Enel Chile S.A. Annual Report 2019

FY2019 Annual Report · Enel Chile S.A.

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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”

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

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.

Enel Chile Annual Report 2019electricity 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

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

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

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 .

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

• 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 .

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 .

Enel Chile Annual Report 2019V

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

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 .

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 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 .

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.

Enel Chile Annual Report 2019JULY

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.

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

Enel Chile Annual Report 201904.

MAIN FINANCIAL
AND OPERATIONAL
METRICS

4. Main financial and operational metrics

Main financial and
operational metrics

Enel Chile Annual Report 2019d
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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

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

Enel Chile Annual Report 201905.

IDENTIFICATION
OF THE
COMPANY

05. Identification of the Company

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

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

Enel Chile Annual Report 2019Public, 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

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,

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

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-

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.

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05. Identification of the Company

Enel Chile Annual Report 201906.

OWNERSHIP
AND CONTROL

06. Ownership and control

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%

69,166,557,220

Enel Chile Annual Report 2019Controlling
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.

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06. Ownership and control

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

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.

Enel Chile Annual Report 2019d
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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

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

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

-0.0012

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

Enel Chile Annual Report 201907.

MANAGEMENT

07. Management

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

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

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Board of Directors

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

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.

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 2019Board 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

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

30,919,415

361,278,792

154,597,073

24,085,253

72,255,758

9,562,391

28,687,173

Variable
Compensation
(2)

TOTAL 2019

206,350,346

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

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

332,540,174

121,931,397

66,527,362

26,525,616

Variable
Compensation

TOTAL 2018

181,788,628

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.

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07. Management

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

Ownership in Enel
Chile S.A.

As of December 31, 2019, according to the shareholder’s

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.

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-

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07. Management

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

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.

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07. Management

Chairman
Herman Chadwick Piñera

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)

Enel Chile Annual Report 2019Key executives

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

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07. Management

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.

Enel Chile Annual Report 2019
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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

Enel Chile Annual Report 201908.

PEOPLE AND
ORGANIZATION

08. People and organization

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

434

616

210

705

1,969

154

Total

475

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

Enel Chile Annual Report 2019Diversity

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

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Enel Chile

453

475

Enel Chile

165

172

107

475

Enel Chile

106

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

Enel Chile

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

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.

Enel Chile Annual Report 2019Activities 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.

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08. People and organization

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

Enel Chile Annual Report 2019

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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

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.

Enel Chile Annual Report 2019
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08. People and organization

Enel Chile Annual Report 201909.

STOCK MARKET
TRANSACTIONS

09. Stock market transactions

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

Enel Chile Annual Report 2019Chilean 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

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09. Stock market transactions

New York Stock
Exchange (NYSE)

Enel Chile shares began trading on the New York Stock Exchange (NYSE) on April 27, 2016. One ADS (American 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

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%

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09. Stock market transactions

Enel Chile Annual Report 201910.

INVESTOR
RELATIONS

10. Investor relations

Investor relations

Enel Chile Annual Report 2019Enel 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

Contact Information
E-mail: ir.enelchile@enel.com
Telephone Number: +56 2 2630 9606

Communication channels:

Website: https://www.enel.cl/

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10. Investor relations

Enel Chile Annual Report 201911.

DIVIDENDS

11. Dividends

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.

Enel Chile Annual Report 2019s
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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

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,

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

2017

2018

2019

11. Dividends

Enel Chile Annual Report 201912.

INVESTMENT AND
FINANCING POLICY

12. Investment and financing policy

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:

In its subsidiaries that operate in the electricity sector, in-

vestments required for the fulfillment of their respective

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:

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);

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12. Investment and financing policy

Enel Chile Annual Report 201913.

HISTORY OF THE
COMPANY

13. History of the Company

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.

Enel Chile Annual Report 2019In 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.

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13. History of the Company

Enel Chile Annual Report 201914.

BUSINESS OF
THE COMPANY

14. Business of the Company

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.

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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

Pehuenche

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.

Enel Green Power del Sur SpA

Empresa Eléctrica Paguipulli S.A.

Enel Green Power del Sur SpA

Almeyda Solar SpA

Enel Green Power del Sur SpA

Technology

Hydroelectric

Fuel/Natural Gas

Coal

Fuel/Natural Gas

Hydroelectric

Wind

Fuel/Natural Gas

Coal

Diesel /Natural Gas

Wind

Geothermal

Hydroelectric

Solar

2018
18

2019(3)
18

376

106

136

449

319

689

240

478

379

388

257

568

466

158

732

112

376

106

136

449

319

689

240

476

379

388

257

568

466

732

112

160

7,463

160

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

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

Enel Chile Annual Report 2019generation 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.

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14. Business of the Company

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%).

Enel Chile Annual Report 2019The 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.

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14. Business of the Company

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%.

Enel Chile Annual Report 2019Distribution 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.

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14. Business of the Company

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.

Enel Chile Annual Report 2019Electric 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.

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14. Business of the Company

Enel Chile Annual Report 201915.

STRATEGY,
INVESTMENTS
AND FINANCIAL
ACTIVITIES

15. Strategy, investments and financial activities

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

Enel Chile Annual Report 2019Our 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

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

9.2
GW

23%

73%
Renewable

Hydroelectric Solar Geothermal Wind Thermal

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15. Strategy, investments and financial activities

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

Enel Chile Annual Report 2019
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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

2019

300

2018

301

2017

266

(1) CAPEX figures represent cash payments each year, except for future
projections.

15. Strategy, investments and financial activities

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

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.

Enel Chile Annual Report 2019s
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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

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.

Enel Chile Annual Report 2019Enel 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.

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15. Strategy, investments and financial activities

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.

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.

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15. Strategy, investments and financial activities

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%.

Enel Chile Annual Report 2019

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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

Enel Chile Annual Report 201916.

INDUSTRY REGULATION
AND ELECTRICITY SYSTEM
OPERATION

16. Industry regulation and electricity system operation

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

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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 2019d
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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.

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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

the Ministry of Economy, Development and

Reconstruction (the restated DFL 1/ 1982) published in

2006, and its amendments.

106

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•

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 201917.

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 2019The 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

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,

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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

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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 2019department, 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.

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1
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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 2019Financial 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.

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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 2019d
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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 2019the 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

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to an annual “green tax” based on greenhouse gas emissions

energy is interrupted for more than the standard permitted

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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 2019Political 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

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crisis, such as the one brought by the COVID-19 virus, which

and relationships with employees and customers. Ultimately,

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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 2019The 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,

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the rest of the country. These actions have become

of control clauses for material mergers and divestures, and

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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 2019Chilean 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

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network infrastructure, but also on communications among the

penalties, third party claims, repair costs, increased insurance

1
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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 201918.

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

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

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empowerment, and resources required to properly execute his

compliance program and strengthening the corporate culture

1
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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
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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 201919.

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

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 2019d
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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

3%3%

2.0
US$ bn

1.9
US$ bn

27%

40%

10%

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

Indicator

% Renewable installed capacity

Specific emissions reduction gCO2/Kwheq

7, 11

Demand response MW

% 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

227

61.8

Results

2018

192

N/A

100

276,934

258,929

357

221

2017

238

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 2019Value 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

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%

Results

2018

100%

2017

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

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%

481

Results

2018

22%

n/a

360

2017

21%

86%

N/A

256

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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

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

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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
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included in the Company’s risk matrix.

Enel Chile’s materiality matrix7

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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

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19. Sustainability

143

144

Enel Chile Annual Report 201920.

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.

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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.

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•

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 201921.

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 2019Innovation
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.

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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 201922.

OWNERSHIP
SHARE TABLE

22. Ownership share table

155

Direct and indirect
ownership shares

156

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Business

Controlling
shareholding

Economic
Interest

93.55%

92.65%

99.99%

100.00%

84.59%

51.00%

100.00%

60.91%

100.00%

99.09%

100.00%

50.00%

100.00%

33.33%

25.00%

57.50%

93.55%

86.67%

99.99%

84.58%

51.00%

99.99%

60.91%

99.99%

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%

99.99%

0.001%

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%

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.

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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%

99.99%

0.001%

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%

Crucero Este

Uno SpA

Crucero Este

Dos SpA

Crucero Este

Tres SpA

160

Enel Chile Annual Report 201923.

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

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

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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

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.

164

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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

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.

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.

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.

Core Business
Electricity generation and distribution and
investment in generation assets

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

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

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).

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.

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Enel Chile Annual Report 2019e
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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.

Taxpayer ID
99,577,350-3

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).

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

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).

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).

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 2019ABC 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.

Telephone
(56 2) 2630 9000

Subscribed and Paid Capital (Ch$)
1,000,000

Corporate Purpose
Research, development, construction,
operation and maintenance of renewable
energy electricity generation facilities.

Core Business
Development of renewable electricity
generation projects.

Administration
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
The company has no commercial relationship
with Enel Chile.

Percent of Enel Chile´s assets: 0.00%

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23. Identification of subsidiaries and associate companies

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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., 5th Floor, Santiago.

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.

Chief Executive Officer and/or Sole
Administrator
James Lee Stancampiano

Senior Executives
James Lee Stancampiano
Chief Executive Officer and/or Sole
Administrator

Business Relations
The company has no commercial relationship
with Enel Chile.

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.

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%

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Enel Chile Annual Report 201924.

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

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• 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 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

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

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• 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

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•

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 201925.

STATEMENT OF
RESPONSIBILITY

25. Statement of responsibility

181

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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