Alfredo Ergas CFO - .ENERGY AND POWER PURCHASES - Pass Through of auction prices - Purchases through

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  • Alfredo ErgasCFO

  • Who are we?

    What are we facing today?

    What do you think we should do in the future?

    What we are really doing and what we are committed to.

    What is our regulatory framework?

  • Total Customers: 11.9 millionTotal Sales: 61,610 GWh Total Assets: US$B 12,177

    Colombia

    Customers 2.2 MillionSales 11,441 GWhMarket Share 23%

    Peru

    Customers 1 MillionSales 5,201 GWhMarket Share 23%

    Chile

    Customers 1.5 MillionSales 12,923GWhMarket Share 44%

    Argentina

    Customers 2.2 MillionSales 15,833 GWhMarket Share 17%

    Brazil

    Customers 2.7 MillionSales 7,227 GWhMarket Share 6%

    Customers 2.4 MillionSales 8,985 GWh

    As of December 2007

    Leading Distribution Company in South America

  • Total Capacity: 13,707 MWTotal Sales: 62,567 GWh Total Assets: US$B 10,842

    ChileCapacity 4,779 MWProduction 18,773 GWhHydro 13,179 GWhThermo 5,591 GWh

    Market Share 37%

    ArgentinaCapacity 3,644 MWProduction 12,117 GWhHydro 3,696 GWhThermo 8,421 GWhMarket Share 15%

    BrazilCapacity 987 MWProduction 3,954 GWhHydro 3,888 GWhThermo 66 GWh

    Market Share 1%

    PeruCapacity 1,468 MWProduction 7,654 GWhHydro 4,385 GWhThermo 3,270 GWh

    Market Share 28%

    ColombiaCapacity 2,829 MWProduction 11,942 GWhHydro 11,427 GWhThermo 515 GWh

    Market Share 21%

    Leading Generation Company in South America

    As of December 2007

  • ENDESA SPAIN

    ChileanPensionFunds

    ADRHolders

    Other

    Gx

    Other Inst. Investors

    61%

    18%

    9%

    9%

    4%

    Who are we?

    99%

    60%

    Dx

  • Operating Income

    Millions Ch$

    11%

    2007 Results

    1,131,631

    1,255,567

    1,060,000

    1,080,000

    1,100,000

    1,120,000

    1,140,000

    1,160,000

    1,180,000

    1,200,000

    1,220,000

    1,240,000

    1,260,000

    1,280,000

    2006 2007

  • 2007 Results

    Millions Ch$

    Non-Operating Income

    27.3%

    Effect BT64 year 2006

    Effect BT64 year 2007

    Gas Atacama provision

    (439,029)

    (558,859)(600,000)

    (500,000)

    (400,000)

    (300,000)

    (200,000)

    (100,000)

    -2006 2007

  • Millions Ch$

    Net Income and Homogeneous Terms

    13.3%

    38.7%307.122

    166.287

    Net Income, as of December 2007

    188,376

    -

    50,000

    100,000

    150,000

    200,000

    250,000

    300,000

    2006 2007

  • Fin. Debt / Equity

    EBITDA / Fin. Expenses

    2005 2006 2007

    135%

    3.3 4.8

    128% 116%

    4.0

    ENERSIS

    Fin. Debt / EBITDA 3.0 2.02.5

    Financial Results

    Source: Enersis

  • (*) As of December 31st, 2007

    2003US$ 4,475

    millionShare: $ 86

    2004US$ 5,557

    millionShare: $ 94

    2005US$ 7,177

    millionShare: $ 111

    2006US$ 10,448

    millionShare: $ 170

    2007US$ 10,504

    millionShare: $ 160

    CAGR*: 17%

    Strong Profits for our Shareholders

    Apr 30, 2008US$ 12,243

    millionShare: Ch$ 173

  • Positive Perception of Rating Agencies

    Date: 07-03-2007Date: 07-05-2007 Date: 12-14-2006

    BBB-

    BBB

    Ba1

    Baa3

    BBB-

    BBB AA- AA-

    A+A+

    Date: 07-06-2007 Date: 07-20-2007

    Domestic MarketInternational Market

    DUE TO A OF GROWTH INCREASING SCENARIO, GREATER FINANCIAL FLEXIBILITY AND FEWER REGULATORY UNCERTANTIES

  • Who are we?

    What are we facing today?

    What do you think we should do in the future?

    What we are really doing and what are we committed to.

    What is our regulatory framework?

  • Generation Distribution & Supply

    Transmission End User

    PRICE REGULATION

    Long term contracting w/ distribution companies for regulated customers

    Free bilateral contracting with eligible customers

    Short-term markets covering variable cost

    Regulated operation of distribution networks

    Guaranteed access where suppliers exist (Colombia)

    Prices based on investment and capital costs plus recovery of energy costs

    Guaranteed access at regulated prices, based on investment and capital costs

    Investor selection through competitive bidding

    New project definition through technical studies

  • DISTRIBUTION AND SUPPLY BUSINESS

    Wholesale energy costs

    Supply costsInvestment

    and O&M costs

    Competitive bidding for long term contracts

    Stabilized spot price

    Competitive bidding for long term contracts

    Competitive bidding for long term contracts

    Competitive bidding for long term contracts and spot price

    Optimal NRV and O&M costs for a model company

    Under

    Optimal NRV and O&M costs for a model company

    O&M model company, depreciation costs, amortized NRV

    NRV at regulated infrastructure prices, O&M costs

    Included in distribution

    Included in distribution

    Included in distribution

    Included in distribution

    Optimal customer administration costs

    Wholesale Energy Costs

    Supply CostsInvestment

    and O&M Costs

    Competitive bidding for long-term contracts

    Stabilized spot price

    Competitive bidding for long-term contracts

    Competitive bidding for long-term contracts

    Competitive bidding for long-term contracts and spot price

    Optimal NRV and O&M costs for a model company

    Under review

    Optimal NRV and O&M costs for a model company

    O&M model company, depreciation costs, amortized NRV

    NRV at regulated infrastructure prices, O&M costs

    Included in distribution

    Included in distribution

    Included in distribution

    Included in distribution

    Optimal customer administration costs

  • ENERGY AND POWER PURCHASES

    - Pass Through of auction prices

    - Purchases through spot market or through public auctions.Pass through:

    - Weighted average cost of own purchase prices and market prices for the last 12 months.

    - Energy purchases at bidding process for the regulated customers demand. Distributor may include free customers demand in the regulated auctions

    Auction prices are passed on to final tariffs at close to +/-3% band of.

    - Energy purchases at bidding processes for the regulated customers demand. For the free customers demand, bilateral contracting or auctions- Pass Through of auction prices

    2. Energy: Average marginal cost of energy.3. Power: Costs of reserve and ancillary services.

    - all the distributors needs are covered together. Pass-Through

    Energy and Power Purchases

    Colombia

    Brasil

    Argentina

    Chile

    Per

    - Energy and power purchases made at seasonal price- Pass Through to final tariffs at seasonal prices.

    Seasonal Price:1. Calculated every 3 months with a 3-year operation simulation.

    - Pass Through of auction prices

    - Purchases through spot market or through public auctions.Pass through:

    - Weighted average cost of own purchase prices and market prices

    - Energy purchases at bidding process for the regulated customerscustomers demand in the regulated auctions

    -3% band of real demand.

    - Energy purchases at bidding processes for the regulated customers demand. For the free customers demand, bilateral contracting or auctions- Pass Through of auction prices

    2. Energy: Average marginal cost of energy.3. Power: Costs of reserve and ancillary services.

    - Energy purchases through auctions organized by ANEEL in whichPass-Through

    Energy and Power Purchases

    Colombia

    Brazil

    Argentina

    Chile

    Peru

    - Energy and power purchases made at - Pass Through to final tariffs .

    Seasonal Price:

  • REGULATORY AND POLITICAL STRUCTURE

    End User Tariff =

    Generation + Transmission + VAD

    Distribution Added Value (VAD) =

    Optimal [NRV @ 10% + O&M costs]

    GENERATION

    TRANSMISSION DISTRIBUTION

    End User Tariff =

    Generation + Transmission + VAD

    Distribution Added Value (VAD) =

    Optimal [NRV @ 10% + O&M costs]

    GENERATION

    TRANSMISSION DISTRIBUTION

  • Who are we?

    What are we facing today?

    What do you think we should do in the future?

    What we are really doing and what we are committed to.

    What is our regulatory framework?

  • Price of oil is US$62/barrel

    Average natural gas coming from Argentina: 16 million cubic meters daily

    Good hydrology

    Reservoirs at normal levels

    US dollar exchange rate of $532.4

    2.9% Inflation

    2006 2007

    Energy Scenario

    2007 2008

    Price of oil is US$91/barrel

    Average natural gas coming from Argentina: 7 million cubic meters daily

    Low hydrology

    Reservoirs at low levels

    US dollar exchange rate of $489.9

    7.8% Inflation

    Price of oil is US$116/barrel

    Average natural gas coming from Argentina: 8 million of cubic meters daily

    Low hydrology

    Reservoirs at low levels

    US dollar exchange rate of $437.7

    8.1% Inflation

  • GDP Forecasts*

    * Latin American Consensus Forecasts, March 2008

    What we can expect in terms of demand?

    4.2%

    6.9% 7.0%

    4.6%

    5.4%

    4.7%4.4%