As filed with the Securities and Exchange Commission on April 28, 2017
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016 Commission File number: 001-33422 Empresa Distribuidora y Comercializadora Norte S.A.(Exact name of Registrant as specified in its charter)
 Distribution and Marketing Company of the North S.A.

   Argentine Republic(Translation of Registrant’s name into English)

   (Jurisdiction of incorporation or organization)
 Avenida Del Libertador 6363 Ciudad de Buenos Aires, C1428ARG Buenos Aires, Argentina(Address of principal executive offices) Leandro Montero

   Tel.: +54 11 4346 5510 / Fax: +54 11 4346 5325 Avenida Del Libertador 6363 (C1428ARG)Buenos Aires, Argentina

   Chief Financial Officer

   (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class:

   Name of each exchange on which registeredClass B Common Shares

   New York Stock Exchange, Inc.*American Depositary Shares, or ADSs, evidenced by American Depositary Receipts, each representing 20 Class B Common Shares

   New York Stock Exchange, Inc.
 *    Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. __________ Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 462,292,111 Class A Common Shares, 442,210,385 Class B Common Shares and 1,952,604 Class C Common Shares Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ̈Nox If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934.  Yes ̈Nox Note:  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  YesxNo ̈ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ̈No ̈ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer

    ̈

   Accelerated Filer

   xNon-Accelerated Filer

    ̈

   Emerging Growth Company

    ̈
 If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ̈ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.


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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:  U.S. GAAP ̈International Financial Reporting Standards as issued by the International Accounting Standards BoardxOther ̈ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ̈Item 18 ̈ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes ̈Nox


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PART IItem 1.

   Identity of Directors, Senior Management and Advisors

   1Item 2.

   Offer Statistics and Expected Timetable

   1Item 3.

   Key Information

   1Item 4.

   Information on the Company

   34Item 4A.

   Unresolved Staff Comments

   68Item 5.

   Operating and Financial Review and Prospects

   68Item 6.

   Directors, Senior Management and Employees

   108Item 7.

   Major Shareholders and Related Party Transactions

   119Item 8.

   Financial Information

   124Item 9.

   The Offer and Listing

   129Item 10.

   Additional Information

   132Item 11.

   Quantitative and Qualitative Disclosures about Market Risk

   150Item 12.

   Description of Securities Other than Equity Securities

   151PART IIItem 13.

   Defaults, Dividend Arrearages and Delinquencies

   152Item 14.

   Material Modifications to the Rights of Security Holders and Use of Proceeds

   152Item 15.

   Controls and Procedures

   152Item 16A.

   Audit Committee Financial Expert

   153Item 16B.

   Code of Ethics|

   154Item 16C.

   Principal Accountant Fees and Services

   154Item 16D.

   Exemptions from the Listing Standards for Audit Committees

   154Item 16E.

   Purchases of Equity Securities by the Issuer and Affiliated Purchasers

   154Item 16F.

   Change in Registrant’s Certifying Accountant

   154Item 16G.

   Corporate Governance

   154Item 16H.

   Mine Safety Disclosures

   158PART IIIItem 17.

   Financial Statements

   159Item 18.

   Financial Statements

   159Item 19.

   Exhibits

   159Index to Financial Statements

   F-1


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PART I Item 1.Identity of Directors, Senior Management and Advisors Not applicable. Item 2.Offer Statistics and Expected Timetable Not applicable. Item 3.Key Information In this annual report, except as otherwise specified, references to “we”, “us”, “our” and “the Company” are references to (i) Empresa Distribuidora y Comercializadora Norte S.A., or “Edenor”, on a standalone basis priortoMarch 1, 2011, (ii) Edenor, Empresa Distribuidora Eléctrica Regional S.A. (“Emdersa”) and Aeseba S.A. (“Aeseba”), between March 1, 2011 and March 31, 2013, (iii) Edenor and Emdersa, between March 1, 2011 and September 30, 2013, and (iv) Edenor on a standalone basis, from October 1, 2013 through the date of filing of this annual report. References to Edenor, Emdersa and/or Aeseba ona standalone basis are made by naming each company as the case may be. For more information, see “Item 4—Information on the Company—History and Development of the Company.”  FORWARD‐LOOKING STATEMENTS This annual report includes forward‐looking statements, principally under the captions “Item 3. Key Information - Risk Factors”, “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”. We have based these forward‐looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business.  Forward‐looking statements may also be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or similar expressions. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ materially from those expressed or implied in our forward‐looking statements, including, among other things: ·The  implementation of the resolution that concluded the integral tariff revision (Revision Tarifaria Integral, or “RTI”) process in the upcoming years; ·uncertainties related to future government interventions or legal actions, such as provisional remedies, that could affect our tariffs; ·general political, economic, social, demographic and business conditions in the Republic of Argentina, or “Argentina” and particularly in the geographic market we serve; ·the impact of regulatory reform and changes in the regulatory environment in which we operate; ·electricity shortages; ·the evolution of energy losses and the impact of fines and penalties and uncollectable debt; ·potential disruption or interruption of our service; ·the revocation or amendment of our concession by the granting authority; ·our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms; ·fluctuations in exchange rates, including a devaluation of the Peso; ·the impact of high rates of inflation on our costs; and, ·additional matters identified in “Risk factors”.


1

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Forward‐looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward‐looking statements after we file this annual report because of new information, future events or other factors. In light of these limitations, undue reliance should not be placed on forward‐looking statements contained in this annual report.


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SELECTED FINANCIAL DATA The following tables present our summary financial data for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. This information should be read in conjunction with our audited financial statements as of December 31, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 (the“Financial Statements”), the related notes thereto and the information under “Item 5. Operating and Financial Review and Prospectsˮ included elsewhere in this annual report. The financial data as of December 31, 2016, have been derived from our Financial Statements. Our Financial Statements have been prepared in accordance with International Financing Reporting Standards (“IFRSˮ), as issued by the International Accounting Standards Board (“IASBˮ), and these have been approved by resolution of the board of directors’ meeting held on March 8, 2017.  See “Item 18—Financial Statements”. The selected statement of comprehensive (loss) income data for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, and the selected statement of financial position data as of December 31, 2016, 2015, 2014, 2013 and 2012 have been prepared in accordance with IFRS, as issued by the IASB, and have been derived from our financial statements, which were audited by Price Waterhouse & Co. S.R.L. (“PwC”), member firm of PricewaterhouseCoopers network. The financial data as of December 31, 2014, 2013 and 2012 is derived from our audited consolidated financial statements that are not included in this annual report, which were also audited by PwC. During 2016, we recorded, as we had done in 2012 and 2014, negative operating and net results, thus deteriorating once again our economic and financial situation, which had temporarily improved in 2015 as a consequence of the issuance of Resolution No. 32/15 by the Secretariat of Energy (the “SE”). Such resolution addressed the need for the adjustment of our distribution resources and considered the adoption of urgent and interim measures necessary in order not only to maintain the quality and safety of our service but also to satisfy the constant year-on-year increase in demand for electricity following Argentina’s relative economic growth in recent years (especially, from 2012 through 2015). The negative results mentioned above were mainly caused because by the delay in the performance of certain obligations under the Adjustment Agreement, especially with regard to the implementation of the semi-annual rate adjustments and the completion of the RTI process. In this context, on December 16, 2015, the Macri administration (as defined below) issued Decree No. 134/15, which declared the state of emergency with respect to the national electricity system, authorizing the Ministry of Energy and Mining (the “ME&M”) to implement a nation-wide plan of action for the generation, transmission and distribution of electricity and to take actions to guarantee the supply of the electricity under adequate economic and technical conditions. As part of the restructuring of the electricity sector, in January 2016, the ME&M issued Resolution No. 6/16 and the Ente Nacional Regulador de la Electricidad (“ENRE”) Resolution No. 1/16, through which approved a new tariff scheme that established the new generation cost and partially adjusted our distribution added value (“VAD”) in order to make investments, carry out maintenance works and expand networks. In respect of these measures, from May through November 2016, several courts granted provisional remedies (injunctions) ordering the temporary suspension of the resolutions increasing tariffs in the Province of Buenos Aires. In the “Abarca” case, an injunction was issued extending throughout the entire concession area of the Province of Buenos Aires, which was lifted on September 6, 2016, and its economic impact on us was compensated in four installments that were charged to the customers’ invoices as from October 2016. Other provisional remedies were granted with respect to the districts of “Pilar” and “La Matanza”, which remained in effect until October 24 and November 11, 2016, respectively, when they expired. The negative effect related to these provisional remedies was compensated by Compañía Administradora del Mercado Mayorista Eléctrico S.A. (“CAMMESA”) through credit notes as authorized by the ME&M (Note No. 2016-04484723). As of the date of this annual report, no injunction remains in force, and the tariff scheme resulting from the referenced ENRE resolutions was applied to all customers. The tariff scheme established by Resolution No. 1/16, which improved our gross margin (taking into account that the effects of the provisional remedies were compensated), resulted insufficient to comply with the provision of the public service in a satisfactory manner in terms of quality and safety, mainly because of the increase in operating expenses, particularly as a result of the recalculation of ENRE fines and penalties following the implementation of Note No. 120,151 issued on April 15, 2016 (the “Note”), and the increase in non-technical losses and past due receivables. Thus, within a context of continued increase in the demand for electricity, our economic and financial situation became untenable.


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However, despite the negative operating and net results recorded in 2016, our board of directors is optimistic that the new tariff schedule (set in force by Resolution No. 63/17 of the ENRE) will establish a regulatory framework with clear and precise rules, which will make possible for us not only to cover our operation costs, afford our investment plans and meet debt interest payments, but also to deal with the impact of the different variables that affect our business from time to time. Our Financial Statements are included in this annual report beginning on page F-1.  The statement of cash flows for the year ended December 31, 2015 has been revised to present the cash inflows related to such agreements within financing activities in the statement of cash flows, instead of operating activities as previously presented. Also, the increase in the balances of the loans with CAMMESA for funds received by the FOCEDE for the year ended December 31, 2015 is now presented as a non-cash transaction in the supplementary disclosures to the statement of cash flows instead of operating activities as previously presented. This correction to the financial statements impacted only the statement of cash flows, and there was no impact on the statements of financial position, comprehensive income, or equity, or on the basic and diluted (loss) earnings per share. In accordance with the decision of our board of directors to divest and sell the subsidiary Aeseba as of March 31, 2013 and the subsidiaries Emdersa Holding S.A. (“Emdersa Holdingˮ or “EHSA”), including Emdersa and its subsidiaries, Empresa Distribuidora de San Luis S.A. (“Edesal”), Empresa Distribuidora de La Rioja S.A. (“Edelar”), Empresa Distribuidora de Salta S.A. (“Edesa”) and Emdersa Generación Salta S.A. (“EGSSA”), as of December 31, 2011, we have classified the corresponding assets and liabilities associated to these subsidiaries in the consolidated financial statements as of December 31, 2013, 2012 and 2011 as “Assets of disposal groups classified as held for sale” and “Liabilities of disposal groups classified as held for sale”. As of October 11, 2011, October 25, 2011 and May 10, 2012 the Company sold its direct and indirect stake in EGSSA (subject to a condition precedent related to Emdersa’s spin-off), Edesal and Edesa, respectively. The corresponding charges to results have been included within “Income (Loss) from discontinued operations” line item in our consolidated statements of comprehensive loss for the years ended December 31, 2012 and 2011. As of April 5, 2013, the Company sold its stake in Aeseba. The corresponding charges to results have been included within “Loss from Discontinued operations” line item in our consolidated statements of comprehensive loss for the year ended December 31, 2013.  In this annual report, except as otherwise specified, references to “$”, “U.S.$” and “Dollars” are to U.S. Dollars, and references to “Ps.” and “Pesos” are to Argentine Pesos.  Solely for the convenience of the reader, Peso amounts as of and for the year ended December 31, 2016 have been translated into U.S. Dollars at the selling exchange rate for U.S. Dollars quoted by Banco de la Nación Argentina (the “Banco Nación”) on December 31, 2016, which was Ps. 15.89 to U.S.$ 1.00, unless otherwise indicated. The U.S. Dollar equivalent information should not be construed to imply that the Peso amounts represent, or could have been or could be converted into, U.S. Dollars at such rates or any other rate. See “Item 3. Key Information—Exchange Rates” and “Item 3.  Key Information—Risk Factors—Risks Relating to Argentina—Fluctuations in the value of the Peso could adversely affect the Argentine economy, and, in turn adversely affect our results of operations.” Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, any discrepancies between the totals and the sums of amounts are due to rounding.


4

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Statement of
      comprehensive (loss) income2016
    
    2016
    
    2015
    
    2014
    
    2013
    
    2012US$
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.Continuing
      operationsRevenue from
      sales (1)
    
    823.1
    
    13,079.6
    
    3,802.2
    
    3,598.4
    
    3,440.7
    
    2,976.2Electric power
      purchases
    
    (381.4)
    
    (6,060.3)
    
    (2,022.0)
    
    (1,878.1)
    
    (2,050.3)
    
    (1,740.2)Subtotal
    
    441.7
    
    7,019.3
    
    1,780.2
    
    1,720.3
    
    1,390.4
    
    1,236.0Transmission
      and distribution expenses
    
    (386.9)
    
    (6,147.2)
    
    (3,153.7)
    
    (2,825.1)
    
    (2,055.3)
    
    (1,344.1)Gross income
      (Loss)
    
    54.9
    
    872.1
    
    (1,373.5)
    
    (1,104.8)
    
    (664.9)
    
    (108.1)Selling
      expenses
    
    (101.7)
    
    (1,616.7)
    
    (832.8)
    
    (657.9)
    
    (548.3)
    
    (352.9)Administrative
      expenses
    
    (73.1)
    
    (1,162.3)
    
    (706.1)
    
    (496.8)
    
    (324.8)
    
    (249.4)Other operating
      income
    
    5.5
    
    87.2
    
    79.2
    
    52.4
    
    61.6
    
    32.3Other operating
      expense
    
    (29.2)
    
    (463.9)
    
    (502.5)
    
    (318.7)
    
    (142.8)
    
    (150.3)Gain from
      acquisition of companies
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -Income from
      non-reimbursable customer contributions
    
    0.0
    
    0.8
    
    0.8
    
    0.8
    
    0.7
    
    -Operating (loss) profit
      before SE Resolution 250/13 and subsequent Notes
    
    (143.7)
    
    (2,283.0)
    
    (3,334.9)
    
    (2,525.0)
    
    (1,618.5)
    
    (828.4)Recognition of income –
      provisional remedies – MEyM Note 2016-04484723
    
    70.8
    
    1,125.6
    
    -
    
    -
    
    -
    
    -Income recognition on
      account of the RTI - SE Resolution 32/15
    
    26.4
    
    419.7
    
    5,025.1
    
    -
    
    -
    
    -Higher costs recognition -
      SE Resolution 250/13 and subsequents Notes
    
    5.1
    
    81.5
    
    551.5
    
    2,271.9
    
    2,933.1
    
    -Operating (loss)
      profit
    
    (41.3)
    
    (656.1)
    
    2,241.7
    
    (253.1)
    
    1,314.6
    
    (828.4)Financial income
    
    12.4
    
    196.8
    
    96.2
    
    235.5
    
    287.1
    
    75.5Financial expenses
      (2)
    
    (90.9)
    
    (1,444.9)
    
    (450.0)
    
    (592.0)
    
    (504.9)
    
    (226.0)Other financial
      expense
    
    (1.7)
    
    (27.5)
    
    (561.7)
    
    (324.5)
    
    (273.1)
    
    (168.1)Net financial (expense)
    
    (80.3)
    
    (1,275.6)
    
    (915.5)
    
    (681.0)
    
    (490.9)
    
    (318.6)(Loss) profit before
      taxes
    
    (121.6)
    
    (1,931.7)
    
    1,326.2
    
    (934.1)
    
    823.7
    
    (1,147.0)-Income tax
    
    46.8
    
    743.1
    
    (183.8)
    
    154.4
    
    44.1
    
    116.7(Loss) profit for the year
      from continuing operations
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    867.8
    
    (1,030.3)Discontinued
      operations
    
    -
    
    -
    
    -
    
    -
    
    (95.1)
    
    16.9(Loss) profit for the
      year
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    772.7
    
    (1,013.4)(Loss) profit for the year
      attributable to:Owners of the
      Company
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    771.7
    
    (1,016.5)Non-controlling
      interests
    
    -
    
    -
    
    -
    
    -
    
    1.0
    
    3.1(Loss) profit for the
      year
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    772.7
    
    (1,013.4)(Loss) profit for the year
      attributable to the owners of the parentContinuing
      operations
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    867.9
    
    (1,030.3)Discontinued
      operations
    
    -
    
    -
    
    -
    
    -
    
    (96.2)
    
    13.8(74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)
    
    771.7
    
    (1,016.5)




5

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Statement of comprehensive (loss)
income *(continued) 2016
    
    2016
    
    2015
    
    2014
    
    2013
    
    2012US$
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.Other comprehensive
      incomeItems that will not be
      reclassified to profit or lossResults related to benefit
      plans
    
    0.5
    
    7.8
    
    (3.7)
    
    (17.8)
    
    (21.0)
    
    7.9Tax effect of actuarial
      (losses) income on benefit plans
    
    (0.2)
    
    (2.7)
    
    1.3
    
    6.2
    
    7.4
    
    (2.8)Total other comprehensive
      loss from discontinued operations
    
    -
    
    -
    
    -
    
    -
    
    -
    
    (2.1)Total other comprehensive
      income (loss)
    
    0.3
    
    5.1
    
    (2.4)
    
    (11.6)
    
    (13.6)
    
    3.0Comprehensive income for
      the year attributable to:Owners of the parent
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)
    
    758.1
    
    (1,013.2)Non-controlling
      interests
    
    -
    
    -
    
    -
    
    -
    
    1.0
    
    2.8Comprehensive (loss) income
      for the year
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)
    
    759.1
    
    (1,010.4)(Loss) profit for the year
      attributable to the owners of the parentContinuing
      operations
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)
    
    757.1
    
    (1,025.1)Discontinued
      operations
    
    
    
    -
    
    -
    
    -
    
    1.0
    
    11.9(74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)
    
    758.1
    
    (1,013.2)Basic and diluted (loss)
      earnings per share:Basic and diluted (loss)
      earnings per share from continuing operations
    
    (0.08)
    
    (1.33)
    
    1.27
    
    (0.87)
    
    0.97
    
    (1.15)Basic and diluted (loss)
      earnings per share from discontinued operations
    
    -
    
    -
    
    -
    
    -
    
    (0.11)
    
    0.02Basic and diluted (loss)
      earnings per ADS(3):Basic and diluted (loss)
      earnings per ADS from continuing operations
    
    (1.67)
    
    (26.60)
    
    25.40
    
    (17.40)
    
    19.40
    
    (23.00)Basic and diluted (loss)
      earnings per ADS from discontinued operations
    
    -
    
    -
    
    -
    
    -
    
    (2.20)
    
    0.40
  (*)Certain amounts of the presented
financial data for comparative purposes (2013 and 2012) have been reclassified
(with regard to the financial statements as of such dates) following the
disclosure criteria used for the financial statements as of December 31, 2016,
mainly due to discontinued operations. (1)Revenue from operations is
recognized on an accrual basis and derives mainly from electricity distribution.
Such revenue includes electricity supplied, whether billed or unbilled, at the
end of each year, and has been valued on the basis of applicable tariffs and the
charges determined by the Resolution No. 347/12. (2)Net of interest capitalized at
December 31, 2016, 2015, 2014, 2013 and 2012 for Ps. 189.7 million,  Ps.
255.9 million, Ps. 123.9 million, Ps. 24.5 million and Ps. 25.4 million,
respectively. (3)Each ADS represents 20 Class B
common shares.


6

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Statement of
      financial position2016
    
    2016
    
    2015
    
    2014
    
    2013
    
    2012US$
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.ASSETSNon-current
      assetsProperty, plant
      and equipment
    
    704.7
    
    11,197.0
    
    8,885.8
    
    6,652.5
    
    5,189.3
    
    4,344.6Intangible
      assets
    
    -
    
    -
    
    -
    
    -
    
    -
    
    845.8Interest in
      joint ventures
    
    0.0
    
    0.4
    
    0.4
    
    0.4
    
    0.4
    
    0.4Deferred tax
      asset
    
    64.1
    
    1,019.0
    
    50.0
    
    87.2
    
    -
    
    -Other
      receivables
    
    3.2
    
    50.5
    
    153.8
    
    249.2
    
    199.4
    
    195.0Trade
      receivables
    
    -
    
    -
    
    -
    
    -
    
    -
    
    2.0Financial
      assets at amortized cost
    
    2.8
    
    44.4
    
    -
    
    -
    
    -
    
    -Financial
      assets at fair value through profit or loss
    
    -
    
    -
    
    23.6
    
    -
    
    -
    
    -Total
      non-current assets
    
    774.8
    
    12,311.4
    
    9,113.6
    
    6,989.3
    
    5,389.1
    
    5,387.8Current
      assetsAssets under
      construction
    
    -
    
    -
    
    -
    
    -
    
    -
    
    84.5Inventories
    
    18.1
    
    287.8
    
    134.9
    
    74.0
    
    83.9
    
    85.0Other
      receivables
    
    11.3
    
    179.3
    
    1,079.8
    
    250.3
    
    522.1
    
    127.2Trade
      receivables
    
    245.5
    
    3,901.1
    
    963.0
    
    882.9
    
    803.1
    
    889.4Financial
      assets at fair value through profit or loss
    
    125.5
    
    1,993.9
    
    1,560.4
    
    254.4
    
    216.4
    
    3.4Financial
      assets at amortized cost
    
    0.1
    
    1.5
    
    -
    
    -
    
    -
    
    -Derivative
      financial instruments
    
    -
    
    -
    
    0.2
    
    -
    
    -
    
    -Cash and cash
      equivalents
    
    16.3
    
    258.6
    
    129.0
    
    179.1
    
    243.5
    
    71.1Total current
      assets
    
    416.8
    
    6,622.2
    
    3,867.3
    
    1,640.7
    
    1,869.0
    
    1,260.6Assets of
      disposal group classified as held for sale
    
    -
    
    
    
    -
    
    -
    
    -
    
    223.4TOTAL
      ASSETS
    
    1,191.5
    
    18,933.5
    
    12,980.9
    
    8,630.0
    
    7,258.1
    
    6,871.8EQUITYCapital and
      reserves attributable to the ownersShare
      capital
    
    56.5
    
    897.0
    
    897.0
    
    897.0
    
    897.0
    
    897.0Adjustment to
      share capital
    
    25.0
    
    397.7
    
    397.7
    
    397.7
    
    397.7
    
    397.7Additional
      paid-in capital
    
    0.2
    
    3.5
    
    3.5
    
    3.5
    
    3.5
    
    3.5Treasury
      stock
    
    0.6
    
    9.4
    
    9.4
    
    9.4
    
    9.4
    
    9.4Adjustment to
      treasury stock
    
    0.7
    
    10.3
    
    10.3
    
    10.3
    
    10.3
    
    10.3Legal
      reserve
    
    4.6
    
    73.3
    
    -
    
    -
    
    -
    
    -Opcional
      reserve
    
    11.1
    
    176.1
    
    -
    
    -
    
    -
    
    -Other
      reserve
    
    1.3
    
    20.3
    
    -
    
    -
    
    -
    
    -Other
      comprehensive (loss) income
    
    (2.3)
    
    (37.2)
    
    (42.3)
    
    (39.9)
    
    (28.3)
    
    (14.6)Accumulated
      deficit
    
    (74.8)
    
    (1,188.6)
    
    249.4
    
    (893.0)
    
    (113.3)
    
    (885.1)Equity
      attributable to the owners
    
    22.8
    
    361.8
    
    1,525.0
    
    385.0
    
    1,176.3
    
    418.2Non-controlling
      interest
    
    -
    
    -
    
    -
    
    -
    
    -
    
    71.1TOTAL
      EQUITY
    
    22.8
    
    361.8
    
    1,525.0
    
    385.0
    
    1,176.3
    
    489.3LIABILITIESNon-current
      liabilitiesTrade
      payables
    
    14.7
    
    232.9
    
    225.0
    
    231.1
    
    220.8
    
    155.3Other payables
      (1)
    
    321.2
    
    5,103.3
    
    2,391.9
    
    1,644.6
    
    944.7
    
    1,894.8Borrowings
    
    174.3
    
    2,769.6
    
    2,461.0
    
    1,598.4
    
    1,309.9
    
    1,350.7Deferred
      revenue
    
    12.6
    
    200.0
    
    153.8
    
    109.1
    
    33.7
    
    264.4Salaries and
      social security taxes payable
    
    5.9
    
    94.3
    
    80.0
    
    62.9
    
    26.0
    
    17.5Benefit
      plans
    
    16.7
    
    266.1
    
    204.4
    
    150.4
    
    102.7
    
    97.4Deferred tax
      liability
    
    -
    
    -
    
    -
    
    -
    
    73.4
    
    230.4Tax
      liabilities
    
    0.0
    
    0.7
    
    1.9
    
    3.2
    
    4.4
    
    10.0Provisions
    
    21.5
    
    341.4
    
    259.6
    
    112.1
    
    83.1
    
    80.0Total
      non-current liabilities
    
    566.9
    
    9,008.3
    
    5,777.6
    
    3,911.8
    
    2,798.7
    
    4,100.5Current
      liabilitiesTrade
      payables
    
    429.3
    
    6,821.1
    
    4,475.4
    
    3,299.6
    
    2,481.2
    
    1,208.5Other payables
      (1)
    
    8.5
    
    134.8
    
    151.7
    
    187.1
    
    147.2
    
    150.4Borrowings
    
    3.4
    
    53.7
    
    48.8
    
    34.0
    
    40.6
    
    103.1Derivative
      financial instruments
    
    -
    
    -
    
    -
    
    5.9
    
    -
    
    -Deferred
      revenue
    
    0.0
    
    0.8
    
    0.8
    
    0.8
    
    -
    
    -Salaries and
      social security taxes payable
    
    65.0
    
    1,032.2
    
    733.1
    
    610.6
    
    420.9
    
    383.6Benefit
      plans
    
    2.1
    
    33.4
    
    28.3
    
    10.6
    
    -
    
    15.0Tax
      payable
    
    9.8
    
    155.2
    
    16.3
    
    -
    
    -
    
    -Tax
      liabilities
    
    78.3
    
    1,244.5
    
    153.4
    
    160.5
    
    182.5
    
    253.6Provisions
    
    5.5
    
    87.9
    
    70.5
    
    24.1
    
    10.7
    
    10.5Total current
      liabilities
    
    601.9
    
    9,563.4
    
    5,678.3
    
    4,333.2
    
    3,283.1
    
    2,124.7Liabilities of
      disposal group classified as held for sale
    
    -
    
    -
    
    -
    
    -
    
    -
    
    157.3TOTAL
      LIABILITIES
    
    1,168.8
    
    18,571.7
    
    11,455.9
    
    8,245.0
    
    6,081.8
    
    6,382.5TOTAL
      LIABILITIES AND EQUITY
    
    1,191.5
    
    18,933.5
    
    12,980.9
    
    8,630.0
    
    7,258.1
    
    6,871.8
  (1)Includes the amounts
collected through the Program for the Rational Use of Electricity Power (PUREE).
As of December, 31, 2014 and 2013  net of Ps. 2,235.1 million and Ps.
1,661.1 million, respectively, compensated pursuant to Resolution No. 250/2013
and Notes 6852/2013, 4012/14, 486/14 and 1136/14, which as of December 31, 2014,
2013 and 2012 amounted to Ps. 17.5 million, Ps. 108.6 million and Ps. 1,352
million, respectively, included under current and non-current liabilities.
Edenor is permitted to retain funds from the PUREE that it would otherwise be
required to transfer to CAMMESA according to Resolution No. 1,037/07 of the SE.
Since the issuance of Resolution No. 32/15, the PUREE funds are considered part
of Edenor’s income on account of the future RTI.


7

---



Statement of Cash
flows Cash
      flow2016
    
    2016
    
    2015
    
    2014
    
    2013
    
    2012(restated)
    
    (restated)US$
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.Cash flows from
      operating activities(Loss) Profit for the
      year
    
    (74.8)
    
    (1,188.6)
    
    1,142.4
    
    (779.7)
    
    772.7
    
    (1,013.4)Adjustments to reconcile
      net (loss) profit to net cash flows provided by operating
      activities:Depreciation of property,
      plant and equipment
    
    22.1
    
    351.6
    
    281.4
    
    237.6
    
    212.1
    
    192.6Loss on disposals of
      property, plant and equipment
    
    2.5
    
    40.5
    
    3.5
    
    1.0
    
    1.2
    
    1.8Net accrued
      interest
    
    78.3
    
    1,244.9
    
    333.7
    
    341.0
    
    196.6
    
    182.6Exchange
      differences
    
    26.3
    
    417.7
    
    894.8
    
    427.9
    
    365.8
    
    192.9Income tax
    
    (46.8)
    
    (743.1)
    
    183.7
    
    (154.4)
    
    (44.1)
    
    (116.7)Allowance for the
      impairment of trade and other receivables, net of recovery
    
    14.3
    
    227.7
    
    24.1
    
    19.7
    
    33.7
    
    54.4Adjustment to present value
      of receivables
    
    (0.2)
    
    (2.9)
    
    (5.4)
    
    (8.1)
    
    (2.4)
    
    2.2Provision for
      contingencies
    
    9.5
    
    151.0
    
    226.4
    
    75.4
    
    36.0
    
    24.8Other expenses -
      FOCEDE
    
    0.9
    
    14.7
    
    59.6
    
    97.7
    
    -
    
    -Changes in fair value of
      financial assets
    
    (25.4)
    
    (404.2)
    
    (323.6)
    
    (67.6)
    
    (16.1)
    
    (39.1)Accrual of benefit
      plans
    
    6.6
    
    105.4
    
    89.3
    
    51.4
    
    22.5
    
    20.4Higher costs recognition -
      SE Resolution 250/13 and subsequents Notes
    
    (5.1)
    
    (81.5)
    
    (551.5)
    
    (2,271.9)
    
    (2,933.1)
    
    -Income recognition on
      account of the RTI - SE Resolution 32/15
    
    (26.4)
    
    (419.7)
    
    (495.5)
    
    -
    
    -
    
    -Recognition of income –
      provisional remedies – MEyM Note 2016-04484723
    
    (70.8)
    
    (1,125.6)
    
    -
    
    -
    
    -
    
    -Net gain from the
      repurchase of Corporate Bonds
    
    -
    
    -
    
    -
    
    (44.4)
    
    (88.9)
    
    -Income from
      non-reimbursable customer contributions
    
    -
    
    (0.8)
    
    (0.8)
    
    -
    
    -
    
    -Other reserve constitution
      - Share bases compensation plan
    
    1.3
    
    20.3
    
    -
    
    -
    
    -
    
    -Discontinued
      operations
    
    -
    
    -
    
    -
    
    -
    
    168.6
    
    287.8Changes in operating assets
      and liabilities:(Increase) in trade
      receivables
    
    (187.2)
    
    (2,973.8)
    
    (40.6)
    
    (55.3)
    
    (48.5)
    
    (306.0)Decrease in other
      receivables
    
    66.9
    
    1,063.5
    
    375.6
    
    (134.7)
    
    (111.7)
    
    (15.6)(Increase) in
      inventories
    
    (9.6)
    
    (152.9)
    
    (60.9)
    
    9.9
    
    (42.7)
    
    (18.3)Increase in deferred
      revenue
    
    3.0
    
    46.9
    
    45.5
    
    76.2
    
    (0.7)
    
    16.9Increase in trade payables
      (1)
    
    175.0
    
    2,780.9
    
    911.7
    
    2,446.5
    
    2,144.5
    
    503.4Increase in salaries and
      social security payable
    
    19.7
    
    313.3
    
    139.7
    
    226.7
    
    95.3
    
    88.8Decrease in benefit
      plans
    
    (1.9)
    
    (30.8)
    
    (21.2)
    
    (11.0)
    
    (7.9)
    
    (4.0)Increase (Decrease) in tax
      liabilities
    
    62.3
    
    990.2
    
    (141.0)
    
    (28.7)
    
    (44.9)
    
    43.4Increase
      (Decrease) in other payables
    
    147.2
    
    2,338.4
    
    (62.1)
    
    262.3
    
    262.0
    
    40.9Funds obtained
      from the program for the rational use of electric power (PUREE) (SE
      Resolution No. 1037/07)
    
    -
    
    -
    
    25.6
    
    482.9
    
    491.9
    
    410.7Decrease in
      provisions
    
    (3.3)
    
    (51.8)
    
    (32.6)
    
    (33.0)
    
    (25.3)
    
    (12.1)Increase in
      account payable and mutuum with Cammesa
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -Net cash flows
      provided by operating activities
    
    184.5
    
    2,931.3
    
    3,001.9
    
    1,167.4
    
    1,436.6
    
    538.4Cash flows from
      investing activitiesPayment of
      property, plant and equipment
    
    (155.7)
    
    (2,474.6)
    
    (2,095.5)
    
    (1,400.1)
    
    (892.4)
    
    (537.9)Net (payment
      for) collection of purchase / sale of financial assets at fair
      value
    
    5.6
    
    89.1
    
    (1,012.0)
    
    (64.6)
    
    (97.4)
    
    37.8Loans
      granted
    
    -
    
    -
    
    -
    
    -
    
    -
    
    (0.5)Collection of
      financial receivables with related companies
    
    -
    
    -
    
    -
    
    -
    
    2.1
    
    142.4Collection of
      receivables from sale of subsidiaries
    0.8
    
    12.0
    
    4.3
    
    3.0
    
    2.9
    
    --
    
    
    
    -Discontinued
      operations
    
    -
    
    -
    
    -
    
    -
    
    (124.2)
    
    (232.1)Net cash flows
      used in investing activities
    
    (149.4)
    
    (2,373.5)
    
    (3,103.2)
    
    (1,461.7)
    
    (1,109.0)
    
    (590.3)
  (1)Includes the increase
in account payable with CAMMESA. As of December, 31, 2015, 2014, 2013 and 2012,
amounted to Ps. 251.0, Ps. 2,974.9, Ps. 2,231.5 and Ps.295.7, respectively. See
“Item 5. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Sources and uses of Funds”.


8

---



Statement of Cash flows
(continued) 2016
    
    2016
    
    2015
    
    2014
    
    2013
    
    2012(restated)
    
    (restated)US$
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.
    
    Ps.Cash flows from
      financing activitiesLoans
      taken
    
    -
    
    -
    
    -
    
    -
    
    -
    
    0.8Repayment of
      principal on loans
    
    -
    
    
    
    -
    
    (0.4)
    
    (25.5)
    
    (36.5)Payment of
      interest on loans
    
    (16.7)
    
    (266.0)
    
    (172.9)
    
    (155.3)
    
    (177.0)
    
    (128.9)Proceeds from
      PP&E mutuum
    
    
    
    
    
    
    
    100.0Proceeds from
      Salaries mutuum
    
    -
    
    -
    
    214.9
    
    280.6
    
    -
    
    -Repurchase of
      corporate notes
    
    (0.3)
    
    (4.9)
    
    -
    
    -
    
    -
    
    -Payment of
      redemption on corporate notes
    
    (14.0)
    
    (221.8)
    
    -
    
    -
    
    -
    
    -Discontinued
      operations
    
    -
    
    -
    
    -
    
    -
    
    25.4
    
    136.8Net cash flows
      (used in) provided financing activities
    
    (31.0)
    
    (492.7)
    
    42.0
    
    224.9
    
    (177.1)
    
    (27.8)Net increase
      (decrease) in cash and cash equivalents
    
    4.1
    
    65.1
    
    (59.3)
    
    (69.4)
    
    150.5
    
    (79.7)Cash and cash
      equivalents at beginning of year
    
    8.1
    
    129.0
    
    179.1
    
    243.5
    
    71.1
    
    130.5Cash and cash
      equivalents at beginning of year included in assets of disposal group
      classified as held for sale
    
    -
    
    -
    
    -
    
    -
    
    11.2
    
    28.3Exchange
      differences in cash and cash equivalents
    
    4.1
    
    64.5
    
    9.1
    
    5.1
    
    10.7
    
    3.2Increase (Decrease) in cash
      and cash equivalents
    
    4.1
    
    65.1
    
    (59.2)
    
    (69.5)
    
    150.5
    
    (79.7)Cash and cash
      equivalents at the end of year
    
    16.3
    
    258.6
    
    129.0
    
    179.1
    
    243.5
    
    82.3Cash and cash
      equivalents at the end of the year in the statement of financial
      position
    
    16.3
    
    258.6
    
    129.0
    
    179.1
    
    243.5
    
    71.1Cash and cash
      equivalents at the end of the year included in assets of disposal group
      classified as held for sale
    
    -
    
    -
    
    -
    
    -
    
    -
    
    11.2Cash and cash
      equivalents at the end of the year
    
    16.3
    
    258.6
    
    129.0
    
    179.1
    
    243.5
    
    82.3Supplemental
      cash flows informationNon-cash
      operating, investing and financing activitiesFinancial costs
      capitalized in property, plant and equipment
    
    (11.9)
    
    (189.7)
    
    (255.9)
    
    (123.9)
    
    (24.5)
    
    (6.4)-Acquisitions of
      property, plant and equipment through increased trade
    payables
    
    (12.9)
    
    (205.8)
    
    (166.8)
    
    (144.8)
    
    (126.4)
    
    --(Decrease) from offsetting
      of PUREE-related liability against receivables (SE Resolution 250/13,
      subsequent Notes and SE Resolution 32/15)
    
    -
    
    -
    
    10.6
    
    (574.0)
    
    (1,661.1)
    
    -Increase from offsetting of
      liability with CAMMESA for electricity purchases against receivables (SE
      Resolution 250/13, subsequent Notes and SE Resolution 32/15)
    
    -
    
    -
    
    158.1
    
    (2,218.4)
    
    (1,152.3)
    
    --Decrease from offset of
      other liabilities with CAMMESA for loans for consumption (Mutuums) granted
      for higher salary costs (SE Resolution 32/15)
    
    -
    
    -
    
    (495.5)
    
    -
    
    -
    
    --Amounts received from
      CAMMESA through FOCEDE
    
    -
    
    -
    
    723.6
    
    100.0
    
    -
    
    --Decrease in
      financial assets at fair value from repurchase of Corporate
      Notes
    
    -
    
    -
    
    -
    
    91.6
    
    165.1
    
    ---Increase in
      financial assets at fair value from subsidiary sale
    
    -
    
    -
    
    -
    
    -
    
    (334.3)
    
    --Decrease of
      other receivables for collection of corporate notes with related
      companies
    
    -
    
    -
    
    -
    
    -
    
    52.8
    
    --Net increase of
      trade receivables from assets of disposal group classified as held for
      sale
    
    -
    
    -
    
    -
    
    -
    
    (44.6)
    
    --Acquisitions of
      property, plant and equipment through increased debt FOTAE
    
    -
    
    -
    
    -
    
    (32.9)
    
    (49.0)
    
    -


9

---



Year ended December 31,2016
    
    2015
    
    2014
    
    2013
    
    2012Operating
      dataEnergy sales
      (in GWh):
    22,275
    
    22,402
    
    21,312
    
    21,674
    
    20,760Residential
    9,708
    
    9,671
    
    9,114
    
    9,114
    
    8,662Small
      Commercial
    1,819
    
    1,878
    
    1,714
    
    1,780
    
    1,688Medium
      Commercial
    1,820
    
    1,828
    
    1,712
    
    1,828
    
    1,717Industrial
    3,677
    
    3,680
    
    3,431
    
    3,458
    
    3,335Wheeling
      System(1)
    4,014
    
    4,200
    
    4,213
    
    4,374
    
    4,261Public
      Lighting
    704
    
    688
    
    678
    
    683
    
    668Shantytowns
    511
    
    435
    
    430
    
    417
    
    409Others
      (2)
    22
    
    21
    
    20
    
    20
    
    20Customers (in
      thousands)(3)
    2,867
    
    2,835
    
    2,800
    
    2,773
    
    2,726Energy Losses
      (%)
    17.00%
    
    14.90%
    
    13.82%
    
    13.00%
    
    13.30%MWh sold per
      employee
    4,748
    
    4,770
    
    4,941
    
    6,083
    
    6,999Customers per
      employee
    611
    
    604
    
    649
    
    778
    
    919
  (1)Wheeling system charges
represent our tariffs for large users, which consist of a fixed charge for
recognized technical losses and a charge for our distribution margins but
exclude charges for electric power purchases, which are undertaken directly
between generators and large users. (2)Represents energy
consumed internally by us and our facilities. (3)We define a customer as
one meter. We may supply more than one consumer through a single meter. In
particular, because we measure our energy sales to each shantytown collectively
using a single meter, each shantytown is counted as a single
customer.      EXCHANGE RATES  From April 1, 1991
until the end of 2001, Law No. 23,928 (the “Convertibility Law”) established a
fixed exchange rate under which the Central Bank of Argentina (Banco Central de la
República Argentina, the “Central Bank”) was obliged to sell U.S. Dollars at
a fixed rate of one Peso per U.S. Dollar (the “Convertibility Regime”).  On
January 6, 2002, the Argentine Congress enacted the Public Emergency Law No.
25,561 (the “Public Emergency Law”), formally putting an end to the
Convertibility Regime and abandoning over ten years of U.S. Dollar-Peso
parity.  The Public Emergency Law grants the Executive Branch of the
Argentine government the power to set the exchange rate between the Peso and
foreign currencies and to issue regulations related to the foreign exchange
market.  The Public Emergency law has been extended until December 31,
2017.  For a brief period following the end of the Convertibility Regime,
the Public Emergency Law established a temporary dual exchange rate
system.  Since February 2002, the Peso has been allowed to float freely
against other currencies, although the government has the power to intervene by
buying and selling foreign currency for its own account, a practice in which it
may engage on a regular basis. After several years of
moderate variations in the nominal exchange rate, the Peso lost more than 30% of
its value with respect to the U.S. Dollar in each of 2013 and 2014, and in 2015,
the Peso lost approximately 52% of its value with respect to the U.S. Dollar,
including a depreciation of approximately 36% mainly experienced after December
17, 2015 following the announcement of the lifting of a significant portion of
exchange restrictions (See “—Risk Factors—Factors Relating to
Argentina—Fluctuations in the value of the Peso could adversely affect the
Argentine economy and, in turn, adversely affect our results of operations”).
This was followed by a devaluation of the Peso with respect to the U.S. Dollar
of approximately 20% from January 1, 2016 through February 29, 2016. From March
1, 2016, through December 31, 2016, the Peso lost approximately 0.6% with
respect to the U.S. Dollar. There can be no
assurance that the Argentine Peso will not depreciate or appreciate again in the
future.


10

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The following table
sets forth the annual high, low, average and period-end exchange rates for U.S.
Dollars for the periods indicated, expressed in Pesos per U.S. Dollar at the
purchasing exchange rate and not adjusted for inflation.  When preparing
our financial statements, we utilize the selling exchange rates for U.S. Dollars
quoted by the Banco Nación to translate our U.S. Dollar denominated assets and
liabilities into Pesos.  The Federal Reserve Bank of New York does not
report a noon buying rate for Pesos. Low
    
    High
    
    Average
    
    Period End(Pesos per U.S. Dollar)Year ended
      December 31,2012
    
    4.30
    
    4.92
    
    4.55(1)
    
    4.922013
    
    4.93
    
    6.52
    
    5.48(1)
    
    6.522014
    
    6.54
    
    8.56
    
    8.23(1)
    
    8.552015
    
    8.56
    
    13.40
    
    9.51(1)
    
    13.042016
    
    13.20
    
    16.03
    
    14.79(1)
    
    15.89MonthNovember-2016
    
    14.92(2)
    
    15.87(2)
    
    15.36
    
    15.87December-2016
    
    15.50(2)
    
    16.03(2)
    
    15.84
    
    15.89January-2017
    
    15.81(2)
    
    16.08(2)
    
    15.91
    
    15.90February-2017
    
    15.36(2)
    
    15.80(2)
    
    15.59
    
    15.48March-2017
    
    15.39(2)
    
    15.65(2)
    
    15.52
    
    15.39April-2017(3)
    
    15.19(2)
    
    15.49(2)
    
    15.33
    
    15.49_____________________Source: Banco Nación(1)
      Represents the average of the exchange rates on the last day of each month
      during the period.(2) Average
      of the lowest and highest daily rates in the month.(3)
      Represents the corresponding exchange rates from April 1 through April 21,
      2017.


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RISK FACTORS Risks Related to
Argentina Overview We are a stock
corporation (sociedad anónima) incorporated under the laws of
the Republic of Argentina and all of our revenues are earned in Argentina and
all of our operations, facilities, and customers are located in Argentina. 
Accordingly, our financial condition and results of operations depend to a
significant extent on macroeconomic, regulatory, political and financial
conditions prevailing in Argentina, including growth, inflation rates, currency
exchange rates, interest rates, and other local, regional and international
events and conditions that may affect Argentina in any manner.  For
example, slower economic growth or economic recession could lead to a decreased
demand for electricity in our concession area or to a decline in the purchasing
power of our customers, which, in turn, could lead to a decrease in collection
rates from our customers or increased energy losses due to illegal use of our
service.  Actions of the Argentine government concerning the economy,
including decisions with respect to inflation, interest rates, price controls
(including tariffs and other compensation of public services), foreign exchange
controls and taxes, have had and may in the future have a material adverse
effect on private sector entities, including us.  For example, during the
Argentine economic crisis of 2001, the Argentine government froze electricity
distribution margins and caused the pesification of our tariffs, which had a
materially adverse effect on our business and financial condition and led us to
suspend payments on our financial debt at the time. We cannot assure you
that the Argentine government will not adopt other policies that could adversely
affect the Argentine economy or our business, financial condition or results of
operations.  In addition, we cannot assure you that future economic,
regulatory, social and political developments in Argentina will not impair our
business, financial condition or results of operations, or cause the market
value of our ADSs and Class B common shares to decline. The Argentine economy
remains vulnerable and any significant decline could adversely affect our
financial condition The Argentine economy
has experienced significant volatility in recent decades, characterized by
periods of low or negative growth, high levels of inflation and currency
devaluation.  Sustainable economic growth in Argentina is dependent on a
variety of factors, including the international demand for Argentine exports,
the stability and competitiveness of the Peso against foreign currencies,
confidence among consumers and foreign and domestic investors and a stable rate
of inflation. The Argentine economy
remains vulnerable, as reflected by the following economic
conditions: ·according
to the revised calculation of 2004 gross domestic product (“GDP”) published by
theInstituto Nacional de Estadística y Censos(National Statistics
and Census Institute or the “INDEC”) on June 29, 2016, which forms the basis for
the real GDP calculation for every year after 2004, and recent data published by
the INDEC in 2017, for the year ended December 31, 2016, Argentina’s real GDP
decreased by 2.1% compared to the same period in 2015. Argentina’s performance
has depended to a significant extent on high commodity prices which, despite
having favorable long-term trends, are volatile in the short-term and beyond the
control of the Argentine government and the private sector; ·Argentina’s public debt as a percentage of GDP remains
high, and the availability of long-term credit and international financing
remains limited; ·continued
increases in public expenditures have resulted and could continue to result in
fiscal deficits and affect economic growth; ·inflation
remains high and may continue at those levels in the future; ·investment
as a percentage of GDP remains low to sustain the growth rate of the past
decade;


12

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·a
significant number of protests or strikes could take place, as has occurred in
the past, which could adversely affect various sectors of the Argentine
economy; ·energy or
natural gas supply may not be sufficient to supply increased industrial activity
(thereby limiting industrial development) and consumption; ·unemployment and informal employment remain high;
and As in the recent past,
Argentina’s economy may be adversely affected if political and social pressures
inhibit the implementation by the Argentine government of policies designed to
control inflation, generate growth and enhance consumer and investor confidence,
or if policies implemented by the Argentine government that are designed to
achieve these goals are not successful.  These events could materially
adversely affect our financial condition and results of operations, or cause the
market value of our ADSs and our Class B common shares to decline. We cannot assure you
that a decline in economic growth, an increase in economic instability or the
expansion of economic policies and measures taken or that may be adopted in the
future by the Argentine government to control inflation or address other
macroeconomic developments that affect private sector entities such as us, all
developments over which we have no control, would not have an adverse effect on
our business, financial condition or results of operations or would not have a
negative impact on the market value of our ADSs and Class B common
shares. The impact of the
congressional and presidential elections on the future economic and political
environment of Argentina remains uncertain, but likely to be
material Since taking office on
December 10, 2015, the Macri administration has announced and implemented
several significant economic and policy reforms, including: Electricity system state of
  emergency and reforms.  The Macri administration declared the state of
  emergency of the national electricity system that will remain in effect until
  December 31, 2017. The state of emergency allows the Argentine government
  to take actions designed to guarantee the supply of electricity.  In
  addition, following the Macri administration’s announcement that it would
  reexamine energy subsidy policies, the ME&M increased electricity rates
  for the wholesale market for purchases made between February 1 through
  April 30, 2016.  This increase was used to reduce subsidies to the
  sector. On January 29, 2016, the ENRE, through Resolution No. 1/16 approved a
  new tariff structure which became effective on February 1, 2016, and
  introduced different prices depending on the categories of customers. Such
  resolution also contemplated a social tariff applicable to residential
  customers who comply with certain consumption requirements, which included a
  full exemption for monthly consumptions equal to or below 150 Kwh and other
  tariff benefits for customers who exceed such consumption levels but achieve a
  monthly consumption lower than that of the same period in the immediately
  preceding year. On the same date, through Resolution No. 2/2016, the ENRE
  partially repealed Resolution No. 347/2012, discontinuing the FOCEDE (as
  defined below) and ordered us to open a special bank account with a Central
  Bank authorized entity where the funds received pursuant to Resolution No.
  347/2012 were be deposited through February 2016. By correcting tariffs,
  reducing subsidies and modifying the regulatory framework, the Macri
  administration aimed at correcting distortions in the energy sector and
  stimulating investment.  Following the tariff increases, preliminary
  injunctions were requested by customers, and non-governmental organizations
  that defend customers’ rights, some of which were granted by Argentine
  courts.  Among others, two separate orders led to the suspension of
  end-user electricity tariff increases in the Province of Buenos Aires and in
  the entire territory of Argentina.  However, on September 6, 2016, the
  Argentine Supreme Court reversed the injunctions that had suspended end-user
  electricity tariff increases on the basis of formal objections and procedural
  defects and, therefore, as of the date of this annual report, increases to
  end-user electricity tariffs are no longer suspended. On September 12, 2016,
  pursuant to an Argentine Supreme Court decision, a public hearing conducted by
  the ME&M was held in relation to the approval of a new gas tariff
  schedule.  In October 2016, such new gas tariff schedule was approved by
  the Macri administration establishing increases in tariffs ranging between
  300% and 500%. On October 28, 2016, a non-binding public hearing was conducted
  by the ME&M and the ENRE to discuss tariff proposals submitted by
  distribution companies covering the greater Buenos Aires area (with
  approximately 15 million inhabitants), including us, for the 2017-2021 period
  within the framework of the RTI. On February 1, 2017, the ENRE enacted several
  resolutions which, among other policy changes, implemented a reduction of
  electricity tariff subsidies, and an increase in electricity tariffs for their
  residential customers. Such increases ranged between 61% and 148%, according
  to the amount of electricity consumption. See “Item 5—Operating and Financial
  Review and Prospects—Integral Tariff Revision.”


13

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INDEC reforms.  In light of
  questions raised by the International Monetary Fund (“IMF”) regarding the
  reliability of the information produced by the INDEC, the Macri administration
  appointed Mr. Jorge Todesca, previously a director of a private
  consulting firm, as head of the INDEC.  The INDEC has implemented certain
  methodological reforms and adjusted certain macroeconomic statistics on the
  basis of such reforms. On January 8, 2016, Decree No. 55/2016 was issued by
  the Argentine government declaring a state of administrative emergency on the
  national statistical system and on the official agency in charge of the
  system, the INDEC, which remained in effect until December 31, 2016. Following
  the emergency declaration, the INDEC ceased publishing statistical data until
  a rearrangement of its technical and administrative structure was finalized.
  During the implementation of these reforms, however, the INDEC used official
  consumer price index (“CPI”) figures and other statistics published by the
  Province of San Luis and the City of Buenos Aires.  As of the date of
  this annual report, the INDEC has published certain revised data, including
  the CPI monthly data since May 2016 and foreign trade and balance of payment
  statistics. On June 29, 2016, the INDEC published a report including revised
  GDP data for the years 2004 through 2015. On September 22, 2016, the INDEC
  resumed publication of its essential goods and services basket assessment. On
  November 9, 2016, the IMF Executive Board lifted its censure on the Republic
  of Argentina, noting that the Republic of Argentina had resumed the
  publication of data in a manner consistent with its obligations under the
  Articles of Agreement of the IMF.  Despite these reforms, there is
  uncertainty as to what effect such reforms and revised data will have on the
  Argentine economy and public accounts.Foreign exchange reforms. 
  In addition, the Macri administration implemented certain reforms to the
  foreign exchange market regulatory framework that provided greater flexibility
  and easier access to the foreign exchange market.  The principal measures
  adopted as of the date of this annual report included (i) the elimination
  of the requirement to register foreign exchange transactions in the Argentine
  Tax Authority’s (“AFIP”) database, (ii) the elimination of the
  requirement to transfer the proceeds of new financial indebtedness
  transactions into Argentina and settle such proceeds through the single and
  free‐floating foreign exchange market (the “MULC”), (iii) a decrease from
  30% to 0% of the registered, non-transferable and non-interest-bearing deposit
  required in connection with certain transactions involving foreign currency
  inflows, and (iv) the elimination of the requirement of a minimum holding
  period (72 business hours) for purchases and subsequent sales of the
  securities. In addition, on December 17, 2015, following the announcement
  of the lifting of a significant portion of exchange restrictions, the Peso
  depreciated approximately 36% against the U.S. Dollar.  The exchange rate
  published by Banco Nación as of April 21, 2017 was  Ps. 15.49 to
  U.S.$1.00.Foreign trade reforms.  The
  Macri administration eliminated export duties on wheat, corn, beef and
  regional products, and reduced the export duty on soybeans by 5%, to
  30%.  Further, the 5% export duty on most industrial exports and export
  duties on mining exports, were eliminated.  With respect to payments of
  existing debts for imports of goods and services, the Macri administration
  eliminated most of the restrictions on access to the MULC and eliminated the
  amount for any new transactions.  In addition, importers were offered
  short-term debt securities issued by Argentina to be used to repay outstanding
  commercial debt for the import of goods.Financial Policy. Since taking
  office, the Macri administration reached agreements to settle outstanding
  claims with a large majority of holdout creditors.  See “—Argentina’s
  ability to obtain financing from international markets is limited, which may
  impair its ability to implement reforms and foster economic growth and,
  consequently, affect our business, results of operations and prospects for
  growth.”


14

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As of the date of this
annual report, the impact that these measures and any future measures to be
taken by the Macri administration will have on the Argentine economy as a whole,
and the electricity sector in particular, cannot be fully anticipated. 
While we believe that the effect of the planned liberalization of the economy
will be positive for our business by stimulating economic activity, it is not
possible to predict such effect with certainty and such liberalization could
also be disruptive to the economy and fail to benefit or harm our
business.  Since assuming office, the Macri administration reformed energy
and gas sector tariffs. In addition, as of the date of this annual report,
political parties opposed to the Macri administration retain a majority of the
seats in the Argentine Congress, which requires the Macri administration to seek
political support from the opposition for its economic proposals and creates
further uncertainty as to the ability of the Macri administration to pass any
measure which it may expect to implement.  In addition, legislative
elections will be held in October 2017. We cannot assure you the impact that
these measures or any future measures taken by the Macri administration will
have on the Argentine economy, would not have an adverse effect on our business,
financial condition or results of operations or would not have a negative impact
on the market value of our ADSs and Class B common shares. If the high levels of
inflation continue, the Argentine economy and our results of operations could be
adversely affected Inflation has, in the
past, materially undermined the Argentine economy and the Argentine government’s
ability to create conditions that allow growth.  In recent years, Argentina
has confronted inflationary pressures, evidenced by significantly higher fuel,
energy and food prices, among other factors.  According to data published
by the INDEC, CPI inflation rates for July, August, September, October, November
and December 2016, and January, February and March 2017 were 2.0%, 0.2%, 1.1%,
2.4%, 1.6%, 1.2%, 1.3%, 2.5% and 2.4%, respectively.  The wholesale price
index (“WPI”) increased by 34.5% in 2016.  See “—The credibility of several
Argentine economic indexes was called into question, which may lead to a lack of
confidence in the Argentine economy and, in turn, limit our ability to access
credit and the capital markets” below.  The previous administration has in
the past implemented programs to control inflation and monitor prices for
essential goods and services, including by freezing the prices of supermarket
products, and by executing price support arrangements with private sector
companies in several industries and markets. A high inflation rate
affects Argentina’s foreign competitiveness by diluting the effects of the Peso
devaluation, negatively impacting employment and the level of economic activity
and undermining confidence in Argentina’s banking system, which may further
limit the availability of domestic and international credit to businesses. 
In turn, a portion of the Argentine debt continues to be adjusted by the
Coeficiente de Estabilización de Referencia (Stabilization Coefficient, or
“CER”), a currency index, that is strongly related to inflation. 
Therefore, any significant increase in inflation would cause an increase in the
Argentine external debt and consequently in Argentina’s financial obligations,
which could exacerbate the stress on the Argentine economy.  A continuing
inflationary environment could undermine our results of operations, adversely
affect our ability to finance the working capital needs of our business on
favorable terms, and cause the market value of our ADSs and Class B common
shares to decline. The credibility of
several Argentine economic indexes was called into question, which may lead to a
lack of confidence in the Argentine economy and, in turn, limit our ability to
access credit and the capital markets In January 2007, the
INDEC modified its methodology used to calculate the CPI, which is calculated as
the monthly average of a weighted basket of consumer goods and services that
reflects the pattern of consumption of Argentine households.  Prior to
2015, the credibility of the CPI, as well as other indices published by the
INDEC were called into question. On November 23, 2010,
the Fernández de Kirchner administration began consulting with the IMF for
technical assistance in order to prepare a new national CPI with the aim of
modernizing the statistical system. However, Argentina was subsequently censured
by the IMF in 2014 for failing to makesufficient progress in
adopting remedial measures to address the quality of official data, including
inflation and GDP.


15

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In order to address the
quality of official data, a new price index was put in place on February 13,
2014. Such new price index represented the first national indicator to measure
changes in prices of final consumption by households. Unlike the previous price
index, which only measured inflation in the urban sprawl of the City of Buenos
Aires, the new price index was calculated by measuring prices of goods across
the entire urban population of the 24 provinces of Argentina. Although this
methodology brought inflation statistics closer to those estimated by private
sources, material differences between official inflation data and private
estimates remained during 2015. In November 2015, the INDEC suspended the
publication of the CPI and the WPI. On January 8, 2016,
based on its determination that the INDEC had failed to produce reliable
statistical information, particularly with respect to CPI, GDP and foreign trade
data, as well as with poverty and unemployment rates, the Macri administration
declared a state of administrative emergency for the national statistical system
and the INDEC that remained in effect through December 31, 2016. The INDEC
suspended the publication of certain statistical data until a reorganization of
its technical and administrative structure to recover its ability to produce
reliable statistical information was finalized in June 2016. During the
suspension period, the INDEC published CPI figures published by the City of
Buenos Aires and the Province of San Luis for reference. In June 2016, the INDEC
began publishing an official inflation rate using a new methodology for
calculating the consumer price index. The official CPI inflation rate for the
period from May to December 2016 was 16.95%. The CPI inflation rates for July,
August, September, October, November, December 2016, and January, February and
March 2017 were 2.0%, 0.2%, 1.1%, 2.4%, 1.6%, 1.2%, 1.3%, 2.5% and 2.4%,
respectively.  The WPI increased by 34.5% in 2016. Any future required
correction or restatement of the INDEC indexes could result in decreased
confidence in Argentina’s economy, which, in turn, could have an adverse effect
on our ability to access international capital markets to finance our operations
and growth, and which could, in turn, adversely affect our results of operations
and financial condition and cause the market value of our ADSs and Class B
common shares to decline. Argentina’s ability to
obtain financing from international markets is limited, which may impair its
ability to implement reforms and foster economic growth and, consequently,
affect our business, results of operations and prospects for
growth The prospects for
Argentine companies of accessing financial markets might be limited in terms of
the amount of financing available, and the conditions and cost of such
financing. In 2005 and 2010,
Argentina conducted exchange offers to restructure part of its sovereign debt
that had been in default since the end of 2001.  As a result of these
exchange offers, Argentina restructured over 92% of its eligible defaulted
debt.  In April 2016, the Argentine government settled U.S.$4.2 billion
outstanding principal amount of debt held by creditors who had not participated
in the 2015 and 2010 restructurings. As of the date of this
annual report, litigation initiated by bondholders that have not accepted
Argentina’s settlement offer continues in several jurisdictions, although the
size of the claims involved has decreased significantly.  Although the
vacatur of thepari passuinjunctions removed a material
obstacle to access to capital markets by the Argentine government, future
transactions may be affected as litigation with holdout bondholders continues,
which in turn could affect the Argentine government’s ability to access
international credit markets, and thus could have a material adverse effect on
the Argentine economy and, in turn, on our business, results of operations and
prospects for growth. Fluctuations in the
value of the Peso could adversely affect the Argentine economy and, in turn,
adversely affect our results of operations Fluctuations in the
value of the Peso may also adversely affect the Argentine economy, our financial
condition and results of operations.  The devaluation of the Peso may have
a negative impact on the ability of certain Argentine businesses to service
their foreign currency-denominated debt, lead to very high inflation,
significantly reduce real wages, jeopardize the stability of businesses whose
successdepends on domestic
market demand including public utilities and the financial industry and
adversely affect the Argentine government’s ability to honor its foreign debt
obligations.  After several years of moderate variations in the nominal
exchange rate, the Peso lost more than 30% of its value with respect to the US
Dollar in each of 2013 and 2014, and in 2015, the Peso lost approximately 52% of
its value with respect to the U.S. Dollar, including a depreciation of
approximately 34% mainly experienced after December 17, 2015 following the
announcement of the lifting of a significant portion of foreign exchange
restrictions.  Since the devaluation in December 2015, the Central Bank has
allowed the Peso to float and limited interventions to those needed to ensure
the orderly functioning of the foreign exchange market. As of  December 31,
2016, the exchange rate was Ps. 15.89 to U.S.$1.00 and the depreciation of the
Peso with respect to the U.S. Dollar reached approximately 20% during
2016.  We are unable to predict the future value of the Peso against the
U.S. Dollar.  If the Peso devalues further, the negative effects on the
Argentine economy could have adverse consequences to our business, our results
of operations and the market value of our ADSs, including as measured in U.S.
Dollars.


16

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On the other hand, a
significant appreciation of the Peso against the U.S. Dollar also presents risks
for the Argentine economy, including the possibility of a reduction in exports
(as a consequence of the loss of external competitiveness).  Any such
increase could also have a negative effect on economic growth and employment,
reduce the Argentine public sector’s revenues from tax collection in real terms,
and have a material adverse effect on our business, our results of operations
and the market value of our ADSs, as a result of the weakening of the Argentine
economy in general. Government intervention
may adversely affect the Argentine economy and, as a result, our business and
results of operations In the recent past, the
Fernández de Kirchner administration increased its direct intervention in the
economy, including through the implementation of expropriation and
nationalization measures, price controls and exchange controls. In December 2008, Law
No. 26,425, was passed by the Argentine Congress unifying the Argentine pension
and retirement system into a system publicly administered by the Administración
Nacional de la Seguridad Social (the National Social Security Agency, or the
“ANSES”), and eliminating the pension and retirement system previously
administered by private managers.  In accordance with the new law, private
pension managers transferred all of the assets administered by them under the
pension and retirement system to the ANSES.  With the nationalization of
Argentina’s private pension funds, the Argentine government, through the ANSES,
became a significant shareholder in many of the country’s public
companies. As of the date of this
annual report, ANSES owns shares representing 26.8% of our capital stock, and
also owns shares of capital stock of our affiliates, Pampa Energía and
Transener. Beginning in April
2012, the Fernández de Kirchner administration provided for the nationalization
of YPF and imposed major changes to the legal framework in which oil companies
operate, principally through the enactment of Law No. 26,741 and Decree No.
1,277/2012.  Additionally, in December 2012, the Fernández de Kirchner
administration issued Decree No. 2,552/2012, pursuant to which it ordered the
expropriation of the Predio Rural de Palermo.  However, in January 2013,
the Federal Civil and Commercial Chamber granted an injunction that has
temporarily blocked the enforcement of Decree No. 2,552/2012. Although the
decision was appealed by the Argentine government, the Supreme Court of Justice
rejected such appeal and confirmed the Federal Civil and Commercial Chamber’s
injunction subject to a decision on the merits. Notwithstanding the
measures recently adopted by the Macri administration, we cannot assure you that
other measures that may be adopted by the current or any future Argentine
government, such as expropriation, nationalization, forced renegotiation or
modification of existing contracts, new taxation policies, changes in laws,
regulations and policies affecting foreign trade and investments will not have a
material adverse effect on the Argentine economy and, as a consequence,
adversely affect our financial condition, our results of operations or cause the
market value of our ADSs and Class B common shares to decline. The implementation in
the future of new exchange controls and restrictions on capital inflows and
outflows could limit the availability of international credit and could threaten
the financial system, adversely affecting the Argentine economy and, as a
result, our business


17

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During 2001 and the
first half of 2002, Argentina experienced a mass withdrawal of deposits from the
financial system as a result of a lack of confidence in the Argentine
government’s ability to repay its debt and sustain the parity between the Peso
and the U.S. Dollar. This caused a liquidity crisis in the Argentine financial
system, which led the Argentine government to impose exchange controls and
transfer restrictions, substantially limiting the ability of companies to retain
foreign currency or make payments abroad.  After 2002, these restrictions,
including those requiring the Central Bank’s prior authorization for the
transfer of funds abroad to pay principal and interest on debt obligations, were
substantially eased through 2007.  In addition to the foreign exchange
restrictions applicable to outflows, in June 2005 the Argentine government
adopted various rules and regulations that established new restrictive controls
on capital inflows into Argentina, including a requirement that, for certain
funds remitted into Argentina, an amount equal to 30% of the funds must be
deposited into an account with a local financial institution as a U.S. Dollar
deposit for a one-year period without any accrual of interest, benefit or other
use as collateral for any transaction. Through a combination
of foreign exchange and tax regulations from 2011 until President Macri assumed
office in 2015, the Fernández de Kirchner administration significantly curtailed
access to the foreign exchange market by individuals and private-sector
entities.  In addition, during the last few years under the Fernández de
Kirchner administration, the Central Bank exercised ade factoprior approval power
for certain foreign exchange transactions otherwise authorized to be carried out
under applicable regulations, such as dividend payments or repayment of
principal of inter-company loans as well as the import of goods, by means of
regulating the amount of foreign currency available to financial institutions to
conduct such transactions.  The number of exchange controls introduced in
the past and in particular after 2011 during the Fernández de Kirchner
administration gave rise to an unofficial U.S. Dollar trading market. The
Peso/U.S. Dollar exchange rate in such market substantially differed from the
official Peso/U.S. Dollar exchange rate.  See “Item 3—Key
Information—Exchange Rates” and “Item 10—Exchange Controls.” Additionally, the level
of international reserves deposited with the Central Bank significantly
decreased from U.S.$ 47.4 billion as of November 1, 2011 to U.S.$ 25.6 billion
as of December 31, 2015, resulting in a reduced capacity of the Argentine
government to intervene in the foreign exchange market and to provide access to
such markets to private sector entities like us. The Macri administration has
aimed at increasing the level of international reserves deposited with the
Central Bank through the execution of different measures. As a result of the
measures adopted, the international reserves increased to over U.S.$ 40.0
billion as of December 31, 2016. Notwithstanding the
measures recently adopted by the Macri administration, in the future the
Argentine government could impose exchange controls, transfer restrictions or
restrictions on the movement of capital or take other measures in response to
capital flight or a significant depreciation of the Peso, which could limit our
ability to access the international capital markets and impair our ability to
make interest, principal or dividend payments abroad.  Such measures could
lead to renewed political and social tensions and undermine the Argentine
government’s public finances, which could adversely affect Argentina’s economy
and prospects for economic growth and, consequently, adversely affect our
business and results of operations and cause the market value of our ADSs and
Class B common shares to decline.  As of the date of this annual report,
however, the transfer of funds abroad to pay dividends is permitted to the
extent such dividend payments are made in connection with audited financial
statements approved by a shareholders’ meeting of the Company. Application of certain
laws and regulations is uncertain and could adversely affect our results of
operations and financial condition. Law No. 26,854, which
regulates injunctions in cases in which the Argentine government is a party or
has intervened, was promulgated on April 30, 2013 as part of a judicial
reform bill approved by the Argentine Congress.  Among the principal
changes implemented pursuant to the judicial reform bill is a time limitation on
injunctions imposed in proceedings brought against the Argentine government and
the creation of three new chambers of Casación, each of which must hear an
appeal before the matter is considered by the Supreme Court of Justice of
Argentina.  In addition, Law No. 26,855, which became effective on
May 27, 2013, modified the structure and functions of the Argentine Consejo
de la Magistratura (judicial council), which has the authority to appoint
judges, present charges against them and suspend or remove them.  As of the
date of this annual report several aspects of this legislation have been struck
down as unconstitutional by the Argentine Supreme Court.


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On August 7, 2014, Law
No. 26,944 on State Responsibility was enacted to regulate government actions.
Said law governs the responsibility of the Argentine government regarding the
damages that its activity or inactivity may cause to individuals’ properties or
rights. Such law establishes that the Argentine government’s responsibility is
objective and direct, that the provisions of the civil and commercial codes are
not applicable to the actions of the Argentine government in a direct nor
subsidiary manner and that dissuasive financial penalties may be imposed on the
Argentine government, its agents or officers. On September 18, 2014,
the Argentine Congress enacted Law No. 26,991 amending Law No. 20,680 (the
“Supply Law”), which became effective on September 28, 2014, to increase control
over the supply of goods and provision of services. Such initiative includes the
ability of the Argentine government to regulate consumer rights under Article 42
of the Constitution and permits the creation of an authority to maintain the
prices of goods and services (the “Observer of Prices of Goods and Services”).
The Supply Law, as amended: (i) requires the continued production of goods to
meet basic requirements; (ii) creates an obligation to publish prices of goods
and services produced and borrowed; (iii) allows financial information to be
requested and seized; and (iv) increases fines for judicial and fiscal persons.
The reforms and creation of the Observer of Prices of Goods and Services could
adversely affect our operations.  An initiative to regulate questions of
consumer rights was also approved, creating the Conciliación Previa en las
Relaciones de Consumo (Prior Conciliatory Procedures For Consumer Relations, or
the “COPREC”), where users and consumers may present claims free of charge and
have them resolved within 30 days. The Supply Law applies
to all economic processes linked to goods, facilities and services which, either
directly or indirectly, satisfy basic consumer needs (“Basic Needs Goods”) and
grants a broad range of powers to its enforcing agency. It also grants the
enforcing agency the power to order the sale, production, distribution or
delivery of Basic Needs Goods throughout the country in case of a shortage of
supply. On October 1, 2014, the
Argentine Congress approved the reform, update and unification of the National
Civil and Commercial codes. A single new National Civil and Commercial Code
became effective on August 1, 2015. The long-term impact of
recently adopted legislation on Argentina’s legal system and future
administrative or judicial proceedings, including potential future claims by us
against the Argentine government, cannot be predicted. A global or regional
financial crisis and unfavorable credit and market conditions may negatively
affect our liquidity, business and results of operations The effects of a global
or regional credit crisis and related turmoil in the global financial system may
have a negative impact on our business, financial condition and results of
operations, an impact that is likely to be more severe on an emerging market
economy, such as Argentina.  Such was the case in 2008, when the global
economic crisis led to a sudden economic decline in Argentina in 2009,
accompanied by inflationary pressures, depreciation of the Peso and a drop in
consumer and investor confidence. The effect of the
economic crisis on our customers and on us cannot be predicted.  Weak
global and local economic conditions could lead to reduced demand or lower
prices for energy, which could have a negative effect on our revenues. 
Economic factors such as unemployment, inflation and the availability of credit
could also have a material adverse effect on demand for energy and, therefore,
on our financial condition and operating results.    The
financial and economic situation in Argentina or other countries in Latin
America, such as Brazil, may also have a negative impact on us and third parties
with whom we do, or may do, business.  See “—The Argentine economy could be
adversely affected by economic developments in other markets and by more general
“contagion” effects.” In addition, the global
economic crisis that began in the fourth quarter of 2008, triggering an
international stock market crash and the insolvency of major financial
institutions, limited the ability of Argentine companies to access international
financial markets as they had in the past or made such access significantly more
costly.  A similar global or regional financial crisis in the future could
limit our ability to access the credit or capital markets at a time when we
require financing, thereby impairing ourflexibility to react to
changing economic and business conditions (see “Argentina’s ability to obtain
financing from international markets is limited, which may impair its ability to
implement reforms and foster economic growth and, consequently, affect our
business, results of operations and prospects for growth”).  For these
reasons, any of the foregoing factors could together or independently have an
adverse effect on our results of operations and financial condition and cause
the market value of our ADSs and Class B common shares to decline.


19

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The Argentine economy
could be adversely affected by economic developments in other markets and by
more general “contagion” effects Argentine financial and
securities markets are influenced, to varying degrees, by economic and financial
conditions in other markets.  Argentina’s economy is vulnerable to external
shocks, including those related or similar to the global economic crisis that
began in 2008 and the economic and financial conditions of Argentina’s major
trading partners, in particular, Brazil.  Specifically, the current
devaluation of the Brazilian currency and the slowdown of its economy may
negatively affect the Argentine economy, and in turn, our business and results
of operations.  Although economic conditions can vary from country to
country, investors’ perception of the events occurring in other countries have
in the past substantially affected, and may continue to substantially affect
capital flows and investments in securities in other countries, including
Argentina.  The Argentine economy was adversely impacted by the political
and economic events that occurred in several emerging economies in the 1990s,
including those in Mexico in 1994, the collapse of several Asian economies
between 1997 and 1998, the economic crisis in Russia in 1998 and the Brazilian
devaluation of its currency in January 1999. In addition,
international investors’ reactions to events occurring in one market sometimes
demonstrate a “contagion” effect in which an entire region or class of
investment is disfavored by international investors.  Argentina could be
adversely affected by negative economic or financial developments in other
countries, which, in turn, may have material adverse effect on the Argentine
economy and, indirectly, on our business, financial condition and results of
operations, and the market value of our ADSs. The designation of
“veedores” (observers) by the CNV or other regulator could adversely affect our
business, financial condition and results of operations The Capital Markets Law
No. 26,831 (the “CML”) provides that the CNV may inspect any entity subject to
its oversight (such as us, our controlling shareholder or any of our affiliates
subject to CNV oversight).  If after any inspection the CNV determines that
a resolution of the board of directors of such entity violated the interests of
its minority shareholders or any holder of its securities subject to the
Argentine public offering regime, it may appoint a veedor (observer) with veto
powers.  The CNV is additionally empowered to suspend a board of directors
for a period of up to 180 days, subject to limited appeals and, alternatively, a
veedor may be appointed through a judicial request.  Any determination by
the CNV or any Argentine court that the right of our minority shareholders or
holders of our securities issued in Argentina has been violated could result in
the direct intervention of the CNV, including the potential suspension of our
board of directors for up to 180 days, and, consequently, have an adverse effect
on our business, financial condition and results of operations.  In this
respect, on April 21, 2014, Molinos Rio de la Plata S.A., an Argentine company
whose shares are publicly-traded in Argentina, reported the judicial appointment
of a veedor at the request of ANSES, one of its shareholders, for a period of
six months. On November 18, 2015, the National Chamber of Appeals suspended the
application of Article No. 20 until the definitive decision on the Molinos case
is rendered.  We cannot assure you that the CNV, or any other party, will
not attempt to pursue a similar course of action with respect to us (or our
controlling shareholder), which may have a negative effect on us.  Risks Relating to the Electricity
Distribution Sector The Argentine
government has intervened in the electricity sector in the past, and is likely
to continue intervening Historically, the
Argentine government has exerted a significant influence on the economy,
including the energy sector, and companies such as us that operate in such
sector have done so in a highly regulated context that aims mainly at
guaranteeing the supply of domestic demand.


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To address the
Argentine economic crisis in 2001 and 2002, the Argentine government adopted the
Public Emergency Law and other regulations, which made a number of material
changes to the regulatory framework applicable to the electricity sector. 
These changes severely affected electricity generation, distribution and
transmission companies and included the freezing of distribution nominal
margins, the revocation of adjustment and inflation indexation mechanisms for
tariffs, a limitation on the ability of electricity distribution companies to
pass on to the customer increases in costs due to regulatory charges and the
introduction of a new price-setting mechanism in the wholesale electricity
market (the “WEM”) which had a significant impact on electricity generators and
generated substantial price differences within the market.  The Argentine
government has continued to intervene in this sector by, for example, granting
temporary nominal margin increases, proposing a new social tariff regime for
residents of poverty-stricken areas, removing discretionary subsidies, creating
specific charges to raise funds that are transferred to government-managed trust
funds that finance investments in generation and distribution infrastructure and
mandating investments for the construction of new generation plants and the
expansion of existing transmission and distribution networks. On December 17, 2015,
the Argentine government issued Decree No. 134/15 declaring the emergency of the
national electricity sector until December 31, 2017, and instructing the
ME&M to adopt any measure the ME&M deems necessary regarding the
generation, transmission and distribution segments, to adjust the quality, and
guarantee the provision of, electricity. On February 3, 2016,
Resolution No. 22/16 of the ME&M established adjustments to the remuneration
of generators to support the operation and maintenance of the generation plants
until the regulatory measures currently under review by the Argentine government
are enacted and the operation of the WEM is normalized. On January 25, 2016,
the ME&M issued Resolution No. 6/16, approving the seasonal WEM prices for
each category of users for the period from February 2016 through April
2016.  Such resolution readjusted the seasonal prices as required by the
regulatory framework. On February 1, 2017, the Secretariat of Electric Energy
(the “SEE”) published Resolution No 20-E/2017, by means of which it approved the
Summer Seasonal Schedule for the WEM corresponding to the period held between
February 1 and April 30, 2017. Energy prices in the spot market were set by
CAMMESA which determined the price to be charged by generators for energy sold
in the spot market of the WEM on an hourly basis.  The WEM prices resulted
in the elimination of certain energy subsidies and a substantial increase in
electricity rates for individuals. On February 3, 2016, Resolution No. 22/16 of
the ME&M established adjustments to the remuneration of generators to
support the operation and maintenance of generations plants until new regulatory
measures are adopted by the Argentine government and the operation of the WEM is
normalized. As of the date of this annual report, the Argentine government has
implemented a new remuneration scheme through SEE Resolution No. 19/17, which
improved margins, especially for “new energy” operators. The ME&M, issued
Resolution No. 7/2016 pursuant to which it instructed the ENRE to, among others,
(i) adjust the VAD using the transitional tariff regime included in the
agreement that Edenor entered into with the Argentine government in February
2006 relating to the adjustment and renegotiation of the terms of the concession
(the “Adjustment Agreement”), (ii) implement a social tariff regime and a
reduction of such WEM prices for certain consumers, and (iii) effect a revision
of the RTI by December 31, 2016. Also, Resolution No. 7/2016 derogated the PUREE
and SE Resolution No. 32/2015. On February 1, 2017, the RTI process was
completed and a new tariff scheme for the following five-years period was
enacted. Notwithstanding the
recent measures adopted by the Macri administration, we cannot assure you that
certain other measures that may be adopted by the Argentine government will not
have a material adverse effect on our business and results of operations or on
the market value of our shares and ADSs or that the Argentine government will
not adopt emergency legislation similar to the Public Emergency Law or other
similar regulations in the future that may increase our obligations, including
increased taxes, unfavorable alterations to our tariff structures and other
regulatory obligations, compliance with which would increase our costs and may
have a direct negative impact on our results of operations and cause the market
value of our ADSs and Class B common shares to decline. See “Item 4. Information
on the Company—Our Business Overview—Edenor Concession.” Electricity
distributors were severely affected by the emergency measures adopted during the
economic crisis, many of which remain in effect


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Distribution tariffs
include a regulated margin that is intended to cover the costs of distribution
and provide an adequate return over the distributor’s asset base.  Under
the Convertibility Regime, distribution tariffs were calculated in U.S. Dollars
and distribution margins were adjusted periodically to reflect variations in
U.S. inflation indexes.  Pursuant to the Public Emergency Law, in January
2002 the Argentine government froze all distribution margins, revoked all margin
adjustment provisions in distribution concession agreements and converted
distribution tariffs into Pesos at a rate of Ps. 1.00 per U.S.$ 1.00. These
measures, coupled with the effect of high inflation and the devaluation of the
Peso, led to a decline in distribution revenues and an increase of distribution
costs in real terms, which could no longer be passed on to users through
adjustments to the distribution margin.  This situation, in turn, led many
public utility companies, including us and other important distribution
companies, to suspend payments on their financial debt (which continued to be
denominated in U.S. Dollars despite the pesification of revenues), effectively
preventing these companies from obtaining further financing in the domestic or
international credit markets and making additional investments. In recent years, the
Argentine government has granted temporary and partial reliefs to some
distribution companies, including a limited increase in distribution margins, a
temporary cost adjustment mechanism which was not fully implemented and the
ability to apply certain additional charges to customers. On February 1, 2017,
the RTI process wascompleted. The ENRE approved a rate of return for us of
12.46% before taxes. The resulting income was determined by applying the Net
Replacement Value (“NRV”) methodology, over a slightly lower base capital than
the one we had submitted in our proposal, reaching an amount of Ps. 34 billion.
The difference with our proposal mainly lies in the fact that the ENRE excluded
the fully depreciated assets from the regulatory net asset base. Moreover, the
ENRE stated that our acknowledged remuneration as of December 2015 was Ps. 12.5
billion, which adjusted to February 2017 reached to Ps. 17.2 billion. The ENRE
also established a non-automatic mechanism to adjust our tariffs, as it had done
within the original Concession Contract and the Adjustment Agreement, in order
to preserve the economic and financial sustainability of the concession in the
event of price fluctuations in the economy. This mechanism has a biannual basis
and includes a combined formula of wholesale and consumer price indexes (WPI,
CPI and salaries increases) which trigger the adjustment of tariffs when the
result is above 5%. However, we cannot guarantee you that these measures will be
sufficient to address the structural problems created for us by the economic
crisis and its aftermath. Our inability to cover the costs of distribution or to
receive an adequatereturn on our asset base may further adversely affect our
financial condition and results of operations. Electricity demand may
be affected by tariff increases, which could lead distribution companies, such
as us, to record lower revenues From 2012 through 2016
electricity demand in Argentina increased 12.1%, which reflects the relative low
cost, in real terms, of electricity to customers due to the freezing of
distribution margins, the establishment of subsidies in the purchase price of
energy and the elimination of the inflation adjustment provisions in
distribution concessions, coupled with the devaluation of the Peso and
inflation.  As of the date of this annual report, the RTI process has been
completed and tariffs have increased by an average of 60%, according to the
category of customer as of February 2016.  Although increases in
electricity transmission and distribution margins, and the elimination of
subsidies, which increased the cost of electricity to end users, have not had a
significant negative effect on demand in the past, we cannot make any assurances
that recent increases or any future increases in the cost of electricity will
not have a material adverse effect on electricity demand or result in a decline
in collections from customers. In this respect, we cannot assure you that any
future tariff increase will not lead electricity utility companies, like us, to
record lower revenues and results of operations, which may, in turn, have a
material adverse effect on the market value of our ADSs. If we experience
continued energy shortages in the face of growing demand for electricity, our
ability to deliver electricity to our customers could be adversely affected,
which could result in customer claims, material penalties, government
intervention and decreased results of operations In recent years, the
condition of the Argentine electricity market has provided little incentive to
generators and distributors to further invest in increasing their generation and
distribution capacity, respectively, which would require material long-term
financial commitments. Although there were newinvestments in
generation capacity during 2016, the Argentine electricity market is still
operating at near full capacity and both generators and distributors may not be
able to guarantee an increased supply of electricity to their customers, which
could lead to a decline in the growth of such companies. During December 2013,
an increase in demand for electricity resulted in energy shortages and blackouts
in Buenos Aires and other cities around Argentina.  Under Argentine law,
distribution companies, such as us, are responsible to their customers for any
disruption in the supply of electricity. As a result, we could face customer
claims and fines and penalties for service disruptions caused by energy
shortages unless the relevant Argentine authorities determine that energy
shortages constitute force majeure.  Additionally, disruptions in the
supply of electricity could expose us to intervention by the Argentine
government, which warned of such possibility during the blackouts of December
2013. Such claims, fines, penalties or government intervention could have a
materially adverse effect on our financial condition and results of operations,
and cause the market value of our ADSs and Class B common shares to
decline.  See also “—A potential nationalization or expropriation of 51% of
our capital stock, represented by the Class A shares, may limit the capacity of
the Class B common shares to participate in the board of directors.”


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Risks Relating to Our Business Failure or delay to
negotiate further improvements to our tariff structure, including increases in
our distribution margin, and/or to have our tariffs adjusted to reflect
increases in our distribution costs in a timely manner or at all, has affected
our capacity to perform our commercial obligations and could also have a
material adverse effect on our capacity to perform our financial obligations. Since the execution of
the agreement entered into with the Argentine government in February 2006
relating to the adjustment and renegotiation of the terms of our concession (the
“Adjustment Agreement”) and as required by them, we have been engaged in an RTI
with the ENRE. The Adjustment
Agreement contemplated a cost adjustment mechanism for the transitional period
during which the RTI process was being conducted. This mechanism, known as the
Cost Monitoring Mechanism (“CMM”), required the ENRE to review our actual
distribution costs every six months (in May and November of each year) and
adjust our distribution margins to reflect variations of 5% or more in our
distribution cost base. We could also request that the ENRE apply the CMM at any
time that the variation in our distribution cost base was at least 10% or
more.  Any adjustments, however, were subject to the ENRE’s assessment of
variations in our costs, and the ENRE’s approval of adjustments were not
sufficient to cover our actual incremental costs in a timely manner. In the
past, even when the ENRE approved adjustments to our tariffs, there was a lag
between the time when we actually experienced increases in our distribution
costs and the time when we received increased income following the corresponding
adjustments to our distribution margins pursuant to the CMM. As a result of the
foregoing, during the years ended December 31, 2014, 2012 and 2011, we recorded
a negative operating results and net results, and thus our working capital and
liquidity levels were negatively affected (even in 2013), primarily as a result
of the delay in obtaining a tariff increase and in having our tariff adjusted to
reflect increases in our distribution costs, coupled with a constant increase in
operating costs to maintain adequate service levels all of which has affected
our capacity to perform our commercial obligations. In this context and in light
of the situation that affected the electricity sector, the ENRE issued
Resolution No. 347/12 in November 2012, which established the application of
fixed and variable charges that have allowed the Company to obtain additional
revenue as from November 2012 through 2016. However, changes made by Resolution
No. 250/13 and Notes No. 6,852/13, No. 4,012/14, No. 486/14 and No. 1,136/14 of
the SE and additional revenue obtained through Resolution No. 347/12 were
insufficient to make up for our operating deficit in 2014, due to the constant
increase in operating costs. In March 2015, 
Resolution No. 32/15 of the SE granted us a temporary increase in income through
funds provided by CAMMESA, applicable retroactively as from February 1, 2015
through February 1, 2016, to cover costs and investments associated with the
regular provision of the public service of distribution of energy on account of
the future RTI. In January 2016, the
ME&M issued Resolution No. 7/16, pursuant to which the ENRE implemented a
VAD adjustment to the tariff schedule on account of the future RTI in effect as
of February 1, 2016.


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In addition, such
resolution: (i) abrogated the PUREE; (ii) repealed Resolution No. 32/2015 as
from the date the ENRE resolution implementing the new tariff schedule becomes
effective; (iii) discontinued the application of mechanisms that imply the
transfer of funds from CAMMESA in the form of loan agreements with CAMMESA; (iv)
ordered the implementation of the actions required to terminate the trusts
created pursuant to Resolution No. 347/2012 of the ENRE and (v) prohibited the
distribution of dividends in accordance with Section 7.04 of the Adjustment
Agreement. Pursuant to Resolution
No. 7/16, the ENRE issued Resolution No. 1/16 establishing a new tariff
structure, which remained in force (with certain suspensions as a result of
injunctions, which are no longer in effect) until February 2017, when the RTI
process was completed. See "Risk Factors— Risks Relating to Our Business—Failure
or delay to negotiate further improvements to our tariff structure, including
increases in our distribution margin, and/or to have our tariffs adjusted to
reflect increases in our distribution costs in a timely manner or at all, has
affected our capacity to perform our commercial obligations and could also have
a material adverse effect on our capacity to perform our financial
obligations.” On April 1, 2016, the
ENRE issued Resolution No. 55/16, which approved the program for the review of
the distribution tariff scheme, establishing the criteria and methodologies for
completing the RTI process. On September 5, 2016,
by means of Resolution No. 55/16, we submitted our rate schedule proposal for
the following five-year period. On October 28, 2016, a public hearing was held
to provide information and listen to the public opinion on the RTI. On February 1, 2017,
the ENRE issued Resolution No. 63/2017, through which it approved a new tariff
scheme that established our new distribution added value (VAD) for the following
five-year period.For more information, see “Item 5—Operating and Financial
Review and Prospects—Integral Tariff Revision”.  However, if we are not
able to recover all future cost increases, and/or if there is a significant lag
of time between when we incur the incremental costs and when we receive
increased income we may be unable to comply with our financial obligations, we
may suffer liquidity shortfalls and we may need to restructure our debt to ease
our financial condition, any of which, individually or in the aggregate, would
have a material adverse effect on our business and results of operations and may
cause the value of our ADSs to decline. Our distribution
tariffs may be subject to challenges by Argentine consumer and other
groups In the recent years,
our tariffs have been challenged by Argentine consumer associations, such as the
action brought against us in December 2009, by an Argentine consumer association
(Unión
de Usuarios y Consumidores) seeking to annul certain retroactive tariff increases,
which was ultimately dismissed, on October 1, 2013, by the Argentine Supreme
Court of Justice. Since May 2016, we
were notified by several courts of the Province of Buenos Aires of certain
provisional remedies granted to individual and collective customers against
Resolution No. 6/16 and Resolution No. 1/16 issued by the ENRE (which authorized
our new tariff schedule as from February 2016). Consequently, the tariff
schedule, which included the WEM prices established by Resolution No. 6/16, were
not applied during certain periods in 2016 (i) to the entire concession area as
a result of the injunctions issued in the “Abarca” case and (ii) to the
districts of “Pilar” and “La Matanza”, where provisional remedies remained in
effect until October 24 and November 11, 2016, respectively, when they expired.
Therefore, as of those dates, no provisional remedy has been in effect and
tariff increases have been applied to all customers. If any future legal challenge
were successful and prevented us from implementing any tariff adjustments
granted by the Argentine government, we could face a decline in collections from
our customers, and a decline in our results of operations, which could have a
material adverse effect in our financial condition and the market value of our
ADSs.  We have been, and may
continue to be, subject to fines and penalties that could have a material
adverse effect on our financial condition and results of
operations We operate in a highly
regulated environment and have been, and in the future may continue to be,
subject to significant fines and penalties by regulatory authorities, including
for reasons outside our control, such as service disruptions attributable to
problems at generation facilities or in the transmission network that result in
a lack of electricity supply.  Since 2001, the amount of fines and
penalties imposed on our company has increased significantly.  As of
December 31, 2016, 2015 and 2014, our accrued fines and penalties totaled Ps.
3,700.0 million, Ps. 1,253.1 million and Ps. 1,102.8 million,
respectively (takinginto account
adjustments made to fines and penalties following the ratification of the
Adjustment Agreement and recent regulation). See “Item 4. Information on the
Company—Our Business Overview—Fines and Penalties.”


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By means of Note No.
120,151, the ENRE established that all fines and penalties imposed by the ENRE
after April 15, 2016, whether in respect of events occurring on or after such
date or events occurring prior to the date thereof, but for which fines or
penalties had not been imposed on us by such date, must be valued according to
the VAD or KWh values in effect as of the last date of the semester or period
during which the event giving rise to the penalty occurred, including any
increases or adjustments applicable to our “remuneration” at such date.  In
addition, the Note provides that fines and penalties that fall under the purview
of the Note will accrue interest as from the day on which the event giving rise
to the penalty occurs, until the day in which they are paid by us. On October 19, 2016, by means of
Note No. 123,091 the ENRE established the average rate values (Ps./KWh) to be
applied as from December 2012, for the penalties payable to the Argentine
government. In accordance with the terms of the Concession Agreement, such
values correspond to the average sale price of energy charged to customers.
Since the amounts set forth in the Note are not consistent with such principle,
on November 1, 2016, the Company submitted a claim to the ENRE requesting the
rectification of the amounts informed as they were considered incorrect. As of
the date of this annual report, we had not received an answer. In the case that the
ENRE considers that the term “remuneration” under the Note includes all the
amounts received, among other things government grants, the amount of the
provision for penalties could increase significantly. However, we believe that
such interpretation would be opposite to the terms of the Concession
Agreement. On February 1, 2017,
the ENRE issued Resolution No. 63/17, through which it approved new parameters
related to the quality standards, with the purpose of achieving by the end of
the 2017-2021 period an acceptable quality level. In this regard, the ENRE
established a penalty regime to be applied in the event of non-compliance with
the requisite quality rates. On March 29, 2017,
through Note No. 125,248 the ENRE established a new methodology for the
calculation of fines and penalties, determining that they must be valued
according to the KWh values in effect as of the first day of the semester during
which the event giving rise to the penalty occurred or the KWh values in effect
as of the day of the occurrence of the event in the case of penalties arising
from specific events. In addition, fines and
penalties, accrued and not imposed during the Transition Period of the
Adjustment Agreement must be updated using the CPI that the Argentine Central
Bank uses to elaborate the Multilateral Real Exchange Rate Index (“TCRM”),
corresponding to the month prior to the semester during which the event giving
rise to the penalty occurred or the month prior to that on which the specific
penalty event occurred, till the previous month of the day on which the penalty
was imposed. Those fines and penalties accrued and imposed since the date of
issuance of the Note No. 120,151 through the completion of the RTI on February
1, 2017 (i.e., the period between April 2016 and February 2017) must also be
updated using the CPI. Furthermore, we cannot
assure that we will have the ability to comply with the new quality standards
set forth by Resolution No. 63/2017. In the case of penalties which had been
imposed but are still unpaid, the 30-day interest rate of theBanco
Nacióncorresponding to commercial discounts applies, as from the day when the penalty
was imposed through the date of payment. Despite the issuance of
Resolution No. 63/2017,the treatment to be given to the penalties and reductions
are still pending to be settled.  We may incur
significant fines in the future, which could have a material adverse effect on
our financial condition, our results of operations and the market value of our
ADSs. See “Item 4. Information on the Company—Our Business Overview—Fines and
Penalties” and “Item 4. Information on the Company—Our Business Overview—Quality
Standards” If we are unable to
control our energy losses, our results of operations could be adversely affected Our concession does not
allow us to pass through to our customers the cost of additional energy
purchased to cover any energy losses that exceed the loss factor contemplated by
our concession, which is, on average, 10%.  As a result, if we experience
energy losses in excess of those contemplated by ourconcession, we may
record lower operating profits than we anticipate. Prior to the 2001 and 2002
economic crisis, we were able to reduce the high level of energy losses
experienced at the time of the privatization down to the levels contemplated
(and reimbursed) under our concession. However, during the last years, our level
of energy losses, particularly our non-technical losses, started to grow again,
in part as a result of the increase in poverty levels and, in turn, the number
of delinquent accounts and fraud. Although we continue to make investments to
reduce energy losses, these losses continue to exceed the average 10% loss
factor contemplated by the concession and, based on the current tariff schedule
and economic turmoil, we do not expect these losses to decrease in the near
term. Our energy losses amounted to 17.0% in 2016, 14.9% in 2015 and 14.3% in
2014. We cannot assure you that our energy losses will not continue to increase
in future periods, which may lead us to have lower margins and could adversely
affect our financial condition, our results of operations and the market value
of our ADSs.


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The Argentine
government could foreclose on the pledge of our Class A common shares under
certain circumstances, which could have a material adverse effect on our
business and financial condition Pursuant to our
concession and the provisions of the Adjustment Agreement, the Argentine
government has the right to foreclose on the pledge of our Class A common shares
and sell these shares to a third party buyer if: ·the fines
and penalties incurred in any given year exceed 20% of our gross energy sales,
net of taxes (which corresponds to our energy sales); ·we
repeatedly and materially breach the terms of our concession and do not remedy
these breaches upon the request of the ENRE; ·our
controlling shareholder, EASA, creates any lien or encumbrance over our Class A
common shares (other than the existing pledge in favor of the Argentine
government); ·we or EASA
obstruct the sale of Class A common shares at the end of any management period
under our concession; ·EASA fails
to obtain the ENRE’s approval in connection with the disposition of our Class A
common shares; ·our
shareholders amend our articles of incorporation or voting rights in a way that
modifies the voting rights of the Class A common shares without the ENRE’s
approval; or ·we, or any
existing shareholders or former shareholders of EASA who have brought a claim
against the Argentine government in the ICSID do not desist from such ICSID
claims following completion of the RTI and the approval of a new tariff regime. On February 1, 2017,
the ENRE issued Resolution No. 63/17 establishing the new tariff scheme
resulting from the completion of the RTI process, for the following five-year
period. In accordance with the provisions of the Adjustment Agreement, EASA and
EDFI withdrew their ICSID claim, and on March 28, 2017, the ICSID acknowledged
the discontinuance of the procedure. If the Argentine
government were to foreclose on the pledge of our Class A common shares, pending
the sale of those shares, the Argentine government would also have the right to
exercise the voting rights associated with such shares.  In addition, the
potential foreclosure by the Argentine government on the pledge of our Class A
common shares could be deemed to constitute a change of control under the terms
of our Senior Notes due 2022. See “—We may not have the ability to raise the
funds necessary to finance a change of control offer as required by the Senior
Notes due 2022.” If the Argentine government forecloses on the pledge of our
Class A common shares, our results of operations and financial condition could
be significantly affected and the market value of our ADSs could also be
affected. In 2016, our fines and penalties
remained below the 20% of our gross energy sales. See "Item 4. Information on
the Company-Our Concession-Fines and Penalties."


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Default by the
Argentine government could lead to termination of our concession, and have a
material adverse effect on our business and financial
condition If the Argentine
government breaches its obligations in such a way that we cannot comply with our
obligations under our concession agreement or in such a way that our service is
materially affected, we may request the termination of our concession, after
giving the Argentine government a 90 days’ prior notice, in writing. Upon
termination of our concession, all our assets used to provide the electricity
distribution service would be transferred to a new state-owned company to be
created by the Argentine government, whose shares would be sold in an
international public bidding procedure. The amount obtained in such bidding
would be paid to us, net of the payment of any debt owed by us to the Argentine
government, plus an additional compensation established as a percentage of the
bidding price, ranging from 10% to 30%, depending on the management period in
which the sale occurs. Any such default could have a material adverse effect on
our business and financial condition. We may be unable to
import certain equipment to meet the growing demand for electricity, which could
lead to a breach of our concession contract and could have a material adverse
effect on the operations and financial position of the Company Certain restrictions on
imports that may be adopted in the future by the Argentine government could
limit or delay our ability to purchase capital goods that are necessary for our
operations (including carrying out specific projects). Under our concession, we
are obligated to satisfy all of the demand for electricity originated in our
concession area, maintaining at all times certain service quality standards that
have been established for our concession. If we are not able to purchase
significant capital goods to satisfy all of the demand or suffer unexpected
delays in the import process, we could face fines and penalties which may, in
turn, adversely affect our activity, financial position and results of
operations and/or the market value of your ADSs. We employ a largely
unionized labor force and could be subject to an organized labor action,
including work stoppages that could have a material effect on our
business As of December 31,
2016, approximately 86% of Edenor employees were union members. Although our
relations with unions are currently stable and we have had an agreement in place
with the two unions representing our employees since 1995, we cannot assure you
that we will not experience work disruptions or stoppages in the future, which
could have a material adverse effect on our business and revenues. We cannot
assure you that we will be able to negotiate salary agreements or labor
conditions on the same terms as those actually in effect, or that we will not be
subject to strikes or work stoppages before or during the negotiation process.
If we are unable to negotiate salary agreements or if we are subject to
demonstrations or work stoppages, our results of operations, financial
conditions and the market value of our ADSs could be materially adversely
affected. We could incur material
labor liabilities in connection with our outsourcing that could have an adverse
effect on our business and results of operations We outsource a number
of activities related to our business to third-party contractors in order to
maintain a flexible cost base.  As of December 31, 2016, we had
approximately 3,786 third-party employees under contract.  Although we have
very strict policies regarding compliance with labor and social security
obligations by our contractors, we are not in a position to ensure that
contractors will not initiate legal actions to seek indemnification from us
based upon a number of judicial rulings issued by labor courts in Argentina
which have recognized joint and several liability between a contractor and the
entity to which it is supplying services under certain circumstances. We cannot
make any assurances that such proceedings will not be brought against us or that
the outcome of such proceedings will be favorable to us. If we were to incur
material labor liabilities in connection with our outsourcing, such liability
could have an adverse effect on our financial condition, our results of
operations and the market value of our ADSs. Our performance is
largely dependent on recruiting and retaining key personnel Our current and future
performance and the operation of our business are dependent upon the
contributions of our senior management and our skilled team of engineers and
other specialized employees. We depend on our ability to attract, train,
motivate and retain key management and specialized personnel with the necessary
skills and experience. There is no guarantee that we will besuccessful in retaining
and attracting key personnel and the replacement of any key personnel who were
to leave could be difficult and time consuming. The loss of the experience and
services of key personnel or the inability to recruit suitable replacements and
additional staff could have a material adverse effect on our business, financial
condition and results of operations.


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We are currently not
able to effectively hedge our currency risk in full and, as a result, increased
devaluation of the Peso may have a material adverse effect on our results of
operations and financial condition Our revenues are
collected in Pesos pursuant to tariffs that are not indexed to the U.S. Dollar,
while all of our existing financial indebtedness is denominated in U.S. Dollars,
which exposes us to the risk of loss from increased devaluation of the Peso. We
are currently hedging part of this risk by converting a portion of our excess
cash denominated in Pesos into U.S. Dollars and investing those funds outside
Argentina, as permitted by applicable Central Bank regulations or by
entering into currency forward contracts. In 2015, the Peso lost approximately
52% of its value with respect to the U.S. Dollar, including a depreciation of
approximately 34% mainly experienced after December 17, 2015 following the
announcement of the lifting of a significant portion of exchange restrictions.
In 2016, the devaluation of the Peso with respect to the U.S. Dollar reached
approximately 20%. In each of 2016 and 2015, our hedging contracts did not cover
all of our exposure to such depreciation. We cannot assure you that the
Argentine government will maintain current exchange regulations or that we will
secure hedging transactions significant to cover all or a part of our exposure
on favorable terms. If we continue to be unable to effectively hedge all or a
sufficient portion of our currency risk exposure, a further devaluation of the
Peso may significantly increase our debt service burden, which, in turn, may
have a material adverse effect on our financial condition and results of
operations. In the event of an
accident or other event not covered by our insurance, we could face significant
losses that could materially adversely affect our business and results of
operations As of December 31,
2016, our physical assets were insured for up to U.S.$ 1,516.8  million.
However, we do not carry insurance coverage for losses caused by our network or
business interruption, including for loss of our concession. See “Item 4.
Information on the Company—Our Business—Insurance.”  Although we believe
our insurance coverage is commensurate with standards for the distribution
industry, no assurance can be given of the existence or sufficiency of risk
coverage for any particular risk or loss. If an accident or other event occurs
that is not covered by our current insurance policies, we may experience
material losses or have to disburse significant amounts from our own funds,
which may have a material adverse effect on our net profits and our overall
financial condition and on the market value of our ADSs. A substantial number of
our assets are not subject to attachment or foreclosure and the enforcement of
judgments obtained against us by our shareholders may be substantially
limited A substantial number of
our assets are essential to the public service we provide. Under Argentine law,
as interpreted by the Argentine courts, assets which are essential to the
provision of a public service are not subject to attachment or foreclosure,
whether as a guarantee for an ongoing legal action or in aid of enforcement of a
court judgment. Accordingly, the enforcement of judgments obtained against us by
our shareholders may be substantially limited to the extent our shareholders
seek to attach those assets to obtain payment on their judgment.


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The loss of exclusivity
to distribute electricity in our service area may be adversely affected by
technological or other changes in the energy distribution industry, which would
have a material adverse effect on our business Although our concession
grants us the exclusive right to distribute electricity within our service area,
this exclusivity may be revoked in whole or in part if technological
developments make it possible for the energy distribution industry to evolve
from its present condition as a natural monopoly into a competitive business. In
no case does the complete or partial revocation of our exclusive distribution
rights entitle us to claim or to obtain reimbursement or indemnity. Although, to
our knowledge, there are no current projects to introduce new technologies in
the medium- or long-term which might reasonably modify the composition of the
electricity distribution business, we cannot assure you that future developments
will not enable competition in our industry that would adversely affect the
exclusivity right granted by our concession. Any total or partial loss of our
exclusive right to distribute electricity within our service area would likely
lead to increased competition and result in lower revenues, which could have a
material adverse effect on our financial condition, our results of operations
and the market value of our ADSs. A potential
nationalization or expropriation of 51% of our capital stock, represented by the
Class A shares, may limit the capacity of the Class B common shares to
participate in the board of directors As of the date of this
annual report, the ANSES owns shares representing 26.8% of our capital stock and
appointed five Class B directors in our last shareholders’ meeting. The rest of
our directors were appointed by the Class A shares. If the Argentine
government were to expropriate 51% of our capital stock, represented by our
Class A shares, the Argentine government would be the sole holder of the Class A
shares and the ANSES would hold the majority of the Class B shares. Certain
strategic transactions require the approval of the holders of the Class A
shares. Consequently, the Argentine government and the ANSES would be able to
determine substantially all matters requiring approval by a majority of our
shareholders, including the election of a majority of our directors, and would
be able to direct our operations. If the Argentine
government nationalizes or expropriates 51% of our capital stock, represented by
our Class A shares, our results of operations and financial condition could be
adversely affected and this could cause the market value of our ADSs and Class B
common shares to decline. We may not have the
ability to raise the funds necessary to repay our commercial debt with CAMMESA,
our major supplier As of December 31,
2016, we owed approximately Ps. 5,469.5 million to CAMMESA, (including
interest). Although we submitted to CAMMESA a repayment plan in November 2015,
as of the date of this annual report negotiations with CAMMESA continue with
respect to a final repayment schedule. This commercial debt is due and unpaid
and we have not secured any waivers from CAMMESA. If CAMMESA requested that we
repay such debt in a single payment, we may be unable to raise the funds
necessary to repay it and, consequently, we could be exposed to a cash
attachment, which could in turn result in our filing for a voluntary
reorganization proceeding (“concurso preventivo”), which could cause the market
value of our ADSs and Class B common shares to decline (see “—Risks related to
Our Business—All of our outstanding financial indebtedness contains bankruptcy,
reorganization proceedings and expropriation events of default, and we may be
required to repay all of our outstanding debt upon the occurrence of any such
events”). Downgrades in our
credit ratings could materially and adversely affect our business, financial
condition and results of operations. A material downgrade of
our credit ratings may have various effects including, but not limited to, the
following: we may have to accept less favorable terms in our transactions with
counterparties, including capital raising activities, or may be unable to enter
into certain transactions; existingagreements or
transactions may be cancelled; and we may be required to provide additional
collateral in connection with derivatives transactions. Any of these or other
effects resulting from a downgrade of our credit ratings could have a negative
impact on the profitability of our treasury and other operations, and could
adversely affect our regulatory capital position, financial condition and
results of operations.


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All of our outstanding
financial indebtedness contains bankruptcy, reorganization proceedings and
expropriation events of default, and we may be required to repay all of our
outstanding debt upon the occurrence of any such events As of the date of this
annual report, approximately U.S.$ 176.4 million of our financial debt is
represented by the Senior Notes due 2022. Under the indenture for the Senior
Notes due 2022, certain expropriation and condemnation events with respect to us
may constitute an event of default, which, if declared, could trigger the
acceleration of our obligations under the notes and require us to immediately
repay all such accelerated debt. In addition, all of our outstanding financial
indebtedness contains certain events of default related to bankruptcy and
voluntary reorganization proceedings (“concurso
preventivo”). If we are not able to comply with certain payment
obligations as a result of our financial situation and if the requirements set
forth in the Argentine Bankruptcy Law No. 24,522 are met, any creditor, or even
us, could file for our bankruptcy, or we could file for a voluntary
reorganization proceeding (“concurso preventivo”). In addition, all of our
outstanding financial indebtedness also contains cross-default provisions
or  cross-acceleration provisions that could cause all of our debt to be
accelerated if the debt containing expropriation or bankruptcy or reorganization
proceeding events of default goes into default or is accelerated. In such a
case, we would expect to actively pursue formal waivers from the corresponding
financial creditors to avoid such potential situation, but in case those waivers
are not timely obtained and immediate repayment is required, we could face
short-term liquidity problems, which could adversely affect our results of
operations and cause the market value of our ADSs and Class B common shares to
decline. We may not have the
ability to raise the funds necessary to finance a change of control offer as
required by the Senior Notes due 2022 As of the date of this
annual report, approximately U.S.$176.4 million of our financial debt is
represented by the Senior Notes due 2022. Under the indenture for the Senior
Notes due  2022, if a change of control occurs, we must offer to repurchase
any and all such notes that are outstanding at a purchase price equal to 100% of
the aggregate principal amount of such notes, plus any accrued and unpaid
interest thereon and additional amounts, if any, through the purchase date. We
may not have sufficient funds available to us to make the required repurchases
of the Senior Notes due 2022 upon a change of control. If we fail to repurchase
such notes in circumstances that may constitute an event of default under the
indenture, which may in turn trigger cross-default provisions in other of our
debt instruments then outstanding, our results of operations could be adversely
affected and the market value of our ADSs and Class B common shares could
decline. We could be required by
law to undertake a mandatory capital stock reduction and may in the future be
required to be dissolved and liquidated. As of December 31,
2016, our negative results exceeded 100% of our reserves and more than 50% of
our capital stock, therefore, in accordance with Section 206 of the Argentine
Corporations Law No. 19,550 (the “Argentine Corporations Law”), we were required
to mandatorily reduce our capital stock. As of the date of this annual report,
in light of the recent conclusion of the RTI process, our board of directors is
currently analyzing the impact thereof on our financial position, estimating
that the expected future revenues will allow us to revert this situation. If our
losses for any fiscal year exceed our reserves plus 50% or more of our capital
stock at the end of any such year, we fall under the purview of Section 206 of
the Argentine Corporations Law and are required to mandatorily reduce our
capital stock. Moreover, if our shareholders’ equity becomes negative (that is,
if our total liabilities exceed our total assets) at the end of any fiscal year,
we are required to dissolve and liquidate pursuant to Article 94 of the
Argentine Corporations Law unless we receive a capital contribution or expect
future revenues or results of operations which would result in our assets
exceeding our liabilities. On April 18, 2017, our shareholders’ meeting decided
not to approve the capital stock reduction at that time. However, if our
quarterly negative results for the periods ended on March 31, 2017 and June 30,
2017 exceed 100% of our reserves and more than 50% of our capital stock, our
board of directors will convene an extraordinary shareholder’s meeting to
reconsider the capital stock reduction. A mandatory capital stock reduction can
adversely affect our results of operations and financial conditions and cause
the market value of our ADSs and Class B common shares to decline. See “Item 8.
Financial Information—Significant Changes”).


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The New York Stock
Exchange and/or the Buenos Aires Stock Exchange may suspend trading and/or
delist our ADSs and Class B common shares, upon the occurrence of certain events
relating to our financial situation The New York Stock
Exchange (“NYSE”) and the Buenos Aires Stock Exchange (“BASE”) may suspend
and/or cancel the listing of our ADSs and Class B common shares, respectively,
in certain circumstances, including upon the occurrence of certain events
relating to our financial situation. For example, the NYSE may decide such
suspension or cancellation if our shareholders’ equity becomes
negative. The NYSE may in its
sole discretion determine on an individual basis the suitability for continued
listing of an issue in the light of all pertinent facts.  Some of the
factors mentioned in the NYSE Listed Company Manual, which may subject a company
to suspension and delisting procedures, include: “unsatisfactory financial
conditions and/or operating results,”  “inability to meet current debt
obligations or to adequately finance operations,” and “any other event or
condition which may exist or occur that makes further dealings or listing of the
securities on the NYSE inadvisable or unwarranted in the opinion of
NYSE.” The BASE may cancel the
listing of our Class B common shares if it determines that our shareholders’
equity and our financial and economic situation do not justify our access to the
stock market or if the NYSE cancels the listing of our ADSs. We cannot assure you
that the NYSE and/or BASE will not commence any suspension or delisting
procedures in light of our current financial situation, including if our
shareholders’ equity becomes negative.  A delisting or suspension of
trading of our ADSs or Class B common shares by the New York Stock Exchange
and/or BASE, respectively, could adversely affect our results of operations and
financial conditions and cause the market value of our ADSs and Class B common
shares to decline. Changes in weather
conditions or the occurrence of severe weather (whether or not caused by climate
change or natural disasters), could adversely affect our operations and
financial performance. Weather conditions may
influence the demand for electricity, our ability to provide it and the costs of
providing it.  In particular, severe weather may adversely affect our
results of operations by causing significant demand increases, which we may be
unable to meet without a significant increase in operating costs. This could
strongly impact the continuity of our services and our quality indicators. For
example, the exceptional thunderstorms that occurred in April and December of
2013 and a heat wave that occurred in December of 2013 affected the continuity
of our services, both in the low voltage and medium voltage networks.  See
“Item 4. Information on the Company—Business Overview—Quality Standards –
Edenor’s Concession".  Furthermore, any such disruptions in the provision
of our services could expose us to fines and orders to compensate those
customers affected by any such power cuts, as has occurred in the past (see
“Item 4. Information on the Company—Business Overview—Quality Standards —Fines
and Penalties”).  Our financial condition, results of operations and cash
flows could therefore be negatively affected by changes in weather conditions
and severe weather. A cyber-attack could
adversely affect our business, financial condition, results of operations and
cash flows. Information security
risks have generally increased in recent years as a result of the proliferation
of new technologies and the increased sophistication and activities of
cyber-attacks. Through part of our grid and other initiatives, we have
increasingly connected equipment and systems related to the distribution of
electricity to the Internet. Because of the critical nature of our
infrastructure and the increased accessibility enabled through connection to the
Internet, we may face a heightened risk of cyber-attack. In the event of such an
attack, we could have our business operations disrupted, property damaged and
customer information stolen; experience substantial loss of revenues, response
costs and other financial loss; and be subject to increased regulation,
litigation and damage to our reputation. A cyber-attack could adversely affect
our results of operations and financial condition and cause the market value of
our ADSs and Class B common shares to decline.


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Risks relating to ADSs and our
Class B common shares Restrictions on the
movement of capital out of Argentina may impair the ability of holders of ADRs
to receive dividends and distributions on, and the proceeds of any sale of, the
Class B common shares underlying the ADSs The Argentine
government may impose restrictions on the conversion of Argentine currency into
foreign currencies and on the remittance to foreign investors of proceeds from
their investments in Argentina.  Beginning in December 2001, the Argentine
government implemented an unexpected number of monetary and foreign exchange
control measures that included restrictions on the free disposition of funds
deposited with banks and on the transfer of funds abroad, including dividends,
without prior approval by the Central Bank, some of which are still in effect.
Although the transfer of funds abroad in order to pay dividends no longer
requires Central Bank approval to the extent such dividend payments are made in
connection with audited financial statements approved by a shareholders’
meeting, future restrictions on the movement of capital to and from Argentina
such as those that previously existed could, if reinstated, impair or prevent
the conversion of dividends, distributions, or the proceeds from any sale of
shares, as the case may be, from Pesos into U.S. Dollars and the remittance of
such U.S. Dollars abroad.  We cannot assure you that the Argentine
government will not take similar measures in the future.  In such a case,
the depositary for the ADSs may hold the Pesos it cannot otherwise convert for
the account of the ADS holders who have not been paid.  In addition, any
future adoption by the Argentine government of restrictions to the movement of
capital out of Argentina may affect the ability of our foreign shareholders and
holders of ADSs to obtain the full value of their shares and ADSs, and may
adversely affect the market value of our ADSs. Our shareholders’
ability to receive cash dividends may be limited Our shareholders’
ability to receive cash dividends may be limited by the ability of the
depositary to convert cash dividends paid in Pesos into U.S. Dollars. Under the
terms of our deposit agreement with the depositary for the ADSs, the depositary
will convert any cash dividend or other cash distribution we pay on the common
shares underlying the ADSs into U.S. Dollars; if it can do so on a reasonable
basis and can transfer the U.S. Dollars to the United States. If this conversion
is not possible or if any government approval is needed and cannot be obtained,
the deposit agreement allows the depositary to distribute the foreign currency
only to those ADS holders to whom it is possible to do so. If the exchange rate
fluctuates significantly during a time when the depositary cannot convert the
foreign currency, shareholders may lose some or all of the value of the dividend
distribution. Under Argentine law,
shareholder rights may be fewer or less well defined than in other
jurisdictions Our corporate affairs
are governed by our by-laws and by Argentine corporate law, which differ from
the legal principles that would apply if we were incorporated in a jurisdiction
in the United States, such as the States of Delaware or New York, or in other
jurisdictions outside Argentina. In addition, the rights of holders of the ADSs
or the rights of holders of our common shares under Argentine corporate law to
protect their interests relative to actions by our board of directors may be
fewer and less well-defined than those under the laws of those other
jurisdictions.    In addition, rules and policies against
self-dealing and regarding the preservation of shareholder interests may be less
well-defined and enforced in Argentina than in the United States, putting
holders of our common shares and ADSs at a potential disadvantage.


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Holders of ADSs may be
unable to exercise voting rights with respect to the Class B common shares
underlying the ADSs at our shareholders’ meetings Shares underlying the
ADSs are held by the depositary in the name of the holder of the ADS.  As
such, we will not treat holders of ADSs as one of our shareholders and,
therefore, holders of ADSs will not have shareholder rights. The depositary will
be the holder of the common shares underlying the ADSs and holders may exercise
voting rights with respect to the Class B common shares represented by the ADSs
only in accordance with the deposit agreement relating to the ADSs. There are no
provisions under Argentine law or under our by-laws that limit the exercise by
ADS holders of their voting rights through the depositary with respect to the
underlying Class B common shares.  However, there are practical limitations
on the ability of ADS holders to exercise their voting rights due to the
additional procedural steps involved in communicating with these holders. For
example, holders of our common shares will receive notice of shareholders’
meetings through publication of a notice in an official gazette in Argentina, an
Argentine newspaper of general circulation and the daily bulletin of the BASE,
and will be able to exercise their voting rights by either attending the meeting
in person or voting by proxy. ADS holders, by comparison, do not receive notice
directly from us.  Instead, in accordance with the deposit agreement, we
provide the notice to the depositary. If we ask it to do so, the depositary will
mail to holders of ADSs the notice of the meeting and a statement as to the
manner in which instructions may be given by holders. To exercise their voting
rights, ADS holders must then instruct the depositary as to voting the Class B
common shares represented by their ADSs. Due to these procedural steps involving
the depositary, the process for exercising voting rights may take longer for ADS
holders than for holders of Class B common shares and Class B common shares
represented by ADSs may not be voted as the holders of ADSs desire. Class B
common shares represented by ADSs for which the depositary fails to receive
timely voting instructions may, if requested by us, be voted at the
corresponding meeting either in favor of the proposal of the board of directors
or, in the absence of such a proposal, in accordance with the
majority. Our shareholders may be
subject to liability for certain votes of their securities Because we are a
limited liability corporation, our shareholders are not liable for our
obligations. Shareholders are generally liable only for the payment of the
shares they subscribe to. However, shareholders who have a conflict of interest
with us and who do not abstain from voting at the respective shareholders’
meeting may be liable for damages to us, but only if the transaction would not
have been approved without such shareholders’ votes. Furthermore, shareholders
who willfully or negligently vote in favor of a resolution that is subsequently
declared void by a court as contrary to the law or our by-laws may be held
jointly and severally liable for damages to us or to other third parties,
including other shareholders. Provisions of Argentine
securities laws could deter takeover attempts and have an adverse impact on the
price of our shares and ADSs. Argentine securities
laws contain provisions that may discourage, delay or make more difficult a
change of control of Edenor, such as the requirement, upon the acquisition of a
certain percentage of our capital stock, to launch a tender offer to acquire a
certain percentage of our capital stock, which percentage ranges from 10% to
100% depending on several factors.  These provisions may delay, defer or
prevent a transaction or a change of control that might otherwise be in the best
interest of our shareholders and may adversely affect the market value of our
shares and ADSs.


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Item
4.Information on the
Company History and Development of the
Company Empresa Distribuidora
y Comercializadora Norte S.A., or Edenor, is a public service company
incorporated as asociedad anónima(stock corporation) under the
laws of Argentina. Our principal executive offices are located at Avenida del
Libertador 6363, Ciudad de Buenos Aires, C1428ARG, Argentina, and our general
telephone number at this location is +54 11 4346 5000. We were incorporated
on July 21, 1992, under the name Empresa Distribuidora Norte Sociedad Anónima,
as part of the privatization of the Argentine state‐owned electricity utility,
Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA). The Company’s term of
duration is 95 years. In anticipation of its privatization, SEGBA was divided
into three electricity distribution companies, including our company, and four
electricity generation companies, and on May 14, 1992, the Argentine Ministry of
Economy and Public Works and Utilities approved the public sale of all of our
company’s Class A common shares, representing 51% of the capital stock of our
company. A group of
international investors, which included EDF International S.A. (a wholly owned
subsidiary of Électricité de France S.A.), presented a bid for our Class A
common shares through Electricidad Argentina S.A. (EASA), an Argentine company.
EASA was awarded the bid and, in August 1992, EASA and the Argentine government
entered into a stock purchase agreement relating to the purchase of our Class A
common shares.  In addition, on August 5, 1992, the Argentine government
granted us a concession to distribute electricity on an exclusive basis within
our concession area for a period of 95 years. On September 1, 1992, EASA
acquired our Class A common shares and became our controlling shareholder. See “Item 7. Major Shareholders
and Related Party Transactions - Acquisition by Central Térmica Loma de la Lata
S.A”. In June 1996, our
shareholders approved the change of our name to Empresa Distribuidora y
Comercializadora Norte S.A. (EDENOR S.A.) to more accurately reflect the
description of our core business. The amendment to our by–laws related to our
name change was approved by the ENRE and registered with the Public Registry of
Commerce (Inspección General de Justicia, the “IGJ”) in 1997. In 2001, EDF
International S.A. (EDFI) acquired, in a series of transactions, all of the
shares of EASA held by EASA’s other shareholders, ENDESA Internacional, YPF
S.A., which was the surviving company of Astra, and SAUR. As a result, EASA
became a wholly–owned subsidiary of EDFI. In addition, EDFI purchased all of our
Class B common shares held by these shareholders, increasing its direct and
indirect interest in us to 90%. On January 6, 2002,
the Argentine Congress enacted the Public Emergency Law, which authorized the
Argentine government to implement certain measures to overcome the country’s
economic crisis. Under the Public Emergency Law, the Argentine government
altered the terms of our concession and the concessions of other public utility
services by renegotiating tariffs, freezing distribution margins and revoking
price adjustment mechanisms, among other measures. In September 2005,
Dolphin Energía and IEASA acquired an indirect controlling stake in our company
from EDFI. Dolphin Energía and IEASA were at the time of such acquisition
controlled by the principals of Grupo Dolphin, an Argentine advisory and
consulting firm that carries out private equity activities. On September 28,
2007, Pampa Energía S.A. (“Pampa Energía” or “Pampa”) acquired all the
outstanding capital stock of Dolphin Energía and IEASA from the then current
shareholders of these companies, in exchange for common stock of Pampa Energía.
Pampa Energía, which is managed by Grupo Dolphin’s former principals, owns a 50%
interest in the company that co-controls the principal electricity transmission
company in Argentina,Compañía de Transporte de Energía Eléctrica en Alta
Tensión S.A.(“Transener”). In addition, Pampa Energía has
controlling stakes in five generation plants located in the Salta, Mendoza,
Neuquén and Buenos Aires provinces (Hidroeléctrica Nihuiles, Hidroeléctrica
Diamante, Central Térmica Güemes, Central Térmica Loma de la Lata and Central
Piedra Buena).  See “Item 7. Major Shareholders and Related Party
Transactions”. In April 2007, we
completed the initial public offering of our Class B common shares, in the form
of shares and American depositary shares, or ADSs. We and certain of our
shareholders sold 18,050,097 ADSs, representing 361,001,940 Class B common
shares, in an offering in the United States and elsewhere outside Argentina, and
our Employee Stock Participation Program sold 81,208,416 Class B common shares
in a concurrent offering in Argentina.  Our ADSs are listed in the NYSE
under the symbol “EDN,” and our Class B common shares are listed on the BASE
under the same symbol.  We received approximately U.S.$ 61.4 million in
proceeds from the initial public offering, before expenses, which we used to
repurchase a part of our then outstanding debt.  Following the initial
public offering, EASA continues to hold 51% of our common shares, and
approximately 49% are held by the public. See “Item 7. Major Shareholders and
Related Party Transactions”. On November 20, 2008,
the Argentine Congress passed a law unifying the Argentine pension and
retirement system into a system publicly administered by the ANSES and
eliminating the retirement savings system previously administered by private
pension funds under the supervision of a governmentalagency. In accordance
with this law, private pension funds transferred all of the assets administered
by them under the retirement savings system to the ANSES. As of the date of this
annual report, ANSES held 242,999,553 of our Class B common shares, representing
26.8% of our capital stock.


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EDESA
Sale On April 23, 2012, our
board of directors accepted the offer made by Salta Inversiones Eléctricas S.A.
(“SIESA”) to Edenor and its subsidiary Emdersa Holding, for the acquisition of
shares representing: (i) 78.44% of the capital stock and voting rights of EDESAH
and (ii) the remaining 0.01% of ESED. The transaction was
carried out on May 10, 2012 at the offered price payable through the delivery of
Argentina’s sovereign debt bonds (Boden 2012) for a value equivalent to Ps.
100.5 million. EDELAR
Offer An offer from Andes
Energía Argentina S.A. (“Andes Energía”) was accepted by our board of directors.
Such offer consisted of a proposal to buy a purchase option for a price of U.S.$
1.5 million to buy, if Emdersa’s spin-off was completed within a term of two
years, 78.44% of the Company’s direct and indirect stake in EDELAR for U.S.$
20.29 million, to be paid in two installments. The purchase option was paid by
the buyer on September 16, 2011. On December 31, 2012, Andes Energía’s purchase
option expired. EDELAR/EMDERSA
Sale On September 17, 2013,
our board of directors approved an irrevocable offer to Energía Riojana S.A.
(ERSA) and the government of the Province of La Rioja for the (i) sale of our
indirect stake in Emdersa, Edelar’s parent company, and (ii) assignment of
certain account receivables that we had against Emdersa and Edelar. On October
4, 2013, ERSA and the government of the Province of La Rioja in its capacity as
controlling shareholder of ERSA accepted the offer. The transaction closed on
October 30, 2013. The price agreed upon was Ps. 75.2 million payable in 120
monthly and consecutive installments. In November 2015, we began to pay
installments in accordance with the agreed upon schedule. EMDERSA Holding Merger
process On October 7, 2013,
the Company resolved to initiate the proceedings pursuant to which the Company
will absorb Emdersa Holding in order to optimize its resources, simplifying its
corporate, administrative and operating structure. On December 20, 2013,
the merger of Emdersa Holding into Edenor was approved by an extraordinary
shareholders’ meeting, as well as all documentation and information required by
applicable regulation towards that end. As of the date of this annual report,
the administrative approval by the IGJ is pending. The effective reorganization
date for all legal, accounting and tax purposes will be retroactive to October
1, 2013. AESEBA/EDEN
Sale In 2013, the Company
received offers from two investment groups for the acquisition of all of the
shares of AESEBA, the controlling company of EDEN. On February 27, 2013, our
board of directors approved the acceptance of the offer by Servicios Eléctricos
Norte BA S.L. (the "Purchaser") for the acquisition of AESEBA's shares
representing 100% of its capital stock and voting rights. The sale price was
payable in Argentine government Bonar 2013 bonds, or similar bonds, in an amount
equivalent to Ps. 334.3 million, considering the market price of such Argentine
government securities at the time of the transaction. Such delivery was secured
by the Purchaser's contribution to a trust (the "Management Trust"or the “Aeseba Sale
Trust”) in Argentine public debt securities, valued at the closing date of the
transaction. No debt instruments of the Company were contributed to the
Trust.


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Through this
transaction, the Company divested the AESEBA business segment, recording a loss
of Ps. 96.5 million, included in the results from continued operations.
Subsequently the Trust used all the cash and bonds deposited to purchase Notes
of the Company due 2017 and 2022. The result of the repurchase of those Notes
was a gain of Ps. 116.1 million, which was recognized in “Other financial
results” (Ps. 71.7 million in fiscal year 2013 and Ps. 44.4 million in fiscal
year 2014).In April 2014, we closed the Management Trust and transferred and
cancelled all the Edenor securities repurchased.   See “Item
5.Operating and Financial Review and Prospects—Debt”.  Business Overview We believe we are the
largest electricity distribution company in Argentina and one of the largest in
Latin America in terms of number of customers and electricity sold (both in GWh
and in Pesos) in 2016. We hold a concession to distribute electricity on an
exclusive basis to the northwestern part of the greater Buenos Aires
metropolitan area and in the northern part of the City of Buenos Aires. As of
December 31, 2016, Edenor served 2,867,250 customers. The following table shows
the percentage of the electricity produced and sold by generating companies that
was purchased by us in the periods indicated:  Year
    
    **Electricity demand**(1)
    
    **Edenor demand**(2)
    
    Edenor ́s demand as % of total
    demand2014
    
    126,397
    
    24,860
    
    19.7%2015
    
    131,998
    
    26,322
    
    19.9%2016
    
    132,950
    
    26,838
    
    20.2%
 Source:Compañía Administradora del Mercado Mayorista Eléctrico,
S.A.(CAMMESA) (1)Demand in the Mercado Eléctrico
Mayorista Sistema Patagónico (Patagonia wholesale electricity market, or
MEMSP). (2)Calculated as electricity
purchased by us and our wheeling system customers.  Edenor
Concession Through a concession
dated August 5, 1992, the Argentine government granted us the exclusive right to
distribute electricity within our concession area for a period of 95 years. Our
concession will expire on August 31, 2087 and can be extended for one additional
10-year period if we request the extension at least 15 months before expiration.
The Argentine government may choose, however, to grant us the extension on a
non-exclusive basis.  The concession period was initially divided into an
initial management period of 15 years expiring on August 31, 2007, followed by
eight 10-year periods. However, pursuant to the terms of the concession we could
request, at our option, the extension of the initial management period for an
additional 5-year period from the entry into force of the new tariff structure
adopted under the RTI process, subject to the ENRE’s approval. We presented
requests for such extension in May 2007 and on July 5, 2007, and the ENRE,
pursuant to its Resolution No. 467/2007, agreed to extend the initial management
period for an additional period of five years from the date when the new tariff
structure was adopted under the RTI.  The remaining 10-year periods will
run from the expiration of the extension of the initial management
period. On January 6, 2002,
the Argentine Congress enacted the Public Emergency Law, which empowered the
Argentine government to implement, among other things, monetary, financial and
foreign exchange measures to overcome the economic crisis. These measures,
combined with the devaluation of the Peso and high rates of inflation, have had
a severe effect on public utility companies in Argentina, including us. Under
the Public Emergency Law, the Argentine government converted public utility
tariffs from their original U.S. Dollar values to Pesos at an exchange rate of
Ps. 1.00 per U.S.$ 1.00, froze all regulated distribution margins relating to
the provision of public utility services (including electricity distribution
services), revoked all price adjustment provisions and inflation indexation
mechanisms in public utility concessions (including our concession) and was
empowered to conduct a renegotiation of public utility contracts (including our
concession) and the tariffs set therein (including our tariffs).


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In September 2005, we
entered into the Adjustment Agreement with the Argentine government, which was
ratified in January 2007. Because a new Argentine Minister of Economy took
office thereafter, we formally re-executed the Adjustment Agreement with the
Argentine government on February 13, 2007 under the same terms and conditions
originally agreed. The following are the
key provisions of the Adjustment Agreement, which are described elsewhere in
this annual report: ·a cost
adjustment mechanism (CMM), pursuant to which our distribution costs were
reviewed semiannually (or, under certain circumstances, more often) and adjusted
if deemed appropriate by the ENRE to cover increases in our distribution
costs; ·an
obligation to make capital expenditures of approximately Ps. 204 million for
specific projects in 2006, which we complied with although we were not required
to given that the Adjustment Agreement was not ratified in 2006; ·our
obligation to meet specified more stringent service quality standards than as
originally contemplated in our concession; ·a
restriction on our ability to pay dividends without prior ENRE approval during
the period in which we were engaged in the RTI; ·forgiveness of approximately one-third of our accrued and
unpaid fines, subject to meeting certain conditions relating to capital
expenditures obligations and service quality standards, and a 7-year payment
plan for the balance, commencing 180 days after the date on which the RTI came
into effect; ·our
obligation to apply a social tariff regime for low-income customers, which
regime was defined in the context of the RTI; and ·our
obligation to extend our network to provide service to certain rural
areas.  Pursuant to the
Adjustment Agreement, the Argentine government granted us an increase of 28% in
our distribution margin as a result of the implementation of a Temporary Tariff
Structure (RTT), which was effective retroactively as from November 1, 2005. The
Adjustment Agreement was intended to apply transitionally until we completed the
RTI with the ENRE in accordance with the terms of the Adjustment Agreement. See
“Item 5. Operating and Financial Review and Prospects—Factors Affecting Our
Results of Operations—Tariffs”.  In addition, the ENRE applied a cost
adjustment mechanism for the transition period during which the RTI process was
being conducted.  The CMM required the ENRE to review our actual
distribution costs every six months (in May and November of each year). If the
variation between our actual distribution costs and our recognized distribution
costs (as initially contemplated in the Adjustment Agreement or, if adjusted by
any subsequent CMM, the most recent distribution cost base established by a CMM)
was 5% or more, the ENRE was required to adjust our distribution margin to
reflect our actual distribution cost base. The ENRE’s review was based on our
distribution costs during the six-month period ending two months prior to the
date on which the ENRE was required to apply the CMM.  We could also
request that the ENRE apply the CMM at any time that the variation in our
distribution cost base was at least 10% or more. Because the Adjustment
Agreement was effective retroactively as of November 1, 2005, in May 2006, the
ENRE determined that our distribution cost base increased by 8.032% (compared to
the distribution cost base recognized in the Adjustment Agreement), and,
accordingly, approved an equivalent increase in our distribution margin
effective May 1, 2006. This increase, when compounded with the 28% VAD increase
granted under the Adjustment Agreement, resulted in an overall 38.3% increase in
our distribution margins charged to our non-residential customers. Also, on
February 13, 2007, the ENRE authorized us to bill our customers (excluding
residential customers) the retroactive portion of the 38.3% increase
(corresponding to the period from November 2005 to January 2007), which amounted
to Ps. 218.6 million and has been invoiced in 55 monthly installments since
February 2007. Between 2007 and 2016,
we requested several CMM adjustments, which were recognized by the ENRE through
different resolutions and notes (Resolution No. 1,037/07, Note No. 81,399,
Resolution No. 250/13 and Resolution No. 32/15). Only two adjustments were
recognized in a timely manner and were incorporated into the tariff structure,
while the rest of them were recognized belatedly and not incorporated into our
tariff structure. On November 23, 2012,
the ENRE issued Resolution No. 347/12 pursuant to which distribution companies
were authorized, as from the issuance thereof, to include a fixed amount for
small-demand (T1) customers and a variable amount for medium and large-demand
(T2 and T3) customers as an additional charge in their bills, calculated as a
percentage of power charges. Such charges, which areclearly indicated in
the bills sent to customers, were deposited into a special trust account created
by Resolution No. 347/2012 (namely, the “FOCEDE”) and exclusively used for the
execution of distribution infrastructure and corrective maintenance works on the
facilities of each of the distribution companies. Resolution No. 2/2016 of the
ENRE partially repealed Resolution No. 347/2012, discontinuing the FOCEDE and
ordering us to open a special bank account with a Central Bank authorized entity
where the funds received pursuant to Resolution No. 347/2012 were deposited
through February 2016.


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In March 2015, the SE
issued Resolution No. 32/15 granting us a temporary increase in income through
funds provided by CAMMESA, which was applicable retroactively as from February
1, 2015, through February 1, 2016, to pay for costs and investments associated
with the regular provision of the public service of distribution of energy on
account of the future RTI. Such additional income resulted from the difference
between the “theoretical” tariff schedules set forth in such resolution and the
tariff schedule in force at each time for each category of user, according to
calculations made by the ENRE, which had been reported monthly to the SE and
CAMMESA. In this respect, CAMMESA had transfered the funds contributed by the
Argentine government, in accordance with the values reported by the
ENRE. As from February 1,
2015, the PUREE funds were considered as part of our income on account of the
future RTI. We were entitled to offset the debts for PUREE with claims arising
from the calculation of CMM until that date, including the application of
interest that could correspond to both concepts. Any amount of PUREE funds in
excess of those applied to offset CMM-related claims as described in the
previous sentence were to be offset against debts arising from loans granted by
CAMMESA in connection with the mandatory salary increases. Although we submitted
to CAMMESA a repayment plan in November 2015, as of the date of this annual
report negotiations with CAMMESA continue with respect to a final repayment
schedule to cancel the obligations owed to it for the provision of electricity. On December 16,
2015, the Macri administration declared the state of emergency of the national
electricity system that will remain in effect until December 31, 2017. The
state of emergency allows the Argentine government to take actions designed to
guarantee the supply of electricity. In January 2016, the
ME&M issued Resolution No. 7/16, pursuant to which the ENRE implemented a
VAD adjustment to the tariff schedule on account of the future RTI in effect as
of February 1, 2016. In addition, such
resolution: (i) abrogated the PUREE; (ii) repealed Resolution No. 32/2015 as
from the date the ENRE resolution implementing the new tariff schedule is in
force; (iii) discontinued the application of mechanisms that imply the transfer
of funds from CAMMESA in the form of loan agreements with CAMMESA; and (iv)
ordered the implementation of the actions required to terminate the trusts
created pursuant to Resolution No. 347/2012 of the ENRE. Pursuant to Resolution
No. 7/16, the ENRE issued Resolution No. 1/16 establishing a new tariff
structure, which remained in force untill February 2017, when the RTI was
completed. On April 1, 2016, the
ENRE issued Resolution No. 55/16, which approved the program for the review of
the distribution tariff scheme, establishing the criteria and methodologies for
completing the RTI process. On September 5, 2016,
by means of Resolution No. 55/16, we submitted our rate schedule proposal for
the following five-year period. On October 28, 2016, a public hearing was held
to provide information and listen to the public opinions on the RTI. On February 1, 2017,
the ENRE issued Resolution No. 63/2017, through which it approved a new tariff
scheme that set our new distribution added value (VAD) for the following
five-year period.For more information, see “Item 5—Operating and
Financial Review and Prospects—Integral Tariff Revision.”  Geographic
Exclusivity Our concession gives
us the exclusive right to distribute electricity within our concession area
during the term of our concession. Under our concession, neither the national
nor the provincial or local governments may grant further concessions to operate
electricity distribution services within our concession area. In that respect,
we are obligated to satisfy all of the demand for electricity originated in our
concession area, maintaining at all times a service quality standard that has
been established in our concession. This geographic exclusivity may be
terminated in whole or in part by the Executive Branch iftechnological changes
make it possible for the energy distribution industry to evolve from its present
condition as a natural monopoly into a competitive business. However, the
Argentine or the Provincial government may only exercise its right to alter or
suppress our geographical exclusivity at the end of each management period under
our concession, by prior written notice at least six months before the
expiration of the then current management period.


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Edenor’s concession
area is divided into the following operating territories: Operating
      territory
    
    DistrictsRegionI
    Ciudad de Buenos Aires, San
      Isidro, Vicente López, San Martín and Tres de FebreroRegionII
    La Matanza, Morón,
      Hurlingham, Ituzaingo, Merlo, Marcos Paz and Gral. Las
  HerasRegion III
    Pilar, Escobar, Tigre, San
      Fernando, San Miguel, Malvinas Argentinas, José C. Paz, Moreno and Gral.
      Rodríguez
  The table below sets
forth certain information relating to operating territories of Edenor as of and
for the year ended December 31, 2016: Operating territory
    Area
    Customers(km2)
    (in thousands)Region
      I
    251.0
    1,151.4
    40.2%Region
      II
    1,761.0
    912.4
    31.8%Region
      III
    2,625.0
    803.4
    28.0%Total
    4,637.0
    2,867.2
    100.0%
  Our
Obligations We are obligated to
supply electricity upon request by the owner or occupant of any property in our
concession area.  We are entitled to charge for the electricity supplied at
rates that are established by tariffs set with the prior approval of the ENRE
under applicable regulations.  Pursuant to our concession, we must also
meet specified service quality standards relating to: ·the time
required to connect new users; ·voltage
fluctuations; ·interruptions or reductions in service; and ·the
supply of electricity for public lighting and to certain
municipalities. Our concession
requires us to make the necessary investments to establish and maintain quality
of service standards and to comply with stringent minimum public safety
standards as specified in our concession. We are also required to furnish the
ENRE with all information requested by it and must obtain the ENRE’s prior
consent for the disposition of assets that are assigned to the provision of our
electricity distribution services. The ENRE also requires us to compile and
submit various types of reports regarding the quality of our service and other
technical and commercial data, which we must periodically report to the
ENRE. Under our concession,
we may also be required to continue rendering services after the termination of
the concession term upon the request of the Argentine government, but for a
period not to exceed 12 months. We are obligated to
allow certain third parties (namely, other agents and large users) to access any
available transportation capacity within our distribution system upon payment of
a wheeling fee. Consequently, we must render the distribution service on an
uninterrupted basis to satisfy any reasonabledemand. We are
prohibited from engaging in practices that limit competition or result in
monopolistic abuses.


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In addition, Clause
22.1 of  the Adjustment Agreement required us and our shareholders and
former shareholders to suspend all claims and legal proceedings (including
arbitration actions) in administrative, state or federal courts located in
Argentina or abroad, that were related to measures adopted with respect to the
Concession Agreement, derived from the emergency situation declared by the
Public Emergency Law.  After the completion of the RTI, we and our
shareholders and former shareholders were also obligated to completely waive and
desist from all of the above mentioned claims and legal proceedings. All
proceedings related to circumstances supervening the above described situations,
or that were not related to the consequences of the Public Emergency Law, were
expressly excluded. If our shareholders or former shareholders had not desisted
from these claims, the Argentine government would have the right to foreclose on
the pledge of our Class A common shares and sell these shares to a third party
buyer. If the Company or any shareholder or former shareholder re-established or
initiated a new claim, we would have the obligation to hold the Argentine
government harmless in respect of amounts it could be required to pay pursuant
to such claims. EDFI and EASA suspended all such claims against the Argentine
government as part of the Adjustment Agreement and, in connection with its sale
of its controlling stake in Edenor, EDFI agreed to withdraw its claims against
the Argentine government before the ICSID at the request of Dolphin Energía
S.A. On February 1, 2017,
the ENRE issued Resolution No. 63/17 establishing the new tariff scheme which
resulted from the completion of the RTI process, which will apply to the
following five-year period. Pursuant to the provisions of the Adjustment
Agreement, EASA and EDFI withdrew their ICSID claim, and on March 28, 2017, the
ICSID took note of the discontinuance of the procedure. In accordance with our
concession, our controlling shareholder, EASA, has pledged its 51% stake in the
Company to the Argentine government to secure obligations under our concession.
The Adjustment Agreement required that the pledge be extended to secure our
obligations under such agreement. Quality Standards Edenor’s Concession Pursuant to our
concession, we are required to meet specified quality standards with respect to
the technical quality of the product delivered (electricity) and the technical
quality of the service provided. The quality standards relating to the technical
product refer to the electricity’s voltage levels.  Edenor’s concession
requires that the voltage level that we deliver be 3x380/220 V; 13.2 kV; 33kV;
132 kV; 220 kV. Edenor’s concession provides that admissible disruptions gaps in
the voltage level may not exceed the following: High voltage
    ‐5.0% to +5.0%Overhead network (medium or low voltage)
    ‐8.0% to +8.0%Buried network (medium or low
voltage)
    ‐5.0% to +5.0%Rural
    ‐10.0% to
+10.0%
 A fine is imposed
under Edenor’s concession for disruption gaps in voltage levels that exceed the
above‐mentioned limits for 3.0% or more of the total amount of time that
electricity is provided. The amount of the fine depends on the magnitude of the
gaps. As the gaps’s percentage increases (or decreases) from the nominal
contracted tension level, the rate of the fine per kWh increases. These fines
are credited to the affected user’s bill. The quality standards
of the product set forth in Edenor’s concession refer to the frequency and
duration of the interruptions. The following table sets forth the standards set
forth in our concession with respect to the frequency and duration of
interruptions per customer during the current management period:


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Category of user
    
    Frequency ofinterruptions(maximum number
      ofinterruptions persemester)
    
    Duration of interruption (maximum amount
      of time per
      interruption)(1)High voltage
    3
    
    2
      hoursMedium voltage
    4
    
    3 hoursLow voltage: (small and medium
demand)
    6
    
    10
      hoursLarge demand
    6
    
    6
      hours
 _______________________ (1)Interruptions of less than three minutes are not
recorded.  In addition, pursuant
to the Adjustment Agreement, we agreed to comply with a medium delivery standard
(SAIFI and SAIDI) that reflected our actual average delivery standards during
the period from 2001 through 2003. This medium delivery standard required us to
comply with a maximum number of interruptions per semester, on average, of 2,761
and a maximum duration of interruption, on average, of 5,386 hours. If we do not
meet the delivery standards required by our concession, as set forth in the
table above, but are otherwise in compliance with the medium delivery standard
under the Adjustment Agreement, we may withhold payment of any fines that may be
imposed under our concession for this failure and use this amount of unpaid
fines for our capital expenditures. If we fail to comply with this measure, we
will be required to pay the fines to the affected customers. Modifications
resulting from the completion of the RTI process  In the five-year
period following the completion of the RTI process, new regulatory requirements
in terms of both product quality and service quality will be implemented, as set
forth in ENRE Resolution No 63/2017. The most relevant changes relating to
product quality will consist of: (1) the unification of the levels of voltage
including an admissible disruption gap of 5% for high voltage and 8% for medium
and low voltage; (2) the update of the cost of energy supplied under bad
conditions (as per its term in Spanish, “CESMC”), which will increase to reflect
the registered voltage offset (the CESMC will be updated depending on the VAD
increases that may occur); (3) the calculation of a factor  to be applied
over the CESMC to establish the reduction to be allocated to each affected user,
with increases for each semester in the mentioned five-year period; and (4) the
determination of an increase mechanism in customer compensation in the case of
persistence over time of the event or incident. In connection with the
technical service quality, the most relevant changes will consist of: (1) the
update of the cost of energy not supplied in conditions (“CENS”) according to
the user’s category, which at the same time will be subject to any VAD increases
that may occur; (2) the exclusion of penalties application in the event of
electrical outages caused by severe climate events that affect between 100,000
and 400,000 users within 24 hours, provided that the service is reestablished
within the terms set forth in ENRE Resolution No. 63/17; (3) the incorporation
of quality paths that set expected values for the  SAIDI and SAIFI
indicators, which satisfaction will determine the application of factors to be
applied over the CENS to establish a compensation to be allocated to users.
These factors are related to the duration of the electrical outage and increase
in subsequent semesters of the five-year period; and, (4) the determination of
adjustment rates differentiated by district/commune over the mentioned factors.
In all cases, the evolution of these quality paths drive the SAIDI/SAIFI indexes
to the values defined as medium grade quality reference in the concession
contract at the end of the five-year period. Pursuant to our
concession, the ENRE may fine us if one of our customers suffers more than the
maximum number of interruptions specified for its category (excluding
interruptions of less than 3 minutes) or suffers interruptions for a longer
period than as specified for its category. We pay these fines by granting
credits to the affected customers in their electricity bills. Fines are
calculated at a rate per kWh that varies depending on the particular tariff or
price schedule that is applicable to the customer.


41

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The following table
sets forth the frequency and duration (SAIDI and SAIFI) of interruptions of our
service in the periods indicated: Year ended December 31,2016
    
    2015
    
    2014Average
      frequency of interruptions
    8.67
    
    8.93
    
    9.55Average duration of interruption (in
      hours)
    25.84
    
    26.63
    
    33.03
  In addition, for the
purpose of meeting the quality levels, we must comply with certain operational
requirements related to the quality of our commercial services, safety in the
public highways, data gathering and processing (including through reports that
must be submitted to ENRE for supervision and control) and other contractual
requirements related to our environmental management plan and the claims filed
with ENRE by users which have been resolved after the established period.  Fines and
Penalties Under the terms of our
concession, the ENRE may impose fines and penalties if we fail to comply with
our obligations. Fines relating to our
failure to meet any of the quality and delivery standards described above are
payable by granting credits or bonuses to our customers to offset a portion of
their electricity charges. Since 1996, we have operated a central information
system that allows us to directly credit customers who are affected by these
quality or delivery deficiencies in the amount of the applicable
fines. Fines and penalties
that are not directly related to services rendered to our customers are owed to
the ENRE. These include fines imposed on us by the ENRE for any network
installations found to create a safety or security hazard in a public space,
including streets and sidewalks. In addition, the ENRE may fine us for
inconsistency in technical information that we are required to furnish to the
ENRE.  Fines paid to the ENRE are deposited in the Third-Party Reserve Fund
of the ENRE(Reserva de Fondos de Terceros del ENRE) in an account held
with Banco Nación.  Payments accumulate in the account until the amount
deposited reaches Ps. 5.6 million and then, with the ENRE’s authorization, the
amount is proportionally distributed among our customers. When we entered into
the Adjustment Agreement in September 2005, the ENRE approved a payment plan in
respect of approximately Ps. 116 million of our accrued fines and penalties and
agreed, subject to the condition that we meet the quality standards and capital
expenditure requirements specified in the Adjustment Agreement, to waive
approximately Ps. 58 million of accrued and unpaid fines and penalties. Under
such payment plan, the penalties and fines to be paid to users were to be repaid
in fourteen semiannual installments, with the first installment due upon the
termination of a 180-day grace period beginning on the date the RTI’s resulting
tariff structure came into effect. Because the Adjustment
Agreement was not ratified until January 2007, we recalculated the amounts of
accrued fines and penalties credited thereof, according to the increase of the
VAD charged to customers (including the CMM adjustments which have been
transferred to customers for a total amount of Ps.17.2 million) up to the date
of their credit to the customers’ accounts. On December 22, 2015,
considering the existence of cash flow and the strong possibility that such
penalties to be paid to users would not be waived, we decided to make such
payment in the form of one single credit, instead of fourteen semiannual
installments as previously agreed, which was made to the users’ accounts for an
amount Ps.152.2 million in the aggregate. In addition, a total of Ps.33.7
million in the aggregate remains available for those clients which had not an
active service as of December 22, 2015. During 2015, we
entered into a settlement agreement with the ENRE (the “ENRE settlement”) under
which we agreed to pay final penalties imposed on and which have been judicially
challenged by us, with an adverse result, for an amount of Ps.85.7 million plus
interest of Ps. 84.2 million. These fines were all paid to the Argentine
government and not to users.


42

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The following
table shows the adjustments to Edenor’s standalone accruals for ENRE fines and
penalties, including current fines and penalties and adjustments to past fines
due to increases in our tariffs pursuant to the Adjustment Agreement, for the
periods specified: Year ended December 31,(in millions of Pesos)2016
    2015
    2014
    2013
    2012
    2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001Accruals at beginning of year
    1,066.8
    1,102.8
    923.8
    647.4
    531.9
    455.4
    377.5
    331.6
    281.4
    241.1
    169.7
    99.2
    63.4
    49.0
    19.0
    13.6ENRE Fines and
Penalties
    2,556.7
    281.7
    278.8
    287.5
    116.9
    81.1
    80.0
    58.5
    34.8
    23.9
    25.2
    72.7
    36.0
    14.6
    31.7
    16.4Accrued interests
    -
    -
    -
    -
    5.1
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -Quality of Technical Service
    1,426.4
    170.2
    177.7
    176.3
    75.7
    47.0
    46.0
    15.0
    15.2
    7.0
    10.4
    4.9
    4.7
    3.2
    5.6
    5.2Quality of Technical Product
    383.1
    29.0
    19.8
    18.7
    12.4
    3.2
    3.4
    3.1
    3.0
    0.9
    0.6
    1.1
    6.9
    6.5
    5.5
    2.9Quality of Commercial Service
    41.5
    14.2
    10.6
    13.9
    6.8
    5.1
    3.0
    2.4
    1.6
    1.1
    1.2
    -
    1.2
    0.5
    1.5
    1.7Public Safety
    564.7
    64.3
    57.5
    37.6
    17.7
    19.8
    19.4
    34.0
    11.6
    10.3
    6.7
    25.4
    10.9
    2.0
    4.9
    4.2Transport Technical Function
    0.1
    (6.1)
    5.4
    2.3
    0.2
    0.6
    0.4
    0.3
    0.3
    0.2
    0.4
    -
    0.2
    0.2
    0.2
    -Reporting Violations
    101.9
    10.1
    6.2
    25.8
    3.4
    4.2
    6.6
    3.7
    2.9
    4.4
    5.6
    33.7
    12.2
    1.7
    4.9
    1.9Others
    38.8
    -
    1.6
    13.0
    0.9
    1.3
    1.3
    -
    -
    -
    0.2
    7.5
    -
    0.4
    9.0
    0.5Less: Paid during period:
    
    
    
    
    
    
    
    
    
    
    
    
    -Quality of Technical Service
    83.5
    64.1
    85.6
    -
    -
    -
    -
    -
    -
    -
    -
    1.6
    -
    -
    0.9
    3.3Quality of Technical Product
    -
    54.1
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -
    -
    2.3Quality of Commercial Service
    6.3
    16.8
    14.2
    11.1
    6.5
    4.5
    1.9
    3.7
    -
    1.5
    0.4
    0.1
    0.1
    0.1
    0.3
    1.4Public Safety
    -
    79.8
    -
    -
    -
    -
    0.1
    8.9
    1.6
    -
    -
    -
    -
    -
    -
    2.1Transport Technical Function
    -
    -
    -
    -
    -
    -
    -
    -
    -
    0.2
    0.3
    -
    -
    0.1
    0.4
    0.2Others
    -
    102.9
    -
    -
    -
    -
    -
    -
    -
    -
    -
    0.6
    -
    -
    -
    1.7Total paid during period
    89.8
    317.7
    99.8
    11.1
    6.5
    4.5
    2.0
    12.6
    1.6
    1.7
    0.7
    2.3
    0.1
    0.2
    1.6
    11.0Plus: Adjustment to fines and
      penalties pursuant to the ratification of the Adjustment
      Agreement
    -
    -
    
    -
    -
    -
    -
    -
    17.2
    18.1
    47.0
    -
    -
    -
    -
    -Accruals at year‐end
    3,533.5
    1,066.8
    1,102.8
    923.8
    647.4
    531.9
    455.4
    377.5
    331.6
    281.4
    241.1
    169.7
    99.2
    63.4
    49.0
    19.0
  Note: The
facts or events that generated the amounts charged in each period may have
occurred in prior periods and not necessarily in the period in which the charge
is made. For 2016 and 2015, fines and penalties do not include Ps. 166.4 million
and 186.3 million under the ENRE settlement, respectively.  Our fines and
penalties imposed on us by the ENRE amounted to Ps.2,556.7 million and Ps.281.7
million as of December 31, 2016 and 2015, respectively. As of December 31,
2016, total accrued fines and penalties imposed on us amounted to Ps.3,533.5
million, of which Ps. 2,156.1 million (including accrued interest) corresponded
to penalties accrued but not yet imposed on us and Ps. 1,377.5 million
(including accrued interest) correspond to penalties imposed on us but not yet
paid. Through Note No.
120,151 , the ENRE established that all fines and penalties to be imposed after
April 15, 2016 (whether with respect to events occurring on or after such date
or events occurring prior to the date thereof but for which fines or penalties
had not been imposed on us by such date) must be valued according to the VAD or
KWh values in effect as of the last date of the semester or period during which
the event giving rise to the penalty occurred, including any increases or
adjustments applicable to our “remuneration” at such date.  In addition,
fines and penalties that fall within the purview of the Note will accrue
interest from the last date of the semester on which the event giving rise to
the penalty occurred until the date they are paid by us. Additionally, on
October 19, 2016, through Note No. 123,091 the ENRE established the average rate
values (Ps./KWh) to be applied as from December 2012, for calculating the
penalties payable to the Argentine government. In accordance with the terms of
the Adjustment Agreement, such values correspond to the average sale price of
energy charged to customers. Since the rate values informed in the Note are not
consistent with such provision, on November 1, 2016, we submitted a note to the
ENRE requesting their rectification as we considered the approach erroneous. As
of the date of this annual report, we had not received an answer.  In case the ENRE
considers that the average rate values (Ps./KWh) to be applied for the
calculation of penalties must include all the amounts received by us in the form
of, for example, government grants, the amount of our provision for penalties
could increase significantly. However, we believe that such interpretation would
be contrary to the terms of the Concession Agreement. On February 1, 2017,
the ENRE issued Resolution No. 63/17, through which it approved new parameters
related to the quality standards, with the purpose of achieving by the end of
the 2017-2021 period an acceptable quality level. In this regard, the ENRE
established a penalty regime to be applied in the event of non-compliance with
the requisite quality rates. On March 29, 2017,
through Note No. 125,248, the ENRE established a new methodology for the
calculation of fines and penalties, determining that fines must be valued
according to the KWh values in effect as of the first day of the semester during
which the event giving rise to the penalty occurred or the KWh value in effect
as of the day of occurrence of the event in the case of penalties arising from
specific events.


43

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In addition, fines and
penalties, accrued and not imposed during the Transition Period of the
Adjustment Agreement must be updated using the CPI that the Argentine Central
Bank uses to elaborate the Multilateral Real Exchange Rate Index (“TCRM”),
corresponding to the month prior to the semester during which the event giving
rise to the penalty occurred or the month prior to that on which the specific
penalty event occurred, till the previous month of the day on which the penalty
was imposed. Those fines and penalties accrued and imposed since the date of
issuance of the Note No. 120,151 through the completion of the RTI on February
1, 2017 (i.e., the period between April 2016 and February 2017) must also be
updated using the CPI. In the case of
penalties which had been imposed but remain unpaid, the 30 day interest rate of
the Banco Nación corresponding to commercial discounts shall apply, as from the
day when the penalty was imposed through the date of payment. Despite the issuance of
Resolution No. 63/2017,the treatment to be given to the penalties and reductions
are still pending to be settled. Disruptions Due to the disruption
in the provision of service in our concession area resulting from a power outage
during a heat- wave occurred between December 20 and December 31, 2010, the ENRE
issued Resolution No. 32/11 in February 2011 whereby we were fined in the amount
of Ps.1.1 million and ordered to compensate those customers who had been
affected by power cuts for approximately Ps.21.2 million. We have filed a direct
appeal with the Appellate Court in Contentious and Administrative Federal
Matters No. 1, requesting that such resolution be declared null and void. Additionally, we filed
a petition for the granting of injunctive relief aimed at suspending the
application of the fine imposed until a decision on the direct appeal is
rendered. On April 28, 2011, the court denied the request for injunctive relief.
As a consequence, we filed a federal extraordinary appeal (“Recurso Extraordinario
Federal”) which was subsequently rejected. We then filed another
appeal (“Recurso de queja por apelación denegada”) with the Supreme
Court requesting that the rejected extraordinary federal appeal be sustained.
During 2014, the Appellate Court in Contentious and Administrative Federal
Matters No. 1, denied the direct appeal requesting such resolution be declared
null and granted the extraordinary appeal on the grounds that the matter
corresponded to the scope and interpretations of a federal rule but not as to
the arbitrariness of the judgment claimed by Edenor. Consequently, we then filed
an appeal (“Recurso de queja por apelación denegada”) requesting that
both appeals be entertained jointly. As of December 31, 2016, Edenor estimated a
potential obligation of Ps. 52.0 million as a result of Resolution No. 32/2011of
the ENRE and registered a provision for this amount in its financial statements
for the year ended December 31, 2016. On November 15, 2012,
the Company was notified of the ENRE’s Resolution No. 336/2012, pursuant to
which the office in charge of enforcing the ENRE’s regulations was instructed to
immediately initiate the corresponding sanction proceeding so as to have the
distribution companies Edenor and Edesur S.A. (“Edesur’’): (a) determine the
customers affected by the power cuts occurred as a consequence of failures
between October 29 and November 14, 2012; (b) determine the discounts to be
recognized to each of the affected customers; and (c) credit such discounts
towards the final discounts that will result from the evaluation of the
Technical Service Quality relating to the six-month control period. In addition, it was
resolved that the Company and Edesur shall compensate each “small demand
residential customer” (T1R) who had been affected by the power cuts occurred
during the aforementioned period. The amount of the compensation depends on the
length of the power cut which must have lasted for more than 12 continuous
hours. We have recorded a Ps. 33 million provision in connection with this
compensation. On January 7, 2014, we
were notified of Resolution No. 1/2014 of the ENRE ordering the payment of
compensation to each user affected by the extreme weather occurring in December
2013 and January 2014. A credit determined by the duration of the interruption
of the service was recognized to each affected user in our invoices until such
credit was fully cancelled, representing an additional 100% compensation for
those users who had been affected by similar interruptions of supply in previous
years. The total compensation paid amounted to Ps. 85.7 million.


44

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On March 28, 2016, we
were notified of Resolution No. 31/2016 of the ENRE pursuant to which we were
instructed to compensate the small residential customers (T1R) who had been
affected by the power outages occurred during the period between February 12,
2016 and February 18, 2016. The amount of each such compensation depended on the
duration of each relevant power outage. The total compensation paid amounted to
Ps. 73 million, and was credited to invoices issued as of April 25,
2016. Foreclosure on the
Pledge of Our Class A common shares or Revocation of Our
Concession Pursuant to the terms
of the Adjustment Agreement, the Argentine government may foreclose on the
pledge of Edenor Class A common shares and sell them in a public bidding process
if any of the following occurs: ·Edenor incurs
penalties in excess of 20% of our gross energy sales, net of taxes (which
corresponds to our energy sales) in any given year; ·EASA, fails to obtain
the ENRE’s approval in connection with the disposition of our Class A common
shares; ·material and repeated
breaches of the Concession are not remedied upon request by the ENRE; ·EASA creates any lien
or encumbrance on our Class A common shares (other than the existing pledge in
favor of the Argentine government); ·EASA or Edenor
obstruct the sale of the Class A common shares at the end of any management
period according to the terms of the Concession; ·our shareholders amend
our articles of incorporation or voting rights in a way that modifies the voting
rights of the Class A common shares without the ENRE’s prior approval;
or ·our
shareholders or former shareholders fail to desist from any ICSID claim brought
against the Argentine government following the completion of the RTI process and
the approval of a new tariff regime. On February 1, 2017,
the ENRE issued Resolution No. 63/17 establishing the new tariff scheme which
resulted from the completion of the RTI process, applicable to the following
five-year period. Pursuant to the provisions of the Adjustment Agreement, EASA
and EDFI withdrew their ICSID claim, and on March 28, 2017, the ICSID took note
of the discontinuance of the procedure. See “Item 7. Major Shareholders and
Related Party Transactions - Acquisition by Central Térmica Loma de la Lata
S.A”. Upon the occurrence of
any of these events, the Argentine government will have the right to foreclose
on the pledge of our Class A common shares and exercise the voting rights of the
Class A common shares until the transfer of such shares to a new purchaser
occurs, at which time EASA will receive the proceeds of such transfer, net of a
specified penalty payable to the Argentine government. In addition, under the
terms of our concession, the Argentine government has the right to revoke our
concession if we enter into bankruptcy and the Argentine government decides that
we may not continue rendering services, in which case all of our assets will be
transferred to a new state‐owned company that will be sold in an international
public bidding process. At the conclusion of this bidding process, the purchase
price would be delivered to the bankruptcy court in favor of our creditors, net
of any debt owed by us to the Argentine government.  Any residual proceeds
would be distributed among our shareholders. Periodic bidding for
control of Edenor Before the end of each
management period under our concession, the ENRE will arrange for an
international public bidding procedure to be conducted for the sale of 51% of
our capital stock and voting rights in similar conditions to those under which
EASA acquired its stake. EASA (or its successor) will be entitled to participate
in the bid.  The person or group offering the highest price will acquire
the stock and will pay the offered price to EASA. If EASA is the highest bidder
or if EASA’s bid equals the highest bid, it will retain 51% of our stock, but no
funds will need to be paid to the Argentine government and EASA will have no
further obligation with respect to its bid.  There is no restriction as to
the amount EASA may bid. In the event EASA fails to submit a bid or its bid is
lower than the highest bid, the ClassA common shares will
be transferred to the highest bidder and the price paid by the purchaser (except
for any amounts owed to the Argentine government) will be delivered to
EASA. See “Item 7. Major
Shareholders and Related Party Transactions - Acquisition by Central Térmica
Loma de la Lata S.A”.


45

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The first management
period was set to expire on August 31, 2007. We presented a request for a
five-year extension of the initial management period in May 2007 and on July 5,
2007, the ENRE, pursuant to the Resolution No. 467/2007 of the ENRE, agreed to
extend the initial management period for an additional five years from the date
that the new tariff structure was adopted under the RTI.  The remaining
10-year periods will run from the expiration of the extension of the initial
management period. Default of the
Argentine government If the Argentine
government breaches its obligations in such a way that we cannot comply with our
obligations under our concession or in such a way that our distribution service
is materially affected, we may request the termination of our concession, after
giving the Argentine government a 90 days’ prior notice. Upon termination of our
concession, all our assets used to provide our electricity distribution service
will be transferred to a new state‐owned company to be created by the Argentine
government, which shares will be sold in an international public bidding
procedure. The amount obtained in such bidding will be paid to us, net of the
payment of any debt owed by us to the Argentine government, plus compensation
established as a percentage of the bidding price, ranging from 10% to 30%
depending on the management period in which the sale occurs. Edenor Network As of December 31,
2016, the system through which we supply electricity was composed of 76
sub-stations of high/high voltage, high/medium voltage and high voltage
customers, representing 16,219 MVA of transformer capacity installed and 1,452
kilometers of high-voltage power lines of 220 kV, 132 kV and 27.5 k. The
distribution system of medium and low voltage was comprised of 17,339
transformers of medium/low voltage, representing 7,370 MVA of transformer
capacity, 10,437 kilometers of medium‐voltage power lines of 33 and 13.2 kV and
26,549 kilometers of low-voltage power lines 380 V. The following table
provides certain information concerning our transmission and distribution system
as of the dates presented: As of December 31,2016
    
    2015
    
    2014Kilometers of
      transmission linesHigh
      voltage
    1,452
    
    1,438
    
    1,410Medium
      voltage
    10,437
    
    10,189
    
    9,979Low
      voltage
    26,549
    
    26,236
    
    25,882Total
    38,438
    
    37,863
    
    37,271Transformer
      capacity (MVA)High
      voltage/high voltage
    8,428
    
    8,128
    
    7,828High
      voltage/medium voltage
    7,791
    
    7,691
    
    7,131Medium
      voltage/low voltage and medium voltage/medium voltage
    7,668
    
    7,158
    
    6,897Total
    23,887
    
    22,977
    
    21,856
   Demand is provided
from points of interconnection with the Argentine Interconnection System
(Sistema Argentino de Interconexión, or SADI), 500 kV and
220 kV Rodríguez Substation, 220 kV and 132 kV Ezeiza Substation  and from
the local power plants Puerto and Costanera. In turn, the transmission network
links these nodes with head sub-stations of 220 kV -Casanova, Colegiales,
Malaver, Matheu, Morón, Rodríguez, Talar and Zappalorto- and 132 kV -Matanza,
Ramos Mejía, Agronomía, Puerto Nuevo, Edison, Malvinas and Pilar-. The transmission and
distribution system, together with the Edesur S.A and Edelap S.A. 
(“Edelap”) systems, forms the Greater Buenos Aires (GBA) system. The GBA system
is operated by  Sociedad Anónima Centro de Movimiento de Energía (SACME),
which is jointly administrated by Edesur and us (50% of SACME shares are owned
by Edesur and us).  SACME is responsible for the
management of regional high-voltage distribution, coordinating, controlling and supervising the operation of the generation, transmission and distribution network in the City of Buenos Aires and the greater Buenos Aires metropolitan area, including coordination with the SADI in Edenor and Edesur’s concession areas.


46

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We distribute energy from the sub-stations of high/medium voltage through the primary 13.2kV and 33kV system to a secondary 380/220 V low-voltage system, supplying end users with different voltage levels according to their requirements. In exceptional cases, we supply high voltage energy to certain users.

Construction works related to the extension of the transformations system 220/132 kV in Rodriguez Substation were completed in 2016, increasing its capacity from 300 MVA to 600 MVA. Furthermore, we continue working towards the installation of a new transformer of 500/220 kV and 800 MVA in the Rodriguez Substation, with financing from the Administration of Transport and Electric Supply Works Trust (FOTAE). We believe that this addition will allow us to meet the increasing energy demand in the medium and long term throughout our concession area.  See “Item 5. Operating and Financial Review and Prospects—Factors Affecting Our Results of Operations—Demand—Capacity Demand”. As an intermediate step, we are working on the assembly of a 500/132 kV and 300 MVA capacity transformer.

Under the framework of Resolution No. 21/16 of the SE, thermal generation projects related to Edenor's electric network have been awarded for approximately 650 MW, starting operations in 2017.

Works to expand Edesur’s substation Ezeiza 220/132 kV are also ongoing, which will increase its capacity by 300 MVA, and will be available to Edenor, and new 132 kV electroducts between such substation and the El Pino substation.

During 2016, several high-voltage facilities were put into service in the high voltage grid:

üNew Substations:

-Olivos 132/13.2 kV 2x80 MVA.

-Aguas 132/13.2 kV 2x40 plus 1x20 MVA.

-Aeroclub 132/13.2 kV 2x80 MVA.

-Gaona 132/33/13.2 kV 4x40 MVA.



üSubstations’ expansion:

-Morón from 132/13,2 kV from 3x40 MVA to 2x40 plus 1x80 MVA

-Suarez 132/13.2 kV from 2x40 MVA to 2x80 MVA.

-Tapiales 132/13.2 kV from 2x40 MVA to 2x80 MVA.

-Pantanosa 132/13.2 kV increasing by 40 MVA.

-José C. Paz 132/13.2 kV increasing by 120 MVA.

-Urquiza 132/13.2 kV to 3x40 MVA.



Systems

Throughout 2016, we continued implementing significant improvement into our technological platform, thus consolidating our leading position in the field. Some of our main projects were:

The implementation of the “Technical Project” was completed, which represented one of the most important projects in our history. It consists of an integral management software for all the assets comprising the Company’s premises and workforce.As a result, a significant knowledge of the network was achieved, improving maintenance efficiencies and reducing the sustained rate of system failure. In addition, effective task management was significantly improved as a result of the enhancement of programming, task dispatch, work planning and the reduction of electrical outage.




- In connection with the CC&B central system (Customer Service and Billing), the adjustments generated by the modification of tariffs required certain changes such as to: the frequency of invoices (from bimonthly to monthly), the application of the social tariff and to invoice design. Moreover, a new support and billing delivery control system was implemented, as well as new payment methods through online third-party platforms (such as Pago Facil) and the use of credit cards introduced.








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With respect to the
  Edenor 2.0 System for mobile phones and Edenor’s website, the second update
  phase was initiated so as to streamline the relationship with customers and to
  enable them to interact with us, including by posting questions and paying
  bills without having to go to our commercial offices.  Throughout 2016, new
  credit card payment functions were developed. In addition, support services
  were introduced to allow customers to carry out 85% of online transactions.
  Accordingly, it is currently easier for customers to manage their accounts. A
  virtual chat tool was also implemented, thus offering a new 24/7 assistance
  channel.  In connection with
  the SAP System, new modules were implemented as well as significant
  improvements to our management system such as in connection with the
  management of contracts and administrative processes in digital platforms to
  reduce time and provide transparency. Moreover, new modules of the management
  system in the central warehouse were implemented. A mobile application was
  also implemented which enables to make system procedure approvals through the
  use of mobile phone lines by the executives of the Company.  We implemented the
  “Remedy”, a new ticket registration system that enables us to unify and order
  the processes of the IT and Telecommunications Directorate, by providing a
  higher quality service in terms of time and response, thus achieving greater
  traceability of the different processes, that is indispensable for our SOX
  certification.  The performance
  management module within the “success factor tool” was acquired and
  implemented, which enables us to manage the performance and development of our
  staff to better achieve the Company’s results through the alignment of plans
  and objectives.  A digital board
  system (Edenor TV) was implemented to address customers who use the monitors
  located in our commercial offices.  The Smartime Phase
  II implementation was carried out, by including referral and/or control
  workflows.  In the technology
  and operations sectors, improvement in terms of applications availability and
  performance were achieved by means of the implementation of new technologies
  and processes, such as a new information storage equipment, achieving a 300%
  improvement in terms of the processing of main systems, the expansion of the
  number of servers supporting the operations and the update of mobile computers
  and a third of the total number of desktop equipment.   Telecommunications During 2016: ·The
connectivity deployment of the Transformation Centers (CT) was initiated to
allow remote control from the network control center over network medium voltage
control elements. This will enable us to reestablish the service in the event of
a failure in a shorter period of time thus improving the quality of the
electrical service rendered. ·A new
technology to improve communications and optimize the equipment of 20
substations was acquired. ·Part of
the call center infrastructure was partially migrated to a new service provider
located in the province of Tucumán with 55 assistance positions and 7
supervising positions. ·A high
availability corporate internet service was implemented, which connects directly
to the cloud so as to improve connectivity by offering a better-quality service
to all internet applications.


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·New video surveillance
systems were installed and some were migrated to the new control and intrusion
system. Certain works were carried out such as: (1) the installation and startup
of the telecommunications or structured wiring of new locations; (2) the startup
of new sectors and commercial offices; (3) the installation of fiber optic cable
which enabled a high-speed connection with sub stations Corralón, SE. Olivos,
Morón Sector and Ituzaingó offices; and (4) the beginning of the connections in
Nuevo Puerto and Substation Puerto Nuevo of the new SMEC meters.   Customers The following graph
shows the evolution of our customer base through December 31 of each year:     As of December 31,
2016, Edenor served 2,867,250 customers. We define a “customer” as one
meter. Edenor Tariff
Categories Edenor classifies its
customers pursuant to the following tariff categories: ·Residential (T1-R1 to
T1-R9): residential customers whose peak capacity demand is less than
10kW.  In 2016, this category accounted for approximately 43.6% of our
electricity sales. ·Small commercial
(T1-G1 to T1-G3): commercial customers whose peak capacity demand is less than
10kW.  In 2016, this category accounted for approximately 8.2% of our
electricity sales. ·Medium commercial
(T2): customers whose peak capacity demand is equal to or greater than 10kW but
less than 50kW.  In 2016, this category accounted for approximately 8.2% of
our electricity sales. ·Industrial (T3):
industrial customers whose peak capacity demand is equal to or greater than
50kW.  This category is applied to high-demand customers according to the
voltage at which each customer is connected.  The voltage ranges included
in this category are the following: (i) Low Voltage (LV): voltage less than or
equal to 1 kV; (ii) Medium Voltage (MV): voltage greater than 1kV but less than
66 kV; and (iii) High Voltage (HV): voltage equal to or greater than 66kV. 
In 2016, this category accounted for approximately 16.5% of our electricity
sales.  This category does not include customers who purchase their
electricity directly through the WEM under the wheeling system. ·Wheeling System: large
users who purchase their electricity directly from generation or broker
companies through the WEM. These tariffs follow the same structure as those
applied under the Industrial category described above. As of December 31, 2016,
the total number of such large users was 713, and in 2016 this category
represented approximately 18% of our electricity sales.


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·Others: public
lighting (T1-PL) and shantytown customers whose peak capacity demand is less
than 10kW.  In 2016, this category accounted for approximately 5.5% of our
electricity sales.  See “Framework Agreement (Shantytowns)”. We try to maintain an
accurate categorization of our customers in order to charge the appropriate
tariff to each of its customers. In particular, we focus on our residential
tariff categorizations to both minimize the number of commercial and industrial
customers who are classified as residential customers and identify residential
customers whose peak capacity demand exceeds 10kW and therefore do not qualify
as residential customers. We rely on the
following measures to detect incorrectly categorized customers: ·reporting by our
employees tasked with reading meter information to identify observed commercial
activities which are being performed by residential customers, ·conducting internet
surveys to identify advertisements for commercial services (such as medical or
other professional services) that are linked to a residential customer’s
address, and ·analyzing customer
demand to determine whether we should further evaluate the peak capacity demand
of a given customer whose use might exceed 10kW.  Reading, Billing and
Collecting We bill our customers
based on their category of service. Residential and small commercial customers
are billed a fixed charge payable monthly and a variable charge based on each
unit of energy consumed. The energy consumption savings obtained by customers
are calculated by comparing the current consumption with the customer’s
consumption registered on the same period in 2015. As of January 29, 2016,
since the issuance of Resolution No. 1/16, the ENRE established a new billing
schedule on a monthly basis maintaining consumption readings on a bimonthly
basis. On February 1, 2017, the ENRE issued Resolution No. 63/2017 establishing
a new tariff schedule, which maintains the billing methodology described
above. Our residential and
small commercial customers are divided into subcategories based on their
consumption, as follows: Residential (Tariff
1-R or T1-R): Tariff 1-R1: bimonthly energy
  consumption less than or equal to 300 kWh;Tariff 1-R2: bimonthly energy
  consumption greater than 301 kWh and less than or equal to 650 kWh;Tariff 1-R3: bimonthly energy
  consumption greater than 651 kWh and less than or equal to 800 kWh;Tariff 1-R4: bimonthly energy
  consumption greater than 801 kWh and less than or equal to 900 kWh;Tariff 1-R5: bimonthly energy
  consumption greater than 901 kWh and less than or equal to 1000 kWh;Tariff 1-R6: bimonthly energy
  consumption greater than 1001 kWh and less than or equal to 1200 kWh;Tariff 1-R7: bimonthly energy
  consumption greater than 1201 kWh and less than or equal to 1400 kWh;bimonthly energy Tariff 1-R8:
  bimonthly energy consumption greater than 1401 kWh and less than or equal to
  2800 kWh; andTariff 1-R9: bimonthly energy
  consumption greater than 2800 kWh.


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Social
Tariff The social tariff
applies to the same subcategories of residential tariff, but without a variable
charge for the first 150 kWh monthly consumption. To qualify for the
social tariff, customers must comply with one of the following
characteristics: ·retirees
or pensioners who receive two gross minimum wages or less; ·workers
in employment relationships that earn two gross minimum wages or
less; ·self-employed individuals falling in categories that
correspond to annual income which monthly break out reaches two minimum gross
wages or less; ·grantees
of social programs; ·registered in the self-employed (monotributista) social
category; ·grantees
of non-contributory pensions with gross income equal to or less than two minimum
wages; ·grantees
of unemployment insurance; ·domestic
service incorporated into the relevant special social security
scheme; ·holders
of the Lifetime Pension for Veterans of the South Atlantic War; ·persons
with disability certificate issued by a competent authority; and ·persons
suffering or living with another person suffering from an illness whose
treatment involves electrodependence (in this case, the variable charge for the
first 600 KWh monthly consumption is free). Small commercial
(Tariff 1-G): Tariff 1-G1: bimonthly energy
  demand less than or equal to 1600 kWhTariff 1-G2: bimonthly energy
  demand greater than 1600 kWh but less than or equal to 4000 kWhTariff 1-G3: bimonthly energy
  demand greater than 4000 kWh Medium Commercial
(Tariff 2): Medium commercial
customers (demand greater than 10 kW but less than 50 kW - Tariff T2) are billed
on a monthly basis, as follows: (1) a fixed charge per invoiced issued; (2) a
fixed charge per each “scope of supply” of  KW capacity agreed; (3) a fixed
charge based on a maximum KW capacity (applicable to the maximum capacity
registered during the billing period); (4) a variable charge based on each unit
of energy consumed, without hour discrimination; and, (4) if applicable, a cos
phi surcharge. Industrial (Tariff
3): Industrial customers
(demand equal or greater than 50 kW - Tariff T3) are billed on a monthly basis,
as follows: (1) a fixed charge per invoice issued; (2) a fixed charge per each
“scope of supply” of KW capacity agreed for low, medium or high voltage, with or
without electricity consumption; (3) a fixed charge based on a maximum KW
capacity registered, in low, medium or high voltage, applicable to the maximum
capacity registered during the billing period; (4) a charge resulting from the
electricity supplied in the voltage corresponding to the provision, in
accordance with the consumption registered in each of the tariff timetables:
“peak”, “night-time” and “remaining hours”; (5) if the supply is carried out incontinuous current, a
surcharge equivalent to a percentage of the price of the rectified electricity;
and (6), if it is applicable, a cos phisurcharge.


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Public Lighting
(AP): Public lighting
customers are billed a monthly variable energy charge based on each unit of
energy consumed. The table below shows
the number of Edenor customers per category at the dates indicated. As of December 31,2016
    2015
    2014T1R
    2,497,386
    2,467,757
    2,443,670T1G
    327,198
    325,149
    317,237T2
    34,662
    34,477
    32,526T3
    6,856
    6,706
    6,552Wheeling system
    714
    708
    710Other*
    434
    432
    426Total
    2,867,250
    2,835,229
    2,801,121
  * Represents public lighting and shantytown customers.  All of the meters are
read with portable meter‐reading terminals, either with manual access or optical
reading (in the case of electronic meters for T2, T3 and certain T1customers).
The systems validate the readings, and any inconsistent reading is checked
and/or corrected before billing. Estimates of customer usage were significantly
reduced as a result of this new billing system. Once the invoices are printed,
independent contractors in each operating area, that are subject to strict
controls, distribute them. Slow-Paying Accounts
and Past Due Receivables Since the beginning of
the concession, many procedures have been established to reduce delinquency and
make collection possible.  Our Commercial Department oversees the strict
observance of such procedures. Municipalities’
accounts form a significant number of our arrears accounts. The methods of
collection on such arrears vary for each municipality. One method of collection
is to withhold from the municipalities certain taxes collected by us from the
public on behalf of the municipalities and using such taxes to offset any past
due amounts owed to us by such municipalities. Another method of collection is
entering into refinancing agreements with the municipalities. These procedures
allowed us to reduce significantly the number of arrears accounts. Our past due
receivables increased from Ps. 209.3 million as of December 31, 2015 to Ps.
658.8 million as of December 31, 2016. This increase was mainly due to the
increase in tariffs established by ENRE Resolution No. 1/2016, in February 2016.
The tariff increase affected directly the amounts owed by customers with debtor
behavior, as their unpaid charges are calculated based on the tariff in force as
of the date of the infringement. The provisional remedies issued against the
tariff increase mentioned above that were in effect in certain districts,
prevented us from taking actions (such as the suspension of the electricity
supply) to rectify delinquent customer situations. As a result, we were unable
to reduce the impact of our past due receivables.


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The following graph
shows Edenor delinquent balances as of December 31, of each year:  We also supply energy
to low-income areas pursuant to the framework agreement with the Argentine
government and the Province of Buenos Aires, for which certain payments are
still owed to us.  See “Framework Agreement (Shantytowns)”.  Energy Losses Energy losses are
equivalent to the difference between energy purchased and energy sold, and may
be classified as technical and non-technical losses. Technical losses represent
the energy that is lost during transmission and distribution within the network
as a consequence of natural heating of the transformers and conductors that
transmit the electricity from the generating plants to the customers. These
losses typically increase in proportion to the amount of energy volume
distributed (as has been the case for us in recent years). Technical losses are
normal for any energy distributor and cannot be completely eliminated, though
reduced through improvements in the network. We believe that the level of
technical energy losses is approximately 9% in countries with similar
distribution networks. The non-technical energy losses represent the remainder
of our energy losses mainly due to the illegal use of its services and
administrative and technical errors. Energy losses require
us to purchase additional energy to satisfy apparent demand, thereby increasing
costs. Furthermore, illegally tied-in customers typically consume more
electricity than the average level of consumption for their category. We are
unable to recover from customers the cost of electricity purchased beyond the
average loss factor set at 10% pursuant to our concession.  Therefore, the
reduction of energy losses reduces the amount of energy we have to purchase to
satisfy apparent demand but cannot invoice, and increases the amount of
electricity actually sold. At the time of the
privatization of the electricity sector in 1992, our total energy losses were
approximately 30%. At that time, our non-technical losses were estimated at 21%,
with over half of that amount due to fraud and illegal use of our service. In
response to the high level of losses, we implemented a loss reduction plan in
1992, which emphasized on accurate measurement of energy consumption through
periodic inspections, reduction of administrative errors, regularization of
shanty towns, reduction of illegal direct connections, provision of services to
shantytowns and reduction of technical losses. At present, our goal
is to maintain our energy losses at an optimal level, taking into account the
cost of reducing such losses and the level at which we are reimbursed for the
cost of these losses under our concession. Our procedures for maintaining an
optimal level of losses are focused on improving collections to ensure that
customers pay for all the energy that they consume and making investments in our
network to control technical losses. To reduce the theft of electricity we have
implemented vigilance and special technologies, such as much higher networks
that cannot be reached using normal ladders, shields close to the electricity
posts, concentric cables, shielded meters and suspension of electricity service,
among other remedies.


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Moreover, we are
testing other programs including teaching low-income customers how to ration
their consumption, providing them with the option of paying in installments and
the installation of prepaid meters, which reached a number of 8,000 prepaid
meters installed in 2016. A large installation plan for this type of meters will
be implemented since 2017. In Regions II and III
of our concession area, low-income neighborhoods continue to be detected and
shantytowns have expanded. Energy theft remains the main cause of the increase
in total energy losses within such regions. Throughout 2016, we continued
working with the support of legal counsel to file criminal complaints against
such frauds and to establish new technological criteria in order to reduce the
vulnerabilities of the grid. The following table
illustrates our estimates of the approximate breakdown between technical and
non-technical energy losses experienced in our concession area since 2007. We
believe that non-technical losses could increase in 2017 following the
establishment of the new tariff structure pursuant to  Resolution No.
63/2017 issued by the ENRE. Year ended December 31,2016
    2015
    2014
    2013
    2012
    2011
    2010
    2009
    2008
    2007
    2006Technical
      losses
    9.6%
    11.1%
    10.8%
    10.3%
    10.5%
    9.8%
    9.8%
    9.8%
    9.8%
    9.6%
    8.6%Non technical
      losses
    7.4%
    3.8%
    3.5%
    2.7%
    2.8%
    2.8%
    2.7%
    2.1%
    1.0%
    2.0%
    2.5%Total
      losses
    17.0%
    14.9%
    14.3%
    13.0%
    13.3%
    12.6%
    12.5%
    11.9%
    10.8%
    11.6%
    11.1%
   As of December 31,
2016, total energy losses recorded by us were 17.0%, out of which technical
losses represented 9.6% and non-technical losses represented 7.4%.  Framework Agreement
(Shantytowns) In accordance with the
terms of our concession and given the nature of public service that the law
grants to the distribution of electricity, the Company is required to supply
electricity to all users within the concession area, including low-income areas
and shantytowns located within our concession area. In October 2003, Edenor,
Edesur and Edelap entered into a framework agreement with the Argentine
government and the Province of Buenos Aires (the “2003 Framework Agreement”) to
regulate the supply of electricity to low-income areas and shantytowns. Under
the 2003 Framework Agreement, the Company has the right to receive compensation
for the services provided to shantytowns from funds collected from residents of
each relevant shantytown, the Municipality in which it is located and, if there
is a shortfall, by a special fund supported by the Argentine government and the
government of the Province of Buenos Aires. The Argentine government and the
Province of Buenos Aires contribute an amount equal to 21% and 15.5% of such
compensation, respectively, net of taxes, paid by those customers with payment
problems and meter irregularities, which are transferred to distributors such as
Edenor as compensation. On June 23, 2008, Edenor entered into an amendment to
the 2003 Framework Agreement (the “Amended 2003 Framework Agreement”) with the
Argentine government, the Province of Buenos Aires and the other national
electric distributors extending the terms of the 2003 Framework Agreement. This
Amended 2003 Framework Agreement expired on December 31, 2010. On July 22, 2011, the
Company, together with Edesur and Edelap, entered into an addendum with the
Argentine government and the government of the Province of Buenos Aires, to
extend for an additional term of four years (from January 1, 2011, to December
31, 2014) the Amended 2003 Framework Agreement. Such extension was approved on
September 21, 2012 by Resolution No. 248/12 issued by the ENRE and ratified by
the Ministry of Planning pursuant to Resolution No. 247/12. As of December 31,
2014 the Agreement expired. With regard to the
accounts receivable we had against the Province of Buenos Aires, on October 18,
2012 we entered into an agreement for the settlement of non-financial
obligations and subscription of Buenos Aires Province government bonds, pursuant
to which we agreed to receive an amount of Ps. 0.3 million in cash and subscribe
Series B bonds for a residual nominal value of Ps. 6.1 million, in compensation
for the debt that the Buenos Aires Province had with us for the electric power
supplied to low-income areas, as of December 31, 2010.


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On May and July, 2016,
we received payments for Ps. 11.4 million and Ps. 53.5 million, respectively,
from the provincial and the Argentine governments corresponding to 2014
period. Given that as of the
date of this annual report the approval of the new Framework Agreement for the
period from January 1, 2015 to December 31, 2018, by the Argentine government
and the government of the Province of Buenos Aires is pending, no additional
revenue in connection with compensation for service provided to shantytowns has
been recognized, which as of December 31, 2016, amounted to Ps. 92.4
million. As of December 31,
2016, 2015 and 2014, our receivable balances with the Argentine government and
the government of the Province of Buenos Aires for the supply of electricity to
shantytowns amounted to Ps. 8.2 million, Ps. 73.1 million and Ps. 75.8 million,
respectively. Insurance As of December 31,
2016, we had insurance for loss and damage to property, including damage due to
floods, fires and earthquakes covering up to U.S.$ 1,515.61 million, with the
following deductibles: ·transformers, between U.S.$ 175,000 and U.S.$ 850,000
(depending on their power level); ·equipment
of sub-stations (not including transformers), U.S.$ 75,000. ·commercial offices, U.S.$ 1,500 for each office; ·deposits
and other properties, U.S.$ 25,000; and ·acts of
terrorism, U.S.$ 50,000, being the maximum insured amount for this purpose,
U.S.$ 10,000,000. We are also insured
against theft of  safe-deposit boxes and cash/valuables-in-transit 
for a maximum amount of U.S.$ 150,000 and U.S.$ 5,000, respectively, with a
deductible of U.S.$ 250. In addition, we
maintain the following insurance, subject to customary deductibles and the
conditions established for each coverage: ·Directors’ and Managers’ Liability insurance; ·Civil
Liability insurance; ·Automobile
insurance; ·Mandatory
life insurance for all our employees which is maintained in accordance with
Argentine law; and ·Optional
life insurances for all our employees. Although we do not
have business interruption insurance, we consider our insurance coverage to be
adequate and in accordance with the prevailing standards for the industry. 
See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—In the
event of an accident or other event not covered by our insurance, we could face
significant losses that could materially adversely affect our business and
results of operations”. Environmental
Management In Argentina, the
Argentine government, the provincial governments and the government of the City
of Buenos Aires are entitled to legislate on natural resources and environmental
protection issues. The 1994 Constitution reaffirms this principle, assigning to
the Argentine government the establishment of broad environmental guidelines and
to the provincial governments and to the government of the City of Buenos Aires
the duty to implement the necessary legislation to attain national environmental
goals. The environmental policy for the electricity market is formulated by the
SE and implemented by the ENRE. Areas regulated by the ENRE include the
tolerance level for electromagnetic fields, radio interference, voltage of
contact and pass, liquid spills, disposal and handling of solid wastes, noise
and vibration admissible levels and use, and the transport and storage of
hazardous waste, includingpolychlorinated
biphenyl (PCB), a viscous substance which was historically used to lubricate
electrical transformers.  The Argentine Environmental Law required that we
eliminate the PCB in our transformers before the end of 2010.


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Over the course of
2009, we completed the removal of PCBs from all our transformers with
contaminated coolant oils exceeding 50 ppm (parts per million), the limit
established by National Law No. 25,670. As part of our
investment plan, we made important improvements to our network and implemented
technological innovations which reduced the impact of these improvements on the
environment. We are required to apply for licenses from the ENRE for all our
business activities, which include certain requirements related to environmental
protection. We believe that we are in compliance in all material respects with
all applicable environmental standards, rules and regulations established by the
ENRE, the SE and other federal, provincial and municipal authorities. We have
implemented environmental management programs to evaluate environmental impact
and to take corrective actions when necessary. In addition, we have in place an
environmental emergency plan designed to reduce potential adverse consequences
should an environment contingency occur.  Finally, as part of our
environmental actions, we improved and deepened the program of rational uses of
energy in our buildings and in our customer equipment. Regarding the addition
of new installations and related construction works, all of the studies
corresponding to the Environmental Impact Evaluation required by law are being
made. These analyses are presented to local environmental authorities and
submitted to consideration of the local communities in Public Audiences held as
required by applicable regulations for the issuance of an Environmental Aptitude
Certificate. On October 19, 1999,
the Argentine Institute of Normalization(Instituto Argentino de
Normalización) certified that we have an Environmental Management
System that is in accordance with the requirements of the standards set by the
International Standardization Organization (ISO) as specified in its release,
ISO 14001, which relates specifically to environmental management systems. This
certification is reaffirmed on an annual basis, most recently as of December
2016. Section 22 of law No.
25,675 requires all persons whose activities risk environmental damage, such as
us, to obtain environmental insurance up to a certain minimum coverage. Moreover, we 
have an environmental emergency plan that details the steps that would be taken
in the event that our operations resulted in any environmental
damage. Seasonality Demand for our
services fluctuates on a seasonal basis.  For a discussion of this
seasonality of demand, see “Item 5. Operating and Financial Review and
Prospects—Demand —Seasonality of Demand”.  The Argentine Electricity Industry Historical
Background Electricity was first
made available in Argentina in 1887 with the first public street lighting in
Buenos Aires.  The Argentine government’s involvement in the electricity
sector began in 1946 with the creation of theDirección General de Centrales
Eléctricas del Estado(General Directorate of Electric Power Plants of the
State) to construct and operate electricity generation plants. In 1947, the
Argentine government createdAgua y Energía Eléctrica S.A.(Water and Electricity, or AyEE)
to develop a system of hydroelectric generation, transmission and distribution
for Argentina. In 1961, the Argentine
government granted a concession to theCompañía Italo Argentina de
Electricidad(Italian‐Argentine Electricity Company, or CIADE) for
the distribution of electricity in a part of the City of Buenos Aires. In 1962,
the Argentine government granted a concession formerly held by theCompañía Argentina de Electricidad(Argentine
Electricity Company, or CADE) toServiciosEléctricos del Gran
Buenos Aires(Electricity Services of Greater Buenos Aires, or
SEGBA), our predecessor, for the generation and distribution of electricity to
parts of Buenos Aires. In 1967, the Argentine government granted a concession to
Hidroeléctrica Norpatagónica S.A. (Hidronor) to build and operate a series of
hydroelectric generation facilities. In 1978, CIADE transferred all of its
assets to the Argentine government, following which CIADE’s business became
government‐owned and operated.


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By 1990, virtually all
of the electricity supply in Argentina was controlled by the public sector (97%
of total generation). The Argentine government had assumed responsibility for
the regulation of the industry at the national level and controlled all of the
national electricity companies, AyEE, SEGBA and Hidronor. The Argentine
government also represented Argentine interests in generation facilities
developed or operated jointly with Uruguay, Paraguay and Brazil. In addition,
several of the Argentine provinces operated their own electricity companies.
Inefficient management and inadequate capital spending, which prevailed under
national and provincial government control, were in large measure responsible
for the deterioration of physical equipment, decline in quality of service and
proliferation of financial losses that occurred during this period. In 1991, as part of
the economic plan adopted by former President Carlos Menem, the Argentine
government undertook an extensive privatization program of all major state‐owned
industries, including within the electricity generation, transmission and
distribution sectors. In January 1992, the Argentine federal congress adopted
the Regulatory Framework Law (Law No. 24,065), which established guidelines for
the restructuring and privatization of the electricity sector. The Regulatory
Framework Law, which continues to provide the framework for regulation of the
electricity sector since the privatization of this sector, divided generation,
transmission and distribution of electricity into separate businesses and
subjected each to appropriate regulation. The ultimate objective
of the privatization process was to achieve a reduction in tariffs paid by users
and improve quality of service through competition. The privatization process
commenced in February 1992 with the sale of several large thermal generation
facilities formerly operated by SEGBA, and continued with the sale of
transmission and distribution facilities (including those currently operated by
our company) and additional thermoelectric and hydroelectric generation
facilities. Regulatory and
Legal Framework  Role of the Government The Argentine
government has restricted its participation in the electricity market to
regulatory oversight and policy-making activities. These activities were
assigned to agencies that have a close working relationship with one another and
occasionally even overlap in their responsibilities. The Argentine government
has limited its holding in the commercial sector to the operation of
international hydropower projects and nuclear power plants. Provincial
authorities followed the Argentine government by divesting themselves of
commercial interests and creating separate policy-making and regulatory entities
for the provincial electricity sector. Limits and
Restrictions To preserve
competition in the electricity market, participants in the electricity sector
are subject to vertical and horizontal restrictions, depending on the market
segment in which they operate. Vertical Restrictions The vertical
restrictions apply to companies that intend to participate simultaneously in
different sub-sectors of the electricity market. These vertical restrictions
were imposed by Law No. 24,065, and apply differently depending on each
sub-sector as follows: Generators ·Under Section 31 of
Law No. 24,065, neither a generation company, nor any of its controlled
companies or its controlling company, can be the owner or a majority shareholder
of a transmitter company or the controlling entity of a transmitter company; and ·Under Section 9 of
Decree No. 1398/1992, since a distribution company cannot own generation units,
a holder of generation units cannot own distribution concessions. However,the shareholders of
the electricity generator may own an entity that holds distribution units,
either as shareholders of the generator or through any other entity created with
the purpose of owning or controlling distribution units.


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Transmitters ·Under Section 31 of
Law No. 24,065, neither a transmission company nor any of its controlled
companies or its controlling entity can be the owner or majority shareholder or
the controlling company of a generation company; ·Under Section 31 of
Law No. 24,065, neither a transmission company, any company controlled by a
transmission company nor any company controlling a transmission company can own
or be the majority shareholder or the controlling company of a distribution
company; and ·Under Section 30 of
Law No. 24,065, transmission companies cannot buy or sell
electricity. Distributors ·Under provision 31 of
Law No. 24,065, neither a distribution company, nor any of its controlled
companies or its controlling company, can be the owner or majority shareholder
or the controlling company of a transmission company; and ·Under Section 9 of
Decree No. 1398/1992, a distribution company cannot own generation units.
However, the shareholders of the electricity distributor may own generation
units, either directly or through any other entity created with the purpose of
owning or controlling generation units. Definition of Control The term “control”
referred to in Section 31 of Law No. 24,065 (which establishes vertical
restrictions) is not defined in the Electricity Regulation Framework. Section 33
of the Argentine Corporations Law states that “companies are considered as
controlled by others when the holding company, either directly or through
another company: (1) holds an interest, under any circumstance, that grants the
necessary votes to control the corporate will in board meetings or ordinary
shareholders’ meetings; or (2) exercises a dominant influence as a consequence
of holding shares, quotas or equity interest or due to special linkage between
the companies.” We cannot assure you, however, that the electricity regulators
will apply this standard of control in implementing the restrictions described
above. Horizontal
Restrictions In addition to the
vertical restrictions described above, distribution and transmission companies
are subject to horizontal restrictions, as described below. Transmitters ·According to Section
32 of Law No. 24,065, two or more transmission companies can merge or be part of
the same economic group only if they obtain an express approval from the ENRE.
Such approval is also necessary when a transmission company intends to acquire
shares of another electricity transmission company; ·Pursuant to the
concession agreements that govern the services rendered by private companies
operating transmission lines above 132Kw and below 140Kw, the service is
rendered by the concessionaire on an exclusive basis over certain areas
indicated in the concession agreement; and ·Pursuant to the
concession agreements that govern the services rendered by the private company
operating the high-tension transmission services equal to or higher than 220Kw,
the company must render the service on an exclusive basis and is entitled to
render the service throughout the entire country, without territorial
limitations.


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Distributors ·Two or more
distribution companies can merge or be part of the same economic group only if
they obtain an express approval from the ENRE. Such approval is necessary when a
distribution company intends to acquire shares of another electricity
transmission or distribution company; and ·Pursuant to the
concession agreements that govern the services rendered by private companies
operating distribution networks, the service is rendered by the concessionaire
on an exclusive basis over certain areas indicated in the concession
agreement. 2001 Economic
Crisis At the end of 2001 and
beginning of 2002, Argentina experienced an unprecedented crisis that virtually
paralyzed the country’s economy through most of 2002 and led to radical changes
in government policies. See “Item 5. Operating and Financial Review and
Prospects—Factors Affecting Our Results of Operations—Argentine Economic
Conditions”. The crisis and the Argentine government’s policies during this
period severely affected the electricity sector.  Pursuant to the Public
Emergency Law enacted to address the crisis, the Argentine government, among
other measures: ·converted public
utility tariffs from their original U.S. Dollar values to Pesos at a rate of Ps.
1.00 per U.S.$ 1.00; ·froze all regulated
distribution margins relating to the provision of public utility services
(including electricity distribution services); ·revoked all price
adjustment provisions and inflation indexation mechanisms in public utility
concessions (including energy concessions); and ·empowered the
Argentine Executive Branch to conduct a renegotiation of public utility
contracts (including energy concessions), including the tariffs for public
utility services. These measures,
combined with the devaluation of the Peso and high rates of inflation, had a
severe effect on public utilities in Argentina, including on us. Because public
utilities were no longer able to increase tariffs to cover their cost increases,
the impact of inflation on costs led to decreases in their revenues in real
terms and a deterioration of their operating performance and financial
condition. Most public utilities had also incurred large amounts of foreign
currency indebtedness under the fixed one-to-one Peso per Dollar exchange rate
of the Convertibility Regime and, following the elimination of the
Convertibility Regime and the resulting devaluation of the Peso, the debt
service burden of these utilities increased sharply, which led many of these
utilities to suspend payments on their foreign currency debt in 2002. This
situation caused many Argentine electricity generators, transmission companies
and distributors to defer making further investments in their networks. As a
result, Argentine electricity market participants, particularly generators, are
currently operating at near full capacity, which could lead to insufficient
supply to meet a growing national energy demand. In addition, the economic
crisis and the resulting emergency measures had a material adverse effect on
other energy sectors, including oil and gas companies, which has led to a
significant reduction in natural gas supplies to generation companies that use
this commodity in their generation activities. The Argentine
government has repeatedly intervened in and modified the rules of the WEM since
2002 in an effort to address the electricity crisis generated by the economic
crisis. These modifications include the establishment of caps on the prices paid
by distributors for electricity power purchases and the requirement that all
prices charged by generators be calculated based on the price of natural gas
(also regulated by the Argentine government) regardless of the fuel actually
used in generation activities. These modifications have created a huge
structural deficit in the operation of the WEM. The Argentine government has
made some attempts to correct these problems, including proposing new rules to
structure the WEM in December 2004 and creating a special fund to finance
infrastructure improvements in the energy sector in April 2006, but little
progress has been made in advancing a system-wide solution to the problems
confronting Argentina’s electricity sector. In September 2006, the
SE issued Resolution No. 1,281/06 in an effort to respond to the sustained
increase in energy demand following Argentina’s economic recovery after the
crisis. This resolution sought to create incentives for energy generation plants
in order to meet increasing energy needs. The resolution’s principal objective
was to ensure that energy available in the market was usedprimarily to service
residential users and those industrial and commercial users whose energy demand
was at or below 300 kilowatts (kW) and who lacked access to other viable energy
alternatives. To achieve this, the resolution provided that:


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·large users in the WEM
and large customers of distribution companies (in both cases above 300 kW), such
as us, would be authorized to secure energy supply up to their “base demand”
(equal to their demand in 2005) by entering into term contracts; and ·large users in the WEM
and large customers of distribution companies (in both cases above 300
kilowatts) had to satisfy any consumption in excess of their base demand with
energy from the Energy Plus (Plus Energy) system at unregulated market prices.
The Energy Plus system consists of the supply of additional energy generation
from new generation and/or generating agents, co-generators or auto-generators
who were not agents of the electricity market or who as of the date of the
resolution were not part of the WEM. Large users in the WEM and large customers
of distribution companies would also enter into contracts directly with these
new generators or purchase energy at unregulated market prices through
CAMMESA. This resolution helped
us to mitigate the risk of energy shortages due to a lack of electricity
generation.  See “—Business Overview—Our obligations.” In 2009, the Argentine
government completed the construction and began the operation of two new 800 MW
combined cycle generators constructed as part of its effort to increase energy
supply. The costs of construction were financed with net revenues of generators
derived from energy sales in the spot market and through specific charges from
CAMMESA to large users. These funds had been deposited in the Fund for
Investments Required to Increase Electricity Supply in the Wholesale Electricity
Market(Fondo de Inversiones Necesarias que Permitan Incrementar
la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista, or
FONINVEMEM). Regulatory Authorities The principal
regulatory authorities responsible for the Argentine electricity industry
are: (1)the Secretariat of
Electric Energy, which assumed certain responsibilities of the former SE (the
“SEE”); (2)the Ente Nacional
Regulador de la Electricidad (the “ENRE”); and (3)the Ministry of Energy
and Mining (the “ME&M”) The SE advises the
Argentine government on matters related to the electricity sector and is
responsible for the application of the policies concerning the Argentine
electricity industry. See “Item. 3. Key Information—Risk Factors—Risks Relating
to Our Business—Failure or delay to negotiate further improvements to our tariff
structure, including increases in our distribution margin, and/or to have our
tariff adjusted to reflect increases in our distribution costs in a timely
manner or at all, has affected our capacity to perform our commercial
obligations and could also have a material adverse effect on our capacity to
perform our financial obligations.” The ENRE is an
autonomous agency created by the Regulatory Framework Law. The ENRE has a
variety of regulatory and jurisdictional powers, including, among
others: ·enforcement of
compliance with the Regulatory Framework Law and related regulations; ·control of the
delivery of electric services and enforcement of compliance with the terms of
concessions; ·adoption of rules
applicable to generators, transmitters, distributors, electricity users and
other related parties concerning safety, technical procedures, measurement and
billing of electricity consumption, interruption and reconnection of supplies,
third‐party access to real estate used in the electricity industry and quality
of services offered; ·prevention of
anticompetitive, monopolistic and discriminatory conduct between participants in
the electricity industry; ·imposition of
penalties for violations of concessions or other related regulations;
and


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·arbitration of
conflicts between electricity sector participants. Under the Law No.
24,065, the ENRE is managed by a five-member board of directors appointed by the
Executive Branch of the Argentine government. Two of these five members are
nominated by the Consejo Federal de la Energía Eléctrica (Federal Council on
Electricity, or CFEE). The CFEE is funded with a percentage of revenues
collected by CAMMESA for each MWh sold in the market. Sixty percent of the funds
received by the CFEE are reserved for the Fondo Subsidiario para Compensaciones
Regionales de Tarifas a Usuarios Finales (Regional Tariff Subsidy Fund for End
Users), from which the CFEE makes distributions to provinces that have met
certain specified tariff provisions. The remaining forty percent is used for
investments related to the development of electrical services in the Argentine
provinces. On December 22, 2015,
through Decree No 231/2015 the ME&M was created, as a result of the rise in
hierarchy of the old Secretariat of Energy, which had been part of the Ministry
of Federal Planning, Public Investment and Services of the Nation, with the
objective of elaborating, proposing and executing the national energy
policy. The Wholesale
Electricity Market Overview The SE established the
WEM in August 1991 to allow electricity generators, distributors and other
agents to buy and sell electricity in spot transactions or under long-term
supply contracts at prices determined by the forces of supply and
demand. The WEM consists
of: ·a term market in which
generators, distributors and large users enter into long-term agreements on
quantities, prices and conditions. Since March 2013, pursuant to Resolution
95/2013 of the SE, all large users have to buy their backup energy from CAMMESA
at any relevant contractual maturity dates. ·a spot market, in
which prices are established on an hourly basis as a function of economic
production costs, represented by the short-term marginal cost of production and
demand; and ·a stabilization fund,
managed by CAMMESA, which absorbs the differences between purchases by
distributors at seasonal prices and payments to generators for energy sales at
the spot price. Operation of the
Wholesale Electricity Market The operation of the
WEM is administered by CAMMESA. CAMMESA was created in July 1992 by the
Argentine government, which currently owns 20% of CAMMESA’s capital stock. The
remaining 80% is owned by various associations that represent WEM participants,
including generators, transmitters, distributors and large users. The following chart
shows the relationships among the various actors in the WEM: cid:image001.jpg@01D04C66.B9E8C7C0


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CAMMESA is in charge
of: ·managing the national
interconnection system pursuant to the Regulatory Framework Law and related
regulations, which includes: ·determining technical
and economic dispatch of electricity (i.e., schedule of production for all
generating units on a power system to match production with demand) in the
national interconnection system; ·maximizing the
system’s security and the quality of electricity supplied; ·minimizing wholesale
prices in the spot market; ·planning energy
capacity needs and optimizing energy use pursuant to the rules set out from time
to time by the SE, and ·monitoring the
operation of the term market and administering the technical dispatch of
electricity pursuant to any agreements entered into in such market; ·acting as agent of the
various WEM participants; ·purchasing or selling
electricity from or to other countries by performing the relevant import/export
operations; ·providing consulting
and other services related to these activities; ·supplying fuel
pursuant to Resolution 95/2013 of the SE, which includes the management,
acquisition, nationalization, control, reception, storage and distribution of
liquid fuels to Generation Centrals through marine, river and land
transportation; ·administrating the
expansion of  gas pipelines associated to natural gas supply to the new
thermal centrals under construction; ·managing the
availability of the generation system, formalizing, controlling and supervising
the works involved with supply commitment contracts. Implementation of the
maintenance plans for the thermal system; ·implementing  the
increase in capacity of the central storage; ·incorporating
Biodiesel to the electricity generation matrix; and ·developing related
activities pursuant to the execution of new generation infrastructure and
transport, managing the trust contracts for the new thermal and nuclear
centrals, especially for non-conventional sources of energy or those works
within the National Hydraulic Works Program. The operating costs of CAMMESA
are covered by mandatory contributions made by WEM participants. CAMMESA’s
annual budget is subject to a mandatory cap equivalent to 0.85% of the aggregate
amount of transactions in the WEM projected for that year. Wholesale Electricity
Market Participants The main participants
in the WEM are generation, transmission and distribution companies.  Large
users and traders participate also in the WEM but to a lesser extent. Generators According to a recent
report issued by CAMMESA, as of December 31, 2016, there were more than a
hundred generation companies – certain of which operate several plants such as
Enarsa, Secco, Agrekko, Sullair-, 25 auto-generation companies and 3
co-generation companies in Argentina. As of December 31, 2016, Argentina’s
installed power capacity was 33.901 MW, out of which 1,679 MW were subject to a
start-up testing process. Of the installed capacity, 61.4% was derived from
thermal generation, 31.4% from hydraulic generation, 5.2% from nuclear
generation and 2.1% from non-conventional sources of energy.  Private
generators participate in CAMMESA through theAsociación de Generadores de
Energía Eléctrica de la República Argentina(Argentine Association of
Electric Power Generators, or AGEERA), which is entitled to appoint two acting
and two alternate directors of CAMMESA.


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Transmitters Electricity is
transmitted from power generation facilities to distributors through high
voltage power transmission systems. Transmitters do not engage in purchases or
sales of power. Transmission services are governed by the Regulatory Framework
Law and related regulations promulgated by the SE. In Argentina,
transmission is carried at 500 kV, 300 kV, 220 kV and 132 kV through the
national interconnection system. The national interconnection system consists
primarily of overhead lines and transformation stations(i.e., assemblies of
equipment through which electricity delivered through transmission circuits
passes and is converted into voltages suitable for use by end users) and covers
approximately 90% of the country. The majority of the national interconnection
system, including almost all of the 500 kV transmission lines, has been
privatized and is owned by Transener, which is indirectly co-controlled by Pampa
Energía, our indirect controlling shareholder and the largest integrated
electricity company in Argentina. Regional transmission companies, most of which
have been privatized, own the remaining portion of the national interconnected
system. Supply points link the national interconnection system to the
distribution systems, and there are interconnections between the transmission
systems of Argentina, Brazil, Uruguay and Paraguay allowing for the import and
export of electricity from one system to another. Transmission companies
also participate in CAMMESA by appointing two acting and two alternate directors
through the Argentine Association of Electric Power Transmitters(Asociación de
Transportistas de Energía Eléctrica de la República Argentina, or
ATEERA). Distributors Each distributor
supplies electricity to consumers and operates the related distribution network
in a specified geographic area pursuant to a concession. Each concession
establishes, among other things, the concession area, the quality of service
required, the tariffs paid by consumers for the distribution service and an
obligation to satisfy demand. The ENRE monitors compliance by federal
distributors, including us and Edesur with the provisions of the respective
concessions and with the Regulatory Framework Law. In turn, provincial
regulatory agencies monitor compliance by local distributors with their
respective concessions and with local regulatory frameworks. Distributors
participate in CAMMESA by appointing two acting and two alternate directors
through the Argentine Association of Electric Power Distributors(Asociación de
Distribuidores de Energía Eléctrica de la República Argentina,or
ADEERA). Large
Users The WEMclassifies large users
of energy into three categories: Major Large Users(Grandes Usuarios
Mayores, or GUMAs), Minor Large Users(Grandes Usuarios
Menores, or GUMEs) and Particular Large Users (Grandes Usuarios
Particulares,or GUPAs). Each of these
categories of users has different requirements with respect to purchases of
their energy demand. For example, GUMAs are required to purchase 50% of their
demand through supply contracts and the remainder in the spot market, while
GUMEs and GUPAs are required to purchase all of their demand through supply
contracts. Large users
participate in CAMMESA by appointing two acting and two alternate directors
through the Argentine Association of Electric Power Large Users(Asociación de Grandes
Usuarios de Energía Eléctrica de la República Argentina, or
AGUEERA). Spot
Market Spot
Prices The emergency
regulations enacted after the Argentine crisis in 2001 and 2002 had a
significant impact on energy prices. Among the measures implemented pursuant to
the emergency regulations were the pesification of prices in the WEM, known as
the spot market, and the requirement that all spot prices be calculated based on
the price of natural gas, even in circumstances where alternative fuel such as
diesel is purchased to meet demand due to the lack of supply of natural
gas.


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Prior to the crisis,
energy prices in the spot market were set by CAMMESA, which determined the price
charged by generators for energy sold in the spot market of the WEM on an hourly
basis. The spot price reflected supply and demand in the WEM at any given time,
which CAMMESA determined using different supply and demand scenarios that
dispatched the optimum amount of available supply, taking into account the
restrictions of the transmission grid, in such a way as to meet demand
requirements while seeking to minimize the production cost and the cost
associated with reducing risk of system failure. The spot price set by
CAMMESA compensated generators according to the cost of the last unit to be
dispatched for the next unit as measured at the Ezeiza 500 kV substation, which
is the system’s load center and is in close proximity of the City of Buenos
Aires. Dispatch order was determined by plant efficiency and the marginal cost
of providing energy. In determining the spot price, CAMMESA also would consider
the different costs incurred by generators not in the vicinity of Buenos
Aires. In addition to energy
payments for actual output at the prevailing spot market prices, generators
would receive compensation for capacity placed at the disposal of the spot
market, including stand-by capacity, additional stand-by capacity (for system
capacity shortages) and ancillary services (such as frequency regulation and
voltage control).  Capacity payments were originally established and set in
U.S. Dollars to allow generators to cover their foreign‐denominated costs that
were not covered by the spot price. However, in 2002, the Argentine government
set capacity payments in reference to the Peso thereby limiting the purpose for
which capacity payments were established. Seasonal
Prices The emergency
regulations also made significant changes to the seasonal prices charged to
distributors in the WEM, including the implementation of a pricing ladder
organized by level of customer consumption (which varies depending on the
category of customers) charged by CAMMESA to distributors at a price
significantly below the spot price charged by generators. According to the
current regulatory framework, the SE is required to adjust the seasonal price
charged to distributors in the WEM every three months and the ENRE must
calculate the tariff scheme as a result of applying the adjustment. 
However, between January 2005 and November 2008, the ENRE did not make these
adjustments. In November 2008, the ENRE passed Resolution No. 628/08
establishing a new distribution tariff as from October 1, 2008 and modified
seasonal prices charged to federal distributors, including the consumption
levels that make up the pricing ladder. On August 14, 2009, the
ENRE adopted Resolution No. 433/2009 approving two tariff charts to be applied
by Edenor, for the winter period of 2009. These charts were based on the new
subsidized seasonal prices set forth by Resolution No. 652/09 issued by the SE.
The new price charts aimed at reducing the impact of increased winter electric
energy consumption on the invoicing of residential customers with bi-monthly
consumption exceeding 1,000 kWh. The ENRE also instructed Edenor to break down
the floating charges of all invoices into the amounts subsidized and not
subsidized by the Argentine government. During the winter
season for the period between 2009-2013, the seasonal tariff chart was revised
twice. For the months of June and July, tariffs were revised so that residential
customers with consumption levels above 1,000 kWh received a full subsidy for
their energy purchases. For the months of August and September, residential
customers with consumption levels above 1,000 kWh received a subsidy equal to a
70% of their energy purchase price. Prior to the
implementation of the emergency regulations, seasonal prices were determined by
CAMMESA based on an estimate of the weighted average spot price that would be
paid by the next generator that would come on-line to satisfy a theoretical
increase in demand (marginal cost), as well as the costs associated with the
failure of the system and several other factors. CAMMESA would use a seasonal
database and optimization models in determining the seasonal prices and would
consider both anticipated energy supplies and demand, including, expected
availability of generating capacity, committed imports and exports of
electricity and the requirements of distributors and large users. In November 2012,
pursuant to Resolution No. 2,016/12 of the SE and in accordance with the Summer
Seasonal Program approved for the period November 2012- April 2013, the seasonal
price format was modified, concluding in a single purchase price without
considering any demand nor time segmentation and taking into account the
structure of the demand as of October 2012 as the base.Subsequently, the SE
adopted Resolution No. 408/13, which maintained both the single price and the
criteria for raising subsidies during the winter season.


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During the winter
season 2014,theResolution No. 2,016/12 was applied without any price
reduction andresidential customers with consumption levels above 1,000
kWh did not received subsidy equivalent to that received in 2013. On January 25, 2016,
the ME&M issued Resolution No. 6/16, approving the seasonal WEM prices for
each category of customer, as required by the regulatory framework, for the
period from February 2016 through April 2016, in force through January 2017.
These WEM prices resulted in the elimination of certain energy subsidies and a
substantial increase in electricity rates for customers. Such resolution also
contemplates a differentiated tariff for residential customers who achieved
energy consumption savings between 10% and 20%, or greater than 20%, compared to
the same period in the year 2015 (Stimulus Plan), and  a social tariff for
residential customers who comply with certain consumption requirements, which
includes a full exemption for monthly consumptions below or equal to 150 Kwh and
tariff benefits for customers who exceed such consumption level but achieve a
monthly consumption lower than that of the same period in the immediately
preceding year.  Since May 2016, we
were notified by several courts of the Province of Buenos Aires of provisional
remedies granted to individual and collective customers against Resolution No.
6/16 and Resolution No. 1/16 issued by the ENRE (which authorized our new tariff
schedule as from February 2016). Consequently, the new tariff schedule, which
includes the WEM prices established by Resolution No. 6/16, were not applied
during certain periods in 2016 to the entire concerned area as a result of the
injunctions issued in the above mentioned case and to the districts of “Pilar”
and “La Matanza” where provisional remedies were in effect until October 24 and
November 11, 2016, respectively, when they expired. Therefore, as of those
dates, no provisional remedy has been in effect and the new tariff scheme has
been applied to all customers.  On February 1, 2017,
the SEE published Resolution No 20-E/2017, by means of which it approved the
Summer Seasonal Schedule for the WEM corresponding to the period held between
February 1 and April 30, 2017.  In this regard, the
SEE established the power and electricity reference prices for the different
categories of customers, which is in force since March 1, 2017, and recognized a
discount for the reference prices, exclusively for the month of February 2017.
The SEE also ratified the social tariff determined by Resolution No. 6/16, and
included the category of electricity dependent customers, which establishes a
full exemption for monthly consumptions below or equal to 600 Kwh and tariff
benefits for those customers who exceed such consumption level but achieve a
monthly consumption lower than that of the same period in the immediately
preceding year.  Stabilization
Fund The stabilization
fund, managed by CAMMESA, absorbs the difference between purchases by
distributors at seasonal prices and payments to generators for energy sales at
the spot price. When the spot price is lower than the seasonal price, the
stabilization fund increases, and when the spot price is higher than the
seasonal price, the stabilization fund decreases. The outstanding balance of
this fund at any given time reflects the accumulation of differences between the
seasonal price and the hourly energy price in the spot market. The stabilization
fund is required to maintain a minimum amount to cover payments to generators if
prices in the spot market during any relevant quarter exceed the seasonal
price. Billing of all WEM
transactions is performed monthly through CAMMESA, which acts as the clearing
agent for all purchases between participants in the market. Payments are made
approximately 40 days after the end of each month. The stabilization fund
was adversely affected as a result of the modifications to the spot price and
the seasonal price made by the emergency regulations, pursuant to which seasonal
prices were set below spot prices resulting in large deficits in the
stabilization fund. As of December 31, 2016, the stabilization fund balance was
approximately Ps. 26,376 million, resulting from the stabilization fund plus the
over expenses of dispatch net of  the Argentine treasury
contributions.  If  all the funds and accounts of energy and power are
considered (including the Additional Energy, Fuel over expenses, Quality Supply,
Surplus Demand pursuant to Resolution No. 1,281/06 of the SE, WEM, over expense
contracts, etc.), this balance rises to Ps. 69,466 million. In this regard, over
a period of more than tenyears, the deficit has
been financed by the Argentine government through nonrefundable loans to
CAMMESA, and the same methodology continues to be applied, through the deficit
tends to reduce as a result of the policies implemented by the ME&M.


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Term
Market Generators are able to
enter into agreements in the term market to supply energy and capacity to
distributors and large users. Distributors are able to purchase energy through
agreements in the term market instead of purchasing energy in the spot market.
Term agreements typically stipulate a price based on the spot price plus a
margin.  Prices in the term market have at times been lower than the
seasonal price that distributors are required to pay in the spot market.
However, as a result of the emergency regulations, spot prices in the term
market are currently higher than seasonal prices, particularly with respect to
residential tariffs, making it unattractive for distributors to purchase energy
under term contracts while prices remain at their current levels. As from March 2013,
pursuant to the SE’s Resolution No. 95/2013 all large users have to buy their
backup energy from CAMMESA at any relevant contractual maturity date. Plus
Energy In September 2006, the
SE issued Resolution No. 1,281/06 in an effort to respond to the sustained
increase in energy demand following Argentina’s economic recovery after the
crisis. This resolution seeks to create incentives for energy generation plants
in order to meet increasing energy needs. The resolution’s principal objective
is to ensure that energy available in the market is used primarily to service
residential users and industrial and commercial users whose energy demand is at
or below 300 kW and who do not have access to other viable energy alternatives.
To achieve this, the resolution provides that: ·large users in the WEM
and large customers of distribution companies (in both cases whose energy demand
is above 300 kilowatts), will be authorized to secure energy supply up to their
“base demand” (equal to their demand in 2005) by entering into term contracts;
and ·large
users in the WEM and large customers of distribution companies (in both cases
whose energy demand is above 300 kilowatts) must satisfy any consumption in
excess of their base demand with energy from the Plus Energy system at
unregulated market prices. The Plus Energy system consists in the supply of
additional energy generation from new generation and/or generating agents,
co-generators or auto-generators that are not agents of the electricity market
or who as of the date of the resolution were not part of the WEM. Large users in
the WEM and large customers of distribution companies can also enter into
contracts directly with these new generators or purchase energy at unregulated
market prices through CAMMESA. Only the new
generation facilities (which include generators that were not connected to the
SADI as of September 5, 2006) and new generation capacity expansions in respect
of existing capacity as of such date are entitled to sell electricity under thePlus
Energysystem. The resolution also
established the price large users are required to pay for excess demand, if not
previously contracted underPlus Energy, which is equal to the
generation cost of the last generation unit transmitted to supply the
incremental demand for electricity at any given time. The SE established certain
temporary price caps, to be paid by large users for any excess demand until
December 2008 (Ps. 225/MWh for GUDIs and Ps. 185/Mwh for GUMEs and
GUMAs). These prices have been
updated as follows: ·after August 2011, the
median incremental charge for excess demand was set at 320 $/MWh for GUMAs and
GUMEs and 455 $/MWh for GUDIs; ·after December 2011,
median incremental charge for excess demand for those who are not subsidized was
set at 360 $/MWh; ·pursuant
to the SE’s Resolution No. 95/13 from March 22, 2013, as opposed to the backup
contracts where a unique energy supplier is authorized by CAMMESA, the Plus
Energycontracts still
function are available to the large users and generators previously authorized
by the  Argentine National Planning, Public Investment and Services
Ministry. The customers under the GUDI  category, whose Energy Plus
contracts mature, have the option of rehiring Energy Plus, reclassifying
themselves under the GUME category; or continue buying  the total amount of
their energy to the distributors, paying in case needed. Base Surplus Demand
pursuant to Resolution SE No. 1,281/06; and


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·as of  March 13,
2015, the median incremental charge for excess demand was set at 450 $/MWh for
GUMAs and GUMEs and 550 $/MWh for GUDIs; ·based on the
guidelines set forth in Resolution No. 6 of the ME&M, the median incremental
charge for excess demand was setat 650 $ / MWh for GUMAs and GUMES, while GUDIs stopped paying this
charge.  ORGANIZATIONALSTRUCTURE We are a subsidiary of
Pampa Energía, the largest fully integrated electricity company in
Argentina.  In addition to its indirect stake in us, Pampa Energía as of
the date of filing of this annual report owns several investments in the
Argentine electricity sector, including a 50% interest in the controlling
shareholder of the principal electricity transmission company in Argentina,
Transener, and controlling stakes in five generation plants located in the
Provinces of Buenos Aires, Salta, Mendoza and Neuquén (Central Piedra Buena
S.A., Hidroeléctrica Los Nihuiles S.A., Hidroeléctrica Diamante S.A., Central
Térmica Güemes S.A., and Central Térmica Loma de la Lata S.A.). The following diagram
presents our corporate structure as of the date of filing of this annual
report.    Property, plant and equipment Our main properties
are transmission lines, substations and distribution networks, all of which are
located in the northwestern part of the greater Buenos Aires metropolitan area
and in the northern part of the City of Buenos Aires. Substantially all of our
properties are held in concession to provide the electricity distribution
service, which, by its nature, is considered to be an essential public service.
In accordance with Argentine law and court precedents, assets which are
necessary for the rendering of an essential public service are not subject to
attachment or attachment in aid of execution. The net book value of
our property, plant and equipment as recorded on our financial statements was
Ps. 11,197.0 million, Ps. 8,885.8 million and Ps. 6,652.5 million as of December
31, 2016,  2015 and2014, respectively.
For a description of our capital expenditures plan see “Item 5. Operating and
Financial Review and Prospects—Liquidity and Capital Resources—Edenor’s Capital
Expenditures”.


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The total value of
property, plant and equipment transferred by SEGBA on September 1, 1992 was
allocated to individual assets accounts on the basis of engineering studies
conducted by the Company. The value of property, plant and equipment was
determined based on the price effectively paid by EASA for the acquisition of
51% of the Company’s capital stock. SEGBA neither prepared separate financial
statements nor maintained financial information or records with respect to its
distribution operations or the operations in which the assets transferred to
EDENOR were used. Accordingly, it was not possible to determine the historical
cost of transferred assets. Additions subsequent to such date have been valued
at acquisition cost, net of the related accumulated depreciation. Depreciation
has been calculated by applying the straight-line method over the remaining
useful life of the assets, which was determined on the basis of the
above-mentioned engineering studies. Furthermore, in order to improve the
disclosure of the account, the Company has made certain changes in the
classification of property, plant and equipment based on each technical process.
In accordance with the provisions of IAS 23, borrowing costs in relation to any
given asset are to be capitalized when such asset is in the process of
production, construction, assembly or completion, and such processes, due to
their nature, take long periods of time; those processes are not interrupted;
the period of production, construction, assembly or completion does not exceed
the technically required period; the necessary activities to put the asset in
condition to be used or sold are not substantially complete; and the asset is
not in condition so as to be used in the production or startup of other assets,
depending on the purpose pursued with its production, construction, assembly or
completion. Subsequent costs (major maintenance and reconstruction costs) are
either included in the value of the assets or recognized as a separate asset,
only if it is probable that the future benefits associated with the assets will
flow to the Company, being it possible as well that the costs of the assets may
be measured reliably and the investment will improve the condition of the asset
beyond its original state. The other maintenance and repair expenses are
recognized in profit or loss in the year in which they are incurred. See “Item
5. Operating and Financial Review and Prospects—Factors Affecting Our Results of
Operations—Tariffs—Distribution Margin or Value‐Added for Distribution
(VAD)—Integral Tariff Revision, or (RTI)”. Item
4A.Unresolved Staff
Comments None. Item
5.Operating and
Financial Review and Prospects The following
discussion should be read in conjunction with our audited financial statements
as of  and for the years ended December 31, 2016, and 2015, included in
Item 18 of this annual report and the “Selected Financial Data”, included in
Item 3 herein. Our financial statements have been prepared in accordance with
IFRS as issued by the IASB. See “Item 3. Key Information—Selected Financial
Data.” During 2016, we
recorded, as we had done in 2012 and 2014, negative operating and net results,
thus deteriorating once again our economic and financial situation, which had
temporarily improved in 2015 as a consequence of the issuance of Resolution No.
32/15 by the SE. Such resolution addressed the need for the adjustment of our
distribution resources and considered the adoption of urgent and interim
measures necessary in order not only to maintain the quality and safety of our
service but also to satisfy the constant year-on-year increase in demand for
electricity following Argentina’s relative economic growth in recent years
(especially, from 2012 through 2015). The negative results
mentioned above were mainly caused because of the delay in the performance of
certain obligations under the Adjustment Agreement, especially with regard to
the implementation of the semi-annual rate adjustments and the completion of the
RTI process. In this context, on December 16, 2015, the Macri administration
issued Decree No. 134/15, which declared the state of emergency with respect to
the national electricity system, authorizing the ME&M to implement a
nation-wide plan of action for the generation, transmission and distribution of
electricity and to take actions to guarantee the supply of the electricity under
adequate economic and technical conditions. As part of the
restructuring of the electricity sector, in January 2016, the ME&M issued
Resolution No. 6/16 and the ENRE Resolution No. 1/16, through which approved a
new tariff scheme that established the new generation cost and partially
adjusted our distribution added value (VAD) in order to make investments, carry
out maintenance works and expand networks.


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In respect of these
measures, from May through November 2016, several courts granted provisional
remedies (injunctions) ordering the temporary suspension of the resolutions
increasing tariffs in the Province of Buenos Aires. In the “Abarca case”,an
injunction was issued extending throughout the entire concession area of the
Province of Buenos Aires, which was lifted on September 6, 2016, and its
economic impact on us was compensated in four installments, that were charged to
the customers’ invoices as from October, 2016. Other provisional remedies were
granted with respect to the districts of “Pilar” and “La Matanza”, which
remained in effect until October 24 and November 11, 2016, respectively, when
they expired. The negative effect related to these provisional remedies was
compensated by CAMMESA through credit notes as authorized by the ME&M (Note
No. 2016-04484723). As of the date of this annual report, no injunction remains
in force, and the tariff scheme resulting from the referenced ENRE resolutions
was applied to all customers. The tariff scheme
established by Resolution No. 1/16, which improved our gross margin (taking into
account that the effects of the provisional remedies were compensated), resulted
insufficient to comply with the provision of the public service in a
satisfactory manner in terms of quality and safety, mainly because of the
increase in operating expenses, particularly as a result of ENRE fines and
penalties following the implementation of Note No. 120,151, issued on April 15,
2016, and the increase in non-technical losses and past due receivables. Thus,
within a context of continued increase in the demand for electricity, our
economic and financial situation became untenable. However, despite the
negative operating and net results recorded in 2016, our board of directors is
optimistic that the new tariff schedule (set in force by Resolution No. 63/17 of
the ENRE) will establish a regulatory framework with clear and precise rules,
which will make possible for us not only to cover our operation costs, afford
the investment plans and meet debt interest payments, but also to deal with the
impact of the different variables that affect our business from time to time.  Operating Results We distribute
electricity on an exclusive basis to the northwestern part of the greater Buenos
Aires metropolitan area and the northern part of the City of Buenos Aires,
comprising an area of 4,637 square kilometers, with an aggregate population of
approximately eight million people.  Pursuant to our concession, we have
the exclusive right to distribute electricity to all users within our concession
area, including to WEM participants.  At December 31, 2016, we had
2,867,250 customers. We serve two markets:
the regulated market, which is comprised of users who are unable to purchase
their electricity requirements directly through the WEM, and the unregulated
market, which is comprised of large users that purchase their electricity
requirements directly from generators in the WEM. The terms and conditions of
our services and the tariffs we charge users in both the regulated and
unregulated markets are regulated by the ENRE. Factors Affecting Our
Results of Operations Our net sales consist
mainly of net energy sales to users in our concession area. Our net energy sales
reflect the tariffs we charge our customers (which include our energy purchase
costs). In addition, our net sales include connection and reconnection charges
and leases of poles and other network equipment. The Adjustment
Agreement contemplated a cost adjustment mechanism for the transitional period
during which the RTI process was being conducted. This mechanism, known as the
Cost Monitoring Mechanism (CMM), required the ENRE to review our actual
distribution costs every six months (in May and November of each year) and to
adjust our distribution margins to reflect variations of 5% or more in our
distribution cost base. We could also request the ENRE to apply the CMM at any
time that the variation in our distribution cost base was at least 10% or more.
Despite the adjustment we were granted under the CMM in October 2007 and July
2008. We requested several
additional increases under the CMM since May 2008, all of which were approved by
ENRE pursuant to Resolution No. 250/13 and Resolution No. 32/15, with retroactive effect
as of May 2008. However, these increases were not incorporated into our tariff
structure in a timely manner to reflect increases in our distribution costs. In
January 2016, the ME&M issued Resolution No.7/16, through which
the ENRE implemented a VAD adjustment to the tariff schedule on account of the
future RTI process in effect as of February 1, 2016. Pursuant to such
resolution, the ENRE issued Resolution No. 1/16 on January 29, 2016, establishing a new
tariff structure.


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In accordance with the
terms of Resolution No. 7/16, which instructed the ENRE to take all necessary
measures to complete the RTI process by December 2016, the RTI process was
concluded. Thus, on February 1, 2016, the ENRE issued Resolution No. 63/17,
which established, among others, a new tariff scheme. As per the ME&M’s
request, the ENRE implemented a VAD increase in three stages, establishing an
initial maximum increase of 42% to be applied as from February 1 2017, and two
subsequent increases in November 2017 and February 2018. In addition, the ENRE
would acknowledge us the difference in VAD resulting from the application of the
gradual tariff increase (the three stages, as described below) recognized by the
RTI in 48 installments as from February 1, 2018, which will be incorporated to
the VAD value on such date. Moreover, the VAD may
be adjusted on a quarterly basis in accordance with a non-automatic mechanism
based on the macroeconomic prices indicators (CPI, WSPI and salaries increases),
to preserve the economic-financial sustainability of the Company in the event of
prices variations in the economy. If, in the future, we
are not able to recover the incremental cost increases or there is a significant
lag of time between when we incur the incremental costs and when we receive
increased income, we may be unable to comply with our financial and commercial
obligations, suffer liquidity shortfalls and need to restructure our debt to
ease our financial condition, any of which, individually or in the aggregate,
would have a material adverse effect on our business and results of operations
and may cause the value of our ADSs to decline. See “Item 5. Operating and
Financial Review and Prospects—Factors Affecting our Results of
Operations—Tariffs” and “Item 3. Key Information—Risk factors—Risks Relating to
Our Business—Failure or delay to negotiate further improvements to our tariff
structure, including increases in our distribution margin, and/or to have our
tariffs adjusted to reflect increases in our distribution costs in a timely
manner or at all, has affected our capacity to perform our commercial
obligations and could also have a material adverse effect on our capacity to
perform our financial obligations.” The following table
sets forth the composition of our net sales for the periods
indicated:  Year ended December 312016
    
    2015
    
    2014(Figures in millions)Sales of
      Electricity (1)
    
    12,952.7
    
    3,720.4
    
    3,536.1Right of use on
      poles
    
    108.2
    
    76.4
    
    57.5Connection
      Charges
    
    15.9
    
    4.2
    
    3.9Reconnection
      Charges
    
    2.8
    
    1.1
    
    0.8Net
      sales
    
    13,079.6
    
    3,802.1
    
    3,598.3
   _______________________________ (1)Includes revenue from the
application of Resolution No. 347/12 for Ps. 1.3 billion, Ps. 535.5 million and
Ps. 508.1 million for the years ended December 31, 2016, 2015 and 2014,
respectively. As of December 31, 2016, includes the effects of the provisional
remedies.


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The following tables
show Edenor’s energy sales by category of customer (in GWh) for the periods
indicated:  Year ended December 31,2016
    
    2015
    
    2014Residential
    
    9,708
    44%
    
    9,671
    43%
    
    9,114
    43%Small
      Commercial
    
    1,819
    8%
    
    1,878
    8%
    
    1,714
    8%Medium
      Commercial
    
    1,820
    8%
    
    1,828
    8%
    
    1,712
    8%Industrial
    
    3,677
    17%
    
    3,680
    16%
    
    3,431
    16%Wheeling
      System(1)
    
    4,014
    18%
    
    4,200
    19%
    
    4,213
    20%Public
      Lighting
    
    704
    3%
    
    688
    3%
    
    678
    3%Shantytowns
    
    511
    2%
    
    436
    2%
    
    430
    2%Others
      (2)
    
    22
    0%
    
    21
    0%
    
    20
    0%Total
    
    22,275
    100%
    
    22,402
    100%
    
    21,312
    100%
  _______________________________ (1)Wheeling charges represent our
tariffs for generators and large users, which consist of a fixed charge for
recognized technical losses and a charge for our distribution margins but
exclude charges for electric power purchases, which are undertaken directly
between generators and large users. (2)Represents energy consumed
internally by our company and our facilities.   Our revenues and results of
operations are principally affected by economic conditions in Argentina, changes
in our regulated tariffs and fluctuations in demand for electricity within our
service area. To a lesser extent, our revenues and results of operations are
also affected by service interruptions or reductions in excess of those
contemplated by Resolution No. 63/17, which may lead us to incur fines and
penalties imposed by the ENRE. Argentine Economic
Conditions and Inflation Because all of our
operations, facilities and customers are located in Argentina, we are affected
by general economic conditions in the country.  In particular, the general
performance of the Argentine economy affects demand for electricity, and
inflation and fluctuations in currency exchange rates affect our costs and our
margins. Inflation primarily affects our business by increasing operating costs,
while at the same time reducing our revenues in real terms. In December 2001
Argentina experienced an unprecedented crisis that virtually paralyzed the
country’s economy through most of 2002 and led to radical changes in government
policies. The crisis and the Argentine government’s policies during this period
severely affected the electricity sector, as described below. Although over the
following years the Argentine economy has recovered significantly from the
crisis, and the business and political environment has been largely stabilized,
the Argentine government has only recently begun to address the difficulties
experienced by the Argentine electricity sector as a result of the crisis and
its aftermath. However, we believe that the current recovery and the recent
measures adopted by the Macri administration in favor of the electricity sector,
such as establishing incentives for the construction of additional generation
facilities and the creation of trust funds to further enhance generation,
transmission and distribution of electricity throughout the country, have set
the stage for growth opportunities in our industry.


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The following table
sets forth key economic indicators in Argentina during the years
indicated:   Year ended December 31,2016
    
    2015
    
    2014
    
    2013
    
    2012Real GDP (%
      change)
    
    -2.3
    
    2.6
    
    -2.5
    
    2.4
    
    -1.0Nominal GDP (in
      millions of Pesos)
    
    7,952,501
    
    5,854,014
    
    4,579,086
    
    3,348,308
    
    2,637,914Real
      Consumption (% change)
    
    -1.6
    
    3.5
    
    -4.4
    
    3.6
    
    1.1Real Investment
      (% change)
    
    -5.4
    
    3.8
    
    -6.8
    
    2.3
    
    -7.1Industrial
      Production (% change)
    
    -4.7
    
    0.1
    
    -1.8
    
    0.0
    
    -7.8Consumer Price
      Index
    
    39.90
    
    15.00
    
    23.80
    
    10.90
    
    10.80Nominal
      Exchange Rate (in Ps. /U.S.$ at year end)
    
    16.17
    
    13.40
    
    8.60
    
    6.50
    
    4.90Exports (in
      millions of U.S.$)
    
    57,413
    
    56,752
    
    68,335
    
    75,963
    
    79,982Imports (in
      millions of U.S.$)
    
    55,753
    
    59,787
    
    65,229
    
    74,442
    
    67,974Trade Balance
      (in millions of U.S.$)
    
    1,659
    
    -3,035
    
    3,106
    
    1,521
    
    12,008Current Account
      (% of GDP)
    
    -2.2
    
    -2.5
    
    -1.4
    
    -2.0
    
    -0.2Reserves (in
      millions of U.S.$)
    
    39,004
    
    24,824
    
    30,119
    
    30,589
    
    44,273Tax Collection
      (in millions of Pesos)
    
    2,007,811
    
    1,537,948
    
    1,169,683
    
    858,832
    
    679,799Primary Surplus
      (in millions of Pesos)
    
    -362,694
    
    -235,117
    
    -155,522
    
    -82,212
    
    -33,448Public Debt (%
      of GDP at December 31) *
    
    48.7
    
    37.2
    
    41.5
    
    35.2
    
    36.2Public Debt
      Service (% of GDP)
    
    5.3
    
    4.4
    
    3.8
    
    3.7
    
    3.1External Debt
      (% of GDP at December 31)
    
    33.8
    
    26.0
    
    27.7
    
    25.0
    
    27.1
   Sources:INDEC;
Central Bank; Ministry of Economy and Production. * Includes
hold-outs  ** The CPI
for 2015 was calculated for the ten-month period ended October 31, 2015. In
November 2015, the INDEC suspended the publication of the CPI and the
WPI.  In 2016, under the
Macri administration the methodology used for the calculation of the economic
indicators at the INDEC was updated.  As a consequence, all the official
economic data since 2004 has been revised. Following years of
hyperinflation and economic recession, in 1991 the Argentine government adopted
an economic program that sought to liberalize the economy and impose monetary
discipline. The economic program, which came to be known as the Convertibility
Regime, was centered on the Convertibility Law of 1991 and a number of measures
intended to liberalize the economy, including the privatization of a significant
number of public sector companies (including certain of our subsidiaries and
co-controlled companies). The Convertibility Law established a fixed exchange
rate based on what is generally known as a currency board. The goal of this
system was to stabilize the inflation rate by requiring that Argentina’s
monetary base be fully backed by the Central Bank’s gross international
reserves. This restrained the Central Bank’s ability to effect changes in the
monetary supply by issuing additional Pesos and fixed the exchange rate of the
Peso and the U.S. Dollar at Ps. 1.00 to U.S.$ 1.00. The Convertibility
Regime temporarily achieved price stability, increased the efficiency and
productivity of the Argentine economy and attracted significant foreign
investment to Argentina. At the same time, Argentina’s monetary policy was tied
to the flow of foreign capital into the Argentine economy, which increased the
vulnerability of the economy to external shocks and led to increased reliance on
the services sector of the economy, with the manufacturing, agricultural and
industrial sectors lagging behind due to the relative high cost of
Peso-denominated products in international markets as a result of the Peso’s peg
to the U.S. Dollar. In addition, related measures restricted the Central Bank’s
ability to provide credit, particularly to the public sector. Following the
enactment of the Convertibility Law, inflation declined steadily and the economy
experienced growth through most of the period from 1991 through 1997. This
growth slowed from 1998 on, however, as a result of the Asian financial crisis
in 1997, the Russian financial crisis in 1998 and the devaluation of Brazil’s
currency in 1999, which led to the widespread withdrawal of investors’ funds
from emerging markets, increased interest rates and a decline in exports to
Brazil, Argentina’s principal export market at the time.  According to
INDEC, in the fourth quarter of 1998, the Argentine economy entered into a
recession that caused the gross domestic product to decrease by 3.4% in 1999,
0.8% in 2000 and 4.4% in 2001. In the second half of 2001, Argentina’s recession
worsened significantly, precipitating a political and economic crisis at the end
of 2001.


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2001 Economic
Crisis Beginning in December
2001, the Argentine government implemented an unexpected number of monetary and
foreign exchange control measures that included restrictions on the free
disposition of funds deposited with banks and on the transfer of funds abroad
without prior approval by the Central Bank, some of which are still in effect.
On December 21, 2001, the Central Bank decided to close the foreign exchange
market, which amounted to ade factodevaluation of the Peso. On
December 24, 2001, the Argentine government suspended payment on most of
Argentina’s foreign debt. The economic crisis
led to an unprecedented social and political crisis, including the resignation
of President Fernando De la Rúa and his entire administration in December 2001.
After a series of interim governments, in January 2002 the Argentine congress
appointed Senator Eduardo Duhalde, a former vice-president and former governor
of the Province of Buenos Aires, to complete De la Rúa’s term through December
2003. On January 6, 2002,
the Argentine congress enacted the Public Emergency Law, which introduced
dramatic changes to Argentina’s economic model, empowered the Argentine
government to implement, among other things, additional monetary, financial and
foreign exchange measures to overcome the economic crisis in the short term and
brought to an end the Convertibility Regime, including the fixed parity of the
U.S. Dollar and the Peso. Following the adoption of the Public Emergency Law,
the Peso devalued dramatically, reaching its lowest level on June 25, 2002, at
which time it had devalued from Ps. 1.00 to Ps. 3.90 per U.S. Dollar according
to Banco Nación. The devaluation of the Peso had a substantial negative effect
on the Argentine economy and on the financial condition of individuals and
businesses. The devaluation caused many Argentine businesses (including us) to
default on their foreign currency debt obligations, significantly reduced real
wages and crippled businesses that depended on domestic demand, such as public
utilities and the financial services industry. The devaluation of the Peso
created pressure on the domestic pricing system and triggered very high rates of
inflation. According to INDEC, during 2002 the Argentine WPI increased by
approximately 118% and the Argentine CPI rose approximately 41%. Following the adoption
of the Public Emergency Law, the Argentine government implemented measures,
whether by executive decree, Central Bank regulation or federal legislation,
attempting to address the effects of the collapse of the Convertibility Regime,
recover access to financial markets, reduce government spending, restore
liquidity to the financial system, reduce unemployment and generally stimulate
the economy. Pursuant to the Public
Emergency Law, the Argentine government, among other measures: ·converted public
utility tariffs from their original U.S. Dollar values to Pesos at a rate of Ps.
1.00 per U.S.$ 1.00; ·froze all regulated
distribution margins relating to the provision of public utility services
(including electricity distribution services); ·revoked all price
adjustment provisions and inflation indexation mechanisms in public utility
concessions (including our concession); and ·empowered the
Argentine Executive Branch to conduct a renegotiation of public utility
contracts (including our concession) and the tariffs set therein (including our
tariffs).  These measures,
combined with the devaluation of the Peso and high rates of inflation, had a
severe effect on public utility companies in Argentina (including us). Because
public utility companies were no longer able to increase tariffs at a rate
consistent with the increased costs they were incurring, increases in the rate
of inflation led to decreases in their revenues in real terms and a
deterioration of their operating performance and financial condition.  Most
public utility companies had also incurred large amounts of foreign currency
indebtedness to finance the capital improvement and expenditure programs. At the
time of these privatizations, the capital structures of each privatized company
were determined taking into account the Convertibility Regime and included
material levels of U.S. Dollar‐denominated debt. Following the elimination of
the Convertibility regime and the resulting devaluation of the Peso, the debt
service burden of these utility companies significantly increased, which when
combined with the margin freeze and conversion of tariffs from U.S. Dollars to
Pesos, led many of these utility companies (including us) to suspend payments on
their foreign currency debt in 2002.


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Economic Recovery and
Outlook Beginning in the
second half of 2002, Argentina experienced economic growth driven primarily by
exports and import‐substitution, both facilitated by the lasting effect of the
devaluation of the Peso in January 2002. While this devaluation had significant
adverse consequences, it also fostered a reactivation of domestic production in
Argentina as the sharp decline in the Peso’s value against foreign currencies
made Argentine products relatively inexpensive in the export markets. At the
same time, the cost of imported goods increased significantly due to the lower
value of the Peso, forcing Argentine consumers to substitute their purchase of
foreign goods with domestic products, substantially boosting domestic demand for
domestic products. In April 2003, Dr.
Néstor Kirchner, the former governor of the province of Santa Cruz, was elected
as president for a four-year term, and he took office in May 2003. During 2003,
Argentina moved towards normalizing its relationship with the IMF, withdrew all
the national and provincial governments’ quasi‐money securities from circulation
and eliminated all deposit restrictions. The trade balance experienced a
sustained surplus, aided by the rise in commodity prices and export
volumes.  At the same time, social indicators improved, with the
unemployment rate decreasing to 17.3%, and real wages began to recover according
to INDEC. In June 2005, the Argentine government completed a restructuring of
Argentina’s public external debt, which had been in default since December
2001.  Argentina reduced its outstanding principal amount of public debt
from U.S.$ 191.3 billion to U.S.$ 129.2 billion and extended payment terms. In
April 2010, the Argentine government launched a new exchange offer for the
outstanding sovereign bonds that did not participate in the 2005 restructuring.
On January 3, 2006, Argentina completed an early repayment of all of its
outstanding indebtedness with the IMF, for an amount totaling approximately
U.S.$ 10.0 billion owing under credit lines. From 2003 to 2007, the
economy continued recovering from the 2001 economic crisis.  The economy
grew by 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007,
led by domestic demand and exports.  From a demand perspective, private
sector spending was accompanied by a combination of liberal monetary and
conservative fiscal policies. Growth in spending, however, consistently exceeded
the rate of increase in revenue and nominal GDP growth. From a supply
perspective, the trade sector benefited from a depressed real exchange rate,
which was supported by the intervention of the Central Bank in the foreign
exchange market.  Real exports improved, in part due to growth in Brazil,
and the current account improved significantly, registering surpluses in 2004,
2005, 2006 and 2007. On December 10, 2007,
Cristina Fernández de Kirchner, wife of the ex-President Dr. Néstor Kirchner,
was inaugurated as President of Argentina for a four-year term. Argentina’s economy
grew by 7% in 2008, 19.5% less than in 2007. According to the INDEC, growth was
negative in both the first and the fourth quarter of 2008 (-0.3% for both
periods) as compared to the same periods in 2007, without adjusting for
seasonality. This negative growth is primarily attributable to the conflict
between the Argentine government and farmers in early 2008 and the global
financial crisis, which deepened in the second half of 2008. The agricultural
sector was particularly hard hit in 2008 as a result of the decrease in
commodities prices as well as a significant drought.  A decline in the
agricultural sector had adverse ramifications for the entire economy due to the
significant role that sector plays in the Argentine economy. At the end of 2008,
the Argentine government enacted a series of measures aimed at counteracting the
decline in the level of economic activity, including special tax rates and less
stringent foreign exchange restrictions in connection with the repatriation and
national investment of capital previously deposited abroad by Argentine
nationals, extensions in the payment terms for overdue taxes and social security
taxes, reductions in payroll tax rates for companies that increase their
headcounts, creation of theMinisterio de Producción(Ministry of Production),
announcements regarding the construction of new public works, consumer loans for
the acquisition of durable goods and loans to finance exports and working
capital for industrial companies, as well as various agricultural and livestock
programs, all aimed at minimizing lay-offs during the current global financial
crisis. The effectiveness of these measures will depend on the Argentine
government’s ability to fund them without reducing the amount of funding for
other budgeted activities as well as the degree of confidence they create in the
overall stability of the Argentine economy.


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In 2009, after six
years of robust and continuous growth, the Argentine economy, according to
official indicators, grew by only 0.1%, and according to private indicators,
contracted by 3.5%. The Central Bank, reacting to local uncertainty and a bleak
global economic environment, adopted policies aimed at avoiding a financial
collapse.  Specifically, the Central Bank sought to stabilize the exchange
market. Although interest rates increased periodically during the course of the
year, the exchange market remained relatively stable throughout. According to official
indicators, in 2011, real GDP in Argentina grew by approximately 6.0%,
furthering the growth trend showed in 2010. The four most important factors
behind the economic recovery are the following: ·the agricultural boom,
with a record harvest (especially soybeans); ·a favorable
international context (with Brazil growing at a 2.7% rate in 2011, which had a
positive effect on the local industrial sector, and China pushing the demand for
commodities in an environment of high prices); ·a climate of financial
stability prevented major shocks in the short term, primarily due to an
oversupply of private dollars and a reduced probability of sovereign default in
the short term; and ·an expansionary
economic policy program (fiscal, monetary and income). According to the
INDEC, Argentina’s real GDP grew around 2.4% in 2013, compared to -a contraction
by 1.0% in 2012.  The increase in the
agricultural harvest (the agricultural production during the season 2012/13 was
approximately 11% higher than the one registered for the previous season), in a
context where international prices of commodities remained high, with greater
financial stability in global markets (resulting from a more stable situation in
Europe and a strengthened, though slow, growth in the United States). These were
the main factors behind the accelerated rate of the economic growth during
2013.  According to official
indicators (data published by INDEC), in 2014, the economic activity contracted
by approximately -2.5%, compared to a growth by  2.4% in 2013.  Private consumption
contracted by 0.8% in 2014. The weakening of the internal demand was the main
factor in the contraction of the economy, and can be explained in part by an
increase in internal prices due to the financing of the fiscal imbalance by
Central Bank to Treasury. In 2014 the public accounts contracted 1.2% of GDP
compared to a contraction of 0.6% in 2013. The weaker performance of the private
sector was mainly due to an increase in prices, a loss of the Peso’s purchasing
power, a nominal slowdown in credit extended to the private sector and a greater
propensity in customers for saving in times of uncertainty.  Regarding internal
market, on January 2014, the Peso lost approximately 19% of its value with
respect to the US Dollar. During the following month of 2014, the US Dollar
remained relatively stable.  During 2015, the
economy registered a positive growth, of approximately 2.6%. The level of
activity was driven by the effect that the summer crop had on GDP growth in the
second and third quarter, while during the last months of the year the economy
evidenced a more moderate expansion.  In terms of supply,
industrial production continued showing a poor performance, the exchange rate
lag, restrictions to import intermediate goods, the deceleration of the main
Argentine commercial partners’ growth and a weak domestic and external demand
impacted on the performance of the manufacturing activity. In terms of expenses,
consumption showed a good performance even though consumers continued acting
with caution.  With reference to
inflationary issues, a significant deceleration in the increase of prices was
observed during the first half of 2015, related with the high 2014 baseline.
Throughout the last months of the year, retail prices relatively picked up
although the average growth rate was lower than that of the previous
year.  In January 2016, the
new INDEC authorities appointed by the Macri administration announced the
discontinuation of the methodology used by the Fernandez de Kirchner
administration to measureinflation and declared
a state of administrative emergency in the national statistics system,
suspending the publication of all indices until the INDEC is able to calculate
such indices based on accurate official data. See “Item 3. Key Information—Risk
factors—Risks Relating to Our Business—The impact of the congressional and
presidential elections on the future economic and political environment of
Argentina remains uncertain, but likely to be material.”


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On December 17, 2015,
the Peso depreciated approximately 36% against the U.S. Dollar following the
announcement of the lifting of a significant portion of exchange restrictions
(See “—Risk Factors—Factors Relating to Argentina—Fluctuations in the value of
the Peso could adversely affect the Argentine economy and, in turn, adversely
affect our results of operations”), which caused the Peso to U.S. Dollar
exchange rate to reach Ps.13.40 to U.S.$1.00 as of December 31, 2015. In 2016, the economy
contracted by around 2.0% and 2.5%. Although the economic activity showed a
slight improvement during the last months of the year, 2016 was a recessive
year.  The negative results
may be explained by the deepening contraction in certain sectors that performed
poorly in terms of activity. In this sense, during the second quarter, lower
levels of agricultural production were exacerbated by a lower than expected
harvest (affected by unusual rains), in addition to a deep fall in the
construction activity and a drop in the activity of the retail sector.
Industrial production also showed a weak performance.  In terms of inflation,
the pace of growth of domestic prices accelerated during the first half of 2016
as a result of the increase in the value of the U.S. Dollar relative to the Peso
in the official market. In addition, monthly price increases in the first half
of 2016 were mainly related to an update of some regulated prices such as public
utility tariffs (gas and electricity prices) and urban transport, mainly in the
Buenos Aires metropolitan region. As of the third quarter, price increases began
to slow down: the absence of new tariff increases, the stagnation of economic
activity, the relative low price of the U.S. Dollar in the local market and the
restrictive monetary policy, through high interest rates that seek to contain
the currency pressure, drove the deceleration in inflation, which slowed to a
monthly average of 1.1% in the July-September 2016 period. During the last
quarter of 2016, the monthly average was 1.7%, and the annual rate of increase
in consumer prices ended the year slightly below 40%. The formal adoption of the
inflation targeting system in September of 2016 sought to consolidate the
gradual deceleration of inflation, leading to an annual target of 5.0% for
2019.  After the currency
devaluation at the beginning of the Macri administration, the Central Bank
changed to a flexible exchange market regime, which resulted in a unified
foreign exchange system. In 2016, some modest depreciation pressure following
Brexit in June and the U.S. election on November 8, 2016, caused the Peso to
weaken, ending at Ps. 16.10 to U.S.$1.00 on December 31, 2016. By the end of the
year, the Peso depreciated by approximately 20% against the U.S. Dollar.  Outlook for
2017  Forecasts show that
GDP will grow by approximately 3.0% in 2017, mainly supported, by the recovery
of public consumption, private consumption and an increase in exports. The
unification in the foreign exchange system, the elimination of the restrictions
on commercial trade and export laws, and other decisions are expected to allow
the Argentine economy to grow again. In this context, the expectation of a
higher internal and external demand would stimulate the productive sectors,
along with the consolidation of the disinflation process, would promote the
recovery of the private consumption.  Tariffs Our revenues and
margins are substantially dependent on the composition of our tariffs and on the
tariff setting and adjustment process contemplated by our concession.


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The following chart
shows the variation in Edenor’s average tariffs, including taxes, in Pesos per
MWh in the periods indicated:   Our tariffs for all of our
customers (other than customers in the wheeling system) are composed
of:  ·the cost of electric
power purchases, which we pass on to our customers, and a fixed charge (which
varies depending on the category and level of consumption of each customer and
their energy purchase prices) to cover a portion of our energy losses in our
distribution activities (determined by reference to a fixed percentage of energy
and power capacity for each respective voltage level set forth in our
concession); ·our regulated
distribution margin, which is known as the value‐added for distribution, or VAD,
and the fixed and variable charges of the Resolution No. 347/12, rendered
ineffective since February 2017 by Resolution No. 63/17; and ·any taxes imposed by
the Province of Buenos Aires or the City of Buenos Aires, which may differ in
each jurisdiction. Certain of our large
users (which we refer to as wheeling system customers) are eligible to purchase
their energy needs directly from generators in the WEM and to acquire from us
only the service of delivering that electricity to them. Our tariffs for these
large users (known as wheeling charges) do not include, therefore, charges for
energy purchases. Accordingly, wheeling charges consist of the fixed charge for
recognized losses (determined by reference to a fixed percentage of energy and
power capacity for each respective voltage level set forth in our concession)
and our distribution margin. As a result, although the amounts billed to
wheeling system customers are relatively lower than those billed to other large
users, namely industrial users, the distribution margin on sales to wheeling
system customers is similar to that of other large users because we do not incur
the corresponding cost of electric power purchases related to those
sales. Recognition of Cost of
Electric Power Purchases As part of our
tariffs, we bill our customers for the costs of our electric power purchases,
which include energy and capacity charges. In general, we purchase electric
power at a seasonal price, which is approved by the ENRE every six months and
reviewed quarterly. Our electric power purchase price reflects transportation
costs and certain other regulatory charges (such as the charges imposed by theFondo
Nacional de Energía Eléctrica-National Electricity Energy
Fund-). According to the
current regulatory framework, the ENRE is required to adjust the seasonal price
charged to distributors in the WEM every six months. However, between January
2005 and November 2008, the ENRE did not make these adjustments. In November
2008, the ENRE issued Resolution No. 628/08, which established new tariffs
applied by Edenor as of October 1, 2008 (see“Tariffs—Distribution
margin or value added for distribution (VAD)—Adjustment Agreement”) and modified
seasonal prices charged to distributors, including the consumption levels that
make up the pricing ladder. The pricing ladder set prices according to the
following levels of consumption:  bimonthly consumption up to 1,000 kWh;
bimonthly consumption greater than 1,000 kWh and less than or equal to 1,400
kWh; bimonthly consumption greater than 1,400 kWh and less than or equal to
2,800 kWh; and bimonthly consumption greater than 2,800 kWh. In 2012, pursuant
to Resolution No. 90688/2009, approximately 290,000 customers were exempted from
paying the prices set forth by Resolution No. 628/2008 of the ENRE. In addition,
the ENRE authorized us to pass through some regulatory charges associated with
the electric power purchases to our customers, excluding residential customers
with bi-monthly consumption levels below 1,000 kWh.


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On November 7, 2011,
through Resolution No. 1301/2011 of the SE, a new unsubsidized tariff scheme
applicable to non-residential customers grouped together by certain economic
activities came into effect. According to this new tariff scheme, depending on
the final seasonal schedule for the period November 2011 and April 2012 for the
Wholesale Electricity Market, the affected customers will pay an average price
of $ 320/MWh as from December
2011.               
On November 24, 2011, through joint Resolution No. 218 of the Undersecretary for
Coordination and Management Control, Ministry of Planning and Resolution No. 799
of the Budget Undersecretary of Ministry of Finance of the Ministry of Economy
and Public Finance, the removal of subsidies as from the January 1, 2012 applied
to certain residential areas within the City of Buenos Aires, including the
neighborhoods of Puerto Madero, Barrio Parque, Recoleta, portions of Palermo and
certain closed community neighborhoods in the northern part of the Greater
Buenos Aires Metropolitan Area.
               
On December 2, 2011, through joint Resolution No. 229 of the Undersecretary for
Coordination and Management Control, Ministry of Planning and Resolution No. 810
of the Budget Undersecretary of Ministry of Finance of the Ministry of Economy
and Public Finance, the removal of subsidies as from January 1, 2012 applied to
certain high-end residential type buildings in the City of Buenos Aires and to
certain public agencies pertaining to the government of the City of Buenos
Aires, as well as to the concessionaire of the highway network in the City of
Buenos
Aires.               
On December 5, 2011, Resolution No. 1,537/2011 of the SE implemented the
Volunteer Waiver Form Subsidy. On May 8, 2012,
Resolution No. 2,883/2012 of the SE instructed the Company to apply a
methodology to stabilize the bills, in order to minimize the effects of the
seasonal consumption of all the residential customers. The application of this
methodology is optional for these costumers. Average consumption is
determined based on the consumption recorded for the last two-month consumption
periods. The stabilization factor results from the difference between the
aforementioned average consumption and the current two-month consumption period.
This value is added to or subtracted from the two-month consumption period
charges, and the result obtained is the amount to be paid before the applicable
taxes. Adjustments to be made in accordance with the differences between average
consumption and recorded consumption will be reflected in consumer bills for the
last two-month consumption period of each calendar year. The differences that
arose as a consequence of comparing the annual average consumption to the
current two-month consumption period have been recorded at the end of each
period in the trade receivables in the Statement of Financial Position account,
crediting or debiting the account as applicable, depending on whether the annual
average consumption is higher or lower than the current two-month consumption
period. Resolution No. 7/16 repealed the stabilization factor. During 2015, the
customers who are not subsidized continued paying a monomial price of Ps. 320
/MWh, as set by Resolution No 324/2008 of the SE. On January 25, 2016,
the ME&M issued Resolution No. 6/16, approving the seasonal WEM prices for
each category of users for the period from February 2016 through April
2016.  Such Resolution adjusted the seasonal prices as required by the
regulatory framework. Energy prices in the spot market were set by CAMMESA,
which determined the price to be charged by generators for energy sold in the
spot market of the WEM on an hourly basis.  The WEM prices result in the
elimination of certain energy subsidies and a substantial increase in
electricity rates for individuals. Resolution No. 6/16  introduced
different prices depending on the categories of customers.  Such resolution
also contemplates a social tariff for residential customers who comply with
certain consumption requirements, which includes a fullexemption for monthly
consumptions below or equal to 150 Kwh and  tariffs benefits for customers
who exceed such consumption level but achieve a monthly consumption lower than
that of the same period in the immediately preceding year.


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The new prices
established by such Resolution are fixed as follows: (1) for customers whose
power demand exceeds 300 kw, the power reference price is 1,427 Ps./Mw-month and
the electricity reference price is approximately 770 Ps./MWh (due to the
differences established between the peak, rest and off-peak prices); (2) for
customers whose power demand does not exceed 300 kw, the electricity reference
price is 320 Ps./MWh.; (3) for customers whose power demand do not exceed 10kw
(considered residential customers) who achieve an energy consumption saving
between the 10% and 20% compared to the same period in the year 2015 (Stimulus
Plan), the electricity reference price is 250 Ps./MWh; and for those whose
energy consumption saving exceeds 20% compared to the same period in 2015, the
reference price is 200 Ps./MWh; (4) for customers whose power demand does not
exceed 10 kw (considered residential customers) and who have been granted the
Social Tariff, the first 150 KWh consumed in the month are without charge. The
energy consumption exceeding said level, but which at the same time is inferior
or equal to the consumption incurred in the same period in 2015, obtain a
reference price of 30 Ps./MWh. Finally, the energy consumption exceeding 150 KWh
and which at the same time is superior to the consumption of the same period in
2015 obtain a reference price of 320 Ps./MWh.  On February 1, 2017,
Resolution No. 20 – E/2017 dated January 27, 2017, of the SEE was published on
the Official Gazette by means of which the Summer Seasonal Rescheduling for the
WEM was approved corresponding to the period held between February 1 and April
30, 2017.  The new prices
established were set as follows (taking the energy reference peak price for all
cases): (1) for customers whose power demand exceeds 300 kw, the power reference
price is 3,157 Ps./Mw-month and the electricity reference price is 1,070.11
Ps./MWh; (2) for customers whose power demand do not exceed 300 kw, the
electricity reference price is 640 Ps./MWh.; (3) for customers whose power
demand do not exceed 10 Kw (acknowledged as residential customers) who achieve
an energy consumption saving between the 10% and 20% compared to the same period
in the year 2015, electricity reference price is 480 Ps./MWh; and for those
whose energy consumption saving exceeds 20% compared to the same period in 2015,
the reference price is 320 Ps./MWh; (4) for customers whose power demand do not
exceed 10 Kw (considered residential customers) and who have been granted the
Social Tariff, the first 150 KWh consumed in the month are without charge. The
energy consumption exceeding said level, but which at the same time is inferior
or equal to the consumption incurred in the same period in 2015, obtain a
reference price of 96 Ps./MWh. In those cases when the energy consumption
exceeds 150KWh, and at the same time it is superior to the consumption of the
same period in 2015 but do not exceed the 450Kwh/month, the reference price is
320 Ps./MWh. Last, if the energy consumption exceeds 150Kwh and at the same time
it is superior to the consumption in the same period in 2015 and exceeds
450Kwh/month, the reference price is 640 Ps./MWh. For all the reference prices
mentioned, a differentiated reduction is included in the categories resulting
from the power demand, exclusively for February 2017.  Resolution No. 20 –
E/2017 incorporated a new category of consumer denominated
“electricity-dependent customer”. An electricity dependent customer is a person
who registers an extraordinary consumption of electrical energy by requiring
special equipment and / or infrastructure for a disease diagnosed by a physician
or needing a stable and permanent electrical service to meet medical needs
within their home. The resolution established the provision of 600KWh per month
free of charge and an electricity reference price that varies according to the
level of savings and demands registered compared to the previous month. In
addition, it stipulates that as from February 2017, the maximum spot price for
the approval of the WEM is 240 Ps./MWh and fixes the charge value corresponding
to the National Fund for Electric Energy at 15.50 Ps./MWh.  We purchased a total
of 22,827 GWh in 2016, 22,126 GWh in 2015 and 20,694 GWh in 2014 (excluding
wheeling system demand). Until 2004, we purchased a portion of our energy needs
under long-term supply contracts. Following the adoption of certain amendments
to the pricing rules applicable to the WEM pursuant to the Public Emergency Law,
however, we have purchased all of our energy supply in the WEM at the spot price
ever since. We have not purchased any energy under long-term supply contracts
since 2004.


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Recognition of cost of
energy losses Energy losses are
equivalent to the difference between energy purchased (including wheeling system
demand) and energy sold. These losses may be classified as technical and
non-technical losses. Technical losses represent the energy that is lost during
transmission and distribution within the network as a consequence of natural
heating of the conductors and transformers that transmit electricity from the
generating plants to the customers.  Non-technical losses represent the
remainder of our energy losses and are primarily due to illegal use of our
services. Energy losses require us to purchase additional electricity to satisfy
demand and our concession allows us to recover from our customers the cost of
these purchases up to a loss factor specified in our concession for each tariff
category. Our loss factor under our concession is, on average, 10%. Our
management is focused on taking the necessary measures to ensure that our energy
losses do not increase above current levels because of their direct impact on
our gross margins. However, due to the inefficiencies associated with reducing
our energy losses below the level at which we are reimbursed pursuant to our
concession (i.e., 10%), we currently do not intend to significantly lower our
level of losses. At the time of our
privatization, our total energy losses represented approximately 30% of our
energy purchases, of which more than two thirds were non-technical losses
attributable to fraud and illegal use of our service. Beginning in 1992, we
implemented a loss reduction plan (plan de disciplina del
mercado, or market discipline plan) that allowed us to gradually
reduce our total energy losses to 10% by 2000, with non-technical losses of
2.7%. However, beginning in mid-2001 and up until 2004, we experienced an
increase in our non-technical losses, as the economic crisis eroded the ability
of our customers to pay their bills, and in our technical losses in proportion
to the increased volume of energy we supplied during those periods. Our total
losses amounted to 17.0% in 2016, 14.9% in 2015 and 14.3% in 2014. The following table
sets forth our estimated breakdown between technical and non-technical energy
losses experienced in our concession area in the last years. We believe that
non-technical losses could increase in 2017 following the establishment of the
new tariff structure pursuant to Resolution No 63/2017 of the ENRE. Year ended December 31,2016
    
    2015
    
    2014Technical
      losses
    
    9.6%
    
    10.0%
    
    9.1%Non‐technical
      losses
    
    7.4%
    
    4.9%
    
    5.2%Total losses
    
    17.0%
    
    14.9%
    
    14.3%
   Our capital
expenditure program includes investments to improve and update our network,
which we believe will allow us to maintain our technical losses at current
levels despite further increases in demand. See “Item 4. Information on the
Company—Business Overview—Energy losses”. Distribution margin or
value‐added for distribution (VAD) Our concession
authorizes us to charge a distribution margin for our services to seek to cover
our operating expenses, taxes and amortization expenses and to provide us with
an adequate return on our asset base. Historical Overview of
VAD.Our concession originally contemplated a fixed
distribution margin for each tariff parameter with semiannual adjustments based
on variations in the U.S. wholesale price index (67% of the distribution margin)
and the U.S. consumer price index (the remaining 33% of the distribution
margin). However, pursuant to the Public Emergency Law, all adjustment clauses
in U.S. Dollars or other foreign currencies and indexation clauses based on
foreign indexes or other indexation mechanisms included in contracts to be
performed by the Argentine government were revoked. As a result, the adjustment
provisions contained in our concession are no longer in force and, from January
2002 through January 2007, we were required to charge the same fixed
distribution margin in Pesos established in 2002, without any type of currency
or inflation adjustment. These measures, coupled with the effect of accumulated
inflation since 2002 and the devaluation of the Peso, have had a material
adverse effect on our financial condition, results of operation and cash flows,
leading us to record net losses.


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Adjustment Agreement.On
September 21, 2005, we entered into theActa Acuerdo sobre la Adecuación
del Contrato de Concesión del Servicio Público de Distribución y
Comercialización de Energía Eléctrica(Adjustment Agreement), an
agreement with the Argentine government relating to the adjustment and
renegotiation of the terms of our concession. Because a new Minister of Economy
took office thereafter, we formally re-executed the Adjustment Agreement with
the Argentine government on February 13, 2006 under the same terms and
conditions originally agreed.  The ratification of the Adjustment Agreement
by the Argentine government was completed in January 2007.  Pursuant to the
Adjustment Agreement, the Argentine government granted us an increase of 28% in
our distribution margin, which includes a 5% increase to fund specified capital
expenditures we are required to make under the Adjustment Agreement.  See
“Item 5. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Capital expenditures.” This increase was subject to a cap in the
increase of our average tariff of 15%.  Although this increase was applied
to the distribution margin as a whole, the amount of the increase was allocated
to our non-residential customers (including large users that purchase
electricity in the wheeling system) only, which, as a result, experienced an
increase in VAD greater than 28%, while our residential customers did not
experience any increase in VAD. The increase was effective retroactively from
November 1, 2005 and remained in effect until the approval of the new tariff
scheme under the RTI, in February 2017. The Adjustment
Agreement also contemplated a cost adjustment mechanism for the transitional
period during which the RTI process was being conducted. This mechanism, known
as the Cost Monitoring Mechanism, or CMM, required the ENRE to review our actual
distribution costs every six months (in May and November of each year).  If
the variation between our actual distribution costs and our recognized
distribution costs (as initially contemplated in the Adjustment Agreement or, if
adjusted by any subsequent CMM, the most recent distribution cost base
established by a CMM) was 5% or more, the ENRE was required to adjust our
distribution margin to reflect our actual distribution cost base. The ENRE’s
review was based on our distribution costs during the six-month period ending
two months prior to the date on which the ENRE was required to apply the cost
adjustment mechanism (on May 1 and November 1) and any adjustment would become
effective from such date. The CMM took into consideration, among other factors,
the wholesale and consumer price indexes, exchange rates, the price of diesel
and construction costs and salaries, all of which are weighted based on their
relative importance to operating costs and capital expenditures. We could also
request that the CMM to be applied at any time that the variation between our
actual distribution costs and our then recognized distribution costs was at
least 10% or more, and any adjustment to our distribution cost base that
resulted from this CMM would become effective retroactively from the date we
presented the CMM request to the ENRE. On January 30, 2007,
the ENRE formally approved our new tariff schedule reflecting the 28% increase
in the distribution margins charged to our non-residential customers
contemplated by the Adjustment Agreement.  In addition, because the
Adjustment Agreement is effective retroactively from November 1, 2005, the ENRE
applied the CMM retroactively in each of May and November 2006, the dates in
each year on which the ENRE is required to apply the CMM. In the May 2006 CMM,
the ENRE determined that our distribution cost base had increased by 8.032%
(compared to the distribution cost base originally recognized in the Adjustment
Agreement), and, accordingly, approved an equivalent increase in our
distribution margins effective May 1, 2006. This increase, when compounded with
the 28% increase granted under the Adjustment Agreement, resulted in an overall
38.3% increase in our distribution margins charged to our non-residential
customers. In the November 2006 CMM, the ENRE determined that our distribution
cost base had increased by 4.6% (compared to our distribution cost base as
adjusted by the May 2006 CMM), and accordingly, did not approve any further
increase in our distribution margins at such time. The ENRE also authorized us
to charge our non-residential customers the retroactive portion of these tariff
increases for the period from November 2005 through January 2007, which amounted
in the aggregate to Ps. 218.6 million and, at December 31, 2011, had been fully
invoiced. Between 2007 and 2016,
we requested several CMM adjustments, which were recognized by the ENRE through
different resolutions and notes (Resolution No. 1,037/07, Note No. 81,399,
Resolution No. 250/13 and Resolution No. 32/15). Only two adjustments were
recognized in a timely manner and were incorporated into the tariff structure,
while the rest of them were recognized belatedly and not incorporated into our
tariff structure. On November 23, 2012,
the ENRE issued Resolution No. 347/2012, pursuant to which it established a
fixed and variable charge differentiated by category of customers, which the
distribution companies will collect on account of the CMM adjustments stipulated
in clause 4.2 of the Adjustment Agreement, and will use exclusively to finance
infrastructure and corrective maintenance of theirfacilities. Such
charges, which were clearly identified in the bills sent to customers, were
deposited in a special account to be managed by a Trustee. Such amounts were
used exclusively to finance infrastructure and corrective maintenance of the
facilities.


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Pursuant to the SE’s
Resolution No. 250/13 and Notes No. 6,852/13, No. 4,012/14, No. 486/14 and No.
1,136/14 of the SE, the Company was authorized to compensate its debt registered
under the PUREE against CMM recognitions for the period from May 2008 through
December 2014. In addition, CAMMESA
was instructed to issue sale settlements with maturity dates to be determined
for the surplus generated after compensation between the credits of the CMM and
the PUREE debts, to partially compensate the debt with the WEM. We were also
entitled to deposit the remaining sale settlements with maturity dates to be
determined in the trust created pursuant to ENRE’s Resolution No. 347/2012. As
of the date of this annual report, all the sale settlements with maturity dates
to be determined issued by CAMMESA were compensated with PUREE debts or with
Commercial debt with CAMMESA. As from February 1,
2015, pursuant to Resolution No. 32/15 of the SE, PUREE funds were considered as
part of Edenor’s income on account of the future RTI. We compensated up to
January 31, 2015, the debts for PUREE, with claims arising from the calculation
of CMM until that date, including the application of interest that could
correspond to both concepts. In January 2016, the
ME&M issued Resolution No. 7/2016, pursuant to which the ENRE implemented a
VAD adjustment to the tariff schedule on account of the future RTI in effect as
of February 1, 2016, and took all the necessary actions to conclude the RTI
process by December 2016. In addition, such
resolution: (i) abrogated the PUREE; (ii) repealed Resolution No. 32/2015 as
from the date the ENRE resolution implementing the new tariff schedule; (iii)
discontinued the application of mechanisms that imply the transfer of funds from
CAMMESA in the form of loan agreements with CAMMESA; and (iv) ordered the
implementation of the actions required to terminate the trusts created pursuant
to Resolution No. 347/2012 of the ENRE. Resolution No. 2/2016 of the ENRE
partially repealed Resolution No. 347/2012, discontinuing the FOCEDE and
ordering us to open a special bank account with a Central Bank authorized entity
where the funds received pursuant to Resolution No. 347/2012 were deposited
through February 2016. Pursuant to Resolution No. 7/16, the ENRE issued
Resolution No. 1/16 establishing a new tariff structure. Integral Tariff
Revision.During the year 2016, the Company, guided by the ENRE,
complied with all the procedural obligations required to complete the RTI
process set forth in the Adjustment Agreement, following ENRE’s guidance. The
RTI process was completed on February 1, 2017, on which date the ENRE issued
Resolution No. 63/2017. Such resolution established a new tariff schedule which
included a VAD maximum increase of 42% for February 2017, as well as two
additional phase increases for the months of November 2017 and February 2018. The following table
sets forth the relative weight of our distribution margin in our average tariffs
per category of customer (other than wheeling system, public lighting and
shantytown customers) in our concession area at the dates indicated. 
Although the VAD and electric power purchases per category of customer are the
same, we are subject to different taxes in the Province of Buenos Aires and the
City of Buenos Aires.


82

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VAD
    
    Average Taxes
    
    Electric Power PurchasesTariff(1)
    
    November
    
    January
    
    February
    
    October 2008
    
    Res.1301
    
    Res. 1
    
    Res. 92/17
    
    Res. 92/17
    
    November
    
    January
    
    February
    
    October 2008
    
    Res.1301
    
    Res. 1
    
    Res. 92/17
    
    Res. 92/17
    
    November
    
    January
    
    February
    
    October 2008
    
    Res.1301
    
    Res. 1
    
    Res. 92/17
    
    Res. 92/172001
    
    2005
    
    2007
    
    
    2011(2)
    
    2016(3)
    
    Feb. 2017
    
    Mar. 2017
    
    2001
    
    2005
    
    2007
    
    
    2011(2)
    
    2016(3)
    
    Feb. 2017
    
    Mar. 2017
    
    2001
    
    2005
    
    2007
    
    
    2011(2)
    
    2016(3)
    
    Feb. 2017
    
    Mar. 2017ResidentialTIRI
      (0-300)
    
    49.40%
    
    44.50%
    
    44.50%
    
    44.69%
    
    11.26%
    
    30.63%
    
    26.60%
    
    19.07%
    
    28.70%
    
    28.70%
    
    28.70%
    
    28.70%
    
    28.70%
    
    28.70%
    
    28.70%
    
    28.70%
    
    21.90%
    
    26.80%
    
    26.80%
    
    26.61%
    
    60.00%
    
    40.65%
    
    44.71%
    
    52.23%TIRI2
      (301-650)
    
    36.20%
    
    33.00%
    
    33.00%
    
    30.81%
    
    4.80%
    
    15.40%
    
    23.49%
    
    16.54%
    
    29.20%
    
    29.20%
    
    29.20%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    34.60%
    
    37.80%
    
    37.80%
    
    39.95%
    
    65.91%
    
    55.33%
    
    47.28%
    
    54.23%TIR3
      (651-800)
    
    
    
    
    
    
    
    32.08%
    
    4.55%
    
    14.48%
    
    26.66%
    
    19.15%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    38.68%
    
    66.15%
    
    56.23%
    
    44.11%
    
    51.61%TIR4
      (801-900)
    
    
    
    
    
    
    
    31.63%
    
    4.32%
    
    13.91%
    
    29.46%
    
    21.55%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    39.13%
    
    66.39%
    
    56.81%
    
    41.30%
    
    49.22%TIR5
      (90-1000)
    
    
    
    
    
    
    
    32.75%
    
    4.35%
    
    14.04%
    
    33.25%
    
    24.91%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    38.02%
    
    66.37%
    
    56.69%
    
    37.51%
    
    45.86%TIR6
      (1001-1200)
    
    
    
    
    
    
    
    26.29%
    
    4.19%
    
    15.98%
    
    37.51%
    
    28.95%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    44.48%
    
    66.51%
    
    54.73%
    
    33.26%
    
    41.81%TIR 7
      (1201-1400)
    
    
    
    
    
    
    
    27.18%
    
    3.98%
    
    15.25%
    
    41.21%
    
    32.64%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    43.59%
    
    66.73%
    
    55.47%
    
    29.55%
    
    38.13%TIR8
      (1401-2800)
    
    
    
    
    
    
    
    25.94%
    
    4.81%
    
    17.83%
    
    45.69%
    
    37.36%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    44.83%
    
    65.89%
    
    52.88%
    
    25.08%
    
    33.40%TIR9 (>
      2800)
    
    
    
    
    
    
    
    22.50%
    
    3.84%
    
    14.81%
    
    46.83%
    
    38.62%
    
    
    
    
    
    
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    29.23%
    
    
    
    
    
    
    
    48.26%
    
    66.88%
    
    55.92%
    
    23.93%
    
    32.15%Commercial -
      small demandsTIG1
    
    55.10%
    
    40.00%
    
    47.80%
    
    48.76%
    
    21.91%
    
    53.18%
    
    53.79%
    
    45.89%
    
    25.70%
    
    25.70%
    
    25.70%
    
    25.68%
    
    25.68%
    
    25.68%
    
    25.68%
    
    25.68%
    
    19.20%
    
    34.30%
    
    26.50%
    
    25.55%
    
    52.34%
    
    21.11%
    
    20.53%
    
    28.43%TIG2
    
    53.60%
    
    31.10%
    
    43.60%
    
    42.39%
    
    15.97%
    
    41.52%
    
    52.94%
    
    44.89%
    
    25.60%
    
    25.60%
    
    25.60%
    
    25.64%
    
    25.64%
    
    25.64%
    
    25.64%
    
    25.64%
    
    20.70%
    
    43.20%
    
    30.70%
    
    31.97%
    
    58.29%
    
    32.79%
    
    21.42%
    
    29.47%TIG3
    
    
    
    
    
    
    
    37.40%
    
    9.13%
    
    24.24%
    
    52.74%
    
    44.65%
    
    
    
    
    
    
    
    25.63%
    
    25.63%
    
    25.63%
    
    25.63%
    
    25.63%
    
    
    
    
    
    
    
    37.57%
    
    65.12%
    
    48.04%
    
    21.63%
    
    29.71%Commercial - medium demandT2
    
    43.30%
    
    27.90%
    
    35.50%
    
    38.03%
    
    16.03%
    
    44.80%
    
    74.36%
    
    74.36%
    
    25.60%
    
    25.60%
    
    25.60%
    
    25.63%
    
    25.63%
    
    25.63%
    
    25.63%
    
    25.63%
    
    31.00%
    
    46.40%
    
    38.90%
    
    36.34%
    
    58.15%
    
    29.47%
    
    0.00%
    
    0.00%IndustrialT3 low
      voltage below 300kw
    
    44.20%
    
    26.50%
    
    34.30%
    
    37.86%
    
    15.37%
    
    43.74%
    
    46.90%
    
    37.97%
    
    25.70%
    
    25.70%
    
    25.70%
    
    25.66%
    
    25.66%
    
    25.66%
    
    25.66%
    
    25.66%
    
    30.10%
    
    47.80%
    
    40.10%
    
    36.48%
    
    58.84
    
    30.53%
    
    27.44%
    
    36.36%T3 low
      voltage over 300kw
    
    42.60%
    
    24.50%
    
    32.10%
    
    27.09%
    
    11.99%
    
    22.80%
    
    23.80%
    
    23.52%
    
    25.60%
    
    25.60%
    
    25.60%
    
    25.62%
    
    25.62%
    
    25.62%
    
    25.62%
    
    25.62%
    
    31.80%
    
    49.90%
    
    42.30%
    
    47.29%
    
    62.29
    
    51.55%
    
    50.58%
    
    50.86%T3
      medium voltage below 300kw
    
    29.30%
    
    14.10%
    
    19.70%
    
    25.25%
    
    8.46%
    
    30.72%
    
    30.38%
    
    22.08%
    
    25.70%
    
    25.70%
    
    25.70%
    
    25.68%
    
    25.68%
    
    25.68%
    
    25.68%
    
    25.68%
    
    45.00%
    
    60.30%
    
    54.60%
    
    49.06%
    
    65.73
    
    43.51%
    
    43.94%
    
    52.24%T3
      medium volgate over 300kw
    
    27.30%
    
    12.30%
    
    17.50%
    
    17.71%
    
    7.09%
    
    14.50%
    
    13.19%
    
    13.00%
    
    25.70%
    
    25.70%
    
    25.70%
    
    25.69%
    
    25.69%
    
    25.69%
    
    25.69%
    
    25.69%
    
    47.00%
    
    62.00%
    
    56.80%
    
    56.60%
    
    67.11
    
    59.77%
    
    61.11%
    
    61.31%Average
      Tariff
    
    41.20%
    
    28.50%
    
    33.90%
    
    33.16%
    
    9.57%
    
    28.33%
    
    39.08%
    
    32.46%
    
    27.20%
    
    27.20%
    
    27.20%
    
    27.24%
    
    27.24%
    
    27.24%
    
    27.24%
    
    27.24%
    
    31.50%
    
    44.20%
    
    38.90%
    
    39.60%
    
    63.10%
    
    44.38%
    
    33.69%
    
    40.30%
  _______________________ (1)T1R1 refers to residential customers whose peak capacity
demand is less than 10 kW and whose bimonthly energy demand is less than or
equal to 300 kWh.  T1R2 refers to residential customers whose peak capacity
demand is less than 10 kW and whose bimonthly energy demand is greater than 300
kWh but less than 650 kWh. TIR3 refers to residential customers whose peak
capacity demand is less than 10 kW and whose bimonthly energy demand is greater
than 650 kWh but less than 800 kWh.  TIR4 refers to residential customers
whose peak capacity demand is less than 10 kW and whose bimonthly energy demand
is greater than 800 kWh but less than 900 kWh. TIR5 refers to residential
customers whose peak capacity demand is less than 10 kW and whose bimonthly
energy demand is greater than 900kWh but less than 1,000 kWh TIR6 refers to
residential customers whose peak capacity demand is less than 10 kW and whose
bimonthly energy demand is greater than 1,000 kWh  but less than 1,200 kWh.
TIR7 refers to residential customers whose peak capacity demand is less than 10
kW and whose bimonthly energy demand is greater than 1,200 kWh but less than
1,400 kWh. TIR8 refers to residential customers whose peak capacity demand is
less than 10 kW and whose bimonthly energy demand is greater than 1,400 kWh but
less than 2,800 kWh.  TIR9 refers to residential customers whose peak
capacity demand is less than 10 kW and whose bimonthly energy demand is greater
than 2,800kWh.  T1G1 refers to commercial customers whose peak capacity
demand is less than 10kW and whose bimonthly energy demand is less than or equal
to 1600 kWh.  T1G2 refers to commercial customers whose peak capacity
demand is less than 10 kW and whose bimonthly energy demand is greater than 1600
kWh but less than 4,000 kWh. T1G3 refers to commercial customers whose peak
capacity demand is greater than 4,000 kWh.  T2 refers to commercial
customers whose peak capacity demand is greater than 10 kW but less than 50
KW.  T3 refers to customers whose peak capacity demand is equal to or
greater than 50 kW.  The T3 category is applied to high-demand customers
according to the voltage (tension) at which each customer is connected. 
Low tension is defined as voltage less than or equal to 1 kV and medium tension
is defined as voltage greater than 1kV but less than 66 kV. (2)On
November 7, 2011, the SE issued Resolution No. 1,301/11, which established the
summer scheduling, eliminating government grants to certain economic activities,
which, in accordance with the provisions of the Resolution, are in conditions to
pay the actual cost that needs to be incurred for being supplied with their
demand of electricity. The removal of government grants has been extended to
residential customers, who were classified by geographical areas and type of
residence. The modification related only to electricity purchase prices in the
Wholesale Electricity Market, for which reason the Company’s VAD (value added
for distribution) remained practically unchanged. (3)On January
29, 2016, the ENRE issued Resolution No. 1/16establishing a new tariff structure. Integral Tariff
Revision (RTI). An integral tariff
proposal includes, among other factors, a recalculation of the compensation we
receive for our distribution services, including taxes that are not currently
passed onto our customers (such as taxes on financial transactions), a revised
analysis of our distribution costs, modifications to our quality of service
standards and penalty scheme and, finally, a revision of our asset base and rate
of return. On April 1, 2016, by
means of Resolution No. 55/16 issued by ENRE, the RTI process was approved,
which set the criteria and methodology to be applied throughout the RTI process,
as well as the corresponding working plan. On August 29, 2016,
the ENRE issued Resolution No. 494/16, through which it approved a rate of
return for the Company of 12.46% before taxes. In connection with the
terms set forth in Resolution No. 55/16, on September 5, 2016, we submitted our
electricity rate schedule proposal for the next five year period. For purposes
of the rate proposal, we: ·determined the capital base using for such purpose the
depreciated NRV method; ·submitted
the 2017-2021 investment plan;


83

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·submitted
a detail of the operating expenses; and ·submitted
all other data requested by the ENRE. On September 28, 2016, the ENRE
issued Resolution No. 522/16 pursuant to which it called for a public hearing
with the purpose of providing information and hearing to the public with respect
to the tariff proposal submitted by us for the 2017-2021 period. Such public
hearing was held on October 28, 2016. As a result and
following the completion of the RTI process, on February 1, 2017, the ENRE
issued Resolution No. 63/2017. Through this resolution, the ENRE approved a new
tariff scheme which set our new distribution added value (VAD) for the following
five-year period. Such income was established by applying the NRV methodology,
but over a slightly lower base capital than the one we had submitted in our
proposal, reaching an amount of Ps. 34 billion. The difference is mainly
explained by the fact that the ENRE excluded the fully depreciated assets from
the regulatory net asset base submitted. Moreover, the ENRE stated that our
acknowledged remuneration was Ps. 12.5 billion as of December 2015, which
adjusted through February 2017, reached Ps. 17.2 billion. In connection with our
operating expenses, these were set based on a model that values the resources
required for our operations, in line with a “model company” with competent
operation costs, including some corrections resulting from the current
inefficiencies detected in the company. In this regard, expenses were calculated
annually based on the real network, by incorporating in each year the facilities
needed to achieve the quality service required throughout the tariff period,
with improvements in the facilities by increasing prevention related maintenance
and projected investments, In this regard, the income requirements needed to
cover the costs calculated for the 2017-2021 tariff period were established. In relation to the new
tariff schedule and tariff charges, the ENRE established a VAD increase in three
stages, including an initial maximum increase of 42% to be applied as from
February 1, 2017, and two subsequent increases in November 2017 (19%) and
February 2018 (17%). In addition, the ENRE should acknowledge to the Company the
difference in VAD resulting from the application of the gradual tariff increase
recognized by the RTI in 48 installments as from February 1, 2018, which will be
incorporated to the VAD value on such date. Furthermore, the fixed charge
billing corresponding to Resolution No. 347/12 was set aside. The ENRE also established a
non-automatic mechanism to adjust our tariff, as it had done in the original
Concession Contract and the Adjustment Agreement, in order to preserve the
economic and financial sustainability of the concession in the event of prices
variations in the economy. This mechanism has a six-month basis and includes a
combined formula of wholesale and consumer price indexes (WPI, CPI and salaries
increases) which trigger the adjustment of tariff when the result is above
5%. In connection with
quality standards, the ENRE approved new parameters with the purpose of
achieving, by the end of the five-year period an acceptable quality. In this
regard, it established a penalties regime to be applied in the event of
noncompliance with the quality rates. Notwithstanding the
foregoing, as of the date of this annual report, the definition of the treatment
to be granted by the SE to all the issues generated by the non-performance of
the Adjustment  Agreement, are still pending. These issues include,
among others:  i)the
treatment of the outstanding balance caused by the mutuums executed to comply
with the investment plan, granted to cover FOCEDE’s insufficient funds; ii)the
treatment of the funds disbursed by us to comply with the investment plan, which
were not reimbursed to the Company; iii)the
conditions for the cancellation of the outstanding balance with CAMMESA at the
issuance date of Resolution SENo 32/15, for which the Company has submitted a
payments plan; iv)the
treatment to be given to the penalties and reductions pending to be
settled.


84

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On April 26, 2017,
following the completion of the RTI process through the issuance of Resolution
ENRE No. 63/17, Edenor was notified by the ME&M of an instruction sent to
the SEE  pursuant to which the SEE was instructed to determine (along with
the participation of the Undersecretariat for Coordination of Tariff Policies
and the ENRE) within 120 days if any obligations under the Adjustment Agreement
were pending as of the date the new tariff schedule resulting from the RTI
process came into effect. If the SEE determines that any such obligation is
pending, the SEE shall define the treatment to be given to such
obligation. Social Tariff Regime.According to the Adjustment Agreement, we will be
required to apply a social tariff regime as part of our revised tariff structure
resulting from the RTI.  This regime is a system of subsidized tariffs for
the poverty‐stricken sectors of the community to be approved by the ENRE in the
context of the RTI.  The social tariff regime will provide poverty‐stricken
sectors of the community with the same service and quality of service as other
users.  The beneficiaries under this regime must register with the
Argentine government and meet certain criteria, including not owning more than
one home and having a level of electricity consumption that is not higher than a
maximum to be established by the Argentine government.  According to the
Adjustment Agreement, the Argentine government will subsidize the increased
costs associated with the social tariff regime in part with contributions by
users not subject to this regime.  We will be required to cover a portion
of these costs by not charging the beneficiaries of this regime for reconnection
expenses and installation of new equipment, updating our billing system and
granting payment plans to beneficiaries for existing past-due electricity
bills.  We currently anticipate that the incremental cost to us of
providing services under the social tariff regime will not be significant. 
However, we cannot guarantee that the social tariff regime will be implemented
in the manner, or under the terms, we currently anticipate. In January 2016,
through Resolution No. 6/16, the Argentine government introduced a social tariff
for residential customers who comply with certain consumption requirements,
which includes a full exemption for monthly consumptions below or equal to 150
Kwh and preferential tariffs for customers who exceed such consumption level but
achieve a monthly consumption lower than that of the same period in the
immediately preceding year. Through Resolution No.
63/2017, the ENRE
ratified this measure, maintaining the zero cost modality for monthly
consumptions below or equal to 150 Kwh and preferential tariffs for consumption
that exceeds such level, updating the values in accordance with the new tariff
scheme. Demand Energy demand depends
to a significant extent on economic and political conditions prevailing from
time to time in Argentina, as well as seasonal factors.  In general, the
demand for electricity varies depending on the performance of the Argentine
economy, as businesses and individuals generally consume more energy and are
better able to pay their bills during periods of economic stability or
growth.  As a result, energy demand is affected by Argentine governmental
actions concerning the economy, including with respect to inflation, interest
rates, price controls, foreign exchange controls, taxes and energy
tariffs. The following table
sets forth the amount of electricity generated in Argentina and our electricity
purchases in each of the periods indicated.


85

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Year
    
    Electricity demand in
      Gwh(1)
    
    Edenor demand in
Gwh(2)
    
    Edenor’s demand as % of total
    demand1995
    
    57,839
    
    11,629
    
    20.1%1996
    
    61,513
    
    12,390
    
    20.1%1997
    
    66,029
    
    13,046
    
    19.8%1998
    
    69,103
    
    13,768
    
    19.9%1999
    
    71,689
    
    14,447
    
    20.2%2000
    
    75,591
    
    15,148
    
    20.0%2001
    
    78,098
    
    15,414
    
    19.7%2002
    
    76,483
    
    14,865
    
    19.4%2003
    
    82,261
    
    15,811
    
    19.2%2004
    
    87,477
    
    16,673
    
    19.1%2005
    
    92,340
    
    17,623
    
    19.1%2006
    
    97,590
    
    18,700
    
    19.2%2007
    
    102,950
    
    20,233
    
    19.7%2008
    
    105,959
    
    20,863
    
    19.7%2009
    
    104,592
    
    20,676
    
    19.8%2010
    
    110,767
    
    22,053
    
    19.9%2011
    
    116,418
    
    23,004
    
    19.8%2012
    
    131,944
    
    23,933
    
    18.1%2013
    
    125,162
    
    24,902
    
    19.9%2014
    
    126,397
    
    24,860
    
    19.7%2015
    
    132,020
    
    26,322
    
    19.9%2016
    
    132,950
    
    26,838
    
    20.2%
  ______________________ Source: Compañía Administradora
del Mercado Mayorista Eléctrico, S.A. (CAMMESA) (1)Includes demand in the Mercado
Eléctrico Mayorista Sistema Patagónico (Patagonia wholesale electricity market,
or MEMSP). (2)Calculated as electricity
purchased by us and our wheeling system customers.   Electricity demand in
our concession area has grown an average of 4% per annum since 1995. The
evolution of demand shows four growth periods interrupted by a slight decline in
demand.  In 2002, the decline was attributable to the economic crisis,
while in 2009 it was a consequence of the global financial crisis. In 2014 a
slight decrease was caused by the devaluation that took place in the second
semester of such year, while in 2016 it was attributable to the tariff increases
implemented in such year and to the decline in industrial activity. The following graph
represents the annual growth of energy purchased to satisfy the demand of each
operating area within Edenor’s concession from 2000 through 2016  Beginning in mid-2001
through 2002, the decline in the overall level of economic activity and the
deterioration in the ability of many of our customers to pay their bills as a
result of the crisis led to an overall decrease in demand for electricity and an
increase in non-technical energy losses. After the economic crisis, however,
demand started growing again, increasing an average of 4.3% per annum from 2003
through 2013. This increase in demand was due to renewed growth in the Argentine
economy since the second half of 2003 and the relative low cost of energy to
consumers, in real terms, resulting from the freeze of our distribution margin
and the elimination of the inflation adjustment provisions of our concession in
2002. In 2016, our customer’s demand decreased by 1% compared to 2015, mainly
due to the tariff increase for residential customers and to the GDP decrease for
industrial customers, whose joint participation represents more than 80% of the
electricity consumption in our concession area.


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The small commercial
category of customers registered a decrease in demand in 2002, but recovered
slightly after the initial effects of the economic crisis due to the sensitivity
of customers in this category to the economic status of their small businesses.
The medium commercial category of customers has generally demonstrated the same
volatility in demand as low-demand customers in recent years. Public lighting demand
has declined significantly over the past few years due to the introduction of
low-consumption lighting. We believe that the public lighting category will
continue to register low demand despite continued economic expansion and urban
development. After having increased significantly in 2005, demand in shantytowns
stabilized in 2006, remaining in line with historic growth levels, and was below
the increase in demand for our low demand residential category of customers.
However, overall demand in this category is relatively small in comparison to
other larger categories of our customers. See “Item 4. Information on the
Company—Framework Agreement (Shantytowns)” The Argentine
government has also implemented the PUREE in an attempt to curb increases in
energy demand by offering rewards to residential and small commercial customers
who reduce their energy usage in comparison to their use in 2003. In 2005, the
Argentine government implemented a second version of the PUREE (PUREE II), which
rewards residential and small commercial customers based on their usage in 2003
and industrial customers based on their usage in 2004. The PUREE II also
penalizes industrial customers whose usage exceeds 90% of the 2004 levels and
penalizes residential customers with bi-monthly consumption levels at or above
300 KWh and small commercial customers whose usage exceeds 90% of their usage
levels for 2003. Residential customers with consumption levels below 300 KWh are
exempt from penalty. In spite of the PUREE and PUREE II, energy demand has
continued to increase during the three years it has been in effect. On October 31, 2008,
the SE adopted Resolution No. 1,170/08, which excludes all the T1G, T2, T3 and
T1R customers with bi-monthly consumption levels over and above 1,000 KWh from
receiving PUREE reward payments. On March 2, 2010, the
SE adopted Resolution No. 45/2010, which revised the calculation of the
coefficient used to reward T1R customers with consumption levels below 1,000
KWh. This resolution decreased the rewards that such users are entitled to
receive. On January 25, 2016,
through Resolution No. 7/16 the ME&M abrogated the PUREE. We cannot assure you
that the tariffs that result from the RTI or future economic, social and
political developments in Argentina, over which we have no control, will not
have an adverse effect on energy demand in Argentina.  See “Item 3. Key
Information—Risk factors—Risks related to the electricity distribution
sector—Electricity demand may be affected by tariff increases, which may lead
distribution companies, such as us, to record lower revenues.” Capacity
demand Demand for installed
capacity to deliver electricity generally increases with growth in demand for
electricity.  However, since the 2001 and 2002 crisis, with the exception
of the two thermal generation plants described below, no new generation plants
have been built in Argentina. However, the Argentine government has implemented
some economic incentives, such as those contained in thePlus EnergyProgram, which have served to increase generating
capacity in existing generation plants such as Central Térmica Güemes and
Central Loma de la Lata. A lack of generation capacity would place limits on our
ability to grow and could lead to increased service disruptions, which could
cause an increase in our fines. See “Item 3. Key Information—Risk factors—Risks
Relating to the Electricity Distribution Sector—If we experience continued
energy shortages in the face of growing demand for electricity, our ability to
deliverelectricity to our
customers could be adversely affected, which could result in customer claims,
material penalties, government intervention and decreased results of
operations.”


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In response to the
lack of private investment in new generation plants, the Argentine government
undertook a project to construct two 800 MW thermal generation plants, Central
Termoeléctrica Manuel Belgrano and Central Termoeléctrica General San Martín.
Construction of these two plants was completed and operations commenced in 2009.
The two plants were constructed with funds derived from three sources: net
revenues of generators derived from energy sales in the spot market, a special
charge to our non-residential customers per MWh of energy billed and a specific
charge from CAMMESA applicable to large users. In addition to the construction
of these two new thermal generation plants, in September 2006 the SE issued
Resolution No. 1,281/06 in an effort to respond to the sustained increase in
energy demand following Argentina’s economic recovery after the crisis. This
resolution seeks to create incentives for energy generation plants to meet
increasing energy needs. The government has also required us to finance 24% and
Edesur 26%, of the construction costs of two high-tension 220 kV lines between
theCentral PuertoandCentral Costaneragenerators and theMalavernetwork, which  provide
access to an additional 600MW of energy from theCentral PuertoandCentral
Costaneragenerators that currently cannot be distributed due to
saturation of their grids. In May 2012, we finished the construction of the
220kV linking lines of the local generators Central Puerto and Central Costanera
with Edenor network, through Malaver substations. This extension was decided by
the Resolution No. 1,875/05 of the SE and it allows an increase in supply
capacity by 600 MW from Central Puerto and Central Costanera generators. In
December 2012, the third transformer of 300 MVA-220/132 kV was put into service
in Malaver’s substation. We cannot assure you
that these new generation plants will be able to serve our energy demands in the
manner we anticipate. Seasonality of
Demand Seasonality has a
significant impact on the demand for electricity in our concession area, with
electricity consumption peaks in summer and winter. The impact of seasonal
changes in demand is registered primarily in our residential and small
commercial customer categories.  The seasonal changes in demand are
attributable to the impact of various climatological factors, including weather
and the amount of daylight time, on the usage of lights, heating systems and air
conditioners. The impact of
seasonality on industrial demand for electricity is less pronounced than on the
residential and commercial sectors, primarily because different types of
industrial activity by their nature have different seasonal peaks, such that the
climatic effect is more varied.  The chart below shows seasonality of
demand in Edenor’s residential customer category for the periods
indicated.


88

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The chart below shows seasonality of demand in Edenor’s small commercial
customer category for the periods indicated.  The chart below shows seasonality of demand in Edenor’s medium commercial
customer category for the periods indicated.  The chart below shows
seasonality of demand in Edenor’s industrial customer category for the periods
indicated.  Taxes on Electricity
Tariffs Sales of electricity
within our service area are subject to certain taxes, levies and charges at the
federal, provincial and municipal levels. These taxes vary according to location
and type of user. In general, residential and governmental users are subject to
a lower tax rate than commercial and industrialusers. Similarly,
taxes are typically higher in the Province of Buenos Aires than in the City of
Buenos Aires. All of these taxes are billed to our customers along with
electricity charges.


89

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Framework Agreement
(Shantytowns) Since 1994, we have
supplied electricity to low-income areas and shantytowns within our concession
area under a special regime established pursuant to a series of framework
agreements.  For a discussion of these agreements and our ongoing
negotiations to extend the most recent framework agreement, see “Item 4.
Information on the Company—Framework Agreement (Shantytowns)” Operating
Expenses Our most significant
operating expenses are transmission and distribution expenses, which include
depreciation charges, salaries and social security taxes, outsourcing, fines and
penalties, and purchases of materials and supplies, among others. We seek to maintain a
flexible cost base by achieving an optimal level of outsourcing, which allows us
to respond more quickly to changes in our market. We had 4,692 employees
and  contracts with third-party services companies that count with 4,045
employees as of December 31, 2016.. See “Item 6. Directors, Senior Management
and Employees—Employees”. Our principal material
and supply expenses consist of purchases of wire and transformers
(i.e., electromagnetic devices used to change the voltage
level of alternating‐current electricity), which we use to maintain our
network. Summary of
Historical Results of Operations The following table
provides a summary of our operations for the years ended December 31, 2016, 2015
and 2014.


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Statement of
      comprehensive (loss) income2016
    
    2016
    
    2015
    
    2014US$
    
    Ps.
    
    Ps.
    
    Ps.Continuing
      operationsRevenue from
      sales (1)
    
    823.1
    
    13,079.6
    
    3,802.2
    
    3,598.4Electric power
      purchases
    
    (381.4)
    
    (6,060.3)
    
    (2,022.0)
    
    (1,878.1)Subtotal
    
    441.7
    
    7,019.3
    
    1,780.2
    
    1,720.3Transmission
      and distribution expenses
    
    (386.9)
    
    (6,147.2)
    
    (3,153.7)
    
    (2,825.1)Gross income
      (Loss)
    
    54.9
    
    872.1
    
    (1,373.5)
    
    (1,104.8)Selling
      expenses
    
    (101.7)
    
    (1,616.7)
    
    (832.8)
    
    (657.9)Administrative
      expenses
    
    (73.1)
    
    (1,162.3)
    
    (706.1)
    
    (496.8)Other operating
      income
    
    5.5
    
    87.2
    
    79.2
    
    52.4Other operating
      expense
    
    (29.2)
    
    (463.9)
    
    (502.5)
    
    (318.7)Gain from
      acquisition of companies
    
    -
    
    -
    
    -
    
    -Income from
      non-reimbursable customer contributions
    
    0.0
    
    0.8
    
    0.8
    
    0.8Operating (loss) profit
      before SE Resolution 250/13 and subsequent Notes
    
    (143.7)
    
    (2,283.0)
    
    (3,334.9)
    
    (2,525.0)Recognition of income –
      provisional remedies – MEyM Note 2016-04484723
    
    70.8
    
    1,125.6
    
    -
    
    -Income recognition on
      account of the RTI - SE Resolution 32/15
    
    26.4
    
    419.7
    
    5,025.1
    
    -Higher costs recognition -
      SE Resolution 250/13 and subsequents Notes
    
    5.1
    
    81.5
    
    551.5
    
    2,271.9Operating (loss)
      profit
    
    (41.3)
    
    (656.1)
    
    2,241.7
    
    (253.1)Financial income
    
    12.4
    
    196.8
    
    96.2
    
    235.5Financial expenses
      (2)
    
    (90.9)
    
    (1,444.9)
    
    (450.0)
    
    (592.0)Other financial
      expense
    
    (1.7)
    
    (27.5)
    
    (561.7)
    
    (324.5)Net financial (expense)
    
    (80.3)
    
    (1,275.6)
    
    (915.5)
    
    (681.0)(Loss) profit before
      taxes
    
    (121.6)
    
    (1,931.7)
    
    1,326.2
    
    (934.1)-Income tax
    
    46.8
    
    743.1
    
    (183.8)
    
    154.4(Loss) profit for the year
      from continuing operations
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)Discontinued
      operations
    
    -
    
    -
    
    -
    
    -(Loss) profit for the
      year
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)(Loss) profit for the year
      attributable to:Owners of the
      Company
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)Non-controlling
      interests
    
    -
    
    -
    
    -
    
    -(Loss) profit for the
      year
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)(Loss) profit for the year
      attributable to the owners of the parentContinuing
      operations
    
    (74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)Discontinued
      operations
    
    -
    
    -
    
    -
    
    -(74.8)
    
    (1,188.7)
    
    1,142.4
    
    (779.7)


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2016
    
    2016
    
    2015
    
    2014US$
    
    Ps.
    
    Ps.
    
    Ps.Other comprehensive
      incomeItems that will not be
      reclassified to profit or lossResults related to benefit
      plans
    
    0.5
    
    7.8
    
    (3.7)
    
    (17.8)Tax effect of actuarial
      (losses) income on benefit plans
    
    (0.2)
    
    (2.7)
    
    1.3
    
    6.2Total other comprehensive
      loss from discontinued operations
    
    -
    
    -
    
    -
    
    -Total other comprehensive
      income (loss)
    
    0.3
    
    5.1
    
    (2.4)
    
    (11.6)Comprehensive income for
      the year attributable to:Owners of the parent
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)Non-controlling
      interests
    
    -
    
    -
    
    -
    
    -Comprehensive (loss) income
      for the year
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)(Loss) profit for the year
      attributable to the owners of the parentContinuing
      operations
    
    (74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)Discontinued
      operations
    
    
    
    -
    
    -
    
    -(74.5)
    
    (1,183.6)
    
    1,140.0
    
    (791.3)Basic and diluted (loss)
      earnings per share:Basic and diluted (loss)
      earnings per share from continuing operations
    
    (0.08)
    
    (1.33)
    
    1.27
    
    (0.87)Basic and diluted (loss)
      earnings per share from discontinued operations
    
    -
    
    -
    
    -
    
    -Basic and diluted (loss)
      earnings per ADS(3):Basic and diluted (loss)
      earnings per ADS from continuing operations
    
    (1.67)
    
    (26.60)
    
    25.40
    
    (17.40)Basic and diluted (loss)
      earnings per ADS from discontinued operations
    
    -
    
    -
    
    -
    
    -
  (*)  Translated
into U.S. Dollars at the selling exchange rate for U.S. Dollars quoted by Banco
de la Nación Argentina (the “Banco Nación”) on December 31, 2016, which was Ps.
15.89  to U.S.$ 1.00. (1)Revenue from operations is
recognized on an accrual basis and derives mainly from electricity distribution.
Such revenue includes electricity supplied, whether billed or unbilled, at the
end of each year, and has been valued on the basis of applicable tariffs and the
charge regarding with the Resolution No. 347/12. (2)Net of
interest capitalized at December 31, 2016, 2015 and 2014  for Ps.189.7 million,  255.9
million and Ps. 123.9 million, respectively. (3)Each ADS
represents 20 Class B common shares.


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Year Ended December
31, 2016 compared with Year Ended December 31, 2015. Revenue from sales Revenue from sales
increased by 244% to Ps. 13,079.6 million for the year ended December 31, 2016,
from Ps. 3,802.2 million for the year ended December 31, 2015. This increase was
mainly due to the tariff increases set forth by Resolution No 1/2016 of the ENRE
in force from February 1, 2016. In respect of these
measures, from May through November 2016, several courts granted provisional
remedies (injunctions) ordering the temporary suspension of Resolution No.
1/2016 in the Province of Buenos Aires. In the “Abarca” case, an injunction was
issued extending throughout the entire concession area of the Province of Buenos
Aires, which was lifted on September 6, 2016, and its economic impact on us was
compensated in four installments, that were charged to the customers’invoices as from
October 2016. Other provisional remedies were granted with respect to the
districts of “Pilar” and “La Matanza”, which remained in effect until October 24
and November 11, 2016, respectively, when they expired. The negative impact on
sales was compensated by CAMMESA through credit notes for a total amount of Ps.
1,125.6 million, which was reflected in “Recognition of Income – provisional
remedies – MeyM Note. 2016-04484723”. In the opposite way,
due to the increase in the electricity tariff, the volume of energy sold
decreased by 0.6% from 22,381 GWh in 2016 to 22,253 GWh in 2015. Net energy sales
represented approximately 99% of our net sales in 2016 and 97.8% in 2015; late
payment charges, pole leases, and connection and reconnection charges account
for the balance in each of those years. Electric Power
Purchases The amount of electric
power purchases increased by 199.7% to Ps. 6,060.3 million for the year ended
December 31, 2016, from Ps. 2,022.0 million for the year ended December 31,
2015. This increase of Ps. 4,038.3 million was mainly due to the implementation
of tariff increase set forth by Resolution No. 6/2016 of the ME&M as from
February 1, 2016, and to a  lesser extent, to an increase in energy losses
( mainly  non-technical losses). Our volume of electric
power purchases increased by 2.0%, to 26,838 GWh for the year ended December 31,
2016, from 26,322 GWh for the year ended December 31, 2015 (in both cases
including wheeling system demand). Energy losses
increased by 17.0% for the year ended December 31, 2016, compared to 14.9% for
the year ended December 31, 2015.  See “—Factors Affecting Our Results of
Operations—Recognition of Cost of Energy Losses.” Transmission and
Distribution Expenses Transmission and
distribution expenses increased by 94.9% to Ps. 6,147.2 million for the year
ended December 31, 2016, from Ps. 3,153.7 million for the year ended December
31, 2015. This increase was mainly due to a Ps. 2,117.0 million increase in
fines and penalties which were calculated in accordance with the new methodology
set forth by ENRE Note No. 120,151 that established that: (i) penalties are to
be valued according to the VAD or KWh values in effect as of the last date of
the semester or period during which the event giving rise to the penalty
occurred, including any increases or adjustments applicable to our
“remuneration” at such date, and (ii) that penalties accrue interest from the
last date of the semester on which the event giving rise to the penalty occurred
until the date they are paid. To a lesser extent, transmission and distribution
expenses increased as a consequence of an increase of Ps. 726.6 million in
salaries and social security taxes attributable to the increase in employee
compensation granted in 2016. As a percentage of
revenue from sales, transmission and distribution expenses decreased to 47.0%
for the year ended December 31, 2016, from 82.9% for the year ended December 31,
2015. The following table
sets forth the principal components of our transmission and distribution
expenses for the years indicated.


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Year ended December 31,2016
    
    
    
    % of 2016
    
    2015
    
    
    
    % of 2015net sales
    
    
    
    
    net salesSalaries and
      social security taxes
    2,586.3
    
    42.1%
    
    19.8%
    
    1,859.7
    
    59.0%
    
    48.9%Supplies
      consumption
    276.2
    
    4.5%
    
    2.1%
    
    211.4
    
    6.7%
    
    5.6%Fees and
      remuneration for services
    453.7
    
    7.4%
    
    3.5%
    
    463.2
    
    14.7%
    
    12.2%Depreciation of
      property, plant and equipment
    284.8
    
    4.6%
    
    2.2%
    
    236.8
    
    7.5%
    
    6.2%ENRE
      penalties
    2,374.2
    
    38.6%
    
    18.2%
    
    257.3
    
    8.2%
    
    6.8%Others
    172.0
    
    2.8%
    
    1.3%
    
    125.3
    
    3.9%
    
    3.3%Total
    6,147.2
    
    100%
    
    47.0%
    
    3,153.7
    
    100%
    
    82.9%
  Gross (loss)
profit Our gross profit,
including transmission and distribution expenses, increased by Ps. 2,245.5
million, or 163.5%,  to Ps. 872.1 million for the year ended December 31,
2016, from a gross loss of Ps. 1,373.5 million for the year ended December 31,
2015. This increase was mainly attributable to the increase in revenue from
sales described above. Selling
Expenses Our selling expenses
are related to customer services provided at our commercial offices, billing,
invoice mailing, collection and collection procedures, as well as allowances for
doubtful accounts. Selling expenses
increased by 94.1% to Ps. 1,616.7 million for the year ended December 31, 2016,
from Ps. 832.8 million for the year ended December 31, 2015. This increase of
Ps. 783.9 million was mainly due to a Ps. 203.6 million increase in allowances
for the impairment of trade as a result of the tariff increase, a Ps. 158.1
million increase in fines and penalties according to the new methodology set by
ENRE Note No 120,151, a Ps. 139.0 million increase in fees and remuneration for
services, and a Ps. 138.0 million increase in salaries and social security taxes
(attributable to an increase in employee compensation granted in
2016). As a percentage of net
sales, selling expenses decreased to 12.4 % of net sales in the year ended
December 31, 2016, from 21.9% for the year ended December 31, 2015. The following table
sets forth the principal components of our selling expenses for the years
indicated. Year ended December 31,2016
    
    
    
    % of 2016
    
    2015
    
    
    
    % of 2015net sales
    
    
    
    
    net salesSalaries and
      social security taxes
    437.9
    
    27.1%
    
    3.3%
    
    299.8
    
    36.0%
    
    7.9%Allowance for
      the impairment of trade and other receivables
    227.7
    
    14.1%
    
    1.7%
    
    24.1
    
    2.9%
    
    0.6%Communication
      expenses
    129.0
    
    8.0%
    
    1.0%
    
    58.7
    
    7.0%
    
    1.5%Fees and
      remuneration for services
    468.5
    
    29.0%
    
    3.6%
    
    329.5
    
    39.6%
    
    8.7%ENRE
      penalties
    182.4
    
    11.3%
    
    1.4%
    
    24.4
    
    2.9%
    
    0.6%Others
    171.2
    
    10.6%
    
    1.3%
    
    96.3
    
    11.6%
    
    2.5%Total
    1,616.7
    
    100%
    
    12.4%
    
    832.8
    
    100%
    
    21.9%
  Administrative
Expenses Our administrative
expenses include, among others, expenses associated with accounting, payroll
administration, personnel training, systems operation third-party services and
taxes. Administrative
expenses increased by 64.6%, to Ps.1,162.3 million for the year ended
December 31, 2016, from Ps. 706.1 million for the year ended December 31, 2015.
This increase of Ps. 456.2 million was mainly due to a  Ps. 180.6 million
increase in fees and remuneration for services, and a Ps. 174.4 million increase
in salaries and social security taxes attributable to an increase in employee
compensation granted in 2016.


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As a percentage of
revenue from sales, administrative expenses decreased to 8.9% for the year ended
December 31, 2016, as compared to 18.6% for the year ended December 31,
2015. The following are the
principal components of our administrative expenses for the years indicated. Year ended December 31,2016
    
    
    
    % of 2016net sales
    
    2015
    
    
    
    % of 2015net salesSalaries and
      social security taxes
    502.7
    
    43.3%
    
    3.8%
    
    328.4
    
    46.5%
    
    8.6%Rent and
      insurance
    87.8
    
    7.6%
    
    0.7%
    
    58.2
    
    8.2%
    
    1.5%Fees and
      remuneration for services
    394.4
    
    33.9%
    
    3.0%
    
    213.8
    
    30.3%
    
    5.6%Security
      Services
    43.6
    
    3.8%
    
    0.3%
    
    24.1
    
    3.4%
    
    0.6%Others
    133.8
    
    11.5%
    
    1.0%
    
    81.6
    
    11.6%
    
    2.1%Total
    1,162.3
    
    100%
    
    8.9%
    
    706.1
    
    100%
    
    18.6%
  Other operating
(expenses) income Other operating
expenses include mainly retirement payments, severance payments and accrual for
lawsuits. Other operating expenses, decreased by 11.0% to a loss of Ps. 376.8
million for the year ended December 31, 2016, compared to a loss of Ps. 423.3
million for the year ended December 31, 2015. The positive variation of Ps. 46.5
million was mainly due to a Ps. 75.4 million decrease in provisions for
contingencies, a decrease of Ps.44.9 million in expenses related to the
abrogation of FOCEDE, and a Ps. 20.5 million decrease in fees for services
provided to third parties, partially offset by an increase of Ps. 71.0 in debit
and credit taxes and an increase of Ps. 37.0 in disposals of property, plant and
equipment. Operating (loss)
profit  Our operating results
decreased by Ps. 2,897.8 million, from a gain of Ps.2,241.7 million for the year
ended December 31, 2015 to a loss of Ps. 656.1 million for the year ended
December 31, 2016, mainly due to the increase in operating expenses explained
above. Net Financial
Expense Net financial expense
totaled Ps. 1,275.6 million for the year ended December 31, 2016, compared to
Ps. 915.5 million for the year ended December 31, 2015. This increase of
Ps.360.1 million was mainly due to a Ps. 828.4 million increase in interests due
on the commercial debt with CAMMESA, partially offset by a decrease of Ps. 477.1
in exchange differences as a result of exchange rate variations. Income
Tax The Company’s
income tax charge includes three effects: (i) the current tax payable for the
year pursuant to tax legislation applicable to the Company; (ii) the effect of
applying the deferred tax method on temporary differences arising out of the
asset and liability valuation according to tax versus financial accounting
criteria; and (iii) the analysis of recoverability of deferred tax assets. We
recorded an income tax credit of Ps.743.1 million in 2016, compared to an income
tax charge of Ps. 183.7 million in 2015, mainly as a result of the increase in
fines and penalties according to the new methodology set by ENRE Note No 120,151
and the decrease in the additional income derived from the application of
Resolution No. 32/15 of the SE. Profit (Loss) for the
year We recorded a loss of
Ps. 1,188.6 million for the year ended December 31, 2016, compared to a profit
of Ps. 1,142.4 million for the year ended December 31, 2015 mainly as a
consequence of the decrease in the additional income derived from the
application of Resolution No. 32/15 of the SE (nolonger in effect as of
February 2016) and the increase in the operating expenses described above, which
were not offset by the tariff increase set forth by Resolution No. 1/2016 of the
ENRE.


95

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Year Ended December
31, 2015 compared with Year Ended December 31, 2014. Revenue from sales Revenue from sales
increased 5.7% to Ps. 3,802.2 million for the year ended December 31, 2015, from
Ps. 3,598.4 million for the year ended December 31, 2014. This increase was
mainly due to an increase in the volume of energy sold, which increased from
21,312 GWh in 2014 to 22,402 GWh in 2015, representing a 5.1% increase, and to
an increase of Ps.19 million in revenue from pole leases. Net energy sales
represented approximately 97.8% of our net sales in 2015 and 98.3% in 2014; late
payment charges, pole leases, and connection and reconnection charges account
for the balance. Electric Power
Purchases The amount of electric
power purchases increased 7.7% to Ps. 2,022.0 million for the year ended
December 31, 2015, from Ps. 1,878.1 million for the year ended December 31,
2014. This increase of Ps. 143.9 million was mainly due to an increase in the
volume of energy sold and to an increase in energy losses due to an increase in
non-technical losses. The volume of electric
power purchases of Edenor increased 5.9% to 26,322 GWh for the year ended
December 31, 2015, from 24,860 GWh for the year ended December 31, 2014 (in both
cases including wheeling system demand). Energy losses
increased to 14.9% for the year ended December 31, 2015, from 14.3% for the year
ended December 31, 2014.  See “—Factors Affecting Our Results of
Operations—Recognition of Cost of Energy Losses.” Transmission and
Distribution Expenses Transmission and
distribution expenses increased 11.6% to Ps. 3,153.7 million for the year ended
December 31, 2015, from Ps. 2,825.1 million for the year ended December 31,
2014. This increase was mainly due to a Ps. 486.5 million increase in salaries
and social security taxes attributable to an increase in employee compensation
granted in 2015, along with an increase in the number of employees. This
increase was partially offset by a decrease of Ps.251.1 million in fees and
remuneration for services. As a percentage of
revenue from sales, transmission and distribution expenses increased to 82.9%
for the year ended December 31, 2015, from 78.5% for the year ended December 31,
2014. The following table
sets forth the principal components of our transmission and distribution
expenses for the years indicated. Year ended December 31,2015
    
    
    
    % of
      2015
    
    2014
    
    
    
    % of
      2014net
      sales
    
    
    
    
    net
      salesSalaries and
      social security taxes
    1,859.70
    
    59.0%
    
    48.9%
    
    1373.2
    
    48.6%
    
    38.2%Supplies
      consumption
    211.40
    
    6.7%
    
    5.6%
    
    205.9
    
    7.3%
    
    5.7%Fees and
      remuneration for services
    463.20
    
    14.7%
    
    12.2%
    
    714.3
    
    25.3%
    
    19.9%Depreciation of
      property, plant and equipment
    236.80
    
    7.5%
    
    6.2%
    
    208.5
    
    7.4%
    
    5.8%ENRE
      penalties
    257.30
    
    8.2%
    
    6.8%
    
    233.9
    
    8.3%
    
    6.5%Others
    125.30
    
    3.9%
    
    3.3%
    
    89.3
    
    3.2%
    
    2.5%Total
    3,153.7
    
    100%
    
    82.9%
    
    2,825.1
    
    100%
    
    78.5%


96

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Gross (loss)
profit Our gross loss,
including transmission and distribution expenses, increased by Ps. 268.7
million, or 24.3%,  to Ps. 1,373.5 million for the year ended December 31,
2015, from a gross loss of Ps. 1,104.8 million for the year ended December 31,
2014. This increase was basically due to the increase in transmission and
distribution expenses described above, which were partially offset by the slight
increase in revenue from sales. Selling
Expenses Our selling expenses
are related to customer services provided at our commercial offices, billing,
invoice mailing, collection and collection procedures, as well as allowances for
doubtful accounts. Selling expenses
increased 26.6% to Ps. 832.8 million for the year ended December 31, 2015, from
Ps. 657.9 million for the year ended December 31, 2014. This increase of Ps.
174.9 million was mainly due to a Ps. 66.7 million increase in fees and
remuneration for services, a Ps. 50.8 million in salaries and social security
taxes (attributable to an increase in employee compensation granted in 2015),
and a Ps. 19.6 million increase in communications expenses. As a percentage of net
sales, selling expenses increased to 21.9% of net sales in the year ended
December 31, 2015, from 18.3% for the year ended December 31, 2014. The following table
sets forth the principal components of our selling expenses for the years
indicated. Year ended December 31,2015
    
    
    
    % of
      2015
    
    2014
    
    
    
    % of
      2014net
      sales
    
    
    
    
    net
      salesSalaries and
      social security taxes
    299.8
    
    36.0%
    
    7.9%
    
    249.0
    
    37.8%
    
    6.9%Allowance for
      the impairment of trade and other receivables
    24.1
    
    2.9%
    
    0.6%
    
    21.5
    
    3.3%
    
    0.6%Communication
      expenses
    58.7
    
    7.0%
    
    1.5%
    
    39.1
    
    5.9%
    
    1.1%Fees and
      remuneration for services
    329.5
    
    39.6%
    
    8.7%
    
    262.8
    
    39.9%
    
    7.3%ENRE
      penalties
    24.4
    
    2.9%
    
    0.6%
    
    18.4
    
    2.8%
    
    0.5%Others
    96.3
    
    11.6%
    
    2.5%
    
    67.1
    
    10.2%
    
    1.9%Total
    832.8
    
    100%
    
    21.9%
    
    657.9
    
    100%
    
    18.3%
   Administrative
Expenses Our administrative
expenses include, among others, expenses associated with accounting, payroll
administration, personnel training, systems operation third-party services and
taxes. Administrative
expenses increased 42.1% to Ps. 706.1 million for the year ended December 31,
2015, from Ps. 496.8 million for the year ended December 31, 2014. This increase
of Ps. 209.3 million was mainly due to a Ps. 86.3 million increase in salaries
and social security taxes attributable to an increase in employee compensation
granted in 2015, a Ps. 65.7 million increase in fees and remuneration for
services, and Ps. 23.0 million increases in rent and insurance. As a percentage of
revenue from sales, administrative expenses increased to 18.6% for the year
ended December 31, 2015, as compared to 13.8% for the year ended December 31,
2014. The following are the
principal components of our administrative expenses for the years indicated.


97

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Year ended December 31,2015
    
    
    
    % of
      2015
    
    2014
    
    
    
    % of
      2014net
      sales
    
    
    
    
    net
      salesSalaries and
      social security taxes
    328.4
    
    46.5%
    
    8.6%
    
    242.1
    
    48.7%
    
    6.7%Rent and
      insurance
    58.2
    
    8.2%
    
    1.5%
    
    35.2
    
    7.1%
    
    1.0%Fees and
      remuneration for services
    213.8
    
    30.3%
    
    5.6%
    
    148.1
    
    29.8%
    
    4.1%Security
      Services
    24.1
    
    3.4%
    
    0.6%
    
    15.1
    
    3.0%
    
    0.4%Others
    81.6
    
    11.6%
    
    2.1%
    
    56.3
    
    11.3%
    
    1.6%Total
    706.1
    
    100%
    
    18.6%
    
    496.8
    
    100%
    
    13.8%
   Other operating
(expenses) income Other operating
expenses include mainly retirement payments, severance payments and accrual for
lawsuits. Other operating expenses, increased by 59.1% to a loss of Ps. 422.5
million for the year ended December 31, 2015, compared to a loss of Ps. 265.5
million for the year ended December 31, 2014. The negative variation of Ps. 157
million was mainly due to a Ps. 151 million increase in accrual for lawsuits, a
Ps.27.1 million increase in fees for services provided to third parties and a
Ps. 20.4 million increase in debit and credit taxes partially offset by a
decrease of Ps.38.1 million in expenses related to FOCEDE. Operating  profit
(loss)  Our operating profit
increased Ps. 2,494.8 million to a gain of Ps. 2,241.7 million for the year
ended December 31, 2015, from a loss of Ps. 253.1 million for the year ended
December 31, 2014, mainly due to the recognition of additional income as set
forth in Resolution No. 32/15 of the SE of Ps. 5,025.1 million, partially offset
by an increase in other operating expenses described above and a decrease of
75.7% in the partial recognition of CMM adjustment pursuant to Resolution No.
250/13 and subsequent notes of the SE, of Ps. 1,720.4 million. Net Financial
Expense Net financial expense
totaled Ps. 915.5 million for the year ended December 31, 2015, compared to Ps.
681.0 million for the year ended December 31, 2014. This increase of Ps. 234.5
million was primarily due to a Ps. 466.9 million increase in exchange
differences as a result of exchange rate variations, a Ps. 122.4 million
increase in financial expense, which was partially offset by a decrease of Ps.
267.2 million in interest due on the debt with CAMMESA, and to a Ps. 279.5
million gain derived from changes in fair value of financial assets. Income
Tax The Company’s
income tax charge includes three effects: (i) the current tax payable for the
year pursuant to tax legislation applicable to the Company; (ii) the effect of
applying the deferred tax method on temporary differences arising out of the
asset and liability valuation according to tax versus financial accounting
criteria; and (iii) the analysis of recoverability of deferred tax assets. We
recorded an income tax charge of Ps.183.8 million in 2015, compared to an income
tax credit of Ps. 154.4 million in 2014, mainly as a result of the increase in
the additional income derived from the application of Resolution No. 32/15 of
the SE, partially offset by a tax loss carry forward generated in recent
years. Profit (Loss) for the
year We recorded a profit
of Ps. 1,142.4 million for the year ended December 31, 2015, compared to a loss
of Ps. 779.7 million for the year ended December 31, 2014 mainly as a
consequence of the additional income derived from the application of Resolution
No. 32/15 of the SE.


98

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Liquidity and capital resources Sources and Uses of
Funds Our cash flows from
operations have been significantly affected in recent periods due to our failure
to obtain adjustments to our tariffs to cover increases in our distribution
costs, resulting in a working capital deficit as of December 31, 2016, 2015 and
2014. In order to preserve and guarantee the provision of the public service and
improve the existing cash deficit, beginning in October 2012, the Company
decided to only partially cancel the obligations with CAMMESA with surplus cash
balances. This decision arose as a consequence of all the commitments necessary
to ensure the provision of the public service, including investment plans and
ongoing operation and maintenance tasks. In 2015, following the issuance of
Resolution No. 32/2015, we resumed full payment of our commercial obligations
with CAMMESA, but did not cancel past commercial debt. As of December 31, 2016
the commercial debt with CAMMESA amounts to approximately Ps. 5,469.5 million
including interests. In November 2015, we submitted to CAMMESA a repayment plan.
As of the date of this annual report, negotiations with CAMMESA continue with
respect to a final repayment schedule. See “Item 3. Risk Factors—Risk relating
to our Business—We may not have the ability to raise the funds necessary to
repay our commercial debt with CAMMESA, our major supplier.” In the recent past,
the Argentine government adopted a series of measures such as the issuance of
Resolution No. 347/2012 of the ENRE, Resolution No. 32/15 of the SE and the
granting of certain economic assistance program (through the extension of loans
for consumption (mutuums)) (the “Program”) for us to be able to  cope with
our cash needs for specific purposes. We have considered the funds received
through the Program as a supplementary measure to being granted increases in
tariffs/rates. In connection with the foregoing, following the adoption of a new
transitional tariff schedule as from February 1, 2016, the ME&M suspended
the transfer of funds that we received under the Program. On June 24, 2014, by
Note No. 4012/14, the SE instructed CAMMESA to enter into a loan for consumption
(mutuum) and assignment of secured receivables agreement with us in order to pay
the higher salary costs indicated in “Item 6. Directors, Senior Management and
Employees – Employees”. The aforementioned agreement was entered into on July
10, 2014. The agreement was guaranteed by us with the assignment of the future
surplus sale settlements with maturity dates to be determined (Liquidaciones de
Venta con Fecha de Vencimiento a Definir - LVFVD), as a result of the
application of Resolution No. 250/13 of the SE. In September 2014, the
SE, through Resolution No. 65/14, instructed CAMMESA to enter into a Loan and
Guarantee Assignment Agreement with us in order to provide the necessary
financing to cover the extraordinary investment plan approved by the SE as a
consequence of a temporary insufficiency of funds received through Resolution
No. 347/12. Resolution No. 32/15
resolved that LVFVDs be issued in our favor for the amounts generated by the
salary increases deriving from the application of Resolution No. 836/14 of the
Ministry of Labor, Employment and Social Security for which payment we received
this loan (Mutuum); allowing the offsetting of any amounts discussed thereunder
against outstanding balances of LVFVDs. The LVFVDs were issued on July 16, 2015
to offset the debt under the loan for consumption (mutuum) and assignment of
secured receivables agreement entered into to pay for the higher salaries
cost. As of December 31,
2016, the total debt under these loans (mutuums agreements) amounted to Ps.
1,346.8 million, comprised of Ps. 923.6 million in principal for the actual
disbursements, and Ps. 423.2 million in accrued interest. As explained before,
these loans were discontinued as from February 1, 2016 under the terms of
Resolution No. 7/16 of the ME&M. Our principal uses of
cash are expected to be operating costs, the servicing of our financial debt and
our investment plan. We are subject to limitations on our ability to incur new
debt under the terms of our debt instruments so the Company cannot assure that
it will be able to obtain additional financing on acceptable terms. See
“Debt”. On January 31, 2017,
the ENRE issued Resolution No. 63/17, pursuant to which it approved the new
tariff scheme which resulted from the completion of the RTI process, for the
following five-year period. Regarding the new
tariff scheme, as per the ME&M’s request, the ENRE implemented a VAD
increase in three stages, establishing an initial maximum increase of 42% to be
applied as from February 1 2017, and two subsequent increases in November 2017
and February 2018. In addition, the ENRE should acknowledge us the difference in
VAD resulting from the application of the gradual tariff increase recognized by
the RTI in 48 installments as from February 1, 2018, which will be incorporated
to the VAD value on such date.


99

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The VAD may be adjusted on a
quarterly basis in accordance with a non-automatic mechanism based on the
macroeconomic prices indicators (CPI, WPI and salaries increases), to preserve
the economic-financial sustainability of the Company in the event of prices
variations in the economy. Notwithstanding the
foregoing, there are some aspects of the Adjustment Agreement which definition
is still pending: (1) the treatment of the outstanding balance caused by the
mutuums addressed to comply with the investment plan, granted to cover FOCEDE’s
insufficient funds; (2) the treatment of the funds disbursed by the Company
allocated to comply with the investment plan, which were not reimbursed to the
Company; (3) the conditions for the cancellation of the outstanding balance with
CAMMESA at the issuance date of Resolution No 32/15 SE, for which the Company
submitted a payments plan; and, (4) the treatment to be given to the penalties
and reductions pending to be settled. On April 26, 2017,
following the completion of the RTI process through the issuance of Resolution
ENRE No. 63/17, Edenor was notified by the ME&M of an instruction sent to
the SEE pursuant to which the SEE was instructed to determine (along with the
participation of the Undersecretariat for Coordination of Tariff Policies and
the ENRE) within 120 days if any obligations under the Adjustment Agreement were
pending as of the date the new tariff schedule resulting from the RTI process
came into effect. If the SEE determines that any such obligation is pending, the
SEE shall define the treatment to be given to such obligation If, in the future, we
are not able to recover the incremental cost increases or there is a significant
lag of time between when we incur the incremental costs and when we receive
increased income, it is likely that we will have insufficient liquidity and will
therefore be obliged to pursue measures similar to those pursued in the past in
order to preserve cash and enhance our liquidity.See “Item 5. Operating and
Financial Review and Prospects—Factors Affecting our Results of
Operations—Tariffs” and “Item 3. Key Information—Risk factors—Risks Relating to
Our Business—Failure or delay to negotiate further improvements to our tariff
structure, including increases in our distribution margin, and/or to have our
tariffs adjusted to reflect increases in our distribution costs in a timely
manner or at all, has affected our capacity to perform our commercial
obligations and could also have a material adverse effect on our capacity to
perform our financial obligations.” As of December 31,
2016, 2015 and 2014, our cash and cash equivalents amounted to Ps. 258.6
million, Ps. 129.0 and Ps. 179.1 million, respectively. We generally invest our
cash in a range of instruments, including sovereign debt, corporate debt
securities and other securities. The table below reflects our cash and cash
equivalents position at the dates indicated and the net cash provided by (used
in) operating, investing and financing activities during the years
indicated:  Year ended December 312016
    
    2015
    
    2014(restated)
    
    (restated)(Figures in millions)Cash and cash
      equivalents at beginning of year
    
    129.0
    
    179.1
    
    243.5Net cash flows
      provided by operating activities
    
    2,931.3
    
    3,001.9
    
    1,167.4Net cash flows
      used in investing activities
    
    (2,373.5)
    
    3,103.2
    
    (1,461.8)Net cash flows
      used in financing activities
    
    (492.7)
    
    42.0
    
    224.9Exchange
      differences in cash and cash equivalents
    
    64.5
    
    9.1
    
    5.1Cash and cash
      equivalents at the end of year
    
    258.6
    
    129.0
    
    179.1
  Net Cash flows
provided by operating activities Net cash flows
provided by operating activities decreased by 2.4% to Ps. 2,931.3 million in the
year ended December 31, 2016, from Ps. 3,002.1 million in the year ended
December 31, 2015. Changes in net cash
flows provided by operating activities in 2016 were primarily due to the loss in
the 2016 period of Ps. 1,188.6 million, from a gain of Ps. 1,142.4 million for
the 2015period, and
an increase in trade receivables of Ps. 2,973.8 million, partially offset by an
increase in trade payables of Ps. 2,780.9 million and in other payables of Ps.
2,338.4 million. Net cash flows
provided by operating activities increased 157.2% to Ps. 3,002.1 million in the
year ended December 31, 2015, from Ps. 1,167.4 million in the year ended
December 31, 2014.


100

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Changes in net cash
flows provided by operating activities in 2015 were primarily due to the income
recognized pursuant Resolution No.32/15, partially offset by a decrease in the
commercial debt with CAMMESA of Ps. 251.0 million. Net cash flows
provided by operating activities decreased by 23.1% to Ps. 1,167.4 million in
the year ended December 31, 2014, from Ps. 1,436.6 million in the year ended
December 31, 2013. Changes in net cash
flows provided by operating activities in 2014 were primarily due to an increase
in the commercial debt with CAMMESA (Ps. 2,446.5 million) and to the funds
obtained from PUREE (Ps. 482.9 million), partially offset by the recognition of
higher costs under Resolution No. 250/13 of the SE and subsequent notes of the
SE (Ps. 2,271.9 million) and to a decrease in net loss (Ps. 779.7
million).. Net Cash flows used in
investing activities Net cash flows used in
investing activities decreased by 23.5% from Ps. 3,103.3 million in the year
ended December 31, 2015, to Ps. 2,373.5 million in the year ended December 31,
2016. Changes in net cash
flows used in investing activities in 2016 were primarily due to a decrease in
net payments for the purchase of financial assets at fair value of Ps. 1,101.2
million, partially offset by an increase in our capital expenditures of Ps.
379.1 million. Net cash flows used in
investing activities increased by 112.3% to Ps. 3,103.3 million in the year
ended December 31, 2015, from Ps. 1,461.7 million in the year ended December 31,
2014. Changes in net cash
flows used in investing activities in 2015 were primarily due to an increase in
our capital expenditures of Ps. 695.4 million and in net payments for the
purchase of financial assets at fair value of Ps. 947.5 million. Net cash flows used in
investing activities increased by 31.8% to Ps. 1,461.7 million in the year ended
December 31, 2014, from Ps. 1,109 million in the year ended December 31,
2013. Changes in net cash
flows used in investing activities in 2014 were primarily due to variations in
our capital expenditures (Ps. 1,400.1 million) and in net payments for the
purchase of financial assets at fair value (Ps. 64.6 million). Net Cash flows
generated in financing activities Net cash flows
generated in financing activities decreased to a negative outcome of Ps. 492.7
million in the year ended December 31, 2016, from a positive outcome of Ps. 42.0
million in the year ended December 31, 2015, primarily as a result of the
cancellation of the proceeds obtained from loans with CAMMESA and due to the
redemption of corporate Note 2017 (Ps. 221.8 million). Net cash flows
generated in financing activities decreased by 81.3% to Ps. 42.0 million in the
year ended December 31, 2015, from Ps. 224.9 million in the year ended December
31, 2014, primarily as a result of the decrease in the proceeds obtained from
loans with CAMMESA (Ps. 214.9 million) and due to the payment of interest on
loans (Ps. 172.9 million). Net cash flows
generated in financing activities increased by 227% to Ps. 224.9 million in the
year ended December 31, 2014, from a use of Ps. 177.1 million in the year ended
December 31, 2013, due to the proceeds obtained from loans with CAMMESA (Ps.
380.6 million). Edenor’s Capital
Expenditures Edenor’s concession
does not require us to make mandatory capital expenditures. Edenor’s concession
does, however, set forth specific quality standards that become progressively
more stringent over time, which require us to make additional capital
expenditures. Financial penalties are imposed on us for non-compliance with the
terms of our concession, including quality standards. Prior to our
privatization, a low level of capital expenditures and poor maintenance programs
adversely affected the condition of our assets. After our privatization in 1992,
we developed an aggressive capital expenditure plan to update the technology of
our productive assets, renew our facilitiesand expand energy
distribution services, automate the control of the distribution network and
improve customer service. Following the crisis, however, the freeze of our
distribution margins and the pesification of our tariffs and our inability to
obtain financing, coupled with increasing energy losses, forced us to curtail
our capital expenditure program and make only those investments that were
necessary to permit us to comply with quality of service and safety and
environmental requirements, despite increases in demand in recent
years.


101

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We are not subject to
any limitations on the amount of capital expenditures we are required to make
pursuant to our concession and applicable laws or regulations. Our capital
expenditures consist of net cash used in investing activities during a specified
period plus supplies purchased in prior periods and used in such specified
period. The following table sets forth our actual capital expenditures for the
years indicated:  Year ended December 31,2016
    
    2015
    
    2014(Figures in millions)Network
      Infraestructure (1)
    1,991.1
    
    1,468.5
    
    1,284.2Network
      maintenance and improvements
    412.2
    
    307.5
    
    201.4Legal
      requirements (2)
    6.6
    
    2.9
    
    6.1Communications
      and telecontrol
    155.2
    
    64.4
    
    55.7Others
    138.1
    
    674.9
    
    154.3Total
    2,703.2
    
    2,518.2
    
    1,701.7
  ______________________ (1)Includes
network infrastructure and additional network supplies. (2)Capital
expenditures required to be made to comply with the ENRE quality standard and
other regulations.  In 2016, in accordance
with our capital expenditure program, we invested Ps. 2,703.2 million, a
substantial portion of which was dedicated to increasing the capacity of our
grid in line with the growth of our customer base. In addition, we made
investments in order to meet our quality standards levels. In the context of the
RTI process, in September 5, 2016, we submitted our investment plan for the
following five-year period.  Debt The economic crisis in
Argentina had a material adverse effect on our operations.  The devaluation
of the Peso caused the Peso value of our U.S. Dollar-denominated indebtedness to
increase significantly, resulting in significant foreign exchange losses and a
significant increase, in Peso terms, in our debt service requirements.  At
the same time, our cash flow remained Peso-denominated and our distribution
margins were frozen and pesified by the Argentine government pursuant to the
Public Emergency Law.  Moreover, the 2001 and 2002 economic crisis in
Argentina had a significant adverse effect on the overall level of economic
activity in Argentina and led to deterioration in the ability of our customers
to pay their bills.  These developments caused us to announce on September
15, 2002 the suspension of principal payments on our financial debt.  On
September 26, 2005, our board of directors decided to suspend interest payments
on our financial debt until the restructuring of this financial debt was
completed. The purpose of the
restructuring was to restructure all, or substantially all, of our outstanding
debt, in order to obtain terms that would enable us to service our financial
debt. We believe that the restructuring was the most effective and equitable
means of addressing our financial difficulties for our benefit and that of our
creditors. We developed a proposal that we believed was necessary to address our
financial and liquidity difficulties, while we continued to pursue tariff
negotiations with the Argentine government to improve our financial condition
and operating performance. On January 20, 2006,
we launched a voluntary exchange offer and consent solicitation to the holders
of our outstanding financial debt. All of these holders elected to participate
in the restructuringand, as a result, on
April 24, 2006, we exchanged all of our then-outstanding financial debt for the
following three series of newly issued notes, which we refer to as the
restructuring notes:


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·U.S.$ 123,773,586
Fixed Rate Par Notes due December 14, 2016, with approximately 50% of the
principal due and payable at maturity and the remainder due in semiannual
installments commencing June 14, 2011, and bearing interest starting at 3% and
stepping up to 10% over time; ·U.S.$ 12,656,086
Floating Rate Par Notes due December 14, 2019, with the same payment terms as
the Fixed Rate Par Notes and bearing interest at LIBOR plus a spread, which
starts at 1% in 2008 and steps up to 2% over time; and ·U.S.$ 239,999,985
Discount Notes due December 14, 2014, with 60% of the principal due and payable
at maturity and the remainder due in semiannual installments commencing on June
14, 2008, and bearing interest at a fixed rate that starts at 3% and steps up to
12% over time. As of the date of this
annual report, all of the restructuring notes have been repaid and
cancelled. In October 2007, we
completed an offering of U.S.$ 220 million aggregate principal amount of our
10.5% Senior Notes due 2017, which we refer to as the Senior Notes due 2017. We
used a substantial portion of the proceeds from that offering to redeem in full
our Discount Notes due 2014 in several transactions throughout the period from
October through December 2007. During 2008, we
repurchased and cancelled U.S.$ 17.5 million and U.S.$ 6 million of our Senior
Notes due 2017, respectively. In May 2009, we issued
Ps. 75.7 million principal amount of Par Notes due 2013 under our Medium Term
Note Program. The Par Notes due 2013 are denominated and payable in Pesos and
accrue interest on a quarterly basis at a rate equal to the private BADLAR, as
published by the Central Bank, for each such quarter plus 6.75%.  Principal
on the notes is payable in 13 quarterly installments, starting on May 7, 2010.
As of December 31, 2013, these Notes had been fully paid. During 2009, we
repurchased U.S.$ 53.8 million Senior Notes due 2017, U.S.$ 24.5 million of
which was transferred to us as a consequence of the dissolution of the
discretionary trust described below. On October 25, 2010,
we issued Senior Notes due 2022 with a face value of U.S.$ 230.3 million, of
which U.S.$ 140 million were subscribed under a cash offer and U.S.$ 90.3
million were exchanged, as a result of an exchange offer, for Senior Notes due
2017, paying in cash U.S.$ 9.5 million plus accrued unpaid interest on those
Senior Notes due 2017. Edenor lunched an offer to purchase under which we
purchased Senior Notes due 2017 with a face value of U.S.$ 33.6 million for
U.S.$ 35.8 million, including payment of accrued and unpaid interest on the
Senior Notes due 2017. The Senior Notes
due 2022 have a 12-year maturity and were issued at par, with interest accruing
from the date of issuance at a fixed rate of 9.75% and payable semi-annually on
October 25 and April 25 of each year, with the first interest payment on April
25, 2011.  As of December 31, 2016, the outstanding amount of Senior Notes
due 2022 is U.S.$ 176.4 million. Edenor repurchased and cancelled U.S.$ 123.6
million during 2014, of which, U.S.$ 68 million were repurchased by the Aeseba
Sale Trust during 2014 (see Item 4. “Information on the Company”). On October 18, 2010,
we cancelled Senior Notes due 2017 with a nominal value of U.S.$ 65.3
million. In addition, on
October 25, 2010, November 4, 2010, and December 9, 2010, we cancelled Senior
Notes due 2017 for a face value of U.S.$ 122.6 million, U.S.$ 1.3 million, and
U.S.$ 0.04 million, respectively, representing approximately 83.3% of the Senior
Notes due 2017 then outstanding. As of December 2015, the outstanding amount of
Senior Notes due 2017 was U.S.$ 14.8 million. On February 2, 2016,
we repurchased the Senior Notes due 2022 at market prices for a nominal value of
U.S.$ 0.3 million.


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On July 12, 2016, we
redeemed our outstanding Senior Notes due 2017 for a principal amount of U.S.$
14.8 million, plus an accrued interest of U.S.$ 0.4 million. As a consequence, as
of the date of this annual report our outstanding debt amounts to U.S.$ 176.4
million consisting of our Senior Notes due 2022, of which U.S.$ 0.3 million are
held by the Company. Line of Credit –
Edenor–Banco de la Provincia de Buenos Aires Loans In March and June
2011, the company entered into loans for a total aggregate amount of Ps. 22
million, from Banco de la Provincia de Buenos Aires, with principal payments at
maturity (March 2012, May 2012 and June 2014). We made monthly interest payments
on accrued interest at a fixed annual rate of 14.0%. As of December 31,
2013 and 2012, the outstanding balance under these loans amounted to Ps. 0.4
million and Ps. 1.2 million, respectively. As of December 31, 2014, this line of
credit was cancelled. Derivatives
Contracts Management of derivative financial instruments  In 2016 and 2015, with
the aim of hedging the currency risk associated with the payment of the next
interest coupon of our Senior Notes 2017 and 2022, we entered into futures
contracts to buy U.S. Dollars.  As of December 31,
2016, the economic impact of these transactions resulted in a loss of Ps. 11.9
million, which is recorded in the “Other financial results of the Statement of
Comprehensive Income”.    Critical accounting policies and
estimates A summary of our
significant financial policies is included in Note 6 to our financial
statements, which are included elsewhere in this annual report. The preparation
of financial statements requires our management to make estimates and
assumptions that affect the amounts reported in our financial statements and
accompanying footnotes. Our estimates and assumptions are based on historical
experiences and changes in the business environment. However, actual results may
differ from estimates under different conditions, sometimes materially. Critical
accounting policies and estimates are defined as those that are both most
important to the portrayal of our financial condition and results of operation
and require management’s most subjective judgments. Our most critical accounting
policies and estimates are described below. Impairment of long-lived assets Long-lived assets are tested for impairment at the lowest
disaggregation level at which independent cash flows can be identified (cash
generating units, or CGU). We analyze the recoverability of its long-lived assets on
a periodical basis or when events or changes in circumstances indicate that the
recoverable amount of assets, which is measured as the higher of value in use
and fair value less costs to sell at the end of the year, may be impaired. The value in use is determined based on projected and
discounted cash flows, using discount rates that reflect the time value of money
and the specific risks of the assets considered. As of the date of this annual report, the company shows
signs of a potential impairment as it has obtained operating losses for Ps.
656.1 million. For this reason, the Company has prepared the projections of the
recoverability of its properties, plants and equipment.


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The increase in electricity rates used by the Company to
assess the recoverability of its property, plant and equipment as of December
31, 2016 is based on both the electricity rate schedule approved as from
February 2017, by means of the ENRE Resolution No. 63/17, that fixed the
Company’s remuneration, and the tariff adjustment mechanism for the following
five years, established by such resolution. Given that the main variable is the
electricity rate, and such rate is supported by the approved electricity rate
schedule, the Company has prepared only one scenario, considering the most
pessimistic situation when estimating the variables with greater impact such us
the resolution of regulatory issues and its best estimation of the other
variables with lower incidence. In order to determine the scenario mentioned in the
preceding paragraph, the Company has considered the following: i.nature,
opportunity, and modality of the electricity rate increases and/or cost
adjustments recognition: Electricity rate increases as resolved in the RTI
process; ii.settlement of
regulatory liabilities: The Company has considered to use the final surplus of
its annual cash flows until these liabilities are settled; iii.electricity demand growth: 2.5%
p.a.; iv.development of costs to be
incurred: mainly, based on the expected level of inflation; v.investments for
infrastructure maintenance: in accordance with the service quality levels
required by the regulator in the RTI; vi.inflation rate; and, vii.exchange
rate.  The discount rate (WACC) in Pesos varies for each year of the projection. For
the first five years, the average of these rates is 29%. Revenue recognition Revenue is  measured at the fair value of the
compensation collected or to be collected, taking into account the estimated
amount of any discount, thus determining the net amounts. Revenue from the electricity provided to low-income areas
and shantytowns is recognized to the extent that a renewal of the Framework
Agreement is formalized for the period in which the service was rendered. As
of the date of this annual report, negotiations with the Argentine and
provincial governments are still ongoing. Revenue from operations is recognized on an accrual basis
and derives mainly from electricity distribution. Such revenue includes both the
electricity supplied, whether billed or unbilled at the end of each year, which
has been valued on the basis of applicable tariffs, and the charges resulting
from the application of ENRE Resolution No. 347/12 (which was abrogated through
Resolution No. 63/17). We also recognize revenue from other concepts included in
distribution services, such as new connections, reconnections, rights of use on
poles and transportation of electricity to other distribution
companies. Allowances for the doubtful accounts The allowance for the impairment of accounts receivable
is assessed based on the delinquent balance, which comprises all such debt
arising from the bills for electricity consumption that remain unpaid 13 working
days after their due dates for small-demand customers (tariff 1) and 7 working
days after due date for medium and large-demand customers (tariff 2 and 3). Our
management records an allowance applying to the delinquent balances of each
customer category an uncollectibility rate that is determined according to each
customer category based on the historical comparison of collections
made. Additionally, and faced with temporary and/or exceptional
situations, our management may redefine the amount of the allowance, specifying
and supporting the criteria used in all the cases.


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Current and deferred
income tax/ Tax on minimum presumed income A degree of judgment is required to determine the income
tax provision inasmuch as the Company’s management has to evaluate, on an
ongoing basis, the positions taken in tax returns in respect of situations in
which the applicable tax regulation is subject to interpretation and, whenever
necessary, make provisions based on the amount expected to be paid to the tax
authorities. When the final tax outcome of these matters differs from the
amounts initially recognized, such differences will impact on both the income
tax and the deferred tax provisions in the period in which such determination is
made. There are many transactions and calculations for which
the ultimate tax determination is uncertain. The Company recognizes liabilities
for eventual tax claims based on estimates of whether additional taxes will be
due in the future. Deferred tax assets are reviewed at each reporting date
and reduced in accordance with the probability that the sufficient taxable base
will be available to allow for the total or partial recovery of these assets.
Deferred tax assets and liabilities are not discounted. The realization of
deferred tax assets depends on the generation of future taxable income in the
periods in which these temporary differences become deductible. To make this
assessment, the Company’s Management takes into consideration the scheduled
reversal of deferred tax liabilities, the projections of future taxable income
and tax planning strategies. Benefit plans The liability recognized by the Company is the best
estimate of the present value of the cash flows representing the benefit plan
obligation at the closing date of the year together with the adjustments for
past service costs and actuarial losses. Cash flows are discounted using a rate
that contemplates actuarial assumptions about demographic and financial
conditions that affect the determination of benefit plans. Such estimate is
based on actuarial calculations made by independent professionals in accordance
with the projected unit credit method.  ENRE penalties and discounts The Company considers its applicable accounting policy
for the recognition of ENRE penalties and discounts critical because it depends
on penalty events, which are valued on the basis of management best estimate of
the expenditure required to settle the present obligation at the date of the
issuance of the financial statements. The balances of ENRE penalties and
discounts are adjusted in accordance with the regulatory framework applicable
thereto.  Contingencies and provisions for lawsuits The Company is a party to several complaints, lawsuits
and other legal proceedings, including customer claims, in which a third party
is seeking payment for alleged damages, reimbursement for losses or
compensation. The Company’s potential liability with respect to such claims,
lawsuits and legal proceedings may not be accurately estimated. The Company’s
management, with the assistance of its legal advisors (attorneys), periodically
analyzes the status of each significant matter and evaluates the Company’s
potential financial exposure.  If the loss deriving from a complaint or
legal proceeding is considered probable and the amount can be reasonably
estimated, a provision is recorded. Provisions for contingent losses represent a reasonable
estimate of the losses that will be incurred, based on the information available
to our management at the date of the financial statements preparation, taking
into account the Company’s litigation and settlement strategies. These estimates
are mainly made with the help of legal advisors. However, if our management’s
estimates proved wrong, the current provisions could be inadequate and result in
a charge to profits that could have a significant effect on the statements of
financial position, comprehensive income, changes in equity and cash
flows.


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Off-Balance Sheet Arrangements We did not have any
off-balance sheet arrangements as of December 31, 2016, 2015 and
2014. CONTRACTUAL OBLIGATIONS Technical assistance
fees Corresponds to the
technical advice on financial affairs that EASA has provided to the Company
since September 19, 2015. For this service, we pay EASA an annual amount of
U.S.$ 2.5 million. The agreement is valid for five years, unless either party
gives notice not less than 60 days prior to the expiration of such term, with no
obligations to fulfill and without paying compensation to the other
party.  Fines and
penalties  Pursuant to caption C
of Section 37 of the Concession Agreement, the grantor of the concession may,
without prejudice to other rights to which it is entitled thereunder, foreclose
on the collateral granted by the Company when the cumulative value of the
penalties imposed in the previous one-year period exceeds 20% of its annual
billing, net of taxes and rates. Imposed and estimated
fines and penalties, adjusted in accordance with the methodology established by
ENRE Note No. 120,151, as of December 31, 2016 and 2015, amounted to Ps. 3,700.0
million and Ps. 1,253.1 million, respectively.  Corporate Notes
programs  The relevant
information of our corporate notes program is detailed below (debt issued in
U.S. Dollars):   Million of US$
    
    Million of
      Ps.Corporate Notes
    
    Class
    
    Rate
    
    Year of Maturity
    
    Debt structure at 12.31.14
    
    Debt repurchase
    
    Debt structure at 12.31.15
    
    At 12.31.15Fixed Rate Par Note
    
    7
    
    10.50
    
    2017
    
    14.76
    
    -
    
    14.76
    
    192.47Fixed Rate Par Note(1)
    
    9
    
    9.75
    
    2022
    
    172.17
    
    -
    
    172.17
    
    2,268.51Total
    
    
    
    
    
    
    
    186.93
    
    -
    
    186.93
    
    2,460.98
  Million of US$
    Million of
      Ps.Corporate Notes
    
    Class
    
    Rate
    
    Year of Maturity
    
    Debt structure at 12.31.15
    
    Debt repurchase
    
    Debt structure at 12.31.16
    
    At 12.31.16Fixed Rate Par Note
    
    7
    
    10.50
    
    2017
    
    14.76
    
    (14.76)
    
    -
    
    -Fixed Rate Par Note(1)
    
    9
    
    9.75
    
    2022
    
    172.17
    
    (0.30)
    
    171.87
    
    2,769.60Total
    
    
    
    
    
    
    
    186.93
    
    (15.06)
    
    171.87
    
    2,769.60
  (1)Net of issuance expenses.


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Tabular Disclosure of Contractual
Obligations The following table
summarizes our contractual liabilities and commitments as of December 31,
2016. Payments due by periodTotal
    
    Less than
    1‐3
    4‐5
    More than1 year
    years
    years
    5 years(in millions of Pesos)Debt
      obligations and commercial debt obligations (1)
    
    9,877.3
    
    6,874.8
    232.9
    -
    2,769.6Accrued fines
      and penalties(2)
    
    3,533.6
    
    56.2
    3,477.4
    -
    -Payment Plan
      ENRE(3)
    
    166.4
    
    60.2
    106.2Financial
      assistance fees(4)
    
    178.7
    
    39.7
    109.2
    29.8
    -Operating
      leases(5)
    
    78.3
    
    47.9
    30.1
    0.3
    -Capital
      expenditures(6)
    
    -
    
    -
    -
    -
    -Total
    
    13,834.3
    
    7,078.8
    3,955.8
    30.1
    2,769.6
  _______________________ (1) Includes
amortization of principal and interest payments. All of our financial
indebtedness is unsecured. None of our financial indebtedness is
guaranteed.  See “Debt” in this section for a broader description of our
financial debt. (2) See “Item. 4.
Information on the Company—Business Overview—Our Concession—Fines and
Penalties.” (3) Refers to Fines and
Penalties’ payment plans, under the ENRE settlement. See “Item. 4.
Information on the Company—Business Overview—Our Concession—Fines and
Penalties.” (4) Fees payable under
our financial services agreement with EASA, our controlling shareholder. 
This agreement expired in 2015 and was renewed for a five-year period.  See
“Item 7. Major Shareholders and Related Party Transactions—Related Party
Transactions —Financial Services Agreement with EASA.” (5) Represents our
minimum required lease payments. (6) Our concession does
not require us to make any specified amount of capital expenditures, but
requires us to meet certain quality and other service standards.  See
“—Liquidity and Capital Resources— Capital Expenditures.”  Item
6.Directors, Senior
Management and Employees  DIRECTORS AND SENIOR MANAGEMENT Board of
Directors Our business and
affairs are managed by our board of directors in accordance with our bylaws and
the Argentine Corporations Law. Our bylaws provide that our board of directors
will consist of twelve directors and up to the same number of alternate
directors. Pursuant to the Argentine Corporations Law, a majority of our
directors must be residents of Argentina. Edenor's bylaws
provide that holders of our Class A common shares are entitled to elect seven
directors and up to seven alternate directors, one of which must be independent
in accordance with CNV regulations, holders of our Class B and Class C common
shares are entitled to elect five directors and up to five alternate directors,
one of which must be independent in accordance with CNV regulations. Holders of
Class C common shares vote jointly as a single class with the holders of Class B
common shares in the election of directors. In the absence of a director elected
by holders of a class of shares, any alternate director elected by holders of
the same class may legally attend and vote at meetings of our board of
directors. The board of director’s elects among its members a chairman and a
vice president. Directors and
alternate directors serve for one-year periods, indefinitely renewable. Our
directors and alternate directors are as follows:


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** Name
    
    Position
    
    Age
    
    Year of appointment(class electing
      director)Ricardo
      Torres
    
    Chairman
    
    58
    
    2016 (Class A)Gustavo
      Mariani
    
    Vice Chairman
    
    46
    
    2016 (Class A)Marcos Marcelo
      Mindlin **
    
    Director
    
    52
    
    2016 (Class A)Damian Miguel
      Mindlin **
    
    Director
    
    50
    
    2016 (Class A)María Carolina
      Sigwald
    
    Director
    
    49
    
    2016 (Class A)Maximiliano
      Alejandro Fernandez*
    
    Director
    
    56
    
    2016 (Class A)Eduardo
      Llanos*
    
    Director
    
    72
    
    2016 (Class A)Emilio
      Basavilbaso*
    
    Director
    
    40
    
    2016 (Class B/C)Carlos Alberto
      Lorenzetti*
    
    Director
    
    56
    
    2016 (Class B/C)Lucas
      Amado*
    
    Director
    
    44
    
    2016 (Class B/C)Mariano García
      Mithieux*
    
    Director
    
    49
    
    2016 (Class B/C)Fernando
      Bearzi*
    
    Director
    
    47
    
    2016 (Class B/C)Diego Martín
      Salaverri
    
    Alternate Director
    
    52
    
    2016 (Class A)Leandro Carlos
      Montero
    
    Alternate Director
    
    41
    
    2016 (Class A)Daniel Eduardo
      Flaks
    
    Alternate Director
    
    52
    
    2016 (Class A)Gerardo Carlos
      Paz
    
    Alternate Director
    
    48
    
    2016 (Class A)Mariano
      Batistella
    
    Alternate Director
    
    34
    
    2016 (Class A)Pablo Alejandro
      Díaz
    
    Alternate Director
    
    59
    
    2016 (Class A)Diana Elena
      Mondino*
    
    Alternate Director
    
    58
    
    2016 (Class A)Santiago Lucas
      Jonas Aguilar*
    
    Alternate Director
    
    35
    
    2016 (Class B/C)José María
      Tenaillon*
    
    Alternate Director
    
    37
    
    2016 (Class B/C)Ignacio Gustavo
      Álvarez Pizzo*
    
    Alternate Director
    
    31
    
    2016 (Class B/C)Juan Martin
      Monge Varela*
    
    Alternate Director
    
    42
    
    2016 (Class B/C)Carlos Andrés
      Rodriguez Lubary *
    
    Alternate Director
    
    56
    
    2016 (Class
B/C)
 *      Independent under
Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934, as
amended. **    The following family relationships
exist within the board of directors: Marcos Marcelo Mindlin and Damián Miguel
Mindlin are brothers. The following is a
brief description of our current directors’ and alternate directors’ background,
experience and principal business activities: Ricardo Alejandro
Torreswas born on March 26, 1958.  Mr. Torres holds a
degree in Public Accounting from the Universidad de Buenos Aires and a Master’s
degree in Business Administration from the Instituto de Altos Estudios
Empresariales—Escuela de Negocios de la Universidad Austral.  He has been a
member of Pampa Energía’s board of directors since November 2005 and was elected
as Vice Chairman in 2013.  Mr. Torres is, since March 2012, Chairman of our
board of directors.He currently serves as director of Bodega Loma de la Lata
S.A., CPB, CTG, Loma de la Lata, Energía Distribuida S.A., EASA, PEPCA, HIDISA,
HINISA, IEASA, Diamante, Nihuiles, IPB, Pampa Comercializadora S.A., PISA, Pampa
Participaciones, Pampa Participaciones II, Petrolera Pampa, Ponderosa Assets
Holding I LLC. Ponderosa Assets Holding II LLC, RT Warrants S.A., Transelec, Pop
Argentina S.R.L. (Partner), Todos Capital S.R.L. (Partner); Citelec (alternate
director), Orígenes Seguros de Vida S.A., Orígenes Seguro de Retiro S.A.,
Transba (alternate director).Also, Mr. Torres is the vocal of
the management board of “Fundación Pampa Energía Comprometidos con la
Educación.” Gustavo
Marianiwas born on September 9, 1970. Mr. Mariani holds a degree
in Economics from the Universidad de Belgrano and a Master’s degree in Business
Administration from the Universidad del CEMA and also is a Chartered Financial
Analyst (CFA) since 1998. He has been a member of our board of directors since
November 2005 and was elected as Chairman in 2013.  Mr. Mariani joined
Grupo Dolphin in 1993 as an analyst and also served as an investment portfolio
manager.He currently serves as Director of Bodega Loma la Lata
S.A., CPB, CTG, Loma de La Lata, GMA Warrants S.A., Transener, Compañía de
Inversiones S.A., Citelec, Comunicaciones y Consumo S.A., Consultores Fund
Management S.A., Dolphin Créditos S.A., Dolphin Créditos Holding S.A., Dolphin
Finance S.A, Dolphin Fund Management S.A., Dolphin Inversora S.A., IEASA, EASA,
Transba, Pampa Energía, Energía Distribuida S.A., PEPCA, Grupo Dolphin S.A.
Grupo Dolphin Holding S.A., HIDISA,HINISA, Nihuiles,
Diamante, IEASA, IPB, Orígenes Seguros de Vida S.A., Orígenes Seguros de Retiro
S.A., Pampa Comercializadora S.A., Pampa F&F LLC, Pampa Participaciones II,
Pampa Participaciones, Transelec, Petrolera Pampa, CIESA, Sitios Argentinos S.A.
and TGS, and as alternate liquidator of CAM Gerenciadrora S.A. (en
liquidación).Also, Mr. Mariani is the executive secretary of the
management board of “Fundación Pampa Energía Comprometidos con la
Educación.”


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Marcos Marcelo Mindlinwas born on January 19, 1964. He has been a member of our
board of directors since June 16, 2006. He is a member of the Council of the
Americas.  Mr. Mindlin received a Master of Science in Business
Administration from the Universidad del CEMA (Center of Macroeconomic
Studies).  He also holds a degree in Economics from theUniversidad de Buenos
Aires.
In 2008, Mr. Mindlin founded and since that time has directed a charity
foundation called “Fundación Pampa Energía Comprometidos con la
Educación” whose purpose is to improve childhood development and
education.  Mr. Mindlin is also a member and was Chairman of the Board of
the Executive Committee of Tzedaka, a leading Jewish-Argentine foundation. 
From 1989 to 2004, Mr. Mindlin served as the founder, Senior Portfolio Manager
and a shareholder of Grupo Dolphin.  From 1991 to 2003, Mr. Mindlin was
also a shareholder, Vice-Chairman and Chief Financial Officer of Inversiones y
Representaciones S.A. (IRSA), a leading Argentine real estate company listed on
the New York Stock Exchange.  In November 2003, Mr. Mindlin resigned from
IRSA to focus his work on Grupo Dolphin.  Mr. Mindlin has extensive
expertise in Latin America through his role as Chairman of the board of
directors of Grupo Dolphin and several of its affiliates.  From 1999 to
2004, Mr. Mindlin also served as Vice President of Alto Palermo S.A. (a leading
owner and operator of shopping centers in Buenos Aires), Vice President at
Cresud S.A.I.C. (one of the largest listed agricultural companies in Argentina)
and as Director and member of the Executive Committee of Banco Hipotecario, the
leading mortgage bank in Argentina.Mr. Mindlin also serves as
director of Pampa Energía S.A., Grupo Dolphin S.A., Dolphin Finance S.A.,
Electricidad Argentina S.A., IEASA S.A., HINISA, HIDISA, Transelec Argentina
S.A., Loma de la Lata, Güemes, Inversora Diamante S.A., Inversora Nihuiles S.A.,
Dolphin Créditos S.A., Dolphin Créditos Holding S.A., Dolphin Inversora S.A.,
Piedra Buena, IPB, Petrolera Pampa, Pampa Participaciones II S.A., Energía
Distribuida S.A., Pampa Participaciones S.A., Bodega Loma de la Lata S.A.,
PEPCA, Grupo Dolphing Holding S.A., Orígenes Seguros de Retiro S.A., Orígenes
Seguros de Vida S.A. Consultores Fund Management, Sitios Argentinos S.A., Pampa
Comercializadora S.A. and Mindlin Warrants S.A. Damián Miguel Mindlinwas born on January 3, 1966.  He has been a member of
our board of directors since November 2005.  Mr. Mindlin joined Grupo
Dolphin in 1991 as a shareholder and a director.  Since November 2003, Mr.
Mindlin has served as Investment Portfolio Manager of Grupo Dolphin.  Also,
Mr. Mindlin is the vice president of management board of
“FundaciónPampa Energía Comprometidos con la
Educación”.Additionally, he currently serves as director of Pampa
Energía S.A., Grupo Dolphin S.A., Dolphin Finance S.A., Electricidad Argentina
S.A., IEASA S.A., HINISA, HIDISA, Transelec Argentina S.A., Pampa
Participaciones S.A., Güemes, Inversora Diamante S.A., Inversora Nihuiles S.A.,
Piedra Buena, IPB, Dolphin Créditos S.A., Dolphin Créditos Holding.S.A., Dolphin
Inversora S.A., Petrolera Pampa, Pampa Participaciones II S.A., Energía
Distribuida S.A., Pampa Inversiones, Bodega Loma de la Lata S.A., PEPCA
(alternate director), Citelec (alternate director), Grupo Dolphin Holding S.A.,
ARPHC S.A., Estancia María S.A., Pampa Comercializadora S.A., Consultores Fund
Management, Dolphin Fund Management, Pampa F&F and DMM Warrants S.A.,
Orígenes Seguros de Vida S.A., Orígenes Seguros de Retiro S.A. and Sitios
Argentinos S.A., and as liquidator of CAM Gerenciadora S.A. (en
liquidación). Carolina
Sigwaldwas born on November 15, 1967. She is Director of Legal
and Regulatory Affairs of Edenor since October 2015. She started her
professional career as a lawyer in Central Puerto after its privatization and
then joined Chadbourne & Parke in New York and later the Inter-American
Investment Corporation (IIC) in Washington. Carolina returned to Argentina in
1998 as founding partner of Law Firm Díaz Bobillo, Sigwald & Vittone, where
she performed as external advisor for energy companies, Pampa Energia among
them. Likewise, she took office in Transportadora de Gas del Sur’s and
Telefónica de Argentina’s board of directors. Mrs. Sigwald obtained her law
degree in from the University of Buenos Aires, where she graduated with honors. Maximiliano Alejandro
Fernándezwas born on April 21, 1960.  He has been a director
of Edenor since 2007 and has served as a director of EASA from 2005 to
2007.  Mr. Fernández has been an associate at Impsat Fiber Network since
1998, and currently serves as president of Red Alternative S.A.  Mr.
Fernández served as the chairperson of Alternativa Gratis S.A, which he founded
along with IRSA, until its merger in 2005.  Since 1991, he has worked as an
independent contractor in thetelecommunications
industry.  Mr. Fernández is an industrial engineer and graduate of the
Universidad de Buenos Aires.


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Eduardo
Llanoswas born on April 29, 1944. He has been a director of
Edenor since 2008.  Mr. Llanos served as a member of the Supervisory
Committee of Televisión Federal S.A. (Telefé), Telefónica de Argentina S.A. y
Telefónica Holding Argentina S.A.  From 1969 to 2000, Mr. Llanos worked at
Arthur Andersen / Pistrelli, Diaz y Asociados, in the Auditing Division and the
Tax Division.  When he left Arthur Andersen, Mr. Llanos was an
International Partner, the Director of Tax Practice for Argentina, Chile,
Uruguay, Paraguay and Boliva and the Director of Operations in Bolivia.From
2000, Mr. Llanos is a partner at Estudio E. Llanos y Asociados. Throughout his
career, Mr. Llanos has taught tax and public finance classes at the Universidad
de Buenos Aires, Universidad Nacional de Lomas de Zamora and Universidad de
Morón.Mr. Llanos graduated with a degree in Public Accounting
from the Universidad de Buenos Aires in 1971. Emilio Basavilbaso,was born on September 11, 1976. He has been a member of
the Company’s board of directors since 2016. In December 2015, he was appointed
Executive Director of the National Social Security Administration (ANSES). He
performed in different public duties such as President of Housing Institute,
Sub-Secretary of Strategy and development of Human Resources and General
Secretary of the Administrative Reform Committee, Sub-Secretary of Public
Management Modernization and Strategic Planning General Director, all these
positions whiting the Autonomous City of Buenos Aires’ public administration.
Likewise, he worked for Telefónica in Argentina, Spain and Brazil, in the
Corporate marketing and Development area. Mr.  Basavilbaso obtained a
degree in Business Economics, issued by the Torcuato Di Tella University (UTDT).
In addition, he obtained a Master in Business Administration with honors in the
Antonio de Nebrija University in Spain and at present, he is studying for a
Leadership degree at Buenos Aires Institute of Technology (ITBA). Carlos Alberto
Lorenzetti,was born on July 7, 1940. From 1964 to 1971,
he served as General Accountant in Ducilo (Dupont Argentina). As from 1971, he
worked as Administrative and Financial Director at Iveco Argentina. From 1976
until 1978, Mr. Lorenzetti held the General Management of Siderúrgia Integrada.
Later, in 1979, he served as advisor to the Presidency of the Banco de la Nación
Argentina. From 1981 to 1983, he served as Manager of the Administration and
Finance area at Austral Líneas Aéreas. From 1983 to 1988, he was Director of
Finance for Sideco Americana. He was Director of Administration and Finance of
C.R.M (Movicom) from 1988 to 1990, and of CICA S.A. from 1991 to 1992. In 1994,
he served as Deputy Manager of Administration and Control at the Argentine
Central Bank until 1997. He was Manager of Administration and Finance at
Ambrosoli Argentina from 1997 to 2001 and at South Aurora from 2003 to 2005.
From 2007 until 2013, he was Chairman of the Audit Committee of AUSA. Since
2013, he has been General Manager and Member of the Board of Directors of Teatro
Colón. He holds a degree of Doctor in Administration from the University of
Buenos Aires. Lucas Amadowas born on May 24, 1974. Since 2016 he has been a member
of the Company’s board of directors. He obtained a lawyer degree at Universidad
Católica Argentina. He performed as Chief of the Land Registry, Real State
Managing Director and Secretary of State of the Government of the province of
Salta. He is member of the Salum, Amado & Asociados Law firm in the province
of Salta and of the Rivera & Asociados Law firm. Mariano García Mithieuxwas born on February 5, 1967.  He has been a member
of the Company’s board of directors since 2016.  He graduated in
Architecture at the University of Buenos Aires and performs as architect in EWG,
Architectural Urban Group. Fernando Bearziwas born on September 15, 1969. He has been a member of
the Company’s board of directors since 2016. He obtained an Economics degree at
Universidad de Morón and a Financial Assets MBA with honors at the Escuela
Superior de Economía y Administración de Empresas (ESEADE). He is a partner of
F. Bearzi & Asociados. He performs Consultancy and Advisory services for
Interbank, Interfondos, Globant, Microsoft, Thomson Reuters, among others. He
delivers expertise lectures and seminars for Bloomberg, Microsoft, Schroders and
Thomson Reuters, in the United States, Mexico, Costa Rica, Panama, Venezuela,
Colombia, Ecuador, Peru, Chile and Argentina.


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Diego Martin Salaverriwas born on August 7, 1964. He has been a member of our
board of directors since June 2006. He is a founding partner of the Argentine
law firm of Salaverri, Dellatorre, Burgio & Wetzler Malbrán.  He earned
a degree in law in 1988 from the Universidad Católica Argentina, Buenos
Aires.  He is member of the board of directors of Pampa Energía S.A.,
Estancia María S.A., Socotherm Amercias S.A. and ARPHC S.A. He is also a member
of the supervisory committee of Dolphin Créditos S.A., Dolphin Créditos Holding
S.A., Grupo Dolphin Holding S.A., Dolphin Finance S.A., Orígenes Seguros de
Retiro S.A., Orígenes Seguros de Vida S.A., CIESA and TGS. Until 2007, he was a
member of the board of directors of EASA.  Mr. Salaverri resigned from his
position as director of EASA at the November 14, 2007 meeting of the board of
directors of EASA.  Mr. Salaverri is also an alternate member of the
statutory audit committee of GSF S.A. and Partners I S.A. Leandro Carlos Monterowas born on February 11, 1976.  Mr. Montero has been
a member of our board of directors since 2012. He is the chief financial officer
of Edenor and previously served in the investment group of Pampa Energía S.A. He
also served as director in CAMMESA. Prior to joining Edenor in 2012, Mr. Montero
held various positions in the Administration and Finance areas of Pampa Energía
and Petrobras Argentina S.A., both public and SEC-listed companies. Mr.
Montero worked at Ernst & Young - Pistrelli, Henry Martin y Asociados in the
Advisory and Auditing Division.  Mr. Montero holds a degree in Public
Accounting from the Universidad de Buenos Aires and a Master degree in Business
Administration from the Instituto de Altos Estudios Empresariales (IAE), school
of business of the Universidad Austral. Daniel Eduardo Flakswas born on November 19, 1964.  Mr. Flaks has been a
member of our board of directors since 2012. He joined Edenor in 1993. Between
1993 and 2003, Mr. Flaks served as department head and assistant manager in the
areas of San Justo and Olivos. Between 2003 and 2006, he worked first as
business manager and later as operations manager of the areas of Olivos and
Pilar. Between 2006 and 2010, he worked as manager of distribution, responsible
for directing, coordinating and controlling the technical and commercial
operations of Edenor relating to the operation of the high, medium and low
voltage facilities, control centers and commercial operations referring mainly
to the attention of customers and the relationship with municipal governments
and the ENRE. He currently serves as technical director of Edenor. Between 1993
and 1998, he was assistant professor of electrical power systems at Universidad
Tecnológica Nacional. Mr. Flaks has a degree in electrical engineering from the
Universidad Tecnológica Nacional and holds an MBA from the Universidad del
Salvador in Argentina. Gerardo Carlos Pazhas been a member of our board of directors since
April 28, 2015. He worked as a lawyer at the ENRE for the period between 1994
and 2000. Then, he became Manager of Legal Affairs at Camuzzi Gas Pampeana S.A.
(2001-2007). As from 2007 and to date, he has worked at Pampa Energía S.A, as
manager of the Legal and Regulatory Area and as Director of Legal and Regulatory
Affairs. He has a degree in Law from the Universidad Nacional de
Córdoba. Mariano
Batistellawas born on July 31, 1982. He has been a member of our
board of directors since 2012. He currently works as Investor Relations
Officer, Planning Manager and Special Projects Manager of Pampa Energía S.A. Mr.
Batistella worked in investment banking at Goldman Sachs. Mr. Batistella holds a
degree in business administration from the Universidad de San Andres and has a
postgraduate degree in finance from the same institution.  He currently
serves as alternate director for Pampa Energía S.A., CIESA and TGS. Pablo Alejandro
Díazwas born on June 26, 1957. Mr. Díaz has been member of
our board of directors since 2012. Previously he served as alternate
director.  Mr. Díaz currently serves as an advisor to the president of
Grupo Dolphin S.A.He also serves as an alternate director at Transba S.A.
and a Director of Inversora Ingentis S.A., Inversora Nihuiles S.A., Inversora
Diamante S.A., Pampa Participaciones II S.A., Central Térmica Güemes S.A.,
Inversora Piedra Buena  S.A., Hidroeléctrica Diamante S.A., Hidroeléctrica
Nihuiles S.A., Citelec S.A. and Transener S.A.Previously, he was an Advisor at
the Argentine Undersecretary for Electrical Energy(Subsecretaría de Energía
Eléctrica) and has held various positions in the electricity
industry. Diana Elena
Mondinowas born on August 8, 1958.  Ms. Mondino has been an
alternate director of Edenor since 2012.  She is also a director of ISE, an
agribusiness company based in Argentina.  Previously, she was based in New
York, as Regional Head for Latin America for Standard & Poor’s Credit Market
Services, reporting to the executive vice president.  Before joining
Standard & Poor’s, she was one of the principal and founding members of the
leading credit rating agency in Argentina which Standard & Poor’s acquired
in 1997.  Previously, Ms. Mondino held various advisory positions in
finance, marketing and strategic planning for various companies and was Dean of
Studies for the MBA program at CEMA-Buenos Aires. Ms. Mondino holds an MBA from
IESE in Spain. She received a B.A. in Economics from the University of Cordoba,
Argentina. Santiago Lucas Jonas
Aguilarwas born in Buenos Aires on October 7, 1981. He has been
a member of our board of directors since April 1, 2017. He was appointed
Operations and Investment Control Director at the Sustainability Guarantee Fund
in February 2011. Previously, he performed as advisor to the Board of Directors
of Banco Hipotecario S.A. and for 5 years he performed as lawyer at Cabanellas,
Etchebarne & Kelly ́s law firm. Mr. Jonas Aguilar obtained a lawyer degree at
Universidad Católica Argentina UCA and obtained a master's degree in Business
Administration at the Torcuato Di Tella University (UTDT).


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José María
Tenaillonwas born on October 23, 1989. He has been a member of our
board of directors since April 1, 2017. Mr. Tenaillon worked for Severgnini,
Robiola Grinberg and Larrechea between 1998 and 2000, for Liendo &
Castiñeyras from year 2000 to 2005, for the National Securities Committee (CNV)
during 2005 and 2006, for Zang, Bergel & Viñes during 2006 and 2007, for
Marval, O’ Farrell and Mairal from 2007 to 2010. As from the year 2010, Mr.
Tenaillon works for the Sustainability Guarantee Fund. Mr. Tenaillon obtained a
lawyer degree at the University of Buenos Aires, specializing in Commercial and
Business Law. Ignacio Gustavo Álvarez
Pizzowas born on August 19, 1985. He has been a member of our
board of directors since April 1, 2017. At present, he holds the position of
Corporate Issues Coordinator at ANSES ́s Sustainability Guarantee Fund. Mr.
Alvarez Pizzo is a lawyer and obtained his degree at the Belgrano University.
Likewise, he obtained a Master's degree in Corporate Law at Austral University. Juan Martín Monge
Varelahas been a member of our board of directors since April 1,
2017. Mr Varela worked as an Analyst at Galicia Advent Private Equity Fund, as
from 1998. In 2000 he became Associate Director at Metlife Investments. Later,
in 2005, Mr. Varela assumed as Chief Investment Officer at the same company.
Currently, he holds the position of Executive Deputy Director at
ANSES. Carlos Andrés Rodríguez
Lubaryhas been a member of our board of directors since April
1, 2017. Mr. Lubary started working for JP Morgan as an Analyst in 1987. In
1998, he was transferred to the Company’s NY Headquarters where he performed as
Latin America’s Credit Responsible. In 2007, he returned to Buenos Aires and
became the General Manager of the local office until early 2009. From there on
and until March 2011 he was involved in family activities and in different NGOs.
In March 2011, he returned to JP Morgan in Buenos Aires where he became Latin
America’s Treasury Services Responsible. In 2014, he retired to engage again in
family activities. As from January 2017 he performs as Investment General
Director at the ANSES ́s Sustainability Guarantee Fund. Mr. Rodriguez Lubary
holds a degree in Administration, and graduated at the University of Buenos
Aires.  Compensation Our board of directors
does not have a compensation or remuneration committee.  The aggregate
remuneration paid to the members and alternate members of our board of
directors, the members and alternate members of our supervisory committee and
our senior management during 2016 was Ps. 7.2 million, Ps. 0.5 million and Ps.
124.4 million, respectively. Board Practices The duties and
responsibilities of the members of our board of directors are set forth in
Argentine law and our by-laws. Under Argentine law, directors must perform their
duties with loyalty and the diligence of a prudent business person. Directors
are prohibited from engaging in activities that compete with our company without
express authorization of a shareholders’ meeting. Certain transactions between
directors and our company are subject to ratification procedures established by
Argentine law. On November 29, 2012,
the Argentine government enacted the Capital Markets Law which revokes law No.
17,811 and Decree No. 677/01. However, Capital Markets Law took most of the
provisions established in those regulations. The Capital Markets Law was enacted
with the aim of creating an adequate legal framework to strengthen the level of
protection of investors in the market.  Other objectives of the Capital
Markets Law were to promote the development, liquidity, stability, solvency and
transparency of the market, generating procedures to guarantee the efficient
distribution of savings and good practices in the administration of
corporations. The Capital Markets
Law imposes the following duties on members of the board of directors of
Argentine public companies: ·a duty to
disclose all material events related to the company, including any fact or
situation which is capable of affecting the value or trading of the securities
of the company; ·a duty of
loyalty and diligence; ·a duty of
confidentiality; and ·a duty to
consider the general interests of all shareholders over the interests of
controlling shareholders. There are no
agreements between our company and the members of our board of directors that
provide for any benefits upon termination of their designation as
directors.


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None of our directors
maintains service contracts with us except as described in “Item 7. Major
Shareholders and Related Party Transactions—Related Party
Transactions.” The significant
differences between our corporate governance practices and the NYSE standards
are listed on our website in compliance with the NYSE requirements. For a
summary of these differences see “Item 16. Corporate Governance”. Executive
Committee On October 4, 2007,
our board of directors created an executive committee, as contemplated by our
by-laws and Law 19.550, and delegated to the executive committee the authority
to take certain actions on behalf of the board.  The executive committee
complements the work of the board by executing certain day-to-day tasks required
to oversee our activity.  By creating an executive committee, the board
sought to increase the efficiency of our management.  The Executive
Committee consists of Ricardo Torres, Marcos Marcelo Mindlin, Gustavo Mariani
and Damián Mindlin. Audit
Committee Pursuant to the
Capital Markets Law and CNV rules, Argentine public companies must appoint acomité
de auditoría(audit committee) composed of at least three members of
the board of directors, a majority of which must be independent in accordance
with the criteria set forth by Argentine law. They serve for one-year
periods Pursuant to our
by-laws, one director is appointed by holders of our Class A common shares and
one by holders of our Class B common shares. Our audit committee’s duties
include: ·monitoring our internal control, administrative and
accounting systems; ·supervising the application of our risk management
policies; ·providing
the market adequate information regarding conflicts of interests that may arise
between our company and our directors or controlling shareholders; ·rendering
opinions on transactions with related parties; ·supervising and reporting to regulatory authorities the
existence of any kind of conflict of interest; ·supervising external audit and evaluating their
independence, plans and performance; ·evaluating plans and performance of the internal audit,
and ·supervising the operations of the complaints
channel.  The members of our
audit committee are:   Name
    
    Position
    
    Class electing memberEduardo Llanos
      (1)
    
    Member
    
    Class AMaximiliano
      Alejandro Fernández (1)
    
    Member
    
    Class ALucas Amado
      (1)
    
    Member
    
    Class B/C
  (1)Independent under Argentine law and under Rule
10A-3 under the Securities Exchange Act of 1934.


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Senior Management The following table
sets forth information regarding our senior management:  Name
    
    Current Position
    
    AgeRicardo Torres
    
    Chairman and Chief Executive Officer
      (CEO)
    
    58Leandro Carlos
      Montero
    
    Chief Financial Officer (CFO)
    
    41Daniel Eduardo
      Flaks
    
    Technical Director
    
    52Eduardo
      Maggi
    
    Director of Operations
    
    61Gerardo
      Tabakman
    
    Director of Information Technology and
      Telecommunications
    
    42Victor Augusto
      Ruiz
    
    Principal Accounting Officer
    
    57María Carolina
      Sigwald
    
    Director of Legal and Regulaory
    Affairs
    
    49Mariana De La
      Fuente
    
    Director of Human Resources
    
    48
   Eduardo Maggiwas born on December 31, 1955. Mr. Maggi was appointed
director of operations of Edenor in 2001. Mr. Maggi currently serves as a
director of SACME, which is responsible for the management of regional
high-voltage distribution in the greater Buenos Aires metropolitan area and for
coordinating, controlling and supervising the operation of the generation,
transmission and sub-transmission network in the City of Buenos Aires. 
Previously, Mr. Maggi served as director of operations of two of Edenor’s
operation areas, San Martín and Morón. Mr. Maggi began his career at Edenor as a
technical manager.  Mr. Maggi received a degree in engineering from the
Universidad Tecnológica Nacional and an MBA from the Universidad del Salvador y
Deusto in Spain. Gerardo
Tabakmanwas born on January 22, 1975. He is Director of
Information Technology and Telecommunications of Edenor since April 2012. He has
also served as Manager of Edenor area between September 2011 and April 2012.
Previously, he served as Manager of Systems in Pampa Energía, between February
2008 and September 2011, and Accenture, where he worked from June 1997 to
February 2008. Mr. Tabakman has a degree in Business Administration from the
Universidad de Buenos Aires and an MBA in Management Development Program from
the Instituto de Altos Estudios Empresariales (IAE), school of business of the
Universidad Austral. Víctor Augusto Ruizwas born on December 20, 1959.He began working at Edenor in
1992.  Mr. Ruiz was one of the original partners from the consortium that
participated in the privatization of our company.He was part of the Grupo ASTRA
CAPSA (Astra Compañía Argentina de Petroleo S.A.).Between 1992 and 2006, he worked
as financial statements sub-manager and accounting sub-manager at Edenor. 
Between 2006 and 2008, he worked as tax manager and since August 2008 he has
worked as principal accounting officer.  He is a consultant member of the
Tax Commission and the Accounting Rules and Public Offering Commission at laCámara
de Sociedades Anónimas(Chamber of Businesses).  Mr. Ruiz holds a CPA from
la Universidad de Buenos Aires and an MBA from la Universidad del Salvador in
Argentina and Deusto in Spain. Mariana de la
Fuentewas born on December 5, 1968. She is Director of Human
Resources of Edenor since July 2014. She has also served as Manager of Edenor.
Before joining the company, she served as Manager of Human Resources EDEN
(Empresa Distribuidora Norte Energia SA) company that was part of Pampa Energía
since 2011. In addition, she has served since 1990 in various areas of
responsibility in human resources in various multinational companies such as
Monsanto, Cerveceria Quilmes, Cabot and Abertis. Miss de la Fuente has a degree
in psychology from the University of Buenos Aires an MBA in Management
Development Program from the Instituto de Altos Estudios Empresariales (IAE),
school of business of the Universidad Austral. Supervisory Committee Argentine law requires
certain corporations, such as us, to have aComisión
Fiscalizadora(supervisory committee).  The supervisory committee
is responsible for overseeing compliance with our by-laws, shareholders’
resolutions and Argentine law and, without prejudice to the role of external
auditors, is required to present to the shareholders at the annual ordinary
general meeting a written report on the reasonableness of the financial
information included in our annual report and in the financial statements
presented to the shareholders by our board of directors.  The members of
the supervisory committee are also authorized to attend board of directors’
audit committee’ and shareholders’ meetings,call extraordinary
shareholders’ meetings, and investigate written complaints of shareholders
holding at least 2% of our outstanding shares. Pursuant to Argentine law, the
members of the supervisory committee must be licensed attorneys or certified
public accountants.


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Our by-laws provide
that our supervisory committee must consist of three members and three alternate
members, elected by our shareholders at an ordinary meeting.  Members of
our supervisory committee are elected to serve one-year terms and may be
re-elected.  Pursuant to our by-laws, holders of our Class A common shares
are entitled to appoint two members and two alternate members of the supervisory
committee and holders of our Class B and Class C common shares are entitled to
collectively appoint one member and one alternate member. The members and
alternate members of our supervisory committee are: Name
    
    Position
    
    Year of appointment (class electing
      director)José Daniel
      Abelovich (1)
    
    Member
    
    2015 (Class A)Damián Burgio
    
    Member
    
    2015 (Class A)Carlos Manuel
      Vidal (1)
    
    Member
    
    2015 (Class B/C)Santiago
      Dellatorre
    
    Alternate Member
    
    2015 (Class A)Marcelo Fuxman
      (1)
    
    Alternate Member
    
    2015 (Class A)Walter Antoni
      Pardi (1)
    
    Alternate Member
    
    2015 (Class
B/C)
 ­­­­­­­­____________________­­­­­­­­­­__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (1)Independent under Argentine law. José Daniel
Abelovichwas born on July 20, 1956. He has been a member of oursupervisory committeesince 2007.  Mr. Abelovich
is a partner of Abelovich, Polano & Asociados/ NEXIA
INTERNATIONAL, an auditing firm. Mr. Abelovich also serves as member
of the supervisory committees of Abus las Americas I S.A., Agra Argentina S.A.,
Agro Investment S.A., Agrotech S.A., Agrology S.A., Alto Palermo S.A., Arcos del
Gourmet S.A., Baicom Networks S.A., Banco de Crédito y Securitización S.A.,
Banco Hipotecario S.A., BH Valores S.A.de Sociedad de Bolsa, BHN Seguros
Generales S.A., BHN Sociedad de Inversión S.A., BHN Vida S.A., Bitania 26 S.A.,
Cactus Argentina S.A., Canteras Natal Crespo S.A., Loma de la Lata, Güemes,
Compañía Buenos Aires S.A., Transener, Citelec, Conil S.A., Convexity Sociedad
Gerente de Fondos Comunes de Inversión S.A., Cresud SACIF y A, Cyrsa S.A.,
Dolphin Créditos Holding S.A., Dolphin Créditos S.A., E-Commerce Latina S.A.,
EASA, Emprendimiento Recoleta S.A., Transba S.A., EDENOR, Energía Distribuida
S.A., Exportaciones Agroindustriales Argentinas S.A., FCMI ARGENTINA FINANCIAL
CORPORATION SA S G F C I, Fibesa S.A., Futuros y Opciones.Com S.A., FYO Trading
S.A., Grupo Dolphin Holding S.A., HIDISA, Hoteles Argentinos S.A., Inversora
Bolívar S.A., IRSA Inversiones y Representaciones S.A., La Clara de Banderaló
SA, Llao – Llao Resorts S.A., Metroshop S.A., Northagro S.A., Nuevas Fronteras
S.A., Nuevo Puerto Santa Fe S.A., Orígenes Seguros de Retiro S.A., Palermo
Invest S.A., Panamerican Mall S.A., PEPASA, Pluriagro S.A., Powerco, Préstamos y
Servicios S.A., Puerto Retiro S.A., Quality Invest S.A., Qualcomm International
Inc., Real Estate Investments S.R.L., Shopping Neuquén S.A., Solares de Santa
María S.A., Tarshop S.A. and Unicity S.A.Mr. Abelovich holds a degree in
Public Accounting from the Universidad de Buenos Aires. Damián
Burgiowas born on December 13, 1963. He has been a member of
our supervisory committee since 2012 Mr. Burgio is a co-founder partner of the
Law Firm Salaverri Delatorre, Burgio & Wetzler Malbrán He holds a
degree in Law from the Universidad Católica Argentina.Mr. Burgio is member of
Urbanizadora del Sur S.A. board of directors and serves as an alternate director
of AFI Servicios S.A. Additionally,  Mr. Burgio  currently serves as a
member of the supervisory committe of Bodega Loma de Lata S.A. , Central Térmica
Loma de Lata S.A. , Desarrollos Caballito S.A., Dolphin Créditos Holding S.A.,
Dolphin Créditos S.A., Dolphin Finance S.A., IEASA S.A., Inversora Diamante
S.A., Inversora Nihuiles S.A., Inversora Piedra Buena S.A., Pampa Energía S.A.,
Argentina SRL, Compañía de Inversiones de Energía S.A., Distribuidora Disco
S.A., T.G.S. S.A., Envases Plásticos S.A., Formosa Refrescos S.A., Salta
Refrescos S.A. and Transelec Argentina S.A. Carlos Manuel
Vidalwas born on March 4, 1949.He has been a member of our
supervisory committee since 2016.  From 1979 to the present, he has mainly
worked as auditor appointed per proposal of the General Attorney’s Office
(SIGEN) on behalf of the government in different corporations (publiclimited companies,
with and without the control of the National Securities Committee, State
companies and liquidation companies) with different equity interests of the
national government in the capital equity (majority and minority), being member
of the corresponding board of directors and auditing commissions, such as:
Repsol YPF S.A.; Papel Prensa S.A.; Aerolíneas Argentinas SA; Varios
Ferrocarriles de Carga (NCA; FEPSA; FERROSUR); Elma SA; Aluminio Argentino S.A.
(ALUAR); Sociedad Mixta Siderúrgica Argentina S.A. (SOMISA); Lotería Nacional
S.E; TELAM S.E; Administración General de Puertos S.E.; O.S.N; Ferrocarriles
Argentinos. He has also worked as management control manager at SIGEN and
advised the Energy Commission of the Chamber of Deputies as well as the SE in
connection with the 1986-2000 National Energy Plan Financing Scheme. He
developed his audit role in many kind of corporations. He has experience in
private companies such as Revlon de Argentina S.A., PHONALEX S.A.I.C and CITROEN
ARGENTINA S.A. Mr. Vidal holds a Certified Account degree at the University of
Buenos Aires.


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Santiago Dellatorrewas born on January 26, 1967.Heis a founding partner
of the Argentine law firm Errecondo, Salaverri, Dellatorre, Burgio & Wetzler
Malbrán. He is a director of Envases Plásticos S.A. and Salta Refrescos S.A. He
is a member of the statutory audit comittees of Desarrollos Gastronómicos S.A.;
and an alternate member of the statutory audit committees of Pampa Energía S.A.,
Central Térmica Loma de la Lata S.A., Bodega Loma de la Lata S.A., IEASA S.A.,
Pampa Participaciones S.A., Pampa Participaciones II S.A., HIDISA, HINISA, IPB,
Transelec Argentina S.A., EPCA S.A. and Electricidad Argentina S.A. Mr
Dellatorre received his law degrees with honors from the Universidad Católica
Argentina in 1990. Marcelo
Fuxmanwas born on November 30, 1955.  He has been a
member of our supervisory committee since June 2006.  Mr. Fuxman is a
partner of Abelovich, Polano & Asociados/ NEXIA INTERNATIONAL,an auditing firm, and
managing partner of Real Estate Investments S.R.L.He currently serves as Director
of Agencia Marítima Bluemar S.A. and Agra Argentina S.A., and as a statutory
auditor of Agro Investment S.A., BHN Sociedad de Inversión S.A., Agropoly
S.A.,  Agropecuaria Cervera S.A., BHN Seguros Generales S.A., BHN Vida
S.A., Comercializadora Los Altos S.A., Credud SACIF y A, Cyrsa S.A., E- Commerce
Latina S.A., Empalme S.A., Emprendimiento Recoleta S.A., Fibesa S.A., Futuros y
Opciones.Com S.A., FYO Trading S.A., Inversiones Ganaderas S.A., Inversora
Bolívar S.A., IRSA Inversiones y Reparaciones S.A., Llao-Llao Resorts S.A.,
Nuevas Fronteras S.A., Palermo Invest S.A., Panamerican Mall S.A., Patagonian
Investment S.A., Quality Invest S.A., Shopping Alto Palermo S.A., Shopping
Neuquén S.A., Solares de Santa María S.A., Tarshop S.A. and Powerco S.A. and as
alternate member of the statutory audit committee of, Compañía Buenos Aires
S.A., Dolphin Créditos S.A., Dolphin Créditos Holding S.A., Myland S.A.,
Petrolera Pampa S.A., Alto Palermo S.A., Cactus Argentina S.A., Dolphin
Inversora S.A., Grupo Dolphin S.A. and Central Térmica Güemes, Electricidad
Argentina S.A.,HIDISA. and Edenor.Mr. Fuxman holds a degree in
Public Accounting from the Universidad de Buenos Aires. Walter Antonio Pardiwas born on April 14, 1961. He has been a member of our
supervisory committee since April 2015. Since 1993, Mr. Pardi has served in the
internal audit body of the Argentine government (Sindicatura General de la
Nación). He also serves in the supervisory committee for
several Argentine companies, including Telam S.E., Nación Leasing S.A. and
Operadora Ferroviaria S.E. Mr. Pardi holds a degree in Public Accounting from
the Universidad de Buenos Aires.  Employees Edenor had 4,692
employees as of December 31, 2016, 4,696 employees as of December 31, 2015 and
4,314 employees as of December 31, 2014. As of December
31, 2016, approximately 86% of our full-time employees were subject to two
collective bargaining agreements. After our privatization, we implemented an
employee reduction plan to reduce the number of employees from 6,368 employees
at the time of the privatization. The employee reductions were primarily
effected through an early retirement program. In July 1995, we signed two
collective bargaining agreements with Sindicato de Luz y Fuerza and Asociación
del Personal Superior, the two unions that represent our employees, which are
currently in force pursuant to collective bargaining agreements 817/06 “E”
(LYF)  and  805/06 “E” (APSEE), which were renewed on November8, 2006 and October 5,
2006 respectively.  The union agreements have a joint commission integrated
by representatives of the Company and the unions entities, to interpret the
agreements and analyze claims and unresolved issues that arise in our daily
activities.  The most common issues that arise are related to changes in
the organization of working tasks, the conformation of the working teams, ,
relocation and readjustment of employees positions, detailed situations with
personnel and the analysis of the suitability of different technological
advances and their applications. Currently, our relations with the unions are
stable.  However, we cannot guarantee that we will not experience any
conflicts with our employees in the future, including with our unionized
employees in the context of future negotiations of our collective bargaining
agreements, which could result in events such as strikes or other disruptions
that could have a negative impact on our operations.


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On May 28 and October
16, 2014, the Secretariat of Labor (ST) issued Resolutions No. 836/14 and No.
1,928/14 whereby the following was established: a) a salary increase, until
April 30, 2015, for the benefits of Edenor’s employees and contractors who are
represented by the Sindicato de Luz y Fuerza de Capital Federal (Electric Light
and Power Labor Union of the City of Buenos Aires) and the Asociación del
Personal Superior de Empresas de Energía (Association of Supervisory Personnel
of Energy Companies) of 15% effective as of May 1, 2014 and of a cumulative 10%
as of July 1, 2014; b) an increase, from May 1, 2014, in the percentage
applicable on account of employee seniority, reaching 2.12% of the basic salary,
per year of seniority; and c) a 10% to 18% increase, from May 1, 2014, in the
percentage applicable to the non-calendar week modality of work. The
aforementioned salary increases apply also to Edenor’s contractors whose direct
employers are included in the collective bargaining agreements of the
above-mentioned union/association. On September 8, 2016,
we signed an agreement with Sindicato de Luz y Fuerza through which the light
operating working teams have to apply with the polyfunctional development of
their tasks, in order to increase the efficiency and levels of quality of
service provided to customers, in accordance with requirements of the regulatory
authorities. Moreover, the
abovementioned agreement established a salary increase of 11.1% based on the
salaries in force as of April 2016, effective as of May 2016 for all personnel
represented by the union. Accordingly, considering the 11.9% increase
established in June 2015, the union reached an aggregate increase of 23% for the
period May through October of 2016. Through a new
agreement, Sindicato de Luz y Fuerza obtained: (1) a salary increase of 6%
(based on the salaries in force as of October 2016), which became effective as
of November 2016; (2) a salary increase of 6%, which became effective as of
March 2017; and, (3) a voluntary one-time extraordinary bonus not regarded as a
salary item of Ps.10,000, payable in 2 installments of Ps. 5,000 each on January
20, 2017 and February 20, 2017. We outsource a number
of activities related to our business to third party contractors in order to
achieve a lower and more flexible cost base, so as not to oversize our structure
following works and investments plans that change from year to year and  to
provide us with the ability to respond more quickly to changes in our market..
We have contracts with third-party service companies, and counted with 4,045
employees as of December 31, 2016, 2,927 employees as of December 31, 2015 and
1,847 employees as of December 31, 2014. Although we have very strict policies
regarding compliance with labor and social security obligations by our
contractors, we are not in a position to ensure that, if conflicted,
contractors’ employees will not initiate legal actions to seek indemnification
from us based upon a number of judicial rulings issued by labor courts in
Argentina recognizing joint and several liability between the contractor and the
entity to which it is supplying services under certain circumstances. As of
December 31, 2016, 2015 and 2014 indemnification complaints amounted to Ps. 134
million, Ps. 162 million and Ps. 130 million, respectively. In 2016
indemnification charges decreased in comparison with the previous year 
to  Ps.134 million, of which approximately  Ps. 100 million correspond
to capital allowances and the balance to cover the costs related to each
process. Such amount includes third-party personnel as well as our own
personnel’s indemnification costs.


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Share Ownership None of the members of
our board of directors, our audit committee or our senior management
beneficially own any shares of our capital stock, except for Messrs. Ricardo
Torres, Marcos Marcelo Mindlin, Damián Miguel Mindlin and Gustavo Mariani who,
through Pampa Energía, are controlling shareholders of IEASA, which makes them
indirect beneficiaries of all of our Class A common shares. In addition, Mr.
Diego Martín Salaverri is the beneficial owner of less than one percent of our
capital stock represented by Class B common shares. See “Item 7. Major
Shareholders and Related Party Transactions.”  Item
7.Major Shareholders and
Related Party Transactions The following table
sets forth information relating to the ownership of our common shares as of the
date of this annual report. Class(1)
    
    Shares
    
    Percent OwnershipElectricidad
      Argentina S.A.(2)
    
    A
    
    462,292,111
    
    51.00%Employee Stock
      Participation Program
    
    C
    
    1,952,604
    
    0.21%Public
    
    B
    
    189,798,332
    
    20.94%ANSES(3)
    
    B
    
    242,999,553
    
    26.81%Treasury Shares
    
    B
    
    9,412,500
    
    1.04%Total
    
    
    
    906,455,100
    
    100.00%
 ___________________ (1)Each class
of shares entitles holders to one vote per share. (2)All of our
Class A common shares have been pledged to the Argentine government to
secure our obligations under our concession and cannot be transferred without
the prior approval of the ENRE.  See “Item 4. Information on the
Company—Business Overview—Our obligations.” Electricidad Argentina S.A. (EASA)
is an Argentine corporation wholly owned by Pampa Participaciones S.A.and
IEASA.  Pampa Participaciones S.A. holds 0.01% of the voting stock of EASA
and IEASA holds the remainder 99.99% of the capital stock of EASA.  Pampa
Energía S.A. currently owns, directly and indirectly, 100% of the capital stock
of Pampa Participaciones and IEASA. See “Item 7. Major Shareholders and Related Party
Transactions - Acquisition by Central Térmica Loma de la Lata
S.A”. (3)On
November 20, 2008, the Argentine Congress passed a law unifying the Argentine
pension and retirement system into a system publicly administered by the ANSES
and eliminating the retirement savings system previously administered by private
pension funds under the supervision of a governmental agency. In accordance with
the new law, private pension funds transferred all of the assets administered by
them under the retirement savings system to the ANSES.  These transferred
assets included 242,999,553 of our Class B common shares, representing 26.8% of
our capital stock.  The ANSES is subject to the same investment rules,
prohibitions and restrictions that were applicable to the Argentine private
pension funds under the retirement savings system, except as described in the
following sentence.  On April 12, 2011, the Executive Power issued
Emergency Decree No. 441, which annulled the restrictions under Section 76(f) of
Law No. 24,241 on the exercise of more than 5% of the voting power in any local
or foreign company, such as us, in any meeting of shareholders, irrespective of
the actual interest held in the relevant company’s capital stock.  The
annulment of the restrictions under Section 76(f) of Law No. 24,241 came into
effect on April 14, 2011.  As of such date, ANSES may exercise its voting
power in any local or foreign company, such as us, based on the actual interest
held in the relevant company’s capital stock.   All of our shares have
the same voting rights. As of December, 31 2016, there was one registered
shareholder of our ADSs in the United States and 5,945,042 of our ADSs were
outstanding. Since certain of our ADSs are held by brokers or other nominees,
the number of direct record holders in the United States may not be fully
indicative of the number of direct beneficial owners in the United States or of
where the direct beneficial owners of such shares are residents. We have no
information concerning holders with registered addresses in the United States
that hold our shares not represented by ADSs. Acquisition by Dolphin Energía
and IEASA In September 2005,
Dolphin Energía and IEASA purchased an indirect controlling stake in us from
EDFI.  Until September 28, 2007, Dolphin Energía and IEASA were controlled
by the principal members of Grupo Dolphin, Marcos Marcelo Mindlin, Damián Miguel
Mindlin and Gustavo Mariani.Such principal members
had significant experience investing in the Argentine energy sector dating back
to 2004.


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Acquisition by Central Térmica
Loma de la Lata S.A. On March 29, 2017,
EASA approved, ad referendum of the corresponding shareholder resolutions and
the corresponding approvals of the controlling entities, the merger by
absorption between Central Térmica Loma de la Lata S.A. (“CTLL”), as merging and
surviving company, and EASA and IEASA S.A. (“IEASA”) - EASA’s majority
shareholder – as the merged/absorbed companies, which will be dissolved without
liquidation. Accordingly, the merger plan was approved as well as the merger
consolidated income statement. Such companies, CTLL and EASA and IEASA, belong
to the same group, Pampa Energía S.A., which is their direct and/or indirect
controller. In accordance with the
applicable regulations, EDENOR and EASA informed the ENRE and requested the
corresponding authorization. As of the date of this annual report, the merger
process was ongoing. Initial Public
Offering In April 2007, we
completed the initial public offering of our Class B ordinary shares in the form
of American Depository Shares (ADSs). We and a group of our shareholders sold
18,050,097 ADSs, representing 361,001,940 ordinary Class B common shares, in an
offering in the United States and other jurisdictions outside of Argentina, and
the Employee Stock Participation Program sold 81,208,416 ordinary class B shares
in a simultaneous offering in Argentina. The ADSs are listed on the New York
Stock Exchange under the symbol “EDN” and the Class B common shares are listed
on the BASE under the same symbol. We received approximately U.S.$ 61.4 million
from the initial public offering, before costs. Of this amount, we used
approximately U.S.$ 36 million to repurchase some of our Discount Notes due
2014. The remainder of the proceeds from the initial public offering was used to
repurchase some of our Fixed Rate Par Notes due 2016 and for capital
expenditures. After the initial public offering, our controlling shareholder
continues to own 51% of our ordinary shares. Acquisition by Pampa
Energía S.A.  (Formerly Pampa Holding S.A.) On June 22, 2007, the
principal members of Grupo Dolphin, Marcos Marcelo Mindlin, Damián Miguel
Mindlin and Gustavo Mariani, and certain other minority investors, signed a
stock subscription agreement with Pampa Energía S.A., pursuant to which they
agreed to transfer all of the stock of Dolphin Energía and IEASA to Pampa
Energía S.A. in exchange for common stock of Pampa Energía S.A. On August 30,
2007, the shareholders of Pampa Energía S.A. approved this transfer of shares,
and the CNV and the BASE approved the public offering and listing of its shares
in September 2007.  The transaction was consummated on September 28, 2007,
and as a result, Pampa Energía S.A. now owns 100% of the capital stock of each
of Dolphin Energía and IEASA, which in turn collectively own all of the capital
stock of EASA, our controlling shareholder.  The ratio of exchange of
common shares of Pampa Energía S.A. and shares of Dolphin Energía and IEASA was
determined using the respective averages of the closing prices of Pampa Energía
S.A.’s and our shares on the BASE during a 10-trading day period ending on
August 15, 2007, taking into account, in the case of shares of Dolphin Energía
and IEASA, EASA’s stake in us, the net present value of EASA’s outstanding
indebtedness and the net present value of fees to be paid by us to EASA under
the Financial Services Agreement dated April 4, 2006 between us and EASA. 
See “—Related party transactions—Financial services agreement with
EASA.” The former
shareholders of Dolphin Energía and IEASA, Messrs. Marcos Marcelo Mindlin,
Damián Mindlin and Gustavo Mariani, are the controlling shareholders of Grupo
Dolphin and are managers of Pampa Energía S.A., an Argentine public company with
a market capitalization of U.S.$ 275.5 million as of December 31, 2013. Pampa
Energía S.A. was acquired in November 2005 by certain principals of Grupo
Dolphin to serve as a corporate vehicle for private equity investments in
Argentina. Through companies under their control, Messrs. Marcos Marcelo
Mindlin, Damián Mindlin and Gustavo Mariani currently control approximately
22.77% of the common stock of Pampa Energía S.A.  In addition, Messrs.
Marcos Marcelo Mindlin and Damián Mindlin together with Pampa Energía S.A.’s
chief executive officers Messrs. Gustavo Mariani and Ricardo Alejandro Torres,
hold warrants to purchase, in the aggregate, approximately 22.5% of the common
stock of Pampa Energía S.A. (on a fully diluted basis). The board of
directors of Pampa Energía S.A. consists of nine directors, of which five are
affiliated with Grupo Dolphin, including Mr. Gustavo Mariani who serves as
chairman of the board ofdirectors , Marcelo
Mindlin,  and Damián Mindlin , members of the board of directors.  The
principal executive officers of Pampa Energía S.A., excluding its Co-chief
executive officer, are also affiliated with Grupo Dolphin.


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In addition to its
indirect stake in us, Pampa Energía S.A. owns as of the date of filing of this
annual report, several investments in the Argentine electricity sector,
including a 50% interest in the controlling shareholder of the principal
electricity transmission company in Argentina, Transener and controlling stakes
in six generation plants located in the Buenos Aires, Salta, Mendoza and Neuquén
provinces (Central Piedra Buena S.A., Hidroeléctrica Los Nihuiles S.A.,
Hidroeléctrica Diamante S.A., Central Térmica Güemes S.A., and Central Térmica
Loma de la Lata S.A.). Share Buy-Back
Program On October 23, 2008,
we launched a tender offer in Argentina for our Class B common
sharesat a
purchase price of Ps. 0.65 per share 400,000 Class B common shares were validly
tendered and purchased pursuant to the offer. On November 14, 2008,
we commenced an open-market share purchase program. Under the terms of the
program, we were authorized to purchase our Class B common shares for up to Ps.
45 million, subject to certain volume and price restrictions. The open market
share purchase program expired on March 17, 2009. Pursuant to the program we
purchased 9,012,500 Class B common shares, at an average price of Ps. 0.65 per
share, representing approximately 1.03% of our capital stock. As of the date of
filing of this annual report, we held 9,412,500 Class B common shares as
treasury stock. The original term of
the open-market share purchase program was extended by resolution of the
Ordinary General Meeting of Shareholders of the Company dated March 3, 2011, for
the same term, computable from November of that year. On November 18, 2014,
the Extraordinary General Meeting of the Company approved an additional
extension of three years which will allow for an automatic reduction of capital
under the Capital Market Law and develop a proposal to target those shares,
which will be submitted for consideration and approval of the relevant corporate
bodies. Long-Term Incentive
Plan In 2017, the “long
term incentive plan” addressed to Edenor’s staff was developed with the purpose
of keeping and attracting key staff and promoting the highest performance by
offering company’s shares to the executive and management levels and other key
employees. The plan will be administered and executed by an implementing
committee to be composed of three members of the Company’s Executive Committee,
which, in April of each year will decide on the implementation of the plan for
the respective calendar year and shall issue the corresponding annual granting
resolution. Employee Stock
Participation Program At the time of the
privatization of SEGBA (our predecessor), the Argentine government allocated all
of our Class C common shares, representing 10% of our outstanding capital stock,
to establish aPrograma de Propiedad Participada(employee stock
participation program,or PPP), pursuant to Law No. 23,696 and regulations
thereunder, through which certain eligible employees (including former employees
of SEGBA who became our employees) were each entitled to receive a specified
number of our Class C common shares, calculated in accordance with a formula
that considered a number of factors, including the employee’s salary level,
position and seniority.  In order to implement the PPP, a general transfer
agreement, a share syndication agreement and a trust agreement were
executed. Pursuant to the
transfer agreement, participating employees were allowed to defer payment for
the Class C common shares over time. As a guarantee for the payment of the
deferred purchase price, the Class C common shares were pledged in favor of the
Argentine government. Furthermore, under the original trust agreement, the Class
C common shares were placed in trust by the Argentine government with Banco
Nación, acting as trustee for the Class C common shares, for the benefit of the
participant employees and the Argentine government. In addition, pursuant to the
share syndication agreement, all political rights of the participant employees
(including the right to vote at our ordinary and extraordinaryshareholders’
meetings) were to be exercised collectively until the payment in full of the
deferred purchase price and the release of the pledge in favor of the Argentine
government. On April 27, 2007, the participant employees paid the deferred
purchase price of all of the Class C common shares in full to the Argentine
government and, accordingly, the pledge was released and the share syndication
agreement was terminated.


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According to the
regulations applicable to the Employee Stock Participation Program,
participating employees who terminated their employment with us before the
payment in full of the deferred purchase price to the Argentine government were
required to transfer their shares to the Guarantee and Repurchase Fund, at a
price calculated pursuant to a formula set forth in the transfer
agreement.  As of the date of payment of the deferred purchase price, the
Guarantee and Repurchase Fund had not paid in full the amounts due to the former
participating employees for the transfer of their Class C common Shares. A number of our and
SEGBA’s former employees have brought claims against the Guaranty and Repurchase
Fund, the Argentine government and, in certain limited cases, us, in each case
relating to the administration of our Employee Stock Participation Program. The
plaintiffs who are former employees of SEGBA were not deemed eligible by the
relevant authorities to participate in the Employee Stock Participation Program
at the time of its creation, which determination these plaintiffs dispute and
are seeking compensation for. The plaintiffs who are our former employees are
either seeking payment of amounts due to them by the Guaranty and Repurchase
Fund for share transfers that occurred upon their retirement from our employment
or disputing the calculation of the amounts paid to them by the Guaranty and
Repurchase Fund.  In several of these claims, the plaintiffs have obtained
attachment orders or injunctive relief against the Guaranty and Repurchase Fund
over approximately 1,567,231 Class C common shares and Ps. 709,149 of the funds
on deposit in the fund, in each case up to the amount of their respective
claims. Because the outcome of these proceedings has not yet been determined,
the Argentine government has instructed Banco Nación to create a Contingency
Fund to hold a portion of the proceeds of the offering of Class B common shares
by the Employee Stock Participation Program pending the outcome of these legal
proceedings. According to the
agreements, laws and decrees that govern the Employee Stock Participation
Program, our Class C common shares may only be held by our employees.  Upon
the closing of our initial public offering, substantially all of our Class C
common shares were converted into Class B common shares and sold.  In
accordance with these agreements, laws and decrees, the rights previously
attributable to the Class C common shares have been combined with those
attributable to the Class B common shares, and holders of the remaining Class C
common shares will vote jointly as a single class with the holders of Class B
common shares in the election of directors.  Only 1,952,604 Class C common
shares remain outstanding, representing 0.2% of our capital stock.  RELATED PARTY TRANSACTIONS Technical Assistance
Agreement with EASA On  April 4,
2006, we entered into a Technical Assistance Agreement with EASA pursuant to
which it shall provide us with advisory services, as well as services related to
the potential development of new lines of business compatible with our corporate
objectives.  The services performed by EASA include providing assistance
and advice in respect of our financial performance, our finance management team
and our financial decision‐making process, our engagement of
financial. On August 31, 2010, we signed an amendment to the EASA agreement extending the
term of the agreement to five years following September 19, 2010. Our Board of
directors approved the amendment on August 31, 2010.  No other terms of the
contract have been modified.  On November 10, 2015,
another amendment was entered into to extend the term of the EASA agreement
until September 19, 2020 and ratifying all other provisions. Such amendment was
approved by our board of directors on November 9, 2015, with the prior favorable
opinion of our Audit Committee.


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Agreement with
Comunicaciones y Consumos S.A. On March 14, 2007 we
entered into an agreement with Comunicaciones y Consumos S.A. (CYCSA), an
Argentine company wholly owned by Mr. Marcelo Mindlin, pursuant to which we
granted CYCSA the exclusive right to provide telecommunication services to our
customers through the use of our network in accordance with Federal Decree
764/2000, which contemplates the integration of voice, data and imaging services
through the existing infrastructure of electricity distribution companies such
as us. Under the terms of this agreement, CYCSA is responsible for all expenses
relating to the maintenance and adaptation of our network for use in providing
its telecommunications services. The agreement was established with a term
validity of ten years as from July 11, 2008, which in November 2008, was
extended from ten to twenty years, thus terminating in July 2028. The agreement
also provides for automatic renewal at the expiration of each term for
subsequent five-year periods, unless either party gives notice not less than 120
days prior to the expiration of such term. Under the agreement, CYCSA is
required to make periodic requests for access to our network, which we will
evaluate and grant based on available capacity in our network. In return for the
use of our network, CYCSA will compensate us with 2% of its annual charges to
customers, before taxes, as well as 10% of any profits derived from its
services. In addition, CYCSA will indemnify us for any liability arising from
the rendering of its services through our network. In October 2008, we entered
into an amendment to the agreement with CYCSA granting CYCSA the right to use
poles and towers of our overhead lines to lay a network of fiber optic cables.
The amendment also grants us the right to use part of the capacity of the fiber
optic cables On December 28, 2015,
a consolidated agreement was instrumented  as approved by our board of
directors on December 16, 2015, with the prior favorable opinion of our Audit
Committee, replacing all previous agreements, letters of intent, arrangements,
statements, warranties or other provisions, but without amending any of its
terms and conditions. On December 1, 2016,
CYCSA ceased to be part of the Pampa Energía economic group.  Agreement with
SACME In the framework of
the regulation of the Argentine electric power sector established by Law No.
24,065 and SE Resolution No. 61/92, and after the awarding of the distribution
areas of the city and metropolitan area of Buenos Aires to Edenor and Edesur,
the bidding terms and conditions of the privatization provided that both
companies were required to organize SACME to operate the electric power
supervision and control center of the transmission and sub-transmission system
that feeds the market areas transferred to those companies. For such purpose, on
September 18, 1992 SACME was organized by Edenor and Edesur. The purpose of SACME
is to manage, supervise and control the operation of both the electric power
generation, transmission and sub-transmission system in the City of Buenos Aires
and the Buenos Aires metropolitan area and the interconnections with the
Argentine Interconnection System (SADI), to represent distribution companies in
the operational management before CAMMESA, and, in general, to carry out the
necessary actions for the proper development of its activities. The share capital of
SACME is divided into 12,000 common, registered non-endorsable shares, of which
6,000 Class I shares are owned by Edenor and 6,000 Class II shares are owned by
Edesur. The operating costs
borne by the Company during fiscal year 2016 amounted to Ps. 35.4
million. Orígenes Seguros de Vida
S.A. During
the process of hiring a compulsory life insurance and after receiving several
proposals from insurance companies, our board of directors approved the election
of Origenes Seguros de Vida on March 8, 2016, subject to the supervisory
committee’s approval.


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Item
8.Financial
Information See “Item 18.
Financial Statements” beginning on page F-1. LEGAL AND ADMINISTRATIVE PROCEEDINGS  Legal Proceedings In the normal course
of our business, we are a party to lawsuits of various types. Our management
evaluates the merit of each claim and assesses its likely outcome, recording an
allowance in our financial statements for the related contingent liability when
an unfavorable decision is probable and the amount may be reasonably
estimated.  At December 31, 2016, we had established provisions in the
aggregate amount of Ps. 429.3 million to cover potential losses from such claims
and legal proceedings. Except as disclosed below, we are not a party to any
legal proceedings or claims that may have a material adverse effect on our
financial position or results of operations. We are not aware of
any other contingencies that are reasonably possible and, as of December 31,
2016, there were no losses in excess of the contingencies that we recognized in
our Financial Statements as of and for the year ended December 31,
2016. Proceedings
Challenging the Renegotiation of our Concession  On October 26, 2009,
we received notice of a complaint filed by a consumer association, the
Consumer’s Cooperative for Community Action, against the Argentine government,
the ENRE, Edesur, Edelap and us. In accordance with the terms of the complaint,
two additional associations for the defense of consumer rights, Association for
the Legal Defense of Consumers(Asociación de Defensa de los Derechos de los Usuarios y
Consumidores) and Consumers Union Legal Defense (Unión de Usuarios y
Consumidores en Defensa de sus Derechos), have joined the
complaint. The remedies sought in
the complaint are as follow: ·that all
the most recent tariff resolutions be declared null and unconstitutional
(Resolutions No. 324/08 – 365/08 – 628/08, 645/08 of the ENRE and SE No. 1169/08
– 797/08 – 1170/08 and its annexes) and, as a consequence, that the amounts
billed by virtue of these resolutions be refunded; ·that all
the defendants be required to carry out the RTI; ·that the
resolutions issued by the SE that extend the transition period of the Adjustment
Agreement be declared null and unconstitutional; ·that the
defendants be ordered to carry out the sale process, through an international
public bidding, of their respective class “A” shares, due to the fact that the
management period of the respective concessions has ended; ·that the
resolutions as well as any act performed by a governmental authority that modify
contractual renegotiations be declared null and unconstitutional; ·that the
resolutions that extend the management periods contemplated in the defendant’s
respective concessions be declared null and unconstitutional; and ·that,
alternatively, should the main claim be rejected, the defendants be ordered to
bill all customers on a bi-monthly basis. Additionally, the
plaintiffs requested that the court issue a preliminary injunction suspending
the rate hikes established in the resolutions questioned by the plaintiffs and
that, alternatively, the application of the resolutions be partially suspended.
Finally, the plaintiffs also requested that the application authority be ordered
not to approve new increases other than within the framework of the RTI process.


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The Company answered
the complaint denying all its terms and requesting the summoning of CAMMESA as a
third-party. The relevant court upheld the third-party summon and CAMMESA
answered such third-party summon. The Argentine government answered the
complaint filed against it by arguing lack of personal jurisdiction(“Falta de legitimación pasiva”).A decision on this
case is pending. We can give no
assurance that these actions or other potential future actions or requests for
injunctive relief will not reverse the adjustments we have obtained or block any
further adjustments to our tariffs. Breach of Contract
Claims In March 2010Consumidores Financieros, Asociación Civil Para Su
Defensa,a consumers’ association, instituted an action against us
and Edesur in the National Court of First Instance in Federal Administrative
Claims Tribunal No. 2, Secretariat 3 (Juzgado Nacional de Primera
Instancia en lo Contencioso Administrativo Federal No 2, Secretería
3)
seeking repayment to customers for alleged excess charges over the course of the
past ten years. The action is based on three claims.  First, the plaintiffs
claim a refund for the percentage payment of VAT over a taxable base they allege
was inappropriately increased to include an amount that exceeded our and
Edesur’s own payments to the WEM. Second, the plaintiffs claim a refund for
charges relating to interest on payments by customers that the plaintiffs claim
we and Edesur failed to adjust to reflect the actual number of days the payment
was outstanding. Finally, the plaintiffs claim a refund for late payment charges
from 2008 onwards calculated at the rate of thetasa pasiva(the interest rate
thatBanco de la Nación Argentinapays on deposits) in alleged
contravention of the Law of Consumer Defense (Ley de Defensa del
Consumidor) in April 2008. We have given express directions to our
legal advisors to contest the suit and all related claims and, on April 22,
2010, we answered the complaint and filed a motion to dismiss for lack of
standing on the part of the plaintiffs, requesting, at such opportunity, that a
summons be served upon the Argentine government, the Federal Tax Administration
Agency (“AFIP”) and the ENRE as third-party defendants. Although plaintiffs’
opposition to the requested summons has not been resolved, the proceedings were
brought to trial, in response to which we filed a motion for reversal with a
supplementary appeal. The court ordered the
summoning as third parties of the Argentine government, ENRE and AFIP, which was
already effected. A decision on this case is pending. On October 21, 2011,
we were notified of a lawsuit filed by the Association for the Defense of Rights
of Users and Consumers (Asociación de Defensa de Derechos de Usuarios y
Consumidores, or “ADDUC”) requesting that the interviewing Court (i) order the
reduction or moderation of penalty interest rates or late payment interests that
we charge to customers, because such rates allegedly violate Art. 31 of Law
24,240, and (ii) declare the non-implementation of the agreements or conventions
which have stipulated the interest rates that we apply to our customers, and of
the administrative regulations on the basis of which we justify the interest
charging and (iii) orders the restitution of wrongfully perceived interests of
customers provided since August 15, 2008 until the day that we comply with the
order of interest reduction. The plaintiff also requested the reinstatement of
VAT (21%) and other taxes charged on the portion of charges unlawfully
perceived. On November 11, 2011, we answered the complaint and filed a motion to
dismiss for both lack of standing and the fact that the claims at issue were
being litigated in another lawsuit (lis pendes). The summoning as third-party of
the ENRE was also requested. On April 8, 2014, the court decided to grant the
motion to dismiss on account of the existence of other action pending (lis
pendens) and ordered that the proceedings be referred to such othrt court, to be
consolidated with such other case"Consumidores Financieros
Asociación Civil c/EDESUR y Otro s/ incumplimiento contractual". We can give no
assurance that these actions or other potential future actions or requests for
injunctive relief will not reverse the adjustments we have obtained or block any
further adjustments to our tariffs. Legal actions brought
by Edenor On February 9, 2011,
the Company challenged Resolution No. 32/11 of the ENRE which, in the context of
the power cuts that occurred between December 20 and December 31, 2010,
established the following:


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- That the Company be
fined in the amount of Ps. 750,000 due to its failure to comply with the
obligations arising from the Concession Agreement and Section 27 of Law No.
24,065. - That the Company be
fined in the amount of Ps. 375,000 due to its failure to comply with the
obligations arising from Section 25 of the Concession Agreement and Resolution
No. 905/1999 of the ENRE. - That the Company’s
customers be paid the following amounts as compensation for the power cuts
suffered: Ps. 180 to each small-demand residential customer who suffered power
cuts that lasted more than 12 continuous hours, Ps. 350 of each of those
who suffered power cuts that lasted more than 24 continuous hours, and Ps. 450
to of each of those who suffered power cuts that lasted more than 48 continuous
hours. The resolution stated that such compensation did not include damages to
customer facilities and/or appliances, which were to be dealt with in accordance
with a specific procedure. We have filed a direct
appeal with the Appellate Court in Contentious and Administrative Federal
Matters No. 1, requesting that such resolution be declared null and void.
Additionally, we filed a petition requesting injunctive relief aimed at
suspending the application of the fine imposed until a decision on the direct
appeal is issued. On July 8, 2011, we
requested that process be served on the ENRE. On October 28, 2011, the court
denied the request for injunctive relief. As a consequence, we filed a Federal
Extraordinary Appeal with the Supreme Court which was dismissed. We then filed
another appeal with the Supreme Court (“Recurso de Queja por apelación
denegada”) requesting review of the rejected federal
extraordinary appeal, which as of the date of this annual report had not been
resolved. On April 24, 2013, we
were notified of the decision of the Appellate Court in Contentious and
Administrative Federal Matters No. 1 to deny direct appeal filed by Edenor. On
May 3, 2013 and on May 13, 2013, we filed an Ordinary Appeal and an
Extraordinary Appeal, respectively, with the Supreme Court. On November 7, 2014,
our Ordinary Appeal was rejected and our Federal Extraordinary Appeal, partially
granted. Edenor timely submitted an extraordinary appeal on account of the
partially denied appeal(“Recurso de Queja por Recurso Extraordinario
Denegado”). As of December 31,
2016, the provision recorded in relation to the aforementioned compensations
amounted to Ps. 52 million, including principal amount and accrued interest. For
further information on this legal proceeding, see “Item 4. Business
Overview—Fines and penalties.” On June 28, 2013, we
initiated a legal action against the Ministry of Planning, Public Investment and
Services pursuant to the acknowledgment process and benefit of litigation
without expenses, both entertained by the National Court of First Instance in
Federal Administrative Claims Tribunal No. 11(Juzgado Nacional de
Primera Instancia en lo Contencioso Administrativo Federal No 12). Breach by the
Argentine government of the agreed terms under the Adjustment Agreement was
claimed and compensation of damages sought.


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On November 22, 2013,
the Company amended the complaint so as to claim additional damages as a
consequence of the Argentine government’s omission to perform the obligations
under the Adjustment Agreement. On February 3, 2015, the court hearing the case
ordered that notice of the complaint be served to be answered within the time
limit prescribed by law, which was answered by the Argentine government. 
Subsequently, we informed the court of the issuance by the SE of Resolution No.
32/15 as new event (“hecho nuevo”) under the terms of Section 365
of the Federal Code of Civil and Commercial Procedure. After notice was served,
the court rejected the treatment thereof as an “event”, holding the Company
liable for costs. The Company filed an appeal, which was admitted “with a
delayed effect” (i.e. the Appellate Court will grant or reject the appeal when
deciding on the granting or rejection of the appeal against final judgment). On
December 4, 2015, we requested the suspension of the procedural time-limits
under the terms of section 157 of the Federal Code of Civil and Commercial
Procedure, in accordance with the provisions of Resolution No. 32/15 of the SE,
notice of which has been served upon the defendant. On February 16, 2016, we
reiterated the request due to the revocation of Resolution No. 32/15 of the SE.
As of the date of this annual report, the procedural deadlines are suspended
until May 17, 2017, as agreed by parties. The motion to litigate
without liability for court fees or costs, which was filed on July 2, 2013, is
currently at the end of its discovery period and the period for the parties to
submit their arguments on the merits of the evidence produced has begun. At the
date of this annual report, the Company had requested the suspension of the
procedural time-limits. In December 2015, we
filed a petition for a declaratory judgment and requested injunctive relief with
the City of Buenos Aires Courts in Contentious and Tax-Related Matters
(Fuero
Contencioso Administrativo y Tributario de la Ciudad de Buenos
Aires), in connection with a claim by the City of Buenos Aires
against us in connection with an alleged local tax liability (relating to the
Study, Review and Inspection of Works in Public Spaces Fees, the “TERI”). The
injunctive relief requested aims at suspending the foreclosure proceedings
initiated by the City of Buenos Aires and avoiding an attachment on our assets.
As of the date of the filing of the petition, the City of Buenos Aires’ claim
amounted to Ps. 28.8 million. In our opinion, such
local taxes are not applicable to us under federal regulations and case law. Our
management and its external counsel understand that there are reasonable grounds
to believe that we should prevail on this matter. In May 2012, the
Company filed the original minimum presumed income tax return for fiscal period
2011 with no assessed tax amount in the understanding that the payment of the
tax for fiscal period 2011 when the Company’s cumulative income tax losses carry
forward amounted to Ps. 258 million, violated recognized constitutional
guarantees and reflected its lack of payment capacity in relation to the taxes
levied on income, such as the minimum presumed income tax. This situation was
duly informed to the AFIP. At the same time, in
accordance with the terms of Section 322 of the CPCCN, the Company filed a
declaratory judgment action (“acción declarativa de certeza”) with a Federal
Court against the Federal Government, AFIP – DGI, with the aim of obtaining a
declaratory judgment as to whether or not the minimum presumed income tax
related to fiscal period 2011 applied in the sense resolved by the CSJN in the
“Hermitage” case on June 15, 2010. In that case, the Supreme Court had declared
that this tax was unconstitutional as it was deemed confiscatory. Subsequently, the
Court of Original Jurisdiction in Contentious and Administrative Federal Matters
No. 7 rejected the action requested by the Company, which decision was ratified
by the Court of Appeals. Faced with this
situation, and in order to avoid possible attachments or prohibitions to dispose
of property that could affect the normal development of its activities for the
provision of the public service, the Company decided to rectify the minimum
presumed income tax return for fiscal period 2011 and adhere to the easy payment
plan implemented by AFIP General Resolution No. 3,451. On November 19, 2015,
by means of administrative proceedings DJ/36/14 initiated by the AFIP, the
Company was accused of and fined for the filing of an inaccurate minimum
presumed income tax return for fiscal period 2011. On December 30, 2015,
the Company filed a post-judgment motion for reversal with the tax authority,
requesting that the administrative proceedings be revoked, the fine imposed be
annulled and the respective records be filed. Additionally, and as
provided for in Law No. 27,260, the fines and other penalties related to
substantive obligations accrued as of May 31, 2016 will be automatically waived
by operation of the law unless they become final at the date on which the
referred to Law came into effect, or the main obligation had been settled as of
that date.


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DIVIDENDS Under Argentine
corporations’ law, declaration and payment of annual dividends, to the extent
the distribution of available earnings complies with the requirements of
applicable Argentine corporate law, is determined by our shareholders at the
annual ordinary shareholders’ meeting. Generally, but not necessarily, the board
of directors makes a recommendation with respect to the payment of dividends.
Edenor has not declared or paid any dividends since August 14, 2001. Amount available for
distribution Dividends may be
lawfully declared and paid only out of our retained earnings stated in our
yearly financial statements prepared in accordance with IFRS and CNV regulations
and approved by the annual ordinary shareholders’ meeting. According to Argentine
Corporations Law and our by-laws we are required to maintain a legal reserve of
20% of our outstanding capital stock. The legal reserve is not available for
distribution to shareholders. Under Argentine corporations’ law and our by-laws,
our yearly net income (as adjusted to reflect changes in prior results) is
allocated in the following order:
 (i)   
to comply with the legal reserve requirement; (ii)   to
pay the accrued fees of the members of our board of directors and supervisory
committee; (iii)  to pay any
amounts owed to our employees under the “Bonos de Participación para el
Personal” (which are bonds issued to our employees according to the provisions
of our by-laws, that entitle each holder to a pro rata portion of 0.5% of our
earnings, after payment of taxes); (iv)  for
voluntary or contingent reserves, as may be resolved from time to time by our
shareholders at the annual ordinary shareholders’ meeting; and (v)  
remainder of the net income for the year may be distributed as dividends on
common shares or as otherwise decided by our shareholders at the annual ordinary
shareholders’ meeting. Our board of directors
submits our financial statements for the preceding fiscal year, together with
reports thereon by the supervisory committee, at the annual ordinary
shareholders’ meeting for approval. Within four months of the end of each fiscal
year, an ordinary shareholders’ meeting must be held to approve the financial
statements and determine the allocation of our net income for such
year. Under applicable CNV
regulations, cash dividends must be paid to shareholders within 30 days of the
shareholders’ meeting approving any dividends. In the case of stock dividends,
shares are required to be delivered within three months of our receipt of notice
of the authorization of the CNV for the public offering of the shares arising
from such dividends. The statute of limitations for any shareholder to receive
dividends declared by the shareholders’ meeting is three years from the date in
which they have been made available to the shareholder. Pursuant to the
Adjustment Agreement, Edenor cannot make any dividend payments without the
ENRE’s prior approval during the period in which Edenor is conducting the
RTI. As from February 2017,
by means of ENRE Resolution No. 63/17, the company has no longer regulatory
restrictions to make dividend payments. Consequently, we could pay dividends out
of our retained earnings, subject to the conditions set forth by the Argentine
Corporations Law. SIGNIFICANT CHANGES Except as identified
in this annual report on Form 20-F, no significant change in our financial
condition has occurred since the date of the most recent audited financial
statements contained in this annual report. See “Item 5. Operating and Financial
Review and Prospects—Factors Affecting our Results of Operations”, “Item 5.
Operating and Financial Review and Prospects - Liquidity and Capital Resources”
and “Item 3. Key Information—Risk factors—Risks Relating to Our Business—Failure
or delay to negotiate further improvements to our tariff structure, including
increases in our distribution margin, and/or to have our tariffs adjusted to
reflect increases in our distribution costs in a timely manner or at all, has
affected our capacity to perform our commercial obligations and could also have
a material adverse effect on our capacity to perform our financial obligations. On March 29, 2017,
through Note No. 125,248 the ENRE established a new methodology for the
calculation of fines and penalties, determining that fines must be valued
according to the VAD values in effect as of the first day of the semester during
which the event giving rise to the penalty occurred or the VAD value in effect
as of the day of occurrence of the event in the case of penalties arising from
specific events. See “Item 4. Business Overview—Fines and penalties”. On March 29, 2017,
EASA approved, ad referendum of the corresponding shareholder resolutions and
the corresponding approvals of the controlling entities, the merger by
absorption between Central Térmica Loma de la Lata S.A. (“CTLL”), as merging and
surviving company, and EASA andIEASA S.A. (“IEASA”) -
EASA’s majority shareholder – as the merged/absorbed companies, which will be
dissolved without liquidation. See “Item 7. Major Shareholders and Related Party
Transactions”.


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On April 18, 2017, our
shareholders’ meeting decided not to approve the capital stock reduction at that
time. However, if our quarterly negative results for the periods ended on March
31, 2017 and June 30, 2017 exceed 100% of our reserves and more than 50% of our
capital stock, our board of directors will convene an extraordinary
shareholder’s meeting to reconsider the capital stock reduction. In 2017, the “long term incentive
plan” addressed to Edenor’s staff was developed with the purpose of keeping and
attracting key staff and promoting the highest performance by offering company’s
shares to the executive and management levels and other key employees. See “Item
7. Major Shareholders and Related Party Transactions”.  Item
9.The Offer and
Listing Since April 26, 2007,
our Class B common shares and the ADSs have been listed on the BASE and the
NYSE, respectively. The ADSs have been issued by the Bank of New York as
depositary. Each ADS represents 20 Class B common shares. Offer and Listing Details The following table
sets forth, for the periods indicated, the annual high and low market prices for
the ADSs on the NYSE and for the shares on the BASE.  Buenos Aires Stock Exchange
    
    New York Stock ExchangePesos per Share
    
    U.S. Dollars per ADSYear
    
    High
    
    Low
    
    High
    
    Low2012
    
    1.65
    
    0.52
    
    7.03
    
    1.712013
    
    3.55
    
    0.67
    
    8.79
    
    1.902014
    
    8.70
    
    2.32
    
    16.47
    
    4.932015
    
    14.55
    
    5.39
    
    19.75
    
    8.902016
    
    22.20
    
    9.38
    
    27.98
    
    13.44
  The
following tables set forth, for the periods indicated, the reported high and low
sales prices for our shares on the BASE and the reported high and low sales
prices for the ADSs on the NYSE.  Buenos Aires Stock Exchange
    
    New York Stock ExchangePesos per Share
    
    U.S. Dollars per ADSPeriod
    
    High
    
    Low
    
    High
    
    Low2015First Quarter
    
    10.90
    
    5.39
    
    18.47
    
    8.90Second Quarter
    
    10.30
    
    8.20
    
    17.43
    
    12.93Third Quarter
    
    9.96
    
    8.00
    
    15.03
    
    11.88Fourth Quarter
    
    14.55
    
    8.40
    
    19.75
    
    12.13


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Buenos Aires Stock Exchange
    
    New York Stock ExchangePesos per Share
    
    U.S. Dollars per ADSPeriod
    
    High
    
    Low
    
    High
    
    Low2016First Quarter
    
    13.30
    
    10.40
    
    18.74
    
    15.09Second Quarter
    
    13.15
    
    9.38
    
    17.51
    
    13.44Third Quarter
    
    14.85
    
    11.40
    
    19.80
    
    15.25Fourth Quarter
    
    22.20
    
    15.00
    
    27.98
    
    19.84
   Buenos Aires Stock Exchange
    
    New York Stock ExchangePesos per Share
    
    U.S. Dollars per ADSPeriod
    
    High
    
    Low
    
    High
    
    Low2016November
    
    22.20
    
    18.75
    
    27.90
    
    24.84December
    
    22.05
    
    19.95
    
    27.98
    
    26.142017January
    
    26.75
    
    21.75
    
    33.79
    
    28.63February
    
    27.95
    
    24.90
    
    34.95
    
    32.32March
    
    26.90
    
    24.40
    
    34.80
    
    31.86April (1)
    
    27.00
    
    26.05
    
    35.37
    
    34.05
  (1)Represents the
corresponding sale prices from April 1 through April 12, 2017.   MARKETS Trading on the Buenos
Aires Stock Exchange Trading in the
Argentine securities market Pursuant to the provisions of the  New Capital Markets Law No. 26,831
(“CML”), the securities market in Argentina is comprised of several markets that
require authorization from the CNV to operate (the “Authorized Markets”),
including the MERVAL, the Mercado Abierto Electrónico S.A., the Mercado
Argentino de Valores S.A., the Mercado de Valores de Córdoba S.A., the Mercado a
Término de Rosario S.A., among others.  The CML allows the Authorized
Markets to delegate certain of their duties and rights as a market to other
qualified entities, as previously authorized by the CNV.  Securities listed
on these Authorized Markets include corporate equity and bonds and government
securities. Prior to the issuance of the CML, the BCBA was the principal and
longest-established exchange in Argentina and is currently the fourth largest
exchange in Latin America in terms of market capitalization.  The BASE
began operating in 1854 and accounted for approximately 95% of all equity
trading in Argentina.  In addition, through separate agreements with the
BASE, all of the securities listed on the BASE could be listed and subsequently
traded on the Córdoba, Rosario, Mendoza, La Plata and Santa Fe exchanges, by
virtue of which many transactions originating on these exchanges related to
BASE-listed companies and were subsequently settled in Buenos Aires.  With
the enactment of the CML, securities listed on the BASE are now listed on the
MERVAL. Although companies may list all of their capital stock on the MERVAL or any
other Authorized Market, controlling shareholders in Argentina typically retain
the majority of a company’s capital stock, resulting in a relatively small
percentage of active trading of the companies’ stock by the public on any such
Authorized Market. Argentina’s equity markets have historically been comprised of individual
investors, though in the past years, there has been an increase in the level of
investment by institutional investors in these markets.  The participation
of theAdministración Nacional de la Seguridad
Social(ANSES) as equity holder in Argentine publicly traded
companies after the elimination of the Argentine pension fund system resulted in
a decrease in the trading of equity in the MERVAL; however, Argentinefondos
comunes de inversión(mutual funds), insurance companies and other
institutional investor continue sustaining tradingin the MERVAL. 
For the year ended December 31, 2016, the MERVAL registered its highest
share-trading volume in the last ten years, Ps. 1.33 billion.


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The MERVAL is the largest Authorized Market in Argentina.  Pursuant to
Resolution No. 17,501, the CNV authorized the MERVAL to operate as an Authorized
Market, and allowed MERVAL to delegate certain of its rights and duties as a
market to the BASE, including without limitation, the right to authorize the
listing of issuers and securities in the MERVAL, and the right to publish the
daily marketgazette. Trading on the MERVAL is conducted either through the traditional auction system
from 11:00 a.m. to 5:00 p.m. on trading days, or through theSistema Integrado de
Negociación Asistida por Computación(Computer-Assisted Integrated
Negotiation System, or SINAC).  SINAC is a computer trading system that
permits trading in both debt and equity securities and is accessed by brokers
directly from workstations located in their offices.  Currently, all
transactions relating to listed negotiable obligations and listed government
securities can be effectuated through SINAC.  In order to control price
volatility, MERVAL imposes a 15-minute suspension on trading when the price of a
security registers a variation in price between 10% and 15% and between 15% and
20%.  Any additional 5% variation in the price of a security will result in
additional 10-minute successive suspension periods. Recently, the shareholders of MERVAL and the BASE entered into a framework
agreement to create Bolsas y Mercados Argentinos S.A. for purposes of operating
a stock market in accordance with the requirements of the newly enacted CML. The
new company will be incorporated as a result of a spin-off of certain assets of
MERVAL relating to its stock market business and shall be further capitalized by
the BASE. Further, theMERVAL and the BASE entered into a memorandum of understanding with (i)
Mercado de Valores de Córdoba S.A., to integrate the stock market of Córdoba
into a federal stock market managed by Bolsas y Mercados Argentinos S.A., and
(ii) several brokers of the city of Santa Fe, Province of Santa Fe, for them to
act within such federal market. On December 29, 2016, the CNV authorized 
Bolsas y Mercados Argentinos S.A. As of the date of this annual report, the MERVAL is still operating as an
Authorized Market, and the BASE is in charge of the rights and duties that
MERVAL delegated to it, as authorized by the CNV. This is expected to change
when Bolsas y Mercados S.A. starts operating. Regulation of the
Argentine securities market The Argentine securities market is regulated and overseen by the CNV, pursuant
to  the CML, as well as stockbroker transactions, market operations, the
public offering of securities, corporate governance matters relating to public
companies and the trading of futures and options.  Argentine insurance
companies are regulated by a government agency, theSuperintendencia de Seguros de la
Nación, whereas financial institutions are regulated primarily
by the Central Bank. In Argentina, debt and equity securities traded on an exchange or the
over-the-counter market must, unless otherwise instructed by their shareholders,
be deposited with Caja de Valores S.A. (“Caja de Valores”), a corporation owned
by the BASE, MERVAL and certain provincial exchanges.  Caja de Valores is
the central securities depositary of Argentina and provides central depositary
facilities, as well as acting as a clearing house for securities trading and as
a transfer and paying agent for securities transactions.  Additionally,
Caja de Valores handles the settlement of securities transactions carried out by
the BASE and operates the computerized exchange information system mentioned
above. Despite a change in the legal framework of Argentine securities trading in the
early 1990s, which permitted the issuance and trading of new financial products
in the Argentine capital markets, including commercial paper, new types of
corporate bonds and futures and options, and significant corporate governance
regulations introduced in 2001 as further described below, there is still a
relatively low level of regulation of the market for Argentine securities and
investors’ activities in such markets and enforcement of them has been extremely
limited.  Because of the limited exposure and regulation in these markets,
there may be less publicly available information about Argentine companies than
is regularly published by or about companies in the United States and certain
other countries.  However, the CNV has taken significant steps to
strengthen disclosure and regulatory standards for the Argentine securitiesmarket, including the
issuance of regulations prohibiting insider trading and requiring insiders to
report on their ownership of securities, with associated penalties for
noncompliance.


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In order to improve Argentine securities market regulation, the Argentine
government issued Decree No. 677/2001 on June 1, 2001, which provided certain
guidelines and provisions relating to capital markets transparency and best
practices.  Decree No. 677/2001 applied to individuals and entities that
participate in the public offering of securities, as well as to stock
exchanges.    Further improvements to Argentine securities market
regulations were introduced in December 2011 when the Argentine Congress enacted
changes to the Argentine Criminal Code to include insider trading as a criminal
offense. Also, on November 29, 2012, the Argentine government enacted the CML
which revoked law No. 17,811 and Decree No. 677/2001. However, CML incorporated
most of the provisions established in those regulations.  In this respect,
the following key provisions of Decree No. 677/2001 have been incorporated into
the CML, among others:  the definition of the term “security”; corporate
governance requirements, including the obligation for publicly-listed companies
to have an audit committee composed of three or more members of the board of
directors (the majority of which must be independent under CNV regulations); the
regulation of market stabilization transactions under certain circumstances;
regulation governing insider trading, market manipulation and securities fraud;
and the regulation of going-private transaction and acquisitions of voting
shares, including controlling stakes in public companies. In addition, the CML
included relevant changes for the modernization and future design of the
Argentine capital markets, such as granting regulatory powers and resources to
the CNV, providing for a mandatory tender offer system and other provisions such
as certain requirements for brokers/dealers and other market participants. 
These provisions were regulated by the CNV through Resolution No. 622/2013 and
further modifications. Before offering securities to the public in Argentina, an issuer must meet
certain requirements established by the CNV with regard to the issuer’s assets,
operating history and management, among others, and only securities for which an
application for a public offering has been approved by the CNV may be listed on
a stock exchange.  Despite these requirements imposed by the CNV, CNV
approval does not imply any kind of certification as to the quality of the
securities or the solvency of the issuer, although issuers of listed securities
are required to file unaudited quarterly financial statements and audited annual
financial statements and various other periodic reports with the CNV and the
stock exchange on which their securities are listed, as well as to report to the
CNV and the relevant stock exchange any event related to the issuer and its
shareholders that may affect materially the value or trading volume of the
securities traded.  Item
10.Additional
Information MEMORANDUM AND ARTICLES OF INCORPORATION Set forth below is a
brief summary of certain significant provisions of our by-laws and Argentine
law. This description does not purport to be complete and is qualified by
reference to our by-laws, which have been filed as an exhibit to this annual
report. For a description of the provisions of our by-laws relating to our board
of directors and statutory auditors, see “Item 6. Directors, Senior Management
and Employees.” Description of Capital
Stock We are a public
service company incorporated on July 21, 1992 as asociedad anónima,a
limited liability corporation, duly incorporated under the laws of Argentina for
a 95−year period and registered on August 3, 1992 with the Public Registry of
Commerce of the City of Buenos Aires under Nr. 7041 of Book 111, Volume A ofSociedades Anónimas. As of the date of this
annual report, our capital stock consists of Ps. 906,455,100, represented by
462,292,111 book-entry Class A common shares, with a par value of one Peso each
and the right to one vote per share, 442,210,385 book-entry Class B common
shares, with a par value of one Peso each and the right to one vote per share,
and 1,952,604 book-entry Class C common shares, with a par value of one Peso
each and the right to one vote per share. Under our by-laws, we are required to
ensure, unless the ENRE approves otherwise, that Class A common shares represent
51% of our outstanding capital stock and that new Class A, Class B and Class C
common shares are issuedpro ratato the percentage of theoutstanding capital
stock represented by them prior to a capital increase, unless a general or
special shareholder’s meeting approves otherwise. All of our outstanding shares
are currently fully paid.


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Our shareholders
authorized a capital increase of 83,161,020 common shares on June 7, 2006
composed of 42,412,120 Class A common shares, 32,432,797 Class B common shares
and 8,316,102 Class C common shares.  Our Class B common shares have been
listed on the BASE since 1995 although they have never been traded effectively
on that exchange or any other market. Holders of Class A common shares may
convert any Class B common shares they may hold into Class A common shares, on a
one−for−one basis, if such conversion would be required to maintain at all times
51% of our outstanding capital stock. Our Class A common shares have been
pledged in favor of the Argentine government to secure our obligations under our
concession and may not be transferred, not even to shareholders of the same
class, without the prior approval of the ENRE. Upon the closing of
our IPO, substantially all our Class C common shares were converted into Class B
common shares.  The rights previously attributable to our Class C common
shares were combined with those attributable to our Class B common shares, and
holders of our remaining Class C common shares vote jointly as a single class
with the holders of our Class B common shares in the election of
directors. Corporate
Purpose Article 4 of our
by-laws establishes that our corporate purpose is to engage in the distribution
and sale of electricity within our concession area. We can also acquire the
capital stock of other electricity distribution companies, subject to regulatory
approval, lease our network to provide power line communication or other voice,
data and image transmission services, and render operating, advisory, training,
maintenance, consultancy, management services and know-how related to the
distribution of electricity both in Argentina and abroad. These activities may
be conducted directly by us or through subsidiaries or affiliates. In addition,
we may act as trustees of trusts created under Argentine law to the extent they
are related to credit facilities granted to vendors and service providers acting
in the distribution and sale of electricity who have guaranties granted by
reciprocal guaranty companies owned by us. Shareholders’
Liability Under Argentine
corporate law, shareholder liability for a company’s losses is limited to the
value of the shareholder’s shareholding in the company. However, shareholders
who have a conflict of interest with the company with respect to certain matters
and who do not abstain from voting on such matters may be held liable for
damages to the company, provided that their votes were involved in the adoption
of the relevant decision. In addition, shareholders who voted in favor of a
resolution that is subsequently declared void by a court as contrary to
Argentine law or the company’s by-laws (or regulations, if any) may be held
jointly and severally liable for damages to the company, other shareholders or
third parties resulting from the resolution. See also “Item 3. Key
Information—Risk factors—Risks related to our ADSs and common shares—Our
shareholders may be subject to liability for certain votes of their
securities.” Appraisal
Rights Whenever our
shareholders approve: ·a merger
or spin-off in which we are not the surviving corporation, unless the acquirer
shares are authorized for public offering or listed on any stock
exchange; ·a
transformation of our corporate legal status; ·a
fundamental change in our by-laws; ·a change
in our domicile outside Argentina; ·a
voluntary termination of the public offering or listing
authorization;


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·a
decision in favor of our continuation upon delisting or cancellation of our
public offering authorization; or ·a total
or partial recapitalization following a mandatory reduction of our capital or
liquidation. Any shareholder that
voted against such action or did not attend the relevant meeting may exercise
appraisal rights, that is, the rights to withdraw as our shareholder and have
its shares cancelled in exchange for the book value of its shares, determined on
the basis of our latest  Statement of Financial Position, or that should
have been prepared, in accordance with Argentine laws and regulations, provided
that such shareholder exercises its appraisal rights within the time frame set
forth below. Appraisal rights must
be exercised within five days following the meeting at which the relevant
resolution was adopted, in the event of a dissenting shareholder that voted
against such resolution, or within 15 days following such meeting in the case of
a dissenting shareholder that did not attend the meeting and who can prove that
it was a shareholder at the date of the meeting.  In the case of mergers or
spin-offs involving an entity authorized to make public offering of its shares,
appraisal rights may not be exercised if the shares to be received as a result
of the transaction are listed in any stock exchange. Appraisal rights are
terminated if the resolution giving rise to such rights is overturned at another
shareholders’ meeting held within 60 days as from the meeting at which the
resolution was adopted. Payment of appraisal
rights must be made within one year of the date of the shareholders’ meeting at
which the resolution was adopted, except where the resolution was to delist our
capital stock, in which case the payment period is reduced to 60 days from the
date of the relevant resolution. Because of the absence
of legal precedents directly on point, there is doubt as to whether holders of
ADSs would be able to exercise appraisal rights either directly or through the
depositary with respect to our Class B common shares represented by
ADSs. Redemption or
Repurchase According to the
Capital Markets Law, a “sociedad anónima”may acquire its own shares,
provided that the public offering and listing thereof has been authorized,
subject to the following terms and conditions and other regulations that may be
issued by the CNV. The conditions are:  (a) the shares to be acquired
should be fully paid; (b) there shall be a resolution of the board of directors
to such effect, (c) the acquisition shall be made out of net profits or
voluntary reserves; (d) the total amount of shares acquired by the company,
including previously acquired shares, shall not exceed 10% of the capital stock
or such lower percentage determined by the CNV. The shares acquired in excess of
such limit shall be disposed of within 90 days after the date of the acquisition
originating the excess. The shares acquired by
the company shall be disposed of by the company within a maximum term of three
years counted as from the date of the acquisition thereof.  Upon
disposition of the shares, the company shall make a preemptive rights offering
of such shares. The offer is not mandatory if the shares are issued in
connection with a compensation plan or program for the company’s employees or if
the shares are distributed among all shareholders in proportion to their
shareholding.  If shareholders do not exercise in whole or in part, their
preemptive rights, the sale shall be made in a stock exchange. In 2008, we acquired
9,412,500 Class B treasury shares with a nominal value of Ps. 1. The amount
disbursed to acquire these shares totaled Ps. 6.1 million, which was deducted
from unappropriated retained earnings of the equity attributable to the owners
of the Company at that date. At the date of this annual report, these shares are
held as “treasury stock”. We are entitled to reissue these shares at a future
date. On November 18, 2014,
we held the general annual meeting which resolved by majority of votes to extend
for another three years the term for holding the treasury shares acquired within
the scope of Section 68 of Law No. 17,811 (text consolidated by Decree No.
677/01). All the shares issued have been fully paid-in.


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Preemptive and
Accretion Rights Under Argentine law,
shareholders of any given class of common shares have preemptive rights, on apro
ratabasis, to subscribe shares of the same class owned by them, and accretion
rights, on apro ratabasis, to subscribe additional
shares of its class or other classes of shares not subscribed by other
shareholders of the same class. Preemptive rights and accretion rights may be
waived only by each shareholder on a case-by-case basis. Pursuant to the
Argentine Corporations Law, in exceptional cases and on a case by case basis
when required for the best interest of the relevant company, its shareholders at
an extraordinary meeting with a special majority may decide to limit or suspend
preemptive rights, provided that the resolution is included in the meeting’s
agenda and the shares to be issued are paid in kind or are issued to cancel
preexisting obligations. In the event of a
capital increase, our by-laws provide that holders of Class A, Class B and Class
C common shares have preemptive rights, on apro ratabasis, to subscribe
new Class A, Class B or Class C common shares, as the case may be, in order to
maintain theirpro ratainterest in our capital stock,
unless otherwise decided at our general or extraordinary shareholders’ meeting.
The holders of our Class A common shares, in any capital increase, must exercise
their preemptive rights to maintain at least 51% of our capital stock
outstanding after giving effect to the capital increase, unless otherwise
authorized by the ENRE or to the extent any other legal mechanism is used to
secure the 51% ownership of our capital stock.  In order for the
participant employees of the PPP to participate in such an offering, all of our
Class C common shares (including shares of PPP participants who will not
participate in such an offering) shall be converted into Class B common
shares. Pursuant to Argentine
law, if approved by an extraordinary shareholders’ meeting, companies authorized
to make a public offering of their securities may shorten the period during
which preemptive rights may be exercised from 30 to 10 days following the
publication of the offering in the Argentine Official Gazette and a newspaper of
wide circulation in Argentina. Preemptive rights are exercisable following such
publication (which must be made for three days) for a period of 30 days,
provided the period is not reduced in the manner described above. Shareholders who have
exercised their preemptive rights have the right to exercise accretion rights,
on apro ratabasis, with respect to any
unsubscribed shares. Shares not subscribed by shareholders by virtue of
preemptive or accretion rights may be offered to third parties.  EASA and
certain of our selling shareholders have assigned their preemptive and accretion
rights to the international underwriters. Holders of ADSs may be restricted in
their ability to exercise preemptive rights if a prospectus under the Securities
Act relating thereto has not been filed or is not effective or an exemption is
not available. Voting
Rights Under our by-laws,
each class of common shares entitles its holder to one vote per share at any
meeting of our shareholders.  Under Argentine corporations’ law, a
shareholder is required to abstain from voting any resolution in which his
direct or indirect interest conflicts with that of, or is different from, the
company. In the event that such shareholder votes on such resolution, and such
resolution would not have been approved without such shareholder’s vote, the
resolution may be declared void by a court and such shareholder may be held
liable for damages to the company, other shareholders and third
parties. Registration
Requirements of Foreign Companies Holding Class B Shares Under Argentine
regulations, foreign companies that hold shares directly (and not indirectly
through ADSs) in an Argentine company must register with theInspección General de
Justicia(the City of Buenos Aires Public Registry of Commerce)
to exercise certain shareholder rights, including voting rights. The
registration requires the filing of certain corporate and accounting documents
in order to demonstrate that the foreign shareholder is not a special purpose
vehicle organized solely to conduct business in Argentina that it is entitled to
conduct business in its place of incorporation and meets certain foreign assets
requirements.


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Liquidation
Rights In case of liquidation
or dissolution, our assets will be applied to satisfy our outstanding
liabilities and then be proportionally distributed among holders of our common
stock without distinction of classes. Ordinary and
Extraordinary Shareholders’ Meetings Shareholders’ meetings
may be either ordinary meetings or extraordinary. We are required to convene and
hold an ordinary meeting of shareholders within four months of the close of each
fiscal year to consider the matters specified in the first two paragraphs of
Section 234 of the Argentine Corporations Law, such as the approval of our
financial statements, allocation of net income for such fiscal year, approval of
the reports of the board of directors and the statutory audit committee and
election, performance and remuneration of directors and members of the statutory
audit committee. In addition, pursuant to the Capital Markets Law, at an
ordinary shareholders’ meetings, our shareholders must consider (i) the
disposition of, or creation of any lien over, our assets as long as such
decision has not been performed under the ordinary course of our business and
(ii) the execution of administration or management agreements and whether to
approve any agreement by virtue of which the assets or services provided to us
are paid partially or totally with a percentage of our income, results or
earnings, if the payment is material when measured against the volume of the
ordinary course of business and our shareholders’ equity. Other matters which
may be considered at an ordinary meeting convened and held at any time include
the responsibility of directors and members of the statutory audit committee,
capital increases and the issuance of certain corporate bonds. Extraordinary
shareholders’ meetings may be called at any time to consider matters beyond the
authority of an ordinary meeting including, without limitations, the amendment
of our by-laws, issuance of debentures, early dissolution, merger, spin off,
reduction of capital stock and redemption of shares, transformation from one
type of entity to another, appointment, removal and retribution of the
liquidators and limitation or suspension of shareholders’ preemptive
rights. Special Shareholders
Meetings of Classes of Shares In the event a
shareholder’s meeting is held to adopt any resolution affecting the rights of a
class of shares, the consent or ratification of shareholders of that class is
required and a special shareholder’s meeting shall be held. The special
shareholder’s meetings shall be governed by the rules provided for the ordinary
shareholder’s meetings. Notices of
Meetings Notices of
shareholders’ meetings are governed by the provisions of Argentine Corporations
Law. Furthermore, notice of shareholders’ meetings must be published for five
days in the Official Gazette, in an Argentine newspaper of wide circulation and
in the bulletin of the BASE, at least 20 but not more than 45 days prior to the
date on which the meeting is to be held. Such notice must include information
regarding the type of meeting to be held, the date, time and place of such
meeting and the agenda. If quorum is not available at such meeting, a notice for
a second meeting, which must be held within 30 days of the date on which the
first meeting was called, must be published for three days, at least eight days
before the date of the second meeting. The above−described notices of
shareholders’ meetings may be held simultaneously for the second meeting to be
held on the same day as the first meeting, only in the case of ordinary meetings
and special shareholder’s meetings of a relevant class of shares. Shareholders’
meetings may be validly held without notice if all shares of our outstanding
capital stock are present and resolutions are adopted by unanimous vote of
shares entitled to vote. Quorum and Voting
Requirements The quorum for
ordinary meetings of shareholders on first call is a majority of the shares
entitled to vote, and action may be taken by the affirmative vote of an absolute
majority of the shares present that are entitled to vote on such action. If a
quorum is not available at the first meeting a second meeting may be held at
which action may be taken by the holders of an absolute majority of the shares
present, regardless of the number of such shares. The quorum for an
extraordinary shareholders’ meeting on first call is 70% of the shares entitled
to vote, and if such quorum is not available, a second meeting may be held, for
which the quorum is 35% of the shares entitled to vote.


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Action may be taken at
extraordinary shareholders’ meetings by the affirmative vote of an absolute
majority of shares present that are entitled to vote on such action, except
that:  the approval of a majority of shares with voting rights (for these
purposes non−voting preferred shares shall have voting rights), without
application of multiple votes, is required at both the first and second meeting
for:  (i) the transfer of our domicile outside Argentina, (ii) a
fundamental change of the corporate purpose set forth in our bylaws, (iii) our
anticipated dissolution, (iv) the total or partial redemption of shares, or (v)
the transformation of our corporate legal status, in which cases resolutions
shall be adopted by the affirmative vote of the majority of shares with the
right to vote. Preferred shares will be entitled to one vote in these
circumstances. Moreover, pursuant to our by-laws, the extension of the company’s
duration, the withdrawal from public offering or delisting, the total or partial
recapitalization, the merger or spin-off (including if we are the surviving
entity) or the termination of the concession agreement for the distribution and
sale of electricity, on first and second calls, shall be taken by the
affirmative vote of shares representing at least 80% of the outstanding shares
entitled to vote, whether present or not at the shareholder’s meeting, without
application of multiple votes, if applicable. An amendment to our by-laws
requires the prior approval of the ENRE. Shareholder’s meetings shall approve
amendments “ad-referendum” of the ENRE. Shareholders’ meetings
may be called by the board of directors or the members of the statutory audit
committee whenever required by law or whenever they deem it necessary. Also, the
board or the members of the statutory audit committee are required to call
shareholders’ meetings upon the request of shareholders representing an
aggregate of at least five percent of our outstanding capital stock in which
case the meeting must take place within 40 days of such shareholders’ request.
If the board or the statutory audit committee fails to call a meeting following
such a request, a meeting may be ordered by the CNV or by the courts. In order
to attend a meeting, a shareholder must also deposit with us a certificate of
book-entry shares registered in its name and issued byCaja de Valores S.A.at
least three business days prior to the date on which the meeting is to be held.
If so entitled to attend a meeting, a shareholder may be represented by proxy.
Proxies may not be granted to our board, members of the statutory audit
committee, officers or employees. Election of
Directors Our board of directors
must have 12 acting directors and the number of alternate directors that the
shareholders may resolve in a general annual ordinary meeting or at a class
annual ordinary meeting, such number not to exceed the number of acting
directors. All directors are elected to serve for one fiscal year. Holders of
Class A common shares are entitled to elect, at a general annual ordinary
meeting or at an annual ordinary meeting of Class A holders 7 directors, two of
which must be independent in accordance with CNV regulations and our by-laws.
Holders of Class B common shares are entitled to elect, at a general annual
ordinary meeting or at an annual ordinary meeting of Class B holders, 4
directors one of which must also be independent in accordance with CNV
regulations and our by-laws. Holders of Class C common shares are entitled to
elect, at a general annual ordinary meeting or at an annual ordinary meeting of
Class C holders 1 director until the percentage of our capital stock represented
by Class C common shares decreases below 6% at which moment holders of Class C
common shares will be required to vote together with holders of Class B common
shares to elect, as a common class, 5 directors.  Upon the closing of the
Argentine offering (to the extent consummated), substantially all Class C common
shares will have been converted into Class B common shares and  a nominal
amount of Class C common shares will remain outstanding.  Accordingly, any
rights previously attributable to the Class C common shares will have been
combined with those attributable to the Class B common shares, and holders of
the remaining Class C common shares will vote jointly as a single class with the
holders of Class B common shares in the election of directors. Form and
Transfer Our current capital
stock is represented by book-entry shares. Our shareholders are required to hold
their shares through book-entries directly made byCaja de Valoresin the stock registry
of the company carried byCaja de Valoresor through book-entries with
brokers, banks and other entities approved by the CNV that have accounts withCaja
de Valores, or with the participants of theCaja de
Valores.Caja de Valoresis in charge of maintaining a
stock registry on our behalf based on information received from shareholders
that chose to hold their shares directly by registration on the stock registry
of the company and from participants of theCaja de Valores, and in accordance
with Argentine law only those holders listed in the stock registry either
directly or through participants of theCaja de Valoreswill be recognized as
shareholders. Shares held by participants of theCaja de Valores -have the same rights
as shares recorded in our shareholders’ register.


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MATERIAL CONTRACTS We are party to
various contracts in the ordinary course of business. For a discussion of the
agreements relating to (i) our acquisition of Emdersa and Aeseba and (ii) the
divestiture of Aeseba and the subsidiaries of Emdersa, see “Item 4. Information
on the Company—History and Development of the Company.” EXCHANGE CONTROLS In January 2002, the  Argentine Congress issued the
Public Emergency Law and declared a state of public emergency in respect of its
social, economic, administrative, financial and foreign exchange matters,
authorizing the Argentine government to establish a system to determine the
foreign exchange rate between the Peso and foreign currencies and to issue
foreign exchange-related rules and regulations.  On February 8, 2002,
through Decree No. 260/2002, the Argentine government established (i) the MULC
through which all foreign exchange transactions in foreign currency must be
conducted, and (ii) that foreign exchange transactions in foreign currency must
be conducted at the foreign exchange rate to be freely agreed upon among
contracting parties, subject to the requirements and regulations imposed by the
Central Bank.  A summary of the main regulations is set forth below. On June 9, 2005, through Decree No. 616/2005, the
Argentine government mandated that (i) all inflows of funds into the local
foreign exchange market arising from foreign debts incurred by residents
(including both individuals and legal entities in the Argentine private sector),
other than those concerning foreign trade financing and primary issuances of
debt securities offered to the public and listed on self-regulated markets, and
(ii) all inflows of funds by non-residents channeled through the MULC and
intended to be held in local currency for acquiring all types of financial
assets or liabilities in the financial or non-financial private sector (except
for foreign direct investments and primary issuances of debt securities and
shares offered to the public and listed on self-regulated markets), as well as
investments in securities issued by the public sector and acquired in secondary
markets, had to meet the following requirements: (a) such inflows of funds could
only be transferred outside the local foreign exchange market at the expiration
of a term of 365 calendar days from the date of settlement of such funds into
Pesos; (b) the proceeds of such inflows of funds had to be credited to an
account in the local banking system; (c) a non-transferable and
non-interest-bearing deposit for 30% of the amount of the transaction had to be
kept in Argentina for a period of 365 calendar days, in accordance with the
terms and conditions set forth in the applicable regulations (the “Deposit”);
and (d) the Deposit had to be denominated in U.S. Dollars and held in Argentine
financial institutions, and it may not be used to guarantee or serve as
collateral for any type of credit transactions. The requirements of Decree No.
616/2005 were subsequently eased. On December 16, 2015,
following the election of President Macri, the newly appointed Central Bank
authorities issued Communication “A” 5,850, which lifted many of the existing
restrictions and, among other things, established free access to the MULC to
purchase foreign currency for general purposes without requiring the Central
Bank’s or the AFIP’s prior authorization and eliminated the requirement of the
mandatory deposit of 30% of certain funds remitted to Argentina. Although these recent
changes to the Argentine government’s foreign exchange policies allow all
individuals free access to the local foreign exchange market, certain
restrictions remain, including the following: ·any
proceeds from the sale of foreign currency in the local exchange market that
exceeds the equivalent of U.S.$2,500 per month must be credited to a checking or
savings account in Pesos at a domestic financial institution; and ·although
the requirement of mandatory inflow and settlement of funds resulting from
foreign indebtedness transactions is no longer in effect, the transfer and sale
of funds in the local foreign exchange market will be necessary to make any
payments of principal or interest through the local foreign exchange
market. The Argentine
government may, in the future, impose additional controls on the foreign
exchange market and on capital flows from and into Argentina, in response to
capital flight or depreciation of the Peso.  These restrictions may have a
negative effect on the Argentine economy and our business if imposed in an
economic environment where access to local capital is limited.


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Money
Laundering On April 13, 2000, the Argentine Congress passed Law No.
25,246, as amended by Laws No. 26,087, 26,119,  26,268 and 26,683 (the
“Money Laundering Law”), which establishes an administrative criminal system and
supersedes various sections of the Argentine Penal Code relating to money
laundering.  The Money Laundering Law defines money laundering as a crime,
stating that a crime is committed whenever a person converts, transfers,
manages, sells, encumbers, or otherwise uses money, or any other assets,
connected with a crime in which that person has not participated, with the
possible result that the original or substituted assets may appear to be of a
legitimate origin, provided the amount of money or value of the relevant assets
exceeds Ps. 300,000, whether such amount results from one or more
transactions. In addition, the Money Laundering Law created the
Financial Information Unit, which is in charge of the handling and transmission
of information in order to prevent the laundering of assets originating
from: ·Crimes
related to illegal trafficking and commercialization of narcotics (Law No.
23,737); ·Crimes
related to arms trafficking (Law No. 22,415); ·Crimes
related to the activities of an illegal association as defined in Article 210
bis of the –Argentine Penal Code; ·Illegal
acts committed by illegal associations (Article 210 of the Argentine Penal Code)
organized to commit crimes with political or racial objectives; ·Crimes of
fraud against the Public Administration (Article 174, Section 5 of the Argentine
Penal Code); ·Crimes
against the Public Administration under Chapters VI, VII, IX and IX bis of Title
XI of Book Two of the Argentine Penal Code; ·Crimes of
underage prostitution and child pornography under Articles 125, 125 bis, 127 bis
and 128 of the Argentine Penal Code; and ·Crimes
related to terrorism financing (Article 213quarterof the Penal
Code). Argentina’s Money Laundering Law, like other international
money laundering laws, does not designate sole responsibility to the Argentine
government for the monitoring of these criminal activities, but rather also
delegates certain obligations to various private sector entities (including us)
such as banks, stockbrokers, stock market entities and insurance
companies.  These obligations essentially consist of information gathering
functions, such as: ·obtaining
from clients documents that indisputably prove the identity, legal status,
domicile and other information, to accomplish any type of intended
activity; ·reporting
any suspicious activity or operation; and ·keeping
any monitoring activities in connection with a proceeding pursuant to the Money
Laundering Law confidential from both clients and third parties. In addition, Central Bank regulations require that
Argentine banks undertake certain minimum procedures to prevent money
laundering.  CNV regulations also require that the issuers and traders of
publicly traded securities in Argentina and those persons participating in
financial trusts and common investment funds subject to the CNV’s control comply
with certain obligations and requirements relating to money laundering
prevention and to the suppression of the financing of terrorism. Financial entities
must inform theUnidad de Información Financiera(“UIF”) about any
suspicious or unusual transaction, or transactions lacking economical or legal
justification, or being unnecessarily complex.  The Central Bank publishes
a list of “non-cooperating” jurisdictions. The UIF has regulated the duty to
report through Resolution No. 229/2011. In addition, it has establishedguidelines and
internal procedures for unusual or suspicious transactions which must be
implemented by financial institutions and other entities.


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CNV regulations
provide that entities involved in the public offering of securities (other than
issuers), including, among others, underwriters of any primary issuance of
securities, must comply with the standards set by the UIF. In particular, they
must comply with the obligation regarding customer identification and required
information, record-keeping, precautions to be taken to report suspicious
operations, policies and procedures to prevent money laundering and terrorism
financing. With respect to issuers (such as us), CNV regulations provide that
any entity performing significant capital contributions or loans must be
identified, whether or not a shareholder at the time of the contributions, and
must meet the requirements for general participants in the public offering of
securities, provided in the CNV regulations and the UIF regulations, especially
with regards to the identification of such persons and to the origin and
legality of the funds and loans provided. On June 1, 2011 the
Argentine Congress adopted law No. 26,683. Pursuant to such law, money
laundering is now an autonomous crime and self-money laundering is also
punished.  The law also extended the reporting obligations to certain
private sector parties which were not obliged before, and also extended from 30
to 150 days the lapse of time within which certain private entities are required
to report suspicious activities or operations, in order to permit those entities
to analyze transactions and operations in more detail before reporting them to
the relevant authorities.  Taxation The following summary
contains a description of the principal Argentine and U.S. federal income tax
consequences of the acquisition, ownership and disposition of common shares or
ADSs, but it does not purport to be a comprehensive description of all the tax
considerations that may be relevant to a decision to purchase common shares or
ADSs.  The summary is based upon the tax laws of Argentina and regulations
thereunder and on the tax laws of the United States and regulations thereunder
as in effect on the date hereof, which are subject to change.  Investors
should consult their own tax advisors as to the tax consequences of the
acquisition, ownership and disposition of common shares or ADSs. Although there is at
present no income tax treaty between Argentina and the United States, the tax
authorities of the two countries have had discussions that may culminate in such
a treaty.  No assurance can be given, however, as to whether or when a
treaty will enter into force or how it will affect the U.S. holders of common
shares or ADSs. Argentine Tax
Considerations The following
discussion is a summary of the material Argentine tax considerations relating to
the purchase, ownership and disposition of our Class B common shares or
ADSs. Dividends
Tax Dividends paid on our
class B common shares or ADSs to individuals or undivided estates domiciled in
Argentina and non-resident persons (whether individuals or legal entities) are
subject to income tax at a 10% rate as a single and final payment (except for
dividends paid out in the form of shares or quotas);  additionally, such
dividends paid in excess of our taxable accumulated income at the previous
fiscal period are subject to withholding at the rate of 35% in respect of the
excess portion of the dividends paid.If applicable, the 10%
withholding will apply on the amount resulting from subtracting the 35%
withholding from the dividends or earnings distribution amount.Both the 10% and the
35% withholdings are subject to the limits set forth by Double Taxation Treaties
in force. Class B Capital Gains
Tax Resident individuals. The Income Tax Reform
introduced by Act No. 26,893 provided for the taxability of resident
individuals’ income resulting from the disposition of shares not listed on stock
exchanges or securities markets as authorized by the CNV, irrespective of the
frequency or regularity of such operations.This income is subject in all
cases to the 15% tax rate.


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Foreign beneficiaries. Pursuant to the
previously mentioned Income Tax Reform, all income resulting from the purchase
and sale, exchange or other disposition of shares earned by foreign
beneficiaries will be subject to the income tax, whether or not they are listed
on stock exchanges or securities markets and/or have an authorization for public
offering, or if they do not meet such requirements.A13.5% effective income tax
withholding rate will apply to foreign individual and legal entities. Local entities. Capital gains obtained
by Argentine entities in general, entities organized or incorporated under
Argentine law, certain traders and intermediaries, local branches of non
Argentine entities, sole proprietorships and individuals carrying on certain
commercial activities in Argentina derived from the sale, exchange or other
disposition of our class B common shares or ADSs are subject to income tax at
the rate of 35%.  Losses arising from the sale of our class B common shares
or ADSs can be applied to offset such income. Personal Assets
Tax Argentine entities,
such as us, have to pay the personal assets tax corresponding to Argentine and
foreign individuals and foreign entities for the holding of our shares at
December 31 of each year.  The applicable tax rate is 0.5% and is levied on
the equity value, or the book value, of the shares arising from the last balance
sheet.  Pursuant to the Personal Assets Tax Law, the Argentine company is
entitled to seek reimbursement of such paid tax from the applicable Argentine
individuals and/or foreign shareholders or by withholding dividend
payments. Value Added
Tax The sale, exchange or
other disposition of our Class B common shares or ADSs and the distribution of
dividends are exempted from the value added tax. Transfer
Taxes The sale, exchange or
other disposition of our Class B common shares or ADSs is not subject to
transfer taxes. Stamp
Taxes Stamp taxes may apply
in the City of Buenos Aires and in certain Argentine provinces in case transfer
of our Class B common shares or ADSs is performed or executed in such
jurisdictions by means of written agreements. Transfer of our Class B common
shares is exempted from stamp tax in the City of Buenos Aires. Tax on credits and
debits on bank accounts Money amounts paid
through bank checking accounts in Argentine banks are subject to a 0.6% tax
levied on credits, and a 0.6% tax levied on debits. In certain cases, an
increased rate of 1.2% and a reduced rate of 0.075% may apply. Any payments
deposited in saving accounts are exempt, in principle, from this tax. The tax is
withheld by the banking institution. The movement of funds
in some special checking accounts is exempt from this tax (Central Bank
Communication “A” 3250), when such accounts have been created in the name of
foreign legal entities, and to such an extent they are solely used to make
financial investments in Argentina (see Section 10, paragraph (s), of the annex
to Executive Decree No. 380/2001). The owners of
bank accounts on which the tax is levied at 0.6% and 1.2% rates may compute 34%
and 17%, respectively, of the amounts paid under this tax on amounts credited to
their accounts as a payment on account of income tax, presumed minimum income
tax and/or the special contribution or cooperative capital.


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Other
Taxes There are no Argentine
inheritance or succession taxes applicable to the ownership, transfer or
disposition of our Class B common shares or ADSs. In addition, neither the
minimum presumed income tax nor any local gross turnover tax is applicable to
the ownership, transfer or disposition of our Class B common shares or
ADSs. Tax
Treaties Argentina has signed
tax treaties for the avoidance of double taxation with Australia, Belgium,
Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the
Netherlands, Norway, Russia, Sweden and Switzerland. There is currently no tax
treaty or convention in effect between Argentina and the United States. It is
not clear when, if ever, a treaty will be ratified or entered into effect. As a
result, the Argentine tax consequences described in this section will apply,
without modification, to a holder of our Class B common shares or ADSs that is a
U.S. resident. Foreign shareholders located in certain jurisdictions with a tax
treaty in force with Argentina may be exempted from the payment of the personal
asset tax. UnitedStatesFederalIncomeTaxConsiderations This summary describes
certain U.S. federal income tax consequences for a U.S. holder (as defined
below) of acquiring, owning, and disposing of ADSs. This summary applies to a
holder only if such holder holds the ADSs as capital assets for tax purposes.
This summary does not address the Medicare tax on net investment income and does
not apply to investors that are members of a class of holders subject to special
rules, such as: ·a dealer in securities
or currencies; ·a trader in securities
that elects to use a mark-to-market method of accounting for securities
holdings; ·a bank; ·a life insurance
company; ·a tax-exempt
organization; ·an entity treated as a
partnership for U.S. federal income tax purposes, or a partner
therein; ·a person that holds
ADSs that are a hedge or that are hedged against interest rate or currency
risks; ·a person that holds
ADSs as part of a straddle or conversion transaction for tax
purposes; ·a person who is liable
for the alternative minimum tax; ·a person whose
functional currency for U.S. tax purposes is not the U.S. Dollar; or ·a person that owns or
is deemed to own 10% or more of any class of our stock. This summary is based
on the Internal Revenue Code of 1986, as amended, its legislative history,
existing and proposed regulations promulgated thereunder, published rulings and
court decisions, all as currently in effect. These laws are subject to change,
possibly on a retroactive basis. Investors should consult their own tax advisors
concerning the consequences of purchasing, owning, and disposing of ADSs in
their particular circumstances, including the possible application of state,
local, non-U.S. or other tax laws. For purposes of this summary, an investor is
a “U.S. holder” if such investor is a beneficial owner of an ADS and
is: ·a citizen or resident
of the United States; ·a U.S. domestic
corporation; or


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·otherwise subject to
U.S. federal income tax on a net income basis with respect to income from the
ADS. In general, if an
investor is the beneficial owner of ADSs, such investor will be treated as the
beneficial owner of the common stock represented by those ADSs for U.S. federal
income tax purposes, and no gain or loss will be recognized if such investor
exchanges an ADS for the common stock represented by that ADS. Dividends The gross amount of
distributions that investors receive (prior to deduction of Argentine taxes)
generally will be subject to U.S. federal income taxation as foreign source
dividend income, to the extent paid out of our current or accumulated earnings
and profits, as determined under U.S. federal income tax principles. Dividends
paid in Argentine Pesos will be included in an investor's income in a U.S.
Dollar amount calculated by reference to the exchange rate in effect on the date
of the depositary's receipt of the dividend, regardless of whether the payment
is in fact converted into U.S. Dollars. A U.S. holder will have a tax basis in
such Pesos for U.S. federal income tax purposes equal to the U.S. Dollar value
on the date of such receipt. Any subsequent gain or loss in respect of such
Pesos arising from exchange rate fluctuations will be ordinary income or loss
and will be treated as income from U.S. sources for foreign tax credit purposes.
If such a dividend is converted into U.S. Dollars on the date of receipt,
investors generally should not be required to recognize foreign currency gain or
loss in respect of the dividend income. Subject to certain exceptions for
short-term (60 days or less) positions, the U.S. Dollar amount of dividends
received by an individual U.S. holder in respect of ADSs generally will be
subject to taxation at a maximum rate of 20% if the dividends are "qualified
dividends." Dividends paid on the ADSs will be treated as qualified dividends if
(i) the ADSs are readily tradable on an established securities market in the
United States and (ii) we were not, in the year prior to the year in which the
dividend was paid, and are not, in the year in which the dividend is paid, a
passive foreign investment company (a "PFIC"). The ADSs are listed on the New
York Stock Exchange and will qualify as readily tradable on an established
securities market in the United States so long as they are so listed. Based on
our audited financial statements and relevant market and shareholder data, we
believe that we were not treated as a PFIC for U.S. federal income tax purposes
with respect to our 2016 taxable year. In addition, based on our current
expectations regarding the value and nature of our assets, the sources and
nature of our income, and relevant market and shareholder data, we do not
anticipate becoming a PFIC for our 2017 taxable year. Because the common
shares are not themselves listed on a U.S. exchange, dividends received with
respect to the common shares may not be treated as qualified dividends. U.S.
holders of ADSs should consult their own tax advisors regarding the availability
of the reduced dividend tax rate in the light of their own particular
circumstances. Distributions of
additional shares in respect of ADSs that are made as part of a pro-rata
distribution to all of our shareholders generally will not be subject to U.S.
federal income tax. Sale or Other
Disposition Upon a sale or other
disposition of ADSs, an investor will recognize gain or loss for U.S. federal
income tax purposes in an amount equal to the difference between the U.S. Dollar
value of the amount realized and such investor’s tax basis, determined in U.S.
Dollars, in the ADSs. Generally, such gain or loss realized on the sale or other
disposition of ADSs will be treated as U.S. source capital gain or loss, and
will be long-term capital gain or loss if the ADSs were held for more than one
year. The ability to offset capital losses against ordinary income is limited.
Long-term capital gain recognized by an individual U.S. holder generally is
subject to taxation at a reduced rate.


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Foreign Tax Credit
Considerations Investors should
consult their own tax advisors to determine whether they are subject to any
special rules that limit their ability to make effective use of foreign tax
credits. If no such rules apply, investors may claim a credit against their U.S.
federal income tax liability for Argentine taxes withheld from cash dividends on
the ADSs, so long as they have owned the ADSs (and not entered into specified
kinds of hedging transactions) for at least a 16-day period that includes the
ex-dividend date. It is unclear whether the Argentine personal assets tax (as
described in “ - Argentine Tax Considerations”) is treated as an income tax for
U.S. federal income tax purposes. If the Argentine personal assets tax is not
treated as an income tax for U.S. federal income tax purposes, a U.S. holder
would be unable to claim a foreign tax credit for any Argentine personal assets
tax withheld. A U.S. holder may be able to deduct such tax in computing its U.S.
federal income tax liability, subject to applicable limitations.  The
calculation of foreign tax credits and, in the case of a U.S. holder that elects
to deduct foreign taxes, the availability of deductions, involve the application
of complex rules that depend on a U.S. holder’s particular circumstances.
Investors should consult their own tax advisors regarding the creditability or
deductibility of such taxes. U.S. Information
Reporting and Backup Withholding Rules Payments of dividends
and sales proceeds that are made within the United States or through certain
U.S.-related financial intermediaries are subject to information reporting
unless the holder is an exempt recipient and may also be subject to backup
withholding unless the holder (1) provides its taxpayer identification number
and certifies that it is not subject to backup withholding or (2) otherwise
establishes an exemption from backup withholding. Investors may obtain a
refund of any excess amounts withheld under the backup withholding rules by
timely filing the appropriate claim or refund with the Internal Revenue Service
and filing any required information. Specified Foreign
Financial Assets Certain U.S. holders
that own "specified foreign financial assets" with an aggregate value in excess
of USD 50,000 are generally required to file an information statement along with
their tax returns, currently on Form 8938, with respect to such assets.
"Specified foreign financial assets" include any financial accounts held at a
non-U.S. financial institution, as well as securities issued by a non-U.S.
issuer that are not held in accounts maintained by financial institutions.
Higher reporting thresholds apply to certain individuals living abroad and to
certain married individuals. Regulations extend this reporting requirement to
certain entities that are treated as formed or availed of to hold direct or
indirect interests in specified foreign financial assets based on certain
objective criteria. U.S. holders who fail to report the required information
could be subject to substantial penalties. In addition, the statute of
limitations for assessment of tax would be suspended, in whole or part.
Investors should consult their own tax advisors concerning the application of
these rules to their particular circumstances.  Description of American Depositary
Shares American Depositary
Receipts The Bank of New York
is the depositary for the American Depositary Shares, also referred to as
ADSs.  Each ADS represents 20 Class B common shares (or a right to receive
20 Class B common shares) deposited with the principal Buenos Aires office of
Banco Río de la Plata S.A., as custodian for the depositary in Argentina. 
Each ADS will also represent any other securities, cash or other property which
may be held by the depositary.  The depositary’s office at which the ADRs
are administered is located at 101 Barclay Street, 22W, New York, NY
10280. The depositary is
required to keep books at its corporate trust office for the registration of
ADSs and transfers of ADSs which at all reasonable times shall be open for
inspection by the holders of ADSs, provided that such inspection shall not be
for the purpose of communicating with holders in the interest of a business or
object other than the business of Edenor or a matter related to the deposit
agreement or the receipts. Investors hold ADSs
directly either by having an American Depositary Receipt, also referred to as an
ADR, which is a certificate evidencing a specific number of ADSs, registered in
the investor’s name, or by having ADSs registered in the investor’s name in the
Direct Registration System.  Investors also hold ADSs indirectly by holding
a security entitlement in ADSs through the investor’s broker or other financial
institution. If investors hold ADSs directly, they are ADS registered holders.
This description assumes that such investors are ADS registered holders. 
If investors hold the ADSs indirectly, the investors must rely on the procedures
of their broker or other financial institution to assert their rights as ADS
registered holders described in this section.  Investors should consult
with their broker or financial institution to learn what those procedures
are. The Direct
Registration System, or DRS, is a system administered by The Depository Trust
Company, also referred to as DTC, pursuant to which the depositary may register
the ownership of uncertificated ADSs, which ownership shall be evidenced by
periodic statements sent by the depositary to the registered holders of
uncertificated ADSs.


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We do not treat ADS
holders as one of our shareholders and ADS holders do not have shareholder
rights. Argentine law governs shareholder rights. The depositary is the holder
of the common shares underlying the ADSs.  Holders of ADSs have ADS holder
rights. A deposit agreement among us, the depositary, the ADS holder, and the
beneficial owners of ADSs sets out ADS holder rights as well as the rights and
obligations of the depositary. New York law governs the deposit agreement and
the ADSs. The following is a
summary of the material provisions of the deposit agreement. For more complete
information, investors should read the entire deposit agreement and the form of
ADR. Dividends and Other Distributions How will investors
receive dividends and other distributions on the shares? The depositary has
agreed to pay to ADS holders the cash dividends or other distributions it or the
custodian receives on common shares or other deposited securities, after
deducting its fees and expenses described below. ADS holders will receive these
distributions in proportion to the number of common shares your ADSs
represent. Cash The depositary will
convert any cash dividend or other cash distribution we pay on the common shares
into U.S. Dollars; if it can do so on a reasonable basis and can transfer the
U.S. Dollars to the United States. If that is not possible or if any government
approval is needed and cannot be obtained, the deposit agreement allows the
depositary to distribute the foreign currency only to those ADR holders to whom
it is possible to do so. It may hold the foreign currency it cannot convert for
the account of the ADR holders who have not been paid.  It will not invest
the foreign currency and it will not be liable for any interest. Before making a
distribution, the depositary will deduct any withholding taxes that must be
paid.  See “Taxation”.  It will distribute only whole U.S. Dollars and
cents and will round fractional cents to the nearest whole cent.  If the
exchange rates fluctuate during a time when the depositary cannot convert the
foreign currency, holders of ADSs may lose some or all of the value of the
distribution. Shares The depositary may
distribute additional ADSs representing any common shares we distribute as a
dividend or free distribution. The depositary will only distribute whole ADSs.
It will try to sell common shares, in lieu of delivering fractional ADS and
distribute the net proceeds in the same way as it does with cash. The depositary
may also sell a portion of the distributed common shares to pay its fees and
expenses in connection with the distribution. If the depositary does not
distribute additional ADSs, the outstanding ADSs will also represent the new
common shares. Rights to Purchase
Additional Common Shares If we offer holders of
our securities any rights to subscribe for additional common shares or any other
rights, the depositary may make these rights available to holders of ADSs. If
the depositary decides it is not legal and practical to make the rights
available but that it is practical to sell the rights, the depositary will use
reasonable efforts to sell the rights and distribute the proceeds in the same
way as it does with cash. The depositary will allow rights that are not
distributed or sold to lapse. In that case, holders of ADSs will receive no
value for them. If the depositary
makes rights to purchase common shares available to holders of ADSs, it will
exercise the rights and purchase the common shares on their behalf.  The
depositary will then deposit the shares and deliver ADSs to the investor. It
will only exercise rights if the investor pays it the exercise price and any
other charges the rights require the investor to pay. U.S. securities laws
may restrict transfers and cancellation of the ADSs representing common shares
purchased upon exercise of rights. For example, you may not be able to trade
these ADSs freely in the United States.  In this case, the depositary may
deliver restricted depositary shares that have the same terms as the ADSs
described in this section except for changes needed to put the necessary
restrictions in place.


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Other
Distributions The depositary will
send to holders of ADSs anything else we distribute on deposited securities by
any means it thinks is legal, fair and practical. If it cannot make the
distribution in that way, the depositary has a choice.  It may decide to
sell what we distributed and distribute the net proceeds, in the same way as it
does with cash. Or, it may decide to hold what we distributed, in which case
ADSs will also represent the newly distributed property.  However, the
depositary is not required to distribute any securities (other than ADSs) to
holders of ADSs unless it receives satisfactory evidence from us that it is
legal to make that distribution. The depositary may sell a portion of the
distributed property to pay its fees and expenses in connection with the
distribution. The depositary is not
responsible if it decides that it is unlawful or impractical to make a
distribution available to any ADR holders. We have no obligation to register
ADSs, common shares, rights or other securities under the Securities Act. We
also have no obligation to take any other action to permit the distribution of
ADSs, common shares, rights or anything else to ADS holders. This means that
holders of ADSs may not receive the distributions we make on our common shares
or any value for them if it is illegal or impractical for us to make them
available to holders of ADSs. Deposit, Withdrawal and Cancellation How are ADSs
issued? The depositary will
deliver ADSs if the investor or the investor’s broker deposits common shares or
evidence of rights to receive common shares with the custodian. Upon payment of
its fees and expenses and of any taxes or charges, such as stamp taxes or stock
transfer taxes or fees, the depositary will register the appropriate number of
ADSs in the names the investor requests. How do ADS holders
cancel ADSs and obtain shares? If an investor
surrenders ADSs to the depositary, upon payment of the investor’s fees and
expenses and of any taxes or charges, such as stamp taxes or stock transfer
taxes or fees, the depositary will deliver the common shares and any other
deposited securities underlying the surrendered ADSs to the investor or a person
the investor designates at the office of the custodian.  Or, at the
investor’s request, risk and expense, the depositary will deliver the deposited
securities at its office, if feasible. How do ADS holders
interchange between certified ADSs and uncertified ADSs? Investors may
surrender their ADRs to the depositary for the purpose of exchanging their ADR
for uncertificated ADSs.  The depositary will cancel that ADR and will send
to the ADS registered holder a statement confirming that the ADS registered
holder is the registered holder of uncertificated ADSs.  Alternatively,
upon receipt by the depositary of a proper instruction from a registered holder
of uncertificated ADSs requesting the exchange of uncertificated ADSs for
certificated ADSs, the depositary will execute and deliver to the ADS registered
holder an ADR evidencing those ADSs. Voting Rights How do holders ADSs
vote? Holders of ADSs may
instruct the depositary to vote the number of common shares their ADSs
represent.  If we ask for the instructions of the holders of the ADSs, the
depositary will notify the holders of the ADSs of shareholders’ meetings and the
upcoming vote and arrange to deliver our voting materials to the holder of the
ADSs.  Those materials will describe the matters to be voted on and explain
how holders of ADSs may instruct the depositary to vote the shares or other
deposited securities underlying their ADSs as the holder of the ADSs directs by
a specified date.  For instructions to be valid, the depositary must
receive them on or before the date specified. The depositary will
try, as far as practical, subject to Argentine law and the provisions of our
by-laws or similar documents, to vote or to have its agents vote the number of
common shares or other deposited securities represented by the ADSs as the
holder of the ADSs instructs.  Otherwise, the holder of the ADSs will not
be able to exercise their right to vote unless they withdraw the shares
underlying their ADSs.  In the absence of the instruction of the holder of
the ADSs, our company may request the
depositary to vote as we instruct at the corresponding meeting. The holder of the ADSs may otherwise not know about the meeting far enough in advance to withdraw the shares.  We will use our best efforts to request that the depositary notify holders of ADSs of upcoming votes and ask for the instructions of holders of ADSs.


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If we timely ask the depositary to solicit the instructions of holders of ADSs and the depositary does not receive voting instructions from the holder of the ADSs by the specified date, the depositary will consider the holder of the ADSs to have authorized and directed it to vote the number of deposited securities represented by their ADSs in favor of all resolutions proposed by our board of directors or, if not so proposed, to vote in the same manner as the majority of all other shares voted in respect of this resolution.  The depositary will vote as described in the preceding sentence unless we notify the depositary that: ·we do not wish the depositary to vote those deposited securities; ·we think there is substantial shareholder opposition to the particular question; or ·we think the particular question would have an adverse impact on our shareholders.  Fees and Expenses Reclassifications, Recapitalizations and Mergers If we:

   Then:·Change the nominal or par value of our common shares

   ·Reclassify, split up or consolidate any of the deposited securities

   ·Distribute securities on the common shares that are not distributed to the holders of ADSs

   ·Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action

   The cash, shares or other securities received by the depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities.

   The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADRs or ask the holder of ADSs to surrender their outstanding ADRs in exchange for new ADRs identifying the new deposited securities.
  Limitations on Obligations and Liability Limits on Our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADRs The deposit agreement expressly limits our obligations and the obligations of the depositary.  It also limits our liability and the liability of the depositary.  We and the depositary: ·are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith; ·are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement; ·are not liable if either of us exercises discretion permitted under the deposit agreement; ·have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on behalf of holders of ADSs or on behalf of any other party;  and ·may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party.


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In the deposit
agreement, we agree to indemnify the depositary for acting as depositary, except
for losses caused by the depositary’s own negligence or bad faith, and the
depositary agrees to indemnify us for losses resulting from its negligence or
bad faith. Requirements for Depositary Actions Before the depositary
will deliver or register a transfer of an ADR, make a distribution on an ADR, or
permit withdrawal of common shares, the depositary may require: ·payment
of stock transfer or other taxes or other governmental charges and transfer or
registration fees charged by third parties for the transfer of any common shares
or other deposited securities; ·satisfactory proof of the identity and genuineness of any
signature or other information it deems necessary; and ·compliance with regulations it may establish, from time
to time, consistent with the deposit agreement, including presentation of
transfer documents. The depositary may
refuse to deliver ADSs or register transfers of ADSs generally when the transfer
books of the depositary or our transfer books are closed or at any time if the
depositary or we think it advisable to do so. The Right of Holders of ADSs to Receive the Common Shares Underlying their
ADRs Holders of ADSs have
the right to surrender their ADSs and withdraw the underlying common shares at
any time except: When temporary delays
arise because:  (i) the depositary has closed its transfer books or we have
closed our transfer books; (ii) the transfer of common shares is blocked to
permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on
our common shares. When holder of ADSs
seeking to withdraw common shares owe money to pay fees, taxes and similar
charges. When it is necessary
to prohibit withdrawals in order to comply with any laws or governmental
regulations that apply to ADRs or to the withdrawal of common shares or other
deposited securities. This right of
withdrawal may not be limited by any other provision of the deposit
agreement. Pre-Release of ADSs The deposit agreement
permits the depositary to deliver ADSs before deposit of the underlying common
shares.  This is called a Pre-Release of the ADSs. The depositary may also
deliver common shares upon the receipt and cancellation of pre-released ADSs
(even if the ADSs are surrendered before the Pre-Release transaction has been
terminated).  A Pre-Release is terminated as soon as the underlying common
shares are delivered to the Depositary.  The depositary may receive ADSs
instead of common shares to satisfy a Pre-Release. The depositary may
pre-release ADSs only under the following conditions:  (a) before or at the
time of the pre-release, the person to whom the pre-release is being made
represents to the depositary in writing that it or its customer (i) owns the
common shares or ADSs to be deposited; (ii) transfers all beneficial right,
title and interest in such common shares or ADSs, as the case may be, to the
Depositary in its capacity as such and for the benefit of the Beneficial Owners,
and (iii) will not take any action with respect to such common shares or ADSs,
as the case may be, that is inconsistent with the transfer of ownership
(including, without the consent of the Depositary, disposing of common shares or
ADSs, as the case may be, other than in satisfaction of such Pre-Release); (b)
the pre-release is fully collateralized with cash or other collateral that the
depositary considers appropriate; (c) the depositary must be able to terminate
the pre-release on not more than five business days’ notice and (d) Pre-Release
is subject to such further indemnities and credit regulations as the Depositary
deems appropriate.  In addition, the depositary will limit the number of
ADSs that may be outstanding at any time as a result of Pre-Release, although
the depositary may disregard the limit from time to time, if it thinks it is
appropriate to do so.


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Direct Registration System In the deposit
agreement, all parties to the deposit agreement acknowledge that the DRS and
Profile Modification System, or Profile, will apply to uncertificated ADSs upon
acceptance thereof to DRS by DTC.  DRS is the system administered by DTC
pursuant to which the depositary may register the ownership of uncertificated
ADSs, which ownership shall be evidenced by periodic statements sent by the
depositary to the registered holders of uncertificated ADSs.  Profile is a
required feature of DRS which allows a DTC participant, claiming to act on
behalf of a registered holder of ADSs, to direct the depositary to register a
transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the
DTC account of that DTC participant without receipt by the depositary of prior
authorization from the ADS registered holder to register that
transfer. In connection with and
in accordance with the arrangements and procedures relating to DRS/Profile, the
parties to the deposit agreement understand that the depositary will not verify,
determine or otherwise ascertain that the DTC participant, which is claiming to
be acting on behalf of an ADS registered holder in requesting registration of
transfer and delivery described in the paragraph above, has the actual authority
to act on behalf of the ADS registered holder (notwithstanding any requirements
under the Uniform Commercial Code).  In the deposit agreement, the parties
agree that the depositary’s reliance on and compliance with instructions
received by the depositary through the DRS/Profile System and in accordance with
the deposit agreement, shall not constitute negligence or bad faith on the part
of the depositary. Shareholder Communications and Inspection of Register of Holders of
ADSs The holders of ADSs
are holders of deposited securities. As such, the depositary will make available
for inspection by the holders of ADSs at its office all communications that it
receives from us that we make generally available to holders of deposited
securities. The depositary will send holders of ADSs copies of those
communications if we ask it to. Holders of ADSs have a right to inspect the
register of holders of ADSs, but not for the purpose of contacting those holders
about a matter unrelated to our business or the ADSs. Amendment and
Termination We may agree with the
depositary to amend the deposit agreement and the ADRs without the consent of
holders of ADSs for any reason.  If an amendment adds or increases fees or
charges, except for taxes and other governmental charges or expenses of the
depositary for registration fees, facsimile costs, delivery charges or similar
items, or prejudices a substantial right of ADR holders, it will not become
effective for outstanding ADRs until 30 days after the depositary notifies ADR
holders of the amendment. At the time an amendment becomes effective, the
holders of ADSs are considered, by continuing to hold their ADR, to agree to the
amendment and to be bound by the ADRs and the deposit agreement as
amended. The depositary will
terminate the deposit agreement if we ask it to do so. The depositary may also
terminate the deposit agreement if the depositary has told us that it would like
to resign and we have not appointed a new depositary bank within 60 days. In
either case, the depositary must notify the holder of ADSs at least 30 days
before termination. After termination, the
depositary and its agents will do the following under the deposit agreement but
nothing else:  (a) advise the holders of ADSs that the deposit agreement is
terminated, (b) collect distributions on the deposited securities, (c) sell
rights and other property, and (d) deliver common shares and other deposited
securities upon surrenders of ADRs. One year after termination, the depositary
may sell any remaining deposited securities by public or private sale. 
After that, the depositary will hold the money it received on the sale, as well
as any other cash it is holding under the deposit agreement for thepro
ratabenefit of the ADR holders that have not surrendered their ADRs.  It will
not invest the money and has no liability for interest. The depositary’s only
obligations will be to account for the money and other cash. After termination
our only obligations will be to indemnify the depositary and to pay fees and
expenses of the depositary that we agreed to pay. Fees, Expenses and
Payment of Taxes See Item 12.
Description of Securities other than Equity Securities.


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DOCUMENTS ON DISPLAY The materials included
in this annual report on Form 20-F, and exhibits thereto, may be inspected and
copied at the Securities and Exchange Commission’s public reference room in
Washington, D.C. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. The
Securities and Exchange Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports and information statements
and other information regarding us. The reports and information statements and
other information about us can be downloaded from the Securities and Exchange
Commission’s website.  Item
11.Quantitative and Qualitative
Disclosures about Market Risk Market risk generally
represents the risk that losses may occur in the value of financial instruments
as a result of movements in interest rates, foreign currency exchange rates or
commodity prices. We are exposed to changes in financial market conditions in
the normal course of our business due to our use of certain financial
instruments and to our execution of transactions in various foreign
currencies. As of December 31,
2016, we had no material exposure to interest rate risk because all our
outstanding financial debt bore interest at fixed rates. See Note 5.1 of our
financial statements for further information. In addition, we had no material
exposure to commodity price risk, since they represented a minor part of our
operating expenses. Foreign Currency
Risk Our cash and deposits
in U.S.Dollars amounted to U.S.$ 10.2 million as of December 31,
2016. As of December 31,
2016, the potential loss to Edenor that would result from a hypothetical 10%
change in foreign currency exchange rates, after giving effect to the impact of
the change on our assets and liabilities denominated in foreign currency as of
December 31, 2016, was approximately Ps. 283.9 million, primarily due to the
increase in the principal amount of, and debt service payments on, our foreign
currency indebtedness. In 2016, the
devaluation of the Peso with respect to the U.S. Dollar reached approximately
20%.


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Item
12.Description of Securities Other
than Equity Securities Persons depositing
common shares or holders of ADSs will be required to pay certain fees and
expenses, as described in the table below, which the depositary is entitled to
deduct prior to making any cash dividend or other cash distribution on the
deposited shares. Persons
      depositing common shares or ADS holders must pay:
    For:$5.00 (or less) per 100
      ADSs (or portion of 100 ADSs)
    ·Issuance of ADSs, including issuances resulting
      from a distribution of common shares or rights or other
property
      ·Cancellation of ADSs for the purpose of withdrawal,
      including if the deposit agreement terminates$0.02 (or less) per
      ADS
    ·Any
      cash distribution to the holder of the ADSs$0.02 (or less) per ADS per
      year
    ·Depositary servicesA fee equivalent to the fee
      that would be payable if securities distributed to the holder of ADSs had
      been common shares and the shares had been deposited for issuance of ADSs
    ·Distribution of securities distributed to holders
      of deposited securities which are distributed by the depositary to ADR
      holdersRegistration or transfer
      fees
    ·Transfer and registration of common shares on our
      common share register to or from the name of the depositary or its agent
      when the holder of ADSs deposits or withdraw common
  shares.Expenses of the depositary
      in converting foreign currency to U.S. DollarsExpenses of the
      depositary
    ·Cable, telex and facsimile transmissions (when
      expressly provided in the deposit agreement)Taxes and other
      governmental charges the depositary or the custodian have to pay on any
      ADSs or common share underlying ADSs, for example, stock transfer taxes,
      stamp duty or withholding taxesAny charges incurred by the
      depositary or its agents for servicing the deposited
    securities
    ·No
      charges of this type are currently made in the Argentine market
 Reimbursement of
fees The Bank of New York
Mellon, as depositary, reimbursed us for certain expenses relating to our
initial public offering and establishment of our ADR program in 2007. Aside from
that initial payment, we do not receive any reimbursement from the depositary
for expenses we incur that related to the maintenance of the ADS
program. The depositary
collects fees for delivery and surrender of ADSs directly from investors
depositing shares or surrendering ADSs for the purpose of withdrawal or from
intermediaries acting for them. The depositary collects fees related to making
distributions to investors by deducting those fees from the amounts distributed
or by selling a portion of distributable property to pay the fees. The
depositary may collect its annual fee for depositary services by deduction from
cash distributions or by directly billing investors or by charging the
book-entry system accounts of participants acting for them.The depositary may
generally refuse to provide fee-attracting services until its fees for those
services are paid.


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Payment of
taxes The depositary may
deduct the amount of any taxes owed from any payments to the holder of
ADSs.  It may also sell deposited securities, by public or private sale, to
pay any taxes owed. The holder of ADSs will remain liable if the proceeds of the
sale are not enough to pay the taxes. If the depositary sells deposited
securities, it will, if appropriate, reduce the number of ADSs to reflect the
sale and pay to the holder of ADSs any proceeds, or send to the holder of ADSs
any property, remaining after it has paid the taxes.  PART II Item
13.Defaults, Dividend Arrearages and
Delinquencies The economic crisis in
Argentina had a material adverse effect on our operations.  The 2001 and
2002 economic crisis in Argentina had a material adverse effect on our
operations. The devaluation of the Peso caused the Peso value of our U.S.
Dollar-denominated indebtedness to increase significantly, resulting in
significant foreign exchange losses and a significant increase, in Peso terms,
in our debt service requirements. At the same time, our cash flow remained
Peso-denominated and our distribution margins were frozen and pesified by the
Argentine government pursuant to the Public Emergency Law. Moreover, the 2001
and 2002 economic crisis in Argentina had a significant adverse effect on the
overall level of economic activity in Argentina and led to deterioration in the
ability of our customers to pay their bills. These developments caused us to
announce on September 15, 2002 the suspension of principal payments on our
financial debt.  On September 26, 2005, our board of directors decided to
suspend interest payments on our financial debt until the restructuring of this
debt was completed. On January 20, 2006,
we launched a voluntary exchange offer and consent solicitation to the holders
of our then-outstanding financial debt. All of these holders elected to
participate in the restructuring and, as a result, on April 24, 2006, we
exchanged all of our then-outstanding financial debt for three series of
newly-issued notes, which we refer to as the restructuring notes. As of the date
of this annual report, all of the restructuring notes have been repaid and
cancelled. For a description of our debt following the restructuring see “Item
5. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Debt”. Item
14.Material Modifications to the
Rights of Security Holders and Use of Proceeds Use of Proceeds On April 30, 2007, we
completed an initial public offering. We received U.S.$ 57.7 million in net
proceeds from the offering. We did not receive any proceeds from the sale of our
shares and ADSs by our selling shareholders in the offering. We used all of the
net proceeds we received from the offering to repurchase a part of our then
outstanding Fixed Rate Par Notes due 2016 and Discount Notes due 2014 in various
market repurchase transactions during 2007 and to make capital expenditures. Item
15.Controls and Procedures a)Disclosure Controls
and Procedures. Our management has
evaluated, with the participation of our chief executive officer and chief
financial officer, the effectiveness of the design and operation of the
Company’s disclosure controls and procedures pursuant to Rule 13a-15e of the
Securities Exchange Act of 1934 as of December 31, 2016. There are inherent
limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or
overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon that evaluation, management,
including the chief executive officer and chief financial officer concluded that
as of December 31, 2016,the Company’s
disclosure controls and procedures were effective to provide reasonable
assurance that information required to be disclosed by the Company in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the applicable
rules and forms, and that it is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.


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b)Management’s Annual
Report on Internal Control Over Financial Reporting Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934. The company’s internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS. The company’s internal control over financial
reporting includes those policies and procedures that:  i.pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;  ii.provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and  iii.provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements.  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.  Our management
assessed the effectiveness of the company’s internal control over financial
reporting as of December 31, 2016. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO 2013) in Internal Control-Integrated Framework.  Based on
our assessment and those criteria, management believes that the company
maintained effective internal control over financial reporting as of December
31, 2016.  The effectiveness of
the Company ́s internal control over financial reporting as of December 31,
2016 has been
audited by Price Waterhouse & Co. S.R.L., an independent registered public
accounting firm, as stated in their report, which is included herein.  c)AttestationReport of
the Registered Public Accounting Firm Reference is made to
the report of the Price Waterhouse & Co. S.R.L. on page [F-102] of this
annual report. d)Changes in Internal
Control over Financial Reporting There has been no
change in our internal control over financial reporting during 2016 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting. Item
16A.Audit Committee Financial Expert Our board of directors
has determined that Eduardo Llanos, an independent member of our board of
directors, under Argentine law and Rule 10A-3, is an “audit committee financial
expert” as defined in Item 16A of Form 20F under the Securities and Exchange Act
of 1934.  See “Item 6. Directors, Senior Management and
Employees—Directors and Senior Management—Audit Committee”.


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Item 16B.Code of Ethics | Our company adopted a code of ethics in May 1999, which applies to all of our employees, including our principal executive, financial and accounting officers. In 2012 and 2015, we reviewed and updated our code of ethics, and we posted a copy of our revised code of ethics on our website at http://www.edenor.com.ar. Item 16C.Principal Accountant Fees and Services Price Waterhouse & Co. S.R.L. (member firm of PricewaterhouseCoopers network) acted as our independent registered public accounting for the fiscal years ended December 31, 2016, 2015, 2014, 2013 and 2012. The chart below sets forth the services rendered to us by Price Waterhouse & Co. S.R.L. and the fees accrued in the last two years for those services (including related expenses), and breaks down these amounts by category of service in Pesos: Year ended December 31,2016

   

   2015Audit fees

   

   6,835,163

   

   4,458,634Audit-related fees

   

   -

   

   -Tax fees

   

   -

   

   -All other fees

   

   -

   

   -Total

   

   6,835,163

   

   4,458,634
 We have adopted pre-approval policies and procedures under which all audit services provided by our external auditors must be pre-approved by the audit committee as set forth in our internal policies. Any service proposals submitted by external auditors need to be discussed and approved by the audit committee during its meetings, which take place at least four times a year. Once the proposed service is approved, we formalize the engagement of services. The approval of any audit services to be provided by our external auditors is specified in the minutes of our audit committee. Item 16D.Exemptions from the Listing Standards for Audit Committees Not applicable. Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers Neither we nor any affiliated purchaser has engaged in share repurchases during the year ended December 31, 2016. Item 16F.Change in Registrant’s Certifying Accountant Not applicable. Item 16G.Corporate Governance Pursuant to Rule 303A.11 of the Listed Company Manual of the New York Stock Exchange (NYSE), we are required to provide a summary of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards.  Our corporate governance practices are governed by our bylaws, Argentine corporate and securities law (including the Argentine Corporations Law, the Capital Markets Law No. 26,386) and the regulations issued by the Argentine National Securities Commission (Comisión Nacional de Valores), such as the Corporate Governance Code CNV’s General Resolution No. 606/2012 (the “CGC”).


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F.NYSELISTED COMPANY MANUAL SECTION303.A

   G.Edenor’sCorporatePracticesSECTION 303A.01.Independent directors must constitute the majority of a listed company’s board of directors.

   EdenorfollowsArgentinelaw,whichdoesnotrequirethatamajorityoftheboard ofdirectorsbecomprisedofindependentdirectors.ArgentinelawinsteadrequiresthatpubliccompaniesinArgentina haveasufficientnumberofindependentdirectorsto beabletoformanauditcommitteeofatleastthreemembers,themajorityofwhichmustbeindependentpursuanttothecriteriaestablishedbytheCNV.Asofthe date of this annual report,sevenofEdenor’stwelvedirectorsareindependentunderArgentinelawandRule10A-3 oftheSecuritiesExchangeAct of1934,asamended(the“ExchangeAct”).SECTION 303A.02.This rule establishes the standards that determine whether a director qualifies as independent.

   

   It provides that directors cannot qualify as independent unless the board of directors finds them to have no material relationship with the listed company. A number of per se exclusions from independence apply, generally triggered by having a connection, individually or through an immediate family member, to the listed company or to a company that has a material relationship with the listed company as a shareholder, employee, officer, or director of the listed company.

   The CNV’s Regulations, specifically Article 11 of Section III, Chapter III, Title II I, indicate the criteria for establishing independence of a director. They provide that any director who does any of the following is not independent:

   

   (i)Is a member of the board of directors of or employee of any of the shareholders with material holdings2in the company or of other companies whose shareholders have direct or indirect material holdings;

   (ii)works at the company in an employment relationship or worked in an employment relationship at any time in the past 3 years;

   (iii)performs professional services or belongs to a company or professional association that provides such services to the company or its shareholders with material holdings;

   (iv)directly or indirectly has a material holding in the company;

   (v)directly or indirectly sells or supplies goods or services to the company and/or its direct or indirect shareholders with material holdings;

   (vi)is spouse, relative to the fourth degree of consanguinity, or relative to the second degree of affinity of any individuals who would qualify as non-independent if they were members of the management body.

   In addition, Article 4 of Section III, Chapter I, Title XII of the CNV’s Regulations provides that at each election of directors, the non-independence or independence of any candidates proposed at the shareholders’ meeting must be disclosed. Moreover, after the shareholders’ meeting in which directors are appointed, the personal data of the appointed directors and their qualification as independent or non-independent (in the latter case in the form of an affidavit executed by each director) must be disclosed to the CNV and the exchanges where the company has its securities listed.SECTION 303A.03.This rule requires regular scheduled meetings of non-executive directors to increase the involvement and efficiency of such director.

   NNeitherArgentinelaw norEdenor’sbylawsrequirethatanysuchmeetingsbeheld.Edenor Edenor’s board of directors as a whole is responsible for administering and monitoringthecompany’saffairs.UnderArgentinelaw,theboardofdirectorsmayapprovethedelegationofspecificresponsibilitiesto designateddirectorsorexecutivedirectorsand ormanagersoftheCompany.Also,itismandatoryforpubliccompaniestohaveasupervisorycommittee(ComisiónFiscalizadora),whichisresponsibleformonitoringlegalcompliancebytheCompany withArgentinelaw,itsbylawsandshareholders’resolutions.Thesupervisorycommittee,withoutprejudicetotheroleofexternalauditors,isalsorequiredto presenttotheshareholdersattheannualordinarygeneralmeetingawrittenreportonthereasonablenessofthefinancialinformation oftheCompany’sannualreportandthefinancialstatementspresentedtotheshareholdersbyEdenor’sboardofdirectors.Thesupervisorycommitteealsopresentsareporttothe boardofdirectorson Edenor’squarterlyfinancialstatements.Themembersofthesupervisorycommitteearenotdirectorsofthecompany.
  1 Under Argentine law, a “material holding” is defined as any shareholding equivalent to at least 15% of a company’s capital stock.


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SECTION 303A.04.Listed companies must organize an Appointment and Corporate Governance Committee composed entirely of independent directors.

   NNeitherArgentinelaw norEdenor’sbylawsrequirehavinganAppointmentCommitteenoraCorporateGovernanceCommittee. We note, however, that CNV corporate governance rules recommend having rules and procedures relating to the selection of Board members and executive directors.

   Theboardofdirectorsispermittedtoand often doesnominateboardmembercandidatesforconsideration bytheshareholders,whoelectthe boardofdirectors.

   

   Theentireboardofdirectorsisincharge ofoverseeingEdenor’scorporategovernance practices.SECTION 303A.05.Listed companies must organize a Compensation Committee composed entirely of independent directors.

   NeitherArgentinelaw norEdenor’sbylawsrequireto havea“compensationcommittee”and Edenorhasnosuchcommittee. The CNV corporate governance rules recommend issuers to have compensation policies applicable to Board members and corporate managers.

   Edenor’s Audit Committee is required to give an opinion about the reasonableness of a director’s fees and stock option plans (if applicable), as proposed by our board of directors.

   Shareholdersattheannualordinarygeneralmeetingdeterminetheannual compensationtomembersofthe boardofdirectors.

   

   TheCEO ofEdenorsetsthesalaryoftheothermembersoftheseniormanagement.Theboard of directors determines the salary of the CEO.SECTION 303A.06.Listed companies must organize an audit committee that meets the requirements set forth in the Securities Exchange Act of 1934.

   Edenorissubjecttoandincompliancewith

   §303A.06andRule10A-3. Edenor’sauditcommitteeis entirelycomposed of independentmembersofEdenor’sboardofdirectors.SECTION 303A.07.The audit committee must have at least 3 members, all of whom must qualify as independent.

   

   In addition, the audit committee must have written regulations establishing: (i) the purpose of the committee; (ii) the annual assessment of the committee’s performance; and (iii) the committee’s obligations and responsibilities.

   

   Finally, the rule establishes that listed companies must have internal audit functions within their organization in order to assist both the audit committee and the company’s management in matters related to risk and internal control processes.

   Asaforeign privateissuer,Edenorisnotsubjectto §303A.07.Assuch,Edenor’sauditcommitteechartermaynotprovideforeveryoneofthespecificdutiesrequired by§303A.07.

   

   ThedutiesoftheauditcommitteeincludemonitoringEdenor’sinternalcontrol,administrativeandaccountingsystems;supervisingtheapplicationofEdenor’sriskmanagement policies;providingthemarketadequateinformationregardingconflictsofintereststhatmayarisebetween Edenor’scompanyand Edenor’sdirectorsorcontrollingshareholders;renderingopinionsontransactionswithrelated parties;andsupervisingandreportingtoregulatoryauthoritiestheexistenceofanykind ofconflictofinterest.

   

   UnderArgentinelaw,thereisnorequirementrelatedtothefinancialexpertiseofthemembersoftheauditcommittee.However,themembersof Edenor’sauditcommitteehaveextensivecorporateandfinancialexperience.Atleastonememberoftheauditcommitteehassufficientexpertiseasanexternalauditortoberecognized bytheboardof directorsofEdenorasan“auditcommitteefinancialexpert”asdefinedinItem16A ofForm 20F.Inaccordancewith Edenor’sinternalpolicies, Edenor’sauditcommitteemustpre-approveallauditandnon-auditservicesprovided byexternalauditors.


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SECTION 303A.08.The shareholders must be given the opportunity to vote on equity-compensation plans and their material revisions, although there are exceptions to this requirement, such as when these compensation plans serve as labor incentive tools.

   Edenordoesnothaveanyequitycompensation plansandthereforedoesnothaveinplace proceduresforshareholderapprovalofsuchplans.SECTION 303A.09.Listed companies must adopt and disclose their corporate governance guidelines.

   Law No. 26,831 (Capital Market’s Law) requires Edenor to provide governance-related information in the annual reports to the CNV, including information relating to the decision- making organization (corporate governance), the company’s internal control system, norms for director and management compensation, and any other compensation system applying to board members and managers. All relevant information provided by the Company to the CNV is sent through the CNV’s electronic financial reporting database and may be viewed by the public on the CNV website.

   Edenor’sAnnualReport,financialstatementsand pressreleasesmayalso beviewed ontheCompany’sWebsite(www.edenor.com.ar).

   UnderArgentinelaw,theboard’sperformanceisevaluatedattheannualShareholders’Meeting.

   Listed companies must meet the annual disclosure requirements of the CGC. Listed companies must issue a report stating whether and how they follow the recommendations provided by the CGC or explaining the reasons for their failure to adopt such recommendations, either fully or in part, and/or whether they plan to adopt them in the future. This information must appear in their annual report, attached to the financial statements for the relevant fiscal year as a separate exhibit.

   Once filed with the CNV and the exchange markets where the company is listed, the CGC report qualifies as public information.

   Edenor complies with the CGC annual disclosure requirements and fully disclose all corporate governance policies and practices. This information may be viewed on the company’s website at http://www.edenor.com.ar.SECTION 303A.10.Listed companies must adopt and disclose to the market a Code of Ethics and Business Conduct which is applicable to their directors, managers and employees. In addition, any waiver of the provisions contained in this Code in favor of any of the parties that are subject to it must be immediately disclosed.

   Under Argentine law there is no requirement that companies adopt a code of conduct. Nonetheless, our company adopted a code of ethics in 1999, which applies to all of our employees, including our principal executive, financial and accounting officers. In 2012 and 2015 we reviewed and updated our code of ethics.


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SECTION 303A.12(a).The Chief Executive Officer (CEO) of a listed company must certify on an yearly basis that he or she has no knowledge of any violation or default of the corporate governance standards.

   

   Additionally, the CEO must report any default or violation of the corporate governance standards contained in the NYSE LCM by any of the company’s executives to the NYSE immediately.

   

   Finally, listed companies must file an annual statement and updated reports with the NYSE disclosing any changes in the composition of their board of directors or any of the committees described in Section 302A of the NYSE LCM.

   NosimilarobligationexistsunderArgentinelegislation.However,inaccordancewithArgentinelawthedirectorsofacompanymustannuallysubmitforitsshareholders’approvalsuchcompany’sannualreportandfinancialstatementsatsuchcompany’sannualshareholders’meeting.Also, EdenordisclosesmaterialeventsinregulatoryfilingsbothwiththeCNVinArgentinaandwiththeSEC onform6KintheUnitedStates(as“materiality”isunderstoodineachofthoserespectivejurisdictions).UnderapplicablerulesoftheNYSE, EdenorisrequiredtodisclosetotheNYSEcertainchangesinitsauditcommittee,includinganychangethataffectsthecommittee’sindependence.

   

   Edenorissubjecttoandcomplieswith §303A.12(b),totheextentthatitrelatestothesectionsoftheNYSE ListedCompanyManualthatapplytoforeign privateissuers.

   

   Edenor complies with the certification requirements under §303A.12(c).  Item 16 H.Mine Safety Disclosures Not applicable.


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PART III Item 17.Financial Statements The Registrant has responded to Item 18 in lieu of this Item. Item 18.Financial Statements Our financial statements are included in this annual report beginning on page F-1. Item 19.Exhibits Documents filed as exhibits to this annual report: 1.1Estatutos sociales(corporate bylaws) of Empresa Distribuidora y Comercializadora Norte S.A. (English translation) (previously filed as Exhibit 3.1 to Edenor’s Registration Statement on Form F-1 (File No. 333-141894) on April 4, 2007 and incorporated by reference herein.) 2.1          Form of Deposit Agreement among Empresa Distribuidora y Comercializadora Norte S.A., The Bank of New York, as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary Receipts (previously filed as Exhibit 4.1 to Edenor’s Amendment No. 2 to Registration Statement on Form F-1 (File No. 333-141894) on April 20, 2007 and incorporated by reference herein.) 2.2          Indenture dated October 9, 2007, between Empresa Distribuidora y Comercializadora Norte S.A., as Issuer, and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Santander Río S.A., as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina (previously filed as Exhibit 2.3 to Edenor’s Annual Report on Form 20-F (File No. 001-33422) on June 26, 2008 and incorporated by reference herein).  2.3          Registration Rights Agreement, dated October 9, 2007, between Empresa Distribuidora y Comercializadora Norte S.A. and Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as Representatives of the Initial Purchasers (previously filed as Exhibit 2.4 to Edenor’s Annual Report on Form 20-F (File No. 001-33422) on June 26, 2008 and incorporated by reference herein). 2.4          Indenture dated October 25, 2010, between Empresa Distribuidora y Comercializadora Norte S.A., as Issuer, and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Santander Río S.A., as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina (previously filed as Exhibit 2.5 to Edenor’s Annual Report on Form 20-F (File No. 001-33422) on June 6, 2011, and incorporated by reference herein). 12.1Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 12.2Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 13.1Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


159

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SIGNATURE The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. Empresa Distribuidora y Comercializadora Norte Sociedad AnónimaBy: /s/ Leandro Carlos MonteroName: Leandro Carlos MonteroTitle: Chief Financial Officer
 Date: April 28, 2017


160

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****

Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.)

Management’s Report on Internal Control Over Financial Reporting



Edenor S.A.’s Management is responsible for establishing and maintaining adequate internal control over financial reporting for Edenor S.A. as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Our internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRS”). Internal control over financial reporting includes those policies and procedures that:

· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Edenor S.A.;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures of Edenor S.A. are being made only in accordance with authorizations of Management and directors of Edenor S.A.; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Edenor S.A.’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of Edenor S.A.’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. Based on such evaluation, Management concluded that the Edenor S.A.’s internal control over financial reporting was effective as of December 31, 2016. The effectiveness of Edenor S.A.’s internal control over financial reporting as of December 31, 2016 has been audited by Price Waterhouse & Co S.R.L., an independent registered public accounting firm, as stated in their report which accompanies this report.



Date: March 8, 2017








/s/ RicardoTorresName: Ricardo Torres Title: Chief Executive Officer





Date:March 8, 2017





/s/ Leandro Carlos MonteroName: Leandro Carlos Montero  Title: Chief Financial Officer

















161

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Report of Independent Registered Public Accounting Firm   To the Board of Directors and Shareholders of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.)  In our opinion, the accompanying statements of financial position and the related statements of comprehensive (loss) income, of changes in equity and of cash flows present fairly, in all material respects, the financial position of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.) (hereinafter, Edenor S.A.) as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included inthe accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.  Without qualifying our opinion, we draw the attention to the situation explained in Note 1 to the financial statements in relation to the economic and financial situation of Edenor S.A.  A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


162

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Autonomous City of Buenos Aires, March 8, 2017.    /s/ PRICE WATERHOUSE & CO. S.R.L.R. Sergio Cravero (Partner)





163

---





CONTENTS Legal Information

   1Statement of Financial Position

   2Statement of Comprehensive Income

   4Statement of Changes in Equity

   6Statement of Cash Flows

   7Notes to the Financial Statements:1 |

   General information

   92 |

   Regulatory framework

   113 |

   Basis of preparation

   264 |

   Accounting policies

   275 |

   Financial risk management

   416 |

   Critical accounting estimates and judgments

   497 |

   Interest in joint venture

   528 |

   Contingencies and lawsuits

   529 |

   Property, plant and equipment

   5810 |

   Financial instruments

   6011 |

   Other receivables

   6312 |

   Trade receivables

   6413 |

   Financial assets at fair value through profit or loss

   6514 |

   Financial assets atamortized cost

   6515 |

   Inventories

   6516 |

   Cash and cash equivalents

   6617 |

   Share capital and additional paid-in capital

   6618 |

   Allocation of profits

   6719 |

   Trade payables

   6820 |

   Other payables

   6821 |

   Deferred revenue

   6922 |

   Borrowings

   6923 |

   Salaries and social security taxes payable

   7124 |

   Benefit plans

   7225 |

   Income tax and tax on minimum presumed income / Deferred tax

   7426 |

   Income tax / Tax on minimum presumed incomepayable, net

   7627 |

   Tax liabilities

   7728 |

   Leasings

   7729 |

   Provisions

   7830 |

   Revenue from sales

   7831 |

   Expenses by nature

   7932 |

   Other operating expense, net

   8033 |

   Net financial expense

   8034 |

   Basic and diluted (loss) earnings per share

   8135 |

   Related-party transactions

   8136 |

   Trust for the Management of Electric Power Transmission Works

   8437 |

   Electric works Arrangement - Agreement for the supply of electric power to Mitre and Sarmiento railway lines

   8538 |

   Construction works - San Miguel and San Martín Transformer Centers

   8539 |

   Agreementfor the execution of works -La Matanza Municipality

   8540 |

   Request for Removal of facilities to carry out expansion works in Jorge Newbery Airport Southern Head Station

   8641 |

   Merger process– EMDERSA HOLDING S.A.

   8642 |

   Safekeeping of documentation

   8643 |

   Ordinary and Extraordinary Shareholders’ Meeting

   8744 |

   Share-based Compensation Plan

   8745 |

   Events after the reporting period

   87Independent Auditors’ Report


164

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Glossary of Terms  The following definitions, which are not technical ones, will help readers understand some of the terms used in the text of the notes to the Company’s Financial Statements.  Terms

   DefinitionsAFIP

   Federal Administration of Public RevenueANAC

   National Civil Aviation AdministrationANSES

   National Social Security AdministrationAySA

   Agua y Saneamientos Argentinos S.A.BICE

   Banco de Inversión y Comercio ExteriorBNA

   Banco de la Nación ArgentinaBST

   Banco de Servicios y TransaccionesCAMMESA

   Compañía Administradora del Mercado Mayorista Eléctrico S.A.

   (the company in charge of the regulation and operation of the wholesale electricity market)CNV

   National Securities CommissionCPCCN

   Federal Code of Civil and Commercial Procedure of ArgentinaCSJN

   Supreme Court of Justice of ArgentinaCYCSA

   Comunicaciones y Consumos S.A.DGI

   General Tax BureauEASA

   Electricidad Argentina S.A.Edenor S.A

   Empresa Distribuidora y Comercializadora Norte S.A.Edesur S.A

   Empresa Distribuidora Sur S.A.ENARSA

   Energía Argentina S.A.ENRE

   National Regulatory Authority for the Distribution of ElectricityFNEE

   National Fund of ElectricityFOCEDE

   Fund for Electric Power Distribution Expansion and Consolidation WorksFOTAE

   Trust for the Management of Electricity Power Transmission WorksIAS

   International Accounting StandardsIASB

   International Accounting Standards BoardIFRIC

   International Financial Reporting Interpretations CommitteeIFRS

   International Financial Reporting StandardsIGJ

   Argentine governmental regulatory agency of corporationsLVFVD

   Sale Settlements with Maturity Dates to be DeterminedMEM

   Wholesale Electricity MarketMEyFP

   Economy and Public Finance MinistryMEyM

   Energy and Mining MinistryMMC

   Cost Monitoring MechanismMPFIPyS

   Ministry of Federal Planning, Public Investment and ServicesOSV

   Orígenes Seguros de Vida S.A.PEN

   Federal Executive PowerPESA

   Pampa Energía S.A.PISA

   Pampa Inversiones S.A.PUREE

   Program for the Rational Use of Electric PowerPYSSA

   Préstamos y Servicios S.A.RTI

   Tariff Structure ReviewSACME

   S.A. Centro de Movimiento de EnergíaSE

   Energy SecretariatSEC

   Securities and Exchange CommissionSEGBA

   Servicios Eléctricos del Gran Buenos Aires S.A.SUSS

   Single Social Security SystemTERI

   Study, Review and Inspection of Works in Public Spaces FeesVAD

   Distribution Added ValueVRD

   Debt Securities


165

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Legal Information  Corporate name:Empresa Distribuidora y Comercializadora Norte S.A. Legal address:6363 Del Libertador Ave., City of Buenos Aires  Main business:Distribution and sale of electricity in the area and under the terms of the concession agreement by which this public service is regulated.  Date of registration with the Public Registry of Commerce: -of the Articles of Incorporation: August 3, 1992 -of the last amendment to the By-laws: May 28, 2007  Term of the Corporation:August3, 2087  Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations):1,559,940  Parent company:Electricidad Argentina S.A. (EASA)  Legal address:Maipú 1, City of Buenos Aires  Main business of the parent company:Investment in Edenor S.A.’s Class “A” shares and rendering of technical advisory, management, sales, technology transfer and other services related to the distribution of electricity.  Interest held by the parent company in capital stock and votes:51.54%   CAPITAL STRUCTURE AS OF DECEMBER 31, 2016 (amounts stated in pesos)  Class of shares

   

   Subscribed and

   paid-in

   (See Note 17)Common, book-entry shares, face value 1

   and 1 vote per shareClass A

   

   462,292,111Class B (1)

   

   442,210,385Class C (2)

   

   1,952,604906,455,100
  (1)Includes 9,412,500 treasury shares as of December 31, 2016 and 2015. (2)Relates to the Employee Stock Ownership Program Class C Shares that have not been transferred.


F-1

---





Edenor S.A. Statement of
Financial Position as of
December 31, 2016 and 2015 (Stated in
thousands of pesos)    Note
    
    12.31.16
    
    12.31.15ASSETSNon-current assetsProperty, plant and
      equipment
    9
    
    11,196,990
    
    8,885,789Interest in joint
      ventures
    7
    
    435
    
    433Deferred tax
      asset
    25
    
    1,019,018
    
    50,048Other
      receivables
    11
    
    50,492
    
    153,777Financial
      assets at amortized cost
    14
    
    44,429
    
    -Financial
      assets at fair value through profit or loss
    13
    
    -
    
    23,567Total non-current
      assets
    
    
    12,311,364
    
    9,113,614Current
      assetsInventories
    15
    
    287,810
    
    134,867Other
      receivables
    11
    
    179,308
    
    1,079,860Trade
      receivables
    12
    
    3,901,060
    
    963,005Financial
      assets at fair value through profit or loss
    13
    
    1,993,915
    
    1,560,434Financial
      assets at amortized cost
    14
    
    1,511
    
    -Derivative financial
      instruments
    
    
    -
    
    197Cash and cash
      equivalents
    16
    
    258,562
    
    128,952Total current
      assets
    
    
    6,622,166
    
    3,867,315TOTAL
      ASSETS
    
    
    18,933,530
    
    12,980,929


F-2

---





Edenor S.A. Statement of
Financial Position as of
December 31, 2016 and 2015(continued) (Stated in
thousands of pesos)   Note
    
    12.31.16
    
    12.31.15EQUITYShare
      capital and reserve attributable to the owners of the CompanyShare
      capital
    17
    
    897,043
    
    897,043Adjustment to share
      capital
    
    
    397,716
    
    397,716Additional paid-in
      capital
    
    
    3,452
    
    3,452Treasury
      stock
    17
    
    9,412
    
    9,412Adjustment to
      treasury stock
    
    
    10,347
    
    10,347Legal
      reserve
    
    
    73,275
    
    -Opcional
      reserve
    
    
    176,061
    
    -Other
      reserve
    
    
    20,346
    
    -Other comprehensive
      loss
    
    
    (37,172)
    
    (42,253)Accumulated
      losses
    
    
    (1,188,648)
    
    249,336TOTAL
      EQUITY
    
    
    361,832
    
    1,525,053LIABILITIESNon-current
      liabilitiesTrade
      payables
    19
    
    232,912
    
    224,966Other
      payables
    20
    
    5,103,326
    
    2,391,878Borrowings
    22
    
    2,769,599
    
    2,460,975Deferred
      revenue
    21
    
    199,990
    
    153,816Salaries
      and social security payable
    23
    
    94,317
    
    80,039Benefit
      plans
    24
    
    266,087
    
    204,386Tax
      liabilities
    27
    
    680
    
    1,922Provisions
    29
    
    341,357
    
    259,573Total non-current
      liabilities
    
    
    9,008,268
    
    5,777,555Current
      liabilitiesTrade
      payables
    19
    
    6,821,061
    
    4,475,427Other
      payables
    20
    
    134,759
    
    151,674Borrowings
    22
    
    53,684
    
    48,798Deferred
      revenue
    21
    
    764
    
    764Salaries
      and social security payable
    23
    
    1,032,187
    
    733,131Benefit
      plans
    24
    
    33,370
    
    28,291Tax
      payable
    26
    
    155,205
    
    16,332Tax
      liabilities
    27
    
    1,244,488
    
    153,415Provisions
    29
    
    87,912
    
    70,489Total current
      liabilities
    
    
    9,563,430
    
    5,678,321TOTAL
      LIABILITIES
    
    
    18,571,698
    
    11,455,876TOTAL LIABILITIES
      AND EQUITY
    
    
    18,933,530
    
    12,980,929
    The accompanying
notes are an integral part of the Financial Statements.


F-3

---





Edenor S.A.Statement of Comprehensive
(Loss)/Incomefor the years ended December 31, 2016, 2015 and
2014(Stated in thousands of pesos)
  Note
    
    12.31.16
    
    12.31.15
    
    12.31.14Revenue
    30
    
    13,079,609
    
    3,802,162
    
    3,598,376Electric power
      purchases
    
    
    (6,060,333)
    
    (2,021,981)
    
    (1,878,088)Subtotal
    
    
    7,019,276
    
    1,780,181
    
    1,720,288Transmission
      and distribution expenses
    31
    
    (6,147,214)
    
    (3,153,664)
    
    (2,825,062)Gross
      loss
    
    
    872,062
    
    (1,373,483)
    
    (1,104,774)Selling
      expenses
    31
    
    (1,616,696)
    
    (832,806)
    
    (657,909)Administrative
      expenses
    31
    
    (1,162,325)
    
    (706,091)
    
    (496,762)Other operating
      expense, net
    32
    
    (376,020)
    
    (422,546)
    
    (265,505)Gain from
      interest in joint ventures
    
    
    2
    
    1
    
    5Operating loss before
      income from provisional remedies, higer costs recognition and SE
      Resolution 32/15
    
    
    (2,282,977)
    
    (3,334,925)
    
    (2,524,945)Recognition of
      income – provisional remedies – MEyM Note 2016-04484723
    2c)VIII
    
    1,125,617
    
    -
    
    -Income
      recognition on account of the RTI - SE Resolution 32/15
    2c)VII
    
    419,732
    
    5,025,114
    
    -Higher cost recognition –
      SE Resolution 250/13 and subsequent Notes
    2c)IV
    
    81,512
    
    551,498
    
    2,271,927Operating (loss) profit
    
    
    (656,116)
    
    2,241,687
    
    (253,018)Financial
    income
    33
    
    196,754
    
    96,225
    
    235,534Financial
      expenses
    33
    
    (1,444,882)
    
    (450,016)
    
    (592,013)Other financial
      results
    33
    
    (27,466)
    
    (561,723)
    
    (324,575)Net financial
      expense
    
    
    (1,275,594)
    
    (915,514)
    
    (681,054)(Loss) profit before
      taxes
    
    
    (1,931,710)
    
    1,326,173
    
    (934,072)Income tax
    25
    
    743,062
    
    (183,730)
    
    154,356(Loss) profit for the
      period
    
    
    (1,188,648)
    
    1,142,443
    
    (779,716)


F-4

---





Edenor
S.A. Statement of
Comprehensive (Loss)/Income for the years ended
December 31, 2016, 2015 and 2014(continued) (Stated in thousands of
pesos)  Note
    
    12.31.16
    
    12.31.15
    
    12.31.14Other comprehensive
      incomeItems that will not be
      reclassified to profit or lossResults related to benefit
      plans
    24
    
    7,817
    
    (3,678)
    
    (17,823)Tax effect of actuarial
      loss profit on benefit plans
    
    
    (2,736)
    
    1,287
    
    6,238Total other comprehensive
      results
    
    
    5,081
    
    (2,391)
    
    (11,585)Comprehensive income for
      the year attributable to:Owners of the parent
    
    
    (1,183,567)
    
    1,140,052
    
    (791,301)Non-controlling
      interests
    
    
    -
    
    -
    
    -Comprehensive (loss) profit
      for the year
    
    
    (1,183,567)
    
    1,140,052
    
    (791,301)Basic and diluted earnings
      (loss) profit per share:Basic and diluted earnings
      (loss) profit per share
    34
    
    (1.33)
    
    1.27
    
    (0.87)
    The accompanying
notes are an integral part of the Financial Statements.


F-5

---





Edenor S.A.Statement ofChanges in Equityfor the years
ended December 31, 2016, 2015 and 2014(Stated in
thousands of pesos)
   Share capital
    
    Adjustment to share capital
    
    Treasury stock
    
    Adjust- ment to treasury stock
    
    Additional paid-in capital
    
    Legal reserve
    
    Opcional reserve
    
    Other reserve
    
    Other comprehesiveloss
    
    Accumulated deficit
    
    Total equityBalance at
      December 31, 2013
    897,043
    
    397,716
    
    9,412
    
    10,347
    
    3,452
    
    -
    
    -
    
    -
    
    (28,277)
    
    (113,391)
    
    1,176,302Loss for the
      year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    
    
    
    
    (779,716)
    
    (779,716)Other
      comprehensive loss for the year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    
    
    (11,585)
    
    
    
    (11,585)Balance at
      December 31, 2014
    897,043
    
    397,716
    
    9,412
    
    10,347
    
    3,452
    
    -
    
    -
    
    -
    
    (39,862)
    
    (893,107)
    
    385,001Profit for
      the year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    
    
    -
    
    1,142,443
    
    1,142,443Other
      comprehensive loss for the year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    
    
    (2,391)
    
    -
    
    (2,391)Balance at
      December 31, 2015
    897,043
    
    397,716
    
    9,412
    
    10,347
    
    3,452
    
    -
    
    -
    
    -
    
    (42,253)
    
    249,336
    
    1,525,053Ordinary and
      Extraordinary Shareholders’ Meeting held on 04.28.2016 (Note
    43)
    -
    
    -
    
    -
    
    -
    
    -
    
    73,275
    
    176,061
    
    -
    
    -
    
    (249,336)
    
    -Other reserve
      constitution - Share-bases compensation plan (Note 44)
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    20,346
    
    -
    
    -
    
    20,346Loss for the
      year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    (1,188,648)
    
    (1,188,648)Other
      comprehensive results for the year
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    -
    
    
    
    5,081
    
    -
    
    5,081Balance at
      December 31, 2016
    897,043
    
    397,716
    
    9,412
    
    10,347
    
    3,452
    
    73,275
    
    176,061
    
    20,346
    
    (37,172)
    
    (1,188,648)
    
    361,832
   The accompanying notes are an integral part of the
Financial Statements.


F-6

---





Edenor S.A.Statement ofCash Flowsfor the years
ended December 31, 2016, 2015 and 2014(Stated in
thousands of pesos)
  12.31.15
    
    12.31.14Note
    
    12.31.16
    
    (restated)
    
    (restated)Cash flows from
      operating activities(Loss) Profit for the
      period
    
    
    (1,188,648)
    
    1,142,443
    
    (779,716)Adjustments to reconcile
      net (loss) profit to net cash flows from operating
      activities:Depreciation of property,
      plants and equipments
    31
    
    351,582
    
    281,407
    
    237,639Loss on disposals of
      property, plants and equipments
    32
    
    40,466
    
    3,513
    
    959Net accrued
      interest
    33
    
    1,244,911
    
    333,674
    
    340,970Exchange
      difference
    33
    
    417,708
    
    894,773
    
    427,896Income tax
    25
    
    (743,062)
    
    183,730
    
    (154,356)Allowance for the
      impairment of trade and other receivables, net of recovery
    31
    
    227,692
    
    24,084
    
    19,692Adjustment to present value
      of receivables
    33
    
    (2,884)
    
    (5,387)
    
    (8,128)Provision for
      contingencies
    32
    
    151,047
    
    226,449
    
    75,417Other expenses -
      FOCEDE
    32
    
    14,653
    
    59,563
    
    97,701Changes in fair value of
      financial assets
    33
    
    (404,173)
    
    (323,610)
    
    (67,591)Accrual of benefit
      plans
    31
    
    105,405
    
    89,254
    
    51,425Gain from interest in joint
      ventures
    
    
    (2)
    
    (1)
    
    (5)Higher cost recognition –
      SE Resolution 250/13 and subsequent Notes
    
    
    (81,512)
    
    (551,498)
    
    (2,271,927)Income
      recognition on account of the RTI - SE Resolution 32/15
    
    
    (419,732)
    
    (495,516)
    
    -Recognition of
      income – provisional remedies – MEyM Note 2016-04484723
    2c)VIII
    
    (1,125,617)
    
    -
    
    -Net gain from the
      repurchase of Corporate Bonds
    33
    
    (42)
    
    -
    
    (44,388)Income from
      non-reimbursable customer contributions
    32
    
    (764)
    
    (764)
    
    -Other reserve
      constitution - Share bases compensation plan
    44
    
    20,346
    
    -
    
    -Changes in operating assets
      and liabilities:(Increase) in trade
      receivables
    
    
    (2,973,819)
    
    (40,557)
    
    (55,276)Decrease in other
      receivables
    
    
    1,063,480
    
    375,620
    
    (134,708)(Increase) in
      inventories
    
    
    (152,943)
    
    (60,898)
    
    9,883Increase in deferred
      revenue
    
    
    46,938
    
    45,490
    
    76,187Increase in trade
      payables
    
    
    2,780,940
    
    911,880
    
    2,446,523Increase in salaries and
      social security payable
    
    
    313,334
    
    139,663
    
    226,689Decrease in benefit
      plans
    
    
    (30,809)
    
    (21,177)
    
    (11,017)Increase (Decrease) in tax
      liabilities
    
    
    990,223
    
    (140,955)
    
    (28,704)Increase
      (Decrease) in other payables
    
    
    2,338,437
    
    (62,125)
    
    262,316Funds obtained
      from the program for the rational use of electric power (PUREE) (SE
      Resolution No. 1037/07)
    
    
    -
    
    25,612
    
    482,929Decrease in
      provisions
    29
    
    (51,840)
    
    (32,550)
    
    (33,042)Net cash flows
      generated by operating activities
    
    
    2,931,315
    
    3,002,117
    
    1,167,368


F-7

---





Edenor S.A.Statement ofCash Flowsfor the years
ended December 31, 2016, 2015 and 2014(continued)(Stated in thousands of pesos)
  12.31.15
    
    12.31.14Note
    
    12.31.16
    
    (restated)
    
    (restated)Cash flows from
      investing activitiesPayment of
      property, plants and equipments
    
    
    (2,474,600)
    
    (2,095,532)
    
    (1,400,140)Net (payment
      for) collection of purchase / sale of financial assets at fair
      value
    
    
    89,120
    
    (1,012,037)
    
    (64,625)Collection of
      receivables from sale of subsidiaries
    
    
    11,975
    
    4,272
    
    2,976Net cash flows
      used in investing activities
    
    
    (2,373,505)
    
    (3,103,297)
    
    (1,461,789)Cash flows from
      financing activitiesPayment of
      principal on loans
    
    
    -
    
    -
    
    (424)Payment of
      interest on loans
    22
    
    (265,950)
    
    (172,923)
    
    (155,251)Proceeds from
      PP&E mutuum
    
    
    -
    
    -
    
    100,000Proceeds from
      Salaries mutuum
    
    
    -
    
    214,894
    
    280,622Repurchase of
      corporate notes
    22
    
    (4,866)
    
    -
    
    -Payment of
      redemption on corporate notes
    22
    
    (221,846)
    
    -
    
    -Net cash flows
      (used in) / generated by financing activities
    
    
    (492,662)
    
    41,971
    
    224,947Increase
      (Decrease) in cash and cash equivalents
    
    
    65,148
    
    (59,209)
    
    (69,474)Cash and cash
      equivalents at the beginning of year
    16
    
    128,952
    
    179,080
    
    243,473Exchange
      differences in cash and cash equivalents
    
    
    64,462
    
    9,081
    
    5,081Increase (Decrease) in cash
      and cash equivalents
    
    
    65,148
    
    (59,209)
    
    (69,474)Cash and cash
      equivalents at the end of the period
    16
    
    258,562
    
    128,952
    
    179,080Supplemental
      cash flows informationNon-cash
      activitiesFinancial costs
      capitalized in property, plants and equipments
    9
    
    (189,656)
    
    (255,932)
    
    (123,861)Acquisitions of
      property, plant and equipment through increased trade
    payables
    
    
    (205,756)
    
    (166,763)
    
    (144,833)(Decrease) from offsetting
      of PUREE-related liability against receivables (SE Resolution 250/13,
      subsequent Notes and SE Resolution 32/15)
    
    
    -
    
    10,619
    
    (574,010)Increase from offsetting of
      liability with CAMMESA for electricity purchases against receivables (SE
      Resolution 250/13, subsequent Notes and SE Resolution 32/15)
    
    
    -
    
    158,081
    
    (2,218,424)Decrease from
      offset of other liabilities with CAMMESA for loans for consumption
      (Mutuums) granted for higher salary costs (SE Resolution
    32/15)
    
    
    -
    
    (495,516)
    
    -Amounts received from
      CAMMESA through FOCEDE
    
    
    -
    
    723,616
    
    100,000Decrease in
      financial assets at fair value from repurchase of Corporate
      Bonds
    
    
    -
    
    -
    
    91,638Acquisitions of
      property, plant and equipment through increased FOTAE debt
    -
    
    -
    
    (32,939)
   The accompanying
notes are an integral part of the Financial Statements.


F-8

---





Note 1 |General
information  History and
development of the Company  Edenor S.A. was
organized on July 21, 1992 by Decree No. 714/92 in connection with the
privatization and concession process of the distribution and sale of electric
power carried out by SEGBA.  By means of an
International Public Bidding, the PEN awarded 51% of the Company’s capital
stock, represented by the Class "A" shares, to the bid made by EASA, the parent
company of Edenor S.A. The award as well as the transfer contract were approved
on August 24, 1992 by Executive Order No. 1,507/92 of the PEN.  On September 1,
1992, EASA took over the operations of Edenor S.A.  The corporate
purpose of Edenor S.A. is to engage in the distribution and sale of electricity
within the concession area. Furthermore, among other activities, the Company may
subscribe or acquire shares of other electricity distribution companies, subject
to the approval of the regulatory agency, assign the use of the network to
provide electricity transmission or other voice, data and image transmission
services, and render advisory, training, maintenance, consulting, and management
services and know-how related to the distribution of electricity both in
Argentina and abroad. These activities may be conducted directly by Edenor S.A.
or through subsidiaries or related companies. In addition, the Company may act
as trustee of trusts created under Argentine laws.  The Company’s
economic and financial situation  In fiscal year
2016, the Company recorded, as it did in fiscal years 2012, 2013 and 2014,
negative operating and net results, thus deteriorating once again its economic
and financial situation, which had temporarily improved in 2015 as a consequence
of the issuance by the SE of Resolution No. 32/15, which addressed the need for
the adjustment of the distribution companies’ resources and considered that the
adoption of urgent and interim measures was necessary in order to maintain the
normal provision of the public service, object of the concession.  This imbalance
in the business equation was caused by the delay in the compliance with certain
obligations under the Adjustment Agreement, especially with regard to both the
recognition of the semiannual rate adjustments resulting from the MMC, and the
carrying out of the RTI, mitigated by the adoption of certain interim
measures.  In line with the
above-described situation, on December 16, 2015, the PEN issued Executive Order
No. 134, which declared the state of emergency in the country’s electricity
sector and authorized the MEyM to implement a plan of action for the generation,
transmission and distribution of electricity at national level and guarantee the
provision of the electricity public service under adequate economic and
technical conditions.


F-9

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As part of the
measures aimed at the restructuring of the electricity sector, in January 2016,
the MEyM issued Resolutions Nos. 6 and 7 and the ENRE its Resolution No. 1
(hereinafter the “Resolutions”), which approved a new electricity rate system
that reflects the new generation cost and seeks to partially adjust the
Distribution companies’ revenue in order for them to be able to cover their
operating costs and make investments. This new electricity rate system protects
those sectors that cannot afford the full cost of the service through the
creation of a “Social Tariff” and special tariffs for public welfare entities,
is accompanied by a program aimed at reducing the consumption of electricity and
provides for the billing of electricity consumption on a monthly basis in order
to soften the impact of the increases on customers.  At the same
time, the aforementioned MEyM Resolution No. 7/16 repealed SE Resolution No.
32/15, pursuant to which the government grant mentioned in the first paragraph
of this Note had been granted, and instructed the ENRE to take all the necessary
steps to conclude the RTI before December 31, 2016. In this regard, the ENRE
issued the Resolution that approved the program for the Review of the
distribution tariff, establishing the criteria and methodologies for the
process. As a result, on October 28, 2016, the public hearing necessary to
define the electricity rate schedule for the next period was held and the new
electricity rate schedule, effective as from February 1, 2017, was issued (Note
2.c).III).  Despite these
advances, as from May 2016, different courts granted provisional remedies
ordering the temporary suspension of the Resolutions in all the Province of
Buenos Aires.  Subsequently,
and as a consequence of the judgment passed by the CSJN on September 6, 2016 in
the “Abarca” case, whereby the provisional remedy granted by Division II of the
Federal Appellate Court of La Plata (Note 2.c).VIII) was revoked, the MEyM
through Resolution No. 197/16, and the ENRE by means of Resolution No. 523/16
set forth the modality of payment of the debt with the MEM for energy purchases,
as well as the customer billing methodology, including the treatment to be given
to the unpaid retroactive amounts as a consequence of the aforementioned
provisional remedy.  Furthermore,
with regard to the economic effects of the provisional remedies that affected La
Matanza and Pilar jurisdictions, which suspended the application of MEyM
Resolutions Nos. 6 and 7/16 and ENRE Resolution No. 1/16, the MEyM instructed
CAMMESA to issue credit notes for the effects of the aforementioned provisional
remedies.  In that regard,
the Company has absorbed the higher costs associated with the provision of the
service and complied with the execution of the investment plan and the carrying
out of the essential operation and maintenance works that are necessary to
maintain the provision of the public service in a satisfactory manner in terms
of quality and safety, which, in a context of constant increase in the demand
for electricity, has deteriorated the Company’s economic and financial equation
over all these years.  As a consequence
of that which has been mentioned in this Note, as of December 31, 2016 the
negative working capital amounts to $ 2.9 billion, which includes the amount
owed to CAMMESA for $ 1.8 billion plus interest accrued as of December 31, 2016,
in respect of which the Company has submitted a payment plan proposal based on
available and projected cash flows. At the date of issuance of these financial
statements, no reply from CAMMESA has yet been received.


F-10

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In spite of this
scenario, considering the application of the RTI as from February 1, 2017, the
Company’s Board of Directors is optimistic that the new electricity rates will
result in the Company’s operating once again under a regulatory framework with
clear and precise rules, which will make it possible not only to cover the
operation costs, afford the investment plans and meet debt interest payments,
but also to deal with the impact of the different variables that affect the
Company’s business.   Note 2 |Regulatory
framework  a)General  The Company is
subject to the regulatory framework provided under Law No. 24,065, the
Concession Agreement, and the regulations issued by the ENRE.  The ENRE is
empowered to approve and control tariffs, and control the quality levels of the
technical product and service, the commercial service and the compliance with
public safety regulations, as provided for in the Concession Agreement. If the
Distribution Company fails to comply with the obligations assumed, the ENRE may
apply the penalties stipulated in the Concession Agreement.  The Distribution
Company’s obligations are, among others, to make the necessary investments and
carry out the necessary maintenance works in order to ensure that the quality
levels established for the provision of the service in the concession area will
be complied with and that electricity supply and availability will be sufficient
to meet the demand in due time, securing the sources of
supply.  If the Company
repeatedly fails to comply with the obligations assumed in the Concession
Agreement, the grantor of the concession will be entitled to foreclose on the
collateral granted by the majority shareholders by means of the pledge of the
Class A shares and sell them in a Public Bid. This, however, will not affect the
continuity of the Holder of the concession (Note 5.4).  Furthermore, the
Concession Agreement may be rescinded in the event of the Distribution Company’s
undergoing bankruptcy proceedings. Additionally, if the Grantor of the
Concession fails to discharge his obligations in such a manner that the
Distribution Company is prevented from providing the Service or the Service is
severely affected on a permanent basis, the Distribution Company may request,
after demanding the regularization of such situation in a term of 90 days, that
the agreement be rescinded. At the date of issuance of these financial
statements, there have been no events of non-compliance by the Company that
could be regarded as included within the scope of this
situation.   b)Concession  The term of the
concession is 95 years, which may be extended for an additional maximum period
of 10 years. The term of the concession is divided into management periods: a
first period of 15 years and subsequent periods of 10 years each. At the end of
each management period, the Class “A” shares representing 51% of the capital
stock of Edenor S.A., currently held by EASA, must be offered for sale through a
public bidding.  If EASA makes the highest bid, it will continue to hold
the Class “A” shares, and no further disbursements will be necessary. On the
contrary, if EASA is not the highest bidder, then the bidder who makes the
highest bid shall pay EASA the amount of the bid in accordance with the
conditions of the public bidding.  The proceeds from the sale of the Class
“A” shares will be delivered to EASA after deducting any amounts receivable to
which the Grantor of the concession may be entitled. The first management period
will end at the conclusion of the tariff period commenced on February 1, 2017 (5
years).


F-11

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The Company has
the exclusive right to render electric power distribution and sales services
within the concession area to all the customers who are not authorized to obtain
their power supply from the MEM, thus being obliged to supply all the electric
power that may be required in due time and in accordance with the established
quality levels. In addition, the Company must allow free access to its
facilities to any MEM agents whenever required, under the terms of the
Concession.  No specific fee
must be paid by the Company under the Concession Agreement during the term of
the concession.  On January 6,
2002, the PEN passed Law No. 25,561 whereby adjustment clauses in US dollars, as
well as any other indexation mechanisms stipulated in the contracts entered into
by the Federal Government, including those related to public utilities, were
declared null and void as from such date. The resulting prices and rates were
converted into Argentine pesos at a rate of 1 peso per US dollar.  Furthermore, Law
No. 25,561 authorized the PEN to renegotiate public utility contracts taking
certain criteria into account.  Additionally,
both the declaration of economic emergency and the period to renegotiate public
utility contracts were extended through December 31, 2017 by Law No. 27,200 that
came into effect on January 1, 2016.  Moreover, on
December 16, 2015, by Executive Order No. 134/15, the country’s electricity
sector was declared in a state of emergency. The declaration of the state of
emergency and the measures to be adopted as a consequence thereof, as indicated
in Section 2 of the aforementioned Executive Order, will remain in effect until
December 31, 2017.  In this regard,
the MEyM is instructed to prepare, launch and implement a plan of action for the
electricity generation, transmission and distribution segments at national level
with the aim of adjusting the quality and safety of the electricity supply and
guaranteeing the provision of the electricity public service under adequate
economic and technical conditions.   c)Electricity
rate situation  I.Adjustment Agreement entered into between Edenor S.A. and
the Federal Government  On September 21,
2005, Edenor S.A. entered into an Adjustment Agreement within the framework of
the process of renegotiation of the Concession Agreement set forth in Law No.
25,561 and supplementary regulations, which was ratified on February 13,
2006.  The Adjustment
Agreement provides for the following:  i)the implementation of a Temporary Tariff Structure
effective as from November 1, 2005, including a 23% average increase in the
distribution margin, which may not result in an increase in the average rate of
more than 15%, and an additional 5% average increase in the VAD, allocated to
certain specified capital expenditures;  ii)the requirement that during the term of said temporary
tariff structure, dividend payment be subject to the approval of the regulatory
authority;


F-12

---





iii)the establishment of a “Social Tariff” for the needy and
the levels of quality of the service to be rendered;  iv)the suspension of the claims and legal actions filed by
the Company and its shareholders in national or foreign courts due to the
effects caused by the Economic Emergency Law;  v)the carrying out of a RTI which will result in a new
tariff structure that will go into effect on a gradual basis and remain in
effect for the following 5 years. In accordance with the provisions of Law No.
24,065, the ENRE will be in charge of such review;  vi)the implementation of a minimum investment plan in the
electric network for an amount of $ 178.8 million to be fulfilled by the Company
during 2006, plus an additional investment of $ 25.5 million should it be
required;  vii)the adjustment of the penalties imposed by the ENRE that
are payable to customers by way of discounts, which were notified by such
regulatory agency prior to January 6, 2002 as well as of those that have
been notified, or whose cause or origin has arisen in the period between January
6, 2002 and the date on which the Adjustment Agreement goes into effect through
the date on which they are effectively paid, using, for such purpose, the
average increase recorded in the Company’s distribution costs as a result of the
increases and adjustments granted at each date;  viii)the waiver of the penalties imposed by the ENRE that are
payable to the National State, which have been notified, or their cause or
origin has arisen in the period between January 6, 2002 and the date on which
the Adjustment Agreement goes into effect;  The payment term
of the penalties imposed by the ENRE, which are described in paragraph vii)
above, is 180 days after the approval of the RTI in 14 semiannual installments.
Those discounts have been early made as from December 2015 (Note
2.e).iii).  Said agreement
was ratified by the PEN by means of Executive Order No. 1,957/06, signed by the
President of Argentina on December 28, 2006 and published in theOfficial Gazetteon January 8,
2007.  The aforementioned agreement stipulated the terms and conditions
that, upon compliance with the other procedures required by the regulations,
would be the fundamental basis of the Comprehensive Renegotiation of the
Concession Agreement of the public service of electric power distribution and
sale within the federal jurisdiction, between the PEN and the holder of the
concession.   II.Breach of Adjustment Agreement  With the aim of
ensuring the viability of the electricity supply continuity, safety and quality,
the Adjustment Agreement provided for the creation of a Temporary Tariff
Structure (RTT), pursuant to which the increase in the Company’s costs would be
recognized -during the period the RTT remained in effect- on a semiannual basis
by means of the cost monitoring mechanism (MMC), and laid down the conditions
for the RTT. That mechanism was only applied in the first three six-month
periods, after which the Federal Government (through its different agencies)
systematically failed to comply with the obligations assumed.  By means of MEyM
Resolutions Nos. 6 and 7/16, and as from February 1, 2016, the current
electricity rate schedule of Distribution companies is readjusted within the
framework of the Temporary Tariff Structure, which is the adjustment of the
existing electricity rate schedule by applying thereto the semiannual
readjustment that was pending.  Additionally,
the aforementioned MEyM Resolution No. 7/16 instructs the ENRE to carry out the
RTI.


F-13

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Finally, by
means of ENRE Resolution No. 63/17 dated January 31, 2017, Note 2.c).III, the
electricity rate schedule resulting from the RTI process, which will be applied
by the Company as from February 1, 2017, is approved.   III.Tariff Structure Review  Due to the
aforementioned non-compliance, in June 2013, the Company filed a complaint
against the Federal Government claiming full compliance with the Adjustment
Agreement and compensation for damages due to the non-compliance with the
commitments stipulated therein. The complaint was amended so as to extend it in
November 2013.  Although in the
last years, the Grantor of the Concession adopted palliative measures
–previously described in this Note 2.c), to allow for the operations to
continue, such measures were partial and considered neither all the variables
nor the essential elements of the rights and obligations deriving from the
Concession Agreement.  Therefore, by
means of MEyM Resolution No. 7/16, SE Resolution No. 32/15 was repealed and the
ENRE was instructed to adopt measures, within its field of competence, to finish
the RTI.  To that end, on
April 1, 2016, the ENRE issued Resolution No. 55/16, which approved the program
for the Review of the distribution tariff, which was carried out in
2016.  On September 5,
2016, the Company submitted its electricity rate schedule proposal for the next
five years. For the purposes of the rate proposal, the Company:  (i)determined the capital base using for such purpose the
depreciated Net Realizable Value (NRV) method;  (ii)submitted the 2017-2021 Investment Plan;  (iii)submitted a detail of the operating expenses; and  (iv)submitted all other data requested by the Regulatory
Authority.  In accordance
with the Work Plan and schedule duly fixed by the ENRE, on October 28, 2016, the
public hearing was held as a preliminary step to define the electricity rate
schedule for the next period.  Finally, on
January 31, 2017, the ENRE issued Resolution No. 63/17, pursuant to which it
determined the definitive Electricity Rate Schedules, the review of costs, the
required quality levels, and all the other rights and obligations that are to be
applied and complied with by the Company as from February 1, 2017. The
above-mentioned regulation was adapted by the ENRE by means of the issuance of
Resolutions Nos. 81/17, 82/17, and 92/17, and Note No.
124,898.  The
aforementioned Resolution states that the ENRE, as instructed by the MEyM, shall
limit the increase in the VAD resulting from the RTI process and applicable as
from February 1, 2017, to a maximum of 42%, as compared to the VAD in effect at
the date of issuance of the aforementioned resolution, with the remaining value
of the new VAD being applied in two stages, the first of them in November 2017
and the last one in February 2018. Additionally, the ENRE shall recognize and
allow the Company to bill the VAD difference arising as a consequence of the
gradual application of the tariff increase recognized in the RTI in 48
installments as from February 1, 2018, which will be incorporated into the VAD’s
value resulting as of that date.


F-14

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Notwithstanding
the above, at the date of issuance of these financial statements, the definitive
treatment to be given, by the MEyM, to all those unresolved issues resulting
from the non-compliance with the Adjustment Agreement, including the remaining
balances and other effects caused by the partial measures adopted, has yet to be
defined.  These issues,
among other, are the following:  i)the treatment to be given to the remaining balances of
the amounts received for the fulfillment of the Investment Plan through the
loans for consumption (mutuums) granted to cover the insufficiency of the funds
deriving from the FOCEDE;  ii)the treatment to be given to the funds disbursed by the
Company for the fulfillment of the Investment Plan, not included in i)
above;  iii)the conditions
for the settlement of the balance outstanding with CAMMESA at the date of
issuance of SE Resolution No. 32/15, for which purpose the Company has submitted
a payment plan;  iv)the treatment to
be given to the Penalties and Discounts whose payment/crediting is
pending.   IV.PUREE – MMC  By means of SE
Resolution 250, dated May 7, 2013, and subsequent Notes, the
SE:  a)Authorized the
values of the adjustments resulting from the MMC for the period May 2007 through
January 2015, determined in accordance with Section 4.2 of the Adjustment
Agreement, but without initiating the review process contemplated in the event
of variations exceeding 5%. b)Assessed the
Company’s debt as of December 31, 2015 deriving from the application of the
PUREE for the period May 2007 through January 2015. c)Authorized the
Company to offset until December 2014 the debt indicated in paragraph b) against
and up to the amount of the receivable established in paragraph a), including
interest, if any, on both amounts. d)Instructed
CAMMESA to issue LVFVD for the MMC surplus amounts after the offsetting process
indicated in paragraph c) has been carried out. e)Authorized
CAMMESA to receive LVFVD as part payment for the past due debts deriving from
the economic transactions of the MEM. f)Instructed the
Company to assign the credits from the surplus LVFVD, if there were any, after
having complied with that established in the preceding paragraph, to the trust
created under the terms of ENRE Resolution 347/12
(FOCEDE).  As of December
31, 2016, the Company recognized a total of $ 74 million for this concept, which
is disclosed in the Higher costs recognition – SE Resolution No. 250/13 and
Subsequent notes line item of the Statement of Comprehensive
Income  Pursuant to MEyM
Resolution No. 7/16, as from February 1, 2016 the PUREE is cancelled and the
Stimulus Plan, a system that rewards energy-saving efforts and results in a
reduction of the wholesale electricity Seasonal Price, comes into
effect.


F-15

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V.ENRE Resolution No. 347/12  On November 23,
2012, the ENRE issued Resolution No. 347, pursuant to which distribution
companies were authorized, as from the issuance thereof, to include in the bills
a fixed amount for small-demand (T1) customers and a variable amount for medium
and large-demand (T2 and T3) customers, to be calculated on a percentage of
power charges.  As established
in such Resolution, on November 29, 2012, the Company, in its capacity as
Trustor, and Nación Fideicomisos S.A., as Trustee, entered into a private
Financial and Management Trust Agreement, whereby the Company, as settlor of the
trust, agreed to assign and transfer to the Trustee the fixed amounts set forth
by ENRE Resolution No. 347/12 that are effectively collected, which will
constitute the trust assets. Such agreement was ratified and approved by the
Company’s Board of Directors on December 11, 2012.  Additionally, it
was agreed that Nación Fideicomisos S.A., in its capacity as trustee, will issue
VRD to be offered to the market and issued in accordance with the public
offering system authorized by the CNV, for a nominal value of up to $ 312.5
million. The proceeds will be used to pay the Company’s investment plan.  On July 4, 2013,
VRDs for $ 250 million were issued through a private placement. A subsequent
public offering of these debt securities, with the possibility of being paid-in
in kind is estimated. The VRD will accrue interest at the private Badlar rate
plus a spread of 4% and will be amortized in 5 years with increasing
installments.  In this regard,
said agreement stipulated that payment obligations under the VRD would be solely
and exclusively the obligations of Nación Fideicomisos S.A. (to the extent that
the trust assets were sufficient) and would not imply in any way whatsoever any
guarantee or recourse against the Company, which in no case would be liable for
the non-payment, whether total or partial, of any amount owed under the VRD or
any other concept contemplated by the Trust Agreement duly signed. Moreover, and
in view of the fact that the only income of the trust derived from the Company’s
contributions and, also, that the VRD accrued interest that was paid with the
trust assets, the Company has decided to recognize the trust’s net financial
charges as other operating expense, which amounted to $ 14.7 million and $ 59.6
million in 2016 and 2015, respectively.  By MEyM
Resolution No. 7/16, the SE is instructed to direct the Execution Committee of
the Trusts to discontinue the transfers of resources to the Company, in the name
and to the order of the Unified Fund of Law No. 24,065, as well as to adopt the
necessary measures to terminate the trusts.  Finally, on
January 29, 2016, by Resolution No. 2, the ENRE resolved to discontinue as of
January 31, 2016 the current trust mechanism for the management of the funds
resulting from the application of ENRE Resolution No. 347/12, and instructed the
Company to open a checking account for the deposit of the funds that will be
received as from February 1, 2016 from the application of the fixed amount to
afford the investments approved by the ENRE. Additionally, the Company is
required to submit to the ENRE a Works Plan, identifying which works of such
Plan will be financed with the funds received.  In this regard,
and according to the provisions of ENRE Resolution No. 2/16, on June 23, 2016
the Company received $ 86.3 million as reimbursement for the amounts duly
transferred to the FOCEDE. On July 20, 2016, the aforementioned trust was
formally terminated and liquidated.


F-16

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VI.Loans for consumption (mutuums) and assignments of
secured receivables  Due to the delay
in obtaining the RTI, the Company lacked the necessary conditions to come to the
financial market to make up the deficit of both its operations and the
investment plans necessary to maintain the quality of the service, object of the
concession. In order to deal with this situation, the Company has obtained from
the Federal Government a series of measures such as the issuance of SE
Resolution No. 250/13 (Note 2.c).IV) and ENRE Resolution No. 347/12 (Note
2.c).V), and the granting of loans for consumption (mutuums) to help it cope
with its cash needs for specific purposes.  The obligations
deriving from this assistance are classified as Other payables and the related
costs as financial expenses, due to both the fact that they result from the lack
of adjustment of the electricity rate schedule, which depends exclusively on the
Federal Government’s resolution, and the fact that such assistance has been
granted under these special circumstances. Therefore, such obligations do not
constitute financing decisions made by the Company in the ordinary course of
business.  As instructed by
MEyM Resolution No. 7/16, as from February 1, 2016 CAMMESA suspended all the
effects of the loans for consumption (mutuums) agreements entered into, as well
as the transfers of resources to Distribution companies on behalf and to the
order of the FOCEDE. As previously mentioned, the new Works Plan will be
exclusively financed with the funds collected from users.  The Loans for
consumption (Mutuums) granted until the issuance of MEyM Resolution No. 7/16 are
detailed below:  Extraordinary
Investment Plan - Temporary insufficiency of the revenue deriving from the
FOCEDE:  Due to the
measures adopted by the Ministry of Planning and the fact that the FOCEDE’s
funds were insufficient to cover the estimated disbursements under the
Investment Plan, the Company has requested of the respective authorities that it
be provided with funding assistance, which has been called Extraordinary
Investment Plan.  Consequently, on
September 26, 2014, the SE, by Resolution 65/14, instructed CAMMESA to enter
into a Loan for consumption (Mutuum) and assignment of secured receivables
agreement with the Company for a total of $ 500 million to cover the
Extraordinary Investment Plan as a consequence of the temporary insufficiency of
the revenue deriving from Resolution 347/12, mentioned in caption V of this
note. The aforementioned agreement was entered into on September 30, 2014. On
December 18, 2014, said agreement was extended, as instructed by the SE to
CAMMESA, for an additional amount of $ 159.4 million.  In fiscal year
2015, the loan for consumption (mutuum) agreement was extended, as instructed by
the SE to CAMMESA, for an additional amount of $ 2.3 billion.  As of December
31, 2016, the debt related to this concept amounts to $ 1.3 billion (comprised
of $ 923.6 million principal and $ 423.2 million in accrued interest) which is
disclosed in the Other non-current payables account.  Furthermore, as
security for the performance of the obligations assumed and the repayment of the
funds granted, the Company agreed to assign and transfer in favor of CAMMESA, as
from the end of the grace period that the SE will estipulate along with the
methodology and terms for the reimbursement of the funds, the amounts receivable
which the Company may have with the MEM up to the actual amount of the funds
granted. At the date of issuance of these financial statements, the Company does
not have any amount receivable with the MEM.


F-17

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Higher salary
costs:  On June 24,
2014, by Note No. 4,012/14, the SE instructed CAMMESA to enter into a Loan for
consumption (Mutuum) and assignment of secured receivables agreement with the
Company in order to pay the higher salary costs. The aforementioned agreement
was entered into on July 10, 2014.  The agreement was guaranteed by the Company with the assignment of the future
surplus LVFVD to be issued due to the application of SE Resolution No. 250/13.
At the date of issuance of these financial statements, the Company does not have
any surplus LVFVD.  The
aforementioned SE Resolution No. 32/15, Note 2.c).VIII, resolved that LVFVD be
issued in favor of the Company for the amounts generated by the salary increases
deriving from the application of Resolution No. 836/14 of the Ministry of Labor,
Employment and Social Security for whose payment the Company received this loan
for consumption (mutuum); allowing for the offsetting thereof against the
outstanding balances for this concept. The LVFVD were issued on July 16,
2015.  In this regard,
in fiscal year 2015, the Company recorded the total settlement of the $ 524.7
million liability for this concept, thus generating a positive result of $ 495.4
million related to the principal received, which has been disclosed in the
“Recognition of income on account of the RTI – SE Resolution No. 32/15” line
item of the Income Statement, and a positive result of $ 29.3 million, related
to interest accrued, which has been disclosed in the “Financial expenses” line
item of the Income Statement.   VII.SE Resolution No. 32/15  At the beginning
of 2015, the SE issued Resolution No. 32/15, which, inter alia, granted the
Company a temporary increase in income effective as from February 1, 2015, and
on account of the RTI, in order for the Company to cover the expenses and afford
the investments associated with the normal provision of the public service,
object of the concession.  As from February
1, 2016, by means of MEyM Resolution No. 7/16, the aforementioned SE Resolution
No. 32/15 was repealed and the application of the new electricity rate schedules
came into effect.  As of December
31, 2016 and 2015, the Company has recognized for this concept $ 419.7 million
and $ 5 billion, respectively, which are disclosed in the “Recognition of income
on account of the RTI – SE Resolution No. 32/15” line item of the Statement of
Comprehensive Income.   VIII.Provisional
remedies  As from May
2016, the Company has been notified by several courts of the Province of Buenos
Aires of the granting of provisional remedies requested by different customers,
both individuals and groups of consumers, which all together accounted for more
than 30% of the Company’s sales, ordering the suspension of MEyM Resolutions
Nos. 6 and 7/16 and ENRE Resolution No. 1/16 (authorizing tariff increases),
retroactively to the date on which such resolutions came into effect, i.e.
February 2016.  These measures
required the Company to refrain from billing with the tariff increase and to
return any amounts of the increases already collected by means of a credit in
the customers’ accounts to offset future electricity
consumption.


F-18

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The current
status of the main provisional remedies is detailed below:  “Abarca”:  On July 15, 2016
the ENRE notified the Company of the granting of a provisional remedy by
Division II of the Federal Appellate Court of the City of La Plata, ordering the
suspension of the tariff increases in all the Province of Buenos Aires for a
period of three months to commence as from the date of issuance of such judicial
order. In July, this measure impacted 80% of the Company’s billing. As a
consequence of the filing of a “Federal Extraordinary Appeal”
(“Recurso Extraordinario Federal”), on September
6, 2016 the CSJN revoked the provisional remedy granted by Division II due to
formal issues (lack of standing) but pronouncing no ruling on the main question
at issue, which implies that, except in those districts of the Province of
Buenos Aires where another provisional remedy remains in force, the applicable
electricity rate schedule should be the one approved by ENRE Resolution No.
1/16. On September 27, 2016, the MEyM issued Resolution No. 197/16, instructing
CAMMESA to invoice Distribution companies for the amounts unbilled in compliance
with the provisional remedy herein described, in 4 equal and consecutive monthly
installments. Furthermore, it instructed the ENRE to direct, in turn,
Distribution companies to make this payment plan, with no interest or
surcharges, available to customers (ENRE Note No. 523 dated September 29, 2016).
At the date of these financial statements, this provisional remedy has no impact
on the trade receivables recognized by the Company as of December 31,
2016.  “Fernández
Francisco Manuel and Other Plaintiffs”:  On August 3,
2016, the short-term provisional remedy (provisional relief that remains in
effect until the Federal Government submits the report required by the law or
the term provided for such purpose expires - “medida
cautelar interina”) requested in the action for the protection
of a constitutional right that was violated (“acción de
amparo”) brought against the Federal Government (PEN and MEyM)
and the ENRE was granted, declaring MEyM Resolutions Nos. 6 and 7/16 and ENRE
Resolution No. 1/16 null and void and ordering CAMMESA to refrain from applying
the new electricity rate schedule until the public hearing was held. On October
6, 2016, final judgment was passed, partially upholding the action
broughtand declaring the electricity rate schedule
included in the aforementionedResolutions inapplicable to small-demand (T1) customers,
ordering the ENRE to instruct Distribution companies to allow customers, who
consider themselves affected by the effects of the aforementioned Resolutions
and at their sole request, to pay and have as settled the amounts owed as well
as those accruing in the future, in accordance with the electricity rate system
applied prior to ENRE Resolution No. 1/16. On October 25, 2016, by Note No.
123,177, the ENRE informed the Company that the referred to judgment had been
appealed by the ENRE and the MEyM, that the appeals had been granted with a stay
of execution, and, therefore, that until a decision on such judgment, whose
enforcement had been stayed, was issued by the Appellate Court, the Company had
to continue billing its customers in accordance with the rate resulting from the
application of the Resolutions issued by the ENRE for such purpose. If the
Appellate Court affirms the appealed judgment, the enforcement thereof may give
rise to significant additional losses for the Company, inasmuch as small-demand
(T1) customers represent 54% of the Company’s revenue from
sales.  “Ombudsman for
the District of Pilar and Other Petitioners”:  With regard to
the provisional remedy granted against the MEyM in respect of the customers
residing in the locality of Pilar, due to both the fact that the originally
stipulated term thereof has expired due to the lapse of time and the fact that
the joining thereof to the “Fernández” case had been
ordered, it is inferred that the customers of the above-mentioned locality would
be subject to the decision issued in such case and consequently included within
the universe of customers subject to the “Fernández” ruling
mentioned in the previous caption.


F-19

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In this regard,
by Note No. 123,967 dated December 28, 2016, the ENRE states that the Company
may begin to collect from medium and large-demand (T2 and T3) customers of this
jurisdiction the amounts related to the February 1-October 24, 2016 period for
which their bills had been duly credited, in a number of installments equivalent
to the number of bills affected by the compliance with the provisional remedy.
Additionally, and at the customer’s request, the established number of
installments may be increased up to twice the number of those originally
affected by the provisional remedy, in which case, an interest rate based on the
BNA lending rate for discount operations will be charged.  With regard to
residential customers, no decision has been taken by the ENRE, which has stated
that it will be necessary to wait until final judgment is rendered by the
competent judicial authority.  “Municipality of
La Matanza and Other Petitioners”:  The short-term
provisional remedy (medida cautelar
interina) granted on June 14, 2016 that benefitted the residents
of the locality of La Matanza was appealed by all the affected parties, the
MEyM, the ENRE and the Company. The appeal has been granted by the Court hearing
the case and the proceedings are about to be sent to the Federal Appellate Court
of San Martín for their treatment. That, without prejudice to the petition filed
to have the action (acción de amparo) rejected,
which is still pending resolution. However, an adverse ruling of the Appellate
Court in the “Fernández” case would include the small-demand (T1) customers
residing in La Matanza District and will have the effects mentioned above in
this Note.  As in the case
of the District of Pilar, by Note No. 123,967 the ENRE states that the rebilling
of the amounts related to the February 1-November 14, 2016 period for which the
customers’ bills of this jurisdiction had been duly credited, will not take
place until judgment on the main question at issue is rendered by the
court.  As a consequence
of the above-described situation, and in order to safeguard the provision of the
public service of electricity distribution in a continuous and safe manner, the
Company has had no alternative but to temporarily suspend payments to CAMMESA
for energy purchases from July to November 2016.  For the balances
related to La Matanza and Pilar jurisdictions, the MEyM instructed CAMMESA to
issue credit notes for the provisional remedies that affected the application of
MEyM Resolutions Nos. 6 and 41/16, seasonal prices, and ENRE Resolution No.
1/16, VAD.  In this regard,
on December 26, 2016, CAMMESA notified the Company that, as instructed by the
MEyM, Note No. 2016 04484723, it would issue credit notes for the negative
effects generated by the provisional remedies that affected:  ·the application of the seasonal prices set by MEyM
Resolutions Nos. 6 and 41/16, for the periods pending as of that date;
and ·the application of the electricity rates set by ENRE
Resolution No. 1/16.  Once the
conditions and time frames for the billing of the concepts covered by the
above-mentioned provisional remedies have been set out by the ENRE, the Company
will issue the bills to its customers and transfer those values to
CAMMESA.


F-20

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The total
effects of the credit notes issued for these concepts are detailed
below:    Res. MEyM N° 6 y 41 /16
    
    Res. ENRE N° 1/16Payables
      for purchase of electricity - CAMMESA
    
    (270)
    
    (1,126)Purchase of
      electricity
    
    270
    
    -Income
      recognition of Note MEyM N° 2016-04484723
    
    -
    
    (1,126)
    Additionally,
based on the credit notes issued, CAMMESA has credited the interest amounts
billed commensurate with the extent thereof.    IX.MEyM Resolution No. 6/16 – Seasonal reference
prices  By means of MEyM
Resolution No. 6/16 the MEM summer quarterly rescheduling relating to the
February 1-April 30, 2016 period is carried out.  The seasonal
reference prices fixed by the aforementioned resolution are as
follow:  i)Power: $
1,427.60/MW month  ii)Energy: $
773.02/Mwh, $ 768.72/Mwh, $ 763.89/Mwh, in peak hours, other hours and off-peak
hours, respectively.   With regard to
residential utility customers, who are beneficiaries of the Social Tariff, the
prices are as follow:  i)Monthly
consumption of up to 150 Kwh/month. $ 0.00 / Mwh.  ii)Monthly
consumption exceeding 150 kwh/month,  i.if it is lower than or equal to the consumption recorded
in the same month of 2015, the reference prices will be $ 31.39/Mwh, $
27.09/Mwh, $ 22.26/Mwh, in peak hours, other hours and off-peak hours,
respectively.  ii.if it is higher than the consumption recorded in the same
month of 2015, the reference prices will be $ 312.39 /Mwh, $ 317.09/Mwh, $
312.26/Mwh, in peak hours, other hours and off-peak hours,
respectively.  These are the
prices that, together with those for power, are to be applied to the respective
electricity rate schedules.


F-21

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X.MEyM Resolution No. 7/16 and its
effects  By MEyM
Resolution No. 7/16 the ENRE is instructed to adjust the VAD in electricity rate
schedules, on account of the RTI, and to take all the necessary steps to carry
out the RTI before December 31, 2016.  Furthermore, the
aforementioned Resolution provided for: (i) the cancellation of the PUREE (Note
2.c).IV); (ii) the revocation of SE Resolution No. 32/15 as from the date on
which the ENRE’s Resolution that implements the electricity rate schedule comes
into effect (Note 2.c).VII); (iii) the suspension until further instruction of
all the effects of the loans for consumption (mutuums) agreements entered into
by and between the Distribution companies and CAMMESA (Note 2.c).VI); (iv) the
implementation of the necessary actions to end the trusts created by ENRE
Resolution No. 347/12 (Note 2.c).V); the restriction on the distribution of
dividends in accordance with the provisions of clause 7.4 of the Adjustment
Agreement (Note 18).   XI.ENRE Resolution No. 290/16  By means of ENRE
Resolution N° 290/16, applicable to Edenor S.A. and Edesur S.A., the ENRE
instructed Distribution companies to eliminate the six per thousand surcharge
established by Section 1 of Law No. 23,681, as from the billings that include
meter-reading dates subsequent to the date on which Decree No. 695/16 came into
effect, inasmuch as both the interconnection construction works and the
transfers of funds duly made by the Federal Government in favor of the province
of Santa Cruz, have been complied with.   d)Framework
agreement  On January 10,
1994, the Company, together with Edesur S.A., the Federal Government and the
Government of the Province of Buenos Aires entered into a Framework Agreement,
whose purpose was to establish the guidelines under which the Company was to
supply electricity to low-income areas and shantytowns.  On July 22,
2011, the Company, the Federal Government, and the Government of the Province of
Buenos Aires entered into the last Addendum for the renewal for a term of four
years (from January 1, 2011 through December 31, 2014) of the New Framework
Agreement that had been signed on October 6, 2003. Such extension was approved
on September 21, 2012 by Resolution No. 248/12 issued by the ENRE and ratified
by Resolution No. 247/12 of the MPFIPyS.  With regard to
the amount receivable the Company has with the Province of Buenos Aires, on
October 18, 2012 the Company entered into an Agreement for the Settlement of
Non-financial Obligations and Subscription of Buenos Aires Province Government
Bonds, pursuant to which the Company agreed to receive an amount of $ 0.3
million in cash and subscribe Series B Bonds for a residual nominal value of $
6.1 million, as settlement of the debt that as of December 31, 2010 such
Province had with the Company for the electric power supplied to low-income
areas.  During the
months of May and July the Company received payments, relating to the 2014
period, for $ 11.4 million and $ 53.5 million, respectively from the Provincial
and the Federal Governments.  Due to the fact
that at the date of these financial statements the approval of the new Framework
Agreement for the period of January 1, 2015 through December 31, 2018 by the
Federal Government and the Government of the Province of Buenos Aires is still
in process, no revenue for this concept has been recognized, which as of
December 31, 2016 amounted to $ 92.4 million.


F-22

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e)Penalties  i.General  The ENRE is
empowered to control the quality levels of the technical product and service,
the commercial service and the compliance with public safety regulations, as
stipulated in the Concession Agreement. If the Distribution Company fails to
comply with the obligations assumed, the ENRE may apply the penalties stipulated
in the aforementioned Agreement.  As of December
31, 2016 and 2015, the Company has recognized in its financial statements the
penalties accrued, whether imposed or not yet issued by the ENRE, related to the
control periods elapsed as of those dates.  By means of ENRE
Note No. 120,151 dated April 15, 2016, which establishes the new criterion to
calculate penalties, the Company is informed that for purposes of calculating
penalty amounts, the values to be applied are the kWh values in effect at the
last day of the six-month period analyzed in which the penalizable event is
detected, with the increases recorded in the “remuneration” as a consequence of
the increases and adjustments granted as of that date. The effect of this
resolution for the September 2015-February 2016 six-month period and subsequent
periods has been recorded during the year ended December 31,
2016.  Furthermore, it
is stated that the resulting amounts determined as indicated in the preceding
paragraph, accrue interest at the BNA lending rate for thirty-day operations
from the date on which they are determined until the Customer’s account is
actually credited, effect which the Company has recorded in its financial
statements.  Additionally, by
Note No. 123,091 dated October 19, 2016, the ENRE set the average rate values
($/KWh) to be applied as from December 2012 for the penalties payable to the
Public Administration. In accordance with the terms of the Concession Agreement,
such values relate to the average sale price of energy charged to customers. Due
to the fact that the amounts informed in the above-mentioned note are not in
agreement with such concept, on November 1, 2016, the Company submitted a note
to the ENRE requesting the rectification of the amounts informed because they
are considered erroneous. At the date of issuance of these financial statements,
said Note has not been answered.  In the case that
in the ENRE’s reply to the Note referred to in the preceding paragraph, the term
“remuneration” were interpreted by the ENRE as to include all the amounts
received in the form of, for example, government grants, the amount of the
provision for penalties could increase significantly. The Company believes that
such interpretation would be contrary to the terms of the Concession
Agreement.  Furthermore,
ENRE Resolution No. 63/17, Note 2.c).III, has set out the control procedures,
the service quality assessment methodologies, and the penalty system, applicable
as from February 1, 2017, for the 2017 – 2021 period.


F-23

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ii.Compensation payable to Customers  On March 21,
2016, the ENRE issued Resolution No. 31/16, pursuant to which it was provided
that each small-demand residential customer (T1R) who suffered power outages
between February 12 and 18, 2016 must be paid a compensation of at least (i) six
hundred pesos if the power cut lasted more than 12 continuous hours but did not
exceed 24 continuous hours; (ii) nine hundred thirty-one pesos if the power cut
lasted more than 24 continuous hours but did not exceed 48 hours; and (iii) one
thousand sixty-five pesos if the power cut lasted more than 48 continuous
hours.  The total amount
of the compensation payable to customers by way of discounts amounted $ 73
million, which was credited to customer bills issued as from April 25,
2016.   iii.Discounts to customers  The Company
began to credit Customer bills issued as from December 22, 2015 for the
penalties included in clauses 9.2.1 and 9.2.2 of the Adjustment Agreement, as
well as the adjustments thereof (Note 2.c).I.vii)), for $ 152.2 million. The
Company finished crediting customer bills for these amounts in the first two
months of 2016. Additionally, an amount of $ 36 million in compensation and
adjustments was made available to the customers who as of December 22, 2015 had
no active service. Such amount has not yet been settled.  iv.Payment agreements  From May, 2014
through December 31, 2015, the Company entered into three payment plan
agreements with the Regulatory Agency pursuant to which it agreed to pay the
penalties that had been ratified by the judicial authority for a total of $ 85.7
million, plus interest for $ 84.2 million. As of the December 31, 2016, payment
plan agreements Nos. 1 and 2 have been complied with in due time and proper
manner. With regard to payment plan agreement No. 3, the outstanding balance
amounts to      $ 47.5 million, which is disclosed in
the ENRE Penalties and Discounts line item of the Other payables account within
current and non-current liabilities.  Furthermore, and
owing to the setting of fees in favor of ENRE professionals who acted in
execution proceedings, the Company entered into two payment agreements for a
total principal amount of $ 18.7 million, plus interest. As of December 31,
2016, the outstanding balances of principal and interest accrued under payment
agreement No. 2 amounted to $ 16.6 million and $ 0.4 million, respectively,
which will be paid in 60 installments. The first payment agreement has been
complied with in due time and proper manner. They are disclosed in the Other
payables account within current and non-current liabilities.   f)Stabilization
factor  By Note No.
2,883 dated May 8, 2012 (reference Resolutions MEyFP No. 693/11 and MPFIPyS No.
1,900/11), the SE had implemented a mechanism whose objective was to keep the
amounts billed to residential customers throughout the year stable, thereby
minimizing the effects of the seasonal consumption of
electricity.  On January 18,
2016, by Note No. 119,098, the ENRE ordered the withdrawal from the
stabilization system of all the customers who were included therein, starting
with the first bill preparation and issuance to be made in
2016.


F-24

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g)Restriction
on the transfer of the Company’s common shares  The by-laws
provide that Class “A” shareholders may transfer their shares only with the
prior approval of the ENRE. The ENRE must communicate its decision within 90
days upon submission of the request for such approval, otherwise the transfer
will be deemed approved.  Furthermore,
Caja de Valores S.A. (the Public Register Office), which keeps the Share
Register of the shares, is entitled (as stated in the by-laws) to reject such
entries which, at its criterion, do not comply with the rules for the transfer
of common shares included in (i) the Business Organizations Law, (ii) the
Concession Agreement and (iii) the By-laws.  In addition, the
Class “A” shares will be pledged during the entire term of the concession as
collateral to secure the performance of the obligations assumed under the
Concession Agreement.  Other restrictions:  ·In connection with the issuance of Corporate Notes,
during the term thereof, EASA is required to be the beneficial owner and owner
of record of not less than 51% of the Company’s issued, voting and outstanding
shares.  ·In connection with the Adjustment Agreement signed with
the Grantor of the Concession and ratified by Executive Order No. 1,957/06,
Section 10 stipulates that from the signing of the agreement through the end of
the Contractual Transition Period, the majority shareholders may not modify
their ownership interest nor sell their shares.  ·In connection with the restructuring of the totality of
EASA’s financial debt, if EASA did not comply with its payment obligations under
the new debt, its creditors could obtain an attachment order against the
Company’s Class A shares held by EASA, and, consequently, the Argentine
Government would be entitled, as stipulated in the concession agreement, to
foreclose on the pledged shares.   h)Concession of
the use of real property  Pursuant to the
Bid Package, SEGBA granted the Company the free use of real property for periods
of 3, 5 and 95 years, with or without a purchase option, based on the
characteristics of each asset, and the Company would be responsible for the
payment of any taxes, charges and contributions levied on such properties and
for the taking out of insurance against fire, property damage and third-party
liability, to SEGBA’s satisfaction.  The Company may
make all kind of improvements to the properties, including new constructions,
upon the Federal Government’s prior authorization, which will become the
grantor’s property when the concession period is over, and the Company will not
be entitled to any compensation whatsoever. The Federal Government may terminate
the loan for use contract after demanding the performance by the Company of any
pending obligation, in certain specified cases set forth in the Bid Package. At
present, as SEGBA’s residual entity has been liquidated, these presentations and
controls are made to the National Agency of Public Properties.


F-25

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Note 3 |Basis of
preparation  The
financial statements forthe year endedDecember 31,
2016 have been prepared in accordance withIFRS issued by
the IASB and IFRIC interpretations, incorporated by the CNV.  The financial
statements are stated in thousands of Argentine pesos, unless specifically
indicated otherwise.  These financial
statements were approved for issue by the Company’s Board of Directors on March
8, 2017.   Comparative
information  The balances as
of December 31, 2015 and 2014, disclosed in these financial statements for
comparative purposes, arise from the financial statements as of that date.  On July 26,
2016, and at the SEC’s request, the Company restated its financial statements
for the year ended December 31, 2015 and 2014, with the aim of reclassifying in
the Statement of Cash Flows the values related to the loan for consumption
(mutuum) agreements duly entered into with CAMMESA.  Accordingly, the
Company’s Statement of Cash Flows for the year ended December 31, 2015 and
2014 has been reviewed to present the cash inflows related to such
agreements within financing activities in the Statement of Cash Flows, instead
of operating activities as previously presented. Also, the increase in the
balances of the loans with CAMMESA for funds received by the FOCEDE for the year
ended December 31, 2015 and 2014 is now presented as a non-cash transaction
in the supplementary disclosures to the Statement of Cash Flows instead of
operating activities as previously presented.  This correction
to the financial statements impacted only the Statement of Cash Flows, there
being no impact on the statements of financial position, comprehensive income,
or equity, or on the basic and diluted (loss) earnings per
share.   12.31.15Published balances
    
    adjustments
    
    Restated balancesCash flows
      generated by operating activities
    3,217,011
    
    (214,894)
    (1)
    
    3,002,117Cash flows from
      financing activities
    (172,923)
    
    214,894
    (1)
    
    41,971Non-cash
      activitiesAmounts
      received from CAMMESA through FOCEDE
    -
    
    723,616
    (2)
    
    723,616Decrease from
      offset of other liabilities with CAMMESA for loans for consumption
      (Mutuums) granted for higher salary costs (SE Resolution
    32/15)
    (495,516)
    (3)
    -
    
    
    (495,516)12.31.14Published balances
    
    adjustments
    
    Restated balancesCash flows
      generated by operating activities
    1,547,990
    
    (380,622)
    (4)
    
    1,167,368Cash flows from
      financing activities
    (155,675)
    
    380,622
    (4)
    
    224,947Non-cash
      activitiesAmounts
      received from CAMMESA through FOCEDE
    -
    
    100,000
    (2)
    
    100,000
  (1)Relates to the
loan for consumption (mutuum) for salaries that was disclosed in the Statement
of Cash Flows under the heading “Increase in trade payables and loans for
consumption (mutuums) with CAMMESA” (Note 2.c).VIII to the financial statements
as of December 31, 2015).  (2)Relates to the
loan for consumption (mutuum) for investments (Note 2.c).VIII to the financial
statements as of December 31, 2015 and 2014).  (3)Relates to the
amounts received in accordance with the provisions of SE Resolution No. 32/15,
pursuant to which the loan for consumption (mutuum) for salaries may be offset
against those funds (Note 2.c).IX to the financial statements as of December 31,
2015).  (4)Relates to the loan for
consumption (mutuum) for salaries and for investments that were disclosed in the
Statement of Cash Flows under the heading “Increase in trade payables and loans
for consumption (mutuums) with CAMMESA” (Note 2.c).VI to the financial
statements as of December 31, 2014) for $ 280.6 million and $ 100 million,
respectively.


F-26

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Financial
reporting in hyperinflationary economies  IAS 29
“Financial reporting in hyperinflationary economies” requires that the financial
statements of an entity whose functional currency is the currency of a
hyperinflationary economy, whether they are based on the historical cost method
or the current cost method, be stated in terms of the measuring unit current at
the closing date of the reporting year. For such purpose, in general terms, the
inflation produced from the acquisition date or the revaluation date, as
applicable, must be computed in non-monetary items. In order to conclude whether
the economy is a hyperinflationary economy, the standard details a series of
factors to be considered, among which the existence of a cumulative inflation
rate over three years that approaches or exceeds 100% is included. Taking into
consideration the inconsistency of the published inflation data, the downward
trend of the level of inflation, the fact that the other indicators are
insufficient to reach a definite conclusion, and the fact that the current legal
framework does not allow for the filing with control authorities of
inflation-adjusted financial statements, and in line with the International
Practices Task Force’s conclusion, there is insufficient evidence to conclude
that Argentina’s economy is a hyperinflationary economy as of December 31, 2016.
Therefore, the restatement criteria established in IAS 29 have not been applied
in the reporting year.  Although the
Argentine economy does not meet the necessary conditions to qualify as a
hyperinflationary economy in accordance with IAS 29, and taking into account the
legal and regulatory limitations imposed by professional bodies and control
authorities for the preparation of adjusted financial statements, as of December
31, 2016 it must be mentioned that certain macroeconomic variables that affect
the Company’s business, such as salary costs and the prices of supplies, have
suffered somewhat important annual variations, a circumstance that must be taken
into account when evaluating and interpreting the Company’s financial position
and results of operations in these financial statements.   Note 4 |Accounting
policies  The main
accounting policies used in the preparation of these financial statements are
detailed below. These accounting policies have been consistently applied to all
the reporting years, unless indicated otherwise.  Note 4.1 |Changes in the accounting policies  Note 4.1.1 |New standards, amendments and
interpretations effective as of December 31, 2016 and adopted by the
Company:  IAS
1“Presentation of financial
statements”: the application by the Company of the issued amendments
implied the disaggregation of the items related to the Company’s share of other
comprehensive income of equity-accounted associates and joint
ventures.


F-27

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Note 4.1.2 |New standards, amendments and
interpretations not effective and not early adopted by the
Company:  IFRS 16
“Leases”: On January 13, 2016, the IASB published IFRS 16, which
replaces the current guidance in IAS 17. The standard defines a lease as a
contract, or part of a contract, that conveys the right to use an asset (the
underlying asset) for a period of time in exchange for consideration. The
standard requires the recognition of a lease liability that reflects future
lease payments and a ‘right-of-use asset’ for almost all lease contracts. This
is a significant change compared to IAS 17 under which lessees were required to
make a distinction between a finance lease (reported on the balance sheet) and
an operating lease (off balance sheet). IFRS 16 contains an optional exemption
for certain short-term leases and leases of low-value assets; however, this
exemption can only be applied by lessees. IFRS 16 is effective for annual
reporting periods beginning on or after January 1, 2019.  IAS 7
"Statement of cash flows": In February
2016, the IASB published an amendment pursuant to which an entity is required to
disclose information that will enable users of financial statements to
understand changes in liabilities arising from financing activities. This
includes changes arising from cash flows, such as drawdowns and repayments of
borrowings; and non-cash changes, such as acquisitions, disposals and unrealized
exchange differences. The amendment is effective for annual periods beginning on
or after January 1, 2017.  IAS 12
“Income taxes”: In February
2016, the IASB published amendments to clarify the requirements for recognizing
deferred tax assets on unrealized losses. The amendments clarify the accounting
for deferred tax where an asset is measured at fair value and that fair value is
below the asset’s tax base. They also clarify certain other aspects of
accounting for deferred tax assets. The amendments are effective from January 1,
2017.  IFRS 2
“Share based payments”: In June 2016,
an amendment was published to clarify the measurement basis for cash-settled,
share-based payments and the accounting for modifications that change an award
from cash-settled to equity-settled. It also introduces an exception to the
principles in IFRS 2 that will require an award to be treated as if it was
wholly equity-settled, where an employer is obliged to withhold an amount for
the employee’s tax obligation associated with a share-based payment and pay that
amount to the tax authority. The amendment is effective for annual periods
beginning on or after January 1, 2018.  IFRS 15
“Revenue from contracts with
customers”: It was issued in May 2014 and is effective, as
subsequently modified in September 2015, for annual periods beginning on or
after January 1, 2018. It deals with the principles for the recognition of
revenue and sets disclosure requirements about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from a contract with a customer.
The core principle implies the recognition of revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services.  The Company is
currently assessing the impact of these new standards and
amendments.


F-28

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Note 4.2 |Property, plant and equipment  Additions have
been valued at acquisition cost, net of the related accumulated depreciation.
Depreciation has been calculated by applying the straight-line method over the
remaining useful life of the assets, which was determined on the basis of
engineering studies. Furthermore, in order to improve the disclosure of the
account, the Company has made certain changes in the classification of property,
plant and equipment based on each technical process.  In accordance
with the provisions of IAS 23, borrowing costs in relation to any given asset
are to be capitalized when such asset is in the process of production,
construction, assembly or completion, and such processes, due to their nature,
take long periods of time; those processes are not interrupted; the period of
production, construction, assembly or completion does not exceed the technically
required period;  the necessary activities to put the asset in condition to
be used or sold are not substantially complete; and the asset is not in
condition so as to be used in the production or startup of other assets,
depending on the purpose pursued with its production, construction, assembly or
completion.  Subsequent costs
(major maintenance and reconstruction costs) are either included in the value of
the assets or recognized as a separate asset, only if it is probable that the
future benefits associated with the assets will flow to the Company, being it
possible as well that the costs of the assets may be measured reliably and the
investment will improve the condition of the asset beyond its original state.
The other maintenance and repair expenses are recognized in profit or loss in
the year in which they are incurred.  In accordance
with the Concession Agreement, the Company may not pledge the assets used in the
provision of the public service nor grant any other security interest thereon in
favor of third parties, without prejudice to the Company’s right to freely
dispose of those assets which in the future may become inadequate or unnecessary
for such purpose. This prohibition does not apply in the case of security
interests granted over an asset at the time of its acquisition and/or
construction as collateral for payment of the purchase and/or installation
price.  The residual
value and the remaining useful lives of the assets are reviewed and adjusted, if
appropriate, at the end of each fiscal year (reporting period).  Land is not
depreciated.  Facilities in
service: between 30 and 50 years  Furniture, tools
and equipment: between 5 and 20 years  Construction in
process is valued based on the degree of completion and is recorded at cost less
any impairment loss, if applicable.  Cost includes expenses attributable to
the construction, including capitalized borrowing costs in accordance with IFRS
and the Company’s accounting policies, when they are part of the cost incurred
for the purposes of acquisition, construction or production of property, plant
and equipment which require considerable time until they are in condition to be
used. Borrowing costs are no longer capitalized when the asset has been
substantially finished or its development has been suspended. These assets begin
to be depreciated when they are in economic condition to be
used.  Gains and losses
from the sale of Property, plant and equipment are calculated by comparing the
price collected with the carrying amount of the asset, and are recognized within
Other operating expense or Other operating income in the Statement of
Comprehensive Income.


F-29

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The valuation of
property, plant and equipment, taken as a whole, does not exceed its recoverable
value, which is measured as the value in use as of the end of each year (Note
6.c).   Note 4.3 |Interests in joint ventures  The Company has
early adopted the application of IFRS 11 as from January 1, 2011, the main
concepts of which are as follow:  i.A joint
arrangement takes place among two or more parties when they have joint control:
joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.  ii.A joint venture
is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the arrangement. Such parties are
called joint venturers.  iii.A joint
operation is a joint arrangement whereby the parties that have joint control of
the arrangement have rights to the assets, and obligations for the liabilities,
relating to the arrangement. These parties are called joint
operators.  The Company
accounts for its investment in joint ventures in accordance with the equity
method. Under this method, the interest is initially recognized at cost and
subsequently adjusted by recognizing the Company’s share in the profit or loss
obtained by the joint venture, after acquisition date. The Company recognizes in
profit or loss its share of the joint venture’s profit or loss and in other
comprehensive income its share of the joint venture’s other comprehensive
income.  When the Company
carries out transactions in the joint ventures, the unrealized gains and losses
are eliminated in accordance with the percentage interest held by the Company in
the jointly controlled entity.  The joint
ventures’ accounting policies have been modified, if applicable, to ensure
consistency with the policies adopted by the Company.  Furthermore,
taking into account that the interests in joint ventures are not regarded as
significant balances, the disclosure requirements of IFRS 12 have not been
made.


F-30

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Note 4.4 |Revenue recognition  a.Revenue from sales  Revenue is
measured at the fair value of the consideration collected or to be collected,
taking into account the estimated amount of any discount, thus determining the
net amounts.  Revenue from the
electricity provided by the Company to low-income areas and shantytowns is
recognized to the extent that a renewal of the Framework Agreement is formalized
for the period in which the service was rendered. At the date of issuance of
these financial statements, the Company’s Board of Directors is negotiating with
the Federal and Provincial Governments the signing of the respective
agreements.  Revenue from
operations is recognized on an accrual basis and derives mainly from electricity
distribution. Such revenue includes both the electricity supplied, whether
billed or unbilled at the end of each year, which has been valued on the basis
of applicable tariffs (except for that described in Note 2.c).VIII), and the
charges resulting from the application of ENRE Resolution No. 347/12 (Note
2.c).V).  The Company also
recognizes revenue from other concepts included in distribution services, such
as new connections, reconnections, rights of use on poles, transportation of
electricity to other distribution companies, etc.  The
aforementioned revenue from operations was recognized when all of the following
conditions were met:  1.the entity
transferred to the buyer the significant risks and rewards;  2.the amount of
revenue was measured reliably;  3.it is probable
that the economic benefits associated with the transaction will flow to the
entity;  4.the costs
incurred or to be incurred, in respect of the transaction, were measured
reliably.  b.Interest income  Interest income
is recognized by applying the effective interest rate method. Interest income is
recorded in the accounting on a time basis by reference to the principal amount
outstanding and the applicable effective rate.  Interest income
is recognized when it is probable that the economic benefits associated with the
transaction will flow to the Company and the amount of the transaction can be
measured reliably.   Note 4.5 |Effects of the changes in foreign currency exchange
rates  a.Functional and presentation
currency  The information
included in the financial statements is measured using the Company’s functional
currency, which is the currency of the main economic environment in which the
entity operates. The financial statements are measured in pesos (legal currency
in Argentina), which is also the presentation currency.  b.Transactions and balances  Foreign currency
denominated transactions and balances are translated into the functional and
presentation currency using the rates of exchange prevailing at the date of the
transactions or revaluation, respectively. The gains and losses generated by
foreign currency exchange differences resulting from each transaction and from
the translation of monetary items valued in foreign currency at the end of the
year are recognized in the Statement of Income.


F-31

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The foreign
currency exchange rates used are: the bid price for monetary assets, the offer
price for monetary liabilities, and the specific exchange rate for foreign
currency denominated transactions.   Note 4.6 |Trade and other receivables  a.Trade receivables  The receivables
arising from services billed to customers but not collected as well as those
arising from services rendered but unbilled at the closing date of each
financial year are recognized at fair value and subsequently measured at
amortized cost using the effective interest rate method.  The receivables
from electricity supplied to low-income areas and shantytowns are recognized,
also in line with revenue, when the Framework Agreement has been renewed for the
period in which the service was provided.  The amounts thus
determined are net of an allowance for the impairment of receivables. Any debt
arising from the bills for electricity consumption that remain unpaid 13 working
days after their due dates for small-demand (T1) customers and 7 working days
after due date for medium and large-demand (T2 and T3) customers is considered a
delinquent balance. The uncollectibility rate is determined per customer
category based on the historical comparison of collections made and delinquent
balances of each customer group.   Additionally, and faced with temporary and/or
exceptional situations, the Company’s Management may redefine the amount of the
allowance, specifying and supporting the criteria used in all the
cases.  b.Other receivables  Other
receivables are initially recognized at fair value (generally the original
billing/settlement amount) and subsequently measured at amortized cost, using
the effective interest rate method, and when significant, adjusted by the time
value of money. The Company records impairment allowances when there is
objective evidence that the Company will not be able to collect all the amounts
owed to it in accordance with the original terms of the
receivables.  The MMC amounts
receivable, as well as the related income, are recognized to the extent that
they have been approved by the ENRE and recognized by the SE by means of a Note
or Resolution.   Note 4.7 |Inventories  Inventories are
valued at the lower of acquisition cost and net realizable
value.  They are valued
based on the purchase price, import duties (if applicable), and other taxes
(that are not subsequently recovered by tax authorities), and other costs
directly attributable to the acquisition of those assets.  Cost is
determined by applying the weighted average price (WAP)
method.


F-32

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The Company has
classified inventories into current and non-current depending on whether they
will be used for maintenance or capital expenditures and on the period in which
they are expected to be used. The non-current portion of inventories is
disclosed in the “Property, plant and equipment” account.  The valuation of
inventories, taken as a whole, does not exceed their recoverable value at the
end of each year.  Note 4.8 |Financial assets  The Company has
adopted phase 1 of IFRS 9 as from the date of transition.    Note 4.8.1
|Classification  The Company
classifies financial assets into the following categories: those measured at
amortized cost and those subsequently measured at fair value. This
classification depends on whether the financial asset is an investment in a debt
or an equity instrument. In order for a financial asset to be measured at
amortized cost, the two conditions described below must be met. All other
financial assets are measured at fair value. IFRS 9 requires that all
investments in equity instruments be measured at fair value.  a.Financial assets at amortized cost  Financial assets
are measured at amortized cost if the following conditions are met:  i.the objective of the Company’s business model is to hold
the assets to collect the contractual cash flows; and  ii.the contractual terms give rise, on specified dates, to
cash flows that are solely payments of principal and interest on principal.  b.Financial assets at fair value  If any of the
above-detailed conditions is not met, financial assets are measured at fair
value through profit or loss.  All investments
in equity instruments are measured at fair value. For those investments that are
not held for trading, the Company may irrevocably elect at the time of their
initial recognition to present the changes in the fair value in other
comprehensive income. The Company’s decision was to recognize the changes in
fair value in profit or loss.   Note 4.8.2
|Recognition and measurement  The regular way
purchase or sale of financial assets is recognized on the trade date, i.e. the
date on which the Company agrees to acquire or sell the asset. Financial assets
are derecognized when the rights to receive the cash flows from the investments
have expired or been transferred and the Company has transferred substantially
all the risks and rewards of the ownership of the assets.


F-33

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Financial assets
are initially recognized at fair value plus, in the case of financial assets not
measured at fair value through profit or loss, transaction costs that are
directly attributable to the acquisition thereof.  The gains or
losses generated by investments in debt instruments that are subsequently
measured at fair value and are not part of a hedging transaction are recognized
in profit or loss. Those generated by investments in debt instruments that are
subsequently measured at amortized cost and are not part of a hedging
transaction are recognized in profit or loss when the financial asset is
derecognized or impaired and by means of the amortization process using the
effective interest rate method.  The Company
subsequently measures all the investments in equity instruments at fair value.
When it elects to present the changes in fair value in other comprehensive
income, such changes cannot be reclassified to profit or loss. Dividends arising
from these investments are recognized in profit or loss to the extent that they
represent a return on the investment.  The Company
reclassifies financial assets if and only if its business model to manage
financial assets is changed.   Note 4.8.3
|Impairment of financial
assets  At the end of
each reporting period, the Company assesses whether there is objective evidence
that the value of a financial asset or group of financial assets measured at
amortized cost is impaired. The value of a financial asset or group of financial
assets is impaired, and impairment losses are incurred only if there is
objective evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a “loss event”), and that loss event
(or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably
measured.  Impairment tests
may include evidence that the debtors or group of debtors are undergoing
significant financial difficulties, have defaulted on interest or principal
payments or made them after they had come due, the probability that they will
enter bankruptcy or other financial reorganization, and when observable data
indicate that there is a measurable decrease in the estimated future cash flows,
such as changes in payment terms or in the economic conditions that correlate
with defaults.  In the case of
financial assets measured at amortized cost, the amount of the impairment loss
is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial asset’s original
effective interest rate. The asset’s carrying amount is reduced and the amount
of the impairment loss is recognized in the Statement of Income.  Note 4.8.4
|Offsetting of financial
instruments  Financial assets
and liabilities are offset, and the net amount reported in the statement of
financial position, when there is a legally enforceable right to offset the
recognized amounts, and there is an intention to settle on a net basis, or
realize the asset and settle the liability simultaneously.   Note 4.9 |Derivative financial instruments  Derivative
financial instruments are initially recognized at fair value on the date on
which the respective contract is signed. Subsequently to the initial
recognition, they are remeasured at their fair value. The method for recognizing
the resulting loss or gain depends on whether the derivative has been designated
as a hedging instrument and, if that is the case, on the nature of the item
being hedged. As of December 31, 2016 and 2015, the economic impact of these
transactions is recorded in the Other financial expense account of the Statement
of Comprehensive Income.  “Derivative
financial instruments” have been valued in accordance with the provisions of
IFRS 9.


F-34

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At the date of
issuance of these financial statements the Company has not entered into futures
contracts to buy US dollars.  As of December
31, 2016, the economic impact of the transactions carried out in the fiscal year
resulted in a loss of $ 11.9 million, which is recorded in the Other financial
expense account of the Statement of Comprehensive Income.   Note 4.10 |Cash and cash equivalents  Cash and cash
equivalents include cash on hand, deposits held at call with banks and other
short-term highly liquid investments with original maturities of three months or
less from their acquisition date, with significant low risk of change in
value.  i.Cash and banks in local currency: at nominal
value.  ii.Cash and banks in foreign currency: at the exchange rates
in effect at the end of theyear.  iii.Money market funds, which have been valued at the
prevailing market price at the end of theyear. Those that do not qualify as cash equivalents are
disclosed in the Financial assets at fair value through profit or loss
account.   Note 4.11 |Equity  Changes in this
account have been accounted for in accordance with the corresponding legal or
statutory regulations and the decisions adopted by the shareholders’
meetings.  a.Share capital  Share capital
represents issued capital, which is comprised of the contributions committed
and/or made by the shareholders, represented by shares, including outstanding
shares at nominal value.  b.Treasury stock  The Treasury
stock account represents the nominal value of the Company’s own shares acquired
by the Company.


F-35

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c.Other comprehensive income (loss)  Represents
recognition, at the end of theyear, of the actuarial losses associated with the
Company’s employee benefit plans.  d.Retained earnings  Retained
earnings are comprised of profits or accumulated losses with no specific
appropriation. When positive, they may be distributed, if so decided by the
Shareholders’ Meeting, to the extent that they are not subject to legal
restrictions. Retained earnings are comprised of previous year results that have
not been distributed, amounts transferred from other comprehensive income and
prior year adjustments due to the application of accounting
standards.   Note 4.12 |Trade and other payables  a.Trade
payables  Trade payables
are payment obligations with suppliers for the purchase of goods and services in
the ordinary course of business. Trade payables are classified as current
liabilities if payments fall due within one year or in a shorter period of time.
Otherwise, they are classified as non-current liabilities.  Trade payables
are initially recognized at fair value and subsequently measured at amortized
cost using the effective interest rate method.  b.Customer
deposits  Customer
deposits are initially recognized at fair value and subsequently measured at
amortized cost using the effective interest rate method.  In accordance
with the Concession Agreement, the Company is allowed to receive customer
deposits in the following cases:  i.When the power supply is requested and the customer is
unable to provide evidence of his legal ownership of the premises;  ii.When service has been suspended more than once in
one-year period;  iii.When the power supply is reconnected and the Company is
able to verify the illegal use of the service (fraud).  iv.When the customer is undergoing liquidated bankruptcy or
reorganization proceedings.  The Company has
decided not to request customer deposits from residential tariff
customers.  Customer
deposits may be either paid in cash or through the customer’s bill and accrue
monthly interest at a specific rate of BNA for each customer category.  When the
conditions for which the Company is allowed to receive customer deposits no
longer exist, the customer’s account is credited for the principal amount plus
any interest accrued thereon, after deducting, if appropriate, any amounts
receivable which the Company has with the customer.


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c.Customer contributions  Refundable:The Company
receives assets or facilities (or the cash necessary to acquire or built them)
from certain customers for services to be provided, based on individual
agreements and the provisions of ENRE Resolution No. 215/12. These contributions
are initially recognized as trade payables at fair value with a contra-account
in Property, plant and equipment, and subsequently measured at amortized cost
using the effective interest rate method.  d.Other
payables  The
other payables recorded in Other Payables, including the loans for consumption
(mutuums) with CAMMESA (Note 2.c).VI), the Payment agreement with the ENRE (Note
2.e).IV) and the advances for the execution of works, are initially recognized
at fair value and subsequently measured at amortized cost.  The
recorded liabilities for the debts with the FOTAE, the penalties accrued,
whether imposed or not yet issued by the ENRE (Note 2.e)), and other provisions
are the best estimate of the settlement value of the present obligation in the
framework of IAS 37 provisions at the date of these financial statements.  The
balances of ENRE Penalties and Discounts are adjusted in accordance with the
regulatory framework applicable thereto and are based on the Company’s estimate
of the outcome of the RTI process described in Note 2, whereas the balances of
the loans for consumption (mutuums) are adjusted by a rate equivalent to the
monthly average yield obtained by CAMMESA from its short-term
investments.   Note 4.13 |Borrowings  Borrowings are
initially recognized at fair value, net of direct costs incurred in the
transaction. Subsequently, they are measured at amortized cost; any difference
between the funds obtained (net of direct costs incurred in the transaction) and
the amount to be paid at maturity is recognized in profit or loss during the
term of the borrowings using the effective interest rate
method.   Note 4.14 |Deferred revenue  Non-refundable customer contributions:The Company receives assets or facilities (or the cash
necessary to acquire or built them) from certain customers for services to be
provided, based on individual agreements. In accordance with IFRIC 18, the
assets received are recognized by the Company as Property, plant and equipment
with a contra-account in deferred revenue, the accrual of which depends on the
nature of the identifiable services, in accordance with the following:  ·customer connection to the network: revenue is accrued
until such connection is completed;  ·continuous provision of the electric power supply
service: throughout the shorter of the useful life of the asset and the term for
the provision of the service.


F-37

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Note 4.15 |Employee benefits  Benefit plans  The Company
operates various benefit plans. Usually, benefit plans establish the amount of
the benefit the employee will receive at the time of retirement, generally based
on one or more factors such as age, years of service and
salary.  The liability
recognized in the statement of financial position in respect of benefit plans is
the present value of the benefit plan obligation at the closing date of the
year, together with the adjustments for past service costs and actuarial gains
or losses. The benefit plan obligation is calculated annually by independent
actuaries in accordance with the projected unit credit method. The present value
of the benefit plan obligation is determined by discounting the estimated future
cash outflows using actuarial assumptions about demographic and financial
variables that affect the determination of the amount of such benefits. The
benefit plans are not funded.  The group’s
accounting policy for benefit plans is as follow:  a.Past service
costs are recognized immediately in profit or loss, unless the changes to the
benefit plan are conditional on the employees’ remaining in service for a
specified period of time (the vesting period). In this case, past service costs
are amortized on a straight-line basis over the vesting
period.  b.Actuarial gains
and losses arising from experience adjustments and changes in actuarial
assumptions are recognized in other comprehensive income in the period in which
they arise.   Note 4.16 |Income tax and tax on minimum presumed
income  a.Deferred income tax  The income tax
is recognized in profit or loss, other comprehensive income or in equity
depending on the items from which it originates.  The deferred tax
is recognized, in accordance with the liability method, on the temporary
differences arising between the tax base of assets and liabilities and their
carrying amounts in the statement of financial position. However, no deferred
tax liability is recognized if such difference arises from the initial
recognition of goodwill, or from the initial recognition of an asset or
liability other than in a business combination, which at the time of the
transaction affected neither the accounting nor the taxable profit.  The deferred tax
is determined using the tax rate that is in effect at the date of the financial
statements and is expected to apply when the deferred tax assets are realized or
the deferred tax liabilities are settled.  Deferred tax
assets and liabilities are offset if the Company has a legally enforceable right
to offset recognized amounts and when deferred tax assets and liabilities relate
to income tax levied by the same tax authority on the same taxable entity.
Deferred tax assets and liabilities are stated at their undiscounted value.  Deferred tax
assets are recognized only to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be
utilized.


F-38

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b.Tax on minimum presumed income  The Company
determines the tax on minimum presumed income by applying the current rate of 1%
on its taxable assets at year-end. The tax on minimum presumed income and the
income tax complement each other. The Company’s tax obligation for each year
will be equal to the higher of these taxes. However, should the tax on minimum
presumed income exceed income tax in any given fiscal year, such excess may be
computed as a payment on account of any excess of income tax that may arise in
any of the ten subsequent fiscal years.  Minimum presumed
income tax assets and liabilities have not been discounted.  The Company has
recognized the minimum presumed income tax paid in previous years as a
receivable, as it estimates that in future fiscal years it may be computed as a
payment on account of the income tax.  Note 4.17 |Assignments of use  The assignments
of use in which a significant portion of the risks and rewards of ownership is
retained by the assignor are classified as operating. At present, the Company
only has assignment of use contracts that are classified as
operating.  a.As assignee  The payments
with respect to operating assignments of use are recognized as operating
expenses in the Statement of Comprehensive Income on a straight-line basis
throughout the term of the assignment.  b.As assignor  The assignments
of use in which the Company does not transfer substantially all the risks and
rewards of the ownership of the asset are classified as operating assignments of
use.  The collections
with respect to operating assignments of use are recognized as income in the
Statement of Comprehensive Income on a straight-line basis throughout the term
of the assignment.   Note 4.18 |Provisions and contingencies  Provisions have
been recognized in those cases in which the Company is faced with a present
obligation, whether legal or constructive, that has arisen as a result of a past
event, whose settlement is expected to result in an outflow of resources, and
the amount thereof can be estimated reliably.


F-39

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The amount
recognized as provisions is the best estimate of the expenditure required to
settle the present obligation, at the end of the reporting year, taking into
account the corresponding risks and uncertainties. When a provision is measured
using the estimated cash flow to settle the present obligation, the carrying
amount represents the present value of such cash flow. This present value is
obtained by applying a pre-tax discount rate that reflects market conditions,
the time value of money and the specific risks of the
obligation.  The provisions
included in liabilities have been recorded to face contingent situations that
could result in future payment obligations. To estimate the amount of provisions
and the likelihood of an outflow of resources, the opinion of the Company’s
legal advisors has been taken into account.   Note 4.19 |Balances with related parties  Receivables and
payables with related parties are initially recognized at fair value and
subsequently measured at amortized cost in accordance with the terms agreed upon
by the parties involved.   Note 4.20 |Higher costs and income recognition   The recognition
of higher costs (Note 2.c).IV) not transferred to the tariff, the recognition
established by SE Resolution No. 32/15 (Note 2.c).VII), as well as the
recognition of income due to the effect of the provisional remedies related to
Pilar and La Matanza localities (Note 2.c).VIII) fall within the scope of IAS 20
inasmuch as they imply a compensation to cover the expenses and afford the
investments associated with the normal provision of the public service, object
of the concession.  Their
recognition is made at fair value when there is reasonable assurance that
they will be collected and the conditions attached thereto have been complied
with, i.e. provision of the service in the case of the recognition established
in SE Resolution No. 32/15, and the ENRE’s approval and the SE’s recognition, by
means of a Note or Resolution, in the case of the recognition of higher
costs.  As for the
income deriving from the funds to which SE Resolution No. 745/05 refers, it was
recognized on the basis of amounts billed.  Such concepts
have been disclosed in the “Recognition of income on account of the RTI –
Resolution 32/15”, “Higher Costs Recognition - SE Resolution 250/13 and
Subsequent notes”, and “Recognition of income – provisional remedies – MEyM Note
No. 2016-04484723” line items of the Statement of Comprehensive Income as of
December 31, 2016 and 2015, recognizing the related tax effects. There have been
no unfulfilled conditions or any other related contingencies.   Note 4.21 |Share-based Compensation Plan  The Company has
share-based compensation plans under which it receives services from some
employees in exchange for the Company’s shares. The fair value of the employee
services received is recognized as an operating expense in the “Salaries and
social security taxes” line item. The total amount of the referred to expense is
determined by reference to the fair value of the shares
granted.  When the
employees provide the services before the shares are granted, the fair value at
the grant date is estimated in order to recognize the respective result.


F-40

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Note 5 |Financial
risk management    Note 5.1 |Financial risk factors  The Company’s
activities and the market in which it operates expose the Company to a series of
financial risks: market risk (including currency risk, cash flows interest rate
risk, fair value interest rate risk and price risk), credit risk and liquidity
risk.  The management
of the financial risk is part of the Company’s overall policies, which focus on
the unpredictability of the financial markets and seek to minimize potential
adverse effects on its financial performance. Financial risks are the risks
derived from the financial instruments to which the Company is exposed during or
at the end of each year. The Company uses derivative instruments to hedge
exposure to certain risks whenever it deems appropriate in accordance with its
internal risk management policy.  Risk management
is controlled by the Finance and Control Department, which identifies, evaluates
and hedges financial risks. Risk management policies and systems are
periodically reviewed so that they can reflect the changes in the market’s
conditions and the Company’s activities.  This section
includes a description of the main risks and uncertainties that could have a
material adverse effect on the Company’s strategy, performance, results of
operations and financial position.  a.Market risks  i.Currency risk  Currency risk is
the risk of fluctuation in the fair value or future cash flows of a financial
instrument due to changes in foreign currency exchange rates. The Company’s
exposure to currency risk relates to the collection of its revenue in pesos, in
conformity with regulated electricity rates that are not indexed in relation to
the US dollar, whereas a significant portion of its existing financial
liabilities is denominated in US dollars. Therefore, the Company is exposed to
the risk of a loss resulting from a devaluation of the peso. The Company may
hedge its currency risk trying to enter into currency futures. At the date of
issuance of these financial statements, the Company has not hedged its exposure
to the US dollar.  If the Company
continued to be unable to effectively hedge all or a significant part of its
exposure to currency risk, any devaluation of the peso could significantly
increase its debt service burden, which, in turn, could have a substantial
adverse effect on its financial and cash position (including its ability to
repay its Corporate Notes) and the results of its operations. The exchange rates
used as of December 31, 2016 and 2015 are $ 15.89 and $ 13.04 per USD,
respectively.


F-41

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As
of December 31, 2016 and 2015, the Company’s balances in
foreign currency are as follow:    Currency
    
    Amount in foreign currency
    
    Exchange rate (1)
    
    Total 12.31.16
    
    Total 12.31.15ASSETSCURRENT
      ASSETSOther
      receivables
    USD
    
    -
    
    15.790
    
    -
    
    11,193Cash and cash
      equivalents
    USD
    
    10,244
    
    15.790
    
    161,753
    
    10,607EUR
    
    12
    
    16.625
    
    200
    
    181TOTAL CURRENT
      ASSETS
    
    
    10,256
    
    
    
    161,953
    
    21,981TOTAL
      ASSETS
    
    
    10,256
    
    
    
    161,953
    
    21,981LIABILITIESNON-CURRENT
      LIABILITIESBorrowings
    USD
    
    174,298
    
    15.890
    
    2,769,599
    
    2,341,098Related
      parties
    USD
    
    -
    
    15.890
    
    -
    
    119,877TOTAL NON-CURRENT
      LIABILITIES
    
    
    174,298
    
    
    
    2,769,599
    
    2,460,975CURRENT
      LIABILITIESTrade
      payables
    USD
    
    11,108
    
    15.890
    
    176,506
    
    185,900EUR
    
    7
    
    16.770
    
    117
    
    12,063CHF
    
    30
    
    15.636
    
    469
    
    397NOK
    
    68
    
    1.854
    
    126
    
    101Borrowings
    USD
    
    3,378
    
    15.890
    
    53,684
    
    46,688Related
      parties
    USD
    
    -
    
    15.890
    
    -
    
    2,110TOTAL CURRENT
      LIABILITIES
    
    
    14,591
    
    
    
    230,902
    
    247,259TOTAL
      LIABILITIES
    
    
    188,889
    
    
    
    3,000,501
    
    2,708,234
   (1)The Exchange
rates used are the BNA exchange rates in effect as of December 31, 2016 for US
Dollars (USD), Euros (EUR), Swiss Francs (CHF) and Norwegian Krones (NOK).  The table below
shows the Company’s exposure to currency risk resulting from the financial
assets and liabilities denominated in a currency other than the Company’s
functional currency.    12.31.16
    
    12.31.15Net position
      Assets/(Liabilities)US
      dollar
    (2,838,036)
    
    (2,673,873)Euro
    83
    
    (11,882)Norwegian
      krone
    (126)
    
    (101)Swiss
      franc
    (469)
    
    (397)Total
    (2,838,548)
    
    (2,686,253)
   The Company
estimates that a 10% devaluation of the Argentine peso with respect to each
foreign currency, with all the other variables remaining constant, would give
rise to the following decrease in the results of operations for the
year:     12.31.16
    
    12.31.15Net position
      Assets/(Liabilities)US
      dollar
    (283,804)
    
    (267,387)Euro
    8
    
    (1,188)Norwegian
      krone
    (13)
    
    (10)Swiss
      franc
    (47)
    
    (40)Decrease in the results of operations for the
      year
    (283,856)
    
    (268,625)


F-42

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ii.Price risk  The Company’s
investments in listed equity instruments are susceptible to market price risk
arising from the uncertainties concerning the future value of these instruments.
Due to the low significance of the investments in equity instruments in relation
to the net asset/liability position, the Company is not significantly exposed to
the referred to instruments price risk.  Furthermore, the
Company is not exposed to commodity price risk.   iii.Interest rate risk  Interest rate
risk is the risk of fluctuation in the fair value or cash flows of an instrument
due to changes in market interest rates. The Company’s exposure to interest rate
risk arises mainly from its long-term debt obligations.  Indebtedness at
floating rates exposes the Company to interest rate risk on its cash flows.
Indebtedness at fixed rates exposes the Company to interest rate risk on the
fair value of its liabilities. As of December 31, 2016 and 2015, 100% of the
loans were obtained at fixed interest rates. The Company’s policy is to keep the
highest percentage of its indebtedness in instruments that accrue interest at
fixed rates.  The Company
analyzes its exposure to interest rate risk in a dynamic manner. Several
scenarios are simulated taking into account the positions with respect to
refinancing, renewal of current positions, alternative financing and hedging.
Based on these scenarios, the Company calculates the impact on profit or loss of
a specific change in interest rates. In each simulation, the same interest rate
fluctuation is used for all the currencies. Scenarios are only simulated for
liabilities that represent the most relevant interest-bearing
positions.  The table below
shows the breakdown of the Company’s loans according to interest rate and the
currency in which they are denominated:    12.31.16
    
    12.31.15Fixed
      rate:US
      dollar
    
    2,823,283
    
    2,509,773Total
      loans
    
    2,823,283
    
    2,509,773
   Due to the fact
that the totality of the loans accrue interest at a fixed rate, and, also, that
none of the Company’s indebtedness is valued at fair value, there is no interest
rate sensitivity impact.  b.Credit risk  Credit risk is
the risk of a financial loss as a consequence of a counterparty’s failure to
comply with the obligations assumed in a financial instrument or commercial
contract. The Company’s exposure to credit risk results from its operating
(particularly from its commercial receivables) and financial activities,
including deposits in financial entities and other instruments.


F-43

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Credit risk
arises from cash and cash equivalents, deposits with banks and financial
entities and derivative financial instruments, as well as from credit exposure
to customers, included in outstanding balances of accounts receivable and
committed transactions.  With regard to
banks and financial entities, only those with high credit quality are
accepted.  With regard to
debtors, if no independent credit risk ratings are available, the Finance
Department evaluates the debtors’ credit quality, past experience and other
factors.  Individual
credit limits are established in accordance with the limits set by the Company’s
CEO, on the basis of the internal or external ratings approved by the Finance
and Control Department.  The Company has
different procedures in place to reduce energy losses and allow for the
collection of the balances owed by its customers. The Commercial Department
periodically monitors compliance with the above-mentioned
procedures.  Delinquent trade
receivables increased from $ 209.3 million as of December 31, 2015 to $ 658.8
million as of December 31, 2016, due to different provisional remedies that
temporarily suspended the tariff increase applicable as from February 1, 2016,
established by ENRE Resolution No. 1/16.  One of the
significant items of delinquent balances is that related to the receivable
amounts with Municipalities, in respect of which the Company either applies
different offsetting mechanisms against municipal taxes it collects in the name
and to the order of those government bodies, or implements debt refinancing
plans, with the aim of reducing them.  Furthermore, and
taking into account that in fiscal year 2016 the ENRE prevented the Company from
suspending the electricity supply to customers with delinquent balances, the
Company’s actions to reduce the impact of delinquency were limited. Therefore,
at the date of issuance of these financial statements the Company’s Board of
Directors is analyzing the plans of action it will implement in order to
reinforce the activities aimed at reducing delinquent
balances.  Additionally, it
is important to point out that in fiscal year 2016 it was possible to collect
more than 50% of the delinquent receivables existing as of December 31,
2015.  Finally, and
with regard to the electricity supplied to low-income areas, as stipulated in
the Adjustment Agreement (Note 2.d), in fiscal year 2016 the Company received
payments for a total of $ 64.9 million, which represents 89% of the outstanding
balance as of December 31, 2015. Past experience shows that these balances have
always been collected.  At each
year-end, the Company analyzes whether the recording of an impairment is
necessary. As of December 31, 2016 and 2015, delinquent trade receivables
totaled approximately $ 658.8 million and $ 209.3 million, respectively. 
As of December 31, 2016 and 2015, the financial statements included allowances
for $ 259.7 million and $ 79.4 million, respectively. The inability to collect
the accounts receivable in the future could have an adverse effect on the
Company’s results of operations and its financial position, which, in turn,
could have an adverse effect on the Company’s ability to repay loans, including
payment of the Corporate Notes.  The balances of
the bills for electricity consumption that remain unpaid 13 working days after
the bills’ due dates for small-demand (T1) customers and 7 working days after
due dates for medium and large-demand (T2 and T3) customers, are considered
delinquent trade receivables. Additionally, the amounts related to the Framework
Agreement are not considered within delinquent balances.  The Company’s
maximum exposure to credit risk is based on the book value of each financial
asset in the financial statements, after deducting the corresponding
allowances.


F-44

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c.Liquidity risk  The Company
monitors the risk of a deficit in cash flows on a periodical basis. The Finance
Department supervises the updated projections of the Company’s liquidity
requirements in order to ensure that there is enough cash to meet its
operational needs, permanently maintaining sufficient margin for undrawn credit
lines so that the Company does not fail to comply with the indebtedness limits
or covenants, if applicable, of any line of credit. Such projections give
consideration to the Company’s debt financing plans, compliance with covenants,
with internal balance sheet financial ratios objectives and, if applicable, with
external regulations and legal requirements, such as, restrictions on the use of
foreign currency.  Cash surpluses
held by the Company and the balances in excess of the amounts required to manage
working capital are invested in Money Market Funds and/or time deposits that
accrue interest, currency deposits and securities, choosing instruments with
appropriate maturities or sufficient liquidity to provide sufficient margin as
determined in the aforementioned projections. As of December 31, 2016 and 2015,
the Company’s current financial assets at fair value amount to $ 2 billion and $
1.5 billion, respectively, which are expected to generate immediate cash inflows
to manage the liquidity risk.  The table below
includes an analysis of the Company’s non-derivative financial liabilities,
which have been classified into maturity groupings based on the remaining period
between the closing date of the fiscal year and the contractual maturity date.
Derivative financial liabilities are included in the analysis if their
contractual maturities are essential for an understanding of the timing of the
cash flows. The amounts disclosed in the table are the contractual undiscounted
cash flows.    No deadline
    
    Less than 3 months
    
    From 3 months to 1 year
    
    From 1 to 2 years
    
    From 2 to 5 years
    
    More than 5 years
    
    TotalAs of December 31,
      2016Trade and other
      payables
    
    4,907,204
    
    3,937,598
    
    3,018,225
    
    310,860
    
    118,174
    
    -
    
    12,292,061Borrowings
    
    -
    
    -
    
    288,494
    
    288,494
    
    865,481
    
    2,947,068
    
    4,389,537Total
    
    4,907,204
    
    3,937,598
    
    3,306,719
    
    599,354
    
    983,655
    
    2,947,068
    
    16,681,598As of December 31,
      2015Trade and other
      payables
    
    2,391,878
    
    4,322,334
    
    304,771
    
    134,943
    
    90,023
    
    -
    
    7,243,949Borrowings
    
    -
    
    -
    
    256,959
    
    439,325
    
    710,250
    
    2,655,238
    
    4,061,772Total
    
    2,391,878
    
    4,322,334
    
    561,730
    
    574,268
    
    800,273
    
    2,655,238
    
    11,305,721


F-45

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Note 5.2 |Concentration risk factors  a.Related to
customers  The Company’s
receivables derive primarily from the sale of electricity.  No single
customer accounted for more than 10% of sales for the years ended December 31,
2016 and 2015. The collectibility of trade receivables balances related to the
Framework Agreement, which amount to $ 8.2 million and $ 73.1 million as of
December 31, 2016 and 2015, respectively, as disclosed in Note 2.d), is subject
to compliance with the terms of such agreement.  b.Related to
employees who are union members  As of December
31, 2016, 85.5% of the Company’s employees are union members, Sindicato de Luz y
Fuerza de Capital Federal (Electric Light and Power Labor Union Federal Capital)
(73%) and Asociación del Personal Superior de Empresas de Energía (Association
of Supervisory Personnel of Energy Companies) (12.5%). These employees labor
cost depends on negotiations between the Company and the unions; a sensitive
change in employment conditions generates a significant impact on the Company’s
labor costs.  On January
18, 2016, the Company entered into two agreements, one with the Sindicato de Luz
y Fuerza de Capital Federal and another one with the Asociación del Personal
Superior de Empresas de Energía, pursuant to which the Company agreed to grant,
on a voluntary and one-time basis, an extraordinary bonus not regarded as a
salary item (i.e. included in the salary but not subject to social security
charges nor considered for the payment of the mid and year-end bonus) of $ 5,000
to all the employees subject to the collective bargaining agreements of the
aforementioned union/association. The bonus was paid in two installments of $
2,000 and $ 3,000 on January 21, 2016 and March 21, 2016, respectively.  Also, on
December 20, 2016 an Agreement was signed with the Sindicato de Luz y Fuerza
Capital Federal, which provides for the following:  ·A salary increase of 6% from November 2016. ·A salary increase of 6% from March 2017. ·A voluntary one-time extraordinary bonus not regarded as
a salary item of $10,000, payable in 2 installments of $ 5,000 each on January
20, 2017 and February 20, 2017, respectively.  The
aforementioned agreements apply also to the contractors whose workers are
included in the collective bargaining agreements of the above-mentioned union as
well as non-unionized personnel.   Note 5.3 |Capital risk management  The Company’s
objectives when managing capital are to safeguard its ability to continue as a
going concern and to maintain an optimal capital structure to reduce the cost of
capital.  Consistent with
others in the industry, the Company monitors its capital on the basis of the
gearing ratio. This ratio is calculated as net debt divided by total capital.
Net debt is calculated as total liabilities (current and non-current) less cash
and cash equivalents. Total capital is calculated as equity attributable to the
owners as shown in the statement of financial position plus net
debt.


F-46

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As of December
31, 2016 and 2015, gearing ratios were as follow:   12.31.16
    
    12.31.15Total
      liabilities
    
    18,571,698
    
    11,455,876Less: cash
      and cash equivalents
    
    (258,562)
    
    (128,952)Net
      debt
    
    18,313,136
    
    11,326,924Total
      Equity
    
    361,832
    
    1,525,053Total
      capital attributable to owners
    
    18,674,968
    
    12,851,977Gearing
      ratio
    
    98.06%
    
    88.13%
    Note 5.4 |Regulatory risk factors  Pursuant to
caption C of Section 37 of the Concession Agreement, the Grantor of the
Concession may, without prejudice to other rights to which he is entitled
thereunder, foreclose on the collateral granted by the Company when the
cumulative value of the penalties imposed to the Company in the previous
one-year period exceeds 20% of its annual billing, net of taxes and
rates.  The Company’s
Management evaluates the development of this indicator on an annual basis.  Note 5.5 |Fair value estimate  The Company
classifies the measurements of financial instruments at fair value using a fair
value hierarchy that reflects the relevance of the variables used to carry out
such measurements. The fair value hierarchy has the following levels: ·Level 1: quoted prices
(unadjusted) in active markets for identical assets or
liabilities. ·Level 2: inputs other
than quoted prices included in level 1 that are observable for the asset or
liability, either directly (i.e. prices) or indirectly (i.e. derived from the
prices). ·Level 3: inputs for the
asset or liability that are not based on observable market data (i.e.
unobservable inputs).


F-47

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The table below
shows the Company’s financial assets measured at fair value as of December 31,
2016 and 2015:   LEVEL 1
    
    LEVEL 2
    
    LEVEL 3
    
    TOTALAt December 31,
      2016AssetsCash and cash
      equivalentsMoney market
      funds
    
    61,461
    
    -
    
    -
    
    61,461Financial assets at fair value through profit or
      loss:Government
      bonds
    
    387,279
    
    -
    
    -
    
    387,279Other
      receivables
    
    28,839
    
    -
    
    -
    
    28,839Money market
      funds
    
    1,606,636
    
    -
    
    -
    
    1,606,636Total
      assets
    
    2,084,215
    
    -
    
    -
    
    2,084,215At December 31,
      2015AssetsCash and cash
      equivalentsMoney market
      funds
    
    93,488
    
    -
    
    -
    
    93,488Financial assets at fair value through profit or
      loss:Government
      bonds
    
    370,161
    
    -
    
    -
    
    370,161Other
      receivables
    
    43,219
    
    -
    
    -
    
    43,219Money market
      funds
    
    1,213,840
    
    -
    
    -
    
    1,213,840Derivative financial
      instruments
    
    -
    
    197
    
    -
    
    197Total
      assets
    
    1,720,708
    
    197
    
    -
    
    1,720,905
    The value of the
financial instruments negotiated in active markets is based on the market quoted
prices on the date of the statement of financial position. A market is
considered active when the quoted prices are regularly available through a stock
exchange, broker, sector-specific institution or regulatory body, and those
prices reflect regular and current market transactions between parties that act
in conditions of mutual independence. The market quotation price used for the
financial assets held by the Company is the current offer price. These
instruments are included in level 1.  The fair value
of financial instruments that are not negotiated in active markets is determined
using valuation techniques. These valuation techniques maximize the use of
market observable information, when available, and rely as little as possible on
specific estimates of the Company. If all significant variables to establish the
fair value of a financial instrument can be observed, the instrument is included
in level 2. These derivative financial instruments arise from the variation
between the market prices at year-end or sale thereof and the time of
negotiation. The market value used is obtained from the “Report on US Dollar
futures – ROFEX” issued by Banco Finansur.


F-48

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When one or more
variables used to determine the fair value cannot be observed in the market, the
financial instrument is included in level 3. There are no financial instruments
that are to be included in level 3.   Note 6 |Critical
accounting estimates and judgments  The preparation
of the financial statements requires the Company’s Management to make estimates
and assessments concerning the future, exercise critical judgments and make
assumptions that affect the application of the accounting policies and the
reported amounts of assets and liabilities and revenues and expenses.  These estimates and judgments are permanently evaluated
and are based upon past experience and other factors that are reasonable under
the existing circumstances. Future actual results may differ from the estimates
and assessments made at the date of preparation of these financial statements.   The estimates
that have a significant risk of causing adjustments to the carrying amounts of
assets and liabilities within the next fiscal year are detailed below:  a.Allowances for the impairment of
receivables  The allowance
for the impairment of accounts receivable is assessed based on the delinquent
balance, which comprises all such debt arising from the bills for electricity
consumption that remain unpaid 13 working days after their due dates for
small-demand (T1) customers and 7 working days after due date for medium and
large-demand (T2 and T3) customers. The Company’s Management records an
allowance applying to the delinquent balances of each customer category an
uncollectibility rate that is determined according to each customer category
based on the historical comparison of collections made.  Additionally,
and faced with temporary and/or exceptional situations, the Company’s Management
may redefine the amount of the allowance, specifying and supporting the criteria
used in all the cases.  b.Revenue recognition  Revenue is
recognized on an accrual basis upon delivery to customers, which includes the
estimated amount of unbilled distribution of electricity at the end of each
year. The accounting policy for the recognition of estimated revenue is
considered critical because it depends on the amount of electricity effectively
delivered to customers, which is valued on the basis of applicable tariffs.
Unbilled revenue is classified as current trade receivables.  c.Impairment of long-lived assets  Long-lived
assets are tested for impairment at the lowest disaggregation level at which
independent cash flows can be identified (cash generating units, or CGU).


F-49

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Recoverability analysis  The Company
analyzes the recoverability of its long-lived assets on a periodical basis or
when events or changes in circumstances indicate that the recoverable amount of
assets, which is measured as the higher of value in use and fair value less
costs to sell at the end of the year, may be impaired.  At the date of
issuance of these financial statements there are indicators of a potential
impairment inasmuch as the Company has operating losses for $ 609.4 million,
Therefore, the Company has made its projections in order to analyze the
recoverability of its property, plant and equipment. The value in use is
determined based on projected and discounted cash flows, using discount rates
that reflect the time value of money and the specific risks of the assets
considered.  Cash flows are
prepared on the basis of estimates concerning the future performance of certain
variables that are sensitive to the determination of the recoverable amount,
among which the following can be noted: (i) nature, opportunity and modality of
the electricity rate increases and/or cost adjustments recognition; (ii) demand
for electricity projections; (iii) evolution of the costs to be incurred; (iv)
investment needs in accordance with the service quality levels required by the
regulatory authority; and (v) macroeconomic variables, such as growth rates,
inflation rates and foreign currency exchange rates.  The increase in
electricity rates used by the Company to assess the recoverability of its
property, plant and equipment as of December 31, 2016 is based on both the
electricity rate schedule approved as from February 2017 that fixed the
Company’s remuneration, and the tariff adjustment mechanism for the next 5 years
(Note 2.c).III). Given that the main variable is the electricity rate, and such
rate is supported by the approved electricity rate schedule, the Company has
prepared only one scenario, considering the most pessimistic situation when
estimating the variables with greater impact (resolution of regulatory issues)
and its best estimate for the other variables with lower
incidence.  In order to
determine the scenario mentioned in the preceding paragraph, the Company has
considered the following:  i.Nature, opportunity, and modality of the electricity rate
increases and/or cost adjustments recognition: Electricity rate increases as
resolved in the RTI process; ii.Settlement of
regulatory liabilities: The Company has considered to use the final surplus of
its annual cash flows until these liabilities are settled; iii.Electricity
demand growth: 2.5% p.a.; iv.Development of
costs to be incurred: mainly, based on the expected level of
inflation; v.Investments for
infrastructure maintenance: in accordance with the service quality levels
required by the regulator in the RTI; vi.Inflation
rate; vii.Exchange
rate.  The discount
rate (WACC) in pesos varies for each year of the projection. For the first 5
years, the average of these rates is 29%.  Further, the
Company has performed a sensitivity analysis in view of reasonably possible
changes to these variables, and it concluded that in no case should it recognize
an impairment in the value of its property, plant and
equipment.


F-50



d.Current and deferred income tax  A degree of
judgment is required to determine the income tax provision inasmuch as the
Company’s Management has to evaluate, on an ongoing basis, the positions taken
in tax returns in respect of situations in which the applicable tax regulation
is subject to interpretation and, whenever necessary, make provisions based on
the amount expected to be paid to the tax authorities. When the final tax
outcome of these matters differs from the amounts initially recognized, such
differences will impact on both the income tax and the deferred tax provisions
in the period in which such determination is made.  There are many
transactions and calculations for which the ultimate tax determination is
uncertain. The Company recognizes liabilities for eventual tax claims based on
estimates of whether additional taxes will be due in the
future.  Deferred tax
assets are reviewed at each reporting date and reduced in accordance with the
probability that the sufficient taxable base will be available to allow for the
total or partial recovery of these assets. Deferred tax assets and liabilities
are not discounted. The realization of deferred tax assets depends on the
generation of future taxable income in the periods in which these temporary
differences become deductible. To make this assessment, the Company’s Management
takes into consideration the scheduled reversal of deferred tax liabilities, the
projections of future taxable income and tax planning
strategies.  e.Benefit plans  The liability
recognized by the Company is the best estimate of the present value of the cash
flows representing the benefit plan obligation at the closing date of the year
together with the adjustments for past service costs and actuarial losses. Cash
flows are discounted using a rate that contemplates actuarial assumptions about
demographic and financial conditions that affect the determination of benefit
plans. Such estimate is based on actuarial calculations made by independent
professionals in accordance with the projected unit credit
method.  f.ENRE penalties and discounts  The Company
considers its applicable accounting policy for the recognition of ENRE penalties
and discounts critical because it depends on penalizable events, which are
valued on the basis of Management best estimate of the expenditure required to
settle the present obligation at the date of these financial statements. The
balances of ENRE penalties and discounts are adjusted in accordance with the
regulatory framework applicable thereto and have been estimated based on that
which has been described in Note 2.e).i.  g.Contingencies and provisions for
lawsuits  The Company is a
party to several complaints, lawsuits and other legal proceedings, including
customer claims, in which a third party is seeking payment for alleged damages,
reimbursement for losses or compensation. The Company’s potential liability with
respect to such claims, lawsuits and legal proceedings may not be accurately
estimated. The Company’s Management, with the assistance of its legal advisors
(attorneys), periodically analyzes the status of each significant matter and
evaluates the Company’s potential financial exposure.  If the loss deriving
from a complaint or legal proceeding is considered probable and the amount can
be reasonably estimated, a provision is recorded.  Provisions for
contingent losses represent a reasonable estimate of the losses that will be
incurred, based on the information available to Management at the date of the
financial statements preparation, taking into account the Company’s litigation
and settlement strategies. These estimates are mainly made with the help of
legal advisors. However, if the Management’s estimates proved wrong, the current
provisions could be inadequate and result in a charge to profits that could have
a significant effect on the statements of financial position, comprehensive
income, changes in equity and cash flows.


F-51

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Note 7 |Interest in
joint venture  Percentage interest held
    
    
    Equity attributable to the ownersin capital stock and votes
    
    
    12.31.16
    12.31.15SACME
    50.00%
    
    435
    433
    Note 8 |Contingencies
and lawsuits  The Company has
contingent liabilities and is a party to lawsuits that arise from the ordinary
course of business. Based on the opinion of its legal advisors, the Company’s
Management estimates that the outcome of the current contingencies and lawsuits
will not exceed the amounts of the recorded provisions nor will be significant
with respect to the Company’s financial position or the results of its
operations.  Furthermore, it
is worth mentioning that there exist contingent obligations and labor, civil and
commercial complaints filed against the Company related to legal actions for
individual non-significant amounts for which a provision, which as of December
31, 2016  amounts to $ 429.3 million, has been recorded.  The most
significant legal actions in which the Company is a party involved are detailed
below:   a.Legal action
brought by Consumidores Libres Coop.Ltda. de
provisión de servicios de acción comunitaria  Purpose:  a) That all the
last resolutions concerning electricity rates issued by the ENRE and the SE be
declared null and unconstitutional, and, in consequence whereof, that the
amounts billed by virtue of these resolutions be refunded.  b) That all the
defendants be under the obligation to carry out the RTI.  c) That the
resolutions issued by the SE that extend the transition period of the Adjustment
Agreement be declared null and unconstitutional.  d) That the
defendants be ordered to carry out the sale process, through an international
public bidding, of the Class "A" shares, due to the fact that the management
period of the Concession Agreement is considered over.  e) That the
resolutions as well as any act performed by a governmental authority that modify
contractual renegotiations be declared null and
unconstitutional.


F-52

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f) That the
resolutions that extend the management periods stipulated in the Concession
Agreement be declared null and unconstitutional.  g) Subsidiarily,
should the main claim be rejected, that the defendants be ordered to bill all
customers on a bimonthly basis.  Amount:undetermined  Procedural
stage of the proceedings:On February 17, 2017 the Court of Original
Jurisdiction rejected the complaint and raisedres judicata
sua sponte, in addition to declaring that the issuance of MEyM
Resolutions Nos. 6 and 7/16 and ENRE Resolution No. 1/16 rendered the
application of the regulatory framework questioned by the plaintiff
baseless.  Conclusion:the Company believes that the trial court’s decision is
based upon the applicable law and that even in the case that such decision were
appealed by the plaintiff there exist solid arguments to believe that it would
be confirmed by the Appellate Court.   b.Legal action
brought by Consumidores Financieros Asociación civil para su
defensa  Purpose:  1) Reimbursement
of the Value Added Tax (VAT) percentage paid on the illegally “widened” taxable
basis due to the incorporation of the FNEE. Distribution companies, the
defendants, had not paid this tax when CAMMESA invoiced them the electricity
purchased for distribution purposes.  2) Reimbursement
of part of the administrative surcharge on “second due date”, in those cases in
which payment was made within the time period authorized for such second
deadline (14 days) but without distinguishing the effective day of payment.  3) Application
of the “borrowing rate” in case of customer delay in complying with payment
obligation, in accordance with the provisions of Law No.
26,361.  Amount:undetermined  Procedural
stage of the proceedings:On April 22, 2010, the Company answered the
complaint and filed a motion to dismiss for lack of standing
(“excepción de falta de legitimación”), requesting,
at such opportunity, that a summons be served upon the Federal Government, the
AFIP and the ENRE as third-party defendants. Notice of this was served upon the
plaintiff. Although the plaintiff’s opposition to the requested summons had not
yet been resolved, the proceedings were brought to trial, in response to which
Edenor S.A. filed a motion for reversal with a supplementary appeal. The Court
hearing the case granted the motion filed by Edenor S.A. and ordered that the
Federal Government, the AFIP and the ENRE be summoned as third-party defendants,
which has already taken place. These proceedings have been joined to those
mentioned below.  Conclusion:no provision has been recorded for these claims in these
financial statements as the Company believes, based on both that which has been
previously mentioned and the opinion of its legal advisors, that there exist
solid arguments for them to be considered unfounded. It is estimated that the
proceedings will not be terminated in 2017.


F-53

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c.Legal action brought by ASOCIACIÓN DE DEFENSA DE DERECHOS
DE USUARIOS Y CONSUMIDORES – ADDUC  Purpose:that the
Company be ordered to reduce or mitigate the default or late payment interest
rates charged to customers who pay their bills after the first due date,
inasmuch as they violate section 31 of Law 24,240, ordering both the non
application of pacts or accords that stipulate the interest rates that are being
applied to the users of electricity –their unconstitutional nature– as well as
the reimbursement of interest amounts illegally collected from the customers of
the service from August 15, 2008 through the date on which the defendant
complies with the order to reduce interest. It is also requested that the VAT
and any other taxes charged on the portion of the surcharge illegally collected
be reimbursed. Amount:undetermined  Procedural
stage of the proceedings:On November 11, 2011, the Company answered
the complaint and filed a motion to dismiss for both lack of standing to sue
(“excepción de falta de legitimación
activa”) and the fact that the claims at issue were being
litigated in another lawsuit (“excepción de
litispendencia”), currently in process, requesting as well that a
summons be served upon the ENRE as a third-party defendant. Notice of these
pleadings was served upon the plaintiff. Prior to rendering a decision on the
motion to dismiss, the Court ordered that the Court in Contentious and
Administrative Federal Matters No. 2 – Clerk’s Office No. 3 provide it with the
proceedings “Consumidores Financieros Asociación Civil vs EDESUR and Other
defendants, for breach of contract”. On April 8, 2014, the Court in Civil and
Commercial Federal Matters No. 9 – Clerk’s Office No. 17 admitted the motion to
dismiss due to the fact that the claims at issue were being litigated in another
lawsuit (“excepción de litispendencia”), and ordered
that the proceedings be sent to Federal Court No. 2 – Clerk’s Office No. 3 to be
dealt with thereat, thus joining them to the case entitled “consumidores
financieros vs Edesur and other defendants, for breach of contract”. Apart from
the fact that the proceedings have been received in the Court that currently
hears the case, which continues in process, no significant events have
occurred.  Conclusion:no provision has been recorded for these claims in these
financial statements as the Company believes, based on both that which has been
previously mentioned and the opinion of its legal advisors, that there exist
solid arguments for them to be considered unfounded. It is estimated that this
legal action will not be terminated in 2017.   d.Legal action brought by the Company (“Edenor S.A. vs ENRE
Resolution No. 32/11”)  Purpose:The judicial
annulment of ENRE Resolution that provided the following:  - That the
Company be fined in the amount of $ 750,000 due to its failure to comply with
the obligations arising from Section 25, sub-sections a, f and g, of the
Concession Agreement and Section 27 of Law No. 24,065.  - That the
Company be fined in the amount of $ 375,000 due to its failure to comply with
the obligations arising from Section 25 of the Concession Agreement and ENRE
Resolution No. 905/99.  - That the
Company be ordered to pay customers as compensation for the power cuts suffered
the following amounts: $ 180 to each small-demand residential customer (T1R) who
suffered power cuts that lasted more than 12 continuous hours, $ 350 to those
who suffered power cuts that lasted more than 24 continuous hours, and $ 450 to
those who suffered power cuts that lasted more than 48 continuous hours. The
resolution stated that such compensation did not include damages to customer
facilities and/or appliances, which were to be dealt with in accordance with a
specific procedure.  Amount:$ 22.4
million.


F-54

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Procedural
stage of the proceedings:On July 8, 2011, the Company requested that
notice of the action be served upon the ENRE, which has effectively taken place.
The proceedings are “awaiting resolution” since the date on which the ENRE
answered the notice served. Furthermore, on October 28, 2011, the Company filed
an appeal (“Recurso deQueja por apelación denegada”) to theCSJNconcerning the provisional relief sought and
not granted. On April 24, 2013, the Company was notified of Division I’s
decision dated March 21, 2013, pursuant to which the appeal filed by Edenor S.A.
was declared formally inadmissible. On May 3, 2013, the Company filed an
ordinary appeal (“Recurso Ordinario de
Apelación”) to the CSJN. Additionally, on May 13, 2013, an
extraordinary appeal (“Recurso Extraordinario
Federal”) was also filed to the same Court. On November 7, 2014,
it was notified to the Company that Division I had rejected the ordinary appeal
but partially granted the extraordinary appeal, considering for the granting
thereof the federal nature of the regulations being challenged and rejecting it
in relation to the arbitrariness raised by Edenor S.A. Therefore, and within the
procedural term granted for such purpose, the Company filed an appeal requesting
that the extraordinary appeal dismissed be sustained (“Recurso
deQueja por Rec. Extraordinario
Denegado”). As of the date of this report, no decision has yet
been issued on this regard.  Conclusion:
as of the closing date of the year ended December 31,
2016, the Company made a provision for principal and interest accrued for an
amount of $ 52 million within the Other non-current liabilities account. It
is estimated that this legal action may be terminated in 2017.   e.Legal action brought by the Company (“Edenor S.A. VS
FEDERAL GOVERNMENT – MINISTRY OF FEDERAL PLANNING / PROCEEDING FOR THE
DETERMINATION OF A CLAIM AND MOTION TO LITIGATE IN FORMA
PAUPERIS”)  On
June 28, 2013, the Company instituted these proceedings for the recognizance of
a claim and the related leave to proceed in forma pauperis, both pending in the
Federal Court of Original Jurisdiction in Contentious and Administrative Federal
Matters No. 11 – Clerk’s Office No. 22.  Purpose of the main proceedings: To
sue for breach of contract due to the Federal Government’s failure to perform in
accordance with the terms of the “Agreement on the Renegotiation of the
Concession Agreement” (“Acta Acuerdo
de Renegociación del Contrato de Concesion” – Adjustment
Agreement) entered into with Edenor in 2006, and for damages caused as a result
of such breach.  Procedural
stage of theproceedings: On
November 22, 2013, the Company amended the complaint so as to extend it and
claim more damages as a consequence of the Federal Government’s omission to
perform the obligations under the aforementioned “Adjustment Agreement”. On
February 3, 2015, the Court hearing the case ordered that notice of the
complaint be served to be answered within the time limit prescribed by law,
which was answered by the Federal Government in due time and in proper
manner.  Subsequently, Edenor S.A. reported as new event, under the terms
of Section 365 of the CPCCN, the issuance by the SE of Resolution No. 32/15.
After notice was served, the Court rejected the treatment thereof as an “event”,
holding the Company liable for costs. The Company filed an appeal, which was
admitted “with a postponed effect” (i.e. the Appellate Court will grant or
reject the appeal when deciding on the granting or rejection of the appeal
against final judgment). On October 16, 2015, the Attorney General’s Office
requested to borrow the records for a term of 20 days, which were returned on
December 1, 2015, in order to control thework done by the state’s attorneys. On
December 4, 2015, the Company requested the suspension of the procedural
time-limits under the terms of section 157 of the CPCCN, in accordance with the
provisions of SE Resolution No. 32/15, notice of which has been served upon the
defendant. On February 16, 2016, the Company reiterated the request due to the
revocation of SE Resolution No. 32/15. At the date of issuance of this report,
and by “agreement of the parties”, the procedural time-limits are suspended
until mid-May 2017.  Regarding the motion to litigate in forma pauperis that
was filed on July 2, 2013, the discovery period has ended and the period for the
parties to put forward their arguments on the merits of the evidence produced
has begun.At the date of issuance of these financial
statements,the Company has requested the suspension of
the procedural time-limits.


---



F-55



Conclusion:the Company believes that there exist solid legal
arguments to support its claim. It is estimated that this legal action will not
be terminated in 2017.   f.Administrative proceedings DJ/36/14 initiated by the
AFIP  Purpose:To accuse the Company of and have it fined for the filing
of an inaccurate Minimum presumed income tax return for fiscal period
2011.  Amount: $ 5.5
million  Status: In May, 2012,
the Company filed the original Minimum presumed income tax return for fiscal
period 2011 with no assessed tax amount in the understanding that the payment of
the tax for fiscal period 2011 when the Company’s cumulative income tax losses
carry forward amounted to $ 258 million, violated recognized constitutional
guarantees and reflected its lack of payment capacity in relation to the taxes
levied on income, such as the Minimum presumed income tax. This situation was
duly informed to the AFIP.  At the same
time, in accordance with the terms of Section 322 of the CPCCN, the Company
filed a declaratory judgment action(“acción
declarativa de certeza”)with the Federal Court against the Federal
Government, AFIP – DGI, with the aim of obtaining a declaratory judgment as to
whether or not the minimum presumed income tax related to fiscal period 2011
applied in the sense resolved by the CSJN in the “Hermitage” case on June 15,
2010. In this case, the Supreme Court had declared that this tax was
unconstitutional as it was deemed confiscatory.  Subsequently,
the Court of Original Jurisdiction in Contentious and Administrative Federal
Matters No. 7 rejected the action requested by the Company, decision which was
ratified by the Court of Appeals.  Faced with this
situation, and in order to avoid possible attachments or prohibitions to dispose
of property that could affect the normal development of its activities for the
provision of the public service, the Company decided to rectify the Minimum
presumed income tax return for fiscal period 2011 and adhere to the easy payment
plan implemented by AFIP General Resolution No. 3,451.  On November 19,
2015, by means of administrative proceedings DJ/36/14 initiated by the AFIP, the
Company is accused of and fined for the filing of an inaccurate Minimum presumed
income tax return for fiscal period 2011.  On December 30,
2015, the Company filed a post-judgement motion for reversal with the tax
authority, requesting that the administrative proceedings be revoked, the fine
imposed be annulled and the respective records be filed.  As is evident
from the preceding paragraphs, it was not the Company’s intention to cause any
harm whatsoever to the national treasury, particularly considering that a
rectifying tax return has been filed. Additionally,
and as provided for in Law No. 27,260, the fines and other penalties related to
substantive obligations accrued as of May 31, 2016 will be automatically waived
by operation of the law unless they have become final at the date on which the
referred to Law came into effect, or the main obligation had been settled as of
that date.


F-56

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Conclusion:no provision has been recorded for this claim in these
financial statements as the Company believes, based on that which has been
previously mentioned, that there exist solid arguments for it to be considered
unfounded.  g.Legal action brought by the Company (Study, Review and
Inspection of Works in Public Spaces Fees “TERI”)  In December
2015, the Company filed with the City of Buenos Aires Court in Contentious and
Tax-Related Matters, a petition for declaratory judgment, together with a
petition for the granting of a precautionary measure, in order to obtain a
favorable judgment that would put an end to the controversy, declaring the
unlawfulness of the Government of the City of Buenos Aires’s claim concerning
compliance by Edenor S.A. with the payment of the TERI. The precautionary
measure requested, if granted, would stop the executory proceedings in process
and eliminate the possibility that an attachment be levied on the Company’s
assets. It must be pointed out that as of the date of the filing of the
petition, the Company has received assessment and demand for payment notices
from the Government of the City of Buenos Aires for a total amount of $ 28.8
million for such concept.  In the Company’s
opinion, these fees are not applicable considering the federal regulations and
applicable case law as well as the procedural status of similar cases.
Therefore, the Company’s Management as well as its external legal advisors
believe that there exist good reasons to support the Company’s position and have
this tax claim rejected by a court of law. Therefore, the probability of an
outflow of resources on account of such contingency has been regarded as
low.


F-57

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Note 9 |Property,
plant and equipment    Lands and buildings
    
    Substations
    
    High, medium and low voltage lines
    
    Meters and Transformer chambers and platforms
    
    Tools, Furniture, vehicles, equipment,
      communications and advances to suppliers
    
    Construction in process
    
    Supplies and spare parts
    
    TotalAt 12.31.15Cost
    
    202,381
    
    1,674,336
    
    4,809,485
    
    2,232,104
    
    1,254,245
    
    2,512,113
    
    188,602
    
    12,873,266Accumulated
      depreciation
    
    (56,376)
    
    (576,740)
    
    (2,054,733)
    
    (839,389)
    
    (460,239)
    
    -
    
    -
    
    (3,987,477)Net amount
    
    146,005
    
    1,097,596
    
    2,754,752
    
    1,392,715
    
    794,006
    
    2,512,113
    
    188,602
    
    8,885,789Additions
    
    -
    
    -
    
    431
    
    318
    
    134,619
    
    2,551,494
    
    16,387
    
    2,703,249Disposals
    
    (3,035)
    
    (15,037)
    
    (21,641)
    
    (67)
    
    (686)
    
    -
    
    -
    
    (40,466)Transfers
    
    37,564
    
    396,416
    
    1,301,966
    
    297,757
    
    32,354
    
    (2,023,156)
    
    (42,901)
    
    -Depreciation for the
      period
    
    (13,922)
    
    (48,023)
    
    (129,721)
    
    (74,784)
    
    (85,132)
    
    -
    
    -
    
    (351,582)Net amount
      12.31.16
    
    166,612
    
    1,430,952
    
    3,905,787
    
    1,615,939
    
    875,161
    
    3,040,451
    
    162,088
    
    11,196,990At 12.31.16Cost
    
    235,709
    
    2,048,014
    
    6,024,954
    
    2,523,084
    
    1,265,502
    
    3,040,451
    
    162,088
    
    15,299,802Accumulated
      depreciation
    
    (69,097)
    
    (617,062)
    
    (2,119,167)
    
    (907,145)
    
    (390,341)
    
    -
    
    -
    
    (4,102,812)Net amount
    
    166,612
    
    1,430,952
    
    3,905,787
    
    1,615,939
    
    875,161
    
    3,040,451
    
    162,088
    
    11,196,990
  ·During the year ended December 31, 2016, direct costs
capitalized amounted to $ 302.5 million.  ·Financial costs capitalized for the year ended December
31, 2016 amounted to $ 189,7 million.


F-58

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Lands and buildings
    
    Substations
    
    High, medium and low voltage ines
    
    Meters and Transformer chambers and platforms
    
    Tools, Furniture, vehicles, equipment,
      communications and advances to suppliers
    
    Construction in process
    
    Supplies and spare parts
    
    TotalAt 12.31.14Cost
    
    162,192
    
    1,444,310
    
    4,086,201
    
    1,953,167
    
    632,114
    
    1,960,435
    
    136,188
    
    10,374,607Accumulated
      depreciation
    
    (44,821)
    
    (536,338)
    
    (1,962,744)
    
    (773,126)
    
    (405,096)
    
    -
    
    -
    
    (3,722,125)Net amount
    
    117,371
    
    907,972
    
    2,123,457
    
    1,180,041
    
    227,018
    
    1,960,435
    
    136,188
    
    6,652,482Additions
    
    -
    
    -
    
    9,599
    
    -
    
    621,357
    
    1,834,857
    
    52,414
    
    2,518,227Disposals
    
    -
    
    -
    
    (3,398)
    
    (115)
    
    -
    
    -
    
    -
    
    (3,513)Transfers
    
    40,189
    
    230,026
    
    733,053
    
    279,138
    
    773
    
    (1,283,179)
    
    -
    
    -Depreciation for the
      period
    
    (11,555)
    
    (40,402)
    
    (107,959)
    
    (66,349)
    
    (55,142)
    
    -
    
    -
    
    (281,407)Net amount
      12.31.15
    
    146,005
    
    1,097,596
    
    2,754,752
    
    1,392,715
    
    794,006
    
    2,512,113
    
    188,602
    
    8,885,789At 12.31.15Cost
    
    202,381
    
    1,674,336
    
    4,809,485
    
    2,232,104
    
    1,254,245
    
    2,512,113
    
    188,602
    
    12,873,266Accumulated
      depreciation
    
    (56,376)
    
    (576,740)
    
    (2,054,733)
    
    (839,389)
    
    (460,239)
    
    -
    
    -
    
    (3,987,477)Net amount
    
    146,005
    
    1,097,596
    
    2,754,752
    
    1,392,715
    
    794,006
    
    2,512,113
    
    188,602
    
    8,885,789
  ·During the year ended December 31, 2015, direct costs
capitalized amounted to $ 271.6 million.  ·Financial costs capitalized for the year ended December
31, 2015 amounted to $ 255.9 million


F-59

---





Acquisition
of real property:  On October 7,
2015, the Company’s Board of Directors approved the acquisition of a real
property with the aim of concentrating centralized functions and reducing rental
costs and the risk of future increases, for a total amount of $ 439.2 million,
which, as of December 31, 2015, had been fully paid.  As security for
the amount paid, the Company received a surety bond from the
seller.  Disclosed in the
Additions line of the Furniture, tools, vehicles, equipment and communication
column.   Note 10 |  Financial instruments   10.1Financial
instruments by category   Financial assets at amortized cost
    
    Financial assets at fair value through profit or
      loss
    
    Non-financial assets
    
    TotalAs of December 31,
      2016AssetsTrade
      receivables
    
    3,901,060
    
    -
    
    -
    
    3,901,060Other
      receivables
    
    193,110
    
    28,839
    
    7,851
    
    229,800Cash and cash
      equivalentsCash and
      Banks
    
    194,476
    
    -
    
    -
    
    194,476Checks to be
      deposited
    
    2,625
    
    -
    
    -
    
    2,625Money market
      funds
    
    -
    
    61,461
    
    -
    
    61,461Financial assets at fair value through profit or
      loss:Government
      bonds
    
    -
    
    387,279
    
    -
    
    387,279Money market
      funds
    
    -
    
    1,606,636
    
    -
    
    1,606,636Financial assets at amortized cost through profit
      or loss:Government
      bonds
    
    45,940
    
    -
    
    -
    
    45,940Total
    
    4,337,211
    
    2,084,215
    
    7,851
    
    6,429,277As of December 31,
      2015AssetsTrade
      receivables
    
    963,005
    
    -
    
    -
    
    963,005Other
      receivables
    
    842,716
    
    43,219
    
    347,702
    
    1,233,637Cash and cash
      equivalentsCash and
      Banks
    
    35,145
    
    -
    
    -
    
    35,145Checks to be
      deposited
    
    319
    
    -
    
    -
    
    319Money market
      funds
    
    -
    
    93,488
    
    -
    
    93,488Financial assets at fair value through profit or
      loss:Government
      bonds
    
    -
    
    370,161
    
    -
    
    370,161Derivative financial
      instruments
    
    -
    
    197
    
    -
    
    197Money market
      funds
    
    -
    
    1,213,840
    
    -
    
    1,213,840Total
    
    1,841,185
    
    1,720,905
    
    347,702
    
    3,909,792


F-60

---





Financial liabilities at amortized cost
    
    Financial liabilities at fair value through profit
      or loss
    
    Non-financial liabilities
    
    TotalAs of December 31,
      2016LiabilitiesTrade payables
    
    7,053,973
    
    -
    
    -
    
    7,053,973Other payables
    
    344,188
    
    -
    
    4,893,897
    
    5,238,085Borrowings
    
    2,823,283
    
    -
    
    -
    
    2,823,283Total
    
    10,221,444
    
    -
    
    4,893,897
    
    15,115,341As of December 31,
      2015LiabilitiesTrade payables
    
    4,700,393
    
    -
    
    -
    
    4,700,393Other payables
    
    345,567
    
    -
    
    2,197,985
    
    2,543,552Borrowings
    
    2,509,773
    
    -
    
    -
    
    2,509,773Total
    
    7,555,733
    
    -
    
    2,197,985
    
    9,753,718
   Financial instruments categories have been determined
based on IFRS 9.  The income,
expenses, gains and losses resulting from each category of financial instruments
are as follow:    Financial assets at amortized cost
    
    Financial assets at fair value through profit or
      loss
    
    TotalAs of December
      31, 2016Interest income
    
    196,754
    
    -
    
    196,754Exchange
      differences
    
    96,701
    
    3,164
    
    99,865Bank fees and
      expenses
    
    (3,217)
    
    -
    
    (3,217)Changes in fair
      value of financial assets
    
    -
    
    424,099
    
    424,099Adjustment to
      present value
    
    (263)
    
    3,147
    
    2,884Total
    
    289,975
    
    430,410
    
    720,385As of December
      31, 2015Interest income
    
    96,225
    
    -
    
    96,225Exchange
      differences
    
    14,326
    
    5,745
    
    20,071Bank fees and
      expenses
    
    (20,117)
    
    -
    
    (20,117)Changes in fair
      value of financial assets
    
    -
    
    350,543
    
    350,543Adjustment to
      present value
    
    3,984
    
    1,403
    
    5,387Total
    
    94,418
    
    357,691
    
    452,109As of December
      31, 2014Interest income
    
    235,534
    
    -
    
    235,534Exchange
      differences
    
    17,432
    
    8,082
    
    25,514Bank fees and
      expenses
    
    (15,509)
    
    -
    
    (15,509)Changes in fair
      value of financial assets
    
    -
    
    71,029
    
    71,029Adjustment to
      present value
    
    8,282
    
    (154)
    
    8,128Other
    
    -
    
    -
    
    -Total
    
    245,739
    
    78,957
    
    324,696


F-61

---





Financial liabilities at amortized cost
    
    Financial liabilities at fair value through profit
      or loss
    
    TotalAs of December
      31, 2016Interest
      expense
    
    (1,441,665)
    
    -
    
    (1,441,665)Other financial
      results
    
    (36,783)
    
    -
    
    (36,783)Bank fees and
      expenses
    
    42
    
    -
    
    42Exchange
      differences
    
    (517,573)
    
    -
    
    (517,573)Total
    
    (1,995,979)
    
    -
    
    (1,995,979)As of December
      31, 2015Interest
      expense
    
    (429,899)
    
    -
    
    (429,899)Other financial
      results
    
    (22,880)
    
    -
    
    (22,880)Exchange
      differences
    
    (914,844)
    
    -
    
    (914,844)Net gain from
      the repurchase of Corporate Notes
    
    -
    
    -
    
    -Total
    
    (1,367,623)
    
    -
    
    (1,367,623)As of December
      31, 2014Interest
      expense
    
    (576,504)
    
    -
    
    (576,504)Other financial
      results
    
    (20,224)
    
    -
    
    (20,224)Bank fees and
      expenses
    
    -
    
    -
    
    -Exchange
      differences
    
    (453,410)
    
    -
    
    (453,410)Net gain from
      the repurchase of Corporate Notes
    
    44,388
    
    -
    
    44,388Total
    
    (1,005,750)
    
    -
    
    (1,005,750)
    10.2Credit
quality of financial assets  The credit
quality of financial assets that are neither past due nor impaired may be
assessed based on external credit ratings or historical
information:    12.31.16
    
    12.31.15Customers
      with no external credit rating:Group 1 (i)
    
    3,479,399
    
    426,468Group 2 (ii)
    
    121,206
    
    232,407Group 3 (iii)
    
    300,455
    
    304,130Total trade
      receivables
    
    3,901,060
    
    963,005(i)     Relates to customers
      with debt to become due(ii)      Relates to
      customers with past due debt from 0 to 3 months.(iii)     Relates to
      customers with past due debt from 3 to 12 months.
   At the Statement
of Financial Position date, the maximum exposure to credit risk is the carrying
amount of these financial assets.


F-62

---





Note 11 |Other receivables   Note
    
    12.31.16
    
    12.31.15Non-current:-
    
    -Minimum national
      income tax
    
    
    -
    
    74,056Financial credit
    
    
    43,636
    
    72,656Related
      parties
    35.d
    
    6,856
    
    7,065Total
      Non-current
    
    
    50,492
    
    153,777Current:Prepaid
      expenses
    
    
    3,589
    
    3,473Credit
      form Income recognition on account of the RTI - SE Resolution
      32/15
    
    
    -
    
    650,938Value added
      tax
    
    
    -
    
    248,364Advances to
      suppliers
    
    
    2,561
    
    20,762Advances to
      personnel
    
    
    1,701
    
    1,047Security
      deposits
    
    
    8,385
    
    6,933Financial credit
    
    
    40,461
    
    16,362Receivable with
      FOCEDE (1)
    
    
    -
    
    49,536Receivables from
      electric activities
    
    
    142,979
    
    65,694Related
      parties
    35.d
    
    766
    
    7,076Guarantee
      deposits on derivative financialinstruments
    -
    
    16,555Judicial
      deposits
    
    
    13,546
    
    10,482Other
    
    
    19
    
    390Allowance
      for the impairment of other receivables
    
    
    (34,699)
    
    (17,752)Total
      Current
    
    
    179,308
    
    1,079,860
   (1)On June 23,
2016, the Company received $ 86.3 million, in accordance with the provisions of
ENRE Resolution No. 2/16, formalizing the definitive termination and liquidation
of the aforementioned trust (see Note 2.c).V). As of December 31, 2015, the
Company’s net position with the FOCEDE was comprised of the
following:    12.31.15Fixed
      charge Res. 347/12 collected from customers and not
      transferred
    
    
    (7,204)Funds
      received in excess of that transferred to FOCEDE from fixed charge Res.
      347/12
    
    
    191,722Outstanding receivables from extraordinary
      Investment Plan
    
    
    18,281Provision for FOCEDE
      expenses
    
    
    (153,263)49,536
   The other
non-current receivables are measured at amortized cost, which does not differ
significantly from their fair value.  The roll forward
of the allowance for the impairment of other receivables is as
follows:     12.31.16
    
    12.31.15
    
    
    12.31.14Balance at
      beginning of year
    
    
    17,752
    
    16,647
    
    
    20,412Increase
    
    
    16,947
    
    1,105
    
    
    2,845Decrease
    
    
    -
    
    -
    
    
    (4,771)Recovery
    
    
    -
    
    -
    
    
    (1,839)Balance at end
      of the period
    
    
    34,699
    
    17,752
    
    
    16,647


F-63

---





The aging
analysis of these other receivables is as follows:    12.31.16
    
    12.31.15Unexpired
    
    
    21,931
    
    49,536Past
      due
    
    
    108,299
    
    63,281Up to 3 months
    
    
    17,024
    
    929,022From 3 to 6 months
    
    
    12,062
    
    11,380From 6 to 9 months
    
    
    10,053
    
    5,366From 9 to 12 months
    
    
    9,939
    
    21,275More than 12 months
    
    
    50,492
    
    153,777Total other
      receivables
    
    
    229,800
    
    1,233,637
  At the Statement
of Financial Position date, the maximuexposure to credit risk is the carrying
amount of each class of other receivables.  The carrying
amount of the Company’s other receivables is denominated in the following
currencies:   12.31.16
    
    12.31.15Argentine
      pesos
    
    
    229,800
    
    1,222,444US
      dollars
    
    
    -
    
    11,193Total other
      receivables
    
    
    229,800
    
    1,233,637
   Note 12 |Trade receivables    12.31.16
    
    12.31.15Current:Sales of electricity
      - Billed
    
    
    2,524,981
    
    709,568Sales of electricity
      – Unbilled (1)
    
    
    1,582,591
    
    216,012Framework
      Agreement
    
    
    8,222
    
    73,097Fee
      payable for the expansion of the transportation and
      others
    
    
    22,397
    
    20,842Receivables in
      litigation
    
    
    22,551
    
    22,847Allowance
      for the impairment of trade receivables
    
    
    (259,682)
    
    (79,361)Total
      Current
    
    
    3,901,060
    
    963,005
   (1)As of December
31, 2016, the billing was affected by the effects of the provisional remedies
detailed in Note 2.c.VIII.  The carrying
amount of the Company’s trade receivables approximates their fair
value.  The roll forward
of the allowance for the impairment of trade receivables is as
follows:    12.31.16
    
    12.31.15
    
    
    12.31.14Balance at
      beginning of year
    
    
    79,361
    
    84,562
    
    
    73,185Increase
    
    
    210,745
    
    22,979
    
    
    18,686Decrease
    
    
    (30,424)
    
    (28,180)
    
    
    (7,309)Balance at end
      of the period
    
    
    259,682
    
    79,361
    
    
    84,562
    The aging
analysis of these trade receivables is as follows:    12.31.16
    
    12.31.15Not
      due
    
    
    8,222
    
    -Past
      due
    
    
    421,661
    
    536,536Up to 3 months
    
    
    3,471,177
    
    426,469Total trade
      receivables
    
    
    3,901,060
    
    963,005


F-64

---





At the Statement
of Financial Position date, the maximum exposure to credit risk is the carrying
amount of each class of trade receivables.  The carrying
amount of the Company’s trade receivables is denominated in Argentine
pesos.  Sensitivity
analysis of the allowance for impairment of trade receivables:  -5% increase
in the uncollectibility rate estimate   12.31.16Contingencieschange
    
    
    270,72211,040
    -5% decrease
in the uncollectibility rate estimate   12.31.16Contingencies
    
    
    248,643change
    
    
    (11,039)
    Note 13 |Financial assets at fair value through profit or
loss    12.31.16
    
    12.31.15Non-currentGovernment
      bonds
    
    
    -
    
    23,567Total Non-current
    
    
    -
    
    23,567CurrentGovernment
      bonds
    
    
    387,279
    
    346,594Money market funds
    
    
    1,606,636
    
    1,213,840Total current
    
    
    1,993,915
    
    1,560,434
    Note 14 |Financial assets at amortized cost    12.31.16
    
    12.31.15Non-currentGovernment
      bonds
    
    
    44,429
    
    -Total Non-current
    
    
    44,429
    
    -CurrentGovernment
      bonds
    
    
    1,511
    
    -Total Non-current
    
    
    1,511
    
    -
   Note 15 |Inventories    12.31.16
    
    12.31.15CurrentSupplies and
      spare-parts
    
    230,291
    
    120,512Advance to
      suppliers
    
    57,519
    
    14,355Total
      inventories
    
    287,810
    
    134,867


F-65

---





Note 16 |Cash and cash equivalents    12.31.16
    
    12.31.15Cash and
      banks
    
    197,101
    
    35,464Money market funds
    
    61,461
    
    93,488Total
      cash and cash equivalents
    
    258,562
    
    128,952
   Note 17 |Share capital and additional paid-in
capital  As of December
31, 2016, the Company’s share capital amounts to 906,455,100 shares, divided
into 462,292,111 common, book-entry Class A shares with a par value of one peso
each and the right to one vote per share; 442,210,385 common, book-entry Class B
shares with a par value of one peso each and the right to one vote per share;
and 1,952,604 common, book-entry Class C shares with a par value of one peso
each and the right to one vote per share.  No changes have
occurred in the Company’s Share Capital structure in the last three fiscal
years.   Listing of
the Company’s shares  The Company’s
shares are listed on the Buenos Aires Stock Exchange and are part of the Merval
Index.  Furthermore,
with the SEC’s prior approval, the Company’s ADSs (American Depositary Shares),
each representing 20 common shares of the Company, began to be traded on the
NYSE (New York Stock Exchange) as from April 24, 2007.  The listing of
ADSs on the NYSE is part of the Company’s strategic plan to increase both its
liquidity and the volume of its shares.  Acquisition
of the Company’s own shares  During fiscal
year 2008, the Company acquired 9,412,500 Class B treasury shares with a nominal
value of 1 peso. The amount disbursed to acquire these shares totaled $ 6.1
million, which was deducted from unappropriated retained earnings of the equity
attributable to the owners of the Company at that date. At the date of these
financial statements, these shares are held as “treasury stock”. The Company is
entitled to reissue these shares at a future date.  On November 18,
2014, the Company held the General Annual Meeting which resolved by majority of
votes to extend for another 3 years the term for holding the treasury shares
acquired within the framework of Section 68 of Law No. 17,811 (text consolidated
by Decree No. 677/01). All the shares issued have been fully
paid-in.


F-66

---





Section 206 –
Business Organizations Law  The negative
results recorded by the Company as of December 31, 2016, consume 100% of the
reserves and more than 50% of its share capital. Section 206 of the Business
Organizations Law provides for the mandatory capital stock reduction where this
situation occurs. Therefore, the Company shareholders must analyze alternatives
in conformity with the applicable regulations to rectify this
situation.  At the date of
issuance of these financial statements, and in the light of the recent
conclusion of the tariff structure review, the Company’s Board of Directors is
currently analyzing the impact thereof on the Company’s financial position,
estimating that its result will allow the Company to revert this
situation.   Note 18 |Allocation of profits  Restrictions on the distribution of
dividends  i.In accordance with the provisions of Law No. 19,550, the
General Annual Meeting held on April 28, 2016 resolved that the profit for the
year ended December 31, 2015 be allocated to the Unappropriated Retained
Earnings account and the statutory and discretionary reserves.  ii.In accordance with the provisions of Law No. 25,063,
passed in December 1998, dividends to be distributed, whether in cash or in
kind, in excess of accumulated taxable profits at the fiscal year-end
immediately preceding the date of payment or distribution, shall be subject to a
final 35% income tax withholding, except for those dividends distributed to
shareholders who are residents of countries benefiting from conventions for the
avoidance of double taxation, who will be subject to a lower tax rate.  iii.In accordance with the provisions of Business
Organizations Law No. 19,550, not less than five percent (5%) of the net profit
arising from the Statement of Income for the year must be allocated to a
reserve, until it equals twenty percent (20%) of the Share
Capital.  iv.MEyM Resolution No. 7/16 provides that the Company shall
not distribute dividends in accordance with clause 7.4 of the Adjustment
Agreement.


F-67

---





Note 19 |Trade payables    12.31.16
    
    12.31.15Non-currentCustomer
      guarantees
    
    
    83,045
    
    67,509Customer
      contributions
    
    
    98,167
    
    105,757Funding contributions
      - substations
    
    
    51,700
    
    51,700Total
      Non-current
    
    
    232,912
    
    224,966Current2,956,726
    
    2,714,263Provision
      for unbilled electricity purchases - CAMMESA (1)
    
    
    2,512,800
    
    646,183Suppliers
    
    
    958,460
    
    817,891Advance to customer
      (1)
    
    
    197,020
    
    -Customer
      contributions
    
    
    136,689
    
    147,775Discounts to
      customers
    
    
    37,372
    
    125,809Funding contributions
      - substations
    
    
    21,790
    
    23,506Related parties
    35.d
    
    204
    
    -Total
      Current
    
    
    6,821,061
    
    4,475,427
   (1)As of December
31, 2016, includes the effects of the provisional remedies detailed in Note
2.c).VIII.  The fair values
of non-current customer contributions as of December 31, 2016 and 2015 amount to
$ 131.7 million and $ 127.1 million, respectively. The fair values are
determined based on estimated discounted cash flows in accordance with a market
rate for this type of transactions. The fair value category applied thereto was
Level 3 category.  The carrying
amount of the rest of the financial liabilities included in the Company’s trade
payables approximates their fair value.   Note 20 |Other payables    Note
    
    12.31.16
    
    12.31.15Non-currentLoans (mutuum) with
      CAMMESA
    
    
    1,346,807
    
    1,099,760ENRE penalties and
      discounts
    
    
    3,477,351
    
    1,004,043Liability with
      FOTAE
    
    
    172,991
    
    155,752Payment agreements
      with ENRE
    
    
    106,177
    
    132,323Total
      Non-current
    
    
    5,103,326
    
    2,391,878CurrentENRE penalties and
      discounts
    
    
    56,164
    
    62,720Related
      parties
    35.d
    
    4,756
    
    3,447Advances
      for works to be performed
    
    
    13,575
    
    31,462Payment agreements
      with ENRE
    
    
    60,264
    
    54,006Other
    
    
    -
    
    39Total
      Current
    
    
    134,759
    
    151,674
   The carrying
amount of the Company’s other financial payables approximates their fair
value.


F-68

---





Note 21 |Deferred revenue   12.31.16
    
    12.31.15Non-currentNonrefundable
      customer contributions
    
    199,990
    
    153,816Total
      Non-current
    
    199,990
    
    153,81612.31.16
    
    12.31.15CurrentNonrefundable
      customer contributions
    
    764
    
    764Total
      Current
    
    764
    
    764
    Note 22 |Borrowings     Note
    
    12.31.16
    
    12.31.15Non-currentCorporate notes
      (1)
    
    
    2,769,599
    
    2,341,098Related
      parties
    35.e
    
    -
    
    119,877Total
      non-current
    
    
    2,769,599
    
    2,460,975CurrentInterest from
      corporate notes
    
    
    53,684
    
    46,688Related
      parties
    35.e
    
    -
    
    2,110Total
      current
    
    
    53,684
    
    48,798
    (1)Net of debt
repurchase and issuance expenses.   On July 12,
2016, the Company redeemed the Fixed Rate par Corporate Notes due in 2017. The
outstanding amount redeemed at 100% of the corporate notes nominal value totaled
USD 14.8 million, plus interest accrued of USD 0.4 million  The fair values
of the Company’s non-current borrowings (Corporate Notes) as of December 31,
2016 and 2015 amount approximately to $ 2.9 billion and $ 2.4 billion,
respectively. Such values were calculated on the basis of the estimated market
price of the Company’s Corporate Notes at the end of each year. The fair value
category applied thereto was Level 1 category.  On February 2,
2016, the Company repurchased at market prices the “Fixed Rate Class 9 par
Corporate Notes” due in 2022 for an amount of USD 0.3 million nominal
value.


F-69

---





The Company’s
borrowings are denominated in the following currencies:    12.31.16
    
    12.31.15US
      dollars
    
    
    2,823,283
    
    2,509,7732,823,283
    
    2,509,773
   The maturities
of the Company’s borrowings and their exposure to interest rate are as
follow:    12.31.16
    
    12.31.15Fixed
      rateLess than 1
      year
    
    
    53,684
    
    48,798From 2 to 4
      years
    
    
    -
    
    192,470More than 4
      years
    
    
    2,769,599
    
    2,268,5052,823,283
    
    2,509,773
    The roll forward
of the Company’s borrowings during the year was as follows:    12.31.16
    
    12.31.15
    
    12.31.14Balance at
      beginning of the year
    
    
    2,509,773
    
    1,632,403
    
    1,350,532Interest
      paid
    
    
    (265,950)
    
    (172,923)
    
    (155,251)Primcipal
      paid
    
    
    -
    
    -
    
    (424)Repurchase of
      Corporate Notes by the trust
    
    
    (4,866)
    
    -
    
    (91,638)Paid from the
      repurchase of Corporate Notes
    
    
    (221,846)
    
    -
    
    -Gain from the
      repurchase of Corporate Notes
    
    (42)
    
    -
    
    (52,848)Exchange
      difference and interest accrued
    
    
    791,516
    
    961,519
    
    490,814Costs
      capitalized
    
    
    14,698
    
    88,774
    
    91,218Balance at the
      end of the year
    
    
    2,823,283
    
    2,509,773
    
    1,632,403
  Corporate Notes programs  The Company is
included in a Corporate Notes program, the relevant information of which is
detailed below:  Debt
issued in United States dollars    Million of USD
    Million of
      $Corporate Notes
    
    Class
    
    Rate
    
    Year of Maturity
    
    Debt structure at
12.31.15
    
    Debt repurchase
    
    Debt structure at
12.31.16
    
    At 12.31.16Fixed Rate Par Note
    
    7
    
    10.50
    
    2017
    
    14.76
    
    (14.76)
    
    -
    
    -Fixed Rate Par Note(1)
    
    9
    
    9.75
    
    2022
    
    172.17
    
    (0.30)
    
    171.87
    
    2,769.60Total
    
    
    
    
    
    
    
    186.93
    
    (15.06)
    
    171.87
    
    2,769.60
    Million of USD
    Million of
      $Corporate Notes
    
    Class
    
    Rate
    
    Year of Maturity
    
    Debt structure at
12.31.14
    
    Debt repurchase
    
    Debt structure at
12.31.15
    
    At 12.31.15Fixed Rate Par Note
    
    7
    
    10.50
    
    2017
    
    14.76
    
    -
    
    14.76
    
    192.47Fixed Rate Par Note(1)
    
    9
    
    9.75
    
    2022
    
    172.17
    
    -
    
    172.17
    
    2,268.51Total
    
    
    
    
    
    
    
    186.93
    
    -
    
    186.93
    
    2,460.98
  (1)Net of issuance
expenses.


F-70

---





The main
covenants are the following:  i.Negative Covenants  The terms and
conditions of the Corporate Notes include a number of negative covenants that
limit the Company’s actions with regard to, among others, the
following:  - encumbrance or
authorization to encumber its property or assets; - incurrence of
indebtedness, in certain specified cases; - sale of the
Company’s assets related to its main business; - carrying out
of transactions with shareholders or related companies; - making certain
payments (including, among others, dividends, purchases of Edenor’s common
shares or payments on subordinated debt).  ii.Suspension of Covenants:  Certain negative
covenants stipulated in the terms and conditions of the Corporate Notes will be
suspended or adapted if:  - the Company’s
long-term debt rating is raised to Investment Grade, or - the Company’s
Level of Indebtedness is equal to or lower than 2.5.  If the Company
subsequently losses its Investment Grade rating or its Level of Indebtedness is
higher than 2.5, as applicable, the suspended negative covenants will be once
again in effect.  At the date of
issuance of these financial statements, the previously mentioned ratios have
been complied with.   Note 23 |Salaries and social security taxes  a.Salaries and
social security taxes payable   12.31.16
    
    12.31.15Non-currentEarly retirements
      payable
    
    5,149
    
    6,324Seniority-based
      bonus
    
    89,168
    
    73,715Total
      non-current
    
    94,317
    
    80,039CurrentSalaries payable and
      provisions
    
    912,275
    
    639,293Social security
      payable
    
    115,793
    
    89,331Early retirements
      payable
    
    4,119
    
    4,507Total
      current
    
    1,032,187
    
    733,131
   The carrying
amount of the Company’s salaries and social security taxes payable approximates
their fair value.


F-71

---





b.Salaries and
social security taxes charged to profit or loss    12.31.16
    
    12.31.15
    
    12.31.14Salaries
    
    2,539,345
    
    1,791,286
    
    1,414,922Social security
      taxes
    
    987,523
    
    696,611
    
    449,464Total salaries
      and social security taxes
    
    3,526,868
    
    2,487,897
    
    1,864,386
   Early
retirements payable correspond to individual optional agreements. After
employees reach a specific age, the Company may offer them this option. The
related accrued liability represents future payment obligations which as of
December 31, 2016 and 2015 amount to $ 4.1 million and $ 4.5 million (current)
and $ 5.1 million and $ 6.3 million (non-current),
respectively.  The
seniority-based bonus included in collective bargaining agreements in effect
consists of a bonus to be granted to personnel with a certain amount of years of
service. As of December 31, 2016 and 2015, the liabilities related to these
obligations amount to $ 89.2 million and $ 73.7 million,
respectively.  As of December
31, 2016 and 2015, the number of employees amounts to 4,746 and 4,696,
respectively.   Note 24 |Benefit plans  The defined
benefit plans granted to Company employees consist of a bonus for all the
employees who have the necessary years of service and have made the required
contributions to retire under ordinary retirement plans.  The amounts and
conditions vary in accordance with the collective bargaining agreement and for
non-unionized personnel.    12.31.16
    
    12.31.15Non-current
    
    266,087
    
    204,386Current
    
    33,370
    
    28,291Total Benefit
      plans
    
    299,457
    
    232,677
   The detail of
the benefit plan obligations as of December 31, 2016 and 2015 is as
follows:    12.31.16
    
    12.31.15Benefit
      payment obligations at beginning of year
    
    232,677
    
    160,921Current service
      cost
    
    23,277
    
    29,241Interest
      cost
    
    82,128
    
    60,013Actuarial
      losses
    
    (7,817)
    
    3,678Benefits
      paid to participating employees
    
    (30,808)
    
    (21,176)Benefit
      payment obligations at year end
    
    299,457
    
    232,677
  As of December
31, 2016 and 2015, the Company does not have any assets related to
post-retirement benefit plans.


F-72



The detail of
the charge recognized in the Statement of Comprehensive Income is as follows:    12.31.16
    
    12.31.15
    
    12.31.14Cost
    
    23,277
    
    29,241
    
    8,080Interest
    
    82,128
    
    60,013
    
    43,345Actuarial
      results - Other comprehensive loss
    
    (7,817)
    
    3,678
    
    17,82397,588
    
    92,932
    
    69,248
   The actuarial
assumptions used are based on market interest rates for Argentine government
bonds, past experience, and the Company Management’s best estimate of future
economic conditions. Changes in these assumptions may affect the future cost of
benefits and obligations. The main assumptions used are as
follow:    12.31.16
    
    12.31.15Discount
      rate
    
    5%
    
    6%Salary
      increase
    
    1%
    
    2%Inflation
    
    21%
    
    32%
    Sensitivity
analysis:    12.31.2016Discount Rate:
      4%Obligation
    
    325,810Variation
    
    26,3539%Discount Rate:
      6%Obligation
    
    276,897Variation
    
    (22,560)(8%)Salary Increase :
      0%Obligation
    
    275,890Variation
    
    (23,567)(8%)Salary Increase:
      2%Obligation
    
    326,613Variation
    
    27,1569%
   The expected
payments of benefits are as follow:   Less than 1 year
    
    From 1 to 2 years
    
    From 2 to 3 years
    
    From 3 to 4 years
    
    More than 4 yearsAt December 31,
      2016Benefit payment
      obligations
    
    33,371
    
    5,646
    
    5,808
    
    6,374
    
    7,754


F-73

---





Estimates based
on actuarial techniques imply the use of statistical tools, such as the
so-called demographic tables used in the actuarial valuation of the Company
active personnel.  In order to
determine the mortality of the Company active personnel, the “1971 Group Annuity
Mortality” table has been used. In general, a mortality table shows for each age
group the probability that a person in any such age group will die before
reaching a predetermined age. Male and female mortality tables are elaborated
separately inasmuch as men and women’s mortality rates are substantially
different.  In order to
estimate total and permanent disability due to any cause, 80% of the “1985
Pension Disability Study” table has been used.  In order to
estimate the probability that the Company active personnel will leave the
Company or stay therein, the “ESA 77” table has been used.  Liabilities
related to the above-mentioned benefit plans have been determined considering
all the rights accrued by the beneficiaries of the plans through the closing
date of the year ended December 31, 2016.  These benefits
do not apply to key management personnel.   Note 25 |Income tax and tax on minimum presumed income / Deferred
tax  The analysis of
deferred tax assets and liabilities is as follows:    12.31.15
    
    Charged to profit and loss
    
    Charged to other comprenhensive
      income
    
    12.31.16Deferred tax
      assetsTax loss
      carryforward
    -
    
    4,172
    
    -
    
    4,172Inventories
    309
    
    4,784
    
    -
    
    5,093Trade
      receivables and other receivables
    41,329
    
    97,487
    
    -
    
    138,816Trade
      payables and other payables
    332,939
    
    790,617
    
    -
    
    1,123,556Salaries
      and social security taxes payable
    18,923
    
    5,577
    
    -
    
    24,500Benefit
      plans
    81,437
    
    26,109
    
    (2,736)
    
    104,810Tax
      liabilities
    14,466
    
    1,268
    
    -
    
    15,734Provisions
    115,522
    
    34,722
    
    -
    
    150,244Deferred tax
      asset
    604,925
    
    964,736
    
    (2,736)
    
    1,566,925Deferred tax
      liabilities:Property, plant and
      equipment
    (505,528)
    
    6,386
    
    -
    
    (499,142)Financial
      assets at fair value through profit or loss
    (39,608)
    
    (743)
    
    -
    
    (40,351)Borrowings
    (9,741)
    
    1,327
    
    -
    
    (8,414)Deferred tax
      liability
    (554,877)
    
    6,970
    
    -
    
    (547,907)Net
      deferred tax (liabilities) assets
    50,048
    
    971,706
    
    (2,736)
    
    1,019,018


F-74

---





12.31.14
    
    Charged to profit and loss
    
    Charged to other comprenhensive
      income
    
    12.31.15Deferred tax
      assetsInventories
    197
    
    112
    
    -
    
    309Derivative financial
      instruments
    2,063
    
    (2,063)
    
    -
    
    -Trade
      receivables and other receivables
    26,851
    
    14,478
    
    -
    
    41,329Trade
      payables and other payables
    347,324
    
    (14,385)
    
    -
    
    332,939Salaries
      and social security taxes payable
    20,935
    
    (2,012)
    
    -
    
    18,923Benefit
      plans
    56,323
    
    23,827
    
    1,287
    
    81,437Tax
      liabilities
    13,893
    
    573
    
    -
    
    14,466Provisions
    47,657
    
    67,865
    
    -
    
    115,522Deferred tax
      asset
    515,243
    
    88,395
    
    1,287
    
    604,925Deferred tax
      liabilities:Property, plant and
      equipment
    (417,006)
    
    (88,522)
    
    -
    
    (505,528)Financial
      assets at fair value through profit or loss
    -
    
    (39,608)
    
    -
    
    (39,608)Borrowings
    (11,070)
    
    1,329
    
    -
    
    (9,741)Deferred tax
      liability
    (428,076)
    
    (126,801)
    
    -
    
    (554,877)Net
      deferred tax (liabilities) assets
    87,167
    
    (38,406)
    
    1,287
    
    50,048
     12.31.16
    
    12.31.15Deferred tax
      assets:To be
      recover in less than 12 moths
    432,952
    
    311,207To be
      recover in more than 12 moths
    1,135,858
    
    295,602Deferred tax
      asset
    1,568,810
    
    606,809Deferred tax
      liabilities:To be
      recover in less than 12 moths
    (155,064)
    
    (135,879)To be
      recover in more than 12 moths
    (394,728)
    
    (420,882)Deferred tax
      liability
    (549,792)
    
    (556,761)Net
      deferred tax assets (liabilities)
    1,019,018
    
    50,048
   Furthermore, the
Company has recognized the Tax on minimum presumed income accrued in the year
and paid in prior fiscal years as a receivable because it estimates that it may
be computed as a payment on account of income tax in future fiscal
years.  The receivable
from the Minimum presumed income tax for an amount of $ 64.4 million is
disclosed netting in the Income tax/tax on minimum presumed income payable, net
account.  The detail of
the minimum presumed income receivable is as follows:    Minimum
      presumed income tax credit
    
    12.31.16
    
    Year of
      expiration2012
    
    20,506
    
    20222013
    
    43,950
    
    202364,456


F-75

---





The detail of
the income tax expense for the year includes two effects: (i) the current tax
for the year payable in accordance with the tax legislation applicable to the
Company; (ii) the effect of applying the deferred tax method which recognizes
the effect of the temporary differences arising from the valuation of assets and
liabilities for accounting and tax purposes:   12.31.16
    
    12.31.15
    
    12.31.14Deferred
      tax
    
    971,706
    
    (38,406)
    
    154,356Current
      tax
    
    (243,666)
    
    (145,324)
    
    -Difference
      between provision and tax return
    
    15,022
    
    -
    
    -Income tax
      expense
    
    743,062
    
    (183,730)
    
    154,35612.31.16
    
    12.31.15
    
    12.31.14(Loss) Profit
      for the period before taxes
    
    (1,931,710)
    
    1,326,173
    
    (934,072)Applicable tax
      rate
    
    35%
    
    35%
    
    35%Profit (Loss)
      for the period at the tax rate
    
    676,099
    
    (464,161)
    
    326,925Gain from
      interest in joint ventures
    
    1
    
    -
    
    2Non-taxable
      income
    
    69,368
    
    44,595
    
    -Other
    
    (1)
    
    -
    
    (25)Difference
      between provision and tax return
    
    (2,405)
    
    (42,332)
    
    10,521Subtotal
    
    743,062
    
    (461,898)
    
    337,423Unrecognized
      net deferred tax assets/liabilities
    
    -
    
    282,399
    
    (183,067)Expiration of
      tax loss-carryforwards
    
    -
    
    (4,231)
    
    -Income tax
      expense
    
    743,062
    
    (183,730)
    
    154,356
     Note 26 |Income tax / tax on minimum presumed income payable,
net    12.31.16
    
    12.31.2015Income tax
      provision
    243,666
    
    425,555Tax loss
      carryforward (1)
    
    -
    
    (280,231)Income tax
      provision net of tax loss carryfoward
    
    243,666
    
    145,324Minimum
      presumed income tax credit
    
    (64,456)
    
    (66,714)Unrestricted
      tax credit
    
    -
    
    (43,510)Tax
      withholdings
    
    (24,005)
    
    (18,768)Income tax
      provision net
    
    155,205
    
    16,332
   (1)As of December
31, 2015, the Company generated positive tax results, which allowed for the
recognition of accrued tax losses carry forward.


F-76

---





Note 27 |Tax liabilities    12.31.16
    
    12.31.15Non-currentTax regularization
      plan
    
    680
    
    1,922Total
      Non-current
    
    680
    
    1,922CurrentProvincial, municipal and federal contributions and
      taxes
    
    377,430
    
    73,805VAT
      payable
    
    725,553
    
    -Tax
      withholdings
    
    78,909
    
    32,750SUSS
      withholdings
    2,785
    
    -Municipal
      taxes
    
    57,832
    
    44,983Tax regularization
      plan
    
    1,979
    
    1,877Total
      Current
    
    1,244,488
    
    153,415
    Note 28 |Leasings  ·As assignee  The features
that these assignments of use have in common are that payments (installments)
are established as fixed amounts; there are neither purchase option clauses nor
renewal term clauses (except for the assignment of use contract of the Energy
Handling and Transformer Center that has an automatic renewal clause for the
term thereof); and there are prohibitions such as: transferring or sub-leasing
the building, changing its use and/or making any kind of modifications thereto.
All operating assignment of use contracts have cancelable terms and assignment
periods of 2 to 13 years.  Among them the
following can be mentioned: commercial offices, two warehouses, the headquarters
building (comprised of administration, commercial and technical offices), the
Energy Handling and Transformer Center (two buildings and a plot of land located
within the perimeter of Central Nuevo Puerto and Puerto Nuevo) and Las Heras
substation.  As of December
31, 2016 and 2015, future minimum payments with respect to operating assignments
of use are as follow:    12.31.16
    
    12.31.152016
    
    -
    
    47,8972017
    
    40,639
    
    19,4642018
    
    7,649
    
    6,3212019
    
    9,495
    
    4,3102020
    
    5,700
    
    1472021
    
    1,850
    
    147Total future minimum lease
      payments
    
    65,332
    
    78,286
   Total expenses
for operating assignments of use for the years ended December 31, 2016 and 2015
are as follow:    12.31.16
    
    12.31.15
    
    12.31.14Total lease expenses
    
    68,483
    
    42,440
    
    31,043


---



F-77





·As assignor  The Company has
entered into operating assignment of use contracts with certain cable television
companies granting them the right to use the poles of the Company’s network.
Most of these contracts include automatic renewal clauses.  As of December
31, 2016 and 2015, future minimum collections with respect to operating
assignments of use are as follow:    12.31.16
    
    12.31.152016
    
    -
    
    90,5222017
    
    108,743
    
    84,9492018
    
    108,511
    
    2512019
    
    103,090
    
    -Total future minimum lease
      collections
    
    320,344
    
    175,722
   Total income
from operating assignments of use for the years ended December 31, 2016 and 2015
is as follows:    12.31.16
    
    12.31.15
    
    12.31.14Total lease income
    
    108,228
    
    76,417
    
    57,463
    Note 29 |Provisions    Non-current liabilities
    
    Current liabilitiesContingenciesAt 12.31.14
    
    112,095
    
    24,068Increases
    
    147,478
    
    78,971Decreases
    
    -
    
    (32,550)At 12.31.15
    
    259,573
    
    70,489Increases
    
    81,787
    
    69,260Decreases
    
    (3)
    
    (51,837)At 12.31.16
    
    341,357
    
    87,912
   Note 30 |Revenue from sales    12.31.16
    
    12.31.15
    
    12.31.14Sales of
      electricity (1) (2)
    
    12,952,666
    
    3,720,442
    
    3,536,147Right of use on
      poles
    
    108,228
    
    76,417
    
    57,463Connection
      charges
    
    15,893
    
    4,195
    
    3,929Reconnection
      charges
    
    2,822
    
    1,108
    
    837Total Revenue
      from sales
    
    13,079,609
    
    3,802,162
    
    3,598,376
  (1)Includes revenue
from the application of ENRE Resolution No. 347/12 for $ 1.3 billion and $ 535.5
million for the years ended December 31, 2016 and 2015,
respectively. (2)As of December
31, 2016, includes the effects of the provisional remedies detailed in Note
2.c).VIII


F-78

---





Note 31 |Expenses by nature  The detail of
expenses by nature is as follows:     Description
    
    Transmission and distribution expenses
    
    Selling expenses
    
    Administrative expenses
    
    TotalSalaries
      and social security taxes
    
    2,586,293
    
    437,863
    
    502,712
    
    3,526,868Pension
      plans
    
    77,295
    
    13,086
    
    15,024
    
    105,405Communications
      expenses
    
    25,072
    
    128,963
    
    10,423
    
    164,458Allowance
      for the impairment of trade and other receivables
    
    -
    
    227,692
    
    -
    
    227,692Supplies consumption
    
    276,201
    
    -
    
    34,571
    
    310,772Leases and insurance
    
    436
    
    -
    
    87,791
    
    88,227Security
      service
    
    67,541
    
    11,485
    
    43,636
    
    122,662Fees and
      remuneration for services
    
    453,738
    
    468,516
    
    394,373
    
    1,316,627Public relations and
      marketing
    
    -
    
    -
    
    18,955
    
    18,955Advertising and
      sponsorship
    
    -
    
    -
    
    9,765
    
    9,765Reimbursements to
      personnel
    
    904
    
    170
    
    774
    
    1,848Depreciation of property, plants
      andequipments
    284,786
    
    49,334
    
    17,462
    
    351,582Directors
      and Supervisory Committee members’ fees
    -
    
    -
    
    5,999
    
    5,999ENRE
      penalties
    
    2,374,242
    
    182,422
    
    -
    
    2,556,664Taxes and charges
    
    -
    
    97,028
    
    14,686
    
    111,714Other
    
    706
    
    137
    
    6,154
    
    6,997At 12.31.16
    
    6,147,214
    
    1,616,696
    
    1,162,325
    
    8,926,235
   The expenses
included in the chart above are net of the Company’s own expenses capitalized in
Property, plant and equipment as of December 31, 2016 for $ 302.5
million.    Description
    
    Transmission and distribution expenses
    
    Selling expenses
    
    Administrative expenses
    
    TotalSalaries
      and social security taxes
    
    1,859,710
    
    299,835
    
    328,352
    
    2,487,897Pension
      plans
    
    65,379
    
    12,332
    
    11,543
    
    89,254Communications
      expenses
    
    13,729
    
    58,735
    
    3,422
    
    75,886Allowance
      for the impairment of trade and other receivables
    
    -
    
    24,084
    
    -
    
    24,084Supplies consumption
    
    211,448
    
    -
    
    23,040
    
    234,488Leases and insurance
    
    510
    
    -
    
    58,194
    
    58,704Security
      service
    
    43,738
    
    839
    
    24,060
    
    68,637Fees and
      remuneration for services
    
    463,159
    
    329,497
    
    213,816
    
    1,006,472Public relations and
      marketing
    
    -
    
    -
    
    10,185
    
    10,185Advertising and
      sponsorship
    
    -
    
    -
    
    5,247
    
    5,247Reimbursements to
      personnel
    
    1,189
    
    214
    
    834
    
    2,237Depreciation of property, plants andequipments
    236,758
    
    34,771
    
    9,878
    
    281,407Directors
      and Supervisory Committeemembers’ fees
    -
    
    -
    
    3,652
    
    3,652ENRE
      penalties
    
    257,282
    
    24,371
    
    -
    
    281,653Taxes and charges
    
    -
    
    47,901
    
    10,047
    
    57,948Other
    
    762
    
    227
    
    3,821
    
    4,810At 12.31.15
    
    3,153,664
    
    832,806
    
    706,091
    
    4,692,561
  The expenses
included in the chart above are net of the Company’s own expenses capitalized in
Property, plant and equipment as of December 31, 2015 for $ 271.6
million.


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The expenses
included in the chart above are net of the Company’s own expenses capitalized in
Property, plant and equipment as of December 31, 2014 for $ 156
million.  Note 32 |Other operating expense, net   12.31.16
    
    12.31.15
    
    12.31.14Other operating
      incomeServices
      provided to third parties
    
    62,495
    
    59,809
    
    33,305Commissions on
      municipal taxes collection
    
    21,441
    
    14,775
    
    12,040Recovery of
      allowance of trade receivables and other receivables
    
    -
    
    -
    
    1,839Related
      parties
    35.a
    500
    
    -
    
    5,020Income from
      non-reimbursable customer contributions
    
    764
    
    764
    
    764Others
    
    2,726
    
    4,613
    
    205Total other
      operating income
    
    87,926
    
    79,961
    
    53,173Other operating
      expenseNet expense from technical
      services
    
    (17,877)
    
    (12,900)
    
    (16,236)Gratifications for
      services
    
    (35,442)
    
    (43,192)
    
    (24,985)Cost for services provided
      to third parties
    
    (31,946)
    
    (52,421)
    
    (25,265)Severance paid
    
    (15,697)
    
    (11,801)
    
    (8,202)Debit and Credit
      Tax
    
    (156,152)
    
    (85,138)
    
    (64,720)Other expenses -
      FOCEDE
    
    (14,653)
    
    (59,563)
    
    (97,701)Provision for contingencies
    
    (151,047)
    
    (226,449)
    
    (75,417)Disposals of property,
      plant and equipment
    
    (40,466)
    
    (3,513)
    
    (959)Other
    
    (666)
    
    (7,530)
    
    (5,193)Total other
      operating expense
    
    (463,946)
    
    (502,507)
    
    (318,678)Other operating
      expense, net
    
    (376,020)
    
    (422,546)
    
    (265,505)
    Note 33 |Net financial expense   12.31.16
    
    12.31.15
    
    12.31.14Financial
      incomeCommercial
      interest
    
    134,092
    
    46,109
    
    43,265Financial
      interest
    
    62,662
    
    50,116
    
    192,269Total financial
      income
    
    196,754
    
    96,225
    
    235,534Financial
      expensesInterest and
      other (1)
    
    (410,940)
    
    (233,769)
    
    (111,356)Fiscal
      interest
    
    (9,837)
    
    (3,652)
    
    (5,477)Commercial
      interest (2)
    
    (1,020,888)
    
    (192,478)
    
    (459,671)Bank fees and
      expenses
    
    (3,217)
    
    (20,117)
    
    (15,509)Total financial
      expenses
    
    (1,444,882)
    
    (450,016)
    
    (592,013)Other financial
      resultsExchange
      differences
    
    (417,708)
    
    (894,773)
    
    (427,896)Adjustment to present value
      of receivables
    
    2,884
    
    5,387
    
    8,128Changes in fair
      value of financial assets (3)
    
    424,099
    
    350,543
    
    71,029Net gain from
      the repurchase of Corporate Notes
    
    42
    
    -
    
    44,388Other financial
      expense
    
    (36,783)
    
    (22,880)
    
    (20,224)Total other
      financial expense
    
    (27,466)
    
    (561,723)
    
    (324,575)Total net
      financial expense
    
    (1,275,594)
    
    (915,514)
    
    (681,054)
  (1)Net of interest
capitalized as of December 31, 2016, 2015 and 2014 for $ 189.7 million, $
255.9 million and $ 123.9 million, respectively. (2)As of December
31, 2015, such amount is net of the gain recorded from the agreement with
CAMMESA instructed by SE Resolution No. 32/15. (3)Includes changes
in the fair value of financial assets on cash equivalents as of December 31,
2016, 2015 and 2014 for $ 19.9 million, $ 26.9 million and $17.6 million, respectively.


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Note 34 |Basic and diluted (loss) earnings per
share  Basic  The basic (loss)
earnings per share are calculated by dividing the (loss)/profit attributable to
the holders of the Company’s equity instruments by the weighted average number
of common shares outstanding as of December 31, 2016 and 2015, excluding common
shares purchased by the Company and held as treasury shares.  The basic (loss)
earnings per share coincide with the diluted (loss) earnings per share, inasmuch
as the Company has issued neither preferred shares nor corporate notes
convertible into common shares.    12.31.16
    
    12.31.15
    
    
    12.31.14(Loss) Profit for the
      period attributable to the owners of the Company
    
    (1,188,648)
    
    1,142,443
    
    
    (779,716)Weighted average number of
      common shares outstanding
    
    897,043
    
    897,043
    
    
    897,043Basic and diluted (loss)
      profit earnings per share – in pesos
    
    (1.33)
    
    1.27
    
    
    (0.87)
   Note 35 |Related-party transactions  ·The following transactions were carried out with related
parties: a.Income   Company
    
    Concept
    
    12.31.16
    
    12.31.15
    
    12.31.14CYCSA
    
    Other income
    
    9,598
    
    6,188
    
    5,018Transener
    
    Reimbursement
      expenses
    
    200
    
    -
    
    -Transba
    
    Reimbursement
      expenses
    
    300
    
    -
    
    -PYSSA
    
    Advertising on
      EDENOR bill
    
    -
    
    -
    
    210,098
    
    6,188
    
    5,020
   b.Expense    Company
    
    Concept
    
    12.31.16
    
    12.31.15
    
    12.31.14EASA
    
    Technical
      advisory services on financial matters
    
    (36,708)
    
    (22,791)
    
    (20,134)SACME
    
    Operation and
      oversight of the electric power transmission system
    
    (35,436)
    
    (27,331)
    
    (19,605)Salaverri,
      Dellatorre, Burgio y Wetzler Malbran
    
    Legal
      fees
    
    (3,454)
    
    (679)
    
    (1,230)PYSSA
    
    Financial and
      granting of loan services to customers
    
    (21)
    
    (89)
    
    (90)OSV
    
    Hiring life
      insurance for staff
    
    (6,227)
    
    -
    
    -PISA
    
    Interest
      Corporate Notes 2022
    
    -
    
    (2,110)
    
    -(81,846)
    
    (53,000)
    
    (41,059)
   c.Key Management personnel’s remuneration   12.31.16
    
    12.31.15
    
    12.31.14Salaries
    
    124,386
    
    85,063
    
    40,539124,386
    
    85,063
    
    40,539


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·The balances with related parties are as
follow:  d.Receivables and payables    12.31.16
    
    12.31.15Other
      receivables - Non currentSACME
    
    6,856
    
    7,0656,856
    
    7,065Other
      receivables - CurrentCYCSA
    
    -
    
    6,406SACME
    
    766
    
    662PYSSA
    
    -
    
    8766
    
    7,076
     12.31.16
    
    12.31.15Trade
      payablesPYSSA
    
    (204)
    
    -(204)
    
    -12.31.16
    
    12.31.15Other
      payablesSACME
    
    (4,756)
    
    (3,447)(4,756)
    
    (3,447)
    e.Borrowings    12.31.16
    
    12.31.15Borrowings -
      Non currentPISA
    
    -
    
    (119,877)-
    
    (119,877)Borrowings -
      CurrentPISA
    
    -
    
    (2,110)-
    
    (2,110)
   The other
receivables with related parties are not secured and do not accrue interest. No
allowances have been recorded for these concepts in any of the periods covered
by these financial statements.  According to IAS 24, paragraphs 25 and 26, the Company
applies the exemption from the disclosure requirement of transactions with
related parties when the counterpart is a governmental agency that has control,
joint control or significant influence. As of December 31, 2016, the ANSES holds
Corporate Notes of the Company due in 2022 for $ 317 million (USD 20 million
nominal value).


F-82

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The agreements
with related parties that were in effect throughout fiscal year 2016 are
detailed below:  (a)   Agreement with Comunicaciones y Consumos
S.A.  During 2007 and
2008, the Company and CYCSA entered into agreements pursuant to which the
Company granted CYCSA the exclusive right to provide telecommunications services
to the Company customers through the use of the Company’s network in accordance
with the provisions of Executive Order 764/00 of the PEN, which contemplates the
integration of voice, data and image transmission services through the existing
infrastructure of electricity distribution companies such as the Company’s
network, as well as the right to use the poles and towers of overhead lines
under certain conditions. Additionally, the Company has the right to use part of
the optical fiber capacity. In accordance with the terms of the agreement, CYCSA
will be responsible for all maintenance expenses and expenses related to the
adapting of the Company’s network for the rendering of such telecommunications
services. The term of the agreement, which was originally ten years to commence
from the date on which CYCSA’s license to render telecommunications services
were approved, was subsequently extended to 20 years by virtue of an addendum to
the agreement. In consideration of the use of the network, CYCSA grants the
Company 2% of the annual charges collected from customers, before taxes, as well
as 10% of the profits obtained from provision of services.  As from December
1, 2016, CYCSA is no longer a related party.  (b)Agreement
with SACME  In the framework
of the regulation of the Argentine electric power sector established by Law No.
24,065 and SE Resolution No. 61/92, and after the awarding of the distribution
areas of the city and metropolitan area of Buenos Aires to Edenor S.A. and
Edesur S.A., the bidding terms and conditions of the privatization provided that
both companies were required to organize SACME to operate the electric power
supervision and control center of the transmission and sub-transmission system
that feeds the market areas transferred to those companies. For such purpose, on
September 18, 1992 SACME was organized by Edenor S.A. and Edesur
S.A.  The purpose of
this company is to manage, supervise and control the operation of both the
electric power generation, transmission and sub-transmission system in the City
of Buenos Aires and the Buenos Aires metropolitan area and the interconnections
with the Argentine Interconnection System (SADI), to represent Distribution
Companies in the operational management before CAMMESA, and, in general, to
carry out the necessary actions for the proper development of its
activities.  The share
capital of SACME is divided into 12,000 common, registered non-endorsable
shares, of which 6,000 Class I shares are owned by Edenor S.A. and 6,000 Class
II shares are owned by Edesur S.A.  The operating
costs borne by the Company during fiscal year 2016 amounted to $ 35.4
million.  (c)Agreement
with EASA  The agreement
stipulates the provision to the Company of technical advisory services on
financial matters for a term of five years to commence as from September 19,
2015. The term of the agreement will be extended if so agreed by the parties. In
consideration of these services, the Company pays EASA an annual amount of USD
2.5 million.  Any of the parties may terminate the agreement at any time by
giving 60 days’ notice, without having to comply with any further obligations or
paying any indemnification to the other party.


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(d)Orígenes
Seguros de Vida  In the framework
of the process for the taking out of the mandatory life insurance for its
personnel, the Company invited different insurance companies to submit their
proposals. After having been analyzed, the one submitted by OSV was selected as
the best proposal. This transaction was approved by the Company’s Board of
Directors at the Board meeting held on March 8, 2016, with the Auditing
Committee’s prior favorable opinion.  The operating
costs borne by the Company in fiscal year 2016 amounted to $ 6.2
million.  ·The ultimate controlling company of Edenor S.A. is
PESA.   Note 36 |Trust for the
Management of Electric Power Transmission Works  Due to the
constant increase recorded in the demand for electricity during 2005, the SE,
through Resolution No. 1875/05, established that the interconnection works
through an underground power cable at 220 kV between Costanera and Puerto Nuevo
Transformer Stations with Malaver Transformer Station were necessary. These
works require not only the execution of expansion works but also new
layout-designs of the High-Voltage subsystems of Edenor S.A. and Edesur S.A.’s
networks.  In addition, it established that a fraction of the electricity
rate increase granted to distribution companies by ENRE Resolution 51/07 (as
mentioned in Note 2.c.I), would be used to finance up to 30% of the total
execution cost of these works, with the remaining 70% of the total cost of the
works being absorbed by the MEM’s demand. Fund inflows and outflows related to
the aforementioned expansion works are managed by the Works Trust Fund SE
Resolution 1/03, which acts as the link among CAMMESA, the Contracting
Distribution Companies and the companies that would have been awarded the
contracts for the provision of engineering services, supplies and main pieces of
equipment as well as those for the execution of the works and provision of minor
supplies.  The works were
developed in different stages, and the Company complied with its responsibility
with regard to the development of each of them, as well as with the operation
and the planned and reactive maintenance of the facilities comprising the
expansion works. The final conclusion of the works occurred in fiscal year
2014.  Furthermore, on
January 15, 2015, CAMMESA not only informed the Company of the amounts disbursed
by the BICE and CAMMESA for the execution of the aforementioned works, but also
requested that the Company carry out the pertinent actions to comply with the
provisions of Resolution 1875/05. Consequently, the Company has begun to carry
out actions aimed at coordinating and reaching agreement, with the different
parties involved, on the steps to be followed to have this process
finalized.  As of December
31, 2015, the Company recognized as facilities in service in the Property, plant
and equipment account its participation in the works for an estimated value of $
141.8 million, including financial charges. As of December 31, 2016 and 2015,
the contribution of $ 173 million and $ 155.8 million, respectively, was
pending, a debt which is disclosed in the Other payables account of non-current
liabilities.


F-84

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Note 37 |Electric
works arrangement - Agreement for the supply of electric power to Mitre and
Sarmiento railway lines  In September
2013, the Company and the Interior and Transport Ministry entered into a supply
and financial contribution arrangement pursuant to which the Federal Government
will finance the necessary electric works aimed at adequately meeting the
greater power requirements of the Mitre and Sarmiento railway
lines.  The total cost
of the works amounts to $ 114.3 million. The Federal Government will bear the
costs of the so called “exclusive facilities”, which amount to $ 59.9 million,
whereas the costs of the remaining works will be financed by the Federal
Government and reimbursed by the Company.   The financed
amount of $ 54.4 million will be reimbursed by the Company in 72 monthly and
consecutive installments, as from the first month immediately following the date
on which the Works are authorized and brought into service.  As of December
31, 2016, the Company recorded $ 63.8 million as non-current deferred revenue
and $ 53.4 million as non-current trade payables – Customer
contributions.   Note 38 |Construction
works - San Miguel and San Martín Transformer Centers  The Company
carried out construction works of a 7.3 km-long electrical transmission line
consisting of four 13.2 kV lines in trefoil formation to link Rotonda Substation
with San Miguel Transformer Center, owned by ENARSA, necessary for the provision
of electric power generation services; and a 6.2 km-long electrical transmission
line consisting of a 13.2 kV line in trefoil formation to link Rotonda
Substation with San Martín Transformer Center, owned by
ENARSA.  The works, whose
ownership was assigned to the Company, were carried out by the Company with the
contributions made by ENARSA. As of December 31, 2016, the Company continues to
recognize liabilities for this concept in the Deferred revenue account.  Note 39 |Agreement for
the execution of works - La Matanza Municipality  In April 2015,
the Company and La Matanza Municipality entered into an agreement for the
execution of works aimed at improving the electricity service. The amount of the
agreement totals $ 103.8 million, including applicable taxes and
charges.  It was agreed
that after the completion of each work and upon the presentation of the
respective invoices, the new facilities will be assigned free of charge in order
for the Company to proceed with the start-up of the facilities and the
subsequent operation and maintenance thereof  The Public Works
Secretariat of the MPFIPyS agrees to provide financial assistance to La Matanza
Municipality, on the basis of an arrangement signed between the parties, for the
total amount of the agreement.  As of December
31, 2016, the Company recorded $ 59.1 million as non-current deferred
revenue.


F-85

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Note 40 |Request for
Removal of facilities to carry out expansion works in Jorge Newbery Airport
Southern Head Station  In December
2013, the Company and the ANAC entered into an agreement for the removal of
High, Medium and Low Voltage facilities.  The ANAC
requires of Edenor S.A. the rectification of a 3.9 km-long section of a 132 kV cable that links Nuevo Puerto
Sub-station with Libertador and Vicente López Sub-stations, the rectification of
a 2.35 km-longsection of a 27.5 kV cable that links Nuevo Puerto and
Puerto Nuevo Sub-stations with AySA and Jorge Newbery Airport, the rectification
of a 5.5 km-long section of a 13.2 kV cable, the moving of 3 Medium-to-Low
Voltage transformercenters, and the
laying of 3.1 km of Low-voltage cable.  It
was agreed that the ANAC would contribute the funds, subject to the progress of
the works, for a total of $ 60.4 million (which includes indirect costs but does
not include taxes, VAT, or the Municipal contribution).  As
of December 31, 2016, the Company recorded $ 52.6 million as non-current
deferred revenue.  Note 41 |Merger
process – EMDERSA HOLDING S.A.  On December 20,
2013, the Company Extraordinary Shareholders’ Meeting approved the merger of
Emdersa Holding S.A. (as the acquired company, which will be dissolved without
liquidation) with and into Edenor S.A. (as the acquiring and surviving company),
as well as all the documentation and information required for such purpose by
the applicable regulations. The effective reorganization date for legal,
accounting and tax purposes is retroactive to October 1, 2013.  At the date
of issuance of these financial statements, the administrative approval thereof
by theIGJis in process.  Note 42 |Safekeeping
of documentation  On August 14,
2014, the CNV issued General Resolution No. 629 which introduced changes to its
regulations concerning the safekeeping and preservation of corporate books,
accounting books and commercial documentation. In this regard, it is informed
that for safekeeping purposes the Company has sent its workpapers and
non-sensitive information, whose periods for retention have not expired, to the
warehouses of the firm Iron Mountain Argentina S.A., located
at:  -1245 Azara St. – City of Buenos Aires -2163 Don Pedro de Mendoza Av. – City of Buenos
Aires -2482 Amancio Alcorta Av. – City  of Buenos
Aires -Tucumán St. on the corner of El Zonda, Carlos Spegazzini
City, Ezeiza, Province of Buenos Aires  The detail of
the documentation stored outside the Company’s offices for safekeeping purposes,
as well as the documentation referred to in Section 5 sub-section a.3) of
Caption I of Chapter V of Title II of the Regulations (Technical Rule No. 2,013,
as amended) is available at the Company’s registered office.


F-86

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Note 43 |Ordinary and
Extraordinary Shareholders’ Meeting  The Company
Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2016
resolved, among other issues, the following:  -To approve the Annual Report and the Financial Statements
of Edenor S.A. as of December 31, 2015; -To appoint Directors and alternate
Directors; -To approve the actions taken by the Directors and
Supervisory Committee members, together with the remuneration
thereof; -To appoint the authorities and the external auditors for
the current fiscal year; -To allocate to the statutory reserve an amount of $ 73.3
million, of which $ 64 million relates to the restoring of the reserve used to
absorb accumulated losses, and $ 9.3 million to the mandatory
allocation; -To record a discretionary reserve in accordance with the
terms of Section 70 of the Business Organizations Law for an amount of $ 176.1
million allocated to investments and other financial needs, authorizing the
Company’s Board of Directors to apply the amount thereof, whether in full or in
part, and to approve the methodology, time periods and conditions of those
investments.  Note 44 |Share-based
Compensation Plan  In the last
months of fiscal year 2016, the Company’s Board of Directors approved the use of
treasury shares for the creation of a Global Compensation Plan with the purpose
of remunerating and retaining the Company’s key personnel. The employees
included in the plan will receive a certain amount of those shares in the term
provided for by the referred to program.  At the date of
issuance of these financial statements, the Company estimates that approximately
1.6 million shares will be granted to its employees as additional remuneration
for fiscal year 2016.  The amount
accrued in the year, determined on the basis of the fair value of the treasury
shares at the grant date, amounted to $ 20.3 million and has been recorded in
the Salaries and social security taxes (Note 31) line item, with a contra
account in Equity.   Note 45 |Events after
the reporting period  Purchase of
financial assets at fair  From January 1,
2017 to the date of issuance of these financial statements, the Company has
purchase in successive operations Brazil Bonds due in 2019 for a value of $
546.5 million (USD 32 million nominal value).   RICARDO
      TORRESChairman


F-87

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“Free translation from
the original in Spanish published in Argentina”  Report of Independent
Auditors  To the Board of Directors,
President and Shareholders of Empresa Distribuidora y
Comercializadora Norte Sociedad Anónima (Edenor
S.A.) Legal address: Avenida del
Libertador 6363 Autonomous City of Buenos
Aires Tax Code No.
30-65511620-2  Report on financial
statements  We have audited the accompanying financial
statements of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima
(Edenor S.A.) (hereinafter, Edenor S.A.), including the statement of financial
position as of December 31, 2016, the related statements of comprehensive
income, of changes in equity and of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory
information.  The amounts and other information related to fiscal year
2015 and its interim periods, are part of the financial statements mention above
and therefore should be considered in relation to those financial statements.  Directors ́
responsibility  Company ́s Board of Directors is
responsible for the preparation and reasonable presentation of these financial
statements in accordance with International Financial Reporting Standards (IFRS)
adopted by the Argentine Federation of Professional Councils in Economic
Sciences (FACPCE) as the applicable accounting framework, and incorporated by
the National Securities Commission (CNV) to its regulations, as they were
approved by the International Accounting Standards Board (IASB). Company ́s Board
of Directors is also responsible for the existence of internal control that it
deems necessary to enable the preparation of financial statements free of
material misstatement due to errors or irregularities. Our responsibility is to
express an opinion on these financial statements based on our audit with the
scope detailed in paragraph "Auditors ́ Responsibility”.  Auditors ́
responsibility  Our responsibility is to
express an opinion onthe accompanyingfinancial statements based on our audit. We have performed our examination in
agreement with International Standards on Auditing, as adopted in Argentina by
FACPCE through Technical Pronouncement No. 32 and its pertinent Adoption
Memoranda. These standards require that we comply with ethics requirements, as
well as plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit involves
performing procedures to obtain evidence about the amounts and other information
disclosed in the financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of risk of material misstatement in
the financial statements due to fraud or error. In making this risk assessment,
the auditor should take into account the internal control relevant


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to the preparation and fair presentation of the Company's financial statements in order to design audit procedures that are appropriate, depending on the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company ́s internal control.  An audit also includes evaluating the appropriateness of accounting policies applied, the reasonableness of significant estimates made by Company ́s management and presentation of the financial statements as a whole.  We believe that the evidence we have obtained provides a sufficient and appropriate basis for our audit opinion.  Opinion  In our opinion, the financial statements referred to in the first paragraph of this report present fairly, in all material aspects, the financial position of Edenor S.A. as of December 31, 2016, its comprehensive income and cash flows for the year then ended, in accordance with International Financial Reporting Standards.  Emphasis of matter paragraph  Without qualifying our opinion, we draw the attention to the situation explained in Note 1 to the financial statements in relation to the economic and financial situation of Edenor S.A. In addition, we would like to emphasize the information contained in Note 17 to the accompanying financial statements, which describes that the Company falls within section 206 of the General Companies Law at the closing date of the current year.  Report on compliance with current regulations  In compliance with regulations in force, we report that:  a)            the financial statements of Edenor S.A. have been transcribed into the “Inventory and Balance Sheet” book and, insofar as concerns our field of competence, are in compliance with the provisions of the Commercial Companies Law and pertinent resolutions of the National Securities Commission;  b)           the financial statements of Edenor S.A. arise from accounting records kept in all formal aspects in conformity with legal regulations, which maintain the security and integrity conditions on the basis of which they were authorized by the National Securities Commission;  c)            we have read the summary of activity and the additional information to the notes to the financial statements (presented separately from these financial statements) required by section 68 of the listing regulations of the Buenos Aires Stock Exchange and by Section 12, Chapter III, Title IV of CNV regulations, on which, as regards those matters that are within our competence, we have no observations to make;


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d)           as of December 31, 2016 the liabilities accrued in favor of the Argentine Integrated Social Security System, according to the Company’s accounting records, amounted to $ 94.657.187, which were not yet due at that date;  e)            as required by Article 21, subsection e), Chapter III, Section VI, Title II of the regulations of the National Securities Commission, we report that total fees for auditing and related services billed to the Company during the fiscal year ended December 31, 2016 account for:  e.1)         96.5% of the total fees for services billed to the Company for all items during that fiscal year;  e.2)        9,1% of the total fees for services for auditing and related services billed to the Company, its parent companies, subsidiaries and related companies during that year;  e.3)        9% of the total fees for services billed to the Company, its parent companies, subsidiaries and related companies for all items during that year;  f)             we have applied the anti-money laundering and anti-terrorist financing procedures foreseen in the professional standards issued by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires.    Autonomous City of Buenos Aires, March 8, 2017.    /s/ PRICE WATERHOUSE & CO. S.R.L.R.Sergio Cravero (Partner)





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