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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of January, 2009

Commission File Number: 001-13240

Empresa Nacional de Electricidad S.A.

National Electricity Co of Chile Inc

(Translation of Registrant’s Name into English)

Santa Rosa 76
Santiago, Chile
(562) 6309000
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  [X]   Form 40-F  [   ]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes    [  ]      No    [X]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes    [  ]      No    [X]

Indicate by check mark whether by furnishing the information
contained in this Form, the Registrant is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes    [  ]      No    [X]

If “Yes” is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A


FOR IMMEDIATE RELEASE

    Juan Pablo Reitze 
For further information contact:    Head of Investor Relations 
Jaime Montero    jprv@endesa.cl 
Investor Relations Director     
Endesa Chile    Irene Aguiló 
(56-2) 634-2329    iaguilo@endesa.cl 
jfmv@endesa.cl     
    Jacqueline Michael 
    jmc@endesa.cl 
 
    María Teresa Fuentealba 
    mtfd@endesa.cl 

ENDESA CHILE ANNOUNCES CONSOLIDATED RESULTS FOR
THE PERIOD ENDED DECEMBER 31, 2008

(Santiago, Chile, January 28, 2009) – Endesa Chile (NYSE: EOC), announced today its consolidated financial results for the period ended December 31, 2008. All figures are in constant Chilean pesos and are in accordance with the Chilean Generally Accepted Accounting Principles (Chilean GAAP) as required by Chilean authorities. December 2007 figures have been adjusted by the year-over-year CPI variation of 8.9% . The figures expressed in US Dollars for both periods were calculated based on the December 31, 2008 exchange rate of 636.45 Chilean pesos per dollar.

The consolidated financial statements of Endesa Chile for such period include all of its Chilean subsidiaries, as well as its Argentine subsidiaries (Hidroeléctrica El Chocón S.A. and Endesa Costanera S.A), its Colombian subsidiary (Emgesa S.A. E.S.P.) and its Peruvian subsidiary (Edegel S.A.A.).

Highlights for the Period 

Endesa Chile’s net income for 2008 amounted to Ch$442,592 million, compared to Ch$209,566 million in 2007. This change is due to a 44% increase in operating income and a 63% improvement in the company’s non-operating result over the comparable period.

Operating income for 2008 was Ch$893,360 million, an increase of 44% compared to the Ch$621,634 million reported for 2007. This better result is mainly due to an increase in operating income of our businesses in Chile and Colombia, and also positively influenced by the result of the conversion to Chilean GAAP of the operations in Colombia and Peru due to exchange rate differences.

The improvement of non-operating result for 2008 is mainly derived from better results from our affiliate company Endesa Brasil and the better result from the application of Chilean Technical Bulletin 64, mainly due to the devaluation of the Colombian peso as applied to the liabilities in that currency.

EBITDA, or operating income plus depreciation and amortization, amounted to Ch$1,145,698 million as of December 31, 2008, a 38% increase over the same period 2007. Endesa Chile does not consolidate the investment in Endesa Brasil, which has been very positive in terms of results.

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Consolidated revenues in 2008 were Ch$2,491,588 million, 33% greater than the Ch$1,880,664 million reported the previous year, explained by higher energy revenues in all the countries where we operate.

Consolidated physical sales in 2008 amounted to 55,734 GWh, a 1% increase over 2007. Argentina experienced 11% lower physical sales. Physical sales of our subsidiary El Chocón fell by 1,402 GWh because the reduced dispatch reflecting lower hydrology. On the other hand, Chile, Colombia and Peru increased sales by 3%, 5% and 6% respectively.

Consolidated operating expenses as of December 2008 were Ch$1,549,013 million, an increase of 27% over 2007. The greater use of liquid fuels for thermal generation in Chile, Argentina and Peru, plus their higher prices, largely explain this increase. Selling, general and administrative expenses rose by 22% to Ch$49,215 million as of December 2008.

The most important activities for Endesa Chile in 2008 were the following:

In 2008, Standard & Poor’s and Fitch Rating upgraded the rating of Peru and Brazil to Investment Grade, countries in which Endesa Chile has investments.


3

Consolidated Income Statement 
(Chilean GAAP, Thousand US$)

Table 1

 
(Chilean GAAP, Thousand US$)                
 
 
 
    2007    2008    Variance    Change 
 
Operating Revenues    2,954,928    3,914,822    959,895    32.5% 
Operating Expenses    (1,914,760)   (2,433,833)   (519,073)   (27.1%)
 
Gross Income    1,040,168    1,480,990    440,822    42.4% 
 
 
SG&A    (63,447)   (77,328)   (13,881)   (21.9%)
                 
 
Operating Income    976,721    1,403,662    426,941    43.7% 
 
 
Net Financial Income (Expenses)   (263,937)   (261,088)   2,849    1.1% 
Interest Income    39,824    45,055    5,231    13.1% 
Interest Expense    (303,761)   (306,144)   (2,382)   (0.8%)
Net Income from Related Companies    (17,885)   178,580    196,465    1098.5% 
Equity Gains from Related Companies    80,329    187,962    107,633    134.0% 
Equity Losses from Related Companies    (98,214)   (9,382)   88,832    90.4% 
Net other Non Operating Income (Expense)   (115,213)   (1,353)   113,860    98.8% 
Other Non Operating Income    30,656    124,492    93,836    306.1% 
Other Non Operating Expenses    (145,869)   (125,845)   20,024    13.7% 
Positive Goodwill Amortization    (1,557)   (1,862)   (304)   (19.6%)
Price Level Restatement    15,150    667    (14,483)   (95.6%)
Exchange differences    28,424    (48,021)   (76,445)   (268.9%)
 
Non Operating Income    (355,018)   (133,077)   221,942    62.5% 
 
 
 
Net Income before Taxes, Min. Interest and Neg. Goodwill Amortization    621,702    1,270,585    648,882    104.4% 
 
 
Income Tax    (194,057)   (300,978)   (106,921)   (55.1%)
Extraordinary Items    -    -    -     
Minority Interest    (105,870)   (283,897)   (178,027)   (168.2%)
Negative Goodwill Amortization    7,498    9,698    2,200    29.3% 
 
 
NET INCOME    329,274    695,407    366,133    111.2% 
 


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Consolidated Income Statement 
(Chilean GAAP, Million Ch$)

Table 1.1

 
(Chilean GAAP, Million Ch$)                
 
 
 
    2007    2008    Variance    Change 
 
Operating Revenues    1,880,664    2,491,589    610,925    32.5% 
Operating Expenses    (1,218,649)   (1,549,013)   (330,364)   (27.1%)
 
Gross Income    662,015    942,576    280,561    42.4% 
 
 
SG&A    (40,381)   (49,215)   (8,835)   (21.9%)
 
 
Operating Income    621,634    893,360    271,726    43.7% 
 
 
Net Financial Income (Expenses)   (167,983)   (166,170)   1,813    1.1% 
Interest Income    25,346    28,676    3,329    13.1% 
Interest Expense    (193,329)   (194,845)   (1,516)   (0.8%)
Net Income from Related Companies    (11,383)   113,657    125,040    1098.5% 
Equity Gains from Related Companies    51,125    119,628    68,503    134.0% 
Equity Losses from Related Companies    (62,509)   (5,971)   56,537    90.4% 
Net other Non Operating Income (Expense)   (73,327)   (861)   72,466    98.8% 
Other Non Operating Income    19,511    79,233    59,722    306.1% 
Other Non Operating Expenses    (92,838)   (80,094)   12,744    13.7% 
Positive Goodwill Amortization    (991)   (1,185)   (194)   (19.6%)
Price Level Restatement    9,642    425    (9,218)   (95.6%)
Exchange differences    18,090    (30,563)   (48,653)   (268.9%)
 
Non Operating Income    (225,951)   (84,697)   141,255    62.5% 
 
 
 
Net Income before Taxes, Min. Interest and Neg. Goodwill Amortization    395,683    808,664    412,981    104.4% 
 
 
Income Tax    (123,507)   (191,557)   (68,050)   (55.1%)
Extraordinary Items    -    -    -     
Minority Interest    (67,381)   (180,686)   (113,305)   (168.2%)
Negative Goodwill Amortization    4,772    6,172    1,400    29.3% 
 
 
NET INCOME    209,566    442,592    233,026    111.2% 
 

 

5

Analysis of the Business by Country

In Argentina, operating income was Ch$18,009 million, compared to Ch$27,828 million in 2007, a reduction of 35%. The reduced hydrology required a larger contribution by thermal plants using expensive liquid fuels. Its efficient production and commercial policy enabled Endesa Costanera to increase operating income by Ch$5,861 million to Ch$6,284 million, as a result of a 31% increase in revenues mainly due to the rising in average tariffs. This was partially offset by a 28% increase in operating expenses. On the other hand, El Chocón showed a reduction in operating income by Ch$15,639 million to Ch$11,918 million in 2008, due to a 35% fall in physical sales, explained by the reduced dispatch caused by low hydrology.

Colombia’s operating income amounted to Ch$262,971 million in 2008, 51% higher than in 2007. This improvement is mainly explained by the effect of the conversion to Chilean GAAP due to exchange rate fluctuations with respect to the dollar in Chile and Colombia, and also by higher average sales prices and a 5% greater sales volume, which reached 16,368 GWh, with better hydraulic dispatch. All of these show the good performance of our operations in that country. On the other hand, operating expenses for their part rose by 34%, mainly due to higher tolls and larger purchases of energy and power.

In Peru, operating income was Ch$54,372 million, which represents a rise of 9% with respect to the Ch$50,105 million generated in 2007. This increase is explained by the effect of the conversion to Chilean GAAP following US dollar exchange rate fluctuations in Chile and Peru. In 2008 physical sales rose by 6% and average prices were higher compared to 2007. Operating expenses increased by 48%, partly explained by the conversion to Chilean GAAP, but also as a result of greater thermal generation with diesel because of maintenance works on the Camisea pipeline, which transports the natural gas, and also due to the congestion on the transmission lines and pipelines, plus larger and more expensive energy purchases.

In Chile, revenues amounted to Ch$1,398,349 million as of December 2008, 97% of which derived from the generating business and the rest from other revenues coming mainly from engineering services. In the generation business, operating income was Ch$550,712 million, 51% up on the Ch$363,843 million accounted in 2007. This rise is mainly the result of an increase in revenues as the average price remained relatively high during 2008. Operating expenses rose by 21% to Ch$786,692 million, notable being Ch$144,387 million of higher fuel costs because of the greater thermal generation with expensive oil during most of the year. The production of 19,807 GWh in the year 2008 showed an increase of 5.5% over the year before.

Non-Operational Analysis

Non-operating loss in 2008 amounted to Ch$84,697 million, which compares to a loss of Ch$225,951 million in 2007, thus positively affecting the Company’s net income for 2008. The principal variations in the non-operating result are as follows:

Net income from investments in related companies increased by Ch$125,040 million in 2008 compared to 2007. This variation is basically explained by Ch$68,203 million of improved results from the affiliate company Endesa Brasil S.A. in 2008 and also by the investment impairment booked by GasAtacama Holding Ltda. in 2007 for an amount of Ch$53,242 million.

Net other non-operating income and expenses showed an improvement of Ch$72,466 million, mainly explained by Ch$84,090 million of better result of the conversion adjustment (Technical Bulletin 64 of the Chilean Institute of Accountants) of our foreign subsidiaries, mainly in Colombia and Peru, by Ch$9,963 million of reduced provisions for capital tax in Colombia, and by Ch$4,522 million of reduced provisions for contingencies and litigation. This was partially offset by Ch$18,595 million of taxes on the dissolution of Cono Sur and the agency of Endesa Chile in the Cayman Islands, and by Ch$5,730 million of larger net expenses in resettlements of energy and capacity.

Consolidated financial expenses rose by Ch$1,516 million, from Ch$193,329 million in 2007 to Ch$194,845 million in 2008, an increase of 0.8% . Financial income rose by Ch$3,329 million, from Ch$25,346 million in 2007 to Ch$28,675 million in 2008, mainly in Chile due to higher average cash balances maintained as a conservative measure to face the complicated situations of the global financial markets .

6

Price-level restatements showed a negative change of Ch$9,218 million, mainly due to the effect of higher inflation in 2008, which reached 8.9%, compared to 7.4% in 2007. This change affects non-monetary assets and liabilities and certain monetary items, mainly bonds denominated in U.F., plus the restatement of the income statement accounts.

Exchange rate differences showed a negative variation of Ch$48,653 million in 2008 compared to 2007, passing from a gain of Ch$18,090 million in 2007 to a loss of Ch$30,563 million in 2008. This is mainly explained by fluctuations in the exchange rate between both years. In 2008, the Chilean peso depreciated against the dollar by 21.9% in contrast to a 7.1% appreciation of the peso in 2007.

Taxes rose by Ch$68,050 million in 2008 compared to the previous year. Consolidated income tax amounted to Ch$191,557 million, comprising a charge for income tax of Ch$164,363 million and Ch$27,194 million of deferred taxes. Income tax showed an increase over 2007 of Ch$77,238 million, related to taxable income, mainly in Endesa Chile, Pehuenche, Pangue, and Emgesa in Colombia. Deferred taxes showed a reduction of Ch$9,188 million compared to 2007.

Investments

Endesa Chile is constructing and studying several projects in Chile, Colombia and Peru. The projects in Chile will contribute approximately with 680 MW to the electricity grid in the period 2009-2011, with an investment of approximately US$990 million. In Peru, the entry of new capacity in the same period will reach 188 MW and the estimated investment is US$90 million. In the case of Colombia, the entry of new capacity will be completed in 2014 to reach 400 MW, and will represent an estimated investment of over US$650 million.

Reinforcing Endesa Chile’s commitment to sustainability and within the non-conventional renewable energy (NCRE) project development initiatives, following the commercial start-up in December 2007 of the Canela 18 MW wind farm, the company, Endesa Eco, has acquired an adjoining land and signed an order to proceed to Acciona Windpower for the supply of 40 wind-generators for producing additional 60 MW, with an estimated investment of US$150 million. On April 28, 2008, the environmental impact declaration (EID) was submitted to the Coquimbo Region Corema (regional environmental authority) for the Canela II wind farm project; the favorable qualification resolution was granted on September 9, 2008. Because of the modifications made to the project by the new micrositting of the wind generators, a new EID “Relocation of Canela II Wind Farm wind generators” was submitted to the environmental impact assessment system (EIAS) on November 14, 2008. On December 10, the civil works contract was awarded to the construction company Logro (a subsidiary of S igdo Koppers), the hand-over of the site being formalized on December 15, 2008. The wind farm will start operating in the last quarter of 2009.

In mid January 2008, two months ahead of the original schedule, the San Isidro II plant completed the closing of the combined cycle to achieve a total capacity of 353 MW. Taking into account both the open and combined cycle stages, the project required a total investment of US$ 233 million. In 2009, once liquefied natural gas (LNG) is available in Chile, the plant will reach its full capacity of 377 MW. The earlier start-up of this plant provided an important support for the complex energy supply situation in early 2008.

As part of its strategy for ensuring reliable and diversified energy sources, the Company is actively taking part in the Chilean government-promoted initiative to diversify the energy matrix through the Quintero LNG project, with a 20% holding in the ownership of the re-gasification terminal, together with Enap, Metrogas and British Gas, the latter being the gas supplier. Its estimated investment is approximately US$1,050 million and will be operating in fast-track mode in mid 2009, and definitively in 2010.

7

Endesa Chile, concerned about Chile’s tight electricity supply situation over the next few years, began the operation of unit No.1 of the Taltal plant, with an additional installed capacity of 120 MW operating with diesel, obtained from a unit that originally was designed to operate with Argentine natural gas.

Similarly, in August 2008, the Valparaíso region environmental authority (Corema) issued the RCA (environmental qualification resolution) with the approval of the EIA (environmental impact declaration) for the Quintero thermal-generation project, consisting of an open cycle to operate with diesel oil until LNG is available. The plant will have a capacity of 250 MW and will be located alongside the Quintero regasification plant. In September 2007, Endesa Chile awarded to General Electric (GE) the supply of two 125 MW turbines and, in January 2008, it awarded the EPC contract to Sigdo Koppers. As of December 18, all the equipment for the project has already arrived at the site, thus enabling the start of the assembly works. The total investment in the Quintero project is estimated to be approximately US$140 million and start-up is expected during the first half of 2009.

Regarding the development and progress of the HidroAysén hydroelectric project, in which Endesa Chile holds a 51% shareholding and Colbún S.A. the remaining 49%, and whose installed capacity would be 2,750 MW, this generation project’s environment impact assessment (EIA) was submitted to the environmental authority on August 14. The preparation of this assessment was prepared by an international consortium comprising SWECO, POCH Ambiental and EPS, has involved a total investment of US$14 million and the participation of 8 top-level academic centers. The EIA is in process and the first request for clarifications has been issued, for which the company is preparing the corresponding answers. HidroAysén has mandated the transmission company Transelec to make the design and route studies for the construction and transmission service of the high voltage direct current (HVDC) line to bring the plants’ energy and power to the SIC.

Construction works have continued on the Bocamina II coal-fired plant in the town of Coronel in Chile’s Eighth Region. With a capacity of 370 MW, this plant will have the latest technologies for reducing emissions and it is expected to commence operations in the second half of 2010. The estimated investment is US$700 million and the works are already well progressed, while the Company solved favorably the progress of the construction works.

On April 16, 2008, the Maule regional environmental authority approved the environmental impact assessment of the Los Cóndores pass-through hydroelectric project, with a capacity of approximately 150 MW and an average annual generation of 560 GWh. This plant will use the waters of the Lake Maule and will be located in San Clemente, Talca. The estimated investment is approximately US$ 400 million and its start up is planned for the first quarter of 2013. Construction works will begin the first quarter of this year.

On June 27, 2008, Endesa Eco started operating its Ojos de Agua pass-through hydroelectric plant, located approximately 100 kilometers from the city of Talca, in the valley of the river Cipreses, downstream from the Lake La Invernada. The investment in this 9 MW plant was US$ 28 million.

In Peru, a turnkey contract was signed in January 2008 with Siemens Power Generation for the installation of a 188 MW turbine at the Santa Rosa plant, which will operate with gas from Camisea, a project that will require an investment of approximately US$ 90 million. This project will increase Edegel’s installed capacity to 1,654 MW and will enable it to keep up with fast-growing electricity demand in the Peruvian market.

In Colombia, following the conclusion of the Assignment of Firm Energy Obligations process for projects coming into operation between December 2014 and November 2019, the Colombian Ministry of Mines and Energy selected in June the assignment of Emgesa’s El Quimbo hydroelectric project. With an estimated investment of over US$650 million, the project will have an installed capacity of 400 MW, will be built in Huila on the river Magdalena, upstream from the Betania plant, and should start providing energy supplies by December 2014.

In Argentina, Endesa Chile, through its subsidiaries Endesa Costanera S.A. and Hidroeléctrica El Chocón S.A., has made an investment of US$160 million, including loans of US$42 million, holding 21% shareholdings in the companies Termoeléctrica José de San Martín S.A. and Termoeléctrica Manuel Belgrano S.A., which are building combined-cycle generating power plants of 800 MW each, both of which started operations in open cycle during 2008. Both plants are estimated to operate in combined cycle during the second half of 2009. From that moment, our companies will begin to recover their credits from the cash flows generated by the projects through their production sales contracts with the MEM.

8

Financing

Facing the complex perspective of the global markets, Endesa Chile has maintained its access to the financial markets.

In June 2008 Endesa Chile signed a six year term bank loan for US$400 million, of which US$200 million are at fixed term and US$200 million are revolving. Endesa Chile thus secured the refinancing of the Yankee bond of the same amount which matured on July 15, 2008.

In addition, Endesa Chile in 2008 made drawings under its revolving credit facilities for a total of US$234 million. Therefore, as of December 31, 2008, the Company had US$450 million withdrawn out of a total of US$850 million available.

In December 2008, Endesa Chile issued a bond on the domestic market for UF 10 million (close to US$340 million) with a 21-year term and repayments starting in the tenth year. The yield was 4.81% . Endesa Chile has thus secured part of the refinancing of the Yankee bond that matures in April 2009 for US$400 million.

Regarding the financing activities of Endesa Chile’s consolidated foreign subsidiaries, a series of transactions were carried out in 2008 to refinance short-term loans and extend the average life of the debt.

The most active foreign subsidiary in terms of issues was the Peruvian Edegel which, in 2008, made three bond issues for a total of approximately US$29 million, at terms of between 6 and 20 years. In September, Edegel contracted new debt of US$30 million for a 5-year term. The proceeds of these new financings were to refinance programmed maturities. In addition, in March Edegel contracted a financial leasing for US$90 million for a 9-year term, to finance the Santa Rosa project.

As of December 31, 2008, Endesa Chile’s consolidated financial debt amounted to US$4,343 million, 6.6% higher than the same date 2007. Endesa Chile’s liquidity reached US$1,104 million, which allows the Company to finance upcoming maturities and investments under development.

Regarding the financial activities of Endesa Chile’s affiliate companies, the financing for GNL Quintero was completed on June 21. Endesa Chile has a 20% share in this company. The amount of the project finance is for up to US$1,110 million, with a 15-year term.

Sustainability and the Environment

In July 2008, Endesa Chile was recognized as one of the companies notable for their environmental concern for the rising from tenth to eighth place in the ranking of the “Most Respected Companies 2008”, a study prepared by Adimark GfK on behalf of La Segunda newspaper. Endesa Chile was the only electricity generation company appearing in this category.

9

In September 2008, the United Nations Global Compact published on its web site, in the “Notable” category, Endesa Chile’s latest Communication of Progress (COP) which was reported through its Sustainability Report 2007. As in the previous year, the company thus forms part of a select group of companies around the world which have obtained this important classification during this year, making it a benchmark in the preparation of COPs. Endesa Chile actively took part during the year in meetings of the Global Compact Executive Committee in Chile and of the Environment Committee. The Company’s chief executive has been invited to chair the Executive Committee in 2009.

Also in September, the Swiss agency Sustainable Asset Management (SAM Research) provided the results of the evaluation of Endesa Chile in corporate sustainability. The company’s score was 76 percentage points, 19 points above the average of the 33 companies evaluated (57 points), placing it within the range of the world’s leaders in sustainability (which obtained scores of between 70 and 83 points).

Endesa Chile obtained third place in the ranking of the “Ten best companies for working mothers and fathers 2008”, prepared by Fundación Chile Unido and the Ya magazine of El Mercurio newspaper.

In 2008, all of the installed capacity of Endesa Chile and subsidiaries was certified under ISO 14000 (environmental certification) and also under OSHAS 18000 (health and safety certification), which has been also extended to the new power plants that recently started-up operations..

Recently, in January 2009, Endesa Chile was awarded the distinction of “Silver Class” in the evaluation of corporate sustainability made by the Swiss agency SAM (Sustainable Asset Management) together with PricewaterhouseCoopers, forming part of a select group of companies in the electricity sector at the global level that were praised in the Sustainability Yearbook 2009 edited by SAM and PwC. Out of a total universe of 107 electricity companies that form part of the 2,500 companies in the Dow Jones Index, 46 electricity companies were submitted to an exhaustive evaluation by SAM of corporate sustainability. The evaluation considered various aspects of the economic, environmental and social dimensions, with a total of 98 questions. Endesa Chile has finished among the 6 electricity companies with the best performance in sustainability.

Conclusion

The solid results for 2008 are basically explained by those of Chile, Colombia and Brazil. In Chile, the suitable commercial policy and the better hydrology have offset the high fuel prices during the year. Additionally, the results in Colombia benefited from the effect of exchange rate fluctuations, higher average prices and greater sales volumes. Endesa Chile’s consolidated operating income increased by 44% and EBITDA grew by 38%. The results of Endesa Brasil in 2008 greatly contributed to the improvement of non-operating income.

Endesa Chile is operating in a world that is experiencing a financial crisis with increasing market volatility. Despite the latter, the Company maintains suitable liquidity and a solid balance sheet to face upcoming challenges, like the refinancing of debt during 2009 and the numerous and varied projects that Endesa Chile is working on to face energy requirements in an environment of growing long-term energy demand. The projects expected to start up in the period 2009-2011 amount to 680 MW in Chile, including Canela II (60 MW), Bocamina II (370 MW) and the Quintero open-cycle (250 MW). In Peru, 188 MW will enter the grid in the same period following the expansion of the Santa Rosa plant.

10

Consolidated Balance Sheet Analysis 

The evolution of the key financial figures has been as follows:

Table 2

 
Assets (Thousand US$)   As of December 2007    As of December 2008    Variance    Change 
 
Current Assets    1,152,631    1,836,424    683,793    59.3% 
Fixed Assets    7,127,270    7,920,115    792,844    11.1% 
Other Assets    938,190    1,465,640    527,450    56.2% 
 
Total Assets    9,218,092    11,222,179    2,004,087    21.7% 
 

Table 2.1

 
Assets (Million Ch$)   As of December 2007    As of December 2008    Variance    Change 
 
Current Assets    733,592    1,168,792    435,200    59.3% 
Fixed Assets    4,536,151    5,040,757    504,606    11.1% 
Other Assets    597,111    932,806    335,695    56.2% 
 
Total Assets    5,866,854    7,142,356    1,275,501    21.7% 
 

The Company’s total assets as of December 31, 2008 showed an increase of Ch$1,275,502 million compared to the year before, mainly due to the following:

Current assets increased by Ch$435,200 million, mainly explained by an increase in other current assets of Ch$346,111 million, basically securities held under repurchase agreements; an increase in cash and banks, time deposits and marketable securities of Ch$247,189 million and in trade accounts receivable of Ch$46,414 million. This was partially offset by reductions in notes and accounts receivable from related companies of Ch$119,348 million, basically a transfer to long term of a loan to the affiliate company Atacama Finance Co. and payment of a loan of the affiliate company GNL Quintero S.A.; a reduction in inventories and recoverable taxes of Ch$53,623 million, basically fuel, lower recoverable taxes and VAT fiscal credit; and a fall in sundry debtors of Ch$33,307 million.

Fixed assets show an increase of Ch$504,606 million, explained by the acquisition of fixed assets in the year for approximately Ch$363,000 and the effect of the real exchange rate on the fixed assets of foreign subsidiaries for approximately Ch$392,000 (using the methodology of keeping non-monetary assets in US dollars in accordance with Technical Bulletin No.64 of the Chilean Institute of Accountants), partially offset by depreciation of fixed assets for the year of Ch$250,505 million and sales of fixed assets of Ch$471 million.

Other assets show an increase of Ch$335,696 million, basically explained by an increase in investments in related companies of Ch$205,332 million, mainly the affiliate companies Endesa Brasil, Centrales Hidroeléctricas de Aysén and GNL Quintero S.A., and an increase in notes and accounts receivable from related companies of Ch$109,601 million, mainly the transfer from short term of receivables from the affiliate company Atacama Finance Co.

 

11

Table 3
 
Liabilities (Thousand US$)   As of December 2007    As of December 2008    Variance    Change 
 
Current liabilities    1,188,581    1,918,629    730,047    61.4% 
Long-term liabilities    3,287,994    3,714,359    426,365    13.0% 
Minority interest    1,517,504    1,874,015    356,511    23.5% 
Equity    3,224,013    3,715,176    491,164    15.2% 
 
Total Liabilities    9,218,092    11,222,179    2,004,087    21.7% 
 

Table 3.1

 
Liabilities (Million Ch$)   As of December 2007    As of December 2008    Variance    Change 
 
Current liabilities    756,473    1,221,111    464,639    61.4% 
Long-term liabilities    2,092,644    2,364,004    271,360    13.0% 
Minority interest    965,815    1,192,717    226,901    23.5% 
Equity    2,051,923    2,364,524    312,601    15.2% 
 
Total Liabilities    5,866,854    7,142,356    1,275,501    21.7% 
 

Current liabilities rose by Ch$464,639 million, mainly due to an increase in bonds payable of Ch$277,424 million, principally the transfer from long term of bonds of Endesa Chile and Edegel S.A., net of payments made; an increase in withholdings and income tax of Ch$54,513 million; an increase in notes and accounts payable to related companies of Ch$67,345 million, basically Codensa S.A.; and rises in accounts payable of Ch$ 54,139 and in bank borrowings of Ch$40,260 million. This was partially offset by a reduction in dividends payable of Ch$21,014 million.

Long-term liabilities grew by Ch$271,360 million, mainly explained by the increase in bank borrowings of Ch$297,847 million, basically in Endesa Chile; an increase in sundry creditors of Ch$45,896 million, mainly the leasing of Edegel, and an increase in deferred taxes of Ch$17,692 million. This was partially offset by a reduction in bonds payable of Ch$108,702 million, mainly due to transfers to short term in Endesa Chile, Emgesa and Edegel net of new issues of Endesa Chile and Edegel, and the effect of the exchange rate net of inflation on US dollar bonds.

The minority interest rose by Ch$226,901 million, equivalent to 23.5%, due to increases in the shareholders’ equity of companies due to the year’s results and the effect of the US dollar-Chilean peso exchange rate.

Shareholders’ equity increased by Ch$312,601 million compared to December 2007. This is mainly explained by the increase in net income for the year of Ch$233,026 million, an increase in retained earnings of Ch$88,241 million and in other reserves of Ch$15,791 million, partially offset by an increase in interim dividends of Ch$24,456 million.


12

Financial Debt Maturities with Third Parties 

Table 4


 
(Thousand US$)   2009    2010    2011    2012    2013    Balance    TOTAL 
 
Chile    632,708    263,585    212,974    17,271    413,732    1,307,457    2,847,727 
 
Endesa Chile (*)
   632,708    263,585    212,974    17,271    413,732    1,307,457    2,847,727 
 
Argentina    109,883    74,556    80,746    24,066    24,738        313,990 
 
Costanera 
   76,133    51,222    39,080    24,066    24,738        215,240 
Chocón 
   33,749    23,333    41,667                98,749 
 
Perú    116,477    52,515    74,171    90,050    42,798    111,302    487,313 
 
Edegel 
   116,477    52,515    74,171    90,050    42,798    111,302    487,313 
 
Colombia    192,335        178,286    135,947        187,200    693,767 
 
Emgesa 
   192,335        178,286    135,947        187,200    693,767 
 
TOTAL    1,051,402    390,655    546,177    267,335    481,268    1,605,959    4,342,797 
 

Table 4.1

 
(Million Ch$)   2009    2010    2011    2012    2013    Balance    TOTAL 
 
Chile    402,687    167,759    135,547    10,992    263,320    832,131    1,812,436 
 
Endesa Chile (*)
   402,687    167,759    135,547    10,992    263,320    832,131    1,812,436 
 
Argentina    69,935    47,451    51,391    15,317    15,745        199,839 
 
Costanera 
   48,455    32,600    24,872    15,317    15,745        136,990 
Chocón 
   21,480    14,851    26,519                62,849 
 
Perú    74,132    33,423    47,206    57,313    27,238    70,838    310,150 
 
Edegel 
   74,132    33,423    47,206    57,313    27,238    70,838    310,150 
 
Colombia    122,411        113,470    86,523        119,143    441,548 
 
Emgesa 
   122,411        113,470    86,523        119,143    441,548 
 
TOTAL    669,165    248,633    347,614    170,146    306,303    1,022,112    2,763,973 
 

(*) Includes: Endesa Chile, Pangue, Pehuenche, San Isidro, Celta and Túnel El Melón
(*) Includes excersice in 2009 of put option of Yankee Bond for MMUS$ 220

Table 5

 
Indicator    Unit    As of December 2007    As of December 2008    Change 
 
Liquidity    Times    0.97    0.96    (1.0%)
Acid ratio test (*)   Times    0.75    0.58    (22.7%)
Leverage (**)   Times    0.94    1.01    7.4% 
Short-term debt    %    26.6    34.1    28.3% 
Long-term debt    %    73.4    65.9    (10.2%)
 

* Current assets net of inventories and pre-paid expenses
** Leverage = Total debt / (equity + minority interest)

The current ratio at December 2008 was 0.96:1, a 1% reduction compared to December 2007. The acid test ratio was 0.58:1, a decrease of 22.7% compared to December 2007, mainly explained by the increase in bonds payable maturing in the short term.

The debt ratio at December 2008 was 1.01:1, a 7.4% increase compared to the same date of the previous year.


13

Consolidated Balance Sheet 
(Chilean GAAP) 

Table 6

 
ASSETS    Million Ch$        Thousand US$     
 
  As of December 
2007 		   As of December 
2008 		   As of December 
2007 		   As of December 
2008 
 
CURRENT ASSETS                 
Cash    21,124    54,516    33,190    85,657 
Time Deposits    48,213    172,001    75,753    270,251 
Marketable Securities    11,222    101,230    17,632    159,054 
Accounts Receivable, net    230,007    276,421    361,391    434,317 
Notes receivable    -    -    -    - 
Other accounts receivable    65,389    32,083    102,741    50,409 
Amounts due from related companies    191,610    72,263    301,061    113,540 
Inventories, net    56,942    44,286    89,468    69,583 
Income taxes recoverable    70,656    29,687    111,016    46,645 
Prepaid expenses    4,989    6,144    7,839    9,654 
Deferred taxes    3,141    3,751    4,936    5,893 
Other current assets    30,299    376,410    47,607    591,422 
 
Total currrent assets    733,592    1,168,792    1,152,631    1,836,424 
 
 
PROPERTY, PLANT AND EQUIPMENT                 
Property    57,654    62,246    90,587    97,802 
Buildings and Infrastructure    6,400,803    7,024,803    10,057,039    11,037,479 
Plant and equipment    1,246,793    1,480,904    1,958,980    2,326,819 
Other assets    184,098    332,199    289,258    521,957 
Technical appraisal    13,976    14,012    21,959    22,016 
Sub - Total    7,903,323    8,914,165    12,417,823    14,006,072 
Accumulated depreciation    (3,367,172)   (3,873,408)   (5,290,553)   (6,085,958)
 
Total property, plant and equipment    4,536,151    5,040,757    7,127,270    7,920,115 
 
 
OTHER ASSETS                 
Investments in related companies    483,551    688,883    759,763    1,082,383 
Investments in other companies    4,499    4,605    7,069    7,236 
Positive Goodwill    10,732    10,882    16,862    17,098 
Negative goodwill    (40,297)   (41,093)   (63,316)   (64,565)
Long-term receivables    90,698    94,691    142,507    148,779 
Amounts due from related companies    0    109,602    1    172,208 
Intangibles    27,505    34,277    43,217    53,857 
Accumulated amortization    (10,777)   (14,466)   (16,932)   (22,729)
Others    31,199    45,425    49,020    71,373 
 
Total other assets    597,111    932,806    938,190    1,465,640 
 
 
 
TOTAL ASSETS    5,866,854    7,142,356    9,218,092    11,222,179 
 


14

Consolidated Balance Sheet 
(Chilean GAAP) 

Table 6.1

 
LIABILITIES AND SHAREHOLDERS' EQUITY    Million Ch$    Thousand US$ 
   
  As of December 
2007 		   As of December 
2008 		   As of December 
2007 		   As of December 
2008 
 
CURRENT LIABILITIES                 
Short-term debt due to banks and financial institutions    28,788    69,048    45,233    108,489 
Current portion of long-term debt due to banks and fin. inst.    72,962    67,275    114,638    105,704 
Notes Payable    -    -    -    - 
Current portions of bonds payable    279,465    556,889    439,100    874,992 
Current portion of other long-term debt    25,498    35,081    40,063    55,120 
Dividends payable    25,619    4,605    40,253    7,235 
Accounts payable and accrued expenses    210,127    264,267    330,155    415,220 
Miscellaneous payables    27,407    18,255    43,062    28,683 
Amounts payable to related companies    17,144    84,489    26,937    132,751 
Provisions    32,163    33,745    50,535    53,020 
Withholdings    21,737    30,543    34,153    47,989 
Income Tax    8,981    54,689    14,111    85,928 
Deferred Income    684    401    1,075    629 
Deferred Taxes    -    -    -    - 
Other current liabilities    5,897    1,825    9,266    2,867 
 
Total current liabilities    756,473    1,221,111    1,188,581    1,918,629 
 
 
LONG-TERM LIABILITIES                 
Due to banks and financial institutions    316,697    614,543    497,598    965,579 
Bonds payable    1,395,877    1,287,175    2,193,224    2,022,430 
Due to other institutions    68,659    81,089    107,878    127,408 
Accounts payable    79,362    125,258    124,695    196,807 
Amounts payable to related companies    -    -    -    - 
Accrued expenses    30,338    30,373    47,667    47,722 
Deferred taxes    173,087    190,780    271,958    299,756 
Other long-Term liabilities    28,624    34,786    44,974    54,656 
 
Total Long-term liabilities    2,092,644    2,364,004    3,287,994    3,714,359 
 
 
 
Minority interest    965,815    1,192,717    1,517,504    1,874,015 
 
 
SHAREHOLDERS' EQUITY                 
Paid-in capital, no par value    1,331,714    1,331,714    2,092,410    2,092,410 
Capital revaluation reserve    -    -    -    - 
Additional paid-in capital-share premium    261,232    261,232    410,452    410,452 
Other reserves    (176,405)  
(160,614)
   (277,171)   (252,360)
Total Capital and Reserves    1,416,541    1,432,332    2,225,691    2,250,502 
 
Retained Earnings                 
Retained earnings    445,556    533,797    700,064    838,709 
Net Income    209,566    442,592    329,274    695,407 
Interim dividend    (19,740)   (44,196)   (31,016)   (69,442)
Accumulated surplus during development period of certain subsidiaries    -    -    -    - 
Total Retained Earnings    635,382    932,192    998,322    1,464,674 
 
Total Shareholders' Equity    2,051,923    2,364,524    3,224,013    3,715,176 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    5,866,854    7,142,356    9,218,092    11,222,179 
 

15

BOOK AND ECONOMIC VALUE OF THE ASSETS

Fixed asset values are adjusted in accordance with the accounting criteria of the Chilean Superintendency of Securities and Insurance Companies, in its Circulars 550 and 566 of 1985.

Depreciation is calculated on the assets’ restated value of the goods, according to the remaining useful life of each asset.

Investments in related companies are shown valued at their proportional equity value. In the case of foreign companies, the application of this method has been made on financial statements prepared in accordance with the rules set out in Technical Bulletins 72 and 64 of the Chilean Institute of Accountants.

Intangible assets are corrected monetarily and are being amortized in accordance with the rules set out in Technical Bulletin 55 of the Chilean Institute of Accountants.

In accordance with Circular 150 of January 31, 2003 of the Superintendency of Securities and Insurance Companies, the Company has evaluated the recoverability of the assets related to its investments in accordance with the terms of Technical Bulletin 72 of the Chilean Institute of Accountants. As a result, it has been determined that there is no deterioration related to the businesses acquired except in the case of Endesa Chile’s investment in Inversiones GasAtacama Holding Ltda. in 2007, whose test determined that the recoverable value is below its book value, for which an allowance was made that same year.

Assets denominated in foreign currencies are shown at the exchange rate at the end of each period.

Investments in securities under repurchase agreements are shown at the investment value plus the proportion of the corresponding interest at the rate implicit in the transaction.

Accounts and notes receivable from related companies are shown according to their maturities, in short and long term. The transactions meet conditions of equity similar to those normally prevailing in the market.

In summary, the assets are shown valued according to generally accepted accounting principles and rules, and the relevant instructions of the Superintendency of Securities and Insurance Companies, as set out in Note 2 to the financial statements.

16

Consolidated Cash Flow 
(Chilean GAAP)

Table 7

 
Effective Cash Flow (Thousand US$)   2007   2008    Variance    Change 
 
Operating    718,377    1,361,905    643,527    89.6% 
Financing    (251,395)   7,839    259,235    103.1% 
Investment    (541,026)   (436,937)   104,089    19.2% 
 
Net cash flow of the period    (74,044)   932,807    1,006,851    1359.8% 
 

Table 7.1

 
Effective Cash Flow (Million Ch$)   2007   2008    Variance    Change 
 
Operating    457,211    866,784    409,573    89.6% 
Financing    (160,001)   4,989    164,990    103.1% 
Investment    (344,336)   (278,089)   66,247    19.2% 
 
Net cash flow of the period    (47,125)   593,685    640,810    1359.8% 
 

Operating activities generated a positive cash flow of Ch$866,784 million, an increase of 89.6% compared to 2007. This is composed of the net income for the year of Ch$442,592 million, plus charges to income not representing net cash flows of Ch$132,281 million, changes in assets affecting cash flow of Ch$10,763 million, changes in liabilities affecting cash flow of Ch$100,447 million, gain on the sale of assets of Ch$15 million, and minority interest of Ch$180,686 million.

Financing activities generated a positive cash flow of Ch$4,989 million, an increase of 103.1% compared to 2007. This consisted of the drawing of loans and bond issues for Ch$619,576 million, loans received from related companies of Ch$67,651 million and other sources of finance of Ch$456 million. This was offset by the repayment of loans and bonds of Ch$393,492 million, the payment of dividends of Ch$282,015 million and other disbursements of Ch$621 million.

Investment activities generated a negative flow of Ch$278,089 million, explained by acquisitions of fixed assets of Ch$290,179 million, documented loans to related companies of Ch$53,161 million, permanent investments of Ch$19,865 million and other investment disbursements of Ch$8,317 million, offset by the collection of other loans to related companies of Ch$85,217 million, fixed asset sales proceeds of Ch$471 million, sales of permanent investments of Ch$7,731 and other investment income of Ch$14 million.

Consolidated Cash Flow from Foreign Operations 
(Chilean GAAP)

Table 8

                 
Cash Flow
(Th US$) (1)		 Interests Dividends  Capital Red.   Intercompany Amortiz.  Others  Total 
                 
  As of Dic. 2007  As of Dic. 2008  As of Dic. 2007  As of Dic. 2008  As of Dic. 2007 As of Dic. 2008  As of Dic. 2007  As of Dic. 2008  As of Dic. 2007  As of Dic. 2008  As of Dic. 2007  As of Dic. 2008 
                         
Argentina  564.4  601.5  11,660.1  334.2          2,588.4  1,314.7  14,813.0  2,250.4 
Peru      14,032.6  9,961.0  4,776.0            18,808.6  9,961.0 
Brazil      73,916.5  57,720.7              73,916.5  57,720.7 
Colombia      51,876.9  60,917.0              51,876.9  60,917.0 
                         
Total  564.4  601.5  151,486.1  128,932.9  4,776.0        2,588.4  1,314.7  159,414.9  130,849.0 
                         
(1) The figures are expressed at exchange rate of Ch$ 636.45 per dollar.             


17

Consolidated Cash Flow (Chilean GAAP)

Table 9

   
    Million Ch$    Thousand US$ 
   
    2007   2008    2007    2008 
 
CASH FLOWS ORIGINATED FROM OPERATING ACTIVITIES                 
 
Net income (loss) for the period    209,566    442,592    329,274    695,407 
 
 
(Profit) loss in sale of assets                 
   (Profit) loss in sale of fixed assets    (413)   15    (648)   23 
   (Profit) loss in sale of investments    (3,352)   -    (5,267)   - 
Charges (credits) which do not represent cash flows:    244,129    132,281    383,579    207,842 
   Depreciation    210,151    250,505    330,192    393,597 
   Amortization of intangibles    1,330    1,833    2,090    2,880 
   Write-offs and provisions    155    411    243    645 
   Amortization of positive goodwill    991    1,185    1,557    1,862 
   Amortization of negative goodwill (less)   (4,772)   (6,172)   (7,498)   (9,698)
   Accrued profit from related companies (less)   (51,125)   (119,628)   (80,329)   (187,962)
   Accrued loss from related companies    62,509    5,971    98,214    9,382 
   Net, price-level restatement    (9,642)   (425)   (15,150)   (667)
   Net exchange difference    (18,090)   30,563    (28,424)   48,021 
   Other credits which do not represent cash flow (less)   (1,177)   (46,771)   (1,849)   (73,487)
   Other charges which do not represent cash flow    53,800    14,810    84,532    23,269 
Assets variations which affect cash flow:    (223,467)   10,763    (351,114)   16,911 
   Decrease (increase) in receivable accounts    (138,798)   (68,887)   (218,082)   (108,237)
   Decrease (increase) in inventories    (29,802)   12,192    (46,825)   19,157 
   Decrease (increase) in other assets    (54,866)   67,458    (86,207)   105,991 
Liabilities variations which affect cash flow:    163,366    100,447    256,684    157,824 
   Accounts payable related to operating results    226,733    (60,847)   356,246    (95,604)
   Interest payable    (20,330)   (398)   (31,943)   (625)
   Income tax payable    19,203    118,039    30,172    185,464 
   Accounts payable related to non operating results    13,150    8,388    20,661    13,179 
   Accrued expenses and withholdings    (75,389)   35,266    (118,452)   55,411 
   Minority Interest    67,381    180,686    105,870    283,897 
 
Net Positive Cash Flow Originated from Operating Activities    457,211    866,784    718,377    1,361,905 
 
 
 
CASH FLOWS ORIGINATED FROM FINANCING ACTIVITIES                 
 
   Shares issued and subscribed    3,071    -    4,825    - 
   Proceeds from loans wired    180,915    387,187    284,256    608,354 
   Proceeds from debt issuance    166,324    232,389    261,332    365,134 
   Proceeds from loans obtained from related companies    43,256    67,651    67,964    106,294 
   Capital distribution    (3,690)   -    (5,799)   - 
   Other financing sources    -    457    -    717 
   Dividends paid    (257,790)   (282,015)   (405,044)   (443,107)
   Loans, debt amortization (less)   (173,693)   (165,883)   (272,909)   (260,638)
   Issuance debt amortization(less)   (117,892)   (227,609)   (185,233)   (357,623)
   Amortization of loans obtained from related companies    -    (6,566)   -    (10,316)
   Amortization of expenses in issuance debt    -    -    -     
   Other disbursements related to financing(less)   (502)   (621)   (788)   (976)
 
Net Cash Flow Originated from Financing Activities    (160,001)   4,989    (251,395)   7,839 
 
 
CASH FLOWS ORIGINATED FROM INVESTING ACTIVITIES                 
   Sale of fixed assets    3,244    471    5,097    740 
   Sale of related companies    9,119    7,731    14,328    12,147 
   Sale of other investments    -    -    -    - 
   Collection upon loans to related companies    -    85,217    -    133,895 
   Other income on investments    47,015    14    73,870    22 
   Additions to fixed assets (less)   (225,455)   (290,179)   (354,239)   (455,933)
   Investments in related companies (less)   (41,582)   (19,865)   (65,335)   (31,212)
   Investments in marketable securities    -    -    -    - 
   Loans provided to related companies(less)   (89,123)   (53,161)   (140,031)   (83,528)
   Other investment disbursements(less)   (47,553)   (8,317)   (74,716)   (13,068)
 
Net Cash Flow Originated from Investment activities    (344,336)   (278,089)   (541,026)   (436,937)
 
 
 
Net Positive Cash Flow for the period    (47,125)   593,685    (74,044)   932,807 
 
 
EFFECT OF PRICE-LEVEL RESTATEMENT UPON CASH AND CASH EQUIVALENT    (24,789)   (1,297)   (38,948)   (2,039)
NET VARIATION OF CASH AND CASH EQUIVALENT    (71,914)   592,387    (112,992)   930,768 
INITIAL BALANCE OF CASH AND CASH EQUIVALENT    181,886    109,972    285,782    172,790 
 
FINAL BALANCE OF CASH AND CASH EQUIVALENT    109,972    702,360    172,790    1,103,559 
 

18

MOST IMPORTANT CHANGES IN THE MARKETS WHERE THE COMPANY OPERATES

ARGENTINA

• The nationalization of private pension funds and the consequent elimination of the AFJPs resulted in forty companies acquiring Argentine state shareholders, although in no case exceeding 27% of their market value. Banks, gas companies, electricity companies, cereal producers, oil companies, etc. thus will become state-owned assets.

• The Senate unanimously approved the law prohibiting the import and sale of incandescent light bulbs for residential use with effect from December 2010. This law points to a reduction in energy demand in the Argentine capital city.

CHILE

• The National Energy Commission postponed until January 30, 2009 the period for the submission of bids in the long-term auctions of the distribution companies CGE Distribución, Chilquinta and Saesa, for their regulated customers consumption starting from January 1, 2010.

• The Mining and Energy Committee of the Chamber of Deputies approved and dispatched the bill creating the Ministry of Energy. Among its new powers are those related to energy efficiency, in particular the creation of a Chilean Agency of Energy Efficiency and the possibility of determining minimum standards of energy efficiency.

COLOMBIA

No relevant changes.

PERÚ

• On November 18, Transportadora de Gas del Perú (TGP) obtained the approval of a US$150 million loan from the Corporación Andina de Fomento (CAF), Banco de Crédito del Perú (BCP) and Natixis Bank, France. The proceeds will be used to expand the gas and liquids pipelines in order to alleviate the pipeline congestion toward the last quarter of 2009.

MARKET RISK ANALYSIS

ARGENTINA

• Hydrological risk: The Chocón reservoir ended December with a water level of 380.13 msl, higher than the level of 368.6 msl recorded at the end of the year before. This means a greater accumulated energy potential in the reservoir of 1,400 GWh, compared to the previous year. Flows in the Limay (Chocón) basin were around 19% below average for the month of December.

CHILE

• Hydrological risk: So far in this hydrological year, the system has experienced a normal type of hydrology with contributions with a probability of excess of 41.9% . As of December 31, the level of the reservoirs of Endesa Chile and subsidiaries was approximately 5,652 GWh of equivalent energy (around 12% above the level recorded as of December 31, 2007).

• Fuels risk: Effective November 20, the Taltal plant had average gas supplies that enabled it to generate at full load. These supplies of natural gas from Argentina are due to problems in the pipeline that supplies Brazil from Bolivia, which resulted in additional gas available to Argentina which allows larger injections into Chile.

19

COLOMBIA

• Hydrological risk: Total flows on the SIN to December 2008 were 118% of the historic average (wet hydrology). For Guavio, the tributaries for the same period were 92% (normal-dry condition) and for Betania were 115% (wet hydrology).

PERU

• Hydrological risk: Edegel’s total volume of water stored in lakes and reservoirs as of the end of December 2008 reached 116.9 MMm3, which represents 50% of total capacity. Flows in the Rimac basin in 2008 were 94% of average (semi-dry condition). On the rivers Tulumayo and Tarma, the flows were 83% and 75% (both in the dry category) of average, respectively.

• Fuels risk: During the last quarter, Edegel signed firm transportation contracts with Cálidda and TGP for its Ventanilla and Santa Rosa units, within the 11th open season for transportation capacity organized by those companies.

EXCHANGE AND INTEREST RATE RISKS ANALYSIS

The Company has a considerable percentage of its loans denominated in US dollars as most of its sales in the different markets where it operates show a high degree of indexation to that currency. On the other hand, the markets in which the foreign subsidiaries operate show a lower indexation to the dollar than in Chile, thus having a higher portion of this financing in local currency.

Despite this natural exchange rate hedge, the Company, in a scenario of high dollar volatility, has continued with its policy of partially hedging its dollar liabilities in order to minimize fluctuations in its results caused by exchange rate variations. Considering the important reduction in the mismatched accounting position in recent years, which has reached prudent levels, the Company has modified its dollar-peso hedging policy by setting a maximum accounting mismatched position followed when hedging transactions are undertaken.

As of December 31, 2008, the Company didn’t have any exchange rate coverage instrument in consolidated terms. As of December 31, 2007, the Company has hedged US$ 125 million through dollar-peso swap and dollar-peso forward contracts.

Regarding the consolidated interest rate risk, the Company has a proportion of fixed to variable rate debt of approximately 73% / 27% as of December 31, 2008. The percentage at fixed rates has reduced from the 82% / 18% fixed / variable percentages at the same date in 2007, thus reducing the interest-rate fluctuation risk.

20

Business Information of Chilean and Foreign Operations 
Main Operating Figures in GWh

Table 10

                 
2008  Costanera  Chocón  Tot. Argentina  Chile  Colombia  Peru  Abroad  TOTAL Cons. 
(GWh)                
                 
Total generation  8,540.1  1,940.0  10,480.2  19,807.1  12,905.1  8,101.9  31,487.2  51,294.3 
                 
 Hydro generation  -  1,940.0  1,940.0  13,784.1  12,402.6  4,188.7  18,531.3  32,315.4 
                 
 Thermo generation  8,540.1  -  8,540.1  5,992.6  502.5  3,913.3  12,955.9  18,948.6 
                 
 Wind generation  -  -  -  30.4  -  -  -  30.4 
                 
Purchases  79.5  614.3  693.7  402.8  3,611.4  524.6  4,829.7  5,232.5 
                 
     Purchases to related companies  -  -  -  4,996.4  -  -  -  4,996.4 
                 
     Purchases to other generators  -  -  -  211.1  885.4  -  885.4  1,096.4 
                 
     Purchases at spot  79.5  614.3  693.7  191.8  2,726.0  524.6  3,944.4  4,136.1 
                 
Transmission losses, pump and other consumption  76.2  -  76.2  401.9  148.6  165.7  390.5  792.4 
                 
Total electricity sales  8,543.4  2,554.3  11,097.7  19,808.0  16,367.9  8,460.8  35,926.5  55,734.5 
                 
 Sales at regulated prices  -  -  -  11,466.0  8,738.9  3,574.0  12,312.9  23,778.9 
                 
 Sales at unregulated prices  1,032.7  1,364.2  2,396.9  5,025.0  2,429.7  4,651.4  9,477.9  14,502.9 
                 
 Sales at spot marginal cost  7,510.7  1,190.1  8,700.8  3,317.0  5,199.3  235.5  14,135.6  17,452.6 
                 
 Sales to related companies generators  -  -  -  4,996.4  -  -  -  4,996.4 
                 
TOTAL SALES OF THE SYSTEM  105,938.3  105,938.3  105,938.3  52,813.2  74,628.7  26,771.2     
                 
Market Share on total sales (%)                8.1%  2.4%  10.5%  37.5%  21.9%  31.6%     
                 

                 
2007  Costanera  Chocón  Tot. Argentina  Chile  Colombia Peru  Abroad  TOTAL Cons. 
(GWh)                
                 
Total generation  8,420.9  3,696.2  12,117.1  18,773.0  11,941.8  7,654.4  31,713.4  50,486.4 
                 
 Hydro generation  -  3,696.2  3,696.2  13,179.4  11,427.2  4,384.6  19,508.0  32,687.5 
                 
 Thermo generation  8,420.9  -  8,420.9  5,591.0  514.6  3,269.9  12,205.3  17,796.3 
                 
 Wind generation  -  -  -  -  -  -  -  - 
                 
Purchases  106.8  260.1  366.9  1,041.9  3,814.0  498.9  4,679.8  5,721.7 
                 
     Purchases to related companies  -  -  -  6,564.2  -  -  -  6,564.2 
                 
     Purchases to other generators  -  -  -  890.1  788.9  -  788.9  1,678.9 
                 
     Purchases at spot  106.8  260.1  366.9  151.8  3,025.1  498.9  3,890.9  4,042.7 
                 
Transmission losses, pump and other consumption  77.7  -  77.7  602.4  142.7  160.1  380.5  982.8 
                 
Total electricity sales  8,450.0  3,956.3  12,406.3  19,212.1  15,613.1  7,993.5  36,012.9  55,225.1 
                 
 Sales at regulated prices  -  -  -  11,501.6  8,045.8  3,333.9  11,379.7  22,881.3 
                 
 Sales at unregulated prices  1,023.0  1,341.5  2,364.5  5,280.9  2,493.4  4,235.3  9,093.2  14,374.1 
                 
 Sales at spot marginal cost  7,427.0  2,614.9  10,041.8  2,429.6  5,073.8  424.3  15,540.0  17,969.6 
                 
 Sales to related companies generators  -  -  -  6,563.9  -  -  -  6,563.9 
                 
TOTAL SALES OF THE SYSTEM  102,950.3  102,950.3  102,950.3  52,656.2  72,660.8  24,615.1     
                 
Market Share on total sales (%) 8.2%  3.8%  12.1%  36.5%  21.5%  32.5%     
                 

21

Business Information in Chilean Operations 
Main Operating Figures in GWh

Table 10.1

 
           
2008  Endesa and Non-Registered 
Subsidiaries 		 Pehuenche  Endesa SIC
Consolidated 		 Endesa SING  Total Chile
Consolidated 
(GWh)          
           
Total generation  15,305.3  3,589.4  18,894.7  912.4  19,807.1 
           
   Hydro generation  10,194.6  3,589.4  13,784.1  -  13,784.1 
           
   Thermo generation  5,080.2  -  5,080.2  912.4  5,992.6 
           
   Wind generation  30.4  -  30.4  -  30.4 
           
Purchases  5,207.5  41.0  252.0  150.8  402.8 
           
       Purchases to related companies  4,996.4  -  4,996.4  -  4,996.4 
           
       Purchases to other generators  211.1  -  211.1  -  211.1 
           
       Purchases at spot  -  41.0  41.0  150.8  191.8 
           
Transmission losses, pump and other consumption  384.3  16.5  400.8  1.1  401.9 
           
Total electricity sales  20,128.4  3,613.9  18,745.9  1,062.1  19,808.0 
           
   Sales at regulated prices  11,113.9  352.1  11,466.0  -  11,466.0 
           
   Sales at unregulated prices  3,965.9  176.8  4,142.7  882.3  5,025.0 
           
   Sales at spot marginal cost  1,552.1  1,585.1  3,137.2  179.8  3,317.0 
           
   Sales to related companies generators  3,496.4  1,500.0  4,996.4  -  4,996.4 
           
TOTAL SALES OF THE SYSTEM  39,594.2  39,594.2  39,594.2  13,218.9  52,813.2 
 
Market Share on total sales (%) 42.0%  5.3%  47.3%  8.0%  37.5% 
           

 
           
2007  Endesa and Non-Registered 
Subsidiaries 		 Pehuenche  Endesa SIC Consolidated  Endesa SING  Total Chile Consolidated 
(GWh)          
           
Total generation  14,403.4  3,436.7  17,840.0  933.0  18,773.0 
           
   Hydro generation  9,742.8  3,436.7  13,179.4  -  13,179.4 
           
   Thermo generation  4,658.0  -  4,658.0  933.0  5,591.0 
           
   Wind generation  2.6  -  2.6  -  2.6 
           
Purchases  7,454.3  4.5  894.6  147.3  1,041.9 
           
       Purchases to related companies  6,564.2  -  6,564.2  -  6,564.2 
           
       Purchases to other generators  890.1  -  890.1  -  890.1 
           
       Purchases at spot  -  4.5  4.5  147.3  151.8 
           
Transmission losses, pump and other consumption  576.0  14.3  590.3  12.1  602.4 
           
Total electricity sales  21,281.0  3,426.9  18,143.9  1,068.2  19,212.1 
           
   Sales at regulated prices  11,277.7  223.9  11,501.6  -  11,501.6 
           
   Sales at unregulated prices  4,100.9  158.8  4,259.7  1,021.2  5,280.9 
           
   Sales at spot marginal cost  1,288.8  1,093.8  2,382.6  47.0  2,429.6 
           
   Sales to related companies generators  4,613.5  1,950.4  6,563.9  -  6,563.9 
           
TOTAL SALES OF THE SYSTEM  39,981.8  39,981.8  39,981.8  12,674.4  52,656.2 
           
Market Share on total sales (%) 41.7%  3.7%  45.4%                     8.4%  36.5% 
           

22

Endesa Chile’s Operating Revenues and Expenses breakdown by country 
(Chilean GAAP)

Table 11

 
    Million Ch$    Thousand US$     
    2007    2008    2007    2008    % Var. 
 
OPERATING REVENUES    1,880,664    2,491,589    2,954,928    3,914,822    32.5% 
 
 
 
Energy Sales Revenues:    1,830,080    2,419,998    2,875,449    3,802,338    32.2% 
 
Endesa Chile and Subs. in Chile    1,014,839    1,329,344    1,594,530    2,088,686    31.0% 
Costanera    227,845    298,913    357,994    469,657    31.2% 
Chocón    60,675    54,030    95,334    84,893    (11.0%)
Emgesa    345,707    492,309    543,180    773,523    42.4% 
Edegel    181,014    245,402    284,412    385,579    35.6% 
                     
 
Other Revenues:    50,584    71,590    79,478    112,484    41.5% 
 
Generation in Chile    17,348    31,340    27,257    49,242    80.7% 
Other Businesses in Chile    31,567    37,665    49,598    59,180    19.3% 
Costanera    -    -    -    -     
Chocón    -    -    -    -     
Emgesa    408    912    640    1,433    123.8% 
Edegel    1,262    1,673    1,982    2,629    32.6% 
                     
 
OPERATING EXPENSES    1,218,649    1,549,013    1,914,760    2,433,833    27.1% 
 
 
 
Depreciation and Amortization:    210,753    248,455    331,138    390,377    17.9% 
 
Generation in Chile    98,525    106,600    154,804    167,492    8.2% 
Other Businesses in Chile    2,382    2,476    3,743    3,890    3.9% 
Costanera    27,250    37,651    42,815    59,158    38.2% 
Chocón    13,003    15,349    20,430    24,116    18.0% 
Emgesa    34,551    42,213    54,287    66,325    22.2% 
Edegel    35,041    44,167    55,058    69,396    26.0% 
                     
 
Other Fixed Costs:    94,645    118,300    148,707    185,875    25.0% 
 
Generation in Chile    28,805    33,042    45,259    51,917    14.7% 
Other Businesses in Chile    20,388    24,249    32,035    38,100    18.9% 
Costanera    11,819    15,927    18,570    25,024    34.8% 
Chocón    2,761    3,448    4,338    5,417    24.9% 
Emgesa    16,382    22,898    25,740    35,977    39.8% 
Edegel    15,525    19,547    24,393    30,713    25.9% 
Consolidation Adjustments of Foreign Subsidiaries    (1,036)   (810)   (1,628)   (1,273)   21.8% 
                     
 
Variable Costs:    913,252    1,182,258    1,434,915    1,857,581    29.5% 
 
Costanera    185,625    234,895    291,657    369,070    26.5% 
Chocón    16,023    21,649    25,175    34,015    35.1% 
Emgesa    115,458    158,169    181,409    248,517    37.0% 
Edegel    71,759    117,530    112,749    184,665    63.8% 
Fuels and Lubricants in Chile    323,204    467,592    507,824    734,687    44.7% 
Energy Purchases in Chile    65,169    56,836    102,394    89,302    (12.8%)
Tolls and Energy Transport Costs in Chile    113,396    103,335    178,169    162,361    (8.9%)
Other Variable Costs of Generation in Chile    19,666    19,287    30,899    30,303    (1.9%)
Other Variable Costs of Other Businesses in Chile    2,952    2,966    4,638    4,661    0.5% 
 

(*) On September 1, 2007 the Colombian companies Emgesa S.A. E.S.P. and Central Hidroeléctrica Betania S.A. E.S.P. were merged into the latter, which then changed its name to Emgesa S.A. E.S.P.
(**) The information disclosed for each subsidiary and country si net of intercompany transactions. Chile includes Chilean investments and all investments vehicles.
(***) Consolidation adjustments of foreign subsidiaries include the Argentine subsidiaries.

23

Endesa Chile’s Operating Income breakdown by country 
(Chilean GAAP)

Table 11.1

 
    Million Ch$    Thousand US$     
    2007    2008    2007    2008    % Var. 
 
OPERATING REVENUES    1,880,664    2,491,589    2,954,928    3,914,822    32.5% 
 
Generation in Chile    1,032,187    1,360,684    1,621,787    2,137,928    31.8% 
Other Businesses in Chile    31,287    37,665    49,158    59,180    20.4% 
Costanera    227,845    298,913    357,994    469,657    31.2% 
Chocón    60,675    54,030    95,334    84,893    (11.0%)
Emgesa    346,395    493,221    544,261    774,956    42.4% 
Edegel    182,276    247,075    286,394    388,208    35.6% 
Consolidation Adjustments of Foreign Subsidiaries    -    -    -    -     
                     
 
OPERATING EXPENSES    1,218,649    1,549,013    1,914,760    2,433,833    27.1% 
 
Generation in Chile    648,765    786,692    1,019,349    1,236,062    21.3% 
Other Businesses in Chile    25,723    29,690    40,416    46,650    15.4% 
Costanera    224,694    288,472    353,043    453,252    28.4% 
Chocón    31,787    40,445    49,944    63,548    27.2% 
Emgesa    166,391    223,279    261,437    350,819    34.2% 
Edegel    122,325    181,245    192,199    284,774    48.2% 
Consolidation Adjustments of Foreign Subsidiaries    (1,036)   (810)   (1,628)   (1,273)   21.8% 
                     
 
GROSS INCOME    662,015    942,576    1,040,168    1,480,990    42.4% 
 
Generation in Chile    383,422    573,992    602,438    901,865    49.7% 
Other Businesses in Chile    5,564    7,975    8,742    12,530    43.3% 
Costanera    3,151    10,441    4,952    16,405    231.3% 
Chocón    28,888    13,585    45,390    21,345    (53.0%)
Emgesa    180,003    269,942    282,824    424,137    50.0% 
Edegel    59,950    65,831    94,195    103,434    9.8% 
Consolidation Adjustments of Foreign Subsidiaries    1,036    810    1,628    1,273    (21.8%)
                     
 
GENERAL AND ADMINISTRATIVE COSTS    40,381    49,215    63,447    77,328    21.9% 
 
Generation in Chile    19,579    23,280    30,762    36,578    18.9% 
Other Businesses in Chile    1,411    1,665    2,216    2,617    18.0% 
Costanera    2,729    4,157    4,288    6,532    52.3% 
Chocón    1,332    1,667    2,092    2,620    25.2% 
Argentinean Investment Companies    151    192    238    301    26.8% 
Emgesa    5,468    6,971    8,591    10,953    27.5% 
Edegel    9,690    11,285    15,224    17,731    16.5% 
Peruvian Investment Companies    155    174    244    273    11.7% 
Consolidation Adjustments of Foreign Subsidiaries    (133)   (176)   (209)   (277)   (32.4%)
                     
 
OPERATING INCOME    621,634    893,360    976,721    1,403,662    43.7% 
 
Generation in Chile    363,843    550,712    571,676    865,287    51.4% 
Other Businesses in Chile    4,153    6,310    6,525    9,914    51.9% 
Costanera    423    6,284    664    9,873    1386.9% 
Chocón    27,557    11,918    43,298    18,725    (56.8%)
Argentinean Investment Companies    (151)   (192)   (238)   (301)   (26.8%)
Emgesa    174,536    262,971    274,233    413,184    50.7% 
Edegel    50,261    54,546    78,970    85,703    8.5% 
Peruvian Investment Companies    (155)   (174)   (244)   (273)   (11.7%)
Consolidation Adjustments of Foreign Subsidiaries    1,169    986    1,837    1,550    (15.6%)
                     
 
INTERNATIONAL GENERATOR CONTRIBUTION    253,638    336,339    398,520    528,461    32.6% 
 

(*) On September 1, 2007 the Colombian companies Emgesa S.A. E.S.P. and Central Hidroeléctrica Betania S.A. E.S.P. were merged into the latter, which then changed its name to Emgesa S.A. E.S.P.
(**) The information disclosed for each subsidiary and country is net of intercompany transactions. Chile includes Chilean investments and all investments vehicles.
(***) Consolidation adjustments of foreign subsidiaries include the Argentine subsidiaries.


24

Endesa Chile’s Ownership Structure, as of December 31, 2008 
Total Shareholders: 19,886. Total Outstanding Shares: 8,201,754,580 

Table 12

 
Shareholders    % Holding 
 
Enersis    59.98% 
Chilean Pension Funds    20.01% 
ADRs (Citibank N.A.)   5.49% 
Individuals    4.34% 
Others    10.18% 
 

25

Conference Call Invitation 

Endesa Chile is pleased to inform you that it will conduct a conference call to review its results for the period ended December 31, 2008, on Thursday, January 29, 2009, at 9:00 am (Eastern Time). To participate, please dial:

Conference Call Information:
Dial-In number: 1 (617) 213 48 61, international.
Dial-In number: 1 (888) 713 4199

Passcode I.D.: 77045653

Replay Information:
Dial-In number: 1 (617) 801 68 88, international.
Dial-In number: 1 (888) 286 80 10
Passcode I.D.: 28348438

In order for you to have an easier access to our conference call, we suggest to pre-register your attendance and obtain your PIN code at the following link:
https://www.theconferencingservice.com/prereg/key.process?key=PY3RQLF6X

Please connect approximately 10 minutes prior to the scheduled starting time.

If you would like to take part in the Conference Call via Internet and watch an online presentation, or listen to a webcast replay of the call, you may access www.endesachile.cl (please note that this is a listen only mode).

This Press Release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may appear in a number of places in this announcement and include statements regarding the intent, belief or current expectations of Endesa Chile and its management with respect to, among other things: (1) Endesa Chile’s business plans; (2) Endesa Chile’s cost-reduction plans; (3) trends affecting Endesa Chile’s financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; (4) supervision and regulation of the electricity sector in Chile or elsewhere; and (5) the future effect of any changes in the laws and regulations applicable to Endesa Chile or its affiliates. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in equity capital markets of the United States or Chile, an increase in market interest rates in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Endesa Chile’s Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their dates, Endesa Chile undertakes no obligation to release publicly the result of any revisions to these forward-looking statements.

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SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

             
    EMPRESA NACIONAL DE ELECTRICIDAD S.A.
             
             
             
    By:    /s/ RAFAEL MATEO A.  
     
   
     
  Rafael Mateo A.
           
      Chief Executive Officer    
           
           
           
Dated: January 28, 2009          
     
   

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