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** **

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM 20-F/A**

 

| **o**                                                                                                                                                                                                                                                                                                            | **REGISTRATION STATEMENT PURSUANT  TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF  1934**                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **OR**                                                                                                                                                                                                                                                                                                           |
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **x**                                                                                                                                                                                                                                                                                                            | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31, 2009** |
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **OR**                                                                                                                                                                                                                                                                                                           |
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **o**                                                                                                                                                                                                                                                                                                            | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                          |
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **For the transition period from                        to                        ** |
| ** **                                                                                                                                                                                                                                                                                                       |
| **OR**                                                                                                                                                                                                                                                                                                           |
| ** **                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                       |
| **o**                                                                                                                                                                                                                                                                                                            | **SHELL COMPANY REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                       |

 

Dateof event requiring this shell company report . . . . . . . . . . . . . . . . ... .

 

Commissionfile number: 1-13240

 
| **EMPRESA NACIONAL DE ELECTRICIDAD S.A.**                                                     |
|-----------------------------------------------------------------------------------------------|
| (Exact name of Registrant as specified in its charter)                                        |
|                                                                                          |
| **EMPRESA NACIONAL DE ELECTRICIDAD S.A.**                                                     |
| (Translation of Registrant’s name into English)                                          |
|                                                                                          |
| **CHILE**                                                                                     |
| (Jurisdiction of incorporation or organization)                                               |
|                                                                                          |
| **Santa Rosa 76, Santiago, Chile**

**Telephone No. (562) 630-9000**                          |
| (Address of principal executive offices)                                                      |
|                                                                                          |
| **Eduardo Escaffi, (56-2) 353-5055, eej@endesa.cl,  Santa Rosa 76, Piso 15, Santiago, Chile** |
| (Name, Telephone, E-mail and/or Facsimile number and Address of  Company Contact Person)      |

 

Securitiesregistered 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 |   | New York Stock Exchange                    |
| Shares                     |   | New York Stock Exchange*                   |

 

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*Listed, not for trading, but only in connection with the registrationof American Depositary Shares, pursuant to the requirements of the Securitiesand Exchange Commission.

 

Securitiesregistered or to be registered pursuant to Section 12(g) of the Act:None

 

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Securitiesfor which there is a reporting obligation pursuant to Section 15(d) ofthe Act:

 
| **$ 400,000,000** | ** ** | **8.350%** | ** ** | **Notes  due 2013** |   |
|------------------------|------------|------------|------------|---------------------|--------|
| **$ 200,000,000** | ** ** | **8.625%** | ** ** | **Notes  due 2015** |   |
| **$ 205,881,000** | ** ** | **7.875%** | ** ** | **Notes  due 2027** |   |
| **$ 220,000,000** | ** ** | **7.325%** | ** ** | **Notes  due 2037** |   |
| **$ 40,416,000**  | ** ** | **8.125%** | ** ** | **Notes  due 2097** |   |
| (Title of Class)       |       |

 

Indicatethe number of outstanding shares of each of the issuer’s classes of capital orcommon stock as of the close of the period covered by the annual report.
| Shares  of Common Stock: | 8,201,754,580 |
|--------------------------|---------------|

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.

x Yes   o No

 

Ifthis report is an annual or transition report, indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934.

o Yes   x No

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days:

x Yes   o No

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act. 

 

| Large accelerated filer x |   | Accelerated filer o |   | Non-accelerated filer o |
|---------------------------|--------|---------------------|--------|-------------------------|

 

Indicateby check mark which basis of accounting the registrant has used to prepare thefinancial statements included in this filing:

 

| U.S. GAAP o |   | International Financial Reporting Standards as issued  by the International Accounting Standards Board x |   | Other o |
|-------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------|

 

Indicateby check mark which financial statement item the registrant has elected tofollow:

o Item 17   o Item 18

 

Ifthis is an annual report, indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

 

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**EXPLANATORY NOTE**

 

This Amendment No. 1 to Form20-F (the “Form 20-F/A”) amends our annual report on Form 20-F for the fiscalyear ended December 31, 2009, originally filed with the U.S. Securities andExchange Commission (“SEC”) on June 11, 2010 (the “Form 20-F”).  The purpose of this Form 20-F/A is to amendthe following sections:

 

·                  Item 4. Information on theCompany, Recent Developments: Disclosure on the delay, damages and expectedlosses in Bocamina II, due to the earthquake that Chile experienced on February27, 2010.

 

·                  Item 4. Information on theCompany. B. Business Overview: Disclosure on breakdown of revenues bygeographic markets.

 

·                  Item 4 Information on theCompany. D. Property, Plants and Equipments: disclosure of additional detail ofprojects under development.

 

·                  Item 5. Operating andFinancial Review and Prospects. B. Liquidity and Capital Resources: Explanationon the convenience of including a financial perspective of our liquidity andcapital resources, as a complement to an accounting perspective.  Addition of a cash flow using an accountingperspective and addition of a reconciliation between financial and accountingcash flows.

 

·                  Item 5 Financial Review andProspects. F. Tabular Disclosure of Contractual Obligations: additionaldisclosure of the “contractual operational obligation amounts.”

 

·                  Item 6. Directors, SeniorManagement and Employees. A. Directors and Senior Management: Disclosure of thebiographical descriptions of the new directors appointed in April 2010.

 

·                  Item 6. Directors, SeniorManagement and Employees. B. Compensation: Disclosure of the total amounts setaside or accrued to provide pension, retirement or similar benefits forexecutive officers.

 

·                  Item 7. Major Shareholdersand Related Party Transactions. A.  MajorShareholders:  Disclosure stating thatour major shareholder, Enersis, has no different voting rights than the otherEndesa Chile shareholders.  Addition ofinformation regarding the number of record holders in the United States and ourexplanation as to the portion of our common stock held in the United States.

 

·                  Item 15. Controls andProcedures. (a) Disclosure Controls and Procedures: Statement regarding theeffectiveness of the design of our controls and procedures.

 

·                  Item 18: FinancialStatements:

 

·                  Report of IndependentRegistered Public Accounting Firm: Addition of the registered accountant’sopinion that the financial statements comply with IFRS, *as issued bythe IASB,* (KPMG’s Report for Empresa Nacional de Electricidad S.A.).

 

·                  Consolidated Statements ofCash Flows: (1) Modification of the line entitled “Share of the (profit) lossof associates accounted for using the equity method, net of the cashdistributions received” deleting “*net of the cashdistributions received*”; and (2) a segregation of the amount of theacquisition of additional ownership interest in Edegel.

 

·                  Note 2, Basis ofPresentation of the Consolidated Financial Statements: First paragraph of Note 2.5revised by replacing “global integration method” with clearer language inconnection with the consolidation process.

 

·                  Note 3,Accounting Principles Applied:  Note 3 a)has been revised to additionally disclose the useful lives used for each classof property, plant and equipment.

 

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·                  Note 11, Investments inAssociates Accounted for using the equity method: (1) Amendment of the tableincluded in Note 11.1 a) by changing “Dividends Received” to “DividendsDeclared;” and (2) in Note 11.1 d), a disclosure about the nature and extent ofsignificant restrictions, on the ability of our associates to transfer funds tous.

 

·                  Note 36, Adoption ofInternational Financial Reporting Standards: Improvement of the explanation ofthe IFRS adoption process carried out by Empresa Nacional de Electricidad S.A.

 

Other than as expressly setforth above, this Form 20-F/A does not, and does not purport to, amend, updateor restate the information in any Item of the 2009 Form 20-F.****

 

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**TABLE OFCONTENTS**

** **

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| ** **          | ** **                                         | **Page** |
|---------------------|----------------------------------------------------|----------|
|                |                                               |     |
| INTRODUCTION   | 5                                                  |
|                |                                               |     |
| PART I         |                                               | 8        |
|                |                                               |     |
| Item 4.             | Information  on the Company                        | 8        |
| Item 5.             | Operating  and Financial Review and Prospects      | 62       |
| Item 6.             | Directors,  Senior Management and Employees        | 83       |
| Item 7.             | Major  Shareholders and Related Party Transactions | 93       |
|                |                                               |     |
| PART II        |                                               | 96       |
| Item 15.            | Controls and  Procedures                           | 96       |
|                |                                               |     |
| PART III       |                                               | 98       |
| Item 17.            | Financial  Statements                              | 98       |
| Item 18.            | Financial  Statements                              | 98       |
| Item  19.           | Exhibits                                           | 98       |
|                     |                                                    |          |  |

 

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**INTRODUCTION**

 

*As used in this report on Form 20-F, firstperson personal pronouns such as “we,” “us” or “our” refer to Empresa Nacionalde Electricidad S.A. (Endesa Chile or the Company) and our consolidatedsubsidiaries unless the context indicates otherwise.  Unless otherwisenoted, our interest in our principal subsidiaries and related companies isexpressed in terms of our economic interest as of December 31, 2009.*

 

Weare a Chilean company with electricity generation assets, and with subsidiariesand unconsolidated equity investments engaged primarily in the generation,transmission and distribution of electricity in Chile, Argentina, Brazil,Colombia and Peru.  As of the date of this report, our direct controllingentity, Enersis S.A. (Enersis), owns a 60.0% stake in our company. ENDESA, S.A. (Endesa Spain), in turn, holds a 60.6% beneficialinterest in Enersis.  Enel S.p.A., an Italian electricity generation anddistribution company, owns 92.1% of Endesa Spain through a wholly-ownedsubsidiary.

 

**Financial Information**

 

Inthis report on Form 20-F, unless otherwise specified, references to “dollars,”“$,” are to dollars of the United States of America; references to “pesos” or “Ch$”are to Chilean pesos; the legal currency of Chile; references to “Ar$” or “Argentinepesos” are to the legal currency of Argentina; references to “R$,”  or “reais”are to Brazilian reals, the legal currency of Brazil; references to “soles” areto Peruvian Nuevo Sol, the legal currency of Peru; references to “CPs” or “Colombianpesos” are to the legal currency of Colombia; references to “€” or “Euros” areto the legal currency of the European Union; and references to “UF” are to *Unidades de**Fomento*.

 

The*Unidad de Fomento* is a Chileaninflation-indexed, peso-denominated monetary unit.  The UF rate is setdaily in advance based on changes in the previous month’s inflation rate. As of December 31, 2009, UF 1 was equivalent toCh$ 20,942.88.  The dollar equivalent of UF 1 was $ 41.30at December 31, 2009, using the Observed Exchange Rate reported by the *Banco Central de Chile* (the “Chilean CentralBank,” or the “Central Bank”) as of December 31, 2009 of Ch$ 507.10per $ 1.00.  As of May 31, 2010, UF 1 was equivalentto Ch$ 21,112.41.  The dollar equivalent of UF 1 was$ 39.79 for May 31, 2010, using the Observed Exchange Ratereported by the Central Bank of Ch$ 530.62 per $ 1.00.

 

Our Consolidated FinancialStatements and, unless otherwise indicated, other financial informationconcerning to our Group included in this report are presented in pesos.  Until the year ended December 31, 2008,Endesa Chile prepared its financial statements in accordance withgenerally accepted accounting principles in Chile (Chilean GAAP).  Inaccordance with the rules of the Superintendence of Securities andInsurance (SVS), for 2009, Endesa Chile has prepared its financialstatements in accordance with International Financial Reporting Standards(IFRS), as issued by the International Accounting Standard Board (IASB). The opening IFRS statement of financial position was prepared as ofJanuary 1, 2008.  A description of the principal differences betweenChilean GAAP and IFRS applicable to Endesa Chile, a reconciliation of ourshareholders’ equity as of January 1 and December 31, 2008, and areconciliation to the net income for the year ended December 31, 2008 fromChilean GAAP to IFRS, are included in Note 36 to our Consolidated FinancialStatements.

 

The subsidiaries areconsolidated and all their assets, liabilities, income, expenses and cash flowsare included in the consolidated financial statements after making the adjustmentsand eliminations related to intra-Group transactions.

 

Jointly-controlled entities,which are those that do not have a controlling shareholder but which aregoverned by a joint management agreement, are consolidated by the proportionalintegration method.  Endesa Chilerecognizes, line by line, its share of the assets, liabilities, income andexpenses of such entities, so that the aggregation of balances and subsequenteliminations, takes place only in the proportions of Endesa Chile’s shares inthem.

 

Investmentsin associates over which the Company entities are recorded in our ConsolidatedFinancial Statements under the equity method.

 

Fordetailed information regarding subsidiaries, jointly-controlled entities andassociates see Appendix No. 1 of the Consolidated Financial Statements.

 

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Forthe convenience of the reader, this report contains translations of certainpeso amounts into dollars at specified rates.  Unless otherwise indicated,the dollar equivalent for information in pesos is based on the ObservedExchange Rate, as defined in “Item 3. Key Information—A. Selected FinancialData—Exchange Rates” as of December 31, 2009.  The Federal ReserveBank of New York does not report a noon buying rate for pesos.  No representationis made that the peso or dollar amounts shown in this report could have been orcould be converted into dollars or pesos, as the case may be, at such rate orat any other rate.  See “Item 3. Key Information—A. Selected FinancialData—Exchange Rates.”

 

**Technical Terms**

 

Referencesto “GW” and “GWh” are to gigawatt and gigawatt hours, respectively; referencesto “MW” and “MWh” are to megawatts and megawatt hours, respectively; referencesto “kW” and “kWh” are to kilowatts and kilowatt hours, respectively; referencesto “kV” are to kilovolts, and references to “MVA” are to megavoltamperes.  Unless otherwise indicated, statistics provided in this reportwith respect to electricity generation facilities are expressed in MW, in thecase of the installed capacity of such facilities.  One TW = 1,000 GW,one GW = 1,000 MW, and one MW = 1,000 kW.  Statisticsrelating to aggregate annual electricity production are expressed in GWh andare based on a year of 8,760 hours, except for 2008, a leap year, based on8,784 hours.  Statistics relating to installed capacity andproduction of the electricity industry do not include electricity ofself-generators.  Statistics relating to our production do not includeelectricity consumed by us from our generators.

 

Energylosses experienced by generation companies during transmission are calculatedby subtracting the number of GWh of energy sold from the number of GWh ofenergy generated (excluding own energy consumption and losses of the powerplant), within a given period. Losses are expressed as a percentage of totalenergy generated.

 

**Calculation of Economic Interest**

 

Referencesare made in this report to the “economic interest” of Endesa Chile and itsrelated companies.   In circumstances where we do not directly own aninterest in a related company, our economic interest in such ultimate relatedcompany is calculated by multiplying the percentage economic interest in adirectly held related company by the percentage economic interest of any entityin the ownership chain of such related company.  For example, if we own60% of a directly held subsidiary and that subsidiary owns 40% of an associate,our economic interest in such associate would be 24%.

 

**Forward-Looking Statements**

 

Thisreport contains statements that are or may constitute forward-lookingstatements.  These statements appear throughout this report and includestatements regarding our intent, belief or current expectations, including, butnot limited to, any statements concerning:

 

·                  our capital investment program;

 

·                  trends affecting our financial condition orresults from operations;

 

·                  our dividend policy;

 

·                  the future impact of competition andregulation;

 

·                  political and economic conditions in thecountries in which we or our related companies operate or may operate in thefuture;

 

·                  any statements preceded by, followed by orthat include the words “believes,” “expects,” “predicts,” “anticipates,” “intends,”“estimates,” “should,” “may” or similar expressions; and

 

·                  other statements contained or incorporated byreference in this report regarding matters that are not historical facts.

 

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Becausesuch statements are subject to risks and uncertainties, actual results maydiffer materially from those expressed or implied by such forward-lookingstatements.  Factors that could cause actual results to differ materiallyinclude, but are not limited to:

 

·                  changes in the regulatory framework for theelectric industry in one or more of the countries in which we operate;

 

·                  our ability to implement proposed capitalexpenditures, including our ability to arrange financing where required;

 

·                  the nature and extent of future competitionin our principal markets;

 

·                  political, economic and demographicdevelopments in the emerging market countries of South America where we conductour business; and

 

·                  the factors discussed below under “RiskFactors.”

 

Youshould not place undue reliance on such statements, which speak only as of thedate that they were made.  Our independent public accountants have notexamined or compiled the forward-looking statements and, accordingly, do notprovide any assurance with respect to such statements.  You shouldconsider these cautionary statements together with any written or oralforward-looking statements that we may issue in the future.  We do notundertake any obligation to release publicly any revisions to forward-lookingstatements contained in this report to reflect later events or circumstances orto reflect the occurrence of unanticipated events.

 

Forall these forward-looking statements, we claim the protection of the safeharbor for forward-looking statements contained in the Private Securities LitigationReform Act of 1995.

 

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PART I

 

**Item 4.   Information on the Company**

 

**A.           History and Development of the Company.**

 

***Incorporation and ContactInformation of the Company***

 

EmpresaNacional de Electricidad S.A. (Endesa Chile) is a publicly held limitedliability stock company incorporated under the laws of the Republic of Chile onDecember 1, 1943.  Since 1943, the Company has been registeredin Santiago with the SVS under Registration No. 0114.  The Company iscommercially referred to as both Endesa and Endesa Chile.

 

TheCompany’s contact information in Chile is:

 
| Main  office:     | Santa  Rosa 76, Santiago, Chile       |
|-------------------|---------------------------------------|
| Mailing  Address: | Código  Postal 8330099, Santiago |
| Telephone:        | (562)  630-9000                       |
| Fax:              | (562)  635-3938                       |

 

TheCompany’s authorized representative in the United States of America isPuglisi & Associates, whose contact information is:

 
| Main  office:     | 850  Library Avenue, Suite 204, Newark, Delaware |
|-------------------|-------------------------------------------------------|
| Mailing  Address: | P.O. Box  885, Newark, Delaware, 19711           |
| Telephone:        | (1-302)  738-6680                                     |
| Fax:              | (1-302)  738-7210                                     |

 

***Development of the Company***

 

TheChilean government owned Endesa Chile from its incorporation in 1943 until wewere privatized in 1987 through a series of public offerings which werecompleted in 1989.

 

InMay 1992, Endesa Chile began its international expansion program with thefollowing developments:

 

·                  we acquired a stake in Endesa Costanera in1992 and later, in August 1993, we acquired a controlling equity interestin El Chocón, both in Argentina; in March 2007 Endesa Chile increased itsequity interest in El Chocón from 47.44% to 65.37% and in Endesa Costanera from64.26% to 69.76%.

 

·                  we acquired Edegel in Peru inOctober 1995; in June 2006, there was a merger between Edegel andEtevensa, after which Endesa Chile’s equity interest became 33.06% of itsPeruvian assets.  In October 2009, we purchased an additional 29.4%of Edegel from Generalima, a Peruvian indirect subsidiary of EndesaSpain.  With this transaction, we increased our economic interest inEdegel to 62.46%.

 

·                  we acquired Betania and Emgesa, both inColombia, in December 1996 and in October 1997, respectively. InSeptember 2007 both subsidiaries were merged into Betania, which thenchanged its name back to Emgesa S.A. E.S.P.; as of December 2009Endesa Chile’s equity interest in Emgesa was 26.9%. Due to a shareholders’agreement, Endesa Chile controls Emgesa.

 

·                  we acquired Cachoeira Dourada in Brazil inSeptember 1997 and in 1998 we and Endesa Spain invested in CIEN whichoperates an international transmission line connecting Brazil andArgentina.  Since October 2005, Cachoeira Dourada and CIEN have beensubsidiaries of Endesa Brasil.

 

OnMarch 26, 2007, Spanish company Acciona, S.A. (Acciona) and Italiancompany Enel, executed an agreement for the joint management of Spanishcompany, Endesa Spain.  The latter, through its Spanish subsidiaryEndesa Latinoamérica, holds 60.6% of the share capital of Enersis, whichin turn holds 60% of the share capital of Endesa Chile.

 

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OnFebruary 20, 2009, Acciona and Enel, reached an agreement whereby Accionawould transfer directly and indirectly to Enel Energy Europe S.L., wholly ownedby Enel, its 25.0% shareholding in Endesa Spain, subject to certainconditions, which were subsequently met.  In accordance with the agreement,Enel paid Acciona € 9,627 million.  The amount was determined bysubtracting the dividends distributed by Endesa Spain and received byAcciona after February 20, 2009 (€ 1,561 million) from the cashconsideration of the agreement established on that same date (€ 11,107million) and adding interest accrued as from the agreement date (€ 81million).  On June 25, 2009, the shares were transferred, making Enelthe ultimate controller of Enersis by virtue of its 92.1% shareholding in Endesa Spain. This transaction was reported to the Spanish National Securities MarketCommission (CNMV in its Spanish acronym) as material information on the samedate.  In addition, during 2009, Endesa Spain transferred to Accionacertain wind and hydroelectric energy generation assets in Spain and Portugalpriced at € 2,814 million.

 

OnJune 25, 2009, the shares and assets were transferred, making Enel theultimate controller of Endesa Chile by virtue of its 92.1% shareholding inEndesa Spain.  This transaction was reported to the Spanish NationalSecurities Market Commission (CNMV in its Spanish acronym) as materialinformation on the same date.

 

***Recent Developments:***

 

OnJanuary 28, 2010 we held three bondholder meetings for our Chilean bondsdenominated in UF, with the purpose of carrying out certain proposedamendments.  The bondholders approved the amendments, which dealt withboth technical adjustments for setting the proper financial covenants as aconsequence of the adoption of IFRS on January 1, 2009, as well as newborrower-friendly language on certain cross acceleration andbankruptcy/insolvency clauses.  After giving legal effect to suchamendments on March 10, 2010, all series of our Chilean bonds referenceonly the borrower, and no longer reference any of our subsidiaries in Chile andabroad, in these Event of Default provisions.

 

On February 27, 2010,Chile experienced a major earthquake measuring 8.8 on the Richter scale, in theBío-Bío Region, followed by a tsunami.  Few of our facilities were affected,and the Company did not suffer any casualty.  However, our thermalgeneration plants Bocamina I (128 MW) and Bocamina II(370 MW, still under construction), which are located near the epicenter,presented some damages, causing the interruption of operations in the formerplant and a delay in the construction on the latter.  Bocamina Irepresents 2% of our generating capacity in Chile.  The earthquake did notaffect the feasibility of the new Bocamina II project.  The main contractor of the project hasestimated a nine month delay from the original estimated completion date due tothe earthquake, with a start up date rescheduled for September 2011, andhas presented to the insurance company an estimated damage loss of$ 20 million, the amount necessary to repair physical damages.  Additionally, there may be a profit lossassociated with the delay of the commissioning date, given the revenues thatthe Company was unable to realize because of such delay.  This potential profit loss is subject toseveral variables, such as the level of prevailing hydrology and actual demandfor electricity in the SIC during this period, which cannot be predicted inadvance.  This profit loss can only becalculated once the plant starts operations. The rest of our generating facilities in the country were impactedwithin the limits of the original design, and there was no disruption in theirnormal operations.

 

Damages experienced by someof our customers affected our business, due to the impact on electricitydemand.  Also, some suppliers (such asTranselec, a transmission company not owned by us) experienced difficulties intheir facilities, with negative effects on our capacity to effectively deliverelectricity to our clients.  We haveinsurance policies which provide us coverage (while in compliance with ourproperty policy), including property damages, business interruptions andcontingent business interruptions (i.e., attributable to our customers and/orsuppliers).  In the case ofBocamina II, we also have insurance for the construction phase of ourprojects, covering damages and advance loss of profits for up to two years.  Our claim is currently under the insurancecompany adjuster’s analysis.  All theseinsurance policies have their customary deductibles.  There may be an important time lag until wefinally receive total compensation.

 

Foradditional information, see “ —D. Property Plants and Equipment.”

 

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***Investments, Capital Expendituresand Divestitures***

 

*Investments in Chile*

 

Ourcapital expenditures and investments during 2009 amounted to $ 760.3million, of which $ 551.0 million corresponds to expansion, primarily inChile, and $ 209.2 million to capital expenditure maintenance in all ouroperating subsidiaries.  As of December 31, 2009, our expectedcapital expenditures amount to approximately $ 2.2 billion over the nextfive years ending on December 31, 2014.  Although we haveconsidered how these investments will be financed as part of the Company’sbudget process, we have not committed to any particular financial structure andthe financing will depend on the market conditions at the time the cash flowsare needed.

 

ReinforcingEndesa Chile’s commitment with sustainability and with itsnon-conventional renewable energy (NCRE) project development initiatives, andfollowing the commercial start-up of the Canela 18 MW wind farm inDecember 2007, our subsidiary Endesa Eco completed the commissioning of 40wind generators of the wind farm Canela II on November 25, 2009, therebyadding 60 MW of new capacity in the *SistemaInterconectado Central* (SIC), with an investment of approximately$ 150 million.  Commercial operations started on December 11,2009.

 

With respect to the QuinteroLNG project, in which Endesa Chile holds a 20% stake in the re-gasificationterminal, the “Early Gas” phase started commercial operations on September 12, 2009,requiring the presence in port of the tanker to operate the re-gasificationplant.  This re-gasification plant is already operating in a fast-trackmode, and plans to be fully operational in its total storage capacity inAugust 2010.  Total investment forthis project is approximately $ 1.1 billion.

 

OnJune 20, 2009 the first unit of the Quintero thermal plant project, whichEndesa Chile built in the Valparaíso Region, successfully made its firstsynchronization with the SIC, beginning its commercial operations onJuly 23, 2009.  The second unit successfully made its synchronizationwith the SIC on August 28, 2009 and has been in commercial operationssince September 4, 2009.  This project, located on a site alongsidethe Quintero re-gasification plant, has a declared capacity of 257 MW, andwill operate with either natural gas or with diesel oil. Total investment wasapproximately $ 140 million.  Works continue for the construction ofthe Bocamina II coal-fired plant in Coronel, in the Bío-Bío Region.  Witha capacity of 370 MW, it will be equipped with the latestemission-reduction technologies and it is estimated that the start-up will bein June 2011.

 

*Investments in Argentina*

 

In Argentina, oursubsidiaries Endesa Costanera S.A. and Hidroeléctrica El Chocón S.A.,carried out investments between 2004 and 2007 in the *Fondo Para Inversiones Necesarias Que Permitan Incrementar La Oferta DeEnergía Eléctrica En El Mercado Eléctrico Mayorista* (Foninvemem),which translated into a 21% shareholding in *TermoeléctricaJosé de San Martín S.A.* (San Martín) and *Termoeléctrica Manuel Belgrano S.A.*(ManuelBelgrano), corresponding to two 800 MW combined-cycle plants.  Bothplants started operating in open cycle during 2008.  The closing of thecycles (combined-cycle operation) took place in January 2010 in the caseof the Manuel Belgrano plant and in February 2010 in the case of the Joséde San Martín plant.

 

*Investments in Colombia*

 

InColombia, following the conclusion of the Firm Energy Obligation process (see “—B. Business Overview—Electricity Industry Regulatory Framework”) for theprojects, which start operations between December 2014 andNovember 2019, in June 2009, the Colombian Ministry of Mines andEnergy chose Emgesa’s El Quimbo hydroelectric project, with a capacity of400 MW.  In line with the project’s schedule, the principal civilworks and equipment supply and assembly contracts are currently in their tenderprocesses, in order to estimate the required investment.

 

*Investments in Peru*

 

InJanuary 2008, Edegel signed a turnkey contract with Siemens PowerGeneration for the installation of a 189 MW turbine at the Santa Rosaplant, to operate with natural gas from Camisea.  On September 2,2009, the turbine started its commercial operations with a capacity of193 MW, with an investment of approximately $ 90 

 

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million. On November 28, 2009, an increase of 7 MW was recognized,reaching a total capacity of 200 MW, allowing Edegel to increase itsinstalled capacity to 1,667 MW, thereby enabling it to meet the Peruvianmarket demand growth.  Also, in October 2009, we purchased a 29.4%stake of Edegel for $ 375 million.  With this transaction, weincreased our economic interest in Edegel from 33.1% to 62.5%.

 

Thetable below sets forth the capital expenditures made by our subsidiaries in2008-2009 and expected capital expenditures for the period 2010-2014

 

**CAPITAL EXPENDITURES OF ENDESA CHILE AND ITSSUBSIDIARIES**

 
| ** ** | ** ** | **(in million of Ch$)** | ** ** |
|------------|------------|----------------------------------------|------------|
| ** ** | ** ** | **2008**                               | ** ** | **2009** | ** ** | **2010-2014** | ** ** |
| **Total**  |       | 357,932                                |       | 385,535 |   | 1,240,640 |   |

 

Wehave carried out some investments, divestitures and other reorganizations inthe last three years including the following:

 

·                  *CentralesHidroeléctricas de Aysén S.A.*, (HidroAysén), a long-terminvestment company, was formed in September 2006.  Endesa Chile has a51% holding and Colbún S.A. holds the remaining 49%.  Theenvironmental impact assessment (EIA) for the 2,750 MW hydroelectricproject was submitted to the environmental authority in August 2008. The EIA was prepared by an international consortium comprised of SWECO, POCHAmbiental and EPS.  The EIA is in process and the first request forclarifications has been issued, for which the company submitted its response inOctober 2009.  In January 2010, HidroAysén received a seconddocument with observations from local environmental authorities, and thecompany requested a suspension from the process until June 2010 in orderto better respond to such observations.

 

·                  In February 2007, Endesa acquired19,574,798 common shares from Southern Cone Power Argentina S.A., whichholds 5.5% of the share capital of Endesa Costanera.  The investmentwas for $ 9.5 million.  As a result of this purchase,Endesa Chile’s beneficial interest in Endesa Costanera increased from64.3% to 69.8%.

 

·                  In March 2007, Endesa Chileacquired a total of 4,467,500 shares from CMS Generation Co. and CMS GenerationS.R.L., representing 25% of the share capital of Hidroinvest S.A., theArgentine holding company and controller of El Chocón, and also acquired7,405,768 direct shares of El Chocón.  The total purchase price was$ 50 million, which included the debt that Hidroinvest S.A. owedto CMS.  With this purchase, the beneficial interest of Endesa Chile inHidroinvest S.A. increased from 69.9% to 96.1%, and strengthens ourcontrol of El Chocón, which is 59%-controlled by Hidroinvest S.A.  Asa result of the foregoing share purchases, Endesa Chile increased itsbeneficial interest in El Chocón from 47.4% to 65.4%.

 

·                  In June 2007, Endesa Chile notifiedCMS Enterprises Company (CMS) of its decision to exercise its right of firstoffer granted by CMS for their interests in the companies and vehicles thatconform GasAtacama.  On this same date, Endesa Chile and SouthernCross Latin America Private Equity Fund III, L.P. (Southern Cross)executed a sale and purchase agreement for 50% of the participation of EndesaChile in GasAtacama and of the sponsor loans associated with thisparticipation, to the Southern Cross fund.  As a result of the foregoing,Endesa Chile and Southern Cross each own 50% of GasAtacama.

 

·              In September 2007 the Colombian companiesEmgesa S.A. E.S.P. and Central HidroeléctricaBetania S.A. E.S.P. were merged into the latter, which then changedits name back to Emgesa S.A. E.S.P. (Emgesa).  As a result,Endesa Chile’s direct and indirect shareholding in Emgesa is 26.9%. This newcorporate structure offers advantages involving better financial terms for ourColombian operations.

 

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**B.           Business Overview.**

 

We are publicly held limitedliability stock electric generation company with consolidated operations inChile, Argentina, Colombia and Peru and an equity interest in a Braziliancompany.  Our core business is electricity generation.  We also participatein the engineering services industry and have a tunnel concession inChile.  The low proportion of non-generation contribution, less than 1.5%in terms of revenues, does not justify the breakdown of revenues per activity.

 
| ** **                             | ** ** | **Year ended  December 31,**                                               | ** ** |
|----------------------------------------|------------|----------------------------------------------------------------------------|------------|
| **Revenues**                           | ** ** | **2008**                                                                   | ** ** | **2009** | ** ** | **%  Change** | ** ** |
| ** **                             | ** ** | **(in million of Ch$ , except percentages)** | ** ** |
| Generation (Chile)                     |       | 1,605,337                                                                  |       | 1,369,647 |   | (14.7 | ) |
| Other businesses (Chile)               |       | 36,857                                                                     |       | 39,001 |   | 5.8 |   |
| Argentina                              |       | 284,228                                                                    |       | 296,578 |   | 4.3 |   |
| Colombia                               |       | 401,470                                                                    |       | 500,964 |   | 24.8 |   |
| Peru                                   |       | 208,497                                                                    |       | 213,625 |   | 2.5 |   |
| Consolidated Adjustments  Foreign Subs |       | —                                                                     |       | (897 | ) |   |   |
| **Total  Revenues**                    |       | 2,536,388                                                                  |       | 2,418,919 |   | (4.6 | ) |

 

For further informationrelated to operating revenue and total income by business segment, see “Item 5.Operating and Financial Review and Prospects — A. Operating Results” and note31 to our Consolidated Financial Statements.

 

Ourconsolidated installed capacity, as of December 31, 2009, was13,864 MW, with 57.6% hydroelectric capacity, 41.8% thermal electric and0.6% wind power generation capacity.  Total installed capacity is definedas the maximum power capacity (measured in MW generation units), under specifictechnical conditions and characteristics.

 

We own and operate 29generation facilities in Chile with an aggregate installed capacity, as ofDecember 31, 2009, of 5,650 MW, 6.9% higher compared to the5,283 MW in 2008.  The difference in 390 MW in the 2008 figure,compared to the total installed capacity disclosed in the 2008 Form 20-F,is explained by the consolidation of 50% of the capacity of GasAtacama, ajointly controlled company, into Endesa Chile’s financial statements dueto the adoption of IFRS in January 2009, which requires for proportionalconsolidation of owned joint ventures.  Thischange also explains differences in other 2008 figures such as physical sales,generation, purchases, installed capacity, main customers and power plants inChile.

 

The most important increasesin our total installed capacity in Chile were mainly due to the start-up ofcommercial operations of the LNG terminal; the incorporation of Quintero(257 MW, thermal) in September 2009; the increase in installedcapacity of San Isidro 2 (from 353 to 399 MW) in December 2009.  Also the incorporation of Canela II(60 MW, wind farm) in December 2009 contributed to the increasedcapacity.

 

Quintero’sproject started operations with a 129 MW unit in July 2009, and witha second 128 MW unit in September 2009.  Canela II has 40generators which, in addition to the 11 initial Canela generators, representthe biggest wind farm in Chile with 78 MW.

 

Weaccounted for 37.4% of Chile’s total generation capacity as ofDecember 31, 2009, measured by the maximum capacity calculated byCDEC-SIC.  Hydroelectric installed capacity represents 61.3% of EndesaChile’s total installed capacity in Chile; thermoelectric installed capacity,37.3% and wind power, 1.4%.  The CDEC is the electricity dispatch center**in the corresponding electricsystem.  See “— B. Business Overview — Electricity Industry andRegulatory Framework.”

 

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As of December 31,2009, we also had interests in 25 generation facilities outside of Chile withan aggregate installed capacity of 8,214 MW, 2.5% higher compared to8,014 MW in 2008.  The main change in our total installed capacityoutside Chile is in Peru with the thermal unit Santa Rosa TG8 which startedoperations in September 2009 with 193 MW and an additional 7 MWsince November 2009 (for a total of 200 MW).  For additionaldetail on capacity increase of these units see “— D. Property, Plant andEquipment.”  Hydroelectric installed capacity outside Chile represents55.1% of Endesa Chile’s total installed capacity outside Chile.  Based on 2009 figures, the Company’s installedgeneration capacity in Argentina, Colombia and Peru represents approximately14%, 21% and 29% of total capacity in each country, respectively.

 

**ENDESA CHILE’S CONSOLIDATED HYDRO/THERMAL GENERATION(GWh)(2)**

 
| ** **               | ** ** | **Year ended December 31,** | ** ** |
|--------------------------|------------|--------------------------------------------|------------|
| ** **               | ** ** | **2007**                                   | ** ** | **2008 (1)** | ** ** | **2009** | ** ** |
| ** **               | ** ** | **(GWh)**                                  | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Hydroelectric generation |       | 32,687                                     |       | 65 |   | 32,297 |   | 61 |   | 34,873 |   | 63 |   |
| Thermal generation       |       | 17,796                                     |       | 35 |   | 20,409 |   | 39 |   | 20,063 |   | 36 |   |
| Other generation (3)     |       | 3                                          |       | 0 |   | 49 |   | 0 |   | 94 |   | 0 |   |
| **Total generation**     |       | 50,486                                     |       | 100 |   | 52,754 |   | 100 |   | 55,030 |   | 100 |   |

 

----

| (1) | The  difference in the values reported in our 2008 Form 20-F is explained by  the incorporation of the mini hydro Ojos de Agua into the item “Other  generation” and the consolidation of GasAtacama. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Generation  minus power plants’ own consumption and technical losses.                                                                                                                                           |
| (3) | Other  generation refers to the generation of the subsidiary Endesa Eco (Renewable  energy: mini hydro *Ojos de Agua*  and wind farms Canela and Canela II)                                                     |

 

Ourconsolidated electricity production reached 55,030 GWh in 2009, 4.3%higher than the 52,754 GWh produced in 2008.  Colombia was the onlycountry which reduced its generation, from 12,905 GWh in 2008 to12,674 GWh in 2009, a decrease of 1.8%.  Argentina was the countrywhich most increased generation, from 10,480 GWh in 2008 to11,955 GWh in 2009, an increase of 14.1%.  Hydroelectric generationin 2009 in the four countries in which we consolidate the results from ouroperations was 8% higher than in 2008 and thermal generation in 2009 was 1.7%lower than in 2008.

 

Ourconsolidated physical energy sales for 2009 were 59,859 GWh, 4.2% higherthan our consolidated physical energy sales of 57,458 GWh in2008.   The main increases in sales were in Argentina and Chile, and themain reduction was in Peru, as illustrated in the following table:

 

**ENDESACHILE PHYSICAL DATA PER COUNTRY**

 

| ** **                                   | ** ** | **As of and for the year ended December 31** | ** ** |
|----------------------------------------------|------------|--------------------------------------------------------------------------------------|------------|
| ** **                                   | ** ** | **2007**                                                                             | ** ** | **2008** | ** ** | **2009** | ** ** |
| **Argentina**                                |       |                                                                                 |       |   |   |   |   |
| Number of generating facilities (1)          |       | 5                                                                                    |       | 5 |   | 5 |   |
| Installed capacity (MW) (2)                  |       | 3,644.1                                                                              |       | 3,652.1 |   | 3,652.1 |   |
| Energy generated (GWh) (3)                   |       | 12,117.1                                                                             |       | 10,480.2 |   | 11,954.6 |   |
| Energy sales (GWh)                           |       | 12,406.3                                                                             |       | 11,097.7 |   | 12,405.3 |   |
| **Chile**                                    |       |                                                                                 |       |   |   |   |   |
| Number of generating facilities (1) (4) |       | 25                                                                                   |       | 27 |   | 29 |   |
| Installed capacity (MW) (2) (4)         |       | 4,779.2                                                                              |       | 5,283.2 |   | 5,650.2 |   |
| Energy generated (GWh) (3)                   |       | 18,773.0                                                                             |       | 21,267.1 |   | 22,239.4 |   |
| Energy sales (GWh)                           |       | 19,212.1                                                                             |       | 21,531.9 |   | 22,326.6 |   |

 

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| **Colombia**                                 |   |     |   |     |   |     |   |
|----------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Number of generating facilities (1)          |   | 11       |   | 11       |   | 11       |   |
| Installed capacity (MW) (2)                  |   | 2,828.7  |   | 2,894.7  |   | 2,894.7  |   |
| Energy generated (GWh) (3)                   |   | 11,941.8 |   | 12,905.1 |   | 12,673.6 |   |
| Energy sales (GWh)                           |   | 15,613.1 |   | 16,367.9 |   | 16,806.2 |   |
| **Peru**                                     |   |     |   |     |   |     |   |
| Number of generating facilities (1) (4) |   | 9        |   | 9        |   | 9        |   |
| Installed capacity (MW) (2) (4)         |   | 1,469.0  |   | 1,466.8  |   | 1,667.2  |   |
| Energy generated (GWh) (3)                   |   | 7,654.4  |   | 8,101.9  |   | 8,162.8  |   |
| Energy sales (GWh)                           |   | 7,993.5  |   | 8,460.8  |   | 8,320.8  |   |
| **Total**                                    |   |     |   |     |   |     |   |
| Number of generating facilities (1)          |   | 50       |   | 52       |   | 54       |   |
| Installed capacity (MW) (2)                  |   | 12,721.0 |   | 13,296.8 |   | 13,864.2 |   |
| Energy generated (GWh) (3)                   |   | 50,486.3 |   | 52,754.3 |   | 55,030.4 |   |
| Energy sales (GWh)                           |   | 55,225.0 |   | 57,458.3 |   | 59,858.9 |   |

 

----

(1)   For details ongeneration facilities, see “ —D. Property Plants and Equipment.”

(2)   Total installedcapacity is defined as the maximum MW capacity of generation units, underspecific technical conditions and characteristics, in most cases confirmed bysatisfaction guarantee tests performed by equipment suppliers certified byBureau Veritas, an international independent certification company. Figures may differ from installed capacity declared to regulating authoritiesand customers in each country, according to criteria defined by each authorityand corresponding contractual frameworks.  We have not restated capacitiesbased on this certification.

(3)   Energygenerated defined as total generation minus own power plant consumption andtechnical losses.

(4)   San Isidro 2,Palmucho and Canela’s generation in Chile consolidated since April,November and December 2007, respectively; Quintero and Canela IIgeneration in Chile consolidated since July and December 2009,respectively; Santa Rosa TG8 ́s generation in Peru consolidated sinceNovember 2009.

 

Wesegment our sales to customers using two different categories.  First, wedistinguish between regulated and unregulated customers.  Regulatedcustomers are distribution companies who mainly serve residentialclients.  Unregulated customers, on the other hand, may freely negotiatethe price of electricity with generators or they may purchase electricity inthe pool market at the spot price.  The second criterion we use to segmentour customer sales is by contracted sales and non-contracted sales.  Thismethod is useful because it provides a uniform way for us to compare ourcustomers from country to country.  The countries in which we operate havevarying classifications for what constitutes a regulated customer.  Incontrast, contracted sales are defined uniformly throughout.

 

Ingeneral, in the countries in which we operate, the potential for contractingelectricity is related to the volume of electricity demand.  Customersidentified as small volume regulated customers, such as residentialcustomers, subject to government regulated electricity tariffs, must purchaseelectricity directly from a distribution company.  These distributioncompanies, which purchase large amounts of electricity for small residentialcustomers, generally enter into contractual agreements with generators at aregulated tariff price.  Those identified as large volume industrialcustomers also enter into contractual agreements with energy suppliers. However, such large volume industrial customers are not subject to the regulatedtariff price.  Instead, these customers are allowed to negotiate the priceof energy with generators based on the characteristics of the servicerequired.  Finally, the market pool, where energy is normally sold at thespot price, is not carried out through contractual agreements, but insteadcomplies with pool market operations.

 

Thefollowing table contains information regarding Endesa Chile’s consolidatedsales of electricity by type of customer for each of the periods indicated:

 

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**ENDESA CHILE CONSOLIDATED PHYSICAL SALES BY TYPE OFCUSTOMER (GWh)**

 
| ** **                    | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------|------------|--------------------------------------------|------------|
| ** **                    | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                    | ** ** | **Sales  (GWh)**                           | ** ** | **% of Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of Sales   Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of Sales  Volume** | ** ** |
| Regulated customers           |       | 22,881                                     |       | 41.4 |   | 24,479 |   | 42.6 |   | 25,517 |   | 42.6 |   |
| Unregulated customers         |       | 14,374                                     |       | 26.0 |   | 15,512 |   | 27.0 |   | 14,280 |   | 23.9 |   |
| Electricity pool market sales |       | 17,970                                     |       | 32.5 |   | 17,467 |   | 30.4 |   | 20,062 |   | 33.5 |   |
| **Total electricity sales**   |       | 55,225                                     |       | 100.0 |   | 57,458 |   | 100.0 |   | 59,859 |   | 100.0 |   |

 

Thespecific energy consumption limit (measured in GWh) for regulated andunregulated customers is country specific.  Moreover, regulatoryframeworks often require that regulated distribution companies have contractsto support their commitments to small customers and also determine whichcustomers can purchase energy in electricity pool markets.

 

Thefollowing table contains information regarding our consolidated physical salesof electricity per customer segment:

 

**ENDESA CHILE CONSOLIDATED PHYSICAL SALES PER CUSTOMERPRICE SEGMENT (GWh)**

 
| ** **                  | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|
| ** **                  | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                  | ** ** | **Sales  (GWh)**                           | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** |
| Contracted sales (1)        |       | 37,255                                     |       | 67.5 |   | 39,991 |   | 69.6 |   | 39,797 |   | 66.5 |   |
| Non-contracted sales        |       | 17,970                                     |       | 32.5 |   | 17,467 |   | 30.4 |   | 20,062 |   | 33.5 |   |
| **Total electricity sales** |       | 55,225                                     |       | 100.0 |   | 57,458 |   | 100.0 |   | 59,859 |   | 100.0 |   |

 

----

| (1) | Includes  the sales to distribution companies not backed by contracts in Chile and  Peru. |
|-----|-------------------------------------------------------------------------------------------|

 

In terms of expenses, theprimarily variable costs involved in the electricity generation business, inaddition to the direct variable cost of generating hydroelectric or thermalelectricity such as fuel costs, are energy purchases and transportation costs. During periods of relatively low rainfall conditions, the amount of ourthermal generation increases.  This not only involves increasing the totalcost of fuel, but also the cost of transporting that fuel to the thermalgeneration power plants.  Under drought conditions, electricity that wehave contractually agreed to provide may exceed the amount of electricity thatwe are able to generate, requiring us to purchase electricity in the poolmarket in order to satisfy our contractual commitments.  The cost of thesepool market purchases may, under certain circumstances, exceed the price atwhich we sell electricity under contracts, and result in a loss.  Weattempt to minimize the effect of poor hydrological conditions on ouroperations in any year primarily by limiting contractual sales requirements toan amount that does not exceed the estimated production in a “dry year.” In determining estimated production in a dry year, we take into accountavailable statistical information concerning rainfall and water flows, and thecapacity of key reservoirs.  In additionto limiting contracted sales, we may adopt other strategies such as installingtemporary thermal capacity, negotiating lower consumption levels withunregulated customers, negotiating with other water users and includingpass-through costs clauses in contracts with clients.

 

Thefollowing table contains information regarding our electricity generation andpurchases:

 

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**CONSOLIDATED PHYSICAL GENERATION AND PURCHASES (GWh)**

 
| ** **             | ** ** | **Year ended December 31,** | ** ** |
|------------------------|------------|--------------------------------------------|------------|
| ** **             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **             | ** ** | **Sales (GWh)**                       | ** ** | **% of Sales  Volume** | ** ** | **Sales (GWh)** | ** ** | **% of Sales  Volume** | ** ** | **Sales (GWh)** | ** ** | **% of Sales  Volume** | ** ** |
| Electricity generation |       | 50,486                                     |       | 89.8 |   | 52,754 |   | 90.5 |   | 55,030 |   | 90.6 |   |
| Electricity purchases  |       | 5,722                                      |       | 10.2 |   | 5,528 |   | 9.5 |   | 5,682 |   | 9.4 |   |
| **Total(1)**           |       | 56,208                                     |       | 100.0 |   | 58,282 |   | 100.0 |   | 60,712 |   | 100.0 |   |

 

----

| (1) | Total  energy generation (GWh) plus purchases differs from GWh sales due to  technical transmission losses in Chile and Peru, as the generation figure has  already deducted power plant consumption and technical losses of generation  units. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

We have a 50% beneficialinterest in GasAtacama Chile S.A. through which we participate in the gastransportation and thermal generation business in northern Chile.  SinceMarch 2008 we have a 51% beneficial interest in HidroAysén throughwhich we participate in a hydroelectric project in the Aysén Region.  Wealso participate in the gas transportation business in Chile through ourrelated company, Electrogas S.A.**(Electrogas),in which we have a 42.5% beneficial interest.  Electrogas owns a pipelinein the Valparaíso Region and supplies natural gas to the power plants SanIsidro and Nehuenco.  The other shareholders are Colbún S.A. andENAP.

 

Since September 2005,our participation in the Brazilian electricity business is carried out throughour equity investment in Endesa Brasil S.A, in which we have a beneficialinterest of 38.9%.  Endesa Brasil S.A. consolidates operations of twogeneration companies, *Central GeradoraTermeléctrica Endesa Fortaleza S.A.,*(Endesa Fortaleza),and Cachoeira Dourada; CIEN, which owns two transmission lines betweenArgentina and Brazil; CTM and TESA, subsidiaries of CIEN which own theArgentine side of the lines; and two distribution companies, *Ampla Energía e Servicos S.A.,*(Ampla),which is the second largest electricity distribution company in the State ofRio de Janeiro and Companhia Energética do Ceará S.A. (Coelce), which isthe sole electricity distributor in the State of Ceará.

 

***Operations in Chile***

 

We own and operate a totalof 29 generation plants in Chile directly and through our subsidiariesPehuenche, Pangue, San Isidro, Celta, Endesa Eco and our jointly controlledcompany GasAtacama.  Of these plants, 16 are hydroelectric, with a totalinstalled capacity of 3,465 MW.  This represents 61.3% of our totalinstalled capacity in Chile.  There are eleven thermal plants whichoperate with gas, coal or oil with a total installed capacity of 2,107 MW,representing 37.3% of our total installed capacity in Chile, and there are twowind power units with 78 MW in the aggregate, representing 1.4% of ourtotal installed capacity in Chile.  Twenty-six (16 hydroelectric, 8thermoelectric and 2 wind power plants) of our plants are connected to thecountry’s major interconnected electricity systems, *Sistema Interconectado Central,*or the SIC*,* and the other three power plants(GasAtacama and two units of Celta) are connected to the*Sistema Interconectado del Norte Grande*,or the SING.

 

Thefollowing table sets forth the installed generation capacity for each of theCompany’s Chilean subsidiaries:

 

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**INSTALLED CAPACITY PER SUBSIDIARY IN CHILE (MW) (1)**

 
| ** ** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|
| Endesa     |       | 3,034    |       | 3,139    |       | 3,446    |       |
| Pehuenche  |       | 699      |       | 699      |       | 699      |       |
| Pangue     |       | 467      |       | 467      |       | 467      |       |
| San Isidro |       | 379      |       | 379      |       | 379      |       |
| Celta      |       | 182      |       | 182      |       | 182      |       |
| GasAtacama |       | —   |       | 390      |       | 390      |       |
| Endesa Eco |       | 18       |       | 27       |       | 87       |       |
| **Total**  |       | 4,779    |       | 5,283    |       | 5,650    |       |

 

----

| (1) | The  installed capacity was certified by Bureau Veritas. |
|-----|----------------------------------------------------------|

 

Ourtotal electricity generation in Chile (in both the SIC and the SING) reached22,239 GWh in 2009, 4.6% higher than in 2008, and accounted forapproximately 39.1% of total electricity production in Chile during 2009.

 

Thefollowing table sets forth the electricity generation for each of our Chileansubsidiaries:

 

**ELECTRICITY GENERATION IN CHILE (GWh)**

 
| ** ** | ** ** | **Year ended December 31,** | ** ** |
|------------|------------|--------------------------------------------|------------|
| ** ** | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| Endesa     |       | 11,093                                     |       | 12,204 |   | 12,265 |   |
| Pehuenche  |       | 3,437                                      |       | 3,589 |   | 3,613 |   |
| Pangue     |       | 1,351                                      |       | 1,763 |   | 2,113 |   |
| San Isidro |       | 1,956                                      |       | 1,289 |   | 1,616 |   |
| Celta      |       | 933                                        |       | 912 |   | 981 |   |
| GasAtacama |       | —                                     |       | 1,460 |   | 1,558 |   |
| Endesa Eco |       | 3                                          |       | 49 |   | 94 |   |
| **Total**  |       | 18,773                                     |       | 21,267 |   | 22,239 |   |

 

Hydroelectricgeneration in 2009 was 7.7% higher than in 2008.  The potential energy inreservoirs at December 31, 2009 was 2% higher than atDecember 31, 2008, as shown in the following table.

 
| ** **    | ** ** | **Year ended December 31,** | ** ** |
|---------------|------------|--------------------------------------------|------------|
| ** **    | ** ** | **2008**                                   | ** ** | **2009** | ** ** | ** ** | ** ** |
| ** **    | ** ** | **(GWh)**                                  | ** ** | **(GWh)** | ** ** | **% Change** | ** ** |
| **Reservoir** |       |                                       |       |   |   |   |   |
| Laja          |       | 3,107                                      |       | 3,045 |   | -2 |   |
| Maule         |       | 1,111                                      |       | 957 |   | -14 |   |
| Chapo         |       | 266                                        |       | 372 |   | 40 |   |
| Colbún   |       | 406                                        |       | 485 |   | 19 |   |
| Ralco         |       | 398                                        |       | 484 |   | 22 |   |
| Invernada     |       | 296                                        |       | 314 |   | 6 |   |
| Rapel         |       | 60                                         |       | 76 |   | 26 |   |
| Melado        |       | 9                                          |       | 13 |   | 44 |   |
| **Total**     |       | 5,652                                      |       | 5,746 |   | 2 |   |

 

Hydroelectricgeneration accounted for 66.7% of our total electricity generation in 2009compared with the 64.8 of 2008.  Generation by type in Chile is shown inthe following table:

 

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**ENDESA CHILE HYDRO/THERMAL GENERATION IN CHILE (GWh)**

 
| ** **               | ** ** | **Year ended December 31,** | ** ** |
|--------------------------|------------|--------------------------------------------|------------|
| ** **               | ** ** | **2007**                                   | ** ** | **2008 (1)** | ** ** | **2009** | ** ** |
| ** **               | ** ** | **Generation  (GWh)**                      | ** ** | **%** | ** ** | **Generation  (GWh)** | ** ** | **%** | ** ** | **Generation  (GWh)** | ** ** | **%** | ** ** |
| Hydroelectric generation |       | 13,179                                     |       | 70.2 |   | 13,766 |   | 64.7 |   | 14,826 |   | 66.7 |   |
| Thermal generation       |       | 5,591                                      |       | 29.8 |   | 7,453 |   | 35.0 |   | 7,319 |   | 32.9 |   |
| Other generation (2)     |       | 3                                          |       | 0.0 |   | 49 |   | 0.2 |   | 94 |   | 0.4 |   |
| **Total generation**     |       | 18,773                                     |       | 100.0 |   | 21,267 |   | 100.0 |   | 22,239 |   | 100.0 |   |

 

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(1)   The differencesin the generation of 2008 compared to last year’s Form 20-F are explainedby the incorporation of the mini hydro Ojos de Agua into the item “Othergeneration” and also to the consolidation of 50% of GasAtacama as previouslyexplained in this report.

(2)   Othergeneration refers to the generation of the subsidiary Endesa Eco (Renewableenergy: mini hydro Ojos de Agua and wind power Canela and Canela II).

 

Ourthermal electric generation facilities are either gas, LNG, coal oroil-fired.  In order to satisfy our natural gas and transportationrequirements, we enter into long-term gas contracts with suppliers whoestablish maximum supply amounts and prices and long-term gas transportationagreements with the pipeline companies, currently Gas Andes and Electrogas (anEndesa Chile related company).  Since March 2008, all ofEndesa Chile’s natural gas units can operate with natural gas and dieseland since December 2009, San Isidro, San Isidro 2 and Quintero canoperate with LNG.

 

Becauseof the lack of Argentine gas since 2006, Endesa Chile has been using coaland diesel in an extensive way.  Diesel consumption during the last fouryears was 23,000 tons, 591,000 tons, 728,000 tons and 430,000tons in 2006, 2007, 2008 and 2009, respectively.  On the other hand, coalconsumption was 438,000 tons, 851,000 tons, 774,000 tons and760,000 tons in 2006, 2007, 2008 and 2009, respectively.

 

In May 2007, as part of a consortium with Enap,Metrogas and British Gas, in which Endesa Chile’s participation is 20%, weagreed to the construction of the LNG re-gasification facility in Quintero Bay,in order to deal with the lack of Argentine gas.

 

In July 2008, westarted the construction of a pipeline that supplies the gas obtained at there-gasification plant in Quintero to Quillota, San Isidro and otheroff-takers.  The pipeline is 28 km long and has a capacity of15 million m3/d.  The construction was completed inFebruary 2009 and partial fast-track commercial operations started onSeptember 2009; full commercial operations should begin inAugust 2010.

 

On June 29, 2009, the first ship with LNGarrived, and after that, another seven commercial ships arrived with LNG during2009.  Endesa Chile consumed 206 million m3 of LNG in2009.

 

Thermal Unit Quintero began partial commercialoperations in July 2009 and full commercial operations inSeptember 2009 using diesel fuel.  Partial commercial operationsburning LNG began in November 2009 and full commercial operations inDecember 2009.

 

Themain effects in the generation of Endesa Chile due to the incorporation of thisterminal are as follows: i) San Isidro 2 increased its installedcapacity from 353 MW to 399 MW; ii) San Isidro, SanIsidro 2 and Quintero may generate with LNG, reducing the operationalcosts and the environmental impact due to the replacement of diesel fuel byLNG.

 

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**ELECTRICITY SALES PER SYSTEM IN CHILE (GWh)**

 
| ** **                    | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------|------------|--------------------------------------------|------------|
| ** **                    | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                    | ** ** | **Sales  (GWh)**                           | ** ** | **Sales  (GWh)** | ** ** | **Sales  (GWh)** | ** ** |
| Electricity sales in the SIC  |       | 39,982                                     |       | 39,594 |   | 39,401 |   |
| Electricity sales in the SING |       | 12,674                                     |       | 13,219 |   | 13,657 |   |
| Total electricity sales       |       | 52,656                                     |       | 52,813 |   | 53,058 |   |

 

Ourphysical energy sales in Chile reached 21,532 GWh in 2008 and22,327 GWh in 2009, which represent a 40.8% and 42.1% market share,respectively.  The percentage of the energy purchases to satisfy ourcontractual obligations to third parties has declined from 5.3% in 2007 to 2.3%in 2009 as a result of the increase in our generation.

 

Thefollowing table sets forth our electricity purchases and production in Chile:

 

**ENDESA CHILE PHYSICAL GENERATION AND PURCHASES INCHILE (GWh)**

 
| ** **             | ** ** | **Year ended December 31,** | ** ** |
|------------------------|------------|--------------------------------------------|------------|
| ** **             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **             | ** ** | **(GWh)**                                  | ** ** | **%  of Volume** | ** ** | **(GWh)** | ** ** | **%  of Volume** | ** ** | **(GWh)** | ** ** | **%  of Volume** | ** ** |
| Electricity generation |       | 18,773                                     |       | 94.7 |   | 21,267 |   | 96.8 |   | 22,239 |   | 97.7 |   |
| Electricity purchases  |       | 1,042                                      |       | 5.3 |   | 698 |   | 3.2 |   | 532 |   | 2.3 |   |
| **Total (1)**          |       | 19,815                                     |       | 100.0 |   | 21,965 |   | 100 |   | 22,772 |   | 100 |   |

 

----

(1)   Total GWhgeneration plus purchases differs from GWh sales due to transmission losses, aspower plant consumption and technical losses have already been deducted.

 

Wesupply electricity to the major regulated electricity distribution companies,large unregulated industrial firms (primarily in the mining, pulp and steelsectors) and the pool market.  Commercial relationships with customers areusually governed by contracts.  Supply contracts with distributioncompanies must be auctioned, are generally standardized and have an averageterm of ten years.

 

Supplycontracts with unregulated customers (large industrial customers) are specificto the needs of each client and the conditions are agreed between both parties,reflecting competitive market conditions.

 

In2007, 2008 and 2009, Endesa Chile (including GasAtacama for 2008 and 2009) had35, 40 and 44 customers respectively, including in 2009 eight main distributioncompanies in the SIC and in the SING, 33 unregulated industrial customers inthe SIC and the SING and three minor commercial customers.  There were 22distribution companies which presented energy withdrawals under the provisionsof Resolution 88, accounting for 11.4% of total sales.  (See “ — B.Business Overview—Electricity Industry Regulatory Framework”).  *Sociedad Austral de Electricidad S.A.*,or Saesa, a non-related Chilean distribution company, was the largest withpurchases of 669 GWh/year.  The following table sets forthinformation regarding our sales of electricity in Chile by type of customer:

 

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**ENDESA CHILE PHYSICAL SALES PER CUSTOMER PRICE SEGMENTIN CHILE (GWh)**

 
| ** **                    | ** ** | **Year  ended December 31,** | ** ** |
|-------------------------------|------------|--------------------------------------------------|------------|
| ** **                    | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                    | ** ** | **Sales  (GWh)**                                 | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** |
| Regulated customers (1)       |       | 11,502                                           |       | 59.9 |   | 12,166 |   | 56.5 |   | 11,966 |   | 53.6 |   |
| Unregulated customers         |       | 5,281                                            |       | 27.5 |   | 6,034 |   | 28.0 |   | 6,177 |   | 27.7 |   |
| Electricity pool market sales |       | 2,430                                            |       | 12.6 |   | 3,331 |   | 15.5 |   | 4,183 |   | 18.7 |   |
| **Total electricity sales**   |       | 19,212                                           |       | 100.0 |   | 21,532 |   | 100.0 |   | 22,327 |   | 100.0 |   |

 

----

(1)   Includes thesales to distribution companies pursuant to Resolution 88.

 

Ourmost significant supply contracts with regulated customers are withChilectra S.A. (Chilectra), an Endesa Chile related company, and *Compañía General de Electricidad S.A.*(CGE),the two largest distribution companies in Chile in terms of sales.  Ourcurrent contracts with Chilectra expire in December 2010.  EndesaChile ́s contracts with CGE expired in December 2009.

 

InMarch 2008, Chilectra and other distributors allocated the third long-termenergy bid for 1,800 GWh for the period 2011-2021 and 1,500 GWh forthe period 2022-2023, in both cases to Gener.  In January 2009,Chilquinta, Saesa and CGE allocated the bid for 8,010 GWh, divided in fourblocks (BB1, BB2, BB3 and BB4) to be delivered starting on January 2010for 14, 12, 14 and 15 years, respectively.  The energy allocated was7,110 GWh and represented 88.7% of the bidders’ demand.  The energyallocation per company and per block was as follows:

 
| ** **      | ** ** | **BB1 -  Chilquinta  (GWh)** | ** ** | **BB2 - Saesa  (GWh)** | ** ** | **BB3 - CGE  (GWh)** | ** ** | **BB4 -   CGE  (GWh)** | ** ** | **Total per  company  (GWh)** | ** ** |
|-----------------|------------|-----------------------------------|------------|----------------------------------|------------|--------------------------------|------------|----------------------------------|------------|------------------------------------|------------|
| Gener           |       | 1,100                             |       | —                           |       | —                         |       | —                           |       | 1,100                              |       |
| Endesa          |       | 660                               |       | —                           |       | —                         |       | 2,000                            |       | 2,660                              |       |
| Campanario      |       | —                            |       | 850                              |       | 900                            |       | —                           |       | 1,750                              |       |
| Monte Redondo   |       | —                            |       | —                           |       | 100                            |       | —                           |       | 100                                |       |
| Colbún     |       | —                            |       | —                           |       | 1,500                          |       | —                           |       | 1,500                              |       |
|            |       |                              |       |                             |       |                           |       |                             |       |                               |       |
| Total allocated |       | 1,760                             |       | 850                              |       | 2,500                          |       | 2,000                            |       | 7,110                              |       |
| Total required  |       | 1,760                             |       | 850                              |       | 2,700                          |       | 2,700                            |       | 8,010                              |       |
| % allocated     |       | 100.0                             | %          | 100.0                            | %          | 92.6                           | %          | 74.1                             | %          | 88.7                               |       |

 

InJuly 2009, CGE allocated the fourth long-term bid for 850 GWh peryear, from 2010 to 2021, as follows:

 
| ** **              | ** ** | **CGE  (GWh)** | ** ** |
|-------------------------|------------|----------------|------------|
| Endesa                  |       | 400            |       |
| Monte Redondo           |       | 175            |       |
| Emelda                  |       | 200            |       |
| Eléctrica Puntilla |       | 75             |       |
|                    |       |           |       |
| Total allocated         |       | 850            |       |

 

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Ourcontracts with unregulated customers are generally long term, and typicallyrange from five to fifteen years.  Such contracts are usuallyautomatically extended at the end of the applicable term, unless terminated byeither party upon prior notice.  Some of them include a price adjustmentmechanism in the case of high marginal costs, which also reduces thehydrological risk.  Contracts with unregulated customers may also includespecifications regarding power sources and equipment, which may be provided atspecial rates, as well as provisions for technical assistance to thecustomer.  We have not experienced any supply interruptions under ourcontracts.  In case of *force majeure*with unregulated customers, as contractually defined, we are also allowed toreject purchases and are not required to supply electricity.  Disputes aretypically subject to binding arbitration between the parties, subject tolimited exceptions.

 

Thefollowing table sets forth our sales by volume to our five largest distributionand unregulated customers in Chile for each of the periods indicated:

 

**MAIN CUSTOMERS IN CHILE (GWh)**

 
| ** **                                              | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                              | ** ** | **2007**                                   | ** ** | **2008 (5)** | ** ** | **2009** | ** ** |
| ** **                                              | ** ** | **Sales  (GWh)**                           | ** ** | **% of total  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of total  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of total  Sales** | ** ** |
| Distribution companies:                                 |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Chilectra                                               |       | 4,017                                      |       | 20.9 |   | 3,727 |   | 17.3 |   | 3,731 |   | 16.7 |   |
| CGE                                                     |       | 4,835                                      |       | 25.2 |   | 4,800 |   | 22.3 |   | 4,727 |   | 21.2 |   |
| Saesa (1)                                               |       | 746                                        |       | 3.9 |   | 766 |   | 3.6 |   | 669 |   | 3.0 |   |
| Empresa Eléctrica de  la Frontera S.A. (2)    |       | 756                                        |       | 3.9 |   | 1 |   | 0.0 |   | 1 |   | 0.0 |   |
| Grupo Emel. (3)                                         |       | 195                                        |       | 1.0 |   | 845 |   | 3.9 |   | 868 |   | 3.9 |   |
| **Total sales to five largest  distribution companies** |       | 10,548                                     |       | 54.9 |   | 10,139 |   | 47.1 |   | 9,996 |   | 44.8 |   |
| Unregulated customers:                                  |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Codelco                                                 |       | 494                                        |       | 2.6 |   | 482 |   | 2.2 |   | 540 |   | 2.4 |   |
| CMPC                                                    |       | 1,103                                      |       | 5.7 |   | 973 |   | 4.5 |   | 912 |   | 4.1 |   |
| Cía. Minera Los Pelambres                          |       | 871                                        |       | 4.5 |   | 874 |   | 4.1 |   | 926 |   | 4.1 |   |
| Cía. Minera Collahuasi (4)                         |       | 869                                        |       | 4.5 |   | 857 |   | 4.8 |   | 903 |   | 4.0 |   |
| Cía. Minera Escondida                              |       |                                       |       |   |   | 645 |   | 3.0 |   | 692 |   | 3.1 |   |
| Cía. Acero del  Pacífico — Huachipato    |       | 588                                        |       | 3.1 |   | 568 |   | 2.6 |   | 500 |   | 2.2 |   |
| **Total sales to six largest  unregulated customers**   |       | 3,925                                      |       | 20.4 |   | 4,586 |   | 21.3 |   | 4,667 |   | 20.9 |   |

 

----

(1)   We do not have a contract with Saesa.  Salesare the result of government Resolution 88 that forces the generators ofthe CDEC-SIC system to supply distribution companies without contracts.  

(2)   Until December 2007, *Empresa Eléctrica de la Frontera S.A.*, Frontel, was aparty to two contracts; one was with Endesa Chile and one with Pangue. In 2008, the contract with Endesa Chile terminated.  Theconsumption by Frontel as the result of Resolution 88 is not included inthis table.  Frontel is a subsidiary of Saesa. 

(3)   The values of the Emel Group for 2007 includes theconsumption of Empresa Eléctrica de Atacama S.A, Emelat and for years 2008and 2009 includes the 50% of the consumptions of the distributors EmpresaEléctrica de Arica, Emelari, Empresa Eléctrica de Iquique S.A., Eliqsa,and Empresa Eléctrica de Antofagasta,  Elecda, clients of GasAtacama, andthe consumptions of the Empresa Eléctrica de Atacama S.A, Emelat, clientof Celta.   The consumptions as the result of governments Resolution88 are not included in this table.  Emel group is a subsidiary of the CGEgroup.

(4)   Consumptions of Cía Minera Collahuasi include the50% of the contract of GasAtacama with this client and the contracts withCelta.

(5)   In 2008, we agreed on a reduction of energyconsumption with some customers, including CMPC —and Codelco — Salvador.

 

Wecompete in the SIC primarily with two generation companies, Gener and *Colbún S.A.* (Colbún).  Accordingto the CDEC-SIC in 2009, Gener and its subsidiaries in the SIC counted with aninstalled capacity of 2,097 MW, of which 88.3% was thermal electric, andColbún on 2,484 MW, of which 51.8% was thermal electric.  In additionto these two large competitors, there are a number of smaller entities with anaggregate installed capacity of 1750 MW that generates electricity in the SIC.

 

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Ourprimary competitors in the SING are Edelnor*(GDF Suez Group)*and Gener, which have 1,757 MW and 931 MWof installed capacity, respectively.  Our direct participation in theSING, includes our 182 MW Tarapacá thermal plant, owned by our subsidiaryCelta, and our participation through our jointly controlled company,GasAtacama, whose power plant has 781 MW of installed capacity.  Aninstalled capacity of 390 MW is included in this report as installedcapacity of Endesa Chile, an amount that corresponds to the 50% of theparticipation of Endesa in GasAtacama.  See “— C. Organizational Structure”for details on related companies.

 

Electricitygeneration companies compete largely on the basis of technical experience andreliability in the regulated market, and in the case of unregulated customers,also on price.  In addition, because 68.2% of our installed capacity inthe SIC derives from hydroelectric power plants, we have lower marginalproduction costs than companies generating electricity with thermalplants.  During periods of extended droughts, however, we may be forced tobuy more expensive electricity from thermoelectric generators at spot prices inorder to satisfy our contractual obligations.

 

We,directly and through our subsidiaries Pehuenche, Pangue, San Isidro and EndesaEco, are the principal operators in the SIC, with 44.5% of the total installedcapacity and 49.3% of the physical energy sales of this system in 2009.

 

In the SING, our subsidiaryCelta, and our jointly controlled company GasAtacama, account for 15.5% of thetotal installed capacity in 2009.  Celta, our subsidiary, has atwo-turbine 182 MW thermal power plant connected to the SING which represents4.9% of the total capacity of the SING.  ForEndesa Chile GasAtacama represents a total of 390 MW or 10.6% of the totalcapacity in the SING.  The following table sets out information relatingto Endesa Chile’s electricity generation capacity in Chile:

 

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**POWER PLANTS IN CHILE (MW) (1)**

 
| ** **              | ** ** | **Type (2)**                          | ** ** | **System** | ** ** | **Installed  Capacity  (MW)** | ** ** |
|-------------------------|------------|--------------------------------------------|------------|------------|------------|-------------------------------|------------|
| **Hydroelectric**       |       |                                       |       |       |       |                          |       |
| Ralco                   |       | Reservoir                                  |       | SIC        |       | 690                           |       |
| Pehuenche               |       | Reservoir                                  |       | SIC        |       | 570                           |       |
| Pangue                  |       | Reservoir                                  |       | SIC        |       | 467                           |       |
| El Toro                 |       | Reservoir                                  |       | SIC        |       | 450                           |       |
| Rapel                   |       | Reservoir                                  |       | SIC        |       | 377                           |       |
| Cipreses                |       | Reservoir                                  |       | SIC        |       | 106                           |       |
| Antuco                  |       | Pass-through                               |       | SIC        |       | 320                           |       |
| Abanico                 |       | Pass-through                               |       | SIC        |       | 136                           |       |
| Curillinque             |       | Pass-through                               |       | SIC        |       | 89                            |       |
| Sauzal                  |       | Pass-through                               |       | SIC        |       | 77                            |       |
| Isla (3)                |       | Pass-through                               |       | SIC        |       | 70                            |       |
| Loma Alta               |       | Pass-through                               |       | SIC        |       | 40                            |       |
| Palmucho (4)            |       | Pass-through                               |       | SIC        |       | 34                            |       |
| Los Molles              |       | Pass-through                               |       | SIC        |       | 18                            |       |
| Sauzalito               |       | Pass-through                               |       | SIC        |       | 12                            |       |
| Ojos de Agua            |       | Pass-through                               |       | SIC        |       | 9                             |       |
| **Total hydroelectric** |       |                                       |       |       | ** ** | **3,465**                     | ** ** |
|                    |       |                                            |       |       |       |                          |       |
| **Thermal**             |       |                                       |       |       |       |                          |       |
| Tarapacá coal      |       | Steam Turbine /Coal                        |       | SING       |       | 158                           |       |
| Bocamina                |       | Steam Turbine/Coal                         |       | SIC        |       | 128                           |       |
| Tarapacá GT        |       | Steam Turbine/Diesel Oil                   |       | SING       |       | 24                            |       |
| Huasco ST               |       | Steam Turbine/Coal                         |       | SIC        |       | 16                            |       |
| Taltal                  |       | Gas Turbine/Gas & Diesel Oil      |       | SIC        |       | 245                           |       |
| Huasco GT               |       | Gas Turbine/IFO 180 Oil                    |       | SIC        |       | 64                            |       |
| Diego de Almagro        |       | Gas Turbine/Diesel Oil                     |       | SIC        |       | 47                            |       |
| San Isidro 2 (5)        |       | Combined   Cycle/Gas & Diesel Oil |       | SIC        |       | 399                           |       |
| GasAtacama (7)          |       | Combined   Cycle/Gas & Diesel Oil |       | SING       |       | 390                           |       |
| San Isidro              |       | Combined   Cycle/Gas & Diesel Oil |       | SIC        |       | 379                           |       |
| Quintero (6)            |       | Combined   Cycle/Gas & Diesel Oil |       | SIC        |       | 257                           |       |
| **Total thermal**       |       |                                       |       |       | ** ** | **2,107**                     | ** ** |
|                    |       |                                            |       |       |       |                          |       |
| **Wind**                |       |                                       |       |       |       |                          |       |
| Canela II (8)           |       | Wind Power                                 |       | SIC        |       | 60                            |       |
| Canela                  |       | Wind Power                                 |       | SIC        |       | 18                            |       |
| **Total wind**          |       |                                       |       |       | ** ** | **78**                        | ** ** |
| **Total capacity**      |       |                                       |       |       | ** ** | **5,650**                     | ** ** |

 

----

(1)          Total installed capacity is defined as the maximumcapacity, under specific technical conditions and characteristics.

(2)          “Reservoir” and “pass-through” refer to ahydroelectric plant that uses a dam or a river, respectively, to move theturbines which generate electricity. “Steam Turbine” refers to a thermal powerplant that uses natural gas, coal, diesel or fuel oil to produce steam, whichmoves the turbines to generate the electricity. “Gas Turbine” (GT) or “opencycle” refers to a thermal power plant that uses diesel oil, fuel oil, naturalgas or other fuels to produce gas that moves the turbines to generate theelectricity. “Combined Cycle” refers to a thermal power plant that uses naturalgas, diesel oil or fuel oil to generate gas that moves the turbines to generateelectricity, and then recovers the heat of the exhaust gases to generate steamto move another turbine.

(3)          In December 2009, the installed capacityrecognized by the CDEC-SIC of the unit Isla increased from 68 MW to70 MW.

(4)          In December 2009, the installed capacityrecognized by the CDEC-SIC of the unit Palmucho increased from 32 MW to34 MW.

(5)          In December 2009, theinstalled capacity recognized by the CDEC-SIC of the unit San Isidro 2 dueto the arrival of LNG increased from 353 MW to 399 MW.

(6)          Quintero’s project started operations with the firstunit in July 2009 (129 MW), and with the second unit (128 MW) in

 

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September 2009.

(7)          Since 2009, 50% of GasAtacama is included inEndesa Chile’s financial statements.

(8)          Canela II started operations inDecember 2009 with 40 generators.

 

***Operations in Argentina***

 

Weparticipate in electricity generation in Argentina through our subsidiariesEndesa Costanera and El Chocón, with a total of five power plants.  ElChocón owns two hydroelectric power plants, with total installed capacity of1,328 MW and Endesa Costanera owns three thermal plants, with a totalinstalled capacity of 2,324 MW.  Our hydro and thermal generationplants in Argentina represented 13.5% of the *SistemaInterconectado Nacional* (the Argentine NIS) generation capacity in2009.

 

Our Argentine subsidiariesparticipate in two new companies, Manuel Belgrano and San Martín*.*  Thesecompanies were formed to undertake the construction of two new generationfacilities for Foninvemem.  These power plants started operations usinggas turbines in 2008, with 1,125 MW of aggregate capacity, and operationas combined cycles was complete for Manuel Belgrano in January 2010 andfor San Martín in February 2010, with an additional 522 MW.  Thetotal aggregate capacity of these units is 1,647 MW (823 MW forManuel Belgrano and 824 MW for San Martín).

 

Since2002, government intervention and energy industry authority actions, includinglimiting the spot price of electricity by considering the variable cost ofgenerating electricity with natural gas without the hydrological conditions ofrivers and reservoirs or the use of more expensive fuels, have led to the lackof investment in the electric power sector.  (See “— ElectricityIndustry Regulatory Framework” and “ — A. History and Development of theCompany” for further detail).

 

Asof December 31, 2009, Endesa Costanera’s installed capacity accountedfor 8.6% of the total installed capacity in NIS.  Endesa Costanera’ssecond combined-cycle plant can operate with natural gas and diesel.  Our1,138 MW steam turbine power plant can operate with either natural gas orfuel oil.

 

ElChocón accounted for 4.9% of the installed capacity in the Argentine MEM as ofDecember 31, 2009.  El Chocón has a 30-year concession, ending in2023, for two hydroelectric generation facilities with an aggregate of1,328 MW of installed capacity.  The larger of the two facilities forwhich El Chocón has a concession of 1,200 MW in installed capacity and isthe primary flood control installation on the Limay River.  The facility’slarge reservoir, Ezequiel Ramos Mejía, enables El Chocón to be one of theArgentine MEM’s major peak suppliers.  Variations in El Chocón’s waterdischarge are moderated by El Chocón’s Arroyito facility, a downstream dam with128 MW of installed capacity.  In November 2008 we finishedconstruction work on the Arroyito dam, and increased the elevation of thereservoir water level, that allows releasing water at an additional1,150 m3/sec, for a total of 3,750 m3/sec.  The additionalenergy (69 GWh/year) was sold on the spot market until April 2009 andon the “Energy Plus” market thereafter.  Energy Plus Service is the offerof new electricity capacity to supply the electricity demand growth, on top ofthe demand level for electricity in 2005.  (For details on Energy Plus,see “— Electricity Industry Regulatory Framework”).

 

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Thefollowing table sets forth the installed capacity of our Argentinesubsidiaries:

 

**INSTALLED CAPACITY PER SUBSIDIARY IN ARGENTINA (MW)**

 
| ** **                                                   | ** ** | **As of December 31,** | ** ** |
|--------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                   | ** ** | **2007**                              | ** ** | **2008** | ** ** | **2009** | ** ** |
| **Endesa Costanera**                                         |       |                                  |       |   |   |   |   |
| Costanera (steam turbine)                                    |       | 1,138                                 |       | 1,138 |   | 1,138 |   |
| Costanera (combined cycle II)                                |       | 859                                   |       | 859 |   | 859 |   |
| Central  Termoeléctrica Buenos Aires (combined cycle I) |       | 327                                   |       | 327 |   | 327 |   |
| **El Chocón**                                           |       |                                  |       |   |   |   |   |
| El Chócon (reservoir)                                   |       | 1,200                                 |       | 1,200 |   | 1,200 |   |
| Arroyito (pass-through)                                      |       | 120                                   |       | 128 |   | 128 |   |
| **Total**                                                    |       | 3,644                                 |       | 3,652 |   | 3,652 |   |

 

Thefair value of the various derivative financial instruments is calculated asfollows:

 

Ourtotal generation in Argentina reached 11,955 GWh in 2009, 14.1% higherthan our 10,480 GWh total electricity generation in 2008.  Ourgeneration market share was approximately 10.7% of total electricity productionin Argentina during 2009.

 

Thefollowing table sets forth the electricity generation of our Argentinesubsidiaries:

 

**ELECTRICITY GENERATION PER SUBSIDIARY IN ARGENTINA(GWh)**

 
| ** **       | ** ** | **Year Ended December 31,** | ** ** |
|------------------|------------|--------------------------------------------|------------|
| ** **       | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| Endesa Costanera |       | 8,421                                      |       | 8,540 |   | 8,172 |   |
| El Chocón   |       | 3,696                                      |       | 1,940 |   | 3,783 |   |
| **Total**        |       | 12,117                                     |       | 10,480 |   | 11,955 |   |

 

Hydroelectricgeneration accounted for nearly 31.6% of total generation in 2009, higher thanin 2008 due to the restrictions of the operation of El Chocón imposed byCammesa and the low level of the reservoir during the first half of the year2008; the hydrological conditions presented during 2009 were classified asnormal.  The level of El Chocón measured bi-annually in 2008 and 2009, interms of GWh, is shown in the following table:

 
| ** **                             | ** ** | **2008**  | ** ** | **2009**  | ** ** |
|----------------------------------------|------------|-----------|------------|-----------|------------|
| **Reservoir El Chocón** | ** ** | **(GWh)** | ** ** | **(GWh)** | ** ** |
| June 30,                          |       | 500       |       | 1,100     |       |
| December 31,                      |       | 1,400     |       | 1,460     |       |

 

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Thevolumes and percentages of hydroelectric and thermal generation are shown inthe following table:

 

**HYDRO/THERMAL GENERATION IN ARGENTINA (GWh) (1)**

 
| ** **               | ** ** | **Year ended December 31,** | ** ** |
|--------------------------|------------|-----------------------------|------------|
| ** **               | ** ** | **2007**                    | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **               | ** ** | **(GWh)**                   | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Hydroelectric generation |       | 3,696                       |       | 30.5 |   | 1,940 |   | 18.5 |   | 3,783 |   | 31.6 |   |
| Thermal generation       |       | 8,421                       |       | 69.5 |   | 8,540 |   | 81.5 |   | 8,172 |   | 68.4 |   |
| **Total generation**     |       | 12,117                      |       | 100.0 |   | 10,480 |   | 100.0 |   | 11,955 |   | 100.0 |   |

 

----

(1)          Generation minus our own power plant consumption andtechnical losses.

 

Theamount of energy generated and purchased in the last three years is shown inthe following table:

 

**PHYSICAL GENERATION AND PURCHASES IN ARGENTINA (GWh)**

 
| ** **             | ** ** | **2007**  | ** ** | **2008** | ** ** | **2009**  | ** ** |
|------------------------|------------|-----------|------------|----------|------------|-----------|------------|
| ** **             | ** ** | **(GWh)** | ** ** | **%**    | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Electricity generation |       | 12,117    |       | 97.1     |       | 10,480    |       | 93.8 |   | 11,955 |   | 95.8 |   |
| Electricity purchases  |       | 367       |       | 2.9      |       | 694       |       | 6.2 |   | 528 |   | 4.2 |   |
| **Total(1)**           |       | 12,484    |       | 100.0    |       | 11,174    |       | 100.0 |   | 12,483 |   | 100.0 |   |

 

----

(1)          Energy generation plus energy purchases differs fromelectricity sales due to power plant consumption of electricity that had beenuploaded to the grid, referred to as non billed electricity consumption.

 

Thedistribution of physical sales in Argentina, in terms of customer segment, isshown in the following table:

 

**PHYSICAL SALES PER CUSTOMER SEGMENT IN ARGENTINA (GWh)**

 
| ** **                   | ** ** | **Year Ended December 31,** | ** ** |
|------------------------------|------------|--------------------------------------------|------------|
| ** **                   | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                   | ** ** | **(GWh)**                                  | ** ** | **% of  Sales  Volume** | ** ** | **(GWh)** | ** ** | **% of Sales  Volume** | ** ** | **(GWh)** | ** ** | **% of Sales  Volume** | ** ** |
| Contracted sales        |       | 2,364                                      |       | 19.1 |   | 2,397 |   | 21.6 |   | 2,128 |   | 17.2 |   |
| Non-contracted sales         |       | 10,042                                     |       | 80.9 |   | 8,701 |   | 78.4 |   | 10,278 |   | 82.8 |   |
| **Total  electricity sales** |       | 12,406                                     |       | 100.0 |   | 11 ,098 |   | 100.0 |   | 12,405 |   | 100.0 |   |

 

**PHYSICAL SALES PER SUBSIDIARY IN ARGENTINA (GWh)**

 
| ** **       | ** ** | **Year Ended December 31,** | ** ** |
|------------------|------------|--------------------------------------------|------------|
| ** **       | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| Endesa Costanera |       | 8,450                                      |       | 8,543 |   | 8,284 |   |
| El Chocón   |       | 3,956                                      |       | 2,554 |   | 4,122 |   |
| **Total**        |       | 12,406                                     |       | 11,098 |   | 12,405 |   |

 

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During2009, Endesa Costanera served an average of 46 unregulatedcustomers.  Endesa Costanera has no contract with distributioncompanies.  Given the regulatory measures adopted since 2003, the currentArgentine electricity industry price scenario makes sales to distributioncompanies less attractive than sales to the wholesale market.

 

Thefollowing table sets forth Endesa Costanera’s sales to its largestunregulated customers for each of the periods indicated:

 

**ENDESA COSTANERA’S MAIN CUSTOMERS (GWh)**

 
| ** **                                            | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                            | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                                            | ** ** | **Sales  (GWh)**                           | ** ** | **% of  contracted  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contracted  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contracted  Sales** | ** ** |
| YPF                                                   |       | 159                                        |       | 15.5 |   | 233 |   | 22.5 |   | 122 |   | 15.8 |   |
| Acindar                                               |       | 88                                         |       | 8.6 |   | 88 |   | 8.5 |   | 29 |   | 3.7 |   |
| Solvay                                                |       | 87                                         |       | 8.5 |   | 130 |   | 12.5 |   | 96 |   | 12.4 |   |
| Transclor                                             |       | 81                                         |       | 7.9 |   | 63 |   | 6.1 |   | 58 |   | 7.5 |   |
| Peugeot                                               |       | 79                                         |       | 7.7 |   | 63 |   | 6.1 |   | 48 |   | 6.2 |   |
| Cencosud                                              |       | 119                                        |       | 11.6 |   | 59 |   | 5.7 |   | 71 |   | 9.2 |   |
| **Total sales to our largest  unregulated customers** |       | 611                                        |       | 59.7 |   | 635 |   | 61.5 |   | 424 |   | 54.9 |   |

 

Salesto the pool market remained stable at 7,511 GWh during 2008 and 2009.

 

During2008 and 2009, Endesa Costanera, through its subsidiary EndesaCemsa S.A. (Cemsa), negotiated with a number of gas producers, whichallowed Costanera to diversify and improve the availability of gas for supplyto Endesa Costanera’s units, including the ability to trade gas with othergenerators.

 

During2009, El Chocón served an average of 25 unregulated customers.  El Chocónhas no contract with distribution companies.

 

Thefollowing table sets forth sales by volume to the largest unregulated customersof El Chocón for each of the periods indicated:

 

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**EL CHOCON’S MAIN CUSTOMERS (GWh)**

 
| ** **                                            | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                            | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                                            | ** ** | **Sales  (GWh)**                           | ** ** | **% of  contract  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contract  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contract  Sale** | ** ** |
| Minera Alumbrera                                      |       | 569                                        |       | 42.4 |   | 571 |   | 41.9 |   | 542 |   | 40.0 |   |
| Profertil (Cemsa) (1)                                 |       | 145                                        |       | 10.8 |   | 94 |   | 6.9 |   | 115 |   | 8.5 |   |
| Massuh                                                |       | 109                                        |       | 8.1 |   | 85 |   | 6.2 |   | — |   | 0.0 |   |
| Chevron                                               |       | 112                                        |       | 8.3 |   | 136 |   | 10.0 |   | 120 |   | 8.8 |   |
| Acindar (Cemsa) (1)                                   |       | 88                                         |       | 6.5 |   | 88 |   | 6.4 |   | 75 |   | 5.5 |   |
| Praxair                                               |       | —                                     |       | 0.0 |   | 89 |   | 6.5 |   | 80 |   | 5.9 |   |
| Air Liquide (2)                                       |       | 9                                          |       | 0.6 |   | 30 |   | 2.2 |   | 122 |   | 9.0 |   |
| **Total sales to our largest  unregulated customers** |       | 1,032                                      |       | 76.9 |   | 1,093 |   | 80.1 |   | 1,055 |   | 77.8 |   |

 

----

(1)          Profertil and Acindar do not have contracts with ElChocón, but are served through Cemsa, an Endesa Chile affiliate.

(2)          During 2009, Air Liquide was the second largestcustomer of El Chocón.  These values differ from those reported in the2008 Form 20-F, for 2007 and 2008, because Air Liquide was notincorporated at that time since its sales reported less than 3% of El Chocón’stotal sales.

 

Weoperate El Chocón pursuant to an operating agreement with a term equal to theduration of the concession that expires in 2023.  El Chocón does not havethe right to terminate the operating agreement, unless we fail to perform ourobligations under the agreement.  Under the terms of the operatingagreement, we are entitled to a fee payable in dollars based on El Chocón’sannual gross revenues, payable in monthly installments. The management fee for2007, 2008 and 2009 was $ 2.2 million, $ 2.2 million and $ 2.4million, respectively.

 

OurArgentine subsidiaries compete with all the major power plants connected to theArgentine NIS.  According to the installed capacity reported by Cammesa inthe monthly report for December 2009, our major competitors in Argentinaare the state-controlled companies Enarsa (with an installed capacity of554 MW), nuclear units -NASA- (1,005 MW) and the binational hydrounits Yacyreta and Salto Grande (3,225 MW in total).  The mainprivate competitors are: AES Group, Sociedad Argentina de Energía S.A.(Sadesa), and Pampa Energía.  The AES Group has nine power plantsconnected to the Argentine NIS with a total capacity of 2,810 MW (43%hydro) and one plant that is not connected to the Argentine NIS that deliversenergy to the Chilean SING, Termo Andes, with a total capacity of 411 MW. On the other hand, Sadesa owns a total of approximately 3,860 MW,the most important of which are Piedra del Aguila (hydro 1,400 MW) andCentral Puerto (thermal 1,777 MW); while Pampa Energía competes with usthrough five power plants, Diamante and Nihuiles (both hydro, 612 MW intotal), and Güemes, Loma de la Lata and Piedra Buena (thermal, 1,356 MW intotal).

 

**Operations in Colombia**

 

UntilAugust 2007, we controlled two electricity generation companies in Colombia,Betania and Emgesa.  These companies were merged into Betania, which thenchanged its name to Emgesa S.A. E.S.P.  We have a 26.9% stake inEmgesa as of December 31, 2009, which we control pursuant a shareholders’agreement.

 

Asof December 31, 2009, our Colombian subsidiary operated eleven generationplants in Colombia, with a total installed capacity of 2,895 MW. Emgesa has 2,451 MW in hydroelectric plants and 444 MW inthermoelectric plants.  During 2009, there were no changes in Emgesa’sinstalled capacity.

 

Ourhydroelectric and thermal generation plants in Colombia represent 21.4% of thecountry’s total electricity generation capacity as of December 2009.

 

Thefollowing table sets forth the installed generation capacity of our Colombiansubsidiaries for the last three years:

 

28

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**INSTALLED CAPACITY IN COLOMBIA (MW)(1)(2)**

 
| ** **                                         | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                         | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                                         | ** ** | **(MW)**                                   | ** ** |
| **Emgesa**                                         |       |                                       |       |   |   |   |   |
| Guavio (reservoir)                                 |       | 1,213                                      |       | 1,213 |   | 1,213 |   |
| Cadena Nueva (reservoir/pass-through)(3)           |       | 601                                        |       | 601 |   | 601 |   |
| Betania (reservoir)                                |       | 541                                        |       | 541 |   | 541 |   |
| Termozipa (steam turbine/coal)                     |       | 236                                        |       | 236 |   | 236 |   |
| Cartagena (steam turbine/natural gas + diesel oil) |       | 142                                        |       | 208 |   | 208 |   |
| Minor Plants (pass-through) (4)                    |       | 96                                         |       | 96 |   | 96 |   |
| **Total**                                          |       | 2,829                                      |       | 2,895 |   | 2,895 |   |

 

----

(1)          The figure includes the capacity used for powerplant consumption.

(2)          The installed capacity was certified during thethree years by Bureau Veritas.

(3)          Includes two power plants named La Guaca andParaiso.

(4)          As of December 31, 2009 Emgesa owned andoperated five minor plants: *Charquito, ElLimonar, La Tinta, Tequendama* and *LaJunca.*

 

Approximately85% of our installed capacity in Colombia is hydroelectric.  As a result,our physical generation depends on the reservoir levels and rainfalls. Our generation market share in Colombia was 22% in 2007, 23.7% in 2008 and22.6% in 2009.  In addition to hydrological conditions, the amount ofgeneration depends on our commercial strategy.  Companies are free tooffer their electricity at prices driven by market conditions being dispatchedby a centralized operating entity to generate according to the prices offered,as opposed to being dispatched according to the operating costs.

 

During 2009, thermalgeneration represented 7.7% of total generation and hydroelectric generationthe remaining 92.3% of our generation in Colombia.  During the second halfof 2009, there were very dry hydrological conditions in the Colombian system,which translated into less hydro electrical generation.  Emgesa reduced its hydro generation by703 GWh as compared with the 2008 generation.  Part of this decreasewas replaced by thermal generation (471 GWh more than 2008), as is shownin the following table:

 

**HYDRO/THERMAL GENERATION INCOLOMBIA (GWh) (1)**

 
| ** **               | ** ** | **Year ended December 31,** | ** ** |
|--------------------------|------------|--------------------------------------------|------------|
| ** **               | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **               | ** ** | **(GWh)**                                  | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Hydroelectric generation |       | 11,427                                     |       | 95.7 |   | 12,403 |   | 96.1 |   | 11,700 |   | 92.3 |   |
| Thermal generation       |       | 515                                        |       | 4.3 |   | 503 |   | 3.9 |   | 974 |   | 7.7 |   |
| **Total generation**     |       | 11,942                                     |       | 100.0 |   | 12,905 |   | 100.0 |   | 12,674 |   | 100.0 |   |

 

----

(1)Generation minus power plant own consumption and technical losses.

 

Themain reservoir of Emgesa is *El Guavio*,which level measured bi-annually in 2008 and 2009, in terms of GWh, is shown inthe following table:

 
| ** **                        | ** ** | **2008**  | ** ** | **2009**  | ** ** |
|-----------------------------------|------------|-----------|------------|-----------|------------|
| **Reservoir El Guavio** | ** ** | **(GWh)** | ** ** | **(GWh)** | ** ** |
| June 30,                     |       | 1,434     |       | 1,029     |       |
| December 31,                 |       | 1,887     |       | 1,310     |       |

 

Thefollowing table sets forth the levels of electricity production and purchasesfor our Colombian subsidiaries for the past three years:

 

29

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**PHYSICAL PRODUCTION AND PURCHASES IN COLOMBIA (GWh)**

 
| ** **             | ** ** | **Year ended December 31,** | ** ** |
|------------------------|------------|--------------------------------------------|------------|
| ** **             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **             | ** ** | **(GWh)**                                  | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Electricity production |       | 11,942                                     |       | 75.8 |   | 12,905 |   | 78.1 |   | 12,674 |   | 74.7 |   |
| Electricity purchases  |       | 3,814                                      |       | 24.2 |   | 3,611 |   | 21.9 |   | 4,284 |   | 25.3 |   |
| **Total**              |       | 15,756                                     |       | 100.0 |   | 16,517 |   | 100.0 |   | 16,958 |   | 100.0 |   |

 

Theonly interconnected electricity system in Colombia is the *Sistema Interconectado Nacional* the “ColombianNIS.”  Electricity demand in the Colombian NIS increased 1.5% during2009.  Total electricity consumption was 52,851 GWh in 2007;53,870 GWh in 2008 and 54,679 GWh in 2009.

 

Thedemand in Colombia’s electricity market has been affected by the agreement onInternational Transactions of Energy governing the interconnection with Ecuador’selectricity system, which began operations in 2003.  During 2009, physicalsales to Ecuador reached 1,077 GWh, 567 GWh higher than the 510 GWh reached in2008.

 

Thedistribution of Endesa Chile’s physical sales in Colombia, in terms of customersegment, is shown in the following table:

 

**PHYSICAL SALES PER CUSTOMER SEGMENT IN COLOMBIA (GWh)**

 
| ** **                  | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|
| ** **                  | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                  | ** ** | **Sales  (GWh)**                           | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of Sales  Volume** | ** ** |
| Contracted sales            |       | 10,539                                     |       | 67.5 |   | 11,169 |   | 68.2 |   | 11,960 |   | 71.2 |   |
| Non-contracted sales        |       | 5,074                                      |       | 32.5 |   | 5,199 |   | 31.8 |   | 4,847 |   | 28.8 |   |
| **Total electricity sales** |       | 15,613                                     |       | 100.0 |   | 16,368 |   | 100.0 |   | 16,806 |   | 100.0 |   |

 

During2009, Emgesa served an average of 717 contracts with unregulated customersand 16 distribution and trading companies.  Our sales to the distributioncompany Codensa accounted for 39.3% of our total contract sales in 2009. Physical sales to the five largest unregulated customers altogether reached5.6% of total contracted sales.

 

Thefollowing table sets forth our sales by volume to our six largest distributioncustomers in Colombia for the last three years:

 

**MAIN DISTRIBUTION AND TRADING CUSTOMERS IN COLOMBIA(GWh)**

 
| ** **                                             | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                                             | ** ** | **Sales  (GWh)**                           | ** ** | **% of  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales** | ** ** |
|                                                   |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Codensa (1)                                            |       | 3,036                                      |       | 28.8 |   | 3,784 |   | 33.9 |   | 4,697 |   | 39.3 |   |
| Enertolima                                             |       | 437                                        |       | 4.1 |   | 150 |   | 1.3 |   | 471 |   | 3.9 |   |
| Electrocosta                                           |       | 652                                        |       | 6.2 |   | 79 |   | 0.7 |   | 517 |   | 4.3 |   |
| Electricaribe                                          |       | 479                                        |       | 4.5 |   | 1,194 |   | 10.7 |   | 954 |   | 8.0 |   |
| EPM                                                    |       | 1,102                                      |       | 10.5 |   | 1,455 |   | 13.0 |   | 720 |   | 6.0 |   |
| Meta                                                   |       | 649                                        |       | 6.2 |   | 624 |   | 5.6 |   | 163 |   | 1.4 |   |
| **Total sales to our largest  distribution customers** |       | 6,355                                      |       | 60.3 |   | 7,286 |   | 65.2 |   | 7,523 |   | 62.9 |   |

 

----

(1)  Subsidiaryof Enersis.

 

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Ourmost important competitors in Colombia include the following state-ownedcompanies: Empresas Públicas de Medellín (with an installed capacity of2,601 MW), Isagen (with an installed capacity of 2,106 MW), andGecelca (with an installed capacity of 1,195 MW).  We also competewith the following privately owned companies in Colombia: Colinversiones (witha installed capacity of 1,719 MW, which includes Termoflores with441 MW; Merieléctrica with 167 MW and Epsa, with 1,111 MW, whichwas acquired from the Union Fenosa group during 2009) and Chivor(1,000 MW), which is owned by Gener, all as of December 2009.

 

**Operations in Peru**

 

Throughour subsidiary Edegel, we operate a total of nine generation plants in Peru,with a total installed capacity of 1,667 MW, as ofDecember 2009.  Edegel owns seven hydroelectric power plants, with atotal installed capacity of 745 MW, two of which are located 280 kilometersfrom Lima and five of which are located approximately 50 kilometers fromLima.  The company has two thermal plants which represent the remaining922 MW of total installed capacity.  Our hydroelectric and thermalgeneration plants in Peru represent 28.5% of the country’s total electricitygeneration capacity according to the information reported in December 2009by the *Organismo Supervisor de la Inversiónen Energía y Minería*, Supervisory Entity of the Investment on Energyand Mining**(Osinergmin).

 

Thefollowing chart sets forth the installed capacity of Edegel:

 

**INSTALLED CAPACITY IN PERU (MW)(1)**

 
| ** **                  | ** ** | **Year Ended December 31,** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|
| ** **                  | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                  | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Edegel S.A. (mixed)**     |       |                                       |       |   |   |   |   |
| Huinco (hydroelectric)      |       | 247                                        |       | 247 |   | 247 |   |
| Matucana (hydroelectric)    |       | 129                                        |       | 129 |   | 129 |   |
| Callahuanca (hydroelectric) |       | 80                                         |       | 80 |   | 80 |   |
| Moyopampa (hydroelectric)   |       | 65                                         |       | 65 |   | 65 |   |
| Huampani (hydroelectric)    |       | 30                                         |       | 30 |   | 30 |   |
| Yanango (hydroelectric)     |       | 43                                         |       | 43 |   | 43 |   |
| Chimay (hydroelectric)      |       | 151                                        |       | 151 |   | 151 |   |
| Santa Rosa (thermal) (2)    |       | 231                                        |       | 229 |   | 430 |   |
| Ventanilla (thermal)        |       | 493                                        |       | 493 |   | 493 |   |
| **Total**                   |       | 1,468                                      |       | 1,467 |   | 1,667 |   |

 

----

(1)          The installed capacity was certified during 2007,2008 and 2009 by Bureau Veritas.

(2)          During 2009, Santa Rosa increased its installedcapacity due to the incorporation of Unit TG8, which started operations inSeptember 2009 with 193 MW and with an additional 7 MW sinceNovember 2009 (200 MW in total).

 

Ourgeneration market share was approximately 27% of total electricity productionin Peru for 2008 and 2009.

 

**HYDRO/THERMAL GENERATION IN PERU (GWh)(1)**

 
| ** **               | ** ** | **Year ended December 31,** | ** ** |
|--------------------------|------------|--------------------------------------------|------------|
| ** **               | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **               | ** ** | **(GWh)**                                  | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Hydroelectric generation |       | 4,385                                      |       | 57.3 |   | 4,189 |   | 51.7 |   | 4,564 |   | 55.9 |   |
| Thermal generation       |       | 3,270                                      |       | 42.7 |   | 3,913 |   | 48.3 |   | 3,599 |   | 44.1 |   |
| **Total generation**     |       | 7,654                                      |       | 100.0 |   | 8,102 |   | 100.0 |   | 8,163 |   | 100.0 |   |

 

----

(1)            Generation minus power plant own consumption andtechnical losses.

 

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Hydrologicalgeneration represented 55.9% of Edegel’s total production in 2009.  Hydrogeneration increased by 375 GWh (9.0%) compared with 2008 generation, dueto the rainy conditions presented during 2009.  For Edegel, the flow ofthe rivers associated at the Rimac basin was one of the highest since1965.  Thermal generation in 2009 decreased by 314 GWh, or 8.0%.

 

Theportion of electricity supplied by Edegel’s own generation was 96.0% of totalphysical sales, requiring only a small amount of purchases to satisfycontractual obligations to customers.

 

Edegelhas supply, transportation and distribution contracts for gas in Ventanilla andSanta Rosa.  During 2007, the gas pipeline Camisea-Lima, owned by TGP,reached its full capacity.  However, since May 2008, TGP startedrestrictions on the gas transfer through the pipeline.  In order toguarantee the transportation capacity for its natural gas demand, Edegelmodified its agreements during 2007 and 2008, shifting from interruptible tofirm mode, with a capacity of 1.5 million m3/d (from August 2008to July 2009) and 2.7 million m3/d (from August 2009 toJuly 2019).  Thus, Edegel expects it will have enough capacity forthe combined cycle Ventanilla plant and part of Santa Rosa.  On the otherhand, in 2009 Edegel extended the contract for transportation and distributionthrough 2025 at a level of 2.1 million m3/d from August 2019.

 

**PHYSICAL GENERATION AND PURCHASES IN PERU (GWh) (1)**

 
| ** **             | ** ** | **Year ended December 31,** | ** ** |
|------------------------|------------|--------------------------------------------|------------|
| ** **             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **             | ** ** | **(GWh)**                                  | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** | **(GWh)** | ** ** | **%** | ** ** |
| Electricity generation |       | 7,654                                      |       | 93.9 |   | 8,102 |   | 93.9 |   | 8,163 |   | 96.0 |   |
| Electricity purchases  |       | 499                                        |       | 6.1 |   | 525 |   | 6.1 |   | 337 |   | 4.0 |   |
| **Total(1)**           |       | 8,153                                      |       | 100.0 |   | 8,627 |   | 100.0 |   | 8,499 |   | 100.0 |   |

 

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(1)          Total GWh production plus purchases differs from GWhsales due to transmission losses, given that our own power plant consumptionand technical losses have already been deducted.

 

*Sistema Eléctrico Interconectado Nacional*, or the SINAC,is the only interconnected system in Peru.  Electricity sales in the SINACincreased 0.3% during 2009 compared to 2008, reaching a total annual sales of27,082 GWh.

 

Thedistribution of Edegel’s physical sales, in terms of customer segment, is shownin the following table:

 

**PHYSICAL SALES PER CUSTOMER SEGMENT IN PERU (GWh)**

 
| ** **                  | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|
| ** **                  | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                  | ** ** | **Sales  (GWh)**                           | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** | **Sales  (GWh)** | ** ** | **% of  Sales  Volume** | ** ** |
| Contracted sales (1)        |       | 7,569                                      |       | 94.7 |   | 8,225 |   | 97.2 |   | 7,565 |   | 90.9 |   |
| Non-contracted sales        |       | 424                                        |       | 5.3 |   | 235 |   | 2.8 |   | 755 |   | 9.1 |   |
| **Total electricity sales** |       | 7,994                                      |       | 100.0 |   | 8,461 |   | 100.0 |   | 8,321 |   | 100.0 |   |

 

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(1) Includesthe sales to distributors without contracts.

 

Edegel’sphysical sales in 2009 decreased by 1.7% compared to 2008.  Sales in thespot market increased 221.5% and contracted sales decreased by 8.0%.  Thedecrease in contracted sales is primarily due to the reduction in the energysold to ElectroPerú whose contract with Ventanilla ended inSeptember 2009, and compensated with the increase in sales to distributorsfor the bids realized during 2006, 2007 and 2008.  During 2009, Edegel hadeight regulated customers.  Edegel has had contracts since 1997 with *Luz del Sur* and Edelnor.  Edegel alsowon the bids 

 

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launchedby other distributors during 2006, 2007.  The company has elevenunregulated customers.  Sales to unregulated customers represented 46.3%of Edegel’s total contracted sales in 2009, compared to 56.5% in 2008.

 

During2009, there were nine bids for the supply of various distributors for theperiod 2009-2013.  The energy required was variable by year with valuesbetween 2,400 GWh and 14,100 GWh.  Of these processes, Edegel allocated600, 2,775 and 3,362 GWh for 2011, 2012 and 2013, respectively.

 

Thefollowing table sets forth our sales by volume to our largest customers in Perufor each of the periods indicated:

 

**MAIN CUSTOMERS IN PERU (GWh)**

 
| ** **                                             | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                             | ** ** | **2007**                                   | ** ** | **2008** | ** ** | **2009** | ** ** |
| ** **                                             | ** ** | **Sales  (GWh)**                           | ** ** | **% of  contract  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contract  Sales** | ** ** | **Sales  (GWh)** | ** ** | **% of  contract  Sales** | ** ** |
| **Distribution companies:**                            |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Edelnor (Regulated) (1)                                |       | 1,039                                      |       | 13.7 |   | 1,693 |   | 20.6 |   | 2,663 |   | 35.2 |   |
| Luz del Sur (Regulated) (1)                            |       | 1,222                                      |       | 16.1 |   | 1,346 |   | 16.4 |   | 949 |   | 12.5 |   |
| Hidrandina                                             |       | 52                                         |       | 0.7 |   | 58 |   | 0.7 |   | 60 |   | 0.8 |   |
| Electronoroeste                                        |       | 46                                         |       | 0.6 |   | 49 |   | 0.6 |   | 50 |   | 0.7 |   |
| Electronorte                                           |       | 45                                         |       | 0.6 |   | 50 |   | 0.6 |   | 54 |   | 0.7 |   |
| Electrosur                                             |       | 27                                         |       | 0.4 |   | 30 |   | 0.4 |   | 32 |   | 0.4 |   |
| **Total sales to our largest  distribution companies** |       | 2,431                                      |       | 32.1 |   | 3,226 |   | 39.2 |   | 3,808 |   | 50.3 |   |
|                                                   |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| **Unregulated costumers:**                             |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| ElectroPerú (2)                                   |       | 2,427                                      |       | 32.1 |   | 2,775 |   | 33.7 |   | 1,821 |   | 24.1 |   |
| Antamina                                               |       | 682                                        |       | 9.0 |   | 644 |   | 7.8 |   | 652 |   | 8.6 |   |
| Refinería                                         |       | 516                                        |       | 6.8 |   | 635 |   | 7.7 |   | 614 |   | 8.1 |   |
| Siderperú                                         |       | 362                                        |       | 4.8 |   | 334 |   | 4.1 |   | 253 |   | 3.3 |   |
| **Total sales to our largest  unregulated companies**  |       | 3,987                                      |       | 52.7 |   | 4,387 |   | 53.3 |   | 3,339 |   | 44.1 |   |
| **Total sales to our largest  costumers**              |       | 6,418                                      |       | 84.8 |   | 7,613 |   | 92.6 |   | 7,147 |   | 94,5 |   |

 

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(1)          The figures for Edelnor and *Luz del Sur* represent sales underbilateral contracts with Edegel only, and not withdrawals of these companiesassigned to Edegel for non contract-related consumption.  For 2007, 2008,and 2009, the energy sold to these distributors includes the amount won byEdegel in the bids realized during 2006 and 2007.

(2)          Since 2006, ElectroPerú has been a customer ofEdegel due to a merger with Etevensa.  The contract with ElectroPerúexpired in September 2009.

 

Ourmost important competitors in Peru are Enersur (GDF-SUEZ group, with aninstalled capacity of 1,030 MW); ElectroPerú (state-owned competitor, withan installed capacity of 990 MW); Egenor (Duke Energy Group, with aninstalled capacity of 492 MW) and Kallpa (Inkia Energy group, with aninstalled capacity of 368 MW).

 

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**ELECTRICITY INDUSTRY REGULATORY FRAMEWORK**

 

**Chile**

 

*Industry Structure*

 

Theelectricity industry in Chile is divided into three business segments:generation, transmission and distribution.  The generation segmentconsists of companies that produce electricity.  They sell theirproduction to distribution companies, unregulated customers, or to othergeneration companies.  The transmission segment consists of companies thattransmit at high voltage the electricity produced by generationcompanies.  Finally, the distribution segment is defined for regulatorypurposes to include all electricity supply to final customers at a voltage nohigher than 23 kV.

 

Theelectricity sector in Chile is regulated pursuant to Decree with force ofLaw No. 4 of 2006, as amended, known as the Chilean Electricity Law.

 

InChile there are four separate interconnected electricity systems.  Themain systems that cover the most populated areas of Chile are the *Sistema Interconectado Central,*or**SIC, that services the central and southcentral part of the territory, where 93% of the Chilean population lives, andthe *Sistema Interconectado del Norte Grande,*or SING, which operates in the northern part of the country, where most of themining industry is located.  According to the 2002 census, 6.1% of theChilean population lives in the territory serviced by the SING.  Inaddition to the SIC and the SING, there are two isolated systems in southernChile that provide electricity in remote areas.  The operation ofelectricity generation companies in each of the two major interconnectedelectricity systems is coordinated by their respective dispatch center,**CDEC, an autonomous entity that involvesindustry groups, transmission companies and large customers.  CDECscoordinate the operation of their system as efficient markets for the sale ofelectricity, in which the lowest marginal cost producer is usually used tosatisfy demand.  As a result, at any specific level of demand, theappropriate supply will be provided at the lowest possible cost of productionavailable in the system at any moment.

 

**Chilean Electricity Law**

 

***General***

 

Thegoal of the Chilean Electricity Law is to provide incentives to maximizeefficiency and to provide a simplified regulatory scheme and tariff-settingprocess which limits the discretionary role of the government by establishingobjective criteria for setting prices.  The expected result is aneconomically efficient allocation of resources.  The regulatory system isdesigned to provide a competitive rate of return on investment to stimulateprivate investment, while ensuring the availability of electricity service toall who request it.

 

Threegovernmental entities have primary responsibility for the implementation andenforcement of the Chilean Electricity Law.  Twice a year (in April andOctober), the CNE calculates the *Precio deNudo* (node price), or energy and capacity regulated prices thatdistribution companies pay to generators.  In 2005, bid processes wereintroduced for distribution companies’ energy supply, and therefore after 2010the energy “node price” will be necessary only to set the maximum offer pricefor each energy bid to regulated customers.  The CNE also prepares theIndicative Plan, a ten-year guide for the expansion of the generation andtransmission system.  The**SEFsets and enforces the technical standards of the system and the propercompliance with the law.  In addition, the Ministry of Energy was createdin 2009.  The Ministry grants final approvals for tariffs and node pricesset by the CNE, and regulates the granting of concessions to electricitygeneration, transmission and distribution companies.

 

Companiesengaged in generation must coordinate their operations through the pertinentCDEC in order to minimize the operating costs of the electricity system andmonitor the quality of service provided by the generation and transmissioncompanies.  Generation companies satisfy their contractual salesrequirements with dispatched electricity, whether produced by them or purchasedfrom other generation companies in the spot market.  The principal purposeof a CDEC in operating the dispatch system is to ensure that only the mostefficiently produced electricity is dispatched to customers.

 

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***Sales by Generation Companies toUnregulated Customers***

 

Salesby generation companies may be made to final unregulated customers or to othergeneration companies under contracts with freely determined terms.  Tobalance their contractual obligations with their dispatch, generators have totrade deficit and surplus electricity at the spot market price, which is sethourly by each CDEC, based on the marginal cost of production of the next kWhto be dispatched.

 

***Sales to Distribution Companies and CertainRegulated Customers***

 

Regulated customers arethose with a maximum consumption capacity not exceeding 0.5 MW.  Customers between 0.5 and 2 MW may choosetheir status as regulated or unregulated.  Customers with capacity needsover 2 MW are unregulated.  Historically, sales to distributioncompanies for resale to regulated customers have been made through contracts atregulated prices (node prices) in effect at the relevant locations (or “nodes”)on the interconnected system through which such electricity is supplied. Nevertheless, since 2005 all new contracts between generation and distributioncompanies for the supply to regulated customers must arise from internationalbids which have a maximum offer energy price based on the average price paid bythe unregulated customers at the time that the bid is made, which is calculatedtwice a year by the CNE.  If a first bid is unsuccessful, authorities mayincrease this maximum price by an additional 15%.  The bids are awarded ona minimum price basis.  The price associated with these bids will betransferred directly to final customers, replacing the current regulated priceregime.  During the life of the contract, the energy and capacity priceswill be indexed according to formulas set forth in the bid documentation andlinked to fuel, investment and other costs of energy generation.  Underthe bid system, all distribution companies will have electricity contracts from2011 onwards.  Distribution companies may also pay for their capacityconsumption at the capacity node price determined by the CNE, and calculatedbased on the marginal cost of increasing the existing capacity of theelectricity system with the least expensive dispatch by any generatingfacility.

 

***Sales of Capacity to Other GenerationCompanies***

 

EachCDEC annually determines a firm capacity for each power plant.  Firmcapacity is the highest capacity which a generator may supply to the system atcertain peak hours, taking into consideration statistical information regardingthe time it is out of service for maintenance and extremely dry conditions forthe operation of hydroelectric plants.

 

Ageneration company may be required to purchase or sell capacity in the spotmarket at any time, depending upon its contractual requirements in relation tothe amount of electricity to be dispatched from such company and to its firmcapacity.

 

***Transmission***

 

Sincetransmission assets are built pursuant to concessions granted by thegovernment, the law requires a company to operate on an “open access” basis, inwhich users may obtain access to the system by contributing towards the costsof operating, maintaining and, if necessary, expanding the system. Transmission companies recover their investment in transmission assets throughtolls, or “wheeling rates,” which are charged to generation companies and finalcustomers in the proportion 80% to generators and 20% to final customers. Transmission tariffs are determined every four years by a decree of theMinistry of Energy.

 

***Concessions***

 

Thelaw permits generation activity without a concession.  However, companiesmay apply for a concession to facilitate access to third-partyproperties.  Third-party property owners are entitled to compensation,which may be agreed to by the parties or, if there is no agreement, may bedetermined by an administrative proceeding that may be appealed in the Chileancourts.

 

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***Fines******and Compensations***

 

Ifa rationing decree is enacted in response to prolonged periods of electricityshortages, severe penalties may be imposed on generation companies thatcontravene the decree.  A severe drought is not considered a *force majeure* event.

 

Generationcompanies may also be required to pay fines to the regulatory authorities,related to system blackouts due to any generator’s operational mistake,including failures related to the coordination duties of all system agents aswell as to make compensatory payments to electricity consumers affected byshortages of electricity.  If generation companies cannot satisfy theircontractual commitments to deliver electricity during periods when a rationingdecree is in effect and there is no energy available to purchase in the system,the generation company must compensate the customers at the failure costdetermined by the authority in each tariff setting.

 

***Environmental Regulation***

 

TheChilean Constitution grants all citizens the right to live in a pollution-freeenvironment.  It further provides that other constitutional rights may belimited in order to protect the environment.  Chile has numerous laws, regulations,decrees and municipal ordinances that may raise environmentalconsiderations.  Among them are regulations relating to waste disposal(including the discharge of liquid industrial wastes), the establishment ofindustries in areas in which they may affect public health, and the protectionof water for human consumption.

 

EnvironmentalLaw No. 19,300 was enacted in 1994 and implemented by several rules,such as Environmental Impact Assessment System Rule issued in 1997 andmodified in 2001.  This law requires companies to conduct environmentalimpact study or declaration of any future generation or transmission projects.

 

Recently,as of January 2010, Law No. 19,300 was modified byLaw No. 20,417, introducing changes in the environmental assessmentprocess and in the public institutions involved in it.  Consequently,environmental assessment process is coordinated by the Environmental AssessmentService, and not by Chilean Environmental Commission, or Conama, that wasrepealed.  Endesa Chile applies the guidelines of the new law whenanalyzing the development of future projects.

 

On April 1, 2008,Law No. 20,257, which is an amendment to the General Services Law*,* was enacted.  The purpose of theamendment is to promote the use of NCRE.  This law defines the differenttypes of technologies considered as NCRE, and establishes the obligation ofgenerators between 2010 and 2014, to supply 5% of the total energy contractedfrom August 31, 2007, to be of such type, and to progressively increasethis percentage 0.5 percentage points annually up to 10% as of 2024. Currently, our power plants recognized as NCRE generators are Palmucho,Canela wind farms and Ojos de Agua.  Additionally, the law sets forthfines for the generators that do not comply with this obligation. Endesa Chile estimates that it will be able to fully comply with thisobligation in 2010 and generate excess energy with NCRE, with the capacity tosell the surplus to other generators.  The additional cost of generatingwith NCRE will be charged as a pass-through in the new contracts, thuseliminating the impact to our revenues.

 

***Water rights***

 

EndesaChile owns indefinite term, unconditional and absolute property water rightsgranted by the Chilean Water Authority.  Chilean generation companies mustpay an annual fee for unused water rights.  License fees already paid maybe recovered through monthly tax credits commencing on the start-up date of theproject associated to the water right considered.  The maximum licensefees to be recovered are those paid during the 8 years before the start-update. As of the date of this report, Endesa Chile has not recovered anylicense fee already paid.  During 2009, we paid Ch$ 2,699 million($ 5.3 million) associated with 2008 water rights located in the SIC area. This amount may vary in the future according to the actual water rights we mayhold each year.  Endesa Chile continuously analyzes which waterrights it will maintain, disregard or acquire.  We estimate that in 2010we will pay fees of $ 5.3 million.  We expect that if we do notabandon any water rights in the SIC, we will have to pay license feesaggregating to no more than $ 5.5 million per year throughDecember 2011.  Thereafter, the water rights law requires an annualfee that will be doubled and will thereafter remain flat for five years, atwhich point the license fee will be doubled once again.  In the case ofwater rights located in the extreme south of Chile, outside the 

 

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areacomprised by the SIC, the license fees will be paid starting as of January 1,2012, even though, Endesa Chile does not and will not have any waterrights in that area.

 

**Argentina**

 

***Introduction***

 

Law No. 15,336of 1960 and Law No. 24,065 of 1992 (together, the “ArgentineElectricity Act”) set the regulatory framework for the electricity sector.

 

Underthe Argentine Electricity Act, the Federal Government:

 

·                  Divided theelectricity industry into three business segments: generation, transmission anddistribution, to enable the electric market development under conditions offree competition for generation with reduced tariffs, requirements regardingquality standards, and restrictions to ownership concentration;

 

·                  Created the *Mercado Eléctrico Mayorista* (WholesaleElectricity Market) or “MEM” where four categories of agents (generators,transmitters, distributors and large customers) are allowed to buy and sellelectricity as well as related products;

 

·                  Imposed the *Compañía Administradora del Mercado MayoristaEléctrico* (Administrative Company for the Wholesale ElectricityMarket) or “Cammesa,” responsible for the dispatch coordination, theadministration of the agent’s transactions in the MEM and the calculation ofthe spot prices.  The agents participate in Cammesa as shareholdersthrough their corresponding associations with the Secretariat of Energy, theowner of the remaining 20% of the capital stock.  The Ministry of FederalPlanning, Public Investment and Services appoints the Cammesa chairman; and

 

·                  Created the *Ente Nacional Regulador de la Electricidad*(Electricity National Regulatory Agency) or “ENRE,” in charge of regulatingpublic service activities in the electricity sector and imposing jurisdictionaldecisions.

 

The Ministry of FederalPlanning, Public Investment and Services, through the Secretariat of Energy, isprimarily responsible for the implementation of the Argentine Electricity Act.  Among the main tasks, the Secretariatregulates the system dispatch and the activities in the MEM, and grants theconcessions or authorization for each activity in the electricity sector.  The Secretariat of Energy is also responsiblefor policy setting in the oil and natural gas sector, with its direct impact tothermal generators and the electricity sector.

 

*Industry structure*

 

Thegeneration sector is organized on a competitive basis, with independentgenerators selling their output on the MEM’s spot market or through privatecontracts to purchasers on the MEM’s contract market.

 

Transmissionis a public service that works under monopoly conditions by several companiesto whom the Federal Government grants concessions.  One concessionaireoperates and maintains the highest voltage facilities and eight concessionairesoperate and maintain high and medium voltage facilities, to which facilities ofthe generation plants, distribution systems and large customers areconnected.  The international interconnected transmission systems alsorequire concessions granted by the Secretariat of Energy.  Transmissioncompanies are authorized to charge different tolls for their services.

 

Distributionis a public service that works under monopoly conditions and is provided bycompanies who have also been granted concessions.  Distribution companieshave the obligation to make electricity available to the final customers withina specific concession area, regardless of whether the customer has a contractwith the distributor or directly with a generator.  Accordingly, these companieshave regulated tariffs and are subject to quality service specifications. Distribution companies may obtain electricity either in the MEM’s spot marketat a price called “seasonal price,” or in the MEM’s term market through privatecontracts with generators.  The seasonal price, defined by the Secretariatof Energy, is the cap for the costs of electricity bought by distributors andpassed through to regulated customers.

 

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Thereare three electricity distribution areas subject to federal concessions. The concessionaires are Edelap, Edesur and Edenor.  The local distributionareas are subject to concessions granted by the provincial or municipalauthorities.  However, all distribution companies acting in the MEM mustoperate under its rules.

 

Regulatedcustomers are supplied by distributors at regulated tariffs, unless they have aminimum capacity demand of 30 kW, in which case they can choose tocontract their supply directly from generators in the MEM ́s spot market,becoming “large customers” who may freely negotiate their prices withgenerating companies.

 

Tradersare also authorized to act as participants in the MEM.  They buy and sellenergy and related products from and for agents of the MEM, includingelectricity royalty payments received by the provinces.

 

Nogenerator, distributor, large user, nor any company controlled by any of theseor controlling the same, may be either owner or a major shareholder of atransmission company or of its controlling companies.  At the same time,transmission companies are prohibited from generating, distributing, purchasingand/or selling electricity. Distribution companies are prohibited from owninggeneration units.

 

***Dispatch and Pricing***

 

Cammesacontrols the coordination of dispatch operations, the spot prices calculationand the administration of the MEM’s economic transactions.  All generatorsthat are MEM agents have to be connected to the *Sistema Argentino de Interconexión*(Argentine InterconnectedSystem) or “Argentine NIS” and are obliged to comply with the dispatch order togenerate and deliver energy to the Argentine NIS, in order to be sold in thespot market or in the term market.  Distribution companies, traders andlarge users that have entered into private supply contracts with generationcompanies, pay the contractual price directly to the generator and also pay atoll to the distribution company for the use of their systems.

 

Thespot price is calculated on an hourly basis by Cammesa and must reflect thecost of the marginal kW to be dispatched in the Argentine NIS and is paid togenerators and sellers of energy at the spot market.  The ArgentineElectricity Act sets that electricity prices in the spot market are determinedon a marginal cost basis.  Since 2002, the Secretariat of Energy startedto modify several criteria regarding the spot prices and imposed, among otherrestrictions, caps for the spot prices to be paid to the generators and onlyrecognized for calculations purposes the natural gas costs established by theFederal Government, even though additional costs are collected by the marketand paid to the generator.

 

In order to stabilize theprices for distribution tariffs, the market has a seasonal price as the energyprice to be paid by distributors for their purchases of electricity traded inthe spot market.  It is a fixed price determined every six months by theSecretariat of Energy after Cammesa recommends the seasonal price level fornext period according to its estimated spot price, which is based on itsevaluation of the expected supply, demand and available capacity, as well asother factors.  The seasonal price is maintained for at least 90 days. Since 2002, the Secretariat of Energyhas been approving seasonal prices lower than those recommended by Cammesa.

 

***Regulatory Developments: the industry afterthe Public Emergency Law***

 

***General***

 

Law No. 25,561,the Public Emergency Law, was enacted in 2002 to manage the public crisis whichbegan that year.  It forced the renegotiation of public service contracts(such as electricity transmission and distribution concession contracts) andimposed the conversion of dollar denominated obligations into Argentine pesosat a pegged rate of Ar$ 1 per $ 1.  It also empowered theFederal Government to implement additional monetary, financial and exchangemeasures to overcome the economic crisis in the medium term.  Thesemeasures have been periodically extended.  In fact,Law No. 26,563, enacted in December 2009, extended the measuresuntil December 31, 2010.

 

TheSecretariat of Energy introduced several regulatory measures aimed to correctthe effects of the devaluation into the MEM’s costs and prices and to reducethe price to be paid by the final customers.

 

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***Generation***

 

Themandatory conversion of transmission and distribution tariffs from dollars toArgentine pesos at the pegged rate of $ 1 per Ar$ 1, when the marketexchange rate was approximately $ 1 per Ar$ 3 and the regulatorymeasures to cap and reduce the spot and seasonal prices hindered the passthrough of generation variable costs into the tariffs to final customers.

 

Resolution SENo. 240/2003 changed the way to fix spot prices, decoupling the spot pricecalculation from the marginal costs of operation.  Until this resolution, spot prices on the MEMwere typically fixed by units operating with natural gas during the warm season(from September through April) and units operating with fuel/diesel in thewinter (May-August).  Then, due to restrictions on natural gas supply,winter prices were higher, and related to imported fuels priced in dollars.  Resolution SE No. 240/2003 seeks to avoidthe pegged price indexation to the dollar and, although generation dispatch isstill based on actual fuels used, the calculation of the spot price under theResolution is defined as if all dispatched generation units did not have theexisting restrictions on natural gas supply.  Water value is notconsidered if its opportunity cost is higher than the cost of generating withnatural gas.  The resolution also set a cap on the spot price at120 Ar$/MWh.

 

The government avoided theincrease in electricity tariffs to final customers and seasonal prices weremaintained substantially fixed in Argentine pesos, although gas producersreceived price revisions by the authority, recovering part of the value thatthey lost with the devaluation.  In this scenario, Cammesa sells energy todistributors who pay seasonal prices, and buys energy from generators at spotprices that recognize rising gas price. To overcome this unbalance, the authority— through Resolution SE N° 406/2003 — only allows payments to generators foramounts collected from the purchasers in the spot market.  This Resolution set a priority of payment fordifferent services: capacity payment, fuel cost, energy sales margin, etc. Cammesa accumulates debt with generators, and the system gives an incorrectprice signal to the agents, by not encouraging savings in electricityconsumption as well as investments to satisfy the growth in electricity demand,including investments in transmission capacity.

 

Additionally,the generators suffer a reduction of estimated income from contract pricesbecause they are reduced as a consequence of the spot price level.

 

Theobligation to settle the unpaid spot electricity with generators led authoritiesto fund investments in new capacity within the MEM, though Foninvemem, a fundmanaged by Cammesa.  Funds in the Foninvemem have been used to install twocombined cycle generation plants of 850 MW each.

 

In order to enhance theenergy supply the Secretariat of Energy created different schemes to sell “morereliable energy.”  Resolution 1,281/2006created the Energy Plus Service, which is the offer of new electricity capacityto supply the growth in electricity demand, over the “Base Demand,” which wasthe demand for electricity in 2005.  The Energy Plus Service is suppliedby generators that install new capacity or that offer existing generationcapacity not connected before to the NIS.  All “large customers” that, asof November 1, 2006, had a higher demand than their Base Demand, had tocontract excess demand with the Energy Plus Service.  The consumption thatexceeded the Base Demand without a contract to supply should pay additionalamounts for the surplus energy.  The price of the contracts for EnergyPlus Service have to be approved by the relevant authorities.  Consumptionof unregulated customers that could not be secured by an Energy Plus Servicecontract, could request Cammesa to conduct an auction to satisfy their demand.

 

Resolutions SE No. 220/2007and No. 724/2008 gives thermal generators the opportunity to reduce someof the adverse effects of Resolution SE No. 406/2003 by entering intoMEM Supply Commitment Contract or “CCAM.”  Generators can commitmaintenance or repowering investments to improve their unit’s availability andadd additional capacity to the system.  Afterauthorization, the generator can sign a CCAM at prices that permit the recoveryof capital expenditures.  Additionally, energy sales through a CCAMreceive payment priority compared with spot energy sales (Res. No. 406/2003). Generators with a CCAM can supply energy to Cammesa for up to 36 months,renewable only for an additional period of six months.

 

During 2009, Resolution SENo. 762 created the Hydroelectric National Program to promote theconstruction of new hydro plants.  Theprogram enables authorized generators to subscribe energy supply contracts withCammesa for up to fifteen years, at prices that allow for an investmentrecovery.

 

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TheFederal Government has adopted several other measures to promote newinvestments, including auctions to expand the capacity of natural gas transportationand of electricity transmission, the implementation of certain projects for theconstruction of power plants, and the creation of fiduciary funds to financethese expansions.  Law No. 26,095 of 2006 created specificcharges that must be paid by final customers to finance new electricity and gasinfrastructure projects.  The Federal Government has also enacted someregulations to promote the rational and efficient use of electricity.

 

***Foninvemem***

 

ResolutionSE No. 712/2004 created Foninvemem, a fund whose purpose is to increaseelectricity capacity/generation within the MEM.  Pursuant to Resolution SENo. 406/2003, the Secretariat of Energy decided to pay the generators thespot prices up to the amount available at a stabilization fund, after collectingthe funds from the purchasers in the spot market at seasonal prices, lower thanspot prices for the same period.  Foninvemem would receive the differencesbetween spot prices and payments to sellers, according to Resolution SENo. 406/2003, from January 1, 2004 to December 31, 2006. Cammesa was appointed to manage the Foninvemem.

 

Pursuantto Resolution SE No. 1,193/2005 all private generators in the MEM werecalled to participate in the construction, operation and maintenance of theelectric energy generation plants to be built with the Foninvemem, consistingof two combined cycle generation plants of 850 MW each.  These powerplants are powered by natural gas or alternative fuels.  ThroughResolutions SE No. 1,427/2004 and Resolution SE No. 1,193/2005 theauthorities committed to return to the original way of calculating spot pricesand to authorize seasonal prices according to those calculated by Cammesa, whensuch electricity generation plants started operations.

 

Becauseof the insufficient resources to conclude the plants, ResolutionSE No. 564/2007 gathered all the MEM’s private sector generators tocommit to Foninvemem by including the differences between spot prices andpayments made pursuant to Resolution SE No. 406/2003 for an extra period endingDecember 31, 2007.  Since the contribution of generators wasonly a right to charge, the actual cash flow to complete the construction camemainly from the fiscal budget.

 

***Transmission and distribution***

 

Transmissionand distribution companies have been renegotiating contracts since 2005 andalthough tariffs were partially and temporarily established, definitive tariffsare still pending.

 

Asa result, although the terms to define energy prices pursuant to the ArgentineElectricity Act are still in force, their implementation reflects the measurestaken by the authorities that reduce compensation for all electricitycompanies.

 

***Natural gas market***

 

Finalcustomers demand for natural gas has a peak during winters. During this season,there have been natural gas shortages to supply power plants for severalyears.  In order to assure internal supply, thermal generators consumealternative fuels, such as diesel and fuel oil.  Since 2002, the lack ofinvestment in natural gas production obliged the system to burn increasingamounts of liquid fuels.  In 2004, the Argentine government entered intoan agreement with Venezuela to guarantee fuel oil supply until 2010.

 

To improve the natural gassupply, the government has adopted different actions.  In 2006, Argentina and Bolivia enteredinto a 20-year agreement under which Argentina has the right to receive up to28 million cubic meters daily.  Inthe winters of 2008 and 2009, various regasification ships arrived at BahíaBlanca with LNG for the system.

 

Since2004, gas producers and the government have subscribed several agreements toguarantee gas supply at rising prices. In July 2009, the last agreementwas signed incorporating a 30% increase in the gas tariff to power producersuntil December 2009.

 

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Oneof the measures related to natural gas in recent years was the creation of theElectronic Gas Market (MEG).  Through the MEG, the regulatory authoritiesincreased the transparency of physical and commercial operations in the spotmarket.

 

***Export and Import of Energy***

 

Inorder to give priority to the internal market supply, the Secretariat of Energyadopted additional measures that restricted electricity and gas exports. Resolution SE No. 949/2004 established measures that allowed agents toexport and import electricity under very restricted conditions.  Thesemeasures prevented generators from satisfying their export commitments.

 

TheSecretariat of Energy published Disposition No. 27/2004, together withrelated resolutions and decrees, which created a plan to ration natural gasexports and the utilization of transport capacity.  These norms impliedthe beginning of restrictions for gas delivery to Chile and Brazil.

 

***Environmental Regulation***

 

Electricityfacilities are subject to federal and local environmental laws and regulations,including Law No. 24,051, or the Hazardous Waste Law, and itsancillary regulations.

 

Certainreporting and monitoring obligations and emission standards are imposed on theelectricity sector.  Failure to satisfy these requirements entitles thegovernment to impose penalties, such as suspension of operations, which, incase of public services, could result in the cancellation of concessions.

 

Law No. 26,190,enacted in 2007, defined the use of renewable resources for electricityproduction as a national interest and set an 8% market share for generationfrom renewable energies as a target.  During 2009, the government tookactions to reach this objective launching an international auction to promotethe installation of up to 1,000 MW of renewable capacity, publishingResolution No. 712/2009, which created a mechanism to sell renewable energythrough fifteen-year contracts under special price conditions.

 

**Brazil**

 

Althoughwe do not own any Brazilian subsidiaries, we do own equity investments throughEndesa Brasil.

 

***Industry Structure***

 

Brazil’selectricity industry is organized into one large interconnected electricitysystem, which is known as the *SistemaInterligado Nacional* (the “Brazilian NIS”), which comprises most ofthe regions of Brazil and several other small, isolated systems.

 

Generation,transmission and distribution are legally separated activities in Brazil. According to the specifications set forth in Law No. 9,427/96unregulated customers in Brazil are currently those customers: (i) whodemand at least 3,000 kW and choose to contract the energy supply directlywith generators or retailers; or (ii) who demand at least 500 kW (andless than 3,000 kW) and choose to contract the energy supply directly withalternative generators or traders.

 

Theelectricity industry in Brazil is regulated by the Federal Government, actingthrough the Ministry of Mines and Energy, or MME, which has exclusive authorityover the electricity sector, and whose primary role is to establish thepolicies, guidelines and regulations for the sector.  Regulatory policiesare implemented by the Brazilian governmental agency for electric energy orANEEL, whose main responsibilities include, among others: (1) supervisionof the concessions for electricity sale, generation, transmission anddistribution activities, and approval of electricity tariffs;(2) enactment of regulations for the electricity sector;(3) implementation and regulation of the exploitation of electricityresources, including the use of hydroelectricity; (4) promotion of abidding process for new concessions; (5) resolution of administrativedisputes between electricity sector agents; and (6) setting the criteriaand methodology for determining distribution and transmission tariffs.

 

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Otherregulatory authorities include: (i) the Brazilian Electricity SystemOperator (ONS), comprised of generation, transmission and distributioncompanies, and independent consumers, responsible for the coordination andcontrol of the generation and transmission operations of the Brazilian NIS;(ii) the Electricity Trading Board (CCEE), a company in which agents aregathered in four categories: Generation, Distribution, Trading and Consumersand whose main purpose is to carry out the wholesale transactions and tradingof electric power within the Brazilian NIS; and (iii) the Brazilian EnergyPolicy Council (CNPE) in charge of developing the national electricitypolicy.

 

***Deregulation and Privatization***

 

TheConcessions Law (No. 8,987) and the Power Sector Law (No. 9,074),both enacted in 1995, intend to promote competition and attract private capitalinto the electricity sector.  Since then, several assets owned by theFederal Government of Brazil and/or state governments were privatized.

 

***Independent Power Producers andSelf-Producers***

 

ThePower Sector Law also introduced the concept of independent power producers, orIPPs, in order to open the electricity sector to private sectorinvestment.  IPPs are individual agents or agents acting in a consortiumwho receive a concession, permit or authorization from the Brazilian governmentto produce electricity for sale on its own account.

 

TheConcessions Law also provides that, upon receiving a concession, IPPs,self-producers, suppliers and consumers will have access to the distributionand transmission systems owned by other concessionaires, provided that they arereimbursed for their costs as determined by ANEEL.

 

Law No. 9,648/98created the wholesale energy market, composed by the generation anddistribution companies.  According to this market regulation, the purchaseand sale of electricity is freely negotiated.

 

Pursuantto Law No. 10,433/02, the wholesale energy market structure changedto be closely regulated and monitored by ANEEL, which is also responsible forsetting wholesale energy market governance rules including measures tostimulate permanent external investment.

 

Law No. 10,848/04seeks to maintain public service for the production and distribution ofelectricity to consumers within each concession area, restructures planningsystem, guarantees transparency in the auction and bidding process for publicprojects to mitigate the systemic risks, to maintain centralized andcoordinated operations of the energy system and to grant universal use andaccess to electricity throughout Brazil, and it also modifies the biddingprocess of public service concessions.

 

***Structure of the Electricity Sector***

 

Themarket regulation established pursuant to Laws No. 10,847 and 10,848seeks to provide cheaper tariffs for consumers and guarantees the expansion ofthe system, with the Power Research Company, (EPE), a governmental body,responsible for the planning of generation and transmission activities. This market regulation has defined an unregulated contracting environment and aregulated environment.

 

Inthe unregulated contracting environment, the conditions for purchasing energyare negotiable between suppliers and their customers.  Regarding theregulated environment, where distribution companies operate, the purchase ofenergy must be conducted pursuant to a bidding process coordinated by ANEEL.

 

Pursuantto the market regulation, 100% of the energy demand from distributors must besatisfied through long-term contracts in advance of the expiration of currentcontracts in the regulated environment.

 

Anotherchange imposed on the electricity sector is the separation of the biddingprocess for “existing power” and “new power project.”  The governmentbelieves that “new power project” needs more favorable contractual conditionsas long term power purchase agreement (15 years for thermal and 30 years forhydro) and certain price level for each technology.  These agreementspromote investment for the required expansion.  On the other hand, 

 

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“existingpower” which considers depreciated power plants can sell their energy at lowerprices in shorter term contracts.

 

***Concessions***

 

Companiesor consortia that intend to build or operate hydroelectric generationfacilities with a capacity in excess of 30 MW, or transmissions networksin Brazil, have to use a public tender process.  Concessions granted tothe holder give the right to generate, transmit or distribute electricity, asthe case may be, in a given concession area for a given period of time.

 

Theperiod of time is limited to 35 years for new generation concessions and to 30years for new transmission or distribution concessions.  Existingconcessions may be renewed at the Brazilian government’s discretion, for aperiod equal to their initial term.

 

***Electricity Sales***

 

Inthe regulated environment (ACR), electricity distribution companies buy theelectricity through bids that are regulated by ANEEL and organized byCCEE.  Distributors must buy electricity at public bids.

 

Thereare three types of regulated bids: new energy bids, existing energy bids andadjustment bids.  The government has also the right to call special bidsfor renewable electricity (biomass, small hydro, solar and wind).  ANEELand CCEE hold the bids annually.  The contracting system is multilateral,with generating companies entering into contracts with all distributors whocall for bids.

 

UnregulatedEnvironment*,*or ACL, include thesale of electricity between generation concessionaires, independent producers,self-producers, sellers of electricity, importers of electricity, unregulatedand special consumers.  The ACL also includes contracts in place betweengenerators and distributors until their expiration, at which point newcontracts may be entered into under the terms of the new regulatory framework.

 

***Hydroelectrical Energy Reassignment***

 

Brazilcreated a special mechanism to share hydrological risk between all hydrogenerators, called Reallocating Energy Mechanism**(MRE).  Each hydro power plant has an assigned energycertificate which defines both the proportion of the total generated hydroenergy owned by this plant and the maximum energy amount that this plant cansale through contracts.  Differences between actual production and theassigned energy must be traded at a regulated fixed tariff (approximately$ 4/MWh).

 

***Settlement Spot Price***

 

Thespot price is used to value the purchase and sale of electric power in theshort term market.  According to the law, CCEE is responsible for thesetting of the electricity price in the spot market.

 

***Fines applicable to agents in theelectricity industry***

 

Sellingagents are responsible to the buying agent for payments if they are unable tosatisfy their delivery obligations.  ANEEL regulation sets forth the finesapplicable to electricity agents based on the nature and the materiality of theviolation (including warnings, fines, temporary suspension of the right toparticipate in bids for new concessions, licenses or authorizations andforfeiture).  For each violation, fines may be imposed for up to 2.0% ofthe concessionaire’s revenues arising from the sale of electricity and servicesprovided (net of taxes) in the 12-month period immediately preceding anyassessment notice.

 

ANEELmay also impose restrictions on the terms and conditions of agreements betweenrelated parties and, in extreme circumstances, terminate such agreements.

 

Aparty defaulting on payment of contributions to subsidy funds for the promotionand development of the electricity sector or any other payments due by virtueof the purchase of electricity in the ACR or from Itaipú, cannot use tariffadjustments (except for the extraordinary revision).

 

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***Incentives for the Development ofAlternative Sources of Energy***

 

Law No. 10,438/02created certain incentive programs for the use of alternative sources in thegeneration of electricity (Proinfa).  It assures the purchase of theelectricity generated by Eletrobrás for a period of 20 years and financialsupport from the BNDES.  Other programs include a discount of up to 50% onthe distribution or transmission tariffs and a special exception for theconsumers with electricity demand of 500 kW to 3,000 kW (specialconsumers), who decide to migrate to ACL provided that such consumers purchaseelectricity from generating companies using alternative sources of electricity.

 

Additionally,the government developed bidding processes for alternative energies (forexample, the bidding process for wind projects that was held inDecember 2009, for 753 MW).

 

***Environmental Regulation***

 

TheBrazilian Constitution gives both the federal and state governments power toenact laws designed to protect the environment and to issue regulations undersuch laws.  While the federal government has power to enact environmentalregulations, state governments have the power to enact more stringentenvironmental regulations.  Most of the environmental regulations inBrazil are at the state and local level rather than at the level of the federalgovernment.

 

Hydroelectricfacilities are required to obtain concessions for water rights andenvironmental approvals.  Thermal electricity generation, transmission anddistribution companies are required to obtain environmental approvals fromenvironmental regulatory authorities.

 

**Colombia**

 

Twopieces of legislation regulate the electricity business in Colombia:Law No. 142 (the “Colombian Public Utilities Law”) sets theregulatory framework for the supply of public residential services, includingelectricity, and Law No. 143 (the “Colombian Electricity Act”)establishes the framework for the generation, trading, transmission anddistribution of electricity.  Law No. 142 states that theprovision of electricity is an essential public service that must be providedby government and private sector entities.

 

Utilitycompanies are required to ensure continuous and efficient service, facilitatethe access of low-income users to subsidies granted by the government, informusers regarding efficient and safe use of the services, protect theenvironment, allow access and interconnection to other public service companiesand large customers, cooperate with the authorities in the event of anemergency to prevent damage to users, and report to the authority anycommercial start-up of operations.

 

TheColombian Electricity Act sets out the principles for the electricity industry,which are implemented through the resolutions enacted by the Energy and GasRegulatory Commission, or “CREG.”  Such principles are: efficiency (thecorrect allocation and use of resources and the supply of electricity atminimum cost);  quality (compliance with technical requirements);continuity (continuous electricity supply without unjustifiedinterruptions);  adaptability (the incorporation of modern technology andadministrative systems to promote quality and efficiency); neutrality(impartial treatment to all electricity consumers); solidarity (the provisionof funds by high-income consumers to subsidize the subsistence consumption oflow-income consumers); and fairness (an adequate and nondiscriminatory supplyof electricity to all regions and sectors of the country).

 

TheColombian Electricity Act regulates the generation, trading, transmission, anddistribution (the “Activities”) of electricity.  Under the law, anycompany, domestic or foreign, may undertake any of the Activities.  Newcompanies, however, must engage exclusively in one of the Activities. Trading can be combined with either generation or distribution.

 

Themarket share for generators and traders is limited.  The limit for generatorsis 25% of the Colombian system Firm Energy.  Firm Energy refers to themaximum electric energy that a generation plant is able to deliver on acontinuous basis during a year, in extremely dry conditions; for instance, inthe case of the *El Niño* phenomenon.

 

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Similarly,a trader may not account for more than 25% of the trading activity in theColombian NIS.  Limitations for traders take into account internationalenergy sales.  Market share is calculated on a monthly basis and tradershave up to six months to reduce their share when the limit is exceeded.

 

Suchlimits are applied to economic groups, including companies that are controlledby, or under common control with, other companies.  In addition,generators may not own more than a 25% interest in a distributor, and viceversa.  However, this limitation only applies to individual companies anddoes not preclude cross-ownership by companies of the same corporate group.

 

Agenerator, distributor, trader or an integrated company, *i.e*. a firm combining generation,transmission and distribution activities, cannot own more than 15% of theequity in a transmission company if the latter represents more than 2% of thenational transmission business in terms of revenues.  A distributioncompany can have more than 25% of an integrated company’s equity if the marketshare of the last company is less than 2% of the national generationbusiness.  A company created before enactment of Law No. 143 isbanned from merging with another company created after Law No. 143.

 

TheMinistry of Mines and Energy defines the government’s policy for the energysector.  Other government entities which play an important role in theelectricity industry are: Public Utility Superintendency of Colombia, which isin charge of overseeing and inspecting the utility companies; CREG, which is incharge of regulating the energy and gas sectors; and the**Mining and Energy Planning Agency, whichis in charge of planning the expansion of the generation and transmissionnetwork.

 

CREGis empowered to issue regulations that govern technical and commercialoperations and to set charges for regulated activities.  CREG’s mainfunctions are to establish conditions for gradual deregulation of theelectricity sector toward an open and competitive market, approve charges fortransmission and distribution networks and charges for retailing to regulatedcustomers, establish the methodology for calculating and establishing maximumtariffs for supplying the regulated market, establish regulations for planningand coordination of operations of the Colombian NIS and establish technicalrequirements for quality, reliability and security of supply, and protection ofcustomers’ rights.

 

***Generation***

 

Thegeneration sector is organized on a competitive basis with companies sellingtheir production on the electricity pool market, the wholesale market at thespot price or by long-term private contracts with other participants andunregulated customers at freely negotiated prices.  The Colombian NIS isthe system formed by generation plants, the interconnection grid, regionaltransmission lines, distribution lines and consumer loads.  The spot priceis the price paid by the participant in the wholesale market for energydispatched under the direction of the Dispatch National Center (CND).  Thehourly spot price paid for energy reflects prices offered by generators in thewholesale market**and therespective supply and demand conditions.

 

Generatorsconnected to the Colombian NIS can also receive “reliability payments” whichare a result of the Firm Energy Obligation that they provide to thesystem.  The Firm Energy Obligation (OEF) is a commitment on the part ofgeneration companies backed by its physical resource capable of producing firmenergy during scarcity periods.  The generator that acquires an OEF willreceive a fixed compensation during the commitment period, whether or not thefulfillment of its obligation is required.  To receive reliabilitypayments, generators have to participate in firm energy bids by declaring andcertifying their firm energy.  Until November, 2012, the transitionperiod, the firm energy supply for reliability purposes will be assignedproportionally to the declared firm energy of each generator.  Beyond thetransition period, the additional firm energy required by the system will beallocated by bids.  The first auction for this period took place inMay 6, 2008, where existing generators participated with new generationprojects while meeting the established market share limits.

 

***Dispatch and Pricing***

 

Thepurchase and sale of electricity can take place between generators,distributors acting in their capacity as traders, traders (who do not generateor distribute electricity) and unregulated customers.  There are norestrictions for new entrants into the market as long as the participantscomply with the applicable laws and regulations.

 

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Thewholesale market facilitates the sale of excess energy that has not beencommitted under contracts.  In the wholesale market*,*an hourly spot price for all dispatchedunits is established based on the offer price of the highest priced generatingdispatched unit for that period.  The CND receives price bids each dayfrom all the generators participating in the wholesale market.  These bidsindicate prices and the hourly available capacity for the following day. Based on this information, the CND guided by “optimal dispatch” principle(which assumes an infinite transmission capacity through the network), ranksthe generators according to their offer price, starting with the lowest bid,and establishing the merit order, on an hourly basis, determining whichgenerator will be dispatched the following day to satisfy expecteddemand.  The price for all generators is set as the most expensivegenerator dispatched in each hourly period under the optimal dispatch. This price-ranking system is intended to ensure that national demand, increasedby the total amount of energy exported to other countries, will be satisfied bythe lowest cost combination of available generating units in the country. Additionally, the CND performs the “planned dispatch,” which takes intoaccount the limitations of the network as well as every other conditionnecessary to satisfy the energy demands expected for the following day, in asafe, reliable and cost-efficient manner.

 

Ifa generator delivers less energy than that assigned by the optimal dispatch, itis charged with the average of the market price and their offer prices. On the other hand, those generators that deliver energy in excess arecredited with the difference.  The net value of these restrictions isassigned proportionally to all the traders within the Colombian NIS, accordingto their demands of energy.  Some generators have initiated legal proceedingsarguing that recognized prices do not cover the costs associated with theserestrictions.

 

Sincethe second half of 2009 and until the date of this report, there have beencritical hydrological conditions in Colombia.  Due to this situation, theMinistry of Mines and Energy and CREG enacted various temporarily resolutionsto modify the dispatch and pricing rules, in order to prevent a possibledeficit during the first half of 2010, the summer season in Colombia.

 

***Export and Import Electricity***

 

Decision CAN 536 of2002, signed by the countries that participate in the Andean Nations Community(CAN) —Colombia, Ecuador, Bolivia and Peru—, established the general frameworkfor the Subregional interconnection of electrical systems that implied acoordinated economic dispatch of the countries involved in theinterconnections.  In this context, in March 2003 the interconnectionsystem between Colombia and Ecuador was inaugurated.

 

InNovember 2009, Decision CAN 720 of 2009 was enacted; it replacedtransitorily Decision CAN 536 for a maximum period of two years. Resolutions CREG 160-2009 and 189-2009 adapted the regulatory framework inColombia according to the new Decision.

 

***Transmission***

 

Transmissioncompanies which operate at least at 220 kV compose the NationalTransmission System, or NTS.  They are required to provide access to thirdparties on equal conditions and are authorized to collect a tariff for theirservices.  The transmission tariff includes a connection charge thatunderwrites the cost of operating the facilities, and a usage charge, whichapplies only to traders.

 

CREGguarantees an annual fixed income to transmission companies.  Income isdetermined by the new replacement value of the networks and equipment, and bythe resulting value of bidding processes awarding new projects for theexpansion of the NTS.  This value is allocated among the traders of theNTS in proportion to their energy demand.

 

Theexpansion of the NTS is conducted according to model expansion plans designedby the Mining and Energy Planning Agency and pursuant to bidding processesopened to existing and new transmission companies, which are handled by theMinistry of Mines and Energy in accordance with the guidelines set byCREG.  Accordingly, the construction, operation and maintenance of newprojects is awarded to the company that offers the lowest present value of cashflows needed for carrying out the project.  During 2009, CREG defined atransmission charges methodology. It is expected that new charges for companieswill be approved during 2010.

 

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***Distribution***

 

Distributionis defined as the operation of local networks below 220 kV.  Any usermay have access to a distribution network for which it pays a connectioncharge.  CREG regulates distribution prices that should permitdistribution companies to recover costs, including operating, maintenance andcapital costs operating efficiently.  Distribution charges are set by CREGfor each company based on the replacement cost of the existing distributionassets, cost of capital, as well as operational and maintenance costs that varydepending on the voltage level.

 

Anew remuneration methodology for the distribution was defined by CREG in 2008which set the Weighted Average Cost of Capital (WACC) at 13.9% before taxes,for assets operating at 34.5 kV or less, and 13% before taxes for assetsoperating above 34.5 kV.  CREG also defined a new methodology for thecalculation of distribution charges, defining an incentive scheme foradministrative, operational and maintenance costs, service quality and energylosses.  During 2009, after auditing the information reported by thecompanies, CREG defined the new distribution charges applicable from 2009 until2013.

 

***Trading***

 

Theretail market is divided into regulated and unregulated customers. Customers in the unregulated market may freely contract for electricity supplydirectly from a generator or a distributor, acting as traders, or from a puretrader.  The unregulated customer market consists of customers with a peakdemand of more than 0.1 MW or a minimum monthly consumption of55 MWh, which for 2009 represented about 31% of the market.

 

Tradingis the resale to final customers of electricity purchased in the wholesalemarket.  It may be conducted by generators, distributors or independentagents, which comply with certain requirements.  Parties freely agree upontrading prices for unregulated customers.

 

Tradingto regulated customers is subject to the “regulated freedom regime” under whichtariffs are set by each trader using a combination of general cost formulasgiven by CREG and individual trading costs approved by CREG for eachtrader.  Since CREG approves limits on costs, traders in the regulatedmarket may set lower tariffs for economic reasons.  Tariffs include, amongother things, energy procurement costs, transmission charges, distributioncharges and a trading margin.

 

Thetariff formula became effective on February 1, 2008.  The mainchanges in the new formula are the establishment of a fixed monthly charge, andthe introduction of reduction costs of non-technical energy losses in thetrading charges.  In addition, CREG allows the traders in the regulatedmarket to choose tariff options to manage tariff increments.

 

Inorder to improve wholesale price formation, CREG is designing a new energyprocurement scheme based on long term energy bids, known as Organized RegulatedMarket or MOR.  The final resolution is expected during the first half of2010.

 

Anothertrading change is the incorporation of an energy derivates market.  In May, 2009, *Derivex*was created by the *Bolsa de Valores deColombia S.A*. and *XMCompañía de Expertos en Mercados S.A. E.S.P*.  This companywill conduct energy derivatives trading, and is expected to start operationsduring 2010.

 

***Environmental Regulation***

 

Law No. 99of 1993 provided the framework for environmental regulation and established theMinistry of the Environment as the authority for determining environmentalpolicies.  The Ministry defines, issues and executes policies andregulations that focus on the recovery, conservation, protection, organization,administration and use of renewable resources.  Therefore, the use ofnatural resources or any impact to them as a result of any activity or projectwill require the issuance of permits and environmental licenses and theestablishment of environmental management plans.  The law particularlyseeks to prevent environmental damage by entities in the energy sector.

 

Anyentity planning to develop projects or activities relating to generation,interconnection, transmission or distribution of electricity which may resultin environmental deterioration, must first obtain an environmental license.

 

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Accordingto Law No. 99, generators which have a total installed nominalcapacity above 10 MW are required to contribute to the conservation of theenvironment through a payment for their activities.  Hydroelectric powerplants must pay 6% of their energy sales; thermoelectric plants must pay 4% oftheir energy sales.  This payment is made monthly to the municipalitiesand environmental corporations where these facilities are located.

 

**Peru**

 

*Industry Structure*

 

Themain regulations of the Peruvian electricity industry are: the Law ofElectricity Concessions (Decree Law No. 25,844) and its ancillaryregulations, the Law to Secure the Efficient Development of ElectricityGeneration (Law No. 28,832), the Technical Regulation on the Qualityof the Electricity Supply (Supreme Decree 020-97), the Electricity Importand Export Regulation (Supreme Decree 049-2005), the Antitrust Law on theElectricity Sector (Law No. 26,876), Law No. 26,734, whichregulates the investments in energy, in addition to the supplementaryLaw No. 27,699 of*OrganismoSupervisor de la Inversión en Energía y Minería* (Energy and MiningInvestment Supervisor Authority) or theOsinergmin, the Peruvian regulatoryelectricity authority, and the regulation for resolution of controversies thatarise within this institution.

 

Someof the characteristics of the regulatory framework are (i) the separationof the three main activities: generation, transmission and distribution;(ii) freedom of prices for the supply of energy in competitive marketconditions; (iii) a system of regulated prices based on the principle ofefficiency shared with a bidding regime; and (iv) private operation of theinterconnected electricity systems subject to the principles of efficiency andquality of service.

 

Thereis one interconnected system, the SEIN, and several isolated regional andsmaller systems that provide electricity to specific areas.

 

TheMinistry of Energy and Mining, or the MINEM, defines the energy policies,regulates environment matters, and oversees the granting, supervision, maturityand termination of licenses, authorizations and concessions for generation,transmission, and distribution activities.

 

Osinergminis an autonomous public regulatory entity that controls and enforces compliancewith legal and technical regulations related to electrical and hydrocarbonactivities, compliance of the obligations stated in the concession contracts,as well as the preservation of the environment in connection with thedevelopment of these activities.  Osinergmin’s**Tariff Regulatory Bureau**has the authority to**publishthe regulated tariffs.  Osinergmin also controls and supervises thebidding processes, required by distribution companies to purchase energy fromgenerators.  The**Committeeof the Economic Operation of the System, or the COES, coordinates the operationand dispatch of electricity of the SEIN and prepares the technical andfinancial study that serves as a basis for the annual bus bar pricecalculations, as defined below.  The COES includes as members thegeneration, transmission and distribution companies, as well as consumers witha capacity demand higher than 200 kW as unregulated customers.

 

Serviceprovided by electricity companies has to comply with technical standards,otherwise companies may be charged with fines imposed by Osinergmin.

 

***Dispatch and Pricing***

 

Thecoordination of dispatch operations, the spot prices setting and theadministration of the economic transactions in the MEM are controlled by COES. Generators can sell energy directly to large customers and transfer thedeficit or surplus between contracted energy and actual production in the poolat spot price.  Distribution companies and large customers that haveentered into private supply contracts with generation companies pay thecontractual price directly to the generator and also pay a toll to transmissionand/or distribution companies for the use of their systems.

 

Customerswith a capacity demand of less than 200 kW are considered regulatedcustomers, and the supply of their energy is defined as a public service. Customers whose annual demand is within the range of 200 kW and2,500 kW are free to choose to be considered regulated or unregulatedcustomers.

 

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Accessto the spot market is permitted to generating and distribution companies, aswell as to consumers with a contracted capacity in excess of 10 MW.

 

In2008, due to gas transport and electricity transmission problems, Osinergmindefined a new rule to calculate spot prices.  Decree 049-2008established two calculations, one theoretical dispatch without any restrictionsand a real dispatch considering the restrictions.  The spot price isobtained from the theoretical dispatch, and the additional cost of operationassociated with the system restrictions are paid to the affected generators,through a mechanism established by the authority.

 

Generatorsreceive a capacity payment whose main component is a resultant of an annualcalculation of every power plant’s firm power.  Every year, Osinergminsets the power price that defines the total amount to assign to each generator.

 

***Transmission***

 

Transmissionlines are divided into principal, those for the common use and trading of allgenerators; or secondary, those lines that connect a power plant with thesystem or a substation with a distribution company or a final consumer. Law No. 28,832, enacted in 2006, defined also guaranteedsystems and complementary systems, applicable to projects commissioned afterthe enactment of that law.  Guaranteed system lines are the result of apublic bid and complementary system lines are freely constructed and exploitedas private projects.  The principal and guaranteed system lines areaccessible to all generators and allow electricity to be delivered to allcustomers.  The transmission concessionaire receives an annual fixedincome and receives tariff revenues and connection tolls reflecting a chargeper kW.  The secondary and complementary system lines are accessible toall generators, but are used to serve only certain customers who areresponsible for making payments related to their use of the system.

 

***Distribution***

 

TheEfficient Development Law (Law No. 28,832) establishes a biddingregime for the acquisition of energy and capacity by distributors establishinga mechanism to determine prices during the life of a contract.  Theapproval of this mechanism is important to generators, because it establishes amechanism for determining price for the duration of a contract that is notfixed by the regulator.

 

Thenew contracts to sell energy to distribution companies for resale to regulatedcustomers must be made at fixed prices determined by public bids.  Only asmall part of the electricity purchased by distribution companies, included inold contracts, is still maintained at bus bar prices.  Bus bar prices areset annually by Osinergmin, and are the maximum prices for electricitypurchased by distribution companies that can be transferred to regulatedcustomers, in those contracts.

 

Theelectricity tariff for regulated customers includes charges for capacity andenergy for generation and transmission (bus bar prices) and for the VAD whichconsiders a regulated return over capital investments, operating andmaintenance fixed charges and a standard percentage for energy distributionlosses.

 

***Concessions***

 

Aconcession for electricity generation activity is required when a power planthas an installed capacity in excess of 500 kW.

 

Aconcession for electricity generation activity is an agreement between thegenerator and MINEM*,* while anauthorization is merely a unilateral permit granted by the Ministry. Authorizations are granted by the MINEM for an unlimited period of time,although their termination is subject to the same considerations andrequirements as the termination of a concession under the procedures set forthin the Law of Electrical Concessions (Law No. 25,844) and relatedregulations.

 

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***Cogeneration Regulation***

 

SupremeDecree 037/2006 establishes the basic rules for the use of the energyproduced as a result of any industrial activity, *i.e*., cogeneration plants.  They are eligible to bepart of the COES and trade their energy in the SEIN.  Cogeneration is thesimultaneous generation of heat and power in a single thermodynamic process.

 

***Environmental Regulation***

 

Theenvironmental legal framework applicable to energy related activities in Peruis set forth in the Environmental Law (Law No. 28,611) and in theRegulation for Environmental Protection regarding Electricity Activities(Supreme Decree 029-94-EM).  The MINEM dictates the specificenvironmental legal dispositions for the activities within the electricityindustry, and the Osinergmin is in charge of supervising their application andimplementation.  According to the Environmental Law, the Ministry of theEnvironment (created in May 2008) is in charge of (i) designing thegeneral environmental policies to every productive activity and(ii) establishing the main guidelines of the different governmentauthorities on their specific environmental sector regulations, as itsprincipal duties.  According to a schedule for 2010, the supervisoryfunctions of the application and implementation of the Environmental Law will betransferred from Osinergmin to the new Ministry of the Environment.

 

**C. Organizational Structure.**

 

***Principal Subsidiaries and Affiliates***

 

Thecompanies listed in the following table were consolidated by us as ofDecember 31, 2009.  In the case of subsidiaries, our economicinterest is calculated by multiplying our percentage economic interest in adirectly held subsidiary by the percentage economic interest of any entity inthe chain of ownership of such ultimate subsidiary.

 
| **Principal Companies and Country of Operations** | ** ** | **% Economic  Ownership of  Main Subsidiary  by Endesa Chile** | ** ** | **Consolidated  Assets of Each  Main Subsidiary  on a Stand-alone  Basis** | ** ** | **Operating Income  of Each Main  Subsidiary on a  Stand-alone Basis** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                 | ** ** | **(in billions of Ch$  except percentages)**              | ** ** |
| *Electricity Generation*                                                   |       |                                                                                    |       |                                                                                                |       |                                                                                                 |       |
| Endesa  Costanera (Argentina)                                              |       | 69.8                                                                                    | %          | 185.6                                                                                               |       | 4.4                                                                                                  |       |
| El  Chocón (Argentina)                                                |       | 65.4                                                                                    | %          | 150.9                                                                                               |       | 38.7                                                                                                 |       |
| Endesa  Chile (Chile) (1)                                                  |       | —                                                                                  |       | 3,815.0                                                                                             |       | 316.1                                                                                                |       |
| Endesa  Eco (Chile)                                                        |       | 100                                                                                     | %          | 161.7                                                                                               |       | 2.6                                                                                                  |       |
| Pehuenche  (Chile)                                                         |       | 92.7                                                                                    | %          | 317.6                                                                                               |       | 179.6                                                                                                |       |
| Pangue  (Chile)                                                            |       | 95                                                                                      | %          | 203.7                                                                                               |       | 89.4                                                                                                 |       |
| Celta  (Chile)                                                             |       | 100                                                                                     | %          | 98.1                                                                                                |       | 8.3                                                                                                  |       |
| San  Isidro (Chile)                                                        |       | 100                                                                                     | %          | 139.9                                                                                               |       | 15.5                                                                                                 |       |
| Emgesa  (Colombia)                                                         |       | 26.9                                                                                    | %          | 1,485.1                                                                                             |       | 250.8                                                                                                |       |
| Edegel  (Perú)                                                        |       | 62.5                                                                                    | %          | 750.1                                                                                               |       | 76.2                                                                                                 |       |
| *Other Non-Electricity Business*                                           |       |                                                                                    |       |                                                                                                |       |                                                                                                 |       |
| Ingendesa  (Chile)                                                         |       | 100                                                                                     | %          | 11.9                                                                                                |       | 2.5                                                                                                  |       |
| Túnel  el Melón (Chile)                                          |       | 100                                                                                     | %          | 36.1                                                                                                |       | 3.1                                                                                                  |       |

 

----

(1)From a stand-alone perspective, excluding subsidiaries.

 

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**Endesa Costanera (Argentina)**

 

Endesa Costanerais a publicly traded electricity generation company in Argentina, with2,324 MW of total installed capacity in Buenos Aires, including twoturbines with an aggregate of 1,138 MW capacity in oil- and gas-firedplants, and a 1,186 MW capacity in natural gas combined-cyclefacility.  The company was acquired from the Argentine government afterthe privatization of *Servicios Eléctricosdel Gran Buenos Aires S.A.* in 1992, when Endesa Chileacquired a 24% interest.  Endesa Chile subsequently increased itstotal ownership to the current level of 69.8% in February 2007.

 

**El Chocón (Argentina)**

 

ElChocón is an electricity generation company, incorporated in Argentina, locatedbetween the Neuquén and Río Negro provinces, in the Comahue Zone in southernArgentina.  It has two hydroelectric power stations with an aggregateinstalled capacity of 1,328 MW.  A 30-year concession was granted bythe Argentine government to our subsidiary, Hidroinvest S.A., which bought59.0% of the shares in July 1993 during the privatization process. Endesa Chile operates El Chocón for a fee pursuant to an operatingagreement with a term equal to the duration of the concession, which expires in2023.  In March 2007, Endesa Chile increased its beneficial interestin El Chocón from 44.8% to 65.4%.

 

**Endesa Chile (Chile)**

 

EndesaChile is a publicly traded electricity generation company in Chile.  Froma stand-alone perspective, excluding direct subsidiaries in Chile (describedbelow), Endesa Chile has a total installed capacity of 3,446 MW as of December2009, with 45 generation units operating in the SIC, the Central InterconnectedSystem.  From the total capacity, nearly 67% are hydroelectric powerplants, which include Ralco with 690 MW, El Toro with 450 MW, Rapel with 377MW, Antuco with 320 MW, among others.  Regarding the thermoelectricfacilities, nearly 88% correspond to fuel/gas fired power plants, including SanIsidro II, which in April 2007 it started operations with 248 MW ofinstalled capacity in open cycle.  In January 2008, this combinedcycle was closed with 353 MW and then in December 2009 the final capacity usingLNG reached 399 MW.  The rest of Endesa Chile’s thermal capacity consistsof coal-steam power plants.

 

**Endesa Eco (Chile)**

 

OnApril 18, 2005, Endesa Chile created Endesa Eco S.A., whoseobjectives are the promotion and development of renewable energy projects suchas mini-hydro, wind, geo-thermal, solar and biomass power plants and to act asthe depositary and trader of emission reduction certificates obtained by theseprojects.  As of December 2009, Endesa Eco’s installed capacity was87 MW.  Endesa Eco is a wholly-owned subsidiary ofEndesa Chile.

 

**Pehuenche (Chile)**

 

Pehuenche,a generation company connected to the SIC, owns three hydroelectric facilitiessouth of Santiago in the high rainfall hydrological basin of the Maule River,with a total installed capacity of 699 MW.  The 570 MW installedcapacity Pehuenche plant started operations in 1991, the 89 MW installed capacityCurillinque plant started in 1993, and the 40 MW installed capacity LomaAlta plant started operating in 1997.  Endesa Chile holds 92.7% ofPehuenche.

 

**Pangue (Chile)**

 

Pangue was incorporated tobuild and operate the 467 MW installed capacity hydroelectric power station inthe Bío-Bío River.  The first unitstarted operations in 1996, while the second unit started operations in1997.  Endesa Chile holds 95% of Pangue’s share capital.

 

**Celta (Chile)**

 

Celtais incorporated in Chile and was formed in 1995 to build and operate the158 MW installed capacity coal-fired and the 24 MW gas/fuel thermalplants in the SING.  Celta is wholly-owned by Endesa Chile.

 

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**San Isidro (Chile)**

 

SanIsidro, a company fully-owned by Endesa Chile, was incorporated in Chile in1996 to build and operate a 379 MW combined-cycle thermal plant in Quillota, inthe Fifth Region.  The plant began commercial operations in 1998.  A220 kV transmission line of 9 kilometers was built to connect this thermalplant to the SIC.  This transmission system is owned by TransquillotaLtda., in which San Isidro has a 50% interest.

 

**Ingendesa (Chile)**

 

Ingendesais a multi-disciplinary engineering company founded in 1990.  Its purposeis to provide engineering services, project management and related services inChile and abroad.  The company offers civil, mechanical and electricalengineering, metallurgy, architecture and environmental services. Ingendesa is wholly-owned by Endesa Chile.

 

**Túnel El Melón (Chile)**

 

TúnelEl Melón is a two-lane 2.5 km long tunnel. The project was built between theprovinces of Petorca and Quillota, Region V, Chile. The authorization forprovisional start-up was granted on September 14, 1995, and the Ministry ofPublic Works granted definitive authorization on May 03, 1996. The operationwill have a duration until the termination of the concession’s contractualperiod in June 2016. Endesa Chile holds 100% of the share capital.

 

**Emgesa (Colombia)**

 

Emgesahas a total installed generating capacity of 2,895 MW.  OnSeptember 1, 2007 *CentralHidroeléctrica Betania S.A. E.S.P.* and Emgesa S.A.E.S.P. were merged into Betania, and then Betania changed its name back toEmgesa S.A. E.S.P.

 

OnMarch 2, 2006, Emgesa purchased the assets of Termocartagena(208 MW), through a public tender process.  On September 15,1997, Central Hidroeléctrica Betania, through its former subsidiary InversionesBetania S.A. and in association with Endesa Desarrollo S.A. of Spain,was awarded control of the generation company Emgesa through the companyCapital de Energía S.A. (CESA), with 48.5% of the shares.  OnJanuary 30, 2006, due to a company restructuring, CESA ceased toexist.  Empresa de Energía deBogotá S.A. has a direct participation in Emgesa of 51.5%.  Endesa Chile’sbeneficial ownership in Emgesa is 26.9%, and due to a shareholders’ agreement,it has the right to appoint the majority of the Board members and, therefore, controlsEmgesa.

 

**Edegel (Peru)**

 

Edegel is an electricitygeneration company, acquired by Endesa Chile in 1995.  It currentlyowns seven hydroelectric plants and two thermal plants, with a combinedinstalled capacity of 1,467 MW.  In October 2009, Endesa Chilepurchased an additional 29.4% share in Edegel from Generalima, a subsidiary ofEndesa Latinoamérica.  Thus, Endesa Chile increased beneficialownership in Edegel from 33.1% to 62.5%.

 

InMay 2009, as contemplated in the contract signed by Edegel in 2000 for thefinancing of the Yanango and Chimay projects, the equity contribution for thesubsidiary Chinango S.A.C., constituted in March 2008, took place.Edegel holds an 80% share of Chinango, and Peruana de Energía S.A.A. theremaining 20% share.

 

**Selected Related Companies**

 

**Cemsa (Argentina)**

 

Cemsais responsible for trading electricity.  As of the date of this report,Endesa Chile has an indirect ownership holding in Cemsa of 45%. Cemsa’s othershareholder is Endesa Spain through Endesa Latinoamérica.

 

**Electrogas (Chile)**

 

Electrogaswas constituted in 1996.  This company offers natural gas transportationservices to the Valparaíso Region in Chile, especially to the San Isidro andNehuenco combined-cycle plants at Quillota.  Endesa Chile has a beneficialinterest of 42.5% share in this company. The other shareholders are Colbún** **S.A. and ENAP.

 

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**GasAtacama (Chile)**

 

EndesaChile has a 50% total beneficial interest in GasAtacama, located at the northof Chile.  As of 2007, Southern Cross Latin America Private EquityFund III, L.P. had the remaining 50% beneficial interest. Subsidiaries of this holding company were Gasoducto AtacamaChile S.A., Gasoducto Atacama Argentina S.A. and GasAtacamaGeneración S.A., which are involved in electricity generation and naturalgas transportation.  On November 28, 2008, GasAtacamaGeneración S.A. and Gasoducto Atacama Chile S.A. merged intoGasAtacama Generación S.A., which changed its name to GasAtacamaChile S.A.

 

**HidroAysén (Chile)**

 

HidroAysén was incorporatedin March 2007.  Endesa Chile has a 51% ownership interest andColbún S.A. the remaining 49%.  Thecompany was created to develop and exploit the Aysén Project, a hydro projectlocated in the Aysén Region.

 

**Endesa Brasil (Brazil)**

 

In2005, Endesa Brasil was formed as a company to manage all generation,transmission and distribution assets that Endesa Latinoamérica S.A.U., or “Endesa Latinoamérica”(formerly known as Endesa Internacional, a subsidiary ofEndesa Spain), Enersis, Endesa Chile and Chilectra held in Brazil,namely, through Ampla, Endesa Fortaleza, Investluz, CIEN,Cachoeira Dourada and Coelce.  Endesa Chile has a beneficial interestof 38.9% in Endesa Brasil.

 

Thefollowing table sets forth the main subsidiaries and affiliates of Endesa Chileand the percentage of each subsidiary and affiliates owned byEndesa Chile:

 

**Percentage of Economic Interest in each OperationalSubsidiary and Related Company per Country**

 

**SUBSIDIARIES (as of December 31, 2009)**

 
| ** **                                    | ** ** | ** **                   | ** ** | ** **                                                                                                                                              | ** ** | ** **        | ** ** | ** **       | ** ** | **ENGINEERING** | ** ** | ** **                    |
|-----------------------------------------------|------------|------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------------|------------|-----------------|------------|-------------------------------|
| **GENERATION**                                | ** ** | ** **                   | ** ** | ** **                                                                                                                                              | ** ** | ** **        | ** ** | ** **       | ** ** | **SERVICES**    | ** ** | **INFRASTRUCTURE**            |
| **Argentina**                                 | ** ** | **Brazil**                   | ** ** | **Chile**                                                                                                                                               | ** ** | **Colombia**      | ** ** | **Peru**         | ** ** | **Chile**       | ** ** | **Chile**                     |
| Endesa  Costanera 69.8%  El Chocón 65.4% |       |                         |       | Pehuenche 92.7%  Pangue 95% (1)  Celta 100%  San Isidro 100%  Endesa Eco 100%                                                                           |       | Emgesa  26.9% (4) |       | Edegel 62.5% (3) |       | Ingendesa 100%  |       | Túnel El Melón 100% |
|                                          |       |                         |       |                                                                                                                                                    |       |              |       |             |       |            |       |                          |
| **Related Companies**                         |       |                         |       |                                                                                                                                                    |       |              |       |             |       |            |       |                          |
| Cemsa 45%                                     |       | Endesa Brasil (2) 38.9% |       | GasAtacama 50%  Electrogas 42.5%GasAtacama Chile 50% (4)  Gasoducto Atacama Argentina 50%  Gasoducto Taltal 50%  Transquillota 50%  HidroAysén 51% |       |              |       |             |       |            |       |                          |

 

----

(1)    Endesa Latinoamérica(formerly Endesa Internacional), a subsidiary of Endesa Spain, has a 5.0%shareholding in Pangue.

(2)    The economic interest inEndesa Brasil increased from 37.7% in December 2006 to 38.9% in October 2009as a consequence of the acquisition of an additional 29.4% in the indirectshare of Endesa Chile in Edegel.

(3)    In October 2009,Endesa Chile acquired an additional 29.4% share in Edegel.

(4)    On November 28,2008, GasAtacama Generación S.A. and Gasoducto Atacama Chile S.A.merged into GasAtacama Generación S.A., which changed its name toGasAtacama Chile S.A.

 

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| The  following table shows, as of December 31, 2009, Endesa Chile’s  direct and indirect economic interests in all its companies: |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                             |
|                                                                                                                                                  |

 

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Additionally,the following table is a simplified version of the previous table, includingthe most important operating companies:

 

 

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**D.           Property, Plant and Equipment.**

 

Endesa Chile’smain properties in Chile are its 29 electricity generation facilities, inaddition to its 27,793 square meter headquarters in Santiago.

 

Asubstantial portion of Endesa Chile’s cash flow and net income is derivedfrom the sale of electricity produced by its electricity generationfacilities.  Significant damage to one or more of Endesa Chile’s mainelectricity generation facilities or interruption in the production ofelectricity, whether as a result of an earthquake, flood, volcanic activity orany other such cause, could have a material adverse effect on Endesa Chile’soperations.  Endesa Chile insures all of its electricity generationfacilities against damage due to earthquakes, fires, floods and other Acts ofGod, but not for prolonged droughts which are not considered *force majeure* and from damage due tothird-party actions, based on the appraised value of the facilities asdetermined from time to time by an independent appraiser.  Based ongeological, hydrological and engineering studies, Endesa Chile’smanagement believes that the risk of an event with a material adverse effect isremote.  Claims under Endesa Chile’s insurance policies are subjectto customary deductibles and other conditions.  Endesa Chile alsomaintains business interruption insurance providing for coverage for failure ofany of its facilities for a period of up to 24 months, commencing after thedeductible period.  For additional detail on the February 2010earthquake and the insurance involved see “ — A. History and Development of theCompany. Recent Development.”

 

EndesaChile consolidates revenues from generating companies in Argentina, Colombiaand Peru, which involve a total of 25 generation power plants detailed below,which together with the plants in Chile, total 54 power plants.  Theinsurance coverage taken abroad is approved by the management of each company,taking into account the quality of the insurance companies and the needs,conditions and risk evaluations of each generating facility, and is based ongeneral corporate guidelines.

 

Allinsurance policies are purchased from reputable international insurers. We continuously monitor and meet with the insurance industry market in order toobtain what it believes to be the most commercially reasonable coverage andpremiums available in the market.

 

Thefollowing table identifies the power plants that Endesa Chile owns, at the endof each year, and their basic characteristics:

 

| **Country/Company**             | ** ** | **Power Plant Name**         | ** ** | **Power Plant Type (1)**  | ** ** | **2007**   | ** ** | **2008**   | ** ** | **2009**   | ** ** |
|---------------------------------|------------|----------------------------------------|------------|------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                      | ** ** | ** **                             | ** ** | ** **                               | ** ** | **MW**     | ** ** | **MW**     | ** ** | **MW**     | ** ** |
|                            |       |                                   |       |                                     |       |       |       |       |       |       |       |
| **Argentina**                   |       |                                   |       |                                     |       |       |       |       |       |       |       |
| Endesa  Costanera               | ** ** | **Total**                              |       |                                     | ** ** | **2,324**  | ** ** | **2,324**  | ** ** | **2,324**  | ** ** |
|                            |       | Costanera  Steam Turbine               |       | Steam  Turbine/Natural Gas+ Fuel Oil     |       | 1,138      |       | 1,138      |       | 1,138      |       |
|                            |       | Costanera  Combined Cycle II           |       | Combined  Cycle/Natural Gas+Diesel Oil   |       | 859        |       | 859        |       | 859        |       |
|                            |       | Central  Buenos Aires Combined Cycle I |       | Combined  Cycle/Natural Gas              |       | 327        | (2)        | 327        |       | 327        |       |
|                            |       |                                   |       |                                     |       |       |       |       |       |       |       |
| El  Chocón                 | ** ** | **Total**                              |       |                                     | ** ** | **1,320**  | ** ** | **1,328**  | ** ** | **1,328**  | ** ** |
|                            |       | Chocón                            |       | Reservoir                                |       | 1,200      |       | 1,200      |       | 1,200      |       |
|                            |       | Arroyito                               |       | Pass-through                             |       | 120        |       | 128        | (3)        | 128        | (2)        |
| **Total Capacity in Argentina** |       |                                   |       |                                     | ** ** | **3,644**  | ** ** | **3,652**  | ** ** | **3,652**  | ** ** |
|                            |       |                                   |       |                                     |       |       |       |       |       |       |       |
| **Chile**                       |       |                                   |       |                                     |       |       |       |       |       |       |       |
| Endesa  Chile                   | ** ** | **Total**                              |       |                                     | ** ** | **3,034**  | ** ** | **3,139**  | ** ** | **3,446**  | ** ** |
|                            | ** ** | **Total Hydroelectric**                |       |                                     | ** ** | **2,286**  | ** ** | **2,286**  | ** ** | **2,290**  | ** ** |
|                            |       | Rapel                                  |       | Reservoir                                |       | 377        |       | 377        |       | 377        |       |
|                            |       | Cipreses                               |       | Reservoir                                |       | 106        |       | 106        |       | 106        |       |
|                            |       | El  Toro                               |       | Reservoir                                |       | 450        |       | 450        |       | 450        |       |
|                            |       | Los  Molles                            |       | Pass-through                             |       | 18         |       | 18         |       | 18         |       |
|                            |       | Sauzal                                 |       | Pass-through                             |       | 77         |       | 77         |       | 77         |       |
|                            |       | Sauzalito                              |       | Pass-through                             |       | 12         |       | 12         |       | 12         |       |
|                            |       | Isla                                   |       | Pass-through                             |       | 68         |       | 68         |       | 70         | (4)        |
|                            |       | Antuco                                 |       | Pass-through                             |       | 320        |       | 320        |       | 320        |       |
|                            |       | Abanico                                |       | Pass-through                             |       | 136        |       | 136        |       | 136        |       |
|                            |       | Ralco                                  |       | Reservoir                                |       | 690        |       | 690        |       | 690        |       |
|                            |       | Palmucho                               |       | Pass-through                             |       | 32         |       | 32         |       | 34         | (5)        |
|                            |       | **Total Thermal**                      |       |                                     | ** ** | **748**    | ** ** | **853**    | ** ** | **1,156**  | ** ** |
|                            |       | Huasco                                 |       | Steam  Turbine/Coal                      |       | 16         |       | 16         |       | 16         |       |
|                            |       | Bocamina                               |       | Steam  Turbine/Coal                      |       | 128        |       | 128        |       | 128        |       |
|                            |       | Diego  de Almagro (6)                  |       | Gas  Turbine/ Diesel Oil                 |       | 47         |       | 47         |       | 47         |       |
|                            |       | Huasco                                 |       | Gas  Turbine/IFO 180 Oil                 |       | 64         |       | 64         |       | 64         |       |
|                            |       | Taltal                                 |       | Gas  Turbine/Natural Gas+Diesel Oil      |       | 245        |       | 245        |       | 245        |       |
|                            |       | San  Isidro 2                          |       | Combined  Cycle /Natural Gas+Diesel Oil  |       | 248        |       | 353        |       | 399        | (2)(7)     |
|                            |       | Quintero                               |       | Gas  Turbine/Natural Gas+Diesel Oil      |       | —     |       | —     |       | 257        | (8)        |
| Pehuenche                       |       | **Total**                              |       |                                     | ** ** | **699**    | ** ** | **699**    | ** ** | **699**    | ** ** |
|                            |       | Pehuenche                              |       | Reservoir                                |       | 570        | (2)        | 570        |       | 570        |       |
|                            |       | Curillinque                            |       | Pass-through                             |       | 89         |       | 89         |       | 89         |       |
|                            |       | Loma  Alta                             |       | Pass-through                             |       | 40         |       | 40         |       | 40         |       |
| Pangue                          |       | Pangue                                 |       | Reservoir                                |       | 467        |       | 467        | (2)        | 467        |       |
| San  Isidro                     |       | San  Isidro                            |       | Combined  Cycle /Natural Gas+Diesel Oil  |       | 379        |       | 379        |       | 379        |       |
| Celta                           |       | **Total**                              |       |                                     | ** ** | **182**    | ** ** | **182**    | ** ** | **182**    | ** ** |
|                            |       | Tarapacá                          |       | Steam  Turbine/Coal                      |       | 158        |       | 158        |       | 158        |       |
|                            |       | Tarapacá                          |       | Gas  Turbine/Diesel Oil                  |       | 24         |       | 24         |       | 24         |       |
| Endesa  Eco                     |       | **Total**                              |       |                                     | ** ** | **18**     | ** ** | **27**     | ** ** | **87**     | ** ** |
|                            |       | Canela                                 |       | Wind  Farm                               |       | 18         |       | 18         |       | 18         |       |
|                            |       | Canela  II                             |       | Wind  Farm                               |       | —     |       | —     |       | 60         | (9)        |
|                            |       | Ojos  de Agua                          |       | Pass-through                             |       | —     |       | 9          |       | 9          |       |
| Gasatacama                      |       | Atacama  (10)                          |       | Combined  Cycle /Natural Gas+Diesel Oil  |       | —     |       | 390        |       | 390        |       |
| **Total Capacity in Chile**     |       |                                   |       |                                     | ** ** | **4,779**  | ** ** | **5,283**  | ** ** | **5,650**  | ** ** |
|                            |       |                                   |       |                                     |       |       |       |       |       |       |       |
| **Colombia**                    |       |                                   |       |                                     |       |       |       |       |       |       |       |
| Emgesa                          |       | **Total**                              |       |                                     | ** ** | **2,829**  | ** ** | **2,895**  |       |       |       |
|                            |       | Guavio                                 |       | Reservoir                                |       | 1,213      |       | 1,213      |       | 1,213      |       |
|                            |       | Paraíso                           |       | Reservoir                                |       | 276        |       | 276        |       | 276        | (2)        |
|                            |       | La  Guaca                              |       | Pass-through                             |       | 325        |       | 325        | (2)        | 325        |       |
|                            |       | Termozipa                              |       | Steam  Turbine/Coal                      |       | 236        |       | 236        |       | 236        |       |
|                            |       | Cartagena                              |       | Steam  Turbine/ Natural Gas + Diesel Oil |       | 142        |       | 208        | (11)       | 208        |       |
|                            |       | Minor  plants (12)                     |       | Pass-through                             |       | 96         |       | 96         |       | 96         |       |
|                            |       | Betania                                |       | Reservoir                                |       | 541        |       | 541        |       | 541        |       |
| **Total Capacity in Colombia**  |       |                                   |       |                                     | ** ** | **2,829**  | ** ** | **2,895**  | ** ** | **2,895**  | ** ** |
| **Peru**                        |       | ** **                             |       |                                     | ** ** | ** ** | ** ** | ** ** |       |       |       |
| Edegel                          |       | ** **                             |       |                                     | ** ** | ** ** | ** ** | ** ** |       |       |       |
|                            |       | **Total**                              |       |                                     | ** ** | **1,469**  | ** ** | **1,467**  |       |       |       |
|                            |       | Huinco                                 |       | Pass-through                             |       | 247        |       | 247        |       | 247        |       |
|                            |       | Matucana                               |       | Pass-through                             |       | 129        |       | 129        |       | 129        |       |
|                            |       | Callahuanca                            |       | Pass-through                             |       | 80         |       | 80         |       | 80         |       |
|                            |       | Moyopampa                              |       | Pass-through                             |       | 65         |       | 65         |       | 65         |       |
|                            |       | Huampani                               |       | Pass-through                             |       | 30         |       | 30         |       | 30         |       |
|                            |       | Yanango                                |       | Pass-through                             |       | 43         |       | 43         |       | 43         |       |
|                            |       | Chimay                                 |       | Pass-through                             |       | 151        |       | 151        | (2)        | 151        |       |
|                            |       | Santa  Rosa                            |       | Gas  Turbine/Diesel Oil                  |       | 231        | (2)        | 229        | (13)       | 430        | (14)       |
|                            |       | Ventanilla                             |       | Combined  Cycle/Natural Gas              |       | 493        |       | 493        |       | 493        | (2)        |
| **Total Capacity in Peru**      |       |                                   |       |                                     | ** ** | **1,469**  | ** ** | **1,467**  | ** ** | **1,667**  | ** ** |
| **Total Endesa Chile**          |       |                                   |       |                                     | ** ** | **12,721** | ** ** | **13,297** | ** ** | **13,864** | ** ** |

 

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| (1)    | Reservoir  and pass-through refer to a hydroelectric plant that uses a dam or a river,  respectively, to move the turbines which generate electricity.                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | “Steam”  refers to the technology of a thermal power plant that uses natural gas,  coal, diesel or fuel oil, to produce steam which moves the turbines to  generate the electricity.                                                                                                                                                                                                                                    |
|   | “Gas  Turbine” (GT) or “Open Cycle” refers to the technology of a thermal power  plant that uses either diesel or natural gas to produce gas that moves the  turbines to generate the electricity.                                                                                                                                                                                                            |
|   | “Combined  Cycle” refers to the technology of a thermal power plant that uses natural  gas, diesel oil or fuel oil to generate gas that moves the turbines to  generate electricity then recuperates the gas that escapes from that process  to generate steam to move another turbine.                                                                                                                                 |
|   | “Wind  Farm” refers to the technology that transforms the kinetic energy of wind  into electricity.                                                                                                                                                                                                                                                                                                                     |
| (2)    | Installed  capacities certified by Bureau Veritas. (For further details, see “ — B.  Business Overview. Note (2) to table Endesa Chile Physical Data per  Country”)                                                                                                                                                                                                                                           |
| (3)    | In  November 2008, the Arroyito power plant increased its installed capacity  due to a higher dam elevation.                                                                                                                                                                                                                                                                                                                 |
| (4)    | In  December 2009, the CDEC-SIC recognized an increase in the installed  capacity of the Isla power plant, from 68 MW to 70 MW.                                                                                                                                                                                                                                                                                         |
| (5)    | In  December 2009, the CDEC-SIC recognized an increase in the installed  capacity of the Palmucho power plant, from 32 MW to 34 MW.                                                                                                                                                                                                                                                                                |
| (6)    | Includes  one additional unit of Diego de Almagro (23 MW), which Endesa Chile  has rented from Codelco since 2001.                                                                                                                                                                                                                                                                                                      |
| (7)    | In  December 2009 the CDEC-SIC recognized an increase in the installed  capacity of the San Isidro II power plant, from 353 MW to 399 MW,  due to the use of GNL in replacement of diesel.                                                                                                                                                                                                                    |
| (8)    | In  July and September 2009, the first and second unit started their  commercial operations with a gross output of 129 MW and 128 MW,  respectively.  The Quintero power plant was finally declared as having a  gross capacity of 257 MW, in open cycle operating with diesel, and from  December 2009, it is also able to also operate with natural gas from the  LNG re-gasification plant.      |
| (9)    | In  December 2009, the Canela II wind farm started its commercial  operations with a total declared capacity of 60 MW.                                                                                                                                                                                                                                                                                             |
| (10)   | Since  2008, we include the 50% of GasAtacama’s installed capacity.                                                                                                                                                                                                                                                                                                                                                          |
| (11)   | Until  2007, the figure represented capacity value for units 1 and 3.  Unit 2  was added in 2008, following overhaul and recovery of capacity.                                                                                                                                                                                                                                                                     |
| (12)   | Minor  plants are registered with a total capacity of 96 MW.  As of  December 31, 2009 Emgesa owned and operated five minor plants: *Charquito*, *El Limonar*, *La Tinta*, *Tequendama*and  *La Junca*.                                                                                                                                                                                                            |
| (13)   | During  2008, the installed capacity of Santa Rosa was redefined as required by the  relevant authority.                                                                                                                                                                                                                                                                                                                          |
| (14)   | In  September 2009, the gas turbine, corresponding to the expansion of Santa  Rosa thermal plant started its commercial operations with a gross capacity of  193 MW.  In November 2009, a capacity increase of 7 MW  was recognized, reaching 200 MW.  Additionally, in April 2009,  a capacity increase of 0.61 MW in the TG7 turbine of the Santa Rosa  plant was also recognized. |

 

Inaddition to generation power plants, Endesa Chile owns insignificant otherassets, such as transmission assets in Peru and Túnel El Melón in Chile. These assets, in the aggregate, represent less than 1% of the value ofEndesa Chile’s total consolidated assets.

 

Asof December 2009, the Company has received the international standard ISO14,001 certification on 96.7% of its installed capacity in South America, whichconsiders 49 out of 54 generation facilities that produced 99.2% of the Company’stotal annual electricity generation in 2009.

 

**Investment Projects Completed during 2009**

 

*Peru. Santa Rosa Thermal Power Plant ExpansionProject*

 

Thisproject consisted in the expansion of the Santa Rosa 229 MW installed capacitythermal plant, in Lima, Peru, by the construction and commissioning of an opencycle gas turbine that will use natural gas from Camisea as fuel.  InSeptember 2009, the new unit started its commercial operations with adeclared gross capacity of 193 MW.

 

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*Chile. Canela II Wind Farm Project*

 

TheCanela II wind farm project consisted in the expansion of the existing18.2 MW wind farm, Canela, with the installation of additional 40 units of1.5 MW each, on an adjoining site, in the Coquimbo Region. Commercial operations began in December 2009, with a total declaredan installed capacity of 60 MW.

 

*Chile. Quintero Power Plant*

 

Thisproject consisted in the construction and commissioning of a thermal powerplant, in the Valparaíso Region, composed of two open cycle gas turbines,designed to operate with both diesel and natural gas.  In addition, thepower plant will be the electrical back up for the LNG terminal in Quintero. For the energy evacuation and connection to the SIC, a 40 km energy line,in 1x220 kV, was built between Quintero and the San Luis Transquillotasubstation.

 

InJuly and September 2009, the first and second unit started theircommercial operations with a gross capacity of 129 MW and 128 MW,respectively.  The Quintero power plant was finally declared with anaggregate gross capacity of 257 MW, in open cycle operating with diesel,and as of December 2009, it is also able to operate with natural gas fromthe LNG re-gasification plant.

 

*Argentina. Manuel Belgrano and San Martín Power PlantProjects*

 

Twopower plant projects are being developed Manuel Belgrano and SanMartín S.A, both related to Endesa Chile through its subsidiaries,Endesa Costanera and El Chocón.

 

Eachproject consists of the installation of a combined cycle gas turbine of823 MW, the first located next to Campana, (80 km north of Buenos Aires),and the second, in Timbúes (35 km north of Rosario).

 

In2009, the Manuel Belgrano power plant operated with the two turbines installedduring 2008.  The annual generation reached 1,662 GWh.  ByDecember 31, 2009, the construction and tests in the new unit were alreadycompleted.  The unit was declared in commercial operations as a combinedcycle on January 7, 2010 with a net capacity of 823 MW.

 

In2009, the San Martín plant operated with two of their installed turbines. Annual generation reached 1,708 GWh.  On December 31, 2009, thecombined cycle was connected for the first time.  The unit started itscommercial operations as a combined cycle on February 2, 2010 with a netinstalled capacity of 824 MW.

 

*Chile. Quintero Quillota Pipeline*

 

InJuly 2008, we started construction of a pipeline that supplies Quillota,San Isidro and other off-takers with the gas obtained at the re-gasificationplant in Quintero.  The pipeline is 28 km long and counts on a transportcapacity of 15 million m3/d.  Theconstruction was completed in February 2009.

 

TheLNG terminal commissioning began in July 2009, and partial fast-trackcommercial operation started in March 2009; full commercial operationsshould begin in August 2010.

 

**Projects under Construction**

 

*Chile. Bocamina Power PlantExpansion, Second Unit*

 

Locatedin the district of Coronel, Bío-Bío Region, the project benefits from theexisting harbor services, as well as some ancillary facilities of the firstunit, built for coal storing and disposal of ashes.  This second unit willuse pulverized coal and technology for reduction of emissions.  Its installedcapacity is estimated to be 370 MW and the start-up is planned for June 2011.

 

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*Chile. LNG Receiving Terminal at Quintero,Valparaíso Region*

 

InMay 2007, as part of a consortium with Enap, Metrogas and British Gas, inwhich Endesa Chile participates with a 20% stake, we agreed to constructof the LNG re-gasification facility in Quintero Bay.  Partial commercialoperations began in September 2009 while full commercial operations arescheduled for August 2010.

 

OnJune 29, 2009 the first LNG ship arrived in Quintero.  Later, during2009, seven other commercial ships with LNG arrived. Endesa Chile consumed 206million m3 of LNGbrought by those ships.

 

**Projects under Development**

 

The estimated investmentsdisclosed in this section aggregate the funds that the Company expects to spendin nominal dollars in each year.  Ingeneral terms, projects are expected to be financed with resources to beprovided by external financing as well as internally generated funds for eachof the companies described.

 

EndesaChile continuously analyzes different growth opportunities in the countries inwhich it participates.  The most relevant projects in the pipeline are asfollows:

 

*Chile. Los Cóndores Project*

 

This project, that alreadyhas the environmental approval, is located in the Maule River basin, in Chile’sMaule Region and consists of a 150 MW hydroelectric power station thatwill use the water flows from the Maule Lake.  Total estimated investment is in the range of$ 450-$ 500 million, of which $ 17 million have been paid.  Start-up is expected no earlier than thesecond half of 2015.  Until now, thisproject has been financed with resources provided by Endesa Chile.

 

Currently,we are studying a new alternative that implies the construction of a tunnelwith TBM technology (tunnel machinery) which involves higher efficiencies,safety standards and a lower environmental impact. For 2010, we expect topresent a modification to the environmental impact study, conclude the basicengineering studies and start the bidding process.

 

*Chile. Choshuenco Hydroelectric Project*

 

The Neltume and Choshuencoprojects are located in Chile’s Los Ríos Region, on the upper part of theValdivia River basin.  The Neltume project consists of a 490 MWinstalled capacity run-of-the-river hydro plant.  The Choshuenco projectuses the flows of the Llanquihue River at its source, at the junction with theFuy and Neltume Rivers, with the possibility of building a run-of-the-river128 MW hydro plant.  Total estimatedinvestment for the Neltume project is in the range of $ 800-$ 850million, of which $ 21 million have been paid.  Start-up is expected no earlier than thesecond half of 2015.  For Choshuenco,total estimated investment is in the range of $ 350-$ 400 million, ofwhich $ 4 million have been paid. Start-up is expected no earlier than the second half of 2017.  Until now, both projects have been financed withresources provided by Endesa Chile.

 

Regarding the Neltume plant,during 2009 the environmental impact study was carried out, and it waspresented to the authorities in February 2010.  In April 2010 wevoluntarily decided to withdraw temporarily the environmental impact studysubmitted, in order to complement it with further studies, some of whichrequire complex modeling and other field surveys for different seasons of theyear.  The final goal is to present a newversion of the environmental impact study that fully contains the informationthat will be requested by the different entities that participate in thisprocess.

 

*Chile. HidroAysén Project*

 

The HidroAysén hydropowerproject consists of five hydroelectric power stations, with an aggregate installedcapacity of 2,750 MW, two of which are in the Baker River (660 MW and360 MW) and the other three in the Pascua River (500 MW, 770 MWand 460 MW).  Connection to the SIC consists of nearly 2,000 km,500 kV high-voltage direct current (HVDC) transmission line.  Estimated investment for Endesa’s 51%participation is in 

 

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the range of $2,700-$3,200 million, of which $ 80 million havebeen paid.  Start-up of the first unit isexpected no earlier than 2019.  Untilnow, our 51% of this project has been financed with resources provided byEndesa Chile.

 

Worksat HidroAysén have been mainly concentrated in engineering and environmentalstudies.  During 2009, we worked on answering the governmentalobservations to the Environmental Impact Study, and presented such answers andcomments to the authorities in October 2009.  In January 2010,we received a second set of observations.  The company developed directcontact with local communities through round table meetings, attended byresidents and their representatives.

 

InDecember 2009, the contract with Transelec ended.  The contractconsisted in the design and studies for the construction of the HVDC line thatwill transport the electricity to the SIC.  As of January 2010, thestudies are being carried out directly by Centrales Hidroeléctricas deAysén S.A.

 

*Chile. Punta Alcalde Power Plant*

 

The project consists of theconstruction of a thermoelectric plant with two steam-coal units, with a totalinstalled capacity of 740 MW, located in the Atacama Region.  Total estimated investment for the first unitof this plant is in the range of $ 850-$ 900 million, of which$ 13 million have been paid. Start-up is expected no earlier than 2015.  Until now, this project has been financedwith resources provided by Endesa Chile.

 

During 2009 the project was submitted to theEnvironmental Impact Study and basic engineering studies took place.

 

*Chile.  Piruquina Mini Hydro Project*

 

The project is developed byEndesa Eco and is located in the island of Chiloé, 17 km fromCastro.  It consists of a run-of-the-river hydroelectric power plant whichwill use water flow from the Carihueico River.  According to thefeasibility study, the installed capacity will be 7.6 MW.  Total estimated investment is in the range of$ 35-$ 40 million, of which $ 3 million have been paid.  Start-up is expected no earlier than 2013.  Until now, this project has been financedwith resources provided by Endesa Chile.

 

In November 2009, theLos Lagos Region Corema approved the Environmental Impact Study and inDecember 2009, Endesa initiated the bidding process for a turnkey EPCcontract.

 

*Colombia. Quimbo Hydroelectric Project*

 

El Quimbo hydroelectricproject will be located in the department of Huila, on the Magdalena River,upstream of the Betania power plant.  Its installed capacity will be400 MW through two generator units.  We expect that the project willstart operations by December 2014. Total estimated investment is in the range of $ 900-$ 950million, of which $ 10 million have been paid.  Until now, this project has been financedwith resources provided by Emgesa.

 

In2009, the Ministry of the Environment approved the environmental license andbuilding permission.  The awarding of the contract for deviation works isexpected for 2010.

 

Asa result of the awarding process, Emgesa assumed a Firm Energy Obligation forEl Quimbo as of December 2014.

 

*Perú. Curibamba Hydroelectric Project*

 

We began the studies for theconstruction of a hydroelectric pass-through power plant, in the region ofJunín, in the Tulumayo River basin in the upper part of the river where Edegel’sChimay power plant is located.  The Curibamba project will have aninstalled capacity of 188 MW with two generation units.  Total estimated investment of this plant is inthe range of $ 350-$ 400 million, of which $ 2 million have beenpaid.  Start-up is expected no earlierthan the second half of 2015.  Until now,this project has been financed with resources provided by Edegel.

 

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During 2009, the environmental impact andfeasibility studies advanced and we expect to have them ready during 2010.

 

**Climate Change**

 

Inrecent years, the country and the region have seen a growing developmentrelated to renewable energy and strategies to face climate change. This has ledboth the public and private sectors to conduct suitable strategies for adaptingthemselves to the new requirements, evidenced by legal obligations at the locallevel, commitments assumed by countries at the international level and thedemanding requirements of the international markets in these matters.

 

During2009, Endesa Chile and its subsidiaries, in particular Endesa Eco, carried outseveral activities and held working meetings with different public and privateentities, in order to learn about the technical and regulatory news in the areaof NCRE and climate change at both the local and international levels, analyzeand establish strategic alliances, develop social and private projects andstrengthen the leadership position achieved by the company in Chile.

 

Inaddition to the Canela wind farm (18.2 MW) in operation since late 2007and the Ojos de Agua mini-hydroelectric plant (9 MW) in operation since2008, the Canela II wind farm (60 MW), located next to thepreviously mentioned wind farm, in the Coquimbo Region, started operationsin 2009.

 

Regardingthe development of emission reduction mechanisms, during 2009, the projects inthe Clean Development Mechanism (CDM) circuit were:

 

*Ojos de Agua Mini-Hydroelectric Plant*: Theprocedures began during 2009 for the verification of the greenhouse effectgas emissions avoided by the Ojos de Agua mini-hydroelectric plant the yearbefore, in order to certify and trade these emission reductions under the CDM.During 2009, this facility has avoided the emission of some 16,000 tons ofCO2, which can betraded in 2010 once verified.

 

*Canela Wind Farm:*On April 3,**2009, the United Nations Climate ChangeOffice approved the registration of the Canela project in the CDM circuit as aCDM project, which recognizes that this wind farm may verify and trade thegreenhouse effect gas emissions it will avoid during its useful life.Canela has avoided the emission of some 21,335 tons of CO2 during 2009, which will be traded on the CDMcircuit in 2010 once verified.

 

*Canela II Wind Farm*: During 2009, the expansionof the Canela wind farm by 60 MW, named Canela II, began the process forobtaining the registration of the reduction with the United Nations FrameworksConvention on Climate Change (UNFCCC). According to the base line analysispresented in the Project Design Document (PDD), estimates are that the facilitywill avoid the emission of 89,608 tons of CO2 annually.

 

**Detail of CDM projects processed in 2009 by Endesa Eco**

 
| **CD; project**                  | ** ** | **Company/country**                        | ** ** | **Position as of December 31, 2009**                                                                                          | ** ** | **Emission factor********(tons CO****2****e/MWh)** | ** ** | **Approximate  emissions avoided********(tons CO****2****e/year)** |
|---------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------|------------|------------------------------------------------------------------------------|
| Ojos de Agua mini-hydroelectric plant |       | Endesa Eco (Chile)                         |       | Registered  with the Executive Authority of the UNFCCC since April 2007 and  currently in verification the reduction in emissions of 2008 period. |       | 0.4348                                                       |       | 7,939   (CER of 2008 being verified) (1)                                     |
| Canela  wind farm                     | * *   | *Central Eólica Canela S.A.  (Chile)* |       | Registered  with the Executive Authority of the UNFCCC since April 2009                                                                           |       | 0.5713                                                       |       | 21,335   (still not verified)                                                |
| Canela  II wind farm                  | * *   | *Central Eólica Canela S.A.  (Chile)* |       | PDD  prepared, public enquiry held and validation begun.                                                                                               |       | 0.6541                                                       |       | 89,608(PDD being  verified)                                             |

 

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(1) CER:Certified Emission Reductions.

 

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TheCO2 (greenhouse effect gas) emissions of theCompany for the last three years were 11.5 million tons in 2007,11.5 million tons in 2008 and 12.4 million tons in 2009.

 

**Major Encumbrances**

 

EndesaCostanera’s debt with Mitsubishi Corporation corresponds to the balance ofpayments in the purchase of equipment.  As of December 31, 2009, thevalue of the assets pledged as a guarantee of this debt was Ch$ 54billion. Additionally, Endesa Costanera has executed liens in favor of CreditSuisse First Boston in order to guarantee a loan in the amount of Ch$ 16billion as of December 31, 2009.

 

Pangueexecuted a first mortgage on the property where its power plant is located, includingthe water rights and the concession to establish the power plant.  Thereis also a lien on the electricity lines, machinery and equipment of the powerplant.  Both include the prohibition to sell, transfer or further encumbersuch assets.  The value of the pledged assets was Ch$ 86 billion asof December 31, 2009.  These encumbrances and prohibitions guaranteethe obligations of Pangue**withthe project lenders and the Export Development Corporation.

 

Edegelhas a debt originated in the financing of the Ventanilla power plant.  Asof December 31, 2009, the value of the assets pledged as a guarantee forthis debt was Ch$ 105 billion.

 

GNLQproject finance required the sponsors, Endesa Chile among them, to encumbertheir shares in the company as a guarantee for the lenders.

 

**Item 5.     Operating andFinancial Review and Prospects**

 

**A.            OperatingResults.**

 

**General**

 

Thefollowing discussion should be read in conjunction with our auditedConsolidated Financial Statements, included in Item 18 in this annual report,and “Selected financial data,” included in Item 3 herein.  OurConsolidated Financial Statements as of December 31, 2008 and 2009 wereprepared in accordance with IFRS.

 

EffectiveJanuary 1, 2009, we adopted the IFRS issued by the IASB, in replacement ofthe previous accounting principles which were under Chilean GAAP.  IFRSdiffer in certain aspects from Chilean GAAP.  For further information, see“Introduction” and Note 36 to our Consolidated Financial Statements.

 

Thetransition date to IFRS for the Company under First Time Adoption isJanuary 1, 2008. Comparative data of the Company’s financial statementshas been restated to retrospectively reflect the adoption of IFRS.

 

**1.****                                    ****Discussion of Main Factors Affecting Operating Results and FinancialCondition of the Company**

 

Weown and operate electricity generation companies in Chile, Argentina, Colombiaand Peru.  We also have equity investments in Endesa Brasil, whichowns generation companies in Brazil that are operated by us.  Revenues,cash flow and equity income primarily come from the electricity generationbusiness of Endesa Chile itself and of our subsidiaries and associates, whichoperate in these five countries.  For the years ended December 31,2008 and 2009, non-generation revenues, related primarily to engineeringconsulting services, represented 4% and 3%, respectively, of total consolidatedrevenues in each year.

 

Factorssuch as hydrological conditions, regulatory developments, extraordinary actionsadopted by government authorities and economic conditions, including growthrate, and exchange rates in each country in which we operate, are important indetermining our financial results.  See “Item 3.  Key Information —D. Risk factors.”

 

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Ourportfolio strategy allows the impact of significant changes in one country tobe sometimes offset by opposing changes in other countries, leading tononmaterial impacts on consolidated figures.  The impact of these factorson us, for the years covered by this report, is discussed below.

 

**a.             HydrologicalConditions**

 

Asubstantial part of our consolidated generation capacity is dependent upon thehydrological conditions prevailing in the countries in which we operate,although only extreme hydrological conditions materially affect the Company’soperating results and financial condition.  In terms of installedcapacity, in 2008 and 2009, approximately 60% and 58% of Endesa Chile’sconsolidated installed capacity, respectively, has been hydroelectric. Consolidated hydroelectric capacity was 7,985 MW as of December 31, 2008and 7,989 MW as of December 31, 2009.  (See “Item 4. Information onthe Company — A. History and Development of the Company”).

 

Hydrologicalconditions for the period between 2008 and 2009 have not led to significantchanges in our financial condition and results from operations. Hydroelectric generation was 32,297 GWh in 2008 and 34,873 GWh in 2009. The generation increase in 2009 is associated with better hydrologicalconditions in Chile, Argentina and Peru as compared to previous year. Total operating income was Ch$ 874.2 billion in 2008 and Ch$ 1,017 billionin 2009.

 

InEndesa Chile, we may compensate for the effect on physical and monetary salesof low hydrology (reservoir levels, rainfall and snow), in the geographicalareas where our power plants are located, with thermal generation andelectricity purchases.  Our thermal capacity and ability to purchaseelectricity from other generators, given the regulatory framework of theindustry in these countries, enables us to increase thermal generation and/orpurchase electricity from other industry players in order to maintain the levelof physical sales when hydrological conditions lead to a reduction inhydroelectric generation.  Additionally, when hydrology is low, given theindustry structure and the percentage of hydroelectric generation capacity inthe countries in which we operate, electricity prices generally increase. Low hydrology could potentially lead to higher revenues and sometimes, higheroperating income.

 

Operatingcosts of thermal generation and energy purchases are higher than the variablecost for hydroelectric generation.  The cost of thermal generation doesnot directly depend on hydrology, but instead on global commodity prices. However, the cost of electricity purchases in the spot market does depend onhydrology.

 

Theimpact of low hydrology on operating results depends on the sensitivity orreaction to electricity prices in the market, the severity of the impact ofhydrological conditions on the Company’s hydroelectric generation, the Company’scost of thermal generation and the need for energy purchases.  The effectof low hydrology on market prices may either partially or completely compensate(depending on the conditions of all relevant market factors) for the highercost of sales, leading to an insignificant impact on operating results. Foradditional information relating to hydrological conditions, please see “Item3.  Key Information — D. Risk factors — Since our generation businessdepends heavily on hydrological conditions, drought conditions may hurt ourprofitability.”

 

**b.             RegulatoryDevelopments**

 

Theregulatory frameworks governing our business in the five countries where weoperate have a material effect on our results from operations.  Inparticular, regulators set generation tariffs taking into consideration factorssuch as the fuel costs, reservoirs levels, exchange rates, future investment ininstalled capacity and demand growth, all of which are intended to allowcompanies to earn a regulated level of return on their investment, andguarantee quality service and reliability. Accordingly, the earnings of oursubsidiaries are determined in a significant part by the actions of governmentregulators, mainly through the tariff setting process. For additionalinformation relating to the regulatory frameworks in the countries in which weoperate, please see “Item 4. Information on the Company — B. Business Overview— Electricity Industry Regulatory Framework.”

 

**c.**             **Economic Conditions**

 

Macroeconomicconditions in the countries in which we operate may have a significant effecton our operating results.  The most significant economic variables includeeconomic growth, mainly due to its impact on electricity 

 

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demand,and the local currency exchange rate against the dollar, which affects revenuesand expenses, as well as assets and liabilities, depending on the percentagedenominated in dollars.  As a result, devaluation of local currencies againstthe dollar shrinks our operating margins and increases the cost of capitalexpenditure plans.  For additional information, see “Item 3. KeyInformation— D. Risk factors —Foreign exchange risks may adversely affect ourresults, and the dollar value of dividends payable to ADS holders” and—“ SouthAmerican economic fluctuations are likely to affect our results fromoperations.”

 

**Economic Growth and Electricity Demand**

 

Inmost of the countries in which we operate, the worldwide financial crisisadversely impacted economic growth in 2009.  Demand for electricity wasalso lower compared to the prior year due to the economic constraints in mostof those countries.  The GDP and electricity growth rate for the yearscovered by this report are included in the following table:

 
| ** ** | ** ** | **2008**             | ** ** | **2009**                                 | ** ** |
|------------|------------|----------------------|------------|------------------------------------------|------------|
| ** ** | ** ** | **GDP  Growth  (%)** | ** ** | **Electricity  Demand  Growth (%)** | ** ** | **GDP  Growth (1)  (%)** | ** ** | **Electricity  Demand  Growth (%)** | ** ** |
| Chile (2)  |       | 3.7                  |       | 0.3                                      |       | (1.5 | ) | 0.5 |   |
| Argentina  |       | 6.8                  |       | 2.9                                      |       | 0.9 |   | (1.3 | ) |
| Colombia   |       | 2.5                  |       | 2.7                                      |       | 0.1 |   | 9.8 |   |
| Brazil     |       | 5.1                  |       | 2.6                                      |       | (0.2 | ) | (0.7 | ) |
| Peru       |       | 9.8                  |       | 9.7                                      |       | 0.9 |   | 0.3 |   |

 

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(1)       Sources: For Chile, Central Bank of Chile.  For Argentina, Colombia,Brazil and Peru, World Economic Outlook (April 2010) estimate of theInternational Monetary Fund (IMF), and internal Company physical energy datafor 2008-2009.

(2)      Electricity demandgrowth in the Central Interconnected System (SIC) and the Northern Grid System(SING).

 

**Local Currency Exchange Rate**

 

Variationsin the parity of the dollar and the local currency in each of the countries inwhich we have operations may have an impact on our operating results andoverall financial position.  The impact will depend on the level at whichtariffs are pegged to the dollar, dollar-denominated assets and liabilitiesexisting in the period and the translation of Consolidated Financial Statementsof the Company to the presentation currency, which is the Chilean peso.

 

Asof December 31, 2009, Endesa Chile had total consolidated indebtedness of$ 4,172 million, of which 51% was denominated in dollars, 20% denominatedin pesos, 21% is in Colombian pesos, 3% in soles and 2% in Argentine pesos.

 

Thefollowing table set forth the closing and average local currencies per dollarexchange rates for the periods indicated:

 
| ** **                              | ** ** | **Local Currency U.S. Dollar Exchange Rates** | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                                               | ** ** | **2009** | ** ** |
| ** **                              | ** ** | **Average**                                                            | ** ** | **Year End** | ** ** | **Average** | ** ** | **Year End(1)** | ** ** |
| Chile (pesos per dollar)                |       | 521.8                                                                  |       | 636.45 |   | 559.66 |   | 507.10 |   |
| Argentina  (Argentine pesos per dollar) |       | 3.16                                                                   |       | 3.45 |   | 3.77 |   | 3.80 |   |
| Colombia (Colombian  pesos per dollar)  |       | 1,963                                                                  |       | 2,246 |   | 2,155 |   | 2,04 |   |
| Brazil (reais per dollar)               |       | 1.83                                                                   |       | 2.34 |   | 2.00 |   | 1.74 |   |
| Peru (soles per dollar)                 |       | 2.92                                                                   |       | 3.14 |   | 3.01 |   | 2.89 |   |

 

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(1)     Sources: Central Bank ofeach country.

 

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Forthe year ended December 31, 2009, our revenues amounted to $ 4,324million of which approximately 17% were denominated in dollars andapproximately 52% were linked in some way to the dollar.  In respect of thetotal balance, the equivalents of $ 74 million were revenues in pesos,$ 680 million in Colombian pesos, $ 530 million in Argentine pesosand $ 50 million in soles.

 

**d.             CriticalAccounting Policies**

 

FinancialReporting Release Section 501.14 encourages all companies to include adiscussion of critical accounting policies or methods used in the preparationof financial statements.  Critical accounting policies are defined asthose that reflect significant judgments and uncertainties, which would potentiallyresult in materially different results under different assumptions andconditions.  We believe that our critical accounting policies are limitedto those described below with reference to the preparation of our financialstatements under IFRS.  Below we present our critical accounting policies.

 

***Impairment of Long-lived Assets***

 

Duringthe year, and at the end of each reporting period, the Group determines whetherthere is any indication that an asset might have suffered an impairment loss.If any such indication exists, the recoverable amount of the asset is estimatedin order to determine the amount of the impairment loss (if any). Where it isnot possible to estimate the recoverable amount of an individual asset, theGroup estimates the recoverable amount of the cash-generating unit to which theasset belongs, which is considered to be the smallest group of cash-generatingunits for which a reasonable and consistent allocation basis can be identified.

 

Forthe case of cash-generating units to which goodwill or intangible assets withindefinite useful lives have been allocated, the recoverability analysis isperformed systematically at the end of each reporting period. Recoverableamount is the higher of fair value less costs to sell and value in use. “Valuein use” is the present value of the future cash flows expected to be derivedfrom an asset or cash-generating unit. In calculating the recoverable amount ofproperty, plant and equipment, goodwill and intangible assets, the Group usedthe value in use approach in practically all cases.

 

Inassessing value in use, the Group prepares the projections of future pre-taxcash flows on the basis of the most recent available budgets. These budgetsinclude the best management estimates of the income and costs of thecash-generating units by using industry projections, historical experience andfuture expectations. These projections cover the next five years and the futurecash flows expected are estimated by applying reasonable growth rates between3.7% and 8.3% that in no case are increasing or exceed the average long-termgrowth rates in the industry or specific country.

 

Expectedfuture cash flows are discounted to their present value using pre-tax discountrates. Such discount rates reflect current market assessments of the time valueof money and the risk premiums generally used by business analysts.

 

Thediscount rates applied in 2009 and 2008 were as follows:

 
| ** **  | ** ** | ** **      | ** ** | **2008**    | ** ** | **2009**    | ** ** |
|-------------|------------|-----------------|------------|-------------|------------|-------------|------------|
| **Country** | ** ** | **Currency**    | ** ** | **Minimum** | ** ** | **Maximum** | ** ** | **Minimum** | ** ** | **Maximum** | ** ** |
| Chile       |       | pesos           |       | 9.90%       |       | 10.40%      |       | 9.24% |   | 9.53% |   |
| Argentina   |       | Argentine pesos |       | 17.40%      |       | 19.51%      |
| Brazil      |       | reais           |       | 12.10%      |       | 11.32%      |
| Peru        |       | soles           |       | 10.00%      |       | 9.09%       |
| Colombia    |       | Colombian pesos |       | 11.90%      |       | 11.45%      |

 

Ifthe recoverable amount of an asset (or cash-generating unit) is estimated to beless than its carrying amount, the carrying amount of the asset (orcash-generating unit) is reduced to its recoverable amount. An impairment loss 

 

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isrecognized immediately in profit or loss under the line item “Depreciation andAmortization Charge” in the consolidated statement of comprehensive income.

 

Whenan impairment loss subsequently reverses, the carrying amount of the asset (orcash-generating unit) is increased to the revised estimate of its recoverableamount, but the increased carrying amount cannot exceed the carrying amountthat would have been determined had no impairment loss been recognized for theasset (or cash-generating unit). An impairment loss recognized for goodwillcannot be reversed in a subsequent period.

 

***Litigation and Contingencies***

 

TheCompany is currently involved in some legal and tax proceedings.  Asdiscussed in Note 19.2 to our Consolidated Financial Statements as ofDecember 31, 2009, we have estimated the probable outflows of resources ofresolving these claims.  We have reached this estimate after consultingour legal and tax advisors who are carrying out our defense in these matters andan analysis of potential results, assuming a combination of litigation andsettlement strategies.

 

Exceptin the case of material proceedings, as described in Note 19.2 to ourConsolidated Financial statements, we do not know the termination date of theselegal and tax proceedings.

 

***Hedges for Revenues Directly Linkedto the US dollar***

 

TheCompany has established a policy to hedge the portion of its revenues directlylinked to the dollar by obtaining financing in this currency. Exchangedifferences related to this debt, as they are cash flow hedge transactions, arecharged, net of taxes, to an equity reserve account and recorded as incomeduring the period in which the hedged cash flows are realized. This term hasbeen estimated at ten years.

 

Thispolicy reflects a detailed analysis of our future dollar revenue streams. Suchanalysis may change in the future due to new regulations limiting the amount ofrevenues tied to the dollar.

 

***Pension and Post-Employment BenefitLiabilities***

 

Wehave various defined benefits plans for our employees.  These plans paybenefits to employees at retirement and use formulas based on years of serviceand the compensation of the participants.  We also offer certainadditional benefits for some retired employees in particular.

 

Theliabilities shown for the pensions and post-retirement benefits reflect ourbest estimate of the future cost of meeting our obligations under these plans. The accounting applied to these defined benefit plans involves actuarialcalculations which contain key assumptions that include: employee turnover,life expectancy and retirement ages, discount rates, expected returns onassets, the future level of compensation and benefits, the claims rate undermedical plans and future medical costs.  These assumptions change aseconomic and market conditions change and any vary in any of these assumptionscould have an important effect on the reported results from operations.

 

Theeffect of an increase of one percentage point in the discount rate used todetermine the present value of the post-employment defined benefits woulddecrease the liability by Ch$ 2,525 million as of December 31, 2009(Ch$ 2,723 million as of December 31, 2008)  and the effectof a decrease of one percentage point in the rate used to determine the presentvalue of the post-employment defined benefits would increase the liability byCh$ 2,175 million as of December 31, 2009(Ch$ 2,923 million as of December 31, 2008).

 

Forfurther detail of the main accounting policies and the methods used in thepreparation of the financial statements, see Notes 2 and 3 to our ConsolidatedFinancial Statements.

 

***Recent Accounting Pronouncements***

 

Pleasesee Note 2.2 to our Consolidated Financial Statements, for additionalinformation regarding recent accounting pronouncement.

 

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**2.****             ****Country byCountry Comparative Analysis of Operating Results and Details of Non-OperatingFigures 2008 vs. 2009**

 

***Revenues from operations***

 

Whencomparing annual consolidated figures in pesos, the fluctuations of all localcurrencies against the dollar affect the Company’s results.

 
| ** **                      | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------|------------|--------------------------------------------|------------|
| ** **                      | ** ** | **2008**                                   | ** ** | **2009** | ** ** |
| ** **                      | ** ** | **(as a % of total)**  | ** ** |
| Chile                           |       | 63.3                                       |       | 56.6 |   |
| Other businesses (Chile)        |       | 1.5                                        |       | 1.6 |   |
| Argentina                       |       | 11.2                                       |       | 12.3 |   |
| Colombia                        |       | 15.8                                       |       | 20.7 |   |
| Peru                            |       | 8.2                                        |       | 8.8 |   |
| **Total Consolidated Revenues** |       | 100.0                                      |       | 100.0 |   |

 

EndesaChile’s revenues from operations that were not related to its electricitybusiness accounted for 1.6% of total consolidated revenues from operations in2009.  We consider those revenues to be immaterial and believe that theydo not affect the analysis of the company’s Consolidated FinancialStatements.  These revenues come mainly from engineering consultingservices and a tunnel concession.  The tables below sets forth thebreakdown by country of Endesa Chile’s total revenues from operations andvolume of GWh sales for 2008 and 2009 and the percentage changes year to year:

 
| ** **                            | ** ** | **Year ended December 31,**                                 | ** ** |
|---------------------------------------|------------|----------------------------------------------------------------------------|------------|
| **Revenues**                          | ** ** | **2008**                                                                   | ** ** | **2009** | ** ** | **%  Change** | ** ** |
| ** **                            | ** ** | **(in million of Ch$ , except percentages)** | ** ** |
| Generation (Chile)                    |       | 1,605,337                                                                  |       | 1,369,647 |   | (14.7 | ) |
| Other businesses (Chile)              |       | 36,857                                                                     |       | 39,001 |   | 5.8 |   |
| Argentina                             |       | 284,228                                                                    |       | 296,578 |   | 4.3 |   |
| Colombia                              |       | 401,470                                                                    |       | 500,964 |   | 24.8 |   |
| Peru                                  |       | 208,497                                                                    |       | 213,625 |   | 2.5 |   |
| Consolidated Adjustments Foreign Subs |       | —                                                                     |       | (897 | ) |   |   |
| **Total Revenues**                    |       | 2,536,388                                                                  |       | 2,418,919 |   | (4.6 | ) |

 
| ** **            | ** ** | **Year ended December 31,** | ** ** |
|-----------------------|------------|--------------------------------------------|------------|
| **Energy Sales** | ** ** | **2008**                                   | ** ** | **2009** | ** ** | **%  Change** | ** ** |
| ** **            | ** ** | **(GWh)**                                  | ** ** | **(GWh)** | ** ** | **(GWh)** | ** ** |
| Chile (1)             |       | 21,532                                     |       | 22,327 |   | 3.7 |   |
| Argentina             |       | 11,098                                     |       | 12,405 |   | 11.8 |   |
| Colombia              |       | 16,368                                     |       | 16,806 |   | 2.7 |   |
| Peru                  |       | 8,461                                      |       | 8,321 |   | (1.7 | ) |
| **Total**             |       | 57,458                                     |       | 59,859 |   | 4.2 |   |

 

----

(1)          With the adoption of IFRS, energy sales in 2008 and2009 include 50% of GasAtacama.

 

Total2009 generation revenues from operations in Chile decreased by 14.7% fromCh$ 1,605 billion in 2008 to Ch$ 1,370 billion in 2009, mainly as aresult of lower prices, which in turn can be explained by lower costs. The increase in physical sales was 3.7%, mainly explained by a 25.6% increasein energy sales to the spot market that reached 4,183 GWh.  In the spotmarket, the average energy market price during 2009 was $ 104 per MWh inthe 

 

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SIC,compared to $ 207 in 2008, due to the impact of lower commodity prices andbetter hydrology.  Sales to regulated customers decreased by 1.6% at anode price which is the result of a price-setting system that reflects the newenergy matrix in Chile.  The sales mix in 2009 at regulated, spot andunregulated prices was 53%, 28% and 19%, respectively.  The total averagesales price of Endesa Chile in Chile decreased by 22%, from $ 139 per MWhin 2008 to $ 108 per MWh in 2009.

 

The“translation effect” is the net effect obtained when translating the resultsfrom the local currency of each country to pesos.

 

Totalrevenues from operations in Argentina increased by 4.3% in 2009, fromCh$ 284.2 billion in 2008 to Ch$ 296.6 billion in 2009.  Thisimprovement was the result of 11.8% higher physical sales during 2009. Physicalenergy sales from El Chocón amounted to 4,122 GWh, a 61.4% increase from 2008,attributable to better hydrological conditions during 2009.  The averagesales price for El Chocón was Ar$ 106.7 per MWh in 2009, 0.2% higher thanthe year before. Energy sold by Endesa Costanera increased by 3.0% to 8,284 GWhin 2009.  The average sales price in Endesa Costanera, expressed inpesos, increased by 7.5% during the year, reaching an average of Ar$ 186per MWh.  Revenues in Argentine had an 8.5% decrease due to thetranslation effect. In Argentina, the sales mix at spot and unregulated marketswas 83% and 17%, respectively.  For additional information of ourprincipal customers in Argentina see “Item 4. Information on the Company — B.Business Overview.”

 

Totalrevenues from operations in Colombia increased by 24.8%, from Ch$ 401.5billion in 2008 to Ch$ 501.0 billion in 2009, mainly explained by a 24%increase in average sales price in local currency to CP$ 114 per kWh in2009 due to low hydrology, as well as a 2.7% increase in physical sales. The sales mix in 2009 at regulated, spot and unregulated prices was 56%, 29%and 15%, respectively.  The translation effect, given the exchange ratefluctuations against the dollar in Colombia and Chile, resulted in a decreasein revenues in pesos of 2.2%.  For additional information of our principaldistribution and trading customers in Colombia see “Item 4. Information on theCompany — B. Business Overview.”

 

Revenues from operations inPeru increased by 2.5%, from Ch$ 208.5 billion in 2008 to Ch$ 213.6billion in 2009, mainly attributable to the translation effect.  Thiseffect made revenues in pesos increase by 4.5%. Additionally, physical energy sales decreased by 1.7% and averageprices, expressed in local currency, decreased by 3.5% reaching 131 soles perMWh in 2009.  The sales mix at regulated, spot and unregulated prices was49%, 9% and 42%, respectively.  For additional information of ourprincipal customers in Peru see “Item 4. Information on the Company — B.Business Overview.”

 

***Operating Expenses***

 

Thetable below sets forth the breakdown by country of operating expenses for 2008and 2009 and the percentage change from year to year:

 
| ** **                              | ** ** | **Year ended December 31,**                                 | ** ** |
|-----------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                                                   | ** ** | **2009** | ** ** | **% Change** | ** ** |
| ** **                              | ** ** | **(in million of Ch$ , except percentages)** | ** ** |
| **Procurements and Services Costs** (1) |       |                                                                       |       |   |   |   |   |
| Generation (Chile) (2)                  |       | 871,056                                                                    |       | 511,522 |   | (41.3 | ) |
| Other businesses (Chile)                |       | 15                                                                         |       | 3 |   | (80.0 | ) |
| Argentina                               |       | 206,240                                                                    |       | 208,540 |   | 1.1 |   |
| Colombia                                |       | 128,688                                                                    |       | 184,067 |   | 43.0 |   |
| Peru                                    |       | 98,453                                                                     |       | 72,014 |   | (26.9 | ) |
| Consolidated Adjustments Foreign Subs   |       | —                                                                     |       | — |   | — |   |
| **Total**                               |       | 1,304,453                                                                  |       | 976,146 |   | (25.2 | ) |

 

----

(1)          Excludes Selling, General and Administrativeexpenses.

 

(2)          Includes all subsidiaries and investment vehicles inChile.

 

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Operating expenses in thegeneration business in Chile decreased by 41.3% in 2009 compared to 2008, givenhigher hydroelectric generation and lower thermal generation using diesel atlower costs given lower fuel prices.  However, we continued to havenatural gas restrictions from Argentina during most of 2009 until September,when the LNG re-gasification terminal started to operate in its earlyphase.  Fuel costs in Chile decreased by 43% or Ch$ 260.7 billionduring 2009.  The average variablegeneration cost, excluding the cost of energy purchases, dropped 40.2%, fromCh$ 34.6 per kWh in 2008 to Ch$ 20.7 per kWh in 2009, as a result ofthe 1.8% decrease in thermal electric generation due to better hydrologicalconditions and to lower average global fuel prices.  The cost ofelectricity purchases decreased from Ch$ 134.9 billion in 2008 toCh$ 52.3 billion, due to a decrease in physical energy purchases of22.7%.  The average cost of purchases decreased from Ch$ 193.3 perkWh in 2008 to Ch$ 98.2 per kWh in 2009.

 

Operating expenses inArgentina increased by Ch$ 2.3 billion, from Ch$ 206.2 billion in2008 to Ch$ 208.5 billion in 2009.  Given the improvement ofhydrological conditions, hydro generation increased by 95.0% whilethermoelectric generation decreased by 4.3%.  The fuel cost slightlyincreased by 0.6% despite lower thermal production during 2009.  Theaverage variable generating cost decreased from Ch$ 18.5 per kWh in 2008to Ch$ 16.7 per kWh in 2009.  Electricity purchases decreased byCh$ 2.7 billion in 2009, due to a 23.8% decrease in physical energypurchases in the spot market, at an average purchase cost of Ch$ 17.7 perkWh in 2009.  The combined effect of thefluctuations of the peso and the Argentine peso against the dollar decreasedtotal operating expenses in pesos by 8.5%.

 

Colombia’soperating expenses increased by 43.0%, from Ch$ 128.7 billion in 2008 toCh$ 184.1 billion in 2009, primarily because of higher costs of energypurchases and higher fuel costs as the lower hydrological conditions during2009 led to more thermal production.  The average variable generation costincreased from Ch$ 6.3 per kWh in 2008 to Ch$ 7.3 per kWh in2009.  Electricity purchases, increased by Ch$ 44.8 billion in 2009given higher volume of energy purchased and higher average purchase cost thatincreased from Ch$ 13.1 per kWh in 2008 to Ch$ 21.5 per kWh in2009.  The combination of a fluctuation of the local currency and the pesoagainst the dollar in 2009 resulted in a net reduction of 2.2% of operatingcosts in pesos.

 

Operatingexpenses in Peru decreased by 26.9% from Ch$ 98.5 billion in 2008 toCh$ 72.0 billion in 2009.  This was primarily due to a more efficientproduction mix driven by better hydrological conditions which led to lower fuelcosts and lower costs of energy purchases.  The average variablegeneration cost was Ch$ 8.4 per kWh in 2008 compared to Ch$ 7.5 per kWhin 2009 and the average purchase cost decreased from Ch$ 57.8 per kWh in2008 to Ch$ 31.7 per kWh in 2009. The effect of converting the soles topesos, given the exchange rate fluctuations of each currency against the dollarmade operating expenses in pesos increase by 4.5%.

 

***Administrative and Selling Expenses***

 

Administrativeand selling expenses are related to salaries, compensation, administrativeexpenses, and office materials and supplies.  These expenses increased byCh$ 14.5 billion in 2009.

 

Thetable below sets forth the breakdown of selling and administrative expenses for2008 and 2009 and the percentage change from year to year:

 
| ** **                                    | ** ** | **Year ended December 31,**                                 | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **2008**                                                                   | ** ** | **2009** | ** ** | **% Change** | ** ** |
| ** **                                    | ** ** | **(in million of Ch$ , except percentages)** | ** ** |
| **Selling and Administrative  Expenses**      |       |                                                                       |       |   |   |   |   |
| Generation (Chile)                            |       | 70,584                                                                     |       | 77,900 |   | 10.4 |   |
| Other businesses (Chile)                      |       | 33,887                                                                     |       | 29,333 |   | (13.4 | ) |
| Argentina                                     |       | 20,019                                                                     |       | 22,445 |   | 12.1 |   |
| Colombia                                      |       | 25,403                                                                     |       | 29,569 |   | 16.4 |   |
| Peru                                          |       | 22,038                                                                     |       | 27,350 |   | 24.1 |   |
| Consolidated Adjustment Foreign Subs          |       | (764                                                                       | )          | (897 | ) | 17.3 |   |
| **Total Selling and Administrative  Expense** |       | 171,167                                                                    |       | 185,701 |   | 8.5 |   |

 

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Approximately58% of total Selling and Administrative expenses are concentrated in Chile,between the generation business and other business, which net increase in 2009over 2008 was primarily due to higher compensation paid to employees, whichalso explains the overall 8.5% increase in other countries as well.

 

***Operating Margin and OperatingIncome***

 

Ouroperating margin, or operating income as a percentage of revenues, increasedfrom 34.5% in 2008 to 42.0% in 2009.  This increase is due to higheroperating margins reported in Peru, Chile, and to a lower degree, Argentina,partially offset by a lower operating margin in Colombia.  The followingis our operating margin by country:

 
| ** **                 | ** ** | **Year ended December 31,** | ** ** |
|----------------------------|------------|--------------------------------------------|------------|
| ** **                 | ** ** | **2008**                                   | ** ** | **2009** | ** ** |
| **Operating Margin**       |       |                                       |       |   |   |
| Chile                      |       | 35.4                                       | %          | 46.7 | % |
| Argentina                  |       | 13.1                                       | %          | 14.5 | % |
| Colombia                   |       | 54.0                                       | %          | 50.1 | % |
| Peru                       |       | 24.8                                       | %          | 35.6 | % |
| **Total Operating Margin** |       | 34.5                                       | %          | 42.0 | % |

 

EndesaChile’s consolidated operating income reached Ch$ 1,017 billion in 2009compared to Ch$ 874.2 billion in 2008.  The main reason behind this16.3% increase was the decrease in our operating costs.  The followingtable breaks down operating income by country for the years endedDecember 31, 2008 and 2009:

 
| ** **                           | ** ** | **Year ended December 31,**                                 | ** ** |
|--------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **2008**                                                                   | ** ** | **2009** | ** ** | **%  Change** | ** ** |
| ** **                           | ** ** | **(in million of Ch$ , except percentages)** | ** ** |
| **Operating Income**                 |       |                                                                       |       |   |   |   |   |
| Generation (Chile)                   |       | 567,737                                                                    |       | 640,040 |   | 12.7 |   |
| Other businesses (Chile)             |       | (212                                                                       | )          | 7,080 |   | — |   |
| Argentina                            |       | 37,284                                                                     |       | 42,951 |   | 15.2 |   |
| Colombia                             |       | 216,818                                                                    |       | 250,811 |   | 15.7 |   |
| Peru                                 |       | 51,772                                                                     |       | 76,049 |   | 46.9 |   |
| Consolidated Adjustment Foreign Subs |       | 764                                                                        |       | — |   | — |   |
| **Total Operating Income**           |       | 874,164                                                                    |       | 1,016,931 |   | 16.3 |   |

 

InChile, operating income for the generation business for 2009 amounted toCh$ 640.0 billion, a 12.7% increase over 2008, despite the non-recurrentwrite-off for obsolete assets for a total amount of Ch$ 44.0billion.  This growth in operating income is mainly explained by a 41.3%decrease in operating costs as a result of the positive hydrology conditions ineffect during 2009, improving the production mix. This led to 61.2% lower costsof energy purchases and to a reduction of fuel costs by 43.0%, which explainsthe increase of the operating margin from 35.4% in 2008 to 46.7% in 2009.

 

InArgentina, operating income reached Ch$ 43.0 billion in 2009, compared toCh$ 37.3 billion reported the year before, a 15.2% increase. Endesa Costanera’s operating income amounted to Ch$ 4.4 billion, 76%below 2008. Physical sales fell by 3%, which basically explains the decrease ofrevenues by 4% as of December 2009 compared to December 2008. Operating costs of the company increased by 1%, driven by higher consumption offuel and the increase of energy purchases. In El Chocón, reservoirs showedhigher levels accumulated in the early months of 2009, thus providing greaterhydroelectric generation throughout the year. This hydroelectric plantgenerated 1,843 GWh more than 2008. With this, El Chocón improved itsoperating income to Ch$ 38.7 billion as of December 2009, 103.4%higher than the previous year, with physical sales increasing by 61.4% comparedto 2008. 

 

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Overall,the production mix in Argentina improved, increasing the operating margin from13.1% in 2008 to 14.5% in 2009, driven by El Chocón.

 

Operating income of ourbusiness in Colombia reached Ch$ 250.8 billion during 2009, a 15.7%increase over 2008.  This is mainlyexplained by an increase of average prices measured in local currency givenlower hydrology conditions during the period as well as an increase of physicalsales of 3% over 2008.  Hydro generation for Emgesa experienced a 703 GWhdecrease in 2009 as result of the lower hydrology related with “El Niño”phenomenon.  This situation led to aweaker production mix, thus a 43% increase in operating costs, in which energypurchases and fuel consumption expenses for thermal generation increased.  All these elements explain the decrease ofColombia’s operating margin from 54.0% in 2008 to 50.1% in 2009.

 

Operating income in Peruincreased by 46.9% as of December 2009, which amounted to Ch$ 76.0billion, compared to Ch$ 24.3 billion in 2008. This is mainly explained bya better production mix given the positive hydrology conditions during theyear, in which hydro generation increased 376 GWh in 2009.  This situation allowed a 26.9% decrease inoperating costs compared to 2008, due to lower costs of energy purchases andlower fuel consumption at lower average global fuel prices.  The latterpermitted the operating margin in Peru to increase from 24.8% in 2008 to 35.6%in 2009.

 

***Non-operating Results***

 

Accordingto IFRS, non-operating results have a new classification, composed of NetFinancial Results, Net Results From Related Companies and other minoritems.  The following table sets forth certain information regarding ourconsolidated non-operating results for each of the periods indicated:

 
| ** **                                       | ** ** | **Year ended December 31,**                                                                        | ** ** |
|--------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                       | ** ** | **2008**                                                                                                          | ** ** | **2009** | ** ** | **% Change** | ** ** |
| ** **                                       | ** ** | **(in million of Ch$ as of  December 31, 2009, except percentages)** | ** ** |
| **Net financial income:**                        |       |                                                                                                              |       |   |   |   |   |
| Financial income                                 |       | 34,323                                                                                                            |       | 25,316 |   | (26.2 | ) |
| Financial expenses                               |       | (198,440                                                                                                          | )          | (188,368 | ) | (5.1 | ) |
| Income (loss) for indexed assets and liabilities |       | (18,950                                                                                                           | )          | 9,275 |   |   |   |
| Foreign currency exchange differences            |       | (5,828                                                                                                            | )          | (17,017 | ) | 192.0 |   |
| **Total net financial income (loss**             | ** ** | **(188,895**                                                                                                      | **)**      | **(170,794** | **)** | **(9.6** | **)** |
| **Other results:**                               |       |                                                                                                              |       |   |   |   |   |
| Net income from related companies                |       | 82,132                                                                                                            |       | 98,458 |   | 19.9 |   |
| Net income from other investments                |       | 1,016                                                                                                             |       | (90 | ) |   |   |
| Net income from sales of assets                  |       | (708                                                                                                              | )          | 65 |   | 109.2 |   |

 

The company’s financialresult as of December 2009 was a loss of Ch$ 170.8 billion, 9.6%lower than 2008. This is mainly explained by lower financial expenses ofCh$ 10.1 billion, primarily in Chile, as a result of the lowerdebt average, lower interest rates and Ch$ 9.3 billion positiveresults from adjustments of debt denominated in UF as a result of lowerinflation in Chile.  This was partiallyoffset by a net loss from exchange rate differences of Ch$ 17.0 billion,which was mainly generated in Chile, while the appreciation of the Chilean pesoin relation to the dollar impacted net assets denominated in dollars, and bylower financial income of Ch$ 9.1 billion.

 

Other results reachedCh$ 98.5 billion in December 2009, increasing by 19.9% over 2008.  These results mostly reflect the proportionalcontribution of our affiliate Endesa Brasil, which equity gain as ofDecember 2009 increased due to better results in CIEN, given a higherlevel of energy transmission, and in Fortaleza due to higher generation and thegrowth of physical sales in the spot market.  This was partly offset by lower prices in thespot market and the decrease in sales of Cachoeira Dourada.  The latter is what mostly explains the increaseof our total equity investment result by 20% in 2009.

 

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***Net Income***

 

Thefollowing table sets forth our net income for the periods indicated:

 
| ** **                  | ** ** | **Year ended December 31,**                                                                        | ** ** |
|-----------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|
| ** **                  | ** ** | **2008**                                                                                                          | ** ** | **2009** | ** ** | **%  Change** | ** ** |
| ** **                  | ** ** | **(in million of Ch$ as of  December 31, 2009, except percentages)** | ** ** |
| **Net income before taxes** | ** ** | **767,708**                                                                                                       | ** ** | **944,569** | ** ** | **23.0** | ** ** |
| Income tax                  |       | (210,178                                                                                                          | )          | (172,468 | ) | (17.9 | ) |
| **Net income**              | ** ** | **557,531**                                                                                                       | ** ** | **772,100** | ** ** | **38.5** | ** ** |
| Parent company              |       | 433,177                                                                                                           |       | 627,053 |   | 44.8 |   |
| Minority interest           |       | 124,354                                                                                                           |       | 145,047 |   | 16.6 |   |

 

**B.           Liquidity and Capital Resources.**

 

The following discussion ofcash sources and uses reflects the key drivers of cash flow forEndesa Chile.  The discussion focuses on our liquidity and capitalresources from a financial perspective, which supplements our discussion froman accounting perspective presented below. We present our cash flow from afinancial perspective primarily because we believe that it better reflects forour investors, Endesa Chile’s cash inflows and outflows for the period as wellas cash that is more readily available for servicing our debt and undertakinginvestments and capital expenditures.  Wehave traditionally discussed our liquidity in a more conservative manner so asnot to potentially induce erroneous interpretations by the reader that mayresult if only an accounting treatment were to be presented.  For information on cash flows from anaccounting perspective, please see “Item 18.  Financial Statements —Consolidated Financial Statements — Consolidated Statements of Cash Flows forthe years ended December 31, 2008 and 2009.”

 

Endesa Chile has a directownership in Pehuenche (92.65%), Pangue (94.99%), San Isidro (100%), Endesa Eco(100%) and Celta (100%), which are Endesa Chile’s main Chilean subsidiariesthat are consolidated in its financial statements.  For the list of main subsidiaries, please seeExhibit 8.1.  Additionally, EndesaChile has a 50% interest in both GasAtacama and Transquillota, and a 51%interest in HidroAysén, which are classified as jointly-controlled companiesand therefore consolidated proportionally, according to International FinancialReporting Standards (IFRS).  All of theaforementioned subsidiaries and jointly-controlled companies are in Chile.

 

Endesa Chile also haseconomic ownership in its foreign subsidiaries. We have economic interests of 62.5% in our Peruvian subsidiary Edegel,26.9% in our Colombian subsidiary Emgesa, 69.8% in our Argentine subsidiary EndesaCostanera and 65.4% in our Argentine subsidiary El Chocón.  The aforementioned companies are consolidatedby Endesa Chile, since the Company controls the majority of the voting rights.

 

Endesa Chile receives cashinflows from its own operational assets and from its subsidiaries, as well asfrom related companies in Chile and abroad. Cash flows generated by Endesa Chile and Chilean subsidiaries in whichEndesa Chile has 100% economic participation or are consolidated, are includedin the analysis as inflows and outflows from operating activities.  The Company directly controls these cashflows through short-term intercompany loans.

 

Inflows and outflows offoreign subsidiaries (which are Endesa Costanera, El Chocón, Emgesa and Edegel)and jointly controlled companies and associates (Electrogas, GasAtacama,HidroAysén, GNL Quintero, GNL Chile and Endesa Brasil), on the other hand, areincluded in the analysis primarily as dividends and capital reductions and alsoas interest income and intercompany debt amortization.

 

Foreign subsidiaries and associates’cash flows are not fully available to Endesa Chile, mainly because they are notwholly-owned, and because there may be a time lag before Endesa Chile haseffective access to those funds. Therefore, an accounting perspective only may distort, and usuallyoverstate, the actual liquidity available to the 

 

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holding company in Chile at any point in time.  The consolidated cash flow in Endesa Chile’sFinancial Statements, as presented on page F-12, is not completelyrepresentative of cash and cash equivalents available to the holding company inChile, because these inflows and outflows are presented in an aggregated form.

 

We believe that cash flowgenerated from our business operations, as well as cash balances, borrowingsfrom commercial banks, and ample access to both Chilean and foreign capitalmarkets will suffice to satisfy all our needs for working capital, debtservice, dividends and routine capital expenditures.  We have relativelysmall revolving bank loans due in November 2010 and in July 2011, andwe do not foresee any difficulty in funding those obligations.

 

 Setforth below is the cash flow from a financial perspective presented in Chilean pesos.Our financial cash flow is constructed in dollars, as it includes financialinformation from our subsidiaries which is also constructed in dollars. Incontrast, the accounting perspective cash flow is in Chilean pesos, ourreporting currency. 2008 data is translated into pesos at the prevailingexchange rate as of December 31, 2008, equivalent to Ch$ 636.45 per U.S.$ 1,and 2009 data is translated into pesos at the prevailing exchange rate as of December31, 2009, equivalent to Ch$ 507.10 per U.S.$ 1. As a consequence of usingdifferent exchange rates for the translation into Chilean pesos, the final cashfor 2008 differs with initial cash for 2009.

 

| ** **                                                 | ** ** | **2008**                       | ** ** | **2009**    | ** ** |
|------------------------------------------------------------|------------|--------------------------------|------------|-------------|------------|
| ** **                                                 | ** ** | **(In Ch$ billion)** | ** ** |
| **INITIAL  CASH (A)**                                      | ** ** | **68.2**                       | ** ** | **410.1**   | ** ** |
|                                                       |       |                           |       |        |       |
| **SOURCES (B) + (C)**                                 | ** ** | **2,364.4**                    | ** ** | **1,563.2** | ** ** |
|                                                       |       |                           |       |        |       |
| **Cash Inflows from Chile (B)**                            | ** ** | **2,281.3**                    | ** ** | **1,451.1** | ** ** |
| Cash inflows from  operations                              |       | 1,444.1                        |       | 1,212.0     |       |
| Interest income from  Chilean Subs                         |       | 3.3                            |       | 6.5         |       |
| Dividend from Chilean Subs                                 |       | 240.3                          |       | 192.1       |       |
| Amortization of  intercompany loans from Chilean Subs      |       | 72.4                           |       | 32.3        |       |
| Other income from  non-operating activities                |       | 31.6                           |       | 8.1         |       |
| Net new financing                                          |       | 489.5                          |       | —      |       |
|                                                       |       |                           |       |        |       |
| **Cash Inflows from Foreign subsidiaries (C)**             | ** ** | **83.1**                       | ** ** | **112.1**   | ** ** |
| Interest income from  foreign Subs                         |       | 0.3                            |       | 0.2         |       |
| Dividends from foreign  Subs and foreign related Companies |       | 82.8                           |       | 111.1       |       |
| Capital reductions                                         |       | —                         |       | —      |       |
| Amortization of  intercompany loans from foreign Subs      |       | —                         |       | —      |       |
| Management fee and others                                  |       | —                         |       | 0.9         |       |
|                                                       |       |                           |       |        |       |
| **USES (D) + (E)**                                    | ** ** | **1,918.0**                    | ** ** | **1,764.5** | ** ** |
|                                                       |       |                           |       |        |       |
| **Cash Outflows from Operations (D)**                      | ** ** | **1,280.8**                    | ** ** | **1,182.0** | ** ** |
| Cash outflows from  operations (1)                         |       | 236.5                          |       | 1,135.6     |       |
| Taxes                                                      |       | 44.3                           |       | 46.4        |       |
| **Cash  Outflows from non-operating Activities (E)**       | ** ** | **637.2**                      | ** ** | **582.5**   | ** ** |
| Intercompany loans                                         |       | 27.6                           |       | 31.6        |       |
| Interest expenses and  derivative contracts                |       | 113.2                          |       | 68.8        |       |
| Dividend payment                                           |       | 177.1                          |       | 194.5       |       |
| Net debt amortization                                      |       | 268.0                          |       | 284.7       |       |
| Others                                                     |       | 51.3                           |       | 2.9         |       |
|                                                       |       |                           |       |        |       |
| **FINAL CASH (A)+(B)+(C)-(D)-(E)**                         | ** ** | **514.7**                      | ** ** | **208.8**   | ** ** |

 

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(1) Includescash flows from investment and operations.

 

Forthe twelve-month period ended December 31, 2009, Endesa Chile’s principalsources of funds were:

 

·                  Ch$ 1,212.0 billion cashinflows from the operating revenues, before taxes and interest expense, ofEndesa Chile;

 

·                  Ch$ 230.9 billion frominterest income, dividends and amortization of intercompany loans from itsother Chilean subsidiaries;

 

·                  Ch$ 112.2 billion fromforeign subsidiaries and foreign-related companies, mainly Endesa Brasil (Ch$65.1 billion), Emgesa (Ch$ 27.0 billion) and Edegel (Ch$ 14.7 billion).

 

The aggregate inflows ofcash from these sources amounted to Ch$ 1,563.2 billion.

 

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For the same twelve-monthperiod ended December 31, 2009 Endesa Chile’s principal cash outflowstotaled an amount of Ch$ 1,764.5 billion, through the following:

 

·                  Ch$ 1,135.6 billion ininvestments, including capital expenditure and operating expenses of EndesaChile;

 

·                  Ch$ 68.8 billion in interestexpense (net of derivative contracts). In 2009, derivative instruments resultedin additional interest expense of Ch$ 0.2 billion;

 

·                  Ch$ 194.5 billion individend payments by Endesa Chile; and

 

·                  Ch$ 284.7 billion in debtamortization.

 

As of December 2009,Endesa Chile including its Chilean subsidiaries had final cash of Ch$ 208.8billion.

 

Forthe twelve-month period ended December 31, 2008, Endesa Chile’s principalsources of funds were:

 

·                  Ch$ 1,444.1 billion cashinflows from the operating revenues, before taxes and interest expense, ofEndesa Chile and its Chilean subsidiaries;

 

·                  Ch$ 316.0 billion frominterest income, dividends and amortization of intercompany loans from itsother Chilean subsidiaries;

 

·                  Ch$ 489.5 billion from netfinancing operations which include Ch$ 148.9 billion drawn from Endesa Chile’srevolving credit facilities, Ch$ 127.3 billion from a new term loan facilityand Ch$ 213.2 billion from the issuance of a new local bond issued in UF; and

 

·                  Ch$ 83.1 billion fromforeign subsidiaries and foreign-related companies, mainly Endesa Brasil (Ch$36.7 billion), Emgesa (Ch$ 38.5 billion) and Edegel (Ch$ 6.4 billion).

 

The aggregate inflows ofcash from these sources amounted to Ch$ 2,364.4 billion.

 

For the same twelve-monthperiod ended December 31, 2008 Endesa Chile’s principal cash outflowstotaled an amount of Ch$ 1,918.0 billion, through the following:

 

·                  Ch$ 1,236.5 billion ininvestments, including capital expenditure and operating expenses of EndesaChile and its Chilean subsidiaries;

 

·                  Ch$ 113.2 billion ininterest expense (net of derivative contracts). In 2008, derivative instrumentsresulted in additional interest expenses of Ch$ 0.2 billion; and

 

·                  Ch$ 177.1 billion individend payments by Endesa Chile and dividends paid by Endesa Chile’s Chileansubsidiaries to third parties.

 

As of December 2008,Endesa Chile including its Chilean subsidiaries had final cash of Ch$ 514.7billion.

 

Set forth below is theConsolidated Cash Flow from an accounting perspective:

 

| ** **                                                                 | ** ** | **in Ch$ billion** | ** ** |
|----------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                 | ** ** | **2008**                | ** ** | **2009** | ** ** |
| **Net Cash Flows Provided by Operating Activities**                        | ** ** | **950.9**               | ** ** | **995.6** | ** ** |
| ** **                                                                 | ** ** | **—**              | ** ** | **—** | ** ** |
| **Net Cash Flows Used in Investing Activities**                            | ** ** | **(201.7**              | **)**      | **(441.5** | **)** |
| ** **                                                                 | ** ** | **—**              | ** ** | **—** | ** ** |
| **Net Cash Flows Used in Financing Activities**                            | ** ** | **(146.5**              | **)**      | **(800.4** | **)** |
|                                                                       |       | **—**              |       | **—** |   |
| Net  Increase (Decrease) in Cash and Cash Equivalents                      |       | 602.8                   |       | (246.2 | ) |
|                                                                       |       | **—**              |       | **—** |   |
| Effects  of foreign exchange rate variations on cash and cash equivalents  |       | 1.3                     |       | (26.5 | ) |
| Beginning  Balance of cash and Cash Equivalents, Statements of Cash Flows  |       | 115.1                   |       | 719.2 |   |
| **Ending Balance of Cash and Cash Equivalents, Statements of  Cash Flows** | ** ** | **719.2**               | ** ** | **446.4** | ** ** |

 

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For the twelve-month period ended on December 31, 2009, theoperating activities of the Company led to a net cash flow of Ch$ 995.6billion.  The main driver was net incomefor the period of Ch$ 772.3 billion.  See“Item 5. Operating and Financial Review and Prospects — A. Operating Results —Net Income”.  Additionally, cash flowfrom operations was affected by non-monetary adjustments of Ch$ 226.2 billion,which corresponds primarily to depreciation and amortization for the period of Ch$196.2 billion.

 

As of December 31, 2008, the operatingactivities of the Company led to a positive cash flow of Ch$ 950.9billion.  One of the main drivers was netincome for the year, which totaled Ch$ 557.5 billion.  See “Item 5. Operating and Financial Reviewand Prospects — A. Operating Results — Net Income.”  Additionally,cash flow from operations was affected by Ch$ 186.5 billion in charges that donot represent cash flow, primarily explained by the depreciation andamortization for the period, partially offset by a decrease in working capitalfor the period of Ch$ 90.4 billion.

 

For the twelve-month period ended on December 31, 2009, investmentactivities generated a negative cash flow of Ch$ 441.5 billion,mostly explained by the additions of fixed and intangible assets of Ch$ 315.9billion, mainly at Endesa Chile, Endesa Eco and Emgesa.  See “Item 4. Information of the Company — A.History and Development of the Company — Capital Investment Program.”  Cash flow from investment activities was alsoaffected by other investment disbursements of Ch$ 208.9 billion, whichcorresponds primarily to the acquisition of an additional 29.4% stake in Edegelby Endesa Chile.  The aforementioned cashoutflow was partially offset by proceeds from dividends classified asinvestment cash flow of Ch$ 75.6 billion, mainly from Endesa Brasil.

 

As of December 31, 2008, investmentactivities totaled a net cash outflow of Ch$ 201.7 billion, mostly explained bythe addition of fixed and intangible assets of Ch$ 257.8 billion, mainly atEndesa Chile, Endesa Eco, Costanera, Edegel and Emgesa.  Other additions included loans to relatedcompanies of Ch$ 47.1 billion, from Emgesa to Codensa, and from Endesa Chile toGNL Quintero.  The aforementioned cashflow was partially offset by the sale of fixed assets of Ch$ 6.4 billion,dividends received mainly from Endesa Brasil for Ch$ 35.6 billion, and othercash flows classified as investment flows of Ch$ 73.8 billion, from Codensa andGNL Quintero.

 

For the twelve-month periodended on December 31, 2009, the financing activities of the Companytotaled a net cash outflow of Ch$ 800.4 billion.  Main drivers of this flow were:

 

·                  The aggregatedcash inflows were mainly explained by:

·                  Issuance oflocal bonds by Emgesa for a total amount of Ch$ 156.7 billion.

·                  The aggregatedcash outflows were mainly explained by:

·                  Ch$ 202.8billion final bullet payment of principal of Endesa Chile’s Yankee Bond due in April 2009.

·                  Ch$ 83.7billion payment of a Put Option in connection with Endesa Chile’s Yankee Bondexercised in February 2009.

·                  Ch$ 321.0billion in dividend payments.

·                  Ch$ 114.6billion in payment of interest expense.

 

Asof December 31, 2008, the financing activities of the Company totaleda net cash outflow of Ch$ 146.5 billion. Main drivers of this flow were:

 

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·                  The aggregatedcash inflows were mainly explained by:

·                  Issuance of local bonds byEndesa Chile for a total amount of Ch$ 214.5 billion.

·                  Ch$ 127.3billion from a term loan agreement.

·                  Ch$ 148.9billion in net proceeds from revolving credit facilities.

·                  Ch$ 57.3billion in leasing agreement to finance the Santa Rosa project in Edegel.

 

·                  The aggregatedcash outflows were mainly explained by:

·                  Ch$ 254.6billion in the final bullet payment of principal of Endesa Chile’s Yankee Bonddue in July 2008.

·                  Ch$ 248.9billion in dividend payments.

·                  Ch$ 163.6billion in payment of interest expense.

 

An accounting criterion isused for covenant certification, as that is the contractual obligation andconvention used in our local bonds contracts and our bank creditfacilities.  As of December 2009, wehad a consolidated final cash of Ch$ 446.4 billion, in contrast to Ch$ 208.8billion presented in the cash flow based on a financial perspective.  A reconciliation of both, as well as figuresfor years 2009 and 2008, is shown in the following table:

 
| ** **                                              | ** ** | **in Ch$ billion** | ** ** |
|---------------------------------------------------------|------------|-------------------------|------------|
| ** **                                              | ** ** | **2008**                | ** ** | **2009** | ** ** |
| **Cash in  Endesa Chile and Chilean Subsidiaries**      | ** ** | **514.7**               | ** ** | **208.8** | ** ** |
| **Cash in  Foreign Subsidiaries and Related Companies** | ** ** | **204.2**               | ** ** | **237.5** | ** ** |
| + Cash in Foreign  Subsidiaries                         |       | 186.5                   |       | 206.5 |   |
| Colombia                                                |       | 133.9                   |       | 161.2 |   |
| Peru                                                    |       | 11.4                    |       | 21.3 |   |
| Argentina                                               |       | 41.1                    |       | 24.0 |   |
| + Cash in Related  Companies                            |       | 18.0                    |       | 31.0 |   |
| GasAtacama                                              |       | 13.5                    |       | 28.4 |   |
| Others                                                  |       | 4.5                     |       | 2.6 |   |
| **Endesa  Chile’s Consolidated Final Cash**        | ** ** | **719.2**               | ** ** | **446.4** | ** ** |

 

Fora description of liquidity risks resulting from the inability of Endesa Chile’ssubsidiaries to transfer funds, please see “Item 3. Key Information — D. RiskFactors — Risks Relating to Our Operations in Every Country in Which We Operate—We depend in part on payments from our subsidiaries and affiliates to meet ourpayment obligations.”

 

Wecoordinate the overall financing strategy of our subsidiaries.  Ouroperating subsidiaries independently develop capital expenditure plans, and thestrategy in the case of operating foreign subsidiaries is to independentlyfinance capital expansion programs through internally generated funds or directfinancings.  In the case of Chilean subsidiaries, they are financed byEndesa Chile through intercompany loans.  All generation acquisitionfinancing is coordinated through Endesa Chile.  For information regardingour commitments for capital expenditures, see “Item 4. Information on theCompany — A. History and Development of the Company — Investments, CapitalExpenditures and Divestitures.”

 

Asof December 31, 2009, our international credit ratings, were asfollows:  “Baa3 with stable outlook” from Moody’s InvestorServices, Inc. (Moody’s) and “BBB with stable outlook” from both Standard &Poor’s Rating Services (S&P) and Fitch Ratings Ltd. (Fitch).  However,as of the filing of this report, both S&P and Fitch have upgraded ourinternational credit ratings to “BBB+ with stable outlook.”

 

Inits press release dated January 8, 2010, Fitch explains, among otherconsiderations, that “the rating action reflects the operational and financialimprovement Endesa Chile has achieved to date and incorporates theexpectation that the company’s solid credit metrics will be maintained over themedium term.  From an operating 

 

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perspective,the beginning of new contracts with price indexation mechanisms and themaintenance of a conservative commercial policy, the recent capacity additions,and Endesa Chile’s participation in the recently inaugurated LNG terminalin Chile have helped the company build a stronger business platform, whichshould enable it to achieve earnings with less volatility.”

 

Inits press release dated February 16, 2010, S&P comments that theupgrade “reflects the improvement of the company’s financial risk profile dueto a strengthening in cash generation, credit metrics, and cash reserves in thepast two years.”  In the paragraph on Liquidity, S&P states that they “expectEndesa Chile to maintain a good liquidity position to cover at least debtmaturities for the next 18 months and good levels of free cash flow generation.”

 

Moody’slast rating action on December 16, 2006, involved an upgrade to ourcurrent “Baa3 with stable outlook.”  No other Moody’s rating changes havetaken place since then.  In the “Summary Rating Rationale” in its latestcredit report dated December 2009, Moody’s mentions our geographicaldiversification and our overall efficiency, among other positiveconsiderations.  Notwithstanding the latter, Moody’s expresses concernabout the group’s “substantial capital expenditure program,” and the lack ofexpected “deleveraging over the medium term beyond 2009.”   Theagency also expresses concern that Enel may look to a higher dividend payout inthe future as well as “the company’s approach to managing liquidity” based onthe fact that we did not renew a $ 200 million committed creditfacility which matured in 2009.  However, on this last point, the reporthad been published before we signed another fully committed credit facility forUF 2.4 million (equivalent to $ 95 million as of May 31, 2010). In addition, our dividend payout ratio for 2009 was 35.1% compared to 40%for 2008.

 

Economicand political stability in the countries where we operate, regulatory frameworkstability, structural changes affecting energy demand, and environmentalissues, are some of the factors that could influence credit ratings in eitherdirection.  The classifications might also be impacted if we face asignificant change in our investments in non-Chilean countries, importantchanges in our financial position, or a significant change in liquidity. A positive change in Argentina’s regulatory framework may also positivelyinfluence our credit ratings.

 

Positivechanges in ratings may have a direct impact on our financing cost and ourability to access capital markets in better terms.  For instance, some ofour credit facilities include rating grid pricing.  A recent upgrade inour local rating by Feller Rate, from AA- to AA, on April 1, 2010,positively impacted some of our local financings that contain such clauses.

 

Webelieve that our recent international upgrades by Fitch and S&P, and ourlocal ratings, by Feller Rate, reflect the strong financial risk profile andsolid operational performance of the company.  On the other hand, with thepositive actions taken by these agencies, Moody’s currently maintains thecredit rating for Endesa Chile two notches below the other twointernational credit agencies.

 

EndesaChile has accessed the international equity capital markets, registering oneADR program with the SEC on August 3, 1994.  It has also frequentlyissued bonds in the United States, so-called Yankee Bonds. Endesa Chile issuedYankee Bonds between 1996 and 2003, of which $ 917 million wereoutstanding as of December 31, 2009.

 

Thefollowing table lists our Yankee Bonds issued outstanding as ofDecember 31, 2009. The weighted average annual interest rate for suchbonds is 8.2%.

 

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| **Issuer**   | ** ** | **Maturity**           | ** ** | **Coupon**                      | ** ** | **Aggregate Principal  Amount Outstanding** | ** ** |
|--------------|------------|------------------------|------------|---------------------------------|------------|-------------------------------------------------------|------------|
| ** **   | ** ** | ** **             | ** ** | **(as a percentage)** | ** ** | **(in $ million)**                          | ** ** |
| Endesa Chile |       | August 1,  2013   |       | 8.350                           | %          | 400                                                   |       |
| Endesa Chile |       | August 1,  2015   |       | 8.625                           | %          | 200                                                   |       |
| Endesa Chile |       | February 1,  2027 |       | 7.875                           | %          | 206                                                   | (1)        |
| Endesa Chile |       | February 1,  2037 |       | 7.325                           | %          | 71                                                    | (2)        |
| Endesa Chile |       | February 1,  2097 |       | 8.125                           | %          | 40                                                    | (1)        |

 

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(1)          Considers cancellation of Yankee Bonds repurchasedby Endesa Chile in 2001.

(2)          Holders of these Yankee Bonds exercised a put optionagainst Endesa Chile for a total amount of $ 149.2 million onFebruary 1, 2009. The remaining bonds will mature in February 2037.

 

EndesaChile, as well as our subsidiaries in the countries in which we operate, haveaccess to domestic capital markets, where we have issued debt instrumentsincluding commercial paper and medium- and long-term bonds that are primarilysold to pension funds, life insurance companies and other institutionalinvestors.  As of the date of this report, we are in compliance with ourfinancial covenants contained in our debt instruments.

 

Thefollowing table lists our UF-denominated Chilean bonds outstanding as ofDecember 31, 2009.

 
| **Issuer**                      | ** ** | **Maturity**           | ** ** | **Coupon (inflation-  adjusted rate)** | ** ** | **Aggregate Principal  Amount Outstanding** | ** ** |
|---------------------------------|------------|------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                      | ** ** | ** **             | ** ** | **(as a percentage)**                  | ** ** | **(in UF million)**                         | ** ** | **(in $ million)** | ** ** |
| Endesa Chile Series F |       | August 1, 2022    |       | 6.200                                            | %          | 1.4                                                   |       | 59 |   |
| Endesa Chile Series K |       | April 15, 2027    |       | 3.800                                            | %          | 4.0                                                   |       | 165 |   |
| Endesa Chile Series H |       | October 15, 2028  |       | 6.200                                            | %          | 4.0                                                   |       | 165 |   |
| Endesa Chile Series M |       | December 15, 2029 |       | 4.750                                            | %          | 10.0                                                  |       | 413 |   |

 

Theweighted average annual interest rate for these SVS-registered bonds, of whichan aggregate principal amount of UF 19.4 million is outstanding as of thedate of this report, is 5.0% in real terms, as adjusted by Chileaninflation.  For a full description of our local bonds, see “ — BondsPayable” in Note 15 to our Consolidated Financial Statements.

 

Wefrequently participate in the international commercial bank markets governed bythe law of the State of New York through syndicated senior unsecuredloans.  Between November 2004 and December 2009, we entered intofour such facilities and a six-year term loan.  These facilities werestructured with various banks, for an aggregate amount of$ 850 million.  As of the date of this report, the amounts stilloutstanding or available for these bank loans governed by the law of the Stateof New York are listed below:

 
| **Borrower**      | ** ** | **Type**                  | ** ** | **Maturity**           | ** ** | **Facility Amount********(in $ million)** | ** ** | **Amount Drawn********(in $ million)** | ** ** |
|-------------------|------------|---------------------------|------------|------------------------|------------|----------------------------------------------------------|------------|-------------------------------------------------------|------------|
| Endesa Chile |       | syndicated revolving loan |       | November 10, 2010 |       | 250                                                      |       | 250                                                   |       |
| Endesa Chile      |       | syndicated revolving loan |       | July 26, 2011     |       | 200                                                      |       | 200                                                   |       |
| Endesa Chile      |       | syndicated revolving loan |       | June 16, 2014     |       | 200                                                      |       | 0                                                     |       |
| Endesa Chile      |       | syndicated term loan      |       | June 16, 2014     |       | 200                                                      |       | 200                                                   |       |

 

Thecredit facilities maturing in 2014 do not contain a condition precedentrequirement that there should not have occurred any “material adverse effect”(MAE, as defined contractually) prior to a disbursement, allowing the Companythe flexibility to draw on such revolving facilities under anycircumstances.  The undrawn amount of Endesa Chile’s threeinternational revolving credit facilities is $ 200 million as ofDecember 31, 2009.

 

Endesa Chilealso borrows from banks in Chile under fully committed facilities in which apotentially materially adverse effect would not be an impediment to this sourceof liquidity.  In December 2009, we signed 3-year bilateral loans forUF 2.4 million which are undrawn (equivalent to $ 95 million as ofMay 31, 2010).

 

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Asa result of all the foregoing, we have access to fully committed revolvingloans, both international and domestic, for up to approximately $ 945million in the aggregate.

 

Wealso borrow routinely from uncommitted Chilean bank facilities with approvedlines of credit for the equivalent, as of December 31, 2009, of approximately$ 231 million in the aggregate of which we do not have any amountoutstanding.  Unlike the previous committed lines not subject to MAEconditions precedent subject to disbursements, this source of funding in theChilean market is not guaranteed under all circumstances.

 

Also,Endesa Chile can tap the Chilean commercial paper market under programs thathave been registered with the SVS for up to the equivalent of $ 200million.  Our subsidiaries also have access to their local capitalmarkets, where we have issued debt instruments including commercial paper andmedium and long-term bonds that are primarily sold to pension funds, insurancecompanies and other institutional investors.  For detailed informationabout local bonds issued by Endesa Chile, see Note 15 to our ConsolidatedFinancial Statements.

 

Exceptfor the SEC-registered Yankee bonds which are not subject to financialcovenants, our outstanding debt facilities include such covenants.  Thetypes of financial covenants, and their respective limits, vary from one typeof debt to another.  As of March 31, 2010, the most restrictivefinancial covenant affecting us was the adjusted consolidated leverage testcorresponding to the revolving loan facility that matures in November 2010. Under such covenant, the maximum additional debt that could be incurred withouta breach of covenant amounted to $ 3.9 billion.

 

Asis customary for certain credit and capital market debt facilities, asignificant portion of Endesa Chile’s financial indebtedness is subject tocross default provisions.  Each of the revolving credit facilitiesdescribed above, as well as our Yankee Bonds, have cross defaultprovisions with different definitions, criteria, materiality thresholds andapplicability as to the subsidiaries that could give rise to across default.  Many of these cross default clauses were amendedin 2009 and early 2010 with the effect that most of these clauses no longerreference any of the borrower’s subsidiaries outside Chile, therebyconsiderably mitigating the risk of such an event of default.

 

Thecross default provision for two of the revolving credit facilities forEndesa Chile governed by the law of the State of New York refer only toso-called “Relevant Subsidiaries,” a contractually defined term that refers toour most important subsidiaries.  Under such credit facilities, onlymatured defaults exceeding $ 50 million qualify for a potentialcross default when the principal exceeds $ 50 million, or itsequivalent in other currencies.  There is a complex mathematicaldetermination to determine the list of Relevant Subsidiaries, which may varysomewhat from year to year.  As of December 2009, Endesa Chile’sRelevant Subsidiaries with debt to third parties include only Emgesa andEdegel, both rated AA in the local markets.  In the case of a matureddefault above the materiality threshold, revolving credit facility’s lenderswould have the option to accelerate if the lenders representing more than 50%of the aggregate debt of a particular facility then outstanding choose to doso.  Neither our Chilean bank facility due on December 2012 nor theinternational facilities maturing in June 2014 have cross defaultprovisions to debt other than that of the respective borrower.

 

Afteramendments in July 2009 following a successful solicitation consent, ourYankee Bonds’ cross default provisions may be triggered only by debt ofthe borrower or its Chilean subsidiaries.  A matured default of eitherEndesa Chile or one of its Chilean subsidiaries could result in a cross defaultto our Yankee Bonds if such matured default, on an individual basis, has aprincipal exceeding $ 30 million, or its equivalent in othercurrencies.  In the case of a matured default above the materialitythreshold, Yankee bondholders would have the option to accelerate if either theTrustee or bondholders representing no less than 25% of the aggregate debt of aparticular series then outstanding choose to do so.  Following the 2009Yankee amendments, a payment default or a bankruptcy/insolvency default outsideof Chile has no contractual effect on our Yankee Bond indentures, no matter howmaterial.

 

Thecross acceleration and bankruptcy/insolvency clauses of three of our fourEndesa Chile UF-denominated Chilean bonds were formally amended inFebruary 2010, after bondholders approved such amendments inJanuary 2010.  After giving effect to such amendments, all series ofour Chilean bonds reference only the borrower, and no subsidiaries, neither inChile nor outside Chile, for those provisions.

 

Atthe time of this report, Endesa Costanera, our Argentine subsidiary, has notpaid the installments due March 2010 for its supplier credit withMitsubishi Corporation (MC) dating back to 1996.  However, onMarch 31, 

 

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2010,MC temporary waived the payment due to Endesa Costanera.  The waiver alsostates MC’s willingness to discuss a new payment date for the amount past due.

 

Except for Costanera, ourcompanies have access to existing credit lines sufficient to satisfy all of itspresent working capital needs.  Last year, Costanera had debt maturitiesof approximately $ 76 million (including MC’s maturities of$ 30 million).  Costanera’saccess to the capital markets has been very limited due to the difficultsituation in Argentina, especially for the utilities sector, and the poorcapital markets development due to the shortage of off-shore financing and thepension fund system nationalization.  However, Costanera was still able to refinanceits debt maturities in 2009.

 

Paymentof dividends and distributions by our subsidiaries and affiliates represent animportant source of funds for us.  The payment of dividends and distributionsby certain subsidiaries and affiliates are subject to legal and contractualrestrictions, such as legal reserve requirements, capital and retained earningscriteria and other restrictions.  We have been advised by legal counsel inthe various geographical locations where our subsidiaries and affiliatesoperate that there currently are no other legal restrictions on the payment toEndesa Chile of dividends or distributions to us in the jurisdictions wheresuch subsidiaries or affiliates are incorporated.  Certain creditfacilities and investment agreements of our subsidiaries restrict the paymentof dividends or distributions in certain circumstances.  For a descriptionof liquidity risks resulting from our company status, please see “Item 3. KeyInformation — D. Risk factors —*We depend inpart on payments from our subsidiaries and affiliates to meet our paymentobligations*” in this report.

 

Ourestimated capital expenditures for the 2010-2014 period, expressed in dollarsat internally estimated exchange rates, amount to $ 2,501 million, ofwhich $ 1,172 million are considered non-discretionary investments. We include maintenance capital expenditures in this category.  It isconsiderably important for us to maintain the quality and operation standards requiredfor our facilities, but we do have some flexibility regarding the timing forthese investments.  We also consider the investment in non-conventionalrenewable energy (NCRE) projects in Chile as non-discretionary since we need tocomply with new requirements which call for 5% of the total  energycontracted to be based on NCRE.  Finally, expansion projects underexecution are also non-discretionary.  We consider the remaining$ 1,329 million as discretionary capital expenditures.  The latterinclude expansion projects which are still under evaluation, in which case wewould undertake them only if deemed profitable.

 

Wedo not currently anticipate liquidity shortfalls affecting our ability tosatisfy the obligations described in this report.  We expect to refinanceour indebtedness as it becomes due, fund our purchase obligations outlinedpreviously with internally generated cash, and fund capital expenditures with amixture of internally generated cash and borrowings.

 

Transactionsthat most significantly affected Endesa Chile’s foreign subsidiaries’ liquidityin 2009 included:

 

·                  Costanera: refinancing ofall 2009 maturities for approximately $ 76 million.  Also, Costanera refinanced $ 4.3 millionwith Credit Suisse due in 2010, extending its maturity to 2011.

 

·                  El Chocón:syndicated loan for $ 31 million for 3 years, which enabled the company torefinance its short-term debt.  It also arranged a 2.5 year interest rateswap for $ 30 million.

 

·                  Emgesa: localbonds for $ 309 million, which proceeds were used to refinance short-termmaturities.

 

·                  Edegel: localbonds for $ 34 million denominated in both dollar and local currency, usedto refinance short term debt.  Edegel also renegotiated bank loans for$ 42 million, which enabled it to reduce the interest rate and extend theterm.

 

Transactionsthat most significantly affected Endesa Chile’s foreign subsidiaries’ liquidityin 2008 included:

 

·                  Edegel: leasing agreementfor $ 90 million to finance the Santa Rosa project.  Edegel also made bond issuances in thePeruvian market for approximately $ 29 million.  Finally, the company obtained loans for$ 96 million, which were used to refinance and prepay debt.

 

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·                  EndesaCostanera: debt refinancing for $ 60 million with bank loans with shortand medium-term maturities and supplier financing with maturity of 5 years.

 

·                  El Chocón: debtrefinancing for $ 12 million with bank loans in local currency, extendingits debt maturity.

 

·                  Emgesa: bankloans for $ 147 million with short-term maturity.

 

**C.            Researchand Developments, Patents and Licenses, etc.**

 

None.

 

**D.            TrendInformation.**

 

The international financialcrisis contributed a recession of the industrial sector in most of thecountries in which we operate, and consequently the industrial energy demanddecreased.  For example, Chileexperienced a decrease of 1.2% in the industrial energy consumption.

 

Theenergy demand growth for each country is shown below:

 
| ** **   | ** ** | **2008 vs 2007** | ** ** | **2009 vs 2008** | ** ** |
|--------------|------------|----------------------------|------------|----------------------------|------------|
| Argentina    |       | 2.9                        | %          | -1.3                       | %          |
| Chile (SIC)  |       | -0.9                       | %          | -0.5                       | %          |
| Chile (SING) |       | 4.3                        | %          | 3.3                        | %          |
| Colombia     |       | 1.9                        | %          | 1.5                        | %          |
| Peru         |       | 9.5                        | %          | 0.3                        | %          |

 

Ingeneral, during 2009, electrical systems achieved better supply conditions, dueto the incorporation of new capacity without a demand increase, better fuelsupply and generally good hydrological conditions.

 

Theestimated changes in the installed capacity per country comparing 2009 against2008 are shown in the next table:

 
| ** **   | ** ** | **MW** | ** ** | **% of increase** | ** ** |
|--------------|------------|--------|------------|-----------------------------|------------|
| Argentina    |       | 818    |       | 3.1                         | %          |
| Chile (SIC)  |       | 1,584  |       | 16.1                        | %          |
| Chile (SING) |       | 95     |       | 2.6                         | %          |
| Colombia     |       | 38     |       | 0.3                         | %          |
| Peru         |       | 701    |       | 13.6                        | %          |

 

The hydrological phenomenon “ElNiño” brought favorable hydrological conditions, particularly in Argentina andPeru.  The opposite occurred in Colombia,where the hydrological conditions were very dry.  For this reason, the authorities establishedsome transitory changes in the operation of the generation sector, so as toprevent energy shortages for the first half of 2010.

 

In Chile, in September 2009, the LNGregasification facility in Quintero Bay started partial commercial operationsgiving a reliable supply to the electric system; it is expected that the fullcommercial operations should occur by August 2010.  This terminalreduces the operational costs and the environmental impact due to the fuelreplacement from diesel to LNG.

 

In Peru, stakeholdersdiscussed natural gas reserves, and the ability to satisfy the increasingdemand.  During 2009, authorities had tonegotiate and define the final use of reserves of lots 88 and 56 of Camisea.  New transport capacity is being added toeliminate restrictions that affect power unit supplies.  We expect to return to a normal gas supply bythe end of 2010.  Brazil and Argentinareceived LNG during 2009, improving gas supply conditions.  In Colombia,because of the critical hydrological conditions, what increased gas demand, theauthority decreed gas rationing for power plants and generation of coal plantsfor system security reasons. This has meant a substantial increase ingeneration of the thermal units.

 

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Theconditions in each country translated into the energy spot prices are asfollow: in Chile the spot price fell during the first half of 2009 whencompared against 2008, due to low demand, reductions in the commodity prices,increase in the installed capacity, better gas supply and good hydrologicalconditions;  in Argentina, since July 2009, the market priceincreased due to a 30% increase in gas prices approved by the government; inColombia, drought conditions implied higher spot prices when compared against2008; and in Peru, the spot price fell during 2009 due to low demand, theincrease in the installed capacity and some regulatory changes.

 

Thisspot prices volatility is one of the main factors that justify the commercialpolicy implemented by Endesa Chile and its subsidiaries for controllingvariations and stabilizing margins. Our commercial policy seeks to establish aglobal framework to conduct the energy trading operations, establishingresponsibilities, guidelines and acceptable risk limits aligned with companyobjectives.

 

Altogether,we believe that the uncertainty and volatility of the markets offeropportunities for improving generation margins and present the challenge ofrelationships with customers subject to higher prices and regulators whoseessential concern is the reliability and adequacy of electricity supply.

 

Investorsshould not look at our past performance as indicative of future performance.

 

**E.             Off-balanceSheet Arrangements.**

 

EndesaChile is not a party to any off-balance sheet transactions.

 

**F.             TabularDisclosures of Contractual Obligations.**

 

Thetable below sets forth the Company’s cash payment obligations as ofDecember 31, 2009:

 

**Paymentsdue by period (in billions of Ch$)Endesa Chile on a consolidated basis (4)**

 
| **As of December 31, 2009** | ** ** | **TOTAL** | ** ** | **2010** | ** ** | **2011-  2012** | ** ** | **2013-  2014** | ** ** | **After  2014** | ** ** |
|-------------------------------------------------|------------|-----------|------------|----------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| Bank debt                                       |       | 541       |       | 175      |       | 259             |       | 106             |       | 1               |       |
| Local bonds                                     |       | 876       |       | 55       |       | 93              |       | 81              |       | 647             |       |
| Yankee bonds                                    |       | 465       |       | 0        |       | 0               |       | 203             |       | 262             |       |
| Other debt (1)                                  |       | 140       |       | 66       |       | 47              |       | 27              |       | 0               |       |
| Interest expense                                |       | 899       |       | 121      |       | 196             |       | 132             |       | 451             |       |
| Pension and postretirement  obligations (2)     |       | 31        |       | 3        |       | 6               |       | 4               |       | 18              |       |
| Contractual operational  obligations (3)        |       | 1,802     |       | 249      |       | 381             |       | 232             |       | 940             |       |
| Financial leases                                |       | 115       |       | 13       |       | 39              |       | 15              |       | 48              |       |
|                                            |       |      |       |     |       |            |       |            |       |            |       |
| **Total**                                       |       | 4,869     |       | 682      |       | 1,021           |       | 800             |       | 2,367           |       |

 

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(1)          Includes Endesa Costanera’s debt with MitsubishiCorporation for Ch$ 72 billion.

(2)          All of our pension and postretirement plans areunfunded. Cash flows estimated in the table are based on future undiscountedpayments necessary to meet all of our pension and postretirement obligations.

(3)          Of the total amount of Ch$1,802 billion, 73% corresponds to miscellaneous services, such as GNLregasification, fuel transport and coal handling, another 20% to fuel supplylong term contracts, and the remaining 7% to tolls and energy purchases.

(4)          All figures are inhistorical Ch$ of each year.

 

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**G.            SafeHarbor.**

 

Theinformation contained in the Items 5.E and 5.F contains statements that mayconstitute forward-looking statements.  See “Forward-Looking Statements”in the “Introduction” of this report, for safe harbor provisions.

 

**Item 6.    Directors,Senior Management and Employees**

 

**A.            Directorsand Senior Management.**

 

Weare managed by our Board of Directors, which consists of nine members who areelected for a three-year term at a Ordinary Shareholders Meeting, or OSM. If a vacancy occurs in the interim, the Board of Directors will elect atemporary director to fill the vacancy until the next scheduled ordinaryshareholders meeting, at which time the entire Board of Directors will beelected.  There were four members who left the Board in 2009.

 

Setforth below are the members of our Board of Directors as of December 31,2009.

 
| **Name**                                  | ** ** | **Position**  | ** ** | **Current Position  Held Since** | ** ** |
|-------------------------------------------|------------|---------------|------------|--------------------------------------------|------------|
|                                      |       |          |       |                                       |       |
| **Directors**                             |       |          |       |                                       |       |
|                                      |       |          |       |                                       |       |
| Jorge Rosenblut R. (1)                    |       | Chairman      |       | 2009                                       |       |
| Paolo Bondi (2) (3)                  |       | Vice Chairman |       | 2009                                       |       |
| Francesco Buresti                         |       | Director      |       | 2008                                       |       |
| José María  Calvo-Sotelo I. (4) |       | Director      |       | 2009                                       |       |
| Luis de Guindos J.  (5) (3)          |       | Director      |       | 2009                                       |       |
| Jaime Estévez V. (2) (5)        |       | Director      |       | 2006                                       |       |
| Gerardo Jofré M.  (2) (6)       |       | Director      |       | 2009                                       |       |
| Borja Prado E. (5)                        |       | Director      |       | 2008                                       |       |
| Leonidas Vial E.  (7)                     |       | Director      |       | 1995                                       |       |

 

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(1)          Appointed Director and Chairman inDecember 2009.

(2)          Member of the Directors’ Committee.

(3)          Appointed Board member in July 2009.

(4)          Appointed Director in March 2009.

(5)          Member of the Audit Committee.

(6)          Appointed Director in April 2009.

(7)          Independent member.

 

**Directors**

 

**Jorge Rosenblut R.**

**Chairman of the Board of Directors**

Mr. Rosenblutwas appointed Chairman in December 2009.  Since 2003, Mr. Rosenbluthas been member of the Endesa Spain International Committee, but hisinvolvement with the Group started in 2000, when he became Chairman ofChilectra, a position held until December 2009.  Between 2002 and2005, Mr. Rosenblut was also Chairman of the wireless phone company, *Smartcom PCS*.  Currently, he is also member of the board of *Ripley*, the think tank *Expansiva* and a senior advisor in *Eulen America Inc*. Additionally, he is amember of several educational and business groups, such as the Dean’s AdvisoryLeadership Committee at Harvard’s Kennedy School of Government, FloridaInternational University President Council of 100, and member of the Group ofFifty (G-50) supported by the Carnegie Endowment for International Peace basedin Washington, D.C.  From 1999 to 2005, he was member of the board of *AFP Cuprum*, a Chilean pension fund. Between 1990 and 1996 he held several senior positions in the Chileangovernment, becoming Undersecretary of the Presidency and Undersecretary ofTelecommunications.  From 1985 to 1990 he was Project Officer at the WorldBank in Washington, D.C.

 

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Mr. Rosenblutholds a degree in industrial civil engineering from *Universidad de Chile* and a Master in Public Administrationfrom Harvard University.

 

**Paolo Bondi**

**ViceChairman, Member of the Audit Committee and President of the DirectorsCommittee**

Mr. Bondi became a Director and Vice Chairman in July 2009.  Mr. Bondi was anexecutive of the Montedison Group, an Italian industrial conglomerate, holdingdiverse positions in Italy, U.S. and France.  In 2002 he joined theEnel Group as Head of Strategic and Financial Analysis and then CFO of theInternational Division, becoming member of the board of its mainsubsidiaries.  In October 2007, he was appointed as Endesa Spain’sDeputy CFO and then Vice Chairman of Chilectra.  As of March 2009, heis CFO and member of the Executive Committee in Endesa Spain. Mr. Bondi holds a degree in Business Administrationfrom *Università Commerciale L. Bocconi diMilano*, Italy.

 

**Francesco Buresti**

**Director ofthe Board**

Mr. Buresti****became a Director inApril 2008.  Mr. Buresti was consultant for Accenture in theindustrial sector, and consultant for McKinsey in the industrial and utilitiessectors.  In 2005, Mr. Buresti joined Enel as DistributionAcquisition Director (Network and Market).  In October 2007,Mr. Buresti was appointed General Acquisition Director and member of theExecutive Committee of Endesa Spain.  Mr. Buresti holds a degreein Electronics Engineering from the *Universitàdegli Studi di Bologna*, Italy.

 

**José MaríaCalvo-Sotelo I.**

**Director ofthe Board**

Mr. Calvo-Sotelo becamea Director in March 2009.  He joinedEndesa Spain in 1997 as head of Planning and Finance of theDiversification and Telecommunications businesses.  In 2001, he wasappointed CEO of *EndesaTelecomunicaciones S.A.,*responsible for Endesa Spain’sinvestments in telecommunication companies in Spain and Chile.  He wasdirector of the Spanish and Chilean mobile operators *Amena* and *Smartcom PCS*.Mr. Calvo-Sotelo also served as director of Chilectra.  Mr. Calvo-Sotelo is currently AssistantGeneral Manager of Corporate Control and Development of Endesa Latinoamérica,which monitors Endesa Spain’s Latin American businesses, and is alsodirector of Endesa Brasil.  Mr. Calvo-Soteloholds a degree in Physical Sciences and a specialization in FundamentalPhysics, from *Universidad Complutense deMadrid*, and an MBA from the Harvard Business School.

 

**Luis de Guindos J.**

**Director and Chairman of the Audit Committee**

Mr. De Guindos became aDirector in July 2009.  From 1988 to1996, he was CEO of *AB Asesores*.  From 1996 to 2004, he worked in the Ministryof Economy and Finance of Spain, where he held several positions includingSecretary of State for Economic Affairs and Secretary of the Economic AffairsCommission.  He also served as Vice Chairman of the European UnionEconomic Policy Committee and Head of the Delegation of the Ecofin Councilduring the Spanish presidency of the EU, among other special appointments.  Between2006 and 2008, he was CEO of Lehman Brothers for Spain and Portugal. Also, during 2008, he was CEO of Nomura Securities in Spain. Currently,he works as Senior Partner at PricewaterhouseCoopers, and is responsible forfinancial services, and he also serves in the board of Endesa Spain. Mr. De Guindos holds a BSc in Economics from Cunef and a Ph.D. inEconomics from *Univesidad Complutense**de Madrid*.

 

**Jaime Estévez V.**

**Director,Member of the Director’s Committee and Audit Committee**

Mr. Estévez****became a Director in March 2006.  Since November 2009, Mr. Estévez hasbeen Director of *Cruzados SADP*and since March 2007 he has been a Director of *Banco de Chile*. Mr. Estévez was Chilean Minister ofPublic Works and Minister of Transport and Telecommunications in 2005.  Hewas Chairman of the Board of *BancoEstado*,a Chilean state-owned bank, between 2000 and 2004, and Director of *AFP Provida* and *AFP Protección*, two Chilean pensionfunds.  He was a Congressman andPresident of the lower Chamber of Congress from 1990 to 1998. Mr. Estévez holds the equivalent of a Bachelor’s degree in Economicsfrom the *Universidad de Chile* andwas awarded the ICU prize for the best student of his class**.**

 

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**Gerardo Jofré M.**

**Director and Member of the Director’s Committee**

Mr. Jofrébecame a Director in April 2009. From 1978 to 1988 he held severalpositions in governmental entities such as Planning Manager and CoordinationManager of Odeplan, Financial Control and Studies Department Manager of theInsurances Area of *SVS* andFinance Minister Advisor.  From 1989 to 2004 he worked for the *Santander Group* in Chile, as an officerand director of several companies of that Group. From 2005 to 2008 he wasdirector of *Viña San Pedro*, *D&S S.A.*, *Inmobiliaria Titanium**S.A*. and *InmobiliariaParque del Sendero S.A*.  Currently he is President of the *Saber Más* Foundation and is a member ofthe Real Estate Investment Council of the Santander Real Estate Funds. Mr. Jofré holds a degree in commercial engineering from the *Pontificia Universidad Católica de Chile*.

 

**Borja Prado E.**

**Directorand Member of the Audit Committee**

Mr. Prado is also Member of the Board of Directors of Endesa Chile asfrom April 2008.  Mr. Prado is currently Executive Chairmanof *Mediobanca* for Spain, Portugaland South America.  He is also Member of the Board of Directors ofTelecinco Gestevisión, the largest private sector television network inSpain, and well as President of the Nominations and Compensations Committee andMember of the Executive Commission of the television network.  InMarch 2009 he was elected as Chairman of Endesa Spain and he is alsoa member of the Auditing and Compliance Commission.  Mr. Prado holdsa law degree from the *Universidad Autónomade Madrid*.

 

**Leonidas Vial E.**

**Director ofthe Board**

Mr. Vial****became a Director inApril 1995.  Mr. Vial has been Vice Chairman of the SantiagoStock Exchange since June 1988, as well as a Director of *Empresas Santa Carolina S.A., Cía Industrial El Volcán S.A, Larraín Vial S.A.,*Chairman of*Cía. CIC S.A.*, director of *Embotelladora Arica*, none of which arerelated to the Endesa Group.

 

A new Board of Directors wasappointed at the Ordinary Shareholders’ Meeting held on April 23, 2010.  The newly appointed directors are: Messrs. JaimeBauzá B., Vittorio Corbo L. and Felipe Lamarca C.  Additionally, thefollowing directors were reelected: Messrs. Paolo Bondi, FrancescoBuresti, José María Calvo-Sotelo I., Jaime Estévez V., Luis Guindos J. andJorge Rosenblut.

 

Set forth below arebiographical information of our directors appointed in April 2010.

 

**Jaime BauzáB.**

**Directorand Member of the Director’s Committee and Audit Committee**

Mr. Bauzá becameDirector in April 2010.  Currently Mr. Bauzáis also Director of other companies unrelated to Endesa Chile, such as TelmexChile, *Laboratorios Andrómaco*, *H. Briones*, *Cementos Bio Bio*, Induraand Invesa.  Mr. Bauzá was alsoDirector of the Company between 1999 and 2007. From 1990 to May 1999, Mr. Bauzá served as Endesa Chile’sCEO.  He joined Endesa Chile in May 1990after more than twenty years working in the electricity sector.  Mr. Bauzá was formerly the CEO of EndesaChile’s subsidiary, *Empresa EléctricaPehuenche S.A*. from 1987 to April 1990 and Chairman of GenerS.A. (formerly Chilgener S.A.), an unrelated electricity generation company,from 1987 to 1989.  Mr. Bauzá alsoserved as Gener S.A.’s CEO from 1981 to 1987. He holds a degree in civil engineering from the *PontificiaUniversidad Católica de Chile*.

 

**VittorioCorbo L.**

**Director of the Board**

Mr. Corbo became aMember of the Board of Directors in April 2010.  Currently Mr. Corbo is also Chairman ofthe Board of Directors of *ING Seguros de Vida*,a Chilean insurance company, and a member of the Board of Directors of *Banco Santander - Chile*. Mr. Corbo is a member of the Advisory Council of the ChiefEconomist of the World Bank and of the International Advisory Council at the Centerfor Social and Economic Research (in Warsaw, Poland).  He was President and Chairman of the Board ofthe Central Bank of Chile between 2003 and 2007.  He was chosen World Central Banker of theYear in 2006 by the Magazine Global Finance. Mr. Corbo is a Senior Research Associate at CEP, a Chilean publicpolicy center.  He holds a commercialengineering degree from the *Universidad de Chile*and a Ph.D. in Economics from Massachusetts Institute of Technology (M.I.T).

 

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**FelipeLamarca C.**

**Director,Member of the Director’s Committee and Audit Committee**

Mr. Lamarca became aDirector in April 2010.  Currently Mr. Lamarcais Director of several companies that belong to different industrial sectors,such as *Ripley*, Deutsche Bank Chile and *Fundación Un Techo para Chile*.  He is Director of the *Servicio deImpuestos Internos*, the Chilean tax authority.  From 1986 to 2005 Mr. Lamarca wasChairman of the Board of *COPEC*, aChilean forestry and fuel conglomerate. Between 1997 and 2001, Mr. Lamarca was the Chairman of the Board at*SOFOFA*, Chile’s ManufacturersAssociation.  Mr. Lamarca was theSuperintendent of the SVS between 1982 and 1983.  He is a commercial engineer from the *Pontificia Universidad Católica de Chile* and in 2001 he wasawarded the “Distinguished Professional of the Year” by the Business andEconomics School of that university.

 

**Executive Officers**

Setforth below are our Executive Officers as of December 31, 2009.

 
| **Name**                         | ** ** | **Position**                                | ** ** | **Current Position  Held Since** |
|----------------------------------|------------|---------------------------------------------|------------|--------------------------------------------|
|                             |       |                                        |       |                                       |
| **Executive Officers**           |       |                                        |       |                                       |
| Joaquín  Galindo V          |       | Chief  Executive Officer                    |       | 2009                                       |
| Juan  Benabarre B                |       | Production &  Transmission Officer |       | 2005                                       |
| Pietro  Corsi M                  |       | Human  Resources Officer                    |       | 2009                                       |
| Eduardo  Escaffi J               |       | Chief  Financial Officer                    |       | 2009                                       |
| Renato  Fernández B         |       | Communications  Officer                     |       | 2003                                       |
| Sebastián  Fernández C |       | Energy  Planning Officer                    |       | 2008                                       |
| Claudio  Iglesis G               |       | Generation  Chile Officer                   |       | 1999                                       |
| Luis  Larumbe A                  |       | Planning &  Control Officer        |       | 2009                                       |
| Carlos  Martín V            |       | General  Counsel                            |       | 1996                                       |
| José  Venegas M             |       | Trading &  Marketing Officer       |       | 2001                                       |

 

**Joaquín Galindo V.**became CEO inNovember 2009.  From 1983 to 1996, he held several positions in *Sevillana de Electricidad*, anEndesa Spain subsidiary, where he was Director of the Thermal Plant of *Bahía de Algeciras*.  In 1998, hebecame Director of Production of the Systems outside the Iberian Peninsula andGeneration Planning for Endesa Generación.  Between 2001 and 2004 hewas Director of Production and Engineering for *EndesaItalia S.p.A.* and Counselor of the *Centro Sperimentale Elettrotecnico Italiano SpA.*  From2004 to 2006, he was Counselor-General Director of the *Société Nationale d ́Électricité et deThermique S.A*, in Paris and Counselor of the Thermal ProductionSociety of Bialystok (Poland).  Between 2006 and 2008, he served asCounselor-General Director of Endesa Italia S.A.  He was also amember of the board of Endesa Europe between 2004 and 2008.Mr. Galindo holds a degree in electrical industrial engineering from *Universidad de Sevilla* and an M.B.A. from *Universidad Comercial de Deusto*, Spain.

 

**Juan Benabarre B.**became Production &Transmission Officer in October 2005.  Mr. Benabarre has heldseveral positions in the Endesa Chile Group since 1979.  From 2000 through2005, he was CEO of Ingendesa.  Mr. Benabarre is also a member of theboards of directors of several companies in the Endesa Spain Group andserves as Endesa Chile’s representative at the International HydropowerAssociation (IHA).  Mr. Benabarre holds a degree in mechanical civilengineering from *Universidad de Chile*and completed graduate studies in geothermal energy at the University ofAuckland, New Zealand.  He also holds an MBA. from the *Universidad Adolfo Ibáñez*, Chile.

 

**Pietro Corsi M.** became Endesa Chile’s HumanResources Officer in December 2009.  From 1991 to 2001, he heldseveral positions in the Development and Management departments in HumanResources of Endesa Chile, becoming Deputy Development Officer in 2000. Afterwards, he held the position of Development and Management Deputy atEnersis between 2001 and 2003, and then he became deputy of Development andTraining department of 

 

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EndesaChile where he worked until November 2009.  Mr. Corsi holds adegree in commercial engineering from *UniversidadGabriela Mistral*, Chile.

 

**EduardoEscaffi J.** became the CFO in October 2009.  From1999 to September 2009, Mr. Escaffi served at the Finance and Riskareas of Endesa Spain, with the position of Risk Officer from 2005 until hismost recent position in Endesa Chile.  He was the CFO of Enersis fromJuly 1998 to August 1999.  Prior to joining the Endesa Group, Mr. Escaffiwas the CEO of an Argentine insurance company from 1992 to 1998.  He also held the position of Technical andFinancial Manager of the life insurance company of the Santander Group in Chilefrom 1989 to 1992.  Before that, in 1989, he served as the DeputyFinancial Officer of the Chilean company, *Compañíade Teléfonos de Chile*.  Between 1986 and 1988 he served asadviser to the United Nations Development Program in Venezuela.  Mr. Escaffi has also held severalpositions in Chilean governmental entities such as ODEPLAN and the Ministry ofthe Interior.  Mr. Escaffi is a civil engineer from the *Universidad de Chile*, with specializationin structural engineering, and he holds a Senior Executive Programme degreefrom the London Business School.

 

**Renato Fernández B.** has been the ExternalAffairs Officer since August 2003, when he joined Endesa Chile. Prior to that, he was the External Affairs Director of *Smartcom PCS* from December 2000 toJuly 2003.   From December 1997 to December 2000,Mr. Fernández was the External Affairs Director of *Hill & Knowlton Captiva*.  He holds a degree in Journalism from *UniversidadGabriela Mistral*.

 

**Sebastián Fernández C.** became Energy PlanningOfficer in January 2008.** **Hejoined Enersis in January 1997, beginning his professional career inDevelopment.  He has served in different positions in the Group, such asProject Manager of Endesa Europe, Deputy Manager of Planning andInvestments in Endesa Italy, and Deputy Manager of Generation Projects inEndesa Chile.  Mr. Fernández holds a commercial engineering degreefrom the *Universidad de Los Andes*and attended the YMP program in the *Insead*,in Fontainebleau, France.

 

**ClaudioIglesis G.**has been the Generation Officer sinceJuly 1999.  He joined Endesa Chile in 1982.  He has been CEO of Emgesa and Betania, and *Central Buenos Aires*, currently part ofEndesa Chile’s subsidiary Endesa Costanera in Argentina. Mr. Iglesis was director of *Cammesa*and Chairman of the *AGEERA* in Argentina.  He holds a degree in electric civil engineering from the *Universidad de Chile*.

 

**Luis Larumbe A.** holds the position ofPlanning & Control Officer of Endesa Chile since December 2009.He joined the Endesa Spain Group in 1991, working first in Spain and inColombia as of 1997 where he held several positions such as Planning &Control Officer in Emgesa and CFO in Codensa. Between 2008 and 2009, he servedas CFO of Codensa and Emgesa.  Mr. Larumbe holds a degree inEconomics and Administration from*UniversidadComercial de Deusto*, Spain.

 

**Carlos Martín V.** became General Counsel inMay 1996.  He had served as the General Counsel of Enersis prior tothat, when he joined the Enersis Group in 1989.  He holds a lawdegree from the *Universidad Católica de Valparaíso*and a Doctor in Law degree from the *Universidadde Navarra*, Spain.

 

**José Venegas M.** has been theTrading & Marketing Officer since June 2001. Mr. Venegas joined the Company in 1992.  He was Director of theCDEC-SIC Economic Load Dispatch Center in 1997 and the Commercial Officer fromSeptember 1997 to May 2000.  He has also served as Planning andEnergy Officer from June 2000 to April 2001.  Mr. Venegasholds a degree in industrial civil engineering from the *Pontificia Universidad Católica de Chile*and an MBA. from *Universidad Adolfo Ibáñez*,Chile.

 

**B.            Compensation.**

 

Atthe regular shareholders’ meeting held on April 15, 2009, our shareholdersmaintained the compensation policy for the Board of Directors approved lastyear.  Each director receives a fixed compensation of UF 55 per monthand a fee of UF 36 for attending meetings of the Board.  The ViceChairman will receive a fixed salary of UF 82.5 per month and a fee ofUF 54 for attending meetings of the board.  The Chairman will receivea fixed stipend of UF 110 per month and a fee of UF 72 for attendingmeetings of the Board.  In 2009, the total compensation paid to eachdirector in pesos, was as follows:

 

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| **Director**                          | ** ** | **Board  Compensation  From Endesa  Chile (1)**                                      | ** ** | **Board  Compensation  From  Subsidiaries** | ** ** | **Director  Committee (2)** | ** ** | **Total** | ** ** |
|---------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| ** **                            | ** ** | **Year ended December 31, 2009 (in thousands of Ch$)** | ** ** |
| Mario Valcarce D (3)                  |       | 39,720                                                                                         |       | —                                      |       | 9,818                            |       | 49,538    |       |
| Paolo Bondi (4)                       |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
| Juan Gallardo Cruces (5)              |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
| Andrea Brentan (6)                    |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
| Francesco Buresti                     |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
| Pío Cabanillas (5)               |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
| Fernando D’Ornellas (7)          |       | 12,640                                                                                         |       | —                                      |       | 2,276                            |       | 14,916    |       |
| Jaime Estévez                    |       | 22,528                                                                                         |       | —                                      |       | 14,361                           |       | 36,889    |       |
| Borja Prado                           |       | 18,000                                                                                         |       | —                                      |       | 2,276                            |       | 20,276    |       |
| Raimundo Valenzuela (5)               |       | 4,844                                                                                          |       | —                                      |       | 1,514                            |       | 6,358     |       |
| Leonidas Vial                         |       | 22,528                                                                                         |       | —                                      |       | —                           |       | 22,528    |       |
| José María Calvo-Sotelo (8) |       |                                                                                           |       | —                                      |       | —                           |       | —    |       |
| Gerardo Jofré Miranda (9)        |       | 16,763                                                                                         |       | —                                      |       | 8,294                            |       | 25,057    |       |
| Luis de Guindos (4)                   |       | 8,523                                                                                          |       | —                                      |       | 754                              |       | 9,277     |       |
| Jorge Rosenblut (10)                  |       | —                                                                                         |       | —                                      |       | —                           |       | —    |       |
|                                  |       |                                                                                           |       |                                        |       |                             |       |      |       |
| **Total**                             |       | 145,546                                                                                        |       | —                                      |       | 39,293                           |       | 184,839   |       |

 

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(1)          Paolo Bondi, Francesco Buresti, Andrea Brentan, JuanGallardo and Pío Cabanillas waived compensation for their position as BoardDirectors of the company.

(2)          Compensations for Audit and Directors committees.

(3)          Mario Valcarce was Chairman of the Board untilOctober 29, 2009.

(4)          Paolo Bondi and Luis de Guindos were appointed asBoard Directors on July 28, 2009.

(5)          Juan Gallardo, Pío Cabanillas and RaimundoValenzuela were Board Directors until March 26, 2009.

(6)          Andrea Brentan was appointed Vice-Chairman of thecompany on March 26, 2009 and held the position until July 28, 2009.

(7)          Fernando D’Ornellas was Board Director untilJuly 28, 2009.

(8)          José María Calvo Sotello was appointed BoardDirector on March 26, 2009.

(9)          Gerardo Jofré was appointed Board Director onApril 15, 2009.

(10)    Jorge Rosenblut was appointed Board Director andChairman of the Board on December 17, 2009.

 

Wedo not disclose, to our shareholders or otherwise, information on individualexecutive officers’ compensation.  For the year ended December 31,2009, the aggregate compensation (including performance-based bonuses) of ourexecutive officers, either paid or accrued, wasCh$ 2,804 million.  Executive officers are eligible for variablecompensation under a bonus plan.  Endesa Chile provides for its executiveofficers an annual bonus plan for meeting company-wide objectives and for theirindividual contribution to the Company’s results.  The annual bonus planprovides for a range of bonus amounts according to hierarchy.  The bonuseseventually paid to executives consist of a certain number of gross monthlysalaries.

 

The amount accrued by theCompany in 2009 to provide for pension, retirement or similar benefits to ourexecutive officers totaled Ch$ 278 million.  The funds accrued to provide for future severanceindemnity to our executive officers amounted to Ch$ 450 million, ofwhich Ch$ 44 million were accrued during 2009.  There are no other amounts set aside oraccrued to provide for pension, retirement or similar benefits to our executiveofficers.

 

Allof our executive officers have severance indemnity agreements with the Companyin the event of voluntary resignation, mutual agreement among the parties, ordeath.  They do not have a right to severance indemnity if theirrelationship with the Company is terminated due to willful misconduct,prohibited negotiations, unjustified absences, abandonment of duties, amongother causes, as defined in article 160 of the Chilean Labor Code.  All ofthe Company’s employees are entitled to legal severance pay if dismissed due tothe needs of the Company, as defined in article 161 of the Chilean Labor Code.

 

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**C.            BoardPractices.**

 

The Board of Directors as ofDecember 31, 2009, was elected at the OSM of April 15, 2009. After the OSM held on April 15, 2009, four vacancies occurred in the Boardof Directors; thus, a Board of Directors election took place at the OSM held onApril 22, 2010, and the term for this new Board of Directors will expirein April 2013.  For information as to the years in which eachdirector began his service at the board, please see “— A. Directors and SeniorManagement” above.  The members of theBoard of Directors do not have service contracts with Endesa Chile or any ofits related companies that provide benefits upon termination of employment.

 

**Corporate Governance**

 

EndesaChile is managed by its Executive Officers under the direction of its Board ofDirectors which, in accordance with its bylaws, consists of nine directors whoare elected at an OSM.  Each director serves for a three-year term and theterm of each of the nine directors expires on the same day.  The directorscan be reelected indefinitely.  Staggered terms are not permitted underChilean law.  If a vacancy occurs on the Board during the three-year term,the Board of Directors may appoint a temporary director to fill thevacancy.  Any vacancy will trigger an election for every seat on the Boardof Directors at the next OSM.

 

Chileancorporate law provides that a company’s board of directors is responsible forthe management, administration and representation of a company in all mattersconcerning its corporate purpose, subject to the provisions of the company’sbylaws and the stockholders’ resolutions.  In addition to the bylaws, theEndesa Chile Board of Directors has adopted regulations and policies that guideour corporate governance principles.

 

TheInternal Regulations on Conduct in the Securities’ Markets, approved by theBoard in June 2002, defines the rules of conduct that must befollowed by members of the Board of Directors, senior management and otherexecutives and employees who, due to the nature of their job responsibilities,may have access to sensitive or confidential information, with a view tocontributing to transparency and to the protection of investors.  Theseregulations are based on the principles of impartiality, good faith, placingthe company’s interests before one’s own, and care and diligence in usinginformation when carrying out transactions in the securities’ markets.

 

TheCharter Governing Executives  approved by our Board in July 2003, andthe Employees Code of Conduct, explain our principles and ethical values,establish the rules governing our contact with customers and suppliers,and establish the principles that should be followed by employees includingethical conduct, professionalism and confidentiality.  They also imposelimitations on the activities that our executives and other employees mayundertake outside the scope of their employment with us.

 

Inorder to comply with Securities Market Law 18,045 and SVS regulations, ourBoard of Directors at its meeting held on May 29, 2008, approved the “Manualfor the Management of Information of Interest to the Market”, or Manual. This document addresses applicable standards regarding the information oftransactions of the Company’s securities or those of its affiliates bydirectors, management, principal executives, employees and other related parties;existence of blackout periods for such transactions by directors, principalexecutives and other related parties; existence of mechanisms for thecontinuous disclosure of information that is of interest to the market; andmechanisms that provide protection for confidential information.  TheManual was informed to the market on May 29, 2008 and posted on thecompany’s website www.endesa.cl.  In February 2010, the Manual wasmodified in order to comply with the provisions of Law N° 20,382 (Corporate GovernanceImprovement Law).

 

Theprovisions of this Manual shall be applied to the members of our Board, as wellas executives and employees of Endesa Chile who have access to privilegedinformation and especially those who work in areas related to the securitiesmarkets.

 

**Compliance with NYSE Listing Standards on CorporateGovernance**

 

Thefollowing is a summary of the significant differences between our corporategovernance practices and those applicable to domestic issuers under thecorporate governance rules of the New York Stock Exchange.

 

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**Independence and Functions of the Audit Committee**

 

Underthe NYSE corporate governance rules, all members of the Audit Committee must beindependent.  We have been subject to this requirement as of July 31,2005.

 

Underthe NYSE corporate governance rules, the Audit Committee of a U.S. company mustperform the functions detailed in the NYSE Listed Company ManualRules 303A.06 and 303A.07.  Non-U.S. companies have been required tocomply with Rule 303A.06 beginning July 31, 2005, but are notrequired to comply with Rule 303A.07.  Since July 31, 2005, wecomply with the independence and the functional requirements ofRule 303A.06.  As required by the Sarbanes-Oxley Act and the NYSEcorporate governance rules, on June 29, 2005, the Board of Directors ofEndesa Chile created an Audit Committee, composed of three directors, who arealso members of the Board.  The members of this Committee as ofDecember 31, 2009, who satisfy the requirements of independence of NYSE,are: Luis de Guindos J., Borja Prado E. and Jaime Estévez V. Messrs. De Guindos and Prado sit on the Board of Directors of Endesa Spainand are relying on the exemption provided by Rule 10A-3(b)(1)(iv)(B). Messrs. De Guindos and Prado otherwise meet the independence requirementsof Rule 10A-3(b)(1)(ii).

 

Asrequired by Chilean Law, Endesa Chile also has a**Directors’ Committee**composedof three members of the Board, which must be composed of a majority (two out ofthree members) of directors independent to the controlling shareholder (a “non-controldirector”).  In case there were notsufficient non-control directors on the Board to serve on the committee, itcould be composed by a majority of directors nominated with the votes of thecontrolling shareholders.  As of December 31, 2009, our Directors’Committee is composed of two non-control directors and one director appointedby the controlling shareholder.

 

OurDirectors’ Committee performs the following functions:

 

·                  examination ofAnnual Report, Financial Statements and the Reports of the External Auditorsand Inspectors of the Accounts;

 

·                  formulation ofthe proposal to the Board of Directors for the selection of external auditorsand private rating agencies;

 

·                  examination ofinformation related to operations by the Company with related parties and/orrelated to operations in which the Company boards members or relevant executiveofficers may have personal interest;

 

·                  examination ofthe compensation framework and plans for managers and executive officers; and

 

·                  any otherfunction mandated to the committee by the bylaws, the Board of Directors or theShareholder of the Company.

 

Asof December 31, 2009, the members of this Committee wereMessrs. Paolo Bondi, Gerardo Jofré M. and Jaime Estévez V.

 

TheAudit Committee performs the following functions:

 

·                  proposal forthe appointment and compensation of independent auditors at OSM;

 

·                  oversightof  the work of independent auditors;

 

·                  pre-approval ofaudit and non- audit services provided by the independent auditors; and

 

·                  establishmentof procedures for receiving and dealing with complaints regarding accounting,internal control and auditing matters.

 

·                  As ofDecember 31, 2009, the members of the audit committee were Luis GuindosJ., Jaime Estévez V. and Borja Prado.

 

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**Corporate Governance Guidelines**

 

TheNYSE’s corporate governance rules require listed companies to adopt anddisclose corporate governance guidelines.  Although Chilean law does notcontemplate this practice (except for the Manual), the Company has adopted thecodes of conduct described above.  Additionally, the Company establishesguidelines in The Bases of Corporate Governance of Endesa Chile (*Bases del Gobierno Corporativo*), approvedby the Board of Directors in February 2005.  See “Item 16B. Code ofEthics” for more details.  At its Extraordinary Shareholders Meeting orESM held on March 2006, the Company approved the inclusion of articles inits bylaws that govern the creation, composition, attributions, functions andretribution of the Directors’ Committee and the Audit Committee.

 

On October** **20, 2009, Law 20,382, which amendedthe Chilean Companies Act, was established, introducing changes to the rules governingcorporate governance of the companies.  In order to comply with the newrequirements of this law, at the ESM of April 22, 2010, the shareholdersof the company approved amendments to the Company’s bylaws, including themerger of the Directors’ and Audit Committees.  The new Directors’Committee is composed of three members that comply with the independencerequirements of the Sarbanes-Oxley Act and the NYSE corporate governancerules.  The members of this merged committee are Messrs. Jaime BauzáB, Jaime Estévez V. and Felipe Lamarca C.  Such committee includes among its functionsthe duties previously performed by the Audit Committee.

 

**D.            Employees.**

 

Thefollowing table provides the total number of full time employees of ourCompanies for the last three fiscal years:

 
| **Company**                                           | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** |
|-------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **In Argentina**                                      |       |     |       |     |       |     |       |
| Endesa Costanera                                      |       | 273      |       | 274      |       | 281      |       |
| El Chocón                                        |       | 50       |       | 51       |       | 51       |       |
| **Total personnel in Argentina**                      |       | 323      |       | 325      |       | 332      |       |
|                                                  |       |     |       |     |       |     |       |
| **In Chile**                                          |       |     |       |     |       |     |       |
| Endesa Chile                                          |       | 525      |       | 554      |       | 595      |       |
| Pehuenche                                             |       | 3        |       | 3        |       | 3        |       |
| Pangue                                                |       | —   |       | —   |       | —   |       |
| San Isidro                                            |       | —   |       | —   |       | —   |       |
| Celta                                                 |       | 1        |       | 1        |       | 1        |       |
| Ingendesa (1)                                         |       | 289      |       | 418      |       | 417      |       |
| Túnel El Melón                              |       | 23       |       | 24       |       | 16       |       |
| GasAtacama (2)                                        |       | —   |       | 92       |       | 96       |       |
| Hidroaysén (2)                                   |       | —   |       | 26       |       | 29       |       |
| Consorcio Ara-Ingendesa (2)                           |       | —   |       | 5        |       | 15       |       |
| **Total personnel in Chile**                          |       | 841      |       | 1,123    |       | 1,172    |       |
|                                                  |       |     |       |     |       |     |       |
| **In Colombia**                                       |       |     |       |     |       |     |       |
| Emgesa (3)                                            |       | 399      |       | 404      |       | 415      |       |
| Betania                                               |       | —   |       | —   |       | —   |       |
| **Total personnel in Colombia**                       |       | 399      |       | 404      |       | 415      |       |
|                                                  |       |     |       |     |       |     |       |
| **In Peru**                                           |       |     |       |     |       |     |       |
| Edegel                                                |       | 206      |       | 219      |       | 224      |       |
| **Total personnel in Peru**                           |       | 206      |       | 219      |       | 224      |       |
|                                                  |       |     |       |     |       |     |       |
| **Total personnel of Endesa Chile  and Subsidiaries** |       | 1,769    |       | 2,071    |       | 2,143    |       |

 

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(1)          The Ingendesa figure includes Ingendesa employees ofIngendesa’s subsidiary in Brazil.

(2)          According to IFRS in 2009, we include the companiesconsolidated by the proportional integration method.

(3)          In September 2007, Emgesa and Betania weremerged into the latter, which then changed its name to Emgesa, where all theemployees were transferred.

 

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Thefollowing table provides the total number of temporary employees of ourcompanies for the last three fiscal years:

 
| **Company**                                                     | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** |
|-----------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **In Argentina**                                                |       |     |       |     |       |     |       |
| Endesa Costanera                                                |       | —   |       | —   |       | —   |       |
| El Chocón                                                  |       | —   |       | —   |       | —   |       |
| **Total temporary personnel in  Argentina**                     |       | —   |       | —   |       | —   |       |
|                                                            |       |     |       |     |       |     |       |
| **In Chile**                                                    |       |     |       |     |       |     |       |
| Endesa Chile                                                    |       | 9        |       | 5        |       | 3        |       |
| Pehuenche                                                       |       | —   |       | —   |       | —   |       |
| Pangue                                                          |       | —   |       | —   |       | —   |       |
| San Isidro                                                      |       | —   |       | —   |       | —   |       |
| Celta                                                           |       | —   |       | —   |       | —   |       |
| Ingendesa (1)                                                   |       | 269      |       | 301      |       | 170      |       |
| Túnel El Melón                                        |       | 2        |       | 1        |       |     |       |
| Gasatacama (2)                                                  |       | —   |       | —   |       | —   |       |
| Hidroaysén (2)                                             |       | —   |       | —   |       | —   |       |
| Consorcio Ara-Ingendesa (2)                                     |       | —   |       | —   |       | —   |       |
| **Total temporary personnel in  Chile**                         |       | 280      |       | 307      |       | 173      |       |
|                                                            |       |     |       |     |       |     |       |
| **In Colombia**                                                 |       |     |       |     |       |     |       |
| Emgesa (3)                                                      |       | —   |       | —   |       | —   |       |
| Betania (3)                                                     |       | —   |       | —   |       | —   |       |
| **Total temporary personnel in  Colombia**                      |       | —   |       | —   |       | —   |       |
|                                                            |       |     |       |     |       |     |       |
| **In Peru**                                                     |       |     |       |     |       |     |       |
| Edegel                                                          |       | 20       |       | 23       |       | 15       |       |
| **Total temporary personnel in Peru**                           |       | 20       |       | 23       |       | 15       |       |
|                                                            |       |     |       |     |       |     |       |
| **Total temporary personnel in  Endesa Chile and Subsidiaries** |       | 300      |       | 330      |       | 188      |       |

 

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(1)          Ingendesa figure includes Ingendesa employees ofIngendesa’s subsidiary in Brazil.

(2)          According to IFRS in 2009 we include the companiesconsolidated by the proportional integration method.

(3)          In September 2007, Emgesa and Betania weremerged into the latter, which then changed its name to Emgesa, where all theemployees were transferred.

 

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AllChilean employees who are dismissed for reasons other than misconduct areentitled by law to a severance payment.  According to Chilean law,permanent employees are entitled to a basic payment of one month’s salary foreach year (or a six-month portion thereof) worked, subject to a limitation of atotal payment of no more than 11 months’ pay for employees hired afterAugust 14, 1981.  Severance payments to employees hired prior to thatdate consist of one month’s salary for each full year worked, not subject toany limitation on the total amount payable.  In addition, under EndesaChile’s collective bargaining agreements, Endesa Chile is obligated to makeseverance payments to all covered employees in cases of voluntary resignationor death in specified amounts that increase according to seniority.  InDecember 2007, Ingendesa signed a new collective contract with itsthree trade unions for a four-year term.  During 2008, Endesa Chile signedthree collective contracts, covering technicians and administrativestaff.  Two of the collective contracts have a three-year term and thethird one has a four-year term.  In 2009, a four-year term collectivecontract for Edegel’s personnel was signed in Peru.  Additionally, EndesaChile signed two collective contracts, for engineers and other professionals,both for four-year terms.  Management believes Endesa Chile’s relationshipwith its trade unions is positive.

 

**E.             ShareOwnership.**

 

Tothe best of Management’s knowledge, none of Endesa Chile’s directors andofficers own more than 0.1% of the shares of the Company.  None of EndesaChile’s directors or officers has any stock options, which are not permittedunder Chilean securities laws and regulations.  It is not possible toconfirm whether any of our directors or officers has a beneficial, rather thandirect, interest in the shares of Endesa Chile.  To the best of ourknowledge, any share ownership by all of the directors and officers of EndesaChile, in the aggregate, amounts to significantly less than 10% of outstanding shares.

 

**Item 7.    MajorShareholders and Related Party Transactions**

 

**A.            MajorShareholders.**

 

Endesa Chile has only oneclass of capital stock and our major shareholder, Enersis, has no differentvoting rights than Endesa Chile’s other shareholders.  As of March 31, 2010 Endesa Chile had19,064 registered shareholders who held 8,201,754,580 outstanding shares.  There are five official record holders in theUnited States of America, as of such date. It is not practicable for us to determine the number of ADSs or commonshares beneficially owned in the United States, as we are not able to ascertainthe domicile of the final beneficial holders represented by the five officialADR record holders in the United States of America.  Likewise, we cannot readily determine thedomicile of any of our foreign stockholders who hold our common stock, eitherdirectly or indirectly.

 

Thefollowing table sets out information concerning beneficial ownership of EndesaChile’s shares for equity interest greater than 5% as of December 31,2009:

 
| ** **  | ** ** | **As of December 31, 2009** | ** ** |
|-------------|------------|-------------------------------------------------|------------|
| ** **  | ** ** | **Shares  Beneficially  Owned**                 | ** ** | **Percentage of  Total Shares  Outstanding** | ** ** |
|        |       |                                            |       |   |   |
| Enersis (1) |       | 4,919,488,794                                   |       | 59.98 | % |

 

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(1)  As of December 31, 2009, EndesaSpain, directly or indirectly, owned 60.6%, of the share capital of Enersis.

 

Enersisis a company primarily engaged, through its subsidiaries and related companies,in the generation and distribution of electricity in Chile, Argentina, Colombiaand Peru, and in the generation, transmission and distribution of electricityin Brazil.  Enersis is controlled by Endesa Spain, one of the largestSpanish electricity companies, which owns 60.6% of Enersis’ outstanding capitalstock.

 

OnMarch 26, 2007, Spanish company Acciona, S.A. (Acciona) and Italiancompany Enel, executed an agreement for the joint management of Spanishcompany, Endesa Spain.  The latter, through its Spanish subsidiaryEndesa Latinoamérica, holds 60.6% of the share capital of Enersis, whichin turn holds 60% of the share capital of Endesa Chile

 

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OnFebruary 20, 2009, Acciona and Enel, reached an agreement whereby Accionawould transfer directly and indirectly to Enel Energy Europe S.L., wholly ownedby Enel, its 25.0% shareholding in Endesa Spain, subject to certainconditions, which were subsequently met.  In accordance with theagreement, Enel paid Acciona € 9,627 million.  The amount wasdetermined by subtracting the dividends distributed by Endesa Spain andreceived by Acciona after February 20, 2009 (€ 1,561 million) fromthe cash consideration of the agreement established on that same date(€ 11,107 million) and adding interest accrued as from the agreement date(€ 81 million).  On June 25, 2009, the shares were transferred,making Enel the ultimate controller of Enersis by virtue of its 92.1%shareholding in Endesa Spain.  This transaction was reported to theSpanish National Securities Market Commission (CNMV in its Spanish acronym) asmaterial information on the same date.  In addition, during 2009, EndesaSpain transferred to Acciona certain wind and hydroelectric energy generationassets in Spain and Portugal priced at € 2,814 million.

 

OnJune 25, 2009, the shares and assets were transferred, making Enel theultimate controller of Endesa Chile by virtue of its 92.1% shareholding inEndesa Spain.  This transaction was reported to the Spanish NationalSecurities Market Commission (CNMV in its Spanish acronym) as materialinformation on the same date.

 

**B.            RelatedParty Transactions.**

 

Article 146of the Corporation Law defines related-party transactions as all operationsinvolving the company and any entity belonging to the corporate group, itsparent companies, controlling companies, subsidiaries or related companies,board members, managers, administrators, senior officers or companyliquidators, including their spouses, some of their relatives and all entitiescontrolled by them, in addition to individuals who may appoint at least onemember of the company’s administration or who control 10% or more of votingcapital.  As required by law, “related-party transactions” must be carriedout in line with corporate interests, as well as prices, terms and conditionsprevailing on the market upon being approved, and meet all legal requirements,including board acknowledgement and approval of the transaction, in addition toapproval by the ESM in some cases, with requisite majority approval andpursuant to regulatory procedures.

 

Theaforementioned law also provides for some exceptions, stating that in certaincases Board approval would suffice for “related-party transactions” to becarried, pursuant to certain related-party transaction thresholds and when suchtransactions are conducted in compliance with the related-party policiesdefined by the company’s board.  At its meeting held on December 17,2009, Endesa Chile’s Board of Directors approved a related-party policy (*política de habitualidad*) effective as ofJanuary 1, 2010.  This policy is available on the company’s website.

 

Shouldan operation not be carried in compliance with the aforementioned rules, thecompany or shareholders may demand compensation from the individual associatedwith the infringement, as provided under law, in addition to a reparation fordamages.

 

Ourlargest electricity distribution customer is Chilectra, a subsidiary ofEnersis.  The terms of our contracts with Chilectra are regulated inaccordance with the Chilean Electricity Law.  For additional informationconcerning the Company’s transactions with affiliates and other relatedparties, see Note 7 to the audited consolidated financialstatements.  We believe that we have complied with the requirements ofArticle 146 in all transactions with related parties.

 

Itis common practice to transfer surplus funds from one company to anotheraffiliate that has a cash deficit.  It is the Endesa Group’s policy thatall cash inflows and outflows of Endesa Chile and Endesa Chile’s Chileansubsidiaries are managed through a centralized cash management policy incoordination with Enersis.  These operations are carried out througheither short-term or structured intercompany loans.  Under Chilean lawsand regulations, such transactions must be carried out on an arm’s length basis. Our centralized cash management is efficient for both financial and taxreasons.  All of these operations are subject to the supervision of ourDirectors’ Committee.  As of December 2009, these operations arepriced at TIP (Chilean variable interest rate) + 0.05% per month.

 

Inother countries in which we do business, these intercompany transactions arepermitted, but they have adverse tax consequences.  Accordingly, we do notmanage the cash flows of our non-Chilean subsidiaries.

 

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Endesa Chile has also madestructured loans to its subsidiaries in Chile, primarily to finance projectsand refinance existing indebtedness.  As of December 31, 2009, theoutstanding net balance for such loans was $ 257 million. The largestamount outstanding during 2009 and 2008 was $ 313 million and $ 521million respectively.  Endesa Chile has only one outstanding loan grantedto a foreign subsidiary, Endesa Costanera.  The outstanding net balance on this loanamounted to $ 7.1 million as of December 31, 2009.  The largestnet amount outstanding during 2009 and 2008 for such loan was$ 7.1 million*.*

 

The interest rates onintercompany loans to Endesa-Chile’s Chilean subsidiaries range from LIBOR plus0.75 % to LIBOR plus 6.06%, with a weighted average interest rate ofapproximately LIBOR plus 4.2%.  The interest rate on the intercompanyloan to Endesa Chile’s foreign subsidiary was LIBOR plus 5.5% as ofDecember 2009.

 

As of the date of thisreport, the aforementioned transactions have not experienced materialchanges.  For more information regarding transactions with affiliates,refer to Note 7 of our consolidated financial statements.

 

**C.           Interests of Experts and Counsel.**

 

Not applicable.

 

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**PART II**

 

**Item 15. Controls and Procedures**

 

**(a) Disclosure Controls and Procedures**

 

TheCompany carried out an evaluation under the supervision and with the participationof the Company’s Management, including the Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of the design and operation of theCompany’s “disclosure controls and procedures” (as defined in Rules 13(a)-15 (e) and 15 (d)-15 (e) under the Exchange Act) for the yearended December 31, 2009.

 

Thereare inherent limitations to the effectiveness of any system of disclosurecontrols and procedures, including the possibility of human error, and thecircumvention or overriding of the controls and procedures. Accordingly, theCompany’s disclosure controls and procedures are designed to provide reasonableassurance of achieving their control objectives.

 

Basedupon the Company’s evaluation, the Chief Executive Officer and the Chief FinancialOfficer concluded that the disclosure controls and procedures are effective inproviding reasonable assurance that information required to be disclosed in thereports the Company files and submits under the Exchange Act is recorded,processed, summarized and reported, within the time periods specified in theapplicable rules and forms, and that it is gathered and communicated tothe Company’s Management, including the Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosure.

 

Our disclosure controls andprocedures are designed to provide reasonable assurance of achieving theirobjectives, and our principal executive officer and principal financial officerhave concluded that our disclosure controls and procedures are effective atthat reasonable assurance level.

 

**(b) Management’s Annual Report on Internal Control OverFinancial Reporting**

 

Asrequired by Section 404 of the Sarbanes-Oxley Act of 2002, Endesa Chile’sManagement is responsible for establishing and maintaining “adequate internalcontrol over financial reporting” (as defined in Rule 13 (a)-15 (f) underthe Exchange Act). The Company’s internal control over financial reporting isdesigned to provide reasonable assurance regarding the reliability of financialreporting and the preparation of the financial statements for external purposesin accordance with IFRS.

 

Becauseof its inherent limitations, internal control over financial reporting may notnecessarily prevent or detect some misstatements. It can only providereasonable assurance regarding financial statement preparation andpresentation. Also, projections of any evaluation of effectiveness for futureperiods are subject to the risk that controls may become inadequate because ofchanges in conditions or because the degree of compliance with the policies orprocedures may deteriorate over time.

 

Managementassessed the effectiveness of its internal control over financial reporting forthe year ended December 31, 2009. The assessment was based on criteriaestablished in the “Internal Controls — Integrated Framework” issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). Basedon the assessment, Endesa Chile’s Management has concluded that as of December 31,2009, the Company’s internal control over financial reporting was effective.

 

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**(c) Attestation Report**

 

KPMGAuditores Consultores Ltda., the independent registered public accounting firmthat has audited our Consolidated Financial Statements, has issued anattestation report on the company’s internal control over financial reportingas of December 31, 2009. This attestation report appears on page F-3.

 

**(d) Changes in internal control**

 

Therewere no changes in the Company’s internal control over financial reporting thatoccurred during 2009 that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal control over financial reporting.

 

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**PART III**

 

**Item17.     Financial Statements**

 

None.

 

**Item18.     Financial Statements**

 

**Endesa Chile and Subsidiaries**

 

**Index to the Audited Consolidated Financial Statements**

 
| **Reports of Independent Registered Public Accounting  Firms:**                                                               |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                          |   |
| Report of KPMG Auditores Consultores Ltda. – Empresa Nacional de Electricidad  S.A. (Endesa Chile)                       | F-1    |
| Report of KPMG Auditores Consultores Ltda. – Endesa  Chile – Internal Control over Financial Reporting              | F-3    |
| Report of Deloitte Touche  Tohmatsu Auditores Independentes Ltda. – Endesa Brasil S.A.                    | F-5    |
| Report of Deloitte & Touche Ltda. – Emgesa  S.A. E.S.P.                                                         | F-6    |
|                                                                                                                          |   |
| **Consolidated  Financial Statements:**                                                                                       |   |
|                                                                                                                          |   |
| Consolidated Statements of Financial Position as of  December 31, 2009 and 2008 and as of January 1, 2008 | F-7    |
| Consolidated Statements of Comprehensive  Income for the years ended December 31, 2009 and 2008                     | F-9    |
| Consolidated Statements of Changes in Equity for the  years ended December 31, 2009 and 2008                             | F-10   |
| Consolidated Statements of Cash Flows for the years  ended December 31, 2009 and 2008                                    | F-11   |
| Notes to the Consolidated Financial Statements                                                                                | F-13   |

 

**Item19.     Exhibits**

 
| **Exhibit** | ** ** | **Description**                                                                                                                                                                                                       |
|-------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1         |       | By-laws  (Estatutos) of Empresa Nacional de Electricidad S.A. as amended (incorporated  by reference to Exhibit 1.1 to the Company’s Annual Report on Form 20-F filed  on June 11, 2010).                        |
| 1.2         |       | By-laws  (Estatutos) of Empresa Nacional de Electricidad S.A., as amended (English  translation) (incorporated by reference to Exhibit 1.2 to the Company’s  Annual Report on Form 20-F filed on June 11, 2010). |
| 8.1         |       | List  of Subsidiaries as of December 31, 2009 (incorporated by reference to Exhibit  8.1 to the Company’s Annual Report on Form 20-F filed on June 11, 2010).                                                    |
| 12.1        |       | Certification  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley  Act.                                                                                                                    |
| 12.2        |       | Certification  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley  Act.                                                                                                                    |
| 13.1        |       | Certification  of Chief Executive Officer and Chief Financial Officer pursuant to  Section 906 of the Sarbanes-Oxley Act.                                                                                        |

 

We will furnish to theSecurities and Exchange Commission, upon request, copies of any unfiledinstruments that define the rights of stakeholders of Endesa.

 

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**SIGNATURES**

 

The registrant certifiesthat it meets all of the requirements for filing on Form 20-F/A and thatit has duly caused and authorized the undersigned to sign this amendment to theannual report on its behalf.

 
| ** ** | **EMPRESA NACIONAL DE  ELECTRICIDAD S.A.** |
|------------|--------------------------------------------|
|       |                                       |   |
|       | By:                                        | /s/  Joaquín Galindo V. |
|       | Name:                                      | Joaquín  Galindo V. |
|       | Title:                                     | Chief  Executive Officer |

 

 

Date: November 26, 2010.

 

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**Endesa Chile and Subsidiaries**

**Audited Consolidated Financial Statements for theyears ended December 31, 2009 and 2008**

**together with the Reports of Independent RegisteredPublic Accounting Firms**

 

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**Endesa Chile and Subsidiaries**

 

**Index to the Audited Consolidated Financial Statements**

 
| **Reports of Independent Registered Public Accounting Firms:**                                                                |   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                          |   |   |
| Report  of KPMG Auditores Consultores Ltda. – Empresa Nacional de Electricidad S.A.  (Endesa Chile)                      |   | F-1    |
| Report  of KPMG Auditores Consultores Ltda. – Endesa Chile – Internal Control over  Financial Reporting             |   | F-3    |
| Report  of Deloitte Touche Tohmatsu Auditores Independentes – Endesa Brasil S.A.                                         |   | F-5    |
| Report  of Deloitte & Touche Ltda. – Emgesa S.A. E.S.P.                                                         |   | F-6    |
|                                                                                                                          |   |   |
| **Consolidated Financial Statements:**                                                                                        |   |   |
|                                                                                                                          |   |   |
| Consolidated Statements of Financial Position as of  December 31, 2009 and 2008 and as of January 1, 2008 |   | F-7    |
| Consolidated Statements of Comprehensive Income  for  the years ended December 31, 2009 and 2008                    |   | F-9    |
| Consolidated Statements of Changes in Equity for the  years ended December 31, 2009 and 2008                             |   | F-10   |
| Consolidated Statements of Cash Flows for the years  ended December 31, 2009 and 2008                                    |   | F-11   |
| Notes to the Consolidated Financial Statements                                                                                |   | F-13   |

 

Ch$                    Chilean pesos

US$                    United States dollars

UF                      The UF is a Chilean inflation-indexed, peso-denominated monetary unit that isset daily in advance based on the previous month’s inflation rate.

ThCh$               Thousand of Chilean pesos

ThUS$               Thousand of United States dollars

 

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|   |   | **KPMG  Auditores Consultores Ltda.**       |   | Phone           |   | +56 (2) 798 1000 |
|--------|--------|---------------------------------------------|--------|-----------------|--------|------------------|
|   |   | 3520 Isidora Goyenechea Av., 2nd floor |   | Fax             |   | +56 (2) 798 1001 |
|   |   | Las Condes, Santiago, Chile                 |   | **www.kpmg.cl** |   |             |

 

**Report ofIndependent Registered Public Accounting Firm**

 

TheBoard of Directors and Shareholders of

Empresa Nacional de Electricidad S.A.(Endesa Chile):

 

Wehave audited the accompanying consolidated statements of financial position of EndesaChile and subsidiaries (the Company) as of December 31, 2009 and 2008, andJanuary 1, 2008, and the related consolidated statements of comprehensiveincome, changes in equity, and cash flows for each of the years in the two-yearperiod ended December 31, 2009. These consolidated financial statementsare the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on ouraudits. We did not audit the December 31, 2009 and 2008 financialstatements of certain subsidiaries and nonsubsidiary investees carried on theequity method of accounting, which statements reflect total assets constituting33.02 percent and 32.63 percent of the Company’s consolidated total assetposition as of December 31, 2009 and 2008, respectively, and totalrevenues constituting 23.48 percent and 18.09 percent of the Company’sconsolidated revenues for the years ended December 31, 2009 and 2008,respectively. Those consolidated financial statements prepared in accordancewith the local statutory accounting basis were audited by other auditors whosereports have been furnished to us and our opinion, insofar as it relates to theamounts included for those entities on such basis of accounting, is basedsolely on the reports of the other auditors. Accordingly, we have audited theconversion adjustments to the financial statements of these subsidiaries andnonsubsidiary investees prepared in accordance with the local statutory accountingbasis to conform them to the Company’s accounting basis referred to below.

 

Weconducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether theconsolidated financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts anddisclosures in the consolidated financial statements, assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits and the reports of the other auditors provide a reasonable basis for ouropinion.

 

In our opinion, based on our audits and the reports of the otherauditors, the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of Endesa Chile andsubsidiaries as of December 31, 2009 and 2008 and January 1, 2008,and the results of their operations and their cash flows for each of the yearsin the two-year period ended December 31, 2009, in conformity withInternational Financial Reporting Standards (IFRS) as issued by the InternationalAccounting Standards Board (IASB).

 

We also have audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States), Endesa Chile’sinternal control over financial reporting as of December 31, 2009, basedon the criteria established in Internal Control — Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO),and our report dated May 25, 2010, expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.

 

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**KPMG Auditores Consultores Ltda.**

 

Santiago, Chile

 

May 25,2010

 

KPMG Auditores ConsultoresLtda. a Chilean member firm of KPMG International, a Swiss cooperative. Allrights reserved.

 

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|   |   | **KPMG Auditores Consultores Ltda.**    |       | Phone           |   | +56  (2) 798 1000 |
|--------|--------|-----------------------------------------|------------|-----------------|--------|------------------------|
|   |   | 3520  Isidora Goyenechea Av., 2nd floor |       | Fax             |   | +56  (2) 798 1001 |
|   |   | Las  Condes, Santiago, Chile            | ** ** | **www.kpmg.cl** |   |                   |

 

**Report ofIndependent Registered Public Accounting Firm**

 

TheBoard of Directors and Shareholders of

Empresa Nacional deElectricidad S.A. (Endesa-Chile):

 

Wehave audited Endesa-Chile’s internal control over financial reporting as of December 31,2009, based on criteria established in *InternalControl - Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). Endesa-Chile’s management is responsiblefor maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting,included in the accompanying *Management’sAnnual Report on Internal Control over Financial Reporting*. Ourresponsibility is to express an opinion on Endesa-Chile’s internal control overfinancial reporting based on our audit.

 

Weconducted our audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internalcontrol over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. Our audit also included performingsuch other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.

 

Acompany’s internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directorsof the company; and (3) provide reasonable assurance regarding preventionor timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

 

KPMG Auditores Consultores Ltda. a Chilean member firm of KPMGInternational, a Swiss cooperative. All rights reserved.

 

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Inour opinion, Endesa-Chile maintained, in all material respects, effectiveinternal control over financial reporting as of December 31, 2009, basedon criteria established in *Internal Control- Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission.

 

Wealso have audited, in accordance with the standards of the Public CompanyAccounting Oversight Board (United States), the consolidated statement offinancial position of Endesa-Chile and subsidiaries as of December 31,2009, and the related consolidated statements of comprehensive income, changesin equity, and cash flows for the year then ended, and our report dated May 25,2010 expressed an unqualified opinion on those consolidated financialstatements.

 

 
| **KPMG Auditores Consultores Ltda.** |   |
|--------------------------------------|--------|
|                                 |   |
| Santiago,                            | Chile  |
| May 25, 2010                    |   |

 

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|        |       |       |                        | Deloitte Touche Tohmatsu  |
|--------|------------|------------|-----------------------------|------------------------------------------|
|   | ** ** |       | Auditores  Independentes    |
|   | ** ** |       | Av.  Presidente Wilson, 231 |
|   |       | ** ** |                        | 22o  andar                          |
|   |       | ** ** |                        | Rio  de Janeiro - RJ -                   |
|   |       | ** ** |                        | 20030-021                           |
|   |       | ** ** |                        | Brasil                                   |
|   |       | ** ** |                        |                                     |
|   |       | ** ** |                        | Tel:  +55 (21) 3981-0500                 |
|   |       | ** ** |                        | Fax:  +55 (21) 3981-0600                 |
|   |       | ** ** |                        | www.deloitte.com.br                 |

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

 

To the Board of Directors and Shareholders of Endesa Brasil S.A.Niterói- RJ

 

1. We have audited the accompanying consolidated balance sheets ofEndesa Brasil S.A. and subsidiaries (the “Company”) as of December 31,2009 and 2008 , and the related consolidated statements of income, changes inshareholders’ equity, and cash flows for the years then ended. These financialstatements, prepared in accordance with accounting practices adopted in Braziland presented in Brazilian real, are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

2. We conducted our audits in accordance with the auditing standards ofthe Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. The Companyis not required to have, nor were we engaged to perform, an audit of itsinternal control over financial reporting. Our audits included consideration ofinternal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the Company’s internal controlover financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

 

3.In our opinion such consolidated financial statements present fairly, in allmaterial respects, the financial position of Endesa Brasil S.A. andsubsidiaries as of December 31, 2009 and 2008, and the results of theiroperations, changes in shareholders’ equity, and cash flows for the years thenended in accordance with accounting practices adopted in Brazil.

 

4.As mentioned in note 1 to the consolidated financial statements, the subsidiaryCompanhia de Interconexao Energetica - CIEN is seeking alternatives for newbusinesses, including the discussions with the regulatory agencies to changeCIEN ‘s “trading” activity to “transmission” activity in order to obtain theAllowed Annual Revenue (RAP).

 

 

| **DELOITTE TOUCHE TOHMATSU** |
|------------------------------|

 

| Auditores Independentes | ** ** | ** ** | ** ** | ** ** |
|-------------------------|------------|------------|------------|------------|

 

| Rio de Janeiro    |
|-------------------|
| May 25, 2010 |   |   |   |   |

 

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|        |       | ** ** |                                    |                                      |
|--------|------------|------------|-----------------------------------------|-------------------------------------------|
|   | ** ** |       | Deloitte &  Touche Ltda.  |
|   | ** ** |       | Cra.  7 N° 94 - 09            |
|   |       | ** ** |                                    | A.A.  075874                         |
|   |       | ** ** |                                    | Nit.  860.005.813-14                 |
|   |       | ** ** |                                    | Bogotá  D.C.                    |
|   |       | ** ** |                                    | Colombia                             |
|   |       | ** ** |                                    |                                      |
|   |       | ** ** |                                    | Tel:  +57(1) 5461810 - 5461815  |
|   |       | ** ** |                                    | Fax:  +57(1) 2178088            |
|   |       | ** ** |                                    | www.deloitte.com/co                  |

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

 

Tothe Board of Directors and Shareholders of

 

Emgesa S.A. E.S.P.:

 

Wehave audited the accompanying balance sheets of EMGESA S.A. E.S.P. (the “Company”)as of December 31, 2009 and 2008, and the related statements of income,shareholders’ equity, changes in financial position and cash flows for theyears then ended. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.

 

Weconducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States of America). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting. Our audits included consideration of internalcontrol over financial reporting as a basis for designing audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financialreporting. Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide areasonable basis for our opinion.

 

Inour opinion, such financial statements present fairly, in all materialrespects, the financial position of the Company as of December 31, 2009and 2008, and the results of its operations, changes in financial position andcash flows for the years then ended in conformity with accounting principlesgenerally accepted in Colombia.

 

Deloitte &Touche Ltda.

 

May 25,2010 Bogotá, Colombia

 

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**ENDESA CHILE AND SUBSIDIARIES**

 

**Consolidated Statements of Financial Position**

Asof December 31, 2009, December 31, 2008 and January 1, 2008

(in thousands of Chilean pesos — ThCh$)

 
| ** **                                                       | ** ** | ** ** | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **01-01-2008**    | ** ** |
|------------------------------------------------------------------|------------|------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|
| **ASSETS**                                                       | ** ** | **Note**   | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** |
| ** **                                                       | ** ** |       | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        |       |
| **CURRENT ASSETS**                                               | ** ** |       | ** ** | **942,361,242**   | ** ** | **1,241,838,883** | ** ** | **660,033,911**   |       |
| **Current Operating Assets**                                     | ** ** |       | ** ** | **942,361,242**   | ** ** | **1,241,838,883** | ** ** | **660,033,911**   |       |
| Cash and cash equivalents                                        |       | 5          |       | 446,438,229       |       | 719,217,980       |       | 115,095,865       |       |
| Financial assets at fair value with changes  through net income  |       | 17         |       | 1,493,492         |       | —            |       | —            |       |
| Other financial assets                                           |       |       |       | 42,657            |       | —            |       | —            |       |
| Trade accounts receivable and other receivables,  net            |       | 6          |       | 328,265,468       |       | 342,260,677       |       | 318,419,894       |       |
| Accounts receivable from related companies                       |       | 7          |       | 69,160,836        |       | 66,245,062        |       | 89,781,454        |       |
| Inventories                                                      |       | 8          |       | 40,179,588        |       | 49,141,746        |       | 55,282,262        |       |
| Prepayments                                                      |       |       |       | 7,184,076         |       | 4,708,584         |       | 2,941,305         |       |
| Current tax receivable                                           |       | 9          |       | 44,392,298        |       | 54,911,904        |       | 75,355,490        |       |
| Other assets                                                     |       |       |       | 5,204,598         |       | 5,352,930         |       | 3,157,641         |       |
|                                                             |       |       |       |              |       |              |       |              |       |
| **NON-CURRENT ASSETS**                                           | ** ** |       | ** ** | **5,226,991,370** | ** ** | **5,437,066,482** | ** ** | **4,735,240,709** |       |
| Available-for-sale financial assets                              |       | 10         |       | 2,487,796         |       | 2,432,507         |       | 2,441,449         |       |
| Other financial assets                                           |       |       |       | 1,063,377         |       | 1,655,343         |       | 339,638           |       |
| Trade accounts receivable and other receivables,  net            |       | 6          |       | 66,716,465        |       | 153,412,332       |       | 95,328,090        |       |
| Accounts receivable from related companies                       |       | 7          |       | —            |       | —            |       | 369               |       |
| Investments in associates accounted for using the  equity method |       | 11         |       | 574,097,291       |       | 536,703,030       |       | 481,019,140       |       |
| Intangible assets, net                                           |       | 12         |       | 148,183,957       |       | 76,954,412        |       | 70,144,288        |       |
| Property, plant and equipment, net                               |       | 13         |       | 4,326,989,360     |       | 4,540,894,618     |       | 3,977,814,818     |       |
| Deferred tax assets                                              |       | 14         |       | 94,924,126        |       | 110,326,384       |       | 96,612,703        |       |
| Hedging instruments                                              |       | 17         |       | 590,622           |       | —            |       | —            |       |
| Other assets                                                     |       |       |       | 11,938,376        |       | 14,687,856        |       | 11,540,214        |       |
|                                                             |       |       |       |              |       |              |       |              |       |
| **TOTAL ASSETS**                                                 | ** ** |       | ** ** | **6,169,352,612** | ** ** | **6,678,905,365** | ** ** | **5,395,274,620** |       |

 

Theattached notes are an integral part of these consolidated financial statements.

 

F-7

----

Table ofContents

 

**ENDESA CHILE AND SUBSIDIARIES**

 

**Consolidated Statements ofFinancial Position**

Asof December 31, 2009, December 31, 2008 and January 1, 2008

(in thousands of Chilean pesos — ThCh$)

 
| ** **                                              | ** ** | ** ** | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **01-01-2008**    | ** ** |
|---------------------------------------------------------|------------|------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|
| **LIABILITIES AND EQUITY**                    | ** ** | **Note**   | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** |
| ** **                                              | ** ** |       | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        |       |
| **CURRENT LIABILITIES**                                 | ** ** |       | ** ** | **981,101,681**   | ** ** | **1,355,644,128** | ** ** | **802,145,326**   |       |
| **Current Operating Liabilities**                       | ** ** |       | ** ** | **981,101,681**   | ** ** | **1,355,644,128** | ** ** | **802,145,326**   |       |
| Interest-bearing loans                                  |       | 15         |       | 345,355,943       |       | 740,117,554       |       | 419,296,249       |       |
| Other financial liabilities                             |       | 17         |       | 696,791           |       | —            |       | —            |       |
| Trade accounts payable and other payables               |       | 18         |       | 373,871,856       |       | 347,675,017       |       | 265,570,606       |       |
| Accounts payable to related companies                   |       | 7          |       | 90,554,059        |       | 137,396,309       |       | 45,176,660        |       |
| Provisions                                              |       | 19         |       | 33,393,224        |       | 33,706,461        |       | 28,522,828        |       |
| Current tax payable                                     |       | 9          |       | 123,945,432       |       | 83,966,248        |       | 29,606,208        |       |
| Other liabilities                                       |       |       |       | 8,669,196         |       | 8,710,488         |       | 5,094,808         |       |
| Deferred revenues                                       |       | 21         |       | 448,467           |       | 449,245           |       | 686,118           |       |
| Post-employment benefit obligations                     |       | 20         |       | 3,448,733         |       | 3,592,982         |       | 3,108,546         |       |
| Hedging instruments                                     |       | 17         |       | 717,980           |       | 29,824            |       | 3,877,756         |       |
| Other accrued liabilities                               |       |       |       | —            |       | —            |       | 1,205,547         |       |
|                                                    |       |       |       |              |       |              |       |              |       |
| **NON-CURRENT LIABILITIES**                             | ** ** |       | ** ** | **2,233,249,079** | ** ** | **2,621,307,019** | ** ** | **2,117,857,841** |       |
| Interest-bearing loans                                  |       | 15         |       | 1,791,980,967     |       | 2,134,544,298     |       | 1,688,324,335     |       |
| Trade accounts payable and other payables               |       | 18         |       | 7,569,739         |       | 13,252,372        |       | 10,023,043        |       |
| Accounts payable to related companies                   |       | 7          |       | —            |       | —            |       | 195,828           |       |
| Provisions                                              |       | 19         |       | 20,160,585        |       | 3,290,525         |       | 2,462,449         |       |
| Deferred tax liabilities                                |       | 14         |       | 347,876,619       |       | 399,374,385       |       | 360,951,167       |       |
| Other liabilities                                       |       |       |       | 34,336,712        |       | 33,436,414        |       | 27,786,390        |       |
| Deferred revenues                                       |       | 21         |       | 163,596           |       | 233,531           |       | 890               |       |
| Post-employment benefit obligations                     |       | 20         |       | 28,231,131        |       | 29,880,296        |       | 26,704,566        |       |
| Hedging instruments                                     |       | 17         |       | 2,929,730         |       | 7,295,198         |       | 1,409,173         |       |
|                                                    |       |       |       |              |       |              |       |              |       |
| **EQUITY**                                              | ** ** |       | ** ** | **2,955,001,852** | ** ** | **2,701,954,218** | ** ** | **2,475,271,453** |       |
| **Equity Attributable to  Shareholders of the Company** | ** ** |       | ** ** | **2,069,085,642** | ** ** | **1,598,730,012** | ** ** | **1,537,699,011** |       |
| Issued share capital                                    |       | 22         |       | 1,537,722,642     |       | 1,537,722,642     |       | 1,428,886,505     |       |
| Reserves                                                |       | 22         |       | (769,182,142      | )          | (744,745,964      | )          | (363,658,095      | )          |
| Retained earnings                                       |       | 22         |       | 1,300,545,142     |       | 805,753,334       |       | 472,470,601       |       |
|                                                    |       |       |       |              |       |              |       |              |       |
| **Equity Attributable to Minority  Interest**           | ** ** |       | ** ** | **885,916,210**   | ** ** | **1,103,224,206** | ** ** | **937,572,442**   |       |
|                                                    |       |       |       |              |       |              |       |              |       |
| **TOTAL LIABILITIES AND EQUITY**                        | ** ** |       | ** ** | **6,169,352,612** | ** ** | **6,678,905,365** | ** ** | **5,395,274,620** |       |

 

The attached notes are an integral part of theseconsolidated financial statements.

 

F-8

----

Table of Contents

 

**ENDESA CHILE AND SUBSIDIARIES**

 

**ConsolidatedStatements of Comprehensive Income**

For the years ended December 31, 2009 and 2008

(in thousands of Chilean pesos— ThCh$, except sharedata)

 
| ** **                                                                        | ** ** | ** **       | ** ** | **January - December** | ** ** |
|-----------------------------------------------------------------------------------|------------|------------------|------------|----------------------------------|------------|
| ** **                                                                        | ** ** | ** **       | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| **STATEMENT OF COMPREHENSIVE INCOME**                              | ** ** | **Note**         | ** ** | **ThCh$**                        | ** ** | **ThCh$** | ** ** |
|                                                                              |       |             |       |                             |       |   |   |
| Sales                                                                             |       | 23               |       | 2,408,239,446                    |       | 2,531,568,173 |   |
| Other operating income, total                                                     |       | 23               |       | 10,679,909                       |       | 4,820,266 |   |
| **Total Revenues**                                                                | ** ** |             | ** ** | **2,418,919,355**                | ** ** | **2,536,388,439** |   |
| Consumption of raw and secondary materials                                        |       | 24               |       | (976,145,889                     | )          | (1,304,453,135 | ) |
| **Contribution Margin**                                                           | ** ** |             | ** ** | **1,442,773,466**                | ** ** | **1,231,935,304** |   |
| Employee expenses                                                                 |       | 25               |       | (74,832,421                      | )          | (63,299,474 | ) |
| Depreciation and amortization                                                     |       | 26               |       | (196,142,075                     | )          | (186,604,575 | ) |
| Impairment losses                                                                 |       | 26               |       | (43,999,600                      | )          | — |   |
| Other miscellaneous operating expenses                                            |       | 27               |       | (110,868,779                     | )          | (107,867,715 | ) |
| **Operating Income**                                                              | ** ** |             | ** ** | **1,016,930,591**                | ** ** | **874,163,540** |   |
| Total gain (loss) on sale of non-current assets  not held for sale                |       |             |       | 64,972                           |       | (707,958 | ) |
| Financial expenses                                                                |       | 28               |       | (188,368,384                     | )          | (198,439,587 | ) |
| Gain (loss) from investments                                                      |       | 29               |       | 25,225,652                       |       | 35,339,570 |   |
| Share of the profit (loss) of associates accounted  for using the equity method   |       | 11               |       | 98,457,836                       |       | 82,131,590 |   |
| Foreign currency exchange differences, net                                        |       | 28               |       | (17,017,325                      | )          | (5,828,382 | ) |
| Gain (loss) for indexed assets and liabilities                                    |       | 28               |       | 9,275,308                        |       | (18,950,333 | ) |
| **Net Income Before Tax**                                                         | ** ** |             | ** ** | **944,568,650**                  | ** ** | **767,708,440** |   |
| Income tax                                                                        |       | 30               |       | (172,468,296                     | )          | (210,177,605 | ) |
| **Net Income**                                                                    | ** ** |             | ** ** | **772,100,354**                  | ** ** | **557,530,835** |   |
| **Attributable to:**                                                              |       |             |       |                             |       |   |   |
| Shareholders of the Company                                                       |       |             |       | 627,053,406                      |       | 433,177,184 |   |
| Minority interest                                                                 |       |             |       | 145,046,948                      |       | 124,353,651 |   |
| **Net Income**                                                                    | ** ** |             | ** ** | **772,100,354**                  | ** ** | **557,530,835** |   |
| **Earnings per Share - Common shares**                                            |       |             |       |                             |       |   |   |
| Basic and diluted earnings per share                                              | ** ** | Ch$ / share | ** ** | **76.45**                        | ** ** | **52.82** |   |
| **Statement of Other Comprehensive  Income**                                      |       |             |       |                             |       |   |   |
| **Net Income**                                                                    | ** ** |             | ** ** | **772,100,354**                  | ** ** | **557,530,835** |   |
| **Other Comprehensive Income**                                                    |       |             |       |                             |       |   |   |
| Available-for-sale financial assets                                               |       |             |       | 55,354                           |       | (55 | ) |
| Cash flow hedge                                                                   |       |             |       | 226,196,062                      |       | (331,840,685 | ) |
| Foreign currency translation                                                      |       |             |       | (251,677,776                     | )          | 168,702,437 |   |
| Share of other comprehensive income (loss) of  associates                         |       |             |       | 14,045,893                       |       | (13,749,102 | ) |
| Actuarial gain (loss) on defined benefit pension  plans                           |       |             |       | (1,143,392                       | )          | (1,884,234 | ) |
| Income tax effect related to the components of  other comprehensive income (loss) |       |             |       | (36,594,489                      | )          | 58,464,628 |   |
| **Total Other Comprehensive Income**                                              | ** ** |             | ** ** | **(49,118,348**                  | **)**      | **(120,307,011** | **)** |
| **Total Comprehensive Income**                                                    | ** ** |             | ** ** | **722,982,006**                  | ** ** | **437,223,824** |   |
| **Attributable to:**                                                              |       |             |       |                             |       |   |   |
| Shareholders of the Company                                                       |       |             |       | 703,772,844                      |       | 248,631,881 |   |
| Minority interest                                                                 |       |             |       | 19,209,162                       |       | 188,591,943 |   |
| **Total Comprehensive Income**                                                    | ** ** |             | ** ** | **722,982,006**                  | ** ** | **437,223,824** |   |

 

Theattached notes are an integral part of these consolidated financial statements.

 

F-9

----

Table of Contents

 

Indexto Financial Statements

**ENDESA CHILE AND SUBSIDIARIES**

 

**Consolidated Statements of Changes in Equity**

Forthe years ended December 31, 2009 and 2008

(inthousands of Chilean pesos— ThCh$)

 
| ** **                                             | ** ** | **Changes in Issued Capital** | ** ** | **Changes in Reserves** | ** ** | ** **                           | ** ** | **Changes in**       | ** ** | ** **            | ** ** | ** **             | ** ** |
|--------------------------------------------------------|------------|----------------------------------------------|------------|-----------------------------------|------------|--------------------------------------|------------|---------------------------|------------|-----------------------|------------|------------------------|------------|
| ** **                                             | ** ** | **Common Shares**                       | ** ** | ** **                        | ** ** | ** **                           | ** ** | ** **                | ** ** | **Available-**        | ** ** | ** **             | ** ** | **Changes in** | ** ** | **Equity** | ** ** | **Changes in** | ** ** | ** ** | ** ** |
| **Statement of Changes in Equity** | ** ** | **Share********Capital**                     | ** ** | **Share  Premium**                | ** ** | **Proposed  Dividend Reserves** | ** ** | **Translation  Reserves** | ** ** | **Hedging  Reserves** | ** ** | **for-Sale  Reserves** | ** ** | **Other********Reserves** | ** ** | **Retained  Earnings** | ** ** | **Attributable  to Parent** | ** ** | **Minority  Interest** | ** ** | **Changes in  Equity, Total** | ** ** |
| **Opening Balance at 01/01/2008**                      |       | 1,222,877,948                                |       | 206,008,557                       |       | (38,433,991                          | )          | 84,113,627                |       | 169,086,413           |       | 4,345                  |       | (578,428,489 | ) | 472,470,601 |   | 1,537,699,011 |   | 937,572,442 |   | 2,475,271,453 |   |
| **Changes:**                                           |       |                                         |       |                              |       |                                 |       |                      |       |                  |       |                   |       |   |   |   |   |   |   |   |   |   |   |
| Comprehensive  income                                  |       | —                                       |       | —                            |       | —                               |       | 101,367,756               |       | (270,884,586          | )          | (46                    | )          | (13,749,102 | ) | 431,897,859 |   | 248,631,881 |   | 188,591,943 |   | 437,223,824 |   |
| Declared  cash dividends                               |       | —                                       |       | —                            |       | (87,036,762                          | )          | —                    |       | —                |       | —                 |       | — |   | (100,306,070 | ) | (187,342,832 | ) | (22,940,179 | ) | (187,342,832 | ) |
| Transfers  to(from) retained earnings                  |       | —                                       |       | —                            |       | 38,433,991                           |       | —                    |       | —                |       | —                 |       | — |   | (38,433,991 | ) | — |   | — |   | — |   |
| Other  increases (decreases) in net equity             |       | 108,836,137                                  |       | —                            |       | —                               |       | —                    |       | —                |       | —                 |       | (149,219,120 | ) | 40,124,935 |   | (258,048 | ) | — |   | (23,198,227 | ) |
| Changes  in equity                                     |       | 108,836,137                                  |       | —                            |       | (87,036,762                          | )          | 101,367,756               |       | (270,884,586          | )          | (46                    | )          | (162,968,222 | ) | 333,282,733 |   | 61,031,001 |   | 165,651,764 |   | 226,682,765 |   |
| **Ending Balance at 12/31/2008**                       |       | 1,331,714,085                                |       | 206,008,557                       |       | (87,036,762                          | )          | 185,481,383               |       | (101,798,173          | )          | 4,299                  |       | (741,396,711 | ) | 805,753,334 |   | 1,598,730,012 |   | 1,103,224,206 |   | 2,701,954,218 |   |
|                                                   |       |                                         |       |                              |       |                                 |       |                      |       |                  |       |                   |       |   |   |   |   |   |   |   |   |   |   |
| **Opening Balance at 01/01/09**                        |       | 1,331,714,085                                |       | 206,008,557                       |       | (87,036,762                          | )          | 185,481,383               |       | (101,798,173          | )          | 4,299                  |       | (741,396,711 | ) | 805,753,334 |   | 1,598,730,012 |   | 1,103,224,206 |   | 2,701,954,218 |   |
| **Changes:**                                           |       |                                         |       |                              |       |                                 |       |                      |       |                  |       |                   |       |   |   |   |   |   |   |   |   |   |   |
| Comprehensive  income                                  |       | —                                       |       | —                            |       | —                               |       | (124,472,978              | )          | 185,568,236           |       | 45,791                 |       | 16,465,996 |   | 626,165,799 |   | 703,772,844 |   | 19,209,162 |   | 722,982,006 |   |
| Declared  cash dividends                               |       | —                                       |       | —                            |       | (188,116,022                         | )          | —                    |       | —                |       | —                 |       | — |   | (43,641,794 | ) | (231,757,816 | ) | (104,443,851 | ) | (231,757,816 | ) |
| Transfers  to (from) retained earnings                 |       | —                                       |       | —                            |       | 87,036,762                           |       | —                    |       | —                |       | —                 |       | — |   | (87,036,762 | ) | — |   | — |   | — |   |
| Other  increases (decreases) in net equity             |       | —                                       |       | —                            |       | —                               |       | —                    |       | (963,963              | )          | —                 |       | — |   | (695,435 | ) | (1,659,398 | ) | (132,073,308 | ) | (238,176,556 | ) |
| Changes  in equity                                     |       | —                                       |       | —                            |       | (101,079,260                         | )          | (124,472,978              | )          | 184,604,273           |       | 45,791                 |       | 16,465,996 |   | 494,791,808 |   | 470,355,630 |   | (217,307,996 | ) | 253,047,634 |   |
| **Ending Balance at 12/31/2009**                       |       | 1,331,714,085                                |       | 206,008,557                       |       | (188,116,022                         | )          | 61,008,405                |       | 82,806,100            |       | 50,090                 |       | (724,930,715 | ) | 1,300,545,142 |   | 2,069,085,642 |   | 885,916,210 |   | 2,955,001,852 |   |

 

Theattached notes are an integral part of these consolidated financial statements.

 

F-10

----

 

Table of Contents

 

**ENDESACHILE AND SUBSIDIARIES**

 

**Consolidated Statements of Cash Flows**

For the years ended December 31, 2009and 2008

(In thousands of Chilean pesos— ThCh$)

 
| **Net Cash Flows provided by (used in) Operating Activities, Indirect  Method**                                                     | ** ** | **Note** | ** ** | **2009  ThCh$**   | ** ** | **2008  ThCh$**   | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|-------------------|------------|-------------------|------------|
| **Cash  Flows provided by (used in) Operations, Indirect Method Operating Cash  Flows Before Changes in Working Capital Reconciliation of Net Income to  Operating Income** |       |     |       |              |       |              |       |
| **Net  income**                                                                                                                                                                  |       |     | ** ** | **772,100,354**   | ** ** | **557,530,835**   | ** ** |
| Financial expenses                                                                                                                                                               |       |     |       | 179,093,076       |       | 217,389,920       |       |
| Financial income                                                                                                                                                                 |       |     |       | (25,315,918       | )          | (34,323,234       | )          |
| Income tax                                                                                                                                                                       |       | 30       |       | 172,468,296       |       | 210,177,605       |       |
| Share of the (profit) loss  of associates accounted for using the equity method                                                                                                  |       | 11       |       | (98,457,836       | )          | (82,131,590       | )          |
| Other adjustments to  reconcile net income to operating income                                                                                                                   |       |     |       | 17,042,619        |       | 5,520,004         |       |
| Adjustments to reconcile  net income to operating income, total                                                                                                                  |       |     | ** ** | **244,830,237**   | ** ** | **316,632,705**   | ** ** |
| Operating income                                                                                                                                                                 |       |     | ** ** | **1,016,930,591** | ** ** | **874,163,540**   | ** ** |
| **Non-Monetary  Adjustments:**                                                                                                                                                   |       |     |       |              |       |              |       |
| Depreciation                                                                                                                                                                     |       | 26       |       | 192,772,740       |       | 182,631,235       |       |
| Amortization of intangible  assets                                                                                                                                               |       | 26       |       | 3,369,335         |       | 3,973,340         |       |
| Impairment losses                                                                                                                                                                |       | 26       |       | 43,999,600        |       | —            |       |
| Loss (gain) on sales of  non-current assets not held for sale                                                                                                                    |       |     |       | (64,972           | )          | 707,958           |       |
| Loss (gain) on investments                                                                                                                                                       |       |     |       | 90,266            |       | (1,016,336        | )          |
| Increase of provisions                                                                                                                                                           |       |     |       | 3,249,264         |       | 2,223,497         |       |
| Decrease (increase) in  deferred tax assets                                                                                                                                      |       |     |       | (8,089,658        | )          | 4,019,875         |       |
| Increase (decrease) in  deferred tax liabilities                                                                                                                                 |       |     |       | 3,257,558         |       | (1,591,803        | )          |
| Other non-monetary  adjustments                                                                                                                                                  |       |     |       | (12,624,485       | )          | (4,329,329        | )          |
| Non-monetary adjustments,  total                                                                                                                                                 |       |     | ** ** | **225,959,648**   | ** ** | **186,618,437**   | ** ** |
| **Total  Operating Cash Flows Before Changes in Working Capital**                                                                                                                |       |     | ** ** | **1,242,890,239** | ** ** | **1,060,781,977** | ** ** |
| **Increase  (Decrease) in Working Capital:**                                                                                                                                     |       |     |       |              |       |              |       |
| Inventories                                                                                                                                                                      |       |     |       | (793,538          | )          | 11,986,371        |       |
| Trade accounts receivable  and other receivables                                                                                                                                 |       |     |       | 13,387,623        |       | (107,070,706      | )          |
| Prepayments                                                                                                                                                                      |       |     |       | (4,364,057        | )          | (19,916,914       | )          |
| Other assets                                                                                                                                                                     |       |     |       | 108,055,151       |       | 91,045,322        |       |
| Trade accounts payable and  other payables                                                                                                                                       |       |     |       | (130,366,242      | )          | 14,956,481        |       |
| Accruals                                                                                                                                                                         |       |     |       | (13,316,393       | )          | (7,953,946        | )          |
| Taxes payable                                                                                                                                                                    |       |     |       | (85,389,647       | )          | (59,258,836       | )          |
| Post-employment benefit  obligations                                                                                                                                             |       |     |       | 6,391,938         |       | (105,392          | )          |
| Other liabilities                                                                                                                                                                |       |     |       | (41,674,765       | )          | (14,185,391       | )          |
| **Decrease  in working capital, total**                                                                                                                                          |       |     | ** ** | **(148,069,930**  | **)**      | **(90,503,011**   | **)**      |
| **Cash  Flows provided by (used in) Other Operating Activities**                                                                                                                 |       |     | ** ** | **1,094,820,309** | ** ** | **970,278,966**   | ** ** |
| Payments of income tax                                                                                                                                                           |       |     |       | (99,250,347       | )          | (19,340,544       | )          |
| **Net Cash  Flows Provided by (used in) Operating Activities**                                                                                                                   |       |     | ** ** | **995,569,962**   | ** ** | **950,938,422**   | ** ** |

 

Theattached notes are an integral part of these consolidated financial statements.

 

F-11

----

Table of Contents

 

**ENDESACHILE AND SUBSIDIARIES**

 

**ConsolidatedStatements of Cash Flows**

For the years ended December 31, 2009and 2008

(In thousands of Chilean pesos— ThCh$)

 
| **Net Cash Flows provided by (used in) investing and financing activities,  Indirect Method** | ** ** | **Note**   | ** ** | **2009********ThCh$** | ** ** | **2008********ThCh$** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|-----------------------|------------|-----------------------|------------|
| **Net Cash  Flows provided by (used in) Investing Activities**                                                                                       |       |       |       |                  |       |                  |       |
| Proceeds from sales of  property, plant and equipment                                                                                                |       |       |       | 4,806,509             |       | 6,536,995             |       |
| Proceeds from sales of  other financial assets                                                                                                       |       |       |       | —                |       | 7,730,911             |       |
| Proceeds from sales or  disposals of other assets                                                                                                    |       |       |       | —                |       | 13,981                |       |
| Other cash flows provided  by (used in) investing activities                                                                                         |       |       |       | 9,847,726             |       | 73,804,675            |       |
| Proceeds from dividends  received classified for investing purposes                                                                                  |       |       |       | 75,347,648            |       | 35,462,910            |       |
| Proceeds from interest  received classified for investing purposes                                                                                   |       |       |       | 2,441,046             |       | 3,025,736             |       |
| Purchases of property,  plant and equipment                                                                                                          |       |       |       | (315,589,508          | )          | (255,117,543          | )          |
| Acquisitions of intangible  assets                                                                                                                   |       |       |       | (411,575              | )          | (2,487,916            | )          |
| Loans to related companies                                                                                                                           |       |       |       | (8,974,911            | )          | (47,066,212           | )          |
| Acquisitions of minority  interest                                                                                                                   |       | 22.7       |       | (208,922,322          | )          | —                |       |
| Other investment  disbursements                                                                                                                      |       |       |       | —                |       | (23,575,554           | )          |
| **Net Cash  Flows Used In Investing Activities**                                                                                                     | ** ** | ** ** | ** ** | **(441,455,387**      | **)**      | **(201,672,017**      | **)**      |
| **Net Cash  Flows provided by (used in) Financing Activities**                                                                                       |       |       |       |                  |       |                  |       |
| Loans obtained                                                                                                                                       |       |       |       | 230,775,256           |       | 348,059,855           |       |
| Proceeds from issuance of  other financial liabilities                                                                                               |       |       |       | 126,062,420           |       | 227,769,894           |       |
| Proceeds from loans from  related companies                                                                                                          |       |       |       | 11,436,262            |       | 58,060,070            |       |
| Proceeds from other  financing activities                                                                                                            |       |       |       | —                |       | 448,471               |       |
| Payments of loans                                                                                                                                    |       |       |       | (231,907,013          | )          | (137,386,174          | )          |
| Repayments of other  financial liabilities                                                                                                           |       |       |       | (439,518,975          | )          | (217,926,280          | )          |
| Repayments of liabilities  for financial leases                                                                                                      |       |       |       | (3,171,884            | )          | (6,996,069            | )          |
| Payments of loans to  related companies                                                                                                              |       |       |       | (58,538,059           | )          | (6,198,854            | )          |
| Payment of interest  classified for financing purposes                                                                                               |       |       |       | (114,393,219          | )          | (163,445,494          | )          |
| Dividends paid to minority  interests                                                                                                                |       |       |       | (164,683,053          | )          | (146,871,431          | )          |
| Dividends paid to  shareholders of the Company                                                                                                       |       |       |       | (156,415,189          | )          | (101,987,826          | )          |
| **Net Cash  Flows Used In Financing Activities**                                                                                                     | ** ** | ** ** | ** ** | **(800,353,454**      | **)**      | **(146,473,838**      | **)**      |
|                                                                                                                                                 |       |       |       |                  |       |                  |       |
| **Net Increase (Decrease) in Cash and Cash Equivalents**                                                                                             | ** ** | ** ** | ** ** | **(246,238,879**      | **)**      | **602,792,567**       | ** ** |
| Effects of foreign  exchange rate variations on cash and cash equivalents                                                                            |       |       |       | (26,540,872           | )          | 1,329,548             |       |
| Beginning Balance of Cash  and Cash Equivalents, Statements of Cash Flows                                                                            |       |       |       | 719,217,980           |       | 115,095,865           |       |
| **Ending  Balance of Cash and Cash Equivalents, Statements of Cash Flows**                                                                           | ** ** | ** ** | ** ** | **446,438,229**       | ** ** | **719,217,980**       | ** ** |

 

Theattached notes are an integral part of these consolidated financial statements.

 

F-12

----

 

Tableof Contents

 

**ENDESA CHILE AND SUBSIDIARIES**

 

**NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS**

 
| **Table of Contents**                                                                                                                                     |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| 1.        **Financial statements and activities of the Group.**                                                        |   | F-16   |
| **2.         Basis of presentation of the  consolidated financial statements.**                                        |   | F-17   |
| **2.1     Basis of presentation.**                                                                                                         |   | F-17   |
| **2.2     New accounting pronouncements.**                                                                                                 |   | F-17   |
| **2.3     Responsibility for the information and estimates made.**                                                                         |   | F-18   |
| **2.4     Subsidiaries and jointly-controlled entities.**                                                                                  |   | F-19   |
| **2.4.1.        Changes in the scope of consolidation.**                                                                    |   | F-19   |
| **2.4.2.        Companies consolidated although the percentage of ownership is less than 50%.**                             |   | F-19   |
| **2.4.3.        Companies not consolidated although the percentage of ownership is more than  50%.**                        |   | F-19   |
| **2.5     Basis of consolidation and business combinations.**                                                                              |   | F-19   |
| **3.        Accounting principles applied.**                                                                           |   | F-21   |
| a)       Property, plant and equipment.                                                                                          |   | F-21   |
| b)       Intangible assets.                                                                                                      |   | F-23   |
| b.1)               Goodwill.                                                             |   | F-23   |
| b.2)               Concessions.                                                          |   | F-23   |
| b.3)               Research and development expenses.                                    |   | F-24   |
| b.4)               Other intangible assets.                                              |   | F-24   |
| c)        Asset impairment.                                                                                                 |   | F-25   |
| d)       Leases.                                                                                                                 |   | F-26   |
| e)        Financial instruments.                                                                                            |   | F-26   |
| e.1)               Financial assets other than derivatives.                              |   | F-26   |
| e.2)               Cash and cash equivalents.                                            |   | F-27   |
| e.3)               Financial liabilities other than derivatives.                         |   | F-27   |
| e.4)               Derivative financial instruments and hedge accounting.                |   | F-27   |
| f)       Investments in  associates accounted for using the equity method.                                                  |   | F-29   |
| g)        Inventories.                                                                                                      |   | F-29   |
| h)       Treasury shares.                                                                                                        |   | F-29   |
| i)         Deferred revenues.                                                                                          |   | F-29   |
| j)         Provisions.                                                                                                 |   | F-30   |
| j.1)                Provisions for post-employment benefit and similar obligations. |   | F-30   |
| k)      Conversion of  balances in foreign currency.                                                                             |   | F-30   |
| l)         Current/Non-current classification.                                                                         |   | F-31   |
| m)     Income tax.                                                                                                                         |   | F-31   |
| n)      Revenue and expense  recognition.                                                                                        |   | F-31   |
| o)       Earnings per share                                                                                                      |   | F-32   |
| p)       Dividends                                                                                                               |   | F-32   |
| q)       Cash flow statement                                                                                                     |   | F-32   |

 

F-13

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Tableof Contents

 

| **4.        Sector regulation and electricity system  operations**                             |   | F-34 |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------|
| a) Chile                                                                                                                          |   | F-34 |
| b)  The rest of Latin America                                                                                                     |   | F-35 |
| **5.        Cash and cash equivalents**                                                        |   | F-37 |
| **6.        Trade accounts receivable and other  receivables**                                 |   | F-37 |
| **7.        Balances and transactions with related  companies**                                |   | F-39 |
| **7.1    Balances and transactions with  related companies**                                                       |   | F-39 |
| **7.2    Board of directors and key  management personnel**                                                        |   | F-41 |
| **7.3    Compensation of key management  personnel**                                                               |   | F-43 |
| **7.4    Compensation plans linked to  share price**                                                               |   | F-43 |
| **8.         Inventories**                                                                     |   | F-44 |
| **9.        Current tax receivables and payables**                                             |   | F-44 |
| **10.     Available-for-sale financial assets**                                                               |   | F-44 |
| **11.     Investments in associates accounted for using the equity method and  jointly-controlled companies** |   | F-45 |
| 11.1   Equity method accounted investment in  associates                                                                |   | F-45 |
| 11.2   Jointly-controlled companies                                                                                     |   | F-47 |
| **12.      Intangible assets**                                                                                |   | F-48 |
| 12.1    Intangible assets                                                                                               |   | F-48 |
| 12.2    Goodwill                                                                                                        |   | F-50 |
| **13.     Property, plant and equipment**                                                                     |   | F-51 |
| **14.      Deferred tax**                                                                                     |   | F-55 |
| **15.     Interest-bearing loans**                                                                            |   | F-56 |
| 15.1    Debt designated as hedging  instrument                                                                |   | F-62 |
| 15.2     Other matters                                                                                             |   | F-62 |
| **16.     Risk management policy**                                                                            |   | F-63 |
| 16.1   Interest rate risk                                                                                               |   | F-63 |
| 16.2    Exchange rate risk                                                                                              |   | F-64 |
| 16.3    Commodities risk                                                                                                |   | F-64 |
| 16.4    Liquidity risk                                                                                                  |   | F-65 |
| 16.5    Credit risk                                                                                                     |   | F-65 |
| 16.6    Risk measurement                                                                                                |   | F-66 |
| **17.     Financial instruments**                                                                             |   | F-67 |
| 17.1   Classification of financial asset  instruments by nature and category                                            |   | F-67 |
| 17.2   Derivative instruments                                                                                           |   | F-69 |
| 17.3   Fair value hierarchies                                                                                           |   | F-71 |
| **18.     Trade accounts payable and other payables**                                                         |   | F-72 |
| **19.      Provisions**                                                                                       |   | F-72 |
| 19.1    *** ***Provisions                                                                                          |   | F-72 |
| 19.2    Lawsuits and arbitration  proceedings                                                                      |   | F-73 |
| **20.     Post-employment benefit obligations**                                                               |   | F-78 |
| 20.1    General aspects                                                                                                 |   | F-78 |
| 20.2   Details, movements and financial  statement presentation                                                         |   | F-78 |
| 20.3    Other disclosures                                                                                               |   | F-79 |

 

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Table of Contents

 
| **21.      Deferred revenues**                                                                                   |   | F-80   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| ** **                                                                                                                           |   |   |
| **22.     Equity**                                                                                               |   | F-81   |
|                                                                                                                                 |   |   |
| 22.1    Equity attributable to the  shareholders of the Company                                                       |   | F-81   |
| 22.2    Foreign currency translation                                                                                  |   | F-82   |
| 22.3     Capital management                                                                                           |   | F-82   |
| 22.4    Restrictions on the disposal of  subsidiary funds                                                             |   | F-82   |
| 22.5     Other reserves                                                                                               |   | F-82   |
| 22.6    Detail of comprehensive income                                                                                |   | F-83   |
| 22.7    Equity attributable to minority  interests                                                                    |   | F-84   |
| **23.     Revenues**                                                                                             |   | F-84   |
| **24.     Consumption of raw and secondary materials**                                                           |   | F-85   |
| **25.     Employee expenses**                                                                                    |   | F-85   |
| **26.     Depreciation, amortization and impairment losses**                                                     |   | F-85   |
| **27.     Other miscellaneous operating expenses**                                                               |   | F-86   |
| **28.     Financial cost**                                                                                       |   | F-86   |
| **29.     Gain (loss) from investments**                                                                         |   | F-87   |
| **30.     Income tax**                                                                                           |   | F-87   |
| **31.     Segment information**                                                                                  |   | F-88   |
| 31.1     Segmentation criteria                                                                                   |   | F-88   |
| 31.2     Distribution by country                                                                                 |   | F-89   |
| **32.     Guarantee commitments to third-party, other contingent assets and  liabilities and other commitments** |   | F-91   |
| 32.1        Direct guarantees                                                                          |   | F-91   |
| 32.2       Indirect  guarantees                                                                        |   | F-91   |
| 32.3        Other information                                                                          |   | F-92   |
| **33.     Personnel figures**                                                                                    |   | F-92   |
| **34.     Subsequent events**                                                                                    |   | F-93   |
| **35.     Environment**                                                                                          |   | F-93   |
| **36.     Adoption of International Financial Reporting Standards**                                              |   | F-94   |
| **37.     Financial statements of principal subsidiaries**                                                       |   | F-98   |
| **Appendix No. 1   Endesa Chile Group Companies**                                                                     |   | F-100  |
| ** **                                                                                                                           |   |   |
| **Appendix No. 2   Changes in the scope of consolidation**                                                            |   | F-103  |
| ** **                                                                                                                           |   |   |
| **Appendix No. 3   Associates**                                                                                       |   | F-104  |

 

F-15

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Table of Contents

 

**ENDESA CHILE AND SUBSIDIARIES**

 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2009 AND 2008**

 

**1.      FINANCIAL STATEMENTS AND ACTIVITIES OF THE GROUP**

 

EmpresaNacional de Electricidad S.A. (hereinafter, the “Parent Company” or the “Company”)and its subsidiaries compose the Endesa Chile Group (hereinafter, “Endesa Chile”,the “Group” or Endesa Chile and subsidiaries”).

 

EndesaChile is a publicly -held corporation with its corporate domicile and principaloffices at Avenida Santa Rosa 76, Santiago, Chile. The Company is registered asNo. 114 in the securities registry of the Chilean Superintendency ofSecurities and Insurances (Superintendencia de Valores y Seguros or “SVS”). Inaddition, it is registered with the United States Securities and ExchangeCommission and in the Spanish National Securities Market Commission. Its stockhas traded on the New York Stock Exchange since 1994 and on the Latibex since2001.

 

EndesaChile is a subsidiary of Enersis S.A., a company which in turn is a subsidiaryof ENDESA, S.A., a Spanish entity controlled by Enel S.p.A. (hereinafter, “Enel”).

 

TheCompany was incorporated by public deed on December 1, 1943.  Itsexistence was authorized and its bylaws approved on January 3, 1994 bySupreme Decree No. 97 of the Ministry of the Treasury.

 

EndesaChile’s corporate purpose involves generation, transmission, production anddistribution of electricity. The Company also invests in financial assets,develops projects and engages in activities within the energy field and otherareas in which electricity is essential, as well as participating in civil orhydraulic public works infrastructure concessions, either directly or throughsubsidiary or associated companies, both domestically or abroad.

 

Theconsolidated financial statements of Endesa Chile for the year 2008 wereapproved by its Board at its meeting held on January 28, 2009, and weresubsequently presented for consideration at the General Shareholders’ Meetingheld on April 15, 2009, where they were finally approved. Those annualfinancial statements were prepared in accordance with the generally acceptedaccounting principles in Chile, and therefore, do not match the balances from2008 which have been included in the present consolidated financial statements,prepared in accordance with International Financial Reporting Standards(hereinafter IFRS). A detailed reconciliation of equity and income and cashflow for the year, along with a description of the principal adjustments made,can be found in note 36.

 

Theseconsolidated financial statements are presented in thousands of Chilean pesos(unless otherwise mentioned) since this is the functional currency of theprimary economic environment in which Endesa Chile operates. Foreign operationsare included in accordance with the accounting policies established in notes2.5 and 3.k.

 

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**2.      BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS**

 

**2.1   Basis of presentation**

 

The consolidated financialstatements of Endesa Chile and subsidiaries as of December 31, 2009 havebeen prepared in accordance with International Financial Reporting Standards(IFRS), as issued by the International Accounting Standards Board (hereinafter “IASB”),and approved by its Board of Directors’ at its meeting on January 27,2010.

 

Theseconsolidated financial statements present fairly the financial position ofEndesa Chile and subsidiaries as of December 31, 2009, as well as theresults of operations, changes in equity and cash flows for the year thenended.

 

Thepresent consolidated financial statements have been prepared from accountingrecords maintained by the company and its subsidiaries. Each entity preparesits financial statements according to the accounting standards and principlesin force in each country, and through the consolidation process, thecorresponding adjustments and reclassifications have been made in order toadapt such standards and principles to IFRS.

 

Theconsolidated statements of financial position as of December 31, 2008 and January 1,2008, as well as the consolidated statements of comprehensive income, equityand cash flows for the year ended December 31, 2008, which are includedfor comparative purposes, have also been prepared according to IFRS andaccounting principles and standards applied consistently with those used during2009.

 

**2.2   New accounting pronouncements**

 

Asof the date of issuance of the present consolidated financial statements, thefollowing accounting pronouncements have been issued by the IASB but theirapplication was not yet mandatory:

 
| **Standards and Amendments**                                  | ** ** | **Mandatory application for:**                                  |
|-------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|
| IFRS  3 revised: *Business Combinations*                                |       | Annual  periods beginning on or after July 1, 2009.                  |
| Amendment  to IAS 39: *Eligible Hedged Items*                           |       | Annual  periods beginning on or after July 1, 2009.                  |
| Amendment  to IAS 27: *Consolidated and Separate Financial  Statements* |       | Annual  periods beginning on or after July 1, 2009.                  |
| Improvements  to IFRS                                                   |       | The  majority for annual periods beginning on or after July 1, 2009. |
| Amendment  to IFRS 2:*Share-Based Payments*                             |       | Annual  periods beginning on or after January 1, 2010.               |
| Amendment  to IAS 32:*Classification of Rights Issues*                  |       | Annual  periods beginning on or after February 1, 2010.              |
| IFRS  9:*Financial Instruments*                                         |       | Annual  periods beginning on or after January 1, 2013.               |
| IAS  24 Revised:*Related party disclosures*                             |       | Annual  periods beginning on or after January 1, 2011.               |

 

F-17

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Table of Contents

 
| **Interpretations and Amendments**                            | ** ** | **Mandatory application for:**                    |
|-------------------------------------------------------------------------|------------|-------------------------------------------------------------|
| IFRIC  17 *Distributions of Non-Cash Assets to Owners*                  |       | Annual  periods beginning on or after July 1, 2009.    |
| IFRIC  19 *Extinguishing Financial Liabilities with  Equity*            |       | Annual  periods beginning on or after July 1, 2010.    |
| Amendment  to IFRIC 14: *Prepayments of a Minimum Funding  Requirement* |       | Annual  periods beginning on or after January 1, 2011. |

 

TheGroup’s Management estimates that the adoption of the aforementioned Standards,Amendments and Interpretations, will not have a significant impact on theconsolidated financial statements of Endesa Chile and its subsidiaries in theperiod of their initial application.

 

**2.3   Responsibility for the information and estimates made.**

 

Theinformation contained in these consolidated financial statements is theresponsibility of the Company’s Board, which expressly states that IFRSprinciples and standards have been fully implemented.

 

Inpreparing the consolidated financial statements, certain estimates made by theCompany’s Management have been used in order to quantify some assets,liabilities, income, expenses and commitments recorded in such statements.

 

Theseestimates basically refer to:

 

·                  The valuation of assets and goodwill todetermine the existence of impairment losses (see note 3.c).

 

·                  The assumptions used to calculate theactuarial liabilities and obligations to employees (see note 20).

 

·                  The useful life of property, plant andequipment and intangible assets (see notes 3.a and 3.b).

 

·                  The assumptions used to calculate the fairvalue of financial instruments (see notes 3.e and 17).

 

·                  Energy supplied to customers and not invoicedat the end of each year.

 

·                  Certain magnitudes of the electrical system,including those of other companies, such as production, customer billing,energy consumption, etc. used on the estimations for electrical systemsettlements. These settlements must be finalized in the corresponding finalsettlements, which are pending emission as of the date of issuance of thefinancial statements, and could affect the balances of assets, liabilities,income and expenses registered in such statements.

 

·                  The probability of occurrence and the amountof uncertain or contingent liabilities (see note 3.j).

 

·                  Future disbursements for the closure offacilities and restoration of land (see note 3.a).

 

·                  The tax results of the various subsidiariesof Endesa Chile, that will be reported to the respective tax authorities in thefuture, which have served as the basis for recording different balances relatedto income taxes in the current consolidated financial statements. (See note3.m).

 

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Althoughthese estimates have been based on the best information available at the dateof issuance of the current consolidated financial statements, it is possiblethat events may occur in the future that will require a change (increase ordecrease) to these estimates in subsequent years, which would be doneprospectively, recognizing the effects of such change in estimation in thecorresponding future consolidated financial statements.

 

**2.4    Subsidiaries and jointly-controlled entities**

 

Subsidiariesare defined as entities in which the Parent Company controls the majority ofthe voting rights or, should that not be the case, is authorized to direct thefinancial and operating policies of such subsidiaries.

 

Jointly-controlledentities are entities in which the situation described in the foregoingparagraph exists as a result of an agreement with other shareholders andcontrol is exercised jointly with them.

 

AppendixNo. 1 of these consolidated financial statements, entitled “Endesa ChileGroup Companies”, describes Endesa Chile’s relationship with each of itssubsidiaries and jointly-controlled entities.

 

**2.4.1    Changes in the scope of consolidation**

 

During2008 and 2009, there were no significant changes in the consolidation scope ofEndesa Chile.

 

AppendixNo. 2 of these consolidated financial statements, entitled “Changes in thescope of consolidation”, describes the entities that were included, and adescription of the respective effect.

 

**2.4.2    Companies consolidated although thepercentage of ownership is less than 50%**

 

Althoughthe Endesa Chile Group holds less than a 50% share in Empresa Generadora deEnergía Eléctrica S.A. (hereinafter “Emgesa”), it is considered a subsidiarysince Endesa Chile exercises control over the entity, directly or indirectly,through contracts or agreements with shareholders, or as a consequence of itsstructure, composition and shareholder classes.

 

**2.4.3     Companies not consolidatedalthough the percentage of ownership is more than 50%**

 

Althoughthe Endesa Chile Group holds more than 50% of Centrales Hidroeléctricas deAysén, S.A. (hereinafter “Hidroaysén”), it is considered to be aJointly-Controlled Entity because the Group, through contracts and agreementswith shareholders, exercises joint control of the entity.

 

**2.5   Basis of consolidation and business combinations.**

 

The subsidiaries areconsolidated and all their assets, liabilities, income, expenses and cash flowsare included in the consolidated financial statements after making the adjustmentsand eliminations related to intra-Group transactions.

 

Jointly-controlledentities are consolidated by the proportional integration method. Endesa Chilerecognizes, line by line, its share of the assets, liabilities, income andexpenses of such entities, so that the aggregation of balances and subsequenteliminations, takes place only in the proportions of Endesa Chile’s shares inthem.

 

Theresults of subsidiaries and jointly-controlled entities are included in theconsolidated comprehensive income statement, from the effective date ofacquisition until the effective date of disposal or termination of jointcontrol, as appropriate.

 

F-19

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Table of Contents

 

Theconsolidation of the operations of the Parent Company and its subsidiaries, aswell as the jointly-controlled entities, was performed applying the followingbasic principles:

 

1.                At thedate of acquisition, the assets, liabilities and contingent liabilities of thesubsidiary or jointly-controlled entity are recorded at market value. In theevent that there is a positive difference between the acquisition cost and thefair value of the assets and liabilities of the acquired entity, includingcontingent liabilities, corresponding to the parent’s share, this difference isrecorded as goodwill. In the event that the difference is negative, it isrecorded with a credit to earnings.

 

2.                The value of minorityshareholder interest in equity and the results of the consolidated subsidiariesare presented, respectively, under the headings “Equity attributable toMinority Interest” in the consolidated statement of financial position and “NetIncome attributable to minority interest” and “Other comprehensive incomeattributable to minority interest” in the consolidated statement ofcomprehensive income.

 

3.                Theconversion of the financial statements of foreign companies with functionalcurrencies other than the Chilean peso is performed as follows:

 

a.                            For assets andliabilities, the prevailing exchange rate on the closing date of the financialstatements is used.

 

b.                        For items inthe comprehensive income statement, the average exchange rate for the year isused.

 

c.                         Equity remainsat the historical exchange rate from the date of acquisition or contribution,and for retained earnings at the average exchange rate at the date ofgeneration.

 

Exchangedifferences that occur in the conversion of the financial statements areregistered under the heading “Translation reserves” within Equity (see Note22.2).

 

Translationadjustments incurred up to the date that Endesa Chile transitioned to IFRS havebeen transferred to reserves, using the exemption for that purpose in IFRS 1 “First-time Adoption of IFRS” (See Note 36).

 

All balances andtransactions between consolidated companies, as well as the share of theproportionally consolidated companies, were eliminated in the consolidationprocess.

 

F-20

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Table of Contents

 

**3.      ACCOUNTING PRINCIPLES APPLIED**

 

Themain accounting principles applied in preparing the attached consolidatedfinancial statements are detailed as follows:

 

**a)            Property, Plant and Equipment.**

 

Property,Plant and Equipment are valued at acquisition cost, net of accumulateddepreciation and any impairment losses it may have experienced. In addition tothe price paid to acquire each item, the cost also includes, where appropriate,the following concepts:

 

·                  Finance expenses accrued during theconstruction period that are directly attributable to the acquisition,construction or production of qualified assets, which require a substantialperiod of time before being ready for use such as, for example, electricitygeneration or distribution facilities. The interest rate used is that of thespecific financing or, if none exists, the mean financing rate of the companycarrying out the investment. The mean financing rate depends principally on thegeographic area and ranges between 2.66% and 5.19%. The amount capitalized forthis concept amounted to ThCh$ 3,385,207 and ThCh$ 3,072,003 for the yearsended December 31, 2009 and 2008, respectively.

 

·                     Employee expenses directlyrelated to works in progress, capitalized for the years ended December 31,2009 and 2008, amounted to ThCh$ 731,901 and ThCh$ 500,315, respectively.

 

·                  Future disbursements that Endesa Chile andsubsidiaries must make to close their facilities are incorporated into thevalue of the asset at present value, recording the corresponding provision inaccounting. On a yearly basis, Endesa Chile and subsidiaries review theirestimate of these future disbursements, increasing or decreasing the value ofthe asset based on the results of this estimate.

 

·                  Items acquired before the date on whichEndesa Chile transitioned to IFRS include within the acquisition cost, whereappropriate, asset reappraisals permitted in various countries to adjust thevalue of Property, Plant and Equipment for inflation as of that date. (See Note13).

 

Worksin progress are transferred to operating assets once the testing period hasbeen completed when they are available for use, at which time depreciationbegins.

 

Expansion,modernization or improvement costs that represent an increase in productivity,capacity or efficiency or a longer useful life are capitalized as a greatercost for the corresponding assets.

 

Thereplacement or overhaul of whole components that increase the asset’s usefullife, or its economic capacity, are recorded as an increase in value for therespective assets, derecognizing the replaced or overhauled components.

 

Periodicmaintenance, conservation and repair expenses are recorded directly in incomeas an expense for the year in which they are incurred.

 

TheCompany, based on the outcome of impairment testing explained in note 3.c,believes that the book value of these assets does not exceed their netrecoverable value.

 

Property,Plant and Equipment, net of its residual value, are depreciated by distributingthe cost of the different items that compose it on a straight-line basis overits estimated useful life, which is the period during which the companiesexpect to use them. Useful life estimates are periodically reviewed and, ifappropriate, adjusted prospectively.

 

F-21

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Table ofContents

 

The following are for themain classes of assets, useful lives used for depreciation:

 
| **Classes of  Property, Plant and Equipment**** ** | ** ** | **Years of estimated useful life** |
|---------------------------------------------------------|------------|--------------------------------------------------------|
| ** **                                              | ** ** | ** **                                             |
| Land                                                    | ** ** | **—**                                             |
| Buildings                                               | ** ** | 22 - 100                                               |
| Plant and Equipment                                     | ** ** | 3 - 65                                                 |
| IT Equipment                                            | ** ** | 3 - 10                                                 |
| Fixtures and Fittings                                   | ** ** | 5 - 21                                                 |
| Motor Vehicles                                          | ** ** | 5 - 10                                                 |
| Other                                                   | ** ** | 10 - 33                                                |

 

Additionally, and for moreinformation, there is a greater opening of the useful lives for plant andequipment class

 
| ** **                                     | ** ** | **Years of estimated useful life** |
|------------------------------------------------|------------|--------------------------------------------------------|
| ** **                                     | ** ** | ** **                                             |
| **Generating facilities:**                     | ** ** | ** **                                             |
| ** **                                     | ** ** | ** **                                             |
| Hydroelectric power plants                     | ** ** | ** **                                             |
|                                           | ** ** | ** **                                             |
| Civil works                                    | ** ** | 35-65                                                  |
|                                           | ** ** | ** **                                             |
| Electromechanical equipment                    | ** ** | 10-40                                                  |
|                                           | ** ** | ** **                                             |
| Coal/fuel power plants                         | ** ** | 25-40                                                  |
|                                           | ** ** | ** **                                             |
| Combined-cycle power plants                    | ** ** | 10-25                                                  |
|                                           | ** ** | ** **                                             |
| Renewable energy power plant                   | ** ** | 35                                                     |
|                                           | ** ** | ** **                                             |
| **Transmission and  distribution facilities:** | ** ** | ** **                                             |
|                                           | ** ** | ** **                                             |
| High voltage network                           | ** ** | 10-60                                                  |
|                                           | ** ** | ** **                                             |
| Low and medium voltage network                 | ** ** | 10-60                                                  |
|                                           | ** ** | ** **                                             |
| Measurement and remote control equipment       | ** ** | 3-50                                                   |
|                                           | ** ** | ** **                                             |
| Other facilities                               | ** ** | 4-25                                                   |

 

TheHidroeléctrica El Chocón S.A. concession is the only administrative concessiongranted specifically for the Group and was not granted indefinitely. Thefollowing table details the period remaining until expiration:

 
| **Company**                                         | ** ** | **Country** | ** ** | **Concession  term** | ** ** | **Period remaining until  expiration** |
|-----------------------------------------------------|------------|-------------|------------|----------------------|------------|--------------------------------------------------|
| Hidroeléctrica El Chocón S.A.(Generation) |       | Argentina   |       | 30 years             |       | 14 years                                         |

 

EndesaChile’s management evaluated the specific casuistry of the aforementionedconcession, and concluded that no determining factors exist to indicate thatthe grantor, which in this case is a government entity, controls theinfrastructure and, at the same time, can continuously set the price to becharged for services. Those requirements are essential for applying IFRIC 12Service Concession Arrangements, which establishes how to record and valuecertain types of concessions (See Note 3b.2).

 

Gainsor losses that arise from the sale or disposal of items of property, plant andequipment are recognized in income for the period and calculated as thedifference between the sale value and the net book value.

 

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**b)      Intangible assets**

 

**b.1)   Goodwill**

 

Goodwillgenerated upon consolidation represents the difference between the acquisitioncost and Endesa Chile’s share of the fair value of assets and liabilities,including identifiable contingent assets and liabilities of a subsidiary as ofthe acquisition date.

 

Acquiredassets and liabilities are temporarily valued as of the date the company takescontrol and reviewed within no more than a year after the acquisition date.Until the fair value of assets and liabilities is ultimately determined, thedifference between the acquisition price and the book value of the acquiredcompany is temporarily recorded as goodwill.

 

Ifgoodwill is finally determined to exist in the financial statements the yearfollowing the acquisition, the prior year accounts presented for comparisonpurposes, are modified to include the value of acquired assets and liabilitiesand final goodwill from the acquisition date.

 

Goodwillgenerated from acquiring companies with functional currencies other than theChilean peso is valued at the functional currency of the acquired company andconverted to Chilean pesos using the exchange rate in effect as of the date ofthe statement of financial position.

 

Goodwillgenerated before the date of IFRS transition is maintained at its net valuerecorded as of that date, while goodwill originated afterwards is valued atacquisition cost (See Note 12.2 and 36).

 

Goodwillis not amortized, instead, at each period end, the Company estimates whetherany impairment has reduced its recoverable value to an amount less than the netrecorded cost and, if appropriate, immediately adjusts for impairment (See Note3.c).

 

In cases where the Groupacquires an additional interest in a company that it already controlled andconsolidated, the difference between the price of the additional percentage andthe balance of “Equity attributable to minority interest” that is derecognizedas a result of the acquisition is recorded as goodwill. In cases where theGroup sells part of its interest in a controlled company and maintains controlafter the sale and, therefore, it is consolidated, the difference between thesale price and the balance of “Equity attributable to minority interest” thatmust be recognized as a result of the sale is recorded in earnings for theyear.

 

**b.2)       Concessions**

 

IFRIC12 *Service Concession Arrangements*provides guidance for accounting operators for public-to-private serviceconcession arrangements. This accounting interpretation applies if:

 

**a)****             **The grantorcontrols or regulates which services the operator should provide with theinfrastructure, to whom it must provide them and at what price; and

 

**b)****             **The grantorcontrols — through ownership, beneficial entitlement or otherwise — anysignificant residual interest in the infrastructure at the end of the term ofthe arrangement.

 

Ifthe aforementioned criteria are met simultaneously, an intangible asset isrecognized on books to the extent the operator is entitled to charge the usersfor the specific use of the public service/facility, and if these charges arestrictly based on the extent of use of the facility.

 

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Theseintangible assets are initially recognized at cost, which is defined as thefair value of the consideration paid, plus any other costs that are directlyattributable to the operation. Subsequently, these intangibles are amortizedover the period of the concession.

 

TheGroup operates various administrative concessions where the counterparty is agovernment entity.****For the mostpart, these concessions are directly related to our electricity generationbusiness (see Note 3.a).  The El Melón Tunnel concession is the onlyconcession where determining factors exist to conclude that both aforementionedrequirements are met.

 

Inthe El Melón Tunnel concession, the Chilean Ministry of Public Works(hereinafter “MOP” in its spanish acronym) and our subsidiary SociedadConcesionaria Túnel El Melón S.A. entered into a concession agreementestablishing both the services that should be provided by the operator as wellas the price to be charged for these services.****The concession right expires in June 2016, at which time MOPwill recover the right to operate the assets associated with the El MelónTunnel concession, without having to meet any specific conditions.

 

TheGroup has applied the intangible asset approach established in IFRIC 12. It has not recognized any financial asset related to the El Melón Tunnel, asthe contract signed with the MOP does not establish unconditionally guaranteedrevenue.

 

**b.3)       Research and development expenses**

 

EndesaChile and subsidiaries follow the policy of recording as intangible assets inthe statement of financial position, the costs incurred in development projectsas long as their technical viability and economic returns are reasonablyassured.

 

Expenditureson research activities are recognized as an expense in the period in which theyare incurred. In 2009 and 2008, no research and development expenses wererecognized.

 

**b.4)       Other intangible assets**

 

Theseintangible assets correspond primarily to computer software, easements andwater rights. They are initially recognized at acquisition or production costand, subsequently, are valued at cost net of accumulated amortization and anyimpairment losses, where appropriate, that may have occurred.

 

Thisgroup of assets is amortized over its useful life, which in most cases isestimated to be between 4 and 5 years. Intangible assets with indefinite usefullives are not amortized because such contracts are by nature permanent orindefinite.

 

Criteriafor recognizing impairment losses on these assets and, if appropriate, recoveryof impairment losses recorded in prior years are explained in letter c) of thisNote.

 

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**c)      Asset impairment**

 

Duringthe period, and principally at period end, the company evaluates whether thereis any indication that an asset has been impaired. Should any such indicationexist, the company estimates the recoverable amount of that asset to determine,where appropriate, the amount of impairment. In the case of identifiable assetsthat do not independently generate cash flows, the company estimates therecoverability of the Cash Generating Unit to which the asset belongs, which isunderstood to be the smallest identifiable group of assets that generatesindependent cash inflows.

 

Notwithstandingthe preceding paragraph, in the case of Cash Generating Units to which goodwillor intangible assets with an indefinite useful life have been allocated, arecoverability analysis is performed routinely at each period end.

 

Therecoverable amount is the greater between the fair value less the cost neededto sell and the value in use, which is defined as the present value of theestimated future cash flows. In order to calculate the recoverable value ofproperty, plant and equipment, goodwill and intangible assets, value in usecriteria is used by the Group in practically all cases.

 

Toestimate the value in use, the Group prepares future cash flow projections,before tax, based on the most recently available budgets. These budgetsincorporate management’s best estimates of revenue and costs of Cash GeneratingUnits using sector projections, past experience and future expectations.

 

Theseprojections cover the next five years, estimating flows for subsequent years byapplying reasonable growth rates between 3.7% and 8.3% that, in no case, areincreasing nor exceed the average long-term growth rates for the particularsector and country.

 

Theseflows are discounted at a given pre-tax rate in order to calculate theirpresent value. This rate reflects the cost of capital of the business and thegeographical area in which it is carried on. In order to calculate it, thecurrent time value of money and the risk premiums generally used by analystsfor the business and the geographical area are taken into account.

 

Thediscount rates, before tax, expressed in nominal terms and applied in 2009 and2008 are the following:

 
|             | ** ** | ** **         | ** ** | **2009**    | ** ** | **2008**    |
|-------------|------------|--------------------|------------|-------------|------------|-------------|
| **Country** | ** ** | **Currency**       | ** ** | **Minimum** | ** ** | **Maximum** | ** ** | **Minimum** | ** ** | **Maximum** |
| Chile       |       | Chilean peso       |       | 9.24%       |       | 9.53%       |   | 9.90% |   | 10.40% |
| Argentina   |       | Argentinean peso   |       | 19.51%      |       | 17.40%      |
| Brazil      |       | Brazilian real     |       | 11.32%      |       | 12.10%      |
| Peru        |       | Peruvian nuevo sol |       | 9.09%       |       | 10.00%      |
| Colombia    |       | Colombian peso     |       | 11.45%      |       | 11.90%      |

 

Ifthe recoverable amount is less than the net carrying amount of the asset, thecorresponding provision for impairment loss is recorded for the difference, andcharged to “Impairment losses” in the consolidated statement of comprehensiveincome.

 

Impairmentlosses recognized for an asset in prior periods are reversed when its estimatedrecoverable amount changes, increasing the asset’s value with a credit toearnings, limited to the asset’s carrying amount if no adjustment had occurred.In the case of goodwill, adjustments that would have been made are notreversible.

 

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Thefollowing procedure is used to determine the need to adjust financial assetsfor impairment:

 

·      In the case of commercial assets, Endesa Chile and subsidiaries have defined apolicy for recording impairment provisions based on the age of past duebalances, which is generally applied except in cases where a specificcollectability analysis is advised.

 

·      In the case of receivables of a financial nature, impairment is determined byspecifically analyzing each case. As of the date of issuance of theseconsolidated financial statements, the Company had no significant past due noncommercial financial assets.

 

**d)      Leases**

 

Leasesthat transfer substantially all the risks and rewards incidental to ownershipare transferred to the lessee are classified as finance leases. All otherleases are classified as operating leases.

 

Financeleases in which Endesa Chile and subsidiaries act as lessee are recognized whenthe agreement begins, recording an asset based on the nature of the lease and aliability for the same amount, equal to the lower of the fair value of theleased asset or the present value of the minimum lease payments. Subsequently,the minimum lease payments are divided between finance expense and reducing thedebt. The finance expense is recorded in the income statement and distributed overthe period of the lease term, so as to obtain a constant interest rate for eachperiod over the balance of the debt pending amortization. The asset isamortized in the same terms as other similar depreciable assets, as long asthere is reasonable certainty that the lessee will acquire ownership of theasset at the end of the lease. If no such certainty exists, the asset will beamortized over the lesser term between the useful life of the asset and theterm of the lease.

 

Operatinglease payments are expensed on a straight line basis over the term of the leaseunless another type of systematic basis of distribution is deemed morerepresentative.

 

**e)      Financial instruments**

 

Financialinstruments are contracts that give rise to both a financial asset for onecompany and a financial liability or equity instrument for another company.

 

**e.1)   Financial assetsother than derivatives**

 

EndesaChile and subsidiaries classify their financial investments, whether permanentor temporary, and excluding equity method investments (see Note 11) andinvestments held for sale, into four categories:

 

·      **Trade accounts receivable and otherreceivables and Accounts receivable from related companies:** Theseare recorded at amortized cost, which corresponds to initial fair value lessprincipal repayments made, plus interest accrued but uncharged, calculatedusing the effective interest rate method.

 

The effective interest rate method is used tocalculate the amortized cost of a financial asset or liability (or a group offinancial assets or liabilities) and is charged to financial income or expenseover the relevant period. The effective interest rate is the discount rate thatsets the cash flows receivable or payable estimated over the expected life ofthe financial instrument (or, when appropriate, over a shorter period) exactlyequal to the net carrying amount of the financial asset or liability.

 

·      **Held-to-maturity investments:**Investments that Endesa Chile intends to hold and is capable of holding untiltheir maturity are accounted for at amortized cost as defined in the precedingparagraph.

 

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·      **Financial assets at fair value with changesin net income:** This includes the trading portfolio and thosefinancial assets that have been designated as such upon initial recognition andthat are managed and evaluated using fair value criteria. They are valued inthe consolidated statement of financial position at fair value, with changes invalue recorded directly in income when they occur.

 

·      **Available-for-sale financial assets:**These are financial assets specifically designated as available for sale orthat do not fit within any of the three preceding categories and consist almostentirely of financial investments in equity instruments (See Note 10). Theseinvestments are recorded in the consolidated statement of financial position atfair value when it can be reliably determined. Changes in fair value, net oftaxes, are recorded with a charge or credit to an equity reserve known as “Available-for-salefinancial assets” until the investment is disposed of, at which time the amountaccumulated in this account for that investment is fully charged to thecomprehensive income statement. Should the fair value be less than theacquisition cost, if there is objective evidence that the asset has been morethan temporarily impaired, the difference is recorded directly in the comprehensiveincome statement.

 

Inthe case of interests in unlisted companies or companies with very littleliquidity, normally the market value cannot be reliably determined and, thus,when this occurs, they are valued at acquisition cost or a lesser amount ifevidence of impairment exists.

 

Purchasesand sales of financial assets are accounted for using their trade date.

 

**e.2)   Cash and cashequivalents**

 

Thisaccount within the statement of consolidated financial position includes cashon hand and in banks, time deposits and other highly-liquid, short-terminvestments that can be quickly converted into cash and have a low risk ofvalue fluctuations.

 

**e.3)   Financialliabilities other than derivatives**

 

Financialliabilities are generally recorded based on cash received, net of any costsincurred in the transaction. In subsequent periods, these obligations arevalued at their amortized cost, using the effective interest rate method.

 

Inthe particular case that a liability is the underlying item of a fair valuehedge derivative, it will be exceptionally valued at its fair value for theportion of the hedged risk.

 

Inorder to calculate the fair value of debt, both for cases in which it isrecorded in the statement of financial position and for information on its fairvalue included in Note 15, debt has been divided into fixed interest rate debt(hereinafter “fixed debt”) and variable interest rate debt (hereinafter “variabledebt”). Fixed debt pays, throughout its life, coupon interest fixed, eitherexplicitly or implicitly, at the beginning of the transaction. Variable debt isissued with variable interest rates (i.e. each coupon is set at the beginningof each period based on a referential interest rate). All debt has been valuedby discounting expected future cash flows with a market-interest rate curvebased on the payment currency.

 

**e.4)   Derivativefinancial instruments and hedge accounting**

 

Derivativesheld by Endesa Chile and subsidiaries correspond primarily to transactionsentered into to hedge interest and/or exchange rate risk, intended to eliminateor significantly reduce these risks in the underlying transactions beinghedged.

 

Derivativesare recorded at fair value as of the date of the statement of financialposition within “Hedging instrument”. If their value is positive, they arerecorded in assets and if their value is negative, they are recorded withinliabilities.

 

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Changesin fair value are recorded directly in income except when the derivative hasbeen designated for accounting purposes as a hedge instrument and all of the conditionsestablished under IFRS for applying hedge accounting are met, including thatthe hedge is highly effective, are met. In this case, changes are recorded asfollows:

 

·      **Fair value hedges:** The underlyingportion for which the risk is being hedged is valued at its fair value as isthe hedge instrument, recording any changes in the value of both in thecomprehensive income statement by netting the effects in the same comprehensiveincome statement account.

 

·      **Cash flow hedges:** Changes in thefair value of the effective portion of derivatives are recorded in an equityreserve known as “Hedging Reserves”. The cumulative loss or gain in thisaccount is transferred to the comprehensive income statement to the extent thatthe underlying item impacts the comprehensive income statement because of thehedged risk, netting the effect in the same comprehensive income statementaccount. Gains or losses from the ineffective portion of the hedge are recordeddirectly in the comprehensive income statement.

 

Ahedge is considered highly effective when changes in the fair value or the cashflows of the underlying item directly attributable to the hedged risk, areoffset by changes in the fair value or the cash flows of the hedginginstrument, with effectiveness ranging from 80% to 125%.

 

TheCompany does not apply hedge accounting to its investments abroad.

 

Asa general rule, long-term commodity purchase or sale agreements are recorded inthe consolidated statement of financial position at their fair value as ofperiod end, recording any differences in value directly in income, except whenall of the following conditions are met:

 

·   The solepurpose of the agreement is for own use.

 

·   Futureprojections by Endesa Chile and subsidiaries justify the existence of theseagreements with the purpose of own use.

 

·   Past experiencewith agreements shows that they have been utilized for own use, except incertain isolated cases in which they had to be used for exceptional reasons orreasons associated with logistical management issues outside the control andprojections of Endesa Chile and subsidiaries.

 

·   The agreementdoes not stipulate settlement by differences and the parties do not make it apractice to settle similar contracts by differences in the past.

 

Thelong-term commodity purchase or sale agreements maintained by Endesa Chile andsubsidiaries, which are mainly for electricity, fuel and other supplies, meetthe conditions described above. Thus, fuel purchase agreements are intended tobe used to generate electricity, while electricity purchase agreements are usedto make sales to end customers and electricity sale agreements are used to sellits own production.

 

TheCompany also evaluates the existence of embedded derivatives in contracts orfinancial instruments to determine if their characteristics and risk areclosely related to the principal contract as long as the set is not beingaccounted for at fair value. If they are not closely related, they are recordedseparately and changes in value are accounted for directly in the comprehensiveincome statement.

 

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The fair value of the various derivative financialinstruments is calculated as follows:

 

·      For derivatives traded on a formal market, by its quoted price as of year end.

 

·      Endesa Chile and subsidiaries value derivatives not traded on formal markets,using discounted expected cash flows and generally accepted options valuationmodels, based on current and future market conditions as of year-end.

 

**f)       Investments in associates accounted for using the equity method**

 

Investmentsin associates in which Endesa Chile has significant influence are recordedusing the equity method. In general, significant influence is assumed in casesin which Endesa Chile has more than 20% interest.

 

Theequity method consists of recording the investment in the statement offinancial position based on the share of its equity that Endesa Chile’sinterest represents in its capital, adjusted for, if appropriate, the effect oftransactions with subsidiaries plus any goodwill generated in acquiring thecompany.

 

Ifthe resulting amount were negative, zero is recorded for that investment in thestatement of financial position, unless there is a commitment from Endesa Chileto support the company’s negative equity situation, in which case a provisionis recorded.

 

Dividendsreceived from these companies are deducted from the value of the investment andany profit or loss obtained from them to which Endesa Chile is entitled basedon its interest is recorded within “Share of the profit of associates accountedfor using the equity method”.

 

AppendixNo. 3 of these consolidated financial statements, known as “Associates”describes the relationship that Endesa Chile has with each of its associates.

 

**g)      Inventories**

 

Inventoriesare valued at the lesser of its weighted average acquisition price or its netrealizable value.

 

**h)      Treasury shares**

 

Treasuryshares are deducted from equity in the consolidated statement of financialposition and valued at acquisition cost.

 

Gainsand losses obtained in disposing of the treasury shares are recorded within “Retainedearnings” in the consolidated statement of financial position. As of December 31,2009, the Company has no treasury shares and had no transactions with treasuryshares during the years 2009 and 2008.

 

**i)       Deferred revenues**

 

Thisaccount primarily includes, contributions received from customers or governmententities to finance construction or acquisition of certain facilities or, insome cases, facilities that are directly transferred based on currentregulations in each country.

 

Theseamounts are recorded as deferred revenues within liabilities in theconsolidated statement of financial position and charged to earnings in theaccount “Other operating income” within the consolidated statement ofcomprehensive income over the useful life of the asset, thus offsetting thedepreciation expense.

 

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Thetransactions that originated the amounts recorded in this account are notwithin the scope of IFRIC 18 *Transfers ofAssets from Customers*, which was applicable starting on July 1,2009.

 

**j)       Provisions**

 

Obligationsexisting as of the date of the consolidated financial statements resulting frompast events for which equity damage for Endesa Chile and subsidiaries is likelyliable, whose amount and timing of payment are uncertain, are recorded asprovisions in the consolidated statement of financial position at the presentvalue of the most likely amount that it is believed that Endesa Chile andsubsidiaries will have to disburse to settle the obligation.

 

Provisionsare quantified using the best information available as of the date of issuanceof the consolidated financial statements regarding the consequences of the eventcausing the provision and are re-estimated at each subsequent accounting close.

 

**j.1)   Provisions forpost-employment benefit and similar obligations.**

 

EndesaChile and some subsidiaries have undertaken commitments for pensions and othersimilar benefits with their employees. These commitments, for both definedbenefits and defined contributions, are basically formalized through pensionplans, except in relation to certain benefits in kind, primarily commitments tosupply electricity which, given their nature, have not been outsourced and areinternally provisioned.

 

Fordefined benefit plans, companies record the corresponding expense for thesecommitments using accrual accounting throughout their employees’ working livesby conducting, as of the date of the financial statements, actuarial studiescalculated using the projected unit credit method. Past service costs fromchanges in benefits are immediately charged to income as benefits are accrued.

 

Contributionsto defined contribution plans are expensed as employees provide services.

 

Actuariallosses and gains that arise in valuing the liabilities subject to these plansare recorded directly under “Equity — Retained earnings”.

 

**k)      Conversion of balances in foreign currency**

 

Transactionscarried out by each company in a currency other than its functional currencyare recorded using the exchange rates in effect as of the date of eachtransaction. During the year, any differences that arise between the exchangerate recorded in accounting and the rate prevailing as of the date ofcollection or payment are recorded as “Foreign currency exchange differences,net” in the comprehensive income statement.

 

Likewise,as of each year-end, balances receivable or payable in a currency other thaneach company’s functional currency are converted using the period-end exchangerate. Any valuation differences are recorded as “Foreign currency exchangedifferences, net” in the comprehensive income statement.

 

EndesaChile and subsidiaries have established a policy to hedge the portion of itsrevenue that is directly linked to the US dollar by obtaining financing in thiscurrency. Exchange differences related to this debt, as they are cash flowhedge transactions, are charged, net of taxes, to a reserve account in equityand recorded in income during the period in which the hedged cash flows arerealized. This term has been estimated at ten years.

 

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**l)       Current/Non-current classification.**

 

Inthe accompanying consolidated statement of financial position, balances areclassified based on maturity (i.e. current balances mature in no more thantwelve months and non-current balances in more than twelve months).

 

Shouldthe Company have any obligations that mature in less than twelve months but canbe refinanced over the long term at the Company’s discretion, throughunconditionally available credit agreements with long-term maturities, suchobligations may be classified as long-term liabilities.

 

**m)    Income tax**

 

Incometaxes for the year are determined as the sum of current taxes from Endesa Chile’snumerous subsidiaries and result from applying the tax rate to the taxable basefor the year, after allowable deductions have been made, plus any changes indeferred tax assets and liabilities and tax credits, both for tax losses anddeductions. Differences between the book value and tax basis of assets andliabilities generate deferred tax asset and liability balances, which arecalculated using tax rates expected to be in effect when the assets andliabilities are realized.

 

Currenttaxes and changes in deferred tax assets and liabilities that are not comingfrom business combinations are recorded in income or in equity accounts in thestatement of financial position, based on where the gains or losses originatingthem were recorded.

 

Anyfluctuations from business combinations that are not recorded upon takingcontrol because their recovery is not assured are recognized by reductions, ifappropriate, to the value of goodwill accounted for in the businesscombination.

 

Deferredtax assets and tax credits are recognized only when it is likely that therewill be future tax gains sufficient enough to recover deductions for temporarydifferences and make use of tax losses.

 

Deferredtax liabilities are recognized for all temporary differences, except thosederived from the initial recognition of goodwill and those that arose fromvaluing investments in subsidiaries, associates and jointly-controlledcompanies in which Endesa Chile can control their reversal and where it islikely that they will not be reversed in the foreseeable future.

 

Anydeductions that can be applied at a given moment to current tax liabilities arecredited to earnings within the income tax account, except when doubts existabout their tax realization, in which case they are not recognized until theyare effectively realized, or when they correspond to specific tax incentives,in which case they are recorded as grants.

 

Ateach accounting period close, the Company reviews the deferred taxes it hasrecorded, both assets and liabilities, in order to ensure they remain currentand otherwise make any necessary corrections based on the results of thisanalysis.

 

**n)      Revenue and expense recognition.**

 

Incomeand expenses are recorded on an accrual basis.

 

Revenueis recognized as a result of a gross inflow of economic profits originatedduring the normal course of business for Endesa Chile and its subsidiariesduring the period, as long as this inflow of benefits causes an increase inequity that is not related to contributions from equity owners and thesebenefits can be reliably valued.****Revenueis recorded at the fair value of the consideration received or receivablederived from such revenue.

 

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Revenuefrom the provision of services is only recognized when it can be reliablyestimated, based on the degree of completion of the services as of the date ofthe consolidated statement of financial position.

 

EndesaChile and its subsidiaries exclude from revenue all gross inflows of economicbenefits received when acting as an agent on behalf of third parties, onlyrecording inflows from its own activities as revenue.

 

Exchangesor bartering of goods or services for other goods or services of a similarnature are not considered revenue-producing transactions.

 

EndesaChile and its subsidiaries record purchase or sale agreements of non-financialitems that are settled by netting with cash or another financial instrument attheir net amount.****Agreementsentered into and maintained in order to receive or deliver these non-financialitems are recorded based on the contractual terms of the purchase, sale orutilization requirements expected by the entity.

 

Interestincome (expense) is accounted for using the effective interest rate applicableto the outstanding principal of the investment (income) or debt (expense)during the corresponding accrual year.

 

**o)      Earnings per share**

 

Basicearnings per share are calculated as the quotient of net earnings (losses) forthe period attributable to the Parent Company divided by that entity’s weightedaverage number of ordinary outstanding shares during that period, withoutincluding the average number of shares of the Parent Company held by anysubsidiaries, should that be the case.

 

During2009 and 2008 Endesa Chile and its subsidiaries have not engaged in any type oftransaction with a potential dilutive effect that assumes diluted earnings pershare differs from basic earnings per share.

 

**p)      Dividends**

 

Article No. 79of Chile’s Corporations Law establishes that, except if unanimously agreedotherwise by shareholders of all issued shares, listed corporations shoulddistribute a cash dividend to its shareholders on a yearly basis, proratedbased on their shares or the proportion established in the company’s by-laws ifthere are preferred shares, of at least 30% of net income for each period,except when accumulated losses from prior years must be absorbed.

 

Asit is practically impossible to achieve a unanimous agreement given EndesaChile’s highly fragmented share capital, as of the end of each year the amountof the obligation to its shareholders, net of interim dividends approved duringthe year, is determined and accounted for in “Trade accounts payable and otherpayables” or “ Accounts payables to related companies”, as appropriate, andcharged to equity in the account “Proposed dividend reserves”.

 

Interimand final dividends are deducted from equity as soon as they are approved bythe competent body, which in the first case is normally the Company’s Board ofDirectors and in the second case is shareholders at the Ordinary Shareholders’Meeting.

 

**q)      Cash flow statement**

 

Theconsolidated statement of cash flows reflects cash movements during the period,determined using the indirect method.****Theterms used in these cash flow statements are defined as follows:

 

·        Cashflows:****inflows and outflows ofcash or cash equivalents, which are defined as highly-liquid investmentsmaturing in less than three months with a low risk of changes in value.

·        Operatingactivities:****activities thatcomprise the Group’s principal source of revenue as well as other activitiesthat cannot be classified as investing or financing.

 

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·        Investingactivities:****activities thatinvolve acquiring, selling or otherwise disposing of non-current assets andother investments not included in cash and cash equivalent.

 

·        Financingactivities:****activities that bringabout changes in the size and composition of equity and financial liabilities.

 

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**4.      SECTOR REGULATION AND ELECTRICITY SYSTEM OPERATIONS.**

 

**a)      Chile**

 

Theelectricity sector in Chile is regulated by the General Electricity ServicesLaw contained in the Ministry of Mining Decree Law No. 1 of 1982 - whosetext was rewritten and stated in Ministry of Economy Decree Law No. 4 of2006-and its corresponding regulations contained in Decree No. 327 of1998.  Three government entities are responsible for enforcement andcompliance of the law: the National Energy Commission (CNE), which has theauthority to propose regulated tariffs (node prices) and develop indicativeplans for the construction of new generating units; the Superintendency ofElectricity and Fuels (SEF), which oversees and enforces the laws, regulationsand technical standards for electricity generation, transmission anddistribution, liquid fuels and gas; and lastly, the recently-created Ministryof Energy (ME) which will be responsible of implementing and carrying out allpublic policies concerning energy and by virtue of being the leading agencyover the SEF, CNE and the Chilean Nuclear Energy Commission (CCHEN), it willultimately strengthen the cohesion and coordination of the sector. Also, theAgency for Energy Efficiency and the Center of Renewable Energy are under theME.

 

Additionally,the law establishes a Panel of Experts whose primary function is to resolvedisputes between electricity companies.

 

Froma physical point of view, the Chilean electricity sector is divided into fourelectricity grids: SIC (Central Interconnected System), SING (NorthernInterconnected System), and two medium isolated systems: Aysén and Magallanes.The SIC, the principal electricity system, is 2,400 km long, linking Taltal inthe north with Quellón, on Chiloé Island in the south. The SING covers thenorth of the country, from Arica to Coloso, approximately 700kms in length.

 

Thereare three fundamental segments within the electricity industry: Generation,Transmission and Distribution, which operate in an interconnected andcoordinated manner and whose main objective is to provide electricity to themarket at minimum cost while still preserving the quality and reliability ofservice standards required by electricity regulations. Due to the fact that theTransmission and Distribution segments have economies of scale in theirrespective roles, they constitute natural monopolies and, therefore, areregulated by electricity standards which provide for free and flexible accessto energy grids and provide regulated pricing.

 

Accordingto the Electricity Law, companies involved in Generation and Transmission on aninterconnected electric grid must coordinate their operations in a centralizedmanner through the Economic Load Dispatch Center (CDEC), in order to operate thesystem at the lowest cost while preserving reliability of service. In order toachieve this, the CDEC plans and operates the system, including the calculationof the hourly marginal cost, basically the price at which energy transfersbetween generators are set.

 

Therefore,the generation decision for each company is dependent on the CDEC’s operatingplan. Each company may decide freely to sell its energy to regulated ornon-regulated customers. Any surplus or deficit between its sales to customersand its production is sold or bought from other generators at the marginalcost.

 

Agenerating company may have the following types of customers:

 

(i) Regulatedclients: These are residential, commercial and small and medium-sizedindustrial customers that have a connected capacity of no more than 2,000 KW,and are located within the concession area of a distribution company. Until2009, the transfer price between the generation and distribution companies hada maximum value called the node price, which was regulated by the Ministry ofEconomy. Node prices are determined every six months (April and October),using a report developed by the CNE based on the expected marginal costs of thesystem over the following 48 months in the case of the SIC, or 34 months in theSING. Starting in 2010, the transfer price between generation and distributioncompanies will result from public tenders these entities conduct.

 

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(ii) Unregulatedclients: These are customers which have a connected capacity greater than 2,000KW, mainly industrial and mining companies. These consumers can freelynegotiate electricity supply prices with generation and distribution companies.Customers with capacity between 500 and 2,000 KW have the option to contractenergy at prices agreed upon with suppliers or continue to be subject toregulated prices, but can only change between these two options once every fouryears.

 

(iii) Spotor short-term market: relates to energy and capacity transactions betweengeneration companies, which result from the coordination by the CDEC in orderto operate the system economically, and any production surpluses (deficits)with respect to commercial commitments are transferred by sales (purchases) toother generators that are members of the CDEC. In the case of energy, thetransfers are valued at marginal cost; for capacity, transfers are valued atthe corresponding node price, as set biannually by authorities.

 

InChile, the payments for capacity to each generator depend on a centralizedcalculation performed annually by the CDEC, from which the firm capacity ofeach plant is obtained. Such value is independent of each plant’s dispatch.

 

Startingin 2010, with the enactment of Law 20,018, distribution companies must havepermanent supply for their total demand, for which public tenders for long-termcontracts must be conducted.

 

Withrespect to renewable energy, in April 2008 Law 20,257 was enacted; itwhich encourages the use of Non-Conventional Renewable Energy (NCRE). The mainaspect of this regulation is that it forces generators to ensure that at least5% of their energy sold comes from these renewable sources between 2010 and2014, progressively increasing annually by 0.5% from 2015 to 2024 when it willreach 10%.

 

**b)      The rest of Latin America**

 

Differentregulatory frameworks exist in the other Latin American countries in whichEndesa Chile operates. In general, the laws of Brazil, Argentina, Peru andColombia permit the participation and investment of private capitals in theenergy sector, defend freedom of competition for the Generation segment, anddefine criteria to assure that certain levels of economic concentration and/ormarket practices do not damage their electricity sectors. Different from Chile,in these countries, the state owned companies also participate in the energysector and compete with the private companies in the Generation, Transmissionand Distribution segments.

 

Inprinciple, companies are allowed to participate in different activities(generation, distribution, trading) as long as there is an adequate separationbetween such activities, in terms of both accounting and corporate structure.However, the transmission sector is where the greatest restrictions tend to beimposed, mainly due to its nature and the necessity to guarantee adequateaccess to all agents.

 

Regardingthe electricity generation business, in general these markets are free and, basedon indicative plans prepared by authorities, private actors are at liberty tomake their own investment decisions. The exception is Brazil, in which pursuantto the needs of distributors, the Ministry of Energy participates in theexpansion of the electric system, establishing capacity limits per technology(separate bids for thermal, hydraulic and renewable energy) or directly biddingspecific projects.

 

Thecoordination of the operation is centralized, whereas one independent operatorcoordinates the dispatch of energy. With the exception of Colombia, where thedispatch is based on the prices offered by the agents, the rest of thecountries have centralized dispatch based on variable costs of production thataims at optimizing available generation resources at the lowest cost for thesystem. These dispatches are used on the determination of the marginal cost ofgeneration which also defines the spot price for the transactions.

 

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However,today the governments in Argentina and Peru have intervened more or less in thedetermination of energy prices in their marginal energy markets. Argentina’sintervention mostly stems from the aftermath of the 2002 economic crisis, andPeru’s, as a result of a recently enacted emergency law of 2008, which definedthe ideal marginal cost, considering as if existing restrictions onTransmission or distribution capacity of gas and electricity did not exist.

 

Inthese four countries, the generators are able to sell their energy throughcontracts with the regulated energy markets or in the unregulated market, andsettle any energy surplus or deficits through the spot market. The unregulatedmarket is mostly tailored to significant individual energy consumers, althoughthe limits that define such a consumer vary per country. These markets mostlydiffer on the way they regulate sales between generators and distributors andhow the regulated price is defined for ultimate determination of rates andfares to end consumers.

 

InArgentina, initially the regulation considered that the sales price forgenerators to distributors was obtained from calculating an estimation of theforecasted average spot price of the upcoming six months. Nevertheless,following the 2002 crisis, the state has arbitrarily fixed prices, ultimatelyresulting on the intervention of the marginal system and thus causing amismatch between the real generation costs and the payment perceived fromdemand through distributors.

 

InBrazil, the purchase price used in the determination of fares to end users isbased on average prices of bids for new and existing energy. The new energycontracts consider that in the long-term all new energy generation projectsshould cover the expected growth of demand from distributors. The existingenergy contracts consider minor short-term commitments to solely accommodatethe energy needs from distributors that may arise from the expiration of priorcontracts. Each bidding process is coordinated centrally, and the stateestablishes maximum prices, and as result, contracts are executed whereasparticipating distributors purchase from offering generators.

 

Distributorsin Colombia may choose their energy supply, thus being able to structure theconditions of the public bidding process related to the energy supplied to theregulated market, and they are permitted to purchase energy from the spotmarket. The price paid by the end user is ultimately an average of the cost ofpurchase.

 

InPeru, as in Chile, legislation was modified to permit energy tenders based onthe requirements of the distributors. Today, there are various bindingcontracts between generators and distributors based on the charge price,defined from a centralized calculation; however, since 2007 all contracts arecarried out through a formal tender process. The state approves all conditionsof the tender and also defines a maximum price.

 

Exceptfor Colombia, all countries have provided for the incorporation of renewableenergy. In practical terms nonetheless, there are no significant incentives oractual obligations such as the ones in place for Chile, which would renderthese technologies more competitive if built on a higher scale. The statepromotes bidding processes specifically tailored at providing incentives forthese types of technologies.

 

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**5.      CASH AND CASH EQUIVALENTS**

 

a)       As of December 31,2009, December 31, 2008 and January 1, 2008 this account is detailedas follows:

 
| ** **                                   | ** ** | **Balance as of** | ** ** |
|----------------------------------------------|------------|-----------------------------|------------|
| ** **                                   | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Cash and Cash Equivalents** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                         |       |                        |       |   |   |   |   |
| Cash on hand                                 |       | 1,811,633                   |       | 78,500 |   | 113,105 |   |
| Bank balances                                |       | 191,462,169                 |       | 73,538,335 |   | 26,495,968 |   |
| Time deposits                                |       | 67,659,377                  |       | 258,584,157 |   | 38,489,850 |   |
| Other fixed-income investments               |       | 185,505,050                 |       | 387,016,988 |   | 49,996,942 |   |
|                                         |       |                        |       |   |   |   |   |
| **Total**                                    | ** ** | **446,438,229**             | ** ** | **719,217,980** | ** ** | **115,095,865** | ** ** |

 

Short-termdeposits mature within no more than three months from their date of acquisitionand accrue market interest for this type of short-term investment. Otherfixed-income investments correspond primarily to transactions with agreementsto resell that mature in less than 30 days. There are no restrictions as to thedisposal of significant amounts of cash.

 

b)       The followingtable details the balance of cash and cash equivalents by type of currency:

 
| ** **            | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** | **01-01-2008**  | ** ** |
|-----------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| **Currency**          | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
|                  |       |            |       |            |       |            |       |
| Chilean pesos         |       | 152,554,270     |       | 159,432,786     |       | 41,839,181      |       |
| Argentinean pesos     |       | 11,629,007      |       | 15,309,637      |       | 5,553,727       |       |
| Colombian pesos       |       | 160,969,953     |       | 133,927,140     |       | 20,396,709      |       |
| Peruvian nuevos soles |       | 13,346,169      |       | 1,920,653       |       | 2,237,065       |       |
| US dollars            |       | 107,638,574     |       | 408,627,764     |       | 45,069,183      |       |
| Brazilean Real        |       | 300,256         |       | —          |       | —          |       |
|                  |       |            |       |            |       |            |       |
| **Total**             | ** ** | **446,438,229** | ** ** | **719,217,980** | ** ** | **115,095,865** | ** ** |

 

**6.      TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES**

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008,this account is detailed as follows:

 
| ** **                                                  | ** ** | **Balance as of** | ** ** |
|-------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                                  | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Trade accounts receivable and**            | ** ** | **Current**                 | ** ** | **Non-current** | ** ** | **Current** | ** ** | **Non-current** | ** ** | **Current** | ** ** | **Non-current** | ** ** |
| **other receivables, gross**                      | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                                        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| **Trade accounts receivable and  other receivables, gross** | ** ** | **330,921,518**             | ** ** | **66,716,465** | ** ** | **344,887,271** | ** ** | **153,412,332** | ** ** | **320,361,516** | ** ** | **95,328,090** | ** ** |
| Trade accounts receivable, gross                            |       | 315,545,472                 |       | 61,309,211 |   | 323,958,886 |   | 134,759,473 |   | 286,772,527 |   | 64,137,425 |   |
| Other receivables, gross                                    |       | 15,376,046                  |       | 5,407,254 |   | 20,928,385 |   | 18,652,859 |   | 33,588,989 |   | 31,190,665 |   |
|                                                        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| ** **                                                  | ** ** | **Balance as of** | ** ** |
| ** **                                                  | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Trade accounts receivable and**            | ** ** | **Current**                 | ** ** | **Non-current** | ** ** | **Current** | ** ** | **Non-current** | ** ** | **Current** | ** ** | **Non-current** | ** ** |
| **other receivables, net**                        | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                                        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| **Trade and other receivables, net**                        | ** ** | **328,265,468**             | ** ** | **66,716,465** | ** ** | **342,260,677** | ** ** | **153,412,332** | ** ** | **318,419,894** | ** ** | **95,328,090** | ** ** |
| Trade accounts receivable, net                              |       | 313,854,813                 |       | 61,309,211 |   | 321,332,292 |   | 134,759,473 |   | 284,830,905 |   | 64,137,425 |   |
| Other receivables, net                                      |       | 14,410,655                  |       | 5,407,254 |   | 20,928,385 |   | 18,652,859 |   | 33,588,989 |   | 31,190,665 |   |

 

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Thebalances in this account do not generally accrue interest.

 

Noindividual customer makes up a significant portion of the Group’s total salesor receivables.

 

Referto Note 7.1 for the amounts, terms and conditions of receivables from relatedparties.

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008, thebalance of unimpaired past due trade receivables is as follows:

 
| ** **                                                                                                      | ** ** | **Balance as of** | ** ** |
|-----------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                                                                                      | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Trade accounts receivable past due and unpaid but not impaired** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Less than three months                                                                                          |       | 2,286,695                   |       | 600,325 |   | 45,533,172 |   |
| Between three and six months                                                                                    |       | 65,951                      |       | 2,855,307 |   | 2,359,287 |   |
| Between six and twelve months                                                                                   |       | 105,135                     |       | 5,003 |   | 74,213 |   |
| Greater than twelve months                                                                                      |       | 88,453                      |       | — |   | — |   |
| **Total**                                                                                                       | ** ** | **2,546,234**               | ** ** | **3,460,635** | ** ** | **47,966,672** | ** ** |

 

Thefollowing table details movements in the impairment provision for tradereceivables:

 
| ** **                                                                                      | ** ** | **Current and** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                                                      | ** ** | **Non-current**      | ** ** |
| **Trade accounts receivables past due, unpaid and impaired** | ** ** | **ThCh$**            | ** ** |
| **Balance at January 1, 2008**                                                             | ** ** | **1,941,622**        | ** ** |
| Increases (Decreases) for the year                                                              |       | 490,055              |       |
| Amounts Written-off                                                                             |       | (129,748             | )          |
| Foreign Currency Translation Differences                                                        |       | 324,665              |       |
| **Balance at December 31, 2008**                                                           | ** ** | **2,626,594**        | ** ** |
| Increases (Decreases) for the year                                                              |       | 544,674              |       |
| Amounts Written-off                                                                             |       | (94,074              | )          |
| Foreign Currency Translation Differences                                                        |       | (421,144             | )          |
| **Balance at December 31, 2009**                                                           | ** ** | **2,656,050**        | ** ** |

 

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**7.      BALANCES AND TRANSACTIONS WITH RELATED COMPANIES**

 

Transactionsbetween the Company and its subsidiaries consist of customary transactions interms of their objective and market conditions. These transactions have beeneliminated in the consolidation process and are not itemized in this note.

 

7.1   Balances and transactions with related companies

 

Balancesof receivables and payables between the company and its unconsolidated relatedcompanies are detailed as follows:

 

a)              Accounts receivable from related companies

 
| ** **           | ** ** | ** **                                              | ** ** | ** **                               | ** ** | ** **        | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **Balance as of** | ** ** |
|----------------------|------------|---------------------------------------------------------|------------|------------------------------------------|------------|-------------------|------------|--------------------------------------|------------|--------------|------------|-------------|------------|-----------------------------|------------|
| ** **           | ** ** | ** **                                              | ** ** | ** **                               | ** ** | ** **        | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **Current**                 | ** ** | **Non-Current** | ** ** |
| **Taxpayer ID** | ** ** | ** **                                              | ** ** | ** **                               | ** ** | **Term of**  | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **12-31-  2009**            | ** ** | **12-31-  2008** | ** ** | **01-01-  2008** | ** ** | **12-31-  2009** | ** ** | **12-31-  2008** | ** ** | **01-01-  2008** | ** ** |
| **Number**           | ** ** | **Company**                                             | ** ** | **Description of transaction** | ** ** | **transaction**   | ** ** | **Nature of relationship** | ** ** | **Currency** | ** ** | **Country** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                 |       |                                                    |       |                                     |       |              |       |                                 |       |         |       |        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| 94.271.000-3         |       | Enersis S.A.                                            |       | Mercantile current  account              |       | Less than 90 days |       | Parent company                       |       | Ch$          |       | Chile       |       | 339,995                     |       | 362,058 |   | 81,054 |   | — |   | — |   | — |   |
| 96.800.570-7         |       | Chilectra S.A.                                          |       | Sale of energy                           |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 23,905,151                  |       | 23,879,572 |   | — |   | — |   | — |   | 369 |   |
| 96.783.910-8         |       | Emp. Electrica de Colina                                |       | Sale of energy                           |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 71,846                      |       | 21,072 |   | — |   | — |   | — |   | — |   |
| 96.800.460-3         |       | Luz Andes                                               |       | Sale of energy                           |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 7,859                       |       | 1,545 |   | — |   | — |   | — |   | — |   |
| 96.543.670-1         |       | Cia A. Multiser. Ltda.                                  |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 14,253                      |       | 19,739 |   | 17,265,900 |   | — |   | — |   | — |   |
| Foreign              |       | CAM Colombia Ltda.                                      |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 10,103                      |       | 18,789 |   | 57,683 |   | — |   | — |   | — |   |
| 96.529.420-1         |       | Synapsis Soluciones y Servicios IT Ltda.           |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 38,129                      |       | 88,763 |   | 13,569 |   | — |   | — |   | — |   |
| Foreign              |       | Edesur S.A.                                             |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | Ar$          |       | Argentina   |       | 3,069                       |       | 4,175 |   | — |   | — |   | — |   | — |   |
| Foreign              |       | Codensa                                                 |       | Sale of energy                           |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 33,387,059                  |       | 26,451,167 |   | 19,129,564 |   | — |   | — |   | — |   |
| Foreign              |       | Edelnor                                                 |       | Sale of energy                           |       | Less than 90 days |       | Common parent company                |       | Soles        |       | Peru        |       | 7,499,676                   |       | 5,645,150 |   | 2,603,199 |   | — |   | — |   | — |   |
| Foreign              |       | Edelnor                                                 |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | Soles        |       | Peru        |       | 1,343,964                   |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | Endesa Brasil S.A.                                      |       | Services rendered                        |       | Less than 90 days |       | Associate                            |       | R$           |       | Brazil      |       | 743                         |       | 90,524 |   | 54,868 |   | — |   | — |   | — |   |
| Foreign              |       | Endesa Brasil S.A.                                      |       | Dividends                                |       | Less than 90 days |       | Associate                            |       | Ch$          |       | Brazil      |       | 156,223                     |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | CIEN (Companhía Interconexao Energética S.A.) |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | US$          |       | Brazil      |       | 773,861                     |       | 993,290 |   | 6,880,788 |   | — |   | — |   | — |   |
| Foreign              |       | E. E. Piura                                             |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | Soles        |       | Peru        |       | 135,940                     |       | 95,305 |   | 15,477 |   | — |   | — |   | — |   |
| Foreign              |       | Endesa Latinoamérica S.A.U.                        |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | US$          |       | Spain       |       | —                      |       | 27,382 |   | 12,669 |   | — |   | — |   | — |   |
| 76.788.080-4         |       | GNL Quintero S.A.                                       |       | Loans                                    |       | Less than 90 days |       | Associate                            |       | US$          |       | Chile       |       | —                      |       | 4,923,842 |   | 42,049,275 |   | — |   | — |   | — |   |
| Foreign              |       | Endesa CEMSA S.A.                                       |       | Mercantile current  account              |       | Less than 90 days |       | Associate                            |       | Ar$          |       | Argentina   |       | 1,451,375                   |       | 3,614,692 |   | 1,615,616 |   | — |   | — |   | — |   |
| Foreign              |       | Sociedad Portuaria Central Cartagena S.A.               |       | Mercantile current  account              |       | Less than 90 days |       | Associate                            |       | CPs          |       | Colombia    |       | 106                         |       | — |   | — |   | — |   | — |   | — |   |
| 78970360-4           |       | Agricola e Inmobiliaria Pastos Verdes Ltda.             |       | Mercantile current  account              |       | Less than 90 days |       | Associate                            |       | Ch$          |       | Chile       |       | 7,402                       |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | CGTF Fortaleza                                          |       | Services rendered                        |       | Less than 90 days |       | Common parent company                |       | Real         |       | Brazil      |       | 3,331                       |       | 7,997 |   | 1,792 |   | — |   | — |   | — |   |
| Foreign              |       | Empresa de Energía de Cundinamarca S.A.            |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 10,751                      |       | — |   | — |   | — |   | — |   | — |   |
|                 |       |                                                    |       |                                     |       |              |       |                                 |       |         |       |        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
|                 | ** ** | **Total**                                               |       |                                     |       |              |       |                                 |       |         |       |        | ** ** | **69,160,836**              | ** ** | **66,245,062** | ** ** | **89,781,454** | ** ** | **—** | ** ** | **—** | ** ** | **369** | ** ** |

 

Thereare no secured receivables.

 

b)              Accounts payables to related companies

 

 
| ** **           | ** ** | ** **                                                     | ** ** | ** **                               | ** ** | ** **        | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **Balance as of** | ** ** |
|----------------------|------------|----------------------------------------------------------------|------------|------------------------------------------|------------|-------------------|------------|--------------------------------------|------------|--------------|------------|-------------|------------|-----------------------------|------------|
| ** **           | ** ** | ** **                                                     | ** ** | ** **                               | ** ** | ** **        | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **Current**                 | ** ** | **Non-Current** | ** ** |
| **Taxpayer ID** | ** ** | ** **                                                     | ** ** | ** **                               | ** ** | **Term of**  | ** ** | ** **                           | ** ** | ** **   | ** ** | ** **  | ** ** | **12-31-  2009**            | ** ** | **12-31-2008** | ** ** | **01-01-  2008** | ** ** | **12-31-  2009** | ** ** | **12-31-  2008** | ** ** | **01-01-  2008** | ** ** |
| **Number**           | ** ** | **Company**                                                    | ** ** | **Description of transaction** | ** ** | **transaction**   | ** ** | **Nature of relationship** | ** ** | **Currency** | ** ** | **Country** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                 |       |                                                           |       |                                     |       |              |       |                                 |       |         |       |        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| 94.271.000-3         |       | Enersis S.A.                                                   |       | Dividends                                |       | Less than 90 days |       | Parent company                       |       | Ch$          |       | Chile       |       | 67,019,988                  |       | 52,476,199 |   | 23,393,344 |   | — |   | — |   | — |   |
| 94.271.000-3         |       | Enersis S.A.                                                   |       | Services received                        |       | Less than 90 days |       | Parent company                       |       | Ch$          |       | Chile       |       | 258,550                     |       | — |   | — |   | — |   | — |   | — |   |
| 96.800.570-7         |       | Chilectra S.A.                                                 |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 133,333                     |       | 235,031 |   | 108,590 |   | — |   | — |   | — |   |
| 96.543.670-1         |       | Cia A. Multiser. Ltda.                                         |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 775,322                     |       | 30,272 |   | 1,383 |   | — |   | — |   | — |   |
| Foreign              |       | CAM Colombia Ltda.                                             |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 385,882                     |       | 459,933 |   | 250,888 |   | — |   | — |   | — |   |
| Foreign              |       | CAM Perú S.A.                                             |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | US$          |       | Peru        |       | 2,280                       |       | 16,621 |   | 27,863 |   | — |   | — |   | — |   |
| 96.529.420-1         |       | Synapsis Soluciones y Servicios IT Ltda.                  |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 1,063,880                   |       | 857,747 |   | 583,572 |   | — |   | — |   | 195,828 |   |
| Foreign              |       | Synapsis de Argentina  Ltda.                                   |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Ar$          |       | Argentina   |       | 19,216                      |       | 27,833 |   | 63,991 |   | — |   | — |   | — |   |
| Foreign              |       | Synapsis Perú Ltda.                                       |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | US$          |       | Peru        |       | 209,962                     |       | 169,044 |   | 34,995 |   | — |   | — |   | — |   |
| Foreign              |       | Synapsis Colombia Ltda.                                        |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 178,602                     |       | 246,280 |   | — |   | — |   | — |   | — |   |
| 79.913.810-7         |       | Inmb. M. Velasco                                               |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Ch$          |       | Chile       |       | 81,669                      |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | Empresa de Energía de Cundinamarca S.A.                   |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 42,539                      |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | Codensa                                                        |       | Energy purchase                          |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Colombia    |       | 1,802,889                   |       | 64,891,983 |   | 2,892,554 |   | — |   | — |   | — |   |
| Foreign              |       | Edelnor                                                        |       | Services received                        |       | Less than 90 days |       | Common parent company                |       | Soles        |       | Peru        |       | 15,611                      |       | — |   | 82,594 |   | — |   | — |   | — |   |
| Foreign              |       | CTM (Compañía de Transmisión del Mercosur S.A.) |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | Ar$          |       | Argentina   |       | 637,078                     |       | 879,934 |   | 749,359 |   | — |   | — |   | — |   |
| Foreign              |       | E. E. Piura                                                    |       | Mercantile current  account              |       | Less than 90 days |       | Common parent company                |       | Soles        |       | Peru        |       | 8,420                       |       | — |   | — |   | — |   | — |   | — |   |
| Foreign              |       | Endesa Latinoamérica S.A.U.                               |       | Dividends                                |       | Less than 90 days |       | Common parent company                |       | CPs          |       | Spain       |       | 866,168                     |       | 886,946 |   | 6,465,149 |   | — |   | — |   | — |   |
| 96.806.130-5         |       | Electrogas S.A.                                                |       | Mercantile current  account              |       | Less than 90 days |       | Associate                            |       | Ch$          |       | Chile       |       | 290,742                     |       | 1,784,801 |   | 209,417 |   | — |   | — |   | — |   |
| Foreign              |       | Endesa CEMSA S.A.                                              |       | Mercantile current  account              |       | Less than 90 days |       | Associate                            |       | Ar$          |       | Argentina   |       | 16,761,928                  |       | 14,433,685 |   | 10,312,961 |   | — |   | — |   | — |   |
|                 |       |                                                           |       |                                     |       |              |       |                                 |       |         |       |        |       |                        |       |   |   |   |   |   |   |   |   |   |   |
|                 | ** ** | **Total**                                                      |       |                                     |       |              |       |                                 |       |         |       |        | ** ** | **90,554,059**              | ** ** | **137,396,309** | ** ** | **45,176,660** | ** ** | **—** | ** ** | **—** | ** ** | **195,828** | ** ** |

 

Thereare no secured obligations.

 

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c)              Most significant transactions and their effect on earnings

 

Transactionswith unconsolidated related companies for the years ended December 31, 2008 and2009 had the following effects on earnings:

 
| **Taxpayer ID**  | ** ** | ** **                                               | ** ** | ** **                           | ** ** | **Description of** | ** ** | ** **  | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|-----------------------|------------|----------------------------------------------------------|------------|--------------------------------------|------------|-------------------------|------------|-------------|------------|----------------|------------|----------------|------------|
| **Number**            | ** ** | **Company**                                              | ** ** | **Nature of relationship** | ** ** | **transaction**         | ** ** | **Country** | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
|                  |       |                                                     |       |                                 |       |                    |       |        |       |           |       |           |       |
| 94.271.000-3          |       | Enersis S.A.                                             |       | Parent company                       |       | Services rendered       |       | Chile       |       | 1,018,125      |       | 1,067,722      |       |
|                  |       |                                                     |       | Parent company                       |       | Services received       |       | Chile       |       | (937,096       | )          | (1,167,488     | )          |
|                  |       |                                                     |       | Parent company                       |       | Loans                   |       | Chile       |       | (3,065         | )          | (98,667        | )          |
| 96.800.570-7          |       | Chilectra S.A.                                           |       | Common parent company                |       | Sale of Energy          |       | Chile       |       | 284,501,577    |       | 245,609,542    |       |
|                  |       |                                                     |       | Common parent company                |       | Services rendered       |       | Chile       |       | 2,975,377      |       | 2,783,160      |       |
|                  |       |                                                     |       | Common parent company                |       | Services received       |       | Chile       |       | (2,189         | )          | (785,707       | )          |
|                  |       |                                                     |       | Common parent company                |       | Loans                   |       | Chile       |       | 616,084        |       | —         |       |
| 96.783.910-8          |       | Emp. Electrica de Colina                                 |       | Common parent company                |       | Sale of Energy          |       | Chile       |       | 42,553         |       | 17,708         |       |
|                  |       |                                                     |       | Common parent company                |       | Services rendered       |       | Chile       |       | 260            |       | —         |       |
| 78.970.360-4          |       | Agricola Pastos Verdes                                   |       | Common parent company                |       | Services rendered       |       | Chile       |       | 34,531         |       | —         |       |
| 96.543.670-1          |       | Cia A. Multiser. Ltda.                                   |       | Common parent company                |       | Services rendered       |       | Chile       |       | 14,254         |       | 4,902          |       |
| Foreign               |       | CAM Colombia Ltda.                                       |       | Common parent company                |       | Services rendered       |       | Colombia    |       | 52,013         |       | 73,208         |       |
|                  |       |                                                     |       | Common parent company                |       | Services received       |       | Colombia    |       | (529,150       | )          | (833,906       | )          |
| Foreign               |       | CAM Perú S.A.                                       |       | Common parent company                |       | Services received       |       | Peru        |       | (27,810        | )          | (71,909        | )          |
| 96.529.420-1          |       | Synapsis  Soluciones y Servicios IT Ltda.           |       | Common parent company                |       | Services rendered       |       | Chile       |       | 1,215,838      |       | 198,769        |       |
| Common parent company |       | Services received                                        |       | Chile                                |       | (2,373,902              | )          | (2,860,109  | )          |
| Foreign               |       | Synapsis de Argentina  Ltda.                             |       | Common parent company                |       | Services received       |       | Argentina   |       | (70,067        | )          | (98,013        | )          |
| Foreign               |       | Synapsis Perú Ltda.                                 |       | Common parent company                |       | Services received       |       | Peru        |       | (426,060       | )          | (458,535       | )          |
| Foreign               |       | Synapsis Colombia Ltda.                                  |       | Common parent company                |       | Services received       |       | Colombia    |       | (706,149       | )          | (784,088       | )          |
| Foreign               |       | Edesur S.A.                                              |       | Common parent company                |       | Sale of Energy          |       | Argentina   |       | 40,377         |       | —         |       |
| 96.800.460-3          |       | Luz Andes                                                |       | Common parent company                |       | Sale of Energy          |       | Chile       |       | 13,080         |       | 1,298          |       |
|                  |       |                                                     |       | Common parent company                |       | Services rendered       |       | Chile       |       | 25             |       | —         |       |
| Foreign               |       | Codensa                                                  |       | Common parent company                |       | Sale of Energy          |       | Colombia    |       | 137,288,265    |       | 93,237,414     |       |
|                  |       |                                                     |       | Common parent company                |       | Services rendered       |       | Colombia    |       | 89,794         |       | 104,362        |       |
|                  |       |                                                     |       | Common parent company                |       | Services received       |       | Colombia    |       | (340,033       | )          | (523,660       | )          |
|                  |       |                                                     |       | Common parent company                |       | Loans                   |       | Colombia    |       | (1,799,469     | )          | (184,570       | )          |
|                  |       |                                                     |       | Common parent company                |       | Electricity tolls       |       | Colombia    |       | (20,387,037    | )          | (18,341,786    | )          |
| Foreign               |       | Edelnor                                                  |       | Common parent company                |       | Sale of Energy          |       | Peru        |       | 77,262,815     |       | 42,033,260     |       |
|                  |       |                                                     |       | Common parent company                |       | Electricity tolls       |       | Peru        |       | (104,129       | )          | —         |       |
| Foreign               |       | Endesa Brasil S.A.                                       |       | Associate                            |       | Services rendered       |       | Brazil      |       | 405,901        |       | 981,558        |       |
| Foreign               |       | Endesa Servicios S.L.U.                                  |       | Common parent company                |       | Services received       |       | Spain       |       | (2,063         | )          | —         |       |
| Foreign               |       | E. E. Piura                                              |       | Common parent company                |       | Sale of Energy          |       | Peru        |       | 929,179        |       | 93,073         |       |
|                  |       |                                                     |       | Common parent company                |       | Purchase of energy      |       | Peru        |       | (1,214,205     | )          | —         |       |
|                  |       |                                                     |       | Common parent company                |       | Services rendered       |       | Peru        |       | 41,403         |       | 9,928          |       |
| Foreign               |       | Generalima S.A.                                          |       | Common parent company                |       | Services rendered       |       | Peru        |       | 111,514        |       | —         |       |
| Foreign               |       | Empresa de Energía de Cundinamarca S.A.             |       | Common parent company                |       | Electricity tolls       |       | Colombia    |       | (315,525       | )          | —         |       |
| 96.806.130-5          |       | Consorcio Ara-Ingendesa  Ltda.                           |       | Common parent company                |       | Services rendered       |       | Chile       |       | —         |       | 505,331        |       |
| 76.788.080-4          |       | GNL Quintero S.A.                                        |       | Associate                            |       | Loans                   |       | Chile       |       | (247,192       | )          | 1,748,868      |       |
|                  |       |                                                     |       | Associate                            |       | Sale of Energy          |       | Chile       |       | 398,267        |       | —         |       |
|                  |       |                                                     |       | Associate                            |       | Services rendered       |       | Chile       |       | 37,651         |       | —         |       |
| Foreign               |       | Endesa CEMSA S.A.                                        |       | Associate                            |       | Sale of Energy          |       | Argentina   |       | 12,489,207     |       | 20,669,866     |       |
|                  |       |                                                     |       | Associate                            |       | Purchase of energy      |       | Argentina   |       | (89,810        | )          | (94,195        | )          |
|                  |       |                                                     |       | Associate                            |       | Gas consumption         |       | Argentina   |       | (55,180,792    | )          | —         |       |
| Foreign               |       | Central Generadora Termoeléctrica de Fortaleza S.A. |       | Common parent company                |       | Services rendered       |       | Brazil      |       | 33,715         |       | 43,951         |       |
| 96.806.130-5          |       | Electrogas S.A.                                          |       | Associate                            |       | Gas tolls               |       | Chile       |       | (1,239,471     | )          | (4,576,224     | )          |
|                  |       |                                                     |       |                                 |       |                    |       |        |       |           |       |           |       |
|                  |       |                                                     |       |                                 | ** ** | **Total**               |       |        |       | 433,616,591    |       | 378,305,063    |       |

 

Short-termfunds transfers between related parties are structured using current accounts,for which a monthly variable interest rate has been established, based onmarket conditions. Receivables and payables originated in this way areessentially due in 30 days, automatically renewable for equal periods andamortized based on cash flow generation.

 

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7.2   Boardof directors and key management personnel

 

EndesaChile is managed by a Board of Directors composed of nine members, who holdtheir positions for three years and may be reelected.

 

TheBoard of Directors was elected in the Ordinary Shareholders’ Meeting on April 15,2009.  The Chairman, Vice Chairman and Secretary of the Board wereappointed in a Board meeting held that same day.

 

**a)             **Accounts receivable andpayable and other transactions

 

·                  Accountsreceivable and payable

 

Thereare no outstanding receivable or payable balances between the Company and itsDirectors and Group Management.

 

·                  Other transactions

 

Thereare no transactions between the Company and its Directors and Group Management.

 

**b)             **Compensation of Directors

 

Inconformity with article 33 of Law No. 18,046 of the Corporations Law, thecompensation of the Board of Directors is set annually by shareholders ofEndesa Chile at the Ordinary Shareholders’ Meeting. The benefits describedbelow regarding the methodology used to determine compensation has not changedsince 2001.

 

Accordingly,compensation is determined as follows:

 

·                  UF 55 as unconditional fixed monthlycompensation, and

 

·                  UF 36 for attending each meeting.

 

Inboth cases, these amounts are increased by 100% for the Chairman and 50% forthe Vice Chairman.

 

Ifa Director of Endesa Chile also participates in more than one Board ofDirectors of its subsidiaries and/or associates, either in Chile or abroad, oracts as a director or advisor to other Chilean or foreign companies or legalentities in which Endesa Chile directly or indirectly holds any interest, hemay only receive compensation from one of these Boards of Directors or ManagingCouncils.

 

Theexecutives of Endesa Chile and/or its subsidiaries or associates, either inChile or abroad, shall not receive compensation or allowances for acting asdirectors of any of Endesa Chile’s subsidiaries, associates or interests in anyway, either in Chile or abroad.

 

Directors’ committee

 

Eachmember of the Directors’ Committee receives an allowance of UF 36 for eachmeeting attended, with a maximum of twelve meetings per year.

 

Audit committee

 

Eachmember of the Audit Committee receives an allowance of UF 36 for each meetingattended, with a maximum of twelve meetings per year. Audit Committeecompensation has remained constant since its creation in 2005.

 

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Thefollowing table details the Board of Directors’ compensation for the 2009 and2008 years:

 
| ** **                                                | ** ** | ** **    | ** ** | **12-31-2009**               | ** ** |
|-----------------------------------------------------------|------------|---------------|------------|------------------------------|------------|
| ** **                                                | ** ** | ** **    | ** ** | ** **                   | ** ** | **Board of********Endesa  Chile** | ** ** | **Board of********Subsidiaries** | ** ** | **Directors’********Committee** | ** ** | **Audit********Committee** | ** ** | **Variable based  on Profits** | ** ** |
| **Name**                                                  | ** ** | **Position**  | ** ** | **Period in  position** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Mario Valcarce Durán                                 |       | Chairman      |       | 01/01/09 -  10/28/09         |       | 39,720 |   | — |   | 9,818 |   | — |   | — |   |
| Paolo Bondi                                               |       | Vice Chairman |       | 07/28/09 -  12/31/09         |       | — |   | — |   | — |   | — |   | — |   |
| Juan Gallardo Cruces                                      |       | Vice Chairman |       | 01/01/09 -  03/26/09         |       | — |   | — |   | — |   | — |   | — |   |
| Andrea Brentan                                            |       | Vice Chairman |       | 03/26/09 -  07/28/09         |       | — |   | — |   | — |   | — |   | — |   |
| Francesco Buresti                                         |       | Director      |       | 01/01/09 -  12/31/09         |       | — |   | — |   | — |   | — |   | — |   |
| Pío Cabanillas Alonso                                |       | Director      |       | 01/01/09 -  03/26/09         |       | — |   | — |   | — |   | — |   | — |   |
| Fernando D’Ornellas  Silva                           |       | Director      |       | 01/01/09 -  07/28/09         |       | 12,640 |   | — |   | — |   | 2,276 |   | — |   |
| Jaime Estévez Valencia                               |       | Director      |       | 01/01/09 -  12/31/09         |       | 22,528 |   | — |   | 10,575 |   | 3,786 |   | — |   |
| Borja Prado Eulate                                        |       | Director      |       | 01/01/09 -  12/31/09         |       | 18,000 |   | — |   | — |   | 2,276 |   | — |   |
| Raimundo Valenzuela Lang                                  |       | Director      |       | 01/01/09 -  03/26/09         |       | 4,844 |   | — |   | 1,514 |   | — |   | — |   |
| Leonidas Vial Echeverría                             |       | Director      |       | 01/01/09 -  12/31/09         |       | 22,528 |   | — |   | — |   | — |   | — |   |
| José María Calvo-Sotelo Ibañez-Martín |       | Director      |       | 03/26/09 -  12/31/09         |       | — |   | — |   | — |   | — |   | — |   |
| Gerardo Jofré Miranda                                |       | Director      |       | 04/15/09 -  12/31/09         |       | 16,763 |   | — |   | 8,294 |   | — |   | — |   |
| Luis de Guindos Jurado                                    |       | Director      |       | 07/28/09 -  12/31/09         |       | 8,523 |   | — |   |   |   | 754 |   | — |   |
|                                                      |       |          |       |                         |       |   |   |   |   |   |   |   |   |   |   |
| **TOTAL**                                                 |       |          |       |                         | ** ** | **145,546** | ** ** | **—** | ** ** | **30,201** | ** ** | **9,092** | ** ** | **—** | ** ** |

 
| ** **                      | ** ** | ** **    | ** ** | **12-31-2008**                   | ** ** |
|---------------------------------|------------|---------------|------------|----------------------------------|------------|
| ** **                      | ** ** | ** **    | ** ** | ** **                       | ** ** | **Board of********Endesa  Chile** | ** ** | **Board of********Subsidiaries** | ** ** | **Directors’********Committee** | ** ** | **Audit********Committee** | ** ** | **Variable based  on Profits** | ** ** |
| **Name**                        | ** ** | **Position**  | ** ** | **Period in position** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Mario Valcarce Durán       |       | Chairman      |       | 01/01/08 -  12/31/08             |       | 43,258 |   | — |   | 8,405 |   | — |   | — |   |
| Juan Gallardo Cruces            |       | Vice Chairman |       | 04/02/08 -  12/31/08             |       | — |   | — |   | — |   | — |   | — |   |
| Jaime Estévez Valencia     |       | Director      |       | 01/01/08 -  12/31/08             |       | 21,251 |   | — |   | 7,652 |   | 6,118 |   | — |   |
| Leonidas Vial Echeverría   |       | Director      |       | 01/01/08 -  12/31/08             |       | 20,490 |   | — |   | — |   | — |   | — |   |
| Raimundo Valenzuela Lang        |       | Director      |       | 01/01/08 -  12/31/08             |       | 20,486 |   | — |   | 6,883 |   | — |   | — |   |
| Carlos Torres Vila              |       | Director      |       | 01/01/08 -  03/30/08             |       | 5,284 |   | — |   | — |   | — |   | — |   |
| Enrique García Alvarez     |       | Director      |       | 01/01/08 -  03/30/08             |       | 5,829 |   | — |   | — |   | 2,306 |   | — |   |
| José Fernández Olano  |       | Director      |       | 01/01/08 -  03/30/08             |       | 5,829 |   | — |   | — |   | 2,306 |   | — |   |
| Rafael Español Navarro     |       | Director      |       | 01/01/08 -  03/30/08             |       | 5,829 |   | — |   | — |   | — |   | — |   |
| Jose Maria Calvo-Sotelo         |       | Director      |       | 01/01/08 -  03/30/08             |       | 5,829 |   | — |   | — |   | — |   | — |   |
| Borja Prado Eulate              |       | Director      |       | 04/02/08 -  12/31/08             |       | 15,424 |   | — |   | — |   | 1,528 |   | — |   |
| Fernando D’Ornellas  Silva |       | Director      |       | 04/02/08 -  12/31/08             |       | 13,914 |   | — |   | — |   | 3,808 |   | — |   |
| Francesco Buresti               |       | Director      |       | 04/02/08 -  12/31/08             |       | — |   | — |   | — |   | — |   | — |   |
| Pío Cabanillas Alonso      |       | Director      |       | 04/02/08 -  12/31/08             |       | — |   | — |   | — |   | — |   | — |   |
|                            |       |          |       |                             |       |   |   |   |   |   |   |   |   |   |   |
| **TOTAL**                       |       |          |       |                             | ** ** | **163,423** | ** ** | **—** | ** ** | **22,940** | ** ** | **16,066** | ** ** | **—** | ** ** |

 

**c)    **Guaranteesestablished by the Company in favor of the Directors

 

TheCompany has established no guarantees in favor of the Directors.

 

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7.3   Compensationof key management personnel

 

**a)    **Compensationreceived by key management personnel

 

**Key Management Personnel**

 
| **Name**                           | ** ** | **Position**                                  |
|------------------------------------|------------|-----------------------------------------------|
| Joaquín  Galindo Vélez   |       | Chief  Executive Officer (1)                  |
| Claudio  Iglesis Guillard          |       | Generation  Manager Chile                     |
| Juan  Benabarre Benaiges           |       | Regional  Production and Transmission Manager |
| José  Venegas Maluenda        |       | Regional  Trading and Sales Manager           |
| Eduardo  Escaffi Johnson           |       | Chief  Financial Officer (2)                  |
| Julio  Valbuena Sánchez       |       | Planning  and Control Manager                 |
| Renato  Fernández Baeza       |       | Communications  Manager                       |
| Sebastián  Fernández Cox |       | Regional  Energy Planning Manager             |
| Carlos  Martín Vergara        |       | General  Counsel                              |

 

----

(1)          Mr. Galindo assumed his role as General Manageron November 20, 2009.

(2)          Mr. Escaffi assumed his role as Chief FinancialOfficer on September 24, 2009.

 

Compensationaccrued by key management personnel amounts to ThCh$ 1,905,095 for the yearended December 31, 2009 (ThCh$ 2,490,689 as of December 31, 2008).This compensation includes salaries and estimated benefits, both short-term(yearly bonus) and long-term (principally staff severance indemnity).

 

Incentiveplans for principal executives and managers

 

EndesaChile has a yearly bonus plan for its executives based on their ability to meetobjectives and their individual contribution to the company’s results. This plan defines a range of bonuses based on each executive’s level within thecompany’s hierarchy. Bonuses eventually given to executives consist of acertain number of monthly gross salaries.

 

**b)****             **Guarantees established bythe Company in favor of Endesa Chile Management

 

TheCompany has not established any guarantees in favor of Endesa Chile’sManagement.

 

**c)****             **Guarantee clauses: Endesa Chile’s Managing Council and Management

 

·                  Guarantee clauses in case of dismissal orchanges of control

 

No guarantee clauses exist.

 

·                  Post contract non-competition clause

 

No such agreements exist.

 

7.4   Compensationplans linked to share price

 

TheCompany has not agreed on any share-price-linked compensation plans with theBoard of Directors.

 

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**8.   INVENTORIES**

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008,this account is detailed as follows:

 
| ** **                         | ** ** | **Balance as of** | ** ** |
|------------------------------------|------------|-----------------------------|------------|
| ** **                         | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Classes of Inventory** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                               |       |                        |       |   |   |   |   |
| Supplies for production            |       | 40,179,588                  |       | 49,141,746 |   | 55,282,262 |   |
|                               |       |                        |       |   |   |   |   |
| Total                              | ** ** | **40,179,588**              | ** ** | **49,141,746** | ** ** | **55,282,262** | ** ** |

 

Noinventory has been pledged to guarantee debt.

 

**9.   CURRENTTAX RECEIVABLES AND PAYABLES**

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008,this account is detailed as follows:

 

Receivablesfor current taxes

 
| ** **                        | ** ** | **Balance as of** | ** ** |
|-----------------------------------|------------|-----------------------------|------------|
| ** **                        | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| ** **                        | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                              |       |                        |       |   |   |   |   |
| Monthly provisional tax payments  |       | 260,857                     |       | 2,562,854 |   | 18,819,554 |   |
| VAT tax credit                    |       | 39,172,644                  |       | 47,570,155 |   | 44,999,310 |   |
| Tax credit for absorbed profits   |       | —                      |       | — |   | 4,035,977 |   |
| Tax credits for training expenses |       | 84,684                      |       | — |   | 64,111 |   |
| Other                             |       | 4,874,113                   |       | 4,778,895 |   | 7,436,538 |   |
|                              |       |                        |       |   |   |   |   |
| Total                             | ** ** | **44,392,298**              | ** ** | **54,911,904** | ** ** | **75,355,490** | ** ** |

 

Payablesfor current taxes

 
| ** **    | ** ** | **Balance as of** | ** ** |
|---------------|------------|-----------------------------|------------|
| ** **    | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| ** **    | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|          |       |                        |       |   |   |   |   |
| Income taxes  |       | 99,147,311                  |       | 55,587,062 |   | 15,364,487 |   |
| VAT tax debit |       | 15,957,390                  |       | 17,231,231 |   | 10,521,839 |   |
| Stamp tax     |       | —                      |       | 2,575,390 |   | — |   |
| Tax provision |       | 983,240                     |       | 1,263,637 |   | 1,050,586 |   |
| Other         |       | 7,857,491                   |       | 7,308,928 |   | 2,669,296 |   |
|          |       |                        |       |   |   |   |   |
| Total         | ** ** | **123,945,432**             | ** ** | **83,966,248** | ** ** | **29,606,208** | ** ** |

 

**10.   AVAILABLE-FOR-SALEFINANCIAL ASSETS**

 

Asstated in Note 3e, as of December 31, 2009, December 31, 2008 and January 1,2008, this account is detailed as follows:

 
| ** **                                        | ** ** | **Balances**   | ** ** |
|---------------------------------------------------|------------|----------------|------------|
| ** **                                        | ** ** | **Current**    | ** ** | **Non-Current** | ** ** |
| ** **                                        | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Available-for-Sale Financial Assets** | ** ** | **ThCh$**      | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                              |       |           |       |   |   |   |   |   |   |   |   |   |   |
| Investments in listed companies                   |       | —         |       | — |   | — |   | 63,918 |   | 8,629 |   | 8,684 |   |
| Investments in unlisted companies                 |       | —         |       | — |   | — |   | 2,423,878 |   | 2,423,878 |   | 2,432,765 |   |
|                                              |       |           |       |   |   |   |   |   |   |   |   |   |   |
| **Total**                                         | ** ** | **—**     | ** ** | **—** | ** ** | **—** | ** ** | **2,487,796** | ** ** | **2,432,507** | ** ** | **2,441,449** | ** ** |

 

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**11.  INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USINGTHE EQUITY METHOD AND JOINTLY-CONTROLLED COMPANIES**

 

11.1 Equity method accounted investment inassociates

 

a)       The followingtable details the Group’s principal investments accounted for using the equitymethod and their movements during 2009 and 2008:

 
| **Movements in investments in associates** | ** ** | **Country of origin** | ** ** | **Functional  Currency** | ** ** | **Ownership  interest** | ** ** | **Balance as of  12/31/08** | ** ** | **Additions** | ** ** | **Share of profit  (loss)** | ** ** | **Dividends********declared** | ** ** | **Foreign  Currency  Translation** | ** ** | **Other comprehensive  income Increase  (Decrease)** | ** ** | **Balance as of  12/31/2009** | ** ** |
|----------------------------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-------------------------|------------|---------------------------------------|------------|---------------|------------|---------------------------------------|------------|-------------------------------|------------|------------------------------------|------------|----------------------------------------------------------------|------------|-----------------------------------------|------------|
|                                                           |       |                            |       |                     |       |                    |       |                                  |       |          |       |                                  |       |                          |       |                               |       |                                                           |       |                                    |       |
| Electrogas  S.A.(1)                                            |       | Chile                           |       | US Dollar                |       | 0.0213                  | %          | 4,275                                 |       | —        |       | 1,632                                 |       | (1,291                        | )          | (841                               | )          | —                                                         |       | 3,775                                   |       |
| Inversiones Electrogas                                         |       | Chile                           |       | Chilean Peso             |       | 42.5000                 | %          | 9,065,667                             |       | —        |       | 2,871,709                             |       | (3,202,586                    | )          | (915,853                           | )          | —                                                         |       | 7,818,937                               |       |
| Endesa Brasil S.A.                                             |       | Brazil                          |       | Brazilian Real           |       | 40.4485                 | %          | 497,656,990                           |       | —        |       | 96,139,414                            |       | (74,292,028                   | )          | 33,574,679                         |       | (1,174,592                                                     | )          | 551,904,463                             |       |
| GNL Quintero S.A.                                              |       | Chile                           |       | US Dollar                |       | 20.0000                 | %          | 24,126,683                            |       | —        |       | (825,889                              | )          | —                        |       | (4,508,852                         | )          | (8,664,477                                                     | )          | 10,127,465                              |       |
| Endesa CEMSA S.A.                                              |       | Argentina                       |       | Argentinean Peso         |       | 45.0000                 | %          | 4,592,900                             |       | —        |       | 186,494                               |       | —                        |       | (1,481,614                         | )          | —                                                         |       | 3,297,780                               |       |
| Distrilec                                                      |       | Argentina                       |       | Argentinean Peso         |       | 0.8900                  | %          | 1,256,515                             |       | —        |       | 84,476                                |       | (33,669                       | )          | (362,451                           | )          | —                                                         |       | 944,871                                 |       |
|                                                           |       |                            |       |                     |       |                    |       |                                  |       |          |       |                                  |       |                          |       |                               |       |                                                           |       |                                    |       |
|                                                           | ** ** |                            | ** ** |                     | ** ** | **Totals**              | ** ** | **536,703,030**                       | ** ** | **—**    | ** ** | **98,457,836**                        | ** ** | **(77,529,574**               | **)**      | **26,305,068**                     | ** ** | **(9,839,069**                                                 | **)**      | **574,097,291**                         |       |

 
| **Movements in investments in associates** | ** ** | **Country of origin** | ** ** | **Functional  Currency** | ** ** | **Ownership  interest** | ** ** | **Balance as of  1/1/08** | ** ** | **Additions**  | ** ** | **Share of Profit  (Loss)** | ** ** | **Dividends********declared** | ** ** | **Foreign  Currency  Translation** | ** ** | **Other comprehensive  income Increase  (Decrease)** | ** ** | **Balance as of  12/31/2008** | ** ** |
|----------------------------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-------------------------|------------|-------------------------------------|------------|----------------|------------|---------------------------------------|------------|-------------------------------|------------|------------------------------------|------------|----------------------------------------------------------------|------------|-----------------------------------------|------------|
|                                                           |       |                            |       |                     |       |                    |       |                                |       |           |       |                                  |       |                          |       |                               |       |                                                           |       |                                    |       |
| Electrogas  S.A.(1)                                            |       | Chile                           |       | US Dollar                |       | 0.0213                  | %          | 3,406                               |       | —         |       | 1,620                                 |       | (1,022                        | )          | 271                                |       | —                                                         |       | 4,275                                   |       |
| Inversiones Electrogas                                         |       | Chile                           |       | Chilean Peso             |       | 42.5000                 | %          | 7,335,639                           |       | —         |       | 3,184,266                             |       | (1,263,179                    | )          | (191,059                           | )          | —                                                         |       | 9,065,667                               |       |
| Endesa Brasil S.A.                                             |       | Brazil                          |       | Brazilian Real           |       | 40.4485                 | %          | 467,658,560                         |       | —         |       | 78,733,060                            |       | (29,213,215                   | )          | (15,086,214                        | )          | (4,435,201                                                     | )          | 497,656,990                             |       |
| GNL Quintero S.A.                                              |       | Chile                           |       | US Dollar                |       | 20.0000                 | %          | 1,590,042                           |       | 17,778,818     |       | (618,726                              | )          | —                        |       | 404,940                            |       | 4,971,609                                                      |       | 24,126,683                              |       |
| Endesa CEMSA S.A.                                              |       | Argentina                       |       | Argentinean Peso         |       | 45.0000                 | %          | 3,488,806                           |       | —         |       | 692,884                               |       | —                        |       | 411,210                            |       | —                                                         |       | 4,592,900                               |       |
| Distrilec                                                      |       | Argentina                       |       | Argentinean Peso         |       | 0.8900                  | %          | 942,687                             |       | —         |       | 138,486                               |       | —                        |       | 175,342                            |       | —                                                         |       | 1,256,515                               |       |
|                                                           |       |                            |       |                     |       | ** **              | ** ** | ** **                          | ** ** | ** **     | ** ** | ** **                            | ** ** | ** **                    | ** ** | ** **                         | ** ** | ** **                                                     | ** ** | ** **                              |       |
|                                                           |       |                            |       |                     |       | **Totals**              | ** ** | **481,019,140**                     | ** ** | **17,778,818** | ** ** | **82,131,590**                        | ** ** | **(30,477,416**               | **)**      | **(14,285,510**                    | **)**      | **536,408**                                                    | ** ** | **536,703,030**                         |       |

 

----

(1) The Group exercises significant influence indirectly through the 42.5%ownership interest held in Inversiones Electrogas S.A. which is the immediateparent company of Electrogas S.A. holding a 99.95% of ownership interest.

 

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b)       The mainmovements in investments in associates during 2009 and 2008 are detailed below:

 

2009

 

Duringyear 2009, there were no significant changes in the Company’s ownership of itsinvestments in associates.

 

2008

 

1)     On July 15, 2008,the Company subscribed capital of US$35,680,377 in GNL Quintero S.A.,equivalent to ThCh$ 17,778,818, by capitalizing loans, thus maintaining its 20%interest.

 

2)     On August 20, 2008,the Company contributed capital of US$1,000,000 to GNL Chile S.A., equivalentto ThCh$528,191, thus maintaining its 33.33% interest.

 

c)       Additionalfinancial information about the investments in associates

 

· Significant influenceinvestments.

 

Thefollowing tables detail financial information as of December 31, 2009 and December 31,2008 from the financial statements of the companies in which Endesa Chileexercises significant influence:

 
| ** **                     | ** ** | **December 31, 2009** | ** ** |
|--------------------------------|------------|---------------------------------|------------|
| **Significant influence** | ** ** | **Ownership  interest**         | ** ** | **Non-Current  assets** | ** ** | **Current assets** | ** ** | **Non-Current  liabilities** | ** ** | **Current  liabilities** | ** ** | **Revenue** | ** ** | **Expenses** | ** ** | **Profit (Loss)** | ** ** |
| **investments**                | ** ** | **%**                           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Endesa  CEMSA S.A.             |       | 45.00                           | %          | 168,678 |   | 54,486,842 |   | — |   | (47,327,120 | ) | 19,339,396 |   | (18,924,965 | ) | 414,431 |   |
| Inversiones  Electrogas S.A.   |       | 42.50                           | %          | 18,471,729 |   | — |   | — |   | (74,230 | ) | 6,940,967 |   | (184,004 | ) | 6,756,963 |   |
| Endesa  Brasil                 |       | 40.45                           | %          | 2,406,346,709 |   | 893,078,804 |   | (1,141,081,701 | ) | (577,155,133 | ) | 1,711,404,371 |   | (1,269,421,973 | ) | 441,982,398 |   |
| Distrilec                      |       | 0.89                            | %          | 106,162,474 |   | 1,318,727 |   | — |   | (1,315,925 | ) | 9,520,678 |   | (28,947 | ) | 9,491,731 |   |
| GNL  Quintero S.A.             |       | 20.00                           | %          | 562,965,213 |   | 28,098,229 |   | (334,839,224 | ) | (205,586,895 | ) | 12,893,075 |   | (17,022,519 | ) | (4,129,444 | ) |
| Electrogas  S.A. (1)      |       | 0.02                            | %          | 5,606,476 |   | 41,393,766 |   | (8,210,466 | ) | (21,027,132 | ) | 13,510,320 |   | (5,830,170 | ) | 7,680,150 |   |

 
| ** **                     | ** ** | **December 31, 2008** | ** ** |
|--------------------------------|------------|---------------------------------|------------|
| **Significant influence** | ** ** | **Ownership  interest**         | ** ** | **Long-term  assets** | ** ** | **Current assets** | ** ** | **Long-term  liabilities** | ** ** | **Current  liabilities** | ** ** | **Revenue** | ** ** | **Expenses** | ** ** | **Profit  (Loss)** | ** ** |
| **investments**                | ** ** | **%**                           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Endesa  CEMSA S.A.             |       | 45.00                           | %          | 548,162 |   | 46,807,941 |   | — |   | (37,149,659 | ) | 5,108,385 |   | (3,568,643 | ) | 1,539,742 |   |
| Inversiones  Electrogas S.A.   |       | 42.50                           | %          | 21,393,734 |   | — |   | — |   | (62,753 | ) | 7,618,787 |   | (126,396 | ) | 7,492,391 |   |
| Endesa  Brasil                 |       | 40.45                           | %          | 2,187,028,374 |   | 841,131,699 |   | (1,051,650,796 | ) | (569,657,502 | ) | 1,618,797,054 |   | (1,424,146,899 | ) | 194,650,155 |   |
| Distrilec                      |       | 0.89                            | %          | 141,241,547 |   | 2,212 |   | — |   | (62,299 | ) | 15,560,224 |   | — |   | 15,560,224 |   |
| GNL  Quintero S.A.             |       | 20.00                           | %          | 586,921,507 |   | 48,609,505 |   | (489,922,026 | ) | (24,975,571 | ) | — |   | (3,093,630 | ) | (3,093,630 | ) |
| Electrogas  S.A. (1)      |       | 0.02                            | %          | 47,753,926 |   | 4,189,072 |   | (25,977,552 | ) | (5,847,799 | ) | 14,006,127 |   | (6,382,598 | ) | 7,623,529 |   |

 

----

(1)    The significant influence is carried out through a 42.5% indirect interest thatthe Group owns on Inversiones Electrogas S.A., a 99.95% owner of ElectrogasS.A.

 

Theassociates shares are not listed or sold through public exchanges.

 

Anassociate with an accumulated deficit at December 31, 2009, 2008 and 2007was GNL Chile S.A:, and accordingly, a provision was recorded forThCh$(2,552,867), ThCh$ (2,244,759) and ThCh$ (1,709,028), respectively.

 

Theaccompanying Appendix 3 to these notes to the consolidated financial statementsfurther describes the business activities of the associates, as well as theownership percentages.

 

F-46

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d)      Restrictions on the disposal of associates funds

 

Endesa Brasil has to complywith some financial covenants which require maintaining a minimum level ofequity that restrict the ability to transfer assets.  The Company’s shareof restricted net assets at December 31, 2009 pertaining to Endesa Brasilamounts to ThCh$ 194,026,123.  It is important to consider that thisrestriction has never prevented Endesa Brasil from paying a dividend.

 

11.2 Jointly-controlled companies

 

Thefollowing tables detail financial information as of December 31, 2009 and December 31,2008 from the financial statements of the jointly-controlled companies in whichEndesa Chile participates that have been used in the consolidation process:

 
| ** **            | ** ** | **December 31, 2009** | ** ** |
|-----------------------|------------|---------------------------------|------------|
| ** **            | ** ** | **Ownership  interest**         | ** ** | **Non-  Current  assets** | ** ** | **Current  assets** | ** ** | **Non-Current  liabilities** | ** ** | **Current  liabilities** | ** ** | **Revenue** | ** ** | **Expenses** | ** ** | **Profit (Loss)** | ** ** |
| ** **            | ** ** | **%**                           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Hidroaysén  S.A. |       | 51.00                           | %          | 86,908,393 |   | 8,111,503 |   | — |   | (37,110,402 | ) | — |   | (5,994,070 | ) | (5,994,070 | ) |
| Transquillota  Ltda.  |       | 50.00                           | %          | 10,198,482 |   | 1,288,870 |   | (876,728 | ) | (1,480,132 | ) | 2,327,365 |   | (1,207,963 | ) | 1,119,402 |   |
| GasAtacama  S.A.      |       | 50.00                           | %          | 316,349,774 |   | 114,435,232 |   | (42,467,600 | ) | (187,877,000 | ) | 343,304,368 |   | (319,108,438 | ) | 24,195,930 |   |

 
| ** **            | ** ** | **December 31, 2008** | ** ** |
|-----------------------|------------|---------------------------------|------------|
| ** **            | ** ** | **Ownership  interest**         | ** ** | **Non-  Current  assets** | ** ** | **Current  assets** | ** ** | **Non-Current  liabilities** | ** ** | **Current  liabilities** | ** ** | **Revenue** | ** ** | **Expenses** | ** ** | **Profit (Loss)** | ** ** |
| ** **            | ** ** | **%**                           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Hidroaysén  S.A. |       | 51.00                           | %          | 61,671,245 |   | 8,981,534 |   | (165,087 | ) | (6,584,072 | ) | — |   | (2,860,539 | ) | (2,860,539 | ) |
| Transquillota  Ltda.  |       | 50.00                           | %          | 11,158,610 |   | 2,195,498 |   | (1,076,759 | ) | (4,267,259 | ) | 1,391,918 |   | (654,610 | ) | 737,308 |   |
| GasAtacama  S.A.      |       | 50.00                           | %          | 397,241,564 |   | 140,024,772 |   | (233,117,138 | ) | (83,824,330 | ) | 553,663,581 |   | (540,477,046 | ) | 13,186,535 |   |

 

F-47

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**12.   INTANGIBLE ASSETS**

 

12.1 Intangible Assets

 

Thefollowing tables detail the balances within this account as of December 31,2009 and December 31, 2008:

 
| ** **                                      | ** ** | **12-31-2009**  | ** ** | **12-31-2008** | ** ** |
|-------------------------------------------------|------------|-----------------|------------|----------------|------------|
| **Intangible Assets, Net**            | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** |
|                                            |       |            |       |           |       |
| **Intangible Assets, Net**                      | ** ** | **148,183,957** | ** ** | **76,954,412** | ** ** |
| Goodwill                                        |       | 105,545,382     |       | 38,588,410     |       |
| **Identifiable Intangible Assets,  Net**        | ** ** | **42,638,575**  | ** ** | **38,366,002** | ** ** |
| Development costs                               |       | 12,330          |       | 17,123         |       |
| Easements                                       |       | 2,695,227       |       | 1,420,607      |       |
| Water Rights                                    |       | 12,240,545      |       | 10,452,421     |       |
| Concessions                                     |       | 16,641,396      |       | 18,751,630     |       |
| Patents, Registered Trademarks and other Rights |       | 6,837,850       |       | 5,310,438      |       |
| Computer Software                               |       | 3,549,640       |       | 1,546,953      |       |
| Other Identifiable Intangible Assets            |       | 661,587         |       | 866,830        |       |

 
| ** **                                      | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** |
|-------------------------------------------------|------------|-----------------|------------|-----------------|------------|
| **Intangible Assets, Gross**          | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
|                                            |       |            |       |            |       |
| **Intangible Assets, Gross**                    | ** ** | **186,419,729** | ** ** | **114,143,569** | ** ** |
| Goodwill                                        |       | 105,545,382     |       | 38,588,410      |       |
| **Identifiable Intangible Assets,  Gross**      | ** ** | **80,874,347**  | ** ** | **75,555,159**  | ** ** |
| Development Costs                               |       | 25,522          |       | 32,031          |       |
| Easements                                       |       | 3,256,459       |       | 1,991,434       |       |
| Water Rights                                    |       | 15,180,923      |       | 13,444,132      |       |
| Concessions                                     |       | 39,246,752      |       | 39,246,752      |       |
| Patents, Registered Trademarks and other Rights |       | 8,535,504       |       | 6,803,664       |       |
| Computer Software                               |       | 11,204,003      |       | 10,415,650      |       |
| Other Identifiable Intangible Assets            |       | 3,425,184       |       | 3,621,496       |       |

 
| ** **                                                 | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** |
|------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|
| **Accumulated Amortization and Impairment** | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
|                                                       |       |            |       |            |       |
| **Total Accumulated Amortization  and Impairment**         | ** ** | **(38,235,772** | **)**      | **(37,189,157** | **)**      |
| Development Costs                                          |       | (13,192         | )          | (14,908         | )          |
| Easements                                                  |       | (561,232        | )          | (570,827        | )          |
| Water Rights                                               |       | (2,940,378      | )          | (2,991,711      | )          |
| Concessions                                                |       | (22,605,356     | )          | (20,495,122     | )          |
| Patents, Registered Trademarks and other Rights            |       | (1,697,654      | )          | (1,493,226      | )          |
| Computer Software                                          |       | (7,654,363      | )          | (8,868,697      | )          |
| Other Identifiable Intangible Assets                       |       | (2,763,597      | )          | (2,754,666      | )          |

 

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Intangibleassets have experienced the following movements during the 2009 and 2008periods:

 

2009

 
| ** **                                                          | ** ** | **Development  costs, net** | ** ** | **Easements,  net** | ** ** | **Water  rights, net** | ** ** | **Concessions,  net** | ** ** | **Patents,  Registered  Trademarks  and other  Rights, net** | ** ** | **Computer  software, net** | ** ** | **Other  Identifiable  Intangible  Assets, net** | ** ** | **Intangible  Assets, net** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------|------------|---------------------|------------|-----------------------------|------------|-----------------------|------------|------------------------------------------------------------------------|------------|----------------------------------|------------|-------------------------------------------------------|------------|----------------------------------|------------|
| **Movements in Intangible Assets**                   | ** ** | **ThCh$**                        | ** ** | **ThCh$**           | ** ** | **ThCh$**                   | ** ** | **ThCh$**             | ** ** | **ThCh$**                                                              | ** ** | **ThCh$**                        | ** ** | **ThCh$**                                             | ** ** | **ThCh$**                        | ** ** |
|                                                                |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  |       |                             |       |
| **Beginning Balance as of 01/01/2009**                              |       | 17,123                           |       | 1,420,607           |       | 10,452,421                  |       | 18,751,630            |       | 5,310,438                                                              |       | 1,546,953                        |       | 866,830                                               | ** ** | **38,366,002**                   | ** ** |
| **Movements in identifiable intangible assets**                     |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  |       |                             |       |
| Additions                                                           |       | —                           |       | 922,067             |       | 3,647,682                   |       | —                |       | 411,575                                                                |       | 104,405                          |       | 125,972                                               | ** ** | **1,564,019**                    | ** ** |
| Retirements,  sales, disposition                                    |       | —                           |       | —              |       | —                      |       | —                |       | (17,512                                                                | )          | —                           |       | —                                                | ** ** | **(17,512**                      | **)**      |
| Amortization                                                        |       | (1,333                           | )          | (557                | )          | (346,002                    | )          | (2,110,244            | )          | (226,916                                                               | )          | (448,816                         | )          | (235,467                                              | )          | **(3,369,335**                   | **)**      |
| Exchange  differences increase (decrease)                           |       | (3,461                           | )          | (96                 | )          | (1,513,556                  | )          | —                |       | (907,664                                                               | )          | (13,909                          | )          | (66,084                                               | )          | **(2,504,770**                   | **)**      |
| Other  increases (decreases)                                        |       | 1                                |       | 353,206             |       | —                      |       | 10                    |       | 2,267,929                                                              |       | 2,361,007                        |       | (29,664                                               | )          | **8,600,171**                    | ** ** |
| **Total movements in identifiable intangible assets**               | ** ** | **(4,793**                       | **)**      | **1,274,620**       | ** ** | **1,788,124**               | ** ** | **(2,110,234**        | **)**      | **1,527,412**                                                          | ** ** | **2,002,687**                    | ** ** | **(205,243**                                          | **)**      | **4,272,573**                    | ** ** |
|                                                                |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  |       |                             |       |
| **Ending Balance Identifiable Intangible Assets as of  12/31/2009** | ** ** | **12,330**                       | ** ** | **2,695,227**       | ** ** | **12,240,545**              | ** ** | **16,641,396**        | ** ** | **6,837,850**                                                          | ** ** | **3,549,640**                    | ** ** | **661,587**                                           | ** ** | **42,638,575**                   | ** ** |
|                                                                |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  |       |                             |       |
| **Ending Balance Goodwill (Note 12.2)**                             |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  | ** ** | **105,545,382**                  | ** ** |
|                                                                |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  |       |                             |       |
| **Ending Balance Identifiable Intangible Assets as of  12/31/2009** |       |                             |       |                |       |                        |       |                  |       |                                                                   |       |                             |       |                                                  | ** ** | **148,183,957**                  | ** ** |

 

2008

 
| ** **                                                          | ** ** | **Development  costs** | ** ** | **Easements** | ** ** | **Water  rights** | ** ** | **Concessions** | ** ** | **Patents,  Registered  Trademarks  and other  Rights** | ** ** | **Computer  software** | ** ** | **Other  Identifiable  Intangible  Assets, Net** | ** ** | **Intangible  Assets, Net** | ** ** |
|---------------------------------------------------------------------|------------|------------------------|------------|---------------|------------|-------------------|------------|-----------------|------------|--------------------------------------------------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------|------------|
| **Movements in intangible assets**                   | ** ** | **ThCh$**              | ** ** | **ThCh$**     | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$**                                                    | ** ** | **ThCh$**              | ** ** | **ThCh$**                                             | ** ** | **ThCh$**                        | ** ** |
|                                                                |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  |       |                             |       |
| **Beginning Balance as of 01/01/2008**                              |       | 14,656                 |       | 922,188       |       | 10,482,238        |       | 18,753,180      |       | 5,395,130                                                    |       | 4,661,120              |       | 696,195                                               | ** ** | **40,924,707**                   | ** ** |
| **Movements**                                                       |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  |       |                             |       |
| Additions                                                           |       | —                 |       | —        |       | 1,360,102         |       | —          |       | 480,782                                                      |       | 473,010                |       | 80,000                                                | ** ** | **2,393,894**                    | ** ** |
| Amortization                                                        |       | (1,649                 | )          | —        |       | (699,006          | )          | (2,779,564      | )          | (259,476                                                     | )          | (223,513               | )          | (10,132                                               | )          | **(3,973,340**                   | **)**      |
| Exchange  differences increase (decrease)                           |       | 819                    |       | —        |       | —            |       | —          |       | 6,895                                                        |       | 61,912                 |       | 3,724                                                 | ** ** | **73,350**                       | ** ** |
| Other  increases (decreases)                                        |       | 3,297                  |       | 498,419       |       | (690,913          | )          | 2,778,014       |       | (312,893                                                     | )          | (3,425,576             | )          | 97,043                                                | ** ** | **(1,052,609**                   | **)**      |
| **Total movements**                                                 | ** ** | **2,467**              | ** ** | **498,419**   | ** ** | **(29,817**       | **)**      | **18,751,630**  | ** ** | **(84,692**                                                  | **)**      | **(3,114,167**         | **)**      | **169,085**                                           | ** ** | **(2,558,705**                   | **)**      |
|                                                                |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  |       |                             |       |
| **Ending Balance identifiable intangible assets as of  12/31/2008** | ** ** | **17,123**             | ** ** | **1,420,607** | ** ** | **10,452,421**    | ** ** | **18,751,630**  | ** ** | **5,310,438**                                                | ** ** | **1,546,953**          | ** ** | **866,830**                                           | ** ** | **38,366,002**                   | ** ** |
|                                                                |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  |       |                             |       |
| **Ending Balance Goodwill (Note 12.2)**                             |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  | ** ** | **38,588,410**                   | ** ** |
|                                                                |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  |       |                             |       |
| **Ending Balance Identifiable Intangible Assets as of  12/31/2008** |       |                   |       |          |       |              |       |            |       |                                                         |       |                   |       |                                                  | ** ** | **76,954,412**                   | ** ** |

 

Basedon estimates and projections available to the Group’s Management, projectionsof cash flows attributable to intangible assets allow the net value of theseassets recorded as of December 31, 2009 to be recovered.  No amountshave been committed to acquire intangible assets.

 

F-49

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Table of Contents

 

**12.2****Goodwill**

 

Thefollowing table details goodwill that has been allocated to the diverse CashGenerating Units or groups of Cash Generating Units and its movements during2009 and 2008:

 
| ** **                               | ** ** | **Beginning Balance  01/01/2009** | ** ** | **Additions**  | ** ** | **Foreign Currency  Translation** | ** ** | **Final Balance  12/31/2009** | ** ** |
|------------------------------------------|------------|----------------------------------------|------------|----------------|------------|----------------------------------------|------------|------------------------------------|------------|
| **Company**                              | ** ** | **ThCh$**                              | ** ** | **ThCh$**      | ** ** | **ThCh$**                              | ** ** | **ThCh$**                          | ** ** |
| Pangue S.A.                              |       | 3,139,337                              |       | —         |       | —                                 |       | 3,139,337                          |       |
| Endesa Costanera S.A.                    |       | 4,556,780                              |       | —         |       | (1,266,688                             | )          | 3,290,092                          |       |
| Southern Cone Power Argentina S.A.       |       | 3,779,030                              |       | —         |       | (1,045,539                             | )          | 2,733,491                          |       |
| Hidroeléctrica El  Chocón S.A. |       | 19,586,941                             |       | —         |       | (5,410,532                             | )          | 14,176,409                         |       |
| San Isidro S.A.                          |       | 1,516,768                              |       | —         |       | —                                 |       | 1,516,768                          |       |
| Edegel S.A.    (1)        |       | 553,603                                |       | 81,370,212     |       | (6,003,555                             | )          | 75,920,260                         |       |
| Emgesa S.A.E.S.P.                        |       | 5,437,195                              |       | —         |       | (681,862                               | )          | 4,755,333                          |       |
| GasAtacama S.A.                          |       | 18,756                                 |       | —         |       | (5,064                                 | )          | 13,692                             |       |
|                                     |       |                                   |       |           |       |                                   |       |                               |       |
| **Total**                                | ** ** | **38,588,410**                         | ** ** | **81,370,212** | ** ** | **(14,413,240**                        | **)**      | **105,545,382**                    | ** ** |

 
| ** **                               | ** ** | **Beginning Balance  01/01/2008** | ** ** | **Additions** | ** ** | **Foreign Currency  Translation** | ** ** | **Final Balance  12/31/2008** | ** ** |
|------------------------------------------|------------|----------------------------------------|------------|---------------|------------|----------------------------------------|------------|------------------------------------|------------|
| **Company**                              | ** ** | **ThCh$**                              | ** ** | **ThCh$**     | ** ** | **ThCh$**                              | ** ** | **ThCh$**                          | ** ** |
| Pangue S.A.                              |       | 3,139,337                              |       | —        |       | —                                 |       | 3,139,337                          |       |
| Endesa Costanera S.A.                    |       | 3,684,244                              |       | —        |       | 872,536                                |       | 4,556,780                          |       |
| Southern Cone Power Argentina S.A.       |       | 3,232,176                              |       | —        |       | 546,854                                |       | 3,779,030                          |       |
| Hidroeléctrica El  Chocón S.A. |       | 16,492,236                             |       | —        |       | 3,094,705                              |       | 19,586,941                         |       |
| San Isidro S.A.                          |       | 1,516,768                              |       | —        |       | —                                 |       | 1,516,768                          |       |
| Edegel S.A.                              |       | 453,128                                |       | —        |       | 100,475                                |       | 553,603                            |       |
| Emgesa S.A.E.S.P.                        |       | 4,727,060                              |       | —        |       | 710,135                                |       | 5,437,195                          |       |
| GasAtacama S.A.                          |       | 17,155                                 |       | —        |       | 1,601                                  |       | 18,756                             |       |
|                                     |       |                                   |       |          |       |                                   |       |                               |       |
| **Total**                                | ** ** | **33,262,104**                         | ** ** | **—**    | ** ** | **5,326,306**                          | ** ** | **38,588,410**                     | ** ** |

 

Basedon estimates and projections available to Endesa Chile’s Management,projections of cash flows attributable to Cash Generating Units or groups ofCash Generating Units to which goodwill has been allocated permit their valueto be recovered. (See Note 3 c).

 

----

(1)   The additionin Edegel originated from an acquisition which took place in October 2009,as further described in note 22.7. Previously, Edegel has been already beenconsolidated.

 

F-50

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Table of Contents

 

**13.   PROPERTY, PLANT AND EQUIPMENT**

 

**a)      **This account is detailed as follows:

 
| ** **                                                                      | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| **Classes of Property, Plant and Equipment, Net** | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** |
| ** **                                                                      | ** ** | ** **        | ** ** | ** **        | ** ** |
| **Property, Plant and Equipment,  Net**                                         | ** ** | **4,326,989,360** | ** ** | **4,540,894,618** | ** ** |
| Construction in Progress                                                        |       | 536,448,556       |       | 462,213,152       |       |
| Land                                                                            |       | 60,524,427        |       | 56,987,967        |       |
| Buildings                                                                       |       | 469,701,385       |       | 557,198,261       |       |
| Plant and Equipment                                                             |       | 3,204,840,870     |       | 3,397,049,290     |       |
| IT Equipment                                                                    |       | 2,644,074         |       | 3,606,127         |       |
| Fixtures and Fittings                                                           |       | 6,763,919         |       | 7,853,672         |       |
| Motor Vehicles                                                                  |       | 813,545           |       | 1,212,948         |       |
| Other Property, Plant and Equipment                                             |       | 45,252,584        |       | 54,773,201        |       |

 
| ** **                                                                        | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** |
|-----------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| **Classes of Property, Plant and Equipment, Gross** | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** |
| ** **                                                                        | ** ** | ** **        | ** ** | ** **        | ** ** |
| **Property, Plant and Equipment,  Gross**                                         | ** ** | **7,180,903,160** | ** ** | **7,369,485,476** | ** ** |
| Construction in Progress                                                          |       | 536,448,556       |       | 462,213,152       |       |
| Land                                                                              |       | 60,524,427        |       | 56,987,967        |       |
| Buildings                                                                         |       | 636,044,699       |       | 740,938,679       |       |
| Plant and Equipment                                                               |       | 5,856,864,944     |       | 6,005,459,847     |       |
| IT Equipment                                                                      |       | 12,121,154        |       | 13,250,504        |       |
| Fixtures and Fittings                                                             |       | 18,887,548        |       | 20,976,543        |       |
| Motor Vehicles                                                                    |       | 3,370,794         |       | 4,015,203         |       |
| Other Property, Plant and Equipment                                               |       | 56,641,038        |       | 65,643,581        |       |

 
| **Classes of Accumulated Depreciation and Impairment, Property, Plant and** | ** ** | **12-31-2009**     | ** ** | **12-31-2008**     | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| **Equipment**                                                                                                       | ** ** | **ThCh$**          | ** ** | **ThCh$**          | ** ** |
| ** **                                                                                                          | ** ** | ** **         | ** ** | ** **         | ** ** |
| **Total Accumulated Depreciation  and Impairment, Property, Plant and Equipment**                                   | ** ** | **(2,853,913,800** | **)**      | **(2,828,590,858** | **)**      |
| Buildings                                                                                                           |       | (166,343,314       | )          | (183,740,418       | )          |
| Plant and Equipment                                                                                                 |       | (2,652,024,074     | )          | (2,608,410,557     | )          |
| IT Equipment                                                                                                        |       | (9,477,080         | )          | (9,644,377         | )          |
| Fixtures and Fittings                                                                                               |       | (12,123,629        | )          | (13,122,871        | )          |
| Motor Vehicles                                                                                                      |       | (2,557,249         | )          | (2,802,255         | )          |
| Other Property, Plant and Equipment                                                                                 |       | (11,388,454        | )          | (10,870,380        | )          |

 

F-51

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**b)      **Property, Plant and Equipment during 2009 and 2008 is detailed asfollows:

 
| **Movement 2009**                            | ** **                             | **Construction in  Progress** | ** **     | **Land**       | ** **    | **Buildings, Net** | ** **      | **Plant and  Equipment, Net** | ** **       | **IT Equipment,  Net** | ** **   | **Fixtures and  Fittings, Net** | ** **     | **Motor  Vehicles,  Net** | ** **   | **Other Property,  Plant and  Equipment, Net** | ** **     | **Property, Plant  and Equipment,  Net** | ** **       |
|---------------------------------------------------|----------------------------------------|------------------------------------|----------------|----------------|---------------|-------------------------|-----------------|-----------------------------------------|------------------|-----------------------------|--------------|-------------------------------------------|----------------|---------------------------|--------------|---------------------------------------------------------------|----------------|----------------------------------------------------|------------------|
| **Beginning balance as of  January 1, 2009** |                                   | 462,213,152                        |           | 56,987,967     |          | 557,198,261             |            | 3,397,049,290                           |             | 3,606,127                   |         | 7,853,672                                 |           | 1,212,948                 |         | 54,773,201                                                    | ** **     | **4,540,894,618**                                  | ** **       |
| Movements                                         | Additions                              |                               | 372,901,552    |           | 113,678       |                    | —          |                                    | 4,456,668        |                        | 471,729      |                                      | 453,928        |                      | 140,131      |                                                          | 10,018,271     | ** **                                         | **388,555,957**  | ** ** |
|                                              | Retirements                            |                               |           |           | (4,639        | )                       | —          |                                    | —           |                        | (9,967       | )                                         | —         |                      | (54,916      | )                                                             | —         | ** **                                         | **(69,522**      | **)** |
|                                              | Depreciation  expense                  |                               | —         |           | —        |                    | (14,471,283     | )                                       | (174,260,775     | )                           | (1,166,463   | )                                         | (871,015       | )                         | (328,701     | )                                                             | (1,674,503     | )                                                  | **(192,772,740** | **)** |
|                                              | Impairment losses recorded on earnings |                               | —         |           | —        |                    | —          |                                    | (43,999,600      | )                           | —       |                                      | —         |                      | —       |                                                          | —         | ** **                                         | **(43,999,600**  | **)** |
|                                              | Foreign  currency translation          |                               | (8,328,806     | )              | (3,731,792    | )                       | (82,185,495     | )                                       | (261,704,168     | )                           | (281,061     | )                                         | (760,511       | )                         | (137,722     | )                                                             | (6,969,535     | )                                                  | **(364,099,090** | **)** |
|                                              | Other  increases (decreases)           |                               | (290,337,342   | )              | 7,159,213     |                    | 9,159,902       |                                    | 283,299,455      |                        | 23,709       |                                      | 87,845         |                      | (18,195      | )                                                             | (10,894,850    | )                                                  | **(1,520,263**   | **)** |
|                                              | Total  movements                       | ** **                         | **74,235,404** | ** **     | **3,536,460** | ** **              | **(87,496,876** | **)**                                   | **(192,208,420** | **)**                       | **(962,053** | **)**                                     | **(1,089,753** | **)**                     | **(399,403** | **)**                                                         | **(9,520,617** | **)**                                              | **(213,905,258** | **)** |
| **Ending balance as of  December 31, 2009**  | ** **                             | **536,448,556**                    | ** **     | **60,524,427** | ** **    | **469,701,385**         | ** **      | **3,204,840,870**                       | ** **       | **2,644,074**               | ** **   | **6,763,919**                             | ** **     | **813,545**               | ** **   | **45,252,584**                                                | ** **     | **4,326,989,360**                                  | ** **       |

 
| **Movement 2008**                            | ** **                    | **Construction in  Progress** | ** **      | **Land**       | ** **    | **Buildings, Net** | ** **     | **Plant and  Equipment, Net** | ** **      | **IT Equipment,  Net** | ** **  | **Fixtures and  Fittings, Net** | ** **     | **Motor  Vehicles,  Net** | ** ** | **Other Property,  Plant and  Equipment, Net** | ** **    | **Property, Plant  and Equipment,  Net** | ** **       |
|---------------------------------------------------|-------------------------------|------------------------------------|-----------------|----------------|---------------|-------------------------|----------------|-----------------------------------------|-----------------|-----------------------------|-------------|-------------------------------------------|----------------|---------------------------|------------|---------------------------------------------------------------|---------------|----------------------------------------------------|------------------|
| **Beginning Balance as of January 1,  2008** |                          | 274,941,230                        |            | 52,164,508     |          | 477,371,309             |           | 3,187,281,527                           |            | 3,636,033                   |        | 12,964,017                                |           | 1,191,607                 |       | 48,974,093                                                    | ** **    | **4,058,524,324**                                  | ** **       |
| Movements                                         | Additions                     |                               | 286,791,216     |           | 696,487       |                    | 357,008        |                                    | 41,916,856      |                        | 446,865     |                                      | 4,790,143      |                      | 146,428    |                                                          | 9,530,142     | ** **                                         | **344,675,145**  | ** ** |
|                                              | Disposals                     |                               | (5,521,137      | )              | —        |                    | —         |                                    | (128,144        | )                           | —      |                                      | —         |                      | (9,153     | )                                                             | (12,349       | )                                                  | **(5,670,783**   | **)** |
|                                              | Retirements                   |                               | —          |           | (25,839       | )                       | —         |                                    | (462,827        | )                           | (10,970     | )                                         | (72,298        | )                         | (124,671   | )                                                             | —        | ** **                                         | **(696,605**     | **)** |
|                                              | Depreciation  expense         |                               | —          |           |          |                    | (13,425,174    | )                                       | (165,156,698    | )                           | (1,636,317  | )                                         | (677,560       | )                         | (362,388   | )                                                             | (1,373,098    | )                                                  | **(182,631,235** | **)** |
|                                              | Foreign  currency translation |                               | 13,490,691      |           | 3,385,722     |                    | 92,745,934     |                                    | 279,845,504     |                        | 909,146     |                                      | 751,092        |                      | 312,385    |                                                          | 9,142,866     | ** **                                         | **400,583,340**  | ** ** |
|                                              | Other  increases (decreases)  |                               | (107,488,848    | )              | 767,089       |                    | 149,184        |                                    | 53,753,072      |                        | 261,370     |                                      | (9,901,722     | )                         | 58,740     |                                                          | (11,488,453   | )                                                  | **(73,889,568**  | **)** |
|                                              | Total  movements              | ** **                         | **187,271,922** | ** **     | **4,823,459** | ** **              | **79,826,952** | ** **                              | **209,767,763** | ** **                  | **(29,906** | **)**                                     | **(5,110,345** | **)**                     | **21,341** | ** **                                                    | **5,799,108** | ** **                                         | **482,370,294**  | ** ** |
| **Ending balance as of  December 31, 2008**  | ** **                    | **462,213,152**                    | ** **      | **56,987,967** | ** **    | **557,198,261**         | ** **     | **3,397,049,290**                       | ** **      | **3,606,127**               | ** **  | **7,853,672**                             | ** **     | **1,212,948**             | ** ** | **54,773,201**                                                | ** **    | **4,540,894,618**                                  | ** **       |

 

F-52

----

Tableof Contents

 

**c)       **Maininvestments

 

Materialinvestments in the electricity generation business include developments in theprogram to create new capacity.

 

InChile, the construction of the Bocamina II Coal-fired Thermoelectric PowerPlant with capacity of 370 MW stands out among other projects. The projectCentral Térmica Quintero, consisting primarily of an open-cycle plant willoperate similarly as GNL with a diesel fuel plant with capacity of 257 MW. Suchproject has been finalized and put into operation in September 2009. The CanelaII Wind Park Expansion project with 40 wind generators with 60 MW capacity, hasbeen finalized and put in operation in December 2009, reinforcing Endesa Chile’scommitment to the environment by developing non-conventional renewable energies(NCREs).

 

InPeru, the Santa Rosa Open Cycle Thermoelectric Power Plant, with a capacity of200 MW. This plant will operate using natural gas from Camisea. This projectwas completed and put in operations in September 2009.

 

**d)       **Finance leases

 

Asof December 31, 2009 and December 31, 2008, tangible assets amount to ThCh$132,693,768 and ThCh$ 141,719,601, respectively, which are the net book valuesof the assets under finance leases.

 

Thepresent values of future payments on finance lease arrangements are detailedbelow:

 
| ** **            | ** ** | **12-31-2009**  | ** ** | **12-31-2008** | ** ** |
|-----------------------|------------|-----------------|------------|----------------|------------|
| ** **            | ** ** | **Gross**       | ** ** | **Interest**   | ** ** | **Present Value** | ** ** | **Gross** | ** ** | **Interest** | ** ** | **Present Value** | ** ** |
| ** **            | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Less than one year    |       | 12,798,056      |       | 3,166,125      |       | 9,631,931 |   | 8,948,699 |   | 1,556,924 |   | 7,391,775 |   |
| Between 1 and 5 years |       | 54,192,355      |       | 12,146,544     |       | 50,048,302 |   | 62,532,208 |   | 4,090,560 |   | 58,441,648 |   |
| More than 5 years     |       | 48,383,017      |       | 7,089,994      |       | 41,293,023 |   | 53,025,710 |   | 7,122,121 |   | 45,903,589 |   |
| **Total**             | ** ** | **115,373,428** | ** ** | **22,402,663** | ** ** | **92,970,765** | ** ** | **124,506,617** | ** ** | **12,769,605** | ** ** | **111,737,012** | ** ** |

 

Assetsunder financing leases are mostly comprised of the following:

 

1.   Endesa Chile S.A.: Corresponds to a contractfor the installation of an electric transmission line (Ralco-Charrúa 2X220 KV),entered into by the Company and Abengoa Chile S.A. Such contract has a 20-yearduration and bears interest at an annual rate of 6.5%.

 

2.   Edegel S.A.: Corresponds to contracts forfinancing the project of converting the Etevensa plant from thermoelectric tocombined-cycle. Such financing has been entered into by the subsidiary, InstitucionesFinancieras Banco de Crédito del Perú and BBVA - Banco Continental. Suchcontracts have an 8-years duration and bear interest at an annual rate of LIBORplus 3.0% and LIBOR plus 2.5%, respectively.

 

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**e)       **Operating leases

 

Futurepayments on operating lease arrangements as of December 31, 2009 and December 31,2008 are detailed below:

 
| ** **            | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|-----------------------|------------|----------------|------------|----------------|------------|
| ** **            | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Less than one year    |       | 1,464,087      |       | 1,854,326      |       |
| Between 1 and 5 years |       | 6,069,375      |       | 6,020,093      |       |
| More than 5 years     |       | 7,166,850      |       | 6,983,257      |       |
| **Total**             | ** ** | **14,700,312** | ** ** | **14,857,676** | ** ** |

 

**f)        **Otherinformation

 

1.     Asof December 31, 2009 and December 31, 2008, Endesa Chile and subsidiariesmaintain commitments to acquire tangible assets totaling ThCh$ 221,189,921 andThCh$ 239,936,558, respectively.

 

2.     Asof December 31, 2009 and December 31, 2008, the Group’s fixed assets pledged toguarantee liabilities amounts to ThCh$ 261,444,289 and ThCh$ 163,505,942,respectively (See Note 30).

 

3.     TheCompany and its Chilean and foreign subsidiaries have contracted an all-risk,earthquake and equipment breakdown insurance policy with a limit of ThUS$200,000, including coverage for business interruption damages. The premiums forthis policy are recorded proportionally by each company within prepaidexpenses.

 

4.     GasAtacama, in which Endesa Chile has a 50%interest consolidated using the proportional integration method, has, amongother assets, a combined-cycle electricity generation plant in northern Chile.As importing natural gas from neighboring countries was not possible,GasAtacama has been forced to generate electricity using alternative fuels, thecost of which significantly increased during the final months of 2007 due toincreases in oil prices. As a result, the company filed lawsuits for earlytermination of a contract with distributor Emel. On January 25, 2008, a rulingwas issued in arbitration proceedings on this matter to deny early termination.This situation significantly reduced the recoverable value of theaforementioned plant and, therefore, as of December 31, 2007, an impairmentprovision of US$ 110 million was recorded for this investment.

 

5.     Thecurrent situation regarding long-lived assets, mostly plants and infrastructureconstructed with the purpose of providing energy resources for the SIC systemfrom year 1998, has changed, principally due to the installation of new thermalplants in the SIC, the arrival of GNL, and the estimated development of new projects.This situation has created an environment of excess supply for future yearsresulting in the expectation that some of these assets will not be used.Accordingly, at December 31, 2009 the Company has recorded an impairmentprovision for these assets for ThCh$ 43,999,600.

 

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**14.    DEFERRED TAX**

 

a)             The origin of the deferred taxes recorded asof December 31, 2009 and December 31, 2008, are detailed as follows:

 
| ** **                                                        | ** ** | **Deferred Tax Assets** | ** ** | **Deferred Tax Liabilities** | ** ** |
|-------------------------------------------------------------------|------------|-------------------------|------------|------------------------------|------------|
| ** **                                                        | ** ** | **12-31-2009**          | ** ** | **12-31-2008**               | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
| **Temporary Difference**                                          | ** ** | **ThCh$**               | ** ** | **ThCh$**                    | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                                              |       |                    |       |                         |       |   |   |   |   |
| Deferred Taxes Relating to Depreciation                           |       | 55,005,317              |       | 69,160,071                   |       | 314,023,981 |   | 376,579,224 |   |
| Deferred Taxes Relating to Amortization                           |       | —                  |       | —                       |       | 6,873,797 |   | 7,659,391 |   |
| Deferred Taxes Relating to Accruals                               |       | 595,379                 |       | 673,766                      |       | 15,800,898 |   | 15,176,010 |   |
| Deferred Taxes Relating to Provisions                             |       | 13,842,035              |       | 16,389,177                   |       | 63,521 |   | — |   |
| Deferred Taxes Relating to Post-employment benefit  obligations   |       | 32,238                  |       | —                       |       | 805,392 |   | 984,434 |   |
| Deferred Taxes Relating to Revaluations of  Financial Instruments |       | 116,452                 |       | 393,823                      |       | 293,219 |   | — |   |
| Deferred Taxes Relating to Tax Losses                             |       | 14,874,363              |       | 17,929,546                   |       | — |   | — |   |
| Deferred Taxes Relating to Others                                 |       | 10,458,342              |       | 5,780,001                    |       | 10,015,811 |   | (1,024,674 | ) |
|                                                              |       |                    |       |                         |       |   |   |   |   |
| **Total**                                                         | ** ** | **94,924,126**          | ** ** | **110,326,384**              | ** ** | **347,876,619** | ** ** | **399,374,385** | ** ** |

 

b)             The following table details the movements of “Deferredtax” accounts within the consolidated statement of financial position during2009 and 2008:

 
| ** **                                  | ** ** | **Assets**      | ** ** | **Liabilities** | ** ** |
|---------------------------------------------|------------|-----------------|------------|-----------------|------------|
| **Deferred tax movements**                  | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| **Balance as of January 1, 2008**           | ** ** | **96,612,703**  | ** ** | **360,951,167** | ** ** |
| Increase (decrease) in profit or  loss |       | 7,897,819       |       | 12,501,699      |       |
| Increase (decrease) in equity               |       | 710,637         |       | (9              | )          |
| Foreign currency translation                |       | 5,105,225       |       | 25,921,528      |       |
| **Balance as of December 31, 2008**         | ** ** | **110,326,384** | ** ** | **399,374,385** | ** ** |
| Increase (decrease) in earnings             |       | (672,698        | )          | (22,160,048     | )          |
| Increase (decrease) in equity               |       | (2,219,677      | )          | 133,193         |       |
| Foreign currency translation                |       | (12,509,883     | )          | (29,470,911     | )          |
| **Balance as of December 31, 2009**         | ** ** | **94,924,126**  | ** ** | **347,876,619** | ** ** |

 

Recoveryof deferred tax assets will depend on whether sufficient tax profits areobtained in the future. The Company believes that the future profit projectionsfor its numerous subsidiaries will allow these assets to be recovered.

 

c)             As of December 31, 2009 and December 31, 2008,the Group has not recognized deferred tax assets related to tax losses of ThCh$4,191,442 and ThCh$ 6,663,979, respectively. Tax losses associated with theseamounts do not expire.

 

EndesaChile has not recorded deferred tax liabilities related to undistributed netincome from subsidiaries, associates and jointly-controlled companies in whichthe position of control that it exercises over these companies enables it tomanage their reversal and it is likely that they will not reverse in theforeseeable future. As of December 31, 2009, the total amount of thisunrecorded temporary difference amounted to ThCh$164,712,571.

 

TheGroup may be subject to income tax audits by tax authorities in theirrespective countries. These audits are limited to a certain number of tax yearsand once this period has lapsed, such inspections generally expire. Tax audits,by nature, are often complex and may extend over several years. The followingtable summarizes the tax periods that are potentially subject to audit:

 
| **Country** | ** ** | **Period** |
|-------------|------------|------------|
| Chile       |       | 2007-2009  |
| Argentina   |       | 2005-2009  |
| Colombia    |       | 2003-2009  |
| Peru        |       | 2006-2009  |

 

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Giventhe range of possible interpretations of tax standards, the results of anyfuture inspections carried out by tax authorities for the years subject toaudit can give rise to tax liabilities that cannot currently be quantified.Nevertheless, Endesa Chile’s Management estimates that the liabilities, if any,that may arise from such audits, would not significantly impact the companies’future results.

 

Theeffect of deferred taxes of components of other comprehensive income for theyears 2009 and 2008 are as follows:

 
| ** **                                        | ** ** | **12-31-2009**          | ** ** | **12-31-2008**                     | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|------------------------------------|------------|
| **Deferred tax effects of components of other**   | ** ** | **Amounts  before tax** | ** ** | **Income tax  expense  (benefit)** | ** ** | **Amounts  after tax** | ** ** | **Amounts  before tax** | ** ** | **Income tax  expense  (benefit)** | ** ** | **Amounts  after tax** | ** ** |
| **comprehensive income**                          | ** ** | **ThCh$**               | ** ** | **ThCh$**                          | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                              |       |                    |       |                               |       |   |   |   |   |   |   |   |   |
| Available-for-sale financial assets               |       | 55,354                  |       | (9,563                             | )          | 45,791 |   | (55 | ) | 9 |   | (46 | ) |
| Cash flow hedge                                   |       | 226,196,062             |       | (39,140,071                        | )          | 187,055,991 |   | (331,840,685 | ) | 58,245,740 |   | (273,594,945 | ) |
| Foreign currency translation                      |       | (251,677,776            | )          | —                             |       | (251,677,776 | ) | 168,702,437 |   | — |   | 168,702,437 |   |
| Share of other comprehensive income of associates |       | 14,045,893              |       | 2,403,087                          |       | 16,448,980 |   | (13,749,102 | ) | — |   | (13,749,102 | ) |
| Actuarial income on defined benefit pension plans |       | (1,143,392              | )          | 152,058                            |       | (991,334 | ) | (1,884,234 | ) | 218,879 |   | (1,665,355 | ) |
|                                              |       |                    |       |                               |       |   |   |   |   |   |   |   |   |
| **Total**                                         | ** ** | **(12,523,859**         | **)**      | **(36,594,489**                    | **)**      | **(49,118,348** | **)** | **(178,771,639** | **)** | **58,464,628** | ** ** | **(120,307,011** | **)** |

 

**15.    INTEREST-BEARING LOANS**

 

a)             The short and long-term detail of this accountas of December 31, 2009, December 31, 2008 and January 1, 2008, is as follows:

 
| ** **                      | ** ** | **12-31-2009**  | ** ** | **12-31-2008**    | ** ** | **01-01-2008**  | ** ** |
|---------------------------------|------------|-----------------|------------|-------------------|------------|-----------------|------------|
| **Classes of Interest-Bearing** | ** ** | **Current**     | ** ** | **Non-current**   | ** ** | **Current**     | ** ** | **Non-current** | ** ** | **Current** | ** ** | **Non-current** | ** ** |
| **Loans**                       | ** ** | **ThCh$**       | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| ** **                      | ** ** | ** **      | ** ** | ** **        | ** ** | ** **      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Interest-Bearing Loans**      | ** ** | **345,355,943** | ** ** | **1,791,980,967** | ** ** | **740,117,554** | ** ** | **2,134,544,298** | ** ** | **419,296,249** | ** ** | **1,688,324,335** | ** ** |
| Bank loans                      |       | 222,518,093     |       | 366,393,195       |       | 135,341,263     |       | 648,566,107 |   | 137,165,649 |   | 274,764,168 |   |
| Unsecured debentures            |       | 72,450,230      |       | 1,239,971,152     |       | 560,869,203     |       | 1,287,238,135 |   | 250,663,027 |   | 1,281,827,932 |   |
| Secured debentures              |       | 11,023,415      |       | 28,559,670        |       | —          |       | — |   | — |   | — |   |
| Finance leases                  |       | 9,631,931       |       | 83,338,834        |       | 7,391,775       |       | 104,345,237 |   | 7,094,714 |   | 56,781,674 |   |
| Other loans                     |       | 29,732,274      |       | 73,718,116        |       | 36,515,313      |       | 94,394,819 |   | 24,372,859 |   | 74,950,561 |   |
|                            |       |            |       |              |       |            |       |   |   |   |   |   |   |
| **Total**                       | ** ** | **345,355,943** | ** ** | **1,791,980,967** | ** ** | **740,117,554** | ** ** | **2,134,544,298** | ** ** | **419,296,249** | ** ** | **1,688,324,335** | ** ** |

 

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b)       The followingtable details bank loans by currency and by maturity as of December 31,2009, December 31, 2008 and January 1, 2008:

 

·         Summary of bank loans per currency and maturity

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | **Total**                  | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **Undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to  Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Current as  of  12/31/2009** | ** ** | **One to Five  Years** | ** ** | **Five Years or  More** | ** ** | **Total Non-  Current as of  12/31/2009** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 2.22        | %          | Unsecured     |       | —           |       | —                     |       | 370,984 |   | 163,384,485 | ** ** | **163,755,469** |   | 104,732,133 |   | 104,514,183 | ** ** | **209,246,316** |   |
| Peru        |       | US$          |       | Quarterly        |       | 5.12        | %          | Unsecured     |       | —           |       | —                     |       | 11,446,321 |   | 6,188,337 | ** ** | **17,634,658** |   | 13,297,208 |   | 11,561,913 | ** ** | **24,859,121** |   |
| Peru        |       | Soles        |       | Quarterly        |       | 4.37        | %          | Unsecured     |       | —           |       | —                     |       | 87,177 |   | — | ** ** | **87,177** |   | 19,540,273 |   | — | ** ** | **19,540,273** | ** ** |
| Argentina   |       | US$          |       | Biannual         |       | 8.70        | %          | Unsecured     |       | —           |       | —                     |       | 8,324,583 |   | 13,621,109 | ** ** | **21,945,692** |   | 36,113,536 |   | — | ** ** | **36,113,536** |   |
| Argentina   |       | Ar$          |       | Biannual         |       | 11.52       | %          | Unsecured     |       | —           |       | —                     |       | 3,963,387 |   | 5,538,868 | ** ** | **9,502,255** |   | 972,164 |   | — | ** ** | **972,164** |   |
| Colombia    |       | CPs          |       | Biannual         |       | 12.93       | %          | Unsecured     |       | —           |       | —                     |       | — |   | 9,592,842 | ** ** | **9,592,842** |   | — |   | 75,661,785 | ** ** | **75,661,785** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
|        |       |         |       |             |       |        | ** ** | **Total**     | ** ** | **—**       | ** ** | **—**                 | ** ** | **24,192,452** | ** ** | **198,325,641** | ** ** | **222,518,093** | ** ** | **174,655,314** | ** ** | **191,737,881** | ** ** | **366,393,195** | ** ** |

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | ** **                 | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **Undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to  Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Total Current  as of  12/31/2008** | ** ** | **One to Five  Years** | ** ** | **Five Years or  More** | ** ** | **Total Non-  Current as of  12/31/2008** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 2.56        | %          | Unsecured     |       | —           |       | —                     |       | 1,133,150 |   | 4,671,629 | ** ** | **5,804,779** |   | 344,742,110 |   | 113,584,688 | ** ** | **458,326,798** |   |
| Peru        |       | US$          |       | Quarterly        |       | 5.79        | %          | Unsecured     |       | —           |       | —                     |       | 3,184,277 |   | 38,431,273 | ** ** | **41,615,550** |   | — |   | 42,424,463 | ** ** | **42,424,463** |   |
| Peru        |       | Soles        |       | Quarterly        |       | 6.60        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 78,814 | ** ** | **78,814** |   | 11,958,775 |   | — | ** ** | **11,958,775** | ** ** |
| Argentina   |       | US$          |       | Biannual         |       | 8.73        | %          | Unsecured     |       | —           |       | —                     |       | 11,027,728 |   | 18,935,559 | ** ** | **29,963,287** |   | 44,946,682 |   | — | ** ** | **44,946,682** |   |
| Argentina   |       | Ar$          |       | Biannual         |       | 11.73       | %          | Unsecured     |       | —           |       | —                     |       | 1,351,264 |   | 13,623,308 | ** ** | **14,974,572** |   | 2,510,699 |   | 1,255,471 | ** ** | **3,766,170** |   |
| Colombia    |       | CPs          |       | Biannual         |       | 13.16       | %          | Unsecured     |       | —           |       | —                     |       | — |   | 42,904,261 | ** ** | **42,904,261** |   | — |   | 87,143,219 | ** ** | **87,143,219** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
|        |       |         |       |             |       |        | ** ** | **Total**     | ** ** | **—**       | ** ** | **—**                 | ** ** | **16,696,419** | ** ** | **118,644,844** | ** ** | **135,341,263** | ** ** | **404,158,266** | ** ** | **244,407,841** | ** ** | **648,566,107** | ** ** |

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | **Total**                  | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **Undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to  Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Current as  of  01/01/2008** | ** ** | **One to Five  Years** | ** ** | **Five Years or  More** | ** ** | **Total Non-  Current as of  01/01/2008** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 3.71        | %          | Unsecured     |       | —           |       | —                     |       | 3,097,022 |   | 48,234,904 | ** ** | **51,331,926** |   | 42,623,343 |   | 62,216,275 | ** ** | **104,839,618** |   |
| Peru        |       | US$          |       | Quarterly        |       | 4.39        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 16,398,362 | ** ** | **16,398,362** |   | 12,923,615 |   | 23,021,791 | ** ** | **35,945,406** |   |
| Peru        |       | Soles        |       | Quarterly        |       | 6.34        | %          | Unsecured     |       | —           |       | —                     |       | 10,038,137 |   | 18,077,771 | ** ** | **28,115,908** |   | — |   | — | ** ** | **—** | ** ** |
| Argentina   |       | US$          |       | Biannual         |       | 8.75        | %          | Unsecured     |       | —           |       | —                     |       | 1,202,664 |   | 13,377,027 | ** ** | **14,579,691** |   | 54,539,572 |   | — | ** ** | **54,539,572** |   |
| Argentina   |       | Ar$          |       | Biannual         |       | 1.75        | %          | Unsecured     |       | —           |       | —                     |       | 1,082,226 |   | 921,452 | ** ** | **2,003,678** |   | 2,488,790 |   | 2,488,790 | ** ** | **4,977,580** |   |
| Colombia    |       | CPs          |       | Biannual         |       | 12.11       | %          | Unsecured     |       | —           |       | —                     |       | — |   | 24,736,084 | ** ** | **24,736,084** |   | — |   | 74,461,992 | ** ** | **74,461,992** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
|        |       |         |       |             |       |        | ** ** | **Total**     | ** ** | **—**       | ** ** | **—**                 | ** ** | **15,420,049** | ** ** | **121,745,600** | ** ** | **137,165,649** | ** ** | **112,575,320** | ** ** | **162,188,848** | ** ** | **274,764,168** | ** ** |

 

Thefair value of current and non-current bank loans amounts to ThCh$ 661,136,716and ThCh$ 979,765,893 as of December 31, 2009 and December 31, 2008,respectively.

 

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Table ofContents

 

·         Bank loans per lender

 
| ** **            | ** ** | ** **                                  | ** ** | ** **       | ** ** | ** **         | ** ** | ** **      | ** ** | **12-31-2009**                   | ** ** |
|-----------------------|------------|---------------------------------------------|------------|------------------|------------|--------------------|------------|-----------------|------------|----------------------------------|------------|
| **Name**              | ** ** | **Name**                                    | ** ** | **Type**         | ** ** | **Nominal**        | ** ** | **Frequency**   | ** ** | **Current**                      | ** ** | **Non-current** | ** ** |
| **of  Company**       | ** ** | **of  lender**                              | ** ** | **of  currency** | ** ** | **interest  rate** | ** ** | **of  payment** | ** ** | **Less than  90 days** | ** ** | **More than  90 days** | ** ** | **Total  current** | ** ** | **1 to 5 years** | ** ** | **More than 10  years** | ** ** | **Total non-  current** | ** ** |
| Celta                 |       | BANESTO                                     |       | US$              |       | 6.83               | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.60               | %          | Term            |       | 19,996                           |       | — |   | 19,996 |   | 5,156,948 |   | — |   | 5,156,948 |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.21               | %          | Term            |       | 1,028,759                        |       | — |   | 1,028,759 |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.52               | %          | Term            |       | 15,962                           |       | 1,014,199 |   | 1,030,161 |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 4.12               | %          | Term            |       | 27,890                           |       | 1,471,230 |   | 1,499,120 |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 3.80               | %          | Term            |       | 1,228                            |       | — |   | 1,228 |   | 1,403,251 |   | — |   | 1,403,251 |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 5.70               | %          | Term            |       | 5,072,753                        |       | — |   | 5,072,753 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 7.19               | %          | Quarterly       |       | 3,681,430                        |       | — |   | 3,681,430 |   | — |   | 10,690,495 |   | 10,690,495 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.97               | %          | Quarterly       |       | 1,619,527                        |       | — |   | 1,619,527 |   | 7,820,494 |   | — |   | 7,820,494 |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 3.08               | %          | Bi-annual       |       | —                           |       | 3,652,838 |   | 3,652,838 |   | 5,476,714 |   | — |   | 5,476,714 |   |
| Edegel                |       | BANCO CONTINENTAL                           |       | Soles            |       | 4.28               | %          | Term            |       | 13,155                           |       | — |   | 13,155 |   | 2,631,096 |   | — |   | 2,631,096 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.40               | %          | Term            |       | 25,609                           |       | — |   | 25,609 |   | 5,262,192 |   | — |   | 5,262,192 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.30               | %          | Term            |       | 27,189                           |       | — |   | 27,189 |   | 5,086,786 |   | — |   | 5,086,786 |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 5.95               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO WESTLB                                |       | US$              |       | 5.50               | %          | Quarterly       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 6.60               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 9.59               | %          | Quarterly       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 7.12               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 5.00               | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 6.02               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | Soles            |       | 6.55               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Davivienda                                  |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 992,230 |   | 992,230 |   | — |   | 7,826,033 |   | 7,826,033 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 710,761 |   | 710,761 |   | — |   | 5,606,000 |   | 5,606,000 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 2,340,613 |   | 2,340,613 |   | — |   | 18,461,158 |   | 18,461,158 |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 2,594,904 |   | 2,594,904 |   | — |   | 20,466,830 |   | 20,466,830 |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 10.38              | %          | Bi-annual       |       | —                           |       | 2,954,334 |   | 2,954,334 |   | — |   | 23,301,764 |   | 23,301,764 |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 15.96              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 16.09              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | BANCO DE  CREDITO                           |       | CPs              |       | 14.62              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | CITIBANK                                    |       | CPs              |       | 15.00              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Av Villas                                   |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco de Bogotá                        |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | US$              |       | 4.67               | %          | Term            |       | 706,604                          |       | — |   | 706,604 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Provincia de Buenos Aires             |       | US$              |       | 6.00               | %          | Term            |       | 685,119                          |       | — |   | 685,119 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 5.44               | %          | Term            |       | 385,930                          |       | — |   | 385,930 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | US$              |       | 5.70               | %          | Term            |       | 1,034,484                        |       | — |   | 1,034,484 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Credit Suisse  International                |       | US$              |       | 12.26              | %          | Term            |       | 2,176,661                        |       | — |   | 2,176,661 |   | 2,173,458 |   | — |   | 2,173,458 |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.00               | %          | Term            |       | —                           |       | 407,548 |   | 407,548 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Nación  Argentina                |       | Ar$              |       | 12.50              | %          | Term            |       | 686,987                          |       | 2,668,948 |   | 3,355,935 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Mediocredito  Italiano                      |       | Ar$              |       | 1.75               | %          | Term            |       | —                           |       | 1,951,134 |   | 1,951,134 |   | 972,164 |   | — |   | 972,164 |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | Ar$              |       | 21.75              | %          | Term            |       | 306,929                          |       | — |   | 306,929 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Comafi                                |       | Ar$              |       | 15.00              | %          | Term            |       | 404,479                          |       | — |   | 404,479 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Itau                                  |       | Ar$              |       | 19.47              | %          | Term            |       | 1,730,145                        |       | 918,786 |   | 2,648,931 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | Ar$              |       | 13.00              | %          | Term            |       | 562,347                          |       | — |   | 562,347 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | Ar$              |       | 6.39               | %          | Term            |       | 257,554                          |       | — |   | 257,554 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.32               | %          | Term            |       | —                           |       | 1,136,571 |   | 1,136,571 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 6.39               | %          | Term            |       | 158,669                          |       | — |   | 158,669 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Bladex                                      |       | US$              |       | 5.88               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco itau                                  |       | US$              |       | 11.13              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | Ar$              |       | 6.70               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Chile          |       | B.N.P. Paribas                              |       | US$              |       | 5.96               | %          | Bi-annual       |       | —                           |       | 901,716 |   | 901,716 |   | 1,659,304 |   | 2,488,955 |   | 4,148,259 |   |
| Endesa Chile          |       | Export  Development Corpotation Loan        |       | US$              |       | 2.50               | %          | Bi-annual       |       | —                           |       | 759,503 |   | 759,503 |   | 1,452,034 |   | 1,452,035 |   | 2,904,069 |   |
| Endesa Chile          |       | Banco Bilbao Vizcaya Argentaria S.A.        |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 15,866,003 |   | 15,866,003 |   | — |   | 30,540,510 |   | 30,540,510 |   |
| Endesa Chile          |       | The Bank of  Tokyo-Mitsubishi, Ltd.         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 12,675,768 |   | 12,675,768 |   | 17,110,472 |   | 16,594,577 |   | 33,705,049 |   |
| Endesa Chile          |       | Caja Madrid, Caja Madrid Miami Agency       |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 8,241,742 |   | 8,241,742 |   | — |   | 25,143,298 |   | 25,143,298 |   |
| Endesa Chile          |       | Banco Santander Central Hispano S.A. N.Y.B. |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 10,771,619 |   | 10,771,619 |   | 17,110,472 |   | 16,594,577 |   | 33,705,049 |   |
| Endesa Chile          |       | Citibank NA ,Nassau, Bahamas Branch         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 15,840,616 |   | 15,840,616 |   | 17,110,472 |   | — |   | 17,110,472 |   |
| Endesa Chile          |       | Ing Bank N.V.                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 20,326,059 |   | 20,326,059 |   | — |   | — |   | — |   |
| Endesa Chile          |       | San Paolo IMI S.p.A                         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 12,672,493 |   | 12,672,493 |   | — |   | — |   | — |   |
| Endesa Chile          |       | HSBC Bank pic  Spanish Branch               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 10,560,411 |   | 10,560,411 |   | — |   | — |   | — |   |
| Endesa Chile          |       | ABN AMRO Bank                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 5,280,206 |   | 5,280,206 |   | — |   | — |   | — |   |

 
| ** **            | ** ** | ** **                                  | ** ** | ** **       | ** ** | ** **         | ** ** | ** **      | ** ** | **12-31-2008**                   | ** ** |
|-----------------------|------------|---------------------------------------------|------------|------------------|------------|--------------------|------------|-----------------|------------|----------------------------------|------------|
| **Name**              | ** ** | **Name**                                    | ** ** | **Type**         | ** ** | **Nominal**        | ** ** | **Frequency**   | ** ** | **Current**                      | ** ** | **Non-current** | ** ** |
| **of  Company**       | ** ** | **of  lender**                              | ** ** | **of  currency** | ** ** | **interest  rate** | ** ** | **of  payment** | ** ** | **Less than  90 days** | ** ** | **More than  90 days** | ** ** | **Total current** | ** ** | **1 to 5 years** | ** ** | **More than 10  years** | ** ** | **Total non-  current** | ** ** |
| Celta                 |       | BANESTO                                     |       | US$              |       | 6.83               | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.60               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.21               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.52               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 4.12               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 3.80               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE CREDITO                            |       | US$              |       | 5.70               | %          | Term            |       | —                           |       | 6,368,554 |   | 6,368,554 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 7.19               | %          | Quarterly       |       | —                           |       | 6,368,554 |   | 6,368,554 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.97               | %          | Quarterly       |       | —                           |       | 1,592,747 |   | 1,592,747 |   | — |   | 11,855,402 |   | 11,855,402 |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 3.08               | %          | Bi-annual       |       | —                           |       | 4,585,278 |   | 4,585,278 |   | — |   | 12,879,026 |   | 12,879,026 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.28               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.40               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.30               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 5.95               | %          | Term            |       | —                           |       | 2,547,422 |   | 2,547,422 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO WESTLB                                |       | US$              |       | 5.50               | %          | Quarterly       |       | —                           |       | 10,600,164 |   | 10,600,164 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 6.60               | %          | Term            |       | —                           |       | 78,814 |   | 78,814 |   | 11,958,775 |   | — |   | 11,958,775 |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 9.59               | %          | Quarterly       |       | —                           |       | — |   | — |   | — |   | 10,923,224 |   | 10,923,224 |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 7.12               | %          | Term            |       | 3,184,277                        |       | — |   | 3,184,277 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 5.00               | %          | Bi-annual       |       | —                           |       | 6,368,554 |   | 6,368,554 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 6.02               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | Soles            |       | 6.55               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Davivienda                                  |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 1,088,007 |   | 1,088,007 |   | — |   | 8,949,497 |   | 8,949,497 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 779,369 |   | 779,369 |   | — |   | 6,410,845 |   | 6,410,845 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 2,566,545 |   | 2,566,545 |   | — |   | 14,344,532 |   | 14,344,532 |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 335,358 |   | 335,358 |   | — |   | 16,638,128 |   | 16,638,128 |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 10.38              | %          | Bi-annual       |       | —                           |       | 257,586 |   | 257,586 |   | — |   | — |   | — |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 15.96              | %          | Bi-annual       |       | —                           |       | 14,650,645 |   | 14,650,645 |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 16.09              | %          | Bi-annual       |       | —                           |       | 11,722,599 |   | 11,722,599 |   | — |   | — |   | — |   |
| Emgesa                |       | BANCO DE  CREDITO                           |       | CPs              |       | 14.62              | %          | Bi-annual       |       | —                           |       | 2,855,358 |   | 2,855,358 |   | — |   | — |   | — |   |
| Emgesa                |       | CITIBANK                                    |       | CPs              |       | 15.00              | %          | Bi-annual       |       | —                           |       | 8,569,590 |   | 8,569,590 |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | 79,204 |   | 79,204 |   | — |   | 26,646,764 |   | 26,646,764 |   |
| Emgesa                |       | Av Villas                                   |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco de Bogotá                        |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | US$              |       | 4.67               | %          | Term            |       | —                           |       | 404,811 |   | 404,811 |   | 849,749 |   | — |   | 849,749 |   |
| Endesa Costanera S.A. |       | Banco Provincia de Buenos Aires             |       | US$              |       | 6.00               | %          | Term            |       | —                           |       | 1,046,049 |   | 1,046,049 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 5.44               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | US$              |       | 5.70               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Credit Suisse  International                |       | US$              |       | 12.26              | %          | Term            |       | 2,734,159                        |       | 8,187,052 |   | 10,921,211 |   | 2,727,679 |   | — |   | 2,727,679 |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.00               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Nación  Argentina                |       | Ar$              |       | 12.50              | %          | Term            |       | —                           |       | 4,617,885 |   | 4,617,885 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Mediocredito  Italiano                      |       | Ar$              |       | 1.75               | %          | Term            |       | 1,267,768                        |       | 1,255,391 |   | 2,523,159 |   | 2,510,699 |   | 1,255,471 |   | 3,766,170 |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | Ar$              |       | 21.75              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Comafi                                |       | Ar$              |       | 15.00              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Itau                                  |       | Ar$              |       | 19.47              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | Ar$              |       | 13.00              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | Ar$              |       | 6.39               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.32               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 6.39               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Bladex                                      |       | US$              |       | 5.88               | %          | Term            |       | 722,371                          |       | 573,624 |   | 1,295,995 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco itau                                  |       | US$              |       | 11.13              | %          | Term            |       | —                           |       | 1,298,740 |   | 1,298,740 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | Ar$              |       | 6.70               | %          | Term            |       | —                           |       | 1,120,666 |   | 1,120,666 |   | — |   | — |   | — |   |
| Endesa Chile          |       | B.N.P. Paribas                              |       | US$              |       | 5.96               | %          | Bi-annual       |       | —                           |       | 3,270,303 |   | 3,270,303 |   | 2,082,556 |   | 4,165,111 |   | 6,247,667 |   |
| Endesa Chile          |       | Export  Development Corpotation Loan        |       | US$              |       | 2.50               | %          | Bi-annual       |       | —                           |       | 1,016,983 |   | 1,016,983 |   | 1,822,416 |   | 2,733,624 |   | 4,556,040 |   |
| Endesa Chile          |       | Banco Bilbao Vizcaya Argentaria S.A.        |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 19,855,862 |   | 37,226,224 |   | 57,082,086 |   |
| Endesa Chile          |       | The Bank of  Tokyo-Mitsubishi, Ltd.         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 12,508 |   | 12,508 |   | 37,356,336 |   | 20,821,447 |   | 58,177,783 |   |
| Endesa Chile          |       | Caja Madrid, Caja Madrid Miami Agency       |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 10,325,048 |   | 31,547,647 |   | 41,872,695 |   |
| Endesa Chile          |       | Banco Santander Central Hispano S.A. N.Y.B. |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 34,973,632 |   | 20,821,447 |   | 55,795,079 |   |
| Endesa Chile          |       | Citibank NA ,Nassau, Bahamas Branch         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 41,327,508 |   | — |   | 41,327,508 |   |
| Endesa Chile          |       | Ing Bank N.V.                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 25,415,503 |   | — |   | 25,415,503 |   |
| Endesa Chile          |       | San Paolo IMI S.p.A                         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 15,884,689 |   | — |   | 15,884,689 |   |
| Endesa Chile          |       | HSBC Bank pic  Spanish Branch               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 13,237,241 |   | — |   | 13,237,241 |   |
| Endesa Chile          |       | ABN AMRO Bank                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 6,618,621 |   | — |   | 6,618,621 |   |

 
| ** **            | ** ** | ** **                                  | ** ** | ** **       | ** ** | ** **         | ** ** | ** **      | ** ** | **01-01-2008**                   | ** ** |
|-----------------------|------------|---------------------------------------------|------------|------------------|------------|--------------------|------------|-----------------|------------|----------------------------------|------------|
| **Name**              | ** ** | **Name**                                    | ** ** | **Type**         | ** ** | **Nominal**        | ** ** | **Frequency**   | ** ** | **Current**                      | ** ** | **Non-current** | ** ** |
| **of  Company**       | ** ** | **of  lender**                              | ** ** | **of  currency** | ** ** | **interest  rate** | ** ** | **of  payment** | ** ** | **Less than  90 days** | ** ** | **More than  90 days** | ** ** | **Total  current** | ** ** | **1 to 5 years** | ** ** | **More than  10 years** | ** ** | **Total non-  current** | ** ** |
| Celta                 |       | BANESTO                                     |       | US$              |       | 6.83               | %          | Bi-annual       |       | 2,047,648                        |       | — |   | 2,047,648 |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.60               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.21               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.52               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO CONTINENTAL                           |       | US$              |       | 4.12               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Chinango              |       | BANCO  CONTINENTAL                          |       | Soles            |       | 3.80               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 5.70               | %          | Term            |       | —                           |       | 1,491,167 |   | 1,491,167 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 7.19               | %          | Quarterly       |       | —                           |       | 1,988,223 |   | 1,988,223 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | US$              |       | 3.97               | %          | Quarterly       |       | —                           |       | 1,486,689 |   | 1,486,689 |   | — |   | 10,496,053 |   | 10,496,053 |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 3.08               | %          | Bi-annual       |       | —                           |       | 3,628,490 |   | 3,628,490 |   | — |   | 6,950,717 |   | 6,950,717 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.28               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.40               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 4.30               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | US$              |       | 5.95               | %          | Term            |       | —                           |       | 1,988,223 |   | 1,988,223 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO WESTLB                                |       | US$              |       | 5.50               | %          | Quarterly       |       | —                           |       | — |   | — |   | 7,953,058 |   | — |   | 7,953,058 |   |
| Edegel                |       | BANCO  CONTINENTAL                          |       | Soles            |       | 6.60               | %          | Term            |       | —                           |       | 9,785,216 |   | 9,785,216 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 9.59               | %          | Quarterly       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 7.12               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Edegel                |       | BANCO CITIBANK                              |       | US$              |       | 5.00               | %          | Bi-annual       |       | —                           |       | 4,970,557 |   | 4,970,557 |   | 4,970,557 |   | — |   | 4,970,557 |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | US$              |       | 6.02               | %          | Term            |       | —                           |       | 845,013 |   | 845,013 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO  SCOTIABANK                           |       | Soles            |       | 6.55               | %          | Term            |       | —                           |       | 8,292,555 |   | 8,292,555 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | 4,378,469                        |       | — |   | 4,378,469 |   | — |   | — |   | — |   |
| Edegel                |       | BANCO DE  CREDITO                           |       | Soles            |       | 5.90               | %          | Term            |       | 5,659,668                        |       | — |   | 5,659,668 |   | — |   | — |   | — |   |
| Emgesa                |       | Davivienda                                  |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 938,051 |   | 938,051 |   | — |   | 7,780,630 |   | 7,780,630 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 671,951 |   | 671,951 |   | — |   | 5,573,476 |   | 5,573,476 |   |
| Emgesa                |       | Bancolombia                                 |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 2,212,808 |   | 2,212,808 |   | — |   | 12,779,034 |   | 12,779,034 |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 12.93              | %          | Annual          |       | —                           |       | 2,453,214 |   | 2,453,214 |   | — |   | 14,773,070 |   | 14,773,070 |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 10.38              | %          | Bi-annual       |       | —                           |       | 1,320,603 |   | 1,320,603 |   | — |   | — |   | — |   |
| Emgesa                |       | BBVA Colombia                               |       | CPs              |       | 15.96              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 16.09              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | BANCO DE  CREDITO                           |       | CPs              |       | 14.62              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | CITIBANK                                    |       | CPs              |       | 15.00              | %          | Bi-annual       |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa                |       | Banco Santander                             |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | 2,793,017 |   | 2,793,017 |   | — |   | 23,166,578 |   | 23,166,578 |   |
| Emgesa                |       | Av Villas                                   |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | 9,892,754 |   | 9,892,754 |   | — |   | — |   | — |   |
| Emgesa                |       | Banco de Bogotá                        |       | CPs              |       | 12.13              | %          | Bi-annual       |       | —                           |       | 4,453,686 |   | 4,453,686 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | US$              |       | 4.67               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Provincia de Buenos Aires             |       | US$              |       | 6.00               | %          | Term            |       | 1,026,904                        |       | — |   | 1,026,904 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 5.44               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | US$              |       | 5.70               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Credit Suisse  International                |       | US$              |       | 12.26              | %          | Term            |       | —                           |       | 4,278,999 |   | 4,278,999 |   | 10,647,556 |   | — |   | 10,647,556 |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.00               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Nación  Argentina                |       | Ar$              |       | 12.50              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Mediocredito  Italiano                      |       | Ar$              |       | 1.75               | %          | Term            |       | 1,082,226                        |       | 921,452 |   | 2,003,678 |   | 2,488,790 |   | 2,488,790 |   | 4,977,580 |   |
| Endesa Costanera S.A. |       | Banco Santander  Río                   |       | Ar$              |       | 21.75              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Comafi                                |       | Ar$              |       | 15.00              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Itau                                  |       | Ar$              |       | 19.47              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | Ar$              |       | 13.00              | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | Ar$              |       | 6.39               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Citibank                                    |       | US$              |       | 5.32               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Galicia                               |       | US$              |       | 6.39               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Bladex                                      |       | US$              |       | 5.88               | %          | Term            |       | —                           |       | 885,686 |   | 885,686 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco itau                                  |       | US$              |       | 11.13              | %          | Term            |       | —                           |       | 2,415,322 |   | 2,415,322 |   | — |   | — |   | — |   |
| Endesa Costanera S.A. |       | Banco Ciudad                                |       | Ar$              |       | 6.70               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Chile          |       | B.N.P. Paribas                              |       | US$              |       | 5.96               | %          | Bi-annual       |       | —                           |       | 3,229,981 |   | 3,229,981 |   | 3,261,481 |   | 4,064,740 |   | 7,326,221 |   |
| Endesa Chile          |       | Export Development  Corpotation Loan        |       | US$              |       | 2.50               | %          | Bi-annual       |       | —                           |       | 859,804 |   | 859,804 |   | 1,422,798 |   | 2,845,597 |   | 4,268,395 |   |
| Endesa Chile          |       | Banco Bilbao Vizcaya Argentaria S.A.        |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Chile          |       | The Bank of  Tokyo-Mitsubishi, Ltd.         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | 27,903 |   | 27,903 |   | 4,180,739 |   | 10,973,496 |   | 15,154,235 |   |
| Endesa Chile          |       | Caja Madrid, Caja Madrid Miami Agency       |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | — |   | — |   | — |   |
| Endesa Chile          |       | Banco Santander Central Hispano S.A. N.Y.B. |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 3,553,628 |   | 10,973,496 |   | 14,527,124 |   |
| Endesa Chile          |       | Citibank NA ,Nassau, Bahamas Branch         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 5,225,923 |   | 10,973,496 |   | 16,199,419 |   |
| Endesa Chile          |       | Ing Bank N.V.                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 6,689,182 |   | — |   | 6,689,182 |   |
| Endesa Chile          |       | San Paolo IMI S.p.A                         |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 4,180,739 |   | — |   | 4,180,739 |   |
| Endesa Chile          |       | HSBC Bank pic  Spanish Branch               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 3,483,949 |   | — |   | 3,483,949 |   |
| Endesa Chile          |       | ABN AMRO Bank                               |       | US$              |       | 1.60               | %          | Term            |       | —                           |       | — |   | — |   | 1,741,975 |   | — |   | 1,741,975 |   |

 

F-58

----

Tableof Contents

 

| Endesa Chile                             |   | Instituto  de Credito Oficial                        |   | US$    |   | 1.60   | %      | Term      |   | —    |   | 5,280,206  |   | 5,280,206   |   | 10,139,539 |   | —     |   | 10,139,539  |   |
|------------------------------------------|--------|------------------------------------------------------|--------|--------|--------|--------|--------|-----------|--------|-----------|--------|------------|--------|-------------|--------|------------|--------|------------|--------|-------------|--------|
| Endesa Chile                             |   | Deutsche Bank AG New York Branch                     |   | US$    |   | 1.60   | %      | Term      |   | —    |   | 4,224,164  |   | 4,224,164   |   | —     |   | —     |   | —      |   |
| Endesa Chile                             |   | The  Royal Bank of Scotland PLC                      |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —     |   | —      |   | 5,069,769  |   | —     |   | 5,069,769   |   |
| Endesa Chile                             |   | Export  Development Corpotation Loan                 |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —     |   | —      |   | 12,674,424 |   | —     |   | 12,674,424  |   |
| Endesa Chile                             |   | B.N.P. Paribas Panama Branch                         |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —     |   | —      |   | 10,139,539 |   | —     |   | 10,139,539  |   |
| Endesa Chile                             |   | Banco Español de crédito S.A.  N.Y.B. |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —     |   | —      |   | 5,069,769  |   | 12,571,649 |   | 17,641,418  |   |
| Endesa Chile                             |   | Banco  Estado                                        |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —     |   | —      |   | 6,970,933  |   | —     |   | 6,970,933   |   |
| Endesa Chile                             |   | The  Bank of Nova Scotia                             |   | US$    |   | 1.60   | %      | Term      |   | —    |   | 5,068,997  |   | 5,068,997   |   | —     |   | —     |   | —      |   |
| Endesa Chile                             |   | Banco Bilbao Vizcaya Argentaria S.A.                 |   | US$    |   | 2.28   | %      | Quarterly |   | —    |   | —     |   | —      |   | —     |   | —     |   | —      |   |
| Endesa Chile                             |   | Caja Madrid, Caja Madrid Miami Agency                |   | US$    |   | 1.77   | %      | Quarterly |   | —    |   | —     |   | —      |   | —     |   | —     |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Deutsche  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 1,508,290 |   | 4,437,126  |   | 5,945,416   |   | 10,564,564 |   | —     |   | 10,564,564  |   |
| Hidroeléctrica El  Chocón S.A. |   | Standard  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 1,508,290 |   | 4,437,126  |   | 5,945,416   |   | 10,564,564 |   | —     |   | 10,564,564  |   |
| Hidroeléctrica El  Chocón S.A. |   | Sindicado                                            |   | US$    |   | 18.67  | %      | Term      |   | 160,537   |   | 3,202,738  |   | 3,363,275   |   | 12,810,950 |   | —     |   | 12,810,950  |   |
| Hidroeléctrica El  Chocón S.A. |   | Ciudad                                               |   | Ar$    |   | 21.50  | %      | Term      |   | 14,946    |   | —     |   | 14,946      |   | —     |   | —     |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Santander  Rio                                       |   | Ar$    |   | 17.44  | %      | Bi-annual |   | —    |   | —     |   | —      |   | —     |   | —     |   | —      |   |
| Inversiones GasAtacama Holding Ltda.     |   | PNC  BANK                                            |   | US$    |   | 3.09   | %      | Bi-annual |   | —    |   | —     |   | —      |   | 225,406    |   | —     |   | 225,406     |   |
| Inversiones GasAtacama Holding Ltda.     |   | SC  GROUP                                            |   | US$    |   | 7.50   | %      | Annual    |   | —    |   | 34,965,052 |   | 34,965,052  |   | —     |   | —     |   | —      |   |
| Pangue                                   |   | Export  Development Corporation                      |   | US$    |   | 1.63   | %      | Bi-annual |   | 370,984   |   | —     |   | 370,984     |   | —     |   | —     |   | —      |   |
| Pangue                                   |   | Export  Development Corporation                 |   | US$    |   | 3.75   | %      | Bi-annual |   | —    |   | —     |   | —      |   | —     |   | —     |   | —      |   |
| Pangue                                   |   | Kreditanstalf  Fúr Wiederaubau                  |   | US$    |   | 4.85   | %      | Bi-annual |   | —    |   | —     |   | —      |   | —     |   | —     |   | —      |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |      |   |       |   |        |   |       |   |       |   |        |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |      |   |       |   | 222,518,093 |   |       |   |       |   | 366,393,195 |   |

 
| Endesa Chile                             |   | Instituto  de Credito Oficial                        |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 19,342,560 |   | —     |   | 19,342,560  |   |
|------------------------------------------|--------|------------------------------------------------------|--------|--------|--------|--------|--------|-----------|--------|-----------|--------|-----------|--------|-------------|--------|------------|--------|------------|--------|-------------|--------|
| Endesa Chile                             |   | Deutsche Bank AG New York Branch                     |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 5,294,896  |   | —     |   | 5,294,896   |   |
| Endesa Chile                             |   | The  Royal Bank of Scotland PLC                      |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 6,361,969  |   | —     |   | 6,361,969   |   |
| Endesa Chile                             |   | Export  Development Corpotation Loan                 |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 15,904,926 |   | —     |   | 15,904,926  |   |
| Endesa Chile                             |   | B.N.P. Paribas Panama Branch                         |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 12,723,939 |   | —     |   | 12,723,939  |   |
| Endesa Chile                             |   | Banco Español de crédito S.A.  N.Y.B. |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 7,777,597  |   | 15,773,824 |   | 23,551,421  |   |
| Endesa Chile                             |   | Banco  Estado                                        |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 8,747,708  |   | —     |   | 8,747,708   |   |
| Endesa Chile                             |   | The  Bank of Nova Scotia                             |   | US$    |   | 1.60   | %      | Term      |   | —    |   | —    |   | —      |   | 6,353,876  |   | —     |   | 6,353,876   |   |
| Endesa Chile                             |   | Banco Bilbao Vizcaya Argentaria S.A.                 |   | US$    |   | 2.28   | %      | Quarterly |   | —    |   | 72,555    |   | 72,555      |   | —     |   | —     |   | —      |   |
| Endesa Chile                             |   | Caja Madrid, Caja Madrid Miami Agency                |   | US$    |   | 1.77   | %      | Quarterly |   | —    |   | 16,298    |   | 16,298      |   | —     |   | —     |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Deutsche  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 3,785,599 |   | 3,712,642 |   | 7,498,241   |   | 20,684,627 |   | —     |   | 20,684,627  |   |
| Hidroeléctrica El  Chocón S.A. |   | Standard  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 3,785,599 |   | 3,712,641 |   | 7,498,240   |   | 20,684,627 |   | —     |   | 20,684,627  |   |
| Hidroeléctrica El  Chocón S.A. |   | Sindicado                                            |   | US$    |   | 18.67  | %      | Term      |   | —    |   | —    |   | —      |   | —     |   | —     |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Ciudad                                               |   | Ar$    |   | 21.50  | %      | Term      |   | —    |   | —    |   | —      |   | —     |   | —     |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Santander  Rio                                       |   | Ar$    |   | 17.44  | %      | Bi-annual |   | 83,496    |   | 6,629,366 |   | 6,712,862   |   | —     |   | —     |   | —      |   |
| Inversiones GasAtacama Holding Ltda.     |   | PNC  BANK                                            |   | US$    |   | 3.09   | %      | Bi-annual |   | 8,357     |   | 282,982   |   | 291,339     |   | 565,964    |   | —     |   | 565,964     |   |
| Inversiones GasAtacama Holding Ltda.     |   | SC  GROUP                                            |   | US$    |   | 7.50   | %      | Annual    |   | —    |   | —    |   | —      |   | 53,722,804 |   | —     |   | 53,722,804  |   |
| Pangue                                   |   | Export  Development Corporation                      |   | US$    |   | 1.63   | %      | Bi-annual |   | 948,555   |   | —    |   | 948,555     |   | 462,087    |   | —     |   | 462,087     |   |
| Pangue                                   |   | Export  Development Corporation                 |   | US$    |   | 3.75   | %      | Bi-annual |   | —    |   | —    |   | —      |   | —     |   | —     |   | —      |   |
| Pangue                                   |   | Kreditanstalf  Fúr Wiederaubau                  |   | US$    |   | 4.85   | %      | Bi-annual |   | 176,238   |   | —    |   | 176,238     |   | —     |   | —     |   | —      |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |      |   |      |   |        |   |       |   |       |   |        |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |      |   |      |   | 135,341,263 |   |       |   |       |   | 648,566,107 |   |

 
| Endesa Chile                             |   | Instituto  de Credito Oficial                        |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | 1,741,975  |   | 6,503,260 |   | 8,245,235   |   |
|------------------------------------------|--------|------------------------------------------------------|--------|--------|--------|--------|--------|-----------|--------|---------|--------|------------|--------|-------------|--------|------------|--------|-----------|--------|-------------|--------|
| Endesa Chile                             |   | Deutsche Bank AG New York Branch                     |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | 1,393,130  |   | —    |   | 1,393,130   |   |
| Endesa Chile                             |   | The  Royal Bank of Scotland PLC                      |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | 3,251,407 |   | 3,251,407   |   |
| Endesa Chile                             |   | Export  Development Corpotation Loan                 |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | 8,128,516 |   | 8,128,516   |   |
| Endesa Chile                             |   | B.N.P. Paribas Panama Branch                         |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | 6,502,812 |   | 6,502,812   |   |
| Endesa Chile                             |   | Banco Español de crédito S.A.  N.Y.B. |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | 3,251,407 |   | 3,251,407   |   |
| Endesa Chile                             |   | Banco  Estado                                        |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | 4,963,412 |   | 4,963,412   |   |
| Endesa Chile                             |   | The  Bank of Nova Scotia                             |   | US$    |   | 1.60   | %      | Term      |   | —  |   | —     |   | —      |   | 1,672,295  |   | —    |   | 1,672,295   |   |
| Endesa Chile                             |   | Banco Bilbao Vizcaya Argentaria S.A.                 |   | US$    |   | 2.28   | %      | Quarterly |   | —  |   | —     |   | —      |   | 5,225,923  |   | —    |   | 5,225,923   |   |
| Endesa Chile                             |   | Caja Madrid, Caja Madrid Miami Agency                |   | US$    |   | 1.77   | %      | Quarterly |   | —  |   | 18,368     |   | 18,368      |   | 2,717,480  |   | —    |   | 2,717,480   |   |
| Hidroeléctrica El  Chocón S.A. |   | Deutsche  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 87,880  |   | 2,898,510  |   | 2,986,390   |   | 21,946,008 |   | —    |   | 21,946,008  |   |
| Hidroeléctrica El  Chocón S.A. |   | Standard  Bank                                       |   | US$    |   | 3.80   | %      | Term      |   | 87,880  |   | 2,898,510  |   | 2,986,390   |   | 21,946,008 |   | —    |   | 21,946,008  |   |
| Hidroeléctrica El  Chocón S.A. |   | Sindicado                                            |   | US$    |   | 18.67  | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | —    |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Ciudad                                               |   | Ar$    |   | 21.50  | %      | Term      |   | —  |   | —     |   | —      |   | —     |   | —    |   | —      |   |
| Hidroeléctrica El  Chocón S.A. |   | Santander  Rio                                       |   | Ar$    |   | 17.44  | %      | Bi-annual |   | —  |   | —     |   | —      |   | —     |   | —    |   | —      |   |
| Inversiones GasAtacama Holding Ltda.     |   | PNC  BANK                                            |   | US$    |   | 3.09   | %      | Bi-annual |   | —  |   | —     |   | —      |   | —     |   | —    |   | —      |   |
| Inversiones GasAtacama Holding Ltda.     |   | SC  GROUP                                            |   | US$    |   | 7.50   | %      | Annual    |   | —  |   | 44,098,848 |   | 44,098,848  |   | —     |   | 662,790   |   | 662,790     |   |
| Pangue                                   |   | Export  Development Corporation                      |   | US$    |   | 1.63   | %      | Bi-annual |   | —  |   | —     |   | —      |   | —     |   | —    |   | —      |   |
| Pangue                                   |   | Export  Development Corporation                 |   | US$    |   | 3.75   | %      | Bi-annual |   | 772,559 |   | —     |   | 772,559     |   | —     |   | 1,218,197 |   | 1,218,197   |   |
| Pangue                                   |   | Kreditanstalf  Fúr Wiederaubau                  |   | US$    |   | 4.85   | %      | Bi-annual |   | 276,815 |   | —     |   | 276,815     |   | —     |   | —    |   | —      |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |    |   |       |   |        |   |       |   |      |   |        |   |
|                                     |   |                                                 |   |   |   |   |   |      |   |    |   |       |   | 137,165,649 |   |       |   |      |   | 274,764,168 |   |

 

F-59

----

Table of Contents

 

c)      The followingtable details Unsecured Debentures by currency and by maturity as of December 31,2009, December 31, 2008 and January 1, 2008:

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | **Total**                  | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Current  as of  12/31/2009** | ** ** | **One to  Five Years** | ** ** | **Five Years or  More** | ** ** | **Total Non-  Current as of  12/31/2009** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 8.22        | %          | Unsecured     |       | —           |       | —                     |       | 15,916,932 |   | — | ** ** | **15,916,932** |   | — |   | 454,187,524 | ** ** | **454,187,524** |   |
| Chile       |       | Ch$          |       | Quarterly        |       | 4.95        | %          | Unsecured     |       | —           |       | —                     |       | 1,081,503 |   | 6,802,729 | ** ** | **7,884,232** |   | 9,968,809 |   | 383,138,979 | ** ** | **393,107,788** |   |
| Peru        |       | US$          |       | Biannual         |       | 6.97        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 789,504 | ** ** | **789,504** |   | 4,056,799 |   | 27,505,653 | ** ** | **31,562,452** | ** ** |
| Peru        |       | Soles        |       | Quarterly        |       | 6.50        | %          | Unsecured     |       | **—**       |       | —                     |       | — |   | 314,504 | ** ** | **314,504** |   | — |   | 30,397,929 | ** ** | **30,397,929** |   |
| Colombia    |       | CPs          |       | Biannual         |       | 7.93        | %          | Unsecured     |       | **—**       |       | —                     |       | — |   | 47,545,058 | ** ** | **47,545,058** |   | — |   | 330,715,459 | ** ** | **330,715,459** |   |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   | ** ** |   |   |   |   |   | ** ** |   | ** ** |
|        |       |         |       |             |       |        |       | **Total**     |       | **—**       |       | —                     |       | **16,998,435** | ** ** | **55,451,795** | ** ** | **72,450,230** | ** ** | **14,025,608** | ** ** | **1,225,945,544** |   | **1,239,971,152** |   |

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | ** **                 | ** ** | **Maturity** | ** ** | **Total Non-** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Total  Current as of  12/31/2008** | ** ** | **One to Five  Years** | ** ** | **Five Years  or More** | ** ** | **Current as  of  12/31/2008** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 8.20        | %          | Unsecured     |       | —           |       | —                     |       | — | ** ** | 422,884,409 |   | **422,884,409** |   | — | ** ** | 538,625,726 |   | **538,625,726** |   |
| Chile       |       | Ch$          |       | Quarterly        |       | 4.97        | %          | Unsecured     |       | —           |       | —                     |       | — | ** ** | 3,630,353 |   | **3,630,353** |   | 10,211,424 | ** ** | 406,826,537 |   | **417,037,961** |   |
| Peru        |       | Soles        |       | Quarterly        |       | 6.48        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 15,282,707 | ** ** | **15,282,707** |   | 23,309,478 |   | 45,260,921 | ** ** | **68,570,399** | ** ** |
| Peru        |       | US$          |       | Biannual         |       | 5.80        | %          | Unsecured     |       | —           |       | —                     |       | — | ** ** | 13,448,960 |   | **13,448,960** |   | 5,094,843 | ** ** | 25,295,850 |   | **30,390,693** |   |
| Colombia    |       | CPs          |       | Biannual         |       | 13.05       | %          | Unsecured     |       | —           |       | —                     |       | 105,622,774 |   | — | ** ** | **105,622,774** |   | — |   | 232,613,356 | ** ** | **232,613,356** |   |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   | ** ** |
|        |       |         |       |             |       |        |       | **Total**     |       | **—**       | ** ** | **—**                 | ** ** | **105,622,774** | ** ** | **455,246,429** | ** ** | **560,869,203** | ** ** | **38,615,745** | ** ** | **1,248,622,390** | ** ** | **1,287,238,135** |   |

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current**            | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|----------------------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | ** **                 | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **undetermined** | ** ** | **Up to  one  Month** | ** ** | **One to  Three  Months** | ** ** | **Three to  Twelve  Months** | ** ** | **Total  Current as of  1/1/2008** | ** ** | **One to Five  Years** | ** ** | **Five Years  or More** | ** ** | **Total Non-  Current as  of 1/1/2008** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Chile       |       | US$          |       | Biannual         |       | 8.11        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 228,001,588 | ** ** | **228,001,588** |   | — |   | 728,590,172 | ** ** | **728,590,172** | ** ** |
| Chile       |       | Ch$          |       | Quarterly        |       | 4.72        | %          | Unsecured     |       | —           |       | —                     |       | — |   | 2,951,811 | ** ** | **2,951,811** |   | 9,340,386 |   | 176,486,204 | ** ** | **185,826,590** | ** ** |
| Peru        |       | Soles        |       | Quarterly        |       | 6.49        | %          | Unsecured     |       | —           |       | —                     |       | 12,947,996 |   | 3,317,022 | ** ** | **16,265,018** |   | 21,560,644 |   | 41,462,774 | ** ** | **63,023,418** | ** ** |
| Peru        |       | US$          |       | Biannual         |       | 5.55        | %          | Unsecured     |       | —           |       | —                     |       | — |   | — | ** ** | **—** |   | 4,970,557 |   | 18,888,119 | ** ** | **23,858,676** | ** ** |
| Colombia    |       | CPs          |       | Biannual         |       | 13.05       | %          | Unsecured     |       | —           |       | —                     |       | 3,444,610 |   | — | ** ** | **3,444,610** |   | 78,296,651 |   | 202,232,425 | ** ** | **280,529,076** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
|        |       |         |       |             |       |        |       | **Total**     |       | **—**       | ** ** | **—**                 | ** ** | **16,392,606** | ** ** | **234,270,421** | ** ** | **250,663,027** | ** ** | **114,168,238** | ** ** | **1,167,659,694** | ** ** | **1,281,827,932** | ** ** |

 

d)       The followingtable details Secured Debentures by currency and by maturity as of December 31,2009 and December 31, 2008:

 
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Current**      | ** ** | **Non-Current** | ** ** |
|-------------|------------|--------------|------------|------------------|------------|-------------|------------|---------------|------------|------------------|------------|-----------------|------------|
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | **Maturity**     | ** ** | **Total**       | ** ** | **Maturity** | ** ** | ** ** | ** ** |
| ** **  | ** ** | ** **   | ** ** | ** **       | ** ** | ** **  | ** ** | ** **    | ** ** | ** **       | ** ** | **Up to**  | ** ** | **One to** | ** ** | **Three to** | ** ** | **Current** | ** ** | ** ** | ** ** | **Five** | ** ** | **Total Non-** | ** ** |
| **Country** | ** ** | ** **   | ** ** | **Type of** | ** ** | **Nominal** | ** ** | ** **    | ** ** | **Undetermined** | ** ** | **one  month**  | ** ** | **three  months** | ** ** | **twelve  months** | ** ** | **as of  12/31/2009** | ** ** | **One to  Five Years** | ** ** | **Years or   More** | ** ** | **Current as  of 12/31/2009** | ** ** |
| **Segment** | ** ** | **Currency** | ** ** | **amortization** | ** ** | **Rate**    | ** ** | **Guarantee** | ** ** | **ThCh$**        | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Peru        |       | US$          |       | Biannual         |       | 6.06        | %          | Unsecured     |       | —           |       | —          |       | — | ** ** | 72,618 |   | **72,618** |   | 10,141,998 |   | — |   | **10,141,998** | ** ** |
| Peru        |       | Soles        |       | Biannual         |       | 6.28        | %          | Unsecured     |       | —           |       | —          |       | — |   | 10,950,797 | ** ** | **10,950,797** |   | 9,647,352 |   | 8,770,320 | ** ** | **18,417,672** | ** ** |
|        |       |         |       |             |       |        |       |          |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   | ** ** |
|        |       |         |       |             |       |        |       | **Total**     |       | **—**       | ** ** | **—**      | ** ** | **—** | ** ** | **11,023,415** | ** ** | **11,023,415** | ** ** | **19,789,350** | ** ** | **8,770,320** | ** ** | **28,559,670** | ** ** |

 

The fair value of currentand non-current bonds payable, both secured and unsecured, amounts to ThCh$ 1,681,709,406and ThCh$ 2,199,232,570 as of December 31, 2009 and December 31,2008, respectively.

 

F-60

----

Table of Contents

 

·         Secured and unsecured debentures per debtor

 
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** | **12-31-2009**             | ** ** |
|---------------|------------|-------------------------------------------------------------|------------|--------------|------------|--------------|------------|-------------|------------|----------------------------|------------|
| **Name**      | ** ** | **Name**                                                    | ** ** | **Type**     | ** ** | **Nominal**  | ** ** | ** **  | ** ** | **Current**                | ** ** | **Non-Current** | ** ** |
| **of**        | ** ** | **of**                                                      | ** ** | **of**       | ** ** | **interest** | ** ** | ** **  | ** ** | **Less than 90** | ** ** | **More than 90** | ** ** | **Total** | ** ** | ** ** | ** ** | ** ** | ** ** | **Total** | ** ** |
| **Company**   | ** ** | **lender**                                                  | ** ** | **currency** | ** ** | **rate**     | ** ** | **Secured** | ** ** | **days**                   | ** ** | **days** | ** ** | **current** | ** ** | **1 to 5 years** | ** ** | **More than 10 years** | ** ** | **non-current** | ** ** |
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | YES         |       | —                     |       | 6,218,332 |   | 6,218,332 |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | YES         |       | —                     |       | 55,078 |   | 55,078 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | YES         |       | —                     |       | 4,431,993 |   | 4,431,993 |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —                     |       | 29,644 |   | 29,644 |   | 5,262,192 |   | — |   | 5,262,192 |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —                     |       | 123,662 |   | 123,662 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | YES         |       | —                     |       | 92,088 |   | 92,088 |   | 4,385,160 |   | — |   | 4,385,160 |   |
| Chinango      |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | YES         |       | —                     |       | 72,618 |   | 72,618 |   | 10,141,998 |   | — |   | 10,141,998 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.31         | %          | No          |       | —                     |       | 6,920 |   | 6,920 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.28         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.75         | %          | No          |       | —                     |       | 78,933 |   | 78,933 |   | — |   | 3,508,128 |   | 3,508,128 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.50         | %          | No          |       | —                     |       | 80,760 |   | 80,760 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.44         | %          | No          |       | —                     |       | 30,582 |   | 30,582 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.63         | %          | No          |       | —                     |       | 14,526 |   | 14,526 |   | — |   | 4,385,160 |   | 4,385,160 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.59         | %          | No          |       | —                     |       | 102,783 |   | 102,783 |   | — |   | 4,964,001 |   | 4,964,001 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 5.97         | %          | No          |       | —                     |       | 108,963 |   | 108,963 |   | 4,056,799 |   | — |   | 4,056,799 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.34         | %          | No          |       | —                     |       | 138,506 |   | 138,506 |   | — |   | 5,070,999 |   | 5,070,999 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 9.00         | %          | No          |       | —                     |       | 59,148 |   | 59,148 |   | — |   | 4,929,095 |   | 4,929,095 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.78         | %          | No          |       | —                     |       | 143,209 |   | 143,209 |   | — |   | 4,140,994 |   | 4,140,994 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.13         | %          | No          |       | —                     |       | 102,050 |   | 102,050 |   | — |   | 3,222,567 |   | 3,222,567 |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.63         | %          | No          |       | —                     |       | 153,978 |   | 153,978 |   | — |   | 5,070,999 |   | 5,070,999 |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.00         | %          | No          |       | —                     |       | 83,650 |   | 83,650 |   | — |   | 5,070,999 |   | 5,070,999 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.91         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 8.50         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.00         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.88         | %          | No          |       | —                     |       | 77,674 |   | 77,674 |   | — |   | 54,124,027 |   | 54,124,027 |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 7.33         | %          | No          |       | —                     |       | 313,888 |   | 313,888 |   | — |   | 42,170,891 |   | 42,170,891 |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 7.64         | %          | No          |       | —                     |       | 2,781,270 |   | 2,781,270 |   | — |   | 9,922,563 |   | 9,922,563 |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 7.33         | %          | No          |       | —                     |       | 41,039,701 |   | 41,039,701 |   | — |   | 59,535,375 |   | 59,535,375 |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 5.77         | %          | No          |       | —                     |       | 98,880 |   | 98,880 |   | — |   | 12,264,287 |   | 12,264,287 |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.04         | %          | No          |       | —                     |       | 446,152 |   | 446,152 |   | — |   | 39,705,134 |   | 39,705,134 |   |
| Emgesa        |       | Bonos B15                                                   |       | CPs          |       | 8.34         | %          | No          |       | —                     |       | 160,448 |   | 160,448 |   | — |   | 13,767,556 |   | 13,767,556 |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 9.27         | %          | No          |       | —                     |       | 1,063,229 |   | 1,063,229 |   | — |   | 22,876,468 |   | 22,876,468 |   |
| Emgesa        |       | Bonos B9                                                    |       | CPs          |       | 8.16         | %          | No          |       | —                     |       | 1,101,083 |   | 1,101,083 |   | — |   | 54,127,579 |   | 54,127,579 |   |
| Emgesa        |       | Bonos B12                                                   |       | CPs          |       | 8.35         | %          | No          |       | —                     |       | 462,733 |   | 462,733 |   | — |   | 22,221,579 |   | 22,221,579 |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 12.56        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 13.28        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 12.56        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | BONOS B COI14B00021                                         |       | CPs          |       | 13.98        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-1     |       | US$          |       | 7.88         | %          | No          |       | 3,425,699                  |       | — |   | 3,425,699 |   | — |   | 102,917,226 |   | 102,917,226 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-2     |       | US$          |       | 7.33         | %          | No          |       | 1,095,470                  |       | — |   | 1,095,470 |   | — |   | 35,440,766 |   | 35,440,766 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-3     |       | US$          |       | 8.13         | %          | No          |       | 693,840                    |       | — |   | 693,840 |   | — |   | 15,095,048 |   | 15,095,048 |   |
| Endesa  Chile |       | Banco Santander Chile   -   264 Serie-F |       | Ch$          |       | 6.20         | %          | No          |       | 1,081,503                  |       | 314,143 |   | 1,395,646 |   | 1,256,571 |   | 27,717,199 |   | 28,973,770 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - 144 - A                      |       | US$          |       | 8.35         | %          | No          |       | 7,057,142                  |       | — |   | 7,057,142 |   | — |   | 211,634,298 |   | 211,634,298 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - 144 - A                      |       | US$          |       | 8.63         | %          | No          |       | 3,644,781                  |       | — |   | 3,644,781 |   | — |   | 99,962,409 |   | 99,962,409 |   |
| Endesa  Chile |       | Banco Santander Chile  -   317 Serie-H       |       | Ch$          |       | 6.20         | %          | No          |       | —                     |       | 5,421,895 |   | 5,421,895 |   | 8,712,238 |   | 66,125,845 |   | 74,838,083 |   |
| Endesa  Chile |       | Banco Santander Chile  -   318 Serie-K       |       | Ch$          |       | 3.80         | %          | No          |       | —                     |       | 657,013 |   | 657,013 |   | — |   | 83,760,687 |   | 83,760,687 |   |
| Endesa  Chile |       | Banco Santander Chile  -   522 Serie-M       |       | Ch$          |       | 4.75         | %          | No          |       | —                     |       | 409,678 |   | 409,678 |   | — |   | 194,673,025 |   | 194,673,025 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Tercera Emisión S-1     |       | US$          |       | 8.50         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Segunda Emisión 1       |       | US$          |       | 7.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
|          |       |                                                        |       |         |       |         |       |        |       |                       |       |   |   |   |   |   |   |   |   |   |   |
|          |       |                                                        |       |         |       |         |       |        |       |                       |       |   |   | 83,473,645 |   |   |   |   |   | 1,268,530,822 |   |

 
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** | **12-31-2008**     | ** ** |
|---------------|------------|-------------------------------------------------------------|------------|--------------|------------|--------------|------------|-------------|------------|--------------------|------------|
| **Name**      | ** ** | **Name**                                                    | ** ** | **Type**     | ** ** | **Nominal**  | ** ** | ** **  | ** ** | **Current**        | ** ** | **Non-Current** | ** ** |
| **of**        | ** ** | **of**                                                      | ** ** | **of**       | ** ** | **interest** | ** ** | ** **  | ** ** | **Less than** | ** ** | **More than 90** | ** ** | ** ** | ** ** | ** ** | ** ** | **More than 10** | ** ** | **Total ** | ** ** |
| **Company**   | ** ** | **lender**                                                  | ** ** | **currency** | ** ** | **rate**     | ** ** | **Secured** | ** ** | **90 days**   | ** ** | **days** | ** ** | **Total current** | ** ** | **1 to 5 years** | ** ** | **years** | ** ** | **non-current** | ** ** |
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** |               |       |   |   |   |   |   |   |   |   |   |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | YES         |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.31         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.28         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.75         | %          | No          |       | —             |       | — |   | — |   | — |   | 4,053,822 |   | 4,053,822 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.50         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.44         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.63         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.59         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,736,153 |   | 5,736,153 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 5.97         | %          | No          |       | —             |       | — |   | — |   | 5,094,843 |   | — |   | 5,094,843 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.34         | %          | No          |       | —             |       | — |   | — |   | — |   | 6,368,554 |   | 6,368,554 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 9.00         | %          | No          |       | —             |       | — |   | — |   | — |   | 6,190,187 |   | 6,190,187 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.78         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.13         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.63         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.00         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.91         | %          | No          |       | —             |       | 15,282,707 |   | 15,282,707 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —             |       | 6,724,480 |   | 6,724,480 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | No          |       | —             |       | — |   | — |   | 7,094,189 |   | — |   | 7,094,189 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | No          |       | —             |       | — |   | — |   | 5,067,278 |   | — |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —             |       | — |   | — |   | 6,080,733 |   | — |   | 6,080,733 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —             |       | — |   | — |   | — |   | 5,067,278 |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | No          |       | —             |       | — |   | — |   | 5,067,278 |   | — |   | 5,067,278 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | No          |       | —             |       | — |   | — |   | — |   | 12,737,109 |   | 12,737,109 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —             |       | 6,724,480 |   | 6,724,480 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 8.50         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.00         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.88         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 7.33         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 7.64         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 7.33         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 5.77         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.04         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B15                                                   |       | CPs          |       | 8.34         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 9.27         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B9                                                    |       | CPs          |       | 8.16         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B12                                                   |       | CPs          |       | 8.35         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | 1,826,096          |       | — |   | 1,826,096 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | 68,540             |       | — |   | 68,540 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | 126,554            |       | — |   | 126,554 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | 461,795            |       | — |   | 461,795 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 12.56        | %          | No          |       | 6,382,490          |       | — |   | 6,382,490 |   | — |   | 59,571,713 |   | 59,571,713 |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 13.28        | %          | No          |       | 6,115,741          |       | — |   | 6,115,741 |   | — |   | 48,224,720 |   | 48,224,720 |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 12.56        | %          | No          |       | 2,648,540          |       | — |   | 2,648,540 |   | — |   | 11,346,993 |   | 11,346,993 |   |
| Emgesa        |       | BONOS B COI14B00021                                         |       | CPs          |       | 13.98        | %          | No          |       | 4,302,930          |       | — |   | 4,302,930 |   | — |   | 113,469,930 |   | 113,469,930 |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | 57,905,331         |       | — |   | 57,905,331 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | 3,083,910          |       | — |   | 3,083,910 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | 5,365,037          |       | — |   | 5,365,037 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | 17,335,810         |       | — |   | 17,335,810 |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-1     |       | US$          |       | 7.88         | %          | No          |       | —             |       | 4,299,519 |   | 4,299,519 |   | — |   | 137,448,195 |   | 137,448,195 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-2     |       | US$          |       | 7.33         | %          | No          |       | —             |       | 144,292,497 |   | 144,292,497 |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-3     |       | US$          |       | 8.13         | %          | No          |       | —             |       | 870,822 |   | 870,822 |   | — |   | 22,098,558 |   | 22,098,558 |   |
| Endesa  Chile |       | Banco Santander Chile   -   264 Serie-F |       | Ch$          |       | 6.20         | %          | No          |       | —             |       | 1,445,988 |   | 1,445,988 |   | 1,287,154 |   | 36,443,753 |   | 37,730,907 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - 144 - A                      |       | US$          |       | 8.35         | %          | No          |       | —             |       | 8,857,263 |   | 8,857,263 |   | — |   | 252,964,910 |   | 252,964,910 |   |
| Endesa  Chile |       | The Bank of New York Mellon  - 144 - A                      |       | US$          |       | 8.63         | %          | No          |       | —             |       | 4,574,484 |   | 4,574,484 |   | — |   | 126,114,063 |   | 126,114,063 |   |
| Endesa  Chile |       | Banco Santander Chile  -   317 Serie-H       |       | Ch$          |       | 6.20         | %          | No          |       | —             |       | 1,091,714 |   | 1,091,714 |   | 8,924,270 |   | 72,121,018 |   | 81,045,288 |   |
| Endesa  Chile |       | Banco Santander Chile  -   318 Serie-K       |       | Ch$          |       | 3.80         | %          | No          |       | —             |       | 673,003 |   | 673,003 |   | — |   | 85,797,535 |   | 85,797,535 |   |
| Endesa  Chile |       | Banco Santander Chile  -   522 Serie-M       |       | Ch$          |       | 4.75         | %          | No          |       | —             |       | 419,648 |   | 419,648 |   | — |   | 212,464,231 |   | 212,464,231 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Tercera Emisión S-1     |       | US$          |       | 8.50         | %          | No          |       | —             |       | 259,989,824 |   | 259,989,824 |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Segunda Emisión 1       |       | US$          |       | 7.75         | %          | No          |       | —             |       | — |   | — |   | — |   | — |   | — |   |
|          |       |                                                        |       |         |       |         |       |        |       |               |       |   |   |   |   |   |   |   |   |   |   |
|          |       |                                                        |       |         |       |         |       |        |       |               |       |   |   | 560,869,203 |   |   |   |   |   | 1,287,238,135 |   |

 
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** | **01-01-2008**             | ** ** |
|---------------|------------|-------------------------------------------------------------|------------|--------------|------------|--------------|------------|-------------|------------|----------------------------|------------|
| **Name**      | ** ** | **Name**                                                    | ** ** | **Type**     | ** ** | **Nominal**  | ** ** | ** **  | ** ** | **Current**                | ** ** | **Non-Current** | ** ** |
| **of**        | ** ** | **of**                                                      | ** ** | **of**       | ** ** | **interest** | ** ** | ** **  | ** ** | **Less than 90** | ** ** | **More than 90** | ** ** | ** ** | ** ** | ** ** | ** ** | **More than 10** | ** ** | **Total non-** | ** ** |
| **Company**   | ** ** | **lender**                                                  | ** ** | **currency** | ** ** | **rate**     | ** ** | **Secured** | ** ** | **days**                   | ** ** | **days** | ** ** | **Total current** | ** ** | **1 to 5 years** | ** ** | **years** | ** ** | **current** | ** ** |
| ** **    | ** ** | ** **                                                  | ** ** | ** **   | ** ** | ** **   | ** ** | ** **  | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Chinango      |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | YES         |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.31         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.28         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | 3,317,017 |   | 3,317,017 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.50         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.44         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.63         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.59         | %          | No          |       | 4,975,533                  |       | — |   | 4,975,533 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 5.97         | %          | No          |       | —                     |       | — |   | — |   | — |   | 8,947,008 |   | 8,947,008 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.34         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 9.00         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.78         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 7.13         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.63         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Scotiabank                                            |       | US$          |       | 6.00         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.91         | %          | No          |       | —                     |       | — |   | — |   | 11,609,577 |   | — |   | 11,609,577 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.72         | %          | No          |       | —                     |       | — |   | — |   | 5,804,789 |   | — |   | 5,804,789 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.09         | %          | No          |       | —                     |       | — |   | — |   | 4,146,278 |   | — |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,975,533 |   | 4,975,533 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.16         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 5.91         | %          | No          |       | —                     |       | — |   | — |   | — |   | 4,146,278 |   | 4,146,278 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 6.06         | %          | No          |       | —                     |       | — |   | — |   | — |   | 9,941,111 |   | 9,941,111 |   |
| Edegel        |       | Banco Continental                                           |       | US$          |       | 3.75         | %          | No          |       | —                     |       | — |   | — |   | 4,970,557 |   | — |   | 4,970,557 |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 8.50         | %          | No          |       | —                     |       | 3,317,022 |   | 3,317,022 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.00         | %          | No          |       | 3,710,089                  |       | — |   | 3,710,089 |   | — |   | — |   | — |   |
| Edegel        |       | Banco Continental                                           |       | Soles        |       | 6.47         | %          | No          |       | 4,262,374                  |       | — |   | 4,262,374 |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.88         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 7.33         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 7.64         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 7.33         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 5.77         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 8.04         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B15                                                   |       | CPs          |       | 8.34         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A5                                                    |       | CPs          |       | 9.27         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B9                                                    |       | CPs          |       | 8.16         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B12                                                   |       | CPs          |       | 8.35         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Emgesa        |       | Bonos A-10                                                  |       | CPs          |       | 12.56        | %          | No          |       | —                     |       | — |   | — |   | — |   | 51,791,231 |   | 51,791,231 |   |
| Emgesa        |       | Bonos B-103                                                 |       | CPs          |       | 13.28        | %          | No          |       | 3,444,610                  |       | — |   | 3,444,610 |   | — |   | 41,926,234 |   | 41,926,234 |   |
| Emgesa        |       | Bonos A102                                                  |       | CPs          |       | 12.56        | %          | No          |       | —                     |       | — |   | — |   | — |   | 9,864,996 |   | 9,864,996 |   |
| Emgesa        |       | BONOS B COI14B00021                                         |       | CPs          |       | 13.98        | %          | No          |       | —                     |       | — |   | — |   | — |   | 98,649,964 |   | 98,649,964 |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.17        | %          | No          |       | —                     |       | — |   | — |   | 56,680,570 |   | — |   | 56,680,570 |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 10.25        | %          | No          |       | —                     |       | — |   | — |   | 4,333,425 |   | — |   | 4,333,425 |   |
| Emgesa        |       | Bonos C10                                                   |       | CPs          |       | 9.88         | %          | No          |       | —                     |       | — |   | — |   | 2,485,162 |   | — |   | 2,485,162 |   |
| Emgesa        |       | Bonos B10                                                   |       | CPs          |       | 12.86        | %          | No          |       | —                     |       | — |   | — |   | 14,797,494 |   | — |   | 14,797,494 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-1     |       | US$          |       | 7.88         | %          | No          |       | —                     |       | 3,749,967 |   | 3,749,967 |   | — |   | 110,666,143 |   | 110,666,143 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-2     |       | US$          |       | 7.33         | %          | No          |       | —                     |       | 3,336,409 |   | 3,336,409 |   | — |   | 108,519,461 |   | 108,519,461 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Primera Emisión S-3     |       | US$          |       | 8.13         | %          | No          |       | —                     |       | 389,219 |   | 389,219 |   | — |   | 5,888,764 |   | 5,888,764 |   |
| Endesa  Chile |       | Banco Santander Chile   -   264 Serie-F |       | Ch$          |       | 6.20         | %          | No          |       | —                     |       | 1,337,624 |   | 1,337,624 |   | 1,177,360 |   | 19,450,567 |   | 20,627,927 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - 144 - A                      |       | US$          |       | 8.35         | %          | No          |       | —                     |       | 6,915,053 |   | 6,915,053 |   | — |   | 197,088,673 |   | 197,088,673 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - 144 - A                      |       | US$          |       | 8.63         | %          | No          |       | —                     |       | 3,571,397 |   | 3,571,397 |   | — |   | 108,545,253 |   | 108,545,253 |   |
| Endesa  Chile |       | Banco Santander Chile  -   317 Serie-H       |       | Ch$          |       | 6.20         | %          | No          |       | —                     |       | 998,591 |   | 998,591 |   | 8,163,026 |   | 41,610,882 |   | 49,773,908 |   |
| Endesa  Chile |       | Banco Santander Chile  -   318 Serie-K       |       | Ch$          |       | 3.80         | %          | No          |       | —                     |       | 615,596 |   | 615,596 |   | — |   | 115,424,755 |   | 115,424,755 |   |
| Endesa  Chile |       | Banco Santander Chile  -   522 Serie-M       |       | Ch$          |       | 4.75         | %          | No          |       | —                     |       | — |   | — |   | — |   | — |   | — |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Tercera Emisión S-1     |       | US$          |       | 8.50         | %          | No          |       | —                     |       | 4,223,565 |   | 4,223,565 |   | — |   | 197,881,878 |   | 197,881,878 |   |
| Endesa  Chile |       | The Bank of New York  Mellon - Segunda Emisión 1       |       | US$          |       | 7.75         | %          | No          |       | —                     |       | 205,815,978 |   | 205,815,978 |   | — |   | — |   | — |   |
|          |       |                                                        |       |         |       |         |       |        |       |                       |       |   |   |   |   |   |   |   |   |   |   |
|          |       |                                                        |       |         |       |         |       |        |       |                       |       |   |   | 250,663,027 |   |   |   |   |   | 1,281,827,932 |   |

 

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15.1       Debt designated as hedging instrument

 

OfEndesa Chile’s dollar-denominated debt, as of December 31, 2009, ThCh$964,291,218 is related to future cash flow hedges for the Group’s dollar-linkedoperating income (see Note 17). As of December 31, 2008, this amounttotals ThCh$ 1,361,366,550.

 

Thefollowing table details movements in “Hedging reserves” during 2009 and 2008due to exchange differences of this debt:

 
| ** **                                                    | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** |
|---------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|
| ** **                                                    | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| **Balance in hedge reserves at the  beginning of the period** | ** ** | **(96,503,511** | **)**      | **169,344,561** | ** ** |
| Exchange differences recorded in net equity                   |       | 191,831,708     |       | (255,006,999    | )          |
| Exchange differences charged to earnings                      |       | (6,263,472      | )          | (13,841,073     | )          |
| **Balance in hedge reserves at the  end of the period**       | ** ** | **89,064,725**  | ** ** | **(96,503,511** | **)**      |

 

15.2       Other matters

 

Asof December 31, 2009 and December 31, 2008, Endesa Chile hadavailable long-term credit lines totaling ThCh$ 152,130,000 and ThCh$ 127,290,000,respectively.

 

Manyof the company’s debt agreements and some agreements entered into by itssubsidiaries include an obligation to comply with certain financial ratios,which is customary for agreements of this nature. This also includes affirmativeand negative obligations that require these commitments to be monitored.

 

InJune 2009, the Company agreed new limits for its financial covenants withthe creditors of its bank loans; basically, the new limits were set with leewayfor indebtedness, so that the effect of adopting International FinancialReporting Standards was neutral.

 

Inthe case of local bonds issued in UF, whose financial covenants are linked tothe company’s Chilean GAAP financial statements using the statutory (FECU)format, these covenants were certified as of March, June and September 2009by associating the FECU accounts with the new IFRS presentation as best aspossible, maintaining the contractual basis and sense of the covenants definedunder the prior FECU format.  Existing leeway is significant and,therefore, there was no risk of defaulting on these requirements at December 31,2009. In January, 2010 the Company and the bondholders for each of the seriesconducted a meeting on which they approved the changes to the financialcovenants necessary to reflect the effects of the change in accountingstandards.

 

Someof Endesa Chile’s financial debt arrangements contain cross defaultclauses.  Endesa Chile has two loans syndicated under New York Lawstipulating that the cross-default clause would be triggered when payments ofinterest and/or principal become overdue, and the default is originated by theCompany or its relevant subsidiaries.  One loan syndicated under New YorkLaw and entered into in 2008, does not reference its subsidiaries and,therefore, a cross default can only arise from that Company’s other debt. For debt repayment of one or more loans to be accelerated due to cross defaultoriginated from other debt, additional conditions must be met, includingexpiration of grace periods, if any, and formal notification of the creditors’intention to accelerate repayment of more than 50% of the amount owed in theagreement. Additionally, in December 2009, Endesa Chile signed loans frombanks in Chile that stipulate that a cross default is triggered only in thecase of default by the debtor. For all scenarios aforementioned, the amount ondefault should exceed US$ 50 million, or its equivalent in other currencies.

 

ForEndesa Chile’s bonds registered with the United States Securities and ExchangeCommission (“SEC”), commonly known as “Yankee Bonds”, after an amendmentapproved by bondholders in July 2009, cross default for nonpayment couldbe triggered by other debt of the same company, or any of its Chileansubsidiaries, for any overdue amount as long as the principal of the debtgenerating the cross default exceeds

 

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US$30 million, or its equivalent in other currencies. As with the preceding case,accelerated repayment of debt as a result of cross default does not occurautomatically, but rather must be demanded by the holders of at least 25% of agiven series of Yankee Bonds.

 

Asof December 31, 2009 and December 31, 2008, neither Endesa Chile norany of its subsidiaries have defaulted on the financial obligations summarizedhere or any other contractual obligations for which a default could give riseto early acceleration of its financial obligations.

 

**16.    RISK MANAGEMENT POLICY**

 

TheGroup’s companies are exposed to certain risks that are managed by implementingsystems to identify, measure, limit concentration of and supervise risks.

 

Thebasic principles outlined by the Group include the following:

 

·       Comply with the standards of good corporate governance.

 

·       Comply strictly and fully with Endesa Chile’s system of standards.

 

·       Each business and corporate area defines:

 

I.      The markets andproducts, in which they can operate, based on sufficient knowledge andcapability to ensure effective risk management.

 

II.    Criteria regarding thirdparties.

 

III.   Authorized operators.

 

·       Businesses and corporate areas establish a predisposition to risk consistentwith the defined strategy for each market in which they operate.

 

·       All business and corporate area transactions are conducted within the limitsapproved by the appropriate internal entity.

 

·       Businesses, corporate areas, business lines and companies establish the riskmanagement controls necessary to ensure that market transactions are conductedin accordance with Endesa Chile policies, rules and procedures.

 

16.1. Interest rate risk.

 

Variationsin interest rates alter the fair value of assets and liabilities that accrueinterest at a fixed rate, as well as future cash flows from assets andliabilities with a variable interest rate.

 

Theobjective of interest rate risk management is to achieve a balanced debtstructure that minimizes the cost of debt, with reduced volatility in theincome statement.

 

Complyingwith the current interest rate hedging policy, the percentage of fixed and/orprotected debt over total net debt is 47% as of December 2009.

 

Dependingon the Group’s estimates and debt structure objectives, hedging transactionstake place through contracted derivatives that mitigate these risks.****The instruments currently used to complywith this policy are collars, that ensure the Libor rate within a specificband, or interest rate swaps that set the rate from variable to fixed.

 

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EndesaChile Group’s financial debt structure according to fixed, protected andvariable rates, after contracted derivatives, is the following:

 

Netposition:

 
| ** **              | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|-------------------------|------------|----------------|------------|----------------|------------|
| ** **              | ** ** | **%**          | ** ** | **%**          | ** ** |
| Fixed interest rate     |       | 46             | %          | 52             | %          |
| Protected interest rate |       | 1              | %          | 3              | %          |
| Variable interest rate  |       | 53             | %          | 45             | %          |
| **Total**               | ** ** | **100**        | **%**      | **100**        | **%**      |

 

16.2. Exchange rate risk

 

Exchangerate risk relates mainly to the following transactions:

 

·          Debt contracted by the Group’s companies that is denominated in a foreigncurrency.

 

·          Payments to be made in international markets for the acquisition of projectrelated materials.

 

·          Group company income directly linked to dollar changes.

 

·          Cash flows from foreign subsidiaries to the Chilean parent company, exposed toexchange rate fluctuations.

 

Inorder to mitigate exchange rate risk, the Endesa Chile Group’s exchange ratehedging policy is based on cash flows and maintaining a balance between flowsindexed to the US dollar and the levels of assets and liabilities in thatcurrency. The objective is to minimize the exposure of flows to exchange ratevariation risk.

 

Theinstruments currently used to comply with the policy are currency swaps andexchange rate forwards. Likewise, the policy seeks to refinance debt in thefunctional currency of each company.

 

16.3. Commodities risk

 

TheEndesa Chile Group is exposed to price fluctuation risks on some commodities,mainly through:

 

·      Fuel purchases forthe electricity generation process.

 

·    Energy buying/selling transactions on local markets.

 

Thecompany does not engage in derivative instrument transactions for commoditiesto manage fuel price fluctuations; however, it is continuously analyzing andverifying the suitability of this type of hedge, and therefore does not rule outpossible use of this type of tool in the future.

 

Inorder to reduce risk in extreme drought, the Company has designed a tradingpolicy that defines sales commitment levels consistent with its generationplants’ sound energy capacity in a dry year and includes risk mitigationclauses in some contracts with non-regulated clients.

 

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16.4. Liquidity risk

 

TheGroup’s liquidity policy consists of contracting committed long-term creditfacilities and temporary financial investments for amounts sufficient tosupport projected needs for a period that reflects the situation andexpectations of debt and capital markets.

 

Theseprojected needs include net financial debt maturity, after financialderivatives. For more detail regarding the characteristics and conditions offinancial derivatives see Note 17.

 

As of December 31, 2009, the Endesa Group hadliquidity of ThCh$ 446,438,229 in cash and cash equivalents and ThCh$152,130,000 in unconditionally available credit lines. As of December 31,2008, the Group had liquidity of ThCh$ 719,217,980 in cash and cash equivalentsand ThCh$ 127,290,000 in unconditionally available credit lines.

 

16.5. Credit risk

 

Giventhe current economic climate, the Group has been carefully following its creditrisk.

 

Tradereceivables:

 

Creditrisk for receivables from commercial activity is historically very limited,given the short length of time before payment is due, which limits theaccumulation of significant individual amounts.

 

Insome countries, supply may be cut in cases of non-payment, and in almost allcontracts a clause is established to terminate the contract upon paymentdefault. Therefore, the company constantly monitors credit risk and measuresmaximum amounts exposed to payment risks, which are limited.

 

Financialassets:

 

Investmentsof cash surpluses are made in prime national and foreign financial entities(with investment grade equivalent risk ratings) within established limits foreach entity.

 

Inthe selection of banks for investment, consideration is given to those thathold at least two investment grade ratings from the three major internationalrating agencies (Moody’s, S&P and Fitch).

 

Positionsare backed by treasury bonds from the country of operations and/or commercialpapers issued by highly-reputable banks, with a preference to the extentpossible on the first option.

 

Derivativesare engaged through highly solvent entities, such that about 90% of thetransactions are with entities that hold an A or higher rating.

 

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16.6. Risk measurement

 

TheEndesa Chile Group measures the Value at Risk of its debt and financialderivatives positions with the aim of ensuring that the risk assumed by thecompany remains consistent with the risk exposure defined by Management, thusrestricting volatility in the income statement.

 

Thepositions portfolio included in the calculations of the current Value at Riskis composed of:

 

·      Debt

 

·      Financial derivatives

 

Thecalculated Value at Risk represents the possible loss in value of theaforementioned positions portfolio over a one-day time period with 95%confidence. To find this value, a study has been performed of the volatility ofrisk variables that affect the value of the positions portfolio, including:

 

·      The US dollar Liborinterest rate.

 

·     The customary local banking index for debt, and taking into account thedifferent currencies our companies operate under.

 

·      The exchange rates ofthe different currencies involved in the calculation.

 

TheValue at Risk calculation, using the Monte Carlo methods, is based ongenerating possible future scenarios (on a one-day time horizon) of the riskvariables of the market values (both spot and timed). The number of scenariosgenerated ensures observance of the simulation’s convergence criteria. In thesimulated scenarios of future prices, the volatilities matrix and thecorrelations between the different risk variables calculated on historic pricelogarithmic returns are applied.

 

Oncethe price scenarios are generated, the fair value of the portfolio iscalculated for each scenario, obtaining a distribution of possible values overone day. The one-day Value at Risk with 95% confidence is calculated as a 5%percentile of the possible increase in fair value of the portfolio in one day.

 

Thevaluation of the diverse debt and financial derivative positions in thecalculation has been consistent with the economic equity calculation methodreported to the Management.

 

Takinginto account the assumptions described above, the Value at Risk of the previouslydiscussed positions, broken down by type of position, is shown in the followingtable:

 
| ** **                   | ** ** | **Balance as of** | ** ** |
|------------------------------|------------|-----------------------------|------------|
| ** **                   | ** ** | **12-31-2009**              | ** ** | **12-31-2008** | ** ** |
| **Financial positions** | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** |
| ** **                   | ** ** | ** **                  | ** ** | ** ** | ** ** |
| Interest rate                |       | 16,308,634                  |       | 19,723,792 |   |
| Exchange rate                |       | 734,415                     |       | — |   |
| Correlation                  |       | (813,296                    | )          | — |   |
|                         |       |                        |       |   |   |
| Total                        | ** ** | **16,229,753**              | ** ** | **19,723,792** | ** ** |

 

TheValue at Risk positions has changed during 2009 and 2008 based on thematurity/commencement of transactions during the period.

 

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**17.   FINANCIAL INSTRUMENTS**

 

17.1 Classification of financial asset instrumentsby nature and category

 

**a)****        **The following table detailsfinancial asset instruments, classified by nature and category, as of December 31,2009, December 31, 2008 and January 1, 2008:

 
| ** **              | ** ** | **December 31, 2009**                       | ** ** |
|-------------------------|------------|-------------------------------------------------------|------------|
| ** **              | ** ** | **Financial assets  held for trading** | ** ** | **Financial assets at fair value  with change in net income** | ** ** | **Held–to-maturity  Investments** | ** ** | **Loans and  receivables** | ** ** | **Available-for-sale  financial assets** | ** ** | **Hedge  derivatives** | ** ** |
| ** **              | ** ** | **ThCh$**                                             | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments     |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Derivative  instruments |       | 1,536,089                                             |       | — |   | — |   | — |   | — |   | — |   |
| Other  financial assets |       | —                                                |       | — |   | — |   | 397,426,364 |   | — |   | — |   |
| **Total Current**       |       | 1,536,089                                             |       | — |   | — |   | 397,426,364 |   | — |   | — |   |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments     |       | —                                                |       | — |   | — |   | — |   | 2,487,796 |   | — |   |
| Derivative  instruments |       | 732,253                                               |       | — |   | — |   | — |   | — |   | 590,622 |   |
| Other  financial assets |       | —                                                |       | — |   | — |   | 67,047,589 |   | — |   | — |   |
| **Total Non-Current**   |       | 732,253                                               |       | — |   | — |   | 67,047,589 |   | 2,487,796 |   | 590,622 |   |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| **Total**               |       | 2,268,342                                             |       | — |   | — |   | 464,473,953 |   | 2,487,796 |   | 590,622 |   |

 
| ** **              | ** ** | **December 31, 2008**                       | ** ** |
|-------------------------|------------|-------------------------------------------------------|------------|
| ** **              | ** ** | **Financial assets  held for trading** | ** ** | **Financial assets at fair value  with change in net income** | ** ** | **Held–to-maturity  Investments** | ** ** | **Loans and  receivables** | ** ** | **Available-for-sale  financial assets** | ** ** | **Hedge  derivatives** | ** ** |
| ** **              | ** ** | **ThCh$**                                             | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments     |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Derivative  instruments |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Other  financial assets |       | —                                                |       | — |   | — |   | 408,505,738 |   | — |   | — |   |
| **Total Current**       |       | —                                                |       | — |   | — |   | 408,505,738 |   | — |   | — |   |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments     |       | —                                                |       | — |   | — |   | — |   | 2,432,507 |   | — |   |
| Derivative  instruments |       | 1,324,219                                             |       | — |   | — |   | — |   | — |   | — |   |
| Other  financial assets |       | —                                                |       | — |   | — |   | 153,743,454 |   | — |   | — |   |
| **Total Non-Current**   |       | 1,324,219                                             |       | — |   | — |   | 153,743,454 |   | 2,432,507 |   | — |   |
|                    |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| **Total**               |       | 1,324,219                                             |       | — |   | — |   | 562,249,192 |   | 2,432,507 |   | — |   |

 
| ** **                   | ** ** | **January 1, 2008**                         | ** ** |
|------------------------------|------------|-------------------------------------------------------|------------|
| ** **                   | ** ** | **Financial assets  held for trading** | ** ** | **Financial assets at fair value  with change in net income** | ** ** | **Held–to-maturity  Investments** | ** ** | **Loans and  receivables** | ** ** | **Available-for-sale  financial assets** | ** ** | **Hedge  derivatives** | ** ** |
| ** **                   | ** ** | **ThCh$**                                             | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                         |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments          |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Derivative  instruments      |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Other  assets of a financial |       | —                                                |       | — |   | — |   | 408,201,348 |   | — |   | — |   |
| **Total Current**            |       | —                                                |       | — |   | — |   | 408,201,348 |   | — |   | — |   |
|                         |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| Equity  instruments          |       | —                                                |       | — |   | — |   | — |   | 2,441,449 |   | — |   |
| Derivative  instruments      |       | —                                                |       | — |   | — |   | — |   | — |   | — |   |
| Other  financial assets      |       | —                                                |       | — |   | — |   | 95,668,097 |   | — |   | — |   |
| **Total Non-Current**        |       | —                                                |       | — |   | — |   | 95,668,097 |   | 2,441,449 |   | — |   |
|                         |       |                                                  |       |   |   |   |   |   |   |   |   |   |   |
| **Total**                    |       | —                                                |       | — |   | — |   | 503,869,445 |   | 2,441,449 |   | — |   |

 

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**b)      **The following table details financial liability instruments, classifiedby nature and category, as of December 31, 2009, December 31, 2008and January 1, 2008:

 
| ** **                  | ** ** | **December 31, 2009**                            | ** ** |
|-----------------------------|------------|------------------------------------------------------------|------------|
| ** **                  | ** ** | **Financial liabilities  held for trading** | ** ** | **Financial liabilities at fair  value through profit and loss** | ** ** | **Loans and  payables** | ** ** | **Hedge derivatives** | ** ** |
| ** **                  | ** ** | **ThCh$**                                                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                        |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans      |       | —                                                     |       | — |   | 345,355,943 |   | — |   |
| Derivative instruments      |       | 420,822                                                    |       | — |   | — |   | 717,980 |   |
| Other financial liabilities |       | —                                                     |       | — |   | 464,701,884 |   | — |   |
| **Total Current**           |       | 420,822                                                    |       | — |   | 810,057,827 |   | 717,980 |   |
|                        |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans      |       | —                                                     |       | — |   | 1,791,980,967 |   | — |   |
| Derivative instruments      |       | —                                                     |       | — |   | — |   | 2,929,730 |   |
| Other financial liabilities |       | —                                                     |       | — |   | 7,569,739 |   | — |   |
| **Total Non-Current**       |       | —                                                     |       | — |   | 1,799,550,706 |   | 2,929,730 |   |
|                        |       |                                                       |       |   |   |   |   |   |   |
| **Total**                   |       | 420,822                                                    |       | — |   | 2,609,608,533 |   | 3,647,710 |   |

 
| ** **                  | ** ** | **December 31, 2008**                            | ** ** |
|-----------------------------|------------|------------------------------------------------------------|------------|
| ** **                  | ** ** | **Financial liabilities  held for trading** | ** ** | **Financial liabilities at fair  value through profit and loss** | ** ** | **Loans and  payables** | ** ** | **Hedge derivatives** | ** ** |
| ** **                  | ** ** | **ThCh$**                                                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                        |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans      |       | —                                                     |       | — |   | 740,117,554 |   | — |   |
| Derivative instruments      |       | —                                                     |       | — |   | — |   | 29,824 |   |
| Other financial liabilities |       | —                                                     |       | — |   | 485,071,326 |   | — |   |
| **Total Current**           |       | —                                                     |       | — |   | 1,225,188,880 |   | 29,824 |   |
|                        |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans      |       | —                                                     |       | — |   | 2,134,544,298 |   | — |   |
| Derivative instruments      |       | —                                                     |       | — |   | — |   | 7,295,198 |   |
| Other financial liabilities |       | —                                                     |       | — |   | 13,252,372 |   | — |   |
| **Total Non-Current**       |       | —                                                     |       | — |   | 2,147,796,670 |   | 7,295,198 |   |
|                        |       |                                                       |       |   |   |   |   |   |   |
| **Total**                   |       | —                                                     |       | — |   | 3,372,985,550 |   | 7,325,022 |   |

 
| ** **                              | ** ** | **January 1, 2008**                              | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------|------------|
| ** **                              | ** ** | **Financial liabilities  held for trading** | ** ** | **Financial liabilities at fair  value through profit and loss** | ** ** | **Loans and  payables** | ** ** | **Hedge derivatives** | ** ** |
| ** **                              | ** ** | **ThCh$**                                                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                    |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans                  |       | —                                                     |       | — |   | 419,296,249 |   | — |   |
| Derivative instruments                  |       | —                                                     |       | — |   | — |   | 3,877,756 |   |
| Other liabilities of a financial nature |       | —                                                     |       | — |   | 310,747,266 |   | — |   |
| **Total Current**                       |       | —                                                     |       | — |   | 730,043,515 |   | 3,877,756 |   |
|                                    |       |                                                       |       |   |   |   |   |   |   |
| Interest-bearing loans                  |       | —                                                     |       | — |   | 1,688,324,335 |   | — |   |
| Derivative instruments                  |       | —                                                     |       | — |   | — |   | 1,409,173 |   |
| Other liabilities of a financial nature |       | —                                                     |       | — |   | 10,023,043 |   | — |   |
| **Total Non-Current**                   |       | —                                                     |       | — |   | 1,698,347,378 |   | 1,409,173 |   |
|                                    |       |                                                       |       |   |   |   |   |   |   |
| **Total**                               |       | —                                                     |       | — |   | 2,428,390,893 |   | 5,286,929 |   |

 

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17.2 Derivative Instruments

 

Inadhering to its risk management policy, the Endesa Group enters into interestand exchange rate derivatives.

 

Thecompany classifies its hedges as:

 

·         Cashflow hedges: Those that hedge the cash flows of the hedged underlying item.

 

·         Fairvalues hedges:**Those thathedge the fair value of the hedged underlying item.

 

·        Non-hedge derivatives: Financial derivatives that do not meet therequirements established by IFRS to be designated as hedge instruments, arerecorded at fair value with changes in net income (assets held for trading).

 

**a)    Assets and liabilities for hedgederivative instruments**

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008,financial derivative transactions that qualify as hedge instruments resulted inrecognition of the following assets and liabilities in the statement offinancial position:

 
| ** **            | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** | **January 1, 2008** | ** ** |
|-----------------------|------------|---------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| ** **            | ** ** | **Asset**                       | ** ** | **Liability**                   | ** ** | **Asset**                     | ** ** | **Liability** | ** ** | **Asset** | ** ** | **Liability** | ** ** |
| ** **            | ** ** | **Current**                     | ** ** | **Non-  current**               | ** ** | **Current**                   | ** ** | **Non-  current** | ** ** | **Current** | ** ** | **Non-  current** | ** ** | **Current** | ** ** | **Non-  current** | ** ** | **Current** | ** ** | **Non-  current** | ** ** | **Current** | ** ** | **Non-  current** | ** ** |
| ** **            | ** ** | **ThCh$**                       | ** ** | **ThCh$**                       | ** ** | **ThCh$**                     | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Interest  rate hedge: | ** ** | **—**                      | ** ** | **509,760**                     | ** ** | **717,980**                   | ** ** | **2,929,730** | ** ** | **—** | ** ** | **—** | ** ** | **29,824** | ** ** | **7,295,198** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **1,409,173** | ** ** |
| Cash  flow hedge      |       | —                          |       | 509,760                         |       | 717,980                       |       | 2,929,730 |   | — |   | — |   | 29,824 |   | 7,295,198 |   | — |   | — |   | — |   | 1,409,173 |   |
| Exchange  rate hedge: | ** ** | **—**                      | ** ** | **80,862**                      | ** ** | **—**                    | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **3,877,756** | ** ** | **—** | ** ** |
| Cash  flow hedge      |       | —                          |       | 80,862                          |       | —                        |       | — |   | — |   | — |   | — |   | — |   | — |   | — |   | 3,877,756 |   | — |   |
| **TOTAL**             | ** ** | **—**                      | ** ** | **590,622**                     | ** ** | **717,980**                   | ** ** | **2,929,730** | ** ** | **—** | ** ** | **—** | ** ** | **29,824** | ** ** | **7,295,198** | ** ** | **—** | ** ** | **—** | ** ** | **3,877,756** | ** ** | **1,409,173** | ** ** |

 

**·****   General Information Relating to Hedge Derivative Instruments**

 

Thefollowing table details the company’s hedge derivative instruments and theassociated underlying item:

 
| **Detail of  Hedge  Instruments** | ** ** | **Description of  Hedge  Instruments** | ** ** | **Description of  Hedged  Instruments** | ** ** | **12-31-2009  Fair Value of Hedge  Instruments  ThCh$** | ** ** | **12-31-2008  Fair Value of Hedge  Instruments  ThCh$** | ** ** | **Nature of Risks Being  Hedged** | ** ** |
|----------------------------------------|------------|---------------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| SWAP                                   |       | Interest  Rate                              |       | Bank  Loans                                  |       | (2,372,070                                                             | )          | (4,998,495                                                             | )          | Cash flow                                        |       |
| SWAP                                   |       | Exchange  rate                              |       | Bank  Loans                                  |       | 80,862                                                                 |       | —                                                                 |       | Cash flow                                        |       |
| COLLAR                                 |       | Interest  Rate                              |       | Bank  Loans                                  |       | (685,018                                                               | )          | (2,326,527                                                             | )          | Cash flow                                        |       |

 

Foryears 2009 and 2008, the Group had not recognized significant gains or lossesfor ineffective cash flow hedges.

 

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**b)    Derivativeinstrument assets and liabilities at fair value with changes in net income**

 

   Asof December 31, 2009, December 31, 2008 and January 1, 2008, financialderivative transactions recorded at fair value with changes in net income,resulted in the recognition of the following assets and liabilities in thestatement of financial position:

 
| ** **                                                      | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** | **January 1, 2008** | ** ** |
|-----------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| ** **                                                      | ** ** | **Asset**                       | ** ** | **Liability**                   | ** ** | **Asset**                     | ** ** | **Liability** | ** ** | **Asset** | ** ** | **Liability** | ** ** |
| ** **                                                      | ** ** | **Current**                     | ** ** | **Non-Current**                 | ** ** | **Current**                   | ** ** | **Non-Current** | ** ** | **Current** | ** ** | **Non-Current** | ** ** | **Current** | ** ** | **Non-Current** | ** ** | **Current** | ** ** | **Non-Current** | ** ** | **Current** | ** ** | **Non-Current** | ** ** |
| ** **                                                      | ** ** | **ThCh$**                       | ** ** | **ThCh$**                       | ** ** | **ThCh$**                     | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Financial  assets at fair value with changes through net income |       | 1,536,089                       |       | 732,253                         |       | —                        |       | — |   | — |   | 1,324,219 |   | — |   | — |   | — |   | — |   | — |   | — |   |
| Other  financial liabilities                                    |       | —                          |       | —                          |       | 420,822                       |       | — |   | — |   | — |   | — |   | — |   | — |   | — |   | — |   | — |   |

 

**c)     Otherinformation about derivative instruments:**

 

Thefollowing table details the Group’s financial derivatives as of December 31,2009 and December 31, 2008, their fair values as well as their notionaland contractual values by maturity:

 
| ** **                                         | ** ** | **December 31, 2009** | ** ** |
|----------------------------------------------------|------------|---------------------------------|------------|
| ** **                                         | ** ** | ** **                      | ** ** | **Notional value** | ** ** |
| ** **                                         | ** ** | **Fair value**             | ** ** | **Before 1******** Year** | ** ** | **1 - 2********Years** | ** ** | **2 - 3******** Years** | ** ** | **3 - 4******** Years** | ** ** | **4 - 5********Years** | ** ** | **Subsequent  Years** | ** ** | **Total** | ** ** |
| **Financial derivatives**                     | ** ** | **ThCh$**                       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Interest rate hedge:**                           | ** ** | **(3,137,950**                  | **)**      | **37,987,629** | ** ** | **24,941,637** | ** ** | **25,121,734** | ** ** | **1,825,560** | ** ** | **101,420,000** | ** ** | **—** | ** ** | **191,296,560** | ** ** |
|    Cash flow hedge                            |       | (3,137,950                      | )          | 37,987,629 |   | 24,941,637 |   | 25,121,734 |   | 1,825,560 |   | 101,420,000 |   | — |   | 191,296,560 |   |
| **Exchange rate hedge:**                           | ** ** | **80,862**                      | ** ** | **—** | ** ** | **—** | ** ** | **5,071,000** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **5,071,000** | ** ** |
|    Cash flow hedge                            |       | 80,862                          |       | — |   | — |   | 5,071,000 |   | — |   | — |   | — |   | 5,071,000 |   |
| **Derivatives not designated as hedge accounting** | ** ** | **1,847,520**                   | ** ** | **91,970,309** | ** ** | **31,945,255** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **123,915,564** | ** ** |
| **TOTAL**                                          | ** ** | **(1,209,568**                  | **)**      | **129,957,938** | ** ** | **56,886,892** | ** ** | **30,192,734** | ** ** | **1,825,560** | ** ** | **101,420,000** | ** ** | **—** | ** ** | **320,283,124** | ** ** |

 
| ** **                                         | ** ** | **December 31, 2008** | ** ** |
|----------------------------------------------------|------------|---------------------------------|------------|
| ** **                                         | ** ** | ** **                      | ** ** | **Notional value** | ** ** |
| ** **                                         | ** ** | **Fair value**             | ** ** | **Before 1******** Year** | ** ** | **1 - 2******** Years** | ** ** | **2 - 3******** Years** | ** ** | **3 - 4******** Years** | ** ** | **4 - 5********Years** | ** ** | **Subsequent  Years** | ** ** | **Total** | ** ** |
| **Financial derivatives**                     | ** ** | **ThCh$**                       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Interest rate hedge:**                           | ** ** | **(7,325,022**                  | **)**      | **49,380,034** | ** ** | **42,277,252** | ** ** | **21,660,515** | ** ** | **31,529,733** | ** ** | **2,291,220** | ** ** | **—** | ** ** | **147,138,754** | ** ** |
|    Cash flow hedge                            |       | (7,325,022                      | )          | 49,380,034 |   | 42,277,252 |   | 21,660,515 |   | 31,529,733 |   | 2,291,220 |   | — |   | 147,138,754 |   |
| **Derivatives not designated as hedge accounting** | ** ** | **1,324,219**                   | ** ** | **14,281,412** | ** ** | **14,281,412** | ** ** | **13,091,295** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **41,654,119** | ** ** |
| **TOTAL**                                          | ** ** | **(6,000,803**                  | **)**      | **63,661,446** | ** ** | **56,558,664** | ** ** | **34,751,810** | ** ** | **31,529,733** | ** ** | **2,291,220** | ** ** | **—** | ** ** | **188,792,873** | ** ** |

 

Thecontractual notional amount of these contracts does not represent the riskassumed by the Group as it is only in response to the basis with whichderivative settlements are calculated.

 

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17.3 Fair Value Hierarchies

 

17.3.1       Financialinstruments recognized at fair value in the statement of financial position areclassified based on the following hierarchies:

 

(a) Level1:  Quoted (unadjusted) price in an active market for identical assets andliabilities.

 

(b) Level 2:  Inputs other than quotedprices included in level 1 that are observable for assets or liabilities,either directly (i.e. as a price) or indirectly (i.e. as a derivative of aprice); and

 

(c) Level 3:  Inputs for assets orliabilities that are not based on observable market information (non-observableinputs).

 

Thefollowing table details financial assets and liabilities measured at fair valueas of December 31, 2009:

 
| **Financial instruments measured at fair value** | ** ** | **Fair value measured at end of reporting period using:** | ** ** |
|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|
| ** **                                                                | ** ** | **12-31-2009**                                                                                    | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
| ** **                                                                | ** ** | **ThCh$**                                                                                         | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Financial Assets**                                                      |       |                                                                                              |       |   |   |   |   |   |   |
| Cash flow hedge derivatives                                               |       | 590,622                                                                                           |       | — |   | 590,622 |   | — |   |
| Derivatives not designated as hedge accounting                            |       | 2,268,342                                                                                         |       | — |   | 2,268,342 |   | — |   |
| Available-for-sale financial assets, non-current                          |       | 63,918                                                                                            |       | 63,918 |   | — |   | — |   |
| **Total**                                                                 | ** ** | **2,922,882**                                                                                     | ** ** | **63,918** | ** ** | **2,858,964** | ** ** | **—** | ** ** |
| **Financial Liabilities**                                                 |       |                                                                                              |       |   |   |   |   |   |   |
| Cash flow hedge derivatives                                               |       | 3,647,710                                                                                         |       | — |   | 3,647,710 |   | — |   |
| Derivatives not designated as hedge accounting                            |       | 420,822                                                                                           |       | — |   | 420,822 |   | — |   |
| Other long-term financial liabilities                                     |       | 11,953,000                                                                                        |       | — |   | — |   | 11,953,000 |   |
| **Total**                                                                 | ** ** | **16,021,532**                                                                                    | ** ** | **—** | ** ** | **4,068,532** | ** ** | **11,953,000** | ** ** |

 

17.3.2        Arollforward (beginning balance to ending balance) of the financial instrumentsmeasured on a recurring basis at fair value using level 3 inputs:

 
| **Non-current interest-bearing loans** | ** ** | **ThCh$**      | ** ** |
|--------------------------------------------------|------------|----------------|------------|
| **Balance at December 31, 2008**            | ** ** | **2,429,372**  | ** ** |
| Total losses recognized in Profit or Loss        |       | 9,523,628      |       |
| **Balance at December 31, 2009**            | ** ** | **11,953,000** | ** ** |

 

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**18.****                  ****TRADE ACCOUNTS PAYABLE AND OTHER PAYABLES**

 

Asof December 31, 2009, December 31, 2008 and January 1, 2008,this account is detailed as follows:

 
| ** **                                                             | ** ** | **Current**     | ** ** | **Non-Current** | ** ** |
|------------------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|
| ** **                                                             | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** | **01-01-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Trade accounts payable and other payables** | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Trade accounts payable                                                 |       | 57,135,698      |       | 112,771,510     |       | 69,749,139 |   | — |   | — |   | — |   |
| Other payables                                                         |       | 316,736,158     |       | 234,903,507     |       | 195,821,467 |   | 7,569,739 |   | 13,252,372 |   | 10,023,043 |   |
| **Total accounts payable and other  payables**                         | ** ** | **373,871,856** | ** ** | **347,675,017** | ** ** | **265,570,606** | ** ** | **7,569,739** | ** ** | **13,252,372** | ** ** | **10,023,043** | ** ** |

 

Thedetail of accounts payable and other payables at December 31, 2009, December 31,2008 and January 1, 2008 is as follows:

 
| ** **                                                             | ** ** | **Current**     | ** ** | **Non-current** | ** ** |
|------------------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|
| ** **                                                             | ** ** |                 | ** ** | ** **      | ** ** | ** ** | ** ** | **1 to 5 years** | ** ** |
| ** **                                                             | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** | **01-01-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Trade accounts payable and other payables** | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Energy suppliers                                                       |       | 45,397,559      |       | 32,676,565      |       | 15,580,296 |   | — |   | — |   | — |   |
| Fuel and gas suppliers                                                 |       | 40,229,649      |       | 80,094,945      |       | 54,168,843 |   | — |   | — |   | — |   |
| Payables for goods and services                                        |       | 223,334,117     |       | 167,992,391     |       | 157,628,256 |   | — |   | — |   | — |   |
| Dividends payable to third parties                                     |       | 36,555,954      |       | 39,074,831      |       | 18,393,614 |   | — |   | — |   | — |   |
| Prepayments from mining clients                                        |       | 11,377,380      |       | 11,720,848      |       | 9,986,656 |   | — |   | — |   | — |   |
| Mitsubishi contract                                                    |       | —          |       | —          |       | — |   | 7,361,867 |   | 12,903,931 |   | 8,538,252 |   |
| Other accounts payable                                                 |       | 16,977,197      |       | 16,115,437      |       | 9,812,941 |   | 207,872 |   | 348,441 |   | 1,484,791 |   |
| **Total accounts payable and other  payables**                         | ** ** | **373,871,856** | ** ** | **347,675,017** | ** ** | **265,570,606** | ** ** | **7,569,739** | ** ** | **13,252,372** | ** ** | **10,023,043** | ** ** |

 

**19.****                  ****PROVISIONS**

 

19.1        Provisions

 

a)                            As of December 31,2009, December 31, 2008 and January 1, 2008, this account is detailedas follows:

 
| ** **                                             | ** ** | **Current**    | ** ** | **Non-Current** | ** ** |
|--------------------------------------------------------|------------|----------------|------------|-----------------|------------|
| ** **                                             | ** ** | **12-31-2009** | ** ** | **12-31-2008**  | ** ** | **01-01-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **01-01-2008** | ** ** |
| **Provisions**                                         | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                                   |       |           |       |            |       |   |   |   |   |   |   |   |   |
| Legal proceedings provision                            |       | 14,518,126     |       | 15,746,971      |       | 8,801,549 |   | 9,488,260 |   | 571,426 |   | 536,682 |   |
| Decommissioning, restoration and rehabilitation  costs |       | —         |       | 64,175          |       | — |   | 10,198,489 |   | 2,283,697 |   | 1,819,711 |   |
| Energy and capacity purchase provision                 |       | 2,581,669      |       | 5,250,948       |       | 7,302,113 |   | — |   | — |   | — |   |
| Suppliers and services provision                       |       | 1,677,527      |       | 890,967         |       | 1,749,431 |   | — |   | 107,895 |   | — |   |
| Employee benefits provision                            |       | 11,585,987     |       | 9,420,144       |       | 6,764,376 |   | 578 |   | 1,592 |   | 92,315 |   |
| Other provisions                                       |       | 3,029,915      |       | 2,333,256       |       | 3,905,359 |   | 473,258 |   | 325,915 |   | 13,741 |   |
|                                                   |       |           |       |            |       |   |   |   |   |   |   |   |   |
| Total                                                  | ** ** | **33,393,224** | ** ** | **33,706,461**  | ** ** | **28,522,828** | ** ** | **20,160,585** | ** ** | **3,290,525** | ** ** | **2,462,449** | ** ** |

 

b)                           Movements inprovisions during 2009:

 
| **Movements in provisions**        | ** ** | **Legal Proceedings** | ** ** | **Decommissioning,  Restoration and  Rehabilitation Costs** | ** ** | **Other Provisions** | ** ** | **Total**      | ** ** |
|----------------------------------------------|------------|----------------------------|------------|-----------------------------------------------------------------------|------------|---------------------------|------------|----------------|------------|
| **Beginning Balance**                        |       | 16,318,397                 |       | 2,347,872                                                             |       | 18,330,717                |       | 36,996,986     |       |
| **Movements in Provisions:**                 |       |                       |       |                                                                  |       |                      |       |           |       |
| Additional provisions                        |       | 10,856,894                 |       | 8,145,666                                                             |       | (318,365                  | )          | 18,684,195     |       |
| Increase (decrease) in existing provisions   |       | (2,157,517                 | )          | (65,100                                                               | )          | 5,809,135                 |       | 3,586,518      |       |
| Provision used                               | ** ** | **—**                 |       | —                                                                |       | (2,474,122                | )          | (2,474,122     | )          |
| Increase from time value of money adjustment |       | 26,940                     |       | 91,233                                                                |       | —                    |       | 118,173        |       |
| Foreign currency translation                 |       | (191,588                   | )          | (321,182                                                              | )          | (1,969,698                | )          | (2,482,468     | )          |
| Other increases (decreases)                  |       | (846,740                   | )          | —                                                                |       | (28,733                   | )          | (875,473       | )          |
| Total movements in provisions                |       | 7,687,989                  |       | 7,850,617                                                             |       | 1,018,217                 |       | 16,556,823     |       |
| **Ending Balance**                           | ** ** | **24,006,386**             | ** ** | **10,198,489**                                                        | ** ** | **19,348,934**            | ** ** | **53,553,809** | ** ** |

 

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19.2        Lawsuits and arbitrationproceedings

 

Asof the date of preparation of these consolidated financial statements, theprincipal lawsuits or arbitration proceedings to which the Group companies areparty are detailed as follows:

 

a)                             Outstandinglawsuits involving Endesa Chile and Subsidiaries:

 

1.                           In 2005, threelawsuits were filed against Endesa Chile, the Treasury and the General WaterBoard (DGA), which are currently being heard as single legal proceeding,petitioning for the nullity in public law of DGA Resolution 134 giving Endesathe right to non-consumptive use of water to implement the Neltume Power Plantproject, with compensation for damages. Alternatively, the lawsuit is filed forcompensation for damages allegedly caused to the plaintiffs by the loss ofquality of their properties on the shores of Lake Pirehueico, and also by theloss in value of their properties. The amount of these lawsuits has not beendetermined. The defendants, including Endesa Chile, have rejected theseallegations on the grounds that the above resolution meets all legalrequirements and exercising this right will not cause any damages to theplaintiffs, among other arguments. At this date, the resolution to take evidencein the case has been decreed, and there are currently appeals forreconsideration of judgment pending resolution in the court.

 

2.                           There are sixlegal proceedings brought in 2008 and 2009 against Empresa Eléctrica PangueS.A., a subsidiary of Endesa Chile, for a total amount of more than Ch$53,386,658,000 (approx. US$ 109 million), seeking compensation for damagescaused, according to the plaintiffs, by floods caused by the operation of thePangue power plant, especially resulting from discharges made in July, 2006.Pangue S.A. has submitted pleas for its defense against these lawsuits statingthat the operation of the power plant was in line with current regulations andthat it acted with due diligence and care, with there being no causal linkbetween the floods and the discharges from the power plant in the periodreferred to. These proceedings are being heard in different courts and they arecurrently in the evidence producing stage or have probatory steps pending. Inthe last quarter, Empresa Eléctrica Pangue S.A. petitioned for all of theseproceedings to be combined and heard in a Civil Court in Santiago, and thedecision thereof is still pending. Four of the six proceedings were covered byan insurance company, which assumed the risk of about US$ 95 million.Consequently, the risk to the equity of Endesa Chile and subsidiaries wasreduced to US$ 14 million. In August, 2009, Pangue won a favorable sentence inone of these proceedings, not covered by insurance, with the lawsuit forCh$4,927,194,000 (approx US$10 million US dollars) being rejected. Theplaintiffs have appealed against this decision by the courts.

 

3.                           TheMunicipalities of Yaguará, Ubalá, Caloto and Puerto Tejeda seek to sanctionEmgesa S.A. ESP for not filing ICT (Industry and Commerce Tax) returns inaccordance with Law 14 of 1981, failing to recognize the special standard (Law56 of 1981) that levies this tax on generation companies based solely on theinstalled generation capacity of their plant rather than on revenues, as theMunicipalities intend to do by applying fines of 20% of reported revenue. Theseproceedings involve approximately US$ 69 million. In some of these hearings,the court has ordered evidentiary proceedings, also the court had called forfinal presentation of conclusion, and others are ready to issue judgement. Inthe case of Ubalá, the subsidiary had already obtained a favorable ruling onthe first instance court, which was subsequently confirmed on a 2nd instance court on November 6, 2009. Theamount related to this specific case amounted to US$25 million.

 

4.                           In 2001, alawsuit was filed against the Colombian generating subsidiary Emgesa S.A. ESP.,Empresa de Energía de Bogotá S.A. ESP. and the Corporación Autónoma Regional bythe inhabitants of Sibaté, Department of Cundinamarca, seeking for thedefendants to answer jointly for damages caused by the pollution of the El Muñareservoir by pumping of polluted water from the Bogotá river by Emgesa S.A.ESP. Faced with this lawsuit, Emgesa has presented pleas that the company is inno way responsible for these events, since it receives the water alreadypolluted, among other arguments. The total amount of the lawsuit is aboutUS$1,200 million. Emgesa S.A. ESP. petitioned for about 80 public and privateentities that discharge into the Bogotá River and, in one way or another havecompetence in the environmental management of this river basin, to be tied in,so the case file was sent to the State Council and it currently has appealspending filed with that agency by those entities.

 

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5.                           Via Resolution506 dated March 28, 2005 and Resolution 1189 dated July 8, 2005, theRegional Autonomous Corporation of Cundinamarca (CAR) imposed upon Emgesa S.A.ESP execution of certain works in the El Muña reservoir, on which therespective water concessions are dependent upon. The value of these worksamounts to approximately US$ 85 million. Emgesa S.A. ESP has filed a motion toannul these Resolutions and reestablish the rights of Emgesa that were violatedby them. The proceedings are currently on evidenciary stage.

 

b)                            Outstandinglawsuits involving Associates (Endesa Brazil and Subsidiaries):

 

6.                           MeridionalServicios, Emprendimientos y Participaciones (hereinafter, “Meridional”) is acompany whose only asset are the rights derived from litigation that itacquired from the construction companies Mistral and CIVEL, which had enteredinto a contract with Centrais Elétricas Fluminense S.A. (“CELF”) for theconstruction of civil works. This contract was cancelled by CELF prior to theprivatization, which gave rise to the Brazilian distribution subsidiary calledAmpla. Since CELF’s assets were transferred to Ampla in the privatizationprocess, in 1998 Meridional sued Ampla, alleging that such assets weretransferred in violation of Meridional’s rights. It should be pointed out thatAmpla only acquired assets from CELF, but it is not CELF’s legal successor,because CELF, a State-run company, continues to exist as a separate legalentity. The plaintiff seeks payment of outstanding invoices and contractualdamages arising from the cancellation of the contract for construction of civilworks. Plaintiff is seeking payment of an amount estimated at US$374.9 million.The lower court ruling was favorable to Ampla, but the plaintiff filed anappeal which was granted. Ampla filed new recourses called “Embargos deDeclaración”, seeking the annulment of the resolution passed on prior recoursesand it requested to be granted a new trial. The court issued a resolution onthe new recourses on June 2, 2009, that was favorable to Ampla, because itannulled the resolutions issued in the proceedings all the way back until April 14,2009. In accordance with the resolutions issued on December 1 and 15,2009, the ruling that granted the recourse filed by Meridional was amended, andthe lower court ruling favorable to Ampla and the State of Rio de Janeiro wasupheld. Meridional, however, can file recourses against these resolutions.

 

7.                           In December of2002 the Brazilian distribution subsidiary Ampla signed with EnertradeComercializadora de Energía S.A. (“Enertrade”) a contract for purchase ofelectricity lasting 20 years. This contract was sent for evaluation andhomologation to Agencia Nacional de Energía Eléctrica (“ANEEL”), and ANEELindicated that the price for energy would have to be lower. Based on thatdecision, Ampla paid for the contract the price authorized by ANEEL. However, in December of 2005 Enertrade sued Amplain arbitration with Cámara de Conciliación y Arbitraje de la Fundación GetúlioVargas/RJ. On March 19, 2009 the arbitration court issued a ruling thatcondemned Ampla: i) to pay the difference between the price set forth in thecontract and the amount actually paid in the period from January 1, 2004to August 28, 2006, updated and with interest; ii) to pay for October toDecember 2003 an updated price plus interest and a 2% penalty. Inaddition, the court ruled that the contract had ended on August 28, 2006and that Ampla owes nothing to Enertrade after that date. Ampla filed arecourse seeking the annulment of the arbitration ruling, including a petition(“Anticipación de tutela”) asking that execution of the arbitration ruling besuspended until a final ruling be passed in a pending trial between Enertradevs. ANEEL (called “Mandado de Seguridad”), where administrative approval of thesame energy purchase contract taken to arbitration is being discussed. The amountinvolved is estimated at US$41.3 million. On May 22, 2009 the “anticipaciónde tutela” was granted, which suspended the effects of the arbitration ruling.On June 30, 2009 an Enertrade recourse was rejected and the suspension wasupheld. On July 9, 2009 an Enertrade petition (agravo de instrumento)against the ruling was rejected. On July 20, 2009 Enertrade filed anotherrecourse (agravo regimental) against the resolution that rejected the previouspetition. On August 25, 2009 the recourse (agravo regimental) filed byEnertrade was rejected. Ampla filed a response that included the lower courtruling passed in the trial (“mandado de seguranca”) of Enertrade vs. ANEEL (on July 7,2009 a lower court ruling rejected Enertrade’s allegations). On September 2,2009 a court order was sent to the CCEE (Cámara de Comercialización de EnergíaEléctrica) informing it of the “Anticipación de tutela” so that the CCEE wouldsuspend the execution of the arbitration ruling until a final decision ispassed on the annulment recourse. On September 28, 2009 the ruling passedin the trial between Enertrade vs. ANEEL became final —a ruling that indicatedthat the parties were obligated to add to the contract the conditions imposedby ANEEL (the price reduction). On November 11, 2009 both parties filed ajoint petition requesting suspension of proceedings for 30 days and in December theyrequested the renovation of that suspension.

 

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8.                           CompanhiaBrasileira de Antibióticos (“CIBRAN”) sued the Brazilian distributionsubsidiary Ampla seeking payment of damages for loss of products and rawmaterials and break-down of machinery, among other things, which allegedly wascaused by Ampla’s poor service between 1987 and May 1994. CIBRAN is alsoseeking payment of moral damages. The amount involved is estimated atapproximately US$45.7 million. The trial is at the early stages where partiesmust submit their allegations and the court must decide whether or not it willask them for evidence.

 

9.                           In 2007 a Statecongressman and a federal Congressman both sued the Brazilian distributionsubsidiary Coelce, the Brazilian generation subsidiary CGTF, ANEEL, and theBrazilian Federal Union, seeking an immediate recalculation of Coelce’s farereview index for 2007, and that the acquisition value of the thermal energy bereplaced with the cheapest available energy (hydroelectric); the annulment ofthe agreement for the supply of energy signed on August 31, 2001 by andbetween Coelce and CGTF because of its high price; and that Coelce’s farereview calculations should include the additional income earned by Coelce from May toOctober of 2005. The amount involved in this trial is indeterminate. In November of2008 a lower court issued a ruling favorable to Coelce/CGTF, rejecting theplaintiffs’ petition. The plaintiffs did not file any recourse; however, thisbeing a popular action, the ruling must mandatorily be reviewed by the FederalRegional Court (FRC). On December 1, 2009 the trial was declare extinct,on the grounds that the plaintiffs’ allegations had not chosen the appropriateproceedings. Nevertheless, this court resolution can be appealed, and theperiod for doing so is still open.

 

10.                     On October 26, 2009Tractebel Energía S.A. sued CIEN for alleged failure to perform the “Agreementfor Purchase and Sale of 300 MW of Wattage with associated energy coming fromArgentina” entered into on October 20, 1999 by and between CIEN andCentrais Geradoras do Sul do Brasil S.A (Gerasul — currently, Tractebel EnergiaS.A.). Tractebel Energia S.A. is asking the court to order CIEN to pay apenalty of R$ 117,666,976.00 (U$ 66,753,829.92) plus other fines, fornon-availability of “wattage and associated energy”, and it asked the court todetermine those other fines in the ruling. The alleged non-performance wouldhave happened because CIEN would not have guaranteed availability of thewattage committed to Tractebel Energía S.A. in the abovementioned agreement,for a term of 20 years, which would allegedly have occurred since March of2005. On November 11, 2009 CIEN answered the lawsuit, alleging in summarythat the non-availability of energy was caused by the “Crisis in Argentina”,the country from which CIEN imports all the energy that it delivers, whenneeded, to Tractebel Energia S.A The defendant also alleges that the “Crisis inArgentina” was an unexpected event, for which CIEN has no responsibility, andthat this situation was even acknowledged by the Brazilian authorities of thatperiod.

 

11.                     In the nineties, a largenumber of Brazilian utility companies filed remedies against the COFINS(Contribution for Financing Social Security) tax, because they considered thatthe Brazilian constitution exempted them from that levy. The large majority ofthe companies lost their lawsuits. Our Brazilian distribution subsidiary,AMPLA, won the lawsuit (for the period from 1996 to 2001), because the TaxAuthorities forgot to appeal against the second appealable judgment. However,the Public Prosecutor’s Office of the Federal Union filed an exceptionalpetition known as an “action for abrogation” in an attempt to annul the firmruling in favor of AMPLA. In December, 2003, the Regional Court of Rio deJaneiro confirmed the inadmissibility of the action for abrogation filed by theFederal Union. In December 2007, the Federal Union filed a Special Appealagainst the decision of the Court in Rio, which unanimously rejected itsprevious appeals. This Special Appeal is addressed to the Higher Court ofJustice (STJ), Court of Brasilia. In February, 2008, AMPLA was served a writ topresent it pleas against the Special Appeal filed by the Federal Union. TheSpecial Appeal was filed without the respective Extraordinary Appeal and thereis jurisprudence indicating that they must be filed together, so there arearguments to deem that the Extraordinary Appeal by the Federal Union has becomevoid. In April, 2008 the Federal Regional Court (Court of Rio) handed down adecision in which it did not accept the Special Appeal by the Federal Union,with the sole purpose of taking the discussion on the admissibility of theAction for Abrogation to the Higher Court of Justice (STJ, Court of Brasilia).In September, 2008, the decision for AMPLA to submit its pleas was published.In the same month of September, 2008, AMPLA submitted its pleas. In March,2009, the Special Appeal filed by the Federal Union was accepted for pleadingsto be examined by the STJ. In April, 2009, the decision was published. Theabove does not change AMPLA’s procedural situation, since the preliminaryquestions regarding the admissibility of the Special Appeal, which were thebasis for the rejection by the Court in Rio based on the jurisprudence of theSTJ itself, will necessarily have to be analyzed by the STJ. In October, 2009,the STJ rejected the Special Appeal filed by the Federal Union, because it hadnot 

 

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beenfiled together with the Extraordinary Appeal. These grounds for the decisionare based on the jurisprudence of the STJ itself. In November, 2009, thesentence rejecting the Special Appeal filed by the Federal Union was published.In November, 2009, the Federal Union filed an Appeal for Reconsideration ofJudgment with the STJ. In December, 2009, the STJ rejected unanimously theAppeal for Reconsideration of Judgment filed by the Federal Union. The amountinvolved is about US$230 million.

 

12.                     In December, 2001 thearticle of the Federal Constitution, on which our Brazilian distributionsubsidiary, AMPLA, based its arguments to argue immunity from the COFINS andpursuant to which AMPLA did not pay tax, was amended. There is an article ofthe Constitution stating that legislative changes come into force 90 days aftertheir publication. Based on that, AMPLA began to pay the COFINS only as ofApril, 2002. However, the Brazilian Tax Authorities argue that this article ofthe Constitution only applies to changes in legal regulations, but not to theConstitution itself, whose changes come into force immediately. Furthermore,the Tax Authorities argue that, by reason of the change in AMPLA’s tax status(earned to accrued) the taxable amount of the COFINS increased during the firstsemester of 2002. Notice was given of the proceedings in July 2003. Thefirst appealable decision went against AMPLA and it filed an appeal in October,2003. In November, 2007, the appeal was ruled on by the court of appeal and thedecision was partly favorable to the Treasury in terms of the period in which achange in the Constitution comes into force and partly favorable to AMPLA interms of the change in the tax status from earned to accrued. In April, 2008,the Ministry of the Treasury filed an appeal against this decision in theHigher Court of Appeal. In October, 2008, AMPLA filed its answer to the appealand also filed an appeal with the Higher Court to attempt to change that partof the decision that was not favorable to AMPLA. In May, 2008, the FederalTreasury applied interest to the fine imposed. This new interest arises from aninternal administrative act (addressed to the tax authorities but for generalapplication) of the tax authorities and has started to be applied uniformly bythe Federal Treasury (SRF). The interest on the fine has been calculated byapplying the Selic (Special System of Liquidation and Custody: an adjustmentindex set by the federal government based on the referential interest rate ofthe Brazilian Central Bank), as of the month after receiving the Record ofInfringement. Consequently, since the Record was received in July, 2003, theSelic corresponds to the interest accumulated as of August 2003, which is81.42%. In August, 2009, AMPLA was notified that the Special Appeal filed bythe company had not been admitted to be heard. AMPLA filed another appealagainst this resolution with the President of the Higher Court for hearing TaxIssues. The purpose of this appeal is for the Special Appeal to be received.The decision on the Special Appeal filed by the SRF is pending. The appealfiled by AMPLA with the President of the Higher Court for hearing Tax Issues isalso pending resolution. The amount involved is US$90 million.

 

13.                     In order to finance itsinvestment in Coelce, in 1998 our Brazilian distribution subsidiary AMPLAissued FRNs (bonds) for US$350 million expiring in 2008. These were subscribedby Cerj Overseas (a foreign subsidiary of AMPLA). The bonds have a special taxstatus in that no withholding tax (15% or 25%) should be applied to payments ofinterest abroad, always provided that, among other requirements, there is noadvanced amortization before the average 96 month amortization deadline. Inorder to acquire these bonds, Cerj Overseas obtained financing with a 6-monthdebt outside Brazil. At the end of that period (October 1998), due toproblems of access to other sources of financing, Cerj Overseas had to obtainre-financing from AMPLA, which made it a loan in reales. The Brazilian TaxAuthorities argue that the tax concession was lost in 1998 because the loans inreales made by AMPLA to Cerj Overseas were the equivalent of an advancedamortization of the debt before the 96 month amortization deadline. The Recordof Infringement was notified in July, 2005. In August, 2005, AMPLA filed anappeal with the first administrative court of appeal and this was rejected. InApril, 2006, an appeal was filed with the Council of Taxpayers (2ndAdministrative Level of Appeal) In December, 2007, the Council of Taxpayersruled completely in favor of AMPLA. It is estimated that putting the sentenceinto due form and publishing it will take about 6 months. In August, 2009, thesentence of the Council of Taxpayers in favor of AMPLA was written up. Thenotice of the sentence handed down by the Council of Taxpayers is pending. Oncethe notice has been issued, the SRF may file a Special Appeal with the HigherCourt of Appeal for Tax Issues, within 30 days. The amount involved is aboutUS$405 million.

 

14.                     In 2002, the State of Rio deJaneiro (RJ) issued a decree stipulating that the ICMS should be calculated andpaid on the 10th, 20th, and 30th of the same month of the accrual. Because ofcash problems, our Brazilian distribution center AMPLA continued paying theICMS under the previous system (payment until the 5th of the day after itsaccrual). Notwithstanding an informal agreement with the State of Rio deJaneiro, and 2 separate amnesty laws, in October, 2004, the State of Rio deJaneiro drew up proceedings against AMPLA to collect a 

 

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fineon late payments, which proceedings were appealed against by AMPLA in that sameyear. In February, 2007, AMPLA was notified of the first appealableadministrative decision, which ratified the Proceedings drawn up by the Stateof RJ. In March 2007, AMPLA filed an appeal with the Council of Taxpayersof the State of RJ (2nd administrative level of appeal). AMPLA won a “liminar”(a precautionary measure) in its favor that enabled it to file this appealwithout having to make a deposit or take out a bond guaranteeing 30% of the valueof the updated amount of the proceedings. The ruling by the Council ofTaxpayers is pending. The amount involved is US$88 million.

 

15.                     Towards the end of 2002, ourBrazilian generating subsidiary CGTF filed a legal action against the FederalUnion for the goods imported for the turbo-generator units to be recognized ascorresponding to the item “Other Generating Sets”, in order to be able to availitself of the 0% rate for Import Tax (II) and for the Tax onIndustrialized Products (IPI). The Federal Union argues that the imported goodsdo not correspond to generating sets. CGTF won an incidental resolution in itsfavor allowing it to clear the goods through customs with a 0% rate, subject toa prior legal deposit of R$56 million (US$35.72 million, updated at July,2009). For its part, in order to prevent the taxes from expiring, the FederalTax Authorities drew up a Record suspending the enforceability of payment ofthe tax until the pending legal action against the Federal Union is resolved.Court Proceedings: A resolution was decreed with regard to the legalproceedings against the Federal Union in August, 2007, determining that (i) theexpert evidence requested by the plaintiff was not necessary and (ii) awrit should be served on the parties so that, if no appeal is filed, theprocess will be sent to the Judge for a decision. Faced with the above, inAugust, 2007, CGTF filed an appeal to guarantee its right, if the lawsuit isjudged to be inadmissible, to produce technical evidence in future. In February,2008, the Ministry of the Treasury submitted its comments on the appeal filedby CGTF and on the expert report of 2005. In April, 2008, CGTF submitted itscomments on the technical report submitted by the Ministry of the Treasury. InMay, 2008, the process was remitted to the Prosecutor’s Office of the Ministryof the Treasury and was returned without any comments or statements from theMinistry of the Treasury. In September, 2008, the first appealable sentencecompletely favorable to CGTF was handed down. The above decision recognized theclassification of the Generating Set as pretended by CGTF and determined thatthe legal deposit shall continue as a guarantee for the process until the finalruling. In September, 2008, the sentence was published. In November, 2008, theFederal Tax Authorities were notified of the first level decision favorable toCGTF. In February, 2009, the Federal Tax Authorities filed an appeal with theRegional Federal Court (TRF). In September, 2009, the incident was resolved definitivelyin favor of CGTF enabling the goods to be given a 0% tax rate and the equipmentto be cleared through customs, subject to a legal deposit. The decision on theappeal filed by the Ministry of the Treasury is pending. AdministrativeProceedings: With regard to the Record issued by the Federal Tax Authoritieswhich were appealed against in the first level of appeal: In February, 2006,the decision of the first level of appeal was favorable to CGTF, with theRecord declared null and void. The arguments submitted by the company wereaccepted, since: (i) The Tax Authority failed to submit the legal groundsfor the tax classification adopted in the Record, which resulted in theannulment; (ii) the Record’s tax classification was not properlydetermined, since it considered each item (each good) imported individually,forgetting the groupings stipulated by Brazilian legislation (this argumentwould also be valid if the special classification of the Generating Set, whichis the object of these legal proceedings, did not prevail) The decision isbased on the fact that the Record was drawn up without heeding due legalrequirements and formalities, so it was declared null and void; in other words,no decision was handed down regarding the matter of substance. As a result,theoretically the Federal Tax Authorities could draw up another Record meetingthe formal requirements, with no deadline for doing so. In October, 2008, theCouncil of Taxpayers, the second level of administrative appeal, completelyratified the decision by the first level decreeing that the Record of theFederal Tax Authorities was null and void because of procedural irregularities.Consequently, the decision handed down by the second level of administrativeappeal was completely favorable to CGTF. After confirmation by the Council ofTaxpayers of the administrative decision by the first level of administrativeappeal, the Ministry of the Treasury could file an appeal with the higheradministrative level of appeal “Higher Court of Appeal for Tax Issues”. Thedeadline for filing the above appeal is 15 straight days as of the personalsummons. In April, 2009, the decision making the Record null and void becauseof procedural irregularities was made firm and final, so the Record is extinct.The amount involved is about US$40 million.

 

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EndesaChile’s Management considers that the provisions recorded in the accompanyingconsolidated statement of financial position adequately cover the risks for thelawsuits and other transactions detailed in this note and, therefore, they donot expect any additional liabilities to arise.

 

Giventhe characteristics of the risks covered by these provisions, the company isunable to determine a reasonable timeframe for the dates of any payments thatmay be required.

 

**20.****      ****POST-EMPLOYMENTBENEFIT OBLIGATIONS**

 

20.1        General aspects

 

EndesaChile and some of its Chilean and Colombian subsidiaries grant differentpost-employment benefit plans to all or part of its active or retiredemployees, which are determined and recorded in the financial statements basedon the criteria described in note 3.j.1.****Thesebenefits refer principally to:

 

Definedbenefit plans:

 

Complementarypension: The beneficiary is entitled to receive a monthlyamount that complements the pension he or she receives from the respectivesocial security system.

 

Staffseverance indemnity: The beneficiary receives a certain number ofcontractual monthly salaries upon retirement. This benefit is applicable oncethe employee has provided a minimum number of years of service which, dependingon the company, ranges from five to fifteen years.

 

Electricitysupply: The beneficiary receives a monthly bonus that covers a portion of itshousehold electricity consumption.

 

Healthbenefits: The beneficiary receives coverage in addition tothat provided by the social security system.

 

20.2        Details, movements andfinancial statement presentation

 

a)                   As of December 31,2009 and December 31, 2008, the balance of post-employment obligations fordefined benefits is summarized as follows:

 
| ** **                  | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|-----------------------------|------------|----------------|------------|----------------|------------|
| ** **                  | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
|                        |       |           |       |           |       |
| Post-employment obligations |       | 31,679,864     |       | 33,473,278     |       |
| **Total**                   | ** ** | **31,679,864** | ** ** | **33,473,278** | ** ** |
|                        |       |           |       |           |       |
| **Current portion**         | ** ** | **3,448,733**  | ** ** | **3,592,982**  | ** ** |
|                        |       |           |       |           |       |
| **Non-current portion**     | ** ** | **28,231,131** | ** ** | **29,880,296** | ** ** |

 

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b)                     The rollforwardof the post-employment obligation for years 2009 and 2008 is as follows:

 
| **Actuarial value of post-employment obligations** | ** ** | **ThCh$**      | ** ** |
|------------------------------------------------------------------------|------------|----------------|------------|
|                                                                   |       |           |       |
| **Balance as of January 1,  2008**                                |       | 29,813,112     |       |
| Current service cost                                                   |       | 391,527        |       |
| Interest cost                                                          |       | 2,619,725      |       |
| Actuarial (gains) losses                                               |       | 1,770,360      |       |
| Foreign currency translation                                           |       | 2,983,818      |       |
| Benefits paid                                                          |       | (4,105,264     | )          |
|                                                                   |       |           |       |
| **Balance as of December 31,  2008**                              | ** ** | **33,473,278** | ** ** |
|                                                                   |       |           |       |
| Current service cost                                                   |       | 1,010,135      |       |
| Interest cost                                                          |       | 3,014,451      |       |
| Actuarial (gains) losses                                               |       | 1,425,917      |       |
| Foreign currency translation                                           |       | (2,990,595     | )          |
| Benefits paid                                                          |       | (4,253,322     | )          |
|                                                                   |       |           |       |
| **Balance as of December 31,  2009**                              | ** ** | **31,679,864** | ** ** |

 

Asof December 31, 2009, of the total actuarial liability, 36% corresponds todefined-benefit commitments granted by Chilean companies (32% as of December 31,2008) and 64% to defined-benefit commitments granted by our Colombiansubsidiary Emgesa (68% as of December 31, 2008).

 

c)                   The amounts recorded inconsolidated comprehensive income for the year ended December 31, 2009 and2008 are as follows:

 
| ** **                                                   | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|--------------------------------------------------------------|------------|----------------|------------|----------------|------------|
| **Total expense recognized on earnings** | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Current service cost of defined benefit plan                 |       | 1,010,135      |       | 391,527        |       |
| Interest cost of defined benefit plan                        |       | 3,014,451      |       | 2,619,725      |       |
| **Total expense recognized in  earnings**                    | ** ** | **4,024,586**  | ** ** | **3,011,252**  | ** ** |
|                                                         |       |           |       |           |       |
| Recognized actuarial gains and losses                        | ** ** | **1,425,917**  | ** ** | **1,770,360**  | ** ** |
|                                                         |       |           |       |           |       |
| **Total expense recognized in other  comprehensive income**  | ** ** | **5,450,503**  | ** ** | **4,781,612**  | ** ** |

 

**20.3****         ****Otherdisclosures:**

 

**Actuarial hypothesis:**

 

Thefollowing hypothesis was used for the actuarial calculation of defined benefitplans as of December 31, 2009 and December 31, 2008:

 
| ** **                        | ** ** | **Chile**               | ** ** | **Colombia**            | ** ** |
|-----------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                        | ** ** | **12-31-2009**          | ** ** | **12-31-2008**          | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
|                              |       |                         |       |                    |       |   |   |   |   |
| Discount rates used               |       | 6.5%                    |       | 6.5%                    |       | 11.59% |   | 10.20% |   |
| Expected rate of salary increases |       | 3.0%                    |       | 3.0%                    |       | 6.48% |   | 5.20% |   |
| Mortality tables                  |       | RV-2004 / RV-85 / RV-04 |       | RV-2004 / RV-85 / RV-04 |       | ISS 1980-1989 |   | ISS 1980-1989 |   |

 

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**Sensitivity:**

 

Asof December 31, 2009, the sensitivity of the value of the actuarialliability for post-employment benefits to variations of 100 basis points in thediscount rate assumes a decrease of ThCh$ 2,525,322 (ThCh$ 2,723,310 as of December 31,2008) if the rate rises and an increase of ThCh$ 2,175,461 (ThCh$ 2,922,928 asof December 31, 2008) if the rate falls.

 

**Future disbursements:**

 

Basedon available estimates, forecasted disbursements for defined benefit plans overthe next 12 months amount to ThCh$ 3,448,733.

 

**Defined Contributions**

 

Contributionsmade to defined contribution plans are recorded directly in “personnel expenses”in the accompanying consolidated statement of comprehensive income. Amountsrecorded for this concept as of December 31, 2009 totaled ThCh$ 326,655(ThCh$ 286,511 for the year ended December 31, 2008).

 

**21.****      ****DEFERREDREVENUES**

 

Deferredrevenues movements in the accompanying consolidated statement of financialposition during 2009, and 2008 are detailed as follows:

 
| ** **                         | ** ** | **Total**   | ** ** |
|------------------------------------|------------|-------------|------------|
| **Deferred Income**           | ** ** | **ThCh$**   | ** ** |
| **Balance as of 01/01/2008:**      | ** ** | **687,008** | ** ** |
| Increases                          |       | 1,083,186   |       |
| Charge (credit) to profit and loss |       | (1,332,082  | )          |
| Other                              |       | 244,664     |       |
| **Balance as of 12/31/2008:**      | ** ** | **682,776** | ** ** |
| Increases                          |       | 205,686     |       |
| Charge (credit) to profit and loss |       | (177,144    | )          |
| Other                              |       | (99,255     | )          |
| **Balance as of 12/31/09:**        | ** ** | **612,063** | ** ** |

 

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**22.****      ****EQUITY**

 

22.1   Equityattributable to the Shareholders of the Company

 

22.1.1      Subscribed and paid capital and number of shares

 

Asof December 31, 2009 and December 31, 2008 Endesa Chile’s sharecapital amounts to ThCh$ 1,331,714,085, represented by 8,201,754,580 fullysubscribed and paid par value shares that are listed on the followingexchanges: Santiago Stock Exchange, Chilean Electronic Stock Exchange,Valparaíso Stock Exchange, New York Stock Exchange (NYSE) and the LatinAmerican Securities Exchange of the Madrid Stock Exchange (LATIBEX). Thesefigures have not experienced any changes during 2008 and 2009.

 

Sharepremium relates to premium on the placement prices of the shares issued in 1986and 1994 for a total of ThCh$ 206,008,557.

 

22.1.2       Dividends

 

TheOrdinary Shareholders’ Meeting of Endesa Chile, held April 15, 2009,approved the dividend policy that the Board of Directors expected to meetduring 2009 of distributing a final dividend equivalent to 60% of 2009 netincome. The Board also intended to distribute an interim dividend charged to2009 net income of 15% of net income as of September 30, 2009, based onthe financial statements as of that date, which were paid on December 16,2009. The final dividend for the year 2009 is defined by shareholders during2010.

 

Compliancewith the aforementioned dividend policy will be conditional upon net incomeactually obtained, as well as periodic earnings projections issued by thecompany or the existence of certain conditions, as appropriate.

 

Hereinis a detail of dividends paid in the last years:

 
| **Dividend No.** | ** ** | **Type of Dividend** | ** ** | **Date of Payment** | ** ** | **Pesos per Share** | ** ** | **Charged to Period** |
|-----------------------|------------|--------------------------------|------------|-------------------------------|------------|-------------------------------|------------|---------------------------------|
| 37                    |       | Final                          |       | 4-22-2002                     |       | 0.94000                       |       | 2001                            |
| 38                    |       | Final                          |       | 4-05-2004                     |       | 2.30000                       |       | 2003                            |
| 39                    |       | Final                          |       | 4-18-2005                     |       | 4.13000                       |       | 2004                            |
| 40                    |       | Final                          |       | 3-30-2006                     |       | 5.82000                       |       | 2005                            |
| 41                    |       | Interim                        |       | 12-22-2006                    |       | 2.57000                       |       | 2006                            |
| 42                    |       | Final                          |       | 5-22-2007                     |       | 10.84000                      |       | 2006                            |
| 43                    |       | Interim                        |       | 12-26-2007                    |       | 2.19260                       |       | 2007                            |
| 44                    |       | Final                          |       | 4-29-2008                     |       | 11.56470                      |       | 2007                            |
| 45                    |       | Interim                        |       | 12-18-2008                    |       | 5.35120                       |       | 2008                            |
| 46                    |       | Final                          |       | 5-11-2009                     |       | 15.9330                       |       | 2008                            |
| 47                    |       | Interim                        |       | 12-16-2009                    |       | 9.31240                       |       | 2009                            |

 

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22.2   Foreigncurrency translation

 

Thefollowing table details translation adjustments net of taxes in theconsolidated statement of financial position and the consolidated statement ofchange in equity for the years ended December 31, 2009 and December 31,2008:

 
| ** **                                 | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Foreign Currency Translation** | ** ** | **ThCh$**                       | ** ** | **ThCh$**                       | ** ** |
| Emgesa                                     |       | 67,512,250                      |       | 103,890,827                     |       |
| Generandes Peru S.A.                       |       | 29,914,925                      |       | 52,552,072                      |       |
| Hidroinvest S.A.                           |       | (3,704,706                      | )          | 3,783,724                       |       |
| Endesa Argentina S.A.                      |       | 477,619                         |       | 15,676,907                      |       |
| Hidroeléctrica El  Chocón S.A.   |       | (9,910,386                      | )          | (4,912,850                      | )          |
| Debt foreign currency effect               |       | 2,336,200                       |       | 15,628,706                      |       |
| Other                                      |       | (25,617,497                     | )          | (1,138,003                      | )          |
| **TOTAL**                                  | ** ** | **61,008,405**                  | ** ** | **185,481,383**                 | ** ** |

 

22.3   Capitalmanagement

 

TheCompany’s capital management objective is to maintain adequate capitalizationlevels that will ensure its access to financial markets in order to develop itsmedium and long-term goals, thus optimizing shareholders’ return andmaintaining a solid financial position.

 

22.4  Restrictions on the disposal of subsidiary funds

 

CertainCompany subsidiaries have to comply with some financial ratios and/or covenantswhich require maintaining a minimum level of equity or contain otherrestrictions that restrict the ability to transfer or dispose of assets. The Company’s share of restricted net assets at December 31, 2009pertaining to the subsidiaries Edegel and Hidroeléctrica el Chocón S.A. amountto ThCh$143,354,664 and ThCh$60,191,836, respectively.

 

Theamount of retained earnings that pertain to undistributed earnings ofassociates at December 31, 2009 was ThCh$160,040,815.

 

22.5   Otherreserves

 

AtDecember 31, 2009 and 2008, the nature and balance of other reserves is asfollows:

 
| ** **                   | ** ** | **Balances at********December 31, 2008** | ** ** | **2009 movement** | ** ** | **Balances at********December 31, 2009** | ** ** |
|------------------------------|------------|---------------------------------------------------------|------------|------------------------|------------|---------------------------------------------------------|------------|
| ** **                   | ** ** | **ThCh$**                                               | ** ** | **ThCh$**              | ** ** | **ThCh$**                                               | ** ** |
|                         |       |                                                    |       |                   |       |                                                    |       |
| Proposed dividend reserves   |       | (87,036,762                                             | )          | (101,079,260           | )          | (188,116,022                                            | )          |
| Translation reserves         |       | 185,481,383                                             |       | (124,472,978           | )          | 61,008,405                                              |       |
| Hedge reserves               |       | (101,798,173                                            | )          | 184,604,273            |       | 82,806,100                                              |       |
| Miscellaneous other reserves |       | (741,392,412                                            | )          | 16,511,787             |       | (724,880,625                                            | )          |
|                         |       |                                                    |       |                   |       |                                                    |       |
| **TOTAL**                    | ** ** | **(744,745,964**                                        | **)**      | **(24,436,178**        | **)**      | **(769,182,142**                                        | **)**      |

 

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·              Proposeddividend reserves:****Relate to thedecrease of equity resulting from the recognition of minimum dividends payablepursuant to Article No. 79 of Chile’s Corporations Law (see note3.p).

 

·              Translationreserves:****This reserve is used torecord the currency translation effects that arise from the following:

 

·                     Conversion of subsidiarieswhose functional currency is not the Chilean peso (note 2.5.3), and

 

·                     Valuation of goodwilloriginating from business acquisitions of subsidiaries whose functionalcurrency is not the Chilean peso (note 3.b.1).

 

·                Hedgereserves:****Represent the effectiveportion of instruments of transactions designated as cash flow hedges (notes3.e.4. and 3.m).

 

·                Miscellaneousother reserves:****These reservescorrespond mostly to the following:

 

·                     Price-level restatementeffect of paid-in capital from the date of transition to IFRS, January 1,2004, to December 31, 2008 (Circular N° 456 of the SVS).

 

·                     Conversion differencesexisting at the date of transition to IFRS (IFRS 1 exemption “First TimeAdoption”, see note 36).

 

22.6   Detail ofcomprehensive income

 
| ** **                                                | ** ** | **January - December**       | ** ** |
|-----------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                | ** ** | **2009**                               | ** ** | **2008** | ** ** |
| ** **                                                | ** ** | **ThCh$**                              | ** ** | **ThCh$** | ** ** |
| ** **                                                | ** ** | **Shareholders  of the  Company** | ** ** | **Minority  interest** | ** ** | **Total** | ** ** | **Shareholders  of the  Company** | ** ** | **Minority  interest** | ** ** | **Total** | ** ** |
| **Net Income**                                            | ** ** | **627,053,406**                        | ** ** | **145,046,948** | ** ** | **772,100,354** | ** ** | **433,177,184** | ** ** | **124,353,651** | ** ** | **557,530,835** | ** ** |
| **Other Comprehensive Income**                            |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Charged or Credited to Retained  Earnings**             | ** ** | **(887,607**                           | **)**      | **(103,727** | **)** | **(991,334** | **)** | **(1,279,325** | **)** | **(386,030** | **)** | **(1,665,355** | **)** |
| Actuarial gain (losses) on defined benefit pension  plans |       | (1,039,665                             | )          | (103,727 | ) | (1,143,392 | ) | (1,498,204 | ) | (386,030 | ) | (1,884,234 | ) |
| Tax effect                                                |       | 152,058                                |       | — |   | 152,058 |   | 218,879 |   | — |   | 218,879 |   |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Credited (Charged) to  Available-for-Sale Reserves**    | ** ** | **45,791**                             |       | — | ** ** | **45,791** | ** ** | **(46** | **)** | — | ** ** | **(46** | **)** |
| Available-for-sale financial assets                       |       | 55,354                                 |       | — |   | 55,354 |   | (55 | ) | — |   | (55 | ) |
| Tax effect                                                |       | (9,563                                 | )          | — |   | (9,563 | ) | 9 |   | — |   | 9 |   |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Credited (Charged) to Hedge  Reserves**                 | ** ** | **185,568,236**                        | ** ** | **1,487,755** | ** ** | **187,055,991** | ** ** | **(270,884,586** | **)** | **(2,710,359** | **)** | **(273,594,945** | **)** |
| Cash flow hedge                                           |       | 231,228,576                            |       | 2,515,218 |   | 233,743,794 |   | (308,591,337 | ) | (1,959,567 | ) | (310,550,904 | ) |
| Cash flow hedges transferred to net income                |       | (7,157,865                             | )          | (389,867 | ) | (7,547,732 | ) | (19,377,407 | ) | (1,912,374 | ) | (21,289,781 | ) |
| Tax effect                                                |       | (38,502,475                            | )          | (637,596 | ) | (39,140,071 | ) | 57,084,158 |   | 1,161,582 |   | 58,245,740 |   |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Credited (Charged) to Foreign  Currency Translation**   | ** ** | **(124,472,978**                       | **)**      | **(127,204,798** | **)** | **(251,677,776** | **)** | **101,367,756** | ** ** | **67,334,681** | ** ** | **168,702,437** | ** ** |
| Foreign currency translation                              |       | (124,472,978                           | )          | (127,204,798 | ) | (251,677,776 | ) | 101,367,756 |   | 67,334,681 |   | 168,702,437 |   |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Credited (Charged) to Other  Reserves**                 | ** ** | **16,465,996**                         | ** ** | **(17,016** | **)** | **16,448,980** | ** ** | **(13,749,102** | **)** | — | ** ** | **(13,749,102** | **)** |
| Share of other comprehensive income (loss) of  associates |       | 14,071,676                             |       | (25,783 | ) | 14,045,893 |   | (13,749,102 | ) | — |   | (13,749,102 | ) |
| Tax effect                                                |       | 2,394,320                              |       | 8,767 |   | 2,403,087 |   | — |   | — |   | — |   |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Total Other Comprehensive Income**                      | ** ** | **76,719,438**                         | ** ** | **(125,837,786** | **)** | **(49,118,348** | **)** | **(184,545,303** | **)** | **64,238,292** | ** ** | **(120,307,011** | **)** |
|                                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Total Comprehensive Income**                            | ** ** | **703,772,844**                        | ** ** | **19,209,162** | ** ** | **722,982,006** | ** ** | **248,631,881** | ** ** | **188,591,943** | ** ** | **437,223,824** | ** ** |

 

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22.7   Equityattributable to minority interests

 

Theprincipal fluctuations on minority interests during years 2009 and 2008 areexplained as follows:

 

On October 9, 2009, ina market transaction on the Lima Stock Exchange (Peru), Endesa Chile acquiredan additional 29.3974% interest on Edegel S.A.A., for a total of ThCh$208,922,322(US$ 375 million). This acquisition resulted in a decrease of minority interestof ThCh$127,551,963.

 

Itis important to highlight that this acquisition was approved by the Company’sBoard of Directors after their review of external valuations prepared by hiredinvestment banks and internal valuations prepared by Management. The shareswere acquired from the Peruvian company Generalima S.A.C., a subsidiary ofEndesa Latinoamérica S.A.U., which is a related party to Endesa Chile.

 

**23.   REVENUES**

 

Thisaccount as presented in the accompanying consolidated statements of comprehensiveincome for the 2009 and 2008 periods is detailed as follows:

 
| ** **                     | ** ** | **For the year ended** | ** ** |
|--------------------------------|------------|---------------------------------------|------------|
| ** **                     | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Revenues**                   | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                           |       |                                  |       |   |   |
| Energy sales                   |       | 2,346,027,026                         |       | 2,441,009,414 |   |
|                           |       |                                  |       |   |   |
| Other sales                    | ** ** | **12,085,420**                        | ** ** | **20,557,959** | ** ** |
| Sales of products and services |       | 12,085,420                            |       | 20,557,959 |   |
|                           |       |                                  |       |   |   |
| Other services provided        | ** ** | **50,127,000**                        | ** ** | **70,000,800** | ** ** |
| Tolls and transmission         |       | 5,841,603                             |       | 30,855,703 |   |
| Lease of measurement equipment |       | 43,947                                |       | 2,631,060 |   |
| Engineering services           |       | 19,960,120                            |       | 14,948,168 |   |
| Other services                 |       | 24,281,330                            |       | 21,565,869 |   |
|                           |       |                                  |       |   |   |
| **Total Revenues**             | ** ** | **2,408,239,446**                     | ** ** | **2,531,568,173** | ** ** |

 
| ** **                           | ** ** | **For the year ended** | ** ** |
|--------------------------------------|------------|---------------------------------------|------------|
| ** **                           | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Other Operating Income** | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                 |       |                                  |       |   |   |
| Other operating income               |       | 10,679,909                            |       | 4,820,266 |   |
|                                 |       |                                  |       |   |   |
| **Total Other Operating Income**     | ** ** | **10,679,909**                        | ** ** | **4,820,266** | ** ** |

 

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**24.   CONSUMPTION OF RAW AND SECONDARY MATERIALS**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **                                                              | ** ** | **For the year ended** | ** ** |
|-------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                              | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Consumption of raw and secondary materials** | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                                                    |       |                                  |       |   |   |
| Energy purchased                                                        |       | (164,312,507                          | )          | (224,432,412 | ) |
| Cost fuel consumed                                                      |       | (587,063,935                          | )          | (845,936,200 | ) |
| Transportation costs                                                    |       | (173,035,230                          | )          | (187,324,624 | ) |
| Other variable supplies and services                                    |       | (51,734,217                           | )          | (46,759,899 | ) |
|                                                                    |       |                                  |       |   |   |
| **Total**                                                               | ** ** | **(976,145,889**                      | **)**      | **(1,304,453,135** | **)** |

 

**25.   EMPLOYEE EXPENSES**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **                                       | ** ** | **For the year ended** | ** ** |
|--------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                       | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Employee expenses**                       | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                             |       |                                  |       |   |   |
| Salaries and wages                               |       | (68,688,989                           | )          | (60,038,243 | ) |
| Post-employment benefit obligation expense       |       | (483,347                              | )          | (485,030 | ) |
| Social security service and other social charges |       | (5,641,035                            | )          | (2,688,880 | ) |
| Other personnel expenses                         |       | (19,050                               | )          | (87,321 | ) |
|                                             |       |                                  |       |   |   |
| **Total**                                        | ** ** | **(74,832,421**                       | **)**      | **(63,299,474** | **)** |

 

**26.   DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **            | ** ** | **For the year ended** | ** ** |
|-----------------------|------------|---------------------------------------|------------|
| ** **            | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| ** **            | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                  |       |                                  |       |   |   |
| Depreciation          |       | (192,772,740                          | )          | (182,631,235 | ) |
| Amortization          |       | (3,369,335                            | )          | (3,973,340 | ) |
| Impairment losses (*) |       | (43,999,600                           | )          | — |   |
|                  |       |                                  |       |   |   |
| Total                 | ** ** | **(240,141,675**                      | **)**      | **(186,604,575** | **)** |

 

----

(*)See note 13.f.5.

 

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**27.   OTHER MISCELLANEOUS OPERATING EXPENSES**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **                                                | ** ** | **For the year ended** | ** ** |
|-----------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Other Miscellaneous Operating Expenses** | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                                      |       |                                  |       |   |   |
| Other supplies                                            |       | (2,350,841                            | )          | (2,298,270 | ) |
| Environmental expenses                                    |       | (3,265,413                            | )          | (3,205,718 | ) |
| Lease and rental cost                                     |       | (3,029,391                            | )          | (2,910,420 | ) |
| Repair and maintenance                                    |       | (13,136,995                           | )          | (12,923,921 | ) |
| Independent professional services                         |       | (6,985,191                            | )          | (12,056,551 | ) |
| Outsourced services                                       |       | (18,702,738                           | )          | (13,247,171 | ) |
| Insurance premiums                                        |       | (12,682,484                           | )          | (9,233,688 | ) |
| Marketing, public relations and advertising               |       | (1,557,060                            | )          | (952,773 | ) |
| Contributions                                             |       | (1,672,172                            | )          | (1,371,164 | ) |
| Other taxes and tariffs                                   |       | (19,124,384                           | )          | (17,006,971 | ) |
| Other supplies and services                               |       | (28,362,110                           | )          | (32,661,068 | ) |
|                                                      |       |                                  |       |   |   |
| **Total Other Miscellaneous  Operating Expenses**         | ** ** | **(110,868,779**                      | **)**      | **(107,867,715** | **)** |

 

**28.   FINANCIAL COSTS**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **                                          | ** ** | **For the year ended** | ** ** |
|-----------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                          | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Financial Costs**                            | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                                |       |                                  |       |   |   |
| **Finance Expenses**                                | ** ** | **(188,368,384**                      | **)**      | **(198,439,587** | **)** |
|                                                |       |                                  |       |   |   |
| Bank loans                                          |       | (46,461,315                           | )          | (45,642,179 | ) |
| Bonds                                               |       | (103,202,475                          | )          | (127,130,691 | ) |
| Finance leasing                                     |       | (3,666,191                            | )          | (4,693,442 | ) |
| Valuation of financial derivatives                  |       | (4,255,054                            | )          | (726,687 | ) |
| Financial provisions                                |       | (3,014,451                            | )          | (2,619,725 | ) |
| Other                                               |       | (27,768,898                           | )          | (17,626,863 | ) |
|                                                |       |                                  |       |   |   |
| **Gain (loss) for indexed assets  and liabilities** | ** ** | **9,275,308**                         | ** ** | **(18,950,333** | **)** |
|                                                |       |                                  |       |   |   |
| **Foreign Currency Exchange  differences, Net**     | ** ** | **(17,017,325**                       | **)**      | **(5,828,382** | **)** |
|                                                |       |                                  |       |   |   |
| Positive                                            |       | 29,665,246                            |       | 42,223,336 |   |
| Negative                                            |       | (45,310,744                           | )          | (48,042,019 | ) |
| Derivatives, net                                    |       | (1,371,827                            | )          | (9,699 | ) |
|                                                |       |                                  |       |   |   |
| **Total Financial Costs**                           | ** ** | **(196,110,401**                      | **)**      | **(223,218,302** | **)** |

 

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**29.   GAIN (LOSS) FROM INVESTMENTS**

 

Thisaccount as presented in the accompanying consolidated statements ofcomprehensive income for the 2009 and 2008 periods is detailed as follows:

 
| ** **                          | ** ** | **For the year ended** | ** ** |
|-------------------------------------|------------|---------------------------------------|------------|
| ** **                          | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Gain from investments** | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                |       |                                  |       |   |   |
| Cash and cash equivalents           |       | 19,525,214                            |       | 19,801,293 |   |
| Other financial assets              |       | 4,877,607                             |       | 7,235,914 |   |
| Other finance income                |       | 822,831                               |       | 8,302,363 |   |
|                                |       |                                  |       |   |   |
| **Total**                           | ** ** | **25,225,652**                        | ** ** | **35,339,570** | ** ** |

 

**30.   INCOME TAX**

 

Incometax as presented in the accompanying consolidated statements of comprehensiveincome for the 2009 and 2008 periods are detailed herein. Also, the followingtable reconciles income taxes resulting from applying the general current taxrate to “Net income before taxes” to the income tax expense recorded in theaccompanying consolidated statement of comprehensive income for 2009 and 2008:

 
| ** **                                                                                   | ** ** | **For the year ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                   | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| **Income tax**                                                                          | ** ** | **ThCh$**                             | ** ** | **ThCh$** | ** ** |
|                                                                                         |       |                                  |       |   |   |
| Current Tax Expense                                                                          |       | (230,226,472                          | )          | (142,840,577 | ) |
| Tax benefit effect from tax assets not previously  recognized                                |       | 12,155,622                            |       | — |   |
| Adjustments to Current Tax of Prior Period                                                   |       | (13,231,189                           | )          | (2,588,205 | ) |
| Other Current Tax Expense                                                                    |       | (2,799,433                            | )          | (6,486,004 | ) |
|                                                                                         |       |                                  |       |   |   |
| **Current Tax Expense, Net**                                                                 | ** ** | **(234,101,472**                      | **)**      | **(151,914,786** | **)** |
|                                                                                         |       |                                  |       |   |   |
| Deferred Tax Income (Expense) Relating to  Origination and Reversal of Temporary Differences |       | 48,513,831                            |       | (50,423,200 | ) |
| Tax benefit effect from tax assets not previously  recognized                                |       | 1,700,625                             |       | — |   |
| Other Deferred Tax Income (Expense)                                                          |       | 11,418,720                            |       | (7,839,619 | ) |
|                                                                                         |       |                                  |       |   |   |
| **Deferred Tax Income (Expense),  Net**                                                      | ** ** | **61,633,176**                        | ** ** | **(58,262,819** | **)** |
| **Income Tax**                                                                               | ** ** | **(172,468,296**                      | **)**      | **(210,177,605** | **)** |

 
| ** **                                                         | ** ** | **2009**         | ** ** | **2008**         | ** ** |
|--------------------------------------------------------------------|------------|------------------|------------|------------------|------------|
| **Reconciliation of Tax Expense**                   | ** ** | **ThCh$**        | ** ** | **ThCh$**        | ** ** |
|                                                               |       |             |       |             |       |
| **Tax expense using statutory rate**                               | ** ** | **(160,576,672** | **)**      | **(130,510,434** | **)**      |
| Tax effect of rates in other jurisdictions                         |       | (44,211,383      | )          | (35,674,678      | )          |
| Tax effect of non-taxable revenues                                 |       | 10,333,820       |       | 21,915,058       |       |
| Tax effect of non-tax-deductible expenses                          |       | (7,419,887       | )          | (13,507,757      | )          |
| Effect of tax credit on assets not previously  recognized          |       | 2,499,071        |       | —           |       |
| Tax effect from under or over provided tax in  prior periods       |       | (7,359,691       | )          | (2,588,205       | )          |
| Price-level restatement for tax purposes  (investments and equity) |       | 34,266,446       |       | (49,811,589      | )          |
| **Total adjustments to tax expense  using statutory rate**         | ** ** | **(11,891,624**  | **)**      | **(79,667,171**  | **)**      |
|                                                               |       |             |       |             |       |
| **Income Tax**                                                     | ** ** | **(172,468,296** | **)**      | **(210,177,605** | **)**      |

 

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**31.   SEGMENT INFORMATION**

 

31.1  Segmentation criteria

 

EndesaChile develops commercial activities within two basic business lines:electricity generation and other.

 

Segmentinformation is also structured geographically by country:

 

·   Chile

·   Argentina

·   Peru

·   Colombia

 

Asthe subsidiaries of Endesa Chile are basically aligned along these two businesslines, the segment information presented below is based on the financialinformation of the companies within each segment.

 

Thefollowing table details this segment information for 2009 and 2008.

 

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31.2  Distribution by country

 
| **Country**                                                      | ** ** | **Chile**         | ** ** | **Argentina**     | ** ** | **Colombia**    | ** ** | **Peru**        | ** ** | **Others**        | ** ** | **Eliminations**  | ** ** | **Total**       | ** ** |
|------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|-------------------|------------|-----------------|------------|
| ** **                                                       | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **12-31-2009**  | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
| **ASSETS**                                                       | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **CURRENT ASSETS**                                               |       | 516,871,512       |       | 806,288,166       |       | 118,440,168     |       | 114,278,494     |       | 256,813,794       |       | 236,178,551       |       | 54,343,007      |       | 74,908,952 |   | 29,830,486 |   | 23,625,828 |   | (33,937,725 | ) | (13,441,108 | ) | **942,361,242** | ** ** | **1,241,838,883** | ** ** |
| **Current Operating Assets**                                     |       | 516,871,512       |       | 806,288,166       |       | 118,440,168     |       | 114,278,494     |       | 256,813,794       |       | 236,178,551       |       | 54,343,007      |       | 74,908,952 |   | 29,830,486 |   | 23,625,828 |   | (33,937,725 | ) | (13,441,108 | ) | **942,361,242** | ** ** | **1,241,838,883** | ** ** |
| Cash  and Cash Equivalents                                       |       | 239,557,586       |       | 531,859,703       |       | 24,084,851      |       | 41,128,903      |       | 160,939,980       |       | 133,927,140       |       | 21,294,688      |       | 11,417,994 |   | 561,124 |   | 884,240 |   | — |   | — | ** ** | **446,438,229** | ** ** | **719,217,980** | ** ** |
| Financial  assets at fair value with changes through net income  |       | 1,493,492         |       | —            |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **1,493,492** | ** ** | **—** | ** ** |
| Other  financial assets                                          |       | 42,597            |       | —            |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | 60 |   | — |   | — |   | — | ** ** | **42,657** | ** ** | **—** | ** ** |
| Trade  accounts receivable and other receivables, net            |       | 201,579,265       |       | 164,670,100       |       | 82,457,014      |       | 62,870,559      |       | 55,169,859        |       | 69,249,693        |       | 11,073,405      |       | 40,513,491 |   | 6,516,558 |   | 4,984,036 |   | (28,530,633 | ) | (27,202 | ) | **328,265,468** | ** ** | **342,260,677** | ** ** |
| Accounts  receivable from related companies                      |       | 8,360,055         |       | 25,369,369        |       | 2,228,305       |       | 4,632,137       |       | 32,526,869        |       | 26,442,021        |       | 8,979,580       |       | 5,739,401 |   | 22,473,119 |   | 17,476,040 |   | (5,407,092 | ) | (13,413,906 | ) | **69,160,836** | ** ** | **66,245,062** | ** ** |
| Inventories                                                      |       | 18,778,149        |       | 26,585,987        |       | 3,803,384       |       | 2,207,392       |       | 6,622,526         |       | 6,559,697         |       | 10,975,529      |       | 13,788,670 |   | — |   | — |   | — |   | — | ** ** | **40,179,588** | ** ** | **49,141,746** | ** ** |
| Prepayments                                                      |       | 2,138,737         |       | 1,876,417         |       | 1,404,934       |       | 1,233,456       |       | 1,554,560         |       | —            |       | 2,016,998       |       | 1,568,626 |   | 68,847 |   | 30,085 |   | — |   | — | ** ** | **7,184,076** | ** ** | **4,708,584** | ** ** |
| Current  tax receivable                                          |       | 44,053,507        |       | 52,051,837        |       | 169,612         |       | 1,081,210       |       | —            |       | —            |       | 2,807           |       | 1,530,723 |   | 166,372 |   | 248,134 |   | — |   | — | ** ** | **44,392,298** | ** ** | **54,911,904** | ** ** |
| Other  assets                                                    |       | 868,124           |       | 3,874,753         |       | 4,292,068       |       | 1,124,837       |       | —            |       | —            |       | —          |       | 350,047 |   | 44,406 |   | 3,293 |   | — |   | — | ** ** | **5,204,598** | ** ** | **5,352,930** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NON-CURRENT ASSETS**                                           |       | 3,993,018,113     |       | 3,878,398,632     |       | 238,359,902     |       | 420,434,264     |       | 1,228,326,578     |       | 1,423,563,041     |       | 785,935,394     |       | 1,138,957,979 |   | 48,511,519 |   | 68,210,295 |   | (1,067,160,136 | ) | (1,492,497,729 | ) | 5,226,991,370 | ** ** | **5,437,066,482** | ** ** |
| Available-for-sale  financial assets                             |       | 2,487,796         |       | 2,431,165         |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | 1,342 |   | — |   | — | ** ** | **2,487,796** | ** ** | **2,432,507** | ** ** |
| Other  financial assets                                          |       | 1,063,377         |       | 1,655,343         |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **1,063,377** | ** ** | **1,655,343** | ** ** |
| Trade  accounts receivable and other receivables, net            |       | 2,378,486         |       | 57,079,072        |       | 61,013,486      |       | 90,101,827      |       | 3,028,768         |       | 3,085,562         |       | —          |       | — |   | 295,725 |   | 3,145,871 |   | — |   | — | ** ** | **66,716,465** | ** ** | **153,412,332** | ** ** |
| Accounts  receivable from related companies                      |       | (76,986           | )          | 7,496,627         |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | 76,986 |   | 78,859 |   | — |   | (7,575,486 | ) | **—** | ** ** | **—** | ** ** |
| Investments  in associates accounted for using the equity method |       | 1,598,184,456     |       | 1,523,350,874     |       | 4,698,977       |       | 96,675,083      |       | 1,366             |       | —            |       | 47,596,359      |       | 290,945,562 |   | 26,488,936 |   | 40,486,656 |   | (1,102,872,803 | ) | (1,414,755,145 | ) | **574,097,291** | ** ** | **536,703,030** | ** ** |
| Intangible  assets, net                                          |       | 8,021,312         |       | 34,614,920        |       | 2,780,777       |       | 3,840,823       |       | 17,245,016        |       | 19,239,677        |       | 11,556,650      |       | 199,529 |   | 16,879,892 |   | 19,059,463 |   | 91,700,310 |   | — | ** ** | **148,183,957** | ** ** | **76,954,412** | ** ** |
| Property,  plant and equipment, net                              |       | 2,359,882,964     |       | 2,228,924,622     |       | 147,343,811     |       | 205,984,029     |       | 1,148,817,647     |       | 1,331,396,777     |       | 724,212,506     |       | 841,810,598 |   | 2,720,075 |   | 2,945,690 |   | (55,987,643 | ) | (70,167,098 | ) | **4,326,989,360** | ** ** | **4,540,894,618** | ** ** |
| Deferred  tax assets                                             |       | 20,016,869        |       | 21,980,616        |       | 12,629,862      |       | 11,706,774      |       | 58,141,132        |       | 68,671,434        |       | 2,152,412       |       | 5,544,615 |   | 1,983,851 |   | 2,422,945 |   | — |   | — | ** ** | **94,924,126** | ** ** | **110,326,384** | ** ** |
| Hedging  instruments                                             |       | 509,760           |       | —            |       | —          |       | —          |       | —            |       | —            |       | 80,862          |       | — |   | — |   | — |   | — |   | — | ** ** | **590,622** | ** ** | **—** | ** ** |
| Other  assets                                                    |       | 550,079           |       | 865,393           |       | 9,892,989       |       | 12,125,728      |       | 1,092,649         |       | 1,169,591         |       | 336,605         |       | 457,675 |   | 66,054 |   | 69,469 |   | — |   | — | ** ** | **11,938,376** | ** ** | **14,687,856** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **TOTAL ASSETS**                                                 | ** ** | **4,509,889,625** | ** ** | **4,684,686,798** | ** ** | **356,800,070** | ** ** | **534,712,758** | ** ** | **1,485,140,372** | ** ** | **1,659,741,592** | ** ** | **840,278,401** | ** ** | **1,213,866,931** | ** ** | **78,342,005** | ** ** | **91,836,123** | ** ** | **(1,101,097,861** | **)** | **(1,505,938,837** | **)** | **6,169,352,612** | ** ** | **6,678,905,365** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Country**                                                      | ** ** | **Chile**         | ** ** | **Argentina**     | ** ** | **Colombia**    | ** ** | **Peru**        | ** ** | **Others**        | ** ** | **Eliminations**  | ** ** | **Total**       | ** ** |
| ** **                                                       | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **12-31-2009**  | ** ** | **12-31-2008**  | ** ** | **12-31-2009**    | ** ** | **12-31-2008**    | ** ** | **12-31-2009**  | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** | **12-31-2009** | ** ** | **12-31-2008** | ** ** |
| **NET EQUITY AND LIABILITIES**                    | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **CURRENT LIABILITIES**                                          |       | 635,092,821       |       | 799,617,498       |       | 143,807,722     |       | 163,211,243     |       | 130,634,275       |       | 282,665,428       |       | 71,313,577      |       | 121,038,408 |   | 12,790,003 |   | 10,467,833 |   | (12,536,717 | ) | (21,356,282 | ) | **981,101,681** | ** ** | **1,355,644,128** |   |
| **Current Operating Liabilities**                                |       | 635,092,821       |       | 799,617,498       |       | 143,807,722     |       | 163,211,243     |       | 130,634,275       |       | 282,665,428       |       | 71,313,577      |       | 121,038,408 |   | 12,790,003 |   | 10,467,833 |   | (12,536,717 | ) | (21,356,282 | ) | **981,101,681** | ** ** | **1,355,644,128** |   |
| Interest-bearing  loans                                          |       | 188,704,590       |       | 434,922,470       |       | 61,178,560      |       | 80,193,716      |       | 57,137,900        |       | 148,527,035       |       | 38,334,893      |       | 76,474,333 |   | — |   | — |   | — |   | — | ** ** | **345,355,943** | ** ** | **740,117,554** | ** ** |
| Other  financial liabilities                                     |       | 420,822           |       | —            |       | 275,969         |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **696,791** | ** ** | **—** | ** ** |
| Trade  accounts payable and other payables                       |       | 293,794,226       |       | 244,668,613       |       | 29,973,620      |       | 40,139,578      |       | 28,526,181        |       | 23,502,230        |       | 20,319,427      |       | 38,106,135 |   | 1,258,402 |   | 1,370,661 |   | — |   | (112,200 | ) | **373,871,856** | ** ** | **347,675,017** | ** ** |
| Accounts  payable to related companies                           |       | 65,008,007        |       | 57,134,259        |       | 29,954,939      |       | 31,255,408      |       | 2,477,464         |       | 65,570,261        |       | 262,056         |       | 256,607 |   | 5,388,310 |   | 4,423,856 |   | (12,536,717 | ) | (21,244,082 | ) | **90,554,059** | ** ** | **137,396,309** | ** ** |
| Provisions                                                       |       | 25,922,905        |       | 26,494,199        |       | 1,163,928       |       | 1,108,306       |       | 26,684            |       | —            |       | 2,790,365       |       | 2,536,882 |   | 3,489,342 |   | 3,567,074 |   | — |   | — | ** ** | **33,393,224** | ** ** | **33,706,461** | ** ** |
| Current  tax payable                                             |       | 57,461,125        |       | 31,637,347        |       | 20,817,793      |       | 9,968,471       |       | 37,298,367        |       | 39,446,971        |       | 8,066,064       |       | 2,415,671 |   | 302,083 |   | 497,788 |   | — |   | — | ** ** | **123,945,432** | ** ** | **83,966,248** | ** ** |
| Other  liabilities                                               |       | 2,638,986         |       | 4,691,756         |       | 409,951         |       | 525,858         |       | 2,086,648         |       | 2,025,949         |       | 1,540,772       |       | 1,248,780 |   | 1,992,839 |   | 218,145 |   | — |   | — | ** ** | **8,669,196** | ** ** | **8,710,488** | ** ** |
| Deferred  revenues                                               |       | 89,440            |       | 58,936            |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | 359,027 |   | 390,309 |   | — |   | — | ** ** | **448,467** | ** ** | **449,245** | ** ** |
| Post-employment  benefit obligations                             |       | 367,702           |       | —            |       | —          |       | —          |       | 3,081,031         |       | 3,592,982         |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **3,448,733** | ** ** | **3,592,982** | ** ** |
| Hedging  instruments                                             |       | 685,018           |       | 9,918             |       | 32,962          |       | 19,906          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **717,980** | ** ** | **29,824** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NON-CURRENT LIABILITIES**                                      |       | 1,310,130,077     |       | 1,676,261,636     |       | 122,228,745     |       | 164,365,394     |       | 424,071,893       |       | 342,424,533       |       | 358,335,279     |       | 415,637,559 |   | 17,632,214 |   | 22,617,897 |   | 850,871 |   | — | ** ** | **2,233,249,079** | ** ** | **2,621,307,019** |   |
| Interest-bearing  loans                                          |       | 1,089,852,354     |       | 1,445,905,323     |       | 97,956,798      |       | 129,801,713     |       | 406,377,244       |       | 322,668,484       |       | 197,794,571     |       | 236,168,778 |   | — |   | — |   | — |   | — | ** ** | **1,791,980,967** | ** ** | **2,134,544,298** | ** ** |
| Trade  accounts payable and other payables                       |       | 7,361,867         |       | 13,212,182        |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | 207,872 |   | 40,190 |   | — |   | — | ** ** | **7,569,739** | ** ** | **13,252,372** | ** ** |
| Provisions                                                       |       | 9,246,395         |       | 1,093,483         |       | —          |       | —          |       | 430,975           |       | 571,426           |       | 10,482,637      |       | 1,516,129 |   | 578 |   | 109,487 |   | — |   | — | ** ** | **20,160,585** | ** ** | **3,290,525** | ** ** |
| Deferred  tax liabilities                                        |       | 184,228,532       |       | 203,427,245       |       | 12,848,716      |       | 18,177,626      |       | —            |       | —            |       | 147,818,131     |       | 173,985,784 |   | 2,981,240 |   | 3,783,730 |   | — |   | — | ** ** | **347,876,619** | ** ** | **399,374,385** | ** ** |
| Other  liabilities                                               |       | 9,964,125         |       | 1,258,605         |       | 10,733,441      |       | 15,374,333      |       | —            |       | —            |       | —          |       | — |   | 12,788,275 |   | 16,803,476 |   | 850,871 |   | — | ** ** | **34,336,712** | ** ** | **33,436,414** | ** ** |
| Deferred  revenues                                               |       | 163,596           |       | 233,531           |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **163,596** | ** ** | **233,531** | ** ** |
| Post-employment  benefit obligations                             |       | 9,313,208         |       | 8,814,659         |       | —          |       | —          |       | 17,263,674        |       | 19,184,623        |       | —          |       | — |   | 1,654,249 |   | 1,881,014 |   | — |   | — | ** ** | **28,231,131** | ** ** | **29,880,296** | ** ** |
| Hedging  instruments                                             |       | —            |       | 2,316,608         |       | 689,790         |       | 1,011,722       |       | —            |       | —            |       | 2,239,940       |       | 3,966,868 |   | — |   | — |   | — |   | — | ** ** | **2,929,730** | ** ** | **7,295,198** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET EQUITY**                                                   |       | 2,564,666,727     |       | 2,208,807,664     |       | 90,763,603      |       | 207,136,121     |       | 930,434,204       |       | 1,034,651,631     |       | 410,629,545     |       | 677,190,964 |   | 47,919,788 |   | 58,750,393 |   | (1,089,412,015 | ) | (1,484,582,555 | ) | **2,955,001,852** | ** ** | **2,701,954,218** |   |
| **Net Equity Attributable to Shareholders of the Company**       |       | 2,564,666,727     |       | 2,208,807,664     |       | 90,763,603      |       | 207,136,121     |       | 930,434,204       |       | 1,034,651,631     |       | 410,629,545     |       | 677,190,964 |   | 47,919,788 |   | 58,750,393 |   | (1,089,412,015 | ) | (1,484,582,555 | ) | **2,069,085,642** | ** ** | **1,598,730,012** |   |
| Issued  share capital                                            |       | 2,114,323,325     |       | 2,135,893,727     |       | 84,324,737      |       | 223,680,953     |       | 259,460,190       |       | 298,494,955       |       | 164,297,758     |       | 658,543,384 |   | 144,937,116 |   | 144,937,116 |   | (1,229,620,484 | ) | (1,923,827,493 | ) | **1,537,722,642** | ** ** | **1,537,722,642** | ** ** |
| Reserves                                                         |       | (683,420,776      | )          | (850,292,883      | )          | 1,707,825       |       | (31,223,039     | )          | 532,944,218       |       | 620,159,057       |       | 224,415,743     |       | (29,555,276 | ) | (27,119,572 | ) | (27,204,184 | ) | 68,206,630 |   | 676,594,567 | ** ** | **(769,182,142** | **)** | **(744,745,964** | **)** |
| Retained  Earnings                                               |       | 1,133,764,178     |       | 923,206,820       |       | 4,731,041       |       | 14,678,207      |       | 138,029,796       |       | 115,997,619       |       | 21,916,044      |       | 48,202,856 |   | (69,897,756 | ) | (58,982,539 | ) | 72,001,839 |   | (237,349,629 | ) | **1,300,545,142** | ** ** | **805,753,334** | ** ** |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Minority Interests**                                           |       | —            |       | —            |       | —          |       | —          |       | —            |       | —            |       | —          |       | — |   | — |   | — |   | — |   | — | ** ** | **885,916,210** | ** ** | **1,103,224,206** |   |
|                                                             |       |              |       |              |       |            |       |            |       |              |       |              |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Net Equity and Liabilities**                             | ** ** | **4,509,889,625** | ** ** | **4,684,686,798** | ** ** | **356,800,070** | ** ** | **534,712,758** | ** ** | **1,485,140,372** | ** ** | **1,659,741,592** | ** ** | **840,278,401** | ** ** | **1,213,866,931** | ** ** | **78,342,005** | ** ** | **91,836,123** | ** ** | **(1,101,097,861** | **)** | **(1,505,938,837** | **)** | **6,169,352,612** | ** ** | **6,678,905,365** |   |

 

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Tableof Contents

 

| **Country**                                                                  | ** ** | **Chile**         | ** ** | **Argentina**     | ** ** | **Colombia**     | ** ** | **Peru**         | ** ** | **Others**       | ** ** | **Eliminations** | ** ** | **Total**       | ** ** |
|------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------------|------------|
| **STATEMENT OF COMPREHENSIVE INCOME**                         | ** ** | **2009**          | ** ** | **2008**          | ** ** | **2009**         | ** ** | **2008**         | ** ** | **2009**         | ** ** | **2008**         | ** ** | **2009**        | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** |
| **For the years ended December 31, 2009 and  2008**                     | ** ** | **ThCh$**         | ** ** | **ThCh$**         | ** ** | **ThCh$**        | ** ** | **ThCh$**        | ** ** | **ThCh$**        | ** ** | **ThCh$**        | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **INCOME**                                                                   | ** ** | **1,369,647,333** | ** ** | **1,605,336,868** | ** ** | **296,577,889**  | ** ** | **284,227,984**  | ** ** | **500,964,413**  | ** ** | **401,470,271**  | ** ** | **213,624,981** | ** ** | **208,496,821** | ** ** | **39,001,367** | ** ** | **36,856,495** | ** ** | **(896,628** | **)** | **—** | ** ** | **2,418,919,355** | ** ** | **2,536,388,439** |   |
| Sales                                                                        | ** ** | **1,363,467,495** | ** ** | **1,603,713,760** | ** ** | **293,388,675**  | ** ** | **284,077,914**  | ** ** | **500,829,922**  | ** ** | **401,257,389**  | ** ** | **212,448,615** | ** ** | **205,662,615** | ** ** | **39,001,367** | ** ** | **36,856,495** | ** ** | **(896,628** | **)** | **—** | ** ** | **2,408,239,446** | ** ** | **2,531,568,173** | ** ** |
| Energy  sales                                                                |       | 1,349,609,938     |       | 1,551,715,509     |       | 293,388,675      |       | 284,077,914      |       | 500,175,971      |       | 400,576,991      |       | 202,852,442     |       | 204,588,804 |   | — |   | 50,196 |   | — |   | — | ** ** | **2,346,027,026** | ** ** | **2,441,009,414** | ** ** |
| Other  sales                                                                 |       | 6,009,988         |       | 14,564,928        |       | —           |       | —           |       | —           |       | —           |       | —          |       | — |   | 6,075,432 |   | 5,993,031 |   | — |   | — | ** ** | **12,085,420** | ** ** | **20,557,959** | ** ** |
| Other  services                                                              |       | 7,847,569         |       | 37,433,323        |       | —           |       | —           |       | 653,951          |       | 680,398          |       | 9,596,173       |       | 1,073,811 |   | 32,925,935 |   | 30,813,268 |   | (896,628 | ) | — | ** ** | **50,127,000** | ** ** | **70,000,800** | ** ** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other  operating income                                                      |       | 6,179,838         |       | 1,623,108         |       | 3,189,214        |       | 150,070          |       | 134,491          |       | 212,882          |       | 1,176,366       |       | 2,834,206 |   | — |   | — |   | — |   | — | ** ** | **10,679,909** | ** ** | **4,820,266** | ** ** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Procurement and Services**                                                 | ** ** | **(511,521,900**  | **)**      | **(871,056,362**  | **)**      | **(208,539,466** | **)**      | **(206,239,901** | **)**      | **(184,067,482** | **)**      | **(128,688,480** | **)**      | **(72,013,860** | **)**      | **(98,453,175** | **)** | **(3,181** | **)** | **(15,217** | **)** | **—** | ** ** | **—** | ** ** | **(976,145,889** | **)** | **(1,304,453,135** | **)** |
| Power  purchased                                                             |       | (52,310,897       | )          | (134,937,913      | )          | (9,375,553       | )          | (12,067,418      | )          | (91,955,452      | )          | (47,123,986      | )          | (10,670,605     | )          | (30,303,095 | ) | — |   | — |   | — |   | — | ** ** | **(164,312,507** | **)** | **(224,432,412** | **)** |
| Cost  of fuel consumed                                                       |       | (345,812,585      | )          | (606,484,644      | )          | (180,160,003     | )          | (179,081,276     | )          | (20,572,023      | )          | (10,740,338      | )          | (40,516,143     | )          | (49,625,820 | ) | (3,181 | ) | (4,122 | ) | — |   | — | ** ** | **(587,063,935** | **)** | **(845,936,200** | **)** |
| Transportation  expenses                                                     |       | (107,314,035      | )          | (122,578,858      | )          | (5,363,800       | )          | (4,689,649       | )          | (46,663,960      | )          | (45,787,546      | )          | (13,693,435     | )          | (14,257,476 | ) | — |   | (11,095 | ) | — |   | — | ** ** | **(173,035,230** | **)** | **(187,324,624** | **)** |
| Other  variable procurement costs and services                               |       | (6,084,383        | )          | (7,054,947        | )          | (13,640,110      | )          | (10,401,558      | )          | (24,876,047      | )          | (25,036,610      | )          | (7,133,677      | )          | (4,266,784 | ) | — |   | — |   | — |   | — | ** ** | **(51,734,217** | **)** | **(46,759,899** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CONTRIBUTION MARGIN**                                                      | ** ** | **858,125,433**   | ** ** | **734,280,506**   | ** ** | **88,038,423**   | ** ** | **77,988,083**   | ** ** | **316,896,931**  | ** ** | **272,781,791**  | ** ** | **141,611,121** | ** ** | **110,043,646** | ** ** | **38,998,186** | ** ** | **36,841,278** | ** ** | **(896,628** | **)** | **—** | ** ** | **1,442,773,466** | ** ** | **1,231,935,304** |   |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Work on non-current assets**                                               |       | —            |       | —            |       | —           |       | —           |       | 517,847          |       | 330,981          |       | 214,054         |       | 169,334 |   | — |   | — |   | — |   | — | ** ** | **731,901** | ** ** | **500,315** |   |
| **Employee expenses**                                                        |       | (29,654,313       | )          | (25,162,701       | )          | (10,769,163      | )          | (8,817,954       | )          | (10,959,497      | )          | (7,918,996       | )          | (6,537,925      | )          | (5,650,625 | ) | (17,643,424 | ) | (16,249,513 | ) | — |   | — | ** ** | **(75,564,322** | **)** | **(63,799,789** | **)** |
| **Other fixed operating expenses**                                           |       | (48,246,105       | )          | (45,421,082       | )          | (11,675,874      | )          | (11,200,880      | )          | (19,127,781      | )          | (17,815,369      | )          | (21,025,750     | )          | (16,556,810 | ) | (11,689,897 | ) | (17,637,815 | ) | 896,628 |   | 764,241 | ** ** | **(110,868,779** | **)** | **(107,867,715** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **GROSS PROFIT FROM OPERATIONS**                                             | ** ** | **780,225,015**   | ** ** | **663,696,723**   | ** ** | **65,593,386**   | ** ** | **57,969,249**   | ** ** | **287,327,500**  | ** ** | **247,378,407**  | ** ** | **114,261,500** | ** ** | **88,005,545** | ** ** | **9,664,865** | ** ** | **2,953,950** | ** ** | **—** | ** ** | **764,241** | ** ** | **1,257,072,266** | ** ** | **1,060,768,115** |   |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation,  amortization and impairment losses                            |       | (140,184,964      | )          | (95,960,199       | )          | (22,642,765      | )          | (20,684,846      | )          | (36,516,121      | )          | (30,560,196      | )          | (38,212,838     | )          | (36,233,239 | ) | (2,584,987 | ) | (3,166,095 | ) | — |   | — | ** ** | **(240,141,675** | **)** | **(186,604,575** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OPERATING INCOME**                                                         | ** ** | **640,040,051**   | ** ** | **567,736,524**   | ** ** | **42,950,621**   | ** ** | **37,284,403**   | ** ** | **250,811,379**  | ** ** | **216,818,211**  | ** ** | **76,048,662**  | ** ** | **51,772,306** | ** ** | **7,079,878** | ** ** | **(212,145** | **)** | **—** | ** ** | **764,241** | ** ** | **1,016,930,591** | ** ** | **874,163,540** |   |
| ** **                                                                   | ** ** | ** **        | ** ** | ** **        | ** ** | ** **       | ** ** | ** **       | ** ** | ** **       | ** ** | ** **       | ** ** | ** **      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| **Net Finance Cost**                                                         | ** ** | **(89,797,956**   | **)**      | **(103,738,107**  | **)**      | **(27,712,641**  | **)**      | **(25,609,868**  | **)**      | **(42,513,775**  | **)**      | **(43,391,504**  | **)**      | **(23,600,707** | **)**      | **(15,330,574** | **)** | **(461,910** | **)** | **12,931,325** | ** ** | **13,292,506** | ** ** | **(13,756,340** | **)** | **(170,794,483** | **)** | **(188,895,068** | **)** |
| Financial  income                                                            |       | 8,827,766         |       | 15,421,392        |       | 2,466,727        |       | 3,173,056        |       | 11,968,380       |       | 5,364,390        |       | 1,341,180       |       | 248,487 |   | 950,486 |   | 10,179,668 |   | (238,621 | ) | (63,759 | ) | **25,315,918** | ** ** | **34,323,234** | ** ** |
| Financial  expenses                                                          |       | (90,264,314       | )          | (119,695,637      | )          | (16,457,318      | )          | (13,908,953      | )          | (54,646,985      | )          | (48,548,045      | )          | (25,576,058     | )          | (15,579,061 | ) | (1,662,330 | ) | (771,650 | ) | 238,621 |   | 63,759 | ** ** | **(188,368,384** | **)** | **(198,439,587** | **)** |
| Income  (loss) for indexed assets and liabilities                            |       | 9,009,669         |       | (16,686,361       | )          | —           |       | —           |       | —           |       | —           |       | —          |       | — |   | 265,639 |   | (2,263,972 | ) | — |   | — | ** ** | **9,275,308** | ** ** | **(18,950,333** | **)** |
| Foreign  currency exchange differences                                       | ** ** | **(17,371,077**   | **)**      | **17,222,499**    | ** ** | **(13,722,050**  | **)**      | **(14,873,971**  | **)**      | **164,830**      | ** ** | **(207,849**     | **)**      | **634,171**     | ** ** | **—** | ** ** | **(15,705** | **)** | **5,787,279** | ** ** | **13,292,506** | ** ** | **(13,756,340** | **)** | **(17,017,325** | **)** | **(5,828,382** | **)** |
| Positive                                                                     |       | 28,981,945        |       | 47,547,505        |       | 1,904,563        |       | 1,406,927        |       | 263,663          |       | 128,111          |       | 635,100         |       | — |   | — |   | 6,887,434 |   | — |   | (13,756,340 | ) | **31,785,271** | ** ** | **42,213,637** | ** ** |
| Negative                                                                     |       | (46,353,022       | )          | (30,325,006       | )          | (15,626,613      | )          | (16,280,898      | )          | (98,833          | )          | (335,960         | )          | (929            | )          | — |   | (15,705 | ) | (1,100,155 | ) | 13,292,506 |   | — | ** ** | **(48,802,596** | **)** | **(48,042,019** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Share of the profit of associates accounted for using the  equity method** |       | 88,336,170        |       | 73,631,341        |       | 186,494          |       | 363,873          |       | —           |       | —           |       | 9,935,172       |       | 8,136,376 |   | — |   | — |   | — |   | — | ** ** | **98,457,836** | ** ** | **82,131,590** |   |
| **Gain (loss) from investments**                                             |       | (55,494           | )          | —            |       | —           |       | —           |       | (34,772          | )          | 252,022          |       | —          |       | 764,314 |   | — |   | — |   | — |   | — | ** ** | **(90,266** | **)** | **1,016,336** |   |
| **Gain (loss) on sale of non-current assets not held for sale**              |       | 34,186            |       | (336,047          | )          | —           |       | —           |       | 83,708           |       | 167,699          |       | (78,969         | )          | (1,530,052 | ) | 26,047 |   | 990,442 |   | — |   | — | ** ** | **64,972** | ** ** | **(707,958** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET INCOME BEFORE TAXES**                                                  | ** ** | **638,556,957**   | ** ** | **537,293,711**   | ** ** | **15,424,474**   | ** ** | **12,038,408**   | ** ** | **208,346,540**  | ** ** | **173,846,428**  | ** ** | **62,304,158**  | ** ** | **43,812,370** | ** ** | **6,644,015** | ** ** | **13,709,622** | ** ** | **13,292,506** | ** ** | **(12,992,099** | **)** | **944,568,650** | ** ** | **767,708,440** |   |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income  taxes                                                                |       | (76,281,986       | )          | (131,655,968      | )          | (6,168,376       | )          | (4,511,350       | )          | (69,788,953      | )          | (57,450,682      | )          | (21,497,520     | )          | (14,500,266 | ) | 1,268,539 |   | (2,059,339 | ) | — |   | — | ** ** | **(172,468,296** | **)** | **(210,177,605** | **)** |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET INCOME AFTER TAX FROM CONTINUING OPERATIONS**                          | ** ** | **562,274,971**   | ** ** | **405,637,743**   | ** ** | **9,256,098**    | ** ** | **7,527,058**    | ** ** | **138,557,587**  | ** ** | **116,395,746**  | ** ** | **40,806,638**  | ** ** | **29,312,104** | ** ** | **7,912,554** | ** ** | **11,650,283** | ** ** | **13,292,506** | ** ** | **(12,992,099** | **)** | **772,100,354** | ** ** | **557,530,835** |   |
| Gain  (loss) of discontinued operations, net of tax                          |       | —            |       | —            |       | —           |       | —           | ** ** | **—**       | ** ** | **—**       |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET INCOME AFTER TAX FROM DISCONTINUED OPERATIONS**                        | ** ** | **562,274,971**   | ** ** | **405,637,743**   | ** ** | **9,256,098**    | ** ** | **7,527,058**    | ** ** | **138,557,587**  | ** ** | **116,395,746**  | ** ** | **40,806,638**  | ** ** | **29,312,104** | ** ** | **7,912,554** | ** ** | **11,650,283** | ** ** | **13,292,506** | ** ** | **(12,992,099** | **)** | **772,100,354** | ** ** | **557,530,835** |   |
|                                                                         |       |              |       |              |       |             |       |             |       |             |       |             |       |            |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET INCOME**                                                               | ** ** | **562,274,971**   | ** ** | **405,637,743**   | ** ** | **9,256,098**    | ** ** | **7,527,058**    | ** ** | **138,557,587**  | ** ** | **116,395,746**  | ** ** | **40,806,638**  | ** ** | **29,312,104** | ** ** | **7,912,554** | ** ** | **11,650,283** | ** ** | **13,292,506** | ** ** | **(12,992,099** | **)** | **772,100,354** | ** ** | **557,530,835** | ** ** |
| **Shareholders of the Company**                                              | ** ** | **562,274,971**   | ** ** | **—**        | ** ** | **—**       | ** ** | **—**       | ** ** | **—**       | ** ** | **—**       | ** ** | **—**      | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **627,053,406** | ** ** | **433,177,184** | ** ** |
| **Minority interest**                                                        | ** ** | **—**        | ** ** | **—**        | ** ** | **—**       | ** ** | **—**       | ** ** | **—**       | ** ** | **—**       | ** ** | **—**      | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **145,046,948** | ** ** | **124,353,651** |   |

 

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Tableof Contents

 

**32    GUARANTEE COMMITMENTS TO THIRD PARTY, OTHER CONTINGENT ASSETS AND LIABILITIESAND OTHER COMMITMENTS**

 

32.1  Direct guarantees

 
| ** **                                              | ** ** | ** **                          | ** ** | ** **       | ** ** | **Type**             | ** ** | **Committed Assets**  | ** ** | **Outstanding balance** | ** ** | ** **                            | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
|---------------------------------------------------------|------------|-------------------------------------|------------|------------------|------------|----------------------|------------|----------------------------|------------|------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|------------|------------|------------|------------|
| ** **                                              | ** ** | **Debtor**                          | ** ** | **of**           | ** ** | ** **           | ** ** | ** **                 | ** ** | **Book**                     | ** ** | **as of December 31,** | ** ** | **Guarantee release date** | ** ** |
| **Creditor of Guarantee**                     | ** ** | **Name**                            | ** ** | **Relationship** | ** ** | **Guarantee**        | ** ** | **Type**                   | ** ** | **Currency**                 | ** ** | **value**                             | ** ** | **Currency**                         | ** ** | **2009**   | ** ** | **2008**   | ** ** | **2010** | ** ** | **Assets** | ** ** | **2011** | ** ** | **Assets** | ** ** |
| Creditor Bank                                           |       | Pangue S.A.                         |       | Creditor         |       | Mortgage  and Pledge |       | Real  Estate and Equipment |       | ThCh$                        |       | 86,239,360                            |       | ThCh$                                |       | 370,984    |       | 1,586,880  |       | — |   | — |   | — |   | — |   |
| Soc. de energía de  la República de Argentina |       | Endesa  Argentina, Endesa Costanera |       | Creditor         |       | Pledge               |       | Shares                     |       | ThCh$                        |       | 1,617,383                             |       | ThCh$                                |       | 2,923,298  |       | 6,289,519  |       | — |   | — |   | — |   | — |   |
| Mitsubishi                                              |       | Endesa Costanera                    |       | Creditor         |       | Pledge               |       | Combined  cycle            |       | ThCh$                        |       | 54,056,510                            |       | ThCh$                                |       | 72,279,911 |       | 90,716,919 |       | — |   | — |   | — |   | — |   |
| Credit Suisse First Boston                              |       | Endesa Costanera                    |       | Creditor         |       | Pledge               |       | Combined  cycle            |       | ThCh$                        |       | 15,853,655                            |       | ThCh$                                |       | 4,346,571  |       | 13,638,215 |       | — |   | — |   | — |   | — |   |
| Various Creditors                                       |       | Endesa  Parent Company              |       | Creditor         |       | Guarantees           |       |                       |       | ThCh$                        |       | —                                |       | ThCh$                                |       | 2,728,493  |       | 508,461    |       | — |   | — |   | — |   | — |   |
| Various Creditors                                       |       | Edegel                              |       | Creditor         |       | Pledge               |       | Real  Estate and Equipment |       | ThCh$                        |       | 105,294,764                           |       | ThCh$                                |       | 574,239    |       | 57,563,928 |       | — |   | — |   | — |   | — |   |
| Banco Santander (Underwriter)                           |       | G.N.L. Quintero                     |       | Associate        |       | Pledge               |       | Shares                     |       | ThCh$                        |       | 10,127,465                            |       | ThCh$                                |       | 93,151,966 |       | 94,205,737 |       | — |   | — |   | — |   | — |   |

 

Asof December 31, 2009, Endesa Chile had future energy purchase commitmentsof ThCh$ 13,196,131 (ThCh$ 50,485,248 as of December 31, 2008).

 

32.2  Indirectguarantees

 
| **Creditor**                | ** ** | ** **       | ** ** | ** **       | ** ** | **Committed Assets** | ** ** | **Outstanding balance** | ** ** | ** **                            | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------|------------|------------------|------------|------------------|------------|---------------------------|------------|------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| **of**                      | ** ** | **Debtor**       | ** ** | **Type of** | ** ** | **Type**                  | ** ** | **Value**                    | ** ** | **as of December 31,** | ** ** | **Guarantee release date** | ** ** |
| **Guarantee**               | ** ** | **Name**         | ** ** | **Relationship** | ** ** | **Guarantee**             | ** ** | **Currency**                 | ** ** | **Accounting**                        | ** ** | **Currency**                         | ** ** | **2009**   | ** ** | **2008**   | ** ** | **2010**   | ** ** | **Assets** | ** ** | **2011** | ** ** | **Assets** | ** ** | **2012** | ** ** | **Assets** | ** ** |
|                        |       |             |       |             |       |                      |       |                         |       |                                  |       |                                 |       |       |       |       |       |       |       |       |       |   |   |   |   |   |   |   |   |
| Vestas Eólicas  S.A.U. |       | Endesa  Eco S.A. |       | Subsidiary       |       | Co-signer                 |       | ThCh$                        |       |                                  |       | ThCh$                                |       | —     |       | 7,923,754  |       | —     |       | —     |       | — |   | — |   | — |   | — |   |

 

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32.3  Other information

 

TheMinistry of Economy of the Chilean government decreed that the regulatedconsumption of energy distributors, without fixed energy supply contracts,should be served jointly by all generation companies, prorated to eachcompanies’ fixed charge (this situation occurred from May 19, 2005 through December31, 2009).

 

Regardingthe aforementioned, the regulation enacted afterward has established that thegeneration companies will receive for these concepts the binding energy spotprice, and they will either credit or charge the distributors any negative orpositive differences that may arise with the current consumption at the currentmarginal cost. Also, the new regulation established a floor and a ceilingwhereas the differences aforementioned could not be lower or higher than the20% of energy spot price, and in case it is not sufficient, the residuals willbe incorporated in the subsequent determination of energy spot price until allthe differences are paid off entirely.

 

Theestimated remaining recoverable amount for Endesa Chile at December 31, 2009reaches Ch$132,000 million. The recovery and accounting for these amounts willtake place through additional charges in the energy rate charged todistributors, which shall be applied and collected by the distributors throughcharges on future energy consumption of non-regulated clients.

 

**33      PERSONNEL FIGURES**

 

EndesaChile’s personnel, including information regarding subsidiaries andjointly-controlled companies in the five Latin American countries where theGroup is present, is distributed as follows as of December 31, 2009 and December31, 2008:

 
| ** **  | ** ** | **12-31-2009**    | ** ** | ** **        | ** ** |
|-------------|------------|-------------------|------------|-------------------|------------|
| ** **  | ** ** | **Managers**      | ** ** | **Professionals** | ** ** | **Workers** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **  | ** ** | **and Principal** | ** ** | **and**           | ** ** | **and** | ** ** | ** ** | ** ** | **Average** | ** ** |
| **Country** | ** ** | **Executives**    | ** ** | **Technicians**   | ** ** | **Others** | ** ** | **Total** | ** ** | **for the period** | ** ** |
| Chile       |       | 46                |       | 1,084             |       | 207 | ** ** | **1,337** | ** ** | **1,396** | ** ** |
| Argentina   |       | 7                 |       | 305               |       | 20 | ** ** | **332** | ** ** | **326** | ** ** |
| Brazil      |       | —            |       | 4                 |       | 2 | ** ** | **6** | ** ** | **4** | ** ** |
| Peru        |       | 7                 |       | 216               |       | 18 | ** ** | **241** | ** ** | **247** | ** ** |
| Colombia    |       | 9                 |       | 386               |       | 20 | ** ** | **415** | ** ** | **415** | ** ** |
| **Total**   | ** ** | **69**            | ** ** | **1,995**         | ** ** | **267** | ** ** | **2,331** | ** ** | **2,387** | ** ** |

 
| ** **  | ** ** | **12-31-2008**    | ** ** | ** **        | ** ** |
|-------------|------------|-------------------|------------|-------------------|------------|
| ** **  | ** ** | **Managers**      | ** ** | **Professionals** | ** ** | **Workers** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **  | ** ** | **and Principal** | ** ** | **and**           | ** ** | **and** | ** ** | ** ** | ** ** | **Average** | ** ** |
| **Country** | ** ** | **Executives**    | ** ** | **Technicians**   | ** ** | **Others** | ** ** | **Total** | ** ** | **for the period** | ** ** |
| Chile       |       | 48                |       | 1,149             |       | 234 | ** ** | **1,431** | ** ** | **1,330** | ** ** |
| Argentina   |       | 7                 |       | 295               |       | 23 | ** ** | **325** | ** ** | **326** | ** ** |
| Peru        |       | 7                 |       | 216               |       | 19 | ** ** | **242** | ** ** | **229** | ** ** |
| Colombia    |       | 7                 |       | 374               |       | 23 | ** ** | **404** | ** ** | **402** | ** ** |
| **Total**   | ** ** | **69**            | ** ** | **2,034**         | ** ** | **299** | ** ** | **2,402** | ** ** | **2,288** | ** ** |

 

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**34     SUBSEQUENT EVENTS**

 

Nosignificant subsequent events have occurred between December 31, 2009 and thedate of issuance of these consolidated financial statements.

 

**35     ENVIRONMENT**

 

Environmentalexpenses for the year ended December 31, 2009 and December 31, 2008 aredetailed as follows:

 
| **Company incurring the cost**           | ** ** | **Project**                                                                                                                                                                                                                                                                   | ** ** | **12-31-2009********ThCh$** | ** ** | **12-31-2008********ThCh$** | ** ** |
|------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Endesa  Chile S.A.                       |       | Studies,  monitoring, laboratory analysis, removal and final disposal of solid waste in  hydroelectric power plants (HEPP) and thermoelectric power plants.                                                                                                                   |       | 3,859,367                   |       | 3,330,696                   |       |
| Hidroeléctrica el  Chocón S.A. |       | ISO  14,001 audit, environmental monitoring and updating of environmental  standards.                                                                                                                                                                                         |       | —                      |       | 9,205                       |       |
| Edegel S.A.                              |       | Environmental  monitoring, waste management, mitigation and restoration.                                                                                                                                                                                                      |       | 667,059                     |       | —                      |       |
| Endesa Costanera S.A.                    |       | Air  quality monitoring, liquid waste monitoring, smokestack gas monitoring, Nox  and SO2 measurements. Environmental noise level monitoring, cleaning of  hydrocarbon separation chambers, environmental standards. Fuel quality  control, prevention of hydrocarbon spills. |       | —                      |       | 373,796                     |       |
| **Total**                                |       |                                                                                                                                                                                                                                                                          | ** ** | **4,526,426**               | ** ** | **3,713,697**               | ** ** |

 

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**36     ADOPTION OF INTERNATIONAL FINANCIAL REPORTINGSTANDARDS**

 

Prior to 2009, the Groupissued its consolidated financial statements in accordance with GenerallyAccepted Accounting Principles in Chile (hereinafter “Chilean GAAP”).

 

In 2009, the Group beganissuing its consolidated financial statements in accordance with InternationalFinancial Reporting Standards (hereinafter “IFRS”); as a consequence the dateof transition to IFRS is January 1, 2008.

 

The Group has presentedfinancial information to its parent company, ENDESA, S.A under IFRS, forconsolidation purposes, since the year ended as of December 31, 2005,considering January 1, 2004 as the transition date.

 

Transition of the consolidatedfinancial statements of Endesa Chile to IFRS has been carried out through theapplication of IFRS 1: First-time adoption of International Financial ReportingStandards, applying the exemption provided in paragraph 24 a), and consideringfirst-time application adjustments retroactively from the date adopted by theparent company, ENDESA, S.A., i.e. January 1, 2004.

 

IFRS 1 allows first-timeadopters certain exemptions from general requirements.  The main exceptions applied by Endesa Chileare as follows:

 

·      Notreprocessing business combinations occurring before January 1, 2004 (exemptionfrom IFRS 3).

 

·      Consideringthe amortized cost as of January 1, 2004, including revaluations of assets thattook place in the different countries where the Group operates, as the deemedcost of Property, Plant and Equipment and Intangibles (exemption from IAS 16and IAS 38).

 

·      IAS21: Accumulated foreign currency translations from all foreign operations areconsidered to be zero as of January 1, 2004.

 

Thefollowing details provide a reconciliation between Chilean GAAP and IFRS of theCompany’s consolidated equity as of January 1, 2008, and consolidated equity,net income and cash flows as of and for the year ended December 31, 2008:

 
| ** **                                       | ** ** | **Equity attributable to the  shareholders of the  Company** | ** ** | **Equity attributable to  minority interest** | ** ** | **Total**         | ** ** |
|--------------------------------------------------|------------|--------------------------------------------------------------|------------|-----------------------------------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **ThCh$**                                                    | ** ** | **ThCh$**                                     | ** ** | **ThCh$**         | ** ** |
| **Net Equity under Chilean GAAP at  12/31/2008** | ** ** | **2,364,523,995**                                            | ** ** | **—**                                    | ** ** | **2,364,523,995** |       |
| **Incorporation of minority  interest**          | ** ** | **—**                                                   | ** ** | **1,192,716,624**                             | ** ** | **1,192,716,624** | (1)        |
| Elimination of price-level restatement           |       | (436,859,977                                                 | )          | (7,050,230                                    | )          | (443,910,207      | )(2)       |
| Goodwill                                         |       | 107,429,164                                                  |       | 5,302,629                                     |       | 112,731,793       | (3)        |
| Deferred tax                                     |       | (68,549,006                                                  | )          | (33,941,077                                   | )          | (102,490,083      | )(4)       |
| Minimum dividend                                 |       | (87,036,762                                                  | )          | (887,868                                      | )          | (87,924,630       | )(6)       |
| Elimination of TB 64                             |       | (306,527,845                                                 | )          | (58,321,210                                   | )          | (364,849,055      | )(5)       |
| Other                                            |       | 25,750,443                                                   |       | 5,405,338                                     |       | 31,155,781        |       |
| **Total IFRS adjustments**                       | ** ** | **(765,793,983**                                             | **)**      | **(89,492,418**                               | **)**      | **(855,286,401**  | **)**      |
| **Net Equity under IFRS at  12/31/2008**         | ** ** | **1,598,730,012**                                            | ** ** | **1,103,224,206**                             | ** ** | **2,701,954,218** |       |

 
| ** **                                                       | ** ** | **Net income attributable to  the shareholders of the  Company** | ** ** | **Net income attributable  to minority interest** | ** ** | **Total**       | ** ** |
|------------------------------------------------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------------------|------------|-----------------|------------|
| ** **                                                       | ** ** | **ThCh$**                                                        | ** ** | **ThCh$**                                         | ** ** | **ThCh$**       | ** ** |
| **Net Income under Chilean GAAP for  the year ended 12/31/2008** | ** ** | **442,591,967**                                                  | ** ** | **180,686,406**                                   | ** ** | **623,278,373** |       |
| Elimination of price-level restatement                           |       | (83,336,719                                                      | )          | (1,568,062                                        | )          | (84,904,781     | )(2)       |
| Amortization of goodwill                                         |       | 498,361                                                          |       | 686,518                                           |       | 1,184,879       | (3)        |
| Deferred taxes                                                   |       | (36,182,329                                                      | )          | (8,146,081                                        | )          | (44,328,410     | )(4)       |
| Elimination of TB 64                                             |       | 108,039,346                                                      |       | (47,659,698                                       | )          | 60,379,648      | (5)        |
| Other                                                            |       | 1,566,558                                                        |       | 354,568                                           |       | 1,921,126       |       |
| **Total IFRS adjustments**                                       | ** ** | **(9,414,783**                                                   | **)**      | **(56,332,755**                                   | **)**      | **(65,747,538** | **)**      |
| **Net Income under IFRS for the  year ended 12/31/2008**         | ** ** | **433,177,184**                                                  | ** ** | **124,353,651**                                   | ** ** | **557,530,835** |       |

 

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| ** **                                       | ** ** | **Equity attributable to the  shareholders of the  Company** | ** ** | **Equity attributable to  minority interest** | ** ** | **Total**         | ** ** |
|--------------------------------------------------|------------|--------------------------------------------------------------|------------|-----------------------------------------------|------------|-------------------|------------|
| ** **                                       | ** ** | **ThCh$**                                                    | ** ** | **ThCh$**                                     | ** ** | **ThCh$**         | ** ** |
| **Net Equity under Chilean GAAP at  01/01/2008** | ** ** | **1,884,226,640**                                            | ** ** | **—**                                    | ** ** | **1,884,226,640** |       |
| **Incorporation of minority  interest**          |       |                                                         | ** ** | **886,882,586**                               | ** ** | **886,882,586**   | (1)        |
| Elimination of price-level restatement           |       | (265,577,228                                                 | )          | (4,496,860                                    | )          | (270,074,088      | )(2)       |
| Goodwill                                         |       | 104,915,533                                                  |       | 5,723,557                                     |       | 110,639,090       | (3)        |
| Deferred tax                                     |       | (86,649,736                                                  | )          | (22,690,142                                   | )          | (109,339,878      | )(4)       |
| Minimum dividend                                 |       | (38,433,991                                                  | )          | (513,097                                      | )          | (38,947,088       | )(6)       |
| Elimination of TB 64                             |       | (92,358,956                                                  | )          | 65,807,019                                    |       | (26,551,937       | )(5)       |
| Other                                            |       | 31,576,749                                                   |       | 6,859,379                                     |       | 38,436,128        |       |
| **Total IFRS adjustments**                       | ** ** | **(346,527,629**                                             | **)**      | **50,689,856**                                | ** ** | **(295,837,773**  | **)**      |
| **Net Equity under IFRS at 1/1/2008**            | ** ** | **1,537,699,011**                                            | ** ** | **937,572,442**                               | ** ** | **2,475,271,453** |       |

 

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| ** **                                                   | ** ** | **Chilean GAAP********Cash and cash  equivalents********12/31/2008** | ** ** | **Adjustments** | ** ** | **IFRS********Cash and cash  equivalents********12/31/2008** | ** ** |
|--------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-----------------|------------|--------------------------------------------------------------|------------|
| ** **                                                   | ** ** | **ThCh$**                                                            | ** ** | **ThCh$**       | ** ** | **ThCh$**                                                    | ** ** |
| **Chilean GAAP ending balance**                              | ** ** | **702,366,035**                                                      |       |            | ** ** | **702,366,035**                                              | ** ** |
| **Incorporation of proportionally  consolidated companies:** |       |                                                                 |       |            |       |                                                         |       |
| GasAtacama                                                   |       | —                                                               |       | 13,365,450      |       | 13,365,450                                                   |       |
| Hidroaysén                                              |       | —                                                               |       | 2,771,850       |       | 2,771,850                                                    |       |
| Other                                                        |       | —                                                               |       | 714,645         |       | 714,645                                                      |       |
| **Total**                                                    | ** ** | **702,366,035**                                                      | ** ** | **16,851,945**  | ** ** | **719,217,980**                                              | ** ** |

 
| ** **                                                               | ** ** | **Chilean GAAP********cash flow 12/31/2008** | ** ** | **Adjustments**  | ** ** | **IFRS  cash flow  12/31/2008** | ** ** |
|--------------------------------------------------------------------------|------------|----------------------------------------------|------------|------------------|------------|---------------------------------|------------|
| ** **                                                               | ** ** | **ThCh$**                                    | ** ** | **ThCh$**        | ** ** | **ThCh$**                       | ** ** |
| **Net Income for the period of  parent company**                         | ** ** | **442,591,967**                              | ** ** | **(9,414,783**   | **)**      | **433,177,184**                 | ** ** |
| Minority interests                                                       |       | 180,686,406                                  |       | (56,332,755      | )          | 124,353,651                     |       |
| Gain (loss) on sale of assets and others                                 |       | 14,735                                       |       | (323,113         | )          | (308,378                        | )          |
| Charges (credits) to profit and loss that do not  represent cash flows   |       | 132,281,142                                  |       | (21,965,913      | )          | 110,315,229                     |       |
| Changes in assets that affect cash flows                                 |       | 10,762,828                                   |       | (69,041,989      | )          | (58,279,161                     | )          |
| Changes in liabilities that affect cash flows                            |       | 100,447,124                                  |       | 241,232,773      |       | 341,679,897                     |       |
|                                                                     |       |                                         |       |             |       |                            |       |
| **Net positive (negative) cash  flows provided by operating activities** | ** ** | **866,784,202**                              | ** ** | **84,154,220**   | ** ** | **950,938,422**                 | ** ** |
| **Cash flows from financing  activities**                                | ** ** | **4,989,328**                                | ** ** | **(151,463,166** | **)**      | **(146,473,838**                | **)**      |
| **Net cash flows from investing  activities**                            | ** ** | **(278,088,592**                             | **)**      | **76,416,575**   | ** ** | **(201,672,017**                | **)**      |
| **Total positive (negative) net  cash flows**                            | ** ** | **593,684,938**                              | ** ** | **9,107,629**    | ** ** | **602,792,567**                 | ** ** |
|                                                                     |       |                                         |       |             |       |                            |       |
| Effect of inflation on cash and cash equivalents                         |       | (1,291,363                                   | )          | 2,620,911        |       | 1,329,548                       |       |
| **Net increase (decrease) in cash  and cash equivalents**                | ** ** | **592,393,575**                              | ** ** | **11,728,540**   | ** ** | **604,122,115**                 | ** ** |
|                                                                     |       |                                         |       |             |       |                            |       |
| **Beginning balance of cash and  cash equivalents**                      | ** ** | **109,972,460**                              | ** ** | **5,123,405**    | ** ** | **115,095,865**                 | ** ** |
| **Ending balance of cash and cash  equivalents as of 12/31/2008**        | ** ** | **702,366,035**                              | ** ** | **121,842,334**  | ** ** | **719,217,980**                 | ** ** |

 

**Principal adjustments applied:**

 

**1.   Incorporation of minority interest**

 

UnderChilean GAAP, equity consists solely of the share attributable to theshareholders of the Company, while under IFRS equity includes the sharesattributable to the shareholders of the Company and the minority interest.Therefore, the share of minority interests on Endesa Chile’s consolidatedstatement of financial position prepared in accordance with Chilean GAAP isincorporated into equity in the consolidated statement of financial positionprepared in accordance with IFRS.

 

**2.   Price-level restatement**

 

Price-levelrestatement recognized under Chilean GAAP is eliminated as inflationadjustments are only accepted under IFRS when the functional currency relatesto a hyperinflationary economy. Neither Chile nor any of the other countries inwhich the Group’s investments are located qualify as hyperinflationarycountries, based on the requirements established in IAS No. 29 “FinancialReporting in Hyperinflationary Economies”.

 

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**3.   Goodwill**

 

Goodwillarises in the acquisition of companies and represents the difference betweenthe acquisition cost and the acquired share in the fair value of assets andliabilities, including identifiable contingent liabilities as of the date ofacquisition. Under Chilean GAAP, in the case of foreign subsidiaries, goodwillis controlled in historic dollars, while under IFRS they are recorded andcontrolled in the functional currency of the acquired company.

 

Inaddition, under Chilean GAAP goodwill is amortized on a straight line basisover a period of time that considers, among other aspects, the nature of theinvestment, the predictable life of the business and the return on investment,which in no case may exceed 20 years.  Under IFRS, systematic amortization does notexist for goodwill, and therefore goodwill is not amortized: The onlyrequirement is to perform a periodic analysis of recoverability.

 

**4.   Deferred tax**

 

UnderIFRS, the balance method is applied to deferred taxes, by which any differencebetween the book and tax basis of an asset or liability represents a deferredtax that should be recorded in the statement of financial position.

 

UnderChilean GAAP, deferred taxes are determined similar to IFRS; however, certainexemptions established by Technical Bulletin No. 60 “Accounting for IncomeTaxes and Deferred Taxes” issued by the Chilean Institute of Accountants andother complementary bulletins result in differences with IFRS that must beadjusted in the adoption process.

 

The main difference arises from the fact thatChilean GAAP allowed accounting for the effect of first-time applicationagainst an account in the statement of financial position known as “complementaryasset (liability) for deferred liabilities (assets)”. These complementaryassets (liabilities) were amortized against income in the estimated period ofreversal of the temporary differences that originated them, except whencomplementary liabilities were originated by recording deferred tax assets fortax losses, in which case they were amortized based on the real use of theselosses.

 

Also,included on these differences is the deferred tax effect of the other Chilean GAAPto IFRS adjustment originated from the changes in respective book basis of thebalances adjusted.

 

**5.   Technical Bulletin No. 64**

 

UnderIFRS, financial statements are prepared based on the functional currency ofeach entity. Under Chilean GAAP, in the case of our foreign companies, asestablished in Technical Bulletin No. 64 issued by the Chilean Institute ofAccountants, non-monetary assets and liabilities are controlled in historicaldollars.

 

**6.  Minimum dividend**

 

ArticleNo. 79 of Chile’s Corporations Law establishes that, except if unanimouslyagreed otherwise by shareholders of all issued shares, listed corporationsshould distribute a cash dividend to its shareholders on a yearly basis,prorated based on their shares or the proportion established in the company’sby-laws if there are preferred shares, of at least 30% of net income for eachperiod, except when accumulated losses from prior years must be absorbed.

 

UnderIFRS, as it is practically impossible to achieve unanimous agreement given EndesaChile’s highly fragmented share capital, the obligation must be accounted foron an accrual basis, net of any interim dividends approved as of period end.Under Chilean GAAP, this obligation is not accounted for until the dividend isapproved at a shareholders’ meeting.

 

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**37     FINANCIAL STATEMENTS OFPRINCIPAL SUBSIDIARIES**

 

Asummary of condensed consolidated and individual financial information for theGroup is as follows:

 

**CONDENSED FINANCIAL INFORMATION FOR THE GROUP PER SUBSIDIARY**

 
| ** **                              | ** ** | **12-31-2009**      | ** ** |
|-----------------------------------------|------------|---------------------|------------|
| ** **                              | ** ** | **Current  assets** | ** ** | **Non-  current  assets** | ** ** | **Total  assets** | ** ** | **Current  liabilities** | ** ** | **Non-  current  liabilities** | ** ** | **Total  liabilities** | ** ** | **Revenues** | ** ** | **Expenses** | ** ** | **Income  (loss)** | ** ** |
| ** **                              | ** ** | **ThCh$**           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| ENDESA  ECO                             |       | 20,342,545          |       | 141,348,885 | ** ** | **161,691,430** |   | (151,709,864 | ) | (19,897,730 | ) | **(171,607,594** | **)** | 5,363,817 |   | (13,478,980 | ) | (8,115,163 | ) |
| PEHUENCHE                               |       | 66,918,651          |       | 250,679,247 | ** ** | **317,597,898** |   | (93,120,578 | ) | (41,741,967 | ) | **(134,862,545** | **)** | 199,025,325 |   | (44,152,639 | ) | 154,872,686 |   |
| SAN  ISIDRO                             |       | 53,986,693          |       | 85,953,344 | ** ** | **139,940,037** |   | (34,584,533 | ) | (16,770,373 | ) | **(51,354,906** | **)** | 119,444,441 |   | (107,229,856 | ) | 12,214,585 |   |
| PANGUE                                  |       | 64,692,377          |       | 139,047,187 | ** ** | **203,739,564** |   | (77,357,564 | ) | (14,588,592 | ) | **(91,946,156** | **)** | 102,435,170 |   | (27,600,506 | ) | 74,834,664 |   |
| CELTA                                   |       | 18,895,799          |       | 79,166,484 | ** ** | **98,062,283** |   | (4,768,430 | ) | (6,362,133 | ) | **(11,130,563** | **)** | 59,026,738 |   | (52,369,255 | ) | 6,657,483 |   |
| ENIGESA                                 |       | 1,656,913           |       | 3,559,633 | ** ** | **5,216,546** |   | (835,342 | ) | (131,357 | ) | **(966,699** | **)** | 5,278,311 |   | (3,994,880 | ) | 1,283,431 |   |
| INGENDESA                               |       | 10,755,422          |       | 1,206,290 | ** ** | **11,961,712** |   | (6,729,033 | ) | (1,825,356 | ) | **(8,554,389** | **)** | 27,630,988 |   | (25,766,921 | ) | 1,864,067 |   |
| INV.  ENDESA NORTE                      |       | —              |       | 25,157,716 | ** ** | **25,157,716** |   | (3,224,334 | ) | — | ** ** | **(3,224,334** | **)** | — |   | (166,553 | ) | (166,553 | ) |
| TUNEL  EL MELON                         |       | 17,507,583          |       | 18,587,880 | ** ** | **36,095,463** |   | (2,090,726 | ) | (15,675,501 | ) | **(17,766,227** | **)** | 6,092,068 |   | (1,160,459 | ) | 4,931,609 |   |
| ENDESA  ARGENTINA                       |       | 2,955,460           |       | 38,713,348 | ** ** | **41,668,808** |   | (44,707 | ) | — | ** ** | **(44,707** | **)** | 413,719 |   | 123,951 |   | 537,670 |   |
| ENDESA  COSTANERA                       |       | 46,132,764          |       | 139,465,744 | ** ** | **185,598,508** |   | (108,896,949 | ) | (73,587,167 | ) | **(182,484,116** | **)** | 228,090,396 |   | (238,967,631 | ) | (10,877,235 | ) |
| HIDROINVEST                             |       | 11,067,591          |       | 27,827,113 | ** ** | **38,894,704** |   | (347,897 | ) | — | ** ** | **(347,897** | **)** | 3,941,241 |   | 611,450 |   | 4,552,691 |   |
| HIDROELÉCTRICA EL CHOCÓN S.A. |       | 59,552,103          |       | 91,442,295 | ** ** | **150,994,398** |   | (35,636,058 | ) | (48,641,578 | ) | **(84,277,636** | **)** | 65,298,279 |   | (46,084,169 | ) | 19,214,110 |   |
| SCP  ARGENTINA                          |       | 58,317              |       | 1,401,197 | ** ** | **1,459,514** |   | (208,178 | ) | — | ** ** | **(208,178** | **)** | — |   | (2,672 | ) | (2,672 | ) |
| EMGESA                                  |       | 256,813,794         |       | 1,228,326,578 | ** ** | **1,485,140,372** |   | (130,634,275 | ) | (424,071,893 | ) | **(554,706,168** | **)** | 500,829,922 |   | (362,272,335 | ) | 138,557,587 |   |
| GENERANDES  PERU                        |       | 195,754             |       | 189,546,962 | ** ** | **189,742,716** |   | (30,872 | ) | — | ** ** | **(30,872** | **)** | 19,653,352 |   | (165,000 | ) | 19,488,352 |   |
| EDEGEL                                  |       | 50,563,350          |       | 699,489,852 | ** ** | **750,053,202** |   | (55,480,341 | ) | (309,812,958 | ) | **(365,293,299** | **)** | 197,723,819 |   | (162,768,423 | ) | 34,955,396 |   |
| CHINANGO                                |       | 3,874,902           |       | 103,736,922 | ** ** | **107,611,824** |   | (16,093,363 | ) | (61,224,726 | ) | **(77,318,089** | **)** | 15,511,080 |   | (14,352,555 | ) | 1,158,525 |   |
| TRANSQUILLOTA                           |       | 644,435             |       | 5,099,241 | ** ** | **5,743,676** |   | (740,067 | ) | (438,364 | ) | **(1,178,431** | **)** | 1,163,684 |   | (603,983 | ) | 559,701 |   |
| HIDROAYSÉN                         |       | 4,136,868           |       | 44,323,280 | ** ** | **48,460,148** |   | (18,926,306 | ) | — | ** ** | **(18,926,306** | **)** | — |   | (3,056,976 | ) | (3,056,976 | ) |
| GASATACAMA                              |       | 57,217,616          |       | 158,174,887 | ** ** | **215,392,503** |   | (93,938,500 | ) | (21,233,800 | ) | **(115,172,300** | **)** | 171,652,188 |   | (159,554,219 | ) | 12,097,969 |   |

 

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| ** **                              | ** ** | **12-31-2008**      | ** ** |
|-----------------------------------------|------------|---------------------|------------|
| ** **                              | ** ** | **Current  assets** | ** ** | **Non-  current  assets** | ** ** | **Total  assets** | ** ** | **Current  liabilities** | ** ** | **Non-  current  liabilities** | ** ** | **Total  liabilities** | ** ** | **Revenues** | ** ** | **Expenses** | ** ** | **Income  (loss)** | ** ** |
| ** **                              | ** ** | **ThCh$**           | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| ENDESA  ECO                             |       | 9,160,899           |       | 86,918,567 | ** ** | **96,079,466** |   | (94,894,579 | ) | (2,460,069 | ) | **(97,354,648** | **)** | 4,678,789 |   | (5,576,689 | ) | (897,900 | ) |
| PEHUENCHE                               |       | 98,565,080          |       | 262,333,664 | ** ** | **360,898,744** |   | (71,944,490 | ) | (78,543,839 | ) | **(150,488,329** | **)** | 306,489,664 |   | (96,689,648 | ) | 209,800,016 |   |
| SAN  ISIDRO                             |       | 39,398,828          |       | 98,193,340 | ** ** | **137,592,168** |   | (33,582,047 | ) | (25,707,596 | ) | **(59,289,643** | **)** | 182,348,450 |   | (136,505,591 | ) | 45,842,859 |   |
| PANGUE                                  |       | 52,174,003          |       | 142,803,816 | ** ** | **194,977,819** |   | (34,601,400 | ) | (64,770,503 | ) | **(99,371,903** | **)** | 120,046,420 |   | (65,396,606 | ) | 54,649,814 |   |
| CELTA                                   |       | 14,856,797          |       | 88,151,582 | ** ** | **103,008,379** |   | (13,395,940 | ) | (9,336,786 | ) | **(22,732,726** | **)** | 56,011,301 |   | (54,300,966 | ) | 1,710,335 |   |
| ENIGESA                                 |       | 1,740,842           |       | 2,723,632 | ** ** | **4,464,474** |   | (1,180,298 | ) | (147,394 | ) | **(1,327,692** | **)** | 5,222,394 |   | (3,969,561 | ) | 1,252,833 |   |
| INGENDESA                               |       | 10,206,362          |       | 1,747,644 | ** ** | **11,954,006** |   | (6,050,212 | ) | (2,183,052 | ) | **(8,233,264** | **)** | 27,154,724 |   | (23,823,914 | ) | 3,330,810 |   |
| INV.  ENDESA NORTE                      |       | —              |       | 39,891,570 | ** ** | **39,891,570** |   | (3,057,780 | ) | — | ** ** | **(3,057,780** | **)** | 6,593,176 |   | (310,198 | ) | 6,282,978 |   |
| TUNEL  EL MELON                         |       | 11,703,571          |       | 23,846,107 | ** ** | **35,549,678** |   | (203,148 | ) | (20,287,451 | ) | **(20,490,599** | **)** | 6,007,859 |   | (5,925,434 | ) | 82,425 |   |
| ENDESA  ARGENTINA                       |       | 3,411,854           |       | 50,160,910 | ** ** | **53,572,764** |   | (58,429 | ) | — | ** ** | **(58,429** | **)** | 2,686,011 |   | 105,890 |   | 2,791,901 |   |
| ENDESA  COSTANERA                       |       | 69,796,986          |       | 186,194,725 | ** ** | **255,991,711** |   | (135,670,744 | ) | (102,513,617 | ) | **(238,184,361** | **)** | 239,937,200 |   | (241,516,233 | ) | (1,579,033 | ) |
| HIDROINVEST                             |       | 9,568,629           |       | 49,436,908 | ** ** | **59,005,537** |   | (415,269 | ) | — | ** ** | **(415,269** | **)** | 4,957,341 |   | 613,969 |   | 5,571,310 |   |
| HIDROELÉCTRICA EL CHOCÓN S.A. |       | 38,632,868          |       | 134,523,941 | ** ** | **173,156,809** |   | (34,756,759 | ) | (61,851,777 | ) | **(96,608,536** | **)** | 44,140,714 |   | (36,121,439 | ) | 8,019,275 |   |
| SCP  ARGENTINA                          |       | 84,049              |       | 879,566 | ** ** | **963,615** |   | (287,720 | ) | — | ** ** | **(287,720** | **)** | — |   | (125,246 | ) | (125,246 | ) |
| EMGESA                                  |       | 223,262,957         |       | 1,436,478,635 | ** ** | **1,659,741,592** |   | (282,665,428 | ) | (342,424,533 | ) | **(625,089,961** | **)** | 401,257,389 |   | (284,861,643 | ) | 116,395,746 |   |
| GENERANDES  PERU                        |       | 686,919             |       | 237,901,179 | ** ** | **238,588,098** |   | (20,674 | ) | — | ** ** | **(20,674** | **)** | 13,518,242 |   | (1,600,845 | ) | 11,917,397 |   |
| EDEGEL                                  |       | 74,222,033          |       | 901,056,800 | ** ** | **975,278,833** |   | (121,017,734 | ) | (415,637,559 | ) | **(536,655,293** | **)** | 205,662,615 |   | (174,891,194 | ) | 30,771,421 |   |
| TRANSQUILLOTA                           |       | 1,097,749           |       | 5,579,306 | ** ** | **6,677,055** |   | (2,133,630 | ) | (538,380 | ) | **(2,672,010** | **)** | 695,960 |   | (327,305 | ) | 368,655 |   |
| HIDROAYSÉN                         |       | 4,580,582           |       | 31,452,335 | ** ** | **36,032,917** |   | (3,357,877 | ) | (84,194 | ) | **(3,442,071** | **)** | — |   | (1,458,875 | ) | (1,458,875 | ) |
| GASATACAMA                              |       | 70,012,385          |       | 198,620,784 | ** ** | **268,633,169** |   | (41,912,166 | ) | (116,558,569 | ) | **(158,470,735** | **)** | 276,831,796 |   | (270,238,523 | ) | 6,593,273 |   |

 

Thefollowing Appendixes (1, 2 and 3) are part of the notes to theconsolidated financial statements.

 

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**APPENDIX NO. 1 ENDESA CHILE GROUPCOMPANIES**

 

Thisappendix is part of note 2.4 “Subsidiaries and jointly-controlled entities”.

 
| **Company**                                          | ** ** | **% Ownership Interest   as of 12/31/09** | ** ** | **% Ownership Interest   as of 12/31/2008** | ** ** | ** **  | ** ** | **Corporate ** | ** ** | ** **          | ** ** |
|------------------------------------------------------|------------|--------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-------------|------------|---------------------|------------|---------------------|------------|
| **(In alphabetical order)**                | ** ** | **Control**                                                        | ** ** | **Economic**                                                         | ** ** | **Control** | ** ** | **Economic**        | ** ** | **Relationship**    | ** ** | **Domicile** | ** ** | **Activity** | ** ** |
|                                                 |       |                                                               |       |                                                                 |       |        |       |                |       |                |       |   |   |   |   |
| Atacama  Finance Co                                  |       | 50.00                                                              | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Grand Cayman  (Cayman Islands) |   | Holding Company |   |
| Central Eólica Canela S.A.                      |       | 75.00                                                              | %          | 75.00                                                                | %          | 75.00       | %          | 75.00               | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Promoting and developing  renewable energy projects |   |
| Centrales Hidroeléctricas de Aysén S.A.    |       | 51.00                                                              | %          | 51.00                                                                | %          | 51.00       | %          | 51.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Developing and operating  hydroelectric project |   |
| Chinango  S.A.C.                                     |       | 80.00                                                              | %          | 49.97                                                                | %          | —      |       | —              |       | Subsidiary          |       | Lima (Peru) |   | Generating, retailing  and distributing electric energy |   |
| Compañía Eléctrica San Isidro S.A.    |       | 100.00                                                             | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Complete cycle of  electric energy |   |
| Compañía Eléctrica Tarapacá S.A. |       | 100.00                                                             | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Complete cycle of electric  energy |   |
| Consorcio  Ara- Ingendesa Ltda.                      |       | 50.00                                                              | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Project engineering  consulting |   |
| Consorcio  Ingendesa Minimetal Ltda.                 |       | 50.00                                                              | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Engineering services |   |
| Edegel  S.A.A                                        |       | 83.60                                                              | %          | 62.46                                                                | %          | 54.20       | %          | 33.06               | %          | Subsidiary          |       | Lima (Peru) |   | Generating, retailing  and distributing electric energy |   |

 

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| **Company**                                | ** ** | **% Ownership Interest   as of 12/31/2009** | ** ** | **% Ownership Interest   as of 12/31/2008** | ** ** | ** **  | ** ** | **Corporate ** | ** ** | ** **          | ** ** |
|--------------------------------------------|------------|----------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-------------|------------|---------------------|------------|---------------------|------------|
| **(In alphabetical order)**      | ** ** | **Control**                                                          | ** ** | **Economic**                                                         | ** ** | **Control** | ** ** | **Economic**        | ** ** | **Relationship**    | ** ** | **Domicile** | ** ** | **Activity** | ** ** |
|                                       |       |                                                                 |       |                                                                 |       |        |       |                |       |                |       |   |   |   |   |
| Emgesa  S.A. E.S.P.                        |       | 26.87                                                                | %          | 26.87                                                                | %          | 26.87       | %          | 26.87               | %          | Subsidiary          |       | Bogota (Colombia) |   | Generating electric  energy |   |
| Empresa  de Ingeniería Ingendesa S.A. |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Providing engineering  services |   |
| Empresa  Eléctrica Pangue S.A.        |       | 94.99                                                                | %          | 94.99                                                                | %          | 94.99       | %          | 94.99               | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Complete cycle of  electric energy |   |
| Empresa  Eléctrica Pehuenche S.A.     |       | 92.65                                                                | %          | 92.65                                                                | %          | 92.65       | %          | 92.65               | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Complete cycle of  electric energy |   |
| Endesa  Argentina S.A.                     |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Buenos Aires  (Argentina) |   | Holding Company |   |
| Endesa  Costanera S.A.                     |       | 69.76                                                                | %          | 69.76                                                                | %          | 69.76       | %          | 69.76               | %          | Subsidiary          |       | Buenos Aires (Argentina) |   | Generating and retailing  electricity |   |
| Endesa  Eco S.A.                           |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Renewable energy  projects |   |
| Endesa  Inversiones Generales S.A.         |       | 100.00                                                               | %          | 99.96                                                                | %          | 100.00      | %          | 99.96               | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Holding Company |   |
| Energex  Co.                               |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Grand Cayman  (Cayman Islands) |   | Holding Company |   |
| GasAtacama  S.A.                           |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Managing and directing  companies |   |
| Gasoducto  Atacama Argentina S.A.          |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Transporting natural gas |   |
| Gasoducto  Atacama Chile S.A.              |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Transporting natural gas |   |

 

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| **Company**                                          | ** ** | **% Ownership Interest   as of 12/31/2009** | ** ** | **% Ownership Interest   as of 12/31/2008** | ** ** | ** **  | ** ** | **Corporate ** | ** ** | ** **          | ** ** |
|------------------------------------------------------|------------|----------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-------------|------------|---------------------|------------|---------------------|------------|
| **(In alphabetical order)**                | ** ** | **Control**                                                          | ** ** | **Economic**                                                         | ** ** | **Control** | ** ** | **Economic**        | ** ** | **Relationship**    | ** ** | **Domicile** | ** ** | **Activity** | ** ** |
|                                                 |       |                                                                 |       |                                                                 |       |        |       |                |       |                |       |   |   |   |   |
| Gasoducto  Taltal Ltda.                              |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Transporting natural gas |   |
| Generandes  Perú S.A.                           |       | 61.00                                                                | %          | 61.00                                                                | %          | 61.00       | %          | 61.00               | %          | Subsidiary          |       | Lima (Peru) |   | Holding Company |   |
| Hidroaysén  Transmisión S.A.               |       | 51.00                                                                | %          | 51.00                                                                | %          | 51.00       | %          | 51.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Developing electricity  transmission systems |   |
| Hidroeléctrica El Chocón S.A.              |       | 67.67                                                                | %          | 65.37                                                                | %          | 67.67       | %          | 65.37               | %          | Subsidiary          |       | Buenos Aires  (Argentina) |   | Producing and retailing  electric energy |   |
| Hidroinvest  S.A.                                    |       | 96.09                                                                | %          | 96.09                                                                | %          | 96.09       | %          | 96.09               | %          | Subsidiary          |       | Buenos Aires  (Argentina) |   | Holding Company |   |
| Ingendesa  do Brasil Ltda.                           |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Rio de Janeiro  (Brazil) |   | Project engineering  consulting |   |
| Inversiones Endesa Norte S.A.                        |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Energy investment  projects in northern Chile |   |
| Inversiones  GasAtacama Holding Ltda.                |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Transporting natural gas |   |
| Progas  S.A.                                         |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly Controlled  |       | Santiago de Chile  (Chile) |   | Distributing gas |   |
| Sociedad Concesionaria Túnel El Melón S.A. |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Santiago de Chile  (Chile) |   | Executing, constructing  and operating El Melon Tunnel |   |
| Sociedad Consorcio Ingendesa-Ara Limitada            |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Providing engineering  services |   |
| Sociedad Portuaria Central Cartagena S.A.            |       | 94.95                                                                | %          | 25.52                                                                | %          | —      |       | —              |       | Subsidiary          |       | Bogota (Colombia) |   | Administration of port  facilities |   |
| Southern  Cone Power Argentina S.A.                  |       | 100.00                                                               | %          | 100.00                                                               | %          | 100.00      | %          | 100.00              | %          | Subsidiary          |       | Buenos Aires  (Argentina) |   | Holding Company |   |
| Transmisora Eléctrica de Quillota Ltda.         |       | 50.00                                                                | %          | 50.00                                                                | %          | 50.00       | %          | 50.00               | %          | Jointly  Controlled |       | Santiago de Chile  (Chile) |   | Transporting and  distributing electric energy |   |

 

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**APPENDIXNO. 2 CHANGES IN THE SCOPE OF CONSOLIDATION**

 

This appendix is part of note 2.4.1 “Changes in the scope ofconsolidation”.

 

| ** **                                 | ** ** | **% Ownership interest**              | ** ** | **% Ownership interest**              | ** ** |
|--------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                 | ** ** | **as of December 31, 2009** | ** ** | **as of December 31, 2008** | ** ** |
| **Company**                                | ** ** | **Control**                                     | ** ** | **Economic**                                    | ** ** | **Consolidation** | ** ** | **Control** | ** ** | **Economic** | ** ** | **Consolidation** | ** ** |
|                                       |       |                                            |       |                                            |       |   |   |   |   |   |   |   |   |
| Sociedad Portuaria Central  Cartagena S.A. |       | 94.95                                           | %          | 25.52                                           | %          | Consolidation |   | — |   | — |   | — |   |

 

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**APPENDIX NO. 3 ASSOCIATES**

 

Thisappendix is part of note 3. f) “Investments in associates accounted for usingthe equity method”.

 
| ** **                                         | ** ** | **% Ownership   12/31/2009** | ** ** | **% Ownership   12/31/2008** | ** ** | **Corporate **       | ** ** | ** **                                                                             | ** ** |
|----------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|---------------------------|------------|----------------------------------------------------------------------------------------|------------|
| **Company (in alphabetical order)** | ** ** | **Economic**                           | ** ** | **Economic**                           | ** ** | **Domicile**              | ** ** | **Activity**                                                                           | ** ** |
|                                               |       |                                   |       |                                   |       |                      |       |                                                                                   |       |
| Distrilec Inversora S.A.                           |       | 0.89                                   | %          | 0.89                                   | %          | Buenos Aires (Argentina)  |       | Holding Company                                                                        |       |
| Electrogas S.A                                     |       | 42.50                                  | %          | 42.50                                  | %          | Santiago de Chile (Chile) |       | Holding Company                                                                        |       |
| Endesa Brasil S.A.                                 |       | 38.88                                  | %          | 37.65                                  | %          | Rio de Janeiro (Brazil)   |       | Holding Company                                                                        |       |
| Endesa CEMSA S.A.                                  |       | 45.00                                  | %          | 45.00                                  | %          | Buenos Aires (Argentina)  |       | Wholesale purchase and sale of electric energy                                         |       |
| GNL Chile S.A.                                     |       | 33.33                                  | %          | 33.33                                  | %          | Santiago de Chile (Chile) |       | Promoting project to supply liquefied natural gas                                      |       |
| GNL Quintero S.A.                                  |       | 20.00                                  | %          | 20.00                                  | %          | Santiago de Chile (Chile) |       | Developing, designing and supplying regasification terminal for  liquefied natural gas |       |
| Inversiones Electrogas  S.A.                       |       | 42.50                                  | %          | 42.50                                  | %          | Santiago de Chile (Chile) |       | Holding Company                                                                        |       |

 

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