##### 



As filed with the Securities and Exchange Commission on
June 13, 2005








UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 20-F


|   |   |  |  |                                                                                                  
|-- | - |  |  | -------------------------------------------------------------------------------------------------
|   | o |  |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR(g)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|OR
|   | þ |  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934         
|   |   |  |  | For the Fiscal Year Ended: December 31, 2004                                                     
|OR
|   | o |  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934     

Commission file number: 1-14970


ENEL-Società per Azioni


(Exact name of registrant as specified in its charter)


ENEL S.p.A.


(Translation of registrants name into English)


Italy


(Jurisdiction of incorporation or organization)


Viale Regina Margherita 137, Rome, Italy


(Address of principal executive offices)





Securities registered or to be registered pursuant to
Section 12(b) of the Act.


|                                                                                |  |                                                        
|------------------------------------------------------------------------------- |  | -------------------------------------------------------
|Title of Each Class                                                             |  | Name of Each Exchange on Which Registered              
|                                                                                |  |                                                        
|American Depositary Shares
     Ordinary shares with a par value of
    1 each |  | New York Stock Exchange
     New York Stock Exchange(*)




Securities registered or to be registered pursuant to
Section 12(g) of the Act:


None


(Title of Class)





Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:


None


(Title of Class)







6,103,521,864 Ordinary Shares




þ o




o þ















---



##### 








TABLE OF CONTENTS









|                                                |  |                                                                          |     |  |     | 
|----------------------------------------------- |  | ------------------------------------------------------------------------ | --- |  | --- | 
|PRESENTATION
OF FINANCIAL AND OTHER INFORMATION |  |                                                                          | iii | 
|                                               
|GLOSSARY                                        |  |                                                                          | v   | 
|                                               
|PART I                                         
|ITEM 1.                                         |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
    AND ADVISORS                |     |  | 1   | 
|ITEM 2.                                         |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                  |     |  | 1   | 
|ITEM 3.                                         |  | KEY INFORMATION                                                          |     |  | 1   | 
|                                                |  | The Enel Group                                                           |     |  | 1   | 
|                                                |  | Selected Consolidated Financial Data                                     |     |  | 2   | 
|                                                |  | Exchange Rates                                                           |     |  | 5   | 
|                                                |  | Risk Factors                                                             |     |  | 5   | 
|                                                |  | Forward-Looking Statements                                               |     |  | 16  | 
|ITEM 4.                                         |  | INFORMATION ON THE COMPANY                                               |     |  | 16  | 
|                                                |  | History and Development of the Company                                   |     |  | 16  | 
|                                                |  | Business                                                                 |     |  | 18  | 
|                                                |  | Overview                                                                 |     |  | 18  | 
|                                                |  | Strategy                                                                 |     |  | 22  | 
|                                                |  | The Enel Group                                                           |     |  | 26  | 
|                                                |  | Italian
    Electricity Demand                                           |     |  | 26  | 
|                                                |  | Generation
    and Energy Management                                     |     |  | 26  | 
|                                                |  | Sales,
    Infrastructure and Networks                                   |     |  | 37  | 
|                                                |  | Transmission                                                             |     |  | 47  | 
|                                                |  | Telecommunications                                                       |     |  | 48  | 
|                                                |  | Services and
    Other Activities                                        |     |  | 53  | 
|                                                |  | Capital
    Investment Program                                           |     |  | 55  | 
|                                                |  | Regulatory Matters                                                       |     |  | 58  | 
|                                                |  | Overview of Regulation in the
    Energy Sector in Italy                 |     |  | 58  | 
|                                                |  | Electricity Regulation                                                   |     |  | 58  | 
|                                                |  | Gas Regulation                                                           |     |  | 70  | 
|                                                |  | Environmental Matters                                                    |     |  | 72  | 
|                                                |  | Telecommunications
    Regulation                                        |     |  | 79  | 
|                                                |  | Property, Plants and Equipment                                           |     |  | 81  | 
|ITEM 5.                                         |  | OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS                         |     |  | 81  | 
|                                                |  | Summary of Results                                                       |     |  | 81  | 
|                                                |  | The Electricity Market under the New
    Regulatory Framework            |     |  | 82  | 
|                                                |  | Outlook                                                                  |     |  | 89  | 
|                                                |  | Analysis of Operating Results                                            |     |  | 91  | 
|                                                |  | 2004 compared with 2003                                                  |     |  | 92  | 
|                                                |  | 2003 compared with 2002                                                  |     |  | 106 | 
|                                                |  | Inflation                                                                |     |  | 118 | 
|                                                |  | U.S. GAAP Reconciliation                                                 |     |  | 118 | 
|                                                |  | Liquidity and Capital Resources                                          |     |  | 124 | 
|                                                |  | Off-Balance Sheet Arrangements                                           |     |  | 129 | 
|                                                |  | Contractual Obligations and Commitments                                  |     |  | 130 | 
|                                                |  | Trend Information                                                        |     |  | 132 | 
|                                                |  | Process of Transition to International
    Financial Reporting Standards |     |  | 132 | 

i



---



##### 



TABLE OF CONTENTS  (Continued)


|          |  |                                                                                                                                     |  |  |     | 
|--------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|ITEM 6.   |  | DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES                                                                                      |  |  | 134 | 
|          |  | Directors                                                                                                                           |  |  | 134 | 
|          |  | Senior Management                                                                                                                   |  |  | 138 | 
|          |  | Board of Statutory Auditors                                                                                                         |  |  | 140 | 
|          |  | Executive Compensation                                                                                                              |  |  | 141 | 
|          |  | Share Ownership                                                                                                                     |  |  | 144 | 
|          |  | Employees                                                                                                                           |  |  | 144 | 
|          |  | Employee benefits                                                                                                                   |  |  | 146 | 
|ITEM 7.   |  | MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS                                                                               |  |  | 146 | 
|          |  | Major Shareholders                                                                                                                  |  |  | 146 | 
|          |  | Related Party Transactions                                                                                                          |  |  | 147 | 
|ITEM 8.   |  | FINANCIAL INFORMATION                                                                                                               |  |  | 148 | 
|          |  | Consolidated Financial Statements                                                                                                   |  |  | 148 | 
|          |  | Other Financial Information                                                                                                         |  |  | 148 | 
|          |  | Legal Proceedings                                                                                                                   |  |  | 148 | 
|          |  | Dividend Policy                                                                                                                     |  |  | 152 | 
|          |  | Significant Changes                                                                                                                 |  |  | 153 | 
|ITEM 9.   |  | THE OFFER AND LISTING                                                                                                               |  |  | 154 | 
|          |  | Markets and Price Range of ADSs and
    Ordinary Shares                                                                             |  |  | 154 | 
|ITEM 10.  |  | ADDITIONAL INFORMATION                                                                                                              |  |  | 155 | 
|          |  | Stock Option Plans                                                                                                                  |  |  | 155 | 
|          |  | By-Laws                                                                                                                             |  |  | 158 | 
|          |  | Significant Differences in Corporate
    Governance Practices for Purposes of Section 303A.11 of the
    NYSE Listed Company Manual |  |  | 171 | 
|          |  | Material Contracts                                                                                                                  |  |  | 175 | 
|          |  | Exchange Controls                                                                                                                   |  |  | 176 | 
|          |  | Taxation                                                                                                                            |  |  | 176 | 
|          |  | Documents On Display                                                                                                                |  |  | 180 | 
|ITEM 11.  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURE
    ABOUT MARKET RISK                                                                       |  |  | 181 | 
|ITEM 12.  |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES                                                                          |  |  | 185 | 
|         
|PART II  
|ITEM 13.  |  | DEFAULTS, DIVIDENDS AVERAGES AND
    DELINQUENCIES                                                                                  |  |  | 185 | 
|ITEM 14.  |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF
    SECURITY HOLDERS AND PROCEEDS                                                           |  |  | 185 | 
|ITEM 15.  |  | CONTROLS AND PROCEDURES                                                                                                             |  |  | 185 | 
|ITEM 16.  |  | [RESERVED]                                                                                                                          |  |  | 185 | 
|ITEM 16A. |  | AUDIT COMMITTEE FINANCIAL EXPERT                                                                                                    |  |  | 185 | 
|ITEM 16B. |  | CODE OF ETHICS                                                                                                                      |  |  | 186 | 
|ITEM 16C. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                              |  |  | 186 | 
|ITEM 16D. |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR
    AUDIT COMMITTEES                                                                      |  |  | 187 | 
|ITEM 16E. |  | PURCHASES OF EQUITY SECURITIES BY THE
    ISSUER AND AFFILIATED PURCHASERS                                                          |  |  | 187 | 
|PART III 
|ITEM 17.  |  | FINANCIAL STATEMENTS                                                                                                                |  |  | 187 | 
|ITEM 18.  |  | FINANCIAL STATEMENTS                                                                                                                |  |  | 188 | 
|ITEM 19.  |  | EXHIBITS                                                                                                                            |  |  | 189 | 



ii



---



##### 






PRESENTATION OF FINANCIAL AND OTHER INFORMATION


Consiglio Nazionale dei Dottori Commercialisti
e dei Ragioneri








| |   |                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | References to dollars, $ and
    U.S. dollars are to United States dollars;                                                                                                                                    
|
| |  | References to lire, lira or
    Lit. are to Italian lire; and                                                                                                                                                  
|
| |  | References to
     or
    euro are to the euro, the single currency
    established for participants in the third stage of the European
    Economic and Monetary Union, or EMU, commencing January 1,
    1999.




 




| |                                        
| | ---------------------------------------
| | Market share information and statistics



iii



---



##### 





| |            
| | -----------
| | Adjustments



iv



---



##### 






GLOSSARY








|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Antitrust Authority                    |  | The Italian Antitrust Authority.                                                                                                                                                                                                                                                                                                                                                                    
|                                      
|Average thermal efficiency             |  | A measure of the efficiency of a thermal generating plant in
    converting sources of energy such as fuel oil into electricity.
    Average thermal efficiency is expressed as the amount of
    electricity actually produced in kWh as a percentage of the kWh
    equivalent of the energy source consumed.                                                                                     
|                                      
|Bersani Decree                         |  | Legislative Decree No. 79 of March 16, 1999, aimed at
    liberalizing the Italian electricity market.                                                                                                                                                                                                                                                                                              
|                                      
|CIP 6                                  |  | Regulation 6/32 issued by Comitato Interministeriale
    Prezzi, an Italian governmental committee, which established
    incentives for new generation plants using renewable resources
    and for the sale of electricity produced from renewable
    resources.                                                                                                                                 
|                                      
|CO2                                    |  | Carbon dioxide.                                                                                                                                                                                                                                                                                                                                                                                     
|                                      
|Combined Cycle Gas Turbine (or CCGT) |  | A type of generating plant that produces electricity through
    both gas turbines and steam turbines. Conventional boilers or
    other generators recover and use the exhaust heat exiting from
    gas turbines.                                                                                                                                                                                 
|                                      
|Co-generation                          |  | The simultaneous generation of steam and electricity, typically
    where the need arises for industrial purposes.                                                                                                                                                                                                                                                                                  
|                                      
|Communications Authority               |  | The Italian Authority for the Guarantee of Communications.                                                                                                                                                                                                                                                                                                                                          
|                                      
|Decommissioning                        |  | The phase of declassification, decontamination and dismantling
    of nuclear power installations and clean up of the plant site
    with the aim of achieving: (i) the complete demolition of
    the nuclear power plant; (ii) the removal of any limitation
    due to the presence of radioactive material; and (iii) the
    restoration of the site for other activities.                     
|                                      
|Eligible Customer                      |  | Electricity customers in Italy who meet consumption thresholds
    that permit them to participate in the free market for
    electricity.                                                                                                                                                                                                                                                          
|                                      
|Emission trading rights                |  | Tradable emission permits that give the right to produce the
    equivalent of one metric ton of carbon dioxide. These permits
    can either be assigned through a national allowance plan,
    purchased on the market, or earned through investments in
    projects in developing countries (Certified Emission Reductions)
    or in transition economies countries (Emission Reduction Units).
|                                      
|Energy Authority                       |  | The Italian Authority for Electric Energy and Gas.                                                                                                                                                                                                                                                                                                                                                  
|                                      
|Environment Ministry                   |  | The Italian Ministry of the Environment.                                                                                                                                                                                                                                                                                                                                                            
|                                      
|Gencos                                 |  | The three generating companies we disposed of in order to comply
    with the Bersani Decree, Elettrogen S.p.A. (now Endesa Italia                                                                                                                                                                                                                                                                  

v



---



##### 



|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                           
|----------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                      |  | S.p.A.), Eurogen S.p.A. (now Edipower S.p.A.) and Interpower
    S.p.A. (now Tirreno Power S.p.A.).                                                                                                                                                                                                                                                                       
|                                                     
|Generating unit                                       |  | An electric generator together with the turbine or other device
    which drives it.                                                                                                                                                                                                                                                                                      
|                                                     
|Gestore della Rete                                    |  | The Gestore della Rete di Trasmissione Nazionale S.p.A., a
    company owned by the MEF that currently manages Italys
    national electricity transmission grid, and also owns the Single
    Buyer and the Market Operator (both as defined below).                                                                                                                    
|                                                     
|Gigawatt (GW)                                         |  | 1,000,000,000 watts (1,000 megawatts).                                                                                                                                                                                                                                                                                                                                    
|                                                     
|Gigawatt hour (GWh)                                   |  | One gigawatt of power supplied or demanded for one hour.                                                                                                                                                                                                                                                                                                                  
|                                                     
|GHG                                                   |  | Greenhouse gases, which are gases that contribute to
    the greenhouse effect, such as carbon dioxide, methane, nitrous
    oxide, chlorofluorocarbons and ozone.                                                                                                                                                                                                      
|                                                     
|Gross installed capacity                              |  | The maximum power that can be produced continuously throughout a
    prolonged period of operation with all equipment assumed to be
    fully operational.                                                                                                                                                                                                                
|                                                     
|Independent power producers                           |  | Industrial companies that produce electricity for their own use
    and for sale to third parties.                                                                                                                                                                                                                                                                        
|                                                     
|Italian power exchange (Borsa dellEnergia Elettrica) |  | A virtual marketplace in which producers, importers,
    wholesalers, the Gestore della Rete, other Eligible Customers
    and the Single Buyer buy and sell electricity at prices
    determined through a competitive bidding process.                                                                                                                                  
|                                                     
|Kilovolt (kV)                                         |  | 1,000 volts.                                                                                                                                                                                                                                                                                                                                                              
|                                                     
|Kilovolt ampere (kVA)                                 |  | 1,000 volts ampere.                                                                                                                                                                                                                                                                                                                                                       
|                                                     
|Kilowatt (kW)                                         |  | 1,000 watts.                                                                                                                                                                                                                                                                                                                                                              
|                                                     
|Kilowatt hour (kWh)                                   |  | One kilowatt of power supplied or demanded for one hour.                                                                                                                                                                                                                                                                                                                  
|                                                     
|Market Operator                                       |  | The entity, wholly owned by the Gestore della Rete, that manages
    the Italian power exchange.                                                                                                                                                                                                                                                                          
|                                                     
|Marzano Law                                           |  | Law No. 239 of August 23, 2004, aimed at reorganizing
    existing energy market regulation and further liberalizing the
    energy market.                                                                                                                                                                                                                               
|                                                     
|MEF                                                   |  | The Italian Ministry of the Economy and Finance and its
    predecessor, the Ministry of the Treasury, Budget and Economic
    Planning.                                                                                                                                                                                                                                  
|                                                     
|Megawatt (MW)                                         |  | 1,000,000 watts (1,000 kilowatts).                                                                                                                                                                                                                                                                                                                                        
|                                                     
|Megawatt hour (MWh)                                   |  | One megawatt of power supplied or demanded for one hour.                                                                                                                                                                                                                                                                                                                  
|                                                     
|Megavolt ampere (MVA)                                 |  | 1,000,000 volts ampere.                                                                                                                                                                                                                                                                                                                                                   
|                                                     
|Ministry of Productive Activities                     |  | The Italian Ministry of Productive Activities and its
    predecessor, the Ministry of Industry, Commerce and Handcrafts.                                                                                                                                                                                                                                                 
|                                                     
|Net Installed Capacity                                |  | The maximum power that can be produced continuously throughout a
    prolonged period of operation with all equipment assumed to be
    fully operational, as measured at the point of entry to the
    transmission network (or minus the power absorbed by plant use
    and the power lost in the transformers required to raise the
    voltage to the network level).

vi



---



##### 





|                                |  |                                                                                                                                                                                                                                                     
|------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Non-Eligible Customers          |  | Electricity customers in Italy who do not meet consumption
    thresholds entitling them to participate in the free market.                                                                                                                         
|                               
|NH3                             |  | Ammonia.                                                                                                                                                                                                                                            
|                               
|NOx                             |  | Nitrogen oxides.                                                                                                                                                                                                                                    
|                               
|Orimulsion                      |  | Abbreviation of Orinoco emulsion, which is a fossil
    fuel from the Orinoco river basin in Venezuela consisting of
    very fine bitumen dispersed in water. Orimulsion emits the same
    amount of CO2 as fuel oil of equivalent energy value.
|                               
|Resellers                       |  | Other distribution companies to whom we transport electricity
    because their networks are attached to our network rather than
    directly to the national transmission grid.                                                                    
|                               
|Single Buyer (Acquirente Unico) |  | A company wholly owned by the Gestore della Rete, responsible
    for ensuring the supply of electricity to regulated customers
    who do not yet have access to the liberalized electricity market.                                               
|                               
|SO2                             |  | Sulfur dioxide.                                                                                                                                                                                                                                     
|                               
|Substation                      |  | Equipment which switches and/or changes or regulates the voltage
    of electricity in a transmission and/or distribution network.                                                                                                                  
|                               
|Terawatt (TW)                   |  | 1,000,000,000,000 watts (1,000 gigawatts).                                                                                                                                                                                                          
|                               
|Terawatthour (TWh)              |  | One terawatt of power supplied or demanded for one hour.                                                                                                                                                                                            
|                               
|Thermal unit                    |  | A generating unit which uses combustible fuel as the source of
    energy to drive an electric generator.                                                                                                                                           
|                               
|Volt                            |  | The basic unit of electric force.                                                                                                                                                                                                                   
|                               
|Voltampere                      |  | The basic unit of apparent electrical power.                                                                                                                                                                                                        
|                               
|Watt                            |  | The basic unit of active electrical power.                                                                                                                                                                                                          

vii



---



##### 






PART I







|        |                                                      
|------- | -----------------------------------------------------
|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS








|        |                                        
|------- | ---------------------------------------
|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE








|        |                
|------- | ---------------
|ITEM 3. | KEY INFORMATION




The Enel Group


 














1



---



##### 








Selected Consolidated Financial Data






|                                           |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         |  |         |        |  |  |         |        | 
|------------------------------------------ | ----------------------------- | ----------------------------------------------- | ------- | ------------------ | ---------------- |  | ------- | ------ |  |  | ------- | ------ |  | ---- | ------- | ------ | ------- |  | ------- | ------ |  |  | ------- | ------ | 
|                                           |                               | As of December 31,                              |        
|                                           |                               |                                                 |        
|                                           |                               | 2000                                            |         |                    | 2001             |  |         | 2002   |  |  | 2003    |        |  | 2004 |         |        | 2004(2) | 
|                                           |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         | 
|                                           |                               |                                                 |         | (Dollars in        |                 
|                                           |                               | (Euro in millions, except per share amounts)(1) |         |                    | millions, except | 
|                                           |                               |                                                 |         | per share amounts) |                 
|                                           |                               |                                                 |         |                    |                 
|CONSOLIDATED STATEMENT OF INCOME DATA      |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         |  |         |        |  |  |         |       
|Amounts in accordance with Italian GAAP:   |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         |  |         |        |  |  |         |       
|Operating revenues                         |                               |                                                 | 25,109 |                    |                  |  | 28,781 |        |  |  | 29,977 |        |  |      | 31,317 |        |         |  | 36,489 |        |  |  | $49,399 |       
|Operating expenses:                        |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         |  |         |        |  |  |         |       
|                                           | Depreciation and amortization |                                                 |         | 3,459              |                  |  |         | 4,459  |  |  |         | 4,477  |  |      |         | 4,516  |         |  |         | 4,173  |  |  |         | 5,649  | 
|                                           | Other                         |                                                 |         | 16,897             |                  |  |         | 20,844 |  |  |         | 22,620 |  |      |         | 22,069 |         |  |         | 25,991 |  |  |         | 35,187 | 
|Total operating expenses                   |                               |                                                 | 20,356  |                    |                  |  | 25,303  |        |  |  | 27,097  |        |  |      | 26,585  |        |         |  | 30,164  |        |  |  | 40,836  |       
|Operating income                           |                               |                                                 | 4,753   |                    |                  |  | 3,478   |        |  |  | 2,880   |        |  |      | 4,732   |        |         |  | 6,325   |        |  |  | 8,563   |       
|Financial income (expense)                 |                               |                                                 | (648    | )                  |                  |  | (1,110  | )      |  |  | (1,178  | )      |  |      | (1,130  | )      |         |  | (1,103  | )      |  |  | (1,493  | )     
|Equity losses(3)                           |                               |                                                 | (458    | )                  |                  |  | (85     | )      |  |  | (59     | )      |  |      | (73     | )      |         |  | (39     | )      |  |  | (53     | )     
|Extraordinary income (expense)(4)          |                               |                                                 | 192     |                    |                  |  | 2,318   |        |  |  | 736     |        |  |      | (136    | )      |         |  | (818    | )      |  |  | (1,107  | )     
|Income before taxes                        |                               |                                                 | 3,839   |                    |                  |  | 4,601   |        |  |  | 2,379   |        |  |      | 3,393   |        |         |  | 4,365   |        |  |  | 5,910   |       
|Income taxes                               |                               |                                                 | 1,649   |                    |                  |  | 649     |        |  |  | 608     |        |  |      | 966     |        |         |  | 1,533   |        |  |  | 2,075   |       
|Net income (after minority interest)       |                               |                                                 | 2,188  |                    |                  |  | 4,226  |        |  |  | 2,008  |        |  |      | 2,509  |        |         |  | 2,706  |        |  |  | $3,663  |       
|                                           |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         | 
|Earnings per share(5)                      |                               |                                                 | 0.18    |                    |                  |  | 0.70    |        |  |  | 0.33    |        |  |      | 0.41    |        |         |  | 0.44    |        |  |  | 0.60    |       
|Number of shares outstanding (in millions) |                               |                                                 | 12.126  |                    |                  |  | 6.063   |        |  |  | 6.063   |        |  |      | 6.063   |        |         |  | 6.125   |        |  |  |        |       
|Amounts in accordance with U.S. GAAP(6):   |                               |                                                 |         |                    |                  |  |         |        |  |  |         |        |  |      |         |        |         |  |         |        |  |  |         |       
|Operating revenues                         |                               |                                                 | 26,432 |                    |                  |  | 28,781 |        |  |  | 30,604 |        |  |      | 31,237 |        |         |  | 35,092 |        |  |  | $47,508 |       
|Depreciation and amortization              |                               |                                                 | 3,485   |                    |                  |  | 4,478   |        |  |  | 4,069   |        |  |      | 4,506   |        |         |  | 3,857   |        |  |  | 5,222   |       
|Operating income(7)                        |                               |                                                 | 4,065   |                    |                  |  | 5,337   | (8)    |  |  | 2,617   | (9)    |  |      | 4,966   |        |         |  | 3,706   |        |  |  | 5,017   |       
|Income before taxes(7)                     |                               |                                                 | 3,125   |                    |                  |  | 3,965   |        |  |  | 1,373   |        |  |      | 3,798   |        |         |  | 2,614   |        |  |  | 3,538   |       
|Net income                                 |                               |                                                 | 1,841   |                    |                  |  | 3,688   |        |  |  | 1,399   |        |  |      | 2,376   |        |         |  | 1,031   |        |  |  | 1,395   |       
|Earnings per share(5)                      |                               |                                                 | 0.15    |                    |                  |  | 0.61    |        |  |  | 0.23    |        |  |      | 0.39    |        |         |  | 0.17    |        |  |  | 0.23    |       

2



---



##### 



|                                         |  |                       |        |             |           |   |        |      |  |   |        |  |  |      |        |  |         |   |        |  |  |   |        | 
|---------------------------------------- |  | --------------------- | ------ | ----------- | --------- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ------- | - | ------ |  |  | - | ------ | 
|                                         |  | As of December 31,    |       
|                                         |  |                       |       
|                                         |  | 2000                  |        |             | 2001      |   |        | 2002 |  |   | 2003   |  |  | 2004 |        |  | 2004(2) |  
|                                         |  |                       |        |             |           |   |        |      |  |   |        |  |  |      |        |  |         |  
|                                         |  |                       |        | (Dollars in |          
|                                         |  | (Euro in millions)(1) |        |             | millions) |  
|CONSOLIDATED BALANCE
    SHEET DATA      |  |                       |        |             |           |   |        |      |  |   |        |  |  |      |        |  |         |   |        |  |  |   |        | 
|Amounts in accordance with Italian GAAP: |  |                       |        |             |           |   |        |      |  |   |        |  |  |      |        |  |         |   |        |  |  |   |        | 
|Fixed assets, net                        |  |                      | 35,744 |             |           |  | 35,004 |      |  |  | 37,533 |  |  |     | 37,155 |  |         |  | 36,459 |  |  | $ | 49,358 | 
|Current assets                           |  |                       | 9,456  |             |           |   | 11,902 |      |  |   | 14,464 |  |  |      | 14,520 |  |         |   | 16,902 |  |  |   | 22,882 | 
|Total assets                             |  |                       | 49,633 |             |           |   | 63,190 |      |  |   | 67,019 |  |  |      | 68,930 |  |         |   | 68,330 |  |  |   | 92,505 | 
|Current liabilities                      |  |                       | 15,621 |             |           |   | 19,164 |      |  |   | 21,916 |  |  |      | 22,908 |  |         |   | 20,587 |  |  |   | 27,871 | 
|Short-term debt(10)                      |  |                       | 6,406  |             |           |   | 7,107  |      |  |   | 8,371  |  |  |      | 8,643  |  |         |   | 6,419  |  |  |   | 8,690  | 
|Long-term debt(11)                       |  |                       | 7,984  |             |           |   | 16,072 |      |  |   | 17,172 |  |  |      | 18,005 |  |         |   | 20,241 |  |  |   | 27,402 | 
|Shareholders equity                     |  |                       | 18,312 |             |           |   | 20,966 |      |  |   | 20,772 |  |  |      | 21,124 |  |         |   | 19,847 |  |  |   | 26,870 | 
|Amounts in accordance with U.S. GAAP(6): |  |                       |        |             |           |   |        |      |  |   |        |  |  |      |        |  |         |   |        |  |  |   |        | 
|Fixed assets, net                        |  |                      | 37,403 |             |           |  | 36,035 |      |  |  | 38,304 |  |  |     | 37,407 |  |         |  | 37,589 |  |  | $ | 50,889 | 
|Total assets                             |  |                       | 54,535 |             |           |   | 63,799 |      |  |   | 66,423 |  |  |      | 68,505 |  |         |   | 67,152 |  |  |   | 90,910 | 
|Short-term debt(10)                      |  |                       | 6,406  |             |           |   | 7,107  |      |  |   | 8,371  |  |  |      | 8,643  |  |         |   | 6,419  |  |  |   | 8,690  | 
|Long-term debt(11)                       |  |                       | 10,301 |             |           |   | 16,072 |      |  |   | 17,172 |  |  |      | 18,005 |  |         |   | 20,242 |  |  |   | 27,404 | 
|Shareholders equity                     |  |                       | 17,438 |             |           |   | 19,467 |      |  |   | 18,526 |  |  |      | 18,651 |  |         |   | 15,697 |  |  |   | 21,250 | 






|                                                    |  |                       |        |             |           |   |        |      |  |   |        |   |  |      |        |   |         |   |        |   |  |   |        |  
|--------------------------------------------------- |  | --------------------- | ------ | ----------- | --------- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ------- | - | ------ | - |  | - | ------ | -
|                                                    |  | As of December 31,    |       
|                                                    |  |                       |       
|                                                    |  | 2000                  |        |             | 2001      |   |        | 2002 |  |   | 2003   |   |  | 2004 |        |   | 2004(2) |  
|                                                    |  |                       |        |             |           |   |        |      |  |   |        |   |  |      |        |   |         |  
|                                                    |  |                       |        | (Dollars in |          
|                                                    |  | (Euro in millions)(1) |        |             | millions) |  
|CONSOLIDATED CASH FLOW DATA                         |  |                       |        |             |           |   |        |      |  |   |        |   |  |      |        |   |         |   |        |   |  |   |        |  
|Amounts in accordance with Italian GAAP:            |  |                       |        |             |           |   |        |      |  |   |        |   |  |      |        |   |         |   |        |   |  |   |        |  
|Net cash provided by operating activities           |  |                      | 4,900  |             |           |  | 6,164  |      |  |  | 4,793  |   |  |     | 7,173  |   |         |  | 5,392  |   |  | $ | 7,300  |  
|Net cash used in investing activities               |  |                       | (3,429 | )           |           |   | (8,666 | )    |  |   | (4,206 | ) |  |      | (4,695 | ) |         |   | (1,898 | ) |  |   | (2,570 | )
|Net cash (used in) provided by financing activities |  |                       | (1,510 | )           |           |   | 2,598  |      |  |   | (774   | ) |  |      | (2,426 | ) |         |   | (3,582 | ) |  |   | 4,849  |  
|Amounts in accordance with U.S. GAAP(6):            |  |                       |        |             |           |   |        |      |  |   |        |   |  |      |        |   |         |   |        |   |  |   |        |  
|Net cash provided by operating activities           |  |                      | 4,937  |             |           |  | 5,554  |      |  |  | 3,815  |   |  |     | 6,843  |   |         |  | 4,855  |   |  | $ | 6,573  |  
|Net cash used in investing activities               |  |                       | (3,468 | )           |           |   | (8,707 | )    |  |   | (4,241 | ) |  |      | (4,730 | ) |         |   | (1,940 | ) |  |   | (2,627 | )
|Net cash (used in) provided by financing activities |  |                       | (1,509 | )           |           |   | 3,249  |      |  |   | 239    |   |  |      | (2,061 | ) |         |   | (3,003 | ) |  |   | (4,065 | )

|                                                         |  |      |        |  |      |  |        |      |  |  |        |      |  |      |        |  |  |  |        | 
|-------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                         |  | 2000 |        |  | 2001 |  |        | 2002 |  |  | 2003   |      |  | 2004 |       
|                                                         |  |      |        |  |      |  |        |      |  |  |        |      |  |      |       
|Operating Data (unaudited)                               |  |      |        |  |      |  |        |      |  |  |        |      |  |      |        |  |  |  |        | 
|Net installed capacity (GW) in Italy                     |  |      | 56.3   |  |      |  | 50.0   |      |  |  | 43.8   | (12) |  |      | 41.8   |  |  |  | 42.0   | 
|Net electricity production in Italy (TWh)                |  |      | 182.5  |  |      |  | 169.1  | (13) |  |  | 145.1  | (14) |  |      | 137.8  |  |  |  | 125.9  | 
|Electricity sales to end users in Italy (TWh)(15)        |  |      | 213.3  |  |      |  | 194.9  |      |  |  | 181.3  |      |  |      | 152.2  |  |  |  | 157.8  | 
|Total electricity distributed in Italy (TWh)(16)         |  |      | 244.5  |  |      |  | 256.3  |      |  |  | 258.0  |      |  |      | 265.0  |  |  |  | 261.2  | 
|Natural gas sold to end users (billions of cubic meters) |  |      | 0.3    |  |      |  | 1.1    |      |  |  | 4.0    |      |  |      | 4.4    |  |  |  | 5.2    | 
|Natural gas sales customers at year end (millions)       |  |      | 0.1    |  |      |  | 0.6    |      |  |  | 1.7    |      |  |      | 1.8    |  |  |  | 2.0    | 
|Employees                                                |  |      | 72,647 |  |      |  | 72,661 |      |  |  | 71,204 |      |  |      | 64,770 |  |  |  | 61,898 | 






|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Lira amounts relating to the fiscal years 2000 and 2001 have
    been translated into euro amounts at the fixed rate of Lit.
    1,936.27 = 1.00.



| |     |                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------
| | (2) | We have translated euro amounts into dollar amounts at the noon
    buying rate for euro on December 31, 2004, of
    1.00 = $1.3538.

3



---



##### 





| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | Under Italian GAAP, for the year ended December 31, 2000,
    we accounted for our investment in Wind, the lead company of our
    Telecommunications Division, under the equity method of
    accounting. We have consolidated Wind on a line-by-line basis
    since January 1, 2001. You should read note 2 to our
    consolidated financial statements for a discussion of our
    consolidation principles. For purposes of U.S. GAAP, we
    have consolidated Wind since January 1, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (4) | You should read notes 24-26 to our consolidated financial
    statements for a discussion of the different criteria used under
    Italian GAAP and U.S. GAAP for determining what constitutes
    an extraordinary item.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (5) | We calculate earnings per share by dividing our consolidated net
    income by the number of ordinary shares outstanding during each
    period. Prior to our initial public offering in November 1999,
    all of our ordinary shares were owned by the MEF. Following the
    offering, and at December 31, 2004, the MEF owned 31.45%
    and its subsidiary Cassa Depositi e Prestiti owned 10.28% of our
    ordinary shares. You should consider that our share capital was
    Lit. 12,126,150,379,000 (corresponding to
    6,262,634,023)
    divided into 12,126,150,379 shares with a par value of each
    share of Lit. 1,000 (corresponding to
    0.52) until
    July 9, 2001, the date on which both the re-denomination of
    our share capital in euros and a one-for-two reverse stock split
    became effective. As a result of the re-denomination and the
    reverse stock split, our share capital amounted to
    6,063,075,189,
    divided into 6,063,075,189 shares, each with a par value of
    1. Currently,
    our share capital amounts to
    6,124,838,588
    divided into 6,124,838,588 shares with a par value of
    1.
|
| | (6) | For information concerning differences between Italian GAAP and
    U.S. GAAP that are relevant to our consolidated financial
    statements, you should read notes 24 through 26 to our
    consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (7) | You should read notes 24-26 to our consolidated financial
    statements for a discussion of the different criteria used under
    Italian GAAP and U.S. GAAP in calculating operating income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (8) | Includes gain on sale of Elettrogen, previously classified as
    other non-operating income (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (9) | Includes gain on sale of Eurogen, previously classified as other
    non-operating income (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



|     |                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes current portion of long-term debt.                                                                                                                            
|    
|(11) | Excludes current portion of long-term debt.                                                                                                                            
|    
|(12) | Including 2.6 GW of capacity of Interpower, which was divested
    in January 2003.                                                                                    
|    
|(13) | Including 12.2 TWh generated by Elettrogen and Valgen before
    they were divested during 2001, and 20.9 TWh generated by
    Eurogen, which was divested in May 2002.
|    
|(14) | Including 8.0 TWh generated by Eurogen before it was divested,
    and 5.7 TWh generated by Interpower.                                                                
|    
|(15) | Excluding sales to resellers.                                                                                                                                          
|    
|(16) | Including electricity distributed to resellers.                                                                                                                        

4



---



##### 






Exchange Rates






|                  |  |                          |        |  |         |  |        |      |  |  |        |  |  |  |        | 
|----------------- |  | ------------------------ | ------ |  | ------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                  |  | End of                   |        |  |         |  |        |      | 
|                  |  | Period                   |        |  | Average |  |        | High |  |  | Low    | 
|                  |  |                          |        |  |         |  |        |      |  |  |        | 
|                  |  | U.S. dollars per euro(1) |       
|Year:             |  |                          |        |  |         |  |        |      |  |  |        |  |  |  |        | 
|2000              |  |                          | 0.9388 |  |         |  | 0.9207 |      |  |  | 1.0335 |  |  |  | 0.8270 | 
|2001              |  |                          | 0.8901 |  |         |  | 0.8909 |      |  |  | 0.9535 |  |  |  | 0.8370 | 
|2002              |  |                          | 1.0485 |  |         |  | 0.9495 |      |  |  | 1.0485 |  |  |  | 0.8594 | 
|2003              |  |                          | 1.2597 |  |         |  | 1.1411 |      |  |  | 1.2597 |  |  |  | 1.0361 | 
|2004              |  |                          | 1.2478 |  |         |  | 1.3538 |      |  |  | 1.3625 |  |  |  | 1.1801 | 
|Month ended:      |  |                          |        |  |         |  |        |      |  |  |        |  |  |  |        | 
|December 31, 2004 |  |                          | 1.3538 |  |         |  | 1.3406 |      |  |  | 1.3625 |  |  |  | 1.3224 | 
|January 31, 2005  |  |                          | 1.3049 |  |         |  | 1.3122 |      |  |  | 1.3476 |  |  |  | 1.2954 | 
|February 28, 2005 |  |                          | 1.3274 |  |         |  | 1.3013 |      |  |  | 1.3274 |  |  |  | 1.2773 | 
|March 31, 2005    |  |                          | 1.2969 |  |         |  | 1.3185 |      |  |  | 1.3465 |  |  |  | 1.2877 | 
|April 30, 2005    |  |                          | 1.2919 |  |         |  | 1.2943 |      |  |  | 1.3093 |  |  |  | 1.2819 | 
|May 31, 2005      |  |                          | 1.2349 |  |         |  | 1.2696 |      |  |  | 1.2936 |  |  |  | 1.2517 | 






|    |                                                                          
|--- | -------------------------------------------------------------------------
|(1) | Based on the noon buying rate for the euro for the periods
    indicated.

Mercato Telematico
Azionario





Risk Factors


You should carefully consider the risks described below and
all of the other information in this document. If any of the
risks described below actually occurs, our business, economic
and financial results and the trading price of Enels
ordinary shares or ADSs could be materially adversely
affected.


Risks Relating to Our Energy Business




| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Future regulation could have a significant adverse effect
    on our energy businesses and their profitability



Regulatory changes promoting market liberalization have
significantly increased competition in our energy
businesses




5



---



##### 









| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in bilateral contracts between our competitors and
    final customers;                                                                                                                  
|
| |  | regulations limiting each operators access to
    international electricity sources to a maximum percentage of
    available interconnection capacity; and                                          
|
| |  | the construction of new generation facilities by our competitors
    and the development of new interconnection lines that will
    increase the volume of electricity that may be imported in Italy.













6



---



##### 



Our facilities are subject to operating risks outside of
our control; certain of our activities depend on third-party
patents and licenses






We may not be able to complete our power plant conversion
and other capital investment programs on schedule or realize the
expected benefits of these programs






Significant increases in fuel prices or disruptions in our
fuel supplies could have a negative effect on our
business








7



---



##### 



Our expansion outside of Italy subjects us to risks
associated with local market conditions, as well as to risks
associated with operating the businesses we acquire










Further power outages involving our electricity operations
could adversely affect our financial condition and results of
operations






8



---



##### 









We have been and are subject to abuse of dominant
position, market abuse and other regulatory
investigations








The effect of the anticipated market for
CO2 emissions trading on our business
is uncertain


2 2 2 2


9



---



##### 










A European Commission challenge to Italian regulations on
hydroelectric concessions could adversely affect our business,
financial condition and result of operations








We are dependent on government concessions for our
electricity and gas distribution businesses




10



---



##### 







Our businesses are subject to numerous environmental
regulations that could significantly affect our financial
condition and results of operations


2 x 2




    2 x 






11



---



##### 



Other Risks Relating to Our Businesses


We may be unable to exit the telecommunications business
on acceptable terms or in accordance with the currently
envisaged timetable






We may be unable to dispose of the majority of our
remaining interest in Terna on the anticipated timetable or
terms


 


Our historical consolidated financial and operating
results may not be indicative of future performance


   


12



---



##### 





We may incur significant capital expenditures to comply
with legislation on electromagnetic fields; we may not be fully
reimbursed for these capital expenditures




The Italian social security fund is seeking to impose
significant liabilities on us


 


Recently enacted legislation could increase our local
property tax burden




13



---



##### 










imposta comunale sugli immobili 


We are defendants in a number of legal proceedings


 




Risks Relating to Enels Ordinary Shares and ADSs


The MEF, Enels controlling shareholder, has
significant influence over Enels actions




The special powers of the Italian government may permit it
to influence Enels business, regardless of the level of
its shareholding




14



---



##### 









| |   |                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the power to oppose the acquisition by persons or entities of an
    interest in the Company equal to or in excess of 3% of the
    shares with voting rights at the ordinary shareholders
    meetings;                                                                          
|
| |  | the power to oppose certain types of shareholders
    agreements entered into by holders of at least one-twentieth of
    the voting capital stock at ordinary shareholders meetings;                                                                                            
|
| |  | the power to veto any resolution to dissolve, merge or demerge
    Enel, transfer a significant part of Enels business or
    Enels registered headquarters outside of Italy, change
    Enels corporate purpose or eliminate or modify any of the
    MEFs special powers; and
|
| |  | the MEF may directly appoint one non-voting member of
    Enels board of directors, in addition to the voting
    members elected by Enels shareholders.                                                                                                                         





The value of ordinary shares or ADSs may be adversely
affected by sales of substantial amounts of shares by the MEF or
other shareholders or the perception that such sales could
occur






The value, expressed in dollars, of the ordinary shares
and ADSs and of any dividends Enel pays in respect of its
ordinary shares and ADSs will be affected by the euro/dollar
exchange rate




It is possible that the price of ordinary shares and ADSs
will experience significant volatility




15



---



##### 



If you hold ADSs rather than ordinary shares it may be
difficult for you to exercise some of your rights as a
shareholder







Forward-Looking Statements






| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Anticipated trends in our businesses, including trends in demand
    for electricity;                                                                                                                                                                                                             
|
| |  | Changes in the regulatory environment and expectations on how
    and when new regulations will be implemented;                                                                                                                                                                                   
|
| |  | The remuneration of our generation activities based on
    competitive electricity prices rather than tariffs following the
    introduction of trading on the Italian power exchange;                                                                                                            
|
| |  | The impact of changes in electricity and gas tariffs;                                                                                                                                                                                                                                             
|
| |  | Our ability to implement successfully our cost reduction program;                                                                                                                                                                                                                                 
|
| |  | The possibility that significant volumes of lower-cost
    electricity will become available as a result of increased
    imports and the construction of new plants in Italy;                                                                                                                    
|
| |  | Enels intention to reduce its stake in Terna from 36.14%
    to approximately 5%, following its agreement in May 2005 to sell
    to Cassa Depositi e Prestiti a 29.99% stake in Terna;                                                                                                          
|
| |  | Our intention to divest Wind, having entered into an agreement
    in May 2005 for the sale of Wind in a series of transactions
    that we expect ultimately to lead our exit from the
    telecommunications business, as well as our intention to divest
    certain other non-core businesses;
|
| |  | Our intentions with respect to future dividend payments;                                                                                                                                                                                                                                          
|
| |  | Our intention to expand our core businesses, including by
    increasing our presence in renewable energy and developing our
    gas distribution and sales business;                                                                                                                             
|
| |  | Our intention to expand our operations outside Italy; and                                                                                                                                                                                                                                         
|
| |  | Future capital expenditures and investments.                                                                                                                                                                                                                                                      








|        |                           
|------- | --------------------------
|ITEM 4. | INFORMATION ON THE COMPANY




History and Development of the Company


(Ente Nazionale per lEnergia Elettrica)


16



---



##### 













17



---



##### 













società per azioni statuto,





Business





Overview


 


18



---



##### 





|                                                                       |                                                          |      |       |       |      |  |       |       |  |  |       |       | 
|---------------------------------------------------------------------- | -------------------------------------------------------- | ---- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                                                                       |                                                          | 2002 |       |       | 2003 |  |       | 2004  | 
|                                                                       |                                                          |      |       |       |      |  |       |       | 
|Net installed capacity (GW) in Italy at year end                       |                                                          |      | 43.8  | (1)   |      |  | 41.8  |       |  |  | 42.0  |      
|Net electricity production in Italy (TWh)                              |                                                          |      | 145.1 | (2)   |      |  | 137.8 |       |  |  | 125.9 |      
|Electricity sales to end users in Italy (TWh)(3)                       |                                                          |      | 181.3 |       |      |  | 152.2 |       |  |  | 157.8 |      
|                                                                       | Electricity sales on the regulated market in Italy (TWh) |      |       | 150.9 |      |  |       | 141.5 |  |  |       | 137.0 | 
|                                                                       | Electricity sales on the free market in Italy (TWh)      |      |       | 30.4  |      |  |       | 10.7  |  |  |       | 20.8  | 
|Total electricity distributed in Italy (TWh)(4)                        |                                                          |      | 258.0 |       |      |  | 265.0 |       |  |  | 261.2 |      
|Natural gas sales to end users in Italy (billions of cubic
    meters) |                                                          |      | 4.0   |       |      |  | 4.4   |       |  |  | 5.2   |      
|Natural gas sales customers in Italy at year end (millions)            |                                                          |      | 1.7   |       |      |  | 1.8   |       |  |  | 2.0   |      






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|(1) | Including 2.6 GW of capacity of Interpower, which was divested
    in January 2003.                                
|   
|(2) | Including 8.0 TWh generated by Eurogen before it was divested in
    May 2002, and 5.7 TWh generated by Interpower.
|   
|(3) | Excluding sales to resellers.                                                                                      
|   
|(4) | Including electricity distributed to resellers.                                                                    

Generation and Energy Management.






     


Sales, Infrastructure and Networks.




19



---



##### 









       


Transmission.


 






  


 


20



---



##### 









   


Telecommunications.  


Services and Other Activities.   


Corporate.  




21



---



##### 









Strategy






| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reducing our Italian power generation costs to levels lower than
    those of our competitors, in particular through the conversion
    of certain generation plants to run on less expensive fuels, and
    the alignment of

22



---



##### 



| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | our other operating costs with international best practice
    through an integrated approach to quality and standards;                                                                                                                                                                             
|
| |  | Increasing our presence in the market for electricity generated
    from renewable resources;                                                                                                                                                                                                       
|
| |  | Growing our natural gas distribution and sales businesses in
    Italy, where we are the second-largest distributor;                                                                                                                                                                                
|
| |  | Extracting value from the integrated management of our
    electricity and gas services in Italy;                                                                                                                                                                                                   
|
| |  | Meeting our operating efficiency targets in the distribution and
    sale of electricity and gas;                                                                                                                                                                                                   
|
| |  | Expanding our operations outside Italy, particularly in
    countries where we are already present or where market
    liberalization and privatization efforts are in progress, in
    which we can capitalize on the experience and technical know-how
    we have acquired in the Italian market;
|
| |  | Reducing Enels current 36.14% stake in Terna to
    approximately 5%, in order to match legally permitted voting
    rights in the appointing of directors, through its sale of a
    29.99% stake in Terna to Cassa Depositi e Prestiti; and                                                      
|
| |  | Divesting Wind and, subject to our disposal of the minority
    interest we expect to acquire in Weather, exiting the
    telecommunications business.                                                                                                                                              

 






| |                                 
| | --------------------------------
| | Generation and Energy Management









| |   |                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue its program to convert approximately 10,000 MW of
    thermal generation plants to combined gas turbine technology,
    much of which has already been completed, as well as our program
    to upgrade additional plants to run on lower-cost fuels, such as
    coal, while still respecting environmental norms;                                         
|
| |  | Consolidate its position in the field of renewable energy,
    including through an investment program expected to total
    approximately
    1.1 billion
    from 2005 through 2009, which includes plans for the
    construction of wind, hydroelectric and geothermal generation
    plants in Italy with a net installed capacity of approximately
    250 MW;
|
| |  | Continually seek to achieve operating excellence while
    increasing the efficiency and availability of its plants and
    respecting the environment and the health and safety of its
    employees;                                                                                                                                                               

23



---



##### 





| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue its efforts to reduce its operating and maintenance
    expenses until it attains best international practice
    levels; and
|
| |  | Optimize its fuel procurement activities, through a
    diversification of suppliers and supply channels.                             



| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

Distribution.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue our program to reduce operating costs and optimize our
    investment expenditures, by seeking constantly to improve our
    administrative processes, increasing our use of technology to
    support our activities and evaluating our investments more
    strictly from a financial perspective;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Continue to improve our performance with respect to Energy
    Authority targets for quality and continuity of service in those
    geographic areas where these targets have not yet been achieved,
    and maintaining the quality and continuity of service where they
    have been achieved or exceeded; overall, in 2004 we received
    bonuses for continuity of services of
    205 million
    with respect to our performance in 2003; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Complete the roll-out of our Telemanagement digital
    metering program in Italy by the end of 2005, in order to
    (i) reduce costs associated with physical measurement of
    consumption and on-site maintenance of meters by our personnel,
    as these tasks would be accomplished remotely; (ii) measure
    more accurately the electricity consumption of our customers;
    (iii) improve our response times in providing technical
    assistance to our customers and provide higher quality service;
    and (iv) offer our customers tailored tariff plans that
    promote the use of electricity in off-peak periods and provide
    customers with opportunities to save money. We entered into an
    agreement with IBM in March 2004 to commercialize our digital
    metering know-how for use by other utilities in Italy and abroad
    in an effort to further benefit from this program. At
    March 31, 2005, we had installed 22.4 million digital
    meters, of which approximately 19.9 million were remotely
    connected to our system.



Sales.








24



---



##### 





Transmission




Telecommunications







Services
and Other Activities


 




25



---



##### 






The Enel Group







| |                           
| | --------------------------
| | Italian Electricity Demand



|                                |  |      |      |  |      |  |      |      |  |  |      |                |  |      |      |  |           |  |      |  |  |  |      | 
|------------------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- | -------------- |  | ---- | ---- |  | --------- |  | ---- |  |  |  | ---- | 
|                                |  |      |      |  |      |  |      |      |  |  |      | Average Annual | 
|                                |  |      |      |  |      |  |      |      |  |  |      | Growth Rate    | 
|                                |  | 2000 |      |  | 2001 |  |      | 2002 |  |  | 2003 |                |  | 2004 |      |  | 2000-2004 | 
|                                |  |      |      |  |      |  |      |      |  |  |      |                |  |      |      |  |           | 
|Growth in real GDP(1)           |  |      | 3.0% |  |      |  | 1.8% |      |  |  | 0.4% |                |  |      | 0.3% |  |           |  | 1.2% |  |  |  | 1.3% | 
|Growth in electricity demand(2) |  |      | 4.4% |  |      |  | 2.1% |      |  |  | 1.9% |                |  |      | 3.2% |  |           |  | 0.4% |  |  |  | 2.4% | 








|    |                                                                         
|--- | ------------------------------------------------------------------------
|(1) | National Institute of Statistics (Istituto Nazionale di
    Statistica).
|   
|(2) | Gestore della Rete. Data for 2004 are provisional.                      





|               |  |               |       |             |             |            |             |                  |  |  |       | 
|-------------- |  | ------------- | ----- | ----------- | ----------- | ---------- | ----------- | ---------------- |  |  | ----- | 
|               |  |               |       |             |             | Per Capita |            
|               |  |               |       | Residential |             |            | Residential |                 
|               |  | Inhabitants   |       |             | Consumption |            |             | Consumption      | 
|               |  |               |       |             |             |            |             |                  | 
|               |  | (In millions) |       |             | (TWh)       |            |             | (Kwh/inhabitant) | 
|France         |  |               | 59.8  |             |             |            | 141.0       |                  |  |  | 2,358 | 
|United Kingdom |  |               | 59.4  |             |             |            | 117.2       |                  |  |  | 1,973 | 
|European Union |  |               | 380.2 |             |             |            | 685.3       |                  |  |  | 1,803 | 
|Germany        |  |               | 82.6  |             |             |            | 135.7       |                  |  |  | 1,643 | 
|Spain          |  |               | 41.1  |             |             |            | 53.70       |                  |  |  | 1,307 | 
|Italy          |  |               | 57.7  |             |             |            | 63.7        |                  |  |  | 1,104 | 













| |                                 
| | --------------------------------
| | Generation and Energy Management



26



---



##### 













| |                    
| | -------------------
| | Domestic Generation



| |                      
| | ---------------------
| | Generating Facilities







|                                      |                                   |       |         |         |      |  |         |         |  |  |         |         | 
|------------------------------------- | --------------------------------- | ----- | ------- | ------- | ---- |  | ------- | ------- |  |  | ------- | ------- | 
|                                      |                                   | 2002  |         |         | 2003 |  |         | 2004*   | 
|                                      |                                   |       |         |         |      |  |         |         | 
|                                      |                                   | (GWh) |        
|Gross production:                     |                                   |       |         |         |      |  |         |         |  |  |         |        
|Thermal                               |                                   |       | 231,068 |         |      |  | 242,784 |         |  |  | 244,375 |        
|Hydroelectric                         |                                   |       | 47,262  |         |      |  | 44,277  |         |  |  | 48,730  |        
|Geothermal and other renewable        |                                   |       | 6,071   |         |      |  | 6,804   |         |  |  | 7,265   |        
|                                      |                                   |       |         |         |      |  |         |         | 
|                                      | Total gross production in Italy   |       |         | 284,401 |      |  |         | 293,865 |  |  |         | 300,370 | 
|Power used by auxiliary installations |                                   |       | (13,619 | )       |      |  | (13,682 | )       |  |  | (13,723 | )      
|                                      |                                   |       |         |         |      |  |         |         | 
|                                      | Total net production in Italy     |       |         | 270,783 |      |  |         | 280,183 |  |  |         | 286,647 | 
|Net electricity imports               |                                   |       | 50,597  |         |      |  | 50,968  |         |  |  | 45,635  |        
|Total pumped storage consumption      |                                   |       | (10,654 | )       |      |  | (10,492 | )       |  |  | (10,308 | )      
|                                      |                                   |       |         |         |      |  |         |         | 
|                                      | Total electricity demand in Italy |       |         | 310,726 |      |  |         | 320,659 |  |  |         | 321,974 | 
|                                      |                                   |       |         |         |      |  |         |         | 








|  |                               
|- | ------------------------------
|* | Data for 2004 are provisional.

27



---



##### 







|                               |       |                      |      |      |             |  |    |            |  |            |            |         |        |        |      |       |   |  |     |   | 
|------------------------------ | ----- | -------------------- | ---- | ---- | ----------- |  | -- | ---------- |  | ---------- | ---------- | ------- | ------ | ------ | ---- | ----- | - |  | --- | - | 
|                               |       | At December 31, 2004 |      |      | 2004        | 
|                               |       |                      |      |      |             | 
|                               |       | Net                  |      |      | Weighted    |  |    |            |  | Percentage |            |         | Forced |       
|                               |       | Installed            |      |      | Average Age |  |    | Net        |  |            | of Our Net |         |        | Outage |     
|                               |       | Capacity             |      |      | of Plant    |  |    | Production |  |            | Production |         |        | Factor |     
|                               |       |                      |      |      |             |  |    |            |  |            |            |         |        |        |     
|                               |       | (GW)                 |      |      | (Years)     |  |    | (GWh)      |  |            | (Percent)  |        
|Thermal                        |       |                      | 26.8 |      |             |  | 19 |            |  |            | 91,854     |         |        |        | 73.0 | %     |   |  | 2.0 | %
|Hydroelectric                  |       |                      | 14.3 |      |             |  | 42 |            |  |            | 28,659     |         |        |        | 22.7 | %     |   |  | 1.5 | %
|Geothermal and other renewable |       |                      | 0.9  |      |             |  | 8  |            |  |            | 5,355      |         |        |        | 4.3  | %     |   |  | 2.0 | %
|                               |       |                      |      |      |             |  |    |            |  |            |            |         |        |        |     
|                               | Total |                      |      | 42.0 |             |  |    |            |  |            |            | 125,868 |        |        |      | 100.0 | % |  |     |   | 
|                               |       |                      |      |      |             |  |    |            |  |            |            |         |        |        |     





| |                   
| | ------------------
| | Thermal Production







28



---



##### 





  






| |   |                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | upgrading the coal-burning technology of a unit at an existing
    coal plant, Sulcis, which we expect to be operational by the end
    of 2005 (approximately 300 MW);                                                                                                                                                                               
|
| |  | converting three units at our fuel-oil plant at Torrevaldaliga
    Nord to clean coal technology, on which construction has already
    started and which we expect to be operational by 2008
    (approximately 1,900 MW); and                                                                                                                       
|
| |  | subject to receipt of required permits, for which we are in the
    process of applying, converting another four units to clean coal
    technology (accounting for approximately 2,500 MW).
    Depending on whether and when we obtain the required permits, we
    estimate that the converted facilities would be operational by
    2010 or 2011.



 




| |                         
| | ------------------------
| | Hydroelectric Production







29



---



##### 












| |                                                         
| | --------------------------------------------------------
| | Production from Geothermal and Other Renewable Resources












30



---



##### 









| |                         
| | ------------------------
| | International Generation



  


 





 


31



---



##### 














|                   |       |            |     |     |            |  |     |        |  |         |          |          |  |      |              |     |      |              |     |      |  |  |       |       |  |  |       |       | 
|------------------ | ----- | ---------- | --- | --- | ---------- |  | --- | ------ |  | ------- | -------- | -------- |  | ---- | ------------ | --- | ---- | ------------ | --- | ---- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                   |       |            |     |     |            |  |     |        |  |         |          | Total at |  |      | Total at     |    
|                   |       | Enel North |     |     | Enel Latin |  |     |        |  | Maritza |          |          |  |      | December 31, |     |      | December 31, |    
|                   |       | America    |     |     | America    |  |     | Viesgo |  |         | East III |          |  | EUFR |              |     | 2004 |              |     | 2003 | 
|                   |       |            |     |     |            |  |     |        |  |         |          |          |  |      |              |     |      |              |     |      | 
|                   |       | (MW)       |    
|Thermal            |       |            |    |     |            |  |    |        |  |         | 1,592    |          |  |      | 732          |     |      |              |    |      |  |  | 2,324 |       |  |  | 2,324 |      
|Hydroelectric      |       |            | 286 |     |            |  | 171 |        |  |         | 672      |          |  |      |             |     |      |              |    |      |  |  | 1,129 |       |  |  | 1,077 |      
|Wind               |       |            | 67  |     |            |  | 24  |        |  |         |         |          |  |      |             |     |      |              | 259 |      |  |  | 350   |       |  |  | 341   |      
|Biomass and Biogas |       |            | 21  |     |            |  |    |        |  |         |         |          |  |      |             |     |      |              |    |      |  |  | 21    |       |  |  | 25    |      
|Cogeneration       |       |            |    |     |            |  |    |        |  |         |         |          |  |      |             |     |      |              | 52  |      |  |  | 52    |       |  |  | 62    |      
|                   |       |            |     |     |            |  |     |        |  |         |          |          |  |      |              |     |      |              |     |      | 
|                   | Total |            |     | 374 |            |  |     | 195    |  |         |          | 2,264    |  |      |              | 732 | *    |              |     | 311  |  |  |       | 3,876 |  |  |       | 3,829 | 
|                   |       |            |     |     |            |  |     |        |  |         |          |          |  |      |              |     |      |              |     |      | 

32



---



##### 








|  |                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------
|* | At December 31, 2004, 183 MW of this capacity was
    undergoing refurbishing and environmental upgrades, and
    549 MW was operational.





| |     
| | ----
| | Fuel








 






33



---



##### 





|                      |               |                         |        |         |            |  |       |             |   |  |            |         |  |             |      |       |            |  |        |         |  |  |      |       |  
|--------------------- | ------------- | ----------------------- | ------ | ------- | ---------- |  | ----- | ----------- | - |  | ---------- | ------- |  | ----------- | ---- | ----- | ---------- |  | ------ | ------- |  |  | ---- | ----- | -
|                      |               | Year Ended December 31, |       
|                      |               |                         |       
|                      |               | 2002                    |        |         | 2003       |  |       | 2004        |  
|                      |               |                         |        |         |            |  |       |             |  
|                      |               | Net                     |        |         |            |  | Net   |             |   |  |            | Net     |  |             |     
|                      |               | Electricity             |        |         | Percentage |  |       | Electricity |   |  | Percentage |         |  | Electricity |      |       | Percentage | 
|                      |               | Produced                |        |         | of Total   |  |       | Produced    |   |  | of Total   |         |  | Produced    |      |       | of Total   | 
|                      |               |                         |        |         |            |  |       |             |   |  |            |         |  |             |      |       |            | 
|                      |               | (GWh)                   |        |         |            |  | (GWh) |             |   |  |            | (GWh)   |  |             |     
|Natural gas           |               |                         | 36,082 |         |            |  | 27.5  | %           |   |  | 48,802     |         |  |             | 35.4 | %     |            |  | 40,602 |         |  |  | 32.3 | %    
|Coal and orimulsion   |               |                         | 29,234 |         |            |  | 22.2  |             |   |  | 30,030     |         |  |             | 21.8 |       |            |  | 30,700 |         |  |  | 24.4 |      
|Oil                   |               |                         | 33,949 |         |            |  | 25.8  |             |   |  | 27,838     |         |  |             | 20.2 |       |            |  | 20,552 |         |  |  | 16.3 |      
|                      | Total thermal |                         |        | 99,265  |            |  |       | 75.5        |   |  |            | 106,669 |  |             |      | 77.4  |            |  |        | 91,854  |  |  |      | 73.0  |  
|Hydroelectric         |               |                         | 27,745 |         |            |  | 21.1  |             |   |  | 26,012     |         |  |             | 18.9 |       |            |  | 28,677 |         |  |  | 22.8 |      
|Geothermal            |               |                         | 4,382  |         |            |  | 3.3   |             |   |  | 5,036      |         |  |             | 3.6  |       |            |  | 5,120  |         |  |  | 4.1  |      
|Wind and photovoltaic |               |                         | 53     |         |            |  | 0     |             |   |  | 77         |         |  |             | 0.06 |       |            |  | 235    |         |  |  | 0.2  |      
|                      |               |                         |        |         |            |  |       |             |   |  |            |         |  |             |      |       |            | 
|                      | Total         |                         |        | 131,445 |            |  |       | 100.0       | % |  |            | 137,794 |  |             |      | 100.0 | %          |  |        | 125,886 |  |  |      | 100.0 | %
|                      |               |                         |        |         |            |  |       |             |   |  |            |         |  |             |      |       |            | 










| |   |                 
| | - | ----------------
| |  | 44% natural gas;
|
| |  | 33% coal; and   
|
| |  | 23% fuel oil.   





| |   |                          
| | - | -------------------------
| |  | 70% coal and other fuels;
|
| |  | 30% natural gas; and     
|
| |  | less than 1% fuel oil.   



2





34



---



##### 





| |         
| | --------
| | Fuel Oil



|                   |                          |                       |     |     |      |  |     |      |  |  |     |     | 
|------------------ | ------------------------ | --------------------- | --- | --- | ---- |  | --- | ---- |  |  | --- | --- | 
|                   |                          | Year Ended            |    
|                   |                          | December 31,          |    
|                   |                          |                       |    
|                   |                          | 2002                  |     |     | 2003 |  |     | 2004 | 
|                   |                          |                       |     |     |      |  |     |      | 
|                   |                          | (In millions of tons) |    
|Domestic suppliers |                          |                       | 2.4 |     |      |  | 1.2 |      |  |  | 1.0 |    
|Foreign suppliers  |                          |                       | 6.9 |     |      |  | 5.3 |      |  |  | 3.8 |    
|                   |                          |                       |     |     |      |  |     |      | 
|                   | Total fuel oil purchased |                       |     | 9.3 |      |  |     | 6.5  |  |  |     | 4.8 | 
|                   |                          |                       |     |     |      |  |     |      | 





|                   |       |                       |     |     |      |  |     |      |  |  |     |     | 
|------------------ | ----- | --------------------- | --- | --- | ---- |  | --- | ---- |  |  | --- | --- | 
|                   |       | Year Ended            |    
|                   |       | December 31,          |    
|                   |       |                       |    
|                   |       | 2002                  |     |     | 2003 |  |     | 2004 | 
|                   |       |                       |     |     |      |  |     |      | 
|                   |       | (In millions of tons) |    
|Fuel oil purchased |       |                       |     |     |      |  |     |      |  |  |     |    
|Low sulfur         |       |                       | 3.8 |     |      |  | 4.0 |      |  |  | 3.0 |    
|Mid sulfur         |       |                       | 5.2 |     |      |  | 2.5 |      |  |  | 1.6 |    
|High sulfur        |       |                       | 0.3 |     |      |  | 0.0 |      |  |  | 0.2 |    
|                   |       |                       |     |     |      |  |     |      | 
|                   | Total |                       |     | 9.3 |      |  |     | 6.5  |  |  |     | 4.8 | 
|                   |       |                       |     |     |      |  |     |      | 



| |            
| | -----------
| | Natural Gas









35



---



##### 



 




| |                    
| | -------------------
| | Coal and Orimulsion







| |                
| | ---------------
| | Purchased power







|                    |               |       |      |      |      |  |      |      |  |  |      |      | 
|------------------- | ------------- | ----- | ---- | ---- | ---- |  | ---- | ---- |  |  | ---- | ---- | 
|                    |               | 2002  |      |      | 2003 |  |      | 2004 | 
|                    |               |       |      |      |      |  |      |      | 
|                    |               | (TWh) |     
|Long-term contracts |               |       | 21.7 |      |      |  | 15.5 |      |  |  | 14.4 |     
|Annual contracts    |               |       | 0.4  |      |      |  | 0.6  |      |  |  | 1.1  |     
|Spot purchases      |               |       | 0.4  |      |      |  | 0.0  |      |  |  | 0.1  |     
|                    |               |       |      |      |      |  |      |      | 
|                    | Total imports |       |      | 22.5 |      |  |      | 16.0 |  |  |      | 15.7 | 
|                    |               |       |      |      |      |  |      |      | 










36



---



##### 








| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks









| |                    
| | -------------------
| | Domestic operations



| |                      
| | ---------------------
| | Electricity Companies





| |   |                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Enel Distribuzione, which owns the electricity distribution
    network serving the free and regulated markets and sells
    electricity on the regulated market;                                                                                                 
|
| |  | Deval, a subsidiary in which we own a 51% interest, which
    engages in similar activities in the Valle dAosta Region;                                                                                                                                          
|
| |  | Enel Energia, which sells electricity on the free market to
    customers with annual consumption of up to 100 GWh (while sales
    to customers with higher consumption levels are made through
    Enel Trade of our Generation and Energy Management Division);
|
| |  | Enel Sole, which provides public and art lighting
    services; and                                                                                                                                                                                               
|
| |  | Enel.si, which provides electricity systems-related services.                                                                                                                                                                                                     





| |                            
| | ---------------------------
| | Distribution of Electricity





|                                           |       |                         |         |         |      |  |         |         |  |  |         |         | 
|------------------------------------------ | ----- | ----------------------- | ------- | ------- | ---- |  | ------- | ------- |  |  | ------- | ------- | 
|                                           |       | Year Ended December 31, |        
|                                           |       |                         |        
|                                           |       | 2002                    |         |         | 2003 |  |         | 2004    | 
|                                           |       |                         |         |         |      |  |         |         | 
|                                           |       | (In GWh)                |        
|Distributed to free market                 |       |                         | 92,516  |         |      |  | 102,973 |         |  |  | 113,691 |        
|Distributed (and sold) to regulated market |       |                         | 150,919 |         |      |  | 141,453 |         |  |  | 136,961 |        
|                                           |       |                         |         |         |      |  |         |         | 
|                                           | Total |                         |         | 243,435 |      |  |         | 244,426 |  |  |         | 250,652 | 
|                                           |       |                         |         |         |      |  |         |         | 

37



---



##### 







|          |  |                 |  |        |  |       
|--------- |  | --------------- |  | ------ |  | ------
|          |  | At December 31,
|          |  |                
|          |  | 2002            |  | 2003   |  | 2004  
|          |  |                 |  |        |  |       
|Employees |  | 36,103          |  | 33,106 |  | 32,595





| |                                 
| | --------------------------------
| | Electricity Distribution Network



|                               |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          |  |         |  |  |  |        | 
|------------------------------ |  | ------------ | ------- |  | ------------ |  | ------- | ------------ |  |  | ----------- |  | --------- | ----------- | ------- | ----------- | -------- |  | ------- |  |  |  | ------ | 
|                               |  | Under-       |         |  | Insulated    |  |         | Bare         |  |  |             |  | Number of |             |         | Transformer |         
|Type                           |  | ground Lines |         |  | Aerial Lines |  |         | Aerial Lines |  |  | Total Lines |  |           | Substations |         |             | Capacity | 
|                               |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          | 
|                               |  | (km)         |         |  | (km)         |  |         | (km)         |  |  | (km)        |  |           | (MVA)       |         |             |         
|Primary:                       |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          |  |         |  |  |  |        | 
|High voltage lines (40-150 kV) |  |              | 392     |  |              |  |        |              |  |  | 18,699      |  |           |             | 19,114  |             |          |  |         |  |  |  |        | 
|Primary substations            |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          |  | 2,013   |  |  |  | 89,848 | 
|Secondary:                     |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          |  |         |  |  |  |        | 
|Medium voltage lines (1-30 kV) |  |              | 123,386 |  |              |  | 7,538   |              |  |  | 204,919     |  |           |             | 335,841 |             |          |  |         |  |  |  |        | 
|Low voltage lines              |  |              | 225,141 |  |              |  | 383,010 |              |  |  | 126,739     |  |           |             | 734,890 |             |          |  |         |  |  |  |        | 
|Secondary substations          |  |              |         |  |              |  |         |              |  |  |             |  |           |             |         |             |          |  | 410,657 |  |  |  | 67,459 | 







| |                                                   
| | --------------------------------------------------
| | Consolidation of Electricity Distribution Networks



38



---



##### 



  






 







| |                   
| | ------------------
| | Other Divestitures





| |                                      
| | -------------------------------------
| | Sales to Regulated Electricity Market





| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | All Non-Eligible Customers, or customers who do not meet the
    consumption threshold for participation in the free
    market; and                         
|
| |  | Those Eligible Customers, or customers who meet the consumption
    threshold for participation in the free market, that choose not
    to participate in it.



39



---



##### 







|                |       |             |        |             |           |  |         |           |          |       |             |         |             |          |        |           |        |  |           |        |          |  |        |         |  |          |         |         |     |  |         |         |  |  |        |         |  |  |       |      | 
|--------------- | ----- | ----------- | ------ | ----------- | --------- |  | ------- | --------- | -------- | ----- | ----------- | ------- | ----------- | -------- | ------ | --------- | ------ |  | --------- | ------ | -------- |  | ------ | ------- |  | -------- | ------- | ------- | --- |  | ------- | ------- |  |  | ------ | ------- |  |  | ----- | ---- | 
|                |       | 2003        |        |             | 2004      | 
|                |       |             |        |             |           | 
|                |       |             |        | Distributed |           |  |         |           |          |       | Distributed |         |             |         
|                |       |             |        | and Sold    |           |  |         |           | Euro     |       |             |         |             | and Sold |        |           |        |  | Euro      |       
|                |       | Distributed |        |             | on the    |  |         |           |          | Cents |             |         | Distributed |          |        | on the    |        |  |           |        | Cents    | 
|                |       | to the Free |        |             | Regulated |  |         |           |          | per   |             |         | to the Free |          |        | Regulated |        |  |           |        | per      | 
|                |       | Market      |        |             | Market    |  |         | Total     |          |       | Revenues    |         |             | Kwh      |        |           | Market |  |           | Market |          |  | Total  |         |  | Revenues |         |         | Kwh | 
|                |       |             |        |             |           |  |         |           |          |       |             |         |             |          |        |           |        |  |           |        |          |  |        |         |  |          |         |         |     | 
|                |       |             |        |             |           |  |         | (Millions |          |       |             |         |             |          |        |           |        |  | (Millions |        |          | 
|                |       |             |        | (In GWh)    |           |  |         |           | of euro) |       |             |         |             | (In GWh) |        |           |        |  |           |        | of euro) |  |        |        
|High voltage(1) |       |             | 45,100 |             |           |  | 4,865   |           |          |       | 49,965      |         |             |          | 549   |           |        |  | 1.10      |        |          |  | 45,083 |         |  |          | 4,827   |         |     |  | 49,910  |         |  |  | 529   |         |  |  | 1.06  |     
|Medium voltage  |       |             | 55,532 |             |           |  | 31,263  |           |          |       | 86,795      |         |             |          | 3,312  |           |        |  | 3.82      |        |          |  | 63,372 |         |  |          | 23,966  |         |     |  | 87,338  |         |  |  | 2,782  |         |  |  | 3.19  |     
|Low voltage     |       |             | 2,341  |             |           |  | 105,325 |           |          |       | 107,666     |         |             |          | 11,980 |           |        |  | 11.13     |        |          |  | 5,236  |         |  |          | 108,168 |         |     |  | 113,404 |         |  |  | 11,791 |         |  |  | 10.40 |     
|                |       |             |        |             |           |  |         |           |          |       |             |         |             |          |        |           |        |  |           |        |          |  |        |         |  |          |         |         |     | 
|                | Total |             |        | 102,973     |           |  |         | 141,453   |          |       |             | 244,426 |             |          |        | 15,841   |        |  |           | 6.48   |          |  |        | 113,691 |  |          |         | 136,961 |     |  |         | 250,652 |  |  |        | 15,102 |  |  |       | 6.03 | 
|                |       |             |        |             |           |  |         |           |          |       |             |         |             |          |        |           |        |  |           |        |          |  |        |         |  |          |         |         |     | 






|    |                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | High-voltage sales on the regulated market are sales to the
    Ferrovie dello Stato, the Italian railway system. All
    high-voltage customers are Eligible Customers.









40



---



##### 







| |                      
| | ---------------------
| | Telemanagement System









| |                 
| | ----------------
| | Customer Service





| |                                          
| | -----------------------------------------
| | Continuity and Quality of Network Service






41



---



##### 










| |                                        
| | ---------------------------------------
| | Sales of Electricity to the Free Market





 








| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | specially tailored contract terms for different types of
    customers; and
|
| |  | value-added services such as energy monitoring and management.             



| |                         
| | ------------------------
| | International Operations







|                                                          |  |      |       |  |      |  |       |      |  |  |       | 
|--------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                                          |  | 2002 |       |  | 2003 |  |       | 2004 | 
|                                                          |  |      |       |  |      |  |       |      | 
|Electricity sales on the regulated market (TWh)           |  |      | 3.594 |  |      |  | 3.734 |      |  |  | 3.709 | 
|Electricity sales on the free market (TWh)                |  |      | N/A   |  |      |  | 0.209 |      |  |  | 0.749 | 
|Electricity transported on our distribution network (TWh) |  |      | 4.939 |  |      |  | 5.102 |      |  |  | 5.308 | 

42



---



##### 








| |                        
| | -----------------------
| | Public and Art Lighting



 




| |                                     
| | ------------------------------------
| | Electricity Systems-related Services









| |                           
| | --------------------------
| | Gas Distribution and Sales





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Enel Rete Gas, into which our subsidiaries Enel Distribuzione
    Gas, GE.AD and Sicilmetano S.p.A. (Sicilmetano) were
    merged as of December 31, 2004, as well as through Ottogas
    Rete S.r.l. (Ottogas Rete) and Italgestioni S.r.l.
    (Italgestioni), both of which were acquired in the
    second half of 2004, and other minor companies; these companies
    all own local distribution networks in specific parts of Italy
    and hold the related concessions for their use; and
|
| |  | Enel Gas, into which Sicilmetano Energy S.r.l.
    (Sicilmetano Energy, and together with Sicilmetano,
    the Sicilmetano Group) was merged as of
    December 31, 2004, as well as Ottogas Vendita S.r.l.
    (Ottogas Vendita) and Italgestioni Gas S.r.l.
    (Italgestioni Gas), both of which were acquired in
    the second half of 2004; these companies all sell natural gas to
    end users.                                                                                        



43



---



##### 










  






|                            |                     |      |           |           |      |  |           |           | 
|--------------------------- | ------------------- | ---- | --------- | --------- | ---- |  | --------- | --------- | 
|                            |                     | 2003 |           |           | 2004 | 
|                            |                     |      |           |           |      | 
|Retail (millions of
    m3) |                     |      | 2,665     |           |      |  | 2,783     |          
|Business                    |                     |      | 1,780     |           |      |  | 2,403     |          
|                            |                     |      |           |           |      | 
|                            | Natural gas sold    |      |           | 4,445     |      |  |           | 5,186     | 
|Retail                      |                     |      | 1,794,019 |           |      |  | 1,963,577 |          
|Business                    |                     |      | 1,634     |           |      |  | 2,038     |          
|                            |                     |      |           |           |      | 
|                            | Number of customers |      |           | 1,795,653 |      |  |           | 1,965,615 | 

44



---



##### 







| |                                               
| | ----------------------------------------------
| | Competition in the Electricity and Gas Markets



Electricity generation.








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An increase in bilateral contracts between our competitors and
    final customers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Regulations limiting each operators access to
    international electricity sources to a maximum percentage of
    available interconnection capacity; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The construction of new generation facilities by our competitors
    and the development of new interconnection lines that will
    increase the volume of electricity that may be imported in
    Italy. Through 2004, other producers were authorized to build
    approximately 19 GW of new generating capacity in Italy, of
    which approximately 2.5 GW is already operational, and another
    8.7 GW is expected to be operational by 2009. For imports, we
    expect an additional 2.1 GW of capacity to become available
    between 2005 and 2009, of which 1.3 GW of import capacity has
    already become available.







45



---



##### 





|                                      |                           |                 |         |                     |                |  |               |        |   |  |    |     |  
|------------------------------------- | ------------------------- | --------------- | ------- | ------------------- | -------------- |  | ------------- | ------ | - |  | -- | --- | -
|                                      |                           |                 |         | Percentage of Total |                |  | Percentage of |       
|Producer                              |                           | 2004 Production |         |                     | Italian Output |  |               | Demand |  
|                                      |                           |                 |         |                     |                |  |               |        |  
|                                      |                           | (GWh)           |         |                     |                |  |              
|Enel                                  |                           |                 | 125,868 |                     |                |  | 44            | %      |   |  | 36 | %  
|Former Gencos                         |                           |                 | 52,186  |                     |                |  | 18            | %      |   |  | 16 | %  
|Edison*                               |                           |                 | 35,552  |                     |                |  | 12            | %      |   |  | 11 | %  
|Eni                                   |                           |                 | 13,900  |                     |                |  | 5             | %      |   |  | 4  | %  
|Main municipal electricity companies* |                           |                 | 9,450   |                     |                |  | 3             | %      |   |  | 3  | %  
|Other independent power producers     |                           |                 | 49,691  |                     |                |  | 17            | %      |   |  | 15 | %  
|                                      |                           |                 |         |                     |                |  |               |        |  
|                                      | Total production in Italy |                 |         | 286,647             |                |  |               | 100    | % |  |    |    |  
|Pumped storage consumption            |                           |                 | (10,308 | )                   |                |  |              |        |   |  |   |    
|Net imports                           |                           |                 | 45,635  |                     |                |  |              |        |   |  | 14 | %  
|                                      |                           |                 |         |                     |                |  |               |        |  
|                                      | Total demand in Italy     |                 |         | 321,974             |                |  |               |       |   |  |    | 100 | %
|                                      |                           |                 |         |                     |                |  |               |        |  






|        |                                                                                                                                                 
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------
|Source: | Enel elaboration based on provisional data for Italy from the
    Gestore della Rete, and publicly available information of other
    producers.



|  |                                   
|- | ----------------------------------
|* | Excluding stakes in former Gencos.



|                                        |                                       |      |        |        |      |  |        |        |  |  |        |        |  |      |        |        |  |  |        |        | 
|--------------------------------------- | ------------------------------------- | ---- | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ |  | ---- | ------ | ------ |  |  | ------ | ------ | 
|Net Installed Capacity (MW) by Producer |                                       | 2000 |        |        | 2001 |  |        | 2002   |  |  | 2003   |        |  | 2004 |       
|                                        |                                       |      |        |        |      |  |        |        |  |  |        |        |  |      |       
|Enel                                    |                                       |      | 56,348 |        |      |  | 49,971 |        |  |  | 43,752 |        |  |      | 41,846 |        |  |  | 42,047 |       
|Former Gencos                           |                                       |      |       |        |      |  | 6,218  |        |  |  | 13,226 |        |  |      | 15,837 |        |  |  | 15,837 |       
|Enipower                                |                                       |      | 985    |        |      |  | 1,025  |        |  |  | 1,025  |        |  |      | 1,930  |        |  |  | 3,330  |       
|Edison                                  |                                       |      | 7,000  |        |      |  | 7,000  |        |  |  | 7,000  |        |  |      | 7,000  |        |  |  | 7,000  |       
|Main municipal electricity companies*   |                                       |      | 2,500  |        |      |  | 2,500  |        |  |  | 2,610  |        |  |      | 2,690  |        |  |  | 2,795  |       
|Other independent power producers       |                                       |      | 8,671  |        |      |  | 9,496  |        |  |  | 8,963  |        |  |      | 8,947  |        |  |  | 8,991  |       
|                                        |                                       |      |        |        |      |  |        |        |  |  |        |        |  |      |       
|                                        | Total net installed capacity in Italy |      |        | 75,504 |      |  |        | 76,210 |  |  |        | 76,576 |  |      |        | 78,250 |  |  |        | 80,000 | 
|                                        |                                       |      |        |        |      |  |        |        |  |  |        |        |  |      |       








|  |                                   
|- | ----------------------------------
|* | Excluding stakes in former Gencos.



Electricity sales on the free market.


46



---



##### 



Gas sales.






| |                                               
| | ----------------------------------------------
| | Seasonality of Electricity and Gas Consumption








| |             
| | ------------
| | Transmission







| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | approximately 10,172 km of 380kV or 400kV interconnections,
    including those connecting Italy and Greece;                             
|
| |  | approximately 9,982 km of 200kV or 220kV interconnections,
    including those connecting Sardinia, Corsica and the Italian
    mainland;
|
| |  | approximately 18,542 km of interconnections of 150kV, 132kV or
    less;                                                                 
|
| |  | 300 substations; and                                                                                                                     
|
| |  | certain other fixed assets.                                                                                                              



|                             |             |        |       |         |        |  |        |        | 
|---------------------------- | ----------- | ------ | ----- | ------- | ------ |  | ------ | ------ | 
|Type of Facility             |             | Number |       |         | Length | 
|                             |             |        |       |         |        | 
|                             |             |        |       | (km)(1) |       
|Primary transformer stations |             |        | 300   |         |        |  |       |       
|Transformers                 |             |        | 569   |         |        |  |       |       
|Busbar connections           |             |        | 3,902 |         |        |  |       |       
|380kV lines                  |             |        |      |         |        |  | 10,172 |       
|220kV lines                  |             |        |      |         |        |  | 9,982  |       
|150kV and 132kV lines        |             |        |      |         |        |  | 18,542 |       
|                             | Total lines |        |       |        |        |  |        | 38,696 | 






|    |                                                    
|--- | ---------------------------------------------------
|(1) | Length in kilometers refers to circuit line length.

47



---



##### 





|                  |  |                         |      |   |      |  |      |      |  |  |      |   |  |      |      |   |  |  |      |  
|----------------- |  | ----------------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | -
|                  |  | Year Ended December 31, |     
|                  |  |                         |     
|                  |  | 2000                    |      |   | 2001 |  |      | 2002 |  |  | 2003 |   |  | 2004 |     
|                  |  |                         |      |   |      |  |      |      |  |  |      |   |  |      |     
|Grid availability |  |                         | 98.7 | % |      |  | 98.8 | %    |  |  | 99.0 | % |  |      | 99.1 | % |  |  | 99.2 | %






|        |      
|------- | -----
|Source: | Enel.





















| |                   
| | ------------------
| | Telecommunications



| |         
| | --------
| | Overview



48



---



##### 



    
















| |                                  
| | ---------------------------------
| | The Italian Communications Market



49



---



##### 





| |                
| | ---------------
| | Mobile Services





| |                         
| | ------------------------
| | Fixed Telephony Services





| |                  
| | -----------------
| | Internet Services





| |                      
| | ---------------------
| | Products and Services



Mobile telephony. tm




Fixed-line telephony.




50



---



##### 





Internet.


Network access.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Direct access: Wind offers direct access to its network
    for its largest corporate customers through microwave links,
    direct fiber optic connections or dedicated lines leased from
    Telecom Italia. Wind also offers direct access to its fixed-line
    customers following the unbundling of the local loop, a process
    whereby Telecom Italia is required to give alternative carriers
    access to Telecom Italias last-mile
    connections that include the wires leading to a customers
    home or office. As of December 31, 2004, the unbundling of
    the local loop was operational through 488 unbundling sites,
    covering approximately 28% of the Italian population. As of the
    same date, a total of 426,000 customers had been connected
    directly to the Wind network. Where the unbundling of the local
    loop is fully operational, Winds customers are no longer
    required to pay fixed-line access fees to Telecom Italia and
    Wind is also able to collect interconnection fees for calls
    originating on another operators network and terminating
    on Winds network. Please see  Regulatory
    Matters  Telecommunications Regulation for
    additional information on the unbundling of the local loop.
|
| |  | Indirect access: Wind also offers indirect access to its
    fixed voice and Internet services through either carrier
    selection or carrier pre-selection.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         





| |                                    
| | -----------------------------------
| | Network Infrastructure and Licenses







| |   |                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a GSM/ GPRS mobile network covering approximately 98.9% of the
    Italian population and a UMTS mobile network covering the
    capital cities of each of Italys 21 regions;                                             
|
| |  | an 18,300 km fiber optic transmission backbone using Synchronous
    Digital Hierarchy, or SDH, and Wavelength Division Multiplexing,
    or WDM technology, the European standard for high-speed digital
    transmission;
|
| |  | metropolitan area networks in the main Italian cities, including
    Rome, Milan, Turin, Naples, Palermo, Florence, Genoa and
    Bologna, comprising 2,374 km of underground cables;                                      
|
| |  | a national voice switched network comprising 67 fixed switches
    and 51 mobile switches; and                                                                                                                             
|
| |  | a packet switched data network comprising 167 Internet Protocol
    and data transmission points of presence for data transmission.                                                                                        

51



---



##### 



  




 




| |                            
| | ---------------------------
| | Customer Care and Marketing







| |                                           
| | ------------------------------------------
| | Environmental and Other Regulatory Matters



52



---



##### 










| |                              
| | -----------------------------
| | Services and Other Activities







| |                            
| | ---------------------------
| | Engineering and Contracting






 




| |                       
| | ----------------------
| | Information Technology







| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | supporting Enel Distribuzione in completing the roll-out of the
    Telemanagement system for remote metering; and                                                                                                                                      
|
| |  | the GIOVE project, aimed at implementing a software
    and hardware platform to support the gas and electricity
    invoicing activities of our Sales, Infrastructure and Networks
    Division, which we expect to roll out over the course of 2005.

 


53



---



##### 





| |                               
| | ------------------------------
| | Real Estate and Other Services

  


 







| |                         
| | ------------------------
| | Personnel Administration





| |                               
| | ------------------------------
| | Professional Training Services





| |          
| | ---------
| | Factoring






| |      
| | -----
| | Water




54



---



##### 





| |                         
| | ------------------------
| | Research and Development













| |                           
| | --------------------------
| | Capital Investment Program



|                                   |       |                       |       |       |      |  |       |       |  |  |       |       | 
|---------------------------------- | ----- | --------------------- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                                   |       | 2002                  |       |       | 2003 |  |       | 2004  | 
|                                   |       |                       |       |       |      |  |       |       | 
|                                   |       | (In millions of euro) |      
|Generation and Energy Management   |       |                      | 1,042 |       |      |  | 853  |       |  |  | 857  |      
|Sales, Infrastructure and Networks |       |                       | 2,014 |       |      |  | 1,764 |       |  |  | 1,711 |      
|Transmission                       |       |                       | 423   |       |      |  | 371   |       |  |  | 277   |      
|Telecommunications                 |       |                       | 1,899 |       |      |  | 854   |       |  |  | 867   |      
|Others                             |       |                       | 339   |       |      |  | 127   |       |  |  | 122   |      
|                                   |       |                       |       |       |      |  |       |       | 
|                                   | Total |                       |      | 5,717 |      |  |      | 3,969 |  |  |      | 3,834 | 
|                                   |       |                       |       |       |      |  |       |       | 

   


  




55



---



##### 





|                                   |       |                       |       |       |      |  |       |       |  |  |       |       | 
|---------------------------------- | ----- | --------------------- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                                   |       | 2002                  |       |       | 2003 |  |       | 2004  | 
|                                   |       |                       |       |       |      |  |       |       | 
|                                   |       | (In millions of euro) |      
|Generation and Energy Management   |       |                       | 986  |       |      |  | 829  |       |  |  | 842  |      
|Sales, Infrastructure and Networks |       |                       | 1,900 |       |      |  | 1,665 |       |  |  | 1,632 |      
|Transmission                       |       |                       | 423   |       |      |  | 371   |       |  |  | 277   |      
|Telecommunications                 |       |                       | 1,550 |       |      |  | 685   |       |  |  | 680   |      
|Others                             |       |                       | 250   |       |      |  | 73    |       |  |  | 87    |      
|                                   |       |                       |       |       |      |  |       |       | 
|                                   | Total |                       |      | 5,109 |      |  |      | 3,623 |  |  |      | 3,518 | 
|                                   |       |                       |       |       |      |  |       |       | 



| |                                 
| | --------------------------------
| | Generation and Energy Management

     




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In Italy, the start of conversion of our approximately
    1,900 MW oil-fired plant at Torrevaldaliga Nord to clean
    coal technology, on which we spent approximately
    106 million
    during the year, and of construction of fluidized bed combustion
    facilities at a section of our power plant at Sulcis with
    approximately 300 MW of net installed capacity
    (55 million),
    as well as the implementation of our conversion program for
    certain thermal generation facilities to combined cycle
    technology at a further section of our plant at Termini Imerese,
    with approximately 360 MW of net installed capacity
    (61 million)
    that has now been converted, and the start of this program at
    our Santa Barbara plant, which will have a net installed
    capacity of 380 MW
    (41 million).
    We also continued implementing our strategic plan to increase
    investment in renewable generation facilities (wind,
    hydroelectric, geothermal) to allow us to comply with the
    regulations requiring us to provide a specified amount of
    green certificates each year, on which we spent
    approximately
    333 million
    in 2004.
|
| |  | In our international operations, expenditures on Maritza East
    IIIs ongoing plant refurbishment project (approximately
    96 million),
    as well as on developing EUFRs generation facilities
    (approximately
    52 million),
    as well as other regular maintenance and other minor
    expenditures to improve the capacity, efficiency and
    productivity of plants in Spain, North America and Latin America.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

     




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For CCGT conversions, we have completed the conversion of
    approximately 4,300 MW and we plan to continue the CCGT
    conversion program, with the most significant projects at our
    Santa Barbara and Termini Imerese power plants (for
    approximately 750 MW);                                                                                                                                            
|
| |  | For coal conversions, continuing the conversions of our thermal
    generation plants at Torrevaldaliga Nord and Sulcis, and
    beginning similar conversions of certain other power generation
    units, expected to affect in the aggregate approximately
    4,700 MW of net installed capacity. The conversion plans
    for approximately 2,500 MW of this amount are still subject
    to regulatory approval.




 


56



---



##### 



 




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

     


 


      




 




| |             
| | ------------
| | Transmission

 


57



---



##### 





| |                   
| | ------------------
| | Telecommunications

   




| |                              
| | -----------------------------
| | Services and Other Activities

   





Regulatory Matters





Overview of Regulation in the Energy Sector in Italy










| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | setting and adjusting tariffs on the basis of general criteria
    established by law;                                                                                                      
|
| |  | advising the Ministry of Productive Activities on the
    structuring and administration of licensing and authorization
    regimes for the energy sector;                                  
|
| |  | ensuring the quality of services provided to customers;                                                                                                                                     
|
| |  | overseeing the separation of utility companies into distinct
    units for accounting and management purposes;                                                                              
|
| |  | promoting competition; and                                                                                                                                                                  
|
| |  | otherwise protecting the interests of consumers, including the
    authority to mediate disputes between utilities and consumers,
    and to impose sanctions for violations of regulations.






Electricity Regulation








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | liberalized, as of April 1, 1999, the generation, import
    and export of electricity;                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | provided that consumers, or Eligible Customers, meeting certain
    consumption thresholds, which have been progressively reduced,
    may negotiate supply agreements directly with any domestic or
    foreign producer, wholesaler or distributor of electricity,
    while other, Non-Eligible Customers must continue to
    purchase electricity from the distributor serving the area in
    which they are located and pay regulated prices determined by
    the Energy Authority;

58



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provided that after January 1, 2003, no electricity company
    may produce or import more than 50% of the total of imported and
    domestically produced electricity in Italy, which limit resulted
    in our sale of the Gencos;                                                                                   
|
| |  | provided for the establishment of the Single Buyer, a central
    purchaser of electricity from producers on behalf of all
    Non-Eligible Customers;                                                                                                                                                                 
|
| |  | provided for the creation of the Italian power exchange, a
    virtual marketplace in which producers, importers, wholesalers,
    the Gestore della Rete, other Eligible Customers and the Single
    Buyer buy and sell electricity at prices determined through a
    competitive bidding process;                  
|
| |  | provided for the creation of a Market Operator to manage the
    Italian power exchange;                                                                                                                                                                                                                               
|
| |  | provided for the separation of management and operation of the
    national electricity transmission grid, which was to be licensed
    to an independent transmission system operator, the Gestore
    della Rete, from ownership of the grid assets, which were
    retained by existing owners, primarily Terna; and
|
| |  | established a new licensing regime for electricity distribution
    and provided incentives for the consolidation of electricity
    distribution networks within each municipality.                                                                                                                                   









59



---



##### 









| |                                    
| | -----------------------------------
| | Eligible and Non-Eligible Customers















| |                 
| | ----------------
| | The Single Buyer





60



---



##### 















| |                           
| | --------------------------
| | The Italian Power Exchange









61



---



##### 















62



---



##### 





| |        
| | -------
| | Imports











| |                                          
| | -----------------------------------------
| | Incentives to Provide Generation Capacity







| |                      
| | ---------------------
| | New Generation Plants





63



---



##### 





| |             
| | ------------
| | Transmission







| |                            
| | ---------------------------
| | Distribution of Electricity















| |                     
| | --------------------
| | The Tariff Structure









| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Operating costs of generation (for electricity prices on the
    regulated market), transmission and distribution activities,
    including procurement costs, and amortization and depreciation.
    In order for

64



---



##### 



| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |   | operators to be able to recover particular costs, the costs must
    be both actually incurred by them and recognized by the Energy
    Authority;
|
| |  | An appropriate return on invested capital, including both equity
    and debt financing; and                                                      
|
| |  | The costs associated with system charges.                                                                                                         















| |   |                                                        
| | - | -------------------------------------------------------
| |  | low-voltage domestic consumers (residential customers);
|
| |  | low-voltage public lighting;                           
|
| |  | other low-voltage end users;                           
|
| |  | medium-voltage public lighting;                        
|
| |  | other medium-voltage end users; and                    
|
| |  | high-voltage end users.                                





| |                                            
| | -------------------------------------------
| | Generation Component of Electricity Tariffs



65



---



##### 







| |   |                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hydroelectric or geothermal generation, since these plants do
    not incur fuel costs; and                                                                                                                                                         
|
| |  | The resale of electricity imported under long-term contracts in
    effect as of the date of the entry into force of the first
    Electricity Directive on February 19, 1997, which was
    frequently cheaper than electricity generated in Italy.











| |                                         
| | ----------------------------------------
| | Transmission and Distribution Components









66



---



##### 















| |                                 
| | --------------------------------
| | System Charges and Other Charges





| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | Charges concerning the electricity system, established by the
    Ministry of Productive Activities, that consist of:



| |   |                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a nuclear surcharge, covering part of the costs incurred by
    So.g.i.n., the company to which we transferred our discontinued
    nuclear operations, in connection with the dismantling of
    nuclear plants and decommissioning of nuclear fuels; this
    surcharge is designed to cover substantially all of such costs
    when added to the funds that we transferred to So.g.i.n.;
|
| |  | a surcharge that benefits producers from renewable resources;                                                                                                                                                                                                                                                                                                                               
|
| |  | special surcharges covering the cost of supplying electricity at
    mandated discounts to certain customers (primarily the Italian
    state-owned railway company and Acciai Speciali Terni S.p.A.,
    both of which transferred electricity assets to us as part of
    the nationalization of the Italian electricity industry in 1962);                                               
|
| |  | research and development surcharges, covering related
    costs; and                                                                                                                                                                                                                                                                                                                        
|
| |  | certain stranded costs that have not yet been recovered. Please
    see  Stranded Costs for a discussion of
    these costs.                                                                                                                                                                                                                                                             



| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other general interest charges established by the Energy
    Authority to adjust or refine the operation of the tariff
    mechanism, which include adjustments to cover potential
    differences between distributors costs as recognized under
    the current tariff structure and actual tariff revenues.
|
| |  | Incentives for the enhancement of the quality of service.                                                                                                                                                                                                                                                      

67



---



##### 





| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | Charges recovered through upward adjustments to the price caps,
    as established by the Energy Authority, which cover:



| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | costs deriving from unforeseeable events, changes in the
    regulatory framework or new obligations for universal service;                                                        
|
| |  | costs deriving from demand-side management initiatives intended
    to promote a more efficient use of resources by electricity
    customers, including information campaigns; and
|
| |  | additional recognized costs incurred in connection with the
    offer of value-added services on top of basic options.                                                             

Cassa Conguaglio per il Settore Elettrico




| |               
| | --------------
| | Stranded Costs





| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | undertook for reasons of public policy;                                                                                      
|
| |  | undertook at a time when the electricity markets were not yet
    open to competition; and                                   
|
| |  | could have been recovered in a monopoly regime but cannot be
    recovered under a regime of competitive electricity pricing.





| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | they minimize the impact of those costs (and, hence, the amount
    of the refund) on their future operations; and         
|
| |  | they submit an industrial plan demonstrating the long-term
    profitability of the activity related to the stranded costs.



   




| |                                             
| | --------------------------------------------
| | Continuity and Quality of Service Regulation



68



---



##### 





 










| |                                 
| | --------------------------------
| | Promotion of Renewable Resources

Comitato Interministeriale Prezzi






69



---



##### 







| |                    
| | -------------------
| | Hydroelectric Power









| |      
| | -----
| | Taxes





| |   |                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A state tax for residential uses (of
    0.0047/kWh) and
    for other uses (of
    0.0031/kWh
    excluding users with consumption over 1.2 GWh per month);
|
| |  | Additional local taxes that vary from
    0.0093/kWh up to
    a maximum of
    0.0204/kWh; and                                                             
|
| |  | Value-added tax of 20% for all users with the exception of
    residential and industrial customers (who are taxed at a rate of
    10%).                     




Gas Regulation




70



---



##### 





| |                                        
| | ---------------------------------------
| | Gas Eligible and Non-Eligible Customers





| |                      
| | ---------------------
| | Transport and storage







| |                             
| | ----------------------------
| | Distribution and Sale of Gas







| |                                        
| | ---------------------------------------
| | Restrictions on Sale and Imports of Gas





| |                                    
| | -----------------------------------
| | Rules Governing Distribution of Gas



71



---



##### 







| |                                                                          
| | -------------------------------------------------------------------------
| | Distribution Tariffs and Sales Tariffs for Gas Non-Eligible
    Customers














Environmental Matters






72



---



##### 



2 x 2




| |                       
| | ----------------------
| | Electromagnetic Fields













| |              
| | -------------
| | CO2 Emissions

2


2


73



---



##### 





2




  




2


2







74



---



##### 







| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | Conversion of existing oil-fired thermal power plants into
    gas-fired or high-efficiency coal-fired plants;
|
| |  | Increased renewable energy capacity; and                                                                      
|
| |  | Purchases of emission rights from third parties.                                                              

2




| |                             
| | ----------------------------
| | SO2, NOx and Other Emissions

2 x 2 x




2 x 3 2 x


2 x


Reductions of SO2 emissions against 2000
levels


|     |  |                |     |            |        |  |     |  
|---- |  | -------------- | --- | ---------- | ------ |  | --- | -
|     |  |                |     | Percentage |       
|Year |  | Metric Tons    |     |            | Change | 
|     |  |                |     |            |        | 
|     |  | (In thousands) |     |            |       
|2001 |  |                | 213 |            |        |  | (11 | )
|2002 |  |                | 187 |            |        |  | (21 | )
|2003 |  |                | 101 |            |        |  | (58 | )
|2004 |  |                | 94  |            |        |  | (61 | )

Reductions of NOx emissions against 2000
levels


|     |  |                |    |            |        |  |     |  
|---- |  | -------------- | -- | ---------- | ------ |  | --- | -
|     |  |                |    | Percentage |       
|Year |  | Metric Tons    |    |            | Change | 
|     |  |                |    |            |        | 
|     |  | (In thousands) |    |            |       
|2001 |  |                | 71 |            |        |  | (8  | )
|2002 |  |                | 71 |            |        |  | (9  | )
|2003 |  |                | 62 |            |        |  | (20 | )
|2004 |  |                | 56 |            |        |  | (28 | )



75



---



##### 









2 x   




| |                  
| | -----------------
| | PCBs and Asbestos







| |                           
| | --------------------------
| | Water Pollution Prevention







| |                       
| | ----------------------
| | Solid Waste Management





| |               
| | --------------
| | Site Clearance



76



---



##### 







| |                     
| | --------------------
| | Landscape Safeguards





| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Re-using routes of previous power lines wherever possible;                                                                                                                                                                   
|
| |  | Soliciting proposals internationally for the design of new
    towers for our transmission lines aimed at reducing the
    environmental and aesthetic impact of towers in non-urban areas
    of particular landscape value;
|
| |  | Acting to reduce the impact of lines in environmentally
    sensitive or protected areas;                                                                                                                                    
|
| |  | For medium-voltage lines, placing underground cables in urban
    areas and aerial cables with low environmental impact in other
    areas with specific environmental value; and                                            
|
| |  | Using aerial insulated cables or underground cables in low
    voltage networks (at present, we have built approximately
    two-thirds of our network in this way).                                                         





| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2003, our medium voltage aerial insulated cables and
    underground cables totaled 127,987 km, which represented 38.3%
    of our medium voltage lines, compared to 35.9% in 2000; and
|
| |  | In 2003, our low voltage aerial insulated cables and underground
    cables totaled 600,675 km, which represented 82.5% of our low
    voltage lines, compared to 80.6% in 2000.          





| |                                                                   
| | ------------------------------------------------------------------
| | Environmental Registrations, Certifications and
    Authorizations









| |                   
| | ------------------
| | Cost of Compliance




77



---



##### 



 




| |                                
| | -------------------------------
| | Discontinued Nuclear Operations















| |                  
| | -----------------
| | Nuclear Liability






78



---



##### 












Telecommunications Regulation












| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to promote convergence among mobile telephony, fixed-line
    telephony, television and Internet services as well as the
    development of third-generation wireless and mobile systems;
|
| |  | to introduce further competition into the Italian
    telecommunications market;                                                                                                         
|
| |  | to promote liberalization in the broadcasting and media industry;                                                                                                                        
|
| |  | easing barriers to entry;                                                                                                                                                                
|
| |  | fostering the growth of new markets; and                                                                                                                                                 
|
| |  | protecting consumers.                                                                                                                                                                    

79



---



##### 





| |                
| | ---------------
| | Interconnection









| |                  
| | -----------------
| | Universal Service

  




| |                           
| | --------------------------
| | Fixed-line Voice Telephony





| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | carrier selection, which allows customers to select carriers on
    a call-by-call basis for both long-distance and local calls by
    dialing a set prefix before making a call;                                        
|
| |  | carrier pre-selection, which allows customers to use alternative
    carriers networks for all of their local, long-distance,
    fixed- to-mobile and international calls without dialing a
    carrier selection code;
|
| |  | number portability, which allows customers to keep the same
    telephone number when they change carrier; and                                                                                                           
|
| |  | unbundling of the local loop of Telecom Italia, which allows
    competing carriers access to the so-called last
    mile, or the wires leading directly into customers
    homes or offices.                         





| |                 
| | ----------------
| | Mobile Telephony





80



---



##### 





| |                                 
| | --------------------------------
| | Internet and Electronic Commerce






Property, Plants and Equipment












|        |                                             
|------- | --------------------------------------------
|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS




Summary of Results


           


   




81



---



##### 





         





The Electricity Market Regulatory Framework




| |         
| | --------
| | Overview











82



---



##### 







| |                   
| | ------------------
| | Tariffs and Prices









| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | a generation cost component, reflecting fuel
    costs; and                                         
|
| |  | the application of global price-cap reductions to transmission
    and distribution transport charges.









| |                      
| | ---------------------
| | Macroeconomic Factors







83



---



##### 





| |                             
| | ----------------------------
| | Critical Accounting Policies



Use of estimates.


Recoverability of long-lived assets.


Realization of deferred tax assets.


Litigation.


Allowance for doubtful accounts.


84



---



##### 







| |                             
| | ----------------------------
| | Comparability of Information





| |                                  
| | ---------------------------------
| | Regulatory and Other Developments





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Start of operation of the Italian power exchange and the
    Single Buyer. On April 1, 2004, the Italian power
    exchange for the spot trading of electricity started operations
    and the Single Buyer became responsible for purchasing all of
    the electricity to be supplied to the regulated market. Please
    see Item 4. Information on the Company 
    Regulatory Matters  Electricity Regulation for
    a detailed discussion of the Italian power exchange, the Single
    Buyer and related developments in the Italian electricity
    market. As a result of this development, since April 1,
    2004, our Generation and Energy Management segment sells the
    electricity we produce that is destined for the regulated market
    to the Single Buyer, and our Sales, Infrastructure and Networks
    segment purchases the electricity that it distributes on the
    regulated market from the Single Buyer. We now record these
    sales and purchases as operating revenues and operating
    expenses, respectively. Before April 1, 2004, our
    Generation and Energy Management segment sold electricity for
    distribution on the regulated market directly to our Sales,
    Infrastructure and Networks segment, and the revenues and costs
    arising from these sales were eliminated from, and therefore not
    recorded in, our consolidated financial statements. As a result,
    both our operating revenues and operating expenses have
    increased substantially on a consolidated basis since
    April 1, 2004. However, while this change has affected the
    comparability of our revenues and expenses for the periods
    presented, it did not have a material impact on our consolidated
    operating income in 2004. Sales to the Single Buyer are now
    included in the line item Sales to regulatory entities,
    sales on the free market and sales on foreign markets in
    the results presented below (please see  2004
    Compared with 2003  Operating Revenues for a
    description of this line item). For prior periods, this line
    item was referred to as Sales to Eligible Customers, sales
    to the Gestore della Rete and sales on foreign markets, as
    the Single Buyer was not fully operational. Purchases from the
    Single Buyer are recorded in the operating expense line item
    Purchased Power.
|
| |  | Equalization mechanism to compensate time lag in tariff
    setting. The prices distributors pay to the Single Buyer for
    electricity to be distributed on the regulated market are set
    monthly by the Energy Authority based on the average unit costs
    incurred by the Single Buyer in connection with its purchases of
    electricity. However, the prices that distributors may charge to
    end users on the regulated market are fixed by the Energy
    Authority on a quarterly basis. In order to minimize the effects
    of this discrepancy, these rules have established a price
    equalizing mechanism applicable for the first time in 2004.
    Please see Item 4. Information on the
    Company  Regulatory Matters  Electricity
    Regulation for more information on the tariff system and
    this equalizing mechanism. We recorded
    231 million
    in revenues in 2004 in connection with this equalizing
    mechanism. As this mechanism was not operational in 2003, its
    introduction has affected the comparability of our revenues for
    the periods presented, particularly with respect to our Sales,
    Infrastructure and Network segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Capacity payments. In order to address a current deficit
    in Italian generation capacity relative to rising electricity
    demand, the regulatory framework provides incentives to power
    generators both to build new capacity as well as to maintain
    their existing plants in good working order and available to
    cover sudden variations in electricity demand. In 2004, the
    Energy Authority established a provisional system of payments to
    remunerate producers that make generation capacity available to
    the electricity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

85



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | system at times of peak demand, known as capacity
    payments. Capacity payments to a given producer comprise
    both an amount due for capacity available on
    critical days (set by the Gestore della Rete) and a
    further amount payable when pool market prices fall below
    specified thresholds, as an extra incentive. The provisional
    system is expected to remain in place until the end of 2005. The
    Energy Authority is currently developing the definitive
    mechanism, which by law must be market-based and also provide
    incentives for new generation capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | August 2004 decree on stranded costs. Stranded costs are
    current costs deriving from contractual commitments or
    investment decisions that electricity companies undertook for
    reasons of public policy, at a time when the electricity markets
    were not yet open to competition, and could have been recovered
    in a monopoly regime but cannot be recovered under a regime of
    competitive electricity pricing. Please see Item 4.
    Information on the Company  Regulatory
    Matters  Electricity Regulation for more
    information on stranded costs. In August 2004, the MEF and the
    Ministry of Productive Activities issued a joint decree that
    determined the overall amount of stranded costs we are entitled
    to recover. On December 1, 2004, following the European
    Commissions approval of the decree, we became entitled to
    recover approximately
    513 million
    on account of stranded costs related to our generation plants
    for the period 2000-2003, as well as our stranded costs related
    to the Nigerian LNG contract, which were determined to be
    555 million
    in respect of the 2000-2003 period and approximately
    910 million
    in respect of the 2004-2009 period
    (151 million
    of which related to 2004). As a result, in 2004 we recorded as
    other revenues a total of
    1,219 million
    arising in connection with stranded costs, the amount we became
    entitled to receive in respect of 2004 and prior years under the
    August 2004 decree. Of this total, the
    513 million
    related to our generation plants and the
    151 million
    related to the Nigerian LNG contract for 2004 were recorded by
    our Generation and Energy Management segment, and the
    555 million
    related to the Nigerian LNG contract in respect of the 2000-2003
    period were recorded by our Corporate segment. We have not
    actually received these funds, as the manner and timing in which
    these amounts are to be paid will be established in a future
    decree, which is currently under consideration by the Italian
    government.
|
| |  | Increased estimates of the useful lives of certain
    distribution assets. Effective January 1, 2004, on the
    basis of technical tests conducted by external advisors, we
    increased our estimates of the useful lives of certain assets
    related to the distribution network of our Sales, Infrastructure
    and Networks segment. As a consequence, the amount of
    depreciation expense we recorded in 2004 with respect to these
    assets was lower than the amount recorded for the same assets in
    2003 by
    518 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



| |                                  
| | ---------------------------------
| | Changes in Scope of Consolidation





| |   |                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the consolidation for balance sheet purposes, effective
    December 31, 2004, of Italgestioni and Italgestioni Gas
    (together, the Italgestioni Group), which are
    companies active in the distribution and sale of natural gas to
    end users in the provinces of Calabria and Naples, following our
    acquisition of these companies in December 2004;
|
| |  | the consolidation, effective October 1, 2004, of Ottogas
    Rete and Ottogas Vendita (together, the Ottogas
    Group), which are companies active in the distribution and
    sale of natural gas to end users in the area of Naples and
    Salerno, following our acquisition of these companies in
    September, 2004;                                       
|
| |  | the deconsolidation of NewReal, a company to which we
    contributed certain of our real estate assets, effective as of
    July 1, 2004, following its disposal on July 14, 2004;                                                                                                                                                                                  
|
| |  | the consolidation, effective January 1, 2004, of
    Sicilmetano and Sicilmetano Energy, which are companies active
    in the distribution and sale of natural gas to end users in
    Sicily, following our acquisition of these companies in January
    2004;                                                                                                    
|
| |  | the deconsolidation, effective January 1, 2004, of our
    recycling and waste management companies, the Aimeri Group,
    which we sold in February 2004;                                                                                                                                                                                                           

86



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the consolidation for balance sheet purposes, as of
    December 31, 2003, of the assets and liabilities of
    Unión Fenosa, a Spanish company that generates electricity
    from renewable resources, which we acquired in December 2003,
    and, effective January 1, 2004, its consolidation on a
    line-by-line basis for income statement purposes;
|
| |  | the elimination of the minority interest relating to Wind
    following our acquisition in July 2003 from France
    Télécom of the 26.6% of Winds share capital that
    we did not already own;                                                                                                                                                           
|
| |  | the consolidation on a line-by-line basis, effective
    April 1, 2003, of Maritza East III Power Holding B.V.
    (Maritza), which in turn controls Maritza
    East III., a Bulgarian electricity generation company that
    we acquired in March 2003;                                                                                                 
|
| |  | the deconsolidation of Interpower S.p.A., the third and last
    Genco we sold, effective as of January 1, 2003;                                                                                                                                                                                                                                             
|
| |  | the deconsolidation of CESI S.p.A. (CESI) effective
    as of January 1, 2003, reflecting the decline of our
    holding to 40.9%, following the disposal of Interpower, through
    which we held part of our interest in CESI. CESI provided
    research and development services;                                                                      
|
| |  | the consolidation on a line-by-line basis of Camuzzi Gazometri
    (Camuzzi, now called Enel Rete Gas), effective
    July 1, 2002, following our acquisition of this company.
    Enel Rete Gas operates natural gas distribution activities in
    Italy; and                                                                                            
|
| |  | the deconsolidation of Eurogen S.p.A., the second Genco we sold,
    effective as of the date of its disposal, May 31, 2002.                                                                                                                                                                                                                                 



| |                  
| | -----------------
| | Business Segments





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Generation and Energy Management. This segment
    corresponds to the division that is responsible for our
    operations related to the production of electricity and the
    procurement and trading of fuel for electricity generation, and
    includes power generation activities in Italy and abroad. This
    division generates operating revenues mainly from the sale of
    electricity to the Single Buyer (or, prior to April 1,
    2004, to our Sales, Infrastructure and Networks Division), to
    the Gestore della Rete and other resellers in the domestic
    electricity market, as well as through fuel trading. The
    division, which procures fuel for all of the companies of the
    Group, also sells natural gas to our Sales, Infrastructure and
    Networks Division and to third parties. Since January 1,
    2003, this division has also sold electricity to large
    electricity users, or Eligible Customers with annual electricity
    consumption higher than 100 GWh, which were previously served by
    our Sales, Infrastructure and Network division. The main
    companies in this division include the following: in Italy, Enel
    Produzione (thermal and hydroelectric generation), Enel Green
    Power (geothermal, hydroelectric and wind power generation), and
    Enel Trade (fuel procurement and trading, risk management, sales
    to large electricity users). We merged Enel Green Power into
    Enel Produzione as of June 1, 2005. Outside of Italy, this
    division in 2004 included Viesgo Generaciòn and EUFR in
    Spain, Maritza East III in Bulgaria; Enel North America in
    the U.S.; and Enel Latin America in Central and South America.
|
| | Sales, Infrastructure and Networks. This segment
    corresponds to the division that includes our electricity and
    gas network operations and carries out distribution and sales of
    electricity on the regulated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

87



---



##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | market and to free market customers with an annual electricity
    consumption of 100 GWh or lower in Italy. It also distributes
    and sells natural gas to end users and provides public and art
    lighting services and electricity systems-related services. This
    division also include our electricity distribution and sales
    activities outside of Italy. Operating revenues at this division
    derive primarily from fees for transport of electricity and gas
    on our distribution networks, the sale of electricity on the
    regulated and free markets and of natural gas to end users.
    Starting from January 1, 2003, electricity sales to large
    electricity users, which were previously carried out by this
    division, are carried out by our Generation and Energy
    Management Division. The divisions electricity-related
    activities are carried out in Italy primarily through Enel
    Distribuzione (sale of electricity on the regulated market and
    transport of electricity on our distribution network), Deval
    (distribution and sales of electricity in the Valle dAosta
    area), Enel Energia (sale of electricity on the free market),
    Enel Sole (public lighting services) and Enel.si (electricity
    systems-related services). Outside of Italy this division
    primarily includes Electra de Viesgo Distribuciòn SL
    and Viesgo Energia SL in Spain. The divisions natural
    gas operations are carried out primarily through Enel Rete Gas,
    Ottogas Rete and Italgestioni, which distribute natural gas in
    Italy, and Enel Gas, Ottogas Vendita and Italgestioni Gas, which
    sell natural gas to end users in Italy. We merged Enel
    Distribuzione Gas, GE.AD and Sicilmetano into Enel Rete Gas, and
    Sicilmetano Energy in Enel Gas as of December 31, 2004
    (except that for accounting purposes we considered these mergers
    retroactively effective as of January 1, 2004). We expect
    to merge Ottogas Rete and Italgestioni into Enel Rete Gas and
    Ottogas Vendita and Italgestioni Gas into Enel Gas by
    June 30, 2005.
|
| | Transmission. Our transmission segment consists of Terna,
    which owns more than 90% of the transmission assets of
    Italys national electricity grid, and its consolidated
    subsidiaries, Transmissora Sudeste Nordeste and Novatrans
    Energia, two Brazilian electricity transmission companies. Terna
    derives its operating revenues from the transportation of
    electricity on the portion of the national transmission grid
    that is owned by Terna, but operated by the Gestore della Rete.
    We owned 50% of Terna as of December 31, 2004, and
    currently have a 36.14% stake, although in May 2005, we agreed
    to sell an additional 29.99% stake in Terna in light of
    regulations that will prevent any electricity operator,
    including us, from controlling more than 5% of the voting rights
    with respect to the appointment of Ternas directors. We
    expect to close this transaction and reduce our stake in Terna
    to approximately 5% by the end of the third period of 2005, and
    to deconsolidate Terna upon closing of this transaction. Please
    see Item 4. Information on the Company 
    Business  Overview  Transmission for
    a detailed description of recent transactions involving Terna.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Telecommunications. Our Telecommunications segment
    includes the operations of Wind and its consolidated
    subsidiaries. Our telecommunications activities include the
    offer of mobile telecommunications services, fixed-line
    telephony services, Internet and other telecommunication-related
    services. We formed Wind in 1997 as a joint venture with France
    Télécom and Deutsche Telekom. After Deutsche
    Telekoms exit from the venture in 2000, in July 2003 we
    became Winds sole shareholder after having acquired France
    Télécoms 26.6% stake. In May 2005, we entered
    into an agreement for the sale of Wind to Weather in a series of
    transactions that will result in our owning 26.1% of Weather
    (which will then control both Wind and Orascom) by mid-2006 and
    which we currently expect ultimately to lead to our exit from
    the telecommunications business. See Item 4.
    Information on the Company  Business  The
    Enel Group  Telecommunications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Corporate. Enel, as the parent company, defines the
    strategic objectives for the Enel Group and coordinates the
    activities of these divisions. In addition, Enel manages finance
    operations and insurance risk coverage for all Group companies
    and provides assistance and guidelines on organizational,
    industrial relations, accounting, administrative, tax and legal
    issues. We consider Enel as a separate reportable segment
    because it holds long-term contracts to purchase imported
    electricity and because it engaged, until 2002, in limited fuel
    procurement activities. In the second half of 2002, Enel
    completed the transfer of its fuel purchase contracts to Enel
    Trade, of our Generation and Energy Management Division. Until
    March 31, 2004, Enel sold the imported electricity it
    purchases to Enel Distribuzione at prices established by the
    Energy Authority. Since that date, Enel has been required to
    sell this electricity to the Single Buyer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

88



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Services and Other Activities. This segment in 2004
    included non-core business operations, including Enelpower,
    which provides power-related engineering and contracting
    services; Enel.it, which operated our group-wide information
    technology unit and other minor businesses, Enel Facility
    Management, which provided commercial real estate management
    services, APE Gruppo Enel, now Enel Ape, which provides
    personnel administration services, and, until its disposal in
    July 2004, NewReal, a company with real estate activities.
    Effective as of January 1, 2005, we merged Enel.it and Enel
    Facility Management into Enel Ape.




Outlook














89



---



##### 











| |                                                         
| | --------------------------------------------------------
| | Acquisition of Infostrada and Sole Ownership of
    Wind




   


 


    


   


90



---



##### 



  







Analysis of Operating Results




|                                   |                               |              |       |       |      |  |       |       |   |  |       |       |  
|---------------------------------- | ----------------------------- | ------------ | ----- | ----- | ---- |  | ----- | ----- | - |  | ----- | ----- | -
|                                   |                               | Year Ended   |      
|                                   |                               | December 31, |      
|                                   |                               |              |      
|                                   |                               | 2002         |       |       | 2003 |  |       | 2004  |  
|                                   |                               |              |       |       |      |  |       |       |  
|Operating revenues                 |                               |              | 100.0 | %     |      |  | 100.0 | %     |   |  | 100.0 | %    
|Operating expenses                 |                               |              |       |       |      |  |       |       |   |  |       |      
|                                   | Personnel                     |              |       | (12.0 | )    |  |       | (11.0 | ) |  |       | (9.1  | )
|                                   | Fuel for thermal generation   |              |       | (14.2 | )    |  |       | (13.1 | ) |  |       | (9.8  | )
|                                   | Purchased power               |              |       | (16.0 | )    |  |       | (14.8 | ) |  |       | (28.7 | )
|                                   | Depreciation and amortization |              |       | (14.9 | )    |  |       | (14.4 | ) |  |       | (11.5 | )
|                                   | Other operating expenses      |              |       | (33.3 | )    |  |       | (31.6 | ) |  |       | (23.6 | )
|                                   |                               |              |       |       |      |  |       |       |  
|Total operating expenses           |                               |              | (90.4 | )     |      |  | (84.9 | )     |   |  | (82.7 | )    
|                                   |                               |              |       |       |      |  |       |       |  
|Operating income                   |                               |              | 9.6   |       |      |  | 15.1  |       |   |  | 17.3  |      
|Financial expense                  |                               |              | (3.9  | )     |      |  | (3.6  | )     |   |  | (3.0  | )    
|Equity losses                      |                               |              | (0.2  | )     |      |  | (0.2  | )     |   |  | (0.1  | )    
|Extraordinary income (expense)     |                               |              | 2.4   |       |      |  | (0.5  | )     |   |  | (2.2  | )    
|                                   |                               |              |       |       |      |  |       |       |  
|Income before taxes                |                               |              | 7.9   |       |      |  | 10.8  |       |   |  | 12.0  |      
|Income taxes                       |                               |              | (2.0  | )     |      |  | (3.1  | )     |   |  | (4.2  | )    
|                                   |                               |              |       |       |      |  |       |       |  
|Income (before minority interests) |                               |              | 5.9   |       |      |  | 7.7   |       |   |  | 7.8   |      
|Net Income                         |                               |              | 6.7   | %     |      |  | 8.0   | %     |   |  | 7.4   | %    

91



---



##### 






2004 Compared with 2003




| |                   
| | ------------------
| | Operating Revenues



|                                                                          |                                                                                                                 |                       |        |        |      |  |        |        | 
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | --------------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                                                                          |                                                                                                                 | Year Ended            |       
|                                                                          |                                                                                                                 | December 31,          |       
|                                                                          |                                                                                                                 |                       |       
|                                                                          |                                                                                                                 | 2003                  |        |        | 2004 | 
|                                                                          |                                                                                                                 |                       |        |        |      | 
|                                                                          |                                                                                                                 | (In millions of euro) |       
|Electricity sales:                                                        |                                                                                                                 |                       |        |        |      |  |        |       
|                                                                          | Tariff revenues from sales on the regulated market and transport
    of electricity on our distribution network |                       |        | 16,740 |      |  |        | 15,444 | 
|                                                                          | Sales to regulatory entities, sales on the free market and sales
    on foreign markets(1)                      |                       |        | 3,094  |      |  |        | 9,720  | 
|                                                                          | Equalization Fund contributions                                                                                 |                       |        | 179    |      |  |        | 17     | 
|                                                                          |                                                                                                                 |                       |        |        |      | 
|Total revenues from electricity sales                                     |                                                                                                                 |                       | 20,013 |        |      |  | 25,181 |       
|Telecommunications services                                               |                                                                                                                 |                       | 3,959  |        |      |  | 4,168  |       
|Gas sales to end users                                                    |                                                                                                                 |                       | 1,254  |        |      |  | 1,374  |       
|Fees for customer connections, inspections and repositioning
    services |                                                                                                                 |                       | 684    |        |      |  | 675    |       
|Other revenues(2)                                                         |                                                                                                                 |                       | 5,407  |        |      |  | 5,091  |       
|                                                                          |                                                                                                                 |                       |        |        |      | 
|                                                                          | Total operating revenues                                                                                        |                       |        | 31,317 |      |  |        | 36,489 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Sales to regulatory entities includes sales to the
    Gestore della Rete, the Single Buyer (since April 1, 2004)
    and the Gestore del Mercato (or Market Operator). While sales to
    third-party resellers of electricity on the free market are
    included in Sales on the free market, this line item
    does not include revenues from sales to resellers purchasing
    electricity for distribution on the regulated market. Since
    April 1, 2004, these resellers have been required to
    purchase electricity directly from the Single Buyer. Revenues
    received prior to that date from resellers purchasing
    electricity for distribution on the regulated market were
    recorded in the line item Tariff revenues from sales on
    the regulated market and transport of electricity on our
    distribution network.
|   
|(2) | Other revenues mainly includes our revenues from
    sales of fuel (including natural gas) to third parties, revenues
    of our Transmission division, engineering and contracting
    activities, and non-recurring items such as reversals of
    provisions, bonus payments and reimbursements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

     




| |                  
| | -----------------
| | Electricity sales




      


92



---



##### 






 


  




| |                            
| | ---------------------------
| | Telecommunications services

   




| |                       
| | ----------------------
| | Gas sales to end users

  




| |                                                                          
| | -------------------------------------------------------------------------
| | Fees for customer connections, inspections and repositioning
    services






| |               
| | --------------
| | Other revenues

    


93



---



##### 



  




|                                   |       |                       |         |        |      |   |        |        | 
|---------------------------------- | ----- | --------------------- | ------- | ------ | ---- | - | ------ | ------ | 
|                                   |       | Year Ended            |        
|                                   |       | December 31,          |        
|                                   |       |                       |        
|                                   |       | 2003                  |         |        | 2004 |  
|                                   |       |                       |         |        |      |  
|                                   |       | (In millions of euro) |        
|Generation and Energy Management   |       |                      | 12,607  |        |      |  | 12,982 |       
|Sales, Infrastructure and Networks |       |                       | 20,433  |        |      |   | 19,466 |       
|Transmission                       |       |                       | 927     |        |      |   | 1,023  |       
|Telecommunications                 |       |                       | 4,383   |        |      |   | 4,714  |       
|Corporate                          |       |                       | 1,139   |        |      |   | 1,617  |       
|Services and Other Activities      |       |                       | 2,742   |        |      |   | 1,799  |       
|Eliminations                       |       |                       | (10,914 | )      |      |   | (5,112 | )     
|                                   |       |                       |         |        |      |  
|                                   | Total |                       |        | 31,317 |      |   |       | 36,489 | 



| |                                 
| | --------------------------------
| | Generation and Energy Management

      


        


94



---



##### 






   




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

        


         





     




| |             
| | ------------
| | Transmission

   


95



---



##### 








| |                   
| | ------------------
| | Telecommunications

       




| |          
| | ---------
| | Corporate

  




| |                              
| | -----------------------------
| | Services and Other Activities

      


         


96



---



##### 





| |             
| | ------------
| | Eliminations






| |                   
| | ------------------
| | Operating Expenses



|                          |                             |                 |        |       |      |   |        |        |  
|------------------------- | --------------------------- | --------------- | ------ | ----- | ---- | - | ------ | ------ | -
|                          |                             | Year Ended      |       
|                          |                             | December 31,    |       
|                          |                             |                 |       
|                          |                             | 2003            |        |       | 2004 |  
|                          |                             |                 |        |       |      |  
|                          |                             | (In millions of |       
|                          |                             | euro)           |       
|Operating expenses:       |                             |                 |        |       |      |   |        |       
|                          | Personnel                   |                 |       | 3,440 |      |   |       | 3,315  |  
|                          | Fuel for thermal generation |                 |        | 4,101 |      |   |        | 3,598  |  
|                          | Purchased power             |                 |        | 4,620 |      |   |        | 10,465 |  
|Other operating expenses: |                             |                 |        |       |      |   |        |       
|                          | Services and rentals        |                 |        | 5,224 |      |   |        | 5,336  |  
|                          | Materials and supplies      |                 |        | 4,111 |      |   |        | 3,072  |  
|                          | Provisions                  |                 |        | 593   |      |   |        | 512    |  
|                          | Other                       |                 |        | 924   |      |   |        | 716    |  
|                          | Capitalized expense         |                 |        | (944  | )    |   |        | (1,023 | )
|                          |                             |                 |        |       |      |  
|Total                     |                             |                | 22,069 |       |      |  | 25,991 |       

        




| |          
| | ---------
| | Personnel






| |                            
| | ---------------------------
| | Fuel for thermal generation

 




| |                
| | ---------------
| | Purchased power




97



---



##### 







| |                     
| | --------------------
| | Services and rentals

     




| |                       
| | ----------------------
| | Materials and supplies

   




| |           
| | ----------
| | Provisions

           




| |            
| | -----------
| | Other costs

    


98



---



##### 





| |                     
| | --------------------
| | Capitalized expenses






|                                   |  |                       |         |   |      |   |        |  
|---------------------------------- |  | --------------------- | ------- | - | ---- | - | ------ | -
|                                   |  | Year Ended            |        
|                                   |  | December 31,          |        
|                                   |  |                       |        
|                                   |  | 2003                  |         |   | 2004 |  
|                                   |  |                       |         |   |      |  
|                                   |  | (In millions of euro) |        
|Generation and Energy Management   |  |                      | 8,948   |   |      |  | 9,054  |  
|Sales, Infrastructure and Networks |  |                       | 16,870  |   |      |   | 15,744 |  
|Transmission                       |  |                       | 343     |   |      |   | 350    |  
|Telecommunications                 |  |                       | 3,507   |   |      |   | 3,360  |  
|Corporate                          |  |                       | 912     |   |      |   | 959    |  
|Services and Other Activities      |  |                       | 2,323   |   |      |   | 1,542  |  
|Eliminations                       |  |                       | (10,834 | ) |      |   | (5,018 | )
|                                   |  |                       |         |   |      |  
|Total                              |  |                      | 22,069  |   |      |  | 25,991 |  



| |                                 
| | --------------------------------
| | Generation and Energy Management

      


    


  




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

        


99



---



##### 



     





  




| |             
| | ------------
| | Transmission

    




| |                   
| | ------------------
| | Telecommunications

    




| |          
| | ---------
| | Corporate

    




| |                              
| | -----------------------------
| | Services and Other Activities

     


100



---



##### 





| |             
| | ------------
| | Eliminations






| |                              
| | -----------------------------
| | Depreciation and Amortization



|                                   |  |                       |       |  |      |  |       | 
|---------------------------------- |  | --------------------- | ----- |  | ---- |  | ----- | 
|                                   |  | Year Ended            |      
|                                   |  | December 31,          |      
|                                   |  |                       |      
|                                   |  | 2003                  |       |  | 2004 | 
|                                   |  |                       |       |  |      | 
|                                   |  | (In millions of euro) |      
|Generation and Energy Management   |  |                      | 1,202 |  |      |  | 1,230 | 
|Sales, Infrastructure and Networks |  |                       | 1,234 |  |      |  | 837   | 
|Transmission                       |  |                       | 154   |  |      |  | 164   | 
|Telecommunications                 |  |                       | 1,716 |  |      |  | 1,810 | 
|Corporate                          |  |                       | 4     |  |      |  | 5     | 
|Services and Other Activities      |  |                       | 206   |  |      |  | 127   | 
|Total                              |  |                      | 4,516 |  |      |  | 4,173 | 

        




| |                 
| | ----------------
| | Operating Income



|                                   |  |                       |       |   |      |   |       |  
|---------------------------------- |  | --------------------- | ----- | - | ---- | - | ----- | -
|                                   |  | Year Ended            |      
|                                   |  | December 31,          |      
|                                   |  |                       |      
|                                   |  | 2003                  |       |   | 2004 |  
|                                   |  |                       |       |   |      |  
|                                   |  | (In millions of euro) |      
|Generation and Energy Management   |  |                      | 2,457 |   |      |  | 2,698 |  
|Sales, Infrastructure and Networks |  |                       | 2,329 |   |      |   | 2,885 |  
|Transmission                       |  |                       | 430   |   |      |   | 509   |  
|Telecommunications                 |  |                       | (840  | ) |      |   | (456  | )
|Corporate                          |  |                       | 223   |   |      |   | 653   |  
|Services and Other Activities      |  |                       | 213   |   |      |   | 130   |  
|Eliminations                       |  |                       | (80   | ) |      |   | (94   | )
|Total                              |  |                      | 4,732 |   |      |  | 6,325 |  




101



---



##### 







| |                                 
| | --------------------------------
| | Generation and Energy Management

    


        




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

   


        




| |             
| | ------------
| | Transmission

  




| |                   
| | ------------------
| | Telecommunications




102



---



##### 








| |          
| | ---------
| | Corporate






| |                              
| | -----------------------------
| | Services and Other Activities

    




| |             
| | ------------
| | Eliminations





| |                  
| | -----------------
| | Financial Expense

  




| |              
| | -------------
| | Equity Losses

   




| |                               
| | ------------------------------
| | Extraordinary Income (expense)

   







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A write-down of
    1,116 million
    to the carrying value of the goodwill attributable to our
    Telecommunications segment reflecting the value attributed to
    our 100% holding in Wind implied by the binding offer for Wind
    we received from Weather in April 2005. In May 2005, we entered
    into an agreement for the sale of Wind to Weather in a series of
    transactions (please see Item 4. Information on the
    Company  Business  The Enel
    Group  Telecommunications);
|
| |  | Charges relating to early retirement incentives totaling
    435 million;                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Write-downs of fixed assets connected with the maintenance and
    updating of our telecommunications network for
    57 million;                                                                                                                                                                                                                                                                                                                                                                         

103



---



##### 





| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Expenses totaling
    52 million
    arising from Terna IPO (including the distribution of
    bonus shares promised to Italian retail investors
    who hold their shares for a specified period);
|
| |  | Adjustments to the value of certain items on a consolidated
    basis totaling
    41 million
    as a result of the application of new corporate and tax
    regulations that took effect in 2004;  
|
| |  | Charges connected with various tax amnesties totaling
    31 million;                                                                                                                                
|
| |  | Adjustments, accruals and other items related to our
    Telecommunications segment totaling
    26 million;                                                                                         
|
| |  | Charges connected to the combined cycle conversion of our plant
    in Santa Barbara totaling
    21 million;                                                                                        
|
| |  | Adjustments totaling
    20 million
    connected to electricity activities in Spain in prior years;                                                                                                 
|
| |  | Charges connected to the settlement of certain contractual
    issues with the purchaser of Elettrogen totaling
    20 million;                                                                      
|
| |  | Charges related to certain financing obligations undertaken in
    connection with the disposal of NewReal totaling
    20 million;                                                                  
|
| |  | Adjustments totaling
    19 million
    connected to certain penalties connected to our Nigerian LNG
    contract;                                                                                   
|
| |  | Capital losses recorded in connection with the disposal of
    certain of our water activities totaling
    12 million; and                                                                          
|
| |  | Payment of taxes relating to previous years totaling
    9 million.                                                                                                                                  






| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 860 million
    from the sale of 50% of the share capital of Terna in its June
    2004 IPO, consisting of the capital gain on the shares sold
    (gross of the net income attributable to minority interest for
    the first semester 2004);                                                                                       
|
| |  | Capital gains on the disposal of NewReal of
    113 million;                                                                                                                                                                                                                                                                          
|
| |  | Adjustments and other items relating to our Telecommunications
    segment totaling
    29 million;                                                                                                                                                                                                                                   
|
| |  | Adjustments in income taxes with respect to previous years
    amounting to
    26 million,
    which resulted from the definition of the tax treatment of
    certain items following clarifications on the application of
    certain tax rules that were not available at the time our 2003
    financial statements were prepared;
|
| |  | The release of
    22 million
    in excess provisions accounted for in 2003 and related to our
    real estate operations; and                                                                                                                                                                                                       
|
| |  | Capital gains on sales of other assets (mainly distribution
    networks in minor urban areas) totaling
    11 million.                                                                                                                                                                                                               





| |             
| | ------------
| | Income Taxes



|                                                                              |       |                       |       |     |      |  |       |       | 
|----------------------------------------------------------------------------- | ----- | --------------------- | ----- | --- | ---- |  | ----- | ----- | 
|                                                                              |       | Year Ended            |      
|                                                                              |       | December 31,          |      
|                                                                              |       |                       |      
|                                                                              |       | 2003                  |       |     | 2004 | 
|                                                                              |       |                       |       |     |      | 
|                                                                              |       | (In millions of euro) |      
|Income taxes:                                                                 |       |                       |       |     |      |  |       |      
|Current and deferred taxes                                                    |       |                       | 1,388 |     |      |  | 2,007 |      
|Reversal of deferred tax provision                                            |       |                       | (375  | )   |      |  | (474  | )    
|Resizing of deferred taxes and deferred tax assets to change in
    tax rates |       |                       | (47   | )   |      |  |      |      
|                                                                              | Total |                       |       | 966 |      |  |       | 1,533 | 

104



---



##### 



 


 


  




Net
Income


       


105



---



##### 






2003 Compared with 2002




| |                   
| | ------------------
| | Operating Revenues



|                                                                          |                                                                                                                 |                       |        |        |      |  |        |        | 
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | --------------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                                                                          |                                                                                                                 | Year Ended            |       
|                                                                          |                                                                                                                 | December 31,          |       
|                                                                          |                                                                                                                 |                       |       
|                                                                          |                                                                                                                 | 2002                  |        |        | 2003 | 
|                                                                          |                                                                                                                 |                       |        |        |      | 
|                                                                          |                                                                                                                 | (In millions of euro) |       
|Electricity sales:                                                        |                                                                                                                 |                       |        |        |      |  |        |       
|                                                                          | Tariff revenues from sales on the regulated market and transport
    of electricity on our distribution network |                       |        | 16,244 |      |  |        | 16,740 | 
|                                                                          | Sales to regulatory entities, sales on the free market and sales
    on foreign markets                         |                       |        | 3,964  |      |  |        | 3,094  | 
|                                                                          | Equalization Fund contributions                                                                                 |                       |        | 187    |      |  |        | 179    | 
|Total revenues from electricity sales                                     |                                                                                                                 |                       | 20,395 |        |      |  | 20,013 |       
|Telecommunications services                                               |                                                                                                                 |                       | 3,642  |        |      |  | 3,959  |       
|Gas sales to end users                                                    |                                                                                                                 |                       | 780    |        |      |  | 1,254  |       
|Fees for customer connections, inspections and repositioning
    services |                                                                                                                 |                       | 645    |        |      |  | 684    |       
|Other revenues(1)                                                         |                                                                                                                 |                       | 4,515  |        |      |  | 5,407  |       
|                                                                          | Total operating revenues                                                                                        |                       |        | 29,977 |      |  |        | 31,317 | 






|    |                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other revenues mainly includes our revenues from
    sales of fuel (including natural gas) to third parties, revenues
    of our Transmission division, engineering and contracting
    activities, and non-recurring items such as reversals of
    provisions, bonus payments and reimbursements.

    




| |                  
| | -----------------
| | Electricity sales




   







| |                            
| | ---------------------------
| | Telecommunications services

 


106



---



##### 





| |                       
| | ----------------------
| | Gas sales to end users






| |                                                                          
| | -------------------------------------------------------------------------
| | Fees for customer connections, inspections and repositioning
    services






| |               
| | --------------
| | Other revenues

             




|                                   |  |                       |         |   |      |   |         |  
|---------------------------------- |  | --------------------- | ------- | - | ---- | - | ------- | -
|                                   |  | Year Ended            |        
|                                   |  | December 31,          |        
|                                   |  |                       |        
|                                   |  | 2002                  |         |   | 2003 |  
|                                   |  |                       |         |   |      |  
|                                   |  | (In millions of euro) |        
|Generation and Energy Management   |  |                      | 11,388  |   |      |  | 12,607  |  
|Sales, Infrastructure and Networks |  |                       | 20,966  |   |      |   | 20,433  |  
|Transmission                       |  |                       | 828     |   |      |   | 927     |  
|Telecommunications                 |  |                       | 3,921   |   |      |   | 4,383   |  
|Corporate                          |  |                       | 1,973   |   |      |   | 1,139   |  
|Services and Other Activities      |  |                       | 2,883   |   |      |   | 2,742   |  
|Eliminations                       |  |                       | (11,982 | ) |      |   | (10,914 | )
|Total                              |  |                      | 29,977  |   |      |  | 31,317  |  



| |                                 
| | --------------------------------
| | Generation and Energy Management

     


107



---



##### 






     


   




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

       


    







| |             
| | ------------
| | Transmission

   




| |                   
| | ------------------
| | Telecommunications




108



---



##### 



    




| |          
| | ---------
| | Corporate

  




| |                              
| | -----------------------------
| | Services and Other Activities

      


     




| |             
| | ------------
| | Eliminations




109



---



##### 





| |                   
| | ------------------
| | Operating Expenses



|                          |                             |                 |        |        |      |   |        |       |  
|------------------------- | --------------------------- | --------------- | ------ | ------ | ---- | - | ------ | ----- | -
|                          |                             | Year Ended      |       
|                          |                             | December 31,    |       
|                          |                             |                 |       
|                          |                             | 2002            |        |        | 2003 |  
|                          |                             |                 |        |        |      |  
|                          |                             | (In millions of |       
|                          |                             | euro)           |       
|Operating expenses:       |                             |                 |        |        |      |   |        |      
|                          | Personnel                   |                 |       | 3,589  |      |   |       | 3,440 |  
|                          | Fuel for thermal generation |                 |        | 4,255  |      |   |        | 4,101 |  
|                          | Purchased power             |                 |        | 4,802  |      |   |        | 4,620 |  
|Other operating expenses: |                             |                 |        |        |      |   |        |      
|                          | Services and rentals        |                 |        | 5,710  |      |   |        | 5,224 |  
|                          | Materials and supplies      |                 |        | 4,212  |      |   |        | 4,111 |  
|                          | Provisions                  |                 |        | 504    |      |   |        | 593   |  
|                          | Other                       |                 |        | 721    |      |   |        | 924   |  
|                          | Capitalized expense         |                 |        | (1,173 | )    |   |        | (944  | )
|Total                     |                             |                | 22,620 |        |      |  | 22,069 |      

          




| |          
| | ---------
| | Personnel






| |                            
| | ---------------------------
| | Fuel for thermal generation

 




| |                
| | ---------------
| | Purchased power




110



---



##### 





| |                     
| | --------------------
| | Services and rentals

    




| |                       
| | ----------------------
| | Materials and supplies

   




| |           
| | ----------
| | Provisions

      




| |            
| | -----------
| | Other costs

 




| |                     
| | --------------------
| | Capitalized expenses






|                                   |       |                       |         |        |      |   |         |        | 
|---------------------------------- | ----- | --------------------- | ------- | ------ | ---- | - | ------- | ------ | 
|                                   |       | Year Ended            |        
|                                   |       | December 31,          |        
|                                   |       |                       |        
|                                   |       | 2002                  |         |        | 2003 |  
|                                   |       |                       |         |        |      |  
|                                   |       | (In millions of euro) |        
|Generation and Energy Management   |       |                      | 8,665   |        |      |  | 8,948   |       
|Sales, Infrastructure and Networks |       |                       | 17,589  |        |      |   | 16,870  |       
|Transmission                       |       |                       | 314     |        |      |   | 343     |       
|Telecommunications                 |       |                       | 3,444   |        |      |   | 3,507   |       
|Corporate                          |       |                       | 1,805   |        |      |   | 912     |       
|Services and Other Activities      |       |                       | 2,731   |        |      |   | 2,323   |       
|Eliminations                       |       |                       | (11,928 | )      |      |   | (10,834 | )     
|                                   | Total |                       |        | 22,620 |      |   |        | 22,069 | 

111



---



##### 





| |                                 
| | --------------------------------
| | Generation and Energy Management

      


     


  




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

       


     







| |             
| | ------------
| | Transmission

 


112



---



##### 



 




| |                   
| | ------------------
| | Telecommunications

   




| |          
| | ---------
| | Corporate

  




| |                              
| | -----------------------------
| | Services and Other Activities

    




| |             
| | ------------
| | Eliminations






| |                              
| | -----------------------------
| | Depreciation and Amortization



|                                   |       |                       |       |       |      |   |       |       | 
|---------------------------------- | ----- | --------------------- | ----- | ----- | ---- | - | ----- | ----- | 
|                                   |       | Year Ended            |      
|                                   |       | December 31,          |      
|                                   |       |                       |      
|                                   |       | 2002                  |       |       | 2003 |  
|                                   |       |                       |       |       |      |  
|                                   |       | (In millions of euro) |      
|Generation and Energy Management   |       |                      | 1,283 |       |      |  | 1,202 |      
|Sales, Infrastructure and Networks |       |                       | 1,249 |       |      |   | 1,234 |      
|Transmission                       |       |                       | 247   |       |      |   | 154   |      
|Telecommunications                 |       |                       | 1,496 |       |      |   | 1,716 |      
|Corporate                          |       |                       | 4     |       |      |   | 4     |      
|Services and Other Activities      |       |                       | 198   |       |      |   | 206   |      
|                                   | Total |                       |      | 4,477 |      |   |      | 4,516 | 

   


 


113



---



##### 



             




| |                 
| | ----------------
| | Operating Income



|                                   |       |                 |        |       |      |   |       |       | 
|---------------------------------- | ----- | --------------- | ------ | ----- | ---- | - | ----- | ----- | 
|                                   |       | Year Ended      |       
|                                   |       | December 31,    |       
|                                   |       |                 |       
|                                   |       | 2002            |        |       | 2003 |  
|                                   |       |                 |        |       |      |  
|                                   |       | (In millions of |       
|                                   |       | euro)           |       
|Generation and Energy Management   |       |                | 1,440  |       |      |  | 2,457 |      
|Sales, Infrastructure and Networks |       |                 | 2,128  |       |      |   | 2,329 |      
|Transmission                       |       |                 | 267    |       |      |   | 430   |      
|Telecommunications                 |       |                 | (1,019 | )     |      |   | (840  | )    
|Corporate                          |       |                 | 164    |       |      |   | 223   |      
|Services and Other Activities      |       |                 | (46    | )     |      |   | 213   |      
|Eliminations                       |       |                 | (54    | )     |      |   | (80   | )    
|                                   | Total |                 |       | 2,880 |      |   |      | 4,732 | 

     




| |                                 
| | --------------------------------
| | Generation and Energy Management

    




114



---



##### 



        




| |                                   
| | ----------------------------------
| | Sales, Infrastructure and Networks

       


    




| |             
| | ------------
| | Transmission

     




| |                   
| | ------------------
| | Telecommunications

   




| |          
| | ---------
| | Corporate




115



---



##### 





| |                              
| | -----------------------------
| | Services and Other Activities

    




| |             
| | ------------
| | Eliminations






| |                  
| | -----------------
| | Financial Expense

    




| |              
| | -------------
| | Equity Losses

  




| |                               
| | ------------------------------
| | Extraordinary Income (expense)

 






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Charges connected with early retirement incentives totaling
    256 million;                                                                                                                                                                                                                                                                                                                                                               
|
| |  | A write-down of
    133 million
    and accruals for
    58 million
    made in connection with the conversion to coal of a plant in
    Torrevaldaliga Nord;                                                                                                                                                                                                                                                                             
|
| |  | Charges for restructuring and reorganization totaling
    92 million,
    of which
    69 million
    related to our Telecommunications segment and included losses
    from the early disposal of certain computer hardware and
    software, costs for training of personnel, and penalties for
    early termination of certain supply agreements, with the
    remaining
    23 million
    pertaining to our real estate operations;
|
| |  | Several charges connected with the tax amnesty totaling
    83 million;                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Adjustments relating to previous years capital grants
    amounting to
    60 million;                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Adjustments and other items relating to our Telecommunications
    segment, totaling
    44 million;                                                                                                                                                                                                                                                                                                                                       
|
| |  | Adjustments amounting to
    30 million
    due to the settlement of transactions due to extraordinary
    events;                                                                                                                                                                                                                                                                                                                         
|
| |  | Write-downs of assets totaling
    23 million
    (of which
    19 million
    related to our Generation and Energy Management segment);                                                                                                                                                                                                                                                                                                  
|
| |  | Adjustments amounting to
    20 million
    on the value of stocks of fuel;                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Write-downs of assets connected with our combined cycle
    conversion plan totaling
    8 million;                                                                                                                                                                                                                                                                                                                                        
|
| |  | Payment of taxes relating to previous years totaling
    6 million;                                                                                                                                                                                                                                                                                                                                                                        

116



---



##### 





| |   |                                                                        
| | - | -----------------------------------------------------------------------
| |  | Extraordinary reimbursements made to customers totaling
    4 million.





| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A capital gain on the disposal of Interpower of
    356 million;                                                                                                                                                                                            
|
| |  | Capital gains on the disposal of electricity distribution
    networks in several municipalities of aggregate
    165 million,
    of which
    120 million
    related to the disposal of the distribution network in Brescia;                            
|
| |  | Adjustments in income taxes with respect to previous years for a
    total of
    58 million,
    resulting from the definition of the tax treatment of certain
    items following clarifications on the application of certain
    rules provided in 2003;
|
| |  | Indemnities amounting to
    44 million;                                                                                                                                                                                                                    
|
| |  | Write-offs of extraordinary provisions and other items relating
    primarily to our Generation and Energy Management segment
    totaling
    37 million;                                                                                                  
|
| |  | Adjustments and other items relating to our Telecommunications
    segment, totaling
    31 million.                                                                                                                                                        





| |             
| | ------------
| | Income Taxes



|                                                                                                                                 |  |                 |      |   |      |   |       |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ---- | - | ---- | - | ----- | -
|                                                                                                                                 |  | Year Ended      |     
|                                                                                                                                 |  | December 31,    |     
|                                                                                                                                 |  |                 |     
|                                                                                                                                 |  | 2002            |      |   | 2003 |  
|                                                                                                                                 |  |                 |      |   |      |  
|                                                                                                                                 |  | (In millions of |     
|                                                                                                                                 |  | euro)           |     
|Income taxes:                                                                                                                    |  |                 |      |   |      |   |       |  
|Current and deferred taxes                                                                                                       |  |                | 919  |   |      |  | 1,388 |  
|Release of deferred tax provision following freeing-up of
    accelerated depreciation reserves                                  |  |                 | (60  | ) |      |   |      |  
|Tax incentives on capital expenditure (Tremonti-bis Law)                                                                         |  |                 | (213 | ) |      |   |      |  
|Reversal of deferred tax provision as a result of revaluation of
    assets carried out in statutory accounts by Group companies |  |                 |     |   |      |   | (375  | )
|Resizing of deferred taxes and deferred tax assets to change in
    tax rates                                                    |  |                 | (38  | ) |      |   | (47   | )
|Total                                                                                                                            |  |                | 608  |   |      |  | 966   |  

  







117



---



##### 










| |           
| | ----------
| | Net Income

         





Inflation







U.S. GAAP Reconciliation






| |   |                                                       
| | - | ------------------------------------------------------
| |  | Fixed assets and related depreciation;                
|
| |  | Capitalized interest and related depreciation;        
|
| |  | Customers connection fees;                           
|
| |  | Pension and employee termination accounting;          
|
| |  | Other post-retirement benefits accounting;            
|
| |  | Derivatives;                                          
|
| |  | Advertising and start-up costs;                       
|
| |  | Software;                                             
|
| |  | Goodwill, write-down and related amortization;        
|
| |  | Restructuring reserve and conversion costs;           
|
| |  | Italian pension system obligations;                   
|
| |  | Asset retirement obligations;                         
|
| |  | Early retirement program;                             
|
| |  | Gain on sale of real estate businesses;               
|
| |  | Stock option compensation expense;                    
|
| |  | Additional share qualification for Terna shareholders;
|
| |  | Consolidation;                                        
|
| |  | Accounting for income taxes;                          
|
| |  | Investment in equity securities;                      
|
| |  | Extraordinary income and expenses; and.               

118



---



##### 





| |   |                                   
| | - | ----------------------------------
| |  | Electricity Industry Pension Fund.



           


  




| |                                             
| | --------------------------------------------
| | Critical Accounting Policies under U.S. GAAP



Recoverability of goodwill.  


Pension and other post-retirement benefits.


119



---



##### 





Accounting for derivatives.


Recoverability of intangible assets and other long-term
assets.




| |                                   
| | ----------------------------------
| | New U.S. GAAP Accounting Standards



120



---



##### 



Certain aspects of revenue arrangements.


Guarantors accounting and disclosure.


Variable interest entities.


Amendment to derivative instruments and hedging
activities.


121



---



##### 



Financial instruments with characteristics of both
liabilities and equity.


Determining whether an arrangement contains a lease.


Pension disclosure.


Other than temporary impairment of investments.


Applying the Equity Method of Accounting to Investments Other
than Common Stock


Preexisting relationships between the Parties to a Business
Combination


122



---



##### 





Inventory Costs.


Guidance in Determining Whether to Report Discontinued
Operations


Share-Based Payments.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A modified prospectivemethod in which compensation
    cost is recognized beginning with the effective date
    (a) based on the requirements of SFAS No. 123R
    for all share-based payments granted after the effective date
    and (b) based on the requirements of SFAS No. 123 for
    all awards granted to employees prior to the effective date of
    SFAS No. 123R that remain unvested on the effective
    date.
|
| |  | A modified retrospective method that includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under SFAS No. 123 for purposes
    of pro forma disclosures of either (a) all prior periods
    presented or (b) prior interim periods of the year of
    adoption.                                            



123



---



##### 





Conditional Asset Retirement Obligations.


Accounting Changes and Error Corrections.





Liquidity and Capital Resources




| |                   
| | ------------------
| | Cash Flow Analysis

               


  


124



---



##### 



            


              






| |                  
| | -----------------
| | Capital Resources



125



---



##### 



           


     


      




126



---



##### 





|                                                             |                                                     |                       |        |        |      |  |        |        |  
|------------------------------------------------------------ | --------------------------------------------------- | --------------------- | ------ | ------ | ---- |  | ------ | ------ | -
|                                                             |                                                     | At December 31,       |       
|                                                             |                                                     |                       |       
|                                                             |                                                     | 2003                  |        |        | 2004 | 
|                                                             |                                                     |                       |        |        |      | 
|                                                             |                                                     | (In millions of euro) |       
|Cash at banks and marketable securities (note 2)             |                                                     |                       | (452   | )      |      |  | (364   | )     
|Factoring receivables (note 4)                               |                                                     |                       | (487   | )      |      |  | (391   | )     
|Other finance receivables                                    |                                                     |                       | (7     | )      |      |  | (11    | )     
|                                                             | Total                                               |                       |        | (946   | )    |  |        | (766   | )
|Short-term debt (note 10):                                   |                                                     |                       |        |        |      |  |        |       
|Bank loans                                                   |                                                     |                       |        |        |      |  |        |       
| Use of revolving credit lines                              |                                                     |                       | 1,172  |        |      |  | 400    |       
| Other short-term bank debt                                 |                                                     |                       | 1,999  |        |      |  | 2,162  |       
|                                                             | Total bank loans                                    |                       |        | 3,171  |      |  |        | 2,562  |  
|Commercial paper                                             |                                                     |                       | 1,457  |        |      |  | 2,487  |       
|Other short-term financial loans                             |                                                     |                       | 4      |        |      |  | 5      |       
|                                                             | Total short-term debt                               |                       |        | 4,632  |      |  |        | 5,054  |  
|                                                             | Net short-term debt                                 |                       |        | 3,686  |      |  |        | 4,288  |  
|Long-term debt (including current maturities)
    (note 10): |                                                     |                       |        |        |      |  |        |       
|Bank loans                                                   |                                                     |                       | 11,951 |        |      |  | 11,672 |       
|Bonds                                                        |                                                     |                       | 9,899  |        |      |  | 9,776  |       
|Other loans                                                  |                                                     |                       | 166    |        |      |  | 158    |       
|                                                             | Total Long-Term Debt (including current maturities) |                       |        | 22,016 |      |  |        | 21,606 |  
|Long-term guarantee deposits                                 |                                                     |                       | (1,528 | )      |      |  | (1,598 | )     
|                                                             | Net Long-Term Debt (including current maturities)   |                       |        | 20,488 |      |  |        | 20,008 |  
|                                                             | Net Financial Indebtedness                          |                       |        | 24,174 |      |  |        | 24,296 |  

      





127



---



##### 



     


            


 


 


        




128



---



##### 







|                          |  |           |    |  |            |  |     |         |  |  |        | 
|------------------------- |  | --------- | -- |  | ---------- |  | --- | ------- |  |  | ------ | 
|                          |  | Long-Term |    |  | Short-Term |  |     |        
|Rating Agency             |  | Debt      |    |  | Debt       |  |     | Outlook | 
|                          |  |           |    |  |            |  |     |         | 
|Standard & Poors         |  |           | A+ |  |            |  | A-1 |         |  |  | Stable | 
|Moodys Investors Service |  |           | A1 |  |            |  | P-1 |         |  |  | Stable | 



| |                                       
| | --------------------------------------
| | Future Liquidity and Capital Resources









| |   |                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | divesting Wind and, subject to the disposition of the minority
    interest we expect to acquire in Weather, ultimately exiting the
    telecommunications business, having entered into an agreement
    for the sale of Wind in May 2005 (please see Item 4.
    Information on the Company  Business  The
    Enel Group  Telecommunication);
|
| |  | the sale of a 29.99% stake in Terna to Cassa Depositi e
    Prestiti, pursuant to a contract Enel entered into in May 2005
    (please see Item 4. Information on the
    Company  Business  Overview 
    Transmission);                                                                                                                       
|
| |  | the sale, on April 5, 2005, of 13.9% of Ternas share
    capital for gross proceeds of
    568 million
    in a private placement to institutional investors not registered
    under the Securities Act;                                                                                                                                          
|
| |  | the acquisition of a 66% interest in SE for
    840 million
    (of which we have already paid
    168 million
    as a deposit). Closing of this transaction is expected by the
    end of 2005;                                                                                                                                                  
|
| |  | the distribution, expected by June 23, 2005, of an ordinary
    dividend equal to
    0.36 per
    share, amounting in the aggregate to approximately
    2,195 million; and                                                                                                                                                                       
|
| |  | an additional dividend at approximately
    0.17 to
    0.20 per share,
    that we expect to pay in the second half of 2005 as a result of
    the expected disposal of the 29.99% stake in Terna noted above.                                                                                                                                    




Off-Balance Sheet Arrangements




Indemnities. 


129



---



##### 






Variable Interest Entities.  


Financial guarantees.  


Derivative instruments.


Nuclear liability.





Contractual Obligations and Commitments




| |                        
| | -----------------------
| | Contractual Obligations



|                                              |  |                        |        |                       |        |  |       |           |           |  |           |  |  |         |       |  |  |  |        | 
|--------------------------------------------- |  | ---------------------- | ------ | --------------------- | ------ |  | ----- | --------- | --------- |  | --------- |  |  | ------- | ----- |  |  |  | ------ | 
|                                              |  | Payments Due by Period |       
|                                              |  |                        |       
|                                              |  |                        |        | Less Than             |        |  |       |           | More Than | 
|Contractual Obligations                       |  | Total                  |        |                       | 1 Year |  |       | 1-3 Years |           |  | 3-5 Years |  |  | 5 Years |      
|                                              |  |                        |        |                       |        |  |       |           |           |  |           |  |  |         |      
|                                              |  |                        |        | (In millions of euro) |        |  |      
|Long-term debt (including current maturities) |  |                        | 21,606 |                       |        |  | 1,365 |           |           |  | 3,772     |  |  |         | 4,677 |  |  |  | 11,792 | 
|Capital (Finance) Lease Obligations(*)        |  |                        |       |                       |        |  |      |           |           |  |          |  |  |         |      |  |  |  |       | 
|Operating leases                              |  |                        | 2,198  |                       |        |  | 331   |           |           |  | 652       |  |  |         | 683   |  |  |  | 532    | 
|Purchase obligations                          |  |                        | 32,634 |                       |        |  | 4,742 |           |           |  | 5,250     |  |  |         | 4,421 |  |  |  | 18,221 | 
|Other long-term obligations                   |  |                        | 7      |                       |        |  | 7     |           |           |  |           |  |  |         |       |  |  |  |        | 
|Total                                         |  |                        | 56,445 |                       |        |  | 6,445 |           |           |  | 9,674     |  |  |         | 9,781 |  |  |  | 30,545 | 






|    |                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | We do not have capital (finance) lease obligations. In
    accordance with Italian GAAP, if we had any capital
    (finance) lease obligations, we would not account
    separately for them, but rather would report such obligations as
    part of our operating leases.

Long-term debt (including current maturities).


130



---



##### 



 


Operating leases. 


Purchase obligations.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Commitments to suppliers of fuel. We have entered into
    various fuel supply contracts, primarily for the purchase of
    fuel oil and natural gas, in respect of which we will be
    required to pay a total
    28,542 million.
    Our aggregate expenditures related to these commitments are
    expected to total
    11,045 million
    for the period from January 1, 2005 through
    December 31, 2009. Please see Item 4.
    Information on the Company  The Enel
    Group  Generation and Energy Management 
    Fuel for information about our purchases of fuel.
|
| |  | Commitments to suppliers of electricity. We also have
    unconditional purchase obligations for electric power in respect
    of which we will be required to pay a total of
    3,642 million.
    Our aggregate expenditures related to these commitments are
    expected to total
    3,002 million
    for the period from January 1, 2005 through
    December 31, 2009. Please see Item 4.
    Information on the Company  The Enel
    Group  Generation and Energy Management 
    Purchased power for information about our purchases of
    electricity.               





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Payable to Ferrovie dello Stato for the lease of
    Telecommunications Network rights of way. Wind is required
    to make payments to Ferrovie dello Stato (the Italian state
    railway company) of
    233 million
    under an agreement that was entered into by Infostrada in 1998
    (before it was merged in Wind), for the use of the fiber optic
    network owned by Ferrovie dello Stato. Winds aggregate
    expenditures related to these commitments in 2005 are expected
    to total
    31 million
    (154 million
    for the period from January 1, 2006 through
    December 31, 2009).                                                    
|
| |  | Payable to MEF for UMTS license. Wind is required to pay
    to the MEF an additional
    217 million
    over the next seven years in connection with the purchase of its
    UMTS license (for which
    2,230 million
    has already been paid). Winds aggregate expenditures
    related to these commitments in 2005 are expected to total
    36 million
    (145 million
    for the period from January 1, 2006 through
    December 31, 2009). For additional information on
    Winds UMTS license, please see Item 4.
    Information on the Company  Business  The
    Enel Group  Telecommunications  Network
    infrastructure and licenses.

Other long-term obligations. 




| |            
| | -----------
| | Commitments








| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Approximately
    7,750 million
    (7,850 million
    including intangible assets) relating to our generation
    businesses, of which
    5,770 million
    (5,860 million
    including intangible assets) in Italy and
    1,980 million
    abroad;

131



---



##### 





| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Approximately
    5,790 million
    relating to our electricity distribution and sale business,
    including approximately
    600 million
    for our Telemanagement project;
|
| |  | Approximately
    350 million
    relating to our gas distribution business; and                                                                                                
|
| |  | Approximately
    182 million
    in our other businesses.                                                                                                                      






Trend Information







Process of Transition to International Financial Reporting
Standards












| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we did not apply retrospectively IFRS 3 Business
    Combinations to business combinations that occurred prior
    to the opening balance sheet date of January 1, 2004;                                                                         
|
| |  | we restated the value of property, plant and equipment as of a
    date prior to the date of our transition to IFRS, based on an
    Italian GAAP revaluation, as an alternative to using historical
    cost; and                                 
|
| |  | we fully applied IAS 32  Financial Instruments:
    Disclosure and Presentation (IAS 32) and
    IAS 39  Financial Instruments: Recognition and
    Measurement (IAS 39) starting from our opening IFRS
    balance sheet at January 1, 2004.

132



---



##### 







Tangible assets and related depreciation. 




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The reversal of depreciation recorded under Italian GAAP in
    connection with land ancillary to buildings, which is not
    permitted under IFRS, which is expected to increase
    stockholders equity at December 31, 2004, as
    calculated in accordance with IFRS, by approximately
    72 million.                                                                                                                                                        
|
| |  | The recalculation, made in accordance with IFRS, of the
    depreciation of certain assets or parts of plants which are
    being shut down, to reflect the change in their useful lives,
    and the related elimination of write-downs recorded under
    Italian GAAP, which is expected to increase stockholders
    equity at December 31, 2004, as calculated in accordance
    with IFRS, by approximately
    56 million.                                  
|
| |  | The application of IFRS criteria requiring that each component
    of any property, plant and equipment the cost of which is
    material with respect to the cost of the relevant asset as a
    whole be separately accounted for and amortized, which is
    expected to reduce stockholders equity at
    December 31, 2004, as calculated in accordance with IFRS,
    by approximately
    32 million,
    reflecting the resulting increase in amortization.
|
| |  | The application of IFRS criteria requiring the capitalization
    and depreciation of certain expenses related to estimated costs
    for the future dismantling and clean-up of productive sites and
    the recording of related accruals in a manner not contemplated
    by Italian GAAP; related adjustments are expected to reduce
    stockholders equity at December 31, 2004, as
    calculated in accordance with IFRS, by approximately
    19 million. 

Start-up, development and advertising and other intangible
assets.  


Goodwill and consolidation differences. 


Derivative financial instruments. 


Employee benefits.  


133



---



##### 





Provisions for risks and charges. 




|                                                                               |  |                       |        |   |                         |               |        |                    |  |  |       |  
|------------------------------------------------------------------------------ |  | --------------------- | ------ | - | ----------------------- | ------------- | ------ | ------------------ |  |  | ----- | -
|                                                                               |  |                       |        |   |                         | Income Before |       
|                                                                               |  | Consolidated          |        |   | Consolidated            |               |        | Minority Interest  | 
|                                                                               |  | Stockholders Equity  |        |   | Stockholders Equity    |               |        | for the year ended | 
|                                                                               |  | as of January 1, 2004 |        |   | as of December 31, 2004 |               |        | December 31, 2004  | 
|                                                                               |  | (Unaudited)           |        |   | (Unaudited)             |               |        | (Unaudited)        | 
|                                                                               |  |                       |        |   |                         |               |        |                    | 
|ITALIAN GAAP                                                                   |  |                       | 21,315 |   |                         |               | 20,978 |                    |  |  | 2,832 |  
|Adjustments                                                                    |  |                       |        |   |                         |               |        |                    |  |  |       |  
| Tangible fixed assets and related depreciation                               |  |                       | 330    |   |                         |               | 79     |                    |  |  | (246  | )
| Start-up, development and, advertising costs and
    other intangible assets |  |                       | (1,501 | ) |                         |               | (1,372 | )                  |  |  | 138   |  
| Goodwill and consolidation differences                                       |  |                       |       |   |                         |               | 94     |                    |  |  | 103   |  
| Derivative financial instruments                                             |  |                       | (391   | ) |                         |               | (480   | )                  |  |  | (29   | )
| Employee benefits                                                            |  |                       | (1,257 | ) |                         |               | (1,336 | )                  |  |  | (87   | )
| Provisions for risks and charges                                             |  |                       | 241    |   |                         |               | 168    |                    |  |  | (73   | )
| Other adjustments                                                            |  |                       | (54    | ) |                         |               | (71    | )                  |  |  | 95    |  
|Tax impact of the adjustments                                                  |  |                       | 938    |   |                         |               | 1,006  |                    |  |  | 14    |  
|Total adjustments net of tax effect                                            |  |                       | (1,694 | ) |                         |               | (1,912 | )                  |  |  | (85   | )
|                                                                               |  |                       |        |   |                         |               |        |                    | 
|IFRS                                                                           |  |                       | 19,621 |   |                         |               | 19,066 |                    |  |  | 2,747 |  






|        |                                           
|------- | ------------------------------------------
|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES




Directors








134



---



##### 













|                    |  |                                                                              |  |                |      | 
|------------------- |  | ---------------------------------------------------------------------------- |  | -------------- | ---- | 
|                    |  |                                                                              |  | Year Initially |     
|Name                |  | Position                                                                     |  | Appointed      |     
|                    |  |                                                                              |  |                |     
|Piero Gnudi         |  | Chairman                                                                     |  |                | 2002 | 
|Fulvio Conti        |  | Director, general manager (direttore generale), chief
    executive officer* |  |                | 2005 | 
|Fernando Napolitano |  | Director                                                                     |  |                | 2002 | 
|Gianfranco Tosi     |  | Director                                                                     |  |                | 2002 | 
|Alessandro Luciano  |  | Director                                                                     |  |                | 2005 | 
|Francesco Valsecchi |  | Director                                                                     |  |                | 2005 | 
|Francesco Taranto   |  | Director                                                                     |  |                | 2000 | 
|Augusto Fantozzi    |  | Director                                                                     |  |                | 2005 | 
|Giulio Ballio       |  | Director                                                                     |  |                | 2005 | 






|  |                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------
|* | Mr. Conti has been Enels chief financial officer
    since 1999 (and continues to perform that function)



135



---



##### 



Piero Gnudi.


Fulvio Conti. direttore generale


Fernando Napolitano.


Gianfranco Tosi.


Alessandro Luciano.


Francesco Valsecchi.


136



---



##### 





Francesco Taranto.


Augusto Fantozzi.


Giulio Ballio.


137



---



##### 






Senior Management




|                    |  |     |    |  |                     |                                                     |           |                |            |          |  |  |      | 
|------------------- |  | --- | -- |  | ------------------- | --------------------------------------------------- | --------- | -------------- | ---------- | -------- |  |  | ---- | 
|                    |  |     |    |  |                     |                                                     |           | Year Appointed |           
|                    |  |     |    |  |                     | Year Joined                                         |           |                | to Current |         
|Name                |  | Age |    |  | Management Position |                                                     | the Group |                |            | Position | 
|                    |  |     |    |  |                     |                                                     |           |                |            |          | 
|Andrea Brentan      |  |     | 56 |  |                     | International Affairs                               |           |                | 2002       |          |  |  | 2004 | 
|Alessandro Bufacchi |  |     | 58 |  |                     | Information and Communication Technology            |           |                | 2000       |          |  |  | 2000 | 
|Vincenzo Cannatelli |  |     | 52 |  |                     | Head of Sales, Infrastructure and Networks Division |           |                | 1999       |          |  |  | 2002 | 
|Antonio Cardani     |  |     | 55 |  |                     | Audit                                               |           |                | 2000       |          |  |  | 2000 | 
|Salvatore Cardillo  |  |     | 55 |  |                     | Legal Affairs                                       |           |                | 2000       |          |  |  | 2000 | 
|Gianluca Comin      |  |     | 42 |  |                     | Communication                                       |           |                | 2002       |          |  |  | 2002 | 
|Sandro Fontecedro   |  |     | 60 |  |                     | Head of Generation and Energy Management Division   |           |                | 1970       |          |  |  | 2003 | 
|Sergio Mobili       |  |     | 64 |  |                     | Head of Transmission Division                       |           |                | 1967       |          |  |  | 2002 | 
|Tommaso Pompei      |  |     | 62 |  |                     | Head of Telecommunications Division                 |           |                | 1996       |          |  |  | 2002 | 
|Massimo Romano      |  |     | 45 |  |                     | Regulatory and Institutional Affairs                |           |                | 1997       |          |  |  | 1999 | 
|Paolo Ruzzini       |  |     | 53 |  |                     | Human Resources                                     |           |                | 2003       |          |  |  | 2003 | 
|Salvatore Sardo     |  |     | 52 |  |                     | Purchasing                                          |           |                | 2003       |          |  |  | 2003 | 
|Claudio Sartorelli  |  |     | 59 |  |                     | Corporate Affairs                                   |           |                | 1970       |          |  |  | 1996 | 
|Luciana Tarozzi     |  |     | 60 |  |                     | Accounting                                          |           |                | 1965       |          |  |  | 1997 | 



Andrea Brentan.


Alessandro Bufacchi.


Vincenzo Cannatelli.


138



---



##### 



Antonio Cardani.


Salvatore Cardillo.


Gianluca Comin.


Sandro Fontecedro.


Sergio Mobili.


Tommaso Pompei.


Massimo Romano.


Paolo Ruzzini.


139



---



##### 



Salvatore Sardo.


Claudio Sartorelli.


Luciana Tarozzi.





Board of Statutory Auditors










|                   |  |                   |  |                |      | 
|------------------ |  | ----------------- |  | -------------- | ---- | 
|                   |  |                   |  | Year Initially |     
|Name               |  | Position          |  | Appointed      |     
|                   |  |                   |  |                |     
|Eugenio Pinto      |  | Chairman          |  |                | 2005 | 
|Carlo Conte        |  | Auditor           |  |                | 2004 | 
|Franco Fontana     |  | Auditor           |  |                | 2001 | 
|Giancarlo Giordano |  | Alternate Auditor |  |                | 2004 | 
|Paolo Sbordoni     |  | Alternate Auditor |  |                | 2004 | 



140



---



##### 








Executive Compensation





|                                      |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |           |           |            |     |           |              | 
|------------------------------------- | ---------------------------------------- | ----------------------------------------------------- | --------------------- | ---------- | ------------ |  | ----------- | ---------------- | ------------ | ------------ | ---------- | ------------ | --------- | ------------ | --------- | --------- | ---------- | --- | --------- | ------------ | 
|                                      |                                          |                                                       |                       | Base       |              |  | Bonuses and |                  |              | Non-Monetary |            |              | Other     |             
|Name                                  |                                          | Positions(s) Held                                     |                       |            | Compensation |  |             | Other Incentives |              |              | Benefits   |              |           | Compensation |          
|                                      |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |          
|                                      |                                          |                                                       |                       | (In euros) |              |  |             |                  |              |              |           
|Current and former directors          |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Piero Gnudi                           |                                          |                                                       | Chairman              |            |              |  | 659,513.36  |                  |              |              | 386,000.00 | (1)          |           |              | 10,378.38 | (2)       |            |     |           |             
|Paolo Scaroni                         |                                          | Chief executive officer, general manager, director(5) |                       |            | 705,164.60   |  |             |                  | 1,702,000.00 | (3)          |            |              | 64,869.62 | (2)          |           |           | 909,032.87 | (4)
|Mauro Miccio                          |                                          |                                                       | Director(5)           |            |              |  | 109,829.12  |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Franco Morganti                       |                                          |                                                       | Director(5)           |            |              |  | 107,763.28  |                  |              |              |            |              |           |              |           |           |            |     | 73,500.00 | (6)         
|Fernando Napolitano                   |                                          |                                                       | Director              |            |              |  | 109,829.12  |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Francesco Taranto                     |                                          |                                                       | Director              |            |              |  | 118,837.35  |                  |              |              |            |              |           |              |           |           |            |     | 28,500.00 | (7)         
|Gianfranco Tosi                       |                                          |                                                       | Director              |            |              |  | 107,763.28  |                  |              |              |            |              |           |              |           |           |            |     |           |             
|                                      | Total compensation of Directors          |                                                       |                       |            |              |  |             | 1,918,700.11     |              |              |            | 2,088,000.00 |           |              |           | 75,248.00 |            |     |           | 1,011,032.87 | 
|Current and former statutory auditors |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Bruno De Leo                          |                                          |                                                       | Chairman(8)           |            |              |  | 30,470.99   |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Angelo Provasoli                      |                                          |                                                       | Chairman(9)           |            |              |  | 51,041.67   | (10)             |              |              |            |              |           |              |           |           |            |     |           |             
|Gustavo Minervini                     |                                          |                                                       | Statutory Auditor(8)  |            |              |  | 24,617.80   |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Franco Fontana                        |                                          |                                                       | Statutory Auditor     |            |              |  | 69,834.36   |                  |              |              |            |              |           |              |           |           |            |     |           |             
|Carlo Conte                           |                                          |                                                       | Statutory Auditor(11) |            |              |  | 44,958.33   | (12)             |              |              |            |              |           |              |           |           |            |     |           |             
|                                      |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |          
|                                      | Total compensation of Statutory Auditors |                                                       |                       |            |              |  |             | 220,923.15       |              |              |            |              |           |              |           |           |            |     |           |              | 
|                                      |                                          |                                                       |                       |            |              |  |             |                  |              |              |            |              |           |              |          
|                                      | Total compensation paid                  |                                                       |                       |            |              |  |             | 2,139,623.26     |              |              |            | 2,088,000.00 |           |              |           | 75,248.00 |            |     |           | 1,011,032.87 | 








| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | This amount is composed of:
    (i) 186,000.00
    as a variable part of the base compensation relating to fiscal
    year 2003, resolved upon and paid in 2004, and
    (ii) 200,000.00
    as a bonus granted for the achievement of targets in the
    MEFs sale of Enels shares in October 2004. On
    March 30, 2005, Enels board of directors granted the
    chairman
    186,000.00 as
    variable part of the base compensation for fiscal year 2004 for
    the achievement of Enels Group objectives in 2004.
|
| | (2) | Insurance policies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

141



---



##### 





| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | This amount is composed of:
    (i) 490,000.00
    as a variable part of the base compensation relating to fiscal
    year 2003, resolved upon and paid in 2004,
    (ii) 512,000.00
    as a bonus entrycompensation,
    (iii) 50,000.00
    as extraordinary compensation for services rendered in 2003 as
    chief operating officer ad interimin the Generation and
    Energy Management Division, resolved upon and paid in 2004, and
    (iv) 650,000.00
    as bonus granted for the achievement of targets in the
    MEFs sale of Enels shares in October 2004. On
    March 30, 2005, Enels board of directors granted
    Mr. Scaroni
    700,000 as
    variable part of the base compensation for fiscal year 2004 for
    the achievement of Enels Group objectives in 2004.
|
| | (4) | This amount is composed of:
    (i) 601,032.87
    as base compensation for services rendered as general manager in
    2004, and
    (ii) 308,000.00
    as a variable part of the base compensation relating to fiscal
    year 2003, paid in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On March 30, 2005, Enels board of directors granted
    Mr. Scaroni, in his capacity as general manager at that
    time, 600,000.00
    as a variable part of the base compensation for fiscal year 2004
    for the achievement of Enels Group objectives in 2004.



| |     |                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (5) | Former member of Enels board of directors.                                                                                                                                                                                                                                                                                                    
|
| | (6) | Compensation paid for services rendered to Wind, as director
    (for the amount of
    28,500.00) and
    for certain non-managerial tasks delegated to him by the board
    of directors in his capacity as director (for the amount of
    45,000.00).
    Mr. Morganti ceased to perform these tasks, effective as of
    March 24, 2005.
|
| | (7) | Compensation paid as a director of Wind.                                                                                                                                                                                                                                                                                                       
|
| | (8) | Former member of Enels board of statutory auditors.                                                                                                                                                                                                                                                                                           
|
| | (9) | Former member of Enels board of statutory auditors                                                                                                                                                                                                                                                                                            



|     |                                                                                                                                                                                                                  
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | This compensation was paid for the services rendered by
    Mr. Provasoli from May 2004 through December 2004.                                                                                                   
|    
|(11) | For services rendered starting from May 2004.                                                                                                                                                                    
|    
|(12) | Compensation paid to the MEF (for the amount of
    33,458.33)
    pursuant to the directive of Council of Ministers 
    Public Office department (Dipartimento della Funzione
    Pubblica) of March 1, 2000.





 






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in April 2001, 621,280 options to purchase the same number of
    Enels ordinary shares, under the 2001 stock option plan.
    Of these options, 56% vested and, consequently, 347,917 options
    were exercisable starting in 2004. These options expire on
    December 31, 2005. The exercise price for these options is
    7.272. As of
    May 13, 2005, Mr. Conti has not exercised any of these
    options;                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | in March 2002, a further 902,500 options to purchase the same
    number of Enels ordinary shares, under the 2002 stock
    option plan. All these options vested and, consequently, 30% of
    the options were exercisable starting in 2003, an additional 30%
    starting in 2004 and the remaining 40% starting in 2005. These
    options expire on December 31, 2007. The exercise price for
    these options is
    6.426. During
    the period between May 24, 2004, and June 11, 2004,
    Mr. Conti exercised 250,000 of these options and sold the
    resulting shares on the market. Subsequently, during the period
    between November 12, 2004, and December 2, 2004,
    Mr. Conti exercised a further 175,000 of these options, and
    between February 3, 2005, and February 23, 2005, a
    further 141,500 of these options and sold all of the resulting

142



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | shares on the market. As of May 13, 2005, Mr. Conti
    has not exercised any of the remaining 336,000 options;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | in April 2003, a further 992,800 options to purchase the same
    number of Enels ordinary shares, under the 2003 stock
    option plan. All these options vested and, consequently, 30% of
    the options are exercisable starting from 2004, an additional
    30% starting from 2005 and the remaining 40% starting from 2006.
    These options expire on December 31, 2008. The exercise
    price for these options is
    5.240. During
    the period between May 24, 2004, and June 11, 2004,
    Mr. Conti exercised 297,840 of these options and sold the
    resulting shares on the market. Subsequently, during the period
    between February 3, 2005, and February 23, 2005,
    Mr. Conti exercised a further 200,000 of these options and
    sold the resulting shares on the market. As of May 13,
    2005, Mr. Conti has not exercised any of the remaining
    494,960 options;
|
| |  | in March 2004, a further 600,000 options to purchase the same
    number of Enels ordinary shares, under the 2004 stock
    option plan. All these options vested and, consequently, 15% of
    the options may be exercised starting from 2005, another 15%
    starting from 2006, an additional 30% starting from 2007 and the
    remaining 40% starting from 2008. These options expire on
    December 31, 2009. The exercise price for these options is
    6.242. As of
    May 13, 2005, Mr. Conti has not exercised any of these
    options;                                                                                                                                                                                                                                                                                                                                                 
|
| |  | in March 2005, a further 600,000 options to purchase the same
    number of Enels ordinary shares, under the 2005 stock
    option plan. Subject to the satisfaction of the conditions
    precedent provided for in the 2005 stock option plan, 15% of the
    options may be exercised starting from 2006, another 15%
    starting from 2007, an additional 30% starting from 2008, and
    the remaining 40% starting from 2009. These options expire on
    December 31, 2010. The exercise price for these options is
    7.273.                                                                                                                                                                                                                                                                                                                                                                  

direttore generale




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in September 2002, 2,503,500 options to purchase the same number
    of Enels ordinary shares, under the 2002 stock option
    plan. All these options vested and, consequently, 30% of the
    options were exercisable starting in 2003, an additional 30%
    starting in 2004 and the remaining 40% starting in 2005. These
    options expire on December 31, 2007. The exercise price for
    these options is
    6.480. During
    the period between May 24, 2004, and June 11, 2004,
    Mr. Scaroni exercised 1,502,100 of these options and sold
    the resulting shares on the market. Subsequently, during the
    period between February 3, 2005, and February 23,
    2005, Mr. Scaroni exercised the remaining 1,001,400 of
    these options and sold the resulting shares on the market;                                                                                                         
|
| |  | in April 2003, a further 4,200,000 options to purchase the same
    number of Enels ordinary shares, under the 2003 stock
    option plan. All these options vested and, consequently, 30% of
    the options are exercisable starting from 2004, an additional
    30% starting from 2005 and the remaining 40% starting from 2006.
    These options expire on December 31, 2008. The exercise
    price for these options is
    5.240. During
    the period between May 24, 2004, and June 11, 2004,
    Mr. Scaroni exercised 1,260,000 of these options and sold
    the resulting shares on the market. Subsequently, during the
    period between February 3, 2005, and February 23,
    2005, Mr. Scaroni exercised a further 1,260,000 of these
    options and sold the resulting shares on the market. As of
    May 13, 2005, Mr. Scaroni has not exercised any of the
    remaining 1,680,000 options;
|
| |  | in March 2004, a further 2,500,000 options to purchase the same
    number of Enels ordinary shares, under the 2004 stock
    option plan. All these options vested and, consequently, 15% of
    the options may be exercised starting from 2005, another 15%
    starting from 2006, an additional 30% starting from 2007 and the
    remaining 40% starting from 2008. These options expire on
    December 31, 2009. The exercise price for these options is
    6.242. During
    the period between April 20, 2005, and May 13, 2005,
    Mr. Scaroni exercised 375,000 of these options and sold the
    resulting shares on the market.                                                                                                                                                                                                                                                                       
|
| |  | in March 2005, a further 2,500,000 options to purchase the same
    number of Enels ordinary shares, under the 2005 stock
    option plan. Subject to the satisfaction of the conditions
    precedent provided for in the 2005 stock option plan, 15% of the
    options may be exercised starting from 2006, another 15%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

143



---



##### 



| |  |                                                                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | starting from 2007, an additional 30% starting from 2008, and
    the remaining 40% starting from 2009. These options expire on
    December 31, 2010. The exercise price for these options is
    7.273.






Share Ownership




|                                           |       |                 |        |         | 
|------------------------------------------ | ----- | --------------- | ------ | ------- | 
|                                           |       | Number of       |       
|                                           |       | Ordinary Shares |       
|                                           |       | Held as of      |       
|Name of Director or Statutory Auditor      |       | May 31, 2005    |       
|                                           |       |                 |       
|Piero Gnudi                                |       |                 | 70,524 | (1)    
|Fulvio Conti                               |       |                 | 23,844 | (2)    
|Francesco Taranto                          |       |                 | 10,000 |        
|Giulio Ballio                              |       |                 | 1,200  | (3)    
|All other directors and statutory auditors |       |                 | 0      |        
|                                           | Total |                 |        | 105,568 | 






|    |                                                                                                  
|--- | -------------------------------------------------------------------------------------------------
|(1) | 46,000 of which are held by a company controlled by
    Mr. Gnudi and 24,262 by Mr. Gnudis wife.
|   
|(2) | 262 of which are held by Mr. Contis wife.                                                       
|   
|(3) | All of these shares are held by Mr. Ballios wife.                                               




Employees




|                                   |                  |           |        |        |          |  |     |      | 
|---------------------------------- | ---------------- | --------- | ------ | ------ | -------- |  | --- | ---- | 
|                                   |                  | Number of |        |        |         
|                                   |                  | Employees |        |        | Division | 
|                                   |                  |           |        |        |          | 
|Generation and Energy Management   |                  |           | 10,828 |        |          |  | 18% |     
|Sales, Infrastructure and Networks |                  |           | 35,537 |        |          |  | 57% |     
|Transmission                       |                  |           | 2,929  |        |          |  | 5%  |     
|Telecommunications                 |                  |           | 8,188  |        |          |  | 13% |     
|Services and Other Activities      |                  |           | 3,826  |        |          |  | 6%  |     
|Holding Company                    |                  |           | 590    |        |          |  | 1%  |     
|                                   | Total Enel Group |           |        | 61,898 |          |  |     | 100% | 





|     |  |                     |       | 
|---- |  | ------------------- | ----- | 
|     |  | Estimated Number of |      
|     |  | Potential Retirees  |      
|     |  |                     |      
|2005 |  |                     | 2,200 | 
|2006 |  |                     | 1,800 | 
|2007 |  |                     | 1,300 | 
|2008 |  |                     | 1,000 | 
|2009 |  |                     | 1,100 | 



144



---



##### 







|                                |  |                    |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        | 
|------------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------ | 
|                                |  | As of December 31, |       
|                                |  |                    |       
|                                |  | 2000               |        |  | 2001 |  |        | 2002 |  |  | 2003   |  |  | 2004 |       
|                                |  |                    |        |  |      |  |        |      |  |  |        |  |  |      |       
|Employees (other than managers) |  |                    | 71,958 |  |      |  | 71,802 |      |  |  | 70,313 |  |  |      | 63,985 |  |  |  | 61,193 | 
|Managers                        |  |                    | 689    |  |      |  | 859    |      |  |  | 891    |  |  |      | 785    |  |  |  | 705    | 
|                                |  |                    |        |  |      |  |        |      |  |  |        |  |  |      |       
|Total                           |  |                    | 72,647 |  |      |  | 72,661 |      |  |  | 71,204 |  |  |      | 64,770 |  |  |  | 61,898 | 
|                                |  |                    |        |  |      |  |        |      |  |  |        |  |  |      |       















145



---



##### 








Employee benefits












|        |                                                  
|------- | -------------------------------------------------
|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




Major Shareholders















146



---



##### 











| |   |                                                            
| | - | -----------------------------------------------------------
| |  | The material acquisition of Enels shares by third parties;
|
| |  | Material shareholders agreements;                         
|
| |  | Major corporate changes; and                               
|
| |  | The appointment of one non-voting director.                





| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Special rules concerning appointments of directors and statutory
    auditors in order to ensure that minority shareholders are
    represented; and                               
|
| |  | Limitations on the maximum number of shares that a shareholder,
    or group of shareholders, other than the MEF (or other entities
    controlled by the Italian state), may hold.










Related Party Transactions




.




147



---



##### 























|        |                      
|------- | ---------------------
|ITEM 8. | FINANCIAL INFORMATION




Consolidated Financial Statements







Other Financial Information





Legal Proceedings




 




Electromagnetic field proceedings.




148



---



##### 








Blackout litigation.


 






Brown-out litigation.


149



---



##### 



 




Alleged abuse of market power proceedings. 


Alleged abuse of dominant position by Enel Energia.  


Alleged abuse of dominant position by Enel and Enel
Produzione.


150



---



##### 



Alleged abuse of dominant position by Viesgo
Generaciòn.


Alleged abuse of dominant position and/or cartel by Wind.


Orimulsion arbitration.


Echelon arbitration. 


Congestion fees litigation with the Energy Authority. 


Gas concessions.


Criminal proceedings involving certain former Enelpower
executives.


151



---



##### 







  





Dividend Policy






|                                                  |  |                         |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|------------------------------------------------- |  | ----------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|                                                  |  | Year Ended December 31, |      
|                                                  |  |                         |      
|                                                  |  | 2000(1)                 |       |  | 2001 |   |       | 2002 |  |   | 2003  |  |  | 2004 |      
|                                                  |  |                         |       |  |      |   |       |      |  |   |       |  |  |      |      
|Dividends per ordinary share (in euros)(2)        |  |                         | 0.13 |  |      |   | 0.36 |      |  |   | 0.36 |  |  |      | 0.36 |  |  |   | 0.69 | 
|Dividends per ordinary share (in U.S. dollars)(3) |  | $                       | 0.12  |  |      | $ | 0.32  |      |  | $ | 0.38  |  |  | $    | 0.45  |  |  | $ | 0.86  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Following the one-for-two reverse stock split effective as of
    July 9, 2001, this dividend, paid in 2001, amounted to
    0.26 and $0.24.                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | The amount of the aggregate dividend for each of 2000, 2001,
    2002, 2003 and 2004 was equal to approximately 72%, 52%, 109%,
    87% and 156% of our consolidated net income for the relevant
    year, respectively.                                                                                                                                                                                                                                                                                                                                                
|   
|(3) | We have translated the historical dividend amounts into
    U.S. dollars using the noon buying rate for euro in effect
    on the respective payment dates, except for the dividend amount
    for 2004, part of which has not yet been paid. For the 2004
    dividend, we have used the noon buying rate on May 26,
    2005, of 1.00 =
    1.2517. The noon buying rate for euro may differ from the rate
    that may be used by the Depositary for the ADSs in order to
    convert euro into U.S. dollars for purposes of making
    payments to holders of ADSs.

152



---



##### 



 


  


 








| |   |                                              
| | - | ---------------------------------------------
| |  | our financial performance;                   
|
| |  | cash and capital requirements;               
|
| |  | any restrictions in financing agreements; and
|
| |  | prevailing business conditions.              






Significant Changes




  


153



---



##### 













|        |                      
|------- | ---------------------
|ITEM 9. | THE OFFER AND LISTING




Markets and Price Range of ADSs and Ordinary Shares






|                       |  |              |       |  |     |  |       | 
|---------------------- |  | ------------ | ----- |  | --- |  | ----- | 
|                       |  | ADSs         |      
|                       |  |              |      
|                       |  | High         |       |  | Low | 
|                       |  |              |       |  |     | 
|                       |  | (In dollars) |      
|2000                   |  |              | 46.00 |  |     |  | 35.05 | 
|2001                   |  |              | 38.85 |  |     |  | 25.00 | 
|2002                   |  |              | 30.31 |  |     |  | 22.60 | 
|                      
|2003                   |  |              |       |  |     |  |       | 
|First Quarter          |  |              | 29.64 |  |     |  | 26.58 | 
|Second Quarter         |  |              | 35.85 |  |     |  | 28.58 | 
|Third Quarter          |  |              | 33.05 |  |     |  | 29.99 | 
|Fourth Quarter         |  |              | 34.15 |  |     |  | 30.50 | 
|                      
|2004                   |  |              |       |  |     |  |       | 
|First Quarter          |  |              | 40.89 |  |     |  | 34.35 | 
|Second Quarter         |  |              | 41.98 |  |     |  | 38.47 | 
|Third Quarter          |  |              | 41.19 |  |     |  | 37.48 | 
|Fourth Quarter         |  |              | 49.44 |  |     |  | 40.00 | 
|                      
|December 2004-May 2005 |  |              |       |  |     |  |       | 
|December 2004          |  |              | 49.44 |  |     |  | 45.23 | 
|January 2005           |  |              | 48.88 |  |     |  | 46.23 | 
|February 2005          |  |              | 49.95 |  |     |  | 47.25 | 
|March 2005             |  |              | 49.20 |  |     |  | 46.80 | 
|April 2005             |  |              | 48.80 |  |     |  | 46.73 | 
|May 2005               |  |              | 48.29 |  |     |  | 45.20 | 

154



---



##### 





|                       |  |                 |       |  |     |  |       | 
|---------------------- |  | --------------- | ----- |  | --- |  | ----- | 
|                       |  | Ordinary Shares |      
|                       |  |                 |      
|                       |  | High            |       |  | Low | 
|                       |  |                 |       |  |     | 
|                       |  | (In euros)      |      
|2000                   |  |                 | 9.357 |  |     |  | 7.348 | 
|2001                   |  |                 | 8.051 |  |     |  | 5.650 | 
|2002                   |  |                 | 6.765 |  |     |  | 4.490 | 
|                      
|2003                   |  |                 |       |  |     |  |       | 
|First Quarter          |  |                 | 5.471 |  |     |  | 5.015 | 
|Second Quarter         |  |                 | 6.022 |  |     |  | 5.227 | 
|Third Quarter          |  |                 | 5.740 |  |     |  | 5.340 | 
|Fourth Quarter         |  |                 | 5.479 |  |     |  | 5.218 | 
|                      
|2004                   |  |                 |       |  |     |  |       | 
|First Quarter          |  |                 | 6.581 |  |     |  | 5.464 | 
|Second Quarter         |  |                 | 6.920 |  |     |  | 6.454 | 
|Third Quarter          |  |                 | 6.651 |  |     |  | 6.143 | 
|Fourth Quarter         |  |                 | 7.245 |  |     |  | 6.570 | 
|                      
|December 2004-May 2005 |  |                 |       |  |     |  |       | 
|December 2004          |  |                 | 7.245 |  |     |  | 6.731 | 
|January 2005           |  |                 | 7.240 |  |     |  | 7.085 | 
|February 2005          |  |                 | 7.698 |  |     |  | 7.142 | 
|March 2005             |  |                 | 7.450 |  |     |  | 7.112 | 
|April 2005             |  |                 | 7.522 |  |     |  | 7.285 | 
|May 2005               |  |                 | 7.430 |  |     |  | 7.141 | 













|         |                       
|-------- | ----------------------
|ITEM 10. | ADDITIONAL INFORMATION




Stock Option Plans








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | if vested, the options are normally exercisable starting one
    year after they are granted and for a period of five years
    thereafter, except under the 2001 plan where the options are
    exercisable for a period of four years; however, during the
    first three or four years (depending on the plan) during which
    exercise is permitted, exercise is limited to annual tranches
    (varying from 15% to 40%), although under the

155



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | 2001 plan, 20% of the options granted in any given year are
    exercisable after one year and the remaining 80% after three
    years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | under the 2001 plan, the options may be exercised only within
    the fifteen trading days following the shareholders
    approval of the financial statements for the preceding fiscal
    year; under the 2002 plan, and 2003 plan, each year, options may
    be exercised only within the fifteen trading days following each
    of (i) the board of directors approval of preliminary
    financial data for the preceding fiscal year on a consolidated
    basis, (ii) the shareholders approval of the
    financial statements for the preceding fiscal year, and
    (iii) the board of directors approval of the report
    relating to the quarter ending September 30; under the 2004
    and 2005 plans the options are exercisable at any time other
    than during the period (i) beginning on the date that is
    one month prior to the day scheduled for the approval of
    Enels annual financial statements by its board of
    directors and ending on the date of such approval and
    (ii) beginning on the date that is one month prior to the
    day scheduled for the approval of Enels six-month report
    by its board of directors and ending on the date of such
    approval;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | under the 2001 plan, options vest if the average reference price
    of Enels shares on Telematico over the last three months
    of the year of the grant is higher than a target price
    determined by the board of directors at the time of the grant.
    The board sets the target price with reference to securities
    analysts estimates of the future price of Enels
    shares. If the target price is not met in a given year, all of
    the one-year options and 30% of the three-year options granted
    in that year do not vest and expire. However, the remaining 70%
    of the three-year options granted in the year (56% of the
    options allotted as a whole) may still vest if (i) the
    price of Enels shares on Telematico during the year of the
    grant outperforms a specified reference index over the same
    period and (ii) the actual growth in value of our business
    during the year of the grant (as determined using a proprietary
    formula) exceeds the expected growth for that year, as
    determined by the board of directors at the time of the grant.
    If these conditions are not met, the remaining 70% of three-year
    options may also vest if the average reference price of
    Enels shares on Telematico over the last three months of
    the second year following the grant is higher than the target
    price for the year of the grant, as adjusted for the expected
    variation of the price of Enels shares in the following
    two years, as determined by the board of directors each year.
    Under the other plans currently in place, options vest if both
    the Earnings Before Interest, Taxes, Depreciation and
    Amortization, or EBITDA, of the Group for the relevant fiscal
    year exceeds the estimated EBITDA as indicated in the budget
    approved by the board of directors for the relevant year, and
    the price of Enels shares on Telematico outperforms a
    specified reference index over the same period. If any of these
    conditions is not met, all the options expire;
|
| |  | The strike price of the options is set by the board of directors
    on the date of the grant and cannot be lower than the average
    reference price of Enels shares on Telematico during the
    month preceding the grant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The number of options granted under the 2001, 2002 and 2003
    plans to participating managers was determined pursuant to a
    formula based on the participants gross salary for the
    year in question and the value of an option exercisable in the
    third year following its grant, calculated according to market
    value indications supplied by primary financial institutions.
    Under the 2004 and 2005 plans, options are granted using a new
    method based on proportional criteria; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Options are not transferable inter vivos.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



156



---



##### 





|              |  |          |     |     |               |  |            |                   |  |              |            |     |  |            |        |     |  |  |                   | 
|------------- |  | -------- | --- | --- | ------------- |  | ---------- | ----------------- |  | ------------ | ---------- | --- |  | ---------- | ------ | --- |  |  | ----------------- | 
|              |  | No. of   |     |     | Total Options |  |            |                   |  | Strike Price |            |     | 
|Year of Grant |  | Grantees |     |     | Granted       |  |            | Options Exercised |  |              |           |     |  | Expiration |       
|              |  |          |     |     |               |  |            |                   |  |              |            |     |  |            |       
|2001          |  |          | 381 | (1) |               |  | 34,274,050 | (2)               |  |              |           | (3) |  |            | 7.272 | (4) |  |  | December 31, 2005 | 
|2002          |  |          | 383 | (5) |               |  | 41,748,500 |                   |  |              | 33,756,350 |     |  |            | 6.426  | (6) |  |  | December 31, 2007 | 
|2003          |  |          | 549 | (7) |               |  | 47,624,005 |                   |  |              | 27,152,567 |     |  |            | 5.240  |     |  |  | December 31, 2008 | 
|2004          |  |          | 640 | (7) |               |  | 38,527,550 |                   |  |              | 854,482    |     |  |            | 6.242  |     |  |  | December 31, 2009 | 
|2005          |  |          | 448 | (7) |               |  | 28,757,000 | (8)               |  |              |           |     |  |            | 7.273  |     |  |  | December 31, 2010 | 






|    |                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Including Enels former chief executive officer,
    Mr. Tatò, in his capacity as general manager
    (direttore generale), as well as Enels current
    chief executive officer, Mr. Conti, in his capacity as
    chief financial officer.                                                                
|   
|(2) | The number of options and the corresponding number of ordinary
    shares, which originally amounted to an aggregate of 68,548,100,
    decreased to 34,274,050 as a result of the one-for-two reverse
    stock split effective as of July 9, 2001.                                                         
|   
|(3) | After June 16, 2005, the options granted under the 2001
    plan will no longer be exercisable.                                                                                                                                                                                                              
|   
|(4) | The strike price of options granted in 2001, originally fixed at
    3.636 per
    share, was set at
    7.272 as a
    result of the one-for-two reverse stock split.                                                                                                                                     
|   
|(5) | Including Enels former chief executive officers,
    Mr. Tatò and Mr. Scaroni, each in his capacity as
    general managers (direttori generali), as well as
    Enels current chief executive officer, Mr. Conti, in
    his capacity as chief financial officer.                                         
|   
|(6) | The strike price for the options granted to Enels former
    chief executive officer, Mr. Scaroni, was determined with
    regard to the reference price of Enels shares on
    Telematico on the date of his appointment as general manager
    (direttore generale), and was therefore set at
    6.480.
|   
|(7) | Including Enels former chief executive officer,
    Mr. Scaroni, in his capacity as general manager
    (direttore generale) as well as Enels current chief
    executive officer, Mr. Conti, in his capacity as chief
    financial officer.                                                              
|   
|(8) | The conditions for the vesting of options under the 2005 plan
    have not yet been formally satisfied.                                                                                                                                                                                                      





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) under the December 1999 authorization (having already
    taken into account the one-for-two reverse stock split effective
    July 9, 2001), on April 9, 2001, Enels board of
    directors resolved to increase the Companys share capital
    by an amount not to exceed
    34,274,050
    through the issuance (in one or more tranches over a five-year
    period) of a maximum of 34,274,050 new ordinary shares reserved
    for issuance upon the exercise of options granted under the 2001
    plan, to be subscribed by December 31, 2005; as of
    May 13, 2005, no ordinary shares had been issued in
    connection with the exercise of 2001 options;
|
| | (ii) under the May 2001 authorization, on April 10,
    2003, Enels board of directors resolved to increase the
    Companys share capital by an amount not to exceed
    41,748,500
    through the issuance (in one or more tranches over a five-year
    period) of a maximum of 41,748,500 new ordinary shares reserved
    for issuance upon the exercise of options granted under the 2002
    plan to be subscribed by December 31, 2007; as of
    May 13, 2005, 33,756,350 ordinary shares had been issued in
    connection with the exercise of an equivalent number of options;                                                                                
|
| | (iii) under the May 2003 authorization, on April 7,
    2004 Enels board of directors resolved to increase the
    Companys share capital by an amount not to exceed
    47,624,005
    through the issuance (in one or more tranches over a five-year
    period) of a maximum of 47,624,005 new ordinary shares, reserved
    for issuance upon the exercise of options granted under the 2003
    plan to be subscribed by December 31,                                                                                                                                                                                                                                 

157



---



##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2008; as of May 13, 2005, 27,152,567 ordinary shares had
    been issued in connection with the exercise of an equivalent
    number of options;                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (iv) under the May 2004 authorization, on March 30,
    2005 Enels board of directors resolved to increase the
    Companys share capital by an amount not to exceed
    38,527,550
    through the issuance (in one or more tranches over a five-year
    period) of a maximum of 38,527,550 new ordinary shares, reserved
    for issuance upon the exercise of options granted under the 2004
    plan to be subscribed by December 31, 2009; as of
    May 13, 2005, 854,482 ordinary shares had been issued in
    connection with the exercise of an equivalent number of options.










    





By-Laws


Statuto


Testo Unico
dellIntermediazione Finanziaria


158



---



##### 







| |        
| | -------
| | General

 








| |                        
| | -----------------------
| | Authorization of Shares









| |                            
| | ---------------------------
| | Form and Transfer of Shares



159



---



##### 







| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an Italian or EU bank;                                                                                                                                                                             
|
| |  | a non-EU bank authorized by the Bank of Italy to operate in the
    Italian market;                                                                                                                
|
| |  | Società di Intermediazione Mobiliare, or SIM;                                                                                                                                                      
|
| |  | an EU investment company;                                                                                                                                                                          
|
| |  | a non-EU investment company authorized by CONSOB to provide
    investment services in Italy;                                                                                                      
|
| |  | an Italian asset management company;                                                                                                                                                               
|
| |  | a stock broker;                                                                                                                                                                                    
|
| |  | the company which has issued the shares;                                                                                                                                                           
|
| |  | the controlling shareholder of the company which has issued the
    shares;                                                                                                                        
|
| |  | the Bank of Italy;                                                                                                                                                                                 
|
| |  | an EU or non-EU entity operating a centralized clearing system;                                                                                                                                    
|
| |  | a financial intermediary operating a clearing system governed by
    art. 69 (2) and 70 of the TUF;                                                                                                
|
| |  | a financial intermediary registered on the list kept by the Bank
    of Italy under art. 107 of Legislative Decree No. 385 of
    September 1, 1993;                                               
|
| |  | Poste Italiane S.p.A. (the Italian Post Office company);                                                                                                                                           
|
| |  | Cassa Depositi e Prestiti;                                                                                                                                                                         
|
| |  | the MEF; and                                                                                                                                                                                       
|
| |  | the managers of foreign clearing, settlement and guarantee
    systems for financial instruments, provided that they are
    subject to supervision equivalent to that provided by Italian
    law.









160



---



##### 





| |                             
| | ----------------------------
| | Limitations on shareholdings







| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Controlling entities and directly or indirectly controlled
    entities of the holder, as well as entities controlled by the
    same controlling entity; and
|
| |  | Affiliated personal entities of the holder, including spouses
    and other closely related personal relatives.                                              





| |                          
| | -------------------------
| | Special powers of the MEF





| |                                              
| | ---------------------------------------------
| | Opposition to material acquisitions of shares





| |                                                
| | -----------------------------------------------
| | Opposition to material shareholders agreements



161



---



##### 







| |                                     
| | ------------------------------------
| | Members of Enels Board of Directors





| |                                 
| | --------------------------------
| | Veto power over material changes







| |                
| | ---------------
| | Dividend Rights







| |              
| | -------------
| | Voting Rights







162



---



##### 









| |                   
| | ------------------
| | Board of Directors









| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | mergers and demergers as permitted by law;                                                   
|
| |  | the establishment or elimination of secondary headquarters;                                  
|
| |  | which directors shall have power to represent the Company;                                   
|
| |  | the reduction of share capital in the event of the withdrawal of
    one or more shareholder;
|
| |  | the harmonization of the by-laws with provisions of the
    law; and                         
|
| |  | the transfer of the Companys registered office within
    Italy.                            









163



---



##### 











| |                   
| | ------------------
| | Statutory Auditors

Collegio Sindacale






| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | specify the number of statutory auditors (not fewer than three)
    and alternate members (not fewer than two);                                                   
|
| |  | regulate the appointment of the chairman of the board of
    statutory auditors;                                                                                  
|
| |  | limit the number of mandates that the statutory auditors may
    have in other companies; and                                                                     
|
| |  | include clauses ensuring that minority shareholders may elect
    one statutory auditor (or at least two if the board is composed
    of more than three members).







164



---



##### 









| |                  
| | -----------------
| | External Auditors









| |                         
| | ------------------------
| | Meetings of Shareholders



Gazzetta Ufficiale




165



---



##### 

















| |                  
| | -----------------
| | Preemptive Rights



166



---



##### 





| |                        
| | -----------------------
| | Reports to Shareholders







| |                   
| | ------------------
| | Liquidation Rights





| |                                          
| | -----------------------------------------
| | Purchase by the Company of its Own Shares











| |                                                                
| | ---------------------------------------------------------------
| | Notification of the Acquisition of Shares and Voting
    Rights



167



---



##### 







bis






| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) concern (including prior consultation for) the exercise
    of voting rights in a listed company or its controlling company;                                       
|
| | (ii) contain limitations on the transfer of shares or
    securities which grant the right to purchase or subscribe shares
    of the companies mentioned in (i) above;
|
| | (iii) provide for the purchase of shares or securities
    mentioned in (ii) above; or                                                                                 

168



---



##### 





| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) have as their object or effect the exercise (including
    joint exercise) of a dominant influence over a listed company or
    its controlling company.









| |                              
| | -----------------------------
| | Minority Shareholders Rights











169



---



##### 











| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | seven-tenths of the members to be elected will be drawn from the
    candidate list that receives the majority of votes expressed by
    the shareholders in the numerical order in which they appear on
    the list, rounded off in the event of a fractional number to the
    next lower number; and                                                                                                                                                                                                                                                                                                                 
|
| |  | The remaining board members will be drawn from the other
    candidate lists; for this purpose, the votes obtained by each
    such list will be divided by one, two, three and so forth up to
    the number of directors to be elected. The numbers obtained
    through this process are attributed to the candidates of each
    list in the order in which such candidates rank in the list. The
    candidates of the various lists are ranked in a single ranking
    and in decreasing order on the basis of the numbers attributed
    to each of them. The candidates with the highest numbers are
    elected.





| |                   
| | ------------------
| | Tender Offer Rules





170



---



##### 



inter alia






| |                                            
| | -------------------------------------------
| | Liability for Mismanagement of Subsidiaries






Significant Differences in Corporate Governance Practices for
Purposes of


Section 303A.11 of the NYSE Listed Company Manual




| |         
| | --------
| | Overview

società per azioni




171



---



##### 















| |                      
| | ---------------------
| | Independent Directors

NYSE domestic company standards. per se


Enels practice.




172



---



##### 









| |                   
| | ------------------
| | Executive Sessions

NYSE domestic company standards.


Enels practice.




| |                                            
| | -------------------------------------------
| | Audit Committee and Internal Audit Function

NYSE domestic company standards.


Enels practice.


173



---



##### 







| |                       
| | ----------------------
| | Compensation Committee

NYSE domestic company standards.


Enels practice.




| |                     
| | --------------------
| | Nominating Committee

NYSE domestic company standards.


Enels practice.




| |                                                                         
| | ------------------------------------------------------------------------
| | Corporate Governance Guidelines/ Code of Business Conduct
    and Ethics

NYSE domestic company standards.


Enels practice.


174



---



##### 



.






| |                                                  
| | -------------------------------------------------
| | Certifications as to Violations of NYSE Standards

NYSE domestic company standards.


Enels practice.




| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Shareholder Approval of Adoption and Modification of
    Equity Compensation Plans

NYSE domestic company standards.


Enels practice. per se





Material Contracts




175



---



##### 






Exchange Controls




 Ufficio Italiano Cambi










Taxation








176



---



##### 









| |                             
| | ----------------------------
| | Withholding Tax on Dividends







imposta
sostitutiva




177



---



##### 













178



---



##### 













| |                     
| | --------------------
| | Tax on capital gains









179



---



##### 









| |                                                
| | -----------------------------------------------
| | Taxation of Distributions from Capital Reserves





| |             
| | ------------
| | Transfer tax





| |                    
| | -------------------
| | Estate and gift tax



  




| |                                             
| | --------------------------------------------
| | Information reporting and backup withholding








Documents On Display




180



---



##### 










|         |                                                          
|-------- | ---------------------------------------------------------
|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Price Risk Management and Market Risk Information










  






181



---



##### 











| |                      
| | ---------------------
| | Foreign exchange risk




 




| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | contracts with a notional amount of
    855 million
    used to hedge the foreign exchange risk related to fuel
    purchases, electricity imports and expected cash flows in
    currencies other than the euro
    (1,681 million
    as of December 31, 2003); and
|
| |  | contracts with a notional amount of
    715 million
    used to hedge the foreign exchange risk related to the repayment
    of the commercial paper we issued in foreign currency
    (440 million
    as of December 31, 2003).                                    



   


 


182



---



##### 



 




| |                   
| | ------------------
| | Interest rate risk

  




         




 


 




| |                     
| | --------------------
| | Commodity price risk



183



---



##### 









| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | futures:
    36.6 million
    or 1,437 contracts;                                      
|
| |  | swaps on petroleum indexes:
    36.7 million
    or 335,852 metric tons; and           
|
| |  | swaps on gas transmission fee:
    16.9 million
    or 1 billion cubic meters per year.





| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | futures:
    0 million
    or 0 contracts;                                             
|
| |  | swaps on petroleum indexes:
    537.56 million
    or 4,133,000 metric tons; and       
|
| |  | swaps on gas transmission fee:
    17.9 million
    or 1 billion cubic meters per year.



|                           |             |                       |      |       |      |  |       |       |  
|-------------------------- | ----------- | --------------------- | ---- | ----- | ---- |  | ----- | ----- | -
|                           |             | As of December, 31    |     
|                           |             |                       |     
|                           |             | 2003                  |      |       | 2004 | 
|                           |             |                       |      |       |      | 
|                           |             | Fair Value            |     
|                           |             | (In millions of euro) |     
|Futures                    |             |                       | 0.5  |       |      |  | 0     |      
|                           | assets      |                       |      | 0.6   |      |  |       | 0     |  
|                           | liabilities |                       |      | (0.1  | )    |  |       | 0     |  
|Swaps on Petroleum indexes |             |                       | 1.6  |       |      |  | 12.2  |      
|                           | assets      |                       |      | 2.3   |      |  |       | 22.3  |  
|                           | liabilities |                       |      | (0.7  | )    |  |       | (10.1 | )
|Gas Transmission fee       |             |                       | (9.6 | )     |      |  | (11.7 | )    
|                           | assets      |                       |      | 0.0   |      |  |       | 0.0   |  
|                           | liabilities |                       |      | (9.6  | )    |  |       | (11.7 | )
|Total                      |             |                       | (7.5 | )     |      |  | 0.5   |      
|                           | assets      |                       |      | 2.9   |      |  |       | 22.3  |  
|                           | liabilities |                       |      | (10.4 | )    |  |       | 21.8  |  



   




184



---



##### 





 














|         |                                                       
|-------- | ------------------------------------------------------
|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES






PART II







|         |                                               
|-------- | ----------------------------------------------
|ITEM 13. | DEFAULTS, DIVIDENDS AVERAGES AND DELINQUENCIES








|         |                                                                          
|-------- | -------------------------------------------------------------------------
|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
    PROCEEDS








|         |                        
|-------- | -----------------------
|ITEM 15. | CONTROLS AND PROCEDURES








|         |           
|-------- | ----------
|ITEM 16. | [RESERVED]






|          |                                 
|--------- | --------------------------------
|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT



185



---



##### 










|          |               
|--------- | --------------
|ITEM 16B. | CODE OF ETHICS








|          |                                       
|--------- | --------------------------------------
|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES



| |                         
| | ------------------------
| | Audit and Non-Audit Fees



|                   |            |              |     |     |      |  |     |     | 
|------------------ | ---------- | ------------ | --- | --- | ---- |  | --- | --- | 
|                   |            | Year Ended   |    
|                   |            | December 31, |    
|                   |            |              |    
|                   |            | 2003         |     |     | 2004 | 
|                   |            |              |     |     |      | 
|                   |            | (In millions |    
|                   |            | of euro)     |    
|Audit fees         |            |              | 1.9 |     |      |  | 2.0 |    
|Audit-related fees |            |              | 0.2 |     |      |  | 1.3 |    
|Tax fees           |            |              | 0.0 |     |      |  | 0.0 |    
|Other fees         |            |              | 0.0 |     |      |  | 0.0 |    
|                   |            |              |     |     |      | 
|                   | Total fees |              |     | 2.1 |      |  |     | 3.3 | 







| |                                                         
| | --------------------------------------------------------
| | Audit Committee Pre-Approval Policies and
    Procedures





186



---



##### 








|          |                                                           
|--------- | ----------------------------------------------------------
|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES








|          |                                                                           
|--------- | --------------------------------------------------------------------------
|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS






PART III







|         |                     
|-------- | --------------------
|ITEM 17. | FINANCIAL STATEMENTS



187



---



##### 








|         |                     
|-------- | --------------------
|ITEM 18. | FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS


|                                                                                                                    |  |  |      | 
|------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Report of Independent Registered Public Accounting Firm                                                             |  |  | F-1  | 
|Consolidated Balance Sheet as of December 31, 2004 and 2003                                                         |  |  | F-2  | 
|Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002                          |  |  | F-3  | 
|Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2004, 2003 and 2002 |  |  | F-4  | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002                      |  |  | F-5  | 
|Notes to Consolidated Financial Statements                                                                          |  |  | F-6  | 
|Report of Independent Registered Public Accounting Firm                                                             |  |  | F-93 | 

188



---



##### 



INDEX TO EXHIBITS FILED WITH THIS REPORT







|         |         
|-------- | --------
|ITEM 19. | EXHIBITS
























189



---



##### 



Report of Independent Registered Public Accounting Firm


To the Shareholders of














KPMG S.p.A.


Rome, Italy


June 8, 2005


F-1



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


AS OF DECEMBER 31, 2004 AND 2003


|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |        |        |        | 
|--------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ------------------------------------------ | ------------ | ------------- | ------ | ------- | ------ | ----- | ------ | ------- | ------ | ------ | ------ | 
|                                                                      |                                                                                                                                                                              | 2004               |                                            |              | 2003          |        |         | 2004   |      
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    |                                            | (millions of |              
|                                                                      |                                                                                                                                                                              | (millions of euro) |                                            |              | U.S. dollars) |       
|ASSETS                                                               
|Current assets:                                                       |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |       
|                                                                      | Cash and cash equivalents (Note 2)                                                                                                                                           |                    |                                            | 364          |               |        |         | 452    |       |        |         | 493    |       
|                                                                      | Receivables, net: (Note 4)                                                                                                                                                   |                    |                                            |              |               |        |         |        |       |        |         |        |       
|                                                                      |                                                                                                                                                                              | Customers          |                                            |              | 7,697         |        |         |        | 6,884 |        |         |        | 10,420 |       
|                                                                      |                                                                                                                                                                              | Other              |                                            |              | 3,119         |        |         |        | 2,053 |        |         |        | 4,222  |       
|Inventories (Notes 2 and 5)                                           |                                                                                                                                                                              |                    | 4,214                                      |              |               |        | 4,211   |        |       |        | 5,705   |       
|Deferred tax assets (Note 12)                                         |                                                                                                                                                                              |                    | 1,082                                      |              |               |        | 506     |        |       |        | 1,465   |       
|Accrued income and prepayments                                        |                                                                                                                                                                              |                    | 426                                        |              |               |        | 414     |        |       |        | 577     |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 16,902                                     |              |               |        | 14,520  |        |       |        | 22,882  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|Utility plant, including construction in progress (Notes 2
    and 6) |                                                                                                                                                                              |                    | 86,616                                     |              |               |        | 85,731  |        |       |        | 117,261 |       
|Accumulated depreciation (Notes 2 and 6)                              |                                                                                                                                                                              |                    | (50,157                                    | )            |               |        | (48,576 | )      |       |        | (67,903 | )     
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 36,459                                     |              |               |        | 37,155  |        |       |        | 49,358  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|Other non-current assets:                                             |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |       
|                                                                      | Intangible assets (Notes 2 and 7)                                                                                                                                            |                    |                                            | 11,534       |               |        |         | 13,576 |       |        |         | 15,615 |       
|                                                                      | Investments (Notes 2 and 8)                                                                                                                                                  |                    |                                            | 302          |               |        |         | 335    |       |        |         | 409    |       
|                                                                      | Deferred tax assets (Note 12)                                                                                                                                                |                    |                                            | 1,257        |               |        |         | 1,532  |       |        |         | 1,702  |       
|                                                                      | Other (Note 9)                                                                                                                                                               |                    |                                            | 1,876        |               |        |         | 1,812  |       |        |         | 2,539  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 14,969                                     |              |               |        | 17,255  |        |       |        | 20,265  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | Total Assets                               |              |               | 68,330 |         |        |       | 68,930 |         |        |        | 92,505 | 
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                     
|LIABILITIES AND SHAREHOLDERS EQUITY                                 
|Current liabilities:                                                  |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |       
|                                                                      | Current maturities of long-term debt (Note 10)                                                                                                                               |                    |                                            | 1,365        |               |        |         | 4,011  |       |        |         | 1,848  |       
|                                                                      | Short term debt (Note 10)                                                                                                                                                    |                    |                                            | 5,054        |               |        |         | 4,632  |       |        |         | 6,842  |       
|                                                                      | Trade accounts payable                                                                                                                                                       |                    |                                            | 6,554        |               |        |         | 5,602  |       |        |         | 8,873  |       
|                                                                      | Taxes payable                                                                                                                                                                |                    |                                            | 339          |               |        |         | 1,511  |       |        |         | 459    |       
|                                                                      | Advances from customers                                                                                                                                                      |                    |                                            | 2,955        |               |        |         | 3,075  |       |        |         | 4,000  |       
|                                                                      | Accrued expenses and other current liabilities                                                                                                                               |                    |                                            | 4,320        |               |        |         | 4,077  |       |        |         | 5,849  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 20,587                                     |              |               |        | 22,908  |        |       |        | 27,871  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|Long-term debt (Note 10)                                              |                                                                                                                                                                              |                    | 20,241                                     |              |               |        | 18,005  |        |       |        | 27,402  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|Other non-current liabilities:                                        |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |       
|                                                                      | Reserves for pensions and similar obligations (Note 11)                                                                                                                      |                    |                                            | 471          |               |        |         | 462    |       |        |         | 637    |       
|                                                                      | Reserves for employee termination indemnities                                                                                                                                |                    |                                            | 1,095        |               |        |         | 1,298  |       |        |         | 1,482  |       
|                                                                      | Deferred income taxes (Note 12)                                                                                                                                              |                    |                                            | 2,883        |               |        |         | 2,515  |       |        |         | 3,903  |       
|                                                                      | Other (Notes 13 and 22)                                                                                                                                                      |                    |                                            | 3,206        |               |        |         | 2,618  |       |        |         | 4,340  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 7,655                                      |              |               |        | 6,893   |        |       |        | 10,362  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|Shareholders equity (Note 14):                                       |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |       |        |         |       
|                                                                      | Share capital, euro 1 par value per share (6,103,521,864
    and 6,063,075,189 shares authorized, issued and outstanding
    as of December 31, 2004 and 2003, respectively) |                    |                                            | 6,104        |               |        |         | 6,063  |       |        |         | 8,264  |       
|                                                                      | Additional paid in capital                                                                                                                                                   |                    |                                            | 200          |               |        |         |       |       |        |         | 271    |       
|                                                                      | Legal reserve                                                                                                                                                                |                    |                                            | 1,453        |               |        |         | 1,453  |       |        |         | 1,967  |       
|                                                                      | Law 292/93 reserve                                                                                                                                                           |                    |                                            | 2,215        |               |        |         | 2,215  |       |        |         | 2,999  |       
|                                                                      | Retained earnings                                                                                                                                                            |                    |                                            | 9,183        |               |        |         | 8,884  |       |        |         | 12,432 |       
|                                                                      | Net income, net of interim dividends paid in 2004 of euro
    2,014 million                                                                                                  |                    |                                            | 692          |               |        |         | 2,509  |       |        |         | 937    |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | 19,847                                     |              |               |        | 21,124  |        |       |        | 26,870  |       
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      
|                                                                      |                                                                                                                                                                              |                    | Total Liabilities and Shareholders Equity |              |               | 68,330 |         |        |       | 68,930 |         |        |        | 92,505 | 
|                                                                      |                                                                                                                                                                              |                    |                                            |              |               |        |         |        |      



F-2



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME


FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |        |  
|------------------------------------------------ | --------------------------------------------- | ------------------ | ------ | ------------ | ------------- |  | ------ | ------ | - |  | ------ | ------ | - |  | ------ | ------ | -
|                                                 |                                               | 2004               |        |              | 2003          |  |        | 2002   |   |  | 2004   |       
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|                                                 |                                               |                    |        | (millions of |              
|                                                 |                                               | (millions of euro) |        |              | U.S. dollars) | 
|Operating revenues (Notes 2 and 15):             |                                               |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                 | Sales and services:                           |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |        |  
|                                                 | Energy sales and transport                    |                    |        | 25,164       |               |  |        | 19,834 |   |  |        | 20,208 |   |  |        | 34,067 |  
|                                                 | Electricity equalization fund contribution    |                    |        | 17           |               |  |        | 179    |   |  |        | 187    |   |  |        | 23     |  
|                                                 | Telecommunications services                   |                    |        | 4,168        |               |  |        | 3,959  |   |  |        | 3,642  |   |  |        | 5,643  |  
|                                                 | Gas sales to end users                        |                    |        | 1,374        |               |  |        | 1,254  |   |  |        | 780    |   |  |        | 1,860  |  
|                                                 | Other revenues                                |                    |        | 5,766        |               |  |        | 6,091  |   |  |        | 5,160  |   |  |        | 7,806  |  
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|                                                 |                                               |                    | 36,489 |              |               |  | 31,317 |        |   |  | 29,977 |        |   |  | 49,399 |       
|Operating expenses:                              |                                               |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                 | Personnel (Note 16)                           |                    |        | 3,315        |               |  |        | 3,440  |   |  |        | 3,589  |   |  |        | 4,488  |  
|                                                 | Purchased power (Note 17)                     |                    |        | 10,465       |               |  |        | 4,620  |   |  |        | 4,802  |   |  |        | 14,168 |  
|                                                 | Fuel for thermal generation (Note 17)         |                    |        | 3,598        |               |  |        | 4,101  |   |  |        | 4,255  |   |  |        | 4,871  |  
|                                                 | Depreciation and amortization (Notes 2 and 6) |                    |        | 4,173        |               |  |        | 4,516  |   |  |        | 4,477  |   |  |        | 5,649  |  
|                                                 | Services and rentals (Note 18)                |                    |        | 5,336        |               |  |        | 5,224  |   |  |        | 5,710  |   |  |        | 7,224  |  
|                                                 | Materials and supplies (Note 17)              |                    |        | 3,072        |               |  |        | 4,111  |   |  |        | 4,212  |   |  |        | 4,159  |  
|                                                 | Provision                                     |                    |        | 512          |               |  |        | 593    |   |  |        | 504    |   |  |        | 693    |  
|                                                 | Other                                         |                    |        | 716          |               |  |        | 924    |   |  |        | 721    |   |  |        | 969    |  
|                                                 | Capitalized expenses (Note 2)                 |                    |        | (1,023       | )             |  |        | (944   | ) |  |        | (1,173 | ) |  |        | (1,385 | )
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|                                                 |                                               |                    | 30,164 |              |               |  | 26,585 |        |   |  | 27,097 |        |   |  | 40,836 |       
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Operating income                                 |                                               |                    | 6,325  |              |               |  | 4,732  |        |   |  | 2,880  |        |   |  | 8,563  |       
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Financial income (expense) (Note 19):            |                                               |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                 | Financial income                              |                    |        | 370          |               |  |        | 425    |   |  |        | 286    |   |  |        | 501    |  
|                                                 | Financial expense                             |                    |        | (1,473       | )             |  |        | (1,555 | ) |  |        | (1,464 | ) |  |        | (1,994 | )
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|                                                 |                                               |                    | (1,103 | )            |               |  | (1,130 | )      |   |  | (1,178 | )      |   |  | (1,493 | )     
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Losses on equity investments (Note 8)            |                                               |                    | (39    | )            |               |  | (73    | )      |   |  | (59    | )      |   |  | (53    | )     
|Extraordinary income (expenses) (Notes 2 and 20) |                                               |                    | (818   | )            |               |  | (136   | )      |   |  | 736    |        |   |  | (1,107 | )     
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Income before income taxes                       |                                               |                    | 4,365  |              |               |  | 3,393  |        |   |  | 2,379  |        |   |  | 5,910  |       
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Income taxes (Notes 2 and 21)                    |                                               |                    | 1,533  |              |               |  | 966    |        |   |  | 608    |        |   |  | 2,075  |       
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|Income before minority interests                 |                                               |                    | 2,832  |              |               |  | 2,427  |        |   |  | 1,771  |        |   |  | 3,835  |       
|Minority interests                               |                                               |                    | (126   | )            |               |  | 82     |        |   |  | 237    |        |   |  | (172   | )     
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       
|                                                 | Net income                                    |                    |        | 2,706        |               |  |        | 2,509  |   |  |        | 2,008  |   |  |        | 3,663  |  
|                                                 |                                               |                    |        |              |               |  |        |        |   |  |        |       



F-3



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004


|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       |  |  |        |   |  |  |        |  
|---------------------------------------------------------------------------- |  | ------------------ | ----- | ---------- | ------- |  | --- | ------- | --- |  | ------- |  |  | -------- | ----- |  | ------ |  | ------ | ----- |  |  | ------ | - |  |  | ------ | -
|                                                                             |  |                    |       | Additional |         |  |     |         | Law |  |         |  |  |          |       | 
|                                                                             |  | Share              |       |            | paid in |  |     | Legal   |     |  | 292/93  |  |  | Retained |       |  | Net    |  |        |      
|                                                                             |  | Capital            |       |            | capital |  |     | Reserve |     |  | Reserve |  |  | Earnings |       |  | Income |  |        | Total | 
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|                                                                             |  | (millions of euro) |      
|Balance at January 1, 2002                                                   |  |                    | 6,063 |            |         |  |    |         |     |  | 1,453   |  |  |          | 2,215 |  |        |  | 7,009  |       |  |  | 4,226  |   |  |  | 20,966 |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Allocation of 2001 net income to reserves                                    |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | 2,043  |       |  |  | (2,043 | ) |  |  |       |  
|Dividends paid                                                               |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | (2,183 | ) |  |  | (2,183 | )
|Translation of foreign companies financial statements and
    other changes |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | (19    | )     |  |  |       |   |  |  | (19    | )
|Net income for 2002                                                          |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | 2,008  |   |  |  | 2,008  |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Balance at December 31, 2002                                                 |  |                    | 6,063 |            |         |  |    |         |     |  | 1,453   |  |  |          | 2,215 |  |        |  | 9,033  |       |  |  | 2,008  |   |  |  | 20,772 |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Dividends paid                                                               |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | (175   | )     |  |  | (2,008 | ) |  |  | (2,183 | )
|Asset revaluation                                                            |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | 33     |       |  |  |       |   |  |  | 33     |  
|Translation of foreign companies financial statements and
    other changes |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | (7     | )     |  |  |       |   |  |  | (7     | )
|Net income for 2003                                                          |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | 2,509  |   |  |  | 2,509  |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Balance at December 31, 2003                                                 |  |                    | 6,063 |            |         |  |    |         |     |  | 1,453   |  |  |          | 2,215 |  |        |  | 8,884  |       |  |  | 2,509  |   |  |  | 21,124 |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Allocation of 2003 net income to reserves                                    |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | 314    |       |  |  | (314   | ) |  |  |       |  
|Dividends paid                                                               |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | (2,195 | ) |  |  | (2,195 | )
|Exercise of stock options                                                    |  |                    | 41    |            |         |  | 200 |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  |       |   |  |  | 241    |  
|Translation of foreign companies financial statements and
    other changes |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  | (15    | )     |  |  |       |   |  |  | (15    | )
|Net income for 2004                                                          |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | 2,706  |   |  |  | 2,706  |  
|Interim dividends paid                                                       |  |                    |      |            |         |  |    |         |     |  |        |  |  |          |      |  |        |  |       |       |  |  | (2,014 | ) |  |  | (2,014 | )
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|Balance at December 31, 2004                                                 |  |                    | 6,104 |            |         |  | 200 |         |     |  | 1,453   |  |  |          | 2,215 |  |        |  | 9,183  |       |  |  | 692    |   |  |  | 19,847 |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 
|                                                                            
|(millions of U.S. dollars)                                                  
|Balance at December 31, 2004                                                 |  |                    | 8,264 |            |         |  | 271 |         |     |  | 1,967   |  |  |          | 2,999 |  |        |  | 12,432 |       |  |  | 937    |   |  |  | 26,869 |  
|                                                                             |  |                    |       |            |         |  |     |         |     |  |         |  |  |          |       |  |        |  |        |       | 



F-4



---



##### 



ENEL S.P.A. AND SUBSIDIARIES CONSOLIDATED


STATEMENTS OF CASH FLOWS


FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2004


|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |        |  
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------ | ------ | ------------ | ------------- |  | ------ | ------ | - |  | ------ | ------ | - |  | ------ | ------ | -
|                                                   |                                                                                                     | 2004               |        |              | 2003          |  |        | 2002   |   |  | 2004   |       
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|                                                   |                                                                                                     |                    |        | (millions of |              
|                                                   |                                                                                                     | (millions of euro) |        |              | U.S. dollars) | 
|CASH FLOWS FROM OPERATING ACTIVITIES:              |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                   | Income before minority interests                                                                    |                    |        | 2,832        |               |  |        | 2,427  |   |  |        | 1,771  |   |  |        | 3,834  |  
|                                                   | Depreciation and amortization                                                                       |                    |        | 4,173        |               |  |        | 4,516  |   |  |        | 4,477  |   |  |        | 5,649  |  
|                                                   | Writedowns (revaluations), net                                                                      |                    |        | 1,242        |               |  |        | 308    |   |  |        | 1,832  |   |  |        | 1,681  |  
|                                                   | Net changes in reserves for employee termination indemnities                                        |                    |        | (194         | )             |  |        | (69    | ) |  |        | 117    |   |  |        | (262   | )
|                                                   | Net changes in other reserves                                                                       |                    |        | 91           |               |  |        | 236    |   |  |        | 19     |   |  |        | 123    |  
|                                                   | Gain on disposal of assets, net                                                                     |                    |        | (873         | )             |  |        | (528   | ) |  |        | (2,772 | ) |  |        | (1,182 | )
|                                                   | Interest income                                                                                     |                    |        | (370         | )             |  |        | (425   | ) |  |        | (286   | ) |  |        | (501   | )
|                                                   | Interest expense                                                                                    |                    |        | 1,473        |               |  |        | 1,555  |   |  |        | 1,465  |   |  |        | 1,994  |  
|                                                   | Income taxes                                                                                        |                    |        | 1,533        |               |  |        | 966    |   |  |        | 608    |   |  |        | 2,075  |  
|(Increase) Decrease:                               |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                   | Inventories                                                                                         |                    |        | (39          | )             |  |        | (1,028 | ) |  |        | (1,320 | ) |  |        | (52    | )
|                                                   | Accounts receivable                                                                                 |                    |        | (1,091       | )             |  |        | 378    |   |  |        | 134    |   |  |        | (1,477 | )
|                                                   | Accrued income, prepayments and other                                                               |                    |        | (20          | )             |  |        | (34    | ) |  |        | (53    | ) |  |        | (27    | )
|                                                   | Equalization fund receivables                                                                       |                    |        | (1,241       | )             |  |        | 24     |   |  |        | 44     |   |  |        | (1,680 | )
|                                                   | Trade accounts payable                                                                              |                    |        | 541          |               |  |        | 275    |   |  |        | 1,434  |   |  |        | 733    |  
|                                                   | Accrued expenses and other current liabilities                                                      |                    |        | 116          |               |  |        | 15     |   |  |        | 204    |   |  |        | 157    |  
|                                                   | Interest received                                                                                   |                    |        | 359          |               |  |        | 425    |   |  |        | 286    |   |  |        | 486    |  
|                                                   | Interest paid                                                                                       |                    |        | (1,445       | )             |  |        | (1,511 | ) |  |        | (1,436 | ) |  |        | (1,956 | )
|                                                   | Income taxes paid                                                                                   |                    |        | (1,695       | )             |  |        | (357   | ) |  |        | (1,731 | ) |  |        | (2,295 | )
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|Net cash provided by operating activities          |                                                                                                     |                    | 5,392  |              |               |  | 7,173  |        |   |  | 4,793  |        |   |  | 7,300  |       
|CASH FLOWS FROM INVESTING ACTIVITIES:              |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                   | Investment:                                                                                         |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |        |  
|                                                   | Capital expenditure (tangibles and intangibles                                                      |                    |        | (3,834       | )             |  |        | (3,969 | ) |  |        | (5,717 | ) |  |        | (5,191 | )
|                                                   | Unconsolidated subsidiaries                                                                         |                    |        | (57          | )             |  |        | (37    | ) |  |        | (39    | ) |  |        | (77    | )
|                                                   | Investments in consolidated subsidiaries, net of cash acquired                                      |                    |        | (135         | )             |  |        | (1,601 | ) |  |        | (2,339 | ) |  |        | (183   | )
|                                                   | Other changes in fixed assets                                                                       |                    |        | 70           |               |  |        | 28     |   |  |        | 111    |   |  |        | 95     |  
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|                                                   |                                                                                                     |                    | (3,956 | )            |               |  | (5,579 | )      |   |  | (7,984 | )      |   |  | (5,356 | )     
|                                                   | Disposals:                                                                                          |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |        |  
|                                                   | Businesses                                                                                          |                    |        | 1,950        |               |  |        | 654    |   |  |        | 3,665  |   |  |        | 2,640  |  
|                                                   | Fixed assets                                                                                        |                    |        | 108          |               |  |        | 230    |   |  |        | 113    |   |  |        | 146    |  
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|                                                   |                                                                                                     |                    | 2,058  |              |               |  | 884    |        |   |  | 3,778  |        |   |  | 2,786  |       
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|Net cash used in investing activities              |                                                                                                     |                    | (1,898 | )            |               |  | (4,695 | )      |   |  | (4,206 | )      |   |  | (2,570 | )     
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|CASH FLOWS FROM FINANCING ACTIVITIES:              |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |        |   |  |        |       
|                                                   | Increase in net long-term debt                                                                      |                    |        | 3,910        |               |  |        | 3,419  |   |  |        | 2,411  |   |  |        | 5,293  |  
|                                                   | Repayment of net long-term debt                                                                     |                    |        | (4,431       | )             |  |        | (1,350 | ) |  |        | (1,029 | ) |  |        | (5,999 | )
|                                                   | Change in net short-term debt                                                                       |                    |        | 1,523        |               |  |        | (2,056 | ) |  |        | 924    |   |  |        | 2,062  |  
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|                                                   |                                                                                                     |                    | 1,002  |              |               |  | 13     |        |   |  | 2,306  |        |   |  | 1,356  |       
|                                                   | Dividends paid                                                                                      |                    |        | (4,256       | )             |  |        | (2,183 | ) |  |        | (2,183 | ) |  |        | (5,761 | )
|                                                   | Electricity Industry Pension Fund contribution and other pension
    obligations                    |                    |        |             |               |  |        |       |   |  |        | (611   | ) |  |        |       |  
|                                                   | Exercise of stock options                                                                           |                    |        | 241          |               |  |        |       |   |  |        |       |   |  |        | 326    |  
|                                                   | Payment of substitute tax on freeing-up of reserves, assets
    revaluation and tax amnesty charges |                    |        | (579         | )             |  |        | (365   | ) |  |        | (402   | ) |  |        | (784   | )
|                                                   | Minority capital contribution and other minor items                                                 |                    |        | 10           |               |  |        | 109    |   |  |        | 116    |   |  |        | 14     |  
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|Net cash used in financing activities              |                                                                                                     |                    | (3,582 | )            |               |  | (2,426 | )      |   |  | (774   | )      |   |  | (4,849 | )     
|NET CASH FLOW FOR THE YEAR                         |                                                                                                     |                    | (88    | )            |               |  | 52     |        |   |  | (187   | )      |   |  | (119   | )     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR |                                                                                                     |                    | 452    |              |               |  | 400    |        |   |  | 587    |        |   |  | 612    |       
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       
|CASH AND CASH EQUIVALENTS AT END OF THE YEAR       |                                                                                                     |                    | 364    |              |               |  | 452    |        |   |  | 400    |        |   |  | 493    |       
|                                                   |                                                                                                     |                    |        |              |               |  |        |        |   |  |        |       



F-5



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |        
|--- | -------
|(1) | GENERAL

















F-6



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Società Elettrica Provincia
Autonoma di Trento ( )






F-7



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                                         
|--- | --------------------------------------------------------
|(2) | SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Basis of Presentation










Consolidation Principles




F-8



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Riforma organica della disciplina delle
società di capitali e società cooperative Vietti Reform






Cash and Cash Equivalents




Receivables




Inventories










Accrued income and expenses




Utility Plant




F-9



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















Depreciation




F-10



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                          |  |               |       |    
|----------------------------------------- |  | ------------- | ----- | ---
|                                          |  | Average years |      
|                                          |  | of estimated  |      
|                                          |  | economic      |      
|Plant categories                          |  | useful life   |      
|                                          |  |               |      
|Buildings and associated land             |  |               | 40    |    
|Generating plant:                         |  |               |       |    
|Hydroelectric                             |  |               | 40    |    
|Thermal                                   |  |               | 20    |    
|Geothermal                                |  |               | 12    |    
|Other renewable sources                   |  |               | 20    |    
|Transmission lines                        |  |               | 40    | (1)
|Transformer stations                      |  |               | 32-42 | (2)
|Medium and low voltage distribution lines |  |               | 30-40 | (3)
|Telecommunications:                       |  |               |       |    
|Mobile equipments                         |  |               | 5-6   |    
|Fixed lines appliances                    |  |               | 8     |    
|Cables                                    |  |               | 20    |    






|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Average years estimated from January 1, 2003; previously
    equal to 35 (Note 6).   
|   
|(2) | Average years estimated from January 1, 2003; previously
    equal to 20 (Note 6).   
|   
|(3) | Average years estimated from January 1, 2004; previously
    equal to 18-20 (Note 6).



Intangible Assets








Investments






F-11



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Payables




Reserve for Employee Termination Indemnities and Other
Employee Benefits
















Other provisions for risks and charges




Operating Revenues




F-12



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Grants






Statements of Cash Flows






Vacation Pay




F-13



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Income Taxes








| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | IRES (corporate income tax, formerly IRPEG), payable at 33%, 34%
    and 36% for the years ended December 31, 2004, 2003 and
    2002, respectively.                                                                                                                             
|
| |  | IRAP (regional income tax), payable at a tax rate of 4.25% for
    the years ended December 31, 2004, 2003 and 2002. From
    January 1, 2003, each Italian region may determine its own
    tax rate leading to an aggregate rate which must fall between
    3.259% and 5.259%.





Research and Development






Foreign Currency






Financial Derivatives




F-14



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Extraordinary Income and Expenses




Environmental Costs






|    |                     
|--- | --------------------
|(3) | REGULATION AND RATES



F-15



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Liberalized, as of April 1, 1999, the generation, import
    and export of electricity, as well as the sale of electricity to
    Eligible Customers;                                                                                                                                                                                                                                                                                                                                        
|
| |  | Provided that, after January 1, 2003, no electricity
    company will be allowed to produce or import more than 50% of
    the total of imported and domestically-produced electricity in
    Italy, and, in connection with this limit, mandated the
    Companys sale of not less than 15,000 MW of its
    generating capacity by January 1, 2003;                                                                                                                                       
|
| |  | Provided that consumers, or Eligible Customers, meeting certain
    consumption thresholds, which have been progressively reduced,
    may negotiate supply agreements directly with any domestic or
    foreign producer, wholesaler or distributor of electricity,
    while other, Non-Eligible Customers must continue to
    purchase electricity from the distributor serving the area in
    which they are located and pay regulated prices determined by
    the Energy Authority;
|
| |  | Provided for the establishment of the Single Buyer, a central
    purchaser of electricity from producers on behalf of all
    Non-eligible Customers;                                                                                                                                                                                                                                                                                                                                       
|
| |  | Provided for the creation of the Borsa dellEnergia
    Elettrica, (Italian power exchange) for electricity,
    in which producers, importers, wholesalers, distributors, the
    Gestore della Rete, other Eligible Customers and the Single
    Buyer buy and sell electricity, with prices being determined
    through a competitive bidding process;                                                                                                                                 
|
| |  | Provided for the creation of the Gestore del Mercato,
    (Market Operator), charged with managing the Italian
    power exchange;                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Provided for the separation of the management and operation of
    the national electricity transmission grid, which was to be
    licensed to an independent transmission system operator, the
    Gestore della Rete, from the ownership of the grid assets, which
    were retained by existing owners, primarily Terna; and                                                                                                                                                              
|
| |  | Established a new licensing regime for electricity distribution
    and provided incentives for the consolidation of electricity
    distribution networks within each municipality.                                                                                                                                                                                                                                                                                                         



F-16



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |            
|--- | -----------
|(4) | RECEIVABLES



|                                         |  |                    |        |   |      |  |       |  
|---------------------------------------- |  | ------------------ | ------ | - | ---- |  | ----- | -
|                                         |  | 2004               |        |   | 2003 | 
|                                         |  |                    |        |   |      | 
|                                         |  | (millions of euro) |       
|Electricity, gas and services            |  |                    | 7,005  |   |      |  | 5,995 |  
|Telecommunication services               |  |                    | 1,054  |   |      |  | 1,335 |  
|Allowance for doubtful accounts          |  |                    | (362   | ) |      |  | (446  | )
|                                         |  |                    |        |   |      | 
|                                         |  |                    | 7,697  |   |      |  | 6,884 |  
|                                         |  |                    |        |   |      | 
|Tax receivables                          |  |                    | 851    |   |      |  | 948   |  
|Equalization Fund receivables (payables) |  |                    | 1,170  |   |      |  | (71   | )
|Other                                    |  |                    | 1,098  |   |      |  | 1,176 |  
|                                         |  |                    |        |   |      | 
|                                         |  |                    | 3,119  |   |      |  | 2,053 |  
|                                         |  |                    |        |   |      | 
|                                         |  |                    | 10,816 |   |      |  | 8,937 |  
|                                         |  |                    |        |   |      | 





corporate


F-17



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|    |            
|--- | -----------
|(5) | INVENTORIES



|                                          |  |                    |       |  |      |  |       | 
|----------------------------------------- |  | ------------------ | ----- |  | ---- |  | ----- | 
|                                          |  | 2004               |       |  | 2003 | 
|                                          |  |                    |       |  |      | 
|                                          |  | (millions of euro) |      
|Fuel                                      |  |                    | 590   |  |      |  | 534   | 
|Materials, supplies and other inventories |  |                    | 554   |  |      |  | 527   | 
|Residential buildings available for sale  |  |                    | 196   |  |      |  | 263   | 
|Contract work in progress                 |  |                    | 2,870 |  |      |  | 2,880 | 
|Advances                                  |  |                    | 4     |  |      |  | 7     | 
|                                          |  |                    |       |  |      | 
|                                          |  |                    | 4,214 |  |      |  | 4,211 | 
|                                          |  |                    |       |  |      | 









F-18



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |              
|--- | -------------
|(6) | UTILITY PLANT



|                                 |  |                    |        |  |      |  |        | 
|-------------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | 
|                                 |  | 2004               |        |  | 2003 | 
|                                 |  |                    |        |  |      | 
|                                 |  | (millions of euro) |       
|Utility plant, gross:            |  |                    |        |  |      |  |        | 
|Generating Plant:                |  |                    |        |  |      |  |        | 
|Hydroelectric                    |  |                    | 8,220  |  |      |  | 8,178  | 
|Thermal                          |  |                    | 17,646 |  |      |  | 17,432 | 
|Geothermal and renewable sources |  |                    | 2,245  |  |      |  | 2,068  | 
|Transmission Line                |  |                    | 7,472  |  |      |  | 7,160  | 
|Distribution Electricity Network |  |                    | 36,256 |  |      |  | 34,961 | 
|Distribution Gas Network         |  |                    | 2,767  |  |      |  | 2,573  | 
|Telecommunication networks       |  |                    | 5,608  |  |      |  | 5,124  | 
|Land and Buildings               |  |                    | 2,129  |  |      |  | 3,767  | 
|Other                            |  |                    | 2,204  |  |      |  | 2,328  | 
|Construction in progress         |  |                    | 2,069  |  |      |  | 2,140  | 
|                                 |  |                    |        |  |      | 
|Total                            |  |                    | 86,616 |  |      |  | 85,731 | 
|                                 |  |                    |        |  |      | 
|Accumulated Depreciation:        |  |                    |        |  |      |  |        | 
|Generating Plant:                |  |                    |        |  |      |  |        | 
|Hydroelectric                    |  |                    | 3,820  |  |      |  | 3,599  | 
|Thermal                          |  |                    | 10,767 |  |      |  | 10,025 | 
|Geothermal and renewable sources |  |                    | 1,159  |  |      |  | 1,036  | 
|Transmission Line                |  |                    | 3,524  |  |      |  | 3,389  | 
|Distribution Electricity Network |  |                    | 24,905 |  |      |  | 24,886 | 
|Distribution Gas Network         |  |                    | 1,036  |  |      |  | 944    | 
|Telecommunication networks       |  |                    | 2,551  |  |      |  | 1,868  | 
|Land and Buildings               |  |                    | 902    |  |      |  | 1,319  | 
|Other                            |  |                    | 1,493  |  |      |  | 1,510  | 
|                                 |  |                    |        |  |      | 
|Total                            |  |                    | 50,157 |  |      |  | 48,576 | 
|                                 |  |                    |        |  |      | 
|Utility plant, net:              |  |                    |        |  |      |  |        | 
|Generating Plant:                |  |                    |        |  |      |  |        | 
|Hydroelectric                    |  |                    | 4,400  |  |      |  | 4,579  | 
|Thermal                          |  |                    | 6,879  |  |      |  | 7,407  | 
|Geothermal and renewable sources |  |                    | 1,086  |  |      |  | 1,032  | 
|Transmission Line                |  |                    | 3,948  |  |      |  | 3,771  | 
|Distribution Electricity Network |  |                    | 11,351 |  |      |  | 10,075 | 
|Distribution Gas Network         |  |                    | 1,731  |  |      |  | 1,629  | 
|Telecommunication networks       |  |                    | 3,057  |  |      |  | 3,256  | 
|Land and Buildings               |  |                    | 1,227  |  |      |  | 2,448  | 
|Other                            |  |                    | 711    |  |      |  | 818    | 
|Construction in progress         |  |                    | 2,069  |  |      |  | 2,140  | 
|                                 |  |                    |        |  |      | 
|Total                            |  |                    | 36,459 |  |      |  | 37,155 | 
|                                 |  |                    |        |  |      | 

F-19



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                       |  |                 |        |                   |          |          |                   |         |     |           |        |   |          |          |        |   |          |        |        |         |           |  |       |      |  |       |        |   |  |  |        |   |  |  |        | 
|-------------------------------------- |  | --------------- | ------ | ----------------- | -------- | -------- | ----------------- | ------- | --- | --------- | ------ | - | -------- | -------- | ------ | - | -------- | ------ | ------ | ------- | --------- |  | ----- | ---- |  | ----- | ------ | - |  |  | ------ | - |  |  | ------ | 
|                                       |  |                 |        | December 31, 2003 |          |          | December 31, 2004 |        
|                                       |  |                 |        |                   |          |          |                   |        
|                                       |  |                 |        |                   |          | Reclass. |                   |         |     |           |        |   | Reclass. |          |        |  
|                                       |  |                 |        |                   |          | retirem. |                   |         | Net |           |        |   |          | retirem. |        |   | Net      |       
|                                       |  | January 1, 2003 |        |                   |          |          | Depre-            |         |     | and other |        |   | book     |          |        |   |          | Depre- |        |         | and other |  |       | book | 
|                                       |  | Net book value  |        |                   | Addition |          |                   | ciation |     |           | mov.   |   |          | value    |        |   | Addition |        |        | ciation |           |  | mov.  |      |  | value |       
|                                       |  |                 |        |                   |          |          |                   |         |     |           |        |   |          |          |        |   |          |        |        |         |           |  |       |      |  |       |       
|Generating Plant:                      |  |                 |        |                   |          |          |                   |         |     |           |        |   |          |          |        |   |          |        |        |         |           |  |       |      |  |       |        |   |  |  |        |   |  |  |        | 
|Hydroelectric                          |  |                 | 4,809  |                   |          |          | 35                |         |     |           | (249   | ) |          |          | (16    | ) |          |        | 4,579  |         |           |  | 56    |      |  |       | (249   | ) |  |  | (14    | ) |  |  | 4,400  | 
|Thermal                                |  |                 | 7,739  |                   |          |          | 293               |         |     |           | (741   | ) |          |          | 116    |   |          |        | 7,407  |         |           |  | 196   |      |  |       | (756   | ) |  |  | 32     |   |  |  | 6,879  | 
|Geothermal and other renewable sources |  |                 | 900    |                   |          |          | 35                |         |     |           | (116   | ) |          |          | 213    |   |          |        | 1,032  |         |           |  | 23    |      |  |       | (119   | ) |  |  | 150    |   |  |  | 1,086  | 
|Transmission line                      |  |                 | 3,326  |                   |          |          | 54                |         |     |           | (139   | ) |          |          | 530    |   |          |        | 3,771  |         |           |  | 78    |      |  |       | (152   | ) |  |  | 251    |   |  |  | 3,948  | 
|Distribution electricity network       |  |                 | 11,720 |                   |          |          | 1,119             |         |     |           | (1,018 | ) |          |          | (117   | ) |          |        | 11,704 |         |           |  | 1,242 |      |  |       | (609   | ) |  |  | 745    |   |  |  | 13,082 | 
|Telecommunication networks             |  |                 | 3,248  |                   |          |          | 515               |         |     |           | (690   | ) |          |          | 183    |   |          |        | 3,256  |         |           |  | 492   |      |  |       | (742   | ) |  |  | 51     |   |  |  | 3,057  | 
|Land and buildings                     |  |                 | 2,445  |                   |          |          | 9                 |         |     |           | (95    | ) |          |          | 89     |   |          |        | 2,448  |         |           |  | 32    |      |  |       | (63    | ) |  |  | (1,190 | ) |  |  | 1,227  | 
|Other                                  |  |                 | 904    |                   |          |          | 116               |         |     |           | (209   | ) |          |          | 7      |   |          |        | 818    |         |           |  | 114   |      |  |       | (198   | ) |  |  | (23    | ) |  |  | 711    | 
|Construction in progress               |  |                 | 2,442  |                   |          |          | 1,447             |         |     |           |       |   |          |          | (1,749 | ) |          |        | 2,140  |         |           |  | 1,285 |      |  |       |       |   |  |  | (1,356 | ) |  |  | 2,069  | 
|                                       |  |                 |        |                   |          |          |                   |         |     |           |        |   |          |          |        |   |          |        |        |         |           |  |       |      |  |       |       
|Total                                  |  |                 | 37,533 |                   |          |          | 3,623             |         |     |           | (3,257 | ) |          |          | (744   | ) |          |        | 37,155 |         |           |  | 3,518 |      |  |       | (2,888 | ) |  |  | (1,326 | ) |  |  | 36,459 | 
|                                       |  |                 |        |                   |          |          |                   |         |     |           |        |   |          |          |        |   |          |        |        |         |           |  |       |      |  |       |       





F-20



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the acquisition of the companies operating in the gas market
    (Sicilmetano, Ottogas and Italgestioni) and disposal of Aimeri
    (waste management), contributing to an increase in tangible
    assets of euro 78 million;
|
| |  | consolidation of Wisco, resulting in an increase in tangible
    assets of euro 12 million;                                                                                                                                   
|
| |  | the acquisition by EUFR of some generation companies, resulting
    in an increase in tangible assets of euro 31 million;                                                                                                     
|
| |  | the acquisition of certain North American generation companies,
    determining an increase in Enel North Americas tangible
    assets of euro 27 million.                                                                   







| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | the disposal of Interpower, which resulted in the
    deconsolidation of fixed assets amounting to
    euro 450 million;
|
| |  | the deconsolidation of CESI resulting in a decrease in net book
    value of euro 55 million;                           
|
| |  | the acquisition of the EUFR resulting in an increase in net book
    value of euro 169 million;                         
|
| |  | the acquisition of Maritza resulting in an increase in net book
    value of euro 55 million.                           









| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | write-downs in the net book value of assets of
    euro 133 million in 2003;                                                                                                                                                                          
|
| |  | accruals for expected dismantling and restoration costs of euro
    4 million and 58 million accrued during the years
    ended December 31, 2004 and 2003, respectively (euro
    6.6 million of the December 31, 2003 accrual was used
    in 2004);

F-21



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | capitalized costs of euro 28 million as of
    December 31, 2004 and 2003.





| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | write-downs in the net book value of assets of
    euro 8 million;            
|
| |  | accruals for expected dismantling and restoration costs of
    euro 9 million;



|    |                  
|--- | -----------------
|(7) | INTANGIBLE ASSETS



|                                                                 |  |                    |        |  |      |  |        | 
|---------------------------------------------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | 
|                                                                 |  | 2004               |        |  | 2003 | 
|                                                                 |  |                    |        |  |      | 
|                                                                 |  | (millions of euro) |       
|Goodwill                                                         |  |                    | 6,586  |  |      |  | 8,313  | 
|Concessions, licenses, trademarks and similar rights             |  |                    | 2,563  |  |      |  | 2,707  | 
|Extraordinary contribution for Electricity Industry Pension Fund |  |                    | 1,333  |  |      |  | 1,422  | 
|Patents and intellectual property rights                         |  |                    | 423    |  |      |  | 489    | 
|Other                                                            |  |                    | 629    |  |      |  | 645    | 
|                                                                 |  |                    |        |  |      | 
|                                                                 |  |                    | 11,534 |  |      |  | 13,576 | 
|                                                                 |  |                    |        |  |      | 





|                      |  |                    |        |              |                   |  |       |       |  |  |             |              |  |            |        |  |       |         |       |        |  |  |       |  |  |  |           | 
|--------------------- |  | ------------------ | ------ | ------------ | ----------------- |  | ----- | ----- |  |  | ----------- | ------------ |  | ---------- | ------ |  | ----- | ------- | ----- | ------ |  |  | ----- |  |  |  | --------- | 
|                      |  | December 31, 2004  |        |              | December 31, 2003 | 
|                      |  |                    |        |              |                   | 
|                      |  |                    |        | Accumulated  |                   |  |       |       |  |  | Accumulated |              |  |           
|                      |  |                    |        | amortization |                   |  | Net   |       |  |  |             | amortization |  |            | Net    |  |       | Amorti- |      
|                      |  | Historical         |        |              | and write-        |  |       | book  |  |  | Historical  |              |  | and write- |        |  | book  |         |       | zation | 
|                      |  | cost               |        |              | downs             |  |       | value |  |  | cost        |              |  | downs      |        |  | value |         |       | period | 
|                      |  |                    |        |              |                   |  |       |       |  |  |             |              |  |            |        |  |       |         |       |        | 
|                      |  | (millions of euro) |       
|Telecommunications    |  |                    | 9,771  |              |                   |  | 4,682 |       |  |  | 5,089       |              |  |            | 9,771  |  |       |         | 3,011 |        |  |  | 6,760 |  |  |  | 15  years | 
|Viesgo                |  |                    | 757    |              |                   |  | 114   |       |  |  | 643         |              |  |            | 757    |  |       |         | 76    |        |  |  | 681   |  |  |  | 20  years | 
|Gas sector            |  |                    | 735    |              |                   |  | 160   |       |  |  | 575         |              |  |            | 701    |  |       |         | 111   |        |  |  | 590   |  |  |  | 15  years | 
|ENA and ELA           |  |                    | 168    |              |                   |  | 33    |       |  |  | 135         |              |  |            | 168    |  |       |         | 24    |        |  |  | 144   |  |  |  | 20  years | 
|Maritza               |  |                    | 16     |              |                   |  | 2     |       |  |  | 14          |              |  |            | 16     |  |       |         | 1     |        |  |  | 15    |  |  |  | 20  years | 
|Enel Union Fenosa Ren |  |                    | 130    |              |                   |  | 6     |       |  |  | 124         |              |  |            | 123    |  |       |         |      |        |  |  | 123   |  |  |  | 20  years | 
|Wisco                 |  |                    | 7      |              |                   |  | 1     |       |  |  | 6           |              |  |            |       |  |       |         |      |        |  |  |      |  |  |  | 5 years   | 
|                      |  |                    |        |              |                   |  |       |       |  |  |             |              |  |            |        |  |       |         |       |        | 
|                      |  |                    | 11,584 |              |                   |  | 4,998 |       |  |  | 6,586       |              |  |            | 11,536 |  |       |         | 3,223 |        |  |  | 8,313 |  |  |  |           | 
|                      |  |                    |        |              |                   |  |       |       |  |  |             |              |  |            |        |  |       |         |       |        | 





F-22



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




















F-23



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |            
|--- | -----------
|(8) | INVESTMENTS



|                                           |  |              |     |  |      |  |     | 
|------------------------------------------ |  | ------------ | --- |  | ---- |  | --- | 
|                                           |  | 2004         |     |  | 2003 | 
|                                           |  |              |     |  |      | 
|                                           |  | (millions of |    
|                                           |  | euro)        |    
|Investments in unconsolidated subsidiaries |  |              | 54  |  |      |  |    | 
|Investments in affiliates                  |  |              | 179 |  |      |  | 244 | 
|Investments in other companies             |  |              | 69  |  |      |  | 91  | 
|                                           |  |              |     |  |      | 
|                                           |  |              | 302 |  |      |  | 335 | 
|                                           |  |              |     |  |      | 







F-24



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                         
|--- | ------------------------
|(9) | OTHER NON-CURRENT ASSETS







|     |     
|---- | ----
|(10) | DEBT

Long-Term Debt




|                                   |  |          |           |            |          |  |            |          |  |                    |          |  |                    |      |       |  |      |  |       |      |  |  |       |  |  |       |       |  |       |  |       |  |  |  |        |  |  |  |        | 
|---------------------------------- |  | -------- | --------- | ---------- | -------- |  | ---------- | -------- |  | ------------------ | -------- |  | ------------------ | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ----- | ----- |  | ----- |  | ----- |  |  |  | ------ |  |  |  | ------ | 
|                                   |  |          |           | Balance at |          |  | Balance at |          |  | Current            |          |  | Long-term maturity |     
|                                   |  | Maturity |           |            | Dec. 31, |  |            | Dec. 31, |  |                    | maturity |  |                    |      |      
|Summary by type of debt instrument |  | range    |           |            | 2003     |  |            | 2004     |  |                    | 2005     |  |                    | 2006 |       |  | 2007 |  |       | 2008 |  |  | 2009  |  |  | After |       |  | Total | 
|                                   |  |          |           |            |          |  |            |          |  |                    |          |  |                    |      |       |  |      |  |       |      |  |  |       |  |  |       |       |  |       | 
|                                   |  |          |           |            |          |  |            |          |  | (millions of euro) |         
|Fixed  rate listed bonds          |  |          | 2005-2033 |            |          |  | 7,178      |          |  |                    | 7,208    |  |                    |      | 745   |  |      |  | 225   |      |  |  |      |  |  |       | 1,000 |  |       |  |      |  |  |  | 5,238  |  |  |  | 6,463  | 
|Floating  rate listed bonds       |  |          | 2006-2010 |            |          |  | 602        |          |  |                    | 402      |  |                    |      |      |  |      |  | 166   |      |  |  |      |  |  |       | 50    |  |       |  | 86    |  |  |  | 100    |  |  |  | 402    | 
|Fixed  rate bonds not listed      |  |          | 2005-2008 |            |          |  | 181        |          |  |                    | 188      |  |                    |      | 70    |  |      |  | 45    |      |  |  |      |  |  |       | 73    |  |       |  |      |  |  |  |       |  |  |  | 118    | 
|Floating  rate bonds not listed   |  |          | 2005-2032 |            |          |  | 1,774      |          |  |                    | 1,853    |  |                    |      | 21    |  |      |  | 21    |      |  |  | 22    |  |  |       | 21    |  |       |  | 330   |  |  |  | 1,438  |  |  |  | 1,832  | 
|Fixed  rate bond EU               |  |          | 2005-2010 |            |          |  | 153        |          |  |                    | 116      |  |                    |      | 38    |  |      |  | 36    |      |  |  | 31    |  |  |       | 9     |  |       |  | 1     |  |  |  | 1      |  |  |  | 78     | 
|Floating  rate bonds EU           |  |          | 2005-2009 |            |          |  | 11         |          |  |                    | 9        |  |                    |      | 3     |  |      |  | 3     |      |  |  | 1     |  |  |       | 1     |  |       |  | 1     |  |  |  |       |  |  |  | 6      | 
|Fixed  rate bank loans            |  |          | 2005-2014 |            |          |  | 103        |          |  |                    | 89       |  |                    |      | 18    |  |      |  | 10    |      |  |  | 8     |  |  |       | 6     |  |       |  | 5     |  |  |  | 42     |  |  |  | 71     | 
|Floating  rate bank loans         |  |          | 2005-2024 |            |          |  | 8,319      |          |  |                    | 8,155    |  |                    |      | 314   |  |      |  | 1,869 |      |  |  | 688   |  |  |       | 997   |  |       |  | 1,248 |  |  |  | 3,039  |  |  |  | 7,841  | 
|Fixed  rate EU Loans              |  |          | 2005-2009 |            |          |  | 166        |          |  |                    | 121      |  |                    |      | 36    |  |      |  | 30    |      |  |  | 30    |  |  |       | 12    |  |       |  | 13    |  |  |  |       |  |  |  | 85     | 
|Floating  rate EU Loans           |  |          | 2005-2018 |            |          |  | 3,363      |          |  |                    | 3,307    |  |                    |      | 106   |  |      |  | 267   |      |  |  | 295   |  |  |       | 394   |  |       |  | 408   |  |  |  | 1,837  |  |  |  | 3,201  | 
|Other financings                   |  |          | 2005-2026 |            |          |  | 166        |          |  |                    | 158      |  |                    |      | 14    |  |      |  | 13    |      |  |  | 12    |  |  |       | 10    |  |       |  | 12    |  |  |  | 97     |  |  |  | 144    | 
|                                   |  |          |           |            |          |  |            |          |  |                    |          |  |                    |      |       |  |      |  |       |      |  |  |       |  |  |       |       |  |       | 
|Total                              |  |          |           |            |          |  | 22,016     |          |  |                    | 21,606   |  |                    |      | 1,365 |  |      |  | 2,685 |      |  |  | 1,087 |  |  |       | 2,573 |  |       |  | 2,104 |  |  |  | 11,792 |  |  |  | 20,241 | 
|                                   |  |          |           |            |          |  |            |          |  |                    |          |  |                    |      |       |  |      |  |       |      |  |  |       |  |  |       |       |  |       | 







F-25



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                |  |                         |  |                        
|--------------- |  | ----------------------- |  | -----------------------
|                |  | 7-year bonds            |  | 20-year bonds          
|                |  |                         |  |                        
|Amount          |  | euro 750 million        |  | euro 750 million       
|Repayment       |  | In full on May 20, 2011 |  | In full on May 20, 2024
|Coupon          |  | 4.125%                  |  | 5.25%                  
|Issuance price  |  | 99.553                  |  | 98.586                 
|Early repayment |  | Not permitted           |  | Not permitted          
|Listed in       |  | Luxembourg              |  | Luxembourg             





|                |  |                             |  |                            
|--------------- |  | --------------------------- |  | ---------------------------
|                |  | 10-year bonds               |  | 20-year bonds              
|                |  |                             |  |                            
|Amount          |  | euro 600 million            |  | euro 800 million           
|Repayment       |  | In full on October 28, 2014 |  | In full on October 28, 2024
|Coupon          |  | 4.25%                       |  | 4.90%                      
|Issuance price  |  | 99.968                      |  | 99.624                     
|Early repayment |  | Not permitted               |  | Not permitted              
|Listed in       |  | Luxembourg                  |  | Luxembourg                 





F-26



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                     |  |          |           |                      |               |  |                      |       |  |         |               |  |              |       |       |   |  |  |        | 
|-------------------- |  | -------- | --------- | -------------------- | ------------- |  | -------------------- | ----- |  | ------- | ------------- |  | ------------ | ----- | ----- | - |  |  | ------ | 
|                     |  |          |           | At December 31, 2004 |               |  | At December 31, 2003 |      
|                     |  |          |           |                      |               |  |                      |      
|                     |  |          |           | Average              |               |  | (millions of         |       |  | Average |               |  | (millions of |      
|Currency             |  | Maturity |           |                      | Interest Rate |  |                      | euro) |  |         | Interest Rate |  |              | euro) |      
|                     |  |          |           |                      |               |  |                      |       |  |         |               |  |              |       |      
|Euro                 |  |          | 2005-2033 |                      |               |  | 3.62                 | %     |  |         | 20,769        |  |              |       | 4.03  | % |  |  | 21,348 | 
|U.S. Dollar          |  |          | 2005-2026 |                      |               |  | 7.60                 | %     |  |         | 213           |  |              |       | 7.59  | % |  |  | 188    | 
|British Pound        |  |          | 2007-2033 |                      |               |  | 5.98                 | %     |  |         | 64            |  |              |       | 6.16  | % |  |  | 67     | 
|Swiss Franc          |  |          | 2007-2009 |                      |               |  | 6.78                 | %     |  |         | 30            |  |              |       | 6.87  | % |  |  | 40     | 
|Japanese Yen         |  |          | 2005-2010 |                      |               |  | 1.60                 | %     |  |         | 141           |  |              |       | 1.80  | % |  |  | 149    | 
|Brasilian Real       |  |          | 2016      |                      |               |  | 12.51                | %     |  |         | 332           |  |              |       | 14.50 | % |  |  | 163    | 
|Other currencies     |  |          | 2012-2024 |                      |               |  | 9.35                 | %     |  |         | 57            |  |              |       | 8.12  | % |  |  | 61     | 
|Non-Euro Currency    |  |          |           |                      |               |  |                      |       |  |         | 837           |  |              |       |       |   |  |  | 668    | 
|                     |  |          |           |                      |               |  |                      |       |  |         |               |  |              |       |      
|Total Long-Term Debt |  |          |           |                      |               |  |                      |       |  |         | 21,606        |  |              |       |       |   |  |  | 22,016 | 
|                     |  |          |           |                      |               |  |                      |       |  |         |               |  |              |       |      



Short-Term Debt










|     |                                             
|---- | --------------------------------------------
|(11) | RESERVE FOR PENSIONS AND SIMILAR OBLIGATIONS



F-27



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|     |                                    
|---- | -----------------------------------
|(12) | DEFERRED TAX ASSETS AND LIABILITIES



|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |   |  |  |        |  
|------------------------------------------------------------------------------------ |  | --------------- | ------ | ------------ | --------- |  | --- | --------- |  |  | --------------- | - |  |  | ------ | -
|                                                                                     |  |                 |        | Consolidated |           |  |     |           | 
|                                                                                     |  | At December 31, |        |              | Statement |  |     | Other     |  |  | At December 31, |  
|In millions of euro                                                                  |  | 2003            |        |              | of Income |  |     | movements |  |  | 2004            |  
|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |  
|Write downs of intangible and tangible assets                                        |  |                 | 76     |              |           |  | 6   |           |  |  | (1              | ) |  |  | 81     |  
|Provisions for risks and charges and write-downs with deferred
    tax deductibility |  |                 | 678    |              |           |  | 169 |           |  |  | (148            | ) |  |  | 699    |  
|Tax losses carry forwarded                                                           |  |                 | 941    |              |           |  | (55 | )         |  |  | 19              |   |  |  | 905    |  
|Investments write-downs                                                              |  |                 | 113    |              |           |  | 164 |           |  |  | 19              |   |  |  | 296    |  
|Consolidation adjustments and other movements                                        |  |                 | 230    |              |           |  | 33  |           |  |  | 95              |   |  |  | 358    |  
|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |  
|                                                                                     |  |                 | 2,038  |              |           |  | 317 |           |  |  | (16             | ) |  |  | 2,339  |  
|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |  
|Less non current portion                                                             |  |                 | (1,532 | )            |           |  |     |           |  |  |                 |   |  |  | (1,257 | )
|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |  
|Deferred tax assets, current portion                                                 |  |                 | 506    |              |           |  |     |           |  |  |                 |   |  |  | 1,082  |  
|                                                                                     |  |                 |        |              |           |  |     |           |  |  |                 |  







F-28



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                               |  |                 |       |              |           |  |     |           |  |  |                 |   |  |  |       | 
|------------------------------------------------------------------------------ |  | --------------- | ----- | ------------ | --------- |  | --- | --------- |  |  | --------------- | - |  |  | ----- | 
|                                                                               |  |                 |       | Consolidated |           |  |     |           | 
|                                                                               |  |                 |       | Statement    |           |  |     |           | 
|                                                                               |  | At December 31, |       |              | of Income |  |     | Other     |  |  | At December 31, |  
|In millions of euro                                                            |  | 2003            |       |              | 2004      |  |     | movements |  |  | 2004            |  
|                                                                               |  |                 |       |              |           |  |     |           |  |  |                 |  
|Additional depreciation                                                        |  |                 | 1,060 |              |           |  | 213 |           |  |  | 19              |   |  |  | 1,292 | 
|Extraordinary contribution to FPE recognized over 20 year
    basis            |  |                 | 467   |              |           |  | (29 | )         |  |  |                |   |  |  | 438   | 
|Accelerated depreciation recognized by subsidiaries in the tax
    filing only |  |                 | 603   |              |           |  | 191 |           |  |  | 1               |   |  |  | 795   | 
|Gains on disposal                                                              |  |                 | 131   |              |           |  | (25 | )         |  |  | (8              | ) |  |  | 98    | 
|Tax effect on allocation of consolidation differences to the net
    assets    |  |                 | 50    |              |           |  | (1  | )         |  |  | 12              |   |  |  | 61    | 
|Other movements                                                                |  |                 | 204   |              |           |  | 16  |           |  |  | (21             | ) |  |  | 199   | 
|                                                                               |  |                 |       |              |           |  |     |           |  |  |                 |  
|Total                                                                          |  |                 | 2,515 |              |           |  | 365 |           |  |  | 3               |   |  |  | 2,883 | 
|                                                                               |  |                 |       |              |           |  |     |           |  |  |                 |  







|     |                              
|---- | -----------------------------
|(13) | OTHER NON-CURRENT LIABILITIES



|                                                              |  |                    |       |  |      |  |       | 
|------------------------------------------------------------- |  | ------------------ | ----- |  | ---- |  | ----- | 
|                                                              |  | 2004               |       |  | 2003 | 
|                                                              |  |                    |       |  |      | 
|                                                              |  | (millions of euro) |      
|Litigation and contingent liabilities reserves                |  |                    | 1,283 |  |      |  | 1,443 | 
|Minority Interest                                             |  |                    | 1,131 |  |      |  | 191   | 
|Reserve for early retirement                                  |  |                    | 295   |  |      |  | 40    | 
|Payable to Ferrovie dello Stato for telecommunication network |  |                    | 202   |  |      |  | 233   | 
|Payable to Treasury for UMTS license                          |  |                    | 181   |  |      |  | 217   | 
|Substitute tax on revaluations (Law 350/2003)                 |  |                    |      |  |      |  | 228   | 
|Other                                                         |  |                    | 114   |  |      |  | 266   | 
|                                                              |  |                    |       |  |      | 
|                                                              |  |                    | 3,206 |  |      |  | 2,618 | 
|                                                              |  |                    |       |  |      | 



F-29



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




















|     |                     
|---- | --------------------
|(14) | SHAREHOLDERS EQUITY

Share Capital




F-30



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Shareholders Equity Reserves






Retained Earnings






Reconciliation of Parents Statutory Net Income and
Shareholders Equity to Consolidated Net Income and
Shareholders Equity






F-31



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                  |  |                    |        |   |                      |  |       |      |  |  |       |   |  |      |        |   |      |  |        |   |  |  |        |  
|--------------------------------------------------------------------------------- |  | ------------------ | ------ | - | -------------------- |  | ----- | ---- |  |  | ----- | - |  | ---- | ------ | - | ---- |  | ------ | - |  |  | ------ | -
|                                                                                  |  | Net Income         |        |   | Shareholders Equity | 
|                                                                                  |  |                    |        |   |                      | 
|                                                                                  |  | 2004               |        |   | 2003                 |  |       | 2002 |  |  | 2004  |   |  | 2003 |        |   | 2002 | 
|                                                                                  |  |                    |        |   |                      |  |       |      |  |  |       |   |  |      |        |   |      | 
|                                                                                  |  | (millions of euro) |       
|Per Parents statutory financial statements                                       |  |                    | 7,272  |   |                      |  | 607   |      |  |  | 2,045 |   |  |      | 15,301 |   |      |  | 11,997 |   |  |  | 13,573 |  
|Effects of consolidating the financial statements of the
    Subsidiary Companies |  |                    | (151   | ) |                      |  | 2,192 |      |  |  | (370  | ) |  |      | 9,111  |   |      |  | 9,576  |   |  |  | 7,358  |  
|Elimination of intra-group gains and other                                        |  |                    | (4,415 | ) |                      |  | (290  | )    |  |  | (27   | ) |  |      | (4,565 | ) |      |  | (449   | ) |  |  | (159   | )
|                                                                                  |  |                    |        |   |                      |  |       |      |  |  |       |   |  |      |        |   |      | 
|Per consolidated financial statements                                             |  |                    | 2,706  |   |                      |  | 2,509 |      |  |  | 2,008 |   |  |      | 19,847 |   |      |  | 21,124 |   |  |  | 20,772 |  
|                                                                                  |  |                    |        |   |                      |  |       |      |  |  |       |   |  |      |        |   |      | 





|     |                   
|---- | ------------------
|(15) | OPERATING REVENUES



|                                                      |  |                    |        |  |      |  |        |      |  |  |        | 
|----------------------------------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                      |  | 2004               |        |  | 2003 |  |        | 2002 | 
|                                                      |  |                    |        |  |      |  |        |      | 
|                                                      |  | (millions of euro) |       
|Energy sales and transport                            |  |                    | 25,164 |  |      |  | 19,834 |      |  |  | 20,208 | 
|Electricity Equalization Fund contributions           |  |                    | 17     |  |      |  | 179    |      |  |  | 187    | 
|Telecommunications services                           |  |                    | 4,168  |  |      |  | 3,959  |      |  |  | 3,642  | 
|Gas sales to end users                                |  |                    | 1,374  |  |      |  | 1,254  |      |  |  | 780    | 
|Other:                                                |  |                    |        |  |      |  |        |      |  |  |        | 
| Connections, inspections and repositioning services |  |                    | 675    |  |      |  | 684    |      |  |  | 645    | 
| Other operating revenues                            |  |                    | 5,091  |  |      |  | 5,407  |      |  |  | 4,515  | 
|                                                      |  |                    |        |  |      |  |        |      | 
|Total other                                           |  |                    | 5,766  |  |      |  | 6,091  |      |  |  | 5,160  | 
|                                                      |  |                    |        |  |      |  |        |      | 
|                                                      |  |                    | 36,489 |  |      |  | 31,317 |      |  |  | 29,977 | 
|                                                      |  |                    |        |  |      |  |        |      | 







F-32



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|     |                   
|---- | ------------------
|(16) | PERSONNEL EXPENSES



|                                         |  |                    |       |  |      |  |       |     |  |  |       | 
|---------------------------------------- |  | ------------------ | ----- |  | ---- |  | ----- | --- |  |  | ----- | 
|                                         |  | 2004               |       |  | 2003 |  |       | 202 | 
|                                         |  |                    |       |  |      |  |       |     | 
|                                         |  | (millions of euro) |      
|Wages and salaries                       |  |                    | 2,372 |  |      |  | 2,440 |     |  |  | 2,554 | 
|Social security contributions            |  |                    | 653   |  |      |  | 675   |     |  |  | 700   | 
|Employee termination indemnities         |  |                    | 181   |  |      |  | 197   |     |  |  | 208   | 
|Employee pension and similar obligations |  |                    | 15    |  |      |  | 26    |     |  |  | 22    | 
|Other costs                              |  |                    | 94    |  |      |  | 102   |     |  |  | 105   | 
|                                         |  |                    |       |  |      |  |       |     | 
|                                         |  |                    | 3,315 |  |      |  | 3,440 |     |  |  | 3,589 | 
|                                         |  |                    |       |  |      |  |       |     | 



F-33



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                                                            
|---- | ---------------------------------------------------------------------------
|(17) | PURCHASED POWER, FUEL FOR THERMAL GENERATION AND MATERIALS
    AND SUPPLIES



|                                          |  |                    |        |  |      |  |        |      |  |  |        | 
|----------------------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                          |  | 2004               |        |  | 2003 |  |        | 2002 | 
|                                          |  |                    |        |  |      |  |        |      | 
|                                          |  | (millions of euro) |       
|Purchased power                           |  |                    | 10,465 |  |      |  | 4,620  |      |  |  | 4,802  | 
|Fuel for thermal generation               |  |                    | 3,598  |  |      |  | 4,101  |      |  |  | 4,255  | 
|                                          |  |                    |        |  |      |  |        |      | 
|Total fuel and power                      |  |                    | 14,063 |  |      |  | 8,721  |      |  |  | 9,057  | 
|                                          |  |                    |        |  |      |  |        |      | 
|Materials consumption                     |  |                    | 1,255  |  |      |  | 1,733  |      |  |  | 1,975  | 
|Gas for distribution and fuel for trading |  |                    | 1,817  |  |      |  | 2,378  |      |  |  | 2,237  | 
|                                          |  |                    |        |  |      |  |        |      | 
|Total materials and supplies              |  |                    | 3,072  |  |      |  | 4,111  |      |  |  | 4,212  | 
|                                          |  |                    |        |  |      |  |        |      | 
|                                          |  |                    | 17,135 |  |      |  | 12,832 |      |  |  | 13,269 | 
|                                          |  |                    |        |  |      |  |        |      | 











|     |                              
|---- | -----------------------------
|(18) | SERVICES AND RENTALS EXPENSES



|                              |  |                    |       |  |      |  |       |      |  |  |       | 
|----------------------------- |  | ------------------ | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                              |  | 2004               |       |  | 2003 |  |       | 2002 | 
|                              |  |                    |       |  |      |  |       |      | 
|                              |  | (millions of euro) |      
|Electricity transmission fees |  |                    | 1,069 |  |      |  | 912   |      |  |  | 1,399 | 
|Interconnections and roaming  |  |                    | 1,346 |  |      |  | 1,381 |      |  |  | 1,426 | 
|Other services                |  |                    | 2,155 |  |      |  | 2,197 |      |  |  | 2,164 | 
|                              |  |                    |       |  |      |  |       |      | 
|Total services                |  |                    | 4,570 |  |      |  | 4,490 |      |  |  | 4,989 | 
|Rentals and leases            |  |                    | 766   |  |      |  | 734   |      |  |  | 721   | 
|                              |  |                    |       |  |      |  |       |      | 
|                              |  |                    | 5,336 |  |      |  | 5,224 |      |  |  | 5,710 | 
|                              |  |                    |       |  |      |  |       |      | 







F-34



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |                              
|---- | -----------------------------
|(19) | FINANCIAL INCOME AND EXPENSES



|                             |  |                    |     |  |      |  |     |      |  |  |     | 
|---------------------------- |  | ------------------ | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                             |  | 2004               |     |  | 2003 |  |     | 2002 | 
|                             |  |                    |     |  |      |  |     |      | 
|                             |  | (millions of euro) |    
|Interest income              |  |                    | 107 |  |      |  | 98  |      |  |  | 100 | 
|Foreign exchange differences |  |                    | 203 |  |      |  | 270 |      |  |  | 152 | 
|Other                        |  |                    | 60  |  |      |  | 57  |      |  |  | 34  | 
|                             |  |                    |     |  |      |  |     |      | 
|                             |  |                    | 370 |  |      |  | 425 |      |  |  | 286 | 
|                             |  |                    |     |  |      |  |     |      | 



|                                                                                    |  |                    |       |  |      |  |       |      |  |  |       | 
|----------------------------------------------------------------------------------- |  | ------------------ | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                                                                    |  | 2004               |       |  | 2003 |  |       | 2002 | 
|                                                                                    |  |                    |       |  |      |  |       |      | 
|                                                                                    |  | (millions of euro) |      
|Interest and other charges on bonds                                                 |  |                    | 505   |  |      |  | 464   |      |  |  | 418   | 
|Interest and other charges on loans from banks and other
    financial institutions |  |                    | 453   |  |      |  | 547   |      |  |  | 510   | 
|Interest on short-term debt from banks and other financial
    institutions         |  |                    | 99    |  |      |  | 148   |      |  |  | 200   | 
|Foreign exchange differences                                                        |  |                    | 198   |  |      |  | 268   |      |  |  | 159   | 
|Other                                                                               |  |                    | 218   |  |      |  | 128   |      |  |  | 177   | 
|                                                                                    |  |                    |       |  |      |  |       |      | 
|                                                                                    |  |                    | 1,473 |  |      |  | 1,555 |      |  |  | 1,464 | 
|                                                                                    |  |                    |       |  |      |  |       |      | 





|     |                                  
|---- | ---------------------------------
|(20) | EXTRAORDINARY INCOME AND EXPENSES





| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | gain on the sale of a 50% share in Terna, placed on the market
    in June 2004, amounting to euro 860 million (inclusive
    of the share in net income for the 1st Half of 2004);                                                                     
|
| |  | gain of euro 113 million related to the sale of
    NewReal;                                                                                                                                                                                            
|
| |  | adjustments of various nature relating to WIND, equal to
    euro 29 million;                                                                                                                                                                           
|
| |  | reversal of euro 22 million from the Provision for
    restructuring costs, accrued in the previous year in the Real
    estate sector;                                                                                                                 
|
| |  | euro 26 million of adjustments on income taxes for the
    previous year resulting from the definition of the tax treatment
    of some items, following clarifications not issued at the time
    at which the 2003 financial statements were prepared;
|
| |  | capital gains of euro 11 million realized on the
    disposal of minor distribution networks;                                                                                                                                                           
|
| |  | other items amounting to euro 90 million.                                                                                                                                                                                                               

F-35



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | write-down of euro 1,116 million for consolidation
    differences related to the Telecommunication sector to align its
    carrying value with the market value implied in the bid
    considered by Enels Board of Directors in the meeting held
    on April 9;                                                                                                                                                                                                                                                                                     
|
| |  | charges on early retirement incentives of
    euro 435 million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | write-downs of euro 57 million for fixed assets no
    longer in use related to WIND;                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | costs incurred by Enel SpA related to the stock market placement
    of a 50% share in the capital of Terna, amounting to euro
    52 million. The amount includes the provision of
    euro 16 million to recognize one additional share to
    be given for every 20 shares (one additional share for
    every 10 shares for Enel Groups employees) purchased
    in the Italian public offer and owned for 18 months from
    such purchase and deposited with one of the Italian managers or
    any other member of Monte Titoli (bonus share);
|
| |  | adjustments to balance sheet items, amounting to
    euro 41 million, due to differences emerging upon the
    application of new corporate law and tax regulations;                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | adjustments of euro 39 million related to energy and
    gas transactions completed in the previous years;                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | charges on participation in the tax pardon law, amounting to
    euro 31 million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | adjustments, write-downs and other items of various nature
    relating to WIND, amounting to euro 26 million;                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | write-downs and related accruals of euro 21 million
    mainly related to the conversion of the plant in
    Santa Barbara;                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | charges of approximately euro 20 million relating to
    contractual obligations regarding the transfer of ENELs
    interest in Elettrogen to Endesa;                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | charges for guarantees given in connection with the sale of
    NewReal of approximately euro 20 million;                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | losses related to the sale of a branch of an entity in the water
    sector of approximately euro 12 million;                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | previous years taxes amounting to euro 9 million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | extraordinary charges of various nature, amounting to
    euro 90 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              







| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | euro 356 million capital gain on the disposal of Interpower
    (Note 1);                                                                                                                                                                                       
|
| |  | euro 165 million capital gain on the disposal of local
    electricity distribution networks, of which
    euro 120 million related to the disposal of the
    Brescia distribution network (Note 1);                                                           
|
| |  | adjustments of euro 58 million on income taxes for the
    previous year, resulting from the definition of the tax
    treatment of a number of items for which there existed
    uncertainty when the 2002 Consolidated Financial Statements were
    prepared;
|
| |  | indemnities recognized by third parties of
    euro 44 million;                                                                                                                                                                                                 
|
| |  | write-backs of euro 37 million as a result of
    adjustments made in previous years;                                                                                                                                                                           
|
| |  | adjustments and other items relating to WIND of
    euro 31 million;                                                                                                                                                                                            
|
| |  | capital gains and non-recurring income of various nature of
    euro 69 million.                                                                                                                                                                                

F-36



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | early retirement incentives of euro 256 million;                                                                                                                                     
|
| |  | write-downs of euro 133 million and other expenses of
    euro 58 million related to the conversion of the
    Torrevaldaliga Nord power plant;                                      
|
| |  | restructuring and reorganization charges of
    euro 92 million, of which euro 69 million
    relates to WIND;                                                                       
|
| |  | charges relating to the tax amnesty of euro 83 million;                                                                                                                              
|
| |  | adjustments relating to capital grants recorded in previous
    years of euro 60 million;                                                                                           
|
| |  | write-downs, settlements of transactions due to extraordinary
    events, extraordinary reimbursements made to customers and taxes
    relating to previous years of euro 48 million;
|
| |  | adjustments and other items of various nature relating to WIND
    of euro 44 million;                                                                                               
|
| |  | write-downs relating primarily to foreign coal trading
    activities of euro 23 million;                                                                                            
|
| |  | adjustments of euro 20 million on previous year fuel
    stocks;                                                                                                                     
|
| |  | expenses of various types of euro 79 million.                                                                                                                                        







| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | gains on the disposal of Eurogen of euro 2,313 million
    (see Note 1);                                                                                                    
|
| |  | gains on the disposal of the distribution networks in the
    municipalities of Milan and Verona of euro 459 million
    (see Note 1);                                      
|
| |  | euro 64 million adjustment on previous years income
    taxes resulting primarily from the definition of the appropriate
    tax rules applicable to certain capital gains;
|
| |  | interconnection fee adjustments and other items relating to WIND
    of euro 46 million;                                                                                    
|
| |  | adjustments and extraordinary gains of euro 34 million
    recorded by the Viesgo Group; and                                                                                
|
| |  | other extraordinary gains of euro 88 million.                                                                                                                               





| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a write-down of euro 1,511 million to reflect the
    impairment in the value of the goodwill relating to WIND, based
    on the outlook for the telecommunications sector and the
    downwards revision of growth expectations (see Note 7);                                                                       
|
| |  | early retirement incentives to personnel of
    euro 291 million;                                                                                                                                                                                                                                                    
|
| |  | a write-down of euro 94 million in the value of a
    discontinued geothermal plant;                                                                                                                                                                                                                                 
|
| |  | adjustments, write-downs and items of various nature relating to
    WIND of euro 92 million;                                                                                                                                                                                                                        
|
| |  | a write-down of euro 58 million in the value of
    generation plants to be decommissioned in view of their
    conversion to combined-cycle technology;                                                                                                                                                             
|
| |  | a write-down of euro 49 million in the value of parts
    of plants destined to international projects in the engineering
    and contracting sector which, in view of the adverse economic
    situation in the area in which such projects were based (South
    America), are no longer expected to be carried on;
|
| |  | adjustments and accruals recorded by Viesgo of
    euro 39 million;                                                                                                                                                                                                                                                  
|
| |  | an adjustment of euro 41 million in the unamortized
    cost paid upon the suppression of the electricity industry
    pension fund following a reduction in personnel; and                                                                                                                                          
|
| |  | other extraordinary losses of euro 93 million.                                                                                                                                                                                                                                                                       

F-37



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |             
|---- | ------------
|(21) | INCOME TAXES



|                                                                                                                                                                                                                                     |  |                    |       |  |      |  |       |      |  |  |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ----- |  | ---- |  | ----- | ---- |  |  | ---- | -
|                                                                                                                                                                                                                                     |  | 2004               |       |  | 2003 |  |       | 2002 | 
|                                                                                                                                                                                                                                     |  |                    |       |  |      |  |       |      | 
|                                                                                                                                                                                                                                     |  | (millions of euro) |      
|Italian Current income taxes                                                                                                                                                                                                         |  |                    | 1,463 |  |      |  | 1,396 |      |  |  | 562  |  
|Foreign Income taxes                                                                                                                                                                                                                 |  |                    | 22    |  |      |  |      |      |  |  |     |  
|Deferred                                                                                                                                                                                                                             |  |                    | 48    |  |      |  | (8    | )    |  |  | 357  |  
|Resizing of deferred taxes and deferred tax assets to changes in
    tax rates                                                                                                                                                       |  |                    |      |  |      |  | (47   | )    |  |  | (38  | )
|Tax incentives on capital expenditure                                                                                                                                                                                                |  |                    |      |  |      |  |      |      |  |  | (213 | )
|Release of deferred tax provision following release of
    accelerated depreciation reserves and reversal of deferred
    provision as a result of revaluation of assets carried out in
    the statutory accounts by ENEL companies |  |                    |      |  |      |  | (375  | )    |  |  | (60  | )
|                                                                                                                                                                                                                                     |  |                    |       |  |      |  |       |      | 
|                                                                                                                                                                                                                                     |  |                    | 1,533 |  |      |  | 966   |      |  |  | 608  |  
|                                                                                                                                                                                                                                     |  |                    |       |  |      |  |       |      | 



|                                                                                                                                                                                                                                     |  |      |       |   |      |  |       |      |  |  |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                                                                                                                                                                                                                     |  | 2004 |       |   | 2003 |  |       | 2002 | 
|                                                                                                                                                                                                                                     |  |      |       |   |      |  |       |      | 
|Normal tax rate on income before taxes(a)                                                                                                                                                                                            |  |      | 44.0  | % |      |  | 45.0  | %    |  |  | 47.0  | %
|Resizing of deferred taxes and deferred tax assets to changes in
    tax rates                                                                                                                                                       |  |      |      |   |      |  | (1.4  | )    |  |  | (1.6  | )
|Release of deferred tax provision following release of
    accelerated depreciation reserves and reversal of deferred
    provision as a result of revaluation of assets carried out in
    the statutory accounts by ENEL companies |  |      |      |   |      |  | (11.1 | )    |  |  | (2.5  | )
|Capital gains subject to 19% substitute tax and release of
    excess deferred taxes of companies sold                                                                                                                               |  |      |      |   |      |  | (4.8  | )    |  |  | (37.1 | )
|Adjustments of deferred tax assets and other impacts relating to
    WIND                                                                                                                                                            |  |      | (10.9 | ) |      |  |      |      |  |  | 23.2  |  
|Tax incentives on capital expenditure                                                                                                                                                                                                |  |      |      |   |      |  |      |      |  |  | (9.0  | )
|Impact due to corporate operations in the gas sector                                                                                                                                                                                 |  |      |      |   |      |  |      |      |  |  | 5.0   |  
|Foreign income taxes and other taxes                                                                                                                                                                                                 |  |      | (1.8  | ) |      |  |      |      |  |  |      |  
|Permanent differences:                                                                                                                                                                                                               |  |      |       |   |      |  |       |      |  |  |       |  
| on capital gains                                                                                                                                                                                                                   |  |      | (9.2  | ) |      |  |      |      |  |  |      |  
| other                                                                                                                                                                                                                              |  |      | 13.0  |   |      |  | 0.8   |      |  |  | 0.6   |  
|                                                                                                                                                                                                                                     |  |      |       |   |      |  |       |      | 
|Effective tax rate                                                                                                                                                                                                                   |  |      | 35.1  | % |      |  | 28.5  | %    |  |  | 25.6  | %
|                                                                                                                                                                                                                                     |  |      |       |   |      |  |       |      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The normal tax rate is estimated considering Italian Corporate
    income tax rate (IRES, which was replaced by IRPEG starting from
    2004) of 33%, 34% and 36% for the years ended December 31,
    2004, 2003 and 2002, respectively, and regional income tax rate
    (IRAP) of 4.25% for all years presented. In order to
    estimate the impact of IRAP (for which employee related costs,
    interest expense and certain other costs are not deductible) an
    estimate of the different tax base has been made based on
    historical trends. The impact of different tax rates used in
    foreign countries is reflected among other differences.

F-38



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















|     |                              
|---- | -----------------------------
|(22) | COMMITMENTS AND CONTINGENCIES

Financial Derivatives






F-39



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                         
| | --------------------------------------------------------
| | Notional Amounts and Credit Exposures of
    Derivatives









| |                              
| | -----------------------------
| | Interest Rate Risk Management



|                      |  |                    |        |  |      |  |       | 
|--------------------- |  | ------------------ | ------ |  | ---- |  | ----- | 
|                      |  | Notional amount    |       
|                      |  |                    |       
|                      |  | 2004               |        |  | 2003 | 
|                      |  |                    |        |  |      | 
|                      |  | (millions of euro) |       
|Interest rate swaps   |  |                    | 9,632  |  |      |  | 8,580 | 
|Interest rate collars |  |                    | 687    |  |      |  | 873   | 
|Swaptions             |  |                    | 60     |  |      |  | 26    | 
|                      |  |                    |        |  |      | 
|Total                 |  |                    | 10,379 |  |      |  | 9,479 | 
|                      |  |                    |        |  |      | 







F-40



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                      
| | -------------------------------------
| | Foreign Exchange Rate Risk Management



|                                                                       |  |                 |       |  |      |  |       | 
|---------------------------------------------------------------------- |  | --------------- | ----- |  | ---- |  | ----- | 
|                                                                       |  | Notional amount |      
|                                                                       |  |                 |      
|                                                                       |  | 2004            |       |  | 2003 | 
|                                                                       |  |                 |       |  |      | 
|                                                                       |  | (millions of    |      
|                                                                       |  | euro)           |      
|Forward exchange contracts relating to Commodity hedging               |  |                 | 536   |  |      |  | 294   | 
|Forward exchange contracts relating to hedges of commercial paper      |  |                 | 715   |  |      |  | 440   | 
|Forward exchange contracts relating to hedges of future cash
    flows |  |                 | 319   |  |      |  | 1,387 | 
|Other forward exchange contracts                                       |  |                 | 215   |  |      |  | 153   | 
|Options                                                                |  |                 | 85    |  |      |  | 110   | 
|                                                                       |  |                 |       |  |      | 
|Total                                                                  |  |                 | 1,870 |  |      |  | 2,384 | 
|                                                                       |  |                 |       |  |      | 





| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | contracts with a notional amount of euro 855 million
    used to hedge the foreign exchange risk related to fuel
    purchases, electricity imports and expected cash flows in
    currencies other than the euro (euro 1,681 million as of
    December 31, 2003); and
|
| |  | contracts with a notional amount of euro 715 million
    used to hedge the foreign exchange risk related to the repayment
    of the commercial paper the Company issued in foreign currency
    (euro 440 million as of December 31, 2003).                           









| |                          
| | -------------------------
| | Commodity Risk Management





F-41



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




















| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Futures: no contracts existing at the balance sheet date;                                         
|
| |  | Swaps on petroleum indexes: euro 537.56 million or
    4,133,000 tons;                            
|
| |  | Swaps on gas transmission fee: euro 17,9 million,
    6 years and 1 billion cubic meters per year;
|
| |  | Contracts for differences: euro 5,133 million or 11,4
    TW; and                                 
|
| |  | National and International congestion contracts: euro
    118 million.                            





| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Futures: euro 36.6 million or 1,437 contracts;                                                    
|
| |  | Swaps on petroleum indexes: euro 36.7 million or 335,852
    tons; and                            
|
| |  | Swaps on gas transmission fee: euro 16,9 million,
    7 years and 1 billion cubic meters per year.

F-42



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                            |  |                    |       |   |      |  |       |  
|----------------------------------------------------------- |  | ------------------ | ----- | - | ---- |  | ----- | -
|                                                            |  | As of              |      
|                                                            |  | December 31,       |      
|                                                            |  |                    |      
|                                                            |  | 2004               |       |   | 2003 | 
|                                                            |  |                    |       |   |      | 
|                                                            |  | Fair Value         |      
|                                                            |  | (millions of euro) |      
|Futures                                                     |  |                    |      |   |      |  | 0.5   |  
| assets                                                    |  |                    |      |   |      |  | 0.6   |  
| liabilities                                               |  |                    |      |   |      |  | (0.1  | )
|Swaps on Petroleum indexes                                  |  |                    | 12.2  |   |      |  | 1.6   |  
| assets                                                    |  |                    | 22.3  |   |      |  | 2.3   |  
| liabilities                                               |  |                    | (10.1 | ) |      |  | (0.7  | )
|Gas Transmission fee                                        |  |                    | (11.7 | ) |      |  | (9.6  | )
| assets                                                    |  |                    | 0.0   |   |      |  | 0.0   |  
| liabilities                                               |  |                    | (11.7 | ) |      |  | (9.6  | )
|Contracts for differences                                   |  |                    |      |   |      |  |      |  
| assets                                                    |  |                    |      |   |      |  |      |  
| liabilities                                               |  |                    |      |   |      |  |      |  
|National and international concession contracts differences |  |                    |      |   |      |  |      |  
| assets                                                    |  |                    |      |   |      |  |      |  
| liabilities                                               |  |                    |      |   |      |  |      |  
|                                                            |  |                    |       |   |      | 
|Total                                                       |  |                    | 0.5   |   |      |  | (7.5  | )
| assets                                                    |  |                    | 22.3  |   |      |  | 2.9   |  
| liabilities                                               |  |                    | (21.8 | ) |      |  | (10.4 | )
|                                                            |  |                    |       |   |      | 



Purchase Commitments




Insurance




Litigation




F-43



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-44



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










F-45



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Environmental litigation and contingencies










F-46



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|     |                           
|---- | --------------------------
|(23) | RELATED PARTY TRANSACTIONS





F-47



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|     |                                               
|---- | ----------------------------------------------
|(24) | DIFFERENCES BETWEEN ITALIAN GAAP AND U.S. GAAP



Fixed Assets and Related Depreciation






Capitalized Interest and Related Depreciation




Customers Connection Fees




F-48



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Pension and Employee Termination Accounting








Other Post-retirement Benefits Accounting






Derivatives






Advertising Costs




F-49



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Start-up Costs




Internal Use Software




Reorganizations of Companies Under Common Control




FS (Italian State Railways) Right of Way




Sundry Differences Regarding Telecommunications Activities




Goodwill and Intangible Assets








F-50



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














F-51



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                        |  |                    |        |            |            |  |       |               |             |  |           |   |  |       |   |  |       |  |   |  |  |  |        |  
|------------------------------------------------------- |  | ------------------ | ------ | ---------- | ---------- |  | ----- | ------------- | ----------- |  | --------- | - |  | ----- | - |  | ----- |  | - |  |  |  | ------ | -
|                                                        |  |                    |        |            |            |  |       | Sales,        |             |  |           |   | 
|                                                        |  |                    |        | Generation |            |  |       |               | infrastruc- |  |           |   |  |      
|                                                        |  | Telecommu-         |        |            | and energy |  |       | International |             |  | tures and |   |  |       |   | 
|                                                        |  | nications          |        |            | management |  |       | operations    |             |  | networks  |   |  | Other |   |  | Total | 
|                                                        |  |                    |        |            |            |  |       |               |             |  |           |   |  |       |   |  |       | 
|                                                        |  | (millions of euro) |       
|Balance as of January 1, 2004, as previously reported   |  |                    | 6,213  |            |            |  |      |               |             |  | 1,064     |   |  |       |  |  |       |  |  |  |  |  | 7,277  |  
|Reclassifications due to change in reorganized segments |  |                    |       |            |            |  | 1,064 |               |             |  | (1,064    | ) |  |       |  |  |       |  |  |  |  |  |       |  
|Goodwill acquired during year                           |  |                    |       |            |            |  | 7     |               |             |  |          |   |  |       | 8 |  |       |  | 7 |  |  |  | 22     |  
|Impairment                                              |  |                    | (3,393 | )          |            |  |      |               |             |  |          |   |  |       |  |  |       |  |  |  |  |  | (3,393 | )
|                                                        |  |                    |        |            |            |  |       |               |             |  |           |   |  |       |   |  |       | 
|Balance as of December 31, 2004                         |  |                    | 2,820  |            |            |  | 1,071 |               |             |  |          |   |  |       | 8 |  |       |  | 7 |  |  |  | 3,906  |  
|                                                        |  |                    |        |            |            |  |       |               |             |  |           |   |  |       |   |  |       | 



Camuzzi Purchase Price Allocation




2004 Purchase Price Allocation




Restructuring reserve, conversion costs and other reserves






Italian Pension System Obligation




F-52



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Investments in Equity Securities




Current and Deferred Taxes








Accounting for Asset Retirement Obligations








Gain on sale of real estate business




F-53



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Stock option compensation cost


Accounting for Stock
Issued to Employees.




Consolidation








Additional share qualification for Terna shareholders




F-54



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Classification Differences






| |                                  
| | ---------------------------------
| | Extraordinary Income and Expenses





| |                     
| | --------------------
| | Cash Flow Statements





|                                                    |  |                    |        |              |               |  |        |      |  |  |        |   |  |  |        |  
|--------------------------------------------------- |  | ------------------ | ------ | ------------ | ------------- |  | ------ | ---- |  |  | ------ | - |  |  | ------ | -
|                                                    |  | 2004               |        |              | 2003          |  |        | 2002 |  |  | 2004   |  
|                                                    |  |                    |        |              |               |  |        |      |  |  |        |  
|                                                    |  |                    |        | (millions of |              
|                                                    |  | (millions of euro) |        |              | U.S. dollars) | 
|Net cash provided by operating activities           |  |                    | 4,855  |              |               |  | 6,843  |      |  |  | 3,815  |   |  |  | 6,573  |  
|Net cash used in investing activities               |  |                    | (1,940 | )            |               |  | (4,730 | )    |  |  | (4,241 | ) |  |  | (2,627 | )
|Net cash (used in) provided by financing activities |  |                    | (3,003 | )            |               |  | (2,061 | )    |  |  | 239    |   |  |  | (4,065 | )
|                                                    |  |                    |        |              |               |  |        |      |  |  |        |  

Recently Issued Accounting Standards




F-55



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










F-56



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-57



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Share-Based Payment, Accounting for Stock-Based
Compensation. Accounting for Stock Issued to
Employees, Statement of
Cash Flows.


F-58



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A modified prospective method in which compensation
    cost is recognized beginning with the effective date
    (a) based on the requirements of SFAS No. 123(R)
    for all share-based payments granted or modified after the
    effective date and (b) based on the requirements of
    SFAS No. 123 for all awards granted to employees prior
    to the effective date of SFAS No. 123(R) that remain
    unvested on the effective date.
|
| |  | A modified retrospective method that includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under SFAS No. 123 for purposes
    of pro forma disclosures of either (a) all prior periods
    presented or (b) prior interim periods of the year of
    adoption.                                                             



Exchanges of Nonmonetary Assets,


Accounting for Conditional Asset
Retirement Obligations,




F-59



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                                                                                           
|---- | ----------------------------------------------------------------------------------------------------------
|(25) | RECONCILIATION BETWEEN NET INCOME AND SHAREHOLDERS
    EQUITY DETERMINED UNDER ITALIAN GAAP AND U.S. GAAP



|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |   |  |  |        |  
|--------------------------------------------------------------- |  | --------------------- | ------ | ------------ | ---------------- |  | ----- | ---- |  |  | ----- | - |  |  | ------ | -
|                                                                |  | 2004                  |        |              | 2003             |  |       | 2002 |  |  | 2004  |  
|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |  
|                                                                |  |                       |        | (millions of |                 
|                                                                |  | (millions of euro)(a) |        |              | U.S. dollars)(a) | 
|Net income as reported in the Consolidated Statements of Income |  |                       | 2,706  |              |                  |  | 2,509 |      |  |  | 2,008 |   |  |  | 3,663  |  
|Items increasing (decreasing) reported net income:              |  |                       |        |              |                  |  |       |      |  |  |       |   |  |  |        |  
|Fixed assets and related depreciation                           |  |                       | 907    |              |                  |  | 110   |      |  |  | 391   |   |  |  | 1,228  |  
|Capitalized interest and related depreciation(b)                |  |                       | (33    | )            |                  |  | (67   | )    |  |  | (37   | ) |  |  | (44    | )
|Customers connection fees                                      |  |                       | (490   | )            |                  |  | (497  | )    |  |  | (491  | ) |  |  | (663   | )
|Pension and employee termination accounting                     |  |                       | (108   | )            |                  |  | (7    | )    |  |  | (71   | ) |  |  | (146   | )
|Other post-retirement benefits accounting                       |  |                       | (14    | )            |                  |  | (24   | )    |  |  | (22   | ) |  |  | (19    | )
|Derivatives                                                     |  |                       | 1      |              |                  |  | (3    | )    |  |  | (42   | ) |  |  | 1      |  
|Stock compensation costs                                        |  |                       | (89    | )            |                  |  |      |      |  |  |      |   |  |  | (120   | )
|Early retirement program                                        |  |                       | 197    |              |                  |  |      |      |  |  |      |   |  |  | 267    |  
|Additional share qualification for Ternas shareholders         |  |                       | (35    | )            |                  |  |      |      |  |  |      |   |  |  | (47    | )
|Gain on sale of real estate business                            |  |                       | (590   | )            |                  |  |      |      |  |  |      |   |  |  | (799   | )
|Advertising costs                                               |  |                       | 18     |              |                  |  | 30    |      |  |  | 25    |   |  |  | 24     |  
|Start-up costs                                                  |  |                       | 10     |              |                  |  | 10    |      |  |  | (13   | ) |  |  | 13     |  
|Internal use of software                                        |  |                       | 16     |              |                  |  | (4    | )    |  |  | 1     |   |  |  | 22     |  
|Reorganization of companies under common control                |  |                       | 2      |              |                  |  | 2     |      |  |  | 2     |   |  |  | 3      |  
|FS (Italian State Railways) Right of Way                        |  |                       | (4     | )            |                  |  | (4    | )    |  |  | (4    | ) |  |  | (6     | )
|Sundry differences regarding telecommunications activity        |  |                       |       |              |                  |  | (2    | )    |  |  | 3     |   |  |  |       |  
|Goodwill amortization and other intangibles                     |  |                       | 583    |              |                  |  | 535   |      |  |  | 594   |   |  |  | 789    |  
|Goodwill impairment                                             |  |                       | (2,277 | )            |                  |  |      |      |  |  | (825  | ) |  |  | (3,083 | )
|Camuzzi purchase price allocation                               |  |                       | (4     | )            |                  |  | (4    | )    |  |  | (4    | ) |  |  | (5     | )
|Restructuring reserve, conversion costs and other reserves      |  |                       | 48     |              |                  |  | 121   |      |  |  | (2    | ) |  |  | 65     |  
|Italian pension system obligation                               |  |                       | 89     |              |                  |  | 124   |      |  |  | (446  | ) |  |  | 120    |  
|Investment in equity securities                                 |  |                       | 4      |              |                  |  |      |      |  |  |      |   |  |  | 5      |  
|Deferred taxes on equity reserves, including revaluations       |  |                       | (3     | )            |                  |  | (371  | )    |  |  | (3    | ) |  |  | (4     | )
|Asset retirement obligations                                    |  |                       | (23    | )            |                  |  | 2     |      |  |  |      |   |  |  | (31    | )
|Tax effects of reconciling items                                |  |                       | 92     |              |                  |  | (77   | )    |  |  | 340   |   |  |  | 124    |  
|Impact of reconciling items on minority interest                |  |                       | 28     |              |                  |  | (7    | )    |  |  | (5    | ) |  |  | 38     |  
|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |  
|Net income in accordance with U.S. GAAP                         |  |                       | 1,031  |              |                  |  | 2,376 |      |  |  | 1,399 |   |  |  | 1,395  |  
|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |  
|Basic earnings per share in accordance with U.S. GAAP(c)        |  |                       | 0.17   |              |                  |  | 0.39  |      |  |  | 0.23  |   |  |  | 0.26   |  
|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |  
|Diluted earnings per share in accordance with U.S. GAAP(d)      |  |                       | 0.17   |              |                  |  | 0.39  |      |  |  | 0.23  |   |  |  | 0.26   |  
|                                                                |  |                       |        |              |                  |  |       |      |  |  |       |  

F-60



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|    |                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Except per-share data which is in Euro and U.S. dollars.                                                                                                                                                                                                                                                                                                                                                                     
|   
|(b) | Includes related depreciation of euro 75 million,
    euro 70 million, euro 72 million and
    U.S. $102 million, respectively.                                                                                                                                                                                                                                                                                              
|   
|(c) | The per share amount has been calculated in accordance with
    SFAS No. 128, Earnings Per Share. See
    Note 26 for additional information on earnings per share.
    For purposes of these calculations the weighted average number
    of shares, taking into account the reverse stock split, was
    6,063,075,189 shares as of December 31, 2002 and 2003,
    and was 6,086,831,617 shares as of December 31, 2004.
|   
|(d) | Diluted per share amounts have been calculated in accordance
    with SFAS No. 128, Earnings Per Share and
    take into account the options outstanding with a potentially
    dilutive effect as of December 31, 2004.                                                                                                                                                                                                   



|                                                                       |  |                    |        |              |               |  |        |      |  |  |        |  
|---------------------------------------------------------------------- |  | ------------------ | ------ | ------------ | ------------- |  | ------ | ---- |  |  | ------ | -
|                                                                       |  | 2004               |        |              | 2003          |  |        | 2004 | 
|                                                                       |  |                    |        |              |               |  |        |      | 
|                                                                       |  |                    |        | (millions of |              
|                                                                       |  | (millions of euro) |        |              | U.S. dollars) | 
|Shareholders equity as reported in the Consolidated
    Balance Sheet |  |                    | 19,847 |              |               |  | 21,124 |      |  |  | 26,869 |  
|Items increasing (decreasing) reported shareholders
    equity:       |  |                    |        |              |               |  |        |      |  |  |        |  
|Fixed assets and related depreciation(a)                               |  |                    | 595    |              |               |  | (313   | )    |  |  | 805    |  
|Capitalized interest and related depreciation(b)                       |  |                    | 1,248  |              |               |  | 1,281  |      |  |  | 1,690  |  
|Customers connection fees                                             |  |                    | (1,478 | )            |               |  | (988   | )    |  |  | (2,001 | )
|Pension and employee termination accounting                            |  |                    | (90    | )            |               |  | (46    | )    |  |  | (122   | )
|Other post-retirement benefits accounting                              |  |                    | (1,138 | )            |               |  | (1,124 | )    |  |  | (1,540 | )
|Derivatives                                                            |  |                    | (431   | )            |               |  | (358   | )    |  |  | (584   | )
|Stock compensation costs                                               |  |                    | (89    | )            |               |  |       |      |  |  | (120   | )
|Early retirement program                                               |  |                    | 197    |              |               |  |       |      |  |  | 267    |  
|Additional share qualification for Ternas shareholders                |  |                    | (35    | )            |               |  |       |      |  |  | (47    | )
|Gain on sale of real estate business                                   |  |                    | (590   | )            |               |  |       |      |  |  | (799   | )
|Advertising costs                                                      |  |                    | (7     | )            |               |  | (25    | )    |  |  | (10    | )
|Start-up costs                                                         |  |                    | (47    | )            |               |  | (56    | )    |  |  | (62    | )
|Internal use of software                                               |  |                    | (21    | )            |               |  | (37    | )    |  |  | (27    | )
|Reorganization under common control                                    |  |                    | (6     | )            |               |  | (8     | )    |  |  | (9     | )
|FS (Italian State Railways) Right of Way                               |  |                    | (27    | )            |               |  | (22    | )    |  |  | (36    | )
|Sundry differences regarding telecommunications activity               |  |                    |       |              |               |  |       |      |  |  |       |  
|Camuzzi purchase price allocation                                      |  |                    | 23     |              |               |  | 27     |      |  |  | 31     |  
|Goodwill impairment, related amortization and other intangibles        |  |                    | (1,469 | )            |               |  | 225    |      |  |  | (1,989 | )
|Restructuring reserve, conversion costs and other reserves             |  |                    | 169    |              |               |  | 121    |      |  |  | 228    |  
|Italian pension system obligation                                      |  |                    | (1,333 | )            |               |  | (1,422 | )    |  |  | (1,805 | )
|Investments in equity securities                                       |  |                    | 9      |              |               |  | (3     | )    |  |  | 12     |  
|Deferred taxes on equity reserves, including revaluations              |  |                    | (630   | )            |               |  | (627   | )    |  |  | (853   | )
|Asset retirement obligations                                           |  |                    | (21    | )            |               |  | 2      |      |  |  | (29    | )
|Tax effects of reconciling items                                       |  |                    | 977    |              |               |  | 885    |      |  |  | 1,323  |  
|Impact of reconciling items on minority interest                       |  |                    | 43     |              |               |  | 15     |      |  |  | 58     |  
|                                                                       |  |                    |        |              |               |  |        |      | 
|Shareholders equity in accordance with U.S. GAAP                      |  |                    | 15,697 |              |               |  | 18,651 |      |  |  | 21,250 |  
|                                                                       |  |                    |        |              |               |  |        |      | 

F-61



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|    |                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes related accumulated depreciation of
    euro 10,824 million, euro 10,374. million, and
    U.S. $14,653 million, respectively.
|   
|(b) | Includes related accumulated depreciation of
    euro 667-million, euro 604. million and
    U.S.$903 million, respectively.           



CONSOLIDATED BALANCE SHEETS


|                                     |  |                    |        |  |              |               |        |      |  |  |        | 
|------------------------------------ |  | ------------------ | ------ |  | ------------ | ------------- | ------ | ---- |  |  | ------ | 
|                                     |  | As of December 31, |        |  |             
|                                     |  |                    |        |  |             
|                                     |  | 2004               |        |  | 2003         |               |        | 2004 | 
|                                     |  |                    |        |  |              |               |        |      | 
|                                     |  | (millions of euro) |        |  | (millions of |              
|                                     |  |                    |        |  |              | U.S. dollars) |       
|Assets                              
|Current Assets                       |  |                    | 16,761 |  |              |               | 14,299 |      |  |  | 22,690 | 
|Fixed Assets, net                    |  |                    | 37,589 |  |              |               | 37,407 |      |  |  | 50,889 | 
|Other non-current assets             |  |                    | 12,802 |  |              |               | 16,799 |      |  |  | 17,331 | 
|                                     |  |                    |        |  |              |               |        |      | 
|                                     |  |                    | 67,152 |  |              |               | 68,505 |      |  |  | 90,910 | 
|                                     |  |                    |        |  |              |               |        |      | 
|                                    
|Liabilities and Shareholders Equity
|Current liabilities                  |  |                    | 21,107 |  |              |               | 23,268 |      |  |  | 28,575 | 
|Long-term debt                       |  |                    | 20,242 |  |              |               | 18,005 |      |  |  | 27,404 | 
|Other non-current liabilities        |  |                    | 9,008  |  |              |               | 8,405  |      |  |  | 12,195 | 
|                                     |  |                    |        |  |              |               |        |      | 
|Total liabilities                    |  |                    | 50,357 |  |              |               | 49,678 |      |  |  | 68,174 | 
|Minority interest                    |  |                    | 1,098  |  |              |               | 176    |      |  |  | 1,486  | 
|Shareholders equity                 |  |                    | 15,697 |  |              |               | 18,651 |      |  |  | 21,250 | 
|                                     |  |                    |        |  |              |               |        |      | 
|                                     |  |                    | 67,152 |  |              |               | 68,505 |      |  |  | 90,910 | 
|                                     |  |                    |        |  |              |               |        |      | 



CONSOLIDATED STATEMENTS OF INCOME


|                                                 |  |                    |        |   |              |  |        |               |  |  |        |   |  |  |        |  
|------------------------------------------------ |  | ------------------ | ------ | - | ------------ |  | ------ | ------------- |  |  | ------ | - |  |  | ------ | -
|                                                 |  | 2004               |        |   | 2003         |  |        | 2002          |  |  | 2004   |  
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  
|                                                 |  | (millions of euro) |        |   | (millions of | 
|                                                 |  |                    |        |   |              |  |        | U.S. dollars) | 
|Total operating revenues                         |  |                    | 35,092 |   |              |  | 31,237 |               |  |  | 30,604 |   |  |  | 47,508 |  
|Total operating expenses                         |  |                    | 32,316 |   |              |  | 26,620 |               |  |  | 30,600 |   |  |  | 43,749 |  
|Gains on sales of businesses                     |  |                    | 930    |   |              |  | 349    |               |  |  | 2,613  |   |  |  | 1,258  |  
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  
|Operating income                                 |  |                    | 3,706  |   |              |  | 4,966  |               |  |  | 2,617  |   |  |  | 5,017  |  
|Financial income                                 |  |                    | (1,056 | ) |              |  | (1,098 | )             |  |  | (1,185 | ) |  |  | (1,430 | )
|Losses on equity method investments              |  |                    | (36    | ) |              |  | (70    | )             |  |  | (59    | ) |  |  | (49    | )
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  
|Income before income taxes and minority interest |  |                    | 2,614  |   |              |  | 3,798  |               |  |  | 1,373  |   |  |  | 3,538  |  
|Income tax expense                               |  |                    | 1,485  |   |              |  | 1,497  |               |  |  | 207    |   |  |  | 2,010  |  
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  
|Income before minority interest                  |  |                    | 1,129  |   |              |  | 2,301  |               |  |  | 1,166  |   |  |  | 1,528  |  
|Minority interest (losses)                       |  |                    | 98     |   |              |  | (75    | )             |  |  | (233   | ) |  |  | 133    |  
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  
|Net Income                                       |  |                    | 1,031  |   |              |  | 2,376  |               |  |  | 1,399  |   |  |  | 1,395  |  
|                                                 |  |                    |        |   |              |  |        |               |  |  |        |  

F-62



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


|                                       |  |                            |       |          |          |       |               |        |  |  |       |   |  |  |        |  
|-------------------------------------- |  | -------------------------- | ----- | -------- | -------- | ----- | ------------- | ------ |  |  | ----- | - |  |  | ------ | -
|                                       |  |                            |       |          |          | Other |               |        | 
|                                       |  |                            |       | Retained |          |       | comprehensive |        |  | 
|                                       |  | Share capital              |       |          | earnings |       |               | income |  |  | Total |  
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|                                       |  | (millions of euro)         |      
|Balance as of December 31, 2001        |  |                            | 6,063 |          |          |       | 13,817        |        |  |  | (413  | ) |  |  | 19,467 |  
|Net income                             |  |                            |      |          |          |       | 1,399         |        |  |  |      |   |  |  | 1,399  |  
|Derivatives                            |  |                            |      |          |          |       |              |        |  |  | (135  | ) |  |  | (135   | )
|Minimum pension liabilities            |  |                            |      |          |          |       |              |        |  |  | (3    | ) |  |  | (3     | )
|Other changes                          |  |                            |      |          |          |       |              |        |  |  | (19   | ) |  |  | (19    | )
|Dividends                              |  |                            |      |          |          |       | (2,183        | )      |  |  |      |   |  |  | (2,183 | )
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|Balance as of December 31, 2002        |  |                            | 6,063 |          |          |       | 13,033        |        |  |  | (570  | ) |  |  | 18,526 |  
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|Net income                             |  |                            |      |          |          |       | 2,376         |        |  |  |      |   |  |  | 2,376  |  
|Derivatives                            |  |                            |      |          |          |       |              |        |  |  | (12   | ) |  |  | (12    | )
|Minimum pension liabilities            |  |                            |      |          |          |       |              |        |  |  | 38    |   |  |  | 38     |  
|Investments in equity securities       |  |                            |      |          |          |       |              |        |  |  | (2    | ) |  |  | (2     | )
|Other changes                          |  |                            |      |          |          |       | (85           | )      |  |  | (7    | ) |  |  | (92    | )
|Dividends                              |  |                            |      |          |          |       | (2,183        | )      |  |  |      |   |  |  | (2,183 | )
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|Balance as of December 31, 2003        |  |                            | 6,063 |          |          |       | 13,141        |        |  |  | (553  | ) |  |  | 18,651 |  
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|Net income                             |  |                            |      |          |          |       | 1,031         |        |  |  |      |   |  |  | 1,031  |  
|Derivatives                            |  |                            |      |          |          |       |              |        |  |  | (50   | ) |  |  | (50    | )
|Minimum pension liabilities            |  |                            |      |          |          |       |              |        |  |  | 43    |   |  |  | 43     |  
|Investments in equity securities       |  |                            |      |          |          |       |              |        |  |  | 5     |   |  |  | 5      |  
|Other changes                          |  |                            |      |          |          |       |              |        |  |  | (16   | ) |  |  | (15    | )
|Exercise of stock options              |  |                            | 41    |          |          |       | 200           |        |  |  |      |   |  |  | 241    |  
|Dividends, including interim dividends |  |                            |      |          |          |       | (4,209        | )      |  |  |      |   |  |  | (4,209 | )
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|Balance as of December 31, 2004        |  |                            | 6,104 |          |          |       | 10,163        |        |  |  | (571  | ) |  |  | 15,697 |  
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  
|                                       |  | (millions of U.S. dollars)
|Balance as of December 31, 2004        |  |                            | 8,264 |          |          |       | 13,759        |        |  |  | (773  | ) |  |  | 21,250 |  
|                                       |  |                            |       |          |          |       |               |        |  |  |       |  



DISCLOSURE OF COMPREHENSIVE INCOME, NET OF TAX


|                                        |  |                    |       |   |              |  |       |               |  |  |       |   |  |  |       |  
|--------------------------------------- |  | ------------------ | ----- | - | ------------ |  | ----- | ------------- |  |  | ----- | - |  |  | ----- | -
|                                        |  | 2004               |       |   | 2003         |  |       | 2002          |  |  | 2004  |  
|                                        |  |                    |       |   |              |  |       |               |  |  |       |  
|                                        |  | (millions of euro) |       |   | (millions of | 
|                                        |  |                    |       |   |              |  |       | U.S. dollars) | 
|Net income in accordance with U.S. GAAP |  |                    | 1,031 |   |              |  | 2,376 |               |  |  | 1,399 |   |  |  | 1,395 |  
|Minimum pension liabilities             |  |                    | 43    |   |              |  | 38    |               |  |  | (3    | ) |  |  | 58    |  
|Investments in equity securities        |  |                    | 5     |   |              |  | (2    | )             |  |  |      |   |  |  | 7     |  
|Derivatives                             |  |                    | (50   | ) |              |  | (12   | )             |  |  | (135  | ) |  |  | (66   | )
|Other changes                           |  |                    | (15   | ) |              |  | (7    | )             |  |  | (19   | ) |  |  | (20   | )
|                                        |  |                    |       |   |              |  |       |               |  |  |       |  
|Total comprehensive income              |  |                    | 1,014 |   |              |  | 2,393 |               |  |  | 1,242 |   |  |  | 1,374 |  
|                                        |  |                    |       |   |              |  |       |               |  |  |       |  

F-63



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                 
|---- | --------------------------------
|(26) | ADDITIONAL U.S. GAAP DISCLOSURES



|    |                                                         
|--- | --------------------------------------------------------
|(a) | Concentrations of Risk and Certain Significant Estimates





| |                 
| | ----------------
| | Tariff Structure







F-64



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                      
| | ---------------------
| | Increased Competition











| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An increase in bilateral contracts between its competitors and
    final customers;                                                                                                                   
|
| |  | Regulations limiting each operators access to
    international electricity sources to a maximum percentage of
    available interconnection capacity; and                                           
|
| |  | The construction of new generation facilities by its competitors
    and the development of new interconnection lines that would
    increase the volume of electricity that may be imported in Italy.



| |                      
| | ---------------------
| | Basis of Presentation





|    |                 
|--- | ----------------
|(b) | EUFR Acquisition



F-65



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |                  |      |  
|----------------------------- |  | ---------------- | ---- | -
|                              |  | Millions of euro |     
|                              |  |                  |     
|Current assets                |  |                  | 46   |  
|Fixed assets, net             |  |                  | 168  |  
|Goodwill                      |  |                  | 123  |  
|Other non-current assets      |  |                  | 39   |  
|                              |  |                  |     
|Total assets acquired         |  |                  | 376  |  
|                              |  |                  |     
|Current liabilities           |  |                  | (47  | )
|Long-term debt                |  |                  | (135 | )
|Minority interest             |  |                  | (14  | )
|Other non-current liabilities |  |                  | (2   | )
|                              |  |                  |     
|Total liabilities assumed     |  |                  | (198 | )
|                              |  |                  |     
|Net assets acquired           |  |                  | 178  |  
|                              |  |                  |     





|    |                 
|--- | ----------------
|(c) | WIND Acquisition





|                              |  |                  |        |  
|----------------------------- |  | ---------------- | ------ | -
|                              |  | Millions of euro |       
|                              |  |                  |       
|Current assets                |  |                  | 395    |  
|Fixed assets, net             |  |                  | 922    |  
|Goodwill                      |  |                  | 855    |  
|Intangible assets             |  |                  | 595    |  
|Other non-current assets      |  |                  | 1,284  |  
|                              |  |                  |       
|Total assets acquired         |  |                  | 4,051  |  
|                              |  |                  |       
|Current liabilities           |  |                  | (622   | )
|Long-term debt                |  |                  | (1,855 | )
|Minority interest             |  |                  | (7     | )
|Other non-current liabilities |  |                  | (178   | )
|                              |  |                  |       
|Total liabilities assumed     |  |                  | (2,662 | )
|                              |  |                  |       
|Net assets acquired           |  |                  | 1,389  |  
|                              |  |                  |       



F-66



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                    
|--- | -------------------
|(d) | Maritza Acquisition





|                              |  |                  |      |  
|----------------------------- |  | ---------------- | ---- | -
|                              |  | Millions of euro |     
|                              |  |                  |     
|Current assets                |  |                  | 95   |  
|Fixed assets, net             |  |                  | 57   |  
|Goodwill                      |  |                  | 28   |  
|Other non-current assets      |  |                  | 9    |  
|                              |  |                  |     
|Total assets acquired         |  |                  | 189  |  
|                              |  |                  |     
|Current liabilities           |  |                  | (53  | )
|Long-term debt                |  |                  |     |  
|Minority interest             |  |                  | (61  | )
|Other non-current liabilities |  |                  |     |  
|                              |  |                  |     
|Total liabilities assumed     |  |                  | (114 | )
|                              |  |                  |     
|Net assets acquired           |  |                  | 75   |  
|                              |  |                  |     





|    |                   
|--- | ------------------
|(e) | Viesgo Acquisition



F-67



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |                  |       |  
|----------------------------- |  | ---------------- | ----- | -
|                              |  | Millions of euro |      
|                              |  |                  |      
|Current assets                |  |                  | 252   |  
|Fixed assets, net             |  |                  | 1,421 |  
|Goodwill                      |  |                  | 757   |  
|Other non-current assets      |  |                  | 123   |  
|                              |  |                  |      
|Total assets acquired         |  |                  | 2,553 |  
|                              |  |                  |      
|Current liabilities           |  |                  | (457  | )
|Long-term debt                |  |                  | (12   | )
|Minority interest             |  |                  | (19   | )
|Other non-current liabilities |  |                  | (145  | )
|                              |  |                  |      
|Total liabilities assumed     |  |                  | (633  | )
|                              |  |                  |      
|Net assets acquired           |  |                  | 1,920 |  
|                              |  |                  |      





|    |                    
|--- | -------------------
|(f) | Camuzzi Acquisition





|                              |  |                  |        |  
|----------------------------- |  | ---------------- | ------ | -
|                              |  | Millions of euro |       
|                              |  |                  |       
|Current assets                |  |                  | 479    |  
|Fixed assets, net             |  |                  | 866    |  
|Intangible assets             |  |                  | 632    |  
|Other non-current assets      |  |                  | 98     |  
|                              |  |                  |       
|Total assets acquired         |  |                  | 2,075  |  
|                              |  |                  |       
|Current liabilities           |  |                  | (658   | )
|Long-term debt                |  |                  | (228   | )
|Minority interest             |  |                  | (2     | )
|Other non-current liabilities |  |                  | (142   | )
|                              |  |                  |       
|Total liabilities assumed     |  |                  | (1,030 | )
|                              |  |                  |       
|Net assets acquired           |  |                  | 1,045  |  
|                              |  |                  |       



F-68



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|(g) | 2004 acquisitions






| |            
| | -----------
| | -Gas sector



| |   |                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sicilmetano and Sicilmetano Energy, based in Catania, Italy,
    operating in the distribution and sale of natural gas to end
    customers, merged into Enel Rete Gas S.p.A. and Enel Gas S.p.A.,
    respectively, effective January 1, 2004 (100% share
    interest acquired);
|
| |  | Ottogas Rete S.r.l. and Ottogas Vendita S.r.l., based in Milan,
    Italy, operating in the distribution and sale of natural gas to
    end customers (100% share interest acquired);                                                                                             
|
| |  | Italgestioni Gas S.r.l. and Italgestioni S.r.l., based in
    Bologna, Italy, operating in the distribution and sale of
    natural gas to end customers (100% share interest acquired);                                                                                          



| |                                         
| | ----------------------------------------
| | -Generation and Energy Management sector



| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sistemas Energeticos Manon Ortigueira SA, based in Ortigueira,
    Spain, operating in the renewable resource electricity
    generation sector (86% share acquired);
|
| |  | certain generation companies, based in North America, operating
    in the renewable resource electricity generation sector;                                         



| |                  
| | -----------------
| | -Other activities



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Water & Industrial Services Company S.p.A., based in
    Monza, Italy, a provider of refluent water softening services
    (51% share interest acquired);







|    |                            
|--- | ---------------------------
|(h) | Accounting for Income Taxes







|         |  |                    |       |              |               |  |       |      |  |  |      |   |  |  |       | 
|-------- |  | ------------------ | ----- | ------------ | ------------- |  | ----- | ---- |  |  | ---- | - |  |  | ----- | 
|         |  | 2004               |       |              | 2003          |  |       | 2002 |  |  | 2004 |  
|         |  |                    |       |              |               |  |       |      |  |  |      |  
|         |  |                    |       | (millions of |              
|         |  | (millions of euro) |       |              | U.S. dollars) | 
|Current  |  |                    | 1,525 |              |               |  | 1,479 |      |  |  | 285  |   |  |  | 2,065 | 
|Deferred |  |                    | (40   | )            |               |  | 18    |      |  |  | (78  | ) |  |  | (55)  | 
|         |  |                    |       |              |               |  |       |      |  |  |      |  
|Total    |  |                    | 1,485 |              |               |  | 1,497 |      |  |  | 207  |   |  |  | 2,010 | 
|         |  |                    |       |              |               |  |       |      |  |  |      |  

F-69



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                            |  |      |       |   |      |  |      |      |  |  |       |  
|------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ---- | ---- |  |  | ----- | -
|                                                                                            |  | 2004 |       |   | 2003 |  |      | 2002 | 
|                                                                                            |  |      |       |   |      |  |      |      | 
|Normal tax rate(a)                                                                          |  |      | 44    | % |      |  | 45   | %    |  |  | 47.0  | %
|Change in tax rates                                                                         |  |      |      |   |      |  | (0.5 | )    |  |  | (1.7  | )
|Reversal of net deferred tax provision                                                      |  |      | (28.4 | ) |      |  |     |      |  |  | (2.7  | )
|Capital gains (not taxable in 2004 or subject to a
    19% substitute tax in 2003 and 2004) |  |      | (15.3 | ) |      |  | (4.3 | )    |  |  | (65.4 | )
|Increase in valuation allowance                                                             |  |      |      |   |      |  |     |      |  |  | 40.1  |  
|Non-deductible goodwill impairment                                                          |  |      | 60.1  |   |      |  |     |      |  |  |      |  
|Other differences                                                                           |  |      | (3.6  | ) |      |  | (0.8 | )    |  |  | (2.2  | )
|                                                                                            |  |      |       |   |      |  |      |      | 
|Effective tax rate                                                                          |  |      | 56.8  | % |      |  | 39.4 | %    |  |  | 15.1  | %
|                                                                                            |  |      |       |   |      |  |      |      | 






|    |                                                   
|--- | --------------------------------------------------
|(a) | See note 22 for the definition of normal tax rate.



|                                                    |  |                    |        |              |               |  |        |      |  |  |        |  
|--------------------------------------------------- |  | ------------------ | ------ | ------------ | ------------- |  | ------ | ---- |  |  | ------ | -
|                                                    |  | 2004               |        |              | 2003          |  |        | 2004 | 
|                                                    |  |                    |        |              |               |  |        |      | 
|                                                    |  |                    |        | (millions of |              
|                                                    |  | (millions of euro) |        |              | U.S. dollars) | 
|Deferred tax assets:                                |  |                    |        |              |               |  |        |      |  |  |        |  
|Other post retirement benefits accounting           |  |                    | 376    |              |               |  | 371    |      |  |  | 508    |  
|Assets write-downs                                  |  |                    | 377    |              |               |  | 189    |      |  |  | 510    |  
|Provision for litigation and contingent liabilities |  |                    | 658    |              |               |  | 646    |      |  |  | 891    |  
|Tax loss carryforwards                              |  |                    | 1,500  |              |               |  | 1,513  |      |  |  | 2,031  |  
|Customers connection fees                          |  |                    | 550    |              |               |  | 368    |      |  |  | 745    |  
|Revaluation of utility plant                        |  |                    |       |              |               |  | 117    |      |  |  |       |  
|Deferred Income                                     |  |                    | 220    |              |               |  |       |      |  |  | 298    |  
|Other                                               |  |                    | 479    |              |               |  | 375    |      |  |  | 648    |  
|                                                    |  |                    |        |              |               |  |        |      | 
|Total deferred tax assets                           |  |                    | 4,160  |              |               |  | 3,579  |      |  |  | 5,631  |  
|Valuation allowances                                |  |                    | (595   | )            |               |  | (572   | )    |  |  | (805   | )
|                                                    |  |                    |        |              |               |  |        |      | 
|Total deferred tax assets, net                      |  |                    | 3,565  |              |               |  | 3,007  |      |  |  | 4,826  |  
|Deferred tax liabilities:                           |  |                    |        |              |               |  |        |      |  |  |        |  
|Revaluation of utility plant                        |  |                    | (222   | )            |               |  |       |      |  |  | (300   | )
|Accelerated depreciation of utility plant           |  |                    | (2,087 | )            |               |  | (1,663 | )    |  |  | (2,825 | )
|Capitalization of interest on utility plant         |  |                    | (465   | )            |               |  | (477   | )    |  |  | (629   | )
|Equity reserves                                     |  |                    | (581   | )            |               |  | (572   | )    |  |  | (787   | )
|Goodwill impairment and amortization                |  |                    |       |              |               |  | (76    | )    |  |  |       |  
|Other                                               |  |                    | (356   | )            |               |  | (383   | )    |  |  | (483   | )
|                                                    |  |                    |        |              |               |  |        |      | 
|Total deferred tax liabilities                      |  |                    | (3,711 | )            |               |  | (3,171 | )    |  |  | (5,024 | )
|                                                    |  |                    |        |              |               |  |        |      | 
|Net deferred tax liabilities                        |  |                    | (146   | )            |               |  | (164   | )    |  |  | (198   | )
|                                                    |  |                    |        |              |               |  |        |      | 



F-70



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |   |                             
| | - | ----------------------------
| |  | 2006: euro 377 million;     
|
| |  | 2007: euro 143 million;     
|
| |  | 2008: euro 637 million;     
|
| |  | 2009: euro 379 million;     
|
| |  | no limits: euro 545 million.





|                                 |  |              |     |   |      |  |     |  
|-------------------------------- |  | ------------ | --- | - | ---- |  | --- | -
|                                 |  | 2004         |     |   | 2003 | 
|                                 |  |              |     |   |      | 
|                                 |  | (millions of |    
|                                 |  | euro)        |    
|Minimum Pension Liabilities      |  |              | (21 | ) |      |  | (17 | )
|Derivatives                      |  |              | 25  |   |      |  | 5   |  
|Investments in equity securities |  |              | (3  | ) |      |  | 1   |  
|                                 |  |              |     |   |      | 







|    |                    
|--- | -------------------
|(i) | Segment Information



F-71



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




















F-72



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|----------------------------- |  | ------------------ | ------ |  | --------------- |  | ------ | ------------ |  | -------------------------- | -------- | -------- |  | --------- | ------ | - | ---------- |  | ------ | ------------ |  |  | ------------ | - |  |  | ------- | - |  |  | ------ | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          | Services |  |           |        |   |           
|                              |  | Generation         |        |  | Sales,          |  |        |              |  |                            |          |          |  | and       |        |   |            |  |       
|                              |  | and energy         |        |  | infrastructures |  |        |              |  |                            |          |          |  | other     |        |   |            |  |       
|                              |  | management         |        |  | and networks    |  |        | Transmission |  |                            | Telecom. |          |  | Corporate |        |   | activities |  |        | Eliminations |  |  | Consolidated |  
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|                              |  | (millions of euro) |       
|2002                          |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                      |  |                    | 11,388 |  |                 |  | 20,966 |              |  |                            | 828      |          |  |           | 3,921  |   |            |  | 1,973  |              |  |  | 2,883        |   |  |  | (11,982 | ) |  |  | 29,977 | 
|Operating Income              |  |                    | 1,440  |  |                 |  | 2,128  |              |  |                            | 267      |          |  |           | (1,019 | ) |            |  | 164    |              |  |  | (46          | ) |  |  | (54     | ) |  |  | 2,880  | 
|Depreciation and Amortization |  |                    | 1,283  |  |                 |  | 1,249  |              |  |                            | 247      |          |  |           | 1,496  |   |            |  | 4      |              |  |  | 198          |   |  |  |        |   |  |  | 4,477  | 
|Capital Expenditures(1)       |  |                    | 986    |  |                 |  | 1,900  |              |  |                            | 423      |          |  |           | 1,550  |   |            |  |       |              |  |  | 250          |   |  |  |        |   |  |  | 5,109  | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets           |  |                    | 22,391 |  |                 |  | 22,190 |              |  |                            | 4,635    |          |  |           | 15,678 |   |            |  | 7,505  |              |  |  | 8,870        |   |  |  | (14,250 | ) |  |  | 67,019 | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|2003                          |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                      |  |                    | 12,607 |  |                 |  | 20,433 |              |  |                            | 927      |          |  |           | 4,383  |   |            |  | 1,139  |              |  |  | 2,742        |   |  |  | (10,914 | ) |  |  | 31,317 | 
|Operating Income              |  |                    | 2,457  |  |                 |  | 2,329  |              |  |                            | 430      |          |  |           | (840   | ) |            |  | 223    |              |  |  | 213          |   |  |  | (80     | ) |  |  | 4,732  | 
|Depreciation and Amortization |  |                    | 1,202  |  |                 |  | 1,234  |              |  |                            | 154      |          |  |           | 1,716  |   |            |  | 4      |              |  |  | 206          |   |  |  |        |   |  |  | 4,516  | 
|Capital Expenditures(1)       |  |                    | 829    |  |                 |  | 1,665  |              |  |                            | 371      |          |  |           | 685    |   |            |  |       |              |  |  | 73           |   |  |  |        |   |  |  | 3,623  | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets           |  |                    | 19,985 |  |                 |  | 23,094 |              |  |                            | 5,681    |          |  |           | 16,366 |   |            |  | 7,113  |              |  |  | 9,271        |   |  |  | (12,580 | ) |  |  | 68,930 | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|2004                          |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                      |  |                    | 12,982 |  |                 |  | 19,466 |              |  |                            | 1,023    |          |  |           | 4,714  |   |            |  | 1,617  |              |  |  | 1,799        |   |  |  | (5,112  | ) |  |  | 36,489 | 
|Operating Income              |  |                    | 2,698  |  |                 |  | 2,885  |              |  |                            | 509      |          |  |           | (456   | ) |            |  | 653    |              |  |  | 130          |   |  |  | (94     | ) |  |  | 6,325  | 
|Depreciation and Amortization |  |                    | 1,230  |  |                 |  | 837    |              |  |                            | 164      |          |  |           | 1,810  |   |            |  | 5      |              |  |  | 127          |   |  |  |        |   |  |  | 4,173  | 
|Capital Expenditures(1)       |  |                    | 842    |  |                 |  | 1,632  |              |  |                            | 277      |          |  |           | 680    |   |            |  |       |              |  |  | 87           |   |  |  |        |   |  |  | 3,518  | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets           |  |                    | 20,485 |  |                 |  | 22,916 |              |  |                            | 4,956    |          |  |           | 14,009 |   |            |  | 12,538 |              |  |  | 7,521        |   |  |  | (14,095 | ) |  |  | 68,330 | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|                             
|2004                          |  |                    |        |  |                 |  |        |              |  | (millions of U.S. Dollars) |          |          |  |           |        |   |            |  |        |              |  | 
|Revenues                      |  |                    | 17,575 |  |                 |  | 26,353 |              |  |                            | 1,385    |          |  |           | 6,382  |   |            |  | 2,189  |              |  |  | 2,435        |   |  |  | (6,921  | ) |  |  | 49,399 | 
|Operating Income              |  |                    | 3,653  |  |                 |  | 3,906  |              |  |                            | 689      |          |  |           | (617   | ) |            |  | 884    |              |  |  | 176          |   |  |  | (127    | ) |  |  | 8,563  | 
|Depreciation and Amortization |  |                    | 1,665  |  |                 |  | 1,133  |              |  |                            | 222      |          |  |           | 245    |   |            |  | 7      |              |  |  | 172          |   |  |  |        |   |  |  | 5,649  | 
|Capital Expenditures(1)       |  |                    | 1,140  |  |                 |  | 2,209  |              |  |                            | 375      |          |  |           | 921    |   |            |  |       |              |  |  | 118          |   |  |  |        |   |  |  | 4,763  | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets           |  |                    | 27,733 |  |                 |  | 31,024 |              |  |                            | 6,709    |          |  |           | 18,965 |   |            |  | 16,974 |              |  |  | 10,182       |   |  |  | (19,082 | ) |  |  | 92,505 | 
|                              |  |                    |        |  |                 |  |        |              |  |                            |          |          |  |           |        |   |            |  |        |              |  |  |              |  






|    |                 
|--- | ----------------
|(1) | Tangible assets.

F-73



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|------------------------------ |  | ------------------ | ------ |  | --------------- |  | ------ | ------------ |  |  | -------- | -------- |  | --------- | ------ | - | ---------- |  | ------ | ------------ |  |  | ------------ | - |  |  | ------- | - |  |  | ------ | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          | Services |  |           |        |   |           
|                               |  | Generation         |        |  | Sales,          |  |        |              |  |  |          |          |  | and       |        |   |            |  |       
|                               |  | and energy         |        |  | infrastructures |  |        |              |  |  |          |          |  | other     |        |   |            |  |       
|                               |  | management         |        |  | and networks    |  |        | Transmission |  |  | Telecom. |          |  | Corporate |        |   | activities |  |        | Eliminations |  |  | Consolidated |  
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|                               |  | (millions of euro) |       
|2002                           |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                       |  |                    | 12,395 |  |                 |  | 828    |              |  |  | 21,425   |          |  |           | 3,967  |   |            |  | 1,973  |              |  |  | 2,971        |   |  |  | (12,955 | ) |  |  | 30,604 | 
|Operating Income               |  |                    | 1,176  |  |                 |  | 1,440  |              |  |  | 230      |          |  |           | (2,839 | ) |            |  | 158    |              |  |  | (107         | ) |  |  | (54     | ) |  |  | 4      | 
|Depreciation and Amortization  |  |                    | 1,222  |  |                 |  | 1,548  |              |  |  | 230      |          |  |           | 930    |   |            |  | 1      |              |  |  | 138          |   |  |  |        |   |  |  | 4,069  | 
|Capital Expenditures(1)        |  |                    | 1,021  |  |                 |  | 1,900  |              |  |  | 423      |          |  |           | 1,550  |   |            |  |       |              |  |  | 250          |   |  |  |        |   |  |  | 5,144  | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets            |  |                    | 23,167 |  |                 |  | 21,993 |              |  |  | 4,567    |          |  |           | 15,286 |   |            |  | 7,616  |              |  |  | 8,044        |   |  |  | (14,250 | ) |  |  | 66,423 | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|2003                           |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                       |  |                    | 12,194 |  |                 |  | 927    |              |  |  | 20,596   |          |  |           | 4,401  |   |            |  | 1,186  |              |  |  | 2,847        |   |  |  | (10,914 | ) |  |  | 31,237 | 
|Operating Income               |  |                    | 2,333  |  |                 |  | 1,805  |              |  |  | 426      |          |  |           | (377   | ) |            |  | 245    |              |  |  | 260          |   |  |  | (80     | ) |  |  | 4,612  | 
|Depreciation and Amortization  |  |                    | 1,303  |  |                 |  | 1,626  |              |  |  | 147      |          |  |           | 1,199  |   |            |  | 7      |              |  |  | 224          |   |  |  |        |   |  |  | 4,506  | 
|Capital Expenditures(1)        |  |                    | 864    |  |                 |  | 1,665  |              |  |  | 371      |          |  |           | 685    |   |            |  |       |              |  |  | 73           |   |  |  |        |   |  |  | 3,658  | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets            |  |                    | 22,958 |  |                 |  | 23,060 |              |  |  | 4,779    |          |  |           | 10,035 |   |            |  | 29,612 |              |  |  | 16,899       |   |  |  | (38,814 | ) |  |  | 68,530 | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|2004                           |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                       |  |                    | 12,318 |  |                 |  | 19,466 |              |  |  | 1,023    |          |  |           | 4,494  |   |            |  | 1,062  |              |  |  | 1,841        |   |  |  | (5,112  | ) |  |  | 35,092 | 
|Operating Income               |  |                    | 2,485  |  |                 |  | 2,531  |              |  |  | 475      |          |  |           | (3,404 | ) |            |  | 1,351  |              |  |  | 361          |   |  |  | (94     | ) |  |  | 3,706  | 
|Depreciation and Amortization  |  |                    | 1,286  |  |                 |  | 1,043  |              |  |  | 168      |          |  |           | 1,242  |   |            |  | 4      |              |  |  | 114          |   |  |  |        |   |  |  | 3,857  | 
|Capital Expenditures(1)        |  |                    | 871    |  |                 |  | 1,632  |              |  |  | 277      |          |  |           | 680    |   |            |  |       |              |  |  | 87           |   |  |  |        |   |  |  | 3,547  | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets            |  |                    | 21,332 |  |                 |  | 22,257 |              |  |  | 4,893    |          |  |           | 12,340 |   |            |  | 12,699 |              |  |  | 7,726        |   |  |  | (14,095 | ) |  |  | 67,152 | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|                              
|(millions
    of U.S. Dollars)
|2004                           |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |   |  |  |         |   |  |  |        | 
|Revenues                       |  |                    | 16,676 |  |                 |  | 26,353 |              |  |  | 1,385    |          |  |           | 6,084  |   |            |  | 1,438  |              |  |  | 2,492        |   |  |  | (6,921  | ) |  |  | 47,508 | 
|Operating Income               |  |                    | 3,365  |  |                 |  | 3,426  |              |  |  | 643      |          |  |           | (4,608 | ) |            |  | 1,829  |              |  |  | 489          |   |  |  | (127    | ) |  |  | 5,017  | 
|Depreciation and Amortization  |  |                    | 1,741  |  |                 |  | 1,413  |              |  |  | 227      |          |  |           | 1,681  |   |            |  | 5      |              |  |  | 154          |   |  |  |        |   |  |  | 5,222  | 
|Capital Expenditures(1)        |  |                    | 1,179  |  |                 |  | 2,209  |              |  |  | 375      |          |  |           | 921    |   |            |  |       |              |  |  | 118          |   |  |  |        |   |  |  | 4,802  | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  
|Identifiable Assets            |  |                    | 28,880 |  |                 |  | 30,132 |              |  |  | 6,624    |          |  |           | 16,705 |   |            |  | 17,192 |              |  |  | 10,460       |   |  |  | (19,082 | ) |  |  | 90,910 | 
|                               |  |                    |        |  |                 |  |        |              |  |  |          |          |  |           |        |   |            |  |        |              |  |  |              |  






|    |                 
|--- | ----------------
|(1) | Tangible assets.



|    |                   
|--- | ------------------
|(j) | Earnings per Share



F-74



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                |  |                       |       |              |                  |  |       |      |  |  |       |  |  |  |       | 
|----------------------------------------------- |  | --------------------- | ----- | ------------ | ---------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|Basic and Diluted EPS                           |  | 2004                  |       |              | 2003             |  |       | 2002 |  |  | 2004  | 
|                                                |  |                       |       |              |                  |  |       |      |  |  |       | 
|                                                |  |                       |       | (millions of |                 
|                                                |  | (millions of Euro)(*) |       |              | U.S. dollars)(*) | 
|Income available to common shareholders         |  |                       | 1,031 |              |                  |  | 2,376 |      |  |  | 1,399 |  |  |  | 1,395 | 
|Weighted average shares  basic (in millions)   |  |                       | 6,087 |              |                  |  | 6,063 |      |  |  | 6,063 |  |  |  | 6,087 | 
|Weighted average shares  diluted (in millions) |  |                       | 6,215 |              |                  |  | 6,063 |      |  |  | 6,063 |  |  |  | 6,215 | 
|                                                |  |                       |       |              |                  |  |       |      |  |  |       | 
|Earnings per share-basic:                       |  |                       | 0.17  |              |                  |  | 0.39  |      |  |  | 0.23  |  |  |  | 0.23  | 
|                                                |  |                       |       |              |                  |  |       |      |  |  |       | 
|Earnings per share-diluted:                     |  |                       | 0.17  |              |                  |  | 0.39  |      |  |  | 0.23  |  |  |  | 0.23  | 
|                                                |  |                       |       |              |                  |  |       |      |  |  |       | 






|    |                                                         
|--- | --------------------------------------------------------
|(*) | Except per-share data which is in euro and U.S. dollars.

(k) Fair Value of Financial Instruments








| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cash and cash equivalents: the carrying values of cash and cash
    equivalents approximate their fair values because of their short
    maturities.                                               
|
| |  | Investments in equity securities classified as available for
    sale: the carrying value of such investments reflects their fair
    value as of the balance sheet date.                          
|
| |  | Short-term debt: the carrying value of short-term debt
    approximates fair value because of the short period of time
    between the origination and maturity of the borrowings.                 
|
| |  | Other noncurrent assets: the carrying value of such assets
    reflects their fair value as of the balance sheet date.                                                                             
|
| |  | Bonds payable-listed: the fair value of bonds payable-listed is
    based upon period-end market prices.                                                                                           
|
| |  | Other bonds and long-term debt (including current maturities):
    the fair values of other bonds and long-term debt (including
    current maturities) are based on discounted cash flow analyses.

|                                                             |  |                    |        |  |       |  |        |          |  |  |        |  |  |  |        | 
|------------------------------------------------------------ |  | ------------------ | ------ |  | ----- |  | ------ | -------- |  |  | ------ |  |  |  | ------ | 
|                                                             |  | As of December 31, |       
|                                                             |  |                    |       
|                                                             |  | 2004               |        |  | 2004  |  |        | 2003     |  |  | 2003   | 
|                                                             |  | Carrying           |        |  | Fair  |  |        | Carrying |  |  | Fair   | 
|                                                             |  | Amount             |        |  | Value |  |        | Amount   |  |  | Value  | 
|                                                             |  |                    |        |  |       |  |        |          |  |  |        | 
|                                                             |  | (millions of euro) |       
|Bonds payable-listed                                         |  |                    | 7,610  |  |       |  | 7,989  |          |  |  | 7,780  |  |  |  | 7,873  | 
|Other bonds and long-term debt, including current maturities |  |                    | 13,996 |  |       |  | 13,987 |          |  |  | 14,236 |  |  |  | 14,085 | 
|                                                             |  |                    |        |  |       |  |        |          |  |  |        | 



F-75



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                  |  |                    |      |   |      |  |      |  
|----------------------------------------------------------------- |  | ------------------ | ---- | - | ---- |  | ---- | -
|                                                                  |  | As of December, 31 |     
|                                                                  |  |                    |     
|                                                                  |  | 2004               |      |   | 2003 | 
|                                                                  |  |                    |      |   |      | 
|                                                                  |  | Fair Value         |     
|                                                                  |  | (millions of euro) |     
|Interest rate swaps                                               |  |                    | (407 | ) |      |  | (354 | )
| assets                                                          |  |                    | 46   |   |      |  | 10   |  
| liabilities                                                     |  |                    | (453 | ) |      |  | (364 | )
|Interest rate collars                                             |  |                    | (13  | ) |      |  | (12  | )
| assets                                                          |  |                    | 0    |   |      |  |     |  
| liabilities                                                     |  |                    | (13  | ) |      |  | (12  | )
|Swaptions                                                         |  |                    |     |   |      |  | 1    |  
| assets                                                          |  |                    |     |   |      |  | 1    |  
| liabilities                                                     |  |                    |     |   |      |  |     |  
|Total interest rate derivatives                                   |  |                    | (420 | ) |      |  | (365 | )
| assets                                                          |  |                    | 46   |   |      |  | 11   |  
| liabilities                                                     |  |                    | (466 | ) |      |  | (376 | )
|Forward exchange contracts relating to commodity hedging          |  |                    | (34  | ) |      |  | (18  | )
| assets                                                          |  |                    |     |   |      |  |     |  
| liabilities                                                     |  |                    | (34  | ) |      |  | (18  | )
|Forward exchange contracts relating to hedge of commercial papers |  |                    | (28  | ) |      |  | (24  | )
| assets                                                          |  |                    |     |   |      |  |     |  
| liabilities                                                     |  |                    | (28  | ) |      |  | (24  | )
|Forward exchange contracts relating to hedge of future cash flows |  |                    | 3    |   |      |  | (9   | )
| assets                                                          |  |                    | 7    |   |      |  | 32   |  
| liabilities                                                     |  |                    | (4   | ) |      |  | (41  | )
|Other Forward exchange contracts                                  |  |                    |     |   |      |  |     |  
| assets                                                          |  |                    | 3    |   |      |  | 2    |  
| liabilities                                                     |  |                    | (3   | ) |      |  | (2   | )
|Options                                                           |  |                    |     |   |      |  |     |  
| assets                                                          |  |                    |     |   |      |  | 2    |  
| liabilities                                                     |  |                    |     |   |      |  | (2   | )
|Contracts for differences                                         |  |                    |     |   |      |  |     |  
| assets                                                          |  |                    |     |   |      |  |     |  
| liabilities                                                     |  |                    |     |   |      |  |     |  
|National and international congestion contracts differences       |  |                    |     |   |      |  |     |  
| assets                                                          |  |                    |     |   |      |  |     |  
| liabilities                                                     |  |                    |     |   |      |  |     |  
|                                                                  |  |                    |      |   |      | 
|Total                                                             |  |                    | (479 | ) |      |  | (416 | )
| assets                                                          |  |                    | 56   |   |      |  | 47   |  
| liabilities                                                     |  |                    | (535 | ) |      |  | (463 | )
|                                                                  |  |                    |      |   |      | 



F-76



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | contracts with a notional amount of euro 855 million
    used to hedge the foreign exchange risk related to fuel
    purchases, electricity imports and expected cash flows in
    currencies other than the euro (euro 1,681 million as of
    December 31, 2003); and
|
| |  | contracts with a notional amount of euro 715 million
    used to hedge the foreign exchange risk related to the repayment
    of the commercial paper issued in foreign currency
    (euro 440 as of December 31, 2003).                                               











|    |                      
|--- | ---------------------
|(l) | Effects of Regulation



F-77



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |              
|--- | -------------
|(m) | Utility Plant



|                                         |  |                    |        |              |               |  |        |      |  |  |         | 
|---------------------------------------- |  | ------------------ | ------ | ------------ | ------------- |  | ------ | ---- |  |  | ------- | 
|                                         |  | 2004               |        |              | 2003          |  |        | 2004 | 
|                                         |  |                    |        |              |               |  |        |      | 
|                                         |  |                    |        | (millions of |              
|                                         |  | (millions of euro) |        |              | U.S. dollars) | 
|Utility plant, gross:                    |  |                    |        |              |               |  |        |      |  |  |         | 
|Generating Plant:                        |  |                    |        |              |               |  |        |      |  |  |         | 
|Hydroelectric                            |  |                    | 6,506  |              |               |  | 6,447  |      |  |  | 8,808   | 
|Thermal                                  |  |                    | 17,205 |              |               |  | 16,966 |      |  |  | 23,292  | 
|Geothermal and other renewable resources |  |                    | 2,127  |              |               |  | 1,944  |      |  |  | 2,880   | 
|Transmission line                        |  |                    | 6,565  |              |               |  | 6,245  |      |  |  | 8,888   | 
|Distribution Network                     |  |                    | 32,551 |              |               |  | 31,189 |      |  |  | 44,068  | 
|Distribution Gas Network                 |  |                    | 2,767  |              |               |  | 2,559  |      |  |  | 3,746   | 
|Telecommunication                        |  |                    | 5,604  |              |               |  | 5,124  |      |  |  | 7,587   | 
|Land and Buildings                       |  |                    | 2,449  |              |               |  | 2,339  |      |  |  | 3,315   | 
|Other                                    |  |                    | 2,179  |              |               |  | 2,272  |      |  |  | 2,950   | 
|Construction in progress                 |  |                    | 2,069  |              |               |  | 2,140  |      |  |  | 2,801   | 
|                                         |  |                    |        |              |               |  |        |      | 
|Total                                    |  |                    | 80,022 |              |               |  | 77,225 |      |  |  | 109,421 | 
|                                         |  |                    |        |              |               |  |        |      | 
|Accumulated depreciation:                |  |                    |        |              |               |  |        |      |  |  |         | 
|Generating Plant:                        |  |                    |        |              |               |  |        |      |  |  |         | 
|Hydroelectric                            |  |                    | 2,484  |              |               |  | 2,309  |      |  |  | 3,363   | 
|Thermal                                  |  |                    | 9,176  |              |               |  | 8,209  |      |  |  | 12,422  | 
|Geothermal and other renewable resources |  |                    | 1,019  |              |               |  | 893    |      |  |  | 1,380   | 
|Transmission Line                        |  |                    | 2,600  |              |               |  | 2,409  |      |  |  | 3,520   | 
|Distribution Network                     |  |                    | 21,102 |              |               |  | 20,875 |      |  |  | 28,568  | 
|Distribution Gas Network                 |  |                    | 1,080  |              |               |  | 973    |      |  |  | 1,462   | 
|Telecommunication                        |  |                    | 2,548  |              |               |  | 1,868  |      |  |  | 3,449   | 
|Land and Buildings                       |  |                    | 947    |              |               |  | 799    |      |  |  | 1,282   | 
|Other                                    |  |                    | 1,477  |              |               |  | 1,483  |      |  |  | 2,000   | 
|Construction in progress                 |  |                    |       |              |               |  |       |      |  |  |        | 
|                                         |  |                    |        |              |               |  |        |      | 
|Total                                    |  |                    | 42,433 |              |               |  | 39,818 |      |  |  | 57,446  | 
|                                         |  |                    |        |              |               |  |        |      | 
|Utility plant, net:                      |  |                    |        |              |               |  |        |      |  |  |         | 
|Generating Plant:                        |  |                    |        |              |               |  |        |      |  |  |         | 
|Hydroelectric                            |  |                    | 4,022  |              |               |  | 4,138  |      |  |  | 5,445   | 
|Thermal                                  |  |                    | 8,029  |              |               |  | 8,757  |      |  |  | 10,870  | 
|Geothermal and other renewable resources |  |                    | 1,108  |              |               |  | 1,051  |      |  |  | 1,500   | 
|Transmission Line                        |  |                    | 3,965  |              |               |  | 3,836  |      |  |  | 5,368   | 
|Distribution Network                     |  |                    | 11,449 |              |               |  | 10,314 |      |  |  | 15,500  | 
|Distribution Gas Network                 |  |                    | 1,687  |              |               |  | 1,586  |      |  |  | 2,284   | 
|Telecommunication                        |  |                    | 3,056  |              |               |  | 3,256  |      |  |  | 4,137   | 
|Land and Buildings                       |  |                    | 1,502  |              |               |  | 1,540  |      |  |  | 2,033   | 
|Other                                    |  |                    | 702    |              |               |  | 789    |      |  |  | 950     | 
|Construction in progress                 |  |                    | 2,069  |              |               |  | 2,140  |      |  |  | 2,801   | 
|                                         |  |                    |        |              |               |  |        |      | 
|Total                                    |  |                    | 37,589 |              |               |  | 37,407 |      |  |  | 50,889  | 
|                                         |  |                    |        |              |               |  |        |      | 

F-78



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                         
|--- | ------------------------
|(n) | Stock-Based Compensation





|                                 |  |           |             |        |             |  |      | 
|-------------------------------- |  | --------- | ----------- | ------ | ----------- |  | ---- | 
|                                 |  | Number of |             |        | Average     | 
|                                 |  | Options   |             |        | Grant Price | 
|                                 |  |           |             |        |             | 
|                                 |  |           |             | (euro) |            
|Outstanding at January 1, 2001   |  |           | 5,513,200   |        |             |  | 8.60 | 
|Granted                          |  |           | 34,274,050  |        |             |  | 7.27 | 
|Exercised                        |  |           |            |        |             |  |     | 
|Forfeited                        |  |           | (15,080,582 | )      |             |  | 7.27 | 
|                                 |  |           |             |        |             | 
|Outstanding at December 31, 2001 |  |           | 24,706,668  |        |             |  | 7.57 | 
|                                 |  |           |             |        |             | 



|                           |  |              |           | 
|-------------------------- |  | ------------ | --------- | 
|                           |  | Tranche 2001 |          
|                           |  |              |          
|Future dividends per share |  |              | euro 0.36 | 
|Risk-free interest rate    |  |              | 4.05%     | 
|Expected life              |  |              | 2.5 years | 
|Expected volatility        |  |              | 27%       | 
|                           |  |              |          





F-79



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |  |           |            |        |             |  |      | 
|-------------------------------- |  | --------- | ---------- | ------ | ----------- |  | ---- | 
|                                 |  | Number of |            |        | Average     | 
|                                 |  | Options   |            |        | Grant Price | 
|                                 |  |           |            |        |             | 
|                                 |  |           |            | (euro) |            
|Outstanding at January 1, 2002   |  |           | 24,706,668 |        |             |  | 7.57 | 
|Granted(*)                       |  |           | 41,748,500 |        |             |  | 6.43 | 
|Exercised                        |  |           |           |        |             |  |     | 
|Forfeited                        |  |           |           |        |             |  |     | 
|                                 |  |           |            |        |             | 
|Outstanding at December 31, 2002 |  |           | 66,455,168 |        |             |  | 6.85 | 
|                                 |  |           |            |        |             | 






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(*) | 2,503,500 granted to Enels Chief Executive Officer at
    euro 6.480.



|                           |  |  |            | 
|-------------------------- |  |  | ---------- | 
|Future dividends per share |  |  | Euro 0.28  | 
|Risk-free interest rate    |  |  | 2.82%      | 
|Expected life              |  |  | 2.0  years | 
|Expected volatility        |  |  | 28%        | 
|                           |  |  |           







|                                 |  |           |             |        |             |  |      | 
|-------------------------------- |  | --------- | ----------- | ------ | ----------- |  | ---- | 
|                                 |  | Number of |             |        | Average     | 
|                                 |  | Options   |             |        | Grant Price | 
|                                 |  |           |             |        |             | 
|                                 |  |           |             | (euro) |            
|Outstanding at January 1, 2003   |  |           | 66,455,168  |        |             |  | 6.85 | 
|Granted(*)                       |  |           | 47,624,005  |        |             |  | 5.24 | 
|Exercised                        |  |           |            |        |             |  |     | 
|Forfeited                        |  |           |            |        |             |  |     | 
|                                 |  |           |             |        |             | 
|Outstanding at December 31, 2003 |  |           | 114,079,173 |        |             |  | 6.18 | 
|                                 |  |           |             |        |             | 






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(*) | 4,200,000 granted to Enels Chief Executive Officer at
    euro 5.240.



|                                         |  |  |            | 
|---------------------------------------- |  |  | ---------- | 
|Future dividends per share               |  |  | Euro 0.28  | 
|Weighted average risk-free interest rate |  |  | 2.82%      | 
|Expected life                            |  |  | 2.0  years | 
|Expected volatility                      |  |  | 28%        | 
|                                         |  |  |           

F-80



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                         |  |  |            | 
|---------------------------------------- |  |  | ---------- | 
|Future dividends per share               |  |  | Euro 0.36  | 
|Weighted average risk-free interest rate |  |  | 2.72%      | 
|Expected life                            |  |  | 3.5  years | 
|Expected volatility                      |  |  | 17%        | 
|                                         |  |  |           





|                                     |  |           |             |        |             |  |      | 
|------------------------------------ |  | --------- | ----------- | ------ | ----------- |  | ---- | 
|                                     |  | Number of |             |        | Average     | 
|                                     |  | Options   |             |        | Grant Price | 
|                                     |  |           |             |        |             | 
|                                     |  |           |             | (euro) |            
|Outstanding at January 1, 2004       |  |           | 114,079,173 |        |             |  | 6.18 | 
|Granted(*)                           |  |           | 38,527,550  |        |             |  | 6.24 | 
|Exercised                            |  |           | (40,446,675 | )      |             |  | 5.95 | 
|Forfeited                            |  |           | (17,309,226 | )      |             |  | 6.80 | 
|                                     |  |           |             |        |             | 
|Outstanding at December 31, 2004(**) |  |           | 94,850,822  |        |             |  | 6.15 | 
|                                     |  |           |             |        |             | 






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(*) | 2,500,000 granted to Enels Chief Executive Officer at
    euro 6.242.



|     |                                                         
|---- | --------------------------------------------------------
|(**) | Price has been reduced by euro 0.41, as discussed above.



|                    |  |              |                     |  |           |  |            |            |  |        |             |  |  |               |        |  |       |        |            |       |  |  |      |  |  |  |       | 
|------------------- |  | ------------ | ------------------- |  | --------- |  | ---------- | ---------- |  | ------ | ----------- |  |  | ------------- | ------ |  | ----- | ------ | ---------- | ----- |  |  | ---- |  |  |  | ----- | 
|Options Outstanding |  |              |                    
|                    |  |              | Options exercisable | 
|                    |  | Weighted     |                     |  |           |  |            |           
|                    |  | average      |                     |  | Weighted  |  |            | Weighted   |  |        | Weighted    |  |  |              
|                    |  | Range of     |                     |  | remaining |  |            | average    |  |        | average     |  |  | average       |        |  |       |        | Fair       |      
|Tranche             |  | Grant Prices |                     |  | options   |  |            | grant life |  |        | grant price |  |  | grant options |        |  | Price |        |            | value | 
|                    |  |              |                     |  |           |  |            |            |  |        |             |  |  |               |        |  |       |        |            |       | 
|                    |  | (euro)       |                     |  |           |  | (years)    |            |  | (euro) |             |  |  |               | (euro) |  |       | (euro) |           
|2001                |  |              | 6.86                |  |           |  | 16,690,142 |            |  |        | 0.5         |  |  |               | 6.86   |  |       |        | 16,690,142 |       |  |  | 7.27 |  |  |  | 0.48  | 
|2002                |  |              | 6.02                |  |           |  | 12,819,944 |            |  |        | 1.5         |  |  |               | 6.02   |  |       |        | 2,707,944  |       |  |  | 6.43 |  |  |  | 0.17  | 
|2003                |  |              | 4.83                |  |           |  | 28,044,186 |            |  |        | 2.5         |  |  |               | 4.83   |  |       |        | 1,384,539  |       |  |  | 5.24 |  |  |  | 0.67  | 
|2004                |  |              | 5.83                |  |           |  | 37,296,550 |            |  |        | 3.5         |  |  |               |       |  |       |        |           |       |  |  |     |  |  |  | 0.183 | 
|                    |  |              |                     |  |           |  |            |            |  |        |             |  |  |               |        |  |       |        |            |       | 



F-81



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                           |  |      |       |   |      |  |       |      |  |  |       |  
|---------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                                           |  | 2004 |       |   | 2003 |  |       | 2002 | 
|                                                           |  |      |       |   |      |  |       |      | 
|Net income in accordance with U.S. GAAP, as reported       |  |      | 1,031 |   |      |  | 2,376 |      |  |  | 1,399 |  
|Stock-based employee compensation expense, as reported     |  |      | 139   |   |      |  |      |      |  |  |      |  
|Stock-based employee compensation expense under fair value |  |      | (122  | ) |      |  | (12   | )    |  |  | (6    | )
|                                                           |  |      |       |   |      |  |       |      | 
|Pro forma net income                                       |  |      | 1,048 |   |      |  | 2,364 |      |  |  | 1,393 |  
|                                                           |  |      |       |   |      |  |       |      | 



|                                     |  |             |      |  |           |  |      |             |  |  |           |  |  |             |      |  |           |  |      |  |  |  |      | 
|------------------------------------ |  | ----------- | ---- |  | --------- |  | ---- | ----------- |  |  | --------- |  |  | ----------- | ---- |  | --------- |  | ---- |  |  |  | ---- | 
|                                     |  | 2004        |      |  | 2003      |  |      | 2002        | 
|                                     |  |             |      |  |           |  |      |             | 
|                                     |  | As Reported |      |  | Pro Forma |  |      | As Reported |  |  | Pro Forma |  |  | As Reported |      |  | Pro Forma | 
|                                     |  |             |      |  |           |  |      |             |  |  |           |  |  |             |      |  |           | 
|Basic and diluted earnings per share |  |             | 0.17 |  |           |  | 0.17 |             |  |  | 0.39      |  |  |             | 0.39 |  |           |  | 0.23 |  |  |  | 0.23 | 
|                                     |  |             |      |  |           |  |      |             |  |  |           |  |  |             |      |  |           | 





|    |                                                
|--- | -----------------------------------------------
|(o) | Pension and Other Post-Retirement Benefit Costs





F-82



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|-------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------- | ------------------- |  | ------ | ---- |  |  | ------ | - |  |  | ------ | -
|                                                                                                   |  |                    |        | Other Post- |                    
|                                                                                                   |  | Pension benefits   |        |             | retirement benefits | 
|                                                                                                   |  |                    |        |             |                     | 
|                                                                                                   |  | 2004               |        |             | 2003                |  |        | 2004 |  |  | 2003   |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|                                                                                                   |  | (millions of euro) |        |             | (millions of euro)  | 
|Change in Benefit Obligation:                                                                      |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|Benefit obligation at January 1                                                                    |  |                    | 1,985  |             |                     |  | 2,087  |      |  |  | 1,152  |   |  |  | 1,149  |  
|Service cost                                                                                       |  |                    | 102    |             |                     |  | 84     |      |  |  | 12     |   |  |  | 10     |  
|Interest cost                                                                                      |  |                    | 98     |             |                     |  | 101    |      |  |  | 56     |   |  |  | 56     |  
|Actuarial (gain) loss                                                                              |  |                    | 5      |             |                     |  | (52    | )    |  |  | 69     |   |  |  | (20    | )
|Plan amendment                                                                                     |  |                    | 1      |             |                     |  |       |      |  |  |       |   |  |  |       |  
|PBO of business acquired (disposed)                                                                |  |                    |       |             |                     |  | 47     |      |  |  |       |   |  |  |       |  
|Benefits paid                                                                                      |  |                    | (172   | )           |                     |  | (291   | )    |  |  | (54    | ) |  |  | (43    | )
|Special withdrawal                                                                                 |  |                    | (209   | )           |                     |  |       |      |  |  |       |   |  |  |       |  
|Adjustment                                                                                         |  |                    | 47     |             |                     |  | 9      |      |  |  |       |   |  |  |       |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Benefit obligation at December 31                                                                  |  |                    | 1,857  |             |                     |  | 1,985  |      |  |  | 1,241  |   |  |  | 1,152  |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Change in plan assets:(a)                                                                          |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|Fair value of plan assets at beginning of year                                                     |  |                    | 129    |             |                     |  | 111    |      |  |  | 18     |   |  |  | 15     |  
|Actuarial return on plan assets                                                                    |  |                    | 6      |             |                     |  | 6      |      |  |  | 1      |   |  |  | 1      |  
|Employer contributions                                                                             |  |                    | 388    |             |                     |  | 284    |      |  |  | 3      |   |  |  | 2      |  
|Plan participants contribution                                                                    |  |                    |       |             |                     |  |       |      |  |  |       |   |  |  |       |  
|Benefits paid                                                                                      |  |                    | (169   | )           |                     |  | (290   | )    |  |  | (1     | ) |  |  |       |  
|Special withdrawal                                                                                 |  |                    | (209   | )           |                     |  |       |      |  |  |       |   |  |  |       |  
|Intercompanies reallocation of plan assets                                                         |  |                    |       |             |                     |  | 4      |      |  |  |       |   |  |  |       |  
|Adjustments                                                                                        |  |                    | 24     |             |                     |  | 4      |      |  |  | 2      |   |  |  |       |  
|Gains (losses)                                                                                     |  |                    | (2     | )           |                     |  | 10     |      |  |  | (1     | ) |  |  |       |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Fair value of plan assets at end of year                                                           |  |                    | 167    |             |                     |  | 129    |      |  |  | 22     |   |  |  | 18     |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Reconciliation of Funded Status of the Plans:                                                      |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|Funded (un-funded) status                                                                          |  |                    | (1,690 | )           |                     |  | (1,856 | )    |  |  | (1,219 | ) |  |  | (1,134 | )
|Unrecognized net (gain) loss                                                                       |  |                    | 367    |             |                     |  | 435    |      |  |  | 51     |   |  |  | (15    | )
|Unrecognized net transition obligation                                                             |  |                    | (16    | )           |                     |  | (17    | )    |  |  |       |   |  |  |       |  
|Accrued benefit cost                                                                               |  |                    | (1,339 | )           |                     |  | (1,438 | )    |  |  | (1,168 | ) |  |  | (1,149 | )
|Adjustment for minimum liability                                                                   |  |                    | (277   | )           |                     |  | (344   | )    |  |  |       |   |  |  |       |  
|Amount recognized in the Consolidated Balance Sheet                                                |  |                    | (1,616 | )           |                     |  | (1,782 | )    |  |  | (1,168 | ) |  |  | (1,149 | )
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Information for pension plans with an accumulated benefit
    obligation in excess of plan assets: |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|Projected benefit obligation                                                                       |  |                    | (1,701 | )           |                     |  | (1,851 | )    |  |  | (1,189 | ) |  |  | (1,108 | )
|Accumulated benefit obligation                                                                     |  |                    | (1,588 | )           |                     |  | (1,729 | )    |  |  | (1,189 | ) |  |  | (1,108 | )
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  
|Fair value of plan assets                                                                          |  |                    | 21     |             |                     |  | 3      |      |  |  |       |   |  |  |       |  
|                                                                                                   |  |                    |        |             |                     |  |        |      |  |  |        |  

F-83



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                       |  |                    |        |             |                     |  |        |      |  |  |        |   |  |  |        |  
|-------------------------------------- |  | ------------------ | ------ | ----------- | ------------------- |  | ------ | ---- |  |  | ------ | - |  |  | ------ | -
|                                       |  |                    |        | Other Post- |                    
|                                       |  | Pension benefits   |        |             | retirement benefits | 
|                                       |  |                    |        |             |                     | 
|                                       |  | 2004               |        |             | 2003                |  |        | 2004 |  |  | 2003   |  
|                                       |  |                    |        |             |                     |  |        |      |  |  |        |  
|                                       |  | (millions of euro) |        |             | (millions of euro)  | 
|Prepaid benefit cost                   |  |                    |       |             |                     |  |       |      |  |  |       |   |  |  |       |  
|Accrued benefit cost                   |  |                    | (1,616 | )           |                     |  | (1,782 | )    |  |  | (1,168 | ) |  |  | (1,149 | )
|Intangible assets                      |  |                    |       |             |                     |  |       |      |  |  |       |   |  |  |       |  
|Accumulated other comprehensive income |  |                    | 277    |             |                     |  | 344    |      |  |  |       |   |  |  |       |  
|                                       |  |                    |        |             |                     |  |        |      |  |  |        |  
|Net amount recognized                  |  |                    | (1,339 | )           |                     |  | (1,438 | )    |  |  | (1,168 | ) |  |  | (1,149 | )
|                                       |  |                    |        |             |                     |  |        |      |  |  |        |  



|                                         |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      |  |    |   |  |  |    | 
|---------------------------------------- |  | ------------------ | --- | ----------- | ------------------- |  | --- | ---- |  |  | ---- | - |  | ---- | -- | - | ---- |  | -- | - |  |  | -- | 
|                                         |  |                    |     | Other Post- |                    
|                                         |  | Pensions benefits  |     |             | retirement benefits | 
|                                         |  |                    |     |             |                     | 
|                                         |  | 2004               |     |             | 2003                |  |     | 2002 |  |  | 2004 |   |  | 2003 |    |   | 2002 | 
|                                         |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      | 
|                                         |  | (millions of euro) |    
|Components of Net Periodic Benefit Cost: |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      |  |    |   |  |  |    | 
|Service cost                             |  |                    | 102 |             |                     |  | 84  |      |  |  | 89   |   |  |      | 12 |   |      |  | 10 |   |  |  | 13 | 
|Interest cost                            |  |                    | 98  |             |                     |  | 101 |      |  |  | 102  |   |  |      | 56 |   |      |  | 56 |   |  |  | 52 | 
|Expected return on plan assets           |  |                    | (7  | )           |                     |  | (6  | )    |  |  | (5   | ) |  |      | (1 | ) |      |  | (1 | ) |  |  |   | 
|Net amortization and deferral            |  |                    | 17  |             |                     |  | 16  |      |  |  | 20   |   |  |      |   |   |      |  |   |   |  |  |   | 
|                                         |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      | 
|Net periodic benefit cost                |  |                    | 210 |             |                     |  | 195 |      |  |  | 206  |   |  |      | 67 |   |      |  | 65 |   |  |  | 65 | 
|Curtailment gain/initial accrual         |  |                    |    |             |                     |  |    |      |  |  | 75   |   |  |      |   |   |      |  |   |   |  |  |   | 
|Special withdrawal                       |  |                    | 68  |             |                     |  |    |      |  |  |     |   |  |      |   |   |      |  |   |   |  |  |   | 
|Adjustment                               |  |                    | 15  |             |                     |  | 13  |      |  |  |     |   |  |      | 2  |   |      |  |   |   |  |  |   | 
|                                         |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      | 
|Total cost accrual                       |  |                    | 293 |             |                     |  | 208 |      |  |  | 281  |   |  |      | 69 |   |      |  | 65 |   |  |  | 65 | 
|                                         |  |                    |     |             |                     |  |     |      |  |  |      |   |  |      |    |   |      | 

Additional Information


|                                                                         |  |                    |    |             |                     |  |    |      |  |  |      |  |  |  |   | 
|------------------------------------------------------------------------ |  | ------------------ | -- | ----------- | ------------------- |  | -- | ---- |  |  | ---- |  |  |  | - | 
|                                                                         |  |                    |    | Other Post- |                    
|                                                                         |  | Pension benefits   |    |             | retirement benefits | 
|                                                                         |  |                    |    |             |                     | 
|                                                                         |  | 2004               |    |             | 2003                |  |    | 2004 |  |  | 2003 | 
|                                                                         |  |                    |    |             |                     |  |    |      |  |  |      | 
|                                                                         |  | (millions of euro) |    |             | (millions of euro)  | 
|Increase in minimum liability included in
    other comprehensive income |  |                    | 67 |             |                     |  | 61 |      |  |  |     |  |  |  |  | 
|                                                                         |  |                    |    |             |                     |  |    |      |  |  |      | 

Assumptions


|                                                                                          |  |                   |       |             |                     |  |      |      |  |  |       |  |  |  |      | 
|----------------------------------------------------------------------------------------- |  | ----------------- | ----- | ----------- | ------------------- |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                                                                                          |  |                   |       | Other Post- |                    
|                                                                                          |  | Pensions benefits |       |             | retirement benefits | 
|                                                                                          |  |                   |       |             |                     | 
|                                                                                          |  | 2004              |       |             | 2003                |  |      | 2004 |  |  | 2003  | 
|                                                                                          |  |                   |       |             |                     |  |      |      |  |  |       | 
|Weighted Average Assumptions used to determine benefit
    obligations as of December 31: |  |                   |       |             |                     |  |      |      |  |  |       |  |  |  |      | 
|Discount rate                                                                             |  |                   | 4.25% |             |                     |  | 5.0% |      |  |  | 4.25% |  |  |  | 5.0% | 
|Rate of compensation increase                                                             |  |                   | 3.0%  |             |                     |  | 3.5% |      |  |  | N/A   |  |  |  | N/A  | 
|                                                                                          |  |                   |       |             |                     |  |      |      |  |  |       | 

F-84



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                                                          |  |                   |      |             |                     |  |      |      |  |  |      |  |  |      |      |  |      |  |      |  |  |  |      | 
|--------------------------------------------------------------------------------------------------------- |  | ----------------- | ---- | ----------- | ------------------- |  | ---- | ---- |  |  | ---- |  |  | ---- | ---- |  | ---- |  | ---- |  |  |  | ---- | 
|                                                                                                          |  |                   |      | Other Post- |                    
|                                                                                                          |  | Pensions benefits |      |             | retirement benefits | 
|                                                                                                          |  |                   |      |             |                     | 
|                                                                                                          |  | 2004              |      |             | 2003                |  |      | 2002 |  |  | 2004 |  |  | 2003 |      |  | 2002 | 
|                                                                                                          |  |                   |      |             |                     |  |      |      |  |  |      |  |  |      |      |  |      | 
|Weighted Average Assumptions used to determine net periodic
    benefit cost for years ended December 31: |  |                   |      |             |                     |  |      |      |  |  |      |  |  |      |      |  |      |  |      |  |  |  |      | 
|Discount rate                                                                                             |  |                   | 5.0% |             |                     |  | 5.0% |      |  |  | 5.0% |  |  |      | 5.0% |  |      |  | 5.0% |  |  |  | 5.0% | 
|Expected long term rate of return on plan assets                                                          |  |                   | 5.0% |             |                     |  | 5.0% |      |  |  | 5.0% |  |  |      | 5.0% |  |      |  | 5.0% |  |  |  | 2.5% | 
|Rate of compensation increase                                                                             |  |                   | 3.5% |             |                     |  | 3.5% |      |  |  | 3.5% |  |  |      | N/A  |  |      |  | N/A  |  |  |  | N/A  | 
|                                                                                                          |  |                   |      |             |                     |  |      |      |  |  |      |  |  |      |      |  |      | 

|                                                                                      |  |      |      |   |      |  |      |  
|------------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                                                                      |  | 2004 |      |   | 2003 | 
|                                                                                      |  |      |      |   |      | 
|Assumed health care cost trend rates at December 31                                   |  |      |      |   |      |  |      |  
|Health care cost trend rate assumed for next year                                     |  |      | 3.0  | % |      |  | 3.5  | %
|Rate to which the cost trend rate is assumed to decline (the
    ultimate trend rate) |  |      | 3.0  | % |      |  | 3.5  | %
|Year that the rate reaches the ultimate trend rate                                    |  |      | 2005 |   |      |  | 2004 |  
|                                                                                      |  |      |      |   |      | 



|                                                         |  |                    |    |  |                |  |     |  
|-------------------------------------------------------- |  | ------------------ | -- |  | -------------- |  | --- | -
|                                                         |  | 1- Percentage-     |    |  | 1- Percentage- | 
|                                                         |  | Point Increase     |    |  | Point Decrease | 
|                                                         |  |                    |    |  |                | 
|                                                         |  | (millions of euro) |   
|Effect on total cost                                     |  |                    | 1  |  |                |  | (1  | )
|Effect on accumulated post-retirement benefit obligation |  |                    | 30 |  |                |  | (24 | )
|                                                         |  |                    |    |  |                | 





Estimated Future Benefit Payments




|                |  |                    |       |  |                     |  |     | 
|--------------- |  | ------------------ | ----- |  | ------------------- |  | --- | 
|                |  | Pension            |       |  | Other Post-         | 
|                |  | benefits           |       |  | retirement benefits | 
|                |  |                    |       |  |                     | 
|                |  | (millions of euro) |      
|2005            |  |                    | 104   |  |                     |  | 55  | 
|2006            |  |                    | 118   |  |                     |  | 57  | 
|2007            |  |                    | 123   |  |                     |  | 58  | 
|2008            |  |                    | 150   |  |                     |  | 60  | 
|2009            |  |                    | 203   |  |                     |  | 62  | 
|Years 2010-2014 |  |                    | 1,335 |  |                     |  | 323 | 
|                |  |                    |       |  |                     | 



|    |                                 
|--- | --------------------------------
|(p) | Derivative Financial Instruments



F-85



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For cash flow hedges, the effective portion of the
    gain or loss from the derivative hedging instrument is
    accumulated in other comprehensive income (OCI) and
    recognized in earnings during the period that the hedged
    forecasted transaction impacts earnings. The ineffective portion
    of the gain or loss from the derivative hedging instrument is
    recognized in earnings immediately.
|
| |  | For fair value hedges, the gain or loss on the
    derivative instrument designated and qualifying as a fair value
    hedging instrument as well as the offsetting loss or gain on the
    hedged item attributable to the hedged risk is recognized
    currently in earnings in the same accounting period.                                                                                                     
|
| |  | For all other derivative contracts which do not qualify for the
    special hedge accounting treatment under SFAS 133, gains
    and losses are recorded in earnings each reporting period.                                                                                                                                                                                                                          





| |    |                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------
| | a. | It has (1) one or more underlying and (2) one or more
    notional amounts or payment provisions or both.



| |    |                                                                                                                                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | No initial net investment or an initial net investment that is
    smaller than would be required for other types of contracts that
    would be expected to have a similar response to changes in
    market factors.



| |    |                                                                                                                                                                                                                                                      
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Its terms require or permit net settlement, it can readily be
    settled net by a means outside the contract, or it provides for
    delivery of an asset that puts the recipient in a position not
    substantially different from net settlement.





| |                 
| | ----------------
| | Cash Flow Hedges









F-86



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                      |       |              |     |        |          |  |      |              |   |  |              |   |  |          |      |      |              |        |     |              |   |  |          |    |  |              |      |      |              |  |    |    |  |  |      |      |   |  |      |      |  
|--------------------- | ----- | ------------ | --- | ------ | -------- |  | ---- | ------------ | - |  | ------------ | - |  | -------- | ---- | ---- | ------------ | ------ | --- | ------------ | - |  | -------- | -- |  | ------------ | ---- | ---- | ------------ |  | -- | -- |  |  | ---- | ---- | - |  | ---- | ---- | -
|                      |       |              |     | Gains/ |          |  |      |              |   |  | Gains/       |   |  |          |      |      |              | Gains/ |     |              |   |  |         
|                      |       | OCI at       |     |        | losses   |  |      | Reclassified |   |  | OCI at       |   |  | losses   |      |      | Reclassified |        |     | OCI at       |   |  | losses   |    |  | Reclassified |      |      | OCI at       | 
|                      |       | December 31, |     |        | recorded |  |      | to earnings  |   |  | December 31, |   |  | recorded |      |      | to earnings  |        |     | December 31, |   |  | recorded |    |  | to earnings  |      |      | December 31, | 
|Type of operation     |       | 2001         |     |        | in 2002  |  |      | in 2002      |   |  | 2002         |   |  | in 2003  |      |      | in 2003      |        |     | 2003         |   |  | in 2004  |    |  | in 2004      |      |      | 2004         | 
|                      |       |              |     |        |          |  |      |              |   |  |              |   |  |          |      |      |              |        |     |              |   |  |          |    |  |              |      |      |              | 
|Interest rate swaps   |       |              | (72 | )      |          |  | (201 | )            |   |  | 3            |   |  |          | (270 | )    |              |        | (29 | )            |   |  | 14       |    |  |              | (285 | )    |              |  | 24 |    |  |  | (106 | )    |   |  | (367 | )   
|Interest rate collars |       |              |    |        |          |  | (4   | )            |   |  |             |   |  |          | (4   | )    |              |        | (3  | )            |   |  |         |    |  |              | (7   | )    |              |  | 11 |    |  |  | (5   | )    |   |  | (1   | )   
|Swaptions             |       |              |    |        |          |  | (2   | )            |   |  |             |   |  |          | (2   | )    |              |        | 2   |              |   |  |         |    |  |              |     |      |              |  |   |    |  |  |     |      |   |  |     |     
|                      |       |              |     |        |          |  |      |              |   |  |              |   |  |          |      |      |              |        |     |              |   |  |          |    |  |              |      |      |              | 
|                      | Total |              |     | (72    | )        |  |      | (207         | ) |  |              | 3 |  |          |      | (276 | )            |        |     | (30          | ) |  |          | 14 |  |              |      | (292 | )            |  |    | 35 |  |  |      | (111 | ) |  |      | (368 | )
|                      |       |              |     |        |          |  |      |              |   |  |              |   |  |          |      |      |              |        |     |              |   |  |          |    |  |              |      |      |              | 













| |                  
| | -----------------
| | Fair Value Hedges









| |                           
| | --------------------------
| | Other Derivative Contracts



F-87



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                |  |                      |    |   |      |  |     |      |  |  |     |  
|----------------------------------------------- |  | -------------------- | -- | - | ---- |  | --- | ---- |  |  | --- | -
|                                                |  | Gain/losses          |   
|                                                |  | included in earnings |   
|                                                |  |                      |   
|Type of Operation                               |  | 2004                 |    |   | 2003 |  |     | 2002 | 
|                                                |  |                      |    |   |      |  |     |      | 
|Interest rate swaps                             |  |                      | (2 | ) |      |  | (2  | )    |  |  | (6  | )
|Interest rate collars                           |  |                      | (8 | ) |      |  | 3   |      |  |  | (1  | )
|Swaptions                                       |  |                      |   |   |      |  | 1   |      |  |  | 5   |  
|Forward exchange agreements                     |  |                      | 1  |   |      |  | 34  |      |  |  | (52 | )
|Options                                         |  |                      |   |   |      |  |    |      |  |  |    |  
|Commodity swaps                                 |  |                      | 7  |   |      |  | (5  | )    |  |  | (13 | )
|Commodity futures                               |  |                      | 2  |   |      |  | (33 | )    |  |  | 25  |  
|Contract for differences                        |  |                      |   |   |      |  |    |      |  |  |    |  
|National and International congestion contracts |  |                      |   |   |      |  |    |      |  |  |    |  
|                                                |  |                      |    |   |      |  |     |      | 
|Total                                           |  |                      |   |   |      |  | (2  | )    |  |  | (42 | )
|                                                |  |                      |    |   |      |  |     |      | 





|    |                                  
|--- | ---------------------------------
|(q) | Amortization of Intangible Assets

|                                     |  |              |     |   |          |  |          |           |  |  |     |  
|------------------------------------ |  | ------------ | --- | - | -------- |  | -------- | --------- |  |  | --- | -
|                                     |  | Customer     |     |   |          |  | Customer |          
|                                     |  | relationship |     |   | Licences |  |          | portfolio | 
|                                     |  |              |     |   |          |  |          |           | 
|Balance as of January 1, 2003, net   |  |              | 544 |   |          |  | 61       |           |  |  | 114 |  
|Additions in 2003                    |  |              | 103 |   |          |  | 84       |           |  |  |    |  
|2003 amortization expense            |  |              | (48 | ) |          |  | (10      | )         |  |  | (14 | )
|                                     |  |              |     |   |          |  |          |           | 
|Balance as of December 31, 2003, net |  |              | 599 |   |          |  | 135      |           |  |  | 100 |  
|                                     |  |              |     |   |          |  |          |           | 
|Additions in 2004                    |  |              | 21  |   |          |  |         |           |  |  |    |  
|2004 amortization expense            |  |              | (59 | ) |          |  | (13      | )         |  |  | (14 | )
|                                     |  |              |     |   |          |  |          |           | 
|Balance as of December 31, 2004, net |  |              | 561 |   |          |  | 122      |           |  |  | 86  |  
|                                     |  |              |     |   |          |  |          |           | 







|    |                             
|--- | ----------------------------
|(r) | Asset Retirement Obligations



F-88



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                  |  |         |    | 
|--------------------------------- |  | ------- | -- | 
|                                  |  | Euro    |   
|                                  |  | million |   
|                                  |  |         |   
|Balance as of January 1, 2004     |  |         | 26 | 
|Liability incurred during 2004    |  |         | 9  | 
|Liability settled in 2004         |  |         |   | 
|Accretion expense                 |  |         | 5  | 
|Revisions in estimated cash flows |  |         | 48 | 
|                                  |  |         |   
|Balance as of December 31, 2004   |  |         | 88 | 
|                                  |  |         |   





|    |                        
|--- | -----------------------
|(s) | Cost method investments





|    |                           
|--- | --------------------------
|(t) | Variable interest entities







|     |                  
|---- | -----------------
|(27) | SUBSEQUENT EVENTS



|    |                                                                 
|--- | ----------------------------------------------------------------
|(a) | Acquisition of an Electricity Generation Company in
    Slovakia



F-89



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                       
|--- | --------------------------------------
|(b) | Sale of Distribution Network in Modena





|    |                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------
|(c) | Transfer of certain activities from Gestore della Rete di
    Transmissione Nazionale SpA (GRTN) to Terna





|    |                
|--- | ---------------
|(d) | Terna borrowing





|    |                                                      
|--- | -----------------------------------------------------
|(e) | Issue of Euro 1 Billion in Bonds to Italian Investors





|    |                        
|--- | -----------------------
|(f) | Sale of 29.99% of Terna





|    |                                      
|--- | -------------------------------------
|(g) | Sale of 13.86% of Terna share capital





F-90



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |           
|--- | ----------
|(h) | Litigation









|    |             
|--- | ------------
|(i) | Sale of Wind



F-91



---



##### 



ENEL S.P.A. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                                 
|--- | ------------------------------------------------
|(j) | Acquisition of Distribution Companies in Romania



F-92



---



##### 



Report of Independent Registered Public Accounting Firm














PricewaterhouseCoopers
Spa





Rome, 8 June 2005


PricewaterhouseCoopers SpA


F-93



---



##### 



SIGNATURES






| |                   
| | ------------------
| | ENEL S.P.A.       
| |                   
| | (Registrant)      
|
| | /s/ Fulvio Conti  
| |                   
| | Name: Fulvio Conti

| |        |                        
| | ------ | -----------------------
| | Title: | Chief Executive Officer

| |                        
| | -----------------------
| | Chief Financial Officer