Empresa Nacional de Electricidad S.A. (EOC)

a.      Consolidated Comparative For the Period 2002-2004

     Total revenues in 2004 increased to Ch$ 1,032.7 billion, 9.5% greater than in 2003 after declining 2.9 % in 2003 as compared to 2002. Consolidated physical sales increased by 5.5% in 2004 and 4.1% in 2003. The effect on revenues of greater physical sales in 2003 was offset by the net impact of exchange differences and the significant effect of the 17% appreciation of the Chilean peso with respect to the U.S. dollar in 2003 on foreign revenues, in addition to a legal dispute with Cachoeira Dourada’s main customer in Brazil, CELG, and the divestiture of Infraestructura 2000. In 2004, the net impact of the exchange difference was weaker, as the appreciation of the Chilean peso to U.S. dollar exchange rate was 6%, partly offset by the 9% average appreciation of the Colombian peso, which favored results. In addition, the legal differences with CELG were resolved and the price of electricity in every country, with the exception of Argentina, reacted to the international fuel scenario and the natural gas crisis in Argentina, allowing greater physical sales to translate into greater revenues.

     Operating expenses increased 11.5% in 2004 after declining 1.9% in 2003 as compared to 2002. Electricity generation increased by 11.1% in 2004 and 4.6% in 2003. Thermal generation increased by 64.8%, or 4,917 GWh, in 2004 and 17.6%, equivalent to 1,135 GWh, in 2003. Higher expenses related to greater thermal generation in 2003 were offset by the effect of exchange differences, including the significant appreciation of the Chilean peso in 2003 on the dollar denominated expenses in Chile. In 2004, the increase in thermal generation, accentuated by the natural gas crisis in Argentina and the international price of alternative fuel, although allowing lower physical electricity purchases, translated into an increase in the variable costs of generation, as there was a weaker exchange difference effect than in 2003.

     Operating income increased to Ch$ 369.0 billion in 2004, compared to Ch$ 347.0 in 2003 and Ch$ 358.4 billion in 2002. The impact of greater electricity demand, the Company’s generation capacity which allowed it to translate greater demand into greater volume sales, the congruent (but lagging) reaction of electricity prices to market conditions, the Company’s commercial strategy determining the level of contracted versus spot market sales which, from 2002 to 2004 has gradually reduced the need to make energy purchases, the complicated fuel scenario in 2004 along with the hydro conditions in the countries in which we operate, and the exchange differences, together resulted in a 3.2% reduction in operating income in 2003 and a 6.4% increase in 2004.

     The Company’s consolidated net income after taxes and minority interests in 2004 reached Ch$ 83.8 billion compared to Ch$ 80.1 billion in 2003 and a net loss of Ch$ 9.6 billion in 2002. Income before taxes and minority interest of Endesa-Chile for 2004 rose by 25% over 2003 to Ch$ 203.9 billion, U.S.$40.2 billion higher than the prior year. The non-operating result positively affected net income for 2004 as a result of a U.S.$16.7 billion reduction in financial expenses. Income tax to December 31, 2004 amounted to Ch$ 93.4 billion compared to Ch$ 28.1 billion at December 31, 2003, a difference produced mainly by an increase in deferred taxes as a result of the effects of the tax losses caused by the devaluation of the Argentine peso in 2002. The net loss in 2002 was mainly explained by the economic condition in Argentina and Brazil affecting the value of Endesa-Chile’s investments in Argentina and Brazil leading to a write-off of goodwill in 2002 of Ch$110.8 billion related to our investments in Argentina and Brazil, which did not occur again in 2003.

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