Effective liberalization: an investor's perspective

Matteo CodazziCountry Manager and CEO ENEL Romania

“Sectorul eniergei electrice” Bucharest – 2007, 5 June

Use: public

May, 2007 2Effective liberalization: an investor's perspective

One of the leading players in Europe

Generation capacity (GW) Customers (mn) EBITDA (€bn)

1. FY_05

2. Include Energy Only

Source: company reports. Data refer to 2006 unless otherwise stated.

(1) (1)

(1)

1

(2)

(2)

(1)

(1)

(1)

(1) ()2

Enel aims to be the most efficient, market driven, quality focused provider of power and gas, creating value for customers,

shareholders and people

Enel aims to be the most efficient, market driven, quality focused provider of power and gas, creating value for customers,

shareholders and people

12

13

14

33

46

48

51

52

54

131

30

British Energy

EDP

CEZ

Iberdrola

Vattenfall

RWE

Endesa

Enel

Suez

Eon

EDF

10

11

11

19

23

23

30

34

40

40

14

EDP

Vattenfall

Gas Natural

GDF

Iberdrola

Endesa

Centrica

RWE

Enel

EDF

EON

2

3

4

5

5

7

7

8

11

14

5

CEZ

Centrica

Iberdrola

Suez

Vattenfall

GDF

Endesa

RWE

Enel

EON

EDF

Use: public

May, 2007 3Effective liberalization: an investor's perspective

Romaniaa core investment in Enel’s Portfolio

Early Entrant inElectricity Distribution & Sales

• came at the time of initial setting of the regulatory framework

• 2005: acquired majority of Electrica Banat & Electrica Dobrogea

• 2006 tender award of Electrica Muntenia Sud

Substantial Position to Sustain Investments

• 2.5 million customers, 110.000 km of network, 5.500 employees *

• 380 mil euro of investments in Banat and Dobrogea to improve network in

the next five years

• Bringing new technology (Telecontrol, Digital Meter, etc.)

Ready to Invest in Generation

• Renewables

• Nuclear

• Conversions to coal

• Lignite

Enel is a long-term industrial partner with a clear investment strategy for Romania

Enel is a long-term industrial partner with a clear investment strategy for Romania

* including EMS

Use: public

May, 2007 4Effective liberalization: an investor's perspective

History and Development of the Company

1992-19991962-1992 2002-20061999-2002

Nationalization of approximately 1,250 private power companies

Enel established in December 1962 as a state-owned entity with the aim of providing low cost electricity to support the development of the country

Monopoly regime

Acquisition of Electra de Viesgo (Spain), several independent gas distributors (Italy) and renewables power plant (North, Central and South America)

Disposal of generation (Elettrogen and Eurogen) and distribution companies

Focus on core business

Divesting of no-core business (Real Estate, TLC)

Organization into Divisions and Business Areas

Disposal of generation (Interpower) and distribution companies

Terna IPO (current share ownership is less than 5%)

IPO of 4th tranche Enel

Push on International expansion with acquisitions in Bulgaria, Romania, Slovakia

Transformation into a joint stock company

Bersani Decree (from a highly regulated market to a liberalized one)

Unbundling: creation of separate subsidiary companies

and dispatching activities spin-off (GRTN)

IPO (31.74%)

Diversification

Investing in TLC (Wind)

Monopoly Privatization Liberalization Internationalization

Use: public

May, 2007 5Effective liberalization: an investor's perspective

Evolution of main generator’s market share

3577

22

20 (*)

32

90

83

37

21

92

93

50

France

Belgium

Italy

Spain

Germany

UK1996

2005

+10+10

-1-1

-3-3

-9-9

-13-13

-42-42

Italy is the Country where the main

operator recorded the biggest decrease.

In many other Countries the

incumbent remains substantially stable or even increases its

market share

(*) 2004 data (British Energy)

1996-2005 (data in %)

Use: public

May, 2007 6Effective liberalization: an investor's perspective

Sixth market in Europe as regional market

114.9Germany

116.7France

78.5UK

79.5Italy

66.1Spain

52

Installed capacity (GW)

South-EastEurope

Albania

Macedonia

Bosnia

Croatia

Bulgaria

Romania

Greece

Serbia

Installed capacity (GW)

A regional market of significant

size made up of small and

highly interconnecte

d national markets

1.7

1.4

3.7

3.8

8.7

9.5

12.9

10

556

482

343.3

330

252

Total internal demand (TWh)

221

Germany

France

UK

Italy

Spain

South-EastEurope

Albania

Macedonia

Bosnia

Croatia

Bulgaria

Romania

Greece

Serbia

Internal demand (TWh)

6

8

11

16

32

41

52

52

2005

Use: public

May, 2007 7Effective liberalization: an investor's perspective

• Regulatory framework fully in line with EU

• Retail competition well on its way, but…

• …Wholesale competition to be promoted by bringing liquidity to the market

• Investments in Generation required to balance fuel mix, improve cost competitiveness and decrease dependancy on specific fuel sources.

• Security of Supply – further develop interconnection and transport capacity

• Strategically located on a regional basis

Romania as a EU CountryElectricity Industry Outlook

Romania has the potential to become an energy hub for the region

Romania has the potential to become an energy hub for the region