Annual Report 2010 - Enel.com

suspended the analysis of the allotment of dividends for
2009.
Edesur has already submitted its 2010 investment plan,
which provides for expenditure of $110 million (greater
than the amount requested in Resolution 525) and
detailed the actions envisaged under the “Programa de
Regularización Operativo” for the October 2010 - March
2011 period. The company also filed an administrative
appeal against Resolution 525.
Brazil
Distribution rates
Following public consultation no. 043/2009 and meetings
with each distribution company, on February 2, 2010 the
regulator ANEEL proposed to the distribution companies
a change in the method for calculating the “system costs”
component of the distribution rate, so as to eliminate the
weaknesses in passing through the cost to consumers and
to neutralize revenues attributable to the system costs (socalled
encargos sectoriales) with respect to the volumes
sold.
The introduction of this different method proposed by
ANEEL (which will not have retroactive effect) means that
a change must be made in the concession agreement
(30-year contract, expiring in 2026 and in 2028, respectively,
for Ampla and Coelce). On June 23, 2010, ANEEL
announced that all the distribution companies operating
in the country had agreed to amend the concession
agreement.
On September 10, 2010 ANEEL formally initiated the process
of reviewing the distribution rates (third rate cycle),
proposing to change the method and reference parameters
used (such as WACC and Regulatory Asset Base - RAB,
non-technical losses and the X efficiency factor). As to
the RAB, the regulator agreed to not subject assets recognized
during the previous period to review, rather allowing
a simple adjustment for capital expenditure and
disposals made over the last few years. The consultation
process, which was initially scheduled to close on December
10, 2010, will continue until January 10, 2011.
Coelce will be the first Brazilian distribution company
subject to review for the April 2011 - April 2014 period.
Pending definition of the new method, the rate review
for Coelce will initially be carried out using a provisional
approach. The review of Ampla is expected for the 2014-
2019 period.
56 Enel Annual Report 2010 Report on operations
Annual rate adjustments
On March 15, 2010 the process of adjusting the annual
rates for the distribution company Ampla was completed.
It received a 1.35% increase in the VAD (Valor Agregado
de Distribución), the component for compensating distribution
activity. This adjustment has not translated into an
increase in the rate for end users, who instead saw a 4.7%
reduction.
The annual rate adjustment process for the distribution
company Coelce was completed on April 22, 2010 with
the definitive publication of the rate adjustment index.
The measure establishes an increase of 3% in the remuneration
paid to the company.
Commercial rules for distribution companies
On September 9, 2010, ANEEL approved Resolution
414/2010, amending Resolution 456/2000 containing
the commercial rules to be followed by distribution companies
in dealing with their regulated customers. The new
text, which incorporates a range of resolutions adopted
in the past ten years, governs the rights and obligation of
distributors and will apply to all final customers. The resolution
requires distribution companies to establish an office
in each city covered by the concession.
Argentina-Brazil interconnection line (CIEN)
On December 9, 2009 final approval was given to Law
12111, which modifies national legislation in preparation
for the future integration of isolated systems into the Sistema
Nacional Interconectado (SNI). Among other things,
the law establishes that as from 2010 interconnection
lines (including CIEN, the Argentina-Brazil interconnection
operated by Endesa) may be treated as part of the national
transmission grid and can therefore take advantage
of regulated rates.
Technical negotiations with ANEEL on the value of the
lines and, as a result, the applicable rates lasted nearly
all of 2010 and were conducted on the basis of the remuneration
method established by ANEEL in Resolution
386/09. On September 20, 2010 ANEEL issued Technical
Note 091/2010 setting the basis of the remuneration for
the CIEN interconnection line. The company responded
by submitting a higher basic request for remuneration
and asked that the concession period be extended from
20 to 30 years. On December 14, 2010, ANEEL formally
approved the value of the Receita Anual Permitida (RAP)
of the CIEN, which will initially amount to R$239 million
($128 million), valuing the line at about $1 billion. The