Empresa Distribuidora y Comercial Norte 20F 2009 Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

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)

Azopardo 1025

Ciudad de Buenos Aires, C1107ADQ

Buenos Aires, Argentina

(Address of principal executive offices)

Ivana Del Rossi

54 11 4346 5127 / 54 11 4346 5325

Azopardo 1025 (C1107ADQ) Bs. As.

Investor Relations Officer

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:	Name of each exchange on which registered

Class B Shares	New York Stock Exchange, Inc.*
American Depositary Shares, or ADSs, evidenced by American Depositary Receipts, each representing 20 Class B 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 Ordinary Shares, 442,210,385 Class B Ordinary Shares and 1,952,604 Class C Ordinary Shares

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

Yes ¨ No þ

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 ¨ No þ

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. Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ¨ IFRS ¨ Other þ

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 þ

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 ¨ No þ

Item 1.	Identity of Directors, Senior Management and Advisors	2
Item 2.	Offer Statistics and Expected Timetable	2
Item 3.	Key Information	2
Item 4.	Information on the Company	21
Item 4A.	Unresolved Staff Comments	46
Item 5.	Operating and Financial Review and Prospects	46
Item 6.	Directors, Senior Management and Employees	86
Item 7.	Major Shareholders and Related Party Transactions	95
Item 8.	Financial Information	99
Item 9.	The Offer and Listing	103
Item 10.	Additional Information	106
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	123
Item 12.	Description of Securities Other than Equity Securities	124
Item 13.	Defaults, Dividend Arrearages and Delinquencies	126
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	126
Item 15.	Controls and Procedures	126
Item 16A.	Audit Committee Financial Expert	127
Item 16B.	Code of Ethics	128
Item 16C.	Principal Accountant Fees and Services	128
Item 16D.	Exemptions from the Listing Standards for Audit Committees	128
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	128
Item 16G.	Corporate Governance	129
Item 17.	Financial Statements	132
Item 18.	Financial Statements	132
Item 19.	Exhibits	132
Index to Financial Statements		F-1

PART I

Introduction

Empresa Distribuidora y Comercializadora Norte S.A., or Edenor, is a sociedad anónima (limited liability corporation) organized under the laws of the Argentine Republic, or Argentina. Our principal executive offices are located at Azopardo 1025, Ciudad de Buenos Aires, C1107ADQ, Buenos Aires, Argentina.

Item 1.

Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

Item 3.

Key Information

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 outcome and timing of the integral tariff revision process we are currently undertaking with the Ente Nacional Regulador de la Electricidad (Argentine National Electricity Regulator, or the ENRE) and, more generally, uncertainties relating to future government approvals to increase or adjust our tariffs;

general political, economic, social, demographic and business conditions in Argentina and particularly in the geographic market we serve;

the global financial crisis and its impact on liquidity and access to capital;

the impact of regulatory reform and changes in the regulatory environment in which we operate;

electricity shortages;

potential disruption or interruption of our service;

restrictions on the ability to exchange Pesos into foreign currencies or to transfer funds abroad;

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 inflation and exchange rates, including a devaluation of the Peso; and

additional matters identified in “Risk factors.”

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.

SELECTED FINANCIAL DATA

The following table presents selected financial and operating data. This information should be read in conjunction with our audited financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report.

The financial data as of December 31, 2009 and 2008 and for each of the three years in the period ended December 31, 2009 are derived from our audited financial statements, which were audited by Price Waterhouse & Co. S.R.L., member firm of PricewaterhouseCoopers, for the years ended December 31, 2009 and 2008 and Deloitte & Co. S.R.L., member firm of Deloitte & Touche Tohmatsu, for the year ended December 31, 2007. We engaged Price Waterhouse & Co. S.R.L as our new auditors in April 2008, in order to consolidate our audit with that of our controlling shareholder, Pampa Energia S.A., also audited by Price Waterhouse & Co. S.R.L. Our audited financial statements have been prepared in accordance with generally accepted accounting principles in the City of Buenos Aires, which we refer to as Argentine GAAP and which differ in certain significant respects from U.S. Generally Accepted Accounting Principles (U.S.GAAP). Note 27 to our audited financial statements included elsewhere in this annual report provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income for the years then ended December 31, 2009, 2008 and 2007 and shareholders’ equity as of December 31, 2009 and2008.

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, 2009 have been translated into U.S. Dollars at the buying rate for U.S. Dollars quoted by Banco de la Nación Argentina (Banco Nación) on December 31, 2009 of Ps. 3.80 to U.S. $1.00. 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.”

Under Argentine GAAP, we generally are not required to record the effects of inflation in our financial statements. However, because Argentina experienced a high rate of inflation in 2002, with the wholesale price index increasing by approximately 118%, we were required by Decree No. 1269/2002 and Comisión Nacional de Valores (National Securities Commission or CNV) Resolution No. 415/2002 to restate our financial statements in constant Pesos in accordance with Argentine GAAP. On March 25, 2003, Decree No. 664/2003 rescinded the requirement that financial statements be prepared in constant currency, effective for financial periods on or after March 1, 2003. As a result, we are not required to restate and have not restated our financial statements for inflation after February 28, 2003. See note 2 to our audited financial statements included in this annual report.

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals may not sum due to rounding.

	For the year ended December 31,
	2009						2008			2007			2006			2005
	(in millions, except for per share and per ADS data)
Statement of operations data
Argentine GAAP
Net sales(1)	U.S. $	546.8		Ps.	2,077.9		Ps.	2,000.2		Ps.	1,981.9		Ps.	1,378.3		Ps.	1,262.2
Electric power purchases		(264.0	)		(1,003.4	)		(934.7	)		(889.9	)		(799.1	)		(757.7	)
Gross margin		282.8			1,074.5			1,065.5			1,092.0			579.3			504.5
Transmission and distribution expenses		(144.4	)		(548.6	)		(497.9	)		(417.6	)		(362.1	)		(346.1	)
Selling expenses		(41.8	)		(158.9	)		(126.0	)		(120.6	)		(87.9	)		(86.0	)
Administrative expenses		(46.5	)		(176.6	)		(138.7	)		(124.7	)		(93.3	)		(72.9	)
Net operating income (loss)		50.1			190.4			302.9			429.2			35.9			(0.4	)
Other income (expenses), net		6.1			23.2			(29.9	)		1.0			(22.9	)		(0.7	)
Financial income (expenses) and holding gains (losses):
Generated by assets:
Exchange difference		5.6			21.4			8.1			(0.9	)		2.6			2.1
Interest		4.3			16.2			9.8			13.4			13.9			12.9
Holding results		9.9			37.6			(7.3	)		0.1			0.1			(0.6	)
Generated by liabilities:
Financial expenses		(3.1	)		(11.7	)		(10.0	)		(21.0	)		(25.4	)		(14.1	)
Exchange difference		(26.1	)		(99.1	)		(92.7	)		(29.9	)		(13.3	)		(29.0	)
Interest		(23.1	)		(87.7	)		(95.3	)		(74.5	)		(101.3	)		(119.5	)
Holding results		—			—			—			—			—			(0.2	)
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and other receivables(2)		0.9			3.4			13.5			(29.6	)		—			—
Gain on extinguishment of former debt(3)		—			—			—			—			179.2			—
Adjustment to present value of notes(4)		(1.4	)		(5.2	)		(8.5	)		(21.5	)		57.1			—
Gain (loss) from the purchase of notes(5)		21.4			81.4			93.6			(10.2	)		—			—
Adjustment to present value of purchased notes(4)		—			—			—			(8.6	)		—			—
Income (loss) before taxes		44.6			169.9			184.3			247.4			125.9			(149.6	)
Income tax(6)		(20.9	)		(79.3	)		(61.2	)		(125.0	)		167.2			—
Net income (loss)	U.S. $	23.7		Ps.	90.6		Ps.	123.1		Ps.	122.5		Ps.	293.1		Ps.	(149.6)
Net income (loss) per ordinary share – basic and diluted		0.027			0.101			0.137			0.135			0.352			(0.180	)
Dividends declared per ordinary share(7)		—			—			—			—			—			—
Net income per ADS(8) — basic and diluted		0.54			2.02			2.716			2.702			—			—

Number of shares outstanding		906,455,100			906,455,100			906,455,100			906,455,100			831,610,200			831,610,200

U.S. GAAP
Net sales/service revenues	U.S. $	569.3		Ps.	2,163.3		Ps.	2,059.0		Ps.	1,937.0		Ps.	1,403.5		Ps.	1,334.9
Electric power purchases		(264.1	)		(1,003.4	)		(934.7	)		(889.9	)		(799.1	)		(757.7	)
Transmission and distribution expenses		(164.2	)		(624.0	)		(577.0	)		(477.5	)		(450.3	)		(425.3	)
Gross margin		141.0			535.9			547.3			569.6			154.1			151.0
Operating expenses, net		(86.1	)		(327.2	)		(296.6	)		(207.5	)		(194.1	)		185.0
Net operating income (loss)		54.9			208.7			250.7			362.1			40.0			(33.1	)
Financial (expense), net and holding gains		(11.2	)		(42.6	)		82.0			(46.5	)		(133.3	)		(139.1	)
Net income (loss) before income taxes		43.7			166.2			332.7			315.7			(173.3	)		(172.1	)
Income tax		(24.5	)		(93.1	)		(68.2	)		(99.9	)		128.0			8.1
Net income (loss) for the year		19.2			73.1			264.5			215.8			(45.3	)		(164.0	)
Net income (loss) per ordinary share – basic and diluted(7)		0.021			0.081			0.295			0.238			(0.054	)		(0.197	)
Net income per ADS(8) — basic and diluted		0.43			1.62			5.90			4.761			—			—

(1)

Net sales for 2007 include the retroactive portion of the February 2007 tariff increase, which amounts in aggregate to Ps. 218.6 million, and is being invoiced in 55 equal and consecutive monthly installments, starting in February 2007. As of December 31, 2009 we had invoiced Ps. 149.4 million of this amount.

(2)

Reflects the adjustment to present value of the retroactive portion of the tariff increase that is being invoiced in 55 consecutive monthly installments, starting in February 2007, and the adjustment to present value of Ps. 38.4 million due under the payment plan agreement with the Province of Buenos Aires that is being invoiced in 18 installments, starting in January 2007. As of December 31, 2009 and 2008, Ps. 2.3 million was due under the payment plan agreement with the Province of Buenos Aires, and Ps. 69.2 million and Ps. 118.9 million of the retroactive tariff increase had not been invoiced in 2009 and 2008, respectively. In accordance with Argentine GAAP, we account for these long term receivables at their net present value, which we calculate at a discount rate of 10.5% for the retroactive tariff increase and 19.62% for the payment plan agreement, recording the resulting non-cash charge as an adjustment to present value of these two receivables. See “Item 4. Information on the Company —Framework agreement (Shantytowns).”

(3)

Our debt restructuring generated a one-time gain of Ps. 179.2 million in the year ended December 31, 2006, reflecting the recognition of a Ps. 55.3 million waiver of principal amount on our financial debt, a Ps. 75 million waiver of accrued interest on our financial debt and a Ps. 65.7 million waiver of penalties related to the non-payment of our financial debt, which more than offset Ps. 16.8 million in related restructuring costs. See “Item 5. Operating and Financial Review and Prospects—Liquidity and capital resources—Debt” for a description of the restructuring notes.

(4)

We record our financial debt in our balance sheet at fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end, calculated at a discount rate of 10.5% for the years ended December 31, 2009, 2008 and 2007 and 10% for the year ended December 31, 2006. We did not record any adjustment to present value in any year before the year ended December 31, 2006 because our financial debt was in default.

(5)

In 2007, we repurchased U.S. $43.7 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and redeemed and repurchased U.S. $240 million principal amount of our outstanding Discount Notes due 2014. In addition, in the year ended December 31, 2008 and 2009, we repurchased U.S. $32.5 million and U.S. $32.2 million principal amount of our outstanding Fixed Rate Par Notes due 2016, respectively and U.S. $17.5 million and U.S. $53.8 million principal amount of our outstanding Senior Notes due 2017, respectively.

(6)

In 2006, our income tax result reflects the reversal of net deferred tax assets, primarily due to the fact that, as a consequence of the ratification of the Adjustment Agreement in January 2007 and the renegotiation of our financial debt in April 2006, we generated taxable income that allowed us to offset a significant portion of the tax loss carryforwards we generated in 2002.

(7)	We have not declared or paid any dividends since August 14, 2001.

(8)	Each ADS represents 20 Class B ordinary shares.

	As of December 31,
	2009				2008		2007		2006		2005
	(in millions)
Balance sheet data
Argentine GAAP
Current Assets:
Cash and banks	U.S.$	2.3	Ps.	8,7	Ps.	6.1	Ps.	3.5	Ps.	0.5	Ps.	11.7
Investments		57.8		219,7		121.0		97.7		32.2		296.5
Trade receivables		102.4		389,2		400.4		346.0		270.9		231.9
Other receivables		16.1		61,1		42.8		26.0		30.2		21.7
Supplies		3.9		14,8		16.7		23.2		13.6		13.8
Total current assets	U.S.$	182.5	Ps.	693,5	Ps.	587.0	Ps.	496.3	Ps.	347.5	Ps.	575.6
Non-Current Assets:
Trade receivables		22.9		87.0		111.4		100.3		—		—
Other receivables		23.4		88.8		99.5		144.1		256.5		74.7
Investments in other companies		0.1		0.4		0.4		0.4		0.4		0.4
Investments		—		—		67.2		—		—		—
Supplies		4.9		18.6		12.8		13.8		4.9		36.5
Property, plant and equipment		916.4		3,482.4		3,256.3		3,092.7		2,925.4		2,889.3
Total non-current assets	U.S.$	967.7	Ps.	3,677.2	Ps.	3,547.6	Ps.	3,351.3	Ps.	3,187.2	Ps.	3,000.9
Total assets	U.S.$	1,150.2	Ps.	4,370.7	Ps.	4,134.6	Ps.	3,847.6	Ps.	3,534.7	Ps.	3,576.5
Current liabilities:
Trade account payable		91.5		347.8		339.3		316.2		267.6		205.1
Loans		21.8		83.0		27.2		29.3		2.0		1,620.1
Salaries and social security taxes		31.2		118.4		94.8		59.9		51.4		34.1
Taxes		36.9		140.3		111.0		84.6		62.2		67.9
Other liabilities		2.1		8.0		10.5		9.7		26.4		175.8
Accrued litigation		16.5		62.8		52.8		39.9		25.9		18.3
Total current liabilities	U.S.$	200.0	Ps.	760.3	Ps.	635.6	Ps.	539.6	Ps.	435.6	Ps.	2,121.3
Non-current liabilities:
Trade account payable		12.3		46.8		40.2		35.5		31.3		26.8
Loans		186.2		707.5		913.1		949.1		1,095.5		—
Salaries and social security taxes		11.5		43.7		40.1		24.7		20.3		12.4
Taxes		2.5		9.4		0		0		0		0
Other liabilities		160.7		610.8		369.0		281.4		241.1		—
Accrued Litigation		2.7		10.0		45.1		42.8		40.6		38.7
Total non-current liabilities		375.9		1,428.2		1,407.5		1,333.5		1,428.7		77.8
Total liabilities	U.S.$	575.9	Ps.	2,188.5	Ps.	2,043.0	Ps.	1,873.0	Ps.	1,864.3	Ps.	2,199.2
Shareholders’ equity		574.3		2,182.2		2,091.6		1,974.6		1,670.4		1,377.3
Total liabilities and shareholders’ equity	U.S.$	1,150.2	Ps.	4,370.7	Ps.	4,134.6	Ps.	3,847.6	Ps.	3,534.7	Ps.	3,576.5

U.S. GAAP
Current assets	U.S.$	185.1	Ps.	703.3	Ps.	666.7	Ps.	536.7	Ps.	547.0	Ps.	728.8
Property, plant and equipment, net		934.8		3,552.4		3,331.2		3,175.7		3,016.4		3,009.7
Other non-current assets		68.5		260.4		258.4		346.6		201.5		145.5
Total assets	U.S.$	1,188.4	Ps.	4,516.1	Ps.	4,256.3	Ps.	4,059.0	Ps.	3,764.9	Ps.	3,884.0
Current liabilities	U.S.$	208.1	Ps.	790.9	Ps.	707.5	Ps.	573.7	Ps.	470.0		Ps 2,124.8
Non-current liabilities		506.3		1,923.8		1,821.6		2,018.2		2,225.1		640.3
Total liabilities		714.4		2,714.7		2,529.1		2,591.9		2,695.1		2,765.1
Shareholders’ equity		474.1		1,801.4		1,727.2		1,467.1		1,069.8		1,118.8
Total liabilities and shareholders’ equity	U.S.$	1,188.4	Ps.	4,516.1	Ps.	4,256.3	Ps.	4,059.0	Ps.	3,764.9	Ps.	3,884.0

	Year ended December 31,
	2009						2008			2007			2006			2005
	(in millions)
Cash flow data
Argentine GAAP
Operating activities:
Net income (loss)	U.S.$	23.8		Ps.	90.6		Ps.	123.1		Ps.	122.5		Ps.	293.1		Ps.	(149.6	)
Adjustment to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation of property, plant and equipment		46.2			175.4			170.3			174.4			179.0			178.4
Retirement of property, plant and equipment		0.7			2.8			1.9			1.1			0.7			0.9
Gain on extinguishment of former debt		—			—			—			—			(179.2	)		—

Gain from investments in affiliated parties		—			—			—			(0.1	)		(0.1	)		—
Loss (Gain) from investments		6.9			26.4			(4.3	)		(8.5	)		—			—
Adjustment to present value of notes		1.4			5.2			8.5			21.5			(57.1	)		—
(Gain) Loss from the purchase and redemption of notes		(21.4	)		(81.4	)		(93.6	)		10.2			—			—
Adjustment to present value of the repurchased and redeemed notes		—			—			—			8.6			—			—
Exchange differences, interest and penalties on loans		47.0			178.6			232.7			69.5			49.1			139.0
Supplies recovered from third parties		—			—			—			—			(5.8	)		—
Increase in trade receivables due to the unbilled portion of the retroactive tariff increase		—			—			—			(171.3	)		—			—
Recovery of the accrual for tax contingencies		(9.3	)		(35.5	)		—			—			—			—
Income tax		20.9			79.3			61.2			125.0			(167.2	)		—
Allowance for doubtful accounts		3.5			13.5			17.1			—			—			—
Reversal of the allowance for doubtful accounts		(7.1	)		(26.9	)		(24.0	)		—			—			—
Allowance for other doubtful accounts		0.9			3.3			1.7			—			—			—
Adjustment to net present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires		(0.9	)		(3.4	)		(13.5	)		29.6			—			—
Changes in operating assets and liabilities:
Decrease (Increase) in trade receivables (net of the unbilled portion of the retroactive tariff increase)		12.7			48.1			(49.5	)		(36.9	)		(39.0	)		(37.1	)
Net decrease (increase) in other receivables		1.4			5.3			(33.4	)		(8.4	)		(23.1	)		(27.2	)
(Increase) Decrease in supplies		(1.0	)		(3.9	)		7.4			(18.4	)		1.4			(5.4	)
Increase in trade accounts payable		4.0			15.2			27.8			52.7			67.1			54.4
Increase in salaries and social security taxes		7.2			27.2			50.3			12.9			25.2			4.5
(Decrease) Increase in taxes		(15.0	)		(56.9	)		26.4			22.5			(5.7	)		23.6
Increase in other liabilities		62.9			239.1			78.1			17.7			91.7			36.8
Net increase in accrued litigation		2.8			10.6			15.1			16.2			9.5			7.7
Financial interest paid, net of interest capitalized		(20.2	)		(76.8	)		(62.7	)		(25.5	)		(26.7	)		(46.5	)
Financial and commercial interest collected		8.5			32.2			6.9			11.6			2.2			2.0
Net cash flow provided by operating activities		175.8			668.0			547.5			427.2			215.0			181.5
Investing activities:
Additions of property, plant and equipment		(106.4	)		(404.2	)		(325.4	)		(336.9	)		(179.7	)		(124.5	)
Net cash flow used in investing activities		(106.4	)		(404.2	)		(325.4	)		(336.9	)		(179.7	)		(124.5	)
Financing activities:
Decrease (Increase) in current and non-current investments		3.6			13.6			(67.9	)		—			—			—
Net Decrease in loans		(46.2	)		(175.4	)		(122.9	)		(203.6	)		(310.8	)		—
Capital increase		—			—			—			181.8			—			—
Treasury Shares		—			—			(6.1	)		—			—			—
Net cash flows used in financing activities		(42.6	)		(161.8	)		(196.9	)		(21.8	)		(310.8	)		—
Cash variations:
Cash and cash equivalents at beginning of year	U.S.$	33.3		Ps.	126.4		Ps.	101.2		Ps.	32.7		Ps.	308.1		Ps.	251.1
Cash and cash equivalents at end of the year		60.1			228.4			126.4			101.2			32.7			308.1
Net increase (decrease) in cash and cash equivalents		26.8			102.0			25.2			68.5			(275.5	)		57.0

	Year ended December 31,
	2009			2008			2007			2006			2005

Operating data
Argentine GAAP
Energy sales (in GWh):
Residential		7,344			7,545			7,148			6,250			5,819
Small Commercial		1,470			1,530			1,485			1,433			1,387
Medium Commercial		1,565			1,597			1,552			1,446			1,354
Industrial		3,204			3,277			3,628			3,364			3,195
Wheeling system(1)		3,622			3,700			3,111			3,211			2,984
Others:
Public Lighting		644			644			643			650			642
Shantytowns		351			304			301			261			279
Others(2)		19			19			18			18			17
Customers (in thousands)(3)		2,605			2,537			2,490			2,445			2,404
Energy losses (%)		11.9	%		10.8	%		11.6	%		11.1	%		11.0	%
MWh sold by employee		6,936.1			7,392.8			7,230.6			6,736.6			6,395.9
Customers per employee		978			997			998			982			971

(1)	Wheeling 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 our company 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, the Convertibility Law established a fixed exchange rate under which the Central Bank was obliged to sell U.S. Dollars at a fixed rate of one Peso per U.S. Dollar. On January 6, 2002, the Argentine Congress enacted the Public Emergency Law, formally putting an end to the regime of the Convertibility Law 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, 2011. 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.

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 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,
2005		2.86		3.04		2.92	(1)		3.03
2006		3.03		3.11		3.07	(1)		3.06
2007		3.06		3.18		3.12	(1)		3.15
2008		3.01		3.47		3.16	(1)		3.45
2009		3.45		3.88		3.73	(1)		3.80

Month
December 2009		3.79		3.82		3.80	(2)		3.80
January 2010		3.79		3.83		3.80	(2)		3.83
February 2010		3.83		3.86		3.85	(2)		3.86
March 2010		3.86		3.88		3.86	(2)		3.88
April 2010		3.86		3.89		3.88	(2)		3.89
May 2010(3)		3.89		3.91		3.90	(2)		3.90

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 May 1 through May 26.

RISK FACTORS

Risks related to Argentina

Overview

We are a sociedad anónima (limited liability corporation) 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 and political conditions prevailing in Argentina. For example, lower economic growth or economic recession could lead to lower demand for electricity in our concession area or a decline in purchasing power of our customers, which, in turn, could lead to lower collections from our clients or growth in energy losses due to illegal use of our service. Argentine government actions concerning the economy, including decisions with respect to inflation, interest rates, price controls, foreign exchange controls and taxes, have had and could continue to have a material adverse effect on private sector entities, including us. To address Argentina’s economic crisis in 2001 and 2002, for example, the Argentine government took measures, such as the freeze of electricity distribution margins and pesification of our tariffs, which had a severe effect on our financial condition and led us to suspend payments on our financial debt. We cannot provide any assurance whether the Argentine government will adopt other policies that could adversely affect the economy or our business. In addition, we cannot provide any assurance that future economic, social and political developments in Argentina, over which we have no control, will not impair our business, financial condition or results of operations.

The global financial crisis and unfavorable credit and market conditions that commenced in 2007 have affected and could continue to negatively affect the Argentine economy and may negatively affect our liquidity, customers, business, and results of operations

The ongoing effects of the global 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. The effect of this current economic crisis on our customers and on us cannot be predicted. Weak economic conditions could lead to reduced demand for energy, which could have a negative effect on our revenues. In addition, our ability to access the credit or capital markets may be restricted at a time when we would need financing, which could have an impact on our flexibility to react to changing economic and business conditions. For these reasons, any of the foregoing factors or a combination of these factors could have an adverse effect on our results of operations and financial condition and cause the market value of our ADSs to decline.

Argentina’s economic recovery since the 2001 economic crisis may not be sustainable in light of current economic conditions, and any significant decline could adversely affect our financial condition

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Although the economy has recovered significantly since the 2001 crisis, uncertainty remains as to the sustainability of economic growth and stability. Although Argentina’s economy continued to grow in 2009, growth occurred at a less rapid pace than in the previous six years, due to the economic slowdown that started in the last quarter of 2008 and that continued into 2009. Sustainable economic growth is dependent on a variety of factors, including 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 and relatively low rate of inflation.

The Argentine economy remains fragile, as reflected by the following economic conditions:

unemployment remains high;

the availability of long-term fixed rate credit is scarce;

investment as a percentage of GDP remains low;

the current fiscal surplus is at risk of becoming a fiscal deficit;

inflation has risen recently and threatens to accelerate;

the regulatory environment continues to be uncertain;

the country’s public debt remains high and international financing is limited; and

the recovery has depended to some extent on high commodity prices, which are volatile and beyond the control of the Argentine government.

As in the recent past, Argentina’s economy may suffer if political and social pressures inhibit the implementation by the Argentine government of policies designed to maintain price stability, generate growth and enhance consumers and investor confidence. This, in turn, could lead to lower demand for our services as well as lower collection rates from clients and growth in energy losses due to illegal use of our services, which could materially adversely affect our financial condition and results of operations. Furthermore, as it has done in the past, the Argentine government could respond to a lack of economic growth or stability by adopting measures that affect private sector enterprises, including the tariff restrictions imposed on public utility companies such as several of our subsidiaries.

We cannot provide any assurance that a decline in economic growth or increased economic instability, 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.

A return to a high inflation environment may have adverse effects on the Argentine economy, which could, in turn, have a material adverse effect on our results of operations

According to data published by the Instituto Nacional de Estadística y Censos (National Statistics and Census Institute, or INDEC), the rate of inflation reached 7.7% in 2009, 7.2% in 2008 and 8.5% in 2007. Over the course of the past several years, the Argentine government has implemented several programs to control inflation and monitor prices for most relevant goods and services. These government actions included price support arrangements agreed to by the Argentine government and private sector companies in several industries and markets.

Despite the relatively flat rate of change in inflation in the past two years, uncertainty surrounding future inflation and the current economic situation could slow economic recovery. In the past, inflation has materially undermined the Argentine economy and the government’s ability to create conditions that permit growth. A return to a high inflation environment would also undermine Argentina’s foreign competitiveness by diluting the effects of the Peso devaluation, with the same negative effects on the level of economic activity. In turn, a portion of the Argentine debt is adjusted by the Coeficiente de Estabilización de Referencia (Stabilization Coefficient, or CER Index), a currency index, which is strongly related to inflation. Therefore, any significant increase in inflation would cause an increase in the external debt and consequently in Argentina’s financial obligations, which could further exacerbate the stress on the Argentine economy. A high inflation environment could also temporarily undermine our results of operations as a result of a lag in cost adjustments, and we may be unable to adjust our tariffs accordingly. In addition, a return to high inflation would undermine the confidence in Argentina’s banking system in general, which would further limit the availability of domestic and international credit to businesses, which could adversely affect our ability to finance our working capital needs on favorable terms, and adversely affect our results of operations.

The credibility of several Argentine economic indices has been called into question, which may lead to a lack of confidence in the Argentine economy and may in turn limit our ability to access the credit and capital markets

In January 2007, INDEC modified its methodology used to calculate the consumer price index (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. Several economists as well as the international and Argentine press have suggested that this change in methodology was related to the Argentine government’s policy aimed at curbing inflation. Further, at the time that INDEC adopted this change in methodology, the Argentine government also replaced several key personnel at INDEC. The alleged governmental interference prompted complaints from the technical staff at INDEC, which, in turn, has led to the initiation of several judicial investigations involving members of the Argentine government and aimed at determining whether there was a breach of classified statistical information relating to the collection of data used in the calculation of the CPI. These events have affected the credibility of the CPI index published by INDEC, as well as other indexes published by INDEC that require the CPI for their own calculation, including the poverty index, the unemployment index as well as the calculation of the GDP, among others. If these investigations result in a finding that the methodologies used to calculate the CPI or other INDEC indexes derived from the CPI were manipulated by the Argentine government, or if it is determined that it is necessary to correct the CPI and the other INDEC indexes derived from the CPI as a result of the methodology used by INDEC, there could be a significant decrease in confidence in the Argentine economy. With credit to emerging market nations already tenuous as a result of the global economic crisis, our ability to access credit and capital markets to finance our operations and growth in the future could be further limited by the uncertainty relating to the accuracy of the economic indices in question which 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.

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, may affect our business, results of operations and prospects for growth

In 2005, Argentina restructured part of its sovereign debt that had been in default since the end of 2001. The Argentine government announced that as a result of the restructuring, it had approximately U.S. $126.6 billion in total outstanding debt remaining. Of this amount, approximately U.S. $19.5 billion correspond to defaulted bonds owned by creditors who did not participate in the restructuring of the external financial debt. Some bondholders in the United States, Italy and Germany have filed legal actions against Argentina, and holdout creditors may initiate new suits in the future. Additionally, foreign shareholders of several Argentine companies, including public utilities and a group of bondholders that did not participate in the sovereign restructuring, have filed claims totaling approximately U.S. $17.0 billion before the International Centre for Settlement of Investment Disputes (ICSID) alleging that certain government measures are inconsistent with the fair and equitable treatment standards set forth in various bilateral investment treaties to which Argentina is a party. To date, ICSID has rendered decisions against Argentina in eight of these cases, requiring the Argentine government to pay U.S. $913 million plus interest in claims and legal fees. In 2009, three groups of bondholders that declined to participate in the restructuring of the external public debt presented claims before ICSID totaling over U.S. $4.4 billion.

Argentina’s past default and its failure to restructure completely its remaining sovereign debt and fully negotiate with the holdout creditors may limit Argentina’s ability to reenter the international capital markets. Litigation initiated by holdout creditors as well as ICSID claims have resulted and may continue to result in judgments against the Argentine government which, if not paid, could prevent Argentina from obtaining credit from multilateral organizations. Judgment creditors have sought and may continue to seek attachment orders or injunctions relating to assets of Argentina that the government intended for other uses. In addition, in May 2009, a number of members of the United States Congress supported by a civil society group called the American Task Force Argentina introduced legislation that would deny foreign states in default of U.S. court judgments exceeding U.S.$100 million for more than two years, such as Argentina, access to U.S. capital markets. Although the United States Congress has not taken any significant steps towards adopting such legislation, we can make no assurance that this legislation or other political actions designed to limit Argentina’s access to capital markets will not take effect. As a result of Argentina’s default and the events that have followed it, the government may not have the financial resources necessary to implement reforms and foster economic growth, which, in turn, could have a material adverse effect on the country’s economy and, consequently, our businesses and results of operations. Furthermore, Argentina’s inability to obtain credit in international markets could have a direct impact on our own ability to access international credit markets to finance our operations and growth.

Significant fluctuations in the value of the Peso against the U.S. Dollar may adversely affect the Argentine economy, which could, in turn adversely affect our results of operations

Despite the positive effects the depreciation of the Peso in 2002 had on the export-oriented sectors of the Argentine economy, the depreciation has also had a far-reaching negative impact on a range of businesses and on individuals’ financial positions. The devaluation of the Peso had a negative impact on the ability of Argentine businesses to honor their foreign currency-denominated debt, led to very high inflation initially, significantly reduced real wages, had a negative impact on businesses whose success is dependent on domestic market demand, including public utilities and the financial industry, and adversely affected the government’s ability to honor its foreign debt obligations. If the Peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences to our businesses, our results of operations and the market value of our ADSs and Class B common shares. Moreover, it would likely result in a decline in the value of our shares and ADSs as measured in U.S. Dollars.

Similarly, a substantial increase in the value of the Peso against the U.S. Dollar also presents risks for the Argentine economy, including, for example, a reduction in exports. This could have a negative effect on economic growth and employment and reduce the Argentine public sector’s revenues by reducing tax collection in real terms, all of which could have a material adverse effect on our business as a result of the weakening of the Argentine economy in general.

Government measures to address social unrest may adversely affect the Argentine economy and thereby affect our business and results of operations.

During the economic crisis in 2001 and 2002, Argentina experienced social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite the economic recovery and relative stabilization since 2002, the social and political tensions and high levels of poverty and unemployment continue. Future government policies to preempt, or respond to, social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights and shareholders’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws, regulations and policies affecting foreign trade and investment. These policies could destabilize the country, both socially and politically, and adversely and materially affect the Argentine economy.

More recently, in March 2008, the Argentine Ministry of Economy and Production announced the adoption of new taxes on exports of a number of agricultural products. The new taxes were to be calculated at incremental rates as the price for the exported products increase, and represented a significant increase in taxes on exports by the agricultural sector in Argentina. The adoption of these taxes met significant opposition from various political and economic groups with ties to the Argentine agricultural sector, including strikes by agricultural producers around the country, roadblocks to prevent the circulation of agricultural goods within Argentina and massive demonstrations in the City of Buenos Aires and other major Argentine cities. Although these measures did not pass the Argentine congress, we cannot make assurances that the Argentine government will not seek to reintroduce the export taxes or adopt other measures affecting this or other sectors of the economy (including the electricity sector) to compensate for the lost revenues associated with these taxes. These uncertainties could lead to further social unrest that could adversely affect the Argentine economy. In addition, economic distress may lead to lower demand for energy, lower collections from our clients, as well as growth of energy losses due to illegal use of our services. We may also experience increased damages to our networks as a result of protesters or illicit activity, which may increase as a result of the decline in economic conditions, all of which, in turn may have a material adverse effect on our financial condition and results of operations and the market value of our ADSs and Class B common shares.

Exchange controls, transfer restrictions and other policies of the Argentine government have limited and can be expected to continue to limit the availability of international and local credit or otherwise adversely affect our business

In 2001 and the first half of 2002, Argentina experienced a massive withdrawal of deposits from the Argentine financial system in a short period of time, which precipitated a liquidity crisis within the Argentine financial system and prompted the Argentine government to impose exchange controls and restrictions on the ability of depositors to withdraw their deposits. These restrictions have been substantially eased; however, in June 2005 the Argentine government adopted various other rules and regulations that established restrictive controls on capital inflows. See “Item 10. Additional Information—Exchange Controls.” In the event of a future shock, the Argentine government could impose further exchange controls or restrictions on the movement of capital and take other measures that could limit our ability to access international capital markets, impair our ability to make dividend payments abroad or adversely affect our business and results of operations, which may adversely affect the market value of our ADSs and Class B common shares.

In recent years a significant portion of the local demand for debt of Argentina companies has come from the private Argentine pension funds. In response to the global economic crisis, in December 2008, the Argentine Congress passed a law unifying the Argentine pension and retirement system into a system publicly administered by the Administración Nacional de la Seguridad Social (National Social Security Agency, or ANSES) and eliminating the retirement savings system previously administered by private pension funds. 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. It is difficult to evaluate the real impact of this measure, but after these changes the demand for local debt in Argentina has been negatively affected. A significant decrease in the demand for local debt could have an adverse impact on our ability to raise capital to refinance our indebtedness or finance capital expenditures, which may adversely affect the market value of our ADSs and Class B common shares.

The Argentine economy could be adversely affected by economic developments in other global markets

Financial and securities markets in Argentina are influenced, to varying degrees, by economic and market conditions in other global markets. Although economic conditions vary from country to country, investors’ perception of the events occurring in one country may substantially affect capital flows into and securities from issuers 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 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, Argentina continues to be affected by events in the economies of its major regional partners, including, for example, currency devaluations caused by the global economic crisis.

Furthermore, the Argentine economy may be affected by events in developed economies which are trading partners or that impact the global economy. Economic conditions and credit availability in Argentina were affected by an economic and banking crisis in the United States in 2008 and 2009. When the crisis began, major financial institutions suffered considerable losses, investor confidence in the global financial system was shaken and various financial institutions required government bailouts or ceased operations altogether. The deterioration in any area of the global economy, as well as the economic conditions in our principal regional partners, including the members of Mercosur, could have an adverse material effect on the Argentine economy and, indirectly, on our business, financial condition and results of operations.

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

To address the Argentine economic crisis in 2001 and 2002, the Argentine government adopted the Public Emergency Law and other resolutions, which made a number of material changes to the regulatory framework applicable to the electricity sector. These changes, which severely affected electricity distribution companies, included the freezing of distribution margins, the revocation of adjustment and inflation indexation mechanisms and a limitation on charging our customers the increases of certain regulatory charges. In addition, a new price-setting mechanism was introduced in the wholesale electricity market, which had a significant impact on electricity generators and has led to significant price mismatches between participants in our market. The Argentine government continues to intervene in this sector, including granting temporary margin increases, proposing a new social tariff regime for residents of poverty-stricken areas, creating specific charges to raise funds that are transferred to government-managed trust funds that finance investments in distribution infrastructure and mandating investments for the construction of new generation plants and the expansion of existing transmission and distribution networks. We cannot make assurances that these or 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 ADSs and Class B common shares or that the Argentine government will not adopt emergency legislation similar to the Public Emergency Law, or other similar resolutions, in the future that may further increase our regulatory obligations, including increased taxes, unfavorable alterations to our tariff structures and other regulatory obligations, compliance with which would increase our costs and have a direct negative impact on our results of operations.

Electricity distributors were severely affected by the emergency measures adopted during the economic crisis, many of which remain in effect

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 concessions 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 in real terms and an increase of distribution costs in real terms, which could no longer be recovered 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), which effectively prevented these companies from obtaining further financing in the domestic or international credit markets and making additional investments. Although the Argentine government has recently granted temporary relief to some distribution companies, including an increase in distribution margins and a temporary cost adjustment mechanism, distribution companies are currently involved in discussions with regulators on additional, permanent measures needed to adapt the current tariff scheme to the post-crisis situation of this sector. We cannot make assurances that these measures will be adopted or implemented or that, if adopted, they will be sufficient to address the structural problems created for our company by the economic crisis and its aftermath.

Electricity demand has grown significantly in recent periods and may be affected by recent or future tariff increases, which could lead distribution companies, such as us, to record lower revenues

During the 2001 economic crisis, electricity demand in Argentina decreased due to the decline in the overall level of economic activity and the deterioration in the ability of many consumers to pay their electricity bills. Despite the decline in the electricity demand registered in 2009, in the years following the economic crisis of 2001 electricity demand has experienced significant growth, increasing an estimated average of approximately 5.8% per annum from 2003 through 2008. This increase in demand reflects the relative low cost, in real terms, of electricity to consumers due to the freeze of distribution margins and the elimination of the inflation adjustment provisions in distribution concessions coupled with the devaluation of the Peso and inflation. The executive branch of the Argentine government granted temporary increases in distribution margins, and we are currently negotiating further increases and adjustments to our tariff schemes with the Argentine government. Although the increases in electricity distribution margins, which increased the cost of electricity to residential customers, have not had a significant negative effect on demand, we cannot make any assurances that these increases or any future increases in the relative cost of electricity (including increases on tariffs for residential users) will not have a material adverse effect on electricity demand or a decline in collections from customers which, in turn, may lead electricity distribution companies, such as us, to record lower revenues and results of operations than currently anticipated, and may have a material adverse effect on the market value of our ADSs and Class B common shares.

Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies

In recent years, the condition of the Argentine electricity market has provided little incentive to generators to further invest in increasing their generation capacity, which would require material long-term financial commitments. As a result, Argentine electricity generators are currently operating at near full capacity and could be required to ration supply in order to meet a national energy demand that exceeds the current generation capacity. 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. In an attempt to address this situation, in September 2006 the Argentine government adopted measures requiring large industrial users to limit their energy consumption to their “base demand” (equal to their demand in 2005) and to secure any additional energy needs in excess of their base demand from sources other than the national grid. Large users that do not comply with these measures can be subject to penalties imposed by the Argentine government. These measures, however, have not led to a significant reduction in demand by these users, despite requests from, and penalties imposed by, the Argentine government. As a result, electricity generators may not to be able to guarantee the supply of electricity to distribution companies, which, in turn, could prevent these companies, including our company, from experiencing continued growth in their businesses and could lead to failures to provide electricity to customers. Under Argentine law, distribution companies are responsible to their customers for any disruption in the supply of electricity. As a result, distribution companies may face customer claims and fines and penalties for disruptions caused by energy shortages unless the relevant Argentine authorities determine that energy shortages constitute force majeure. To date, the Argentine authorities have not been called upon to decide under which conditions energy shortages may constitute force majeure. In the past, however, the Argentine authorities have recognized the existence of force majeure only in limited circumstances, such as internal malfunctions at the customer’s facilities, extraordinary meteorological events (such as major storms) and third party work in public thoroughfares. We cannot make assurances that we will not experience a lack of energy supply that could adversely affect our business, financial condition and results of operations.

Risks relating to our business

Our business and prospects depend on our ability to negotiate further improvements to our tariff structure, including increases in our distribution margin

We are currently engaged in a Revisión Tarifaria Integral (integral tariff revision process, or RTI) with the ENRE. The goal of the RTI is to achieve a comprehensive revision of our tariff structure, including further increases in our distribution margins and periodic adjustments based on changes in our cost base, to provide us with an adequate return on our asset base. Although we believe the RTI will result in a new tariff structure, we cannot make assurances that the RTI will conclude in a timely manner or at all, or that the new tariff structure will effectively cover all of our costs and provide us with an adequate return on our asset base. Moreover, the RTI could result in the adoption of an entirely new regulatory framework for our business, with additional terms and restrictions on our operations and the imposition of mandatory investments. We also cannot predict whether a new regulatory framework will be implemented and what terms or restrictions could be imposed on our operations. If we are not successful in achieving a satisfactory renegotiation of our tariff structure, our business, financial condition and results of operations may be materially adversely affected and the value of our Class B common shares and ADSs may decline.

We may not be able to adjust our tariffs to reflect increases in our distribution costs in a timely manner, or at all, which may have a material adverse effect on our results of operations

The Adjustment Agreement currently contemplates a cost adjustment mechanism for the transition period during which the RTI is being conducted. This mechanism, known as the Cost Monitoring Mechanism (CMM), requires 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 may also request that the ENRE apply the CMM at any time that the variation in our distribution cost base is at least 10% or more. Any adjustments, however, are subject to the ENRE’s assessment of variations in our costs, and we cannot guarantee that the ENRE will approve adjustments that are sufficient to cover our actual incremental costs. In the past, even when the ENRE has approved adjustments to our tariffs, there has been a lag from when we actually experience increases in our distribution costs and when we receive increased revenues following the corresponding adjustments to our distribution margins pursuant to the CMM. Despite the adjustment we were granted under the CMM in October 2007 and July 2008, we cannot make assurances that we will receive similar adjustments in the future. As of the date of this annual report we have requested four increases under the CMM that are still subject to ENRE´s review. If we are not able to recover all of these incremental costs or there is a significant lag time between when we incur the incremental costs and when we receive increased revenues, we may experience a decline in our results of operations, which may have a material adverse effect on the value of our ADSs and Class B common shares.

Our tariff adjustments may be subject to challenge by Argentine consumer and other groups

In November 2006, two Argentine consumer associations, Asociación Civil por la Igualdad y la Justicia (Civil Association for Equality and Justice, or ACIJ) and Consumidores Libres Cooperativa Limitada de Provisión de Servicios de Acción Comunitaria (Consumers’ Cooperative for Community Action), brought an action against us and the Argentine government before a federal administrative court seeking to block the ratification of the adjustment of our tariffs on the grounds that the approval mechanism was unconstitutional. Because the court dismissed these claims and ruled in our favor, in April 2008, the ACIJ filed another complaint challenging the procedures utilized by the Argentine congress in approving these adjustments. In addition, in January 2009, the defensor del pueblo (Public Ombudsman) filed a complaint opposing the October 2008 adjustment to our tariffs, and naming us as a third-party defendant. On January 27, 2009, the ENRE notified us of a preliminary injunction, as a result of the Ombudsman’s claim, pursuant to which we were ordered to refrain from cutting the energy supply to customers challenging the October 2008 tariff increase until a decision is reached with respect to the claim. We and the Argentine government have appealed the injunction several times, the resolution of which is still pending as of the date of this annual report. See “Item 8. Financial Information—Legal Proceedings—Distribution—Proceedings challenging the renegotiation of our concession.” We cannot make assurances regarding how these complaints will be resolved nor can we make assurances that other actions or requests for injunctive relief will not be brought by these or other groups seeking to reverse the adjustments we have obtained or to block any further adjustments to our distribution tariffs. If these legal challenges are successful and prevent us from implementing tariff adjustments granted by the Argentine government, we could face a decline in collections from distribution customers, and a decline in our results of operations, which may have a material adverse effect on our financial condition and the market value of our ADSs and our Class B common shares.

We have been, and may continue to be, subject to fines and penalties that could have a material adverse effect on our 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. After 2001, the amount of fines and penalties imposed on our company has increased significantly, which we believe is mainly due to the economic and political environment in Argentina following the recent economic crisis. Although the Argentine government has agreed to forgive a significant portion of our accrued fines and penalties pursuant to the Adjustment Agreement and to allow us to repay the remaining balance over time, this forgiveness and repayment plan is subject to a number of conditions, including compliance with quality of service standards, reporting obligations and required capital investments. As of December 31, 2009, our accrued fines and penalties totaled Ps. 377.5 million (taking into account our adjustment to fines and penalties following the ratification of the Adjustment Agreement). If we fail to comply with any of these requirements, the Argentine government may seek to obtain payment of these fines and penalties by our company. In addition, we cannot make assurances that we will not incur material fines in the future, which could have a material adverse effect on our results of operations.

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 our concession, we may record lower operating profits than we anticipate. Prior to the economic crisis in 2001, we had been able to reduce the high level of energy losses experienced at the time of the privatization to the levels contemplated (and reimbursed) under our concession. However, during the economic crisis and during the year ended December 31, 2009, 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, with it, the number of delinquent accounts and fraud. Our energy losses amounted to 11.9% in 2009. We cannot make assurances that our energy losses will not grow in future periods, which may lead us to have lower margins and could adversely affect our results of operations and financial condition.

The Argentine government could foreclose its pledge over our Class A 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 will have the right to foreclose its pledge over our Class A shares and sell these shares to a third party buyer if:

the fines and penalties we incur 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 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 shares (other than the existing pledge in favor of the Argentine government);

we or EASA obstruct the sale of Class A 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 shares;

our shareholders amend our articles of incorporation or voting rights in a way that modifies the voting rights of the Class A shares without the ENRE’s approval; or

EASA does not desist from its ICSID claims against the Argentine government following completion of the RTI and the approval of a new tariff regime.

In 2009, the fines and penalties imposed on us by the ENRE amounted to Ps. 58.5 million, which represented 2.8% of our energy sales. See “Item 4. Information on the Company—Our concession—Fines and penalties.”

Pending the sale of our Class A shares following a foreclosure of its pledge, the Argentine government also has the right to exercise the voting rights of the Class A shares. In addition, the foreclosure by the Argentine government of the pledge on our Class A shares may be deemed to constitute a change of control under the terms of our restructured debt, which would require us to offer to repurchase all such debt at its nominal value. We cannot make assurances that we will have sufficient funds or access to financing to effect such repurchases. If the Argentine government forecloses its pledge over our Class A shares, the market value of our ADSs and Class B common shares could be significantly affected.

We employ a largely unionized labor force and could be subject to an organized labor action

As of December 31, 2009, approximately 81% of our employees were union members and we have had an agreement in place with the two unions representing our employees since 1995. Although our relations with unions are currently stable, we cannot make assurances that we will not experience work disruptions or stoppages in the future, which could have a material adverse effect on our business and revenues, especially in light of the social tensions generated in Argentina by the economic crisis. We cannot make assurances that we will be able to negotiate salary agreements on the same terms as those currently in effect, or that we will not be subject to strikes or work stoppages before or during the negotiation process.

We might incur material labor liabilities in connection with our outsourcing

We have outsourced a number of activities related to our business to third party contractors in order to maintain a flexible cost base that allows us both to maintain a lower cost base and respond more quickly to changes in our market. We had approximately 3,611 third-party employees under contract with our company as of December 31, 2009. 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’ 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. If we are not able to prevail in any of these proceedings, we might be forced to incur material labor liabilities, which may have an adverse effect on our results of operations.

We currently are not able to effectively hedge our currency risk in full and, as a result, a 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 a significant portion of our existing financial indebtedness is denominated in U.S. Dollars, which exposes us to the risk of loss from devaluation of the Peso. We currently seek to hedge this risk in part 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 Argentine Central Bank regulations, entering in currency forward contracts, but we continue to have substantial exposure to the U.S. Dollar. We cannot make assurances that the Argentine government will continue to allow us to access the market to acquire U.S. Dollars in the manner we have done so to date. Although we may also seek to enter into further hedging transactions to cover all or a part of our remaining exposure, we have not been able to hedge all of our exposure to the U.S. Dollar on terms we consider viable for our company. If we continue to be unable to effectively hedge all or a significant portion of our currency risk exposure, a 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. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

Our insurance may not be sufficient to cover certain losses

As of December 31, 2009, our physical assets are insured for up to U.S. $562.5 million. However, we do not carry insurance coverage for losses caused by our network or business interruption, including loss of our concession. Although we believe that our insurance coverage is commensurate with standards for the international electricity 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 results of operations and financial condition.

A substantial number of our assets are not subject to attachment or foreclosure

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, whether as a guarantee for an ongoing legal action or to allow for the enforcement of a legal 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.

If our controlling shareholder fails to meet its debt service obligations, its creditors may take measures that could have a material adverse effect on our results of operations

In July 2006, EASA completed a comprehensive restructuring of all of its outstanding financial indebtedness, which had been in default since 2002. In connection with this restructuring, EASA issued approximately U.S. $85.3 million in U.S. Dollar-denominated notes in exchange for the cancellation of approximately 99.94% of its outstanding financial debt. EASA’s ability to meet its debt service obligations under these notes depends largely on our ability to pay dividends or make distributions or payments to EASA, and our failure to do so could result in EASA becoming subject to actions by its creditors, including attachments of EASA’s assets and petitions for involuntary bankruptcy proceedings. If EASA’s creditors were to attach our Class A shares held by EASA, the Argentine government would have the right under our concession to foreclose its pledge over our Class A shares, which could trigger a repurchase obligation under the terms of our restructured debt and have a material adverse effect on the market value of our ADSs and Class B common shares.

Our exclusive right to distribute electricity may be adversely affected by technological or other changes in the energy distribution industry

Although our concession grants us the exclusive right to distribute electricity within our service area, this exclusivity may be terminated in whole or in part if technological changes make it possible for the energy distribution industry to evolve from its present condition as a natural monopoly into a competitive business. Although, to our knowledge, there are currently no projects to introduce new technologies in the medium or long-term which could reasonably be expected to alter the current landscape of the electricity distribution business, we cannot make assurances that future developments will not introduce competition 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 have a material adverse effect on our financial condition, results of operations and prospects.

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. Argentine law currently permits the government to impose these kinds of restrictions temporarily in circumstances where a serious imbalance develops in Argentina’s balance of payments or where there are reasons to foresee such an imbalance. 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. Among the restrictions that are still in effect are those relating to the payment prior to maturity of the principal amount of loans, bonds or other securities owed to non-Argentine residents, the requirement for Central Bank approval prior to acquiring foreign currency for certain types of investments and the requirement that 30% of certain types of capital inflows into Argentina be deposited in a non-interest-bearing account in an Argentine bank for a period of one year. Although the transfer of funds abroad in order to pay dividends no longer requires Central Bank approval, restrictions on the movement of capital to and from Argentina such as the ones which previously existed could, if reinstated, impair or prevent the conversion of dividends, distributions, or the proceeds from any sale of Class B common shares, as the case may be, from Pesos into U.S. Dollars and the remittance of the U.S. Dollars abroad. We cannot make assurances 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 convert for the account of the ADR holders who have not been paid.

Our ability to pay dividends is limited

In accordance with Argentine corporate law, we may pay dividends in Pesos out of retained earnings, if any, as set forth in our audited financial statements prepared in accordance with Argentine GAAP. Our ability to pay dividends, however, is restricted pursuant to the indenture we entered into when we restructured our financial debt. Pursuant to this indenture, our ability to pay dividends is limited at any time that our leverage ratio, as defined in the indenture, exceeds 2.5, unless we attain an international investment grade rating on our long term debt from an internationally recognized rating agency. Our leverage ratio is defined in the indenture as our total indebtedness (without giving effect to the discount to net present value applied to our restructured debt) over EBITDA, as defined in the indenture. EBITDA is defined in the indenture as our operating income plus amortization of intangible assets and non-current assets, depreciation of fixed assets and any other non-cash charges. If our leverage ratio is greater than 2.5, we will only be able to pay dividends using a specified portion of our excess cash (as defined in the indenture), which ranges from 25% to 50% of our excess cash depending on our leverage ratio. In addition, if our leverage ratio exceeds 3.5 we will not be able to pay any dividends to our shareholders. We cannot make assurances that we will be able to generate excess cash under the indenture at any time or that our leverage ratio will allow us to pay dividends at any given time. In addition, pursuant to the Adjustment Agreement, we have agreed not to pay dividends without the ENRE’s prior approval until we complete the integral tariff review process with the ENRE. We cannot make assurances regarding when this process will be completed.

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 ADR 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 under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets are not as highly regulated or supervised as the U.S. securities markets or markets in some 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 that in the United States, putting holders of our common shares and ADRs at a potential disadvantage.

Holders of ADRs may be unable to exercise voting rights with respect to the Class B common shares underlying the ADSs at our shareholders’ meetings

ADRs represent ADSs being held by the depositary in the name of the holder of the ADR. As such, we will not treat holders of ADRs as one of our shareholders and holders of ADRs 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 bulletin of the Buenos Aires Stock Exchange, 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 ADRs desire. Class B common shares represented by ADSs for which the depositary fails to receive timely voting instructions may, if requested by our company, be voted as we instruct at the corresponding meeting.

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. 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 bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

Item 4.

Information on the Company

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 2009. We hold a concession to distribute electricity on an exclusive basis to the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, comprising an area of 4,637 square kilometers and a population of approximately seven million people. As of December 31, 2009, we served 2,604,612 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:

	Demand (GWh)
	Wholesale Electricity Market(1)		Edenor Demand(2)		Edenor Demand as a % of Wholesale Electricity Market
2009		104,592		20,676		19.8	%
2008		105,959		20,863		19.7	%
2007		102,950		20,233		19.7	%

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.

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 the Dirección 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 created Agua 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 the Compañía 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 the Compañía Argentina de Electricidad (Argentine Electricity Company, or CADE) to Servicios Eléctricos 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.

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 rates 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.

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 government’s policies during this period severely affected the electricity sector. Pursuant to the Public Emergency Law that the Argentine Congress 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 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 our company. 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 wholesale electricity market 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 wholesale electricity market. The Argentine government has made some attempts at correcting these problems, including proposing new rules to structure the wholesale electricity market 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 2009, the Argentine government completed construction and began operation of two new 800 MW combined cycle generators constructed as part of the government’s 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 applicable to large users. These funds had been deposited in the Fondo de Inversiones Necesarias que Permitan Incrementar la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista (Fund for Investments Required to Increase Electricity Supply in the Wholesale Electricity Market, or FONINVEMEM).

In September 2006 the Secretaría de Energía (Secretary of Energy) of the Ministerio de Planificación Federal, Inversión Pública y Servicios (Ministry of Federal Planning, Public Investment and Services) issued Resolution No. 1281/06 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 those industrial and commercial users whose energy demand is at or below 300 kilowatts (kW) and who lack access to other viable energy alternatives. To achieve this, the resolution provides that:

large users in the wholesale electricity market and large customers of distribution companies (in both cases above 300 kW), such as us, 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 wholesale electricity market and large customers of distribution companies (in both cases above 300 kilowatts) must satisfy any consumption in excess of their base demand with energy from the Energía Plus (Energy Plus) 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 are not agents of the electricity market or who as of the date of the resolution were not part of the wholesale electricity market. Large users in the wholesale electricity market 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.

This resolution helped us to mitigate the risk of energy shortages due to a lack of electricity generation. See “Business—Our concession—Our obligations.”

Regulatory authorities

The principal regulatory authorities responsible for the Argentine electricity industry are:

(1)

the Secretary of Energy of the Ministry of Federal Planning, Public Investment and Services, and

(2)

the Ente Nacional Regulador de la Electricidad (National Electricity Regulator, or the ENRE).

The Secretary of Energy 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.

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

arbitration of conflicts between electricity sector participants.

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 interior regions of Argentina.

The wholesale electricity market

Overview

The Secretary of Energy established the wholesale electricity market 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 wholesale electricity market consists of:

a term market in which generators, distributors and large users enter into long-term agreements on quantities, prices and conditions;

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 measured at the Ezeiza 500 kV substation, the system’s load center, and demand; and

a stabilization fund, managed by CAMMESA, that 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 wholesale electricity market is administered by the Compañía Administradora del Mercado Mayorista Eléctrico S.A. (Wholesale Electricity Market Administration Company, or 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 wholesale electricity market participants, including generators, transmitters, distributors, large users and electricity brokers.

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 Secretary of Energy, 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 wholesale electricity market participants;

purchasing or selling electricity from or to other countries by performing the relevant import/export operations; and

providing consulting and other services related to these activities.

The operating costs of CAMMESA are covered by mandatory contributions made by wholesale electricity market participants. CAMMESA’s annual budget is subject to a mandatory cap equivalent to 0.85% of the aggregate amount of transactions in the wholesale electricity market projected for that year.

Wholesale electricity market participants

The main participants in the wholesale electricity market are generation, transmission and distribution companies. Large users and traders participate also in the wholesale electricity market, but to a lesser extent.

Generators

According to a recent report issued by CAMMESA, there are 62 generation companies and 17 auto generation companies, in Argentina, most of which operate more than one generation plant. As of December 31, 2009, Argentina’s installed power capacity was 31,625 MW. Of this amount, 54% was derived from thermal generation, 42% from hydraulic generation and 4% from nuclear generation. Private generators participate in CAMMESA through the Asociación 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.

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 Secretary of Energy.

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 sub-stations (i.e., assemblies of equipment through which electricity delivered by transmission circuits is passed and 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 Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener), which is indirectly co-controlled by Pampa Energía S.A., a public company managed by Grupo Dolphin’s principals and our controlling shareholder. Regional transmission companies, most of which have been privatized, own the remaining portion of the national interconnection 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 or export of electricity from one system to another.

Transmission companies also participate in CAMMESA by appointing two acting and two alternate directors through the Asociación de Transportistas de Energía Eléctrica de la República Argentina (Argentine Association of Electric Power Transmitters, 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 rates paid by consumers for service and an obligation to satisfy demand. The ENRE monitors compliance by federal distributors, including us, Empresa Distribuidora Sur S.A. (Edesur) and Empresa Distribuidora La Plata S.A. (Edelap), with the provisions of our respective concessions and with the Regulatory Framework Law, and provides a mechanism for public hearings at which complaints against distributors can be heard and resolved. In turn, provincial regulatory agencies monitor compliance by local distributors with their respective concessions and with local regulatory frameworks.

We and Edesur are the largest distribution companies and, together with Edelap, originally comprised SEGBA, which was divided into three distribution companies at the time of its privatization in 1992.

Distributors participate in CAMMESA by appointing two acting and two alternate directors through the Argentine Association of Asociación de Distribuidores de Energía Eléctrica de la República Argentina (Electric Power Distributors, or ADEERA).

Large users

The wholesale electricity market classifies large users of energy into three categories: Grandes Usuarios Mayores (Major Large Users, or GUMAs), Grandes Usuarios Menores (Minor Large Users, or GUMEs) and Grandes Usuarios Particulares (Particular Large Users, 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 Asociación de Grandes Usuarios de Energía Eléctrica de la República Argentina (Argentine Association of Electric Power Large Users, or AGUEERA).

Traders

Since 1997, traders are authorized to participate in the wholesale electricity market by intermediating block sales of energy. Currently, there are eight authorized traders in the wholesale electricity market, several of which conduct transactions with Comercializadora de Energía del Mercosur S.A. (CEMSA) in the export market.

Spot market

Spot prices

The emergency regulations enacted after the Argentine crisis in 2001 had a significant impact on energy prices. Among the measures implemented pursuant to the emergency regulations were the pesification of prices in the wholesale electricity market, known as the spot market, and the requirement that all spot prices be calculated based on the price of natural gas, even in circumstances were alternative fuel such as diesel is purchased to meet demand due to the lack of supply of natural gas.

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 wholesale electricity market on an hourly basis. The spot price reflected supply and demand in the wholesale electricity market 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 wholesale electricity market, including the implementation of a pricing ladder organized by level of customer consumption (which varies depending on the category of customer) charged by CAMMESA to distributors at a price significantly below the spot price charged by generators. According to the current regulatory framework, the ENRE is required to adjust the seasonal price charged to distributors in the wholesale electricity market every six months. However, between January 2005 and November 2008, the ENRE failed to make these adjustments. In November 2008, the ENRE passed Resolution 628/08 establishing a new distribution tariff as from October 1, 2008 and modified seasonal prices charged to distributors, including the consumption levels that make up the pricing ladder.

On August 14, 2009, ENRE adopted Resolution No. 433/2009 approving two tariff charts to be applied by Edenor. The first one applied retroactively for the period from June 1, 2009 to July 31, 2009. The second rate chart was effective for the period from August 1, 2009 to September 30, 2009. These charts were based on the new subsidized seasonal prices set forth Resolution No. 652/09 issued by the Secretary of Energy. The new price charts aimed at reducing the impact of increased winter electrical energy consumption on the invoicing of residential customers with bi-monthly consumption exceeding 1,000 kWh. The modification to the ENRE rate charts did not have any effect on our VAD. The ENRE also instrumented us to break down the floating charges of all invoices into the amounts subsidized and not subsidized by the Argentine government.

As of October 1, 2009, the tariff chart of October 2008 was reinstated pursuant to ENRE Resolution No. 628/2008. The floating charge of all invoices continues to be broken down into the amounts subsidized and not subsidized by the Argentine Government.

Prior to 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.

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 the quarter exceed the seasonal price.

Billing of all wholesale electricity market 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, 2009, the stabilization fund deficit totaled approximately Ps. 24,000 million. This deficit has been financed by the Argentine government through loans to CAMMESA and with FONINVEMEM funds, but these continue to be insufficient to cover the differences between the spot price and the seasonal price.

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 to distributors to purchase energy under term contracts while prices remain at their current levels.

HISTORY AND DEVELOPMENT OF THE COMPANY

We are a public service company incorporated as an Argentine sociedad anónima (limited liability corporation) on July 21, 1992 under the name Empresa Distribuidora Norte Sociedad Anónima. We were incorporated as part of the privatization of the Argentine state-owned electricity utility, Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA). 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 (currently the Ministry of Economy and Public Finance) approved the public sale of all of our company’s Class A 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 EDF), presented a bid for our Class A 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 shares. In addition, on August 5, 1992, the Argentine government granted our company 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 the Class A shares and became our controlling shareholder.

In June 1996, our shareholders approved the change of our company’s 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 bylaws related to our name change was approved by the ENRE and registered with the Public Registry of Commerce 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 the Class B shares of our company held by these shareholders, increasing its direct and indirect interest in our company 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 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 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 New York Stock Exchange under the symbol “EDN,” and our Class B shares are listed on the Buenos Aires Stock Exchange 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 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 Administración Nacional de la Seguridad Social (National Social Security Agency, or 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. As of March 5, 2010, ANSES hold 229,125,205 of our Class B shares, representing 25.3% of our capital stock.

BUSINESS OVERVIEW

Our strengths

We believe our main strengths are the following:

We believe we are the largest electricity distributor in Argentina in terms of number of customers and electricity sold (both in GWh and in pesos) in 2009. We serve the largest number of electricity customers in Argentina, which at December 31, 2009 amounted to 2,604,612 customers. Our electricity purchases, used to meet customer demand in our service area, accounted for approximately 19.8% of total electricity demand in the country in 2009. As a result of being the largest electricity distributor in Argentina in terms of volume and customers, we have strong bargaining power with respect to many of our operating expenses, including salaries, and benefit from economies of scale. We also actively participate in industry decision making bodies and are working closely with the Argentine government to address Argentina’s current energy challenges.

We distribute electricity to an attractive and diversified client base in a highly developed area of Argentina. We operate on an exclusive basis in the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, which is one of Argentina’s largest industrial and commercial centers. We have a highly concentrated, urban client base characterized by high purchasing power and low delinquency in payments of electricity bills (with an average of less than four days of past due bills outstanding). Our geographically concentrated and urban client base also allows us to operate more efficiently with relatively lower distribution costs. Finally, we have a balanced distribution of clients (residential, commercial, industrial).

We have substantial experience in the operation of electricity distribution systems with strong operating performance and efficiency for the characteristics of our concession area. We have substantial experience in the operation of electricity distribution systems and have received multiple ISO certifications on our commercial, technical and administrative processes, including on the quality of our services and safety and environmental standards. We were declared by the ENRE a self-operating business in 1997, which means we are not required to have a strategic operator conduct our business and allows us to act as an operator in other electricity businesses. We believe that our energy losses are low compared to other electricity distribution companies in Latin America. In addition, we have maintained what we believe are optimal levels of operating efficiency, with 978 customers per employee and 6,936.1 MWh sold per employee in 2009.

We have a well-balanced capital structure. As of December 31, 2009, our financial debt amounted to U.S. $208.0 million, including U.S. $196.6 million principal amount of notes. We have continued to strengthen our capital structure during 2009 acquiring through market purchases U.S. $32.2 million principal amount of Fixed Rate Par Notes due 2016 and U.S. $53.8 million principal amount of Senior Notes due 2017.

We have a stable, committed and seasoned management team. Our management team has not changed significantly since 1992, despite the changes to and from foreign ownership of our company since our privatization. In accordance with our concession, we are operating our electricity distribution business without the assistance of an external technical operator. Our new controlling shareholder has maintained our management team, and added financial expertise. We encourage internal promotion and provide training and other opportunities for our employees to continue to grow with our business.

Our strategy

Our goal is to continue to serve the strong demand in our concession area, while maximizing profitability and shareholder value. We are seeking to realize this goal through the following key business strategies:

Complete our tariff renegotiation process. On November 12, 2009, we submitted our tariff proposal to ENRE's Board of Directors in response to the ENRE’s request as part of the integral tariff revision process. Our integral tariff proposal includes, among other factors, a recalculation of the compensation we receive for our distribution services based on a revision of our asset base and rate of return. Furthermore Our proposal presented the ENRE with three options for the revised tariff scheme based on three different scenarios and each of which implementation of the tariff increase in three equal semiannual installments.

Continue to serve our concession area with a high quality of service. We aim to continue serving our clients in accordance with the terms of our concession, distributing electricity within our area meeting or exceeding the required quality standards. We intend to continue to dedicate a significant portion of our capital expenditures to the maintenance, enhancement and expansion of our network to achieve this goal.

Undertake a reclassification of our smaller customers by economic activity rather than level of demand to optimize our tariff base. We intend to reclassify our client base based on type of economic activity and purchasing power rather than only on levels of electricity demand. We believe this will allow us to shift clients who currently fall within our lowest tariff categories, to other, more appropriate categories, including professionals and small businesses which, due to their low demand, are currently classified as residential customers, and to charge them accordingly.

Focus on increasing our operating efficiency and optimizing our level of energy losses. We are committing significant resources to improving the quality of our technical services and the safety of our public infrastructure to allow us to reduce the amount of fines imposed by Argentine regulatory authorities in the ordinary course of our operations. We intend to build new entry points for our network in Tigre (previously called Escobar), Province of Buenos Aires, and Malaver, City of Buenos Aires, which will significantly improve the quality and reliability of our network. Currently, our objective is to maintain energy losses at an optimum level, taking into account the marginal cost of reducing such losses and the level at which, pursuant to the terms of our concession, we are reimbursed for the cost of such losses.

Our concession

By 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 August 31, 2007, followed by eight 10-year periods. However, the initial management period may be extended at our option, with the ENRE’s approval, for an additional 5-year period from the entry into force of the new tariff structure to be adopted under the integral tariff revision process. We presented a request for such extension in May 2007 and on July 5, 2007, the ENRE, pursuant to ENRE resolution No. 467/2007, agreed to extend the initial management period for an additional five years from the date that the new tariff structure is 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, had a severe effect on public utilities in Argentina, including our company. 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 empowered the Executive Branch to conduct a renegotiation of public utility contracts (including our concession) and the tariffs set therein (including our tariffs).

In September 2005 we and the Argentine government entered into an Adjustment Agreement, which was ratified by the Argentine executive branch 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.

Pursuant to the Adjustment Agreement, the Argentine government granted us an increase of 28% in our distribution margin, which is effective retroactively as of November 1, 2005. The Adjustment Agreement is intended to apply transitionally until we complete 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, because the Adjustment Agreement is effective retroactively as of 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 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, results 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 clients (excluding residential clients) 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 which we have continued to invoice in 55 monthly installments since February 2007. As of December 31, 2009, we had invoiced Ps. 149.4 million of the total amount.

In October 2007, the Argentine Secretary of Energy published Resolution No 1037/2007, which granted us an increase of 9.63% to our distribution margins to reflect an increase in our distribution cost base for the period from May 1, 2006 to April 30, 2007, compared to the recognized distribution cost base as adjusted by the May 2006 CMM. However, this increase was not incorporated into our tariff structure, and, instead, we were allowed to retain the funds that we are required to collect and transfer to the PUREE to cover this CMM increase and future CMM increases. In July 2008, we obtained an increase of approximately 17.9% to our distribution margin, which we incorporated into our tariff structure. This increase represented the 9.63% CMM increase corresponding to the period from May 2006 to April 2007 and the 7.56% CMM increase corresponding to the period from May 2007 to October 2007. These CMM adjustments were included in our tariff structure as of July 1, 2008 and resulted in an average increase of 10% for customers in the small commercial, medium commercial, industrial and wheeling system categories and an average increase of 21% for residential customers with bimonthly consumption levels over 650 kWh. In addition, the ENRE authorized us to be reimbursed for the retroactive portion of the 7.56% CMM increase for the period between November 2007 and June 2008, from the PUREE funds.

Furthermore, we requested an additional increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from November 2007 to April 2008, in comparison to the distribution cost base recognized by the CMM in November 2007. In 2008, the ENRE adopted Note No 81.399, which authorized a 5.791% increase under the CMM. As of the date of this annual report, the ENRE has not approved a new tariff scheme including this tariff increase.

As of December 31, 2009, we have submitted to the ENRE three additional requests from CMM adjustments as described in the table below:

Assessment Period	Application Date	CMM Adjustment Requested
May 2008 – October 2008	November 2008	5.684%
November 2008 - April 2009	May 2009	5.068%
May 2009 – October 2009	November 2009	5.041%

As of the date of this annual report, the ENRE has not responded to these requests.

Although we believe that these increases comply with the terms of the CMM, we cannot assure that the ENRE will grant us these increases in full, or at all, or if granted, that we will be able to bill our customers or otherwise recover these increases from other sources of payment (such as PUREE).

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 are 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 specified 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 service quality standards more stringent than the ones originally contemplated in our concession;

a restriction on our ability to pay dividends without prior ENRE approval during the period in which we are conducting the RTI;

forgiveness of approximately one-third of our accrued and unpaid fines, subject to certain conditions relating to compliance with our 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 comes into effect;

our obligation to apply a social tariff regime for low-income customers, which regime will be defined in the context of the RTI; and

our obligation to extend our network to provide service to certain rural areas.

Currently, the RTI has not yet been completed and although we are currently in discussions with the Argentine government regarding the RTI, we cannot predict when or how the RTI will be implemented.

Geographic Exclusivity

The concession gives us the exclusive right to distribute electricity within the concession area during the term of the 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 the concession area, maintaining at all times a service quality standard that has been established in the concession. This geographic exclusivity may be terminated in whole or in part by the executive branch if technological 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 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.

We divide our concession area into the following operating territories:

Operating territory		Districts
Morón		Morón, Ituzaingó, Hurlingham, Merlo, Marcos Paz, Las Heras and La Matanza
Norte		Ciudad de Buenos Aires, San Martín and Tres de Febrero
Olivos		Vicente López, San Isidro, San Fernando, Tigre and Escobar
Pilar		Moreno, Gral, Rodríguez, Pilar, Malvinas Argentinas, J.C. Paz and San Miguel

The table below sets forth certain information relating to our operating territories as of and for the period ended December 31, 2009:

Operating territory	Area (km2)		Customers (in thousands)				% of Sales
Morón		1,761		840.6	32.3	%		26.6	%
Norte		164		811.5	31.2	%		32.0	%
Olivos		1,624		480.2	18.4	%		23.0	%
Pilar		1,088		472.3	18.1	%		18.4	%
Total		4,637		2,604.6	100	%		100	%

According to INDEC, the Pilar area experienced the highest population growth rate of the Buenos Aires metropolitan region between 1991 and 2001, growing by 56.6% from approximately 149,070 people in 1991 to approximately 233,508 people in 2001. Today, some of the most affluent neighborhoods and upscale commercial centers and businesses are located in the Pilar area.

Our obligations

We are obligated to supply electricity upon request by the owner or occupant of any premises 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 (other agents and large users) to access any available transportation capacity within our distribution system upon payment of a wheeling fee. Consequently, Edenor must render the distribution service on an uninterrupted basis to satisfy any reasonable demand. We are prohibited from engaging in practices that limit competition or result in monopolistic abuses.

In addition, the Adjustment Agreement requires 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 are related to measures adopted since the Public Emergency Law was enacted. After the completion of the RTI, we and our shareholders and former shareholders must completely waive and desist from all of the above mentioned claims and legal proceedings. If our shareholders or former shareholders do not desist from these claims, the Argentine government will have the right to foreclose its pledge over our Class A shares and sell these shares to a third party buyer. If the company or any shareholder or former shareholder re-establishes or initiates a new claim, we must hold harmless the Argentine government in respect of amounts it is required to pay pursuant to such claims. EDFI and EASA have 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 has agreed to withdraw its claims against the Argentine government before the ICSID at the request of Dolphin Energía S.A.

In accordance with our concession, our controlling shareholder, EASA, has pledged its 51% stake in our company to the Argentine government to secure obligations under the concession. The Adjustment Agreement requires the pledge to be extended to secure our obligations under this agreement.

Quality standards

Pursuant to the concession, we are required to meet specified quality standards with respect to the quality of the product (electricity) and the delivery of the product. The quality standards relating to the product quality refer to the electricity’s voltage levels. A disturbance occurs when there is a change in the voltage level. The concession requires that the voltage level that we deliver must be 3x380/220 V; 13.2 kV; 33kV; 132 kV; 220 kV. The concession provides that disturbances in the voltage level may not exceed the following (in accordance with international standards):

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 the concession for disturbances 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 disturbance. As the disturbance’s percentage increases (or decreases) from the contracted tension level, the rate of the fine per kWh increases. These fines are credited to the affected user’s next bill.

The standards for delivery of the product set forth in the concession refer to the frequency and duration of the interruptions. The following table sets forth the standards set forth in the concession with respect to the frequency and duration of interruptions per customer during the current management period:

Category of user	Frequency of interruptions (maximum number of interruptions per semester)	Duration of interruption (maximum amount of time per interruption)(1)
High voltage	3	2 hours
Medium voltage	4	3 hours
Low voltage: (small and medium demand)	6	10 hours
Large demand	6	6 hours

(1)	Interruptions of less than three minutes are not recorded.

These standards may be subject to change during subsequent management periods and/or pursuant to the outcome of the RTI.

In addition, pursuant to the Adjustment Agreement, we have agreed to comply with a medium delivery standard that reflects our actual average delivery standards during the period from 2001 through 2003. This medium delivery standard requires 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.

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 time than the time 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 user. Following the privatization of our company in 1992, we have been able to improve our quality of service from an average of 22 hours of interruptions per customer and 13 interruptions per customer in 1992 to an average of 7.33 hours of interruptions per customer and 4.98 interruptions per customer in 2000, the last full year prior to the Argentine crisis.

The following table sets forth the frequency and duration of interruptions of our service in the periods indicated:

	Year ended December 31,
	2009		2008		2007		2006		2005
Average frequency of interruptions		4.42		4.10		3.47		2.81		3.38
Average duration of interruption (in hours)		8.79		8.31		6.59		5.01		5.10

Additionally, in order to satisfy quality standards, we must meet certain operating requirements relating to commercial service, including maintenance of the distribution network so as to minimize failures and to maximize the useful life of fixed assets and billings on actual meter readings to generate customer bills. We may bill customers using estimates in cases of force majeure, but we may not send a customer more than two successive estimated bills, if billed bimonthly, or, in other cases, more than three successive estimated bills. Furthermore, estimated bills cannot exceed 8% of total billings in each category of customers.

Fines and penalties

Pursuant to our concession, the ENRE may impose various fines and penalties on us if we fail to comply with our obligations under the concession, including our failure to meet any of the quality and delivery standards described above. Because we are required to pay for the fines imposed for violations of our quality or delivery standards by granting credits to our customers, we operate since 1996 a central information system that allows us to credit fines directly to our customers who are affected by these quality or delivery deficiencies.

The ENRE may also fine us for any of our network installations that it considers may pose a safety or security hazard in public spaces, including streets and sidewalks. In addition, the ENRE may fine us for inconsistency in technical information required to be furnished to the ENRE.

Fines and penalties for violations of public safety and reporting violations are deposited in the Reserva de Fondos de Terceros del ENRE (Third Party Reserve Fund of the ENRE) in an account in the Banco Nación. Payments accrue in that account until the account reaches Ps. 3 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 granted us 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 forgive approximately Ps. 58 million of our accrued fines and penalties. Because the Adjustment Agreement was not ratified until January 2007, we have recalculated the amounts of accrued fines and penalties subject to the payment plan under the terms of the Adjustment Agreement as well as the amounts subject to forgiveness. In addition, we were also required to make an adjustment as of December 31, 2006, totaling Ps. 47.0 million to the accrued fines and penalties under the payment plan in order to reflect the increase to our VAD pursuant to the Adjustment Agreement, and we will be required to make further adjustments to our payment plan to reflect the impact of future increases in our distribution margins, including the CMM adjustments. For the years ended on December 31, 2008 and 2007, we recorded adjustments of Ps. 17.2 million and Ps. 18.1 million, respectively, to reflect CMM adjustments. We estimate that the ENRE will forgive approximately Ps. 71.4 million of our accrued fines and penalties upon the completion of the RTI, and that we will be required to pay approximately Ps. 306.1 million in accordance with the payment plan provided for in the Adjustment Agreement. This payment plan allows us to repay these fines and penalties in fourteen semiannual installments commencing after a 180-day grace period from the date the RTI comes into effect.

In 2009, the fines and penalties imposed on us by the ENRE amounted to Ps. 58.5 million, which represented 2.8% of our energy sales. As of December 31, 2009 our accrued fines and penalties imposed by the ENRE amounted to Ps. 377.5 million.

The following table shows the adjustments to our accruals for potential 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)
	2009		2008		2007		2006		2005		2004		2003		2002		2001		2000
Accruals at beginning of year		331.6		281.4		241.1		169.7		99.3		63.4		49.0		19.0		13.6		17.4
ENRE Fines and Penalties		58.5		34.8		23.9		25.2		72.7		36.0		14.6		31.7		16.4		13.6
Quality of Technical Service		15.0		15.2		7.0		10.4		4.9		4.7		3.2		5.6		5.2		4.0
Quality of Technical Product		3.1		3.0		0.9		0.6		1.1		6.9		6.5		5.5		2.9		2.9
Quality of Commercial Service		2.4		1.6		1.1		1.2		—		1.2		0.5		1.5		1.7		0.9
Public Safety		34.0		11.6		10.3		6.7		25.4		10.9		2.0		4.9		4.2		6.3
Transport Technical Function		0.3		0.3		0.2		0.4		—		0.2		0.2		0.2		—		0.3
Reporting Violations		3.7		3.1		4.4		5.6		33.7		12.2		1.7		4.9		1.9		(0.2	)
Others		—		—		—		0.2		7.5		—		0.4		9.0		0.5		(0.5	)
Less: Paid during period:
Quality of Technical Service		—		—		—		—		1.6		—		—		0.9		3.3		5.6
Quality of Technical Product		—		—		—		—		—		—		—		—		2.3		4.2
Quality of Commercial Service		3.7		—		1.5		0.4		0.1		0.1		0.1		0.3		1.4		1.0
Public Safety		8.9		1.8		—		—		—		—		—		—		2.1		6.1
Transport Technical Function		—		—		0.1		0.3		—		—		0.1		0.3		0.2		0.5
Others		—		—		—		—		0.6		—		—		—		1.8		—
Total paid during period		12.6		1.8		1.7		0.7		2.4		0.1		0.2		1.6		11.1		17.4
Plus: Adjustment to fines and penalties pursuant to the ratification of the Adjustment Agreement		—		17.2		18.1		47.0		—		—		—		—		—		—
Accruals at year-end		377.5		331.6		281.4		241.1		169.7		99.2		63.4		49.0		19.0		13.6

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.

Foreclosure of pledge over our Class A shares or revocation of our concession

The Argentine government may foreclose its pledge over our Class A shares and sell them in an public bidding process if any of the following occur:

we incur penalties in excess of 20% of our gross energy sales, net of taxes (which corresponds to our energy sales) in any given year;

our controlling shareholder, EASA, fails to obtain the ENRE’s approval in connection with the disposition of our Class A shares;

material and repeated breaches of our concession that are not remedied upon request of the ENRE;

EASA creates any lien or encumbrances on our Class A shares (other than the pledge to the Argentine government);

EASA or Edenor obstruct the sale of the Class A shares at the end of any management period under our concession;

our shareholders amend our articles of incorporation or voting rights in a way that modifies the voting rights of the Class A shares without the ENRE’s approval; or

our shareholders or former shareholders fail to desist from any ICSID claims against the Argentine government following completion of the RTI and the approval of a new tariff regime.

Upon the occurrence of any of these events, the Argentine government will have the right to foreclose its pledge over our Class A shares and exercise the voting rights of the Class A 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 our concession, the Argentine government has the right to revoke our concession if we enter into bankruptcy and the government decides that we shall 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 will 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 will 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 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 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 Class A 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.

The first management period was set to expire 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 ENRE resolution No. 467/2007, agreed to extend the initial management period for an additional five years from the date that the new tariff structure is 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 obligation under the concession or in such a way that the distribution service is materially affected, we can request the termination of the concession, after giving the Argentine government 90 days’ prior notice. Upon termination of the concession, all our assets used to provide electricity 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 compensation established as a percentage of the bidding price, ranging from 10% to 30% depending on the management period in which the sale occurs.

Our network

As of December 31, 2009, the system through which we supply electricity was composed of 70 Sub-Stations of high/high voltage, high/high/medium voltage, high/medium voltage, representing 13,404 MVA of transformer capacity and 1,365 kilometers of high-voltage power lines 220 kV and 132 kV. The distribution system of medium/low voltage was comprised of 14,879 transformers of medium/low voltage, representing 5,643 MVA of transformer capacity, 9,191 kilometers of medium-voltage power lines 33 and 13.2 kV and 24,761 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:

	At December 31,
	2009		2008		2007
Kilometers of transmission lines
High voltage		1,365		1,364		1,338
Medium voltage		9,191		8,890		8,806
Low voltage		24,761		24,445		23,910
Total		35,317		34,699		34,054

Transformer capacity (MVA)
High voltage/high voltage		7,048		7,048		7,128
High voltage/medium voltage		6,356		6,106		5,866
Medium voltage/low voltage and medium voltage/medium voltage		5,643		5,369		5,136
Total		19,047		18,523		18,130

Access is provided from points of connection with the national interconnection grid, (500 kV-220 kV Rodríguez, 220 kV Ezeiza) and from the local Puerto and Costanera power plants. Our transmission and subtransmisson system (“HV System”) is composed of the 220kV and 132kV head sub-stations: Casanova, Matanza, Ramos Mejía, Morón, Agronomía, Puerto Nuevo, Nuevo Puerto, Malaver, Colegiales, Edison, Matheu, Talar and Zappalorto.

This HV System, together with the Edesur and Edelap systems, forms the Greater Buenos Aires (GBA) system. The GBA system is operated by the Sociedad Anónima Centro de Movimiento de Energía (SACME), of which Edenor and Edesur own 50% of the shares. SACME is responsible for the management of regional high-voltage distribution in the greater Buenos Aires metropolitan area, coordinating, controlling and supervising the operation of the generation, transmission and sub-transmission network in the City of Buenos Aires and the greater Buenos Aires metropolitan areas, including coordination with Sistema Interconectado Nacional (the National Network System or NIS) in the Edenor and Edesur concession areas. SACME also represents its shareholders in the control of distribution for those concession areas.

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. Our distribution network, consisting of several transformers, power lines and substations, distributes the electricity to final users with varied voltages depending on the requirements of end users. Certain customers, however, are supplied with power at significantly higher voltages.

We are currently working with the Argentine government and Edesur to construct two new entry points for our network, the first named “Oscar Smith” (previously called “Norte”) and the other “Puerto Nuevo-Malaver-Costanera”. These new entry points would significantly improve the quality and reliability of our network. On April 4, 2008, we entered into an agreement with the Minsterio de Planificación Federal, Inversión Pública y Servicios (the Ministry of Federal Planning, Public Investment and Services) to build the new 500/220 kV “Oscar Smith” transformer station at the Partido de Tigre. This new transformer station will serve to connect our network with the Sistema Argentino de Interconexión (Argentine Interconnection System, or SADI). We believe that this new entry point will allow us to meet the increasing energy demands 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.”

Systems

In 2009, we have been working on the following projects:

We continued with the implementation of the CC&B (Customer Care & Billing) software for the complete renewal of our commercial systems. The project began in August 2008 and is scheduled to conclude in the first half of 2011;

In August 2009, we began in collaboration with Microsoft, the migration of our technological platform, which will allow us to improve our net services, data storage and email.

In October 2009, we signed a printer renting contract with Lexmark, which will allow us to replace all our printers unifying our printing services and reducing and rationalizing our related costs.

Customers

The following graph shows the evolution of our customer base through December 31, 2009:

As of December 31, 2009, we served 2,604,612 customers. We define a “customer” as one meter. We classify our customers pursuant to the following tariff categories:

Residential (T1-R1 to R9): residential customers whose peak capacity demand is less than 10kW. In 2009, this category accounted for approximately 40% of electricity sales.

Small commercial (T1-G1 and T1-G2): commercial customers whose peak capacity demand is less than 10kW. In 2009, this category accounted for approximately 8% of electricity sales.

Medium commercial (T2): customers whose peak capacity demand is equal to or greater than 10kW but less than 50kW. In 2009, this category accounted for approximately 9% of 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 2009, this category accounted for approximately 18% of our electricity sales. This category does not include customers who purchase their electricity requirements directly through the wholesale electricity market under the wheeling system.

Wheeling System: large users who purchase their electricity requirements directly from generation or broker companies through the wholesale electricity market. These tariffs follow the same structure as those applied under the Industrial category described above. As of December 31, 2009, the total number of such large users was 636, and in 2009 this category represented approximately 20% of our electricity sales.

Others: public lighting (T1-PL) and shantytown customers whose peak capacity demand is less than 10kW. In 2009, this category accounted for approximately 5% of 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 our 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 users.

We rely on the following measures to detect incorrectly categorized customers:

reporting by our employees tasked with reading meters 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 bimonthly and a variable charge based on each unit of energy consumed. The price of these charges, in turn, is determined based on the bimonthly consumption registered by each customer, which is divided into subcategories for each of our residential and small commercial customers as follows:

Residential (Tariff 1-R):

Tariff 1-R1: bimonthly energy demand less than or equal to 300 kWh

Tariff 1-R2: bimonthly energy demand greater than 301 kWh

Tariff 1-R3: bimonthly energy demand greater than 651 kWh and less than 800 kWh.

Tariff 1-R4: bimonthly energy demand greater than 801 kWh and less than 900 kWh.

Tariff 1-R5: bimonthly energy demand greater than 901 kWh and less than 1000 kWh.

Tariff 1-R6: bimonthly energy demand greater than 1001 kWh and less than 1200 kWh.

Tariff 1-R7: bimonthly energy demand greater than 1201 kWh and less than 1400 kWh.

Tariff 1-R8: bimonthly energy demand greater than 1401 kWh and less than 2800 kWh.

Tariff 1-R9: bimonthly energy demand greater than 2800 kWh.

Small commercial (Tariff 1-G):

Tariff 1-G1: bimonthly energy demand less than or equal to 1600 kWh

Tariff 1-G2: bimonthly energy demand greater than 1600 kWh but less than or equal to 4000 kWh

Tariff 1-G3: bimonthly energy demand greater than 4000 kWh

Medium commercial customers (Tariff T2) are billed a fixed charge based on a fixed amount of capacity that is payable monthly and a variable charge based on each unit of energy consumed.

Industrial customers (Tariff T3) are billed two monthly fixed charges based on capacity during peak hours and non-peak hours and three variable charges for each unit of energy consumed, which charges vary based on whether the unit was consumed during peak hours (from 6 p.m. to 11 p.m.), horas de valle (valley hours, from 11 p.m. to 5 a.m.) or during the remaining hours of the day (from 5 a.m. to 6 p.m.).

Public lighting customers are billed a monthly variable energy charge based on each unit of energy consumed.

The table below shows the number of our customers per category at the dates indicated.

	At December 31,
	2009		2008		2007
Residential		2,271,960		2,206,847		2,162,586
Small commercial		297,070		295,827		292,617
Medium commercial		28,923		28,397		28,676
Industrial		5,628		5,437		5,217
Wheeling system		636		626		569
Other*		395		393		399
Total		2,604,612		2,537,527		2,490,064

*	Represents public lighting and shantytown customers.

Since 1995, we have maintained two billing systems: one for small- and medium-demand customers and other for large users. Both permit the integration of the reading, billing, collection processes and the tracing of the delinquent balances of customers included in those demand categories.

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 medium commercial and industrial customers). The systems validate the readings, and any inconsistent reading is checked in the field. Estimates of customer usage are no longer used as a result of this new billing system. Once the invoices are printed, they are distributed by independent contractors in each operating area, subject to strict controls.

More than 70% of the bills are paid through banking institutions, automatic credit via card debit or in stores, including supermarkets and pharmacies. Customers pay the remainder at any of our 28 commercial offices. In summary, automation of these processes has led to high quality billing, reducing the billing cycle from 87 days to less than 54 days over the last few years. In addition, we use various incentive plans to increase payment of outstanding bills by our customers.

Slow-Paying Accounts and Past Due Receivables

When we assumed the operation of the distribution system from SEGBA in September 1992, many residential electricity meters had not been read for months, individual customer account information was unreliable or nonexistent, and billing and collection systems and procedures required substantial improvement. The state of these customer records made it difficult to determine how much electricity individual customers had used and whether they were delinquent in paying for the service. As a result, one of our primary objectives since 1992 has been to address and minimize slow-paying accounts and past due receivables.

Since 1992, 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 reducing significantly the number of arrears accounts.

Our past due receivables increased from Ps. 31.5 million in 2008 to Ps. 56.0 million in 2009.

This increase in past due receivables was the result of the preliminary injunction that the Ombudsman challenging the October 2008 adjustment to our tariffs received. The preliminary injunction prohibits us from cutting the supply of energy to customers challenging the October 2008 tariff increase until a decision is reached with respect to the Ombudsman’s claim. See “Item 8. Financial Information – Legal and Administrative Proceedings – Legal proceedings – Preliminary Injunction of the Ombudsman.” Although we felt the brunt of the injunction in February and March 2009, it continues to adversely impact our collections.

The following paragraph shows our monthly delinquent balances in 2009:

The following graph shows our 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 which 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 but can be reduced by improvements in the network. We believe that the level of technical losses is approximately 7% in countries with distribution networks similar to ours. Non-technical losses represent the remainder of our energy losses and are primarily due to illegal use of our 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 loss factor established as 10% (on average) pursuant to our concession. The reduction of energy losses therefore reduces the amount of energy that we have to purchase to satisfy apparent demand but cannot invoice, and increases the amount of electricity actually sold.

At the time of 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 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.

In the year 2000, our losses were close to the 10% target rate established in our concession and recognized in tariffs. However, as a result of the economic, political and social crisis that erupted in 2001, the level of energy losses began to escalate again due to increased poverty levels and payment delinquency. Fraud control by Edenor workers was often impeded due to the increased aggression from customers during monitoring visits. Such incidents have decreased since 2004, however, due to improved socioeconomic conditions and the efforts of our management. Due to the inefficiencies associated with reducing our energy losses below the level at which we are reimbursed pursuant to our concession, we currently do not intend to significantly lower our level of 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. We are experimenting with other programs including teaching low-income customers how to ration their consumption, providing low-income customers with the option of paying in installments and the installation of 4,800 prepaid meters. We also plan to encourage, through subsidies, the installation of special low-energy lamps. A final decision with respect to the implementation of these energy sales measures on a large scale is currently under evaluation by the ENRE. In addition, the national government has implemented a program through PRONUREE (Programa Nacional de Uso Racional y Eficiente de la Energía) to distribute low energy consumption lamps to our clients through agreements with local municipalities. In 2008 and 2009, over 2,400,000 of such lamps were distributed to our clients through this program.

The following table illustrates our estimation of the approximate breakdown between technical and non-technical energy losses experienced in our concession area in the last ten years.

	Year ended December 31,
	2009			2008			2007			2006			2005			2004			2003			2002			2001			2000			1999
Technical losses		9.8	%		9.8	%		9.6	%		8.6	%		8.3	%		8.1	%		8.0	%		7.8	%		7.5	%		7.3	%		8.0	%
Non-technical losses		2.1	%		1.0	%		2.0	%		2.5	%		2.7	%		3.4	%		4.7	%		4.5	%		3.6	%		2.7	%		2.2	%
Total losses		11.9	%		10.8	%		11.6	%		11.1	%		11.0	%		11.5	%		12.7	%		12.3	%		11.1	%		10.0	%		10.1	%

Framework agreement (Shantytowns)

In January 1994, we and Edesur entered into the framework agreement with the Argentine government and the Province of Buenos Aires to regulate our supply to low-income areas and shantytowns. Pursuant to the framework agreement, we agreed to supply electricity and, if feasible, install individual meters within each shantytown. However, given the lack of adequate space or streets between shantytown homes, in many instances we were only able to install a single meter at the boundary of each shantytown to measure its collective consumption. Under the terms of the framework agreement, we were entitled to receive compensation from (a) the municipality in which the shantytowns were located, (b) a federal fund, first, for any non-payment in respect of the electricity supplied to the shantytowns and, second, for losses up to Ps. 20 million incurred prior to the signing of the framework agreement, and (c) a provincial fund for capital expenditures made to regularize the shantytown energy supply.

In October 2003, we, together with Edesur and Edelap, signed a new framework agreement with the Argentine government and the Province of Buenos Aires, which was applicable retroactively as of September 2002 and was to expire on the earlier of December 31, 2006 or the full regularization of electricity supply to the shantytowns. Under this 2003 framework agreement, we are compensated for the service we provide to shantytowns by a commission formed in each shantytown that collects funds from residents of the shantytown. In addition, we are compensated separately by the municipality in which each shantytown is located, and, if there is any payment shortfall, by a special fund which the Argentine government, and the Province of Buenos Aires support. Specifically, the Argentine government contributes an amount equal to 21% and the Province of Buenos Aires contributes an amount equal to 15.5% of the compensation, net of taxes, paid by those customers with payment problems and meter irregularities who have been regularized under the framework agreement. Under the framework agreement, we may also suspend service to regularized clients for lack of payment.

In October 2006, we and the Province of Buenos Aires entered into a payment plan agreement with respect to amounts owed to us by the Province of Buenos Aires under the framework agreement with respect to periods prior to 2007. Pursuant to the payment plan agreement, we submitted a statement of claims owed to us for the service we provided in low-income and shantytown areas between September 2002 and June 2006. The Province of Buenos Aires verified these claims in accordance with the terms of the framework agreement and began paying these claims in 18 equal consecutive monthly installments. Furthermore, as part of the payment plan agreement, the Province of Buenos Aires agreed to pay the first six installments of our claims, irrespective of whether verification of such claims had taken place, and to pay any amounts corresponding with the services we provided to low-income areas and shantytowns during the second half of 2006. We agreed to waive our right to interest accrued on outstanding amounts owed to us under the framework agreement, provided the Province of Buenos Aires complies with its obligations under the payment plan. As of December 31, 2009, the Government of the Province of Buenos Aires owed us Ps. 2.3 million of the total amount due under this new agreement.

On June 23, 2008, we signed an amendment to the framework agreement with the Argentine government, the Province of Buenos Aires and the other national electric distributors agreeing to extend the framework agreement for four years from January 1, 2007. The Argentine government ratified the amendment on September 22, 2008 and on June 18, 2009 the Province of Buenos Aires published the ratification of this Addendum in the Official Bulletin of the Province of Buenos Aires,. Throughout this process, we have continued to supply energy to the shantytowns. During November and December 2009, we received from the Argentine government payments for a total amount of Ps.20 million. In March and May 2010, we received from the Argentine government payments of Ps.5.0 million and Ps.3.1 million, respectively..

Our receivables for amounts accrued but not yet paid for the supply of energy to shantytowns under the framework agreement amounted to Ps. 54.8 million as of December 31, 2009 and Ps. 49.4 million as of December 31, 2008.

In March 2010, the Company signed with the Government of the Province of Buenos Aires a payment plan agreement with respect to amounts owed to us by the Province of Buenos Aires under the new framework agreement. The Government of the Province of Buenos Aires agreed to pay the amount due through Cancellation Bonds “Bonos de Cancelación de Deuda”. The agreement was signed at referendum of the ratification by the Provincial Executive Power and the Company's Board of Directors. The Company’s managing board ratified the agreement in the meeting held on April 27, 2010. During May 2010, the Company received payments from the Government of the Province of Buenos Aires for Ps.1.6 million in cash and Ps.30.1 million (face value) with Cancellation Bonds.

Insurance

As of December 31, 2009, we are insured for loss or damage to property, including damage due to floods, fires and earthquakes covering amounts up to U.S. $562.5 million, with the following deductibles:

transformers, with a deductible of U.S. $100,000 to U.S. $750,000 (depending on the capacity);

equipment of sub-stations (not including transformers), with a deductible of U.S. $50,000.

commercial offices, with a deductible of U.S. $1,500 for each office.

deposits and other properties, with a deductible of U.S. $25,000; and,

terrorist acts up to U.S. $10 million, with a deductible of U.S. $50,000.

We maintain customary directors’ and officers’ liability insurance, a civil liability insurance (covering damages to third parties), workmen’s compensation, automobile, life and theft/burglary insurance policies subject to customary deductibles and limitations. Mandatory life insurance for each employee is maintained in accordance with Argentine law. Although we do not have business interruption insurance, we consider our insurance coverage to be adequate and in accordance with the standards prevailing for the industry. See “Item 3. Key Information. Risk Factors—Risks Relating to Our Business—Our insurance may not be sufficient to cover certain losses.”

Environmental management

In Argentina, the national government, the provinces 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 federal government the establishment of broad environmental guidelines and to the provinces the duty to implement the necessary legislation to attain national environmental goals. The environmental policy for the electricity market is formulated by the Secretary of Energy 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 on and storage of toxic substances, including polychlorinated biphenil (PCB), a viscous substance which was historically used to lubricate electrical transformers. The Argentine Environmental Law requires that we eliminate the PCB in our transformers before the end of 2010.

In 2009, Edenor completed the removal of PCBs from all its transformers with cooling oils and emissions exceeding 50 ppm (parts per million).

As part of our investment plan, we made important improvements to our network and implemented environmental tests to evaluate the impact of these improvements on the environment and the surrounding areas. We are currently engaged, together with environmental governmental entities, in the application of procedures to decontaminate mineral oils. We are required to apply for licenses from the ENRE for all our business activities, including those related to the environment. We believe that we are in compliance in all material respects with all applicable environmental standards, rules and regulations established by the ENRE, the Secretary of Energy and federal, provincial and municipal authorities. We have implemented environmental variables testing programs to evaluate environmental variances and to take corrective actions when necessary. In addition, we have in place an environmental emergency plan to reduce potential adverse consequences if an environment accident should occur. Finally, as part of our environmental actions, we improved the program of rational uses of energy in our buildings and in our customer equipment.

On October 19, 1999, the Instituto Argentino de Normalización (the Argentine Institute of Normalization) 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 October 2009.

Argentine law requires all persons whose activities risk environmental damage, such as us, to obtain environmental insurance up to a certain minimum coverage or set aside funds in an environmental restoration fund to pay for environmental liabilities that may arise. As of the date of this annual report, the Superintendencia de Seguros de la Nación (the Superintendent of Insurance) has only approved one environmental insurance policy that meets with the legal requisites. We have explored the possibility of setting up an environmental restoration fund, yet it is not clear what the appropriate size or scope of the fund would be. We continue to consult with leading insurance companies to evaluate our alternatives. We have conducted a review of the possible impact and effects our activities might have on the environment, and we have implemented certain preventative measures and operational controls as a result. We also have an environmental emergency plan that details the steps that would be taken in the case our operations resulted in any environmental damage.

Seasonality

For a discussion of seasonality of demand see “Item 5. Operating and Financial Review and Prospects—Demand—Seasonality of Demand.”

PROPERTY, PLANT AND EQUIPMENT

Our main properties are transmission lines, substations and distribution networks, all of which are located in the northwestern area of the greater Buenos Aires metropolitan area and the northern area of the City of Buenos Aires. Substantially all of our properties are held in concession to provide the electricity distribution service, which, by nature, is considered to be an essential public service. In accordance with Argentine legislation and court precedents, assets which are affected to rendering an essential public service are not subject to attachment or attachment in aid of execution and therefore, enforcement of judgments against us may be substantially limited. The net book value of the property, plant and equipment recorded on our balance sheet as of December 31, 2009 was Ps. 3,482.4 million. The net book value of the property, plant and equipment recorded on our balance sheet as of December 31, 2008 and 2007 was Ps. 3,256.3 million and Ps. 3,092.7 million, respectively.

Our gross asset base represents property, plant and equipment related to our distribution services. Because our total property, plant and equipment represents substantially the same assets, but calculated at historical cost as adjusted by inflation through February 2003, we believe the inflation-adjusted value of our property, plant and equipment is an accurate measure of our asset base for purposes of calculating our return on our assets. See “Item 5. Operating and Financial Review and Prospects—Factors affecting our results of operations—Tariffs—Distribution margin or value-added for distribution (VAD)—Revisión Tarifaria Integral (Integral Tariff Revision, or RTI).” The last adjustment for inflation to our property, plant and equipment was registered in February 2003 in accordance with Argentine GAAP. Accordingly, we estimate the effects of inflation on our property, plant and equipment for periods after February 2003 for purposes of determining the value of our gross asset base in connection with our concession. See Note 2 to our audited financial statements included elsewhere in this annual report.

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 December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007. Our audited financial statements have been prepared in accordance with Argentine GAAP, which differ in certain significant respects from U.S. GAAP. Note 27 to our audited financial statements included elsewhere in this annual report provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income for the years ended December 31,2009, 2008 and 2007 and shareholders’ equity as of December 31,2009 and 2008. Our financial statements have not been adjusted for inflation after February 28, 2003, in accordance with Argentine GAAP. See “Item 3. Key Information—Selected financial data.”

OPERATING RESULTS

We distribute electricity on an exclusive basis to the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, comprising an area of 4,637 square kilometers, with a population of approximately seven million people. Pursuant to our concession, we have the exclusive right to distribute electricity to all users within our concession area, including to wholesale electricity market participants. At December 31, 2009, we had 2,604,612 customers.

We serve two markets: the regulated market, which is comprised of users who are unable to purchase their electricity requirements directly through the wholesale electricity market, and the unregulated market, which is comprised of large users that purchase their electricity requirements directly from generators in the wholesale electricity market. 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 service area. Our net energy sales reflect the tariffs we charge our customers (which include our energy purchase costs) and reflect deductions for fines and penalties we incur during the year. Any adjustments, however, to our accrual for fines and penalties resulting from increases in our distribution margins are recorded under financial income (expenses) and holding gains (losses). See “Item 4. Information on the Company—Our concession —Fines and penalties.”

In addition, our net sales include late payment charges we bill our customers for delays in payment of their bills, connection and reconnection charges and leases of poles and other network equipment.

If we fail to comply with the obligations under our concession, we may become subject to fines and penalties imposed by the ENRE. Some of these fines and penalties are payable by granting credits or bonuses to our customers to offset a portion of their electricity charges. Fines and penalties that are not directly related to our customers, such as fines for public safety violations, are paid directly to the ENRE. We deducted approximately Ps. 58.5 million in fines and penalties from our revenues in 2009, Ps. 34.8 million in 2008 and Ps. 23.9 million in 2007. We incurred significantly higher levels of fines and penalties last year, due to an increase in underlying cost of energy factors upon which the fines and penalties are calculated. In September 2005, we entered into an agreement with the Argentine government, which was formally re-executed in February 2006 and ratified in January 2007, pursuant to which the Argentine government has agreed, subject to certain conditions, to forgive approximately one-third of our accrued and unpaid fines and penalties and grant us a payment plan for the remainder of these fines and penalties, which will be adjusted for future increases in our distribution margins, if any. See “Item 4. Information on the Company—Our concession —Fines and penalties.”

The following table sets forth the composition of our net sales for the periods indicated:

	Year ended December 31,
	2009			2008			2007
	(in millions of Ps.)
Energy sales (1)	Ps.	2,094.3		Ps.	2,000.8		Ps.	1,972.7
Fines and penalties		(58.5	)		(34.8	)		(23.9	)
Net energy sales		2,035.8			1,966.0			1,948.7
Late payment charges		20.7			17.8			17.1
Connection charges		5.7			3.7			4.0
Reconnection charges		2.0			2.2			1.4
Pole leases		13.7			10.5			10.7
Net sales	Ps.	2,077.9		Ps.	2,000.2		Ps.	1,981.9

(1)

Energy sales for 2007 include the retroactive portion of the February 2007 VAD increase, which amounts in aggregate to Ps. 218.6 million and is being invoiced in 55 consecutive monthly installments. We began invoicing these installments in February 2007 and, as of December 31, 2009, we had invoiced Ps. 149.4 million of this amount.

The following tables show our energy sales by category of customer (in GWh and in Pesos) for the periods indicated:

	Year ended December 31,
	2009				2008				2007				2006				2005
	(in GWh)
Residential		7,344	40	%		7,545	41	%		7,148	40	%		6,250	38	%		5,819	37	%
Small commercial		1,470	8	%		1,530	8	%		1,485	8	%		1,433	9	%		1,387	9	%
Medium commercial		1,565	8	%		1,597	9	%		1,552	9	%		1,446	9	%		1,354	9	%
Industrial		3,204	18	%		3,277	18	%		3,628	20	%		3,364	20	%		3,195	20	%
Wheeling system(1)		3,622	20	%		3,700	20	%		3,111	17	%		3,211	19	%		2,984	19	%
Others:
Public lighting		644	4	%		644	3	%		643	4	%		650	4	%		642	4	%
Shantytowns		351	2	%		304	2	%		301	2	%		261	2	%		279	2	%
Others(2)		20	—			19	—			19	—			18	—			17	—
Total		18,220	100	%		18,616	100	%		17,886	100	%		16,632	100	%		15,677	100	%

(1)	Wheeling 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 our company and our facilities.

	Year ended December 31,
	2009					2008(2)				2007(1)				2006				2005
	(in millions of Pesos)
Residential	Ps.	679.6		32	%	Ps.	575.8	30	%	Ps.	488.7	29	%	Ps.	445.4	32	%	Ps.	421.8	32	%
Small commercial		322.3		15	%		307.7	16	%		276.5	16	%		202.7	15	%		197.2	15	%
Medium commercial		335.4		16	%		317.4	17	%		288.1	17	%		216.5	16	%		204.1	16	%
Industrial		569.2		27	%		498.2	26	%		481.9	28	%		376.8	27	%		358.6	27	%
Wheeling system(3)		139.2		7	%		113.6	6	%		84.9	5	%		60.7	4	%		57.1	4	%
Others:
Public lighting		55.3		3	%		55.9	3	%		55.2	3	%		46.9	4	%		46.3	4	%
Shantytowns and others (4)		(6.7	)	0	%		47.6	2	%		29.1	2	%		23.6	2	%		26.0	2	%
Total	Ps.	2,094.3		100	%	Ps.	1,916.2	100	%	Ps.	1,704.4	100	%	Ps.	1,372.5	100	%	Ps.	1,311.0	100	%

(1)

Does not include the retroactive portion (Ps. 218.6 million ) of our February 2007 VAD increase, of which we have invoiced Ps. 149.4 million as of December 31, 2009, and the CMM adjustment for the period May 2006 – April 2007, applicable as of May 1, 2007 and collected through PUREE funds, for a total amount of Ps. 49.6 million.

(2)

Does not include CMM adjustment collected through PUREE funds, which amount to Ps. 84.6 million.

(3)

Wheeling charges represent our tariffs for large users, which consist of a fixed charge for recognized energy losses and a charge for our distribution margins but exclude charges for electric power purchases, which are undertaken directly between generators and large users.

(4)

In 2009, shantytown sales totaled Ps. 28.4 million; this amount was adjusted by various accounting changes and changes to rate charts imposed by the ENRE in June and July 2009.

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 our concession, which may lead us to incur fines and penalties imposed by the ENRE.

Argentine Economic Conditions and Inflation

Because a substantial portion 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 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 Argentine government in favor of the electricity sector, such as incentives for the construction of additional generation facilities and the creation of fiduciary funds to further enhance generation, transmission and distribution of electricity throughout the country, have set the stage for growth opportunities in our industry.

The following table sets forth key economic indicators in Argentina during the years indicated:

	Year ended December 31,
	2009			2008		2007		2006		2005
Real GDP (% change)		1.0			7.0		8.7		8.5		9.2
Nominal GDP (in millions of Pesos)		1,146,258			1,038,188		812,456		654,413		531,939
Real Consumption (% change)		1.1			6.7		8.8		7.4		8.5
Real Investment (% change)		(7.6	)		9.0		13.6		18.2		22.7
Industrial Production (% change)		0.4			5.0		7.6		8.9		7.5
Consumer Price Index		7.7			7.2		8.5		9.8		12.3
Nominal Exchange Rate (in Ps. /U.S.$ at year end)		3.80			3.45		3.15		3.06		3.04
Exports (in millions of U.S.$)		55,750			70,589		55,933		46,569		40,013
Imports (in millions of U.S.$)		38,771			55,413		44,780		34,159		28,692
Trade Balance (in millions of U.S.$)		16,979			13,176		11,153		12,410		11,321
Current Account (% of GDP)		2.8			2.5		2.7		3.6		2.9
Reserves (in millions of U.S.$)		46,355			46,383		46,176		32,037		28,077
Tax Collection (in millions of Pesos)		304,930			269,375		199,781		150,008		119,252
Primary Surplus (in millions of Pesos)		17,286			32,529		25,719		23,156		19,661
Public Debt (% of GDP at December 31) *		46.4			48.5		55.9		64.6		71.7
Public Debt Service (% of GDP)		5.4			4.9		5.8		5.1		5.4
External Debt (% of GDP at December 31)		40.6			39.2		47.9		51.5		62.9

Sources: INDEC; Central Bank; Ministry of Economy and Production.

* Does not include hold outs

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.

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 a de facto devaluation 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 our company) 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 wholesale price index increased by approximately 118% and the Argentine consumer price index 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 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 utilities in Argentina (including our company). Because public utilities 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 utilities 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 utilities significantly increased, which when combined with the margin freeze and conversion of tariffs from U.S. Dollars to Pesos, led many of these utilities (including our company) to suspend payments on their foreign currency debt in 2002.

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. $126.6 billion and extended payment terms. Approximately U.S. $19.5 billion of defaulted bonds held by creditors who did not participate in the exchange offer remain outstanding according to the Argentine Ministry of Economy and Production. 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 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 has 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 the Ministerio 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 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.

In 2009, after six years of robust and continuous growth, the Argentina economy, according to official indicators, grew by only 1%, and according to private indicators, contract 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 the interest rates increased at specific moments during the course of the year, the exchange market did remain relatively stable throughout.

By the second quarter of 2009, due to improvements in the global economy and the relative stability of the domestic financial markets, the Argentine economy began to recover.

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. Our management is currently focused on the renegotiation of our tariff structure, which, if successful, would have a significant impact on our results of operations.

The following chart shows the variation in our average tariff, including taxes, (in Ps. /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

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 wholesale electricity market 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 the same as for sales to 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 the Fondo 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 wholesale electricity market every six months. However, between January 2005 and November 2008, the ENRE failed to make these adjustments. In November 2008, the ENRE issued Resolution No. 628/08, which established the 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 new pricing ladder sets 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 addition, the ENRE authorized us to pass through some regulatory charges associated with the electric power purchases to our customers, excluding residential customers with consumption levels below 1,000 kWh.

On August 14, 2009, ENRE adopted Resolution No. 433/2009 approving two tariff charts to be applied by Edenor. The first one applied retroactively for the period from June 1, 2009 to July 31, 2009. The second rate chart was effective for the period from August 1, 2009 to September 30, 2009. These charts were based on the new subsidized seasonal prices set forth Resolution No. 652/09 issued by the Secretary of Energy. The new price charts aimed at reducing the impact of increased winter electrical energy consumption on the invoicing of residential customers with bi-monthly consumption exceeding 1,000 kWh. The modification to the ENRE rate charts did not have any effect on our VAD. The ENRE also instrumented usto break down the floating charges of all invoices into the amounts subsidized and not subsidized by the Argentine government.

Upon the ratification of the Adjustment Agreement, we again were allowed to charge our non-residential customers for increases in regulatory charges. As part of the RTI, we also expect we will be able to bill residential customers for accrued amounts under these increases, which we were not permitted to do under the Adjustment Agreement.

We purchased a total of 17,040 GWh in 2009, 17,169 GWh in 2008 and 17,122 GWh in 2007 (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 wholesale electricity market pursuant to the Public Emergency Law, however, we currently purchase all of our energy supply in the wholesale electricity market at the spot price. We have not purchased any energy under long-term supply contracts since 2004 and we do not anticipate making any material purchases of energy in the term market in the near future.

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 10.0% 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 with the increased volume of energy we supplied during those periods. Our total losses amounted to 11.6% in 2007, 10.8% in 2008 and 11.9% in 2009.

The following table sets forth the approximate breakdown between technical and non-technical energy losses experienced in our concession area over the periods indicated:

	Year ended December 31,
	2009			2008			2007
Technical losses		9.8	%		9.8	%		9.6	%
Non-technical losses		2.1	%		1.0	%		2.0	%
Total losses		11.9	%		10.8	%		11.6	%

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—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.

Adjustment Agreement. On September 21, 2005, we entered into the Acta 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 “—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 is effective retroactively from November 1, 2005 and will remain in effect until the approval of a new tariff scheme under the RTI.

The Adjustment Agreement also contemplates a cost adjustment mechanism for the transition period during which the integral tariff review process is being conducted. This mechanism, known as the Cost Monitoring Mechanism, or CMM, requires 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) is 5% or more, the ENRE is required to adjust our distribution margin to reflect our actual distribution cost base. The ENRE’s review is based on our distribution costs during the six-month period ending two months prior to the date on which the ENRE is required to apply the cost adjustment mechanism (on May 1 and November 1) and any adjustment will become effective from such date. The CMM takes into consideration, among other factors, the wholesale and consumer price indexes, current 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 may also request that the CMM be applied at any time that the variation between our actual distribution costs and our then recognized distribution costs is at least 10% or more, and any adjustment to our distribution cost base that results from this CMM will become effective retroactively from the date we present the CMM request to the ENRE. We cannot make any assurances, however, that we will receive any future increases under the CMM.

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 as of 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 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, results 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 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 amounts in the aggregate to Ps. 218.6 million, which is being invoiced in 55 consecutive monthly installments beginning in February 2007, representing approximately Ps. 48 million each year. As of December 31, 2009, we had invoiced Ps. 149.4 million of this amount.

In July 2008, we obtained an increase of approximately 17.9% to our distribution margin, which we incorporated into our tariff structure. This increase represented the 9.63% CMM increase corresponding to the period from May 2006 to April 2007 and the 7.56% CMM increase corresponding to the period from May 2007 to October 2007. These CMM adjustments were included in our tariff structure as of July 1, 2008 and resulted in an average increase of 10% for customers in the small commercial, medium commercial, industrial and wheeling system categories and an average increase of 21% for residential customers with bimonthly consumption levels over 650 kWh. In addition, the ENRE authorized us to be reimbursed for the retroactive portion of the 7.56% CMM increase for the period between November 2007 and June 2008, from the PUREE funds.

Furthermore, we requested an additional increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from November 2007 to April 2008, in comparison to the distribution cost base recognized by the CMM in November 2007. The ENRE adopted Note No 81.399, which authorized a 5.791% increase under the CMM. As of the date of this annual report, the ENRE has not approved a new tariff scheme including this tariff increase.

As of December 31, 2009, we have submitted to the ENRE three additional requests from CMM adjustments as described in the table below:

Assessment Period	Application Date	CMM Adjustment Requested
May 2008 – October 2008	November 2008		5.684	%
November 2008 - April 2009	May 2009		5.068	%
May 2009 – October 2009	November 2009		5.041	%

As of the date of this annual report, the ENRE has not responded to these requests.

Although we believe that these increases comply with the terms of the CMM, we cannot assure you that the ENRE will grant us these increases in full, or at all, or if granted, that we will be able to bill our customers or otherwise recover these increases from other sources of payment (such as PUREE).

These increases, and any further increases granted under the CMM, will remain in force until the approval of a new tariff structure under the RTI.

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.

	VAD												Average Taxes												Electric Power Purchases
Tariff(1)	November 2001			January 2005			February 2007			October 2008			November 2001			January 2005			February 2007			October 2008			November 2001			January 2005			February 2007			October 2008
Residential
TIRI (0-300)		49.40	%		44.50	%		44.50	%		44.69	%		28.70	%		28.70	%		28.70	%		28.70	%		21.90	%		26.80	%		26.80	%		26.61	%
TIRI2 (301-650)		36.20	%		33.00	%		33.00	%		30.81	%		29.20	%		29.20	%		29.20	%		29.23	%		34.60	%		37.80	%		37.80	%		39.95	%
TIR# (651-800)											32.08	%											29.23	%											38.68	%
TIR4 (801-900)											31.63	%											29.23	%											39.13	%
TIR5 (90-1000)											32.75	%											29.23	%											38.02	%
TIR6 (1001-1200)											26.29	%											29.23	%											44.48	%
TIR 7 (1201-1400)											27.18	%											29.23	%											43.59	%
TIR8 (1401-2800)											25.94	%											29.23	%											44.83	%
TIR9 (> 2800)											22.50	%											29.23	%											48.26	%
Commercial - small demands
TIG1		55.10	%		40.00	%		47.80	%		48.76	%		25.70	%		25.70	%		25.70	%		25.68	%		19.20	%		34.30	%		26.50	%		25.55	%
TIG2		53.60	%		31.10	%		43.60	%		42.39	%		25.60	%		25.60	%		25.60	%		25.64	%		20.70	%		43.20	%		30.70	%		31.97	%
Commercial - medium demand
T2		43.30	%		27.90	%		35.50	%		38.03	%		25.60	%		25.60	%		25.60	%		25.63	%		31.00	%		46.40	%		38.90	%		36.34	%
Industrial
T3 low voltage below 300kw		44.20	%		26.50	%		34.30	%		37.86	%		25.70	%		25.70	%		25.70	%		25.66	%		30.10	%		47.80	%		40.10	%		36.48	%
T3 low voltage over 300kw		42.60	%		24.50	%		32.10	%		27.09	%		25.60	%		25.60	%		25.60	%		25.62	%		31.80	%		49.90	%		42.30	%		47.29	%
T3 medium voltage below 300kw		29.30	%		14.10	%		19.70	%		25.25	%		25.70	%		25.70	%		25.70	%		25.68	%		45.00	%		60.30	%		54.60	%		49.06	%
T3 medium volgate over 300kw		27.30	%		12.30	%		17.50	%		17.71	%		25.70	%		25.70	%		25.70	%		25.69	%		47.00	%		62.00	%		56.80	%		56.60	%
Average Tariff		41.20	%		28.50	%		33.90	%		33.16	%		27.20	%		27.20	%		27.20	%		27.24	%		31.50	%		44.20	%		38.90	%		39.60	%

(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 800kWh 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. 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.

Revisión Tarifaria Integral (Integral Tariff Revision, or RTI). Pursuant to the Adjustment Agreement, we are also currently engaged in an integral tariff revision process with the ENRE.

Our integral tariff proposal will include, among other factors, a recalculation of the compensation we receive for our distribution services, including taxes that are not currently passed through to 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. For this purpose, we will present a post-tax return on our asset base, which we calculate as operating income plus depreciation of property, plant and equipment, less the tax charge resulting from the application to this amount of the legal tax rate (currently, 35%), divided by the value of our gross asset base. The last adjustment for inflation to our property, plant and equipment was registered in February 2003 in accordance with Argentine GAAP. Accordingly, we estimate the effects of inflation on our property, plant and equipment for periods after February 2003 for purposes of determining the value of our gross asset base in connection with our concession. See “Item 4. Information on the Company—Property, plant and equipment.” Based on our method of calculation, we estimate that the post-tax return on our gross asset base was 2.2% in 2009 (on the basis of a gross asset base valued at Ps. 10.9 billion at December 31, 2009), which we believe is still extremely low considering our annual post-tax return before the economic crisis. Our average annual post-tax return on our gross asset base from 1997 through 2001 was 9.6%. We believe that this method of calculating our return on assets is consistent with the requirements of the Adjustment Agreement, although we cannot guarantee that the ENRE will not decide to use other factors or methods to calculate our return on assets.

On April 30, 2007, the Argentine Secretary of Energy published Resolution No. 434/2007, which established that the new tariff structure resulting from the RTI would take effect on February 1, 2008 and would be implemented in two installments, in February and August 2008.

In July 2008, the Secretary of Energy issued Resolution 865/2008, which reviews the RTI schedule contemplated by the Adjustment Agreement. The Secretary revised the original RTI schedule and stated that the new tariff structure of the RTI would take effect in February 2009 and that if in February 2009 the tariff resulting from the RTI were greater than the tariff in place at that moment, the tariff increase would be applied in three stages: the first adjustment would take place in February 2009, the second in August 2009 and the last one in February 2010.

As of the date of this annual report, no resolution has been issued concerning the application of the electricity rate schedule resulting from the RTI, which was expected to be in effect since February 1, 2009.

On November 12, 2009, we submitted our tariff proposal to the ENRE's Board of Directors in response to the ENRE’s request in ENRE Resolution No. 467/2008 and as part of the RTI. Our proposal presented the ENRE with three different options for the revised tariff scheme based on three different scenarios; two scenarios contemplated in Resolution No. 467/08 of the ENRE and a third one which contemplated a quality regime and cost of undelivered energy similar to the one currently in effect. Each proposal described the assumptions on which the proposal was prepared, and the detailed studies supporting each scenario: projected demand, measurement campaign, environmental management plan, capital base study, study of the group of facilities required to meet the demand of a certain homogeneous market in terms of consumption with the lowest costs (known as “Sistemas Eléctricos Representativos”), contemplated investment plan, operating costs analysis, profitability rate analysis, resulting revenue requirement and electricity rate adjustment criterion.

We stated to the ENRE that the sustainability of the proposals depends on the actual occurrence of the assumptions and that any change in the criteria and/or parameters contemplated in our proposal could directly affect the economic and financial equation that supports each of the proposed options.

Furthermore, the calculations made in each of the three options took into account the implementation of the tariff in three equal semiannual installments.

We anticipate that, once the ENRE has reviewed our integral tariff proposal, it will hold a public hearing on the proposal, following which we expect that the ENRE will adopt a revised tariff scheme.

Based on the parameters of the RTI set forth in the Adjustment Agreement, we expect that this revised tariff scheme will maintain our then current distribution margins following the increases granted under the Adjustment Agreement (including any increases granted pursuant to the CMM) and include a cost adjustment mechanism similar to the CMM. Because the RTI is provided for in the Adjustment Agreement, which was approved by the Argentine Congress and ratified by the Argentine executive branch, we believe that the ENRE’s decision will not be subject to ratification procedures. See “Item 3. Key Information—Risk factors—Risks relating to our business—The Adjustment Agreement may be subject to challenge by Argentine consumer and other groups, which, if successful, could materially adversely affect our ability to implement any tariff adjustments granted by the Argentine government.”

The outcome of the renegotiation of our tariff structure, however, is highly uncertain as to its final result. We cannot make assurances that the renegotiation process will conclude in a timely manner or that the revised tariff structure will cover our costs and compensate us for inflation and currency devaluations in the future and provide us with an adequate return on our asset base. See “Item 3. Key Information—Risk factors—Risks relating to our business—Our business and prospects depend on our ability to negotiate further improvements to our tariff structure, including increases in our distribution margin.”

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 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.

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.

Electricity demand

The following table sets forth the amount of electricity generated in Argentina and electricity purchases by our company in each of the periods indicated.

Year	Electricity Demand(1)		Edenor Demand(2)		Edenor’s Demand as a% of Total Demand
	(in GWh)
1994		55,827		11,386		20.4	%
1995		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	%

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 4.1% per annum since 1994. The evolution of demand shows two growth periods interrupted by a slight decline in demand in 2002 attributable to the economic crisis, and a slight decrease registered in 2009, as a consequence of the international financial crises..

The following graph represents the annual growth of energy purchased to satisfy the demand of each operating area from 2000 through 2009:

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 5.8% per annum from 2003 through 2008. 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. Demand by residential customers increased by 5.5% in 2008, primarily due to the addition of new appliances and the relative low cost of energy, in real terms. In 2009, residential demand decreased by 2.7%, the first annual decline since the 2002 crisis, resulting from the slowdown in Argentina's economy this year. Demand by our high-demand customers and wheeling system customers has also experienced a decrease in 2009 due to a decrease in economic activity, particularly in the industrial sector (which includes wheeling customers), with demand decreasing by 2.2% in 2009.

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 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, energy demand has continued to increase during the three years it has been in effect.

On October 31, 2008, the Secretary of Energy adopted Resolution 1170/08, which excludes all the T1G, T2, T3 and T1R customers with bimonthly consumption levels over and above 1,000 KWh from receiving PUREE reward payments.

On March 2, 2010, the Secretary of Energy adopted Resolution 45/2010, which revised the calculation of the coefficient used to reward T1R customers with consumption levels below 1,000 KWh. This resolution decreases the rewards amount that these users will receive.

We cannot make assurances 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 recent or future tariff increases.”

Capacity demand

Demand for installed capacity to deliver electricity generally increases with growth in demand for electricity. However, since the 2001 crisis, with the exception of the two thermal generation plants described below, no new generation plants have been built. However, the Argentine government has implemented some economic incentives, such as those contained in the Energía Plus Program, 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—Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies.”

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 Secretary of Energy of the Ministry of Federal Planning, Public Investment and Services issued Resolution No. 1281/06 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 Empresa Distribuidora Sur S.A.(Edesur) 26%, of the construction costs of two high-tension 220 KV lines between the Central Puerto and Central Costanera generators and the Malaver network, which will provide access to an additional 600MW of energy from the Central Puerto and Central Costanera generators that currently cannot be distributed due to saturation of their grids. We estimate that we will be required to contribute an aggregate of approximately Ps. 39.3 million to construction of the Malaver network under the scheduled capital expenditures of the Adjustment Agreement The actual costs of this project will be determined at the time we receive and accept bids from third party contractors in connection with the project.

We cannot make assurances that these initiatives will be implemented in a timely manner or that they 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 for several reasons. First, different types of industrial activity by their nature have different seasonal peaks, such that the effect on them of climate factors is more varied. Second, industrial activity levels tend to be more significantly affected by the economy, and with different intensity levels depending on the industrial sector.

The chart below shows seasonality of demand in our residential customer category for the periods indicated.

The chart below shows seasonality of demand in our small commercial customer category for the periods indicated.

The chart below shows seasonality of demand in our medium commercial customer category for the periods indicated.

The chart below shows seasonality of demand in our 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 industrial users. 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 consumers along with electricity charges.

Framework agreement (Shantytowns)

We also supply electricity to low-income areas and shantytowns within our concession area under a special regime established pursuant to a framework agreement that we, Edesur and Empresa Distribuidora La Plata S.A. (Edelap) entered into in October 2003 with the Argentine government and the Province of Buenos Aires. The framework agreement contains terms similar to a prior framework agreement entered into in 1994. Pursuant to the new framework agreement, we are compensated for the service we provide to shantytowns by a commission in each shantytown that collects funds from residents of the shantytown. In addition, we are compensated by the municipality in which each shantytown is located, and, if there is any payment shortfall, by a special fund to which the Argentine government and the Province of Buenos Aires each contributes and to which each is severally liable. The new framework agreement took effect retroactively from September 1, 2002 and was to remain in effect through the earlier of December 31, 2006 or the full normalization of the shantytowns.

During November and December 2009, we received from the Argentine government payments for a total amount of Ps.20 million. In March and May 2010, we received from the Argentine government payments of Ps. 5.0 million and Ps.3.1 million, respectively.

In October 2006, we and the Province of Buenos Aires entered into a payment plan agreement with respect to amounts owed to us by the Province of Buenos Aires under the new framework agreement with respect to periods prior to 2007. As of December 31, 2009, the Government of the Province of Buenos Aires owed us Ps. 2.3 million of the total amount due under the payment plan 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 and purchases of materials and supplies, among others.

After depreciation, our highest expenses are typically salaries and social security taxes. We believe that future increases in our salary and social security expenses will result primarily from salary raises rather than from a significant growth in our work force, which we anticipate will remain relatively stable in the near future. We typically try to reach an agreement at the beginning of each fiscal year, although we have, in the past, implemented mid-year salary increases as necessary.

We seek to maintain a flexible cost base by achieving an optimal level of outsourcing, which allows us both to maintain a lower cost base and gives us the ability to respond more quickly to changes in our market. We had approximately 3,611 third-party employees under contract with our company as of December 31, 2009, 3,029 as of December 31, 2008 and 3,612 as of December 31, 2007. The number of third-party employees under contract does not directly relate to the number of third-party employees actually performing services for our company at any given time, as we only pay for the services of these employees on an as-needed basis. 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 Historical Results of Operations

The following table provides a summary of our operations for the years ended December 31, 2009, 2008 and 2007.

	Year ended December 31,
	2009			2008			2007
	(in millions of pesos)
Net sales	Ps.	2,077.9		Ps.	2,000.2		Ps.	1,981.9
Electric power purchases		(1,003.4	)		(934.7	)		(889.9	)
Gross margin		1,074.5			1,065.5			1,092.0
Transmission and distribution expenses		(548.6	)		(497.9	)		(417.6	)
Selling expenses		(158.9	)		(126.0	)		(120.6	)
Administrative expenses		(176.6	)		(138.7	)		(124.7	)
Net operating income		190.4			302.9			429.2
Financial income (expenses) and holding gains (losses)
Generated by assets		75.2			10.6			12.7
Generated by liabilities		(198.5	)		(197.9	)		(125.5	)
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and from the Payment Plan Agreement with the Province of Buenos Aires		3.4			13.5			(29.6	)
Adjustment to present value of notes		(5.2	)		(8.5	)		(21.5	)
Gain (loss) from the purchase and redemption of notes		81.4			93.6			(10.2	)
Adjustment to present value of purchase and redeemed notes		0			0			(8.6	)
Other income (expenses), net		23.2			(29.9	)		1.0
Net income before income tax		169.9			184.3			247.4
Income tax		(79.3	)		(61.2	)		(125.0	)
Net income	Ps.	90.6		Ps.	123.1		Ps.	122.5

Year ended December 31, 2009 compared with year ended December 31, 2008.

Net sales

Net sales increased Ps. 77.7 million (3.9%) to Ps. 2,077.9 million in the year ended December 31, 2009 from Ps. 2,000.2 million in the year ended December 31, 2008. Net energy sales represented approximately 98.0% of our net sales in 2009 and 98.3% in 2008; late payment charges, pole leases, and connection and reconnection charges represented the remaining balance. Energy sales increased by 4.7% (Ps. 93.5 million) to Ps. 2,094.3 million in the year ended December 31, 2009 from Ps. 2,000.8 million in the year ended December 31, 2008.

This increase in net sales was mainly due to:

An increase in the energy purchase price that, since October 2008 we have passed on to certain of our customers, due to the tariff schedule set by ENRE’s Resolution 628/08 (from June 2009 to August 2009, this increase was partially subsidized by the Argentine Government);

a 1.6% increase in capacity demand by certain of our customers;

a 2.7% increase in the number of T1R and T1G customers, which are billed for a fixed charge payable bimonthly; and

a Ps.7.9 million increase in late payment charges, pole leases, and connection and reconnection charges.

These increases were partially offset by:

a decrease in the volume of energy sold in 2009, compared to the volume of energy sold in 2008 (from 18,616 GWh in the year ended December 31, 2008 to 18,220 GWh in the year ended December 31, 2009), due to an increase in demand; and

an increase in ENRE penalties of Ps. 23.7 million.

Electric power purchases

The amount of electric power purchases increased 7.3% to Ps. 1,003.4 million for the year ended December 31, 2009 from Ps. 934.7 million in the year ended December 31, 2008, mainly due to an energy purchase price increase that we have passed through to certain of our customers (T1R with bimonthly consumption levels over 1,000 Kwh, T1G and T3 with capacity demand over 300 KW) since October 2008, in accordance with ENRE’s Resolution 628/08 .

The volume of energy purchased in the year ended December 31, 2009 was 17,040 GWh, which was 0.8% lower when compared to the year ended December 31, 2008, when we purchased 17,169 GWh (in both cases excluding wheeling system demand).

Energy losses increased to 11.9% in the year ended December 31, 2009 from 10.8% in the year ended December 31, 2008.

Gross margin

Our gross margin of Ps. 1,074.5 million in the year ended December 31, 2009 is in line with the one recorded in the year ended December 31, 2008 of Ps. 1,065.5 million.

Transmission and distribution expenses

Transmission and distribution expenses increased 10.2% to Ps. 548.6 million in the year ended December 31, 2009 from Ps. 497.9 million in the year ended December 31, 2008, mainly due to a Ps. 44.1 million increase in salaries and social security taxes, attributable to an increase in compensations granted in 2009, and a Ps. 16.1 million increase in outsourcing, mainly attributable to increases in contractors prices. These increases were partially offset by a decrease of Ps.15.4 million in technical assistance fees in 2009, due to the termination of the Technical Assistance Agreement certain technical assistance agreement that were in place.

The following table sets forth the principal components of our transmission and distribution expenses for the years indicated:

	Year ended December 31,
	2009				% on 2009 net sales			2008				% on 2008 net sales
	(in millions of Pesos)
Salaries and social security taxes	Ps.	219.8	40.1	%		10.6	%	Ps.	175.7	35.3	%		8.8	%
Supplies Consumption		34.3	6.3	%		1.7	%		31.9	6.4	%		1.6	%
Outsourcing		110.2	20.0	%		5.3	%		94.1	18.9	%		4.7	%
Depreciation of property, plant and equipment		166.8	30.4	%		8.0	%		166.0	33.3	%		8.3	%
Others		17.5	3.2	%		0.8	%		30.2	6.1	%		1.5	%
Total	Ps.	548.6	100.0	%		26.4	%	Ps.	497.9	100.0	%		24.9	%

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 26.1% to Ps. 158.9 million in the year ended December 31, 2009 from Ps. 126.0 million in the year ended December 31, 2008, primarily as a result of a Ps. 16.1 million increase in salaries and social security taxes, an increase of Ps. 5.4 million in outsourcing attributable to price increases in our outsourcing services contracts, an increase of Ps. 3.2 million in taxes and charges due to the increase in municipal taxes and the ENRE contributions and a Ps. 3.3 million increase in our allowance for doubtful accounts.

The following table sets forth the principal components of our selling expenses for the years indicated:

	Year ended December 31,
	2009				% on 2009 net sales			2008				% on 2008 net sales
	(in millions of Pesos)
Salaries and social security taxes	Ps.	51.6	32.5	%		2.5	%	Ps.	35.5	28.2	%		1.8	%
Allowance for doubtful accounts		18.6	11.7	%		0.9	%		15.3	12.1	%		0.8	%
Outsourcing		40.1	25.2	%		1.9	%		34.7	27.5	%		1.7	%
Taxes and charges		17.9	11.3	%		0.9	%		14.7	11.7	%		0.7	%
Others		30.8	19.3	%		1.4	%		25.8	20.5	%		1.3	%
Total	Ps.	158.9	100.0	%		7.6	%	Ps.	126.0	100.0	%		6.3	%

Administrative expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, systems operation, maintenance and advertising expenses. Administrative expenses increased 27.3% to Ps. 176.6 million in the year ended December 31, 2009 from Ps. 138.7 million in the year ended December 31, 2008, primarily as a result of a Ps. 12.4 million increase in salaries and social security taxes (attributable to an increase in compensations granted in 2009), a Ps. 5.9 million increase in computer services due to a renewal of certain of our hardware and software licenses and a Ps.5.5 million increase in tax on financial transactions due to the repurchase of our financial debt and the issuance of Class 8 Notes due 2013.

The following are the principal components of our administrative expenses for the years indicated:

	Year ended December 31,
	2009				% on 2009 net sales			2008				% on 2008 net sales
	(in millions of Pesos)
Salaries and social security taxes	Ps.	58.9	33.4	%		2.8	%	Ps.	46.5	33.5	%		2.3	%
Computer services		22.8	12.9	%		1.1	%		16.9	12.2	%		0.8	%
Outsourcing		15.1	8.5	%		0.7	%		11.4	8.2	%		0.6	%
Tax on financial transactions		32.5	18.4	%		1.6	%		27.0	19.5	%		1.3	%
Advertising expenses		16.8	9.5	%		0.8	%		12.8	9.2	%		0.6	%
Others		30.5	17.3	%		1.5	%		24.1	17.4	%		1.3	%
Total	Ps.	176.6	100.0	%		8.5	%	Ps.	138.7	100.0	%		6.9	%

Net operating income

Our net operating income decreased significantly from Ps. 302.9 million in the year ended December 31, 2008 to Ps. 190.4 million in the year ended December 31, 2009. This decrease is largely due to a 15.9% increase in the operating expenses, which is attributable to a Ps. 50.7 million increase in transmission and distribution expenses, a Ps. 37.9 million increase in administrative expenses and a Ps. 32.9 million increase in selling expenses.

Financial income (expenses) and holding gains (losses)

Financial income and holding gains generated by assets represented Ps. 75.2 million in the year ended December 31, 2009, compared to Ps. 10.6 million in the year ended December 31, 2008. This increase of Ps. 64.6 million is primarily due to:

a Ps. 44.9 million increase in holding gains resulting from the repurchases and valuation of our 2017 and 2016 notes; and

a Ps. 13.3 million increase in the exchange gains on dollar denominated assets due to an increase of the peso-dollar exchange rate.

Financial expenses generated by liabilities which include financial interest, exchange results and other expenses, were in line with the previous year, from Ps. 197.9 million in the year ended December 31, 2008 to Ps. 198.5 million in the year ended December 31, 2009.

Adjustment to present value of notes

We record our financial debt on our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money at the initial measurement. The adjustment to present value of the future cash flows of our oustanding debt issued appliying a market annual interest rate of 10.5%, generated an accounting loss of Ps. 8.5 million in the year ended December 31, 2008 and accounting non-cash loss of Ps. 5.2 million in the year ended December 31, 2009.

Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires

The retroactive portion of the February 2007 tariff increase, which amounts in aggregate to Ps. 218.6 million, is being invoiced in 55 consecutive monthly installments to our non-residential customers, starting in February 2007. As of December 31, 2009, Ps. 149.4 million of the retroactive tariff adjustment has been invoiced to our non-residential customers.

In addition, in October 2006, we entered into a payment plan agreement with the Province of Buenos Aires with respect to amounts owed to us by the Province of Buenos Aires under the 2006 framework agreement. The amounts due under the payment plan agreement are being invoiced in 18 installments, starting in January 2007. As of December 31, 2009, the Province of Buenos Aires owed us Ps. 2.3 million.

In accordance with Argentine GAAP, we account for these long term financing plans at their net present value, which we calculate at a discount rate of 10.5% for the retroactive tariff increase and 19.62% for the payment plan agreement, recording the resulting non-cash charge as an adjustment to present value of these two receivables. We recorded a total non-cash loss of Ps. 3.4 million in the year ended December 31, 2009 as adjustment to present value of these receivables, compared to a loss of Ps. 13.5 million in the year ended December 31, 2008.

Gain from repurchase of notes

During 2009 we repurchased and cancelled at market prices U.S. $32.2 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and repurchased U.S. $53.8 million principal amount of our outstanding Fixed Rate Par Notes due 2017. This transaction generated a net gain of Ps. 81.4 million.

Other income (expenses), net

Other income (expenses), net, includes mainly voluntary retirements, severance payments and accrual for lawsuits. We recorded a gain of Ps. 23.2 million in the year ended December 31, 2009, compared to a loss of Ps. 29.9 million in the year ended December 31, 2008, mainly comprised by due to the recovery of the allowance for doubtful accounts (Ps. 21.2 million) resulting from the approval of the New Framework Agreement Addendum that we entered into with the Argentine government and the Province of Buenos Aires, and the recovery of the allowance for tax contingencies (Ps. 23.4 million) due to our registration in the tax regularization plan established in Law n°26.476, both partially offset by an increase in provisions for accrued litigation (Ps. 15.5 million), voluntary retirements bonuses (Ps. 5.4 million) and severance paid (Ps.4.4 million).

Income tax

We recorded an income tax charge of Ps. 79.3 million in the year ended December 31, 2009, compared to a charge of Ps. 61.2 million in the year ended December 31, 2008.

Net income

We recorded net income of Ps. 90.6 million in the year ended December 31, 2009, compared to net income of Ps. 123.1 million in the year ended December 31, 2008. This decrease of 26.4% is primarily due to the decrease in the net operating income, partially compensated by better financial results.

Year ended December 31, 2008 compared with year ended December 31, 2007.

Net sales

Net sales increased Ps. 18.3 million (0.9%) to Ps. 2,000.2 million in the year ended December 31, 2008 from Ps. 1,981.9 million in the year ended December 31, 2007. Net energy sales represented approximately 98.3% of our net sales in 2008 and 2007; late payment charges, pole leases, and connection and reconnection charges represented the remaining balance. Energy sales increased by 1.4% (Ps. 28.1 million) to Ps. 2,000.8 million in the year ended December 31, 2008 from Ps. 1,972.7 million in the year ended December 31, 2007. This variation was significantly affected by the recognition of the retroactive portion of the February 2007 VAD increase (Ps. 218.6 million) during the first quarter of 2007. The increase is being invoiced in 55 equal and consecutive monthly installments, starting in February 2007. Excluding this adjustment, our energy sales in 2007 would have been Ps. 1,754.1 million, representing an increase in energy sales from 2007 to 2008 of 14.1% (Ps. 246.7 million) compared to the energy sales recorded in 2008. This increase in energy sales was mainly due to:

the application of a 17.9% increase in our VAD since July 1, 2008 authorized by the ENRE pursuant to the CMM for the period from May 2007 to October 2007, which resulted in tariff increases of 0% to 30% for our customers, depending on their level of consumption;

the retroactive application of the 17.9% VAD increase pursuant to the CMM, which represented a Ps. 84.6 million increase in our net sales in 2008;

the energy purchase price increase passed on to some of our customers since October 2008; and

a 4.2% increase in the volume of energy sold in 2008, compared to the volume of energy sold in 2007 (from 17,886 GWh in the year ended December 31, 2007 to 18,616 GWh in the year ended December 31, 2008). The increase in volume is attributable to a 2.3% increase in the average GWh consumption per customer and a 1.9% increase in the number of our customers in 2008.

Electric power purchases

The amount of electric power purchases increased 5.0% to Ps. 934.7 million for the year ended December 31, 2008 from Ps. 889.9 million in the year ended December 31, 2007, mainly due to an energy purchase price increase applied to some of our customers (T1R with bimonthly consumption levels over 1,000 Kwh, T1G and T3 with capacity demand over 300 KW) since October 2008. This effect was slightly offset by the transition of a number of our industrial customers (for whom we purchase energy) to the wheeling system (where participants purchase energy directly).

The volume of energy purchased in the year ended December 31, 2008 was 17,169 GWh, which was in line with the year ended December 31, 2007, when we purchased 17,122 GWh (in both cases excluding wheeling system demand).

Energy losses decreased to 10.8% in the year ended December 31, 2008 from 11.6% in the year ended December 31, 2007.

Gross margin

Our gross margin decreased 2.4% to Ps. 1,065.5 million in the year ended December 31, 2008 from Ps. 1,092.0 million in the year ended December 31, 2007. This decrease is mainly due to the recording of the retroactive portion of the February 2007 VAD, resulting in a positive impact of Ps. 218.6 million during 2007. Excluding this effect, our gross margin during that year would have been Ps. 873.4 million, and comparing this amount with the gross margin recorded in 2008, the increase in the gross margin would represent 22.0%. This increase is attributable to an increase in the volume of energy sold and to the application of the VAD increase and the CMM adjustment described above.

Transmission and distribution expenses

Transmission and distribution expenses increased 19.2% to Ps. 497.9 million in the year ended December 31, 2008 from Ps. 417.6 million in the year ended December 31, 2007, mainly due to a Ps. 49.9 million increase in salaries and social security taxes, attributable to an increase in compensation in the second half of the year, a Ps. 19.9 million increase in outsourcing, mainly attributable to greater activity by our contractors, and to a Ps. 9.0 million increase in the consumption of materials associated with preventive maintenance due to an increase in material prices and an increase in maintenance activity.

The following table sets forth the principal components of our transmission and distribution expenses for the years indicated:

	Year ended December 31,
	2008				% on 2008 net sales			2007				% on 2007 net sales (excluding unbilled retroactive adjustment)(1)
	(in millions of Pesos)
Salaries and social security taxes	Ps.	175.7	35.3	%		8.8	%	Ps.	125.8	30.1	%		7.1	%
Supplies		31.9	6.4	%		1.6	%		22.9	5.5	%		1.3	%
Outsourcing		94.1	18.9	%		4.7	%		74.2	17.8	%		4.2	%
Depreciation of property, plant and equipment		166.0	33.3	%		8.3	%		169.5	40.6	%		9.6	%
Others		30.2	6.1	%		1.5	%		25.2	6.0	%		1.5	%
Total	Ps.	497.9	100.0	%		24.9	%	Ps.	417.6	100.0	%		23.7	%

Calculated based on net sales as of December 31, 2007 excluding the retroactive portion of the February 2007 VAD increase (Ps. 218.6 million), which results in net sales of Ps. 1,763.3 million. The retroactive tariff increase is being invoiced in 55 equal and consecutive monthly installments, starting on February 2007. As of December 31, 2008, we have billed Ps. 99.7 million.

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 4.5% to Ps. 126.0 million in the year ended December 31, 2008 from Ps. 120.6 million in the year ended December 31, 2007, primarily as a result of a Ps. 10.1 million increase in salaries and social security taxes, an increase of Ps. 5.3 million in outsourcing attributable to price increases in our outsourcing services contracts and an increase of Ps. 3.6 million in taxes and charges due to the increase in municipal and the ENRE contributions. These increases were partially offset by a decrease of Ps. 15.4 million in our allowance for doubtful accounts attributable to the recovery of the allowance resulting from the supply of electricity to shantytowns that are covered by the new framework agreement, signed in June 2008.

The following table sets forth the principal components of our selling expenses for the years indicated:

	Year ended December 31,
	2008				% on 2008 net sales			2007				% on 2007 net sales (excluding unbilled retroactive adjustment)(1)
	(in millions of Pesos)
Salaries and social security taxes	Ps.	35.5	28.2	%		1.8	%	Ps.	25.4	21.0	%		1.4	%
Allowance for doubtful accounts		15.3	12.1	%		0.8	%		30.7	25.5	%		1.7	%
Outsourcing		34.7	27.5	%		1.7	%		29.4	24.4	%		1.7	%
Taxes and charges		14.7	11.7	%		0.7	%		11.1	9.2	%		0.6	%
Others		25.8	20.5	%		1.3	%		24.0	19.9	%		1.4	%
Total	Ps.	126.0	100.0	%		6.3	%	Ps.	120.6	100.0	%		6.8	%

Calculated based on net sales as of December 31, 2007 excluding the retroactive portion of the February 2007 VAD increase (Ps. 218.6 million) , which results in net sales of Ps. 1,763.3 million. The retroactive tariff increase is being invoiced in 55 equal and consecutive monthly installments, starting on February 2007. As of December 31, 2008, we have billed Ps. 99.7 million.

Administrative expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, systems operation, maintenance and advertising expenses. Administrative expenses increased 11.2% to Ps. 138.7 million in the year ended December 31, 2008 from Ps. 124.7 million in the year ended December 31, 2007, primarily as a result of a Ps. 9.9 million increase in salaries and social security taxes (attributable to an increase in compensation in the second half of the year) and a Ps. 5.5 million increase in computer services due to a renovation of the hardware and software. These increases were partially offset by a decrease of Ps. 4.5 million in taxes on financial transactions and a Ps. 2.5 million decrease in advertising expenses (including institutional relations, radio advertising and community service programs).

The following are the principal components of our administrative expenses for the years indicated:

	Year ended December 31,
	2008				% on 2008 net sales			2007				% on 2007 net sales (excluding unbilled retroactive adjustment)(1)
	(in millions of Pesos)
Salaries and social security taxes	Ps.	46.5	33.5	%		2.3	%	Ps.	36.5	29.3	%		2.1	%
Computer services		16.9	12.2	%		0.8	%		11.4	9.2	%		0.6	%
Outsourcing		11.4	8.2	%		0.6	%		10.9	8.7	%		0.6	%
Tax on financial transactions		27.0	19.5	%		1.3	%		31.5	25.3	%		1.8	%
Advertising expenses		12.8	9.2	%		0.6	%		15.4	12.3	%		0.9	%
Others		24.1	17.4	%		1.3	%		19.0	15.2	%		1.1	%
Total	Ps.	138.7	100.0	%		6.9	%	Ps.	124.7	100.0	%		7.1	%

Calculated based on net sales as of December 31, 2007 excluding the retroactive portion of the February 2007 VAD increase (Ps. 218.6 million) , which results in net sales of Ps. 1,763.3 million. The retroactive tariff increase is being invoiced in 55 equal and consecutive monthly installments, starting on February 2007. As of December 31, 2008, we have billed Ps. 99.7 million.

Net operating income (loss)

Our net operating income decreased significantly from Ps. 429.1 million in the year ended December 31, 2007 to Ps. 302.9 million in the year ended December 31, 2008. This decrease is largely due to the recognition of the retroactive portion of the February 2007 VAD increase (Ps. 218.6 million) during the first quarter of 2007. Excluding this adjustment, our net operating income in 2007 would have been Ps. 210.6 million, reflecting an increase in net operating income from 2007 to 2008 of 43.8%. This increase was mainly due to the CMM adjustments described above and, to a lesser extent, to the increase in the volume of energy and power capacity sold, which more than offset a Ps. 80.3 million increase in transmission and distribution expenses, a Ps. 14.1 million increase in administrative expenses and a Ps. 5.4 million increase in selling expenses.

Financial income (expenses) and holding gains (losses)

Financial income and holding gains generated by assets represented Ps. 10.6 million in the year ended December 31, 2008, compared to Ps. 12.7 million in the year ended December 31, 2007. This decrease of Ps. 2.1 million is primarily due to a decrease of Ps. 3.6 million in interest gained.

Financial expenses generated by liabilities which include financial interest, exchange results and other expenses, were Ps. 197.9 million in the year ended December 31, 2008 compared to Ps. 125.5 million in the year ended December 31, 2007. This Ps. 72.4 million increase is primarily the result of:

a Ps. 20.8 million increase in interest expenses, mainly resulting from an increase in the interest rates on our debt in 2008 (an average of 9.1%) as compared to 2007 (an average of 4.9%); and

a Ps. 62.8 million increase in exchange losses (Ps. 92.7 million in the year ended December 31, 2008, compared to the Ps. 29.9 million in the year ended December 31, 2007), due to a 9.6% variation in the exchange rate of Argentine Pesos for U.S. Dollars.

These increases were partially offset by a decrease in financial expenses of Ps. 11.0 million in 2008, as compared to 2007.

Adjustment to present value of notes

We record our financial debt on our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money. In 2006, we restructured all of our outstanding debt after receiving approval from holders of 100% of our defaulted debt. We did not record any adjustment to present value before 2006 because our financial debt was in default. The adjustment to present value of the future cash flows of the debt issued in the restructuring, using a market annual interest rate of 10.5%, generated an accounting loss of Ps. 21.5 million in the year ended December 31, 2007 and an accounting loss of Ps. 8.5 million in the year ended December 31, 2008 related to the non-cash adjustment to present value of payments due on our debt instruments issued in April 2006.

Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires

The retroactive portion of the February 2007 tariff increase, which amounts in aggregate to Ps. 218.6 million, is being invoiced in 55 consecutive monthly installments to our non-residential customers, starting in February 2007. As of December 31, 2008, Ps. 99.7 million of the retroactive tariff adjustment has been invoiced to our non-residential customers.

In addition, in October 2006, we entered into a payment plan agreement with the Province of Buenos Aires with respect to amounts owed to us by the Province of Buenos Aires under the 2006 framework agreement. The amounts due under the payment plan agreement are being invoiced in 18 installments, starting in January 2007. As of December 31, 2008, the Province of Buenos Aires owed us Ps. 2.3 million.

In accordance with Argentine GAAP, we account for these long term financing plans at their net present value, which we calculate at a discount rate of 10.5%, recording the resulting non-cash charge as an adjustment to present value of these two receivables. We recorded a total non-cash charge of Ps. 13.5 million in the year ended December 31, 2008 as adjustment to present value of these receivables, compared to a loss of Ps. 29.6 million in the year ended December 31, 2007.

Gain from repurchase of notes

In several transactions in 2007, we repurchased U.S. $43.7 million principal amount of our outstanding Fixed Rate Par Notes due 2016. In addition, we repurchased and redeemed U.S. $240.0 million principal amount of our outstanding Discount Notes due 2014. These transactions generated a net loss of Ps. 18.8 million.

During 2008 the Company repurchased and cancelled at market prices U.S. $32.5 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and repurchased U.S. $17.5 million principal amount of our outstanding Fixed Rate Par Notes due 2017. When compared to the fixtures of 2007, this transaction generated a net gain of Ps. 93.6 million.

Other income (expenses), net

Other income (expenses), net, includes mainly voluntary retirements, severance payments and accrual for lawsuits. We recorded a loss of Ps. 29.8 million in the year ended December 31, 2008, compared to a gain of Ps. 1.0 million in the year ended December 31, 2007, mainly comprised of voluntary retirements (Ps. 31.3 million) due to an employee reduction in July 2008 and accrued litigations (Ps. 19.9 million), which were partially offset (Ps. 14.1 million) by the recovery of the allowance for doubtful accounts due to the fact that a new framework agreement had been signed in June 2008.

Income tax

We recorded an income tax charge of Ps. 61.2 million in the year ended December 31, 2008, compared to a charge of Ps. 125.0 million in the year ended December 31, 2007.

Net income

We recorded net income of Ps. 123.1 million in the year ended December 31, 2008, compared to net income of Ps. 122.5 million in the year ended December 31, 2007. The 2008 income is in line with the net income of 2007. However, in 2007 we registered a gain from the recording of the retroactive tariff increase described above, which resulted in a positive impact of Ps. 218.6 million for 2007. This increase in net income from 2007 to 2008 was a result of a positive net operating income, which was partially offset by an increase in financial results and exchange rates effects. Losses due to exchange rate effects were in turn partially compensated for by the gain resulting from the debt repurchases.

LIQUIDITY AND CAPITAL RESOURCES

Sources and uses of funds

Historically, our sources of liquidity have been cash flow from operations and long-term borrowings. However, our ability to access the capital and bank loan markets was effectively eliminated as a result of the economic crisis in Argentina and our resulting default on our then-outstanding financial debt, as well as the Argentine government’s imposition of transfer restrictions on payments of foreign financial obligations. We have recovered the ability to incur new financial debt with the closing of our financial debt restructuring in April 2006. See “—Debt.”

We expect to make capital expenditures amounting to approximately U.S. $100 million on average per year over the next five years. Our principal uses of cash are expected to be capital expenditures and our financial debt service obligations. We expect that our principal source of liquidity will be cash flow from operations and, to a lesser extent, short-term and long-term borrowings, which we expect will be sufficient to meet our capital requirements in the near future. In particular, we may need to incur indebtedness in the long-term to refinance a portion of our outstanding debt as it becomes due. However, we are subject to limitations on our ability to incur new debt and to use our excess cash under the terms of our restructured debt instruments. See “—Debt.”

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 31,
	2009			2008			2007
	(in millions of Pesos)
Cash and cash equivalents at the beginning of the year	Ps.	126.4		Ps.	101.2		Ps.	32.7
Net cash provided by operating activities		668.0			547.5			427.2
Of which:
Financial interest paid, net of interest capitalized		(76.8	)		(62.7	)		(25.5	)
Net cash used in investing activities		(404.2	)		(325.4	)		(336.9	)
Net cash used in financing activities		(161.8	)		(197.0	)		(21.8	)
Cash and cash equivalents at the end of the year	Ps.	228.4		Ps.	126.4		Ps.	101.2

Net cash provided by operating activities

Net cash provided by operating activities increased by 22.0% to Ps. 668.0 million in the year ended December 31, 2009, compared to Ps. 547.5 million in the year ended December 31, 2008. This increase is attributable to:

positive adjustments to net income for non-cash charges in the year ended December 31, 2009, including Ps. 178.6 million in exchange difference, interest and penalties on loans, Ps. 175.4 million for depreciation of property, plant and equipment and Ps. 79.3 million for income taxes, which were partially offset by negative adjustments of Ps. 81.4 million in gains from the repurchase of notes, Ps. 35.5 million in the recovery of the contingencies allowance and Ps. 26.9 million in the recovery of the allowance for doubtful accounts, and

a positive change in assets and liabilities of Ps. 239.1 million increase in other liabilities, a Ps. 48.1 million decrease in trade accounts receivable, and Ps.27.2 million increase in salaries and social securities taxes. These increases were partially offset by a decrease of Ps. 56.9 million in fiscal charges.

Net cash provided by operating activities increased by 28.2% to Ps. 547.5 million in the year ended December 31, 2008, compared to Ps. 427.2 million in the year ended December 31, 2007. This increase is attributable to positive adjustments to net income for non-cash charges in the year ended December 31, 2008, including Ps. 232.7 million in exchange difference, interest and penalties on loans, Ps. 170.3 million for depreciation of property, plant and equipment, Ps. 61.2 million for income taxes, and Ps. 8.5 million for adjustment to present value of notes, among others, which were added to a positive change in assets and liabilities of Ps. 259.9 million in the year ended December 31, 2008. This positive change in operating assets and liabilities is primarily due to a Ps. 88.2 million decrease in accounts receivable related to the recognition of the retroactive portion of the VAD increase in the year ended December 31, 2008, an increase of Ps. 93.2 million in other liabilities and accrual litigation and, an increase of Ps. 50.3 million in salaries and social securities taxes, and to a lesser extent, an increase of Ps. 7.4 million in supplies, a Ps. 26.4 million increase in fiscal charges and a Ps. 27.8 million increase in trade accounts payable. These increases were partially offset by an increase of Ps. 33.4 million in other receivables.

Net cash used in investing activities

Net cash used in investing activities increased 24.2% to Ps. 404.3 million for the year ended December 31, 2009 from Ps. 325.4 million for the year ended December 31, 2008. Over 85% of the total investments were made in supplies (Ps. 280.8 million) and network maintenance and improvements (Ps. 67.2 million).

Net cash used in investing activities decreased by 3.4% to Ps. 325.4 million for the year ended December 31, 2008 from Ps. 336.9 million for the year ended December 31, 2007. No significant changes were registered in investing activities. In 2008, the principal investments were made in supplies, as in 2007, and in 2008 less investment was directed toward network maintenance and improvements than in 2007.

The changes in net cash used in investing activities in each of these periods were primarily due to variations in our capital expenditures in accordance with the investment plan initially contemplated by the Adjustment Agreement. See “—Capital expenditures.”

Net cash used in financing activities

In the year ended December 2009, we used Ps. 175.4 million primarily to repurchase Senior Notes due 2017 and Fixed Rate Par Notes due 2016.

In the year ended December 2008, we used Ps. 122.9 million to repurchased Senior Notes due 2017 and Fixed Rate Par Notes due 2016. In addition, part of our cash position was used to create the Edenor Financial Trust for a total amount of Ps. 67.9 million. See “—Debt—Financial Trust Agreement.” We also used Ps. 6.1 million to repurchase shares at market prices at an average price of Ps. 0.65 per share.

On April 30, 2007, we completed a capital increase (in the form of an initial public offering in local and international markets) pursuant to which we received Ps. 181.8 million in cash contributions. In May 2007, we used a portion of the proceeds of the capital increase (Ps. 110.9 million) to repurchase part of our outstanding financial debt.

On October 9, 2007 we issued our U.S. $220,000,000 10.5% Senior Notes due 2017. We used the proceeds from that offering to repurchase U.S. $204.0 million aggregate principal amount of our Discount Notes due 2014, which were redeemed in full through several transactions during the period from October through December 2007. We used the balance of the proceeds from the October debt offering or capital expenditures and working capital purposes.

Capital expenditures

Our concession does not require us to make mandatory capital expenditures. Our 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 facilities and 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.

We are currently subject to limitations on the amount of non-mandatory capital expenditures we may make in a given year pursuant to the terms of our restructured debt instruments. Under these debt instruments, we may make the following amounts (or its equivalent in other currencies) of non-mandatory capital expenditures:

U.S. $90 million in each of 2010 and 2011,

U.S. $86 million in 2012,

U.S. $90 million in 2013,

U.S. $86 million in 2014,

U.S. $87 million in 2015, and

U.S. $90 million in 2016.

In addition, we may carry over unused amounts of permitted capital expenditures and use these amounts to make additional capital expenditures in future years, so long as these additional capital expenditures do not exceed the amount of permitted capital expenditures for the prior year. 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.

We believe that the limits on capital expenditures in the restructuring indenture currently exceed our anticipated expenditures during each specified period.

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,
	2009		2008		2007
	(in millions of Pesos)
Supplies	Ps.	280.8	Ps.	235.6	Ps.	235.3
Network maintenance and improvements		67.2		57.6		70.0
Legal requirements(1)		15.8		12.2		12.3
Communications and telecontrol		13.7		8.7		7.0
Others		26.8		21.8		18.1
Total	Ps.	404.3	Ps.	335.7	Ps.	342.7

(1)	Capital expenditures required to be made to comply with the ENRE quality standard and other regulations.

In 2009, in accordance with our capital expenditure program, we invested Ps. 404.3 million. In order to keep pace with the growth in our customer’s base (our customer base increased 2.7% in 2009, despite a 2.1% decrease in energy sales by volume during that period) an important portion of our investments were designed to meet this increase and to improve our grid. In addition, we made investments in order to meet our quality standards levels and to maintain the level of past due receivables.

Our capital expenditure program for 2010 contemplates total expenditures of Ps. 400 million. We can give no assurance that actual expenditure will not be lower or exceed our current estimate.

Debt

The economic crisis in Argentina had a material adverse effect on our operations. The devaluation of the Argentine 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 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 debt. On September 26, 2005, our board of directors decided to suspend interest payments on our debt until the restructuring of this 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 will enable us to service our debt. We believe that the restructuring was the most effective and equitable means of addressing our financial difficulties for the benefit of the company and 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 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:

U.S. $123,773,586 Fixed Rate Par Notes due December 14, 2016 (of which U.S. $15.3 million remains outstanding as of the date of this annual report), 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 (of which U.S. $12.6 million remains outstanding as of the date of this annual report), 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 (as of the date of this annual report, none of our Discount Notes due 2014 were outstanding), 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.

We are subject to a number of restrictive covenants under the terms of the restructuring notes, including the following:

limitations on our ability to sell or pledge assets or make investments in third parties;

limitations on our ability to incur new indebtedness;

limitations on our ability to make capital expenditures;

limitations on our ability to pay dividends;

limitations on our ability to repurchase our common shares; and

limitations on our ability to enter into transactions with shareholders and affiliates other than on an arm’s length basis.

Upon a change of control (as defined in the indenture for the restructuring notes), each holder of the restructuring notes will have the right to require us to repurchase all or a portion of that holder’s notes at par plus accrued and unpaid interest and additional amounts (as defined in the indenture), if any, pursuant to an offer made by us on terms set forth in the indenture.

In addition, the terms of the restructuring notes require us to apply our excess cash (as defined in the indenture for the restructuring notes) to specific uses, including prepayments or repurchases of the notes. The indenture for the restructuring notes defines excess cash for these purposes as our earnings before interest expenses, taxes, depreciation and amortization charges (EBITDA, as defined in the indenture for the restructuring notes) during a given six-month period, after adjustments to reflect negative or positive changes in our working capital and deductions for borrowings, scheduled debt payments, prepayments, redemptions or repurchases of our debt, capital expenditures, certain permitted investments, taxes and other cash expenses, in each case during the same six-month period. If we generate excess cash (as defined in the indenture) during any six-month period in which our leverage ratio (defined in the indenture as our total indebtedness over our 12-month EBITDA) is greater than 2.5, we will be required to use a portion of our excess cash to prepay or repurchase the restructuring notes. If our leverage ratio is:

greater than 2.5, but not greater than 3.0, we must apply 50% of our excess cash to prepay or repurchase restructuring notes;

greater than 3.0, but not greater than 3.5, we must apply 75% to prepay or repurchase restructuring notes, unless we commit to use 50% of the excess cash for capital expenditures, in which case we must apply the remaining 50% to prepay or repurchase restructuring notes, and

greater than 3.5, we must apply all of our excess cash to prepay or repurchase restructuring notes.

We are entitled to use any excess cash not allocated to debt prepayments or repurchases as set forth above for any purpose at our discretion, including dividend payments. In addition, most of the restrictive covenants set forth in the restructuring indenture will be suspended or adjusted if we attain an international investment grade rating on our long-term debt or if our leverage ratio (as defined in the indenture) is equal or lower to 2.5.

We are currently in compliance with all of our financial debt covenants.

During the year ended December 31, 2007, through various market transactions, we repurchased U.S. $43.7 million of our outstanding Fixed Rate Par Notes due 2016 and repurchased and redeemed U.S. $240 million Discount Notes due 2014.

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. The terms of the senior notes are substantially similar to those of our restructuring notes, except that the senior notes are not subject to the covenants relating to mandatory prepayments with excess cash and limitation on capital expenditures. 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. $32.5 million principal amount of our Fixed Rate Par Notes due December 2016 and repurchased U.S. $17.5 million Senior Notes due 2017, in several transactions.

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 Argentine Pesos and accrue interest on a quarterly basis at a rate equal to the private BADLAR, as published by the Argentine Central Bank, for each such quarter plus 6.75%. Principal on the notes is payable in 13 quarterly installments, starting on May 7, 2010.

During 2009, we repurchased and cancelled U.S. $32.2 million Fixed Rate Par Notes due 2016 and 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.

As of the date of this annual report, we have in our portfolio U.S. $65.3 million Senior Notes due 2017.

Line of Credit – Banco Nación Loans

In order to optimize our management of working capital, in December 2008, as part of our line of credit with Banco Nación, we received a two-year loan for Ps. 50 million, with no principal payments due for the first six months followed by 18 consecutive monthly payments of amortized principal. We make monthly interest payments on accrued interest at a floating rate equal to BAIBOR, as published by the Argentine Central Bank, plus 5%.

The outstanding principal amount as of December 31, 2009 was Ps.33.3 million.

Discretionary Trust Agreement

In September 2008, we entered into a twenty-year irrevocable and discretionary trust agreement with Macro Bank Limited. Under the terms of the trust, in October 2008 we assigned to the trust, and the trust manages in accordance with the terms of the trust agreement, certain liquid assets, including cash, in an initial amount of up to U.S. $23.9 million. On November 3 and 11, 2008, we carried out an additional assignment of liquid assets for U.S. $2 million and U.S. $1 million, respectively.

The funds of the trust were used to repurchase Par Notes due in 2016 with a nominal value of U.S. $21.7 million.

On September 3, 2009, we liquidated the Discretionary Trust and the U.S. $ 24.5 million principal amount of Notes held by the Trust were transferred to us.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of our significant accounting policies is included in notes 2 and 3 of our audited financial statements, which are included 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 and require management’s most subjective judgments. Our most critical accounting policies and estimates are described below.

Allowance for doubtful accounts

Our trade receivables include services billed but not collected, and services accrued but not billed as of the end of each year, net of an allowance for doubtful accounts. The allowance for doubtful accounts is assessed based on the historical levels of collections for services billed through the end of each year and subsequent collections. Future adjustments to the allowance may be necessary if future economic conditions differ substantially from the assumptions used in the assessment for each year. The related charges to the allowance for doubtful accounts are included in selling expenses.

	Year ended December 31,
	2009			2008			2007
	(in millions of Ps. )
Allowance for doubtful accounts:
Beginning balance	Ps.	33.1		Ps.	40.0		Ps.	25.6
Additions		20.3			23.6			30.1
Retirements		(6.8	)		(6.5	)		(15.7	)
Recovery		(26.9	)		(24.0	)		—
Ending balance	Ps.	19.7		Ps.	33.1		Ps.	40.0

As of December 31, 2009, 2008 and 2007, the allowance for doubtful accounts was Ps. 19.7 million, Ps. 33.1 million and Ps. 40.0 million, respectively. During 2009, 2008 and 2007, the additions to the allowance for doubtful accounts amounted to Ps. 20.3 million, Ps. 23.6 million and Ps. 30.1 million, respectively, and the retirements amounted to Ps. 6.8 million, Ps. 6.5 million and Ps. 15.7 million, respectively. The recovery of Ps.26.9 million in 2009 and Ps.24.0 million in 2008, was due to the new framework agreement that we signed with and was ratified by the Argentine government and the Province of Buenos Aires. See “Item 4. Information on the Company—Framework agreement (Shantytowns).”

Revenue recognition

We recognize our revenues from operations, which relate primarily to electricity distribution, on an accrual basis. These revenues include energy supplied (whether billed or unbilled) at year-end, valued on the basis of applicable tariffs. We also recognize revenues from other components of our distribution services, such as new connections, pole rentals and the transportation of energy to other distribution companies. We recognize revenues when our revenue earning process has been substantially completed, the amount of revenues may be reasonably measured and we believe we are entitled to enjoy the economic benefit derived from such revenues. During 2007, we recognized the retroactive increase in revenues resulting from the tariff increase pursuant to the ratification of the Adjustment Agreement when the ENRE issued its resolution authorizing our new tariff schedule with respect to non-residential customers for the period from November 2005 through January 31, 2007, and subsequently published such resolution in the Argentine Official Gazette on February 5, 2007.

On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the Secretary of Energy. This resolution established that the portion of our tariff relating to energy purchases, which we ordinarily pass through to our customers, as well as the amounts corresponding to the CMM for the period from May 2006 through April 2007, would have to be deducted from the funds collected under the PUREE, until the regulatory authorities adjusted our tariff in order to compensate us for these amounts. The resolution also establishes that the CMM adjustment for the period from May 2006 through April 2007, in effect as of May 1, 2007, amounts to 9.63%. Additionally, on October 25, 2007 the ENRE issued Resolution Nº 710/2007, which approves the use of the PUREE as a CMM compensation mechanism. In accordance with this resolution, we recognize the revenues resulting from the 9.63% CMM adjustment and collected through the PUREE funds.

In July 2008, we obtained an increase of approximately 17.9% to our distribution margin, which we incorporated into our tariff structure. This increase represented the 9.63% CMM increase corresponding to the period from May 2006 to April 2007 and the 7.56% CMM increase corresponding to the period from May 2007 to October 2007. These CMM adjustments were included in our tariff structure as of July 1, 2008 and resulted in an average increase of 10% for customers in the small commercial, medium commercial, industrial and wheeling system categories and an average increase of 21% for residential customers with bimonthly consumption levels over 650 kWh. As of December 31, 2008, we recorded a total amount of Ps. 84.6 million in net sales for these two CMM adjustments.

Impairment of long-lived assets

We periodically evaluate the carrying value of our long-lived assets for impairment. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recovered. The value in use was determined as of December 31, 2009 primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. We have made projections in order to determine the recoverable value of our non current assets based on the estimated outcome of the RTI. No impairment was recognized during the years presented. We do not foresee likely circumstances in the near future that would result in the recognition of an impairment of long-lived assets.

Accrued litigation

We recognize contingent liabilities with respect to existing or potential claims, lawsuits and other legal proceedings and record an accrual for litigation when it is probable that future costs will be incurred and these costs can be reasonably estimated. These accruals are based on the most recent developments, our assessment of the likely outcome of the litigation and our counsel’s advice in dealing with, litigating and settling this and other similar legal matters. Changes to the accrual may be necessary if future events differ substantially from the assumptions used in the assessment for each period. In 2009, we recorded a net decrease to our accrual for litigation of Ps. 24.9 million basically due to recovery of a fiscal contingency as a consequence of entering into a tax payment plan agreement offered pursuant to law N° 26476. This amount is net from the increase generated by new litigation and changes in our evaluation of existing litigation. Our accrual for litigation amounted to Ps. 72.9 million at December 31, 2009, Ps. 97.8 million at December 31, 2008 and Ps. 82.7 million at December 31, 2007.

Income tax and tax on presumptive minimum income

Until December 31, 2002, we determined our income tax charge by applying the legal tax rate of 35% to our taxable income for the year. During that period, the effect of temporary differences between book value and the taxable basis of our assets and liabilities was not considered. Since 2003, current generally accepted accounting principles in Argentina require us to determine the income tax charge under the deferred tax method. This method involves the recognition of certain assets and liabilities in cases where there is a temporary difference between the accounting valuation and the tax valuation of those assets and liabilities, excluding differences in price levels on assets and liabilities as adjusted for inflation and their historical tax basis, which are treated as permanent differences.

As of December 31, 2005, a valuation allowance had been recorded in our financial statements to reduce the deferred tax assets. Based on available information as of the end of each of those years, it was more likely than not that these deferred tax assets would not be realized. The amount of the valuation allowance was based on various factors, such as historical taxable income, projected future taxable income, the experience with previous tax audits and different interpretations of tax regulations by the tax authority. As of December 31, 2006, the valuation allowance of the deferred tax assets was partially reversed mainly due to the fact that, as a consequence of the ratification of the Adjustment Agreement in January 2007 and the renegotiation of our financial debt in April 2006, we have expected to generate taxable income allowing us to offset a significant portion of the tax loss carryforwards we generated in 2002 before such offset becomes barred by the applicable statute of limitations. The reversal of the deferred tax asset related to the tax loss carryforward was due to a significant increase in our taxable income, which was partially offset by the tax deduction of the ENRE penalties in 2007. In the year ended December 31, 2008, we reversed the entire valuation allowance of the deferred tax assets.

Our tax obligation for any given year is equal to the higher of our income tax and our the tax on our minimum presumed income. However, to the extent that our tax on minimum presumed income exceeds our income tax, we earn tax credit against the payment of any income tax in excess of our tax on minimum presumed income in the subsequent ten fiscal years. In 2009, our income tax exceeded our minimum presumed income tax and so we earned no additional credits.

Labor cost liabilities

Labor cost liabilities and early retirement payables correspond to the following charges:

paid leave for accumulated vacation;

bonuses to employees with a specified number of years of employment and who are included in our collective bargaining agreements;

benefits to employees (pension plan) which are included in our collective bargaining agreements, to be given at the time of retirement; and

early retirement payables.

Our accruals for early retirement payables amounted to Ps. 16.0 million at December 31, 2009, Ps. 20.9 million at December 31, 2008 and Ps. 8.0 million at December 31, 2007.

Liabilities related to bonuses and benefits to employees (pension plans) are calculated considering all rights accrued by the beneficiaries of both plans as of year end based on an actuarial report issued by an independent professional as of that date. These liabilities are recorded as bonuses accrued and provisions for benefits to personnel, respectively. Our liabilities related to bonuses and benefits to employees (pension plans) amounted to Ps. 33.9 million at December 31, 2009, Ps. 26.0 million at December 31, 2008 and Ps. 19.0 million at December 31, 2007. Actuarial calculations are typically based on the following key assumptions: employee turnover, actual salary increases, mortality ages, disability studies, retirement age probability studies, discount rates and inflation. These assumptions change as market and economic conditions change. See notes 3 and 8 to our audited financial statements included elsewhere in this annual report for further information on our labor cost liabilities.

Financial debt

We record our financial debt in our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each period end. The fair value has been determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate which, in accordance with the criterion we apply, reasonably reflected market assessment of the time value of money and risk specific of the debt instruments at the time of their initial measurement. During the year ended December 31, 2006, we recorded the restructuring of debt after receiving consents to our restructuring from holders of 100% of our defaulted debt. The debt extinguishment generated a gain of Ps. 179.2 million. We did not record any adjustment to present value before the year ended December 31, 2006 because our financial debt was in default. The adjustment to present value of the future cash flows of the debt issued in the restructuring, using a market interest rate of 10.5% for the year ended December 31, 2009 and 2008, generated a charge of Ps. 5.2 million and Ps. 8.5 million, respectively.

During 2007 we used a portion of the proceeds of our initial public offering to repurchase U.S. $36 million aggregate principal amount of our Discount Notes due 2014. In addition, we repurchased U.S. $43.7 million aggregate principal amount of our Fixed Rate Par Notes due 2016.

On October 9, 2007 we issued our U.S. $220 million 10.5% Senior Notes due 2017. We used the proceeds from that offering to repurchase and redeem in full our Discount Notes due 2014. We used the balance of the proceeds from the October debt offering for capital expenditures and working capital purposes.

During the years ended December 31, 2009 and December 31, 2008, we repurchased a total amount of U.S. $32.2 million and U.S. $32.5 million of principal amount of our Fixed Rate Par Notes due 2016 and U.S. $53.8 million and U.S. $17.5 million of our Senior Notes due 2017, respectively. As of December 31, 2009 we recorded a gain of Ps. 73.5 million related to these repurchases and redemptions. In addition, the adjustment to present value of the cash flows of these repurchased and redeemed notes, using a market interest rate of 10.5% for the year ended December 31, 2009, generated an accounting gain of Ps. 7.9 million.

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 Argentine Pesos and accrue interest on a quarterly basis at a rate equal to the private BADLAR, as published by the Argentine Central Bank, plus 6.75%. We used proceeds from the this debt offering for capital expenditures and working capital purposes.

Derivatives Contracts

Corporate Notes

During the year ended December 31, 2008, the Company carried out transactions with derivative financial instruments with the aim of hedging the foreign currency exchange rate of the cash flows and derivatives of interest payment transactions.

These instruments provided an economic and financial hedge of the amounts in foreign currency that the Company had to pay on the interest payment dates of its financial debt –Senior Notes due 2017 and Fixed rate Par Notes due 2016-, maturing on October 8, 2008, December 11, 2008, April 8, 2009, June 12, 2009, October 8, 2009 and December 11, 2009, in the event of fluctuations in foreign currency exchange rates. The Company has not formally designated these transactions as hedging instruments.

Therefore, they have been recorded in the accounting at their net realizable value or settlement value, depending on whether they have been classified as assets or liabilities, with a contra-account in the financial gains or losses for the year.

As of December 31, 2009, these transactions have been fully settled, there being no outstanding balances.

As of December 31, 2009 and 2008, income resulting from these transactions amounted to Ps. 1.6 million and Ps. 5.7 million, respectively, and was recorded in the Financial income (expense) and holding gains (losses) generated by liabilities account of the Statement of Income under Exchange difference.

Forward and Futures Contracts

During the year ended December 31, 2009, the Company has entered into forward and futures contracts with the aim of using them as economic instruments in order to mitigate the risk generated by the fluctuations in the US dollar rate of exchange.

As of December 31, 2009, the economic impact of these transactions -including contracts that have already been settled as well as those currently in effect-, resulted in a loss of Ps. 12.3 million that has been recorded in the Financial income (expense) and holding gains (losses) generated by assets account of the Statement of Income under Holding results.

Adoption of IFRS

On December 29, 2009, the CNV issued Resolution No. 562 "Adoption of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)" (“Resolution No. 562”) which requires that companies under the supervision of the CNV, such as us, prepare their financial statements in accordance with IFRS as published by the IASB for fiscal periods beginning on or after January 1, 2012 including comparative information for earlier periods.

IFRS 1, First Time Adoption of International Financial Reporting Standards, is the guidance that is applied during preparation of a company’s first IFRS-based financial statements. IFRS 1 was created to help companies transition to IFRS and provides practical accommodations intended to make first-time adoption cost-effective. It also provides application guidance for addressing difficult conversion topics.

The key principle of IFRS 1 is full retrospective application of all IFRS standards that are effective as of the closing balance sheet or reporting date of the first IFRS financial statements. IFRS 1 requires companies to (i) identify the first IFRS financial statements; (ii) prepare an opening balance sheet at the date of transition to IFRS; (iii) select accounting policies that comply with IFRS and to apply those policies retrospectively to all of the periods presented in the first IFRS financial statements; (iv) consider whether to apply any of the optional exemptions from retrospective application; (v) apply the mandatory exceptions from retrospective application; and (vi) make extensive disclosures to explain the transition to IFRS. Exemptions provide limited relief for first-time adopters, mainly in areas where the information needed to apply IFRS retrospectively may be most challenging to obtain.

The Company is currently assessing the impact that this change would have on their respective financial statements, and will continue to monitor the development of the implementation of IFRS.

PRINCIPAL DIFFERENCES BETWEEN ARGENTINE GAAP AND U.S. GAAP

Our financial statements are prepared in accordance with generally accepted accounting principles in the City of Buenos Aires, Argentina, which we refer to as Argentine GAAP and which differ in certain significant respects from U.S. GAAP. Note 27 to our audited financial statements included elsewhere in this annual report, provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income for the years ended December 31, 2009, 2008 and 2007 and shareholders’ equity as of December 31, 2009 and 2008.

The principal differences between Argentine GAAP and U.S. GAAP as they relate to us in these years are the accounting for the results of our trouble debt restructuring and repurchases of debt, the treatment of deferred income taxes, the capitalization of interest, the treatment of asset retirement obligations, our expenses related to our initial public offering, the treatment of certain pension plan liabilities, the treatment of the trust consolidation and accounting for the investments in marketable securities. Each of these differences affects either net income or shareholders’ equity. See note 27 to our audited financial statements included elsewhere in this annual report for a discussion of these differences and the effect on our results of operations and financial position.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have any off-balance sheet arrangements as of December 31, 2009, 2008 and 2007.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual liabilities and commitments as of December 31, 2009. Peso amounts have been translated from U.S. Dollar amounts at the buying rate for U.S. Dollars quoted by Banco Nación on December 31, 2009 of Ps. 3.80 to U.S. $1.00.

	Payments due by period
	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
	(in millions of Pesos)
Long term debt obligations (1)	Ps.	1,314.5		124.5		291.9		144.3		753.8
Accrued fines and penalties(2)		377.5		—		—		—		—
Financial assistance fees(3)		9.5		9.5		—		—		—
Operating leases(4)		11.9		8.4		3.2		0.3		—
Capital expenditures(5)		—		—		—		—		—
Taxes(6)		10.6		1.1		3.4		2.3		3.8
Total	Ps.	1,724.0	Ps.	143.5	Ps.	298.5	Ps.	146.9	Ps.	757.6

(1)

Includes amortization of principal and interest payments, including our management’s current estimates of future market rates in respect of our floating rate debt (which amounted to U.S. $12.7 million as of December 31, 2009). Calculated at the prevailing exchange rate as of December 31, 2009, Ps./U.S. $3.80. See “—Debt” for a description of these restructuring notes, including amortization and interest payment terms and mandatory prepayment with excess cash provisions. All of our indebtedness is unsecured. None of our indebtedness is guaranteed.

(2)

Includes adjustments made to reflect the ratification of the Adjustment Agreement. We were required to make an adjustment to a portion of our accrued fines and penalties totaling Ps. 47.0 million to reflect the increase to our VAD pursuant to the Adjustment Agreement and the May 2006 CMM and Ps. 17.2 million and Ps. 18.1 million to reflect the CMM adjustment for the years ended December 31, 2008 and 2007, respectively. In addition, pursuant to the terms of the Adjustment Agreement, the Argentine government agreed, subject to the fulfillment of certain conditions, to forgive, upon the completion of the RTI, approximately Ps. 71.4 million of our accrued fines and penalties and allow us to pay the remaining Ps. 306.1 million of these fines and penalties in semi-annual installments over a 7-year period commencing 180 days after the RTI comes into effect. Because the Adjustment Agreement was not ratified until January 2007, we have recalculated the amounts of accrued fines and penalties subject to the payment plan under the terms of the Adjustment Agreement as well as the amounts subject to forgiveness. See “Item 4. Information on the Company—Our concession —Fines and penalties.”

(3)

Fees payable under our financial services agreement with EASA, our controlling shareholder. This agreement expires in 2010. We are currently renegotiating this Agreement. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions— Financial Services Agreement with EASA.”

(4)	Reports our minimum required lease payments.

(5)	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 “—Capital expenditures.”

(6)

Represents a liability for the tax claim that we have with the Argentine Tax Authority related to the income tax deduction of the allowance for bad debts for the three fiscal years ended December 31, 1996, December 31, 1997 and December 31, 1998. On April 27, 2009, we agreed to the tax regularization plan established in Law No. 26,476. The balance is payable in 120 monthly installments at a 0.75% monthly interest rate. In accordance with the assessment of the tax regularization plan, our outstanding balance amounts to Ps. 12.1 million plus interest in the amount of Ps. 5.2 million. During the year ended December 31, 2009, we paid Ps.1.5 million of the outstanding balance, thus our remaining balance totals Ps.10.6 million, excluding the interest amount. Includes only the amortization of principal.

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 Companies 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 Companies Law, a majority of our directors must be residents of Argentina.

Our bylaws provide that holders of our Class A 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 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 shares vote jointly as a single class with the holders of Class B 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 directors 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:

Name	Position	Age	Year of appointment (class electing director)
Alejandro Macfarlane	Chairman and CEO	44	2010 (Class A)
Marcos Marcelo Mindlin**	Vice Chairman	46	2010(Class A)
Damián Miguel Mindlin**	Director	44	2010 (Class A)
Gustavo Mariani	Director	39	2010 (Class A)

Name	Position	Age	Year of appointment (class electing director)
Luis Pablo Rogelio Pagano	Director	56	2010 (Class A)
Eduardo Llanos*	Director	66	2010 (Class A)
Maximiliano Alejandro Fernández*	Director	50	2010 (Class A)
Ricardo Alejandro Torres	Director	52	2010 (Class B/C)
Diego Martín Salaverri	Director	45	2010 (Class B/C)
Edgardo Alberto Volosín	Director	56	2010 (Class B/C)
Alfredo MacLaughlin *	Director	67	2010 (Class B/C)
Eduardo Orlando Quiles*	Director	67	2010 (Class B/C)
Javier Douer	Alternate Director	36	2010 (Class A)
Pablo Díaz	Alternate Director	52	2010 (Class A)
Brian Henderson	Alternate Director	64	2010 (Class A)
Jorge Miguel Grecco	Alternate Director	49	2010 (Class A)
Ariel Schapira	Alternate Director	48	2010 (Class A)
Ricardo Sericano	Alternate Director	61	2010 (Class A)
Jaime Barba	Alternate Director	46	2010 (Class A)
Maia Chmielewski	Alternate Director	30	2010 (Class B/C)
Gabriel Cohen	Alternate Director	45	2010 (Class B/C)
Alejandro Mindlin**	Alternate Director	34	2010 (Class B/C)
Rafael Mancuso*	Alternate Director	67	2010 (Class B/C)
Eduardo Maggi	Alternate Director	54	2010 (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, Damián Miguel Mindlin and Alejandro Mindlin are brothers.

The following is a brief description of our current directors’ and alternate directors’ background, experience and principal business activities:

Alejandro Macfarlane. Mr. Macfarlane has been the chairman of the board of directors and CEO of Edenor since 2005. He serves as president of ADEERA, the pre-eminent electricity distributors association of Argentina, since September 2005. Mr. Macfarlane is also a member of the board of directors of Macro Bansud Bank and San Antonio International SRL. He was a board member of YPF S.A. and has been a member of YPF Foundation since 1999. He is the president of Grupo AM S.A., a corporate and institutional relationships consulting firm. He is member and director of the Instituto para el Desarrollo Empresarial Argentino (Argentinean Business Development Institute, or IDEA) and a member of the Consejo Argentino para las Relaciones Internacionales (Argentinean Council for International Relationships, or CARI).

Marcos Marcelo Mindlin. Mr. Mindlin has been a member of the board of directors of Edenor since 2005. Mr. Mindlin has been the vice chairman of Edenor since 2005. Mr. Mindlin currently serves as the chairman of Pampa Energía S.A. and as chairman of the Cámara Argentina de Energía (CADE), an Argentine energy services institution. From 1991 to 2003, Mr. Mindlin was the founding partner, vice chairman and CFO of IRSA Inversiones y Representaciones S.A., a leading Argentine real estate firm, and director of Banco Hipotecario S.A., the leading mortgage bank in the country. In November 2003, Mr. Mindlin resigned from the IRSA Group to focus his efforts on Grupo Dolphin S.A., an Argentine investment advisory and private equity firm created in 1990 based in Argentina of which Mr. Mindlin is a founding shareholder. Mr. Mindlin received an MBA from the Universidad del Centro de Estudios Macroeconómicos and a degree in business administration from the Universidad de Buenos Aires. In 2002, Mr. Mindlin founded and managed a non-governmental organization called Foundation for the Popular Initiative, whose objective is to create political space for citizens to present popular initiatives in Congress. In 2008, he founded Fundación todo por los chicos, whose principal objective is to assist vulnerable children. In addition, Mr. Mindlin formerly served as president of the executive committee of Tzekada, a foundation of the judeo-argentine community and he is a member of the Council of the Americas.

Damián Miguel Mindlin. Mr. Mindlin has been a member of the board of directors of Edenor since 2005. Mr. Mindlin is a shareholder and director of Grupo Dolphin S.A., an Argentine investment advisory and private equity firm founded in 1990, and is vice chairman of Pampa Energía S.A. Mr. Mindlin is also a member of the board of directors of Pampa Participaciones S.A., Pampa Real Estate S.A., Compañía Buenos Aires S.A., Powerco S.A. Central Térmica Güemes S.A. and Pampa Participaciones II S.A. and as vice chairman of Comunicaciones y Servicios S.A., Dilurey S.A., Inversora Güemes S.A., Transelec Argentina S.A., Grupo Dolphin S.A., Dolphin Energía S.A., IEASA S.A., Electricidad Argentina S.A. and Transba S.A. He also serves as a member of the board of directors of Edenor S.A., Citelec S.A., Dolphin Finance S.A., Hidroeléctrica Los Nihuiles S.A., Hidroeléctrica Diamante S.A., Préstamos y Servicios S.A., Inversora Dimante S.A., Inversora Nihuiles S.A., Inversora Ingentis S.A., Central Piedra Buena S.A., Corporación Independiente de Energía S.A. and as an alternate member of the board of directors of Compañia de Transporte de Energia Eléctrica en Alta Tension S.A. (Transener) and Ingentis S.A.

Gustavo Mariani. Mr. Mariani has been a member of the board of directors of Edenor since 2005. Mr. Mariani is a member of the board of directors and a managing director of Grupo Dolphin S.A., an Argentine investment advisory and private equity firm. He joined Grupo Dolphin S.A. in 1993, as an analyst and then served as a portfolio manager. He served as financial and corporate director of IRSA Inversiones y Representaciones S.A. Currently, he also serves as member of the board of directors of each of EASA, IEASA, Dolphin Energia, Transba, Pampa Energía S.A., Pampa Advisors S.A., Citelec, Transener, Transba and Dolphin Finance S.A., and alternate director for Transener S.A. and Citelec S.A. Mr. Mariani has an MBA from Universidad del Centro de Estudios Macroeconómicos and a degree in economics from the Universidad de Belgrano in Buenos Aires. He is a certified financial analyst since 1998.

Luis Pablo Rogelio Pagano. Mr. Pagano has been a member of the board of directors of Edenor since 2005. Mr. Pagano is the chief financial officer of Edenor and was also a managing director of Grupo Dolphin S.A. Prior to joining Grupo Dolphin S.A. in 2002, Mr. Pagano held various positions, including general partner and managing director for Newbridge Latin America, investment banking director for Deutsche Morgan Grenfell in Argentina, vice president and investment banking director for Citibank N.A. and chief financial officer for Argentina, Brazil, Paraguay, Uruguay and Chile of Bank of America, NTSA. Mr. Pagano received an MBA from the Instituto de Estudios Superiores de la Empresa (IESE), in Spain and both a CPA and BA in Business Administration from the Universidad Católica Argentina.

Eduardo Llanos. Mr. Llanos 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 to 2003, Mr. Llanos was a partner at Estudio E. Llanos y Asociados. Throughout his career, Mr. Llanos has taught tax and public finance classes at Universidad de Buenos Aires, Universidad Nacional de Lomas de Zamora and Universidad de Morón. Mr. Llanos graduated with a degree in public accounting from Universidad de Buenos Aires in 1971.

Maximiliano Alejandro Fernández. Mr. Fernández has been a director of Edenor since 2007 and has served as a director of EASA since 2005. He 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 Alternative Gratis S.A, which he founded along with IRSA, until its merger in 2005. Since 1991, he has worked as an independent contractor in the telecommunications industry, and, together with Martín Varsavsky, founded, and until 1995 directed, VIATEL S.R.L. Each of the companies mentioned is a telecommunications company. Mr. Fernández is an industrial engineer and graduate of La Universidad de Buenos Aires.

Ricardo Alejandro Torres. Mr. Torres has been a director of Edenor since 2007, and served as an alternate director from 2006 through 2007. Mr. Torres has been chief executive officer of Pampa Energía S.A. since November 2005, before which he was a partner of Darwin Inversiones S.A. From 1993 through 2001, Mr. Torres was chief financial officer of IRSA Inversiones y Representaciones S.A. and a director of Alto Palermo S.A., Brazil Realty Empreendimentos e Participações S.A., Abril S.A. and Inversora Bolívar S.A. Mr. Torres was also a professor of finance and taxes at the Faculty of Economic Sciences of the University of Buenos Aires. He currently serves as a member of the board of directors of Pampa Advisors S.A. and Educaria, a private equity fund specializing in the education sector. Mr. Torres is a public accountant with a degree from the University of Buenos Aires and holds an MBA from the Universidad Austral.

Diego Martín Salaverri. Mr. Salaverri has been a member of the board of directors of Edenor since 2007. He is a founding partner of the Argentine law firm of Errecondo, Salaverri, Dellatorre, González & Burgio. 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, Laboratorios Northia SACIFIA, Dico S.A. and Formosa Refrescos S.A. He also is a member of the supervisory committee of Dolphin Creditos S.A., Dolphin Creditos Holding S.A., Pampa Generación S.A., Pampa Participaciones S.A., Pampa Participaciones II S.A., Pampa Real Estate S.A., Energía Distribuida S.A., Inversora Güemes S.A., Grupo STSA and Credit Group S.A. 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 Inversora Diamante S.A., Compañía Buenos Aires S.A., Inversora Nihuiles S.A., GSF S.A. and Maltería del Puerto S.A.

Edgardo Alberto Volosín. Mr. Volosín has been a member of the board of directors of Edenor since 2005. In addition, Mr. Volosín served as Director of Human Resources and Legal Affairs of Edenor since our privatization in 1992 through July 2002 and currently serves as Director of Corporate Affairs, a position which he has held since August 2002. Mr. Volosín holds a degree in Law from the Universidad de Belgrano in Buenos Aires.

Alfredo MacLaughlin. Mr. MacLaughlin became a member of the board of directors of Edenor in 2010. He is a licensed attorney and practiced as Counsel at the Argentine law firm of Cárdenas, Cassagne. In addition, Mr. MacLaughlin served as Secretary of Finance of the Republic of Argentina from December 2005 until December 2006, and has held various other business and finance positions, including that of Executive Member of Banco Hipotecario Nacional, President of Deutsche Morgan Grenfell, Argentina, Secretary General of the Bolsa de Comercio de Buenos Aires, and Director of Telefónica de Argentina S.A. Mr. MacLaughlin was also a Director of Edesur from 2001 through 2005.

Eduardo Orlando Quiles. Mr. Quiles has been a member of the board of directors since 2009. Between 1965 and 1971 he served as the Sindicato de Luz y Fuerza de Capital Federal (Light and Power Union of the Capital) in the Treasury and Accounting Department. Subsequently, he worked as general accountant at Cooperativa de Crédito Luz y Fuerza Ltda (Credit Union of Light and Power) until 1980. Between 1980 and 1985 he served as tax chief in Petersen Thiele y Cruz S.A. He holds a CPA from la Universidad Nacional de Buenos Aires and he has a master degree in professional independent bureau in taxes and audit.

Javier Douer. Mr. Douer has been an alternate director of Edenor since 2005. He has held various positions with Grupo Dolphin S.A. since 2000 and currently is chief administrative officer for a group of portfolio companies. Mr. Douer holds a bachelor’s degree in business administration from the Universidad de Palermo, in Buenos Aires, as well as a master’s degree in capital markets from the Universidad de Buenos Aires.

Pablo Díaz. Mr. Díaz has been an alternate director of Edenor since 2005. 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., Corporación Independiente de Energfía S.A., Hidroeléctrica Diamante S.A., Hidroeléctrica Nihuiles S.A., Citelec S.A. and Transener S.A. Previously, he was an Advisor at the Subsecretaría de Energía Eléctrica (the Argentine Undersecretary for Electrical Energy) and has held various positions in the electricity industry.

Brian Henderson. Mr. Henderson has been an alternate director of Edenor since 2005. He has been a technical advisor to Grupo Dolphin S.A. since 2003. He also serves as president of Central Piedra Buena S.A. and Corporación Independiente de Energía S.A. Mr. Henderson is also a director of Citelec, Transener S.A., Inversora Nihuiles S.A., and Central Térmica Güemes S.A. and an alternate director of Dolphin Energía S.A., Edenor S.A., Transba S.A., Powerco S.A., IEASA S.A., Inversora Ingentis S.A., Termoeléctrica San Martín S.A., Termoeléctrica Manuel Belgrano S.A., Pampa Participaciones II S.A., Pampa Generación S.A. and Inversora Güemes S.A. Previously, Mr. Henderson served as Director of Latin America for National Grid (UK), president of the board of directors of Transener, Citelec and Transba. He was director of Silica Networks and Manquehue Net Telecomunicaciones (Chile) and vice president of commercial operations of Charter Oak Energy in Americ, Africa and Europe. Mr. Henderson was Vice Chairman and General Manager of Deutsche Babcock Riley, Canada Inc. Mr. Henderson has a degree in electrical engineering from Hebburn College.

Jorge Miguel Grecco. Mr. Grecco has been an alternate director of Edenor since 2006. Mr. Grecco served as director of external relations of Edenor since 2005. Mr. Grecco has also held positions in various media companies, including Grupo América, Grupo Cimeco, Infobae, Perfíl, Clarín, El Heraldo de Buenos Aires, Trespuntos and Somos. Mr. Grecco is also a professor of journalism at the University of Belgrano and is a published author.

Ariel Schapira. Mr. Schapira has been an alternate director of Edenor since 2007. In addition, since 2007, Mr. Shapira has served as the director of new business for Grupo Dolphin S.A. Previously, from 2004 to 2007, he served as the regional director for Latinamérica at Telefónica Móviles S.A., vice president of marketing and customer operations of Bellsouth International in Atlanta from 2001 to 2004, manager of marketing and new business for Compañía de Radiocomunicaciones Móviles S.A. (Movicom Bellsouth) from 1995 to 2001, CEO and general manager of Radiomensaje S.A. (a joint-venture with Motorola) from 1995 to 1997, and general manager of Pouyet Tecsel S.A. from 1991 to 1995. Mr. Schapira is an industrial engineer. He graduated from la Universidad de Buenos Aires.

Ricardo Sericano. Mr. Sericano has been an alternate director at Edenor since 2007. In addition, he has served as the technical director of Edenor since December 2006. Previously, he served as manager of engineering and investment and manager of supplies and logistics. Before the privatization of the company, Mr. Sericano served in various offices at ITALO and SEGBA. He is a mechanical-electrical engineer. He received his degree in 1972 from la Facultad de Ingeniería de la Universidad de Buenos Aires, where he also taught for 23 years.

Jaime J. Barba. Mr. Barba has been an alternate director at Edenor since 2009. He also served as legal manager and secretary of the board of directors at Edenor. In addition, he is a director and member of the executive committee at Compañía Administradora del Mercado Mayorista Eléctrico S.A. (CAMMESA), and a member of the supervisory committees at Petropack S.A. and Centro de Movimiento de Energía S.A. (SACME). Between 1996 and 2004 he worked in various positions at EDEERSA (Empresa Distribuidora de Energía Entre Rios SA). Mr. Barba holds a degree in law from the Universidad Nacional del Litoral and a master’s from the Direct Development Program at IAE.

Maia Chmielewski. Ms. Chmielewski has been an Alternate Director at Edenor since 2007. She also serves as an Alternate Director of CIESA S.A. and CPB S.A. Ms. Chmielewski serves in the investment group of Pampa Energía S.A. Ms. Chmielewski holds both a Bachelor’s degree in Business Economics and in Economics from the Universidad Torcuato Di Tella in Buenos Aires.

Gabriel Cohen. Mr. Cohen has been an Alternate Director of Edenor since 2005. He also has served since 2004 on the board of directors of Citelec, and as Alternate Director of Transba. In addition, he worked at Citibank, N.A. for fifteen years, serving at the bank’s offices in Buenos Aires and Paris, where he has acquired sound experience in debt restructuring processes. Mr. Cohen holds a degree in Business Administration from the Universidad de Buenos Aires.

Alejandro Mindlin. Mr. Mindlin has been an alternate director of Edenor since 2005. Mr. Mindlin is an alternate director of Pampa Energía where he serves in the institutional relations and communications department. He is also an alternate director of EASA. Prior to joining Pampa Energía, Mr. Mindlin served in the marketing group of Grupo Dolphin S.A. Mr. Mindlin has a bachelor’s degree in middle eastern history and languages from the Tel Aviv University, as well as a film director’s degree.

Eduardo Maggi. Mr. Maggi has been an alternate director at Edenor since 2007. He 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.

Rafael Mancuso. Mr. Mancuso has been an alternate director at Edenor since 2009. During 2008 and 2007 he has served as member of the board of directors at Edenor. He has served as the general manager of OSTEE since 1993. He was the general undersecretary of the Sindicato de Luz y Fuerza de la Capital Federal (Electric Light and Power Labor Union of the City of Buenos Aires) from 1991 through 1999, for which he also has served as secretary of social responsibility since 1993. Mr. Mancuso served as a member of the board of directors of Central Puerto from 1993 through 1997.

BOARD PRACTICES

The duties and responsibilities of the members of our board of directors are set forth in Argentine law and our bylaws. 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 May 22, 2001, the Argentine government enacted the Transparency Decree with the aim of creating an adequate legal framework to strengthen the level of protection of investors in the market. Other objectives of the Transparency Decree 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 Transparency Decree 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.

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 for overseeing our company. By creating an executive committee, the board sought to increase the efficiency with which our company is directed. The Executive Committee consists of Alejandro Macfarlane, Marcos Marcelo Mindlin, Damián Mindlin, Gustavo Mariani, Ricardo Torres and Rogelio Pagano.

Audit committee

Pursuant to the Transparency Decree and CNV rules, Argentine public companies must appoint a comité 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 Argentine law.

Pursuant to our bylaws, one director is appointed by holders of our Class A shares and one by holders of our Class B 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; and

supervising and reporting to regulatory authorities the existence of any kind of conflict of interest.

The members of our audit committee are:

Name	Position	Class electing member
Alfredo MacLaughlin (1)	Member	Class B
Maximiliano Alejandro Fernández(1)	Member	Class A
Eduardo Llanos(1)	Member	Class A

(1) Independent under Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934.

Senior management

The following table sets forth information regarding our senior management:

Name	Current Position	Age
Alejandro Macfarlane	Chief Executive Officer		44
Luis Pablo Rogelio Pagano	Chief Financial Officer		56
Ricardo Sericano	Technical Director		61
Eduardo Maggi	Director of Operations		54
Victor Augusto Ruiz	Principal Accounting Officer		50
Jorge Miguel Grecco	Director of External Relations		49
Edgardo Alberto Volosín	Director of Corporate Affairs		56

Víctor Augusto Ruiz. Mr. Ruiz began working at Edenor in 1992. He 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 la Cámara 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.

Supervisory committee

Argentine law requires certain corporations, such as our company, to have a Comisión Fiscalizadora (supervisory committee). The supervisory committee is responsible for overseeing compliance with our bylaws, 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 of the Company’s annual report and 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.

Our bylaws 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 bylaws, holders of our Class A shares are entitled to appoint two members and two alternate members of the supervisory committee and holders of our Class B and Class C 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 member)
Javier Errecondo	Member	2010 (Class A)
José Daniel Abelovich(1)	Member	2010 (Class A)
Jorge Roberto Pardo	Member	2010 (Class B/C)
Santiago Dellatorre	Alternate member	2010 (Class A)
Marcelo Fuxman(1)	Alternate member	2010 (Class A)
Alejandro Gabriel Turri(1)	Alternate member	2010 (Class B/C)

(1) Independent under Argentine law.

Javier Errecondo. Mr. Errecondo is a founding partner of the Argentine law firm Errecondo, Salaverri, Dellatorre, González & Burgio. He earned a degree in law in 1985 from the Universidad de Buenos Aires. He is a director of Dolphin Créditos S.A. and Nortel Inversora S.A. and an alternate director of AEI Servicios Argentina S.A., Formosa Refrescos S.A. and Dico S.A. In addition, he is a member of the statutory audit committees of IEASA, Dolphin Energía and Pampa Energía S.A., Desarrollos Caballito S.A., Pegasus Realty S.A., O.P.M. Inmobiliaria S.A., Entertainment Depot S.A., EDEN S.A., FinanGroup S.A., GSF S.A., Grupo Union S.A., Credit Group S.A., Farmacity S.A., Freddo S.A. and AESEBA S.A. and an alternate member of the statutory audit committees of EASA, Construred S.A. BA Mall S.R.L., Cablevisión S.A. and Multicanal S.A.

José Daniel Abelovich. Mr. Abelovich obtained a degree in accounting from the Universidad de Buenos Aires. He is a senior partner of the audit firm Abelovich, Polano & Asociados SRL/ Nexia International, an accounting firm in Argentina. Formerly, he had been a manager of Harteneck, Lopez y Cia,/Coopers & Lybrand and has served as a senior advisor for the World Bank. He is a member of the supervisory committees of Pampa Energía S.A., Transener SA, Cresud SA, IRSA Inversiones y Representaciones SA, Banco Hipotecario SA, Alto Palermo SA, among other companies.

Jorge Roberto Pardo. Between 1993 and 2008, Mr. Pardo worked at la Sindicatura General de la Nación (General Union of the Republic of Argentina, or SIGEN) in several positions, including as Joint General Statutory Auditor of the Nation. Between 1983 and 1992 he worked in la Sindicatura General de Empresas Públicas (General Union of State-Owned Companies, or SIGEP). Mr. Pardo holds a CPA from la Universidad de Buenos Aires.

Santiago Dellatorre. Mr. Dellatorre is a founding partner of the Argentine law firm Errecondo, Salaverri, Dellatorre, González & Burgio. He has been a member of the board of directors at Cablevisión since 2005. Between 1994 and 1995, Mr. Dellatorre worked as an international associate at the United States law firm Shearman & Sterling LLP. Mr. Dellatorre received his law degree with honors from the Universidad Católica Argentina in 1990. He is a director of Cablevisión S.A. and EDEN S.A., a member of the statutory audit committee of Empresa de Energía Río Negro S.A. (EdERSA). In addition, he is an alternate member of the statutory audit committee of Dolphin Energía S.A., EASA and GSF S.A.

Marcelo Fuxman. Mr. Fuxman obtained a degree in accounting from the Universidad de Buenos Aires. He is a partner of the audit firm Abelovich, Polano & Asociados SRL/ NEXIA INTERNATIONAL, an accounting firm in Argentina. He is a member of the supervisory committees of Pampa Energía S.A., Transener SA, Cresud SA, IRSA Inversiones y Representaciones SA, Banco Hipotecario SA, Alto Palermo SA, among other companies.

Alejandro Gabriel Turri. Mr. Turri has worked at SIGEN in various positions since 1993. Between 1989 and 1992 he worked at SIGEP and between 1984 and 1988 at the Tribunal de Cuentas de la Nación. Mr. Turri holds a CPA and a business administration degree, both from la Universidad de 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 2009 was approximately Ps. 16.7 million.

EMPLOYEES

As of December 31, 2009, we had 2,691 full-time employees and 30 part-time employees, for a total of 2,721 employees and as of December 31, 2008, we had 2,487 full-time employees and 38 part-time employees, for a total of 2,525 employees, and at December 31, 2007 we had 2,465 full-time employees and 43 part-time employees, for a total of 2,508 employees. As of December 31, 2009, approximately 81% of our full-time employees are subject to two collective bargaining agreements. After the privatization, an employee reduction plan was implemented 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 addition, we implemented an early retirement plan for those employees who had made the payments required by law and had less than five years before retirement, offering them monthly payments of 80% of their pre-retirement net salary. Access to this plan is conditioned upon our own approval and the prior separation from our company under an agreement signed before the Argentine Ministry of Labor. 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. In accordance with the union agreements, which have been revised since 1995 but remain in effect, we created a mediation commission to interpret the agreements and analyze claims and unresolved issues that arise in our daily activities. The most common issues that arise deal with changes to employment categories, relocation of employees, detailed situations with personnel and the analysis of the suitability of different technological advancements. 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.

We have outsourced a number of activities related to our business to third party contractors as we seek to maintain a flexible cost base that allows us both to maintain a lower cost base and gives us the ability to respond more quickly to changes in our market. We had approximately 3,611 third-party employees under contract with our company as of December 31, 2009, 3,029 as of December 31, 2008 and 3,612 as of December 31, 2007. We calculate our number of third-party employees based on the number of employees we have under contract, which does not directly relate to the number of third-party employees performing services for our company at any given time, as we only pay for services of these employees on an as-needed basis although they remain under contract for specified periods. 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, 2009, contractors’ employees were seeking indemnification from us for an aggregate amount of Ps. 64.2 million, including legal fees and interest and as of such date, based on legal advice, have recorded accruals for an aggregate amount of Ps. 36.9 million to cover the liabilities we may have in connection with such claims.

SHARE OWNERSHIP

None of the members of our board of directors or our senior management beneficially own any shares of our capital stock except for Mr.. Diego Martín Salaverri, whom beneficially owns Class B shares representing less than one percent of our capital stock. 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		(%)
Electricidad Argentina S.A.(2)		A		462,292,111		51.0	%
Employee Stock Participation Program		C		1,952,604		0.2	%
Public		B		203,672,680		22.5	%
ANSES(3)		B		229,125,205		25.3	%
Treasury Shares		B		9,412,500		1.0	%
Total				906,455,100		100.0	%

(1) Each class of shares entitles holders to one vote per share.

(2) All of our Class A 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—Our concession —Our obligations.” Electricidad Argentina S.A. (EASA) is an Argentine corporation wholly owned by Dolphin Energía and IEASA. Dolphin Energía holds 90% of the voting stock and 92.3% of the total outstanding stock of EASA, and IEASA holds the remainder. Pampa Energía S.A. currently owns 100% of the capital stock of Dolphin Energía and IEASA.

(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 Administración Nacional de la Seguridad Social (National Social Security Agency, or 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 229,125,205 of our Class B shares, representing 25.3% 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, including restrictions on the exercise of more than 5% of the voting power in any local or foreign company, such as the Company, in any meeting of shareholders, irrespective of the actual interest held in the relevant company's capital stock.

As of December 31, 2009, we had approximately 4,177,186 ADSs outstanding, representing 83,543,720 Class B shares.

Acquisition by Dolphin Energía and IEASA.

In September 2005, Dolphin Energía and IEASA purchased a controlling stake in the company 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 Argentine energy sector dating back to 2004.

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 shares, in a 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 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 called Pampa Holding SA)

On June 22, 2007, the principal members of Grupo Dolphin, Marcos Marcelo Mindlin, Damián Miguel Mindlin and Gustavo Mariani, 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 the shares in September 2007. The transaction was consummated on September 28, 2007, and as a result, Pampa Energía S.A. 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 Buenos Aires Stock Exchange 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 our company, 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 our company 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 (net of repurchases) of Ps. 1,371.8 million as of December 31, 2008. 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 21.04% of the common stock of Pampa Energía S.A. In addition, Messrs. Marcos Marcelo Mindlin, Damián Mindlin and Gustavo Mariani, together with Pampa Energía S.A.’s chief executive officer, hold warrants to purchase, in the aggregate, approximately 21.4% 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. Marcelo Mindlin, who serves as chairman of the board of directors, Damian Mindlin, who serves as vice-chairman of the board of directors, and Gustavo Mariani,. The principal executive officers of Pampa Energía S.A., including its chief executive officer, are also affiliated with Grupo Dolphin.

In addition to its indirect stake in us, Pampa Energía S.A. currently owns several investments in the Argentine electricity sector, including a 50% interest in the controlling shareholder of the principal electricity transmission company in Argentina, Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener), controlling stakes in five 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 Loma de la Lata S.A.).

Share buy-back program

On October 23, 2008, we launched a tender offer in Argentina for our shares at a purchase price of Ps. 0.65 per share. 400,000 ordinary Class B shares were 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 up to Ps. 45 million of our shares, 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 shares, at an average price of Ps. 0.65 per share, representing approximately 1% of our capital stock. We currently hold 9,412,500 Class B shares as treasury stock.

Employee Stock Participation Program

At the time of the privatization of SEGBA (our predecessor), the Argentine government allocated all of our Class C shares, representing 10% of our outstanding capital stock, to establish a Programa 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 employees of our company) were each entitled to receive a specified number of our Class C 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, participant employees were allowed to defer payment for the Class C shares over time. As a guarantee for the payment of the deferred purchase price, the Class C shares were pledged in favor of the Argentine government. Furthermore, under the original trust agreement, the Class C shares were placed in trust by the Argentine government with Banco Nación, acting as trustee for the Class C 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 extraordinary shareholders’ 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 shares in full to the Argentine government and, accordingly, the pledge was released and the share syndication agreement was terminated.

According to the regulations applicable to the Employee Stock Participation Program, participant employees who terminated their employment with our company 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 participant employees for the transfer of their Class C Shares.

A number of former employees of SEGBA and our company have brought claims against the Guaranty and Repurchase Fund, the Argentine government and, in certain limited cases, our company, 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 former employees of our company 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 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 instructed Banco Nación to create a Contingency Fund to hold a portion of the proceeds of the offering of Class B 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 shares may only be held by our employees. Upon the closing of our initial public offering, substantially all of our Class C shares were converted into Class B shares and sold. In accordance with these agreements, laws and decrees, the rights previously attributable to the Class C shares have been combined with those attributable to the Class B shares, and holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares in the election of directors. Only 1,952,604 Class C shares remain outstanding, representing 0.2% of our capital stock.

RELATED PARTY TRANSACTIONS

Financial Services Agreement with EASA

On April 4, 2006, we entered into a Financial Services Agreement with EASA pursuant to which EASA 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 to be performed by EASA include assistance and advice in respect of our financial performance, our finance management team and our financial decision-making process, our engagement of financial advisory services firms and the development of new financial products, the restructuring of our commercial and financial debt, feasibility, profitability and implementation of new businesses, hedging and derivatives strategies, relationship with foreign and local financial institutions, financial aspects of tariffs renegotiation and concession contract process and our annual budget.

The term of the agreement is 5 years from September 2005, with each party having the right to terminate it at any time without cause with 60 days prior notice. The consideration to be received by EASA is U.S. $2 million per year, plus Argentine value added tax, and will be payable in advance in October of each year, or as otherwise agreed by the parties, with the first payment (for services rendered in the 12-month period from September 2005) being paid upon approval of the agreement by the audit committees and boards of directors of both our company and EASA, approvals which have both been obtained. The payment related to the first year of services was made on April 19, 2006.

In April 2008, our board of directors approved an amendment to the EASA agreement increasing the amount to be paid by us in consideration for the services provided by EASA to U.S. $2.5 million, plus Argentine value added tax, payable retroactively from January 1, 2008. No other terms of the contract have been modified.

We are currently renegotiating this agreement.

Agreement with Comunicaciones y Consumos S.A.

On March 16, 2007 we entered into an agreement with Comunicaciones y Consumos S.A. (CYCSA), an Argentine company wholly owned by Messrs. Marcelo Mindlin, Damian Mindlin and Gustavo Mariani, 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 ours. Under the terms of this agreement, CYCSA will be responsible for all expenses relating to the maintenance and adaptation of our network for use in providing its telecommunications services. The agreement will be valid for ten years commencing from the date on which the ENRE approves the terms of the agreement and the date on which CYCSA’s telecommunications license is granted approval, which it received on July 11, 2008. 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 will be 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

In November 2008, CYCSA and we extended the term of our initial agreement from ten to twenty years.

Agreement with Préstamos y Servicios S.A.

On March 16, 2007, we entered into an agreement with Préstamos y Servicios S.A. (PYSSA), a financial services company indirectly owned by Pampa Holdings LLC, a company indirectly controlled by Messrs. Marcelo Mindlin, Damian Mindlin and Gustavo Mariani, pursuant to which we granted PYSSA the exclusive right to conduct its direct and marketing services through the use of our facilities and mailing services. Under the terms of the agreement, we agree to provide PYSSA with office space and allow them to communicate financial and loan offers directly to our customers. In addition, we include PYSSA marketing material in the invoices and other mail we send to our customers. The term of the agreement is five years, which automatically renews for subsequent five year periods unless terminated by one of the parties with 120 days notice. In accordance with the terms of the agreement, PYSSA pays us 2% of the monthly charges collected from our customers, before taxes, and 10% of profits. PYSSA has indemnified us for any obligation arising from the rendering of its services. This agreement required authorization from the ENRE, which it received through Resolution No. 381/2007 on June 15, 2007.

On February 28, 2008, PYSSA informed us that the office space Edenor provides to PYSSA would be used by personnel of Credilogros Compañía Financiera S.A., a firm that provides financial services, personal loans and credit cards. However, the work of Credilogros Compañía Financiera in our office space has been temporarily suspended due to the international financial crisis and its impact on the financial services industry in Argentina.

The activities related to this contract are temporarily suspended, as a consequence of the international financial crisis.

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 business, we are a party to lawsuits of various types. Our management evaluates the merit of each claim and assesses the likely outcome, recording an accrual 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, 2009, we had established accruals in the aggregate amount of Ps. 72.9 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.

Tax claims

On December 1, 2003, the Provincial Board of Electric Power of the Province of Buenos Aires initiated a claim against us in the amount of Ps. 51.2 million, which does not include surcharges, interest or penalties accrued in respect of this amount after the date of the claim. At December 31, 2003, the amount of surcharges and interest accrued on the claim, including applied penalties, was Ps. 310 million. In addition, on April 23, 2007, the Board notified us of an additional claim for Ps. 4.0 million, without including surcharges, interest or penalties accrued. The claims are based on an alleged failure to collect, as collection agent, in respect of certain taxes established by Decree Laws No. 7290/67 and No. 9038/78 between July 1997 and June 2001 and between July 2001 and June 2002, respectively. On December 23, 2003, we filed an appeal of the Board’s decision with the provincial Tax Court of Appeals of La Plata, and enforcement of the judgment was suspended pending the outcome of the appeal. On June 14, 2007, the Court granted our appeal and rejected the Board’s tax claim against us. On June 27, 2007 the provincial Tax Court of Appeals of Buenos Aires rendered a favorable decision in relation to our appeal. This decision reaffirms a recent decision by the Supreme Court of the Republic of Argentina in an unrelated case that held that the regulations were unconstitutional due to the commitment assumed by the Province of Buenos Aires not to tax the transfer of electric power. We have not established any accruals in our financial statements for this claim.

The Argentine federal tax authorities have challenged certain income tax deductions for allowance for doubtful accounts on our income tax returns for fiscal years 1996, 1997 and 1998, and have assessed additional taxes of approximately Ps. 9.3 million. Tax related contingencies are subject to interest charges and, in some cases, fines. We have appealed the tax authorities’ ruling before the Argentine federal tax court. During the appeal process payment for such claim is suspended. We have accounted for an accrual in our financial statements for the contingent tax liability related to this claim, including interest and penalties.

On April 27, 2009, we agreed to the tax regularization plan established in Law No. 26,476. The main features of the moratorium offered to participating companies are as follows:

Waiver of fines and penalties on which no final judgment has been issued at the time of the company’s adherence to the regularization plan;

Waiver of late payment/default and penalty interest in the amount exceeding 30% of the principal owed;

An initial payment equal to 6% of the liability existing at the time of the company’s adherence to the regularization plan;

The remaining balance payable in 120 monthly installments with a 0.75% monthly interest rate.

30% to 50% reduction in tax agents and AFIP (the Argentine tax authorities) attorneys’ fees.

In accordance with the assessment of the tax regularization plan, our debt amounts to Ps. 12.1 million plus interest amounting to Ps. 5.2 million. We expect that all federal tax claims against us will be dropped upon our payment of these amounts.

In 2009, we paid Ps.1,5 million of this amount, thus the remaining balance of our debt totals Ps.10.6 million, excluding the interest amount.

Environmental claims

On May 24, 2005, three of our employees were indicted on charges of PCB-related environmental contamination dangerous to human health, which is a crime under Argentine law. In connection with this alleged infraction, the judge sought a pre-judgment attachment of our assets in the amount of Ps. 150 million to cover the potential cost of environmental damages and estimated clean-up costs. On May 30, 2005, we appealed the charges against our employees as well as the attachment order. On December 15, 2005, the court of appeals dismissed the charges against all three defendants for lack of evidence and, accordingly, vacated the attachment order. The decision by the court of appeals also stated that the trial judge should order the acquittal of two public officers of the ENRE, who had been indicted on related charges. This decision was appealed to the Tribunal de Casación (National Criminal Appellate Court), the highest appellate body for this matter, which on April 5, 2006 ruled that the appeal of the decision relating to our employees and our company was not admissible because decisions rendered on grounds of lack of evidence are not reviewable. On July 16, 2007, we were notified that on July 11, 2007, the trial judge issued acquittals for all of our officials and employees who had been indicted. On appeal on March 25, 2008, the Sala I de la Cámara Federal de San Martín (First Court of the Federal Circuit of San Martín) upheld the acquittals and confirmed the finding that there had been insufficient evidence to prove any PCB contamination. On April 18, 2008 the Minsterio Público (Attorney General) appealed this decision before the First Court of the Federal Circuit of San Martín and lost the appeal. On December 29, 2008, the Attorney General was notified that the National Criminal Appellate Court had rejected the appeal as well. In response, the Attorney General filed an “extraordinary appeal”, to which the defense responded. On May 27, 2009, the Tribunal dismissed the extraordinary appeal filed by the Attorney General on the grounds that it failed to specifically and reasonably refute the arguments that supported the resolution being appealed, and proved neither the alleged arbitrariness nor the violation of constitutional guaranties. The Attorney General filed an appeal (“Recurso de Queja”) to the Argentine Supreme Court requesting that the appeal dismissed by the National Criminal Appellate Court be sustained. As of the date of this annual report, the appeal is being analyzed by the Supreme Court.

Proceedings challenging the renegotiation of our concession

In November 2006, two Argentine consumer associations, Asociación Civil por la Igualdad y la Justicia (Civil Association for Equality and Justice, or ACIJ) and Consumidores Libres Cooperativa Limitada de Provisión de Servicios de Acción Comunitaria (Consumer’s Cooperative for Community Action), brought an action against us and the Argentine government before a federal administrative court seeking to block the ratification of the Adjustment Agreement on the grounds that the approval mechanism was unconstitutional. On March 26, 2007, the federal administrative court dismissed these claims and ruled in our favor on the grounds that the adoption of Executive Decree No. 1957/06, which ratified the Adjustment Agreement, rendered the action moot. ACIJ appealed this decision on April 12, 2007, and the appeal was decided in our favor. However, on April 14, 2008, ACIJ filed another complaint challenging the procedures utilized by the Argentine Congress in approving the Adjustment Agreement. Specifically, the claim alleges that Article 4 of Law No. 24,790, which authorized the Congress to tacitly approve agreements negotiated between the Argentine government and public service companies, such as us, violated the congressional procedures established in the Argentine Constitution. ACIJ has requested that the Adjustment Agreement be renegotiated and submitted to Congress for its express approval. We have responded to this complaint, which is in the sentencing period. However, we cannot make assurances regarding how this latest complaint will be resolved nor can we make assurances that other actions or requests for injunctive relief will not be brought by these or other groups seeking to reverse the adjustments we have obtained or to block any further adjustments to our tariffs.

100

Preliminary Injunction of the Public Ombudsman

On October 31, 2008, the Secretary of Energy approved new seasonal reference prices of power and energy in the WEM. Consequently, the ENRE applied the new rate schedule as of October 1, 2008. The new rate schedule passed the purchase price of electricity as well as the other costs related to the WEM, including transmission, to the final customer.

In response to the new tariff schedule, the defensor del pueblo de la nación (National Public Ombudsman) filed a claim opposing the resolutions establishing the October 1, 2008 tariff schedule and naming us as a third-party defendant. On January 27, 2009, the ENRE notified us of a preliminary injunction, as a result of the Ombudsman’s claim, pursuant to which we were ordered to refrain from cutting the energy supply to customers challenging the October 2008 tariff increase until a decision is reached with respect to the claim. We, along with the Argentine government, have appealed this injunction through various legal actions, and the resolution of our most recent appeal is still pending as of the date of this annual report.

On August 14, 2009, the Secretary of Energy issued Resolution No. 652/09, which ordered the suspension of the certain reference market prices of energy, and established new reference prices for the periods from June to July 2009 and from August to September 2009, reinstating partial government subsidies to the electricity generation sector. Furthermore, the resolution also established the unsubsidized reference market prices of energy for the months of June and July 2009 and August to October 2009.

On October 26, 2009, we received notice of a complaint filed by two consumer associations, Consumer’s Cooperative for Community Action and the Unión de Usuarios y Consumidores 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, Asociación de Defensa de los Derechos de los Usuarios y Consumidores (Association for the Legal Defense of Consumers) and Unión de Usuarios y Consumidores en Defensa de sus Derechos (Consumers Union Legal Defense), have joined the complaint.

The remedies sought in the complaint are as follow:

that all the most recent resolutions concerning electricity rates issued by the ENRE and the Secretary of Energy be declared null and unconstitutional, and, as a consequence that the amounts billed by virtue of these resolutions be refunded.

that all the defendants be carry out the RTI.

that the resolutions issued by the Secretary of Energy that extend the transition period of the Adjustment Agreement be declared null and unconstitutional.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. freshman Avg

Empresa Distribuidora y Comercial Norte (EDN) 20-F2009 FY Annual report (foreign)

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