Mail Stop 3561
January 3, 2006
By Facsimile and U.S. Mail
Joao Ramalho Talone
Chief Executive Officer
EDP - Energias de Portugal
Praca Marques de Pombal, 12
Lisbon, Portugal 1250-162
Re: EDP - Energias de Portugal
Form 20-F for the year ended December 31, 2004
Filed September 30, 2005
File No. 1-14648
Dear Mr. Talone:
We have reviewed your filing and have the following
comments.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
Please be as detailed as necessary in your explanation. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Where a comment below requests additional disclosures or
other
revisions to be made, please show us what the revisions will look
like in your supplemental response. These revisions should be
included in your future filings.
Form 20-F for Fiscal Year Ended December 31, 2004
General
1. Please be advised that the instructions to Form 20-F, require
the
consent of experts when their report is included in your Form 20-
F.
In this regard, please explain if you have filed such consent, and
if
so, where. See Item 10 - Additional Information - part G.
Strategy, page 25
2. You indicate that you acquired operating control of
Hidrocantabrico in 2001, the fourth largest electricity operator
in
Spain, which, in turn, acquired Naturcorp, the second largest gas
operator in Spain, in 2003, and in December 2004 acquired full
control of Hidrocantabrico by increasing our stake to 95.7%.
Explain
what analysis, if any, was done with respect to FIN 46R with
respect
to your investment in Hidrocantabrico given that you indicate you
had
operating control of the entity.
History and Overview, page 65
3. Explain how you are accounting for the put option that CajAstur
holds regarding your recent acquisition of Hidrocantabrico in
2004.
Please be detailed in your response citing all applicable local
and
US GAAP literature.
Critical Accounting Policies, page 103
Regulatory Assets and Liabilities and Tariff Adjustment, page 106
4. Prospectively, please enhance your regulatory discussion to
reflect your recent acquisition of Hidrocantabrico. In this
regard,
it would be beneficial to provide an overview with respect to any
applicable regulatory concerns or issues in Spain.
Liquidity and Capital Resources, page 126
Tabular Disclosure of Contractual Obligations, page 128
5. Please be advised that Release No. 34-47264 requires disclosure
of
finance obligations, such as capital leases, and purchase
obligations. To the extent either of these items is applicable;
please revise your Form 20-F prospectively.
Impact of Recently Issued US Accounting Standards, page 132
6. You disclose that through Energias do Brasil you engage in
energy
trading activities. In this regard, please provide a summary of
all
trading activities conducted by the company, or any subsidiary.
Furthermore, explain to us what analysis you performed with
respect
to EITF Issue 02-3. Please be detailed in your response.
7. Explain to us what analysis was performed with respect to SFAS
no.
143, and any preliminary conclusions reached with respect to FIN
47.
In this regard, we note your disclosure regarding
Hidrocantabrico`s
ownership of a nuclear power plant. Furthermore, explain to us if
you collect cost of removal, or any remediation costs in rates,
and
if so, how you are accounting for such collections. Also, explain
where such amounts, if applicable, are classified on your
consolidated balance sheets.
Note 8. Long term receivables, net, page F-16
8. Explain to us the nature of the local debt receivable which has
a
date of 1988, and your substantive reasons for assuming this
remains
collectible. On a separate note, explain how you account for gas,
or
electricity which is delivered at the end of an accounting period,
but not yet billed. If material amounts of unbilled revenue exist
at
a period end, you should be disclosing such amounts separately.
Note 23. Minority Interests, page F-37
9. Explain to us why your minority interest in Hidrocantabrico
increased in light of your recent acquisition of the Group in
2004.
Note 40. Commitments, page F-48
10. Prospectively, consider enhancing your guarantee discussion to
provide a narrative description of your more material guarantees.
Note 42 i. Reconciliation to accounting principles generally
accepted
in the United States of America, page F-53
11. Explain why you have not provided a statement of cash flows
prepared under US GAAP. See Item 17(c)(2)(iii) of the
instructions
to Form 20-F. Also, explain to us any material differences in how
you define cash and cash equivalents, as compared to US generally
accepted practice. We may have further comment.
12. Provide to us a summary of your goodwill impairment testing as
required by SFAS no. 142. Also, please explain where you
quantified
the telecommunications impairment in this footnote. Furthermore,
explain to us how you concluded you did not have impairment with
respect to your goodwill in EDP Brazil, especially in light of the
economic downturn see in resent years and the devaluation of the
Brazilian Real.
13. To the extent applicable, please disclose your accounting
treatment for foreign currency transactions and the aggregate
transaction gain or loss recorded in your consolidated profit and
loss accounts for the three years ended December 31, 2004. Please
refer to paragraphs 15 and 30 of SFAS 52.
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respond to these comments within 10 business days or tell us when
you
will provide us with a response. Please furnish a letter with
your
responses to our comments and provide any requested supplemental
information. Please understand that we may have additional
comments
after reviewing your responses to our comments. Please file your
response letter on EDGAR as a correspondence file.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
If you have any questions regarding this comment, please
direct them to Robert Babula, Staff Accountant, at (202) 551-3339
or,
in his absence, to the undersigned at (202) 551-3841. Any other
questions regarding disclosures issues may be directed to H.
Christopher Owings, Assistant Director at (202) 551-3725.
Sincerely,
Michael Moran, Esq.
Branch Chief
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Mr. Talone
January 3, 2006
Page 5