively affect the business, operational of producing higher levels of greenhouse gas emissions, results, and financial condition. Results have been adversely which decreases operating income due to the payment affected when hydrological conditions in Chile have been of emissions taxes. below their historical average. The Company’s subsidiary Enel Generación Chile has entered where most of the Company’s hydroelectric power plants are into certain agreements with the Chilean government and located may last for an extended period, and new drought local irrigators regarding the use of water for hydroelectric periods may occur in the future. Prolonged droughts may generation purposes during periods of low water levels. exacerbate the risks described above and may have a further However, if droughts persist, the Company may face increased negative effect upon the business, operational results, and A full recovery from the drought that has affected the regions pressure from the Chilean government, or third parties, to financial condition. further restrict water use. 17. Risk factors 119 Our distribution business is also affected by inclement weather. Thermal power plants have higher operating costs and Extreme temperatures can increase demand significantly generate greenhouse gas emissions. Also, the Company may within a very short time period, which may put a strain on need to buy electricity in the spot market to fulfill contractual the service and could result in service disruptions that could supply obligations of solar and wind generation facilities, be subject to fines. Depending on weather conditions, results which may be at prices higher than the contracted electricity obtained in the distribution business may vary significantly sale prices. These impacts could increase costs or result in from one year to the next. For example, during severe losses and have a material adverse effect on the business, rainstorms in 2017, high gusts of wind brought down part of the operational results, and financial condition. electricity network, and 125,000 customers were left without electricity. In July 2017, a strong snowstorm hit the Santiago Future climate change legislation and regulation restricting Metropolitan Region, causing massive damage to the region’s or regulating greenhouse gas emissions could result in electrical infrastructure and a blackout that affected 342,000 increased operating costs and have a material adverse customers and 17% of the Company’s feeders. This was the effect on the Company’s business, operational results, and most damaging snowstorm to hit Santiago since 1970, and financial condition. The adoption and implementation of any left parts of the city without power for more than a week. international treaty, or any legislation or regulation imposing These events triggered emergency responses that increased new or additional reporting obligations on or limiting emissions costs significantly, including payments related to damage of greenhouse gases in the Company’s facilities, may require compensation, fines, network maintenance, and a tree incurring additional costs to comply with such requirements, trimming program. and possibly require reducing or limiting greenhouse gas emissions in these facilities. these higher compliance The Company is subject to physical, operational, and standards may involve additional costs to operate and financial risks related to climate change effects, and maintain equipment and facilities, install emission controls, potential business risks resulting from climate change or pay taxes and fees related to greenhouse gas emissions, legislation and regulation to limit greenhouse gas which could have a material adverse effect on the business, emissions. operational results, and financial condition. In addition to meteorological risks that affect hydrology, solar and wind generation facilities are highly dependent on Governmental regulations may unfavorably affect the suitable solar and wind conditions, which, even under normal business, cause delays, impede the development of new operating circumstances, can vary greatly. Climate change projects, or increase the costs of operations and capital may also have long-term effects on wind patterns and the expenditures. amount of solar energy received at any particular solar facility, Our businesses and the tariffs charged to its customers are reducing the output of electricity generated there. Even subject to extensive regulation that may negatively affect though the Company bases its decisions for each renewable profitability. For instance, governmental authorities may energy facility on solar and wind studies, actual conditions impose rationing policies during droughts or prolonged failures may not reflect the results of these studies, possibly affected in power facilities, which may adversely affect the business, by changes in weather patterns, including the potential impact operational results, and financial condition. of climate change. Additionally, severe weather may damage critical components of renewable power generation systems, Some aspects of the Chilean electricity law have been subject including turbines, solar panels, and inverters. to significant regulatory changes, and such changes may have If renewable energy production falls below anticipated levels, For instance, in the context of the social crisis that began the Company would have to dispatch back-up thermal power in October 2019, the government established a transitional plants to make up the shortfall in electricity generation. mechanism to stabilize electricity prices for customers under an impact on the Company’s operations and profitability. 120 Enel Chile Annual Report 2019the regulated price system. Such mechanism eliminates Changes to the regulatory framework are often submitted to the 9.2% price increase that had been applied to regulated legislators and administrative authorities, and some of these customers in July 2019 and defers the price increase for changes could have a material adverse effect on the Company’s the sale of electricity under contracts between generation business, operational results, and financial condition. and distribution companies that start before 2021. A price stabilization fund will be implemented by the CNE and will The Company’s business faces risks from the promotion be financed by companies in the generation industry, which of decarbonization efforts nationally and globally. includes subsidiary Enel Generación Chile, expected to enable In June 2019, the Chilean government announced its plan generation companies to recover from the consequences of to phase out coal from its energy matrix entirely by 2040 lost revenues beginning December 31, 2019. The Company and achieve carbon neutrality by 2050. Under this plan, Enel expects a financial loss due to revenue deferral because Generación Chile and GasAtacama Chile S.A. (“GasAtacama”, generation companies must bear the financial cost of the fund. now merged into Enel Generación Chile) signed an agreement Other Chilean electricity sector regulations may also affect with the Chilean Ministry of Energy. The protocol defines the the ability of generation companies to collect enough revenue process for the progressive closure of coal-fired power plants to cover their operating costs, affecting the Company’s future Tarapacá (158 MW), Bocamina I (128 MW), and Bocamina profitability. The Chilean Congress is currently discussing a II (350 MW). Under this agreement, Enel Generación Chile reform in electricity distribution tariffs, which, if approved, is irrevocably obligated to close Tarapacá, Bocamina I, and could reduce future profitability. It is possible that recently Bocamina II coal power plants. The Tarapacá plant was closed prevailing social and political pressure may influence in December 2019. The deadlines for closing Bocamina I and II regulators in deferring tariff adjustments scheduled for 2020, are December 31, 2023, and December 31, 2040, respectively. which would accrue. Although the Chilean government’s plan to achieve The operations of subsidiaries are also subject to environmental decarbonization may overlap with the Company’s sustainability regulations that, among other things, requires performing strategy, the actual implementation of government targets may environmental impact studies on future projects in order to exert considerable pressure on the Company and its ability to obtain construction and operating permits from local and satisfy contractual obligations with other cleaner sources. In national regulators. Governmental authorities may withhold or turn, this may increase expenses, decrease profitability, and delay the approval of these permits until the completion of limit the ability to fully satisfy electricity demand. environmental impact studies. Therefore, the processing time may be longer than expected. Environmental regulations for Regulatory authorities may impose fines on subsidiaries existing and future generation capacity have become stricter due to operational failures or breaches on regulation. and have required increased capital investments. Any delay Our Electricity businesses are subject to regulatory fines for in meeting the required emission standards may constitute any breach of current regulations, including failure to supply a violation of environmental regulations. Failure to certify electricity. Generation subsidiaries are supervised by local the original implementation and ongoing emission standard regulatory entities and may be subject to fines in cases where requirements of such monitoring systems may result in the regulator determines that the company is responsible significant penalties and sanctions or legal claims for damages. for the operational failures that affect the regular supply of Expectations suggest that more restrictive emission limits electricity to the system, including coordination issues. will be established in the future. The Company is also subject Regulations establish end customer compensation when d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C to an annual “green tax” based on greenhouse gas emissions energy is interrupted for more than the standard permitted . 1 2 from the previous year. Such taxes may increase in the future time due to events or failures affecting transmission facilities. and discourage thermal electricity generation. 17. Risk factors 121 In 2017, Enel Distribución was fined by the Superintendence Power plant projects may encounter opposition from of Electricity and Fuel for a total amount of 160,000 UTM different groups, which could cause significant delays, (Ch$ 8 billion) due to various claims of infractions related to stoppages, cost overruns, damaged reputation, and extreme inclement weather during June and July of 2017. Enel potentially deteriorate stakeholders’ image of the Distribución was also fined for a total amount of 35,611 UTM Company. (Ch$ 1.8 billion) in 2017 due to breaches of electricity supply The Company’s power plant projects may face delays in quality standards. For further information on fines, please obtaining regulatory approvals or may face shortages and refer to Note 36.3 of the Consolidated Financial Statements. increases in the price of equipment, materials, or labor. They The Company depends on payments received from weather, natural disasters, civil conflicts, accidents, and subsidiaries and affiliate companies to meet its payment human error. Any of these events could negatively affect the obligations. Company’s results and financial condition. may be subject to construction delays, strikes, inclement In order to pay its obligations, the Company relies on cash from dividends, loans, interest payments, capital reductions, and other Market conditions may change significantly between the distributions from subsidiaries. These payments and distributions approval and completion of a project, which in some cases made to the Company are subject to legal constraints, such as may decrease a project’s profitability or feasibility. This dividend restrictions and fiduciary obligations. has been the case with several past projects, which were Contractual Constraints: Distribution restrictions included energy prices were higher and there was less competition. in certain credit agreements with subsidiaries may prevent Deviations in market conditions, such as time and expenditure dividends and other distributions to shareholders if certain estimates, may cause cost overruns and significant delays in specified financial ratios are not met. Company credit project completion that may adversely affect the Company’s agreements generally prohibit any type of distribution in case business, operational results, and financial condition. initially planned under different market conditions when of ongoing default. Operating thermal power plants, especially those that are Operating Results of Subsidiaries: The ability of subsidiaries coal-fired, may affect the Company’s relationship with its to pay dividends, make loan payments or other distributions stakeholders due to greenhouse gas emissions that could is limited by their operational results. To the extent that cash unfavorably affect the environment and nearby residents. requirements exceed cash availability, such subsidiary will not Furthermore, external stakeholders could influence a be able to distribute cash to the Company. community’s interests or perception of the Company. If Any of the situations described above could adversely affect Company may face opposition, which could negatively the Company’s business, operational results, and financial affect its reputation, stall operations, or lead to litigation we cannot address all relevant stakeholders properly, the condition. threats or actions. Enel Chile’s reputation is the foundation of relationships with stakeholders. If the Company cannot The Company is involved in litigation proceedings. handle sensitive issues effectively, its business, operational The Company is involved in various litigation proceedings that results and financial condition could be adversely affected. could result in unfavorable decisions or financial penalties. It will continue to be subject to future litigation proceedings, Damage to the Company’s reputation may exert considerable which could case material adverse consequences to the pressure on regulators, creditors, and other stakeholders, business. The financial condition or operational results possibly leading to the abandonment of projects and could be unfavorably affected if the defense of lawsuits or operations. This could cause the share price to drop and hinder proceedings is unsuccessful. For further information on the Company’s ability to attract and retain valuable employees. litigation proceedings, please refer to Note 36.3 of the Any of these outcomes could result in a deteriorated image Consolidated Financial Statements. towards stakeholders. 122 Enel Chile Annual Report 2019Political events or financial or other crises in any region Political and financial events, or other crises, could also diminish worldwide can have a significant impact on Chile, and the Company’s ability to access Chilean and international consequently may adversely affect operations and capital markets, or lead to higher interest rates. Reduced liquidity. liquidity, in turn, could adversely affect capital expenditures, Chile is vulnerable to external shocks, including financial investments, and long-term acquisitions, growth projections and political events that could cause significant economic and dividend payout policy. difficulties and affect growth. If Chile experiences lower than expected economic growth or a recession, it is likely that Changes in social, political, regulatory, or economic conditions, consumer demand for electricity will decrease and some or in laws and policies that govern foreign trade, manufacturing, customers may have difficulties paying their electric bills, or development and investment in Chile and other countries in possibly increasing uncollectible accounts. Any of these Latin America could adversely affect the Company’s business, situations could adversely affect the Company’s operational operational results and financial condition. For example, in results and financial condition. addition to the social unrest and riots in Chile, massive protests were also held against the governments of Colombia, Bolivia, Financial and political events in other parts of the world could and Ecuador, as well as an economic crisis in Argentina and a also negatively affect the business. For instance, since 2018, constitutional crisis in Peru. Protests, riots, and other political the United States and China have been immersed in a trade crises could continue or even escalate, which could adversely war involving protectionist measures that has increased the impact the economies of those countries and affect the volatility of financial markets worldwide due to the uncertainty Company’s business, operational results, financial condition, of political decisions. Instability in the Middle East, or in any and value of our securities. other major oil-producing region, could also result in higher fuel prices worldwide, increasing the operating cost for our The Company may be unable to make suitable acquisitions thermal generation plants, adversely affecting the Company’s or successfully integrate acquired businesses. results of operations and financial condition. On an ongoing basis, the Company reviews acquisition prospects that may increase its market share or provide The federal government of the United States has experienced synergies with existing businesses, but there can be no shutdowns in recent years. The 2018 – 2019 U.S. government assurance that the Company will be able to identify and shutdown, the longest in U.S. history, lasted 35 days and acquire such suitable companies in the future. The acquisition affected most federal agencies, including the Securities and and integration of independent companies not under the Exchange Commission (SEC). Even temporary shutdowns Company’s control is generally a complex, costly and time- or threats to shut down the U.S. government could have a consuming process that requires significant effort and material adverse effect on the timing, execution, and increased expenditures. If the Company makes further acquisitions, expenses associated to the Company’s main transactions and it could incur in substantial debt, take on unknown reorganizations within the SEC’s jurisdiction. responsibilities, potentially lose critical employees, be forced An international financial crisis and its disruptive effects on the management’s attention from other business concerns. financial industry could also negatively affect the Company’s ability to obtain new financings under the same terms and Integrating acquired businesses may be difficult, expensive, conditions it has secured in the past. An international sanitary time-consuming, and a strain on the Company’s resources to amortize expenses related to tangible assets, and divert d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C crisis, such as the one brought by the COVID-19 virus, which and relationships with employees and customers. Ultimately, . 1 2 became a global issue in December 2019, could seriously these acquisitions may not be successful or may not achieve affect the Company and its business partners. These effects the expected benefits. Any delays or difficulties encountered could cause an increase in the price of goods, as well as a in connection with acquisitions and the integration of their recession that would affect electricity demand. operations may have an adverse effect on the Company’s business, operational results, and financial condition. 17. Risk factors 123 The Company’s business and profitability could be consolidated debt has been in U.S. dollars. Even though a unfavorably affected if water rights are denied or if water substantial portion of its operating cash flows is linked to concessions are granted with limited duration. the U.S. dollar, the Company is generally, and will continue The Company owns water rights granted by the Chilean Water to be, exposed to fluctuations in the Chilean peso against Authority (DGA in its Spanish acronym) for the supply of water the U.S. dollar because of time lags and other limitations from rivers and lakes near production facilities. Currently, these to adjust electricity rates to the U.S. dollar, in addition to rights are (i) for an unlimited duration period, (ii) absolute and potential difficulties in financing debt in the same currency as unconditional property rights, and (iii) not subject to further operational cash flows. Due to this exposure, the value of the challenge. Chilean generation companies must pay an annual cash that Company subsidiaries generate can substantially fee for unused water rights. New hydroelectric facilities are decrease as the Chilean peso devaluates against the U.S. required to obtain water rights, whose conditions may affect dollar. Future volatility in the exchange rate of the currency the design, timing, or profitability of a project. in which the Company and its subsidiaries receive revenues or incur expenditures may adversely affect the business, The Chilean Congress has discussed proposed amendments operational results, and financial position. to the Water Code since 2014 to prioritize the use of water by defining its access as a basic human need that must Long-term electricity sales contracts are subject to be guaranteed by the state. The amendments would give fluctuations in the market prices of certain commodities, precedence to water use for human consumption, domestic energy, and other factors. and sanitary subsistence, in both granting and limiting The Company’s electricity generation business is exposed to the exercise of exploitation rights. Restrictions enacted to fluctuations in the market price of certain commodities due to preserve environmental flows would also reduce water its the long-term energy sales contracts. As a selling party, the availability for generation purposes. To date, no resolutions Company has important commitments stemming from long- regarding these amendments have been approved by the term electricity sales contracts. The price of these contracts is Chilean Congress. indexed to the price of commodities, exchange rates, inflation, and the market price of electricity. Adverse changes to these Any limitation to Company water rights, to the granting of indices would reduce the rates the Company charges under additional water rights, or to the duration of water concessions these contracts, which could adversely affect the business, could have a material adverse effect on hydroelectric operational results, and financial condition. development projects and profitability. To the date of this report, there have been no resolutions, and therefore, the Risk in the electricity distribution business increases as uncertainty persists. liberalization of the market raises. The Company’s electricity distribution business is exposed to Foreign exchange risks may unfavorably affect the fluctuations in electricity prices. Since 2016, some customers Company’s results and the U.S. dollar value of dividends who had freely chosen to be subject to regulated tariffs have payable to ADS holders. switched to the unregulated tariff regime due to lower prices. The Chilean peso has been subject to devaluations and These customers are tendering their electricity needs, either appreciations against the U.S. dollar and may be subject to directly or in association with other customers, because significant fluctuations in the future. For example, the Chilean regulated tariffs are currently higher than unregulated tariffs peso depreciated 7.2% against the U.S. dollar in 2019 and because the prices of latest electricity tenders are lower reached Ch$ 828.25 on November 28, 2019. The Chilean than prices of previous tenders. Unregulated customers are peso continues to devalue against the U.S. dollar in 2020, free to choose from among alternative energy providers. This reaching an observed exchange rate value of Ch$ 841 per U.S. could reduce our number of customers and adversely affect dollar on March 9, 2020. Enel Chile pays dividends in Chilean the Company’s business, operational results, and financial pesos. Historically, a significant portion of the Company’s condition. 124 Enel Chile Annual Report 2019The Company’s controlling shareholder may exert confrontations between protesters and the police and armed considerable influence and have a different strategic forces have resulted in a significant loss of human lives and view on the Company´s development than minority severe injuries. The accumulated damage to private and shareholders. public property could amount to billions of dollars. Damage Enel SpA, Enel Chile S.A.’s ultimate controlling shareholder, to Chile’s economy, growth prospects, risk perception, and holds a 61.9% ownership share of the Company and has immediate repercussions in unemployment and productivity announced its intention to acquire an additional 3% by has also been significant. The Company’s corporate offices the end of 2020. If successful, its indirect shareholding in suffered a severe fire on October 18, 2019, resulting in the Enel Generación Chile would reach 60.7%. Under Chilean relocation of management and headquarter employees for a corporate law, Enel has the power to determine the outcome prolonged period of time. An electricity substation belonging of substantially all material matters that require a simple to an unrelated company in the northern area of the city majority of shareholders’ votes, such as the election of the of Copiapó was set on fire on November 28, 2019. Chilean majority of the seats on the Board and the adoption of the public authorities have expressed their concern for the Company’s dividend policy, subject to some contractual and country’s strategic electricity infrastructure, including power legal restrictions. Enel also exercises significant influence stations, transmission lines, and distribution substations. It is over the Company’s business strategy and operations. Enel’s impossible to determine the final impact on the Company’s interests could, in some cases, differ from those of minority businesses or when the violence will end; however, this social shareholders. Any present or future conflict of interest crisis could have a material long term adverse effect on the affecting Enel could be resolved in a manner that strays from Company. the interests of the Company and its minority shareholders. Any natural or human catastrophic disruption to the Company’s The electricity business is subject to risks arising from electricity assets in Chile could lead to significant adverse natural disasters, catastrophic accidents, and acts of effects on its operational results and financial position. terrorism, which could unfavorably affect the Company’s operations, earnings, and cash flow. The Company is subject to financing risks, such as The Company’s primary facilities include power plants and those associated with funding new projects and capital transmission and distribution assets that are exposed to expenditures, and risks related to refinancing maturing damage from natural disasters, such as earthquakes, and risk debt, in addition to existing debt obligations, which could arising from increasingly catastrophic climate events, such as damage liquidity. fires, tornados, and floods. A catastrophic event could cause As of December 31, 2019, the Company’s consolidated debt service interruptions, significant reductions in revenue due totaled Ch$ 2,661 billion, which includes a Ch$ 781 billion loan to lower demand or additional costs arising from uninsured from Enel Finance International (EFI), a related company. As of business interruptions. There may be time lags between an December 31 ,2019, the largest debt obligation was the US$ accident or catastrophic event and the final reimbursement 1.7 billion SEC-registered bonds issued in the U.S. under the from insurance policies, which typically carry a deductible and laws of the State of New York. are subject to per event policy maximum amounts. In mid-October 2019, widespread street demonstrations and (2) affirmative and negative covenants, (3) events of default (4) protests erupted in Santiago and quickly spread throughout mandatory prepayments for contractual breaches, (5) change Some debt agreements are subject to (1) financial covenants, d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C the rest of the country. These actions have become of control clauses for material mergers and divestures, and . 1 2 commonplace, and have since then been accompanied, (6) bankruptcy and insolvency proceeding covenants, among at times, by looting, arson, and severe vandalism. Violent others. 17. Risk factors 125 A significant portion of the Company’s financial indebtedness financial condition. The construction of new transmission lines is subject to cross-default provisions, which have varying may take longer than in the past, mainly due to new social definitions, criteria, and materiality and applicability thresholds and environmental requirements that create uncertainties regarding subsidiaries, which may result in a cross-default. as to the probability of completing projects. Additionally, the Debt may also become immediately due and payable in Company’s thermal power plants are connected to natural gas cases involving bankruptcy or insolvency proceedings of any pipelines and are subject to interruptions should the pipelines subsidiary. Similarly, some of the Company’s debtholders may be damaged. Stoppages could force purchasing energy at the decide to accelerate debt in case of cross-default events with spot market price, which could be higher than the contracted any significant subsidiary, among other potential covenant fixed sale price to customers. This scenario could adversely defaults. affect the business, operational results, and financial position. The Company may be unable to refinance its debt or obtain The business could face adverse consequences if the such refinancing on acceptable terms. In the absence of such Company is unable to reach satisfactory collective refinancing, the Company could be forced to liquidate assets bargaining agreements with unionized employees. at unfavorable prices to pay debt obligations. Even more so, A large percentage of employees are members of unions and it may be impossible to sell assets fast enough or for enough have collective bargaining agreements that must be renewed money to make these payments. regularly. The business, financial condition, and operational The Company may also be unable to raise the necessary funds collective bargaining agreement with any labor union, or by required to finish projects under development or construction. any agreement with a labor union that contains conditions Market conditions or unforeseen project costs prevailing at deemed unfavorable by the Company. Chilean law provides the time when funds are needed could compromise the legal mechanisms for judicial authorities to impose a collective Company’s ability to finance these projects and expenditures. bargaining agreement if parties are unable to come to an results could be adversely affected by a failure to reach a Inability to finance new projects or capital expenditures, refinance existing debt, or comply with covenants could adversely affect The Company employs many highly specialized employees, the Company’s operational results and financial position. and certain actions, such as strikes, walkouts, or work The Company depends on third party electricity business, operational results, and financial condition, as well stoppages by these employees could adversely impact the agreement, which could increase costs past their budget. transmission facilities. If these facilities do not provide an as Company reputation. adequate transmission service, it may be impossible to deliver energy to final customers. The Chilean legislative branch is currently analyzing proposed The Company depends on transmission facilities owned and bills that could increase Company’s cost per employee, such operated by unrelated companies to deliver electricity sold. as a workweek reduction from 45 hours to 40 hours, and a This dependence exposes it to several risks. If transmission 4% increase in employer contributions to pension funds. If is disrupted, or if transmission capacity is inadequate, the enacted, these measures could lead to reduced productivity Company may be unable to sell and deliver electricity. If a and higher expenses. region’s power transmission infrastructure is inadequate, recovery of costs of goods sold and profits may be insufficient. The relative illiquidity of the Company’s ADS and common If restrictive transmission price regulations are imposed, the stock could negatively impact the share price, its ability transmission companies the Company relies on may not have to maintain a favorable fiscal position and the Company’s enough incentives to invest in expanding infrastructure, which status as a registrant in the United States Securities and could unfavorably affect the Company’s operational results and Exchange Commission. 126 Enel Chile Annual Report 2019Chilean securities markets are substantially smaller and have The Company’s generation plants, IT systems, and other less liquidity than major securities markets in the United types of infrastructure, as well as the information processed States and other developed countries. The low liquidity of by IT systems, could be affected by cybersecurity incidents, the Chilean markets may impair the ability of shareholders to including those caused by human error. This industry has begun sell shares, or ADS holders to sell shares withdrawn from the to see an increased volume and sophistication of cybersecurity ADS program, on Chilean stock exchanges in the amount and issues from international activist organizations, nation states, at the desired price and time. and individuals, and are among the emerging risks identified in the Company’s planning process. Cybersecurity incidents Lawsuits brought against the Company outside of Chile, could affect the Company’s business, limit its generation or complaints based on foreign legal concepts may have capacity, delay the development and construction or new unintended outcomes. projects or capital improvement projects in existing facilities, All the Company’s investments are located outside the United disrupt customer operations, or expose it to liabilities. States. All its directors and officers reside outside the United States, and most of its assets are also located outside the The Company’s’ business requires the collection and United States. If any investor were to submit a lawsuit against retention of personal information on customers, employees, Company directors, officers, or experts, it may be difficult for and shareholders, who expect that it can adequately protect them to notify of such legal processes in the United States, the privacy of such information. Cybersecurity breaches or enforce sentences obtained in U.S. courts based on civil may expose the Company to a risk of misuse of confidential liability provisions of U.S. federal securities laws in Chilean information. Theft, loss, or fraudulent use of personal or U.S. courts. There is also doubt as to whether legal action information may lead to potentially large costs in notifying and could be brought successfully in Chile based solely on the civil protecting affected persons, and could cause the Company liability provisions of U.S. federal securities laws. to become a target for litigation, losses, liabilities, fines, or penalties, which could negatively affect the Company’s Any interruption or failure in the Company’s’ information operational results and its reputation with its customers, systems and communications systems, and any external shareholders, and authorities, among others. The Company cyberattack or cybersecurity breach of these systems may also be required to incur significant costs associated could have an adverse effect on operations and results. to governmental actions in response to such invasion or to The Company operates in an industry that requires the strengthen IT systems and electronic controls. continued use of sophisticated information technology, control, and communications systems (IT systems) and network The cybersecurity threat is dynamic and evolving, and is infrastructure. IT systems are used to create, collect, use, increasing its sophistication, magnitude, and frequency. disclose, store, dispose, and process confidential information The Company may not be able to implement adequate on the Company, customers, employees, contractors, and preventive measures or accurately assess the likelihood of a shareholders. In this business, IT systems are critical to controlling cybersecurity incident, which is one of the emerging risks in and monitoring power plants’ operations, maintaining generation the Company’s planification process. The Company is unable and network performance, generating invoices to bill customers, to quantify the potential impact of cybersecurity incidents on achieving operational efficiencies, and meeting service quality its business and reputation. These potential incidents and the standards. Operating generation units is not only dependent on corresponding regulatory action could result in a significant the physical interconnection of these facilities with the electrical decrease in revenues and high additional costs, including d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C network infrastructure, but also on communications among the penalties, third party claims, repair costs, increased insurance . 1 2 various parties connected to the network. The resilience of IT expense, litigation costs, notification and remediation costs, systems in managing information and communication among security costs, and compliance costs. those parties has increased significantly since the development of smart meters and intelligent grids in Chile. 17. Risk factors 127 128 Enel Chile Annual Report 201918. ETHICS AND TRANSPARENCY 18. Ethics and transparency 129 Ethics and transparency Internal control system The internal control and risk management system “SCIGR” (in its Spanish acronym) consists of a set of rules, procedures and organizational structure to identify, measure, manage, and monitor the Company’s main corporate risks. Particularly, these systems utilize recommendations contained in the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The system also guarantees the traceability of risk identification, evaluation, management and monitoring This department carries out periodical audit procedures to evaluate the performance of the Company’s operations from a risk perspective, identifying areas of improvement and facilitating, along with process owners, action plans to strengthen the Internal Control System to minimize irregular or fraudulent events that may affect the Company. The outcome of each audit and the follow up on the implementation of action plans are reported regularly to the Board, which directly supervises the execution of improvement plans. Each audit includes control activities included in the Criminal Risk Prevention Model (MPRP, in its Spanish acronym), which contains the requirements of the Crime Prevention Model of Law 20,393, which governs Enel Chile as a company based in Chile, that promotes international best practices to prevent and detect potential risks of illegal behavior, fraud, and any other action that may be in conflict with Enel Group’s ethical measures, and considers three different types of activities: principles. • First level of control: All control activities that the Company’s operational units carry out to ensure that operations are executed properly. • Second level of control: Assigned to specific corporate functions that aim to manage and monitor certain types of risk. • Third level of control: Internal audit activities that aim to verify the structure and the functionality of the SCIGR, including monitoring first and second level control activities. Internal Audit The Internal Audit department is responsible for ensuring the efficiency and efficacy of the internal control and risk management system in an objective and independent manner. In 2019, the Audit and Compliance Manager had access to the Board of Directors’ Meetings held in January, February, March, July, August, and September, to report all previously described issues, as well as the management of the ethics channel. Ethical conduct and the Criminal Risk Prevention Model Given the nature of the Internal Audit department, it reports Enel Chile is fully committed to complying with its ethical to the Board of Directors directly at least once every quarter. standards and conduct and with the current regulation of each This includes any serious deficiency or possible irregular sector in which it operates, regarding both internal and external situation detected that must be reported to the authorities or relationships with other stakeholders. Transparency and other competent entities, as well as events that may affect ethical behavior are values that build trust and responsibility the Company’s judicial standing. with all stakeholders. 130 Enel Chile Annual Report 2019 The Company and its subsidiaries rely on a Code of Ethics, prevention system adopted and implemented by the Company, approved by the Board of Directors, to guide the behavior of to the standards stipulated in Law 20,393. The certification lasts directors, executives, employees, and contractors. The Code two years (2019 - 2020), period in which the Company and its describes the ethical principles, guidelines, commitments and subsidiaries are subject to constant evaluations. responsibilities to be followed in managing the business and performing entrepreneurial activities. In 2019, the Board of Directors approved the Criminal Risk The Code of Ethics and other documents that provide the to Law 20,393 in late 2018 and early 2019, adding the liability framework for Enel Chile’s ethical culture are handed to of legal persons in corruption, disloyal administration, employees, directors, suppliers, and contractors, and are incompatible negotiations, improper appropriation, illegal also posted on the website, offering easy access to all its fishing, water contamination, activities with products in Prevention Model update, which considered the amendments stakeholders. closed extraction season, and fishing activities without proper legal accreditation. These crimes are added to asset The Company strictly abides to the Chile’s Corporations Law, laundering, financing terrorism, receiving stolen goods, and which establishes independence criteria to avoid conflicts bribery, which is considered an extraterritorial crime. of interest. Also, the Board of Directors voluntarily adopted General Norm 385. The Internal Audit department directly In addition, the Head of Crime Prevention, with the support of informs the Board on the compliance with NCG 385. experts, coordinated the update of risks and specific controls of the Criminal Risk Prevention Model involving all areas and Enel Chile utilizes a Criminal Risk Prevention Model (MPRP processes of the Company. in its Spanish acronym) against corruption, built upon the Code of Ethics and the Zero Corruption Tolerance Plan. Its All Enel Chile subsidiaries also maintain a compliance program objective is to control and prevent criminal activity within the aligned with their respective business practices. In companies organization, comply with norms, and provide transparency that are not directly controlled by Enel Chile, joint ventures, in the activities of all companies in which Enel Chile holds a related companies or suppliers and contractors, the Company majority stake, controls the administration, or is responsible promotes the implementation of independent ethics and for its management. This model covers all the requirements conduct codes, aligned with local legislation and Enel Chile’s included in the Crime Prevention Model of Law 20,393 and standards. its amendments. In 2019, Enel Chile and its subsidiaries were acknowledged The Board of Directors is responsible for supervising the by the Foundation Fundación Generación Empresarial and the compliance to ethical norms and criminal risk prevention journal Diario Financiero with the “Entrepreneurial Generation measures in the Company, and delegates its follow-up and - Diario Financiero” award, for its commitment to systemically management to the Internal Audit department. The Board promoting ethical behavior and best practices in corporate approves all documents involved in the compliance system, compliance, both internally and externally, obtaining one of including the Criminal Risk Prevention Model, and relies on the top 3 grades among the 49 participating companies. the Head of Crime Prevention for its implementation. The Head of Crime Prevention has the autonomy, 2019, which focuses on disclosing the main aspects of the Enel Chile also kept its communications plan operational in d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C empowerment, and resources required to properly execute his compliance program and strengthening the corporate culture . 1 2 or her functions. The Board regularly evaluates and monitors among employees and suppliers. These plans consider internal the implementation and improvement of the Company’s and external activities, including new employee induction procedures by meeting with the Head of Crime Prevention programs, where they receive specific training on Enel Chile’s who reports on the subject. compliance system. Enel Chile and its subsidiaries obtained external certification for its During 2019, 26 training programs were held for 283 Criminal Risk Prevention Model, awarded most recently in 2019. individuals, and 154 communication activities were carried The external certifier accredited and objectively evaluated the out, focused on corruption prevention, unethical behavior, 18. Ethics and transparency 131 ethical channel use, ISO 37001 Anti-Bribery Management huenche, maintained their Anti-Bribery Management System System, and on the Company’s compliance system in general. certification under ISO 37001: 2016 standards. Simultaneous- ISO 37001 Anti-Bribery Management System Under the tenth principle of the Global Pact, companies com- mit to fight corruption in all its forms, including extorsion and bribery. Enel Chile’s ISO 37001 Anti-Bribery Management Sys- tem, in addition to other voluntary commitments, contribute to this commitment. The ISO 37001 standard specifies a series of measures and best practices to aid organizations in preventing, detecting, and confronting bribery. In Enel Chile, this system is focused on identifying risks and designing, executing, and improving behavior controls and standards in operations deemed risky, such as negotiations and contract executions with third parties, public and private tender participation, financial resource man- agement, gifts and hospitalities management, employee selec- tion processes, management incentive mechanisms, among others. The Anti-Bribery Management System is a part of Enel Chile’s compliance program. The Board of Directors is its maximum authority, and together with the Company’s Senior Manage- ment, promote bribery prevention in Company activities and operations. The ISO 37001 certification strengthens trust between stake- holders and Enel Chile. In 2018, Enel Chile became the first company in the Chilean electricity sector listed on the New York Stock Exchange to be certified, and along with Enel Américas, became the first Latin-American companies listed on the New York Stock Exchange to be certified. As part of Enel Chile’s commitment to implementing best practices worldwide, during 2019, Enel Chile, along with its subsidiaries Enel Generación Chile and Empresa Eléctrica Pe- 132 ly, subsidiaries Enel Distribución Chile and Empresa Eléctrica Colina obtained their first ISO 37001 Anti-Bribery Management System certification, becoming the first electricity distribution companies in Chile to be certified. Enel Chile has participated in numerous events sharing its ex- perience in implementing this important certification, as well as its deployment to subsidiaries. Complaints Channel Management The Complaints Channel is managed by the Internal Audit department but operated externally. It allows anonymous reports of any irregular conduct contrary to the principles of the Criminal Risk Prevention Model or the Ethics Code, as well as other complaints related to issues such as accounting, control, internal audit, or crimes such as asset laundering, financing terrorism, fraud, corruption, improper appropriation, incompatible negotiation, environmental crimes, among others. This channel is governed by the Global Policy 107 Whistleblowing, which guarantees anonymity, whistleblower protection against retaliation, and protection against complaints in bad faith. The Complaints Channel is available for employees, contractors, suppliers, clients, communities, and other stakeholders, and is reachable through the telephone, in person, and digitally through the intranet and the Company website. The whistleblower may communicate through the channel to deliver more information related to the reported situation, as well as to receive feedback and questions from the team investigating the case. During 2019, part of the Company’s training and communications plans focused on promoting the use of the Ethical Channel through publications and training. Employees were taught how to use it and were shown its usefulness. It was also promoted during events with suppliers using promotional items and talks. Enel Chile Annual Report 2019 d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C In 2019, the Ethical Channel received 15 complaints related to Enel Chile’s ethics code. Of these reports, 3 were non-relevant violations of the Company’s Ethics Code, regarding contract management and conflicts of interest, and were all managed accordingly. www.enelchile.cl www.eneldistribucion.cl www.enelgeneracion.cl WHERE TO REPORT CONCERN? Corporate website Right menu/ Ethical Channel Internet Directly to Ethical Channel https://secure.ethicspoint.eu/domain/media/es/gui/102504/index.html Enel Chile Internal Audit Department, Santiago, 76 Santa Rosa Ave, Floor 9. Presencial o escrito The Enel Group has a whistleblowing policy to organize the reception, analysis and management of reports concerning suspected violations to Enel Compliance Programs. Channels ensure • Anonymity • Confidentiality • Safety • Protection against retaliation Whistleblowing Policy 107 Report a Concern External Company sends concerns to Internal Audit Internal Audit Response Receipt notice and further i n f o r m a t i o n r e q u e s t a n d evidence of concern Internal Audit performs preliminary analysis • What is your concern? • Who is being reported? • Which principle or ethical behavior is being violated? Internal Audit performs preliminary analysis Internal Audit analysis Relevant violation to Compliance Program Operational concern Concern is sent to the unit for resolution Closure form of concern reported Investigation and review of concern reported Unsubstantiated concern Concern is filed Disciplinary system, implementation of improvement and report to Board of Directors 18. Ethics and transparency 133 134 Enel Chile Annual Report 201919. SUSTAINABILITY 19. Sustainability 135 Sustainability Today, more than ever, we are facing a world where change is constant and permanent. Demographic variables, social demands, the climate crisis and the technological revolution present global challenges that drive companies to rethink their business strategies and come up with ways of developing their activities considering the environment, society and the economy (ESG). Additionally, they must answer social demands for concrete and immediate action that integrate and consider all variables regarding sustainability. This presents several aspects that organizations must consider, bringing new opportunities that require innovation so that companies can develop their business in a long-term sustainable way. Consequently, the financial community is increasingly evaluating Company’s performance in terms of ESG, taking it into account in their investment decisions. International organizations have alerted the world about the risks related to global warming, which has significant economic, social, and environmental impacts. Another relevant trend is related to demographics that is challenging markets with increasing urbanization and the need to develop sustainable cities to improve quality of life. Particularly in Latin America, migration towards big cities has led to great segregation, inequality and contamination, which is why electricity plays a crucial role as an enabler for sustainable growth and progress. All of this has led the industry towards an energy transition. In order to lead this transition, Enel Chile has focused its investments on renewable energies, aiming towards decarbonizing its energy matrix, and developing ecosystems and platforms that can offer new applications to energy, while overcoming the energetic poverty that mainly affects the outskirts of big cities. Sustainable business strategy For Enel, sustainability means value creation, which is developed by using a model that integrates economic, environmental, social, and governance goals into the business plan, creating long term value for all stakeholders. This model is put into practice in a plan to achieve the Sustainable Development Goals (SDG) that guide management throughout the Company and its subsidiaries by means of specific indicators. Sustainability plan Sustainability in the business Enel plays a fundamental leadership role in Chile’s energy transition, responding to the climate crisis and reducing environmental and social risks in the country. Therefore, the Company’s business is focused on increasing renewable capacity, retiring coal power plants, electrifying cities, delivering quality service to customers, and digitalizing networks. 136 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C Growth through low carbon technologies and services: the role of renewable ener- gies and electrification allow renewable energy to increase from 65% to 73% of total installed capacity. Simultaneously, and aligned with the Energy Roadmap 2018- 20222 promoted by the Chilean Government, the Company has committed to decarbonize its energy matrix through the progressive closure of its coal power plants. As agreed, upon In the context of the current climate crisis and considering with the Chilean Government under the decarbonization plan possible socio-environmental risks that could affect opera- in June 2019, the 158 MW Tarapaca power plant, had closed by tions, Enel Chile has targeted its investments towards in- year-end 2019. The Company has also agreed to retire the 128 creasing the generation capacity through non-conventional MW, Bocamina I power plant no later than December 2023, renewable energy, planning to add 2 GW by 2022. This will and Bocamina 2, 350 MW, no later than December 2040. Total Generation Capex 2020-2022 Generation Capex Growthn 2020-2022 Installed Capacity by 2022 9% 3%3% 8% 2.0 US$ bn 1.9 US$ bn 27% 40% 10% 9% 1% 76% 9.2 GW 23% 91% Asset development Asset management Hydro Solar Geothermal Wind Thermal The energy transition process also demands the promotion of new uses of electricity in a more efficient and accessible way. Consequently, Enel Chile promotes electromobility, energy efficiency and greater network resilience. . 1 2 2 The Energy Road Map 2018-2020 involves 10 mega commitments aiming towards modernization and decarbonization of the Chilean energy matrix. It includes the commitment to begin a decarbonization process by setting a retirement and reconversion schedule of coal fueled power plants. 19. Sustainability 137 Performance indicators in low carbon ODS technologies ODS 7,13 13 Indicator % Renewable installed capacity Specific emissions reduction gCO2/Kwheq 7, 11 Demand response MW 13 % Generation from renewable sources 11, 13 Promote activities “Making Cities Resilient”3 (Number of counties) 7, 13 9, 11 Residential photovoltaic system sales Lighting points managed 9, 11, Innovation and infrastructure through chargers (# of chargers) 2019 65 227 61.8 66 3 81 Results 2018 63 192 N/A 69 1 100 276,934 258,929 357 221 2017 57 238 N/A 57 N/A N/A N/A N/A Currently, 66% of Enel Chile’s electricity generation comes from renewable energy sources, mainly hydroelectric power plants. Renewable capacity remained stable between 2018 and 2019, but Enel Chile has 600 MW of renewable energy Operational improvement for quality service under construction to be in place by 2020. Over the last few The development of networks is fundamental to increase years, the climate crisis has seriously affected Chile, intensi- the resilience, reliability, and quality of the electricity supply. fying dry conditions that has compromised the performance Hence, the Company has focused its investments on the of hydroelectric power plants. This has had a negative impact on the CO2 emissions by kWh generated throughout 2019. The contingency is being handled with emphasis on the de- digitalization of networks and assets. In terms of generation, Enel Chile continually invests in in- velopment of new wind and solar plants. In terms of water corporating the latest developments in terms of innovation, management, Enel Chile has been carrying out programs to digitalization, robotization, automatization, data driven, and protect basins and their ecosystems. predictive maintenance for the different technologies used in generation facilities. This has increased the efficiency in the On the other hand, in order to capitalize city electrifica- use of resources, improved asset management and main- tion opportunities, the Company, through Enel X, invests in tained an excellent performance. possible solutions and services for new and efficient elec- tricity uses, the necessary infrastructure for electric mobility development, and electricity services for clients. Service Quality indicators ODS 9, 11 Indicator Number of remote-controlled equipment installed (cumulative) 7, 11, Losses index 9, 11, 12 Residential client satisfaction index 7, 114 7, 11 SAIDI SAIFI 2019 2,148 4.99 55% 184 1.55 Results 2018 1,733 5.02 57% 195 1.47 2017 1,481 5.1 58% 230 1.72 Reduction in SAIDI and SAIFI indicators is due to the Company’s ongoing investment in the improvement of quality and agility to identify and correct network failures. 3 UN- Habitat program to increase cities’ resilience to natural disasters and man-made impact. 4 SAIDI: System Average System Interruption Duration Index, during the last 12 months. The value for the year 2018 has been adjusted due to a modification in criteria in 2019. 138 Enel Chile Annual Report 2019Value chain One of the pillars for the sustainability of the business is a sustainable supply chain network. We share the common purpose of creating value in the long-term with our suppliers. We constantly reduce risks associated to social and environmental breaches and workplace security, all the while awarding the best practices. Supply chain sustainability indicators ODS Indicator 12 12 12 Supplier evaluation of health and safety Supplier evaluation of environmental performance Supplier evaluation of human rights Sustainability in the social dimension Involving our People 2019 100% 100% 100% Results 2018 100% 100% 100% 2017 47% 47% 47% In times of energy transition and business model transformation, employees have a fundamental role when facing challenges in innovation and technology. Therefore, skills training, overcoming barriers to become a more inclusive Company, and delivering the proper tools to take on a role in the energy market are essential pillars to create long-term value. Indicators to measure sustainable development of the workplace environment ODS 5, 10 8 10 8 Indicator Gender diversity (% of women) Workplace environment survey (employee participation) Exemplary employee for co-workers with disabilities Labor flexibility – Smart Working (5) (Number of employees) 2019 22% 96% 3 481 Results 2018 22% n/a 1 360 2017 21% 86% N/A 256 d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C . 1 2 5 Smartworking s a program that grants employees of Enel Chile and its subsidiaries the possibility to select one day a week, between Tuesday and Thursday, to work remotely from home or any physical space that allows good internet connectivity and complies with the safety norms. 19. Sustainability 139 Involving local communities locations, other than the corporate building that had been affected by the social uprising in the city. Social contingency On a territorial level, Enel Chile and its subsidiaries manage community relationships through a dedicated team that can be constantly found in the regions of the country where the Since October 2019, an important social unrest began in Company operates. The strategy through which we relate to Chile, rooted in several demands against inequality and communities focuses on inclusive and participatory projects injustice. Faced with this situation, Enel Chile concentrated its that seek to reduce the gap in multidimensional poverty efforts on two issues: guaranteeing the continuity of electric through clean and affordable energy, economic development, generation and distribution and looking out for people’s safety. and access to quality education. This shared goal with This contingency was addressed through prompt planification, communities has allowed us to move forward with local carry out operations without further inconveniences, and development plans throughout the entire year, especially putting people in a safe work environment, in alternative office during the final trimester of 2019, when the social uprising became more relevant nationwide. Measurement indicators for initiatives focused on local development ODS Indicator 8 7 4 Economic development and dignified work (cumulative beneficiaries since 2015) Access to clean and affordable energy (cumulative beneficiaries since 2015) Inclusive, fair, and quality education (cumulative beneficiaries since 2015) 2019 371,400 198,900 79,800 Results 2018 361,500 170,000 39,000 2017 330,800 141,100 25,300 ESG (Environment, Society and Governance) analysis methodology Materiality analysis and stakeholder prioritization national standards. The main approach of this method is to place stakeholders as a focal point when defining the Com- pany’s strategic issues. Hence, the entire Company partici- pates directly in the identification and prioritization process. As a result, the relevant stakeholders identified are consulted regarding their priorities and expectations from the Company. This same procedure is carried out within the Company to determine strategic priorities. Enel Chile applies the methodology adopted by the Enel This is how we define the Company’s materiality, which governs the strategic plan we disclose in various public re- Group, which fulfills GRI (Global Reporting Initiative) inter- ports. 140 Enel Chile Annual Report 2019 d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C Economic and financial value creation Engaging the local communities Environmental management New technologies and solutions Employees management, development & motivation Innovation and digital transformation Costumer engagement Sound governance andfair corporate conduit Energy distribution Decarbonization of the energy mix Occupational health and safety Sustainable supply chain Due diligence on Human Rights The Enel Group is committed to the principles that safeguard and promote the protection of human rights, evidenced by the policy approved by the Board of Directors in 2013. Since 2016, Enel Chile, aligned with the UN’s guidelines, car- ries out a fundamental rights due diligence process going through the entire value chain to identify possible risks within its operations and establish corrective measures to address any possible gaps. Potential infringements that arise from this due diligence are . 1 2 included in the Company’s risk matrix. Enel Chile’s materiality matrix7 s e i g e t a r t S s ´ y n a p m o C n i s e u s s I f o y t i r o i r P Priority of Issues for Stakeholder ESG risk analysis ESG risks are an integral part of the risk management policy, as is stated in the Risk Factors section, and are identified con- sidering the following references: • Relevant issues in Materiality, identified in the 2020 Global Risk Report of the World Economic Forum (WEF). • Risk assessments carried out as part of Enel’s due dili- gence process on human rights and integrated manage- ment systems (environmental, quality and safety) among others. • The analysis of some of the world’s most highly ac- claimed sustainability rating agencies, which use specific risk assessment systems to rate companies’ ESG perfor- mance. 7 The final materiality matrix indicates the issues that are a priority for our stakeholders, and strategic for the company. The information provided is used to create the sustainability plan, which is updated annually. 19. Sustainability 141 Long-term creation of economic value The economic indicators we use to measure our performance reflect the value generated by our sustainable business model. Ebidta from low carbon products and services (MCh$) Capex of low carbon products and services (MCh$) Ratio Capex of low carbon products and services to total capex (%) Shareholder remuneration (Ch$/share)8 2019 867,644 295,853 88% 4.23 2018 777,591 282,184 80% 3.14 2017 598,123 215,934 73% 3.00 Market recognition - Rating and sustainability indexes Analysts specialized in sustainable development evaluate companies in terms of their ESG performance or overall sustainability. These evaluations are important tools for the Company to be able to improve and refocus its business management, all the while allowing investors to integrate non-financial information (ESG) into their business decisions. included in RobecoSAM’s Sustainability Yearbook for the first time. The Company was recognized in the bronze category, as the only Chilean company, alongside Enel Americas, to receive these distinctions and to be present in three indexes. • For the third consecutive year, Enel Chile was confirmed in FTSE4Good’s categories “Emerging Markets Index” and “Latin America Index”. During 2019, Enel Chile improved its position in most sustainability indexes and ratings, among which we highlight: • For the third consecutive year, Enel Chile was included in the utilities sector of the Best Emerging Markets Performers ranking, carried out by Vigeo Eiris. • Enel Chile was within the top 10% electricity companies worldwide, according to the Dow Jones Sustainability Index (DJSI), and 8th in the DJSI Chile, DJSI MILA Pacific Alliance and DJSI Emerging Markets. Enel Chile was • During 2019, MSCI gave Enel Chile an A rating, becoming part of several of their stock sustainability indexes. • Enel ranked in the 64th percentile under the new risk ranking methodology Sustainalytics. 8 The 2019 dividend is an estimate that considers the reduction of the Dividend Policy from 65% to 60% and the distribution of an eventual dividend paid to compensate for the impairment caused by the decarbonization process of the Enel Generación Chile S.A. subsidiary. 142 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C . 1 2 19. Sustainability 143 144 Enel Chile Annual Report 201920. ENVIRONMENT 20. Environment 145 Environmental management highlights Environmental protection is a major pillar of the Enel Group’s The environmental policies that were updated during 2019 strategy. Hence, its companies have directed their efforts are: towards constant improvement, permanently seeking to en- hance the efficiency of their processes and products, incor- • Quality, Safety and Environmental Policy, March 2019 porating cutting-edge technology. Their purpose is not just to • Policy 292, Version 2, “Environmental Risk and Impact comply with norms and reduce environmental externalities, Evaluation Methodology”, June 25, 2019 but also to take care of the environment. • Policy 101 HSEQ Wolk, Version 2, broadens scope of en- Enel's policy and internal process implementation does not just focus on reducing environmental risks; they also seek to Seeking to safeguard and optimize environmental manage- consolidate the Company’s leadership position in the energy ment, several actions were taken during 2019, which we high- market. Human resource and environmental protection, the light below. vironmental issues, June 13, 2019. struggle against climate change, and sustainable economic growth are all strategic factors considered during the plani- fication, implementation and development of Enel Chile’s ac- tivities. Consequently, environment protection and sustainable development are the strategic focus of the Company’s plan- ning, start up and development activities. Generation The management of environmental aspects of Enel Chile’s generation facilities throughout the country, through its sub- sidiaries Enel Generación Chile and Enel Green Power Chile, are centralized in the Health, Security, Environment & Quality (HSE&Q) department of every business segment in the coun- try. In this context, the Environmental unit oversees the imple- mentation of environmental policy, strategic goals and environ- mental procedures in all power plants, according to the stan- dards defined by HSE&Q Global, ensuring their compliance in terms of environmental management. Environmental management • Coordination and leadership when responding to environ- mental events or incidents. • Review of environmental matrices, contractor inductions, and works inspections, in order to determine contrac- tor’s compliance with environmental standards, commit- ments, and legal requirements related to environmental issues. • Participation in elaborating the Base Line for calculating the Carbon Footprint, a project promoted by the Compa- ny and led by Sustainability. • Logistics support for strategic environmental studies car- ried out at the corporate level. Waste management Regarding actions taken to reduce waste during 2019, we highlight the following: • Installment of recycling stations in the corporate offices in Santiago, and in the Pangue and Laja hydroelectric power plants. • Waste recovery through oil recycling, initiative that began in Laja and Maule power plants. 146 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C Continuous improvement Aiming towards the continuous improvement of processes, during 2019, teams from the Operations and Environmental divisions worked together to identify opportunities for im- provement in all power plants. This led to the identification of Compliance with Environ- mental Commitment Resolu- tions (RCA) equipment with oil content, which in turn helps detect possi- To comply with the RCA during 2019, the following actions are ble risks regarding leakages or spillages, allowing to take the highlighted in relation to the Ralco Hydroelectric power plant: necessary actions to prevent such incidents. These efforts are carried out as part of a project promoted by HSEQ Global, • Reforestation Agreement with Universidad de Concep- after implementing trial versions in Italy and Spain. ción: 515.5 hectares were reforested during the period. Environmental awareness Within the context of environmental protection, during 2019 an environmental awareness program was carried out in the cor- porate building and in power plants, highlighting the following activities: • Improvement of the Drinking Water System: projects to improve the drinking water system for the Ayin Mapu and El Barco indigenous communities are being developed. These communities were relocated a consequence of the construction of the Ralco Power Plant. 100% progress is registered within the period. • Commemoration of the International Water Day by broad- casting a video for all Company workers, regarding the importance of water for life and as a resource for our Company. • Housing Program: 34 homes are currently being constructed for families of the indigenous community of El Barco, relocated due to the construction of the Ralco Power Plant. Progress reached 80% during the period. • Environmental Workshop for people who work in the corporate building, regarding Environmental Regula- tions (Environmental Impact Study (EIA in its Spanish acronym), Environmental Impact Declaration (DIA in its Spanish acronym) - Environmental Sanctions and Envi- ronmental Criminal Liability) and held a discussion about the environmental development of our projects. • Bridge repairs: Seven bridges were repaired in inner roads of the Ayin Mapu indigenous community during the period, guaranteeing the connectivity of 41 families that were relo- cated due to the construction of the Ralco Power Plant. Additionally, with the purpose of mitigating potential environ- mental impacts, the Renewable Energy Unit monitors Wind Farms, Photovoltaic Solar Modules and Cerro Pabellón. • Biodiversity Workshop to inform employees on the various environmental monitoring mechanisms and proj- ects that are executed by the Company. In this context, the following environmental monitoring proce- dures were executed during 2019: • Participation in the 2019 Trawu Forestry Fair, where we presented our reforestation experiences developed as part of the Reforestation Agreement signed with Univer- sidad de Concepción. > Monitoring of Avifauna > Monitoring of Flora > Monitoring of Fauna > Monitoring of archaeological sites > Monitoring of Wind Farm noise • Electronics Recycling Campaign by installing pick-up stations in the corporate building and in the Central and North Business Units power plants (Rapel, Sauzal, Cam- pamento Pehuenche,and Los Cóndores Project). Atotal 1,787 electronic devices were recycled, disposed in De- graf. 20. Environment 147 Compliance with the thermoelectric power plant emissions standard Distribution Enel Distribución Chile strives to protect the environment, During 2019, the Environmental Superintendence (SMA in managing and minimizing the environmental impact generated its Spanish acronym) published reports verifying compliance by its activities, and become a benchmark company within the with the established limits according to the decree, based on energy market. Several policies and procedures have been im- the emissions figures in the quarterly reports that each power plemented to achieve this goal. Our Integrated Management plant uploaded to the "Thermoelectric Power Plant" website System Policy, Environmental Policy, and Biodiversity Policy of the SMA. In turn, this organism verified that the emissions seek to establish the environmental guidelines for the opera- from all the Company's electricity generation units (UGE in its tions of the entire organization. Spanish acronym) complied with the established limit. Additionally, to comply with the Atmospheric Decontamina- year 2019 was carried out based on four key pillars: Process tion and Prevention Plan of the Concón, Quintero, and Pu- Analysis, Digitalization, Operational Control, and Cultural Con- chuncavi counties that was published in Chile’s Official Journal trol. Activities associated to each pillar are presented in the Enel Distribución Chile’s environmental management for the on March 30, 2019, by means of Decree 105/19 of the Min- following sections. istry of Environment, the Continuous Emissions Monitoring System (CEMS in its Spanish acronym) of both units of the Quintero Thermal Power Plant were connected directly to the Process analysis SMA. Green taxes • During 2019, the Company performed ISO 14001 follow-up and maintenance audit of the 2015 version of the Environ- mental Management System. The norm was upgraded in 2018 adding the life cycle perspective and Enel’s new envi- In April 2019, the thermoelectric power plants reported ronmental impacts evaluation methodology. their emissions according to the emissions quantification method presented and authorized by the SMA to determine • In November 2019, the Enel Environmental Studies School green tax payments. The total tax payment amounted to was launched, targeted to contractors’ environmental spe- US$23,647,493.85, which includes the atmospheric emissions cialists Enel’s environmental coordinators. Its purpose is from the Enel Generación Chile thermoelectric park and its to standardize criteria and knowledge to strengthen Enel’s GasAtacama S.A. subsidiary, acquired in October 2019. operational performance regarding the environment. The New projects On July 15, 2019, the Environmental Evaluation Service (SEA in its Spanish acronym) of the Copiapó Region issued Exempt Resolution 85, indicating that the project "Bess Energy Storage System in the Huasco Thermoelectric Power Plant" is not re- duration of the program is 13 months and involves a month- ly 3-hour training course that covers subjects such as envi- ronmental management systems, permitting, operational control, environmental sustainability, and Enel documents. Digitalization quired to comply with the SEA to be executed. • To eliminate the use of paper in Enel Distribución Chile, On August 27, 2019, the SEA of the Antofagasta Region issued mented for contractors and employees to record environ- Exempt Resolution 223, indicating that the project “Bess En- mental inspections and Stop Work. during 2019 the Easy Check List application was imple- ergy Storage System in the Atacama Thermoelectric Power Plant” is not required to comply with the SEA to be executed. 148 Enel Chile Annual Report 2019d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I . 1 2 y n a p m o C • In July, the Collaborative Portal was made available, ed, and noise measurements were performed in 10 which is a permanent communication channel between substations. The results established that the National HSE and contractors, allowing to visualize and share Regulations were being met. best practices, procedures, skills training, special events, HSE’s weekly work shifts, among others. - Noise measurements of projects with Environmental Operational control • To evaluate operational control procedures established to manage the environmental impacts of operations and evaluate compliance with current environmental regula- tion, during 2019 a total 600 environmental inspections of contractors hired by Enel Distribution were performed. Any non-compliance identified is solved by implementing specific action plans. Qualification Resolution (RCA for its Spanish acronym): During 2019, the noise of Nueva Lampa Isolator Project was measured as required by the project’s RCA. - Electromagnetic field measurements of substations and transmission lines: During 2019, measurements were carried out in 9 locations. Results showed that the ICNIRP International Regulations were being met. Culture • During 2019, 3 ECoS (Extra Check on Site) were imple- • Innovambiente, ideas for environmental innovation, was mented and executed by the technical and environmental launched in January 2019. Contracting companies pre- units of the Company. Their goal is to verify compliance sented their environmental ideas focused on digitaliza- with environmental regulation and Enel Group procedures tion, process improvement, and circular economy. These and its operational implementation, allowing to visualize ideas were presented in the Management Committee, weaknesses and potential improvement and continuous where the best ideas were chosen based on implementa- improvement opportunities. tion feasibility, global outreach, and impact. The use of re- cycled graywater to water green areas in facilities and re- • Within the context of the implementation and compliance using fire-safe clothing to make EPP bags were the ideas with the Stop Work Policy, during 2019, 7 Environmen- selected. Both ideas were implemented during 2019. tal Stop Works were registered, mainly to fauna during pruning activities. • Communication with contracting companies was fluent during 2019. Twelve meetings were held throughout the • In compliance with the PCB project, in 2019, 5 contami- year, to communicate Enel’s environmental guidelines nated underground transformers were removed from the and reinforce operational controls. Additionally, two work- distribution network. These devices were disposed by an shops were held: one focused on Good Environmental authorized company. Practices, and an Environmental Emergency Drill. • In order to ensure compliance with current environmen- • A pilot project to Replace Urban Woodland was launched tal standards, an annual follow-up program was imple- in October. The main goal of the project is to harmonize mented to monitor environmental variables: the distribution network with the existing urban wood- - Noise management plan: to ensure that our facilities terrupted electricity supply. In the Quinta Normal district, comply with noise regulations, power substations 17 diseased trees were removed and replaced by 21 new located in urban areas are inspected annually. During native trees that add aesthetic value to the site. land, protect the distribution network and ensure unin- 2019, the zoning map of these installations was updat- 20. Environment 149 150 Enel Chile Annual Report 201921. INNOVATION CULTURE IN THE COMPANY 21. Innovation culture in the Company 151 Innovation culture in the Company For Enel Generación Chile, innovation is a differentiating fac- tor that provides a competitive advantage in the electricity generation market. Therefore, the Company aspires to maintain and improve its leadership position in this area, working in a systematic, organized, and cross-disciplinary way, in alignment with the Company’s strategic plan. • Best Practices: Performance Improvement, Environment, and Health & Safety • Innovative Ideas: Performance Improvement, Environ- ment, and Health & Safety The winners and their ideas are the following: Best Practices category: • Luis Durand, winner of the “Environment” category with the proposal “Catalyzed CO2 as a controlled pH agent in cooling towers”. • Cristián Valenzuela, winner of the “Performance Improve- ment” category with the proposal “Database to compare flowmeters” Innovation category: During 2019, the Company, through its subsidiary Enel Gen- category with the innovative idea “Combustion System Op- • José Sanchez, winner of the “Performance Improvement” eración Chile, continued to promote an innovation culture, cli- timization” mate, and practice, working towards materializing this culture through the development of projects that add value to the or- • Rafael Gajardo, winner of the “Health&Safety” category ganization. To achieve this goal, the internal climate of the Com- with the innovative idea “Condenser Continuous cleaning” pany must foster innovation and materialize such innovation as greater competitiveness and efficient processes. The following Winning ideas later participated in the worldwide competition. activities were carried out during 2018 to strengthen the inno- vation culture and promote employees’ creativity Capturing Ideas Open innovation - Boot Camp In order to capture ideas, we have a systematized process in place year-round. The method is based on the collaborative participation of the entire workforce of all Group companies, allowing us to capture everybody’s ideas to innovate and im- prove in different areas. To encourage the participation of all collaborators, the initia- tive was presented in every company in the country, inviting workers to submit their ideas in the categories “Innovation” and “Continuous Improvement”. They were categorized as fol- During 2019, in collaboration with the Chilean Innovation Hub, we encouraged several local startups and senior innovation managers to participated in Boot Camp, which sets forth our open innovation philosophy, an important pillar of our inno- vation policy. This philosophy is based on Professor Henry Chesbrough’s ideas (UCLA, Berkeley), and is one of the cur- rent global mega-trends in terms of innovation because it cap- tures the creativity of people within the organization. It culti- vates creativity through the implementation of events such as Boot Camps and Workshops to apply methodologies and systematize challenges. lows: 152 Enel Chile Annual Report 2019Innovation projects Innovation projects developed in Chile for hydroelectric and thermal generation power plants were selected based on criteria that aims to improve processes, increase safety and environmental standards, and optimize electricity generation operations. The main innovation projects developed during 2019 are presented below. Virtual visit Virtual visit is a videoconference system able to retransmit in situ, developed to reduce the time required to select suppliers. A Virtual visit is similar to a videoconference, allowing to re-trans- mit a video in the workspace and include explanations of em- ployees. A coordinator facilitates the visit and communicates it to the Sup- ply Department, plant personnel, and suppliers. This innovative idea was created in 2018 and tested throughout 2019, presenting many benefits in terms of saving time, costs, and reducing CO2 emissions due to less transportation and travel. It was developed by the Chilean start-up Erikusa Robotics and received awards in the 2019 Enel Days and was also recog- nized by Procurement Global as one of the best initiatives. This innovative telepresence technique was submitted, in 2019, to in- tense testing to expand its use to more than six countries. The formal escalation process in Europe began with over 30 visits held in Enel España during the second semester of the year. Digital Twins lates real work conditions in a safe environment. It was de- veloped by the startup Qtec that has modelled over 40,000 square meters using drones. This advanced technology was highlighted at the Enel Days in Rome. It replicates operational environments using Virtual Reality, capable of representing reality in 3D, allowing to interact with third parties in real time via avatars, and with objects and variables in real time by connecting to the databases of our control systems. Submarine Robotics This is a project based on Open Hardware that unfolded during 2019, and provided significant benefits in terms of reducing risks, costs, and time. It allowed us to switch from preventive submarine filter maintenance to predictive maintenance. Its open platform has enabled it to become the hardware base of a project to be carried out jointly by Spain and Chile to improve Artificial Intelligence and Machine Learning capabilities. This project will be carried out in 2020 to improve its operational and adaptational capabilities for its potential global application. Autonomous boats for ba- thymetry Tests were performed in different locations to evaluate its au- tonomy, operation, information quality and process. They were tested on two ships (different chassis), Maule Pehuenche intake; Sauzal reservoir; Rapel Dam; Currillinque discharge channel; Polcura intake and Sauzal desander channel. Drones The development of a solution for photovoltaic inspections providing automated data and reports. Autonomous drones (do not need to be operated by a person) were installed in 40 MW Chañares Solar Plant, located in northern Chile. d n a n o i t a l u g e r y r t s u d n I . 6 1 n o i t a r e p o m e t s y s y t i c i r t c e l e s r o t c a f k s i R 7. 1 y c n e r a p s n a r t d n a s c i h t E . 8 1 y t i l i b a n i a t s u S . 9 1 t n e m n o r i v n E . 0 2 e h t n i e r u t l u c n o i t a v o n n I y n a p m o C Digital Twins, 4d Risk Map is an initiative based on the Serious Drone operations training was carried out in collaboration with O&M, to certify operators through DGA. 8 pilots were certi- . 1 2 Games and Virtual Reality concept that reduce the time and fied. risks associated to worker’s induction processes and simu- 21. Innovation culture in the Company 153 154 Enel Chile Annual Report 201922. OWNERSHIP SHARE TABLE 22. Ownership share table 155 Direct and indirect ownership shares 156 Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r Business Controlling shareholding Economic Interest Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Gx Dx Dx Dx Tx Tx Ox Ox Ox Ox 93.55% 92.65% 99.99% 100.00% 100.00% 100.00% 84.59% 51.00% 100.00% 60.91% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.09% 100.00% 100.00% 100.00% 50.00% 100.00% 33.33% 25.00% 57.50% 93.55% 86.67% 99.99% 99.99% 99.99% 99.99% 84.58% 51.00% 99.99% 60.91% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.09% 99.09% 99.09% 99.09% 46.77% 100.00% 31.18% 25.00% 57.50% Company Enel Generación Chile S.A. Empresa Eléctrica Pehuenche S.A. Enel Green Power Chile Ltda. Empresa Eléctrica Panguipulli S.A. Diego de Almagro Matriz SpA Parque Eólico Tal Tal SpA Geotérmica del Norte S.A . Empresa Nacional de Geotermia S.A . Parque Eólico Valle de los Vientos SpA Parque Talinay Oriente S.A . Almeyda Solar SpA Enel Green Power del Sur SpA Parque Solar Maipú ABC Solar 2 SPA ABC Solar 10 SPA MNS Solar Tres SPA Parronal SPA Crucero Atacama SpA Crucero Este Uno SpA Crucero Este Dos SpA Crucero Este tres SpA Enel Distribución Chile S.A. Luz Andes Ltda. Empresa Eléctrica de Colina Ltda. Empresa de Transmisión Chena S.A. Transmisora Eléctrica de Quillota Ltda. Enel X Chile Spa GNL Chile S.A. Energía Marina SpA Sociedad Agrícola de Cameros Ltda. Gx: Generation Dx: Distribution Tx: Transmission/Commercialization Ox: Gas pipeline, others 22. Ownership share table 157 Enel Chile organization structure ENEL CHILE S.A. 99.99% 57.50% 93.55% 100.00% ENEL Green Power Chile Ltda. Soc. Agrícola de Cameros Ltda. ENEL Generación Chile S.A. ENEL X Chile SpA 0.01% Parque Eólico Valle de los Vientos S.A. 99.99% 84.59% Geotérmica del Norte S.A. 0.01% Parque Eólico Taltal SpA 99.99% 51.00% Empresa Nacional de Geotermia S.A. 0.04% Empresa Eléctrica Panguipulli S.A. 99.96% 60.91% Parque Eólico Talinay Oriente S.A. 100.00% Luz Andes Ltda. 50.00% Transquillota Ltda. 100.00% Diego de Almagro Matriz SpA 25.00% Energía Marina SpA 0.00042% Enel Green Power del Sur SpA 99.99% 100.00% Almeyda Solar SpA 100.00% 100.00% 99.99% 0.001% 100.00% 100.00% 100.00% Parronal SpA Crucero Atacama SpA Parque Solar Maipú SpA ABC Solar Dos SpA ABC Solar 10 SpA MSN Solar Tres SpA 100.00% 100.00% 100.00% Crucero Este Uno SpA Crucero Este Dos SpA Crucero Este Tres SpA 158 99.09% ENEL Distribución Chile S.A. 99.99% 99.90% 0.0002% Empresa Eléctrica de Colina Ltda. 0.10% Empresa de Transmisión Chena S.A. 92.65% Pehuenche S.A. 33.33% GNL Chile S.A. 100.00% Gasoducto Atacama Argentina S.A. Argentine branch 0.08% ENEL Argentina S.A. Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 99.09% ENEL Distribución Chile S.A. 99.99% 99.90% 0.0002% Empresa Eléctrica de Colina Ltda. 0.10% Empresa de Transmisión Chena S.A. 93.55% 100.00% ENEL Generación Chile S.A. ENEL X Chile SpA 92.65% Pehuenche S.A. 33.33% GNL Chile S.A. 0.04% Empresa Eléctrica 99.96% Panguipulli S.A. 60.91% Parque Eólico Talinay Oriente S.A. 100.00% Luz Andes Ltda. 50.00% Transquillota Ltda. 100.00% Gasoducto Atacama Argentina S.A. Argentine branch 0.08% ENEL Argentina S.A. 22. Ownership share table 159 ENEL CHILE S.A. 99.99% 57.50% ENEL Green Power Chile Ltda. Soc. Agrícola de Cameros Ltda. 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 SpA 51.00% Empresa Nacional de Geotermia S.A. 100.00% Diego de Almagro Matriz SpA 25.00% Energía Marina SpA 0.00042% Enel Green Power 99.99% 100.00% del Sur SpA Almeyda Solar SpA 100.00% 100.00% 99.99% 0.001% 100.00% 100.00% 100.00% Parronal SpA Crucero Atacama SpA Parque Solar Maipú SpA ABC Solar Dos SpA ABC Solar 10 SpA MSN Solar Tres SpA 100.00% 100.00% 100.00% Crucero Este Uno SpA Crucero Este Dos SpA Crucero Este Tres SpA 160 Enel Chile Annual Report 201923. IDENTIFICATION OF SUBSIDIARIES AND ASSOCIATE COMPANIES 23. Identification of subsidiaries and associate companies 161 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 Álvarez de Araya Sanhueza Ingrid Morales Ávila Manuel Larraín García María Cristina Auad Faccuse Cristián Guadi Imbarack Dagach Alternate Directors Fernando Morey Sampaio Solange Zincke Cavalieri José Hernández Flores Jorge Geldres Reyes Samy 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. Percent of Enel Chile´s assets: 0.07% Taxpayer ID 96,800,570-7 Address 76 Santa Rosa Ave., 8th floor Santiago, Chile Telephone (56 2) 2675 2000 Taxpayer ID 91,081,000-6 Address 76 Santa Rosa Ave. 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) (until 04.26.2019) Monica Hodor (until 04.26.2019) Edoardo Marcenaro (since 04.26.2019) Alessandra Billia Hernán Felipe Errázuriz Correa Claudia Bobadilla Ferrer (since 04.26.2019) Mauro Di Carlo (since 04.26.2019) Main Executives Ramón Castañeda Ponce Chief Executive Officer 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 set in UF. (iii) Centralized Cash Management Contract (iv) Administration services provided by Enel Chile. Price: monthly amount set in UF. Percent of Enel Chile´s assets: 18.64% 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) María Soledad Arellano Schmidt (since 04.26.2019) Fabrizio Barderi (since 04.26.2019) Julio Pellegrini Vial (since 04.26.2019) Cristiano Bussi (since 04.26.2019) Luca Noviello (until 04.26.2019) Antonio Scala (until 04.26.2019) Hernán Cheyre Valenzuela (until 04.26.2019) Francesco Giorgianni (until 04.26.2019) Main Executives Valter Moro (until 09.30.2019) Chief Executive Officer Michele Siciliano (CEO since 10.01.2019 and Development and Regulation Officer (interim) since 10.02.2019) Raúl Arteaga Errázuriz Luis Ignacio Quiñones Sotomayor Bernardo Canales Fuenzalida Humberto Espejo Paluz Luis Vergara Adamides (until 12.01.2019) Claudio Órdenes Tirado Juan Alejandro Candia (until 06.30.2019) Carlo Carvallo Artigas (until 12.01.2019) María Paulina Guglielmi Espósito (since 12.01.2019) Viviana Meneses Robledo (since 07.01.2019) Carlos Iván Peña Garay (since 12.01.2019) Business Relations (i)Service contract provided by Enel Chile: Procurement services; Materials Purchasing; Contracting of works, services, and consultancies. Price: Directly proportional to 162 Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 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 set in UF. (iii) Service contract provided by Enel Chile: Accounting services. Price: Monthly amount set 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) Centralized Cash Management Contract with Enel Chile (vi) Administration services provided by Enel Chile. Percent of Enel Chile´s assets: 45.65% CHENA Name Empresa de Transmisión Chena S.A Type of Company Privately held corporation Taxpayer ID 76,722,488-5 Address 76 Santa Rosa Ave. 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 Ramón Castañeda Ponce Daniel Gómez Sagner Francisco Messen Rebolledo Senior Executives Víctor Hugo Balbontín 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. Percent of Enel Chile´s assets: 0.02% GASATACAMA CHILE* Name GasAtacama Chile S.A. Type of Company Privately held corporation Taxpayer ID 78,932,860-9 Address 76 Santa Rosa St., Santiago, Chile Corporate Purpose The company has the following purpose: a) develop the generation, transmission, purchase, distribution and commercialization of electricity or energy of any other source; b) purchase, extract, operate, process, distribute, commercialize and sell solid, liquid and gas 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 Carlo Cavallo Pablo Arnés Poggi Humberto Espejo Paluz Senior Executives Valter Moro Chief Executive Officer Business Relations with Enel Chile S.A. Communications, human resource management, and capital management service contract provided by Enel Chile S.A. Price: monthly amount expressed in UF. * The Company was dissolved on October 1, 2019 and absorbed by Enel Generación Chile. Enel Generación purchased the entire shareholding held by Enel Chile S.A. in GasAtacama Chile through a purchase agreement executed as a public deed by notary public Ivan Torrealba Acevedo dated September 16, 2019. GASODUCTO ATACAMA ARGENTINA - Sucursal Argentina* Name Gasoducto Atacama Argentina S.A. Type of Company Privately held corporation Taxpayer ID 78,952,420-3 Address 76 Santa Rosa St, Santiago, Chile Corporate Purpose The transportation of natural gas, either by itself, through or jointly with a third party, in Chile or abroad, including the construction, location and operation of gas pipelines and other operations directly or indirectly related to this objective. This 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$) 126,309,044 Directors Raúl Arteaga Errázuriz Pablo Arnés Poggi Alex Díaz Sanzana Senior Executives Valter Moro Chief Executive Officer Business Relations with Enel Chile S.A. The company has no business relationships with Enel Chile. The dissolution of the company was effective on September 1, 2019, executed as a public deed by notary public Ivan Torrealba Acevedo dated September 5, 2019 and was absorbed by GasAtacama Chile. Enel Generación Chile transferred its entire shareholding in Gasoducto Atacama Argentina to Gastacama Chile through a purchase agreement executed as a public deed by notary public Ivan Torrealba Acevedo dated August 21, 2019. Consequently, Gas Atacama Argentina was wholly owned by GasArtacama Chile, absorbed by GasAtacama Chile and finally dissolved. 23. Identification of subsidiaries and associate companies 163 GNL CHILE PEHUENCHE TRANSQUILLOTA Name Gasoducto Atacama Argentina S.A. Name Empresa Eléctrica Pehuenche S.A. Name Transmisora Eléctrica de Quillota Ltda. Type of Company Publicly held Limited Liability Stock Corporation, registered in the SVS Corporations Registry under number 293. Type of Company Limited liability Company Taxpayer ID 77,017,930-0 Address Route 60, km 25, Lo Venecia, Quillota, V Region of Valparaíso, Chile Corporate Purpose Transportation, distribution, and supply of electricity, either by itself or through a third party. Core Business Electricity transmission Subscribed and Paid Capital (ThCh$) 4,404,446 Representatives Pedro de la Sotta Sánchez (Enel) Joint Manager (Commercialization Chile) Sergio Ávila Arancibia (Enel) Joint Manager (Tech 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. Percent of Enel Chile´s assets: 0.08% Taxpayer ID 96,504,980-0 Address 76 Santa Rosa Ave., 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$) 175,774,920 Board of Directors Raúl Arteaga Errázuriz Ignacio Quiñones Sotomayor Paula Riveros Pérez (until 06.19.2019) Fernando Vallejos Reyes Juan Candia Narváez (until 06.20.2019) Viviana Meneses Robledo (since 06.28.2019) Luis Bolvarán Capetillo (since 07.26.2019) Senior Executives Carlo Carvallo Artigas Chief Executive Officer Claudio Toledo Freitas Chief Financial Officer Vicente Villaseca Villalobos Assistant Business Manager Business Relations with Enel Chile S.A. Communications, human resource management, capital management and legal services contract, among others provided by Enel Chile S.A. Price: monthly amount expressed in UF. Operation and maintenance services contract with Enel Generación Chile. Percent of Enel Chile´s assets: 2.72% Type of Company Privately held corporation Taxpayer ID 78,952,420-3 Address 76 Santa Rosa St, Santiago, Chile Corporate Purpose The transportation of natural gas, either by itself, through or jointly with a third party, in Chile or abroad, including the construction, location and operation of gas pipelines and other operations directly or indirectly related to this objective. This company has incorporated an agency in Argentina under the name of Gasoducto Cuenca Noroeste Limitada Sucursal Argentina whose purpose is the construction of a gas pipeline between Cornejo, a town in the province of Salta, and the Argentina-Chile border in the vicinity of Paso de Jama in Chile’s Second Region. Core Business Gas transportation Subscribed and Paid Capital (ThCh$) 126,309,044 Directors Raúl Arteaga Errázuriz Pablo Arnés 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. The dissolution of the company was effective on September 1, 2019, executed as a public deed by notary public Ivan Torrealba Acevedo dated September 5, 2019 and was absorbed by GasAtacama Chile. Enel Generación Chile transferred its entire shareholding in Gasoducto Atacama Argentina to Gastacama Chile through a purchase agreement executed as a public deed by notary public Ivan Torrealba Acevedo dated August 21, 2019. Consequently, Gas Atacama Argentina was wholly owned by GasArtacama Chile, absorbed by GasAtacama Chile and finally dissolved. 164 Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r Subscribed and Paid Capital (US$) 842,086,000.00 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 Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Senior executives James Lee Stancampiano CEO and/or Sole Administrator 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 Energía 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 management support services, regulatory analysis services, and energy management services. Enel Geen Power Chile also provides Enel Generación Chile S.A. business development services and operating and maintenance services of Canela wind farm. 8. A trade account management contract with Geotérmica del Norte S.A. Percent of Enel Chile´s assets: 10.46% LUZ ANDES* EMPRESA ELÉCTRICA DE COLINA Name Luz Andes Limitada Name Empresa Eléctrica de Colina Ltda. Type of Company Limited Liability Company Type of Company Limited Liability Company Taxpayer ID 96,800,460-3 Address 76 Santa Rosa Ave. Santiago, Chile Telephone N° (56 2) 263752260 Taxpayer ID 96,783,910-8 Address 31 Chacabuco St., Colina Santiago, Chile Telephone (56 2) 2844 4280 Subscribed and Paid Capital (ThCh$) 1,224 Subscribed and Paid Capital (ThCh$) 82,222 Corporate Purpose Distribution and sale of electricity, and sale of household, sports, entertainment and computer appliances. Corporate Purpose Distribution and sale of electricity, and sale of household, sports, entertainment and computer appliances. Core Business Electricity distribution Joint Administration Claudio Inzunza Díaz Rodrigo Vicente Arévalo Cid Senior Executives Claudio Inzunza Díaz Chief Executive Officer 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 on average price of consumed materials. (ii) Service contract provided by Enel Chile: Internal audit and compliance services. Price: UF amount per hour that Enel Chile’ staff dedicates to contracted services. (iii) Administration service contract provided by Enel Chile. Percent of Enel Chile´s assets: 0.07% *The company was dissolved as of December 31, 2019. 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 on 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. Percent of Enel Chile´s assets: 0.18% 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. Telephone (56 2) 2630 9000 23. Identification of subsidiaries and associate companies 165 ALMEYDA SOLAR SpA ENEL GREEN POWER DEL SUR SpA EMPRESA ELÉCTRICA PANGUIPULLI S.A. Name Almeyda Solar SpA. Type of Company Joint Stock Company Taxpayer ID 76,321,458-3 Name Enel Green Power del Sur SpA Name Empresa Eléctrica Panguipulli S.A. Type of Company Joint Stock Company Taxpayer ID 76,412,562-2 Type of Company Privately held corporation Taxpayer ID 96,524,140-k Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 3,500,000 Subscribed and Paid Capital (US$) 355,605,313 Subscribed and Paid Capital (US$) 48,038,937.00 Corporate Purpose Generation, distribution and commercialization of solar energy or any other non-conventional renewable energy. Corporate Purpose Generation, distribution and commercialization of wind energy or any other non-conventional renewable energy. Core Business Photovoltaic solar energy generation. Core Business NCRE powered electricity generation. 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. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Core Business Electricity generation and distribution and investment in generation assets Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Administration Conducted by a Board of Directors, as stated by the Corporations Law. Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Business Relations 1. A contract with Enel Chile S.A. for treasury Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies are 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 management support services, regulatory analysis services, and energy management services. or trade accounts management. The transactions among both companies are 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 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. Percent of Enel Chile´s assets: 0.63% Percent of Enel Chile´s assets: 11.74% Board of Directors Ali Shakhtur Said (Chairman) James Lee Stancampiano Jaime Toledo Alternate Directors Alejandra Bermudez Barreda Juan Candia Narváez Adrien Coudurier Senior Executives James Lee Stancampiano 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 Chile S.A. to provide management support services, regulatory analysis services, energy management services and operation and maintenance of the company´s Pullinque and Pilmaiquén power plants. 166 Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 5. A contract for technical support provided by GEOTÉRMICA DEL NORTE S.A. PARQUE EÓLICO TALTAL SpA Enel Green Power SpA. Percent of Enel Chile´s assets: 3.57% EMPRESA NACIONAL DE GEOTERMIA S.A. Name Geotérmica del Norte S.A. Type of Company Privately held corporation Name Empresa Nacional de Geotermia S.A. Taxpayer ID 96,971,330-6 Name Parque Eólico Taltal SpA Type of Company Joint Stock Company Taxpayer ID 76,179,024-2 Type of Company Privately held corporation Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Taxpayer ID 99,577,350-3 Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Address 76 Santa Rosa Ave., Santiago. Subscribed and Paid Capital (US$) 488,236,221.33 Subscribed and Paid Capital (US$) 8,199,805.00 Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 23,268,985.70 Corporate Purpose Research and exploration of geothermal generation by performing studies, measurements, and other research projects to identify geothermal resources. Core Business Exploration of geothermal resources. Administration Conducted by a Board of Directors, as stated by the Corporations Law. Board of Directors Valter Moro Ali Shakhtur Said Carlos Alberto Reyes Comandari Rodrigo Lobos Roldán Alternate Directors Anna Paola Minervini 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. Percent of Enel Chile´s assets: 0.03% 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 Conducted by a Board of Directors, as stated by the Corporations Law. Board of Directors Walter Moro (Chairman) Ali Shakhtur Said Pedro Echeverría Faz Giuseppe Di Bello 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 services, technical inspection of 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. Percent of Enel Chile´s assets: 5.23% Corporate Purpose Construction, operation, and maintenance of wind farm generation projects. Core Business Wind power generation Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies are 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. Percent of Enel Chile´s assets: 1.49% 23. Identification of subsidiaries and associate companies 167 PARQUE TALINAY ORIENTE S.A. DIEGO DE ALMAGRO MATRIZ SpA Name Parque Talinay Oriente S.A. Type of Company Privately held corporation Taxpayer ID 76,126,507-5 Name Diego de Almagro Matriz SpA Type of Company Joint Stock Company Taxpayer ID 76,306,985-0 Address 76 Santa Rosa Ave., Santiago Address 76 Santa Rosa Ave., Santiago Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Subscribed and Paid Capital (US$) 140,502,351.12 Subscribed and Paid Capital (US$) 665,000 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. Administration Conducted by Empresa Eléctrica Panguipulli S.A. as the only administrator, according to provisions of the company bylaws Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator 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). Percent of Enel Chile´s assets: 0.00% Corporate Purpose Planning, development and exploitation of wind power projects. Core Business Wind power generation. Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator 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. Percent of Enel Chile´s assets: 2.14% PARQUE EÓLICO VALLE DE LOS VIENTOS SpA Name Parque Eólico Valle de los Vientos SpA Type of Company Privately held corporation Taxpayer ID 76,052,206-6 Address 76 Santa Rosa Ave., Santiago. 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 non-conventional renewable energy. Core Business Wind power generation Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Business Relations 1. A contract with Enel Chile S.A. for treasury or trade accounts management. The transactions among both companies are 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. Percent of Enel Chile´s assets: 1.13% 168 Enel Chile Annual Report 2019ABC SOLAR 2 SpA ABC SOLAR 10 SpA MSN SOLAR TRES SpA Name ABC Solar 2 SpA Type of Company Joint Stock Company Taxpayer ID 76,336,638-3 Name ABC Solar 10 SpA Type of Company Joint Stock Company Taxpayer ID 76,336,669-3 Name MNS Solar Tres SpA Type of Company Joint Stock Company Taxpayer ID 76,349,123-4 Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 1,000,000 Subscribed and Paid Capital (Ch$) 1,000,000 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. Corporate Purpose Research, development, construction, operation and maintenance of renewable energy electricity generation facilities. Core Business Development of renewable electricity generation projects. Core Business Development of renewable electricity generation projects. Core Business Development of renewable electricity generation projects. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Business Relations The company has no commercial relationship with Enel Chile. Business Relations The company has no commercial relationship with Enel Chile. Business Relations The company has no commercial relationship with Enel Chile. Percent of Enel Chile´s assets: 0.00% Percent of Enel Chile´s assets: 0.00% Percent of Enel Chile´s assets: 0.00% e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 23. Identification of subsidiaries and associate companies 169 PARQUE SOLAR MAIPÚ SpA PARRONAL SPA ENEL X SpA Name Parque Solar Maipú SpA Type of Company Joint Stock Company Taxpayer ID 76,052,135-3 Name Parronal SpA Type of Company Joint Stock Company Taxpayer ID 76,499,496-5 Name ENEL X CHILE SpA Type of Company Joint Stock Company Taxpayer ID 76,924,079-9 Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., Santiago. Address 76 Santa Rosa Ave., 5th Floor, Santiago. Telephone (56 2) 2630 9000 Telephone (56 2) 2630 9000 Subscribed and Paid Capital (Ch$) 264,208,742 Subscribed and Paid Capital (Ch$) 1,000,000 Corporate Purpose Generation, distribution, and commercialization of wind power or any other non-conventional renewable energy, and research, development, construction, operation and maintenance of solar electricity generation projects. 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 solar electricity generation projects. Core Business Development of wind power generation projects. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Chief Executive Officer and/or Sole Administrator James Lee Stancampiano Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Senior Executives James Lee Stancampiano Chief Executive Officer and/or Sole Administrator Business Relations The company has no commercial relationship with Enel Chile. Business Relations The company has no commercial relationship with Enel Chile. Percent of Enel Chile´s assets: 0.00% Percent of Enel Chile´s assets: 0.00% Corporate Purpose The purpose of the company is to develop, implement, and commercialize innovative, state-of-the-art technology products and services related to energy in Chile. To fulfill its purpose, the company may directly or through third parties, associations, collaboration agreements and/or any other form of cooperation, implement the following activities: a) The purchase, sale, rent, import, export, manufacture or production, collection, consignation, representation, intermediation, commercialization, distributed generation, replenishment, energy consumption management and efficiency control, reparation and maintenance of all type of goods or merchandise related to energy, home, and/or company, environment, transport, security, sports, recreation, technology, computer science, communications, including telematics, information technology, home automation, and multimedia and interactive services. b) Install networks (electricity, water, gas, optic fiber, urban heating, telecommunications) c) Provide urban services in the territory (lighting, environmental monitoring systems) d) Design, build, maintain, and manage plants, production and sale of all types of equipment. f) e) Promote and develop electric mobility, investigate, design, promote, build, develop, test, produce, commercialize, manage, and maintain all types of equipment, installations and services. Investigate, design, promote, develop, and commercialize products and services, innovative processes and solutions, including digital, destined towards improving operational performance, optimizing industrial, technological and commercial processes and innovative solutions. g) Design, advise, and assist, as well as investigate and develop initiatives to create, maintain, and raise asset value. Provide, directly or through third parties, all services related directly or indirectly with the aforementioned activities and products, to all natural and legal persons. In addition to its main corporate purpose, the Company may invest in: 170 Enel Chile Annual Report 2019 Firstly, acquisition, exploitation, construction, rental, administration, intermediation, commercialization, and disinvestments in all types of movable and immovable assets. Secondly, all types of financial assets, including stock, bonds and debentures, trade bills, and in general, all types of securities and contributions to companies. Core Business Commercialize electric goods and services. Subscribed and Paid Capital (ThCh$) 3,800,000 Administration Conducted by a sole administrator and/or Chief Executive officer, as established by the bylaws. Senior Executives Karla Zapata Oballe Chief Executive Officer and/or Sole Administrator 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 set in UF. Percent of Enel Chile´s assets: 1.31% e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 23. Identification of subsidiaries and associate companies 171 172 Enel Chile Annual Report 201924. SIGNIFICANT EVENTS 24. Significant Events 173 2019 Consolidated significant events as of December 31, 2019 In accordance with articles 9 and 10, second paragraph, The agreement is subject to the condition precedent under Chilean Securities Law 18,045, and as established un- that the Power Transfer Regulation between generation der Chilean General Norm 30 of the Superintendence, the companies enters into full effect. The Power Transfer Reg- following significant events are informed, which are available ulation establishes, among others things, the essential in English and Spanish through our communication channels: conditions that ensure a non-discriminatory treatment Enel Chile S.A. • The Ordinary Shareholders Meeting held April 29, 2019, agreed to distribute a minimum mandatory dividend (from which the interim dividend paid in January 2019 is deducted) and an additional dividend amounting a total of Ch$217,025,962,471, equivalent to Ch$3.137730 per share. Since the aforementioned interim dividend N°6 has al- ready been paid, the Company will proceed to distribute and pay the remaining of the definitive dividend N°7 amounting a total of Ch$185,737,591,809, equivalent to Ch$2.685367 per share. • On June 4, 2019, the following was informed as a significant event. Enel Generación Chile S.A. (“Enel Generación”) and GasAtacama Chile S.A. (“GasAtaca- ma”), both controlled by Enel Chile S.A. (“Enel Chile”, or the “Company”), signed an agreement, in line with the Group’s sustainability strategy and strategic plan in Chile, with the Energy Ministry that defined the procedure re- garding the progressive closure of the coal-fired plants Tarapacá, Bocamina 1 and Bocamina 2, the first located in Iquique and the second and third in Coronel, with an installed gross capacity of 158 MW, 128 MW, and 350 MW, respectively (hereafter, “Tarapacá”, “Bocamina 1”, “Bocamina 2” respectively), hereafter the “Agreement”. 174 between the different generators, and defines the Stra- tegic Reserve State (“ERE” in its Spanish acronym).In accordance with the Agreement, GasAtacama and Enel Generación would be formally and irrevocably required to disconnect Tarapacá and Bocamina 1, respectively, from the National Electric System by May 31, 2020, and De- cember 23, 2023, respectively. Regarding Bocamina 2, Enel Generación aims at its early retirement by Decem- ber 31, 2040. All the above mentioned is subject to autho- rizations, as established in the Ley General de Servicios Eléctricos. Therefore, Enel Generación and GasAtacama will record an impairment loss related to the Bocamina 1 and Tara- pacá plants, which will affect Enel Generación's net profit for 2019, and consequently, have an impact on Enel Chile, amounting to approximately US$ 270 million. Regarding Bocamina 2, the financial effects will depend on the factors that affect the behavior of the energy sec- tor, such as the price of fuels, hydrology, growth of elec- tricity demand, and international inflation rates, among others, which are impossible to determine at this time. Considering the importance of this Agreement with re- gard to the fulfillment of commitments established to face the effects of climate change, and in line with the re- newable energy growth plan, Enel Chile will take all nec- essary measures so that the impairment does not impact the dividends for the 2019 announced by the Company to investors in its strategic plan released to the market in November 2018. Enel Chile Annual Report 2019 e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r • On July 31, 2019, the following was informed as a signifi- Consequently, a copy of the updated version of the cant event. The Board of Directors, in its meeting held on Related Party Transactions Policy, as approved by the July 30, 2019, unanimously agreed to update the Com- Board of Directors of Enel Chile S.A., is attached to this pany’s Related Party Transactions Policy, which had been letter, and is also available on the Company’s website, approved by the Board of Directors in the meeting held www.enel.cl, and at its main office. on March 23, 2016. Media Relations Investor Relations T +39 06 8305 5699 ufficiostampa@enel.com T +39 06 8305 7975 investor.relations@enel.com enel.com enel.com ENEL TO INCREASE ITS STAKE IN ENEL CHILE BY UP TO 3% • Enel has entered into two share swap transactions with a financial institution to increase its shareholding in Enel Chile from the current 61.9% stake Rome, December 5th, 2019 – Enel S.p.A. (“Enel”) has entered into two share swap transactions (the “Swap Transactions”) with a financial institution to increase its shareholding in its listed Chilean subsidiary Enel Chile S.A. (“Enel Chile”) by up to 3% from the current 61.9% stake. Pursuant to the Swap Transactions, Enel may acquire, on dates that are expected to occur no later than the fourth quarter of 2020: • up to 1,763,747,209 shares of Enel Chile’s common stock; and • up to 6,224,990 of Enel Chile’s American Depositary Shares (“ADSs”), each representing 50 shares of Enel Chile’s common stock. The above-mentioned shares of Enel Chile’s common stock and ADSs represent up to 3.0% of the company’s entire share capital. The number of shares of Enel Chile’s common stock and Enel Chile’s ADSs actually acquired by Enel, pursuant to the Swap Transactions, will depend on the ability of the financial institution to establish its hedge positions with respect to the Swap Transactions. The amount payable for any shares of Enel Chile’s common stock acquired will be based on the prices at which the financial institution establishes its hedge with respect to the corresponding Swap Transaction. The amount payable for any of Enel Chile’s ADSs acquired will be based on the volume-weighted average prices of Enel Chile’s ADSs during the period in which the financial institution establishes its hedge with respect to the corresponding Swap Transaction. Prior to settlement, Enel will not have any right to dispose of or vote any shares of Enel Chile’s common stock or Enel Chile’s ADSs acquired or held by the financial institution as a hedge in connection with the corresponding Swap Transaction. Enel’s payment obligations under the Swap Transactions will be funded through internal cash flow generation. These transactions are in line with the Enel Group’s 2020-2022 Strategic Plan announced to the markets, which foresees the buyout of minorities in South America. 24. Significant Events 1 175 Enel SpA – Registered Office: 00198 Rome – Italy - Viale Regina Margherita 137 – Companies Register of Rome and Tax I.D. 00811720580 - R.E.A. 756032 – VAT Code 00934061003 – Stock Capital Euro 10,166,679,946 fully paid-in. RELATED-PARTY TRANSACTIONS POLICY Enel Chile S.A. The Related-party transactions policy approved by the Board of Directors as set forth in Article 147, letter b), under Law N°18,046, is the following: 1. Related-party transactions include financial transactions with related parties such as trade account transactions and/or financial loans. 2. Related-party transactions include financial transactions or financial intermediation carried out by the Company with related-party such as fixed-income and equity, purchase and sale of currencies, derivatives, swaps, pacts, term deposits, overdraft lines, credits documented with promissory notes, letters of credit, guarantee slips, standby letters of credit, forward contracts, hedges, options and futures, operations related to banking accounts, money market trade and short term financial investments of the Company or other usual cash management operations. 3. Related-party transactions include related-party transactions associated to IT services, infrastructure services, data center, microcomputers, software and hardware, and data management in general. 4. Related-party transactions include related-party transactions relative to administration, top management or professional, financial management, corporate services and other similar management services comprising among others accounting, financial reporting, fixed assets, sales and purchases ledger, treasury and banks, taxation advisory, legal counsel, communications, human resources and organization, investor relations, public relations, compliance, general services, asset management insurance, procurement, comptroller and internal audit, and crime prevention management. 5. Related-party transactions include acquisition or disposal operations of shareholding, subsidiaries or affiliates of the Company, or other companies in which has participation directly or indirectly, signed with related-companies, in order to proceed with corporate restructuration or asset relocation, which do not exceed 10% the shareholding of the entity in which the transaction is completed, nor exceed the equivalent of US$ 200 million. 176 Enel Chile Annual Report 2019 e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r • On November 25, 2019, the following was informed as Chagres” (hereafter the “Agreement”) by virtue of which a significant event. Today, the Board of Directors of Enel it has been agreed to anticipate the termination date of Chile has approved the Strategic Plan of the Company for the contracts to February 20, 2020, and the payment to the 2020 – 2022 period. Enel Gneración of the respective exit compensation, in accordance with both provisions of the contracts and the The macro elements included in this Strategic Plan for aforementioned Agreement. the 2020 – 2022 three-year period have an estimated ac- cumulated EBITDA of approximately US$ 5.3 billion, and As of this date, it is impossible to quantify the financial an estimated accumulated CAPEX of approximately US$ effects of the early termination of the contracts on the 2.5 billion. results of Enel Generación. The financial effects will de- pend on factors that affect the behavior of the electricity Considering that contents of the Strategic Plan are based market, such as the price of fuels, the hydrological condi- on projections of hypotheses that may or may not be tions, growth of demand and international inflation rates, verified in the future, their effects are not determinable at among others, that as of this date are impossible to de- this date. termine. • On November 26, 2019, the following was informed as • On April 26, 2019, the Ordinary Shareholders Meeting a significant event. The Board of Directors of Enel Chile agreed to distribute a definitive dividend equal to 60% unanimously agreed to distribute an interim dividend of (sixty percent) of the Net Income as of December 31, Ch$ 0.447231118704613 per share, attributable to 2019, 2018, equivalent to Ch$ 11.4115037985 per share, to be to be paid on January 31, 2020. This amount corresponds paid on May 17, 2019. to 15% of Net Income as of September 30, 2019, deter- mined by the Company’s Income Statement as of that The shareholders who are registered by May 11, 2019 in date. the Shareholders’ Registry will be entitled to receive this • On December 5, 2019, the following was informed as a dividend. significant event. In a Press Release issued on the same • On April 26, 2019, the Extraordinary Shareholders’ date by the parent Company, Enel SpA, the Italian compa- Meeting of Enel Generación S.A. (“Enel Generación”, or ny informs the market that it has entered into two agree- the “Company”) was held, and the shareholders of Enel ments with a financial institution to increase its share- Generación decided to approve the changes to the by- holding in Enel Chile S.A. (“Enel Chile”) by up to 3%, in laws of Enel Generación in order to delete the articles addition to its current stake of 61.9%. More details can referring to the Directors’ Committee, articles 22, 23, 25, be found in the attached copy. 26, 27, 28 and 29. It also approved restating the text of the bylaws of Enel Generación to include these changes. Enel Generación Chile S.A. • On April 24, 2019, regarding the power and electricity purchase and sale contracts informed through a signifi- cant event issued on May 5, 2016, Anglo American Sur S.A. (“AngloAmerican”) and Enel Generación Chile S.A. (“Enel Generación”) have signed an Agreement called “Payment of Compensation for Exit Clause, Settlement and Transaction for Contracts for the Purchase and Sale of Power and Electricity for Los Bronces, El Soldado and • At the Ordinary Shareholders’ Meeting of Enel Generación S.A., held on April 26, 2019, the following individuals were elected to the new Board of Directors of the company for a three-year period: - - - Giuseppe Conti Fabrizio Barderi Cristiano Bussi - Maria Soledad Arellano Schmidt - Julio Pellegrini Vial 24. Significant Events 177 • At the Ordinary Board of Directors meeting of Enel Given the importance the Agreement represents, the Generación S.A., held on April 26, 2019, after the Ordi- Company will take all necessary measures so that the nary Shareholders’ Meeting, Mr. Guiseppe Conti was impairment does not impact the dividends announced for elected as Chairman of the Board of Directors, and Mr. 2019 which would have resulted if the impairment had Ignacio Quiñones Sotomayor was elected Secretary to not been applied. the Board of Directors. • On August 29, 2019, the Board of Directors of Enel Gen- • On June 4, 2019, Enel Generación Chile S.A. (“Enel eración Chile S.A. (the “Company”) agreed on the related Generación” or the "Company") and GasAtacama Chile party transaction consisting of buying and acquiring the S.A. (“GasAtacama”) signed an agreement, in line with 2.63% ownership stake of GasAtacama Chile S.A. held its sustainability strategy and strategic plan, with the by Enel Chile S.A. As a result, Enel Generación Chile S.A. Ministry of Energy that defined the procedure regarding became the owner of 100% of the shares in GasAtacama the progressive retirement of the coal-fired plants Tara- Chile S.A., absorbing it through a merger. pacá, Bocamina 1 and Bocamina 2, the first located in the Iquique district and the second and third in the Coronel The purpose of the operation is to reorganize and simpli- district, with a gross installed capacity of 158 MW, 128 fy the corporate structure of entities that comprise the MW, and 350 MW, respectively (hereafter, “Tarapacá”, GasAtacama Group and all Company subsidiaries, which “Bocamina 1”, “Bocamina 2” respectively), hereafter the would generate corporate and operational efficiencies “Agreement”. for the Company. The proposed merger does not have a significant economic-financial effect on the results The agreement is subject to the condition precedent that and financial situation of the Company, considering the the Power Transfer Regulation between generation com- shareholding that the Company already has in the afore- panies enters into full effect, establishing, among others, mentioned subsidiary, but will have a positive effect in op- the essential conditions that ensure a non-discriminatory erational and corporate terms by simplifying the current treatment between the different generators, and define organizational structure. the Strategic Reserve State (“ERE” in its Spanish acro- nym). In accordance with the Agreement, GasAtacama • Related to Official Letter 27748, dated September 3, 2019, and Enel Generación would be formally and irrevocably I hereby inform you that the amount involved in the acqui- required to disconnect Tarapacá and Bocamina 1 from the sition of 2.63% of the shares of GasAtacama Chile S.A., National Electricity System by no later than May 31, 2020, in Chilean pesos according to the value of the UF (Unidad and December 23, 2023, respectively. Regarding Bocami- de Fomento) at the closing date, is US$ $20,197,404 us- na 2, the goal of Enel Generación is its early retirement by ing the Observed Dollar price on August 29, 2019, equiv- December 31, 2040. All the above mentioned is subject alent to US$ 1,886.55 per share. The estimated deadline to authorizations, as established in the Ley General de to carry out the mentioned acquisition will be towards Servicios Eléctricos. the middle of this month. The merger would take place on October 1, 2019. Subsequent to this date, the proce- Therefore, Enel Generación and GasAtacama will re- dures to publish the extract and the cancellation of the cord an impairment loss related to the Bocamina 1 and absorbed company in the Registry of Commerce of San- Tarapacá plants, which will affect net profit for 2019 in tiago would be formalized. approximately US$ 290 million. • On September 26, 2019, the Board of Directors acknowl- Regarding Bocamina 2, the financial effects will depend edged the resignation of Mr. Valter Moro to the position on the factors that affect the behavior of the energy sec- of Chief Executive Officer of Enel Generación, to be ef- tor, such as the price of fuels, hydrological conditions, fective on October 1, 2019. In his place, the Board unan- growth of electricity demand, and international inflation imously appointed Mr. Michele Siciliano, the Company's rates, among others. To this date, they are impossible to current Thermal Generation Chile Manager, as the new determine. Chief Executive Officer of Enel Generación Chile S.A., as of October 1, 2019. 178 Enel Chile Annual Report 2019 e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r • In its session held on November 26, 2019, the Board of • The Ordinary Shareholders’ Meeting held on April 26, Directors of Enel Generación Chile S.A. approved the 2019, agreed on the distribution of a Definitive Dividend Strategic Plan for the 2020 – 2022 period. amounting to Ch$ 21.16692221 per share for 2018 to be The macro elements included in this Strategic Plan for Shareholders’ Registry 5 business days prior to the date paid on May 17, 2019, to shareholders registered in the the 2020 – 2022 three-year period have an estimated ac- stated. cumulated EBITDA of approximately US$ 3.1 billion, and an accumulated CAPEX of approximately US$ 358 mil- • In the Board of Directors meeting held on April 29, 2019, lion. Edoardo Marcenaro was appointed Chairman of the Considering that the contents of the Strategic Plan is Board. based on projections of hypotheses that may or may not • The Board of Directors of Enel Distribución Chile S.A., in be verified in the future, their effects are not determin- its meeting held on November 26, 2019, approved the able at this date. Company’s 2020–2022 Industrial Plan. • In its session held on November 26, 2019, the Board of The macro elements included in this Industrial Plan for Directors of Enel Generación Chile S.A. agreed to dis- the 2020 – 2022 three-year period have an estimated tribute an interim dividend for an amount equivalent to accumulated EBITDA of approximately US$ 1.036 billion, 15% (fifteen percent) of Net Income as of September 30, and an accumulated CAPEX of approximately US$ 448 2019, equivalent to Ch$ 2.3584352417 per share, to be million. paid on January 24, 2020. The shareholders that are registered in the Shareholders’ based on projections of hypotheses that may or may not Registry as of January 18, 2020, will be entitled to re- be verified in the future, its effects are not determinable ceive this dividend. at this date. Considering that the contents of the Industrial Plan is The expected payment date is January 24, 2020. • On November 26, 2019, form 1 was sent with informa- Enel Distribución Chile S.A. • At the Ordinary Shareholders’ Meeting, held on April 26, 2019, the following individuals were elected to the new Board of Directors of the company for a three-year period: - Mr. Edoardo Marcenaro - Ms. Alessandra Billia - Ms. Claudia Bobadilla Ferrer - Mr. Mauro Di Carlo - Mr.Hernán Felipe Errázuriz Correa tion regarding the interim dividend N. 38 for year 2019, including amount and payment date, approved by the Board on November 26, 2019. The amount is equivalent to 15% of net income of Enel Distribución Chile as of September 30, 2019, determined by the Income State- ment of the Company on that date, equal to equivalent to Ch$11.2183765447 per share. This dividend will be paid starting on January 24, 2020, to all shareholders registered in the Shareholders Registry by midnight 5 business days prior the date stated. 24. Significant Events 179 180 Enel Chile Annual Report 201925. STATEMENT OF RESPONSIBILITY 25. Statement of responsibility 181 182 Enel Chile Annual Report 2019e l b a t e r a h s p h s r e n w O i . 2 2 f o n o i t a c i f i t n e d I . 3 2 e t a i c o s s a d n a s e i r a i d i s b u s s e i n a p m o c s t n e v E t n a c i f i n g S i . 4 2 f o t n e m e t a t S . 5 2 y t i l i b i s n o p s e r 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 30, issued by the Superinten- dence 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 25. Statement of responsibility 183 Key executives CHIEF EXECUTIVE OFFICER Paolo Pallotti Telephone (56) 22847 4988 MANAGEMENT, FINANCE AND CONTROL OFFICER Giuseppe Turchiarelli Telephone (56) 22675 2019 PEOPLE AND ORGANIZATION OFFICER Liliana Schnaidt Telephone (56) 22353 4686 INTERNAL AUDIT OFFICER Eugenio Belinchon Telephone (56) 22353 4635 GENERAL COUNSEL AND SECRETARY TO THE BOARD Domingo Valdés Telephone (56) 2 2630 9227 Investor Relations INVESTOR RELATIONS MANAGER Isabela Klemes Telephone (56) 2 2630 9606 CITIBANK NY Teresa Loureiro-Stein Telephone (1-212) 816 6814 Design & Production: LEADERS enel.cl-enelchile.cl 

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