0557aes memoria anual 2017 ingles - aes gener · baa3 ı bbb- ı bbb-risk rating por moody’s,...

AnnualReport

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06

07

08

09

0302

04

0504 | AES Gener at a Glance

28 | About This Report

32 | Our Company

22 | Letter from the Chairman

AES Gener in one LookHighlightsCompany ProfileOur HistoryAbout AES CorporationOrganizational DocumentsAES Gener Group of CompaniesOwnership and Control of the Company

353535374045

0609

111215151618

5863727576

113119123127

8083

4955

9797

Our VisionOur BusinessOur ValuesEthical FrameworkOur Sustainable ApproachRelation with Stakeholders

Our StrategyInnovation and Development of New Technologies

46 | Our Strategy

56 | Our Business

Business Model and Main AssetsAreas of BusinessProjects under DevelopmentProjects under ConstructionProgress of Projects under Construction

78 | Market Context

Main Macroeconomic AspectsRegulatory Framework

94 | Corporate Governance

Corporate Governance StructureGovernance Bodies

110 | Our Management during 2017

Risk ManagementResults of the YearSummary of Financial ActivitiesOperation and Maintenance

10 14

15

1617

11

12 238274

290

215217218219

149150151

153155156

172177179181

160165165166169

146 | Shareholder and Investor Relations

Stock TransactionsOwnership StructureRisk Rating2017 Dividend Policy2016 Dividend PolicyDividends paid out of Earnings for Fiscal Year 2016

158 | Our People

Human CapitalTalent AttractionCompensation and BenefitsPerformance ManagementA Great Place to Work

222 | AES Gener S.A. Financial Statements

236 | Exhibits

232 | Subscription and Affidavit of Liability

213 | Caring for the Environment

170 | Occupational Health and Safety

13186201

204208

184 | Our Stakeholders

Community EngagementSustainability ManagementOur Customers Our Suppliers

Industrial Safety and Occupational HealthTraining and CoachingOccupational HealthOccupational Safety and Health Indicators

Mission and PolicyBasis for Environmental ManagementManagement of Environmental VariablesOutstanding Environmental Events

Annex 1 EnvironmentAnnex 2 History of Related CompaniesAnnex 3 Essential Facts and Communications

AES Gener at a Glance

01

0609

111215151618

AES Gener in one LookHighlightsCompany ProfileOur HistoryAbout AES CorporationOrganizational DocumentsAES Gener Group of CompaniesOwnership and Control of the Company

AES Gener at a Glance6

AES GENER AT A GLANCEImproving Lives in Chile, Colombia, and Argentina

Under constructionAlto Maipo

Installed Capacity Total

5,813

Human Team of Approx.Persons

1,500Total Assets 2017

Millionus $ 8,160

2017 Consolidated Debt

Millionus $ 3,741

Chile: 29% for generationColombia: 6% for installed capacity Argentina: 3% for installed capacity

Market Share

Efficient generation contracted with a remaining average life of 11 years.

Long-term business strategy

Listed in theStock Exchangeof Santiago

Baa3 ı BBB- ı BBB-Risk Rating

Por Moody’s, S&P Global y Fitch Ratings

Coal: 3,030 MWHydro: 1,291 MWGas/Diesel: 1,458 MWSolar: 21 MWBiomass: 13 MW

Technology

Chile 4,150 MW

Argentina 643 MW

Colombia 1,020 MW

GREAT PLACE TO WORKChile (10th place)Colombia (14th place)Argentina (10th place)

Member of Dow Jones SustainabilityIndex para Chile

EBITDA 2017

Millionus $793

Fundada en

Bought by AES Corporation in 2000, which currently controls 66.7% of the company

Equity Market Capitalization

MillionUS $ 2,628(As of 31 December 2017)

MW

MW

* The 52MW in energy storage assets are not considered in the installed capacity.

Annual Report 2017 AES Gener 7

277 MW coal12 MW energy

storage

643 MW natural gas / diesel


storage


storage

760 MW coal

884 MW coal

379 MW natural gas/ diesel100 MW diesel

13 MW biomass

337 MW diesel (Los Vientos, Santa Lidia,

and Laguna Verde)

1.Nueva Tocopilla

13.TermoAndes

410km international transmission line

(SING-SADI)

14.InterAndes

2.Cochrane

3.Angamos

5.Guacolda

6.Ventanas

7.Nueva Renca

10.Laja

11. Backup Plants

Argentina

Chile

11

1O

1

2 43

5

67

98

1,020 MW hydroelectric

12.Chivor and Tunjita

Colombia

271 MW (Alfalfal, Queltehues, Maitenes,

Volcán)

531 MW hidroeléctrica (Under construction)

8. Hydroelectric Plants

9.Alto Maipo

21 MW solar4.Andes Solar

Main Assets of AES Gener Group

13

12

14


Main results Unit Dec 2015 Dec 2016 Dec 2017

Ordinary income US$ million 2,165 2,286 2,437

EBITDA US$ million 691 778 793

Gross Income US$ million 583 625 617

Net Income US$ million 265 261 185

Main Ratios Unit Dec 2015 Dec 2016 Dec 2017

ROA (%) 3.6 3.3 2.3

ROE (%) 11.36 10.76 7.11

Operational Assets Performance (%) 10.06 10.17 9.62

Balance Unit Dec 2015 Dec 2016 Dec 2017

Total Assets US$ million 7,286 7,849 8,160

Property, plant and equipment, net US$ million 5,796 6,150 6,421

Shareholders' Equity US$ million 2,332 2,559 2,710

Liabilities Unit Dec 2015 Dec 2016 Dec 2017

Current liabilities US$ million 4,954 5,290 5,434

Total debt US$ million 3,340 3,824 3,741

Net debt US$ million 3,073 3,354 3,465

Debt ratio Unit Dec 2015 Dec 2016 Dec 2017

Current liabilities/Shareholders' equity (times) 2.12 2.07 2.01

Gross debt/EBITDA (times) 4.8 4.9 4.7

Net debt/EBITDA (times) 4.5 4.3 4.4

Financial expenses coverage (times) 3.60 3.26 2.77

Financial Highlights

HIGHLIGHTS


2017 Stock Market Indicators Unit Value

Number of outstanding shares Shares 8,400,318,891

Stock closing price as of 31 December 2017 CLP 203.7

Dividend Return % 9.4

Earnings per Share US$ 0.022

Dividend paid US$ 261,008,828

EBITDA por Mercados

SICSIN SINGSADI

39%

22%

36%

YEAR 2015

US$ 691 MILLONES

EBITDA

3%

44% 35%

YEAR 2016

US$ 778 MILLONES EBITDA

YEAR 2017

US$ 793 MILLONES EBITDA

31% 39%

22% 22%

3% 4%

sin sadi sic singNational Interconnected Grid (Colombia)

Argentine Interconnected Grid

Central Interconnected Grid (Chile)

Great Northern Interconnected Grid (Chile)


AES Gener S.A. (AES Gener, the Company) is an open corporation whose mission is to improve lives by providing safe, reliable, and sustainable energy solutions in all the markets we serve, following the commitments assumed with customers, shareholders, workers, communities, suppliers and other persons and groups to which we are related. The Company runs a portfolio of generation assets in Chile, Colombia, and Argentina, with a total capacity of 5,813 MW.

It is the second largest generator of Chile in terms of installed capacity with 4.150MW in operation at the end of 2017, and the first in terms of gross electricity generation with 21.3 TWh distributed between the SIC and the SING.

The combination of generation alternative gives AES Gener competitive advantages in the Chilean electric

market, for not being exclusively dependent on a resource to produce electricity. AES Gener provides electric power in 4 independent markets: SIC and SING in Chile, SIN in Colombia and SADI in Argentina.

In Colombia, AES Chivor is one of the main operators of the National Interconnected System that, with an installed hydroelectric capacity of 1020MW, contributed 6% of the system's net generation during 2017.

In Argentina, TermoAndes has an installed capacity of 643MW and makes sales to the Argentine Interconnected System. During 2017, it was responsible for 3% of the net generation in the SADI.

COMPANY PROFILE

Collaborators

2017

TOTAL1,501

1,333Chile

112Colombia

56Argentina

Gender Diversity

140

9022

3 53

1193

Non-Financial

Highlights


Founding of Chilean Electric Tramway and Light Company, whose assets were merged in 1921 with those of Compañía Nacional de Fuerza Eléctrica, created in 1919, and gave origin to Compañía Chilena de Electricidad (Chilectra).

Change of our name to Chilgener S.A., after completing the privatization process.

Chilectra is restructured and its generation and transmission assets are transferred to Chilectra Generation S.A.

AES Corporation acquires 95.67% of the shares of the Company (including ADRs).

Nationalization of Chilectra, which was taken over by Corporación de Fomento de la Producción (CORFO).

Change of name to Gener S.A.

OUR HISTORY

1889 1970 1981

1989 1998 2000

*The complete history of AES Corporation is available in www.aes.com, in the tab “Our history"


Beginning of the second expansion phase, which involves the construction of five 1,256 MW power generation projects and an investment of about US$4,000 million.

Beginning of the construction of Cochrane thermoelectric project (532 MW) in the SING and Alto Maipo Hydroelectric Power Project (531 MW). The coming into commercial operation of Ventanas IV in the SIC turns AES Gener into a key player in the market since it successfully meets the growing demand of energy in Chile of 1,256 MW and an investment of about US$4,000 million.

Consolidation of the second expansion stage for 1,256 MW, which includes a portfolio of electric energy generation projects with different technologies and more than 8,000 workers, and initiation of desalination projects as new line of business.

Beginning of the commercial operation of Guacolda Unit 5, desalination plant in Angamos and completed construction of Andes solar project.

AES Gener recorded the highest EBITDA of its history, reaching US$ 778 million, driven by the completion of the construction and the entry into commercial operation of Cochrane (532 MW), Andes Solar (21 MW) and Tunjita (20MW); and by a higher availability of generation assets portfolio. At the end of the year, the Company becomes once again the main producer of energy in Chile, contributing 31% of the total generation in the country.

AES Gener maintained its predominant place as the largest producer of electric power in Chile thanks to a full year of operation recorded in its new Cochrane 2 and Andes Solar power plants, generating 29% of the total energy produced in 2017. In December, we announced the contract for the sale of Sociedad Eléctrica Santiago SpA to Generadora Metropolitana SpA.

The Company changed its name to AES Gener S.A. and started a process for the sale of assets to concentrate on the electricity generation business, mainly in Chile.

Beginning of the first expansion phase, which involves the construction and commercial operation of 1,677 MW, with an investment of about US$3,000 million.

2001 2007 2012

2013 2015 2016 2017

AES Gener at a Glance14 AES AES GeneGeneGenn r atr at a Ga Glanlancla e14


ABOUT AES CORPORATION

AES Corporation focuses on improving the lives of people in the markets where we operate, through the delivery of safe, reliable, and sustainable energy solutions. The vision of AES Corporation is to be the leading company in global sustainable energy, delivering reliable and affordable energy.

AES Corporation is currently one of the largest energy companies in the world. Its great installed capacity of 34,907 MW and its large workforce of more than 10,500 people allows it to generate and distribute electricity in 16 countries from 3 continents. AES Corporation exercises corporate control over AES Gener through its subsidiary Inversiones Cachagua SpA, where it holds a 99.9% interest. Inversiones Cachagua made, as the last major stock amended, a sale in the stock exchange of 4% of AES Gener in November 2015, thus decreasing its

shareholding interest to 66.7%, percentage that remained unchanged until December 31, 2017.

ORGANIZATIONAL DOCUMENTS

AES Gener S.A. (“Gener”) is an open corporation created by means of a public deed dated June 19, 1981 and delivered in Santiago by Notary Public Patricio Zaldívar Mackenna. Its business name was, at that time, Compañía Chilena de Generación Eléctrica S.A. (Chilectra Generation S.A.). The Superintendency of Securities and Insurance approved its by-laws by means of Resolution No. 410-S dated 17 July 1981, published in the Official Gazette No. 31,023 of July 23, 2018. The Company is registered with the Commercial Registry of the Real Estate Conservator of Santiago in page 13,107, No. 7,274 of 1981.

Corporate Data

Corporate Name AES Gener S.A.

Tax identification (RUT) number: 94,272,000-9

Type of Company Open Corporation

Registration with the Registry of Securities No. 0176

Address: Rosario Norte 532 Piso 19, Las Condes, Santiago, Chile

Phone (56) 226868900

Web page www.aesgener.cl

Issued capital US$ 2,052 million

Number of Shares 8,400,318,891

Activity Generation and Commercialization of Electric Power

Markets Chile, Colombia, and Argentina

Santiago Stock Exchange Mnemonic Code AESGENER

(1) The complete history of AES Corporation is available in www.aes.com, in the tab “Our history"

For more information about AES Gener, visit the website of the Company(www.aesgener.cl)


Inversiones Nueva Ventanas SpA (Chile)

Norgener Renovables SpA (Chile)

Norgener Foreign Investment SpA (Chile)

Alto Maipo SpA (Chile)

Gener ArgentinaS.A. (Argentina)

Andes SolarSpA (Chile)

Norgener Inversiones SpA (Chile)

Sociedad Eléctrica Santiago SpA(Chile)

Guacolda Energía S.A. (Chile)

50% + 1 Sha.

100%

100%

99.99% 0.01%

100% 93.30%

99.99%

99.99%

7.95%

92.05%

100%

AES Chivor S.A. & CIA SCA, ESP.(Colombia)


AES GENER GROUP OF COMPANIES

Empresa Electrica Angamos S.A. (Chile)

Cia. Transmisora del Norte Grande S.A.

Cia Transmisora Angamos SpA

Empresa Electrica Cochrane, SpA(Chile)

Empresa ElectricaVentanas, S.A.(Chile)

Empresa ElectricaCampiche, S.A.(Chile)

AES Chivor(Colombia)

Termoandes S.A. (Argentina) (Chile)

94.82% 70.8%

60% 100%

100%

100%

0.63%

0.63%

50.63%

47.50%

91.18%

5.18% 29.2%

8.82%


OWNERSHIP AND CONTROL OF THE COMPANY

AES Gener is an open corporation listed in three Chilean stock exchanges: the Santiago Stock Exchange, the Valparaiso Stock Exchange, and the Electronic Stock Exchange of Chile.

On December 31, 2017, the shareholders' equity of the Company amounted to US$ 2,781 million, divided into 8,400,318,891 shares, with no par value, all from the same series, distributed among 1,382 shareholders.

The US company, AES Corporation, is the indirect controller of AES Gener, through its interest of approximately 99.9% in Inversiones Cachagua SpA. At the end of the year, Inversiones Cachagua SpA recorded a majority interest of 66.70% in the Company.

21.56%

11.74%66.70%OWNERSHIP

STRUCTURE

Minority ShareholdersAES Corporation Chilean Pension Funds


Name Tax identification (RUT) number:

No. of shares as of 31 Dec 2017 Interest

Inversiones Cachagua Spa 77,504,420-9 5,603,012,701 66.70%

Banco Itaú on behalf of Investors 33,338,288-1 252,530,650 3.01%

Habitat C Pension Fund 33,500,000-5 231,293,883 2.75%

Banco de Chile on behalf of Third Parties Ca 33,338,248-2 220,570,774 2.63%

Provida C Pension Fund 33,500,103-6 193,765,193 2.31%

Habitat A Pension Fund 33,500,028-5 151,190,220 1.80%

Cuprum A Pension Fund 33,500,040-4 127,665,542 1.52%

Habitat B Pension Fund 33,500,029-3 124,379,149 1.48%

Cuprum C Pension Fund 33,500,011-0 119,762,685 1.43%

Santander Bank Jp Morgan 33,338,330-6 111,615,595 1.33%

Provida A Pension Fund 33,500,101- K 94,983,917 1.13%

Capital C Pension Fund 33,500,002-1 94,473,873 1.12%

Total 12 Major Shareholders 7,325,244,182 87.20%

Other Shareholders 1,075,074,709 12.80%

Total Shareholders 8,400,318,891 100%

66.70% 21.56% 11.74%AES Corporation Pension Funds Other Shareholders

Ownership Structure

Main Shareholders

AES Gener at a Glance20 AES Gener at a Glance2200


MAJOR CHANGES TO THE OWNERSHIP OF THE COMPANY

The next table shows the main changes to the ownership of the Company organized according to changes in the number of shares (example table):


No. of shares Dec 2017

No. of shares Dec 2016

N° Shares Variation

Habitat C Pension Fund 33500000-5 231,293,883 188,404,420 42,889,463

BTG Pactual Chile S.A. Corredores De Bolsa 84177300-4 68,842,368 108,388,216 -39,545,848

Banchile Corredores De Bolsa S.A. 96571220-8 53,859,555 79,674,855 -25,815,300

Banco de Chile on behalf of Third Parties Ca 33338248-2 220,570,774 242,268,966 -21,698,192

Banco Santander JP Morgan 33338330-6 111,615,595 91,501,431 20,114,164

Sample A Pension Fund 33500051-K 33,327,829 13,470,398 19,857,431

Compañía De Seguros De Vida Consorcio Nacional De Seguros S.A. 99012000-5 - 14,833,304 -14,833,304

Sample B Pension Fund 33500052-8 45,624,321 31,039,010 14,585,311

Capital C Pension Fund 33500002-1 94,473,873 106,753,443 -12,279,570

Habitat B Pension Fund 33500029-3 124,379,149 112,262,901 12,116,248

Cuprum A Pension Fund 33500040-4 127,665,542 115,597,905 12,067,637

Habitat A Pension Fund 33500028-5 151,190,220 139,669,751 11,520,469

Letter from the Chairman

02

Letter from the Chairman24

Dear Shareholders,

It is a pleasure for me to share with you the information about the management of our company during 2017, which marks the beginning of the transformation of our Company toward a more sustainable energy future.

As a company, we are improving our efficiency with a new organizational structure that will mean savings of 15 million dollars from 2019 and we continue optimizing our capital structure to maintain the degree of investment. Moreover, we are strengthening our portfolio of long-term contracts.

During this past year, we have made considerable progress in the Alto Maipo project, a run-of-the-river hydroelectric project that will generate sustainable energy, which is essential for the diversification of the energy matrix and the growth of Chile.

BERNERD DA SANTOS

Chairman of the Board

During this past year, we have made considerable progress

in the Alto Maipo project, a run-of-the-river hydroelectric

project that will generate sustainable energy, which is

essential for the diversification of the energy matrix and the

growth of Chile.


We are firmly committed to the environment, and I am pleased to inform you that we have designed a plan to have a balanced portfolio of energy and we are setting targets for reducing Carbon.

In this sense, not only we honor the commitment proposed by the Government to stop building coal-fired thermoelectric plants, but also, we are briskly moving forward toward renewable energies and vigorously pursuing energy innovations and implementing artificial intelligence technology to achieve minimum generation standards that will allow us to become more sustainable as a company.

As has been the trend in recent years, AES Gener closed 2017 with an EBITDA of US$ 793 million, due to the better performance of the operations in Chile, Colombia, and Argentina.

There is no doubt that it makes us really proud to be, for the third consecutive year, the main generating company in Chile, which accounts for 29% of the total power demanded by the country, and to be leaders in energy storage in Latin America with 52MW in operation.

We are also proud of the fact that, for the third consecutive year, we are part of the Chile Dow Jones Sustainability Index, one of the most important market measurements in terms of sustainability, and that we obtained the tenth and fourteenth place in the Great Place to Work ranking in Chile and Argentina and in Colombia, respectively.

Safety is our first value. We received a recognition for that value in Colombia with two awards: ARL Sura honored us, for the fourth consecutive year, with a world-class business excellence award, and we achieved the first place in the competition organized by the Organización Iberoamericana de Protección contra Incendio (Fire Protection Iberoamerican Organization).

In line with its strategy to accelerate a more sustainable future, during 2017 the Company announced the

sale Empresa Eléctrica Santiago in the amount of US$ 300 million.

As has been the trend in recent years, AES Gener closed 2017 with an EBITDA of US$ 793 million, due to the better performance of the operations in Chile, Colombia, and Argentina.

In the same line, the Company launched AES Gener Distributed Energy, a new line of business to provide solar power-based distributed generation solutions to industrial clients, and we began to supply power to small unregulated customers, covering a segment that ranges from 0.5 to 5 MW. As of December 2017, we had entered into 90 power purchase agreements for a total volume of approximately 3.800 GWh/year; a figure that will continue to grow.

Considering the immense potential and in response to the growing demand for water, the company submitted environmental impact statements to build desalination plants in Huasco and Puchuncaví for its own consumption and for sale to third parties by leveraging their existing assets and knowledge.

However, the recent year, also posed important challenges for the company. The Alto Maipo Project has faced difficulties during its construction and financing. The foregoing added to the decision of Minera Los Pelambres to withdraw the project, keeping only its power purchase agreement with the run-of-river hydroelectric project. Our contractor Strabag joined as a partner to the project and, being also the sole contractor, took control of the fronts abandoned by Constructora Nueva Maipo (CNM). Currently, the Project is undergoing a process of corporate and financial restructuring, which we hope to complete during the second quarter of 2018.

Letter from the Chairman26


Our business in Colombia experienced a drop in prices following the normalization of the system’s hydrological conditions and the lack of dynamism in the economy. Thinking about the future, we started the project to extend the useful life for another 50 years of La Esmeralda reservoir in Chivor plant, through the construction of new intakes. And we have also made progress in our development efforts to grow in non-conventional renewable energies.

Under the scope of what AES Gener has been doing during 2017, it is important mention that the General Management decided to take a series of steps aimed at strengthening the sustainability performance of the company, especially in terms of obtaining a higher level of compliance in the assessment for the Dow Jones Sustainability Index.

Therefore, among other agreements, we wish to put emphasis on the implementation, during 2018, of a management system based on indicators specially focused in social matters and which the Company will inform on a regular basis. Similarly, we agreed to the creation of the Sustainability Committee made up of top management officers and whose main role will be to ensure a more sustainable management. In addition, the Company committed itself, for year 2018, to update it Community Engagement Policy and to prepare its own Human Rights Policy, with their respective validation.

Under these agreements, the commitment of AES Gener reflects the search for a more integrated and coherent approach in its different lines of work toward the long term, which along with being consistent with its business model, will allow us to consolidate the sustainability management and good performance, thus strengthening the financial performance of the company as well.

Dear shareholders, the results and achievements made during 2017 are a consequence of the operational, environmental, and social excellence and values added to the operation and construction of each of our projects and energy solutions. We are grateful for the support, dedication and excellence of our workers and their families, who have made these achievements possible, and for the support of our partners: Mitsubishi and GIP. Without a doubt, to count on them is a great evidence of support.

AES Gener is today the leading generation company in Chile and we aim to lead the transformation toward a more sustainable energy future.

Thank you for your confidence.

BERNERD DA SANTOS

Chairman of AES Gener Board

About This Report28 Aboubouut Tht is Report2222222228888888888

About This Report

03

Annual Report 2017 AES Gener 29Annual Report 2017 AES Gener 22999

About This Report30

AES Gener prepares its annual report in accordance with the recommendations of the International Integrated Reporting Council and Global Reporting Initiative. The characteristics of the report seek to fully comply with the criteria considered by international standards such as the Reporta Report and the Dow Jones Sustainability Index, of which the company is part for the third consecutive year.

For the preparation of the report, AES Gener has consulted its stakeholders, staff, senior staff, external consultants, analysts, and investors.

Through the report, AES Gener plans to provide information to its shareholders and stakeholders about the Company, its activities, business model, strategy, corporate governance structure and results obtained in the fiscal year, in the countries where it is present and from the triple dimension of the company:

The information and financial and non-financial data contained in the report refer to the period between January 1 to December 31, 2017; however, we also include, where necessary, certain references to events occurred

PREPARATION PROCESS

ENVIRONMENTAL

in previous years or after the end of the reporting year so that the persons reading the report may understand the strategy and management principles used by AES Gener.

The financial information is consistent with the total perimeter of consolidation of the Company. Non-financial information includes the subsidiaries and investees where AES Gener is a controlling shareholder and has management control.

SOCIAL ECONOMIC


If you need additional information about the content of this document or any of its sections, please contact the:

CONTACT INFORMATION

Juan-Luis Carrasco

Investor Relations Manager

John Wills Investor Relations Analyst.

e-Mail: [email protected]

For more information about AES Gener, visit the website of the Company.www.aesgener.cl

INVESTOR RELATIONS DEPARTMENT

SHAREHOLDER OFFICE

COMMUNICATIONS AND SUSTAINABILITY:

AES Gener Corporate Communications

Contact: [email protected]

Phone: +56 22 364 6772

Our Company32

Our Company

04

353535374045

Our Vision Our Company Our Values Ethical Framework Our Sustainable Approach Relation with Stakeholders

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OUR VISION

In AES Gener S.A. (AES Gener or the Company) we seek to generate electric power in a safe, reliable, and sustainable manner, following the commitments assumed with customers, shareholders, workers, communities, suppliers and other persons and groups to which it relates.

OUR COMPANY

We make proper use of our electricity platforms and knowledge to provide energy and infrastructure solutions in the markets where we work.

OUR VALUES

Throughout our history, we have been characterized by our permanent commitment to a charter of values that constitutes the central axis of our Code of Conduct, thus providing an appropriate support to our daily activities.

In this same sense, AES Gener promotes the practical application of these values at work, developing activities and materials to promote reflection on them.

A copy of the Code of Conduct is delivered to and accepted by all our collaborators, contractors, suppliers, and business partners. It is also available on the website of the Company.

As part of its new strategy focused on accelerating the future toward a cleaner energy, the Company amended its charter of values by replacing “Honor our commitments” by “Agility”, which refers to cause the organization to move with vision, speed, and flexibility to adapt to an increasingly dynamic and changing world.

In this way, agility should be at the core of the management of the Company's culture, either by adapting to the needs of customers by incorporating new technologies to solve the challenges or by improving the manner of working.

OUR COMPANY

AES Gener promotes the practical application of these values at work, developing activities and materials to promote reflection on them.

Our Company36

Our priority continues to be to honor the commitments assumed, which is contained in the value called “Act with Integrity”.

The main aspects of the charter of values are:

• Put safety first. To ensure safe operations in our facilities is the cornerstone of our daily activities and decisions. The members of the Company should give priority to safety and prevention of risks associated with the work for its staff, contractors, and surrounding communities. To maintain this safety culture, we carry out various activities on a regular basis, including monthly talks in all our facilities, with the involvement of all the workers across the organization.

• Act with integrity. Our people must be honest, trustworthy, and responsible. The integrity is at the core of how we conduct ourselves, interact with each other and relate with our stakeholders at work, always respecting and honoring the commitments made.

• Agility. We move with vision, speed, and flexibility to adapt to our dynamic and rapidly changing world. Our world and our industry are changing at an accelerated pace. We must be agile and continue to evolve our business to succeed. Agility means we create value by moving quickly, anticipating opportunities, and changing direction as necessary to grow in new ways and best serve our customers.

• Strive for excellence. We strive to be the best in all that we do and to perform at world-class levels.

• Have fun through work. Those who are part of the organization know that work is interesting and rewarding. We encourage our people to have fun through work and to appreciate the satisfaction of being part of a team that makes a positive difference.

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The Board of Directors of AES Gener S.A. adopted the Code of Conduct and the Ethics and Compliance Program, whose purpose is to ensure that the Company and all its employees, partners, suppliers, and contractors, conform to the highest ethical standards and comply with all legal and regulatory requirements of Chile.

The Code of Conduct regulates the actions of all the people who work in AES Gener, including workers of their subsidiaries. The Code of Conduct is delivered to and accepted by all workers, and delivered also to contractors, suppliers, and business partners. The Code of Conduct is available at our web site www.aesgener.cl. We will inform any changes using the same means.

The purpose of our Ethics and Compliance Program is, among others, to ensure that the Company and its workers, as well as its business partners, suppliers and contractors comply with all legal and regulatory requirements in Chile, governing this matter, such as Law 20,393 (Corporate Criminal Liability), as well as the relevant international laws and standards, such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; other anti-fraud and anti-corruption laws; the US Foreign Corrupt Practices Act; and other applicable laws.

The Ethics and Compliance Program of the Company is an integral part of the business and culture of AES Gener, as it defines our business practices and expectations all over the world. To support our workers and collaborators in their efforts to conduct businesses with the highest standards of integrity, we offer training programs and communication materials, such as:

• Ethics Champions Program: The purpose of this program is to encourage and promote the debate on contingent and challenging issues that we face in our business. Through an open discussion and communication, we can ensure that AES Gener of values will always be present in the decisions that we make in our daily life at work.

• AES Gener Values Guide Training: This program focuses on the importance of exercising good judgment to make the better business decisions for AES Gener. The program provides guidance to practical business situations. The program also informs where to go for aid when there arose doubts or other situations at the time of making potentially difficult business decisions.

• AES Gener Code of Conduct Training and Acknowledgment: All workers must certify that they have read and understood the AES Values Guide (Code of Conduct).

Moreover, the Ethics and Compliance Program also sets forth a Contract Compliance Review Process, which establishes that before entering into transactions with third parties, AES people must complete the Contract Compliance Review Process on the proposed business partner. The Contract Compliance Review Process includes assessing the risk posed by a transaction, conducting appropriate compliance due diligence on each transaction, incorporating appropriate contract compliance language in the written agreement with the counterparty and obtaining Compliance Department approval prior to engaging the business partner. The

ETHICAL FRAMEWORK

Our Company38

depth and extent of the compliance due diligence review is determined by the assessed risk posed to AES Gener by a particular transaction. For purposes of our review process, we categorize transactions as either Low Risk or High Risk. The risk category of the contract determines the required compliance due diligence, the appropriate contract compliance language to be inserted into the contract, and the required approvals to be obtained from the compliance officers.

Ethics and Compliance Department

The AES Gener Ethics and Compliance Department (E&C) is headed by the Ethics and Compliance Manager, whose responsibility is to train AES People, carry out regular meetings on topics of interest, monitor compliance with the program, manage the AES Helpline, conduct research, review the agreements to be executed by the Company in order to ensure the anti-corruption, anti-terrorist financing, anti-money laundering, anti-bribery, and other provisions are inserted; and review donations to ensure they comply with the applicable regulations.

The Ethics and Compliance Department offers training, information and certification programs for AES Gener collaborators related to the Code of Conduct and programs to prevent and detect criminal behaviors, foster an organizational culture that promotes ethical behavior and commitment to compliance with the laws, in addition to monitoring and enforcing our policies on corruption, bribery, money laundering and partnerships with terrorist groups.

Moreover, to secure compliance with the provisions contained in General Provision No. 270, dated 31 December 2009, issued by the Comisión para el Mercado Financiero (Financial Market Commission, CMF), the Company sets forth the internal policies and rules governing the handling of information that, without constituting an essential fact or information in nature, is useful for the proper financial analysis of AES Gener and its affiliates, its securities or their offer; through our “Handbook on Handling Information of Interest to the

Market”. This notion includes all the legal, economic, and financial information concerning relevant aspects of the development of corporate businesses, or that may have a significant impact on the same (“Information of Interest”). This document is available at the web page of the Company.

At the same time, the E&C Department has a series of policies aimed at being a guide for the decision-making process and detailing the way the organization expects its people to behave during the development of their duties, thus decreasing the differences that may arise from personal interpretations.

ANTI-CORRUPTION POLICY

It is strictly forbidden for AES Gener, its workers, and agents, either directly or indirectly, to offer or give anything of value to a person -including government officials or private business companies- to unduly influence any governmental or business decision. AES Gener staff is not allowed to request or accept anything of value from any current or future business partners in exchange for doing business with AES Gener or receiving any other favorable treatment.

Policy of Prevention under the Scope of Law No. 20,393, on Corporate Criminal Liability.

Law 20,393 establishes sanctions for those companies that commit offenses related to money laundering, terrorist financing, receiving stolen goods, and bribery of public officials by their assistants, when they were committed in the interest or to the benefit of the company.

Donations Policy

Donations include anything of value delivered to individuals, companies or organizations that support charitable activities. No donations are allowed in exchange for financial benefits, recommendations, preferential treatment, or other undue influence. Prior to committing a contribution or donation, you must obtain approval from the Ethics and Compliance Department.


• Complaints: includes concerns with respect to im-proper or unlawful activities that require investigation.

• Inquiries: includes requests for advice on substantive issues, such as conflicts of interest and donations.

All the complaints are thoroughly investigated to pass a resolution. The steps of the investigation, the findings and any resulting corrective action are recorded in the confidential E&C research database.

Gifts and Entertainment Policy

No gifts shall be received or offered whenever they compromise or seem to compromise the ability of any employee to act according to the best interests of the company. Gifts must be legal and habitual in the jurisdiction where they are given or received; they must be reasonable and proper to the occasion and not excessive in terms of value.

Conflicts of Interest Policy

There may arise a conflict of interest whenever a worker takes a step or makes a decision during the discharge of their professional responsibilities under which they can be personally affected. AES Gener People should avoid situations that might create, or even give the appearance of creating, a conflict between personal interests and the interests of the Company.

Free Competition Policy

This policy offers internal guidelines regarding the correct forms of prevention in the occurrence of behaviors that may risk free competition.

Lobbying Policy

This policy defines the main notions relating to lobby and establishes the guidelines that we should follow at the time of retaining lobby services.

Help Line

In AES Gener, we strive to create a working atmosphere where workers feel free to ask questions and voice concerns directly to the management of the company. In addition, the Company has a Help Line administered by an external provider to seek advice or inform about a bad behavior. The Helpline is available 24 hours a day, 7 days a week by phone (800 360 312 and then dialing 800 505 7319) or through the web page www.aeshelpline.com. Reports may be made anonymously and, once received by the external supplier, they will be submitted to the Ethics and Compliance area of the Company to carry out the relevant investigation. Moreover, the Ethics and Compliance Department receives questions by phone, email or personally, and investigates the concerns or provides advice when management or other departments receive issues and refer them to the E&C department. Regardless of the mechanism used to make a report, the E&C department investigates all allegations and responds to all investigations communicated to it and records them in the confidential research database.

To follow up a report, they are categorized into two general types:

Our Company40

OUR SUSTAINABLE APPROACHOur goal is for AES Gener and its affiliates to be locally respected and valued for delivering good economic, social, and environmental performance, and for contributing to the sustainable development of the communities where we operate.

Moreover, our parent, AES Corporation, provides us with a series of tools that help to facilitate the incorporation of sustainability in each business, the most outstanding of which are AES Corp EHS Standards. These EHS Standards have been developed by observing the best international practices and establish performance requirements that complement the local regulations applicable to each business. The EHS standards currently regulate the operational requirements needed to supervise and control legal compliance and permits, air contamination monitoring, discharge to receiving bodies, handling of hazardous substances, hazardous waste, and non-hazardous waste, standards to ensure quality

of data, occupational safety and health, and control of contractors and biodiversity protection. Twelve of these standards are environmental, all of them apply to operations, and seven of them apply to projects under construction. As part of the management of each of its businesses in Chile, Colombia and Argentina, the Company establishes environmental goals and indicators with respect to the main environmental aspects of the electric generation processes: Air Emissions, regulatory compliance, waste generation, use of water and biodiversity.

The main responsibility of AES Gener is the generation of power, which is essential for households, businesses, industries, schools, and health facilities, and therefore, for the development of countries and their inhabitants. We seek to fulfill this role by acting in a responsible manner with all groups of people that are part of or related to the Company.

All the complaints are thoroughly investigated to pass a resolution. The steps of the investigation, the findings and any resulting corrective action are recorded in the confidential E&C research database. These data are useful to management to identify trends that help to develop proactive steps to prevent similar incidents in the future, such as changes in internal controls or additional trainings. As part of this analysis, the allegations are classified into five types:

(1) Financial Reports and Controls

(2) Staff Behavior and Policies

(3) Trade Interactions

(4) Ownership and assets of the Company

(5) Safety and Environment

A characteristic that distinguishes the contacts to the AES Gener Helpline (both by telephone and via the web-site) is the ability to remain anonymous while making a report. When the complaint is anonymously made, the line of AES Gener Helpline assigns a case number and a personal identification number (PIN) that allows the E&C department to send and receive messages to and from the caller during an investigation.

We make all efforts to protect the confidentiality of re-ports and we will not tolerate retaliation against any person raising questions or concerns or making a good faith report of improper behavior. More informa-tion is available on our website www.aesgener.cl


Collaborators Suppliers

Society / Community

Government

Customers

Managers

Partners

Shareholders

Internal stakeholders External stakeholders

AES GENER

We understand that Corporate Social Responsibility (CSR) is the responsible development of the business, which seeks the best benefit for each of the stakeholders. Stakeholders are any society actors that may become positively or adversely affected by the decisions made and goals set by the Company. In this sense, AES Gener clearly identifies them and divides them into those who are part of the organization and those who represent the external world.

The Vice-President of Corporate Affairs is responsible for the management and engagement of external actors and, mainly, the community. The responsibilities of the Vice-President of Corporate Affairs include:

• Identify Stakeholders

• Distinguish the nature of their demands

• Establish the operation spaces of these groups

• Analyze and prioritize their demands

• Develop their responses at an organizational level

• Monitor, check and implement the social investment programs

Community actions involve an appropriate management of environmental impacts, mainly the mitigation of any possible adverse impacts and enhancement of positive impacts, in full compliance with the applicable Regulations and the Environmental Qualification Resolutions, internal Environmental Policies, and additional commitments voluntarily assumed.

Moreover, we assume that the basic requirement is to comply with all the regulations in force, both legal and ethical, that are applicable to the Company.

As members of each of the communities where we work, our deepest desire is to develop and forge a harmonious bond based on a collaborative relationship with our neighbors, which entails a considerable internal commitment to develop an organizational culture intended to support, foster, and reinforce this work approach.

For this reason, we understand that to achieve a harmonious coexistence not only depends on the contribution of material resources, but also on establishing a two-way dialog process with stakeholders on economic, social, and environmental aspects of corporate management. For this purpose, we gave shape to communication and extension programs and tools that will contribute to a good relationship.

Our Company42

• One-to-one Meetings

• Work Tables

• Support and training to social leaders of each location

• Promotion of participation in activities of the Community Engagement Plan

• Manage associativity and promote public-private alliances.

• Permanent Dialog

AES GENER

ENGAGEMENT

COMMUNITIES

Social Leaders and Neighbors, Fishermen

Unions, and others.

LOCAL AUTHORITIES

Mayors, Council Members and

COSOC (1)

REGIONAL AUTHORITIES

Governors, Seremis, Regional Ministers

ASSOCIATION OF COMPANIES

Universities, and NGOs

For the development of a joint work with the community, we have defined three lines of approach: Education and training, support to community-use infrastructure and employability. Through each of these action lines, we have developed transparent, consistent, and fair programs and projects according with the local reality. In some of these cases, the community itself, through a participatory formal dialog process with the company, has established the priority of the issues that needed to be resolved.

Sustainability Related Plans and Strategies

As part of our commitment to continued improvement, and based on internal and external, national, and regional experiences and knowledge acquired, we are working on completing, improving, and progressively implementing a set of Sustainability Policies and a System of Comprehensive Social Responsibility Management with respect to all our stakeholders.

We understand we must generate and keep a permanent dialog with each of our stakeholders and satisfy in a balanced way the interests of all of them to fulfill our business role in an ethical and responsible manner, thus making it possible for our business, as a whole, to become an increasingly positive contribution to the society.

In this particular way, we establish for ourselves and for our affiliates the general guidelines contained in our Local Community Engagement and Relations Policy that will be implemented with the communities where we operate.

These guidelines are intended to progress towards an integrated and consistent system of relations with the persons that live in their environments, which is relevant or appropriate to the different local realities, and which is sustainable according to the expected results and impacts both on the local communities and on the operations of the Company.

Considering the construction of projects, as well as the operation of the existing plants and on the understanding that an important part of the works related to the transactions of the plants are executed by contractors, we need to have a strong Local Community Engagement and Relations Policy in place. For this purpose, we have developed a Community Engagement Policy for Contractors whose purpose is to cause them to assume community engagement responsibilities.

Our main purpose is to achieve business goals by acting in a responsible manner and causing this responsibility to be recognized and generate legitimate, effective,

Stakeholder Two-way Dialog Process

COLLABORATORS

Workers and Trade Unions

(1) COSOC: Council of the Civil Society


efficient, and sustainable channels for a collaborative relation that will allow communities to become actually and legitimately benefitted from the productive activity developed by the Company.

This way, we expect to obtain the “social license to operate” and the “social license to be successful” in each community where we develop or have decided to develop our productive activity.

The transparency of the criteria and procedures to be eligible for social benefits from the Company, and the performance of local public accounts for the actions to benefit the community significantly mitigate the risk of causing the engagement and support actions to be misunderstood as a tool for restricting the freedom of those who receive social help.

AES Gener and Social Responsibility are subject to a series of regulations, standards, and initiatives, which have been defined by its parent, AES Corporation. In this sense there is a series of internal principles that were developed by using the AA1000 Stakeholder Engagement Standard as reference.

These principles cover various fields, from identifying and prioritizing the stakeholders to deciding the appropriate methodology to assume the community commitments and risk assessments.

As mentioned above, we adhere to the Universal Declaration of Human Rights and our Policy is consistent with the United Nations Guiding Principles on Business and Human Rights.

Purpose Description Expected Results

Effectively manage the joint work with local authorities

We hold face-to-face (or remote) meetings and constant communications with local authorities to

agree on the scope and purposes of the actions

That each action executed in the territory is confirmed and valued by the local authority

Coordination and permanent work with social leaders

We hold regular meetings with social leaders. Training to improve the management and

evaluation of the actions performed

Properly coordinate the management of the actions to be carried out with the participation of local leaders

Development of social programs that have a positive impact on the communities

We prepare quarterly reports of each program and raise periodic alerts as needed

Run programs that are of real interest to the communities and that enhance the areas of

productive and community development in the locations where we operate

Generate actions to enhance the reputational value of the Company

Every program or action developed in the community must be in line with the corporate

values and consistent with the axes established by the company

Perform actions in the territory to pursue not only fulfillment of the Social Responsibility commitment but also enhancement and validation of its local presence.

Define the direct beneficiaries of our actions

Each executed program reports the number of participants

Have accurate data of the number of beneficiaries and the groups to which they belong

Nuestra Compañía44


The monitoring actions concerning our stakeholder engagement strategy include:

• Meetings, coordination, and delivery of permanent information to local, provincial, regional, and national authorities.

• Focus on permanent information regarding work in the areas of influence of the Company for national authorities and parliamentarians.

• Coordination and joint work with social leaders and their organizations.

STAKEHOLDER ENGAGEMENT

The stakeholder identification and categorization process is carried out jointly between the corporate and local teams.

• Participation in activities together with beneficiaries and participants of our Social Responsibility programs.

• Coordinate and disseminate communications on Social Responsibility actions.

• Weekly report with respect to the activities performed with stakeholders, supervision of programs under development and main events that might be critical.

Our Strategy

054955

Our strategy Innovation and Development of New Technologies

Our Strategy48


OUR STRATEGYIn 2017, AES Gener S.A. was again the company with greater market share in terms of energy generated in Chile and also an important player in the Colombian and Argentine markets. In this context, we have the responsibility to lead the new dynamics in the energy sector and, based on our human team, to go beyond being the classic energy supplier to fully meet the energy needs of our clients. This view puts our stakeholders in the center of the acts that we carry out, a fact that is evidenced in our 2018-2022 Strategic Framework.

OUR GOALS AND COMMITMENTS

Our main goal is to meet the energy needs of our customers, adding value to their businesses, companies and/or entrepreneurships. This goal is set with the commitment to improve the lives of all people where we work and to make a sustainable difference in the communities where we develop our businesses:

The development of a wide range of social, economic, and environmental initiatives that

improve the lives of

our clients and their

communities

A protection of

the environment

where we develop

our business;

The care and

empowerment of

our people; and

The improvement of

the long-term return

of our investors.

I II III IV

Pillars of Development of our Businesses

Our Strategy50

Knowledge and harmony with our

customers

Next Generation Business Models

Ability to develop products and

services

Capacity to formalize ideas

Generation of trust with our stakeholders

Add more Renewable

Energy to the portfolioLeverage our existing

platforms

Safety | Integrity | Having Fun through work | Agility | Excellence

Profitable growth by adding value to our stakeholders

2018-2022 STRATEGIC FRAMEWORK

Our strategic framework is graphically represented with a temple, where the values of the Company are the base of the temple, our strategy agents are represented as the core of the foundations, the action

priorities, as the pillars, and our strategic goal, i.e. profitable growth by adding value to stakeholders, as the roof of the temple.


Our people must be honest, trustworthy, and responsible. The

integrity is at the core of how we conduct ourselves, interact

with each other and relate with our stakeholders at work.

Those who are part of the organization know that work is

interesting and rewarding. We encourage our people to have

fun through work and to appreciate the satisfaction of being

part of a team that makes a positive difference.

Put safety first

Act with Integrity

To ensure safe operations in our facilities is the cornerstone

of our daily activities and decisions. The members of the

Company should give priority to safety and prevention of

risks associated with the work for its staff, contractors, and

surrounding communities. To maintain this safety culture,

we carry out various activities on a regular basis, including

monthly talks in all our facilities, with the involvement of all

the workers across the organization.

I. Corporate Values and Business Ethics

Throughout our history, we have been characterized by our permanent commitment to a charter of values that constitutes the central axis of our Code of Conduct, thus providing an appropriate support to our daily activities.

In this same sense, AES Gener promotes the practical application of these values at work, developing

activities and materials to promote reflection on them. The Code of Conduct is delivered to, and accepted by, all collaborators, contractors, suppliers, and business partners. It is also available on the website of the Company.

The main aspects of the charter of values are:

Have fun through work

Our Strategy52

II. Strategy Agents

• Knowledge and harmony with our customers. Our clients are experiencing constant changes during the development of its products and services, and each time they face different challenges due to changes in their markets. To be able to help them to find the best energy solutions so that they can adopt their strategy, we foster a culture that puts the customer at the center of the decision-ma-king process.

• Ability to Develop Products and Services that Meet the Needs of Clients. Understanding the cu-rrent and future needs of our clients, the process of devising and exploring how to deliver the best energy solution for the customer by adding value to our shareholders. AES Gener uses methods

The wide experience and deep knowledge of the markets where

we operate allows us to offer value-added solutions to the new

business opportunities and market challenges. This agility has

been translated, for example, in the development of new business

opportunities, such as energy exports from Chile to Argentina,

the development of energy storage solutions.

We strive to be the best in all that we do and to perform at

world-class levels.

and creativity to link the needs of the client to anything that is economic, social, and technologi-cally feasible.

• Capacity to formalize ideas. We foster a culture where taking action is the default status, with a risk management process to evaluate, measu-re, control and manage the risks, and to respond quickly to market trends.

• Generation of trust with our stakeholders. This is a firm belief in the reliability, truth, and capaci-ty of the Company to fulfill our commitments. In our view, trust creates a competitive advantage by showing experience and long-term commit-ment to our stakeholders.

Agility

Strive for Excellence


III. Strategy Pillars

i. Add more Renewable Energy to the Portfolio. Enrich our asset portfolio with renewable generation units. The main goals and/or actions are:

• Reduce CO2 emissions of our portfolio.

• Complete the construction of projects by adding renewable energy, diversifying our generation portfolio.

• Provide new solutions or energy applications to facilitate and leverage an increased use of renewable energy in the electrical systems where we participate. An example of this are the distributed energy solutions and also the use of batteries (BESS), where the contribution of our parent, AES Corporation, and its subsidiary, Fluence, have a crucial role and a worldwide leadership.

ii. Leverage our Existing Platforms. Preservation of the value of our business and its main assets through:

• Diversification of the portfolio of clients with diverse types of needs, covering different segments, such as commercial, industrial, and mining customers of varied sizes, and also the electricity distribution companies that carry our energy to residential customers.

• Extension of the useful life of our Colombian hydroelectric plant (Chivor) through the extension of the water concession, which allows us to implement necessary infrastructure improvements.

• Develop our businesses based on our current platform to diversify and seek new sources of profitability (e.g., water desalination equipment).

iii. Next Generation Business Models. The energy sector is changing all over the world and to cope with this dynamic, we need to be able to look at the market with new and innovative business models. In this line, the main steps to follow are:

• Design cost-effective energy services for our customers

• Deepen the services and solutions that we are already delivering to our customers, such as distributed generation and implementation of batteries.

• Penetrate new market segments adapting ourselves to their needs.

• Attract and retain human talent in accordance to these challenges, thus enriching our knowledge.

• Position the trademark before our clients as an energy service provider going beyond the classic electric power supplier.

• Actively participate in the various regulatory discussions pertaining to the sector with the aim of delivering more and better services to our customers.

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INNOVATION AND DEVELOPMENT OF NEW TECHNOLOGIES

AES Gener, in line with the changes in the market, has reviewed the innovation practice and has made it an integral part of the business strategy. An example of this, during the second half of 2017, was the creation of the Transformational Solutions Department, under the Commercial Vice-Presidency. The main mission of this new department is to administrate the Research and Development managements and the different Product and Services managements (including among them the Distributed Generation Management), as a natural evolution between the conception and development of new products and services, and their subsequent exploitation. This new structure allows the innovation process to be in direct contact with the business strategy, and to be able to enter, as from such strategy, an initial stage of discovery, to prepare a value proposal and the applicable business model, to develop and deploy prototypes (if necessary) so that those successful initiatives eventually move to a stage of exploitation and consolidation in new lines of business.

In this 2017, we started preparing the Digital Strategy, as a necessary step in the face of the digital revolution that is having a strong impact on the electricity generation and distribution sector. We have understood that our customers in turn have become more sophisticated and demand more technological solutions, which, together with future regulations, will push toward an increasingly intelligent and efficient use of energy. In addition, new data science and artificial intelligence technologies are gaining greater maturity and are consistent with a scenario where the operation of our assets and business as a whole must be even more cost-efficient, intelligent, and agile.

Also, the early development of new lines of business, including among them the energy efficiency services,

electro-mobility, and the already mature development of distributed generation, constitute the first initiatives that will make up the product and services portfolio of AES Gener.

Maintaining also the balance between the pursuit of new business opportunities and the exploitation of the existing asset portfolio. Likewise, certain alternative analysis of the different uses of current facilities and improvements in the efficiency of the current coal-fired units were developed through the implementation of artificial intelligence in control systems and performance of maintenance inspections in photovoltaic generation plants by means of drones fitted with thermal imaging cameras. This practice was recognized and replicated by AES businesses at a global level. The above, together with the regular use of drones for mechanical maintenance inspections, as well as the use of remotely operated vehicles (ROV) in submerged inspections allows the consolidation of innovative practices in business processes.

Finally, to sustain the innovation process, we approved the development of the Applied Energy Solutions LAB (AES LAB) which will be the innovation HUB of AES Gener, whose main purpose is to look for solutions to problems of the Company and industry through Open Challenges with external innovation ecosystems, universities, and investigational sites. In the future, AES LAB will seek to encourage the creativity of these groups with the aim of building a portfolio of sustainable projects/initiatives/solutions that can be integrated into the Company’s products and services, once they have been evaluated, selected, incubated, and developed in our system for continuous innovation.

Our Business56 Our Our OuuOurOurOuOuuOuOOOururuOurOuOuruu BusisiBusiB iBusiBusBussBusiiBBuBusiBusisinessnessnessnessnnnesseenessesssssnnessne snnessnessss556

Our Business

06

5863727576

Business Model and Main Assets Areas of BusinessProjects under DevelopmentProjects under ConstructionProgress of Projects under Construction

Annual Report 2017 AES Gener 57AnnuAnn al Reporpoeporp t 20017 A1 ES Gener 55555555555555777777777777

Our Business58

COMPANY PROFILE

AES Gener S.A. (AES Gener, the Company) is an open corporation whose mission is to improve lives by providing safe, reliable, and sustainable energy solutions in all the markets we serve, following the commitments assumed with customers, shareholders, workers, communities, suppliers and other persons and groups to which we are related. The Company operates a portfolio of generation assets in Chile, Colombia, and Argentina, with a total capacity of 5813 MW.

It is the second largest generator of Chile in terms of installed capacity with 4.150 MW in operation at the end of 2017, and the first in terms of gross electricity generation with 21.3 TWh distributed between the SIC and the SING. The combination of generation alternative gives AES Gener competitive advantages in the Chilean electric market, for not being exclusively dependent on a resource to produce electricity. AES Gener provides electric power in 4 independent markets: SIC and SING in Chile, SIN in Colombia and SADI in Argentina.

BUSINESS MODEL AND MAIN ASSETS

AES Gener operates a portfolio of electricity generation assets with presence in four independent markets: SIC and SING in Chile, SIN in Colombia and SADI in Argentina. The business model of the Company is based on the following axes.

OUR BUSINESS

• Diversification: AES Gener operates a diversified portfolio of assets in terms of markets, geography, customers, and technologies.

• Flexibility: The diversification of assets, technologies, customers, and markets provides operational flexibility to meet the energy supply commitments in a reliable manner and using varieties of fuels.

• Innovation: We position innovation at the core of our corporate culture, and this has allowed us to make significant progresses, such as the installation of the first energy storage solution, by means of batteries, for commercial use in electric power generation in Chile. We have also been pioneers in our industry in exploring the business of water desalination.

• Agility: The wide experience and deep knowledge of the markets where we operate allows us to offer value-added solutions to the new business opportunities and market challenges. This agility has been translated, for example, in the development of new business opportunities, such as energy exports from Chile to Argentina.

• Reliability: AES Gener baseload plants are key to providing efficient, reliable, and highly available energy to the systems where we operate.


4,150 1,020MW MW 643 MW

Installed Capacity Chile

Installed Capacity Colombia

Installed Capacity Argentina

The Company is an open corporation whose mission is to improve lives by providing safe, reliable, and sustainable energy solutions in all the markets we serve.

SIN

1,020 100%

1.020 100%

SADI

643 100%

643 100%

3,029 52%

1,458 25%

1,291 22%

13 0%

21 0%

5,813 100%

Coal

Gas/Diesel

Hydroelectric

Biomass

Solar

Total

SIC

1,644 60%

816 30%

271 10%

13 0%

2,744 100%

SING

1,385 99%

21 1%

1,406 100%

Chile Colombia Argentina Total

• Excellence: The experience, path and commitment to excellence and the best practices of AES Corporation are transferred to AES Gener. This constant strive for excellence has been recognized with several awards from prestigious institutions.

As of December 31, 2017, we operate, through AES Gener S.A. and its affiliates, a generation assets portfolio with a total capacity of 5,813 MW, with presence in Chile, Colombia, and Argentina.

Our Business60

The generation assets run by the Company in the SIC amount to 2,744 MW, coming from hydroelectric and thermoelectric plants, and a biomass-fired plant. The thermoelectric plants operated by the Company in the SIC use coal, gas, and diesel as fuels. The most relevant assets operated by the Company in the SIC are: Ventanas Complex, with a total capacity of 884 MW; Guacolda Complex, with a total capacity of 760 MW; Renca Complex, with a total capacity of 479 MW; and hydroelectric assets with a total capacity of 271 MW.

The generation assets run by the Company in the SING amount to 1,406 MW, coming from thermoelectric plants and a solar plant. The thermoelectric plants run by the Company in the SING use coal as fuel.

The assets run by the Company in the SING are: Angamos Complex, with a total capacity of 558 MW; Cochrane

Complex, with a total capacity of 550 MW; Nueva Tocopilla Complex, with a total capacity of 277 MW; and the Andes Solar photovoltaic plant, with a total capacity of 21 MW.

In Colombia, the Company has generation assets with a capacity of 1,020 MW, mainly coming from Chivor hydroelectric plant, with a capacity of 1,000 MW, and Tunjita hydroelectric plant, with a capacity of 20 MW.

In Argentina, the Company owns TermoAndes Plant, a combined cycle thermoelectric plant with a capacity of 643 MW.

Below, we present a summary of the main subsidiaries and affiliates of the Company, together with their respective electric generation assets.

In Chile, the Company has a electricity generation capacity of 2,744 MW, made up of generation assets in the SIN and the SING.


SIC SING SIN SADI

MW MW MW MW

AES Gener S.A. Ventanas 1 120 Tocopilla 277

Ventanas 2 220

Laguna Verde TV 47

Laguna Verde TG 19

Laja 13

Alfalfal 178

Queltehues 49

Maitenes 31

Volcán 13

Andes Solar 21

Sociedad Eléctrica Santiago SpA (*) Renca 100

Nueva Renca 379

Los Vientos 132

Santa Lidia 139

Guacolda Energía S.A. Guacolda 760

Empresa Eléctrica Ventanas S.A. Ventanas 3 272

Empresa Eléctrica Campiche S.A. Ventanas 4 272

Empresa Eléctrica Angamos S.A. Angamos 558

Empresa Eléctrica Cochrane SpA Cochrane 550

AES Chivor S.A. Chivor 1,020

TermoAndes S.A. TermoAndes 643

Total 2,744 1,406 1,020 643

Main Electric Generation Subsidiaries and Assets

*As of the date of publication of this report, the process for the sale of Sociedad Eléctrica Santiago SpA to Generadora Metropolitana SpA is ongoing.

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Energy Storage Assets

The company has an energy storage capacity of 52 MW, made up of three units: Andes BESS, adjacent to Andes substation, with a capacity of 12 MW; Angamos BESS adjacent to Angamos Plant, with a capacity of 20 MW; and Cochrane BESS adjacent to Cochrane Plant, with a capacity of 20 MW.

Electricity Transmission Assets

AES Gener has transmission lines and substations. In the SIC, the Company has 455.8 kilometers of transmission lines (including Guacolda transmission assets) and 12 substations. In the SING, the Company has 808 kilometers of transmission lines and 11 substations. In the SADI, the Company has one substation.

Additionally, through its subsidiary InterAndes, the Company has the only transmission line of 268 kilometers that connects the SADI in Argentina with the SING in Chile (section in Argentine territory).

Gas Transport Assets

AES Gener participates in the natural gas transport, through GasAndes S.A. Pipeline and GasAndes Argentina S.A. Pipeline.

Water Desalination Assets

In Chile, AES Gener owns water desalination assets with a capacity of 437 liters per second (l/s), 56 l/s of which are reverse osmosis, and are adjacent to Angamos Plant. The rest of the desalination capacity runs with various technologies.

SIC SING SADI

AES Gener Guacolda AES Gener Angamos Cochrane Interandes

Voltage Circuit Length (kms) Total

345 Simple 142 268 410

220

Simple 203 203

Double 85 69 135 142 152 584

110

Simple 15 20 33 68

Double 252 252

66 Simple 14 14

Total 366 90 514 142 152 268 1531

Main Transmission Assets


CHILEAN ELECTRIC GRID

Since 1982, the electricity sector in Chile has been structured based on private initiative and property, in a framework of market competition for the generation segment and for transmission expansions, with a regulation based on an efficient business distribution and transmission model.

In Chile, except for the small isolated systems of Aysén and Punta Arenas, the electric generation activities are developed around two independent electrical grids: the Central Interconnected Grid (SIC), which covers from the south of the region of Antofagasta (bay of Paposo) to the region of Los Lagos (town of Quellón) and meets the electric demand of approximately 92% of the Chilean population; and the Great Northern Interconnected Grid (SING), which covers the regions of Tarapacá, Antofagasta and Arica-Parinacota, whose main users are the mining and industrial companies. In both grids, electricity generation is organized by the National Electric Grid Independent Coordinator (CISEN), in such a way as

AREAS OF BUSINESS

Hydroelectric Hydroelectric

Thermoelectric Thermoelectric

Thermoelectric Thermoelectric

NCRE NCRE

NCRE NCRE

SIC Installed

TOTAL POWER Installed

GENERATION

SING Installed

2017 Total Energy Production

2017 Total Energy Production

GWh

GWh

MW Gross

MW Gross

of the Chilean Grid

of the Chilean Grid

37% 40%

84% 89%

44% 51%

16% 11%

19% 10%54,970

19,251

17,691

5,850

75%

25%

Total Installed Power for Electric Supply in Chile

to minimize the operation costs and ensure the greatest economic efficiency in the set, while meeting at the same time the demands of service quality and safety established in the current provisions.

On November 21, 2017, we reached one of the most relevant milestones in the field of power transmission in the history of Chile with the synchronous interconnection of the greater northern electricity grid and the central electricity grid (SING and SIC respectively). With this milestone, the National Electric Grid (SEN) was created, which joins the city of Arica with the Islands of Chiloé through a more than 3,000 km transmission network. This first stage of the interconnection project mainly includes a 600 km 500 kv double circuit transmission line running from Mejillones (in the Region of Antofagasta) to the area of Cardones in Copiapó (in the Region of Atacama). In this first stage of operation the interconnection will be restricted in its transmission capabilities due to the still pending entry into full operation of the Los Cardones

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Polpaico 2 x 500 kV Project. In a future operation system, with an interconnection without restrictions except for those inherent in the technical design, a new market of electric power is created, which integrates its predecessors, SING and SIC, in terms of offer and supply.

The total installed capacity for the electric supply in Chile, considering the plants of all companies members of the SIC and the SING, at 2017 year-end reached 23,541 MW.

During 2017, 29% of the installed capacity in the SIC and the SING accounted for hydroelectric capacity, 56% for thermoelectric capacity, and 15% for wind and solar capacity. Out of this total, AES Gener contributes 4,150 MW, equivalent to an 18% share, considering a thermoelectric capacity of 3,858 MW, a hydroelectric capacity of 271 MW and a solar plant of 21 MW. During 2017, AES Gener was the largest generator of the country and main thermoelectric generator.

Central Interconnected Grid (SIC)

The total installed capacity in the SIC, considering the plants of all companies members of the CDEC-SIC, as of the end of 2017 reached 17,691 MW gross, equivalent

to 75% of the total installed capacity of the SIC and SING in Chile. Thirty-seven per cent of that installed capacity is supplied by hydroelectric plants, 44% by thermoelectric plants and the remaining 19% among NCRE plants (mainly wind and solar plants).

Hydrology continues to be a key factor in the SIC since the condition of the tributary rivers and the initial level of the reservoirs determine to a large extent the dispatch of hydroelectric and thermoelectric plants.

Year 2017 began with an availability of hydro power a 47% lower than the previous year, reaching 1,921 GWh on January 1, 2017. At the end of the year, the system had sufficient dam water to generate approximately 3,410 GWh, a capacity 77% greater than as of December 31, 2016.

During 2017, the annual gross energy generation in the SIC was supplied 39.52% by hydroelectric plants, 50.59% by thermoelectric generation and the remaining 9.89% by generation coming from NCRE plants (mainly wind and solar plants). The total electric power production during 2017 in the SIC reached 54,971 GWh, 1.93% higher than in 2016.

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Equivalent Energy Accumulated in Reservoirs (GWh)

5.000

4.000

3.000

2.000

1.000

0

2017

2016

Historic Average

GWh


2010 2011 2012 2013 2014 2015 2016 2017

Month US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh

January 114.1 174.3 188.3 122.7 152.4 117.7 50.4 54.3

February 138.9 242.7 188.8 128.3 142.6 145.3 58.3 55.5

March 144.5 260.8 240.1 178.5 200.1 146.1 76.3 84.7

April 139.5 223.9 279.3 171.8 146.7 139.7 52.4 59.3

May 145.3 246.9 260.3 219.4 148.7 169.3 43.6 64.6

June 157.8 257.4 146.8 251.5 175.5 91.1 106.3 96.4

July 151.9 196.0 139.4 240.9 202.7 73.7 102.2 54.7

August 181.4 167.1 172.0 209.9 74.8 54.5 47.2 67.6

September 132.7 165.9 165.3 95.8 90.1 41.3 49.7 51.5

October 134.2 136.0 181.1 71.2 76.8 35.9 50.2 39.1

November 143.0 153.9 190.5 70.9 90.4 37.5 46.9 33.6

December 199.9 171.2 181.7 83.9 116.8 43.2 47.4 43.9

Average 148.6 199.7 194.5 153.7 134.8 91.3 60.9 58.8

Marginal Cost of Energy in 220 KV Alto Jahuel

RELEVANT NEWS OF THE SIC IN 2017

During 2017, the grid installed capacity increased in 643.4 MW. Our of total power incorporated in the SIC, 9.7 MW came from hydroelectric generation, 13.8 MW from thermal generation, 268.7 MW from wind generation and 352.2 MW from solar generation. The most relevant were: El Romero Photovoltaic Solar Park (196 MW), San Juan Wind Park (193.20 MW), Quilapilún Solar Park (103.02 MW).

SHARE OF AES GENER IN THE SIC

The electricity generation capacity of AES Gener in the SIC, as of December 31, 2017, was 2,744 MW. The AES Gener matrix contributes 690 MW, distributed in four hydroelectric plants and four thermoelectric plants.

The Alfalfal, Maitenes, Queltehues and Volcán hydroelectric plants represent 271 MW, while Ventanas plants with its two units, Laguna Verde TV (steam turbine), Laguna Verde TG (gas turbine) and Laja Cogeneration Plant are part of the thermoelectric capacity of AES Gener with a 419 MW installed power.

Meanwhile, Eléctrica Santiago has a total installed power of 750 MW and is made up of the Renca and Nueva Renca thermoelectric power, Los Vientos TG Plant and Santa Lidia TG Plant.

With regard to the plants of the other companies of AES Gener present in the SIC, the subsidiary Eléctrica Ventanas provides 272 MW through its Nueva Ventanas

During 2017, the new efficient energy input and the high thermal generation availability helped to mitigate the rise in the marginal costs of the grid. Both effects caused

an average marginal cost of 58.8 US$/MWh in 2017, as compared with the average 60.94 US$/MWh recorded in 2016 (at Alto Jahuel node).

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coal-fired plant and the subsidiary Eléctrica Campiche provides 272 MW through its Ventanas IV coal-fired plant. On the other hand, the subsidiary Guacolda contributes 760 MW to the system through the five units of Guacolda thermoelectric power plant.

During 2017, AES Gener sold to its customers in the SIC and other producers of the grid, a total of 12,189 GWh, 4,623 GWh of which were intended for distribution companies.

At an annual physical level, 100% of the power sold to customers was covered with generation from AES Gener and its subsidiaries, plus purchases to other producers of the grid, by virtue of the long-term contracts executed by the Company: Masisa Ecoenergía S.A, KDM Energía S.A, Energía Coyanco S.A, Agrícola Ancali Limitada, Eléctrica San Miguel SpA, Empresa Eléctrica Aguas del Melado SpA and Eólico Las Peñas SpA.

During most part of the year, Nueva Renca Plant operated by means of a lease agreement that allowed to ensure the availability of Liquified Natural Gas (LNG) for the operation of the plant, thus making it possible to generate 1,617.5 GWh with LNG. In addition, the plant injected 21.05 GWh into the system using its own LNG and, to a lesser extent, propane (LPG) and 127.13 GWh with diesel oil. The total production was 15% lower with respect to the generation of year 2016.

During 2017, the plants of AES Gener, including Guacolda and Nueva Renca, accounted for 22.19% of the SIC gross generation.

AES Gener Gross Power (MW)

Ventanas Complex 884

Laguna Verde TV 47

Laguna Verde TG 18

Laja 13

Sociedad Eléctrica Santiago 750

Total 1,712

AES Gener Energy Balance Energy (GWh)

Coal Net Production 4,936

Hydro Net Production 1,314

LNG Net Production 7

Diesel Net Production 133

Biomass Net Production 26

Purchases to other generators 1,621

Spot Purchases 539

Intercompany Purchases 3,546


Alfalfal 178

Queltehues 49

Maitenes 31

Volcán 13

Total 271

Guacolda Energy Gross Power (MW)

Guacolda Plant 760

Thermoelectric Power Plants of AES Gener Group in the SIC

Hydroelectric Power Plants of AES Gener Group in the SIC


Sales Energy (GWh)

Regulated Customers 4,623

Non-regulated Customers 3,789

Spot 231

Intercompany sales 3,546

Total Sales 12,189

Great Northern Interconnected Grid (SING)

The SING is characterized for having very scarce water resources for electricity generation. Therefore, the grid installed capacity, which as of the end of 2017 reached 5,850 MW gross, is based on an 84% of thermoelectric power generation, which at the same time is made up of 37% by natural gas-fired plants; 46% by coal-fired plants and 5% by oil-fired plants. The remaining 16% corresponds

to NCRE-type generation capacity. The consumption cen-ters are separated by large distances and the majority of them are mining companies, some of which have a high relative weight with respect to the total grid consumption.

The total electric power production during 2017 in the SING reached 19,251 GWh, 1.11% lower than in 2016. A major factor that influenced this decrease has to do with the strike of workers of Minera Escondida, which lasted 43 days, since the work of the mining company represents approximately 20% of the SING demand. Seventy-seven per cent of the annual gross energy generation in the SING was supplied by generation from coal, 10% for generation from gas, 2% for generation based on diesel or fuel oil and the remaining 12% on the basis of Non-Conventional Renewable Energy (NCRE). On the other hand, the average marginal cost of the system was reduced from 61.8 US$/MWh in 2016 to 55.6 US$/MWh in 2017.

Marginal Cost of Energy in 220 kV Crucero

2010 2011 2012 2013 2014 2015 2016 2017

US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh US$/MWh

January 100.6 101.6 64.7 99.2 92.6 49.7 48.5 61.0

February 148.2 96.1 88.1 68.8 98.2 49.6 48.5 60.2

March 144.5 118.6 78.5 65.8 73.3 48.3 49.6 57.4

April 143.9 131.9 112.2 82.1 97.2 53.0 52.3 51.5

May 101.0 104.5 112.3 73.6 86.6 46.4 73.4 60.2

June 120.6 126.2 132.9 74.5 84.8 76.4 85.0 54.6

July 113.9 76.5 74.9 81.9 85.4 50.6 82.2 48.5

August 108.0 74.5 67.5 80.0 58.0 59.5 49.7 47.3

September 121.7 66.5 71.7 64.3 62.6 57.1 63.8 49.0

October 108.7 105.5 69.1 90.1 61.2 72.1 47.5 58.0

November 123.8 83.2 81.6 88.3 57.9 73.6 60.4 59.8

December 122.9 65.6 84.9 95.0 51.5 50.2 80.7 59.9

Average 121.5 95.9 86.5 80.3 75.8 57.2 61.8 55.6

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70

60

50

40

US$ / MW

RELEVANT NEWS OF THE SING IN 2017

During 2017, the installed capacity of the grid increased in 2,823 MW due to the coming into commercial operation of several projects. Our of total incorporated power, 2,795 MW came from solar power generation and 28 MW from geothermal energy. The most relevant of them are the Bolero Photovoltaic Park (147 MW) and Finis Terrae Solar Park (138 MW).

SHARE OF AES GENER IN THE SING

In the SING, AES Gener has a gross generation capacity of 1,408 MW, made up of the contribution of 279 MW from the Nueva Tocopilla Plant, 21 MW from Andes Solar Plant owned by AES Gener; 558 MW from Angamos Plant with its two units, owned by the subsidiary Eléctrica Angamos and 550 MW from Cochrane Plant owned by the subsi-diary of the same name.

The coal-fired plants of AES Gener, Nueva Tocopilla, Angamos and Cochrane, have BESSs (Battery Energy

Storage Systems) that allows them to replace a portion of its reserve base, increasing its maximum dispatch power. The 12 MW BESS of Nueva Tocopilla Plant was installed in Andes substation of the SING, while the 20 MW BESS from Angamos Plant was installed in Angamos substation. The BESS of Cochrane has a capacity of 20 MW, installed in Cochrane substation.

In addition, with respect to the export of electricity to Argentina, there was an exchange both in February and in March, with a total net transfer toward the SADI of 35.45 [GWh].

In operational terms, in 2017 Nueva Tocopilla, Angamos and Cochrane plants contributed to the SING a gross production of 2,028 GWh, 3,833 GWh and 3,228 GWh. All of the above is equivalent to 47.21% of the total gross production of the SING.

SING: Marginal Cost of Energy in 220 kV Crucero

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Nueva Tocopilla 275

Andes Solar 22

Angamos 558

Cochrane 550

Total 1,405

Thermoelectric Power Plants of AES Gener Group in the SING


Coal Net Production 8,123

Solar Net Production 64

Purchases 37

Sales Energy (GWh)

Spot 377

Spot (re-routing) 2,098

Contracts 5,762

Total Sales 8,237

COLOMBIAN ELECTRIC GRID

Since 1994, the Colombian electricity sector allows private participation in different segments, within a framework of market competition for the generation and commercialization of electric power, and in a regulated environment for transmission and distribution.

The Colombian Electric Grid is structured around a single National Interconnected Grid (SIN), that, as of December 31, 2017, had an effective installed capacity of 16,782 MW.

Out of this total, 69.9% corresponds to hydroelectric capacity, 29.2% to thermoelectric capacity, and 0.91% to alternative capacities. The power demand during 2017 reached 66,891 GWh, registering an increase of 0.9% with respect to the 2016 demand.

Energy imports with Ecuador recorded a decrease in the last year, amounting to 194.2 GWh, as a result of a decrease in exchange prices, and exports amounted to 18.9 GWh, representing 0.03% of the demand served by the Colombian generator park.

AES Gener, through the subsidiary AES Chivor owns the Chivor Hydroelectricity Plant with an installed capacity of 1,000 MW, and La Esmeralda reservoir, and Tunjita, a 20 MW run-of-the-river hydroelectric power plant that, as of the end of December 2017, represented 6.1% of the total installed capacity in the SIN.

Hydrological Year in Colombia

The phenomenon of La Niña, of a “weak” category, occurred by the end of 2016, allowed the atmospheric conditions to favor the formation of rains in the first quarter of 2017 for both Chivor and the SIN. As from March 2017, the area returned to neutrality and in the fourth quarter the conditions of Weak La Niña appeared again, but without direct influence in the rains of the country.

During the first half of 2017, the National Interconnected Grid (SIN) recorded a significant increase in hydrology with contributions of 115.15% of the historical mean, and during the second half year, it recorded a decrease of 81.84% of the historical mean. Regarding AES Chivor, the contributions in the first half were 97.64%, and even lower in the second half of the year with volumes that accounted for 80.09% of the historical mean.

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The Exchange prices diminished a 64.5% with respect the previous years as a result of rain formation in the first quarter of 2017 both for Chivor and the SIN, together with a low growth of the economy.


Chivor 1,000

Tunjita 20

Total 1,020

AES Chivor Hydroelectric Power Stations


Net Production 3,852

Purchases 2,168

Sales Energy (GWh)

Spot 2,123

Contracts 3,952

Total Sales 6,075

Increase of Capacity

During 2017, 468.5 MW of new generation capacity were inserted, 69.9% of which represented hydroelectric capacity, 29.2% represented thermoelectric capacity and 0.9% represented self-generation cogeneration plants.

SHARE OF AES GENER GROUP IN THE SIN

In the SIN, AES Chivor has a gross generation capacity of 1,020 MW, made up by Chivor hydroelectric power plant and Tunjita 20 MW run-of-the-river hydroelectric power plant, which came into operation during 2016. This represents 6.1% of the installed capacity of 2017.

180

160

140

120

100

80

60

40

US$ / MW

Energy Price in the Colombian Market (SIN)

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Salta 643



Sales Energy (GWh)

Spot 3,464

Contracts 1,013

Total Sales 4,477

ARGENTINE ELECTRIC GRID

In Argentina, the generation and distribution activities are developed through the Argentine Interconnected Grid (SADI), the main electric power transmission grid covering the national territory.

The total installed power for the electric supply in Argentina, considering the plants of all the companies members of the SADI, reached at the end of 2017 36,505 MW, 62.7% of which come from conventional thermoelectric generation, 30.4% from hydroelectric plants, 4.8% from nuclear generation and the remaining 2.1% from other sources of generation.

Electrical demand in the SADI during 2017 was 137,170 GWh, which represented a 0.65% decrease as compared with 2016. Sixty-four point five percent of this demand was met by energy from conventional thermal source, 28.9% by hydroelectric power, 4.2% by nuclear energy and 2.5% by imports and other energy sources. On February 24, 2017, the historical record of power in the SADI was broken and reached 25,628 MW. On the same day, the historical record of energy demand was also broken and reached 526.3 GWh.

SHARE OF AES GENER GROUP IN THE SADI

In the SADI, we participate through our subsidiary TermoAndes with the 643 MW natural gas Salta combined cycle Plant, which is located in the province of Salta and connected to the SADI and SING in Chile. Before the plant was connected to the SADI, its power was supplied to the SING only through a transmission line owned by the subsidiary InterAndes S.A. (InterAndes). In September 2007, in accordance with requirements of the Argentine authorities, the TermoAndes steam turbine was connected to the SADI, in an attempt to maximize the export of energy to the SING. During 2008, its two gas turbines were connected to the SADI, maintaining the steam turbine unit for the Chilean

market. However, as from mid-December 2011 to date, 100% of the TermoAndes generation was sold to the SADI, due to the revocation of the power export permit from Argentina to Chile.

During 2017, the generation of Salta Plant was exclusively allocated to the SADI, which injected 4,477 GWh, 100% of which were generated with natural gas. These 1,052 GWh were sold to customers, under the scope of the Plus Energy program, and 3,464 GWh were traded in the spot market.

During 2017, there were no new additions of plants to the Plus Energy market.

In the SADI, we participate through our subsidiary TermoAndes with the 643 MW natural gas Salta combined cycle Plant, which is located in the province of Salta and connected to the SADI and SING in Chile.

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We have an extensive portfolio of electrical projects to answer to the needs of a very dynamic market that appreciates the supply of reliable, clean and highly competitive energy, including, as a significant feature, renewable energy sources.

The above is consistent with the commitments acquired by the Chilean Generators Association to stop the development of new coal-fired plants with no carbon capture and storage or other equivalent technologies. We adhere to that commitment and will seek to contribute in this way to the sustainable development of Chile.

PROJECTS UNDER DEVELOPMENT

In this scenario, today our business development strategy is based on three pillars:

• Development of our own projects starting with the search for land and ending with the plant in operation

• Purchase of assets under development

• Joint development agreements for third parties to provide projects as and when required that can be finally operated and funded by AES Gener.

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Along with the above, the business development corporate strategy has been straightly directed to the solution of the present market demands, taking advantage of the opportunities of natural synergies with existing assets. This way, during this year, we have successfully made progress in the development of desalination plant projects to allow the expansion of the current capacity of fresh water supply and whose purpose is to serve a variety of customers ranging from mining and industrial companies to health service providers, thus generating a solution for the water shortages affecting some parts of the country.

PROJECTS UNDER DEVELOPMENT

Andes Solar (expansion from 21 to 220 MW)

Currently, the Andes Solar photovoltaic plant, which is situated on the region of Antofagasta and whose initial phase of 21 MW was put into operation during 2016, is undergoing the final permit application stage. The construction of this project is expected to begin late in 2018.

Desal Guacolda 1400 l/sec

The project considers the construction of a desalination plant located in the premises of Guacolda Complex, in the region of Atacama (Commune of Huasco). This is a low

We have an extensive portfolio of electrical projects to answer to the needs of a very dynamic market that appreciates the supply of reliable, clean and highly competitive energy, including, as a significant feature, renewable energy sources.

impact project since it will be conducted in the existing facilities and using that infrastructure, thus reducing the environmental impact that could be caused by a similar project developed in an isolated and individual manner.

Desal Guacolda, currently under environmental processing, expects to obtain all the permits early in 2019.

Desal Ventanas 560 l/sec

This project involves the construction of a desalination plant located in the premises of Ventanas Complex, in the region of Valparaiso (Commune of Puchuncaví).

The project considers the construction of a desalination plant that -as in the case of Desal Guacolda- generates a low impact project since it will be conducted in the existing facilities and using the existing land and infrastructure. This plant, whose environmental processing will start soon, expects to obtain all the permits early in 2019.

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PROJECTS UNDER CONSTRUCTION

Alto Maipo Hydroelectric Project (Sic- Chile)

The Alto Maipo hydroelectric project (PHAM) considers the construction of two run-of-the-river plants in hydraulic series in the basin of the Maipo river called Alfalfal II (264 MW) and Las Lajas (267 MW), with a total installed power of 531 MW. The environmental approval of the project was granted in 2009, the transmission system was approved in 2010 and the electric concession was obtained in 2012.

The project is located in the Metropolitan Region and, as of December 31, 2017, a 60.2% construction progress was reported.

Originally, we entered into the main contracts for the supply of generation equipment and the construction of underground works with three top-level international contractors in 2012. The construction of the main civil works and tunnels was entrusted to the Austrian firm Strabag AG, through its Chilean subsidiary Strabag SpA, and initially (until June 7, 2017) Constructora Nueva Maipo SpA (CNM), a consortium between the German company Hochtief A.G. and the Italian company CMC Di Ravenna.

Moreover, the subsidiaries in Brazil and Chile of the German company Voith Hydro are responsible for

the supply and assembly of the electromechanical equipment of the plants.

On June 7, 2017, Alto Maipo decided to cause the early termination of the contract with CNM, after the company made up of Hochtief and CMC Di Ravenna failed to comply with its contractual responsibilities. Alto Maipo took over the work abandoned by CNM since its withdrawal. Later, after several negotiations, on November 24, 2017, we executed a Term Sheet with Strabag (the “Term Sheet”) in order to transfer these activities to Strabag. On January 1, 2018, the activities in Yeso and Volcán were transferred to Strabag, thus giving continuity to the works during the negotiation of a new contract.

Alto Maipo constitutes an important source of energy for the SIC through the provision of a volume of clean, efficient and economic energy of approximately 2,200 GWh/year. In addition, the project has a low environmental impact since it involves 90% of underground works and no reservoir and brings relevant advantages to the SIC concerning the security of supply resulting from its proximity to the city of Santiago and the consequent savings in electric power transmission, which involves only 17 kilometers of new transmission lines.

Alto Maipo constitutes an important source of energy for the SIC through the provision of a volume of clean, efficient and economic energy of approximately 2,200 GWh/year.

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Alto Maipo Hydroelectric Project (SIC- Chile)

AES Gener has consolidated an important part of its second expansion stage, with an electric energy generation project portfolio involving different technologies for a total of 1,256 MW and directly employing more than 7,500 persons during this process. During 2016, projects for 573 MW were completed in this expansion, being the 531 MW Alto Maipo project currently under construction, where approximately 4,500 people are working.

During the first quarter of the year, financial and corporate restructuring of the Alto Maipo Project was completed. The multilateral agencies and foreign and domestic banks that took part in the financing of the project approved the plan proposed by Alto Maipo and the restructuring process was completed on last March 17.

PROGRESS OF PROJECTS UNDER CONSTRUCTION

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The financial restructuring considered, among other issues, the acquisition by AES Gener of all the interest of Minera Los Pelambres (MLP) in the company Alto Maipo SpA (Alto Maipo); the incorporation of Strabag SpA, main contractor of the Project, as a minority shareholder of Alto Maipo, with an approximate interest of 7%; the modification of the power supply agreement executed between Alto Maipo and MLP; and the modification of the terms and conditions of the current Project financing. During June 2017, Alto Maipo terminated one of the construction agreements of the Project, entered into with the company Constructora Nueva Maipo S.A. (“CNM”), due to the breaches of the contractor. Since that date, Alto Maipo took interim charge of the works with excellent results and has initiated a process to find a contractor to replace CNM. Moreover, we brought a series of court and arbitral procedures, including the collection of the CNM bank guarantees for MUS$73,000.

The termination of the construction contract with CNM has brought about an event of technical default under the financing contracts. For this reason, Alto Maipo cannot continue requesting disbursements under the same unless this situation is regularized. Moreover, as a result of the above-mentioned technical default, the financial debt and liabilities for derivatives of Alto Maipo SpA, that as of December 31, 2017 amount to MU$618,000 and MUS$132,000, respectively, are recorded as current debt in the Financial Statements of Alto Maipo SpA and AES Gener S.A. as long as this situation persists.

In November 2017, the Company entered into an agreement with Strabag that establishes the bases to change and restructure the tunnel construction agreement existing between the parties according to the following new terms and conditions:

• Strabag will carry out the works on a lump sum basis at a fixed price, with Strabag assuming the geological hazards of the construction.

• The dates of guaranteed commercial operation shall be included.

• The construction of El Volcán and El Yeso systems shall be included, an agreement originally assigned to CNM.

• Strabag will provide financing for a part of the contract cost.

• Increase in equity interest and subordinated claims of Strabag in Alto Maipo.

As of December 31, 2017, the Project recorded a 60.2% progress, with 35.4 km of progress in tunnels, out of a total of 74.6 km.

• After the announcement of the technical default of Alto Maipo on July 31, 2017, the three major Rating Agencies issued the following press releases:

» S&P Global reported that the BBB rating of AES Gener would not be immediately affected, maintaining a stable perspective.

» Moody’s reaffirmed the Baa3 rating but downgraded the perspective from stable to negative.

» Fitch Ratings confirmed the BBB rating of AES Gener but assigned negative Rating Watch to AES Gener and its subsidiaries Eléctrica Angamos S.A., Guacolda Energía S.A. and Sociedad Eléctrica Santiago SpA.

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07Main Macroeconomic AspectsRegulatory Framework

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MARKET CONTEXT

MAIN MACROECONOMIC ASPECTS

During 2017, the international markets have proven to be more stable than in 2016, as all the uncertainties concerning the Brexit, whose negotiations progress, have been removed, and the United States prepare the legislation on the tax reform. The major central banks cautiously began to diminish their monetary stimulus, while China suffered a decline in its growth rate, albeit lower than expected by the market consensus. A sce-nario of low inflation was maintained in the Euro area and the United States, with minor upturns toward the end of the year. These factors caused several exchange indexes to reach historical record levels toward the end of 2017, thus generating good growth and profitability expectations for 2018.

Latin America has benefited from the global context with the inflow of capital in the region, at the same time that some central banks continued delivering monetary incentives, in a context where the levels of business and consumer trust were on the rise. Despite

these positive factors, the growth acceleration was a little more lethargic, becoming active toward the end of the year and generating better expectations for growth in the year 2018.

Chile

Chile recorded a 1.6% level of economic growth in 2017, in line with the previous year, showing an increase in growth by the end of the year according to the IMACEC of December 2017.

The mining sector and consumption were the main positive growth factors while the investment, especially in the construction sector, and to a lesser extent, the exports suffered a fall.

The mining activity was affected during the first half of the year because of a strike at Minera Escondida and low copper prices, however, during the second half of the

The mining sector and consumption were the main positive growth factors while the investment, especially in the construction sector, and to a lesser extent, the exports suffered a fall.


year, the mining activity grew in line with the rise in the price of the red metal. At year end, the price of copper was 324,6 US$/lb with an annual average of 279.7 US$/lb for 2017, a 30% and 27% higher than the prices of 2016 respectively, according to the information delivered by COCHILCO (Chilean Copper Commission). This upturn marks the end of the negative trend of several years ago. The main factors of the rise were a reduction in the excess supply of copper in the market, the drop in the price of the dollar, the stable growth in the Chinese market -this being the largest consumer of copper and the speculation about an increase in future demand driven by renewable energy sectors and electromobility.

Sebastián Piñera won the presidential election run-off in mid-December. With the pro-market agenda of Piñera, coupled with increases in the price of copper, the growth rate of the Chilean economy is expected to be accelerated in the coming years.

Colombia

In Colombia, the economic growth suffered a moderate deceleration as compared with 2016, with the GDP expanding 1.8% in 2017, according to DANE (National Statistics Administrative Department - Colombia) estimates.

Among the most important internal factors, we should mention the low levels of consumption, which were affected by inflation, the increase in the value added tax and uncertainty with respect to the peace process and the presidential elections in 2018. Prices as of raw materials, especially oil, had a negative impact on the export and domestic production levels, however, they experienced a rise in the last quarter of 2017.

As a projection, we expect an acceleration in the economic growth during 2018, thanks to the increase of exports and investment, driven by global growth and

increases in the price of oil, together with an increase in the domestic consumption levels due to a more optimistic confidence sense in the community.

Argentina

During 2017, the Argentine economy, as a result of -among other factors- policies for the correction to the macroeconomic imbalances and the implementation of structural reforms, had an estimated 4%* GPD annual growth, according to official data. This marks a rupture in the decreasing trend suffered by the Argentine economy till mid-2016. Investment was the main engine of the growth acceleration in the economic activity in 2017, followed by private consumption, both variables that grew at rates above GDP during 2017, while the growth of public consumption slowed down.

By the end of the third quarter (latest data available) the unemployment rate was 8.3%, less than the 9.2% recorded in the first quarter of the year and the 8.7% recorded in the second quarter, according to INDEC data. Inflation was reduced to 36.6 per cent, which, -although it represents a significant decrease as compared with 2016- was higher than the target set by the Central Bank of the Republic of Argentina. This triggered the review by the Central Bank of the inflation goals for the next two years, thus causing a depreciation in the exchange rate of the Argentine peso, which closed the year at $16.56/US$. This implies a 4.5% depreciation with respect to the $15.84/US$ recorded at the end of year 2016. Inflation and poor liquidity in the market have slowed the economic growth acceleration.

* Data from the Monetary Policy Report dated January 2018 issued by the Central Bank of the Republic of Argentina

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Chile

Since 1982 the electricity sector in Chile has been structured based on private initiative and property, in a framework of market competition for the generation and transmission expansions, with a regulation based on an efficient distribution and transmission business.

According to the constitutional order, and laws in force, the government entities, including those related to the electricity sector, play a regulatory and supervisory role.

These entities are grouped in the Ministry of Energy and in the Ministry of the Environment, with different agencies responsible for the various areas that encompass the energy sector: National Energy Commission (CNE), Superintendency of Electricity and Fuels (SEC), Environmental Impact Assessment Service, Superintendency for the Environment -which oversees and monitors compliance with the Environmental Qualification Resolutions under the control of the Ministry of the Environment-, Environmental Courts and General Water Board (DGA) -under the control of the Ministry of Public Works.

For the construction and commissioning of the power plants, it is required to obtain environmental permits regulated by the Chilean laws and, in the case of thermoelectric plants, the construction permits established by the law are also required.

Chilean electricity institutions, without prejudice to the jurisdiction of the ordinary courts of justice, considers the creation of a Panel of Experts as an independent technical body which has the role to process and resolve in an expeditious manner most disputes arising between

REGULATORY FRAMEWORK

the electric sector companies and between one or more of these companies and the energy authorities.

The different activities of the electricity sector are regulated by the Ley General de Servicios Eléctricos (General Law of Electric Services), Decree with Force of Law (DFL, for its acronym in Spanish) No. 1/1982 issued by the Ministry of mining, as amended: Law No. 19,940/2004, known as the “Ley Corta I”, and Law No. 20.018/2005 or “Ley Corta II”, which maintained unchanged the core aspects of the stable Chilean electric model. These laws were restated and systematized by DFL No. 4/2007 issued by the Ministry of Economy, Development and Reconstruction. In addition, the activities of the electricity sector are governed by the corresponding regulations and technical standards.

The business is based mainly on long-term contracts between generators and customers, which specify the volume, price or conditions for the sale of energy and power. The law establishes two types of customers of the generating companies: regulated and non-regulated customers.

Non-regulated customers are, mainly and necessarily, those consumers whose connected load is greater than 5 MW, generally of industrial or mining nature, and additionally those with connected load between 500 kW and 5 MW who have chosen - for a period of at least four years- to be subject to a free market price system. These customers are not subject to price regulation and, therefore, can freely negotiate the price and conditions of the electrical supply with the generating companies.

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Regulated customers, on the other hand, those consumers whose connected load is less than or equal to 500 kW, and additionally, those customers with connected load between 500 kW and 5 MW which have also chosen for four years to be subject to a regulated tariff system. These customers are served by distribution companies, which are required to conduct public tenders to assign the electric power supply agreements that will enable them to meet their consumption.

The new contracts allocated by the distribution companies for the consumption of its regulated customers should be awarded to the generating companies that offer the lowest supply price in regulated public tenders. These prices are called long-term node prices, consider indexing formulae and are valid for all the effective term of the respective agreement.

In more precise terms, the long-term node price of energy is the average of prices awarded in the bidding process, while the long-term node price of power is the node price of power established in the decree of node price valid as of the date of the tender.

Through an adjustment procedure, each distributor transfers to their consumers an average node price, different from the purchase price paid by the distributor to its supplier, which cannot differ in more than 5% the average node prices of all the system. The price is fixed by the CNE. The CNE communicates its outcome to the Ministry of Energy through a Technical Report. The Ministry of Energy proceeds to fix the price through the issuance of a decree published in the Official Gazette. Each bidding process sets forth, under the regulatory framework, its own indexing formulae applicable to long-term node prices, whose respective indexes must be checked on a monthly basis to verify whether these prices have changed.

Chilean Electric Grids

In Chile, except for the small isolated grids of Aysén and Punta Arenas, the generation activities are developed around two electrical grids: the Central Interconnected Grid (SIC), which covers from the south of the region of Antofagasta (bay of Paposo) to the region of Los Lagos (town of Quellón) and meets the demand of approximately 92% of the Chilean population; and the Great Northern Interconnected Grid (SING), which covers the regions of Tarapacá, Antofagasta and Arica-Parinacota, whose main users are the mining and industrial companies.

Specifically, to meet the demand always and at the lowest cost possible, the CISEN orders the dispatch of the power plants strictly according to their variable generation costs, starting with those of a lower variable cost and with no regard for the contractual positions of each generating company that owns such plants. This way, in spite of the fact that generating companies are free to sign supply agreements with regulated and non-regulated customers, and are required to comply with such contracts, the energy needed to comply with these contracts is produced by the generating units of the different CISEN members whose variable production costs are lower than or equal to the marginal cost of the system at the time of dispatch.

As of today, there is a 500 KV interconnection that is transporting 700 MW between the Changos S/E in the SING and Maitencillo (in the north of the SIC). This interconnection will reach Polpaico with 1,700 MW in the month of September 2018.

In addition to the above, the last transmission expansion plan includes the construction of a 1,500 km line of at least +-500 KV and 3,000 MW direct current, with a budget of about US$ 1,800 million, which will interconnect both systems, between the Kimal substation in the SING and Huelquén substation in the SIC. The construction is expected to last 7 years (84 months).


In addition, the design of the Chilean market considers payments by capacity (or firm power), which are explicit payments received by generators for their contribution to grid sufficiency. These payments are allocated according to the availability that each generator can ensure during critical grid events, particularly drought, unavailability of fuels and failures in the plants, and are transferred to the final price of the electric supply to both regulated and non-regulated customers.

As a result of the above, there are significant differences between the energy actually produced and the energy contracted by each generator, and between power allocated and contracted by each one of them, which gives rise to energy and power transfers within the CISEN among the various actors. In these spot transactions, the generating companies that, as a result of the economic dispatch conducted by the CISEN, record a generation higher than the generation committed under contracts (surplus companies), sell energy to those recording a production that is insufficient to supply the energy contracted by its customers (deficit companies).

A similar situation occurs with the power transactions, which are established on an annual basis by the CISEN and generate transfers from those generating companies that record firm power surplus with respect to their peak power commitments with their own customers to those who, on the contrary, have a deficit production.

Physical and monetary transfers are established by the CISEN, and are valued, in the case of energy, on an hourly basis at the marginal cost resulting from the grid operation. In the case of power, its price is the marginal cost of power that currently corresponds to the short-term node price of peak power.

The law allows the generating companies and regulated customers to agree on voluntary and temporary reductions of electrical energy consumption through

incentives. In this way, it is sought to make it easier, in situations of scarcity, for these clients to be motivated to save power and make efficient use of the power they consume.

Supporting Services

Regarding the regulations on Supporting Services (“Servicios Complementarios” or SSCC), it should be noted that, in October 2017, the regulations of the SSCC referred to in Article 72°7 of the General Law of Electric Services were published. These regulations establish a system of tenders and/or auctions to award the provision of those services, effective on January 1, 2019.

Article 72°7 of this law has provided for the implementation mechanisms and the remuneration to be received by the companies for the provision of SSCC.

Provisional section 18 of the law establishes that the previous section shall be effective on January 1, 2020. In the period preceding that date, the SSCC will continue to be provided under the same framework currently force.

Its main points are:

a) The Coordinator will be responsible for defining the SSCC required by the grid -which will be eventually resolved by the Commission through an exempted resolution- and will have the capacity to order the mandatory implementation of new resources or infrastructures for SSCC, as necessary. The parties under its coordination shall, in turn, have the obligation to put at the disposal of the Coordinator the equipment and resources available for that purpose.

b) In June of each year, the Coordinator shall draw up a report of SSCC according to the resolution of the Commission, which will establish the mechanism to be followed for their implementation.

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c) Three possible mechanisms for the implementation of and remuneration for the provision of the SSCC identified by the coordinator shall be established:

i. Bids

ii. Auctions for very short-term requirements. For bid and auctions, the Commission may define a cap price, which may be confidential whenever bids are concerned.

iii. Services by direct allocation of responsibility to a company coordinated by the Coordinator when the tenders or auctions are declared void or when there are no sufficient competitive market terms to perform any of them.

If it is impossible to launch a bid or auction, a study of costs shall be performed according to basis approved by the Commission, whose outcomes can be appealed before the panel of experts. In the event of bids or auctions that have been declared void, the cost shall be the cap price.

d) In the case of direct allocation under a cost-efficient study, the remuneration of the investments shall be paid by end users through a fee that will be added to the single transmission fee for a period equal to the useful life of such investments.

e) The remuneration for the provision of technical resources required in the grid operation will be paid by generating companies that make withdrawals allocated to end users.

Renewable Energies

In 2008, Law 20,257 was passed, which promotes Non-Conventional Renewable Energy (NCRE) from geothermal, wind, solar, biomass, tidal, mini-hydro, cogeneration and other sources. In particular, this law required that a percentage of the supply agreements of

generators executed after August 31, 2007 be supplied with renewable sources. The percentage of energy required began with 5% for the period 2010-2015 and was gradually increased to reach a maximum of 10% in 2024. In October 2013, the Law on Impulse for Non-Conventional Renewable Energies (Law 20,698, also known as Law 20/25) was passed, which increases the NCRE requirements by doubling the goal established in Law 20,257, and sets forth that, towards 2025, a 20% of the marketed power shall come from NCRE for those contracts entered into after July 1, 2013.

To boost investment and competitiveness in the electric market, the Electricity Concessions Law was enacted in October 2013 in order to expedite the processing and deadlines associated with the electric concession. Essentially, it simplifies the process to grant provisional concessions and strengthens the procedure to obtain the final concession, since the processing times are adapted and reduced from 700 to 150 days and establishes the possible observations and oppositions; modifies the notification process; modernizes the procedure for real property appraisal; and resolves any conflicts between different types of concessions. This way, by facilitating the incorporation of NCRE, greater certainty will be delivered to the actors involved and it will be possible to diversify the energy matrix.

Within the environmental regulation, we should mention Supreme Decree No. 13/2011 issued by the Ministry of the Environment, which establishes an emission standard for thermoelectric plants, effective as from June 2011. This standard regulates the limits for air emissions of Particulate Matter (PM), Sulfur Dioxide (SO2), Nitrous Oxides (NOx), and Mercury (Hg) and sets different emission caps, making a distinction between new and existing plants, as well as between type of fuel (solid, liquid and gas). In addition, the standard set compliance deadlines for existing facilities, which in the case of Particulate Matter (PM) is 36 months as from the date of issuance, i.e. December 2013, and in the case of NOx and SO2, is 4 years for power plants located in areas declared as latent or saturated and 5 years in the rest of the country.


In 2014, Law 20,780 was passed, which creates a new tax on emissions or “green tax”. This tax is levied on air emissions of Particulate Matter (PM), Sulfur Dioxide (SO2), Nitrous Oxide (NOx) and Carbon Dioxide (CO2) produced by turbines or boilers with a power equal to or greater than 50 MWt and will be effective as from 2017. In the case of Carbon Dioxide emissions, this tax will be equivalent to 5 dollars per ton of CO2 emitted.

Energy Transfer

With regard to the business of high voltage electric power transmission, the law ensures to the owners of transmission networks the right to recover all its capital, operation, maintenance and administration costs. For that purpose, the transmission network is divided as follows: national subsystem, made up of the transmission lines that are essential to enable comprehensive supply of the electric grid; zonal subsystem, mainly made up of power lines that make it possible to supply the demand in concession areas of distribution companies; and dedicated subsystem, made up of lines essentially and mainly allocated to electric power supply to non-regulated customers or to evacuate the energy of generating companies.

The annual value of the national and zone transmission facilities and the payment for use of dedicated transmission facilities by users subject to price regulation will be set by the CNE every four years based on the valuation studies, which are conducted by independent consultants. Mainly in the case of the national system, the interaction of the market will ultimately determine the works to be developed, since the opinion of CISEN and CNE is also considered, and in case of disputes, the matter will be submitted to the resolution of the Panel of Experts. The works are finally allocated according to lower fees (annual collection) in open tenders launched by each CISEN.

In July 2016, Law 20,936 (also known as Transmission Law) was published. This law sets forth, among other issues, that the transmission systems will be paid by end users through one-time charges, which will be calculated semiannually by the CNE in the respective technical report, on the occasion of the determination

short term nude prices. The transmission payment will be gradually transferred to end users, beginning in 2019 and ending in 2034. Additionally, the Transmission Law created the CISEN in replacement of the CDEC, changed its internal structure, gave new obligations and powers to the coordinator, and made it independent from generation and transmission companies. The new Law also establishes development poles, such as those areas with high potential for renewable energy generation whose use is a matter of public interest. The annual value of the development poles is set by the CNE in the same opportunities as for other transmission segments. Every five years, the Ministry of Energy will develop a long-term energy planning process for different generation and consumption energy scenarios within a term of at least 30 years. The result of this process will be used as input for the annual planning of the transmission carried out by the CNE, which will consider at least a twenty-year horizon.

Colombia

Since 1994, the Colombian electricity sector allows private participation in different chain businesses, within a framework of market competition for the generation and commercialization of electric power and a regulated environment for transmission and distribution.

The different activities of the electricity sector are regulated by the Law of Public Services No. 142 of 1994, and the Electricity Law No. 143 of 1994. In addition, the activities of the electricity sector are regulated by the corresponding regulations and technical standards issued by the Commission for Energy and Gas Regulation (CREG, for its acronym in Spanish). The wholesale energy market started operating in July 1995 and, as from that moment, the generating companies must make their offer of prices and availability on a daily basis in a competition environment.

There are two kinds of customers in the market: non-regulated and regulated. Non-regulated customers are allowed to freely negotiate with the generators, distributors or retailers. The conditions to qualify as a non-regulated customer are: to have a minimum

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installed capacity of 100 kW or to have a minimum consumption of 55,000 kWh-month. The demand of regulated customers can be supplied by retailers or distributors and their energy will be purchased by means of public calls, under which the parties will enter into bilateral contracts for a term that normally ranges from one to five years.

The market has included, within its structure, a plan for the allocation of a reliability fee that will be given to the generation plants providing firm energy at critical points in the grid, as it usually occurs due to the climatic phenomena known as El Niño. This plan also allows the incorporation of expansion plants to meet the needs of future demand. Currently, the regulation is focused on the promotion of renewable energies and the creation of more robust medium- and long-term contracting schemes to give sustainability to the companies doing business in the market.

Argentina

The Argentine Regulatory Framework for the electricity sector was established in Law No. 15,336 of 1960 and Law No. 24,065 of 1992, both of which, taken together, make up the Argentine Electricity Law. The activities of the electricity sector are mainly divided into three segments: generation, transmission and distribution. Under the Argentine Electricity Law, the federal government created the Wholesale Electricity Market (MEM, for its acronym in Spanish) with four types of participants: generators, transmitters, distributors, and large customers, which can buy and sell electricity.

In Argentina, the mixed company CAMMESA is responsible for dispatch coordination, the administration of MEM transactions and the calculation of spot prices. The market participants are shareholders of CAMMESA with 80% of the capital stock and the Secretary of Energy participates in the remaining 20%. The main goal of CAMMESA is to ensure that electricity demand is met at a minimum cost. Due to recent changes in the regulations, fuels are supplied to generators through CAMMESA and units are dispatched considering the calorific consumption, price, and availability of fuel for each generator.

The Chairman of CAMMESA is appointed by the Ministry of Federal Planning, Public Investment and Services.

The National Electricity Regulatory Authority (ENRE, for its acronym in Spanish) is responsible for regulating the public service businesses in the electricity sector and the issuance of jurisdictional decisions. The Ministry of Federal Planning, Public Investment and Services, through the Secretary of Energy, is mainly responsible for the enforcement of the Argentina Electricity Law. Through its main tasks, the Secretary of Energy regulates the dispatch and activities of the system in the MEM and grants concessions or authorizations of each activity in the electricity sector. The Secretary of Energy is also responsible for establishing policies in the industry of oil and natural gas, which impacts directly on the thermoelectric generators and the electricity sector in general.

In Argentina, electric power generation, distribution, and other general developments are conducted through the Argentine Interconnected Grid or SADI, the main electric power transmission grid covering the national territory.

The generation sector is organized on a competitive basis, where independent generators sell energy in the spot market. The supply of energy is highly dependent on fossil fuels, mainly natural gas.

Since 2004, the availability of fuel has become an important matter in the SADI due to a decrease of natural gas production in the country. To replace the production of natural gas, the Argentine government has increased the volume of imported LNG, Gas Oil and Fuel Oil, which are usually imported during the winter season (between May and August).

Regulated and industrial customers in the SADI are defined as Large Users within the Electricity Market and answer to three well-defined categories according to their consumption levels: Major Large Users (“Grandes Usuarios Mayores”, GUMA) with a 1 MW capacity and energy consumption greater than 4,380 MWh/year, Minor Large Users (“Grandes Usuarios Menores”, GUME) with a capacity between 30 KW and 2 MW, and Private

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Large Users (“Grandes Usuarios Particulares”, GUPA) with a capacity between 30 KW and 100 KW.

The prices of contracts with industrial customers are negotiated in bilateral direct agreements, denominated in United States dollars and include payments for energy and power.

At the end of 2006, Resolution 1281/06 issued by the Secretary of Energy was published. This resolution created the Plus Energy program and established a new supply service that can be served by generators, joint generators or own generation, which were not MEM members as of the publication date of the resolution or whose capacity or generation units were not connected to the system as of such date. The purpose of the program was to support the increase in the demand of large customers with consumption equal to or higher than 300 kW.

The implementation of the Plus Energy program requires the execution of a supply agreement between the parties and the negotiation of a price considering both the costs involved and a gain margin. These contracts and the costs involved will be approved by the Ministry of Federal Planning, Public Investment and Services and the gain margin will be established by the Secretary of Energy.

The contracts under the Plus Energy program are of short term, usually for a term not to exceed 18 months. As these contracts cover the excess demand of industrial customers, the utilization factor of the installed capacity is usually low. In addition, these contracts are supplied with backup contracts entered into with other generators to sell the energy contracted and unused, resulting in a higher load factor.

In March 2013, the Secretary of Energy issued Resolution 95/2013 which affects the remuneration of generators that sell their energy to the spot market. This resolution turned the Argentine electricity market into an “average cost”

compensation scheme, increasing the sales of generators. TermoAndes was not considered by this resolution.

In May 2014, the Secretary of Energy issued Resolution 529/2014, which updated the prices set in the previous Resolution 95/2013 as a result of a cost increase and made adjustments to some items, such as, for example, a new fee intended to finance major maintenance costs and a differential fee for the use of biodiesel as fuel.

On July 10, 2015, the Secretary of Energy issued Resolution 482/2015 (“Resolution 482”) that retroactively updates the prices of Resolution 529/2014 as from February 1, 2015.

This resolution includes the energy of TermoAndes that was not committed under Plus Energy contracts. In this way, the energy and power sold at the spot market are compensated in accordance with the following items:

• Variable O&M Costs: the price of this fee is set according to technology type and installed MW and is paid based on generated energy.

• Generating Margin: the price of this fee is set according to technology type and installed MW and is paid based on generated energy.

• Trust Margin: the price of this fee is set according to technology type and installed MW. It is paid according to generated energy and is withheld by CAMMESA to be repaid to the generator once the infrastructure project to be built with these funds is submitted.

• Non-recurring Maintenance: the price of this fee is set according to technology type and installed MW. It is paid based on generated energy. This item is also withheld by CAMMESA and repaid to generator to meet major maintenance costs upon approval by the Secretary of Energy.


• "Resources for Investments of FONINVEMEM from 2015 to 2018": it is created to invest in new generation plants. This fee is paid based on generated energy.

• Fixed Costs: the price of this fee is set according to technology type and installed MW. It is paid based on power made available and not committed under contracts. The price of this fee will become affected if the generator fails to comply with a target availability established by CAMMESA.

On March 30, 2016, the Secretary of Electric Power issued Resolution 22/2016, which retroactively updates, as of February 2016 the price published in Resolution 482, without introducing any changes in the payment methodology or in the plants reached.

Resolution 19/2017, issued by the Secretary of Electric Power, was published on February 2, 2017 to replace Resolution 22/2016 and to establish the new guidelines for the remuneration to existing generation plants. The Resolution sets a minimum power remuneration by technology and scale. In addition, regarding thermal units, the chance to offer availability commitments with an equal differential remuneration for all the technologies is established. The thermal generator shall declare, in each summer season, the firm power value to be committed by each unit during a three-year term, being able to make a differentiation between summer and winter (adjustments may be made in the same period).

There is a ceiling price that will be based on offers to be made by generators and which must be awarded by CAMMESA, in accordance with the needs to be defined for the grid in the event of critical situations.

This Resolution also introduces the notion of operated energy in the grid, which is understood as the energization of the rotating power. For instance, for a Plant operating at a certain time below its power at the request of the dispatch entity, the operated energy will be equivalent to the power of the machine, rather than the power actually dispatched.

Moreover, the Resolution sets forth that the remunerations are expressed in US dollars and that they will be converted into pesos at the exchange rate published by the Central Bank of the Republic of Argentina on the last business day of each month. The maturity dates of economic transactions shall continue to be those established in the CAMMESA procedures.

On July 26, 2017, the Secretary of Energy established that, with regard to the payment of the economic transaction, the amounts of the commercial document issued should be adjusted through credit and/or debit notes, as applicable, considering the exchange rate reported by the Central Bank of the Republic of Argentina one day before the maturity date.

These criteria will be applied as from the commercial transaction of November 2017.

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Transmission Activity

With regard to the transmission business, it is a public service provided by several companies to which the federal government has granted concessions. Today, a concessionaire operates and maintains high voltage facilities and eight concessionaires maintain and operate high and medium voltage facilities, to which generating units, distribution systems and large customers are connected.

The international interconnection transmission systems also require concessions granted by the Secretary of Energy. Transmission companies are authorized to collect tolls for their services.

On the other hand, distribution is a public service awarded to companies that have also been granted

The regulation establishes that, in the event of deficits at generation level relative to the consumption of clients, generators involved in the Energía Plus market must purchase energy at marginal cost, which is much higher than the price set in the agreements. This risk is mitigat - ed by guarantee agreements among generators, whose sale prices are lower than the marginal cost, but higher than the spot price.

by means of concessions. The distribution companies are required to make electricity available to end users within a concession area, regardless of the place where the customer has an agreement with the distributor or directly with a generator. As a consequence, these companies have regulated tariffs and are subject to service quality specifications.

Distributors get electricity from the MEM through the spot market at prices according to the season. These seasonal prices, as defined by the Secretary of Energy, are equivalent to the maximum cost of the electricity purchased by distributors and transferred to the regulated customers.

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Corporate Governance

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Corporate Governance96


Corporate Purpose

The current corporate purpose of the Company was approved at the Special Shareholders’ Meeting held on October 3, 2013. The relevant portions of such meeting's minutes were notarized in Santiago at the office of Notary Public Ivan Torrealba Acevedo on November 8, 2013. An excerpt of such modification was published in the Official Gazette on November 25, 2013 and registered with the Commercial Registry of the Real Estate Conservator of Santiago in pages 90,278 under No. 58,879 for the year 2013.

To exploit the generation, transmission, purchase, distribution, and sale of electric and other kind of energy; to purchase, extract, exploit, process, distribute, commercialize, and sell solid, liquid and gaseous fuels; to process, treat, desalinate, and commercialize desalinated water; to sell, and provide project engineering, maintenance, and harbor services; to execute and exploit civil, hydraulic, and any other infrastructure works; to provide management, auditing, financial, commercial, technical, and legal advice, and other services; to provide port and dock services; to exploit docks, freight terminals, warehouses, deposit facilities, and any kind of vessels, either owned by the Company or third parties, in any manner whatsoever; to act as shipbuilder and ship agent in any manner provided for by the Law; to transport cargoes of any nature, either within the country or abroad, through sea or land, on a multimodal or other basis; to obtain, transfer, purchase, lease, levy, and, in general, exploit in any manner whatsoever the concessions referred to in the General Law of Electricity Services, maritime

concessions, public works concessions, and any kind of water rights; to invest in personal or real properties; and to organize and create companies of any nature, whether they be affiliates, related, or other kind of companies, whose purposes are related or linked to energy in all its forms, or to the supply of public services, or whose main input is the electric power, or which are otherwise related to any of the activities mentioned above, the Company being able to administrate and supervise them, and to coordinate the management thereof. In the event that any companies are created where the Company is required to contribute assets directly related to electric generation, the Company will maintain an interest therein not to exceed 51%.

GOVERNANCE BODIES

Ordinary Shareholders' Meeting

The shareholders of AES Gener meet at least once a year at an Ordinary Meeting, and when necessary, at Special Meetings. Ordinary Meetings are held once a year, within the first quarter of each year, to decide on the issues under its scope. At an Ordinary Meeting, the shareholders whose shares are registered in the Registry of Shareholders can participate and exercise their right to express their opinions and vote at the midnight of the fifth business day immediately preceding the date on which the relevant meeting was held. The directors and managers that are not shareholders will be able to participate in a meeting with the right to speak.

CORPORATE GOVERNANCE STRUCTURE


The Shareholders' Meetings will be held at first call with the absolute majority of issued voting shares, and at second call with the shares present in person or by proxy, whatever be their number, and the resolutions will be adopted by the absolute majority of the voting shares present in person or by proxy, unless the law or the bylaws of the Company provide for a larger majority. In 2017, the Ordinary Shareholders’ Meeting was held on April 26.

Summary of Comments and Proposals of Shareholders

During 2017, the Company received no comments or proposals concerning the development of corporate businesses by shareholders holding or representing 10% or more of the issued voting shares, pursuant to the provisions of article 74 of Corporations Law No. 18,046 and article 13 of the regulations of that Law.

The minutes of the Ordinary Shareholders’ Meeting held in 2017 is available at the website of the Company.

Board of Directors

The Board of Directors is the body to which, according to the Companies Law and the By-laws of the Company, is responsible for the management of the Company. The Board is made up of seven regular members, and their corresponding alternate members, elected by the Shareholders’ Meeting.

The office of the Board members will last for three years and can be reelected.

Board Compensation

Pursuant to the provisions of the by-laws of AES Gener S.A., the Directors do not receive any compensation for the discharge of their offices. As a result, during fiscal year 2017, the directors of the Company collected neither compensations for duties other than those of their office, nor entertainment and traveling expenses, royalties, or any other compensation. The above, without prejudice to the fees collected by those directors who are members of the Committee of Directors and whose amount is detailed in the section below.

The Board is made up of seven regular members, and their corresponding alternate members, elected by the Shareholders’ Meeting. The office of the Board members will last for three years and can be reelected.


E4088685L

Singaporean

6,283,668-7

Chilean

6024620

Venezuelan

Andrés Gluski Director

Master in Economics, University of Virginia, USA.

Ph.D. in Economics and International Finance, University of Virginia, USA.

Radovan Razmilic Director

Engineer of Roads, Channels and Ports,

Universidad Politécnica Superior de Madrid, Spain.

Arminio Borjas Director

Lawyer, Universidad Católica Andrés Bello, Venezuela.

Vineet Mohan* Director

MBA Edinburg Business School.

Bachelor of Technology (Hons.), Mechanical Engineering Indian Institute of Technology, Kharagpur.

Gonzalo Parot Director (Independent)

Industrial Civil Engineer, University of Chile, Chile

Claudia BobadillaDirector (Independent)

Lawyer, Universidad Diego Portales. Chile

6,703,799-5

Chilean

9,954,477-5

Chilean

037105150

Venezuelan

Bernerd Da Santos Chairman

Licenciado en Administración Comercial (Graduate Diploma in Business Administration),Universidad José MaríaVargas, Venezuela.Master's degree in Finance and Business ManagementUniversidad José MaríaVargas, Venezuela.

REGULAR DIRECTORS

MEMBERS OF THE BOARD OF DIRECTORS

D0259811

Venezuelan

* In the Board meeting held on 28 March 2018, the Directors were informed of the resignation submitted by Vineet Mohan as Regular Director of the Company.


6,948,688-6

Chilean

506715725

US Citizen

121154314

Venezuelan

YC268844

Brazilian

Margaret Tigre Alternate Director

Bachelor of Science in Accounting, George Mason University, USA.

Julian Nebreda Alternate Director

Lawyer, Universidad Católica Andrés Bello, Venezuela.

Leonardo Moreno Alternate Director

Business Administration, Universidade Federal de Minas Gerais, Brazil

Paul Freedman Alternate Director

J.D. from Georgetown Law, USA

B.A. from Columbia Univer-sity, USA

Juan Ignacio Rubiolo* Alternate Director

Licenciado in Business Sciences

Luis Palacios Alternate Director

Commercial Engineer, University of Chile, Chile.

Antonio Kovacevic Alternate Director

Commercial Engineer, Pontificia Universidad Católica de Chile, Chile

6,053,904-9

Chilean

498340129

US Citizen

ALTERNATE DIRECTORS

AAB479862

Argentine

BUDGET OF THE BOARD FOR CONSULTANTS

The Board of Directors has a budget for the engagement of experts that will advise them on tax, financial, legal, or other matters, which is fixed each year by the Shareholders’ Meeting of the Company. The engagement of the different experts is discussed within the Board and resolved by the quorum required for the adoption of resolutions.

The annual budget of the Board for consultants du-ring fiscal year 2017, amounting to US$25,000, was

approved by the Ordinary Shareholders’ Meeting held on April 26, 2017.

During fiscal year 2017, the Board hired the company Indecs Consulting Ltd. out of the funds of the budget for consultants, for the preparation of an independent study of the insurance market in relation to the value of the premiums that could be obtained for the coverage of operating insurance, which had a cost of GBP 7,500.

*At the Board meeting held on 28 March 2018, the Directors were informed of the resignation submitted by Juan Ignacio Rubiolo as Alternate Director of the Company.


Vicente Javier Giorgio 1

Chief Executive Officer

Electronic Engineer, Universidad Tecnológica Nacional, Argentina.

MBA, Universidad del CEMA, Argentina.

23,202.311-2

Argentine

Ricardo Falú 1 Chief Financial Officer

Certified Public Accountant, Universidad Nacional de Salta, Argentina.

MBA, IAE Business School, Argentina.

21,535,942-5

Argentine

Mariana Soto

Chief Corporate

Affairs Officer

Lawyer, University of

Chile, Chile

12,240,551-6

Chilean

Rodrigo Sáez

Chief Commercial Officer

Electronic Civil Engineer,

Universidad Técnica

Federico Santa Maria

12,621,820-6

Chilean

Fidel Venegas 2

Chief Operations Officer

Electrical Civil Engineer, Master's Degree in Electrical Engineering, Universidad Federico Santa María, Valparaíso, Chile.

MBA Pontificia Universidad Católica de Chile, Chile.

Luis Knaak Chief Engineering and

Construction Officer

Mechanical Engineer,

Universidad Santa María,

Chile.

Master's degree in

Industrial Engineering,

PUCV, Chile.

6,130,443-6

Chilean

11,261,393-5

Chilean

Alberto Zavala

General Counsel

Lawyer, Pontificia

Universidad Católica de

Chile, Chile

7,054,225-0

Chilean

and corporate results, whose amount is set each year according to the above-mentioned parameters.

It should be noted here that, according to the policy of the company, AES Gener executives who participate in the boards of related companies shall not collect any compensation for that reason or can waive the compensations payable to them.

Remuneration of Senior Executives

The global remuneration for senior executives, and their reports, of the Company during 2017 amounted to US$6.8 million. This amount includes a fixed monthly remuneration and variable bonuses according to performance and corporate results, which are also granted to other workers of AES Gener.

The incentive plan of the officers of the Company consists of an annual variable bonus according to performance

SENIOR EXECUTIVES

1. On April 1, 2018, Vicente Javier Giorgio was replaced by Ricardo Falú as new Chief Executive Officer. On the same date, Ricardo Roizen was appointed as Chief Financial Officer. Roizen is Chilean, Commercial Engineer of the Pontificia Universidad Católica de Chile and obtained an MBA from the University of Chile.

2. On November 30, 2017, Fidel Venegas ceased to provide services to the Company. His duties were assumed on an interim basis by Norberto Corridor, who as of this date served as AES Gener Costa Complex Manager.


During 2017, the Company made payments as compensation for senior executives for a total amount of US$ 0.8 million.

COMMITTEE OF DIRECTORSMembers

Pursuant to the provisions of article 50 bis of Corporations Law 18,046, the Company has a Committee of Directors made up of three members, which exercises the powers and complies with the duties established by the Law.

At the Ordinary Board Meeting held on April 27, 2017, the following two members of the Board, who are independent directors, were designated as members of the Committee of Directors: Gonzalo Parot Palma (Committee Chairman), and Claudia Bobadilla Ferrer; and Radovan Razmilic Tomicic.

Chief Operations Officer

Fidel Venegas 2

Chief Commercial Officer

Rodrigo Sáez

Chief Financial Officer

Ricardo Falú

Chief Engineering and Construction Officer

Luis Knaak

General Counsel Alberto Zavala

Chief Corporate Affairs Officer

Mariana Soto

Gerente General Vicente Javier Giorgio

Chief Executive Officer Vicente Javier Giorgio

Remuneration of Committee of Directors (UF)

2017 2016 2015

Iván Díaz-Molina 640 1,920

Radován Razmilic 2,520 1,920 1,920

José Pablo Arellano 640 1,920

Claudia Bobadilla 2,520 1,280

Gonzalo Parot 2,520 1,280

Total 7,560 5,760 5,760

REMUNERATIONS OF THE MEMBERS OF THE COMMITTEE OF DIRECTORS (UF)

At the Ordinary Shareholders’ Meeting held on April 26, 2017, it was agreed to set as remuneration of the members of the Committee of Directors the amount of 240 monthly Development Units.

BUDGET OF THE COMMITTEE OF DIRECTORS FOR CONSULTANTS

The Committee of Directors has a budget for the engagement of experts that will advise them on tax, financial, legal, or other matters, which is fixed each year by the Shareholders’ Meeting of the Company. The engagement of the different experts is discussed within the Committee of Directors and resolved by the quorum required for the adoption of resolutions.

The annual budget of the Committee of Directors for consultants during fiscal year 2017, amounting to US$25,000, was approved by the Ordinary Shareholders’ Meeting held on April 26, 2017.

During fiscal year 2017 the Committee of Directors did not make use of the annual budget for consulting services.


PERFORMANCE OF THE COMMITTEE OF DIRECTORS

Pursuant to the provisions of article 50 bis of the Corporations Law, as amended by Law 20,382, during 2017 the Committee of Directors met in 14 opportunities to render an opinion on transactions and contracts of the Company with related persons, pursuant to Title XVI of Corporations Law No. 18,046, and to discuss other issues under its legal jurisdiction, informing the Board about its resolutions and recommendations. As the related party transactions assessed by the Committee were consistent with the equity conditions prevailing in the market and contributed to the social interest, the Board suggested to approve them.

At the meeting of the Committee of Directors No. 151, dated February 21, the Committee

• Analyzed the background information and agreed, by the unanimous vote of the members in attendance, to recommend to the Board the adoption of the financial restructuring of Alto Maipo Project, which includes, among others, the following aspects:

i. The granting, by some creditors, of additional financing;

ii. Amendments to the Schedules and Confirmations to the Required Hedging Agreements (as defined in the Finance Agreement) entered into by Alto Maipo;

iii. Amendments to the contracts containing the terms and conditions of the Original Financing, through the issuance of a revised and amended version of those documents, according to the conditions agreed under the restructuring, including the financing Common Terms Agreement (“Common Terms Agreement”);

iv. Commitments of additional contributions by the shareholders of Alto Maipo and the Company, in its capacity as Sponsor;

v. Withdrawal of Minera Los Pelambres as shareholder and subordinated creditor of Alto Maipo and of Antofagasta plc as sponsor of the project, leaving Norgener SpA as main shareholder and the Company as single sponsor; and

vi. The inclusion of Strabag SpA as a new minority shareholder of Alto Maipo SpA.

• Was informed of, reviewed background information, and agreed, by the unanimous vote of the members in attendance, to issue a favorable report with respect to the balance sheet and financial statements of the Company for the year ended December 31, 2016, as well as the External Auditors Report; and

• Was informed of and approved the press releases that the Company will issue following delivery of the FECUs to the Superintendency of Securities and Insurance.

At the meeting of the Committee of Directors No. 152, dated March 16, the Committee

• Reviewed the background information and resolved, by unanimous vote of the members in attendance, to recommend to the Board the adoption of the Corporate Governance Policy Report, and to send it to the Superintendency of Securities and Insurance pursuant to the provisions of the General Provision No. 385 of the Superintendency of Securities and Insurance.

At the meeting of the Committee of Directors No. 153, dated March 29, the Committee

• Was informed of the status of the 2016 internal audit work plan for AES, detailing the activities that were included in the plan, and its results, explaining the different levels of risk assigned to different subjects and the result of controls applied;


• Was informed of and resolved, by the unanimous vote of the members present, to recommend to the Board the adoption of the 2017 internal audit plan for AES Gener S.A. and its subsidiaries, to be carried out by The AES Corporation, parent of AES Gener, and the proposed 2017 expenditure budget for such services, which amounts to US$262,563; and

• Analyzed the background information and agreed, by the unanimous vote of the members in attendance, to recommend that the Board should propose in the following Ordinary Shareholders' Meeting of the Company the appointment, for fiscal year 2017, of Fitch Ratings and Feller Rate as national private risk rating agencies, and Standard & Poor's, Fitch Ratings and Moody's as international private risk rating agencies;

At the meeting of the Committee of Directors No. 154, dated April 27, the Committee

Met with the management of the Company for the purposes of being informed about the development status of the construction works of Alto Maipo Project.

At the meeting of the Committee of Directors No. 155, dated May 25, the Committee

• Was informed about the details of the visit made early in May by the Independent Engineer appointed by the Alto Maipo Project financiers to the works of the Project, for the purposes of checking their development status;

• Was informed of the various initiatives that, as of the date hereof is implementing the company in a framework of a program of Operational Excellence "Energy Star" in order to optimize operations SD its plants;

• Was informed of the efforts made by the Company to assess the likelihood of selling the transmission lines subject to regulation, owned by AES Gener

and its subsidiary Empresa Eléctrica Angamos S.A., which are not included in the strategic assets of any of both companies, since the Company could be able to access and make use of them even in the case of a possible sale;

• Was informed of the non-binding offer made by Campesino Plant for the purchase by the subsidiary Sociedad Eléctrica Santiago SpA, owner of Renca, Nueva Renca, Santa Lidia and Los Vientos plants.

• Was informed of the closed bidding process conducted by AELA Energía for the sale of two energy supply contracts to regulated customers, under which the Company made a non-binding bid.

• Was informed and resolved, by the unanimous vote of the members in attendance, to recommend to the Board of Directors the approval of a transaction between the Company, and AES Hawaii, a related company of the parent of AES Gener, AES Corporation, under which AES Hawaii would assign to Gener a coal transport agreement for year 2018 with the company Swissmarine (SWM), for 600,000 metric tons. Gener will use such transportation agreement to transport coal from Colombia to Ventanas. The final rate to be paid by Gener for such contract would be US$15.35 pmt, taking into account for that purpose that SWM will collect a tariff of US$17.85 pmt and AES Hawaii will refund US$2.5 pmt to Gener. AES Hawaii will replace its supply for another contract that will involve savings of US$0.55 pmt. As a result of this transaction, Gener will get a contract for a price of US$0.5 pmt lower than the average of purchases of the last bidding.

At the meeting of the Committee of Directors No. 156, dated June 29, the Committee

• Was informed of the analysis that, as of the date hereof, carried out the management of the Company with a view to implement a corporate


restructuring, which would involve the division of the subsidiary Norgener SpA in three companies, one that would be the owner of the generation assets outside of Chile; another one that would own the coal generation assets in Chile; and the third company that would be the owner of other renewable assets;

• Was informed about the development status of the Alto Maipo project works; about the compliance plan submitted to the Superintendency of Environment in relation to the Project; about the status of the works entrusted to CNM as of the date on which the contract with such contractor was terminated; about the status of the Project versus financiers; and about the various courses of action that are evaluated, among others, as of the date hereof.

At the meeting of the Committee of Directors No. 157, dated July 27, the Committee

• Was informed and reviewed the main assumptions to be considered by the management of the Company at the time of preparing the budget of the company for the financial year 2018, in relation to macro-economic and financial aspects, commodity prices, hydrology, growth in demand, availability of gas, and status of the transmission system, among others.

• Was informed, and by the unanimous vote of the members in attendance, decided to recommend to the Board of Directors the approval of the new currency risk hedging strategy according to the terms proposed by management of the Company.

FOTO PENDIENTE


• Was informed about the development status of the Alto Maipo project works; about the delivery to the Superintendency of Environment of a new compliance plan containing the observations made by that instrumentality to the previous compliance plan; about the current situation vis-à-vis the contractor Constructora Nueva Maipo, derived from the term of the construction contract executed with that company as a consequence of defaults by the latter in relation to the Project; about the development status of the works developed by the contractor Strabag; and about the offer made to Strabag to take charge of the works that originally were the responsibility of Constructora Nueva Maipo;

• Was informed of progresses made in the preparation of the business strategy of the Company to deal with small and medium-sized customers.

At the meeting of the Committee of Directors No. 158, dated August 3, the Committee

• Was informed about the Audit Plan of AES Gener and its subsidiaries for the fiscal year 2017, to be conducted by the external auditors Ernst & Young;

• Was informed and approved, by the unanimous vote of the members in attendance, the information contained in the Financial Statements of the Company as of June 30, 2017;

• Was informed of progresses made in the preparation of the business strategy of the Company to deal with small and medium-sized customers.

At the meeting of the Committee of Directors No. 159, dated August 17, the Committee

• Was informed of, and resolved, by the unanimous vote of the members in attendance, to approve the new communications plan for the Alto Maipo project presented by Management of the Company;.

At the meeting of the Committee of Directors No. 160, dated September 28, the Committee

• Learned about the status of the negotiations held with Campesino Plant, joint venture made up of EDF, Andes Mining and Energy and Cheniere, who made an indicative tender for the purchase by the subsidiary Sociedad Eléctrica Santiago SpA, owner of Renca, Nueva Renca, Santa Lidia and Los Vientos plants.

• Was informed about the development status of the Alto Maipo project works; about the progress in the works that were originally entrusted to Constructora Nueva Maipo (“CNM”), and that, as a result of the termination of the construction contract due to defaults on the part of CNM, had been directly assumed by Alto Maipo; about the offers received to replace the contractor CNM; about the negotiations held as of that date with Strabag to restructure the construction contract then in force with that company; and about the various alternatives the Company was analyzing to finance the restructuring of the Project.

At the meeting of the Committee of Directors No. 161, dated October 26, the Committee

• Was informed about the strategy of the Company before the new scenario in the segment of commercial and industrial non-regulated customers, as a result of the latest amendments to the law regulating the Chilean electricity market.

• Was informed about the strategy prepared by the Company to face the market of distributed generation in Chile, and the plan of action of the Company for fiscal years 2018 and 2019 in that market.

At the meeting of the Committee of Directors No. 162, dated October 31, the Committee

Was informed and approved, by the unanimous vote of the members in attendance, the information contained in the Financial Statements of the Company as of June 30, 2017.


At the meeting of the Committee of Directors No. 163, dated November 30, the Committee

• Was informed and resolved, by the unanimous vote of the members in attendance, to suggest the Board the sale of Andes Solar plant and its PPA by AES Gener S.A. to the company Andes Solar SpA, a subsidiary of Norgener Renovables SpA, which in turn is a subsidiary of AES Gener S.A. The transaction would be performed on an arm’s length basis and is part of the strategy of the Company to group all of its renewable energy assets in the subsidiary Norgener Renovables SpA.

• Was informed and decided, by the unanimous vote of the members in attendance, to recommend to the Board the approval of the creation of a new subsidiary, to be called Compañía Transmisora del Norte Grande SpA, to which both the Company and its subsidiary Empresa Eléctrica Angamos SpA will contribute certain transmission assets at book value. The proposed transaction was

intended to create a new company gathering only certain transmission assets with a view to eventually selling it to a third party.

• Was informed, and decided, by the unanimous vote of the members in attendance, to recommend to the Board the approval of the purchase during 2018 by AES Gener of the coal required for its own and subsidiaries’ operation. Under this transaction, it shall transfer to the subsidiaries the coal necessary for their operation and all costs associated with each of such transactions. These costs would be adjusted on market terms and the terms of costs obtained by the Company with its coal, freight and insurance suppliers would be replicated. The centralized purchase of coal by the Company under the proposed terms would allow to obtain the best economic and logistical conditions possible, therefore that the transaction would be beneficial to all the parties.

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• Was informed and resolved, by the unanimous vote of the members in attendance, to recommend to the Board the renewal of the revolving credit line held at that time by the Society, up to an amount of $250 million.

• Analyzed the background information and agreed, by the unanimous vote of the members in attendance, to suggest the Board to propose at the next Ordinary Shareholders’ Meeting of the company the appointment of Ernst & Young Servicios Profesionales de Auditoría y Asesorías Limitada as first option and KPMG as the second alternative, in that order of preference, as external auditing firm for fiscal year 2018.

• Was informed of the progress made in the preparation by the Management of the budget of the Company for fiscal years 2018 and 2019.

At the meeting of the Committee of Directors No. 164, dated December 20, the Committee

• Was informed of the budget of the Company for fiscal years 2018 and 2019, as prepared by the Management.

• Was informed and resolved, by the unanimous vote of all the members in attendance, to suggest the Board to approve the transaction with AES Itabo, an affiliate of AES Gener’s parent, AES Corp, under which AES Itabo would assign to AES Gener a coal shipment, and at the same time AES Gener would assign a shipment of its own to that company, thus obtaining both parties an income of US$ 50 thousand each, since greater flexibility in mixtures of coal would be achieved.

• Was informed about the operational renewal process for the Company and its affiliates; about the renewal proposal submitted for 2018 by AES Global Insurance Company ("AIGIC"), a related company of AES Corp, parent of AES Gener, which currently provides the Company and its affiliates coverage under those policies; and about the preliminary conclusions of the market study on insurance with this type of coverages entrusted by the Company to INDECS Consulting Ltda., which concludes that the premiums and terms offered by AIGIC are similar or more favorable than those offered in the local market. The Committee resolved, by the unanimous vote of the members in attendance, that each member of the Committee should render an opinion on this transaction individually, through an e-mail, once the final report of INDECS Consulting is received.”

Our Management during 2017

09

113119123127

Risk ManagementResults of the Fiscal YearSummary of Financial ActivitiesOperation and Maintenance

112 Our Management during 2017


RISK MANAGEMENT

The Company’s risk management is consistent with the general guidelines defined by its ultimate controlling shareholder, the AES Corporation.

Risk refers to situations where there is a possibility of suffering a variation with respect to an expected outcome. For this reason, the Management has assessed that it was strategic to manage with responsibility and effectiveness all the relevant risks that could affect the profitable growth and addition of value for our stakeholders.

Our risk management strategy seeks to achieve the following goals:

1. Establish, manage and govern the Company’s risk management policies and procedures, seeking that they are consistent with the risk management policies of its parent, AES Corporation.

2. Implement guidelines and standards to identify, study, measure, manage, and report all inherent and residual risks of the business and markets where it operates.

The Risk Management strategy is designed to safeguard the stability and sustainability of the AES Gener Group of Companies in relation to all relevant components of uncertainty, both in normaland special circumstances

3. Establish the necessary controls to regularly anticipate any variation of expected earnings and be able to make the decisions necessary to mitigate any impact.

4. Set the risk management roles and responsibilities of each business and in every market where it operates.

5. Promote a risk culture where the understanding of and manner of mitigating such risks is part of our daily work, with discipline and excellence in each of the businesses.

6. Manage the company’s risk management program (Enterprise Risk Management)

7. Manage the Andes Risk Management Committee (ARMC), whose purpose is to govern, establish and implement the risk management.


Below, we present a summary of the main risks to which our business is exposed:

Technological Change Risk

The Company is exposed to the development of new technologies that can reduce the sales prices or make fundamental changes to the generation business. To mitigate the above, where possible, the Company executes long-term Power Purchase Agreements or PPAs to ensure an income stream that will make it possible to cover foreseeable financial obligations and generate value to their stakeholders. In Chile, the Company has an average contract remaining life of 11 years.

Regulatory Risks

The industry where the Company operates is subject to multiple regulations governing the business operation. These regulations are likely to suffer changes in the future or to be interpreted in a different manner, an event that could have effects on the transactions of the Company.

Risk of Natural Disasters

The occurrence of natural disasters can damage the electricity generation assets of the Company, thus decreasing their generation capacity and/or increasing production costs. If these events occur, the Company could be in the need to buy energy to other generators to meet its contractual commitments, which could have a negative impact on its financial results.

To mitigate this risk the Company purchases insurance policies for assets and operations with coverage consistent with the industry standard against earthquakes and other natural disasters, and also for physical damage and coverage in the event of operational interruptions and mitigation of lost profits, among others.

Foreign Exchange Risk

The financial results of the Company can become affected by variations in the exchange rate, particularly of the Chilean Peso, the Colombian Peso and the

Argentine Peso. Exposure to this type of risk arises when the Company faces revenues, costs, investments and financial debt denominated in currencies other than the functional currency of Company (United States Dollars).

In order to mitigate these risks, the Company has implemented a strategy to cover the exchange rate variations. The main sources of exposure to the exchange rate risk are: (i) exposure to the Chilean peso in the period between the date on which the tariff is set and the collection of sales from certain customers in Chile; (ii) constant exposure to the Chilean peso for certain items of fixed and variable costs in their operations; (iii) exposure to the Colombian Peso in dividend distributions from the Colombian operation to the parent company in Chile; and (iv) bank loans and obligations in bonds denominated in a currency other than the US dollar.

On a consolidated basis, the investments in new plants and maintenance equipment are mainly fixed in US Dollars. Most of the short-term investments associated with the handling of cash are denominated in US Dollars.

The Company mitigates these exchange rate risks through the implementation of its hedging strategy. This strategy contemplates the execution of derivative contracts with financial institutions that make it possible to set the exchange rate of flows and/or transactions in currencies other than the functional currency.

Interest Rate Risk

The interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations at variable interest rates.

The Company manages its interest rate risk by having an important percentage of its debt at fixed rate or with rate swaps that fix the rates. To mitigate interest rate risks with long-term obligations, the AES Gener has entered into hedging transactions by way of interest rate swaps.


Commodity Risk

The AES Gener Group is affected by the volatility of prices of certain fuels. The fuels used by the Company, mainly coal, diesel and liquefied natural gas (LNG), are “commodities” with international prices fixed by market factors beyond the control of the Company. It should be noted that, in Argentina, Termoandes purchases natural gas under fixed price short-term agreements that are reflected at the time of setting the sales price of energy under the contract.

The price of fuels is a key factor for the dispatch of plants and spot prices both in Chile and Colombia. Given that AES Gener is a company with a mixture of mainly thermal generation, the fuel cost represents an important portion of the sales costs.

Today, most of the power purchase agreements of AES Gener include indexation mechanisms that adjust the price on the basis of increases or decreases in the price of coal, according to the specific adjustment indexes and schedules of each contract, which makes it possible to mitigate much of the variations in the price of this fuel.

At present, the volume of AES Gener’s contracted energy is balanced with the generation of plants with high dispatch probabilities (efficient generation), therefore the other units (backup units) that use diesel or LNG are expected to operate only in straitened conditions, such as dry hydrologic conditions in the case of the SIC, by selling their energy in the spot market. Currently, the purchases of diesel and LNG have no associated hedge since the sale of energy in the spot market makes it possible to transfer the changes in the fuel price to the sales price.

Credit Risk

The credit risk is associated with the credit quality of the commercial partners of AES Gener and its subsidiaries. These risks are mainly reflected in the trade debtors and financial assets, including deposits with banks and other financial institutions and other financial instruments.

Customers of AES Gener in Chile are mainly distributing companies and industrial customers of high solvency and has local and/or international investment grade risk ratings of 90% of them or their parents. The sales of AES Gener group in the spot market are required to be made with other generation companies. In Colombia, AES Chivor has a variety of clients including distributing companies and industrial customers.

On the other hand, in Argentina, the main commercial partners of Termoandes are CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico S.A.) and non-regulated customers called “Large Users of the Wholesale Electricity Market”, whose contracts operate under the Plus Energy standards.

Under all circumstances, counterparty risk assessments are made based on a quantitative and qualitative credit assessment, which in some cases could include the request of collaterals for the delivery of energy. This credit assessment is reviewed from time to time to monitor any variation in the rating of the counterparty.

With respect to the credit risk associated to the financial counterparties with which the Company does business, AES Gener maintains a policy that requires a local credit rating greater or equal to “A” (Standard & Poor's and Fitch) and “A2” (Moody's).

Liquidity Risk

Liquidity risk is related to the need for funds to meet payment obligations. The Company's goal is to maintain the necessary liquidity and financial flexibility through normal operating flows, bank loans, public bonds, short term investments, committed and non-committed credit lines.


Risk Measurement

In AES Gener, the risk of changes in the variable margin is monitored by measuring the value at risk in the commercial portfolio of each market, thus limiting the volatility of the statement of income. The calculated value at risk represents the possible change in the variable margin of each of our portfolios during one semester with a 95% confidence level. The calculation of

the value at risk is based on the simulation of future risk factor scenarios and their impact on the variable margin.

Specifically, to measure and quantify the risks, the policy defines the use of at least two qualitative and quantitative methodologies. Within the quantitative methodologies, we have:

• Maximum Potential Exposure (MEP)

• Conditional Value-at-Risk (CVaR)


Construction Risk

In the various development phases of our projects there is the risk of failing to fully meet the goals proposed, of differences between the execution plans and the actual progress of the works due to adverse situations or challenges that have not been foreseen or quantified in detail.

Other Risks

• We are involved in various litigations.

» Our business may be adversely affected by court decisions in the environmental qualification resolutions of electrical projects in Chile.

» The demands brought against us outside of Chile or the claims against us based on foreign legal notions might not be successful.

• We are exposed to the impact that various international financial, political or other phenomena may have on the economy of the countries where we operate, and therefore our economic performance and financial liquidity may become affected.

• The economic cycles and interventions carried out by the authorities in the countries where we operate may have an impact on our economic results, financial condition and stock market performance.

• Natural Disasters, Acts of Terrorism and Accidents can affect the operation of our assets and therefore our economic and financial performance.

• All the conditions for the financing of future projects, capital expenditures, obligations due to maturity and debt refinancing are exposed to funding risks associated with financial market conditions.

• Gener can make acquisitions that may not be appropriate for the Company.

• Part of the behavior of the demand of our generating park is influenced by a higher or lesser hydroelectric availability, and, therefore by the effects of climate change, thus altering the economic performance of the Company.

• The environmental regulatory framework and its governmental institutions can generate delays, increases in cost or cancellation of the development of new projects.

• AES Gener projects could suffer the opposition of groups, bringing about reputational damage and possible delays in the development of projects or even rendering their performance impossible.

• The risk of failing to meet collective agreements and negotiations with the workers of Gener and its affiliates may have an impact on our business.

• Our information and communications systems and technologies can present security gaps that may give rise to interruptions or failures due to cyber-attacks that may cause a disturbance in our operations.

• Our operations require the service of power transmission systems that are not owned or controlled by Gener. In case of failures or poor performance, the dispatch of energy from our plants to our customers could become negatively affected.

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RESULTS FOR THE FISCAL YEAR

As of December 31, 2017, AES Gener S.A. (hereinafter, AES Gener or the Company), recorded a profit of MUS$184,519, MUS$76,490 less than the profit of MUS$261,009 recorded at the end of the previous year. Meanwhile, EBITDA was MUS$793,406, 2% higher than the EBITDA of MUS$778,201 recorded for the year ended in December 2016. The variation of the EBITDA is primarily explained by the better performance of the operations in the Great Northern Interconnected Grid (SING), the Argentine Interconnected Grid (SADI) and Colombian Interconnected Grid (SIN), offset by lower profits in the Central Interconnected Grid (SIC).

At the operational level, the cumulative gross profit as at December 31, 2017 was MUS$617,494, representing a negative variation of 1% as compared with the amount recorded at the end of the previous year of MUS$625,447. The Gross Profit variation in the different markets where we operate, between the years ended December 31, 2017 and 2016, is explained mainly by the following detail:

• In the SIC: the negative variation of the gross profit of MUS$52,646 is mainly due to a lower production of efficient energy mainly due to the major maintenance carried out in Unit 2 of Ventanas Complex, which reduced sales margins per contract, higher costs per emission taxes and

lower margins associated with the ENAP contract executed only once in 2016, partially offset by better margins obtained in 2017 due to the lease agreement of Nueva Renca plant executed with ENEL.

• In the SING: the increase of MUS$45,869 mainly corresponds to the additional margin generated by the commissioning of the two units of the Project Cochrane in Mejillones. This positive effect was offset by the effects associated with the emissions tax in force since the beginning of this year over all our plants in this market.

• In the SIN, the change was negative in MUS$2,553 as a consequence of less physical sales in the spot market at lower prices, partially offset by higher sales per contract at higher prices.

• In the SADI: the positive variation of the gross profit of MUS$2,040 is mainly due to higher sales to customers under the Plus Energy modality, in addition to the increase in spot market prices (Base Energy) related to the issuance of Resolution 19/2017 of the Ministry of Energy, partially offset against an increase in the cost of natural gas in addition to higher expenses for maintenance in relation to the previous year.

As in 2015 and 2016, the plants of AES Gener continued to be generation leaders in Chile, contributing 29% of the total generation in the country as of December 2017.


Within the non-operating result, we highlight the negative variations associated with the item “other gains (losses)” in the amount of MUS$44,642 mainly associated with the voluntary waiver of water rights and the corresponding reduction of related tax credits, in addition to the negative effect related to the anticipated redemption of bonds for a total amount of US$ 325 million in December 2017. We also highlight higher “financial costs”, where there was an increase of MUS$15,506 mainly due to lower capitalization of financial costs as a result of the completion of the construction and commissioning of Cochrane Project.

The main milestones occurred during 2017 and as of the date hereof were:

As in 2015 and 2016, the plants of AES Gener continued to be generation leaders in Chile, contributing 29% of the total generation in the country as of December 2017.

• AES Gener announced the sale of 100% of the shares of Sociedad Eléctrica Santiago SpA (ESSA) to Generadora Metropolitana SpA, whose indirect shareholders are AME and EDF Chile.

• The operation provides for the sale of Renca and Nueva Renca plants (in the metropolitan region), Los Vientos plant (Region of Valparaiso) and Santa Lidia plant (Region of Biobio), which together add up 750 MW.

• The sale price of 100% of ESSA stock amounted to US$ 300 million, subject to working capital adjustments.

• The transaction is subject to the approval of the National Economic Prosecutor and to a corporate restructuring to dispose of the assets free of its financial debt, which as of December 31, 2017 amounts to US$36 million.

• During the third quarter of 2016 a new agreement was executed with ENEL to lease the Nueva Renca Plant covering the period from January to December 2017. Moreover, during 2017, a new agreement was entered into and will be effective in 2018.

• During 2016 and 2017, Guacolda managed to obtain contracts for an annual volume of approximately 1,200 GWh with industrial clients for periods ranging from 3 to 7 years that will allow to increase the contracted capacity of the company in the medium term.

• Since February 2016, AES Gener began the commercialization of energy from the SING to the SADI through its Interandes transmission line. During 2017, approximately 35 GWh were exported.

• On February 2, 2017 Resolution 19/2017 issued by the Secretary of Electric Power was published in the Official Gazette of the Republic of Argentina. This resolution modifies the energy and power remuneration scheme to the generators included in Resolution 95/2013 issued by the Secretary of Energy, as amended. In the case of Termoandes, the power and energy that was not committed under the Plus Energy contracts are included. As from this resolution, prices are fixed in US dollars and converted into Argentine pesos at the exchange rate prevailing at the end of the month of the transaction. All of the items identified in the resolution are payable on the expiration date of the transaction and withheld items are no longer existent.

• The 2014 Tax Reform Law incorporated a tax on the emissions coming from fixed sources, made up of boilers or turbines that, individually or as a whole, sum up a thermal power higher than or equal to 50 MWt. In the case of CO2 emissions, the tax shall be US$5 per ton emitted.


For the purposes of setting the payable tax, the Superintendency of Environment shall certify, in March of each year, the emissions of each taxpayer in the previous calendar year. The first payment of this tax shall occur in April 2018 for the emissions recorded in 2017. The company has started to record the economic impacts of this regulation as from January 2017.

EBITDA by Market

44% 35%YEAR 2016

US$ 778 MILLONESYEAR 2017

US$ 793 MILLONES

31% 39%

22% 22%

3% 4%

sin sadi sic singNational Interconnected Grid (Colombia)

Argentine Interconnected Grid

Central Interconnected Grid (Chile)

Great Northern Interconnected Grid (Chile)

• The Company has been part, for the third consecutive year, of the Dow Jones Sustainability Chile Index, one of the most important market measurements in terms of sustainability.

Below there is a list of contributions from the different segments to the AES Gener consolidated EBITDA for the year ended December 31, 2017 and 2016:

SICSIN SINGSADI


Cumulative Quarter

Results (Thousands of US$)December

2017

December

2016Var %

December

2017

December

2016Var %

Income from ordinary activities

Sales of energy and power 2,151,025 2,028,950 6 % 577,499 512,903 13 %

Other income 285,687 257451 11 % 87776 51,044 72 %

Total income from ordinary activities 2,436,712 2,286,401 7 % 665,275 563,947 18 %

Sales costs

Fuel cost (610,082) (476,613) 28 % (151,536) (127002) 19 %

Fuel sales cost (150,766) (144,104) 5 % (52,779) (18,800) 181 %

Purchase of energy and power (298,557) (441,624) -32 % (87043) (82,901) 5 %

Cost for use of transmission system (97,802) (94,004) 4 % (20,389) (26,001) -22 %

Production and other sales costs (380,487) (254,683) 49 % (92,689) (77,748) 19 %

Depreciation of intangible assets (281,524) (249,926) 13 % (69,636) (69,068) 1 %

Total of Sales Cost (1,819,218) (1,660,954) 10 % (474,072) (401,520) 18 %

Gross Income 617,494 625,447 -1 % 191,203 162,427 18%

Other income, by function 457 2,243 -80 % 84 259 -68 %

Administrative expenses (108,656) (102,296) 6 % (30,492) (25,405) 20 %

Other expenses, by function (2,142) (2,981) -28 % (308) (1,030) -70 %

Other income (losses) (44,108) 534 -8360 % (22,198) 1,077 -2161 %

Financial income 8,173 8,111 1 % 2,411 1,923 25 %

Financial costs (177037) (161,531) 10 % (41,112) (47207) -13 %

Interest in earnings (losses) of investees 23,584 12,909 83 % 12,535 3,044 312 %

Exchange Differences (4,662) (17297) -73 % 4,620 2,001 131 %

Income (loss) before taxes 313,103 365,139 -14 % 116,743 97,089 20 %

Income tax (115,018) (106,830) 8 % (41,376) (26,030) 59 %

Income (loss) 198,085 258,309 -23 % 75,367 71,059 20%

Income (loss) attributable to owners of parent company 184,519 261,009 -29 % 70,856 71,334 -1 %

Income (loss) attributable to non-controlling interests 13,566 (2,700) -602 % 4,511 (276) -1737 %

Income (loss) 198,085 258,309 -23 % 75,367 71,059 6 %

Statement of Income


SUMMARY OF FINANCIAL ACTIVITIES

The main financial commitment of AES Gener is to maintain a balanced capital structure consistent with an investment-grade rating by the major international rating agencies. With this goal, the AES Gener Chief Financial Officer permanently takes steps towards optimizing the debt position held by the Company and implementing the most efficient hedging strategy to mitigate the risk of devaluation of Chilean, Colombian and Argentine currencies.

As of December 31, 2017, the financial debt was US$ 3,741 million, while cash, cash equivalents and other financial

Debt Amortization Schedule (US$ million)

Non-recourse Debt Recourse Debt

assets reached US$ 275 million, thus recording a net financial debt of US$ 3,465 million.

The total consolidated debt of the Company has an average life of 14 years and a manageable repayment schedule, with no relevant maturities until 2021. Out of the total outstanding debt as of the 2017 year-end, 64% (US$ 2,387 million) accounts for debt subscribed by subsidiaries of the Company with no recourse to the parent AES Gener S.A; the remaining 36% (US$ 1,354 million) is made up of AES Gener S.A. corporate debt. In addition, out of total debt of AES Gener, 93% is fixed and the remaining 7% is at variable rate.

2026/2073

1.792

2025

354

2024

188

2023

174

2022

160

2020

152

2019

174

2021

448

2018

299

171 44 20 313 23 30 36193

524

128 130 132 135 137 144 152 161 1268

124 Our Management during 201711112222444 Our Management ddururing 201717177717771


During 2017, the Company carried out important actions in order to optimize the terms and conditions of the current debt, including, without limitation:

• Special corporate debt repayment. During December 2017, AES Gener made an offer of partial repurchase of its 144 A/RegS Notes due 2021 and 2025 (5.25% and 5.00% coupon rate, respectively). Finally, we were able to redeem a total amount of US$ 327 million (US$ 110 million of Notes due 2021 and US$ 227 million of Notes due 2025). With this, the notional value of the Notes due 2021 and 2025 as of December 31 was reduced to US$291.7 and US$172.4, respectively. The funds for this purchase will come from the operational cash generation and the execution of a short-term credit for US$ 92.5 million (US$10 million of which were already paid during January 2018). The redeemed notes were settled.

• Repayment of US$100 million Revolving Line. During 2017, AES Gener repaid the total of the revolving line of US$12 million issued in 2014 with local and international banks.

• Opening of credit lines committed in US$ for US$250 million until year 2021. In December 2017, AES Gener executed a long-term committed line

for US$ 120 million during a period of 4 years with HSBC and SMBC.

• On February 26, 2018, AES Gener closed an additional $130mn, and therefore the total committed line reaches $250mn. This credit line replaces the Revolving Line of UF 6,000,000 that was canceled in March 2018.

• Alto Maipo Hydroelectric Project Restructuring. During the first quarter of the year, financial and corporate restructuring of the Alto Maipo Project was completed. The multilateral agencies and foreign and domestic banks that took part in the financing of the project approved the plan proposed by Alto Maipo and the restructuring process was completed on March 17, 2017. The financial restructuring considered, among others, the acquisition by AES Gener of all the interest of Minera Los Pelambres (MLP) in the company Alto Maipo SpA (Alto Maipo); the incorporation of Strabag SpA, main contractor of the Project, as a minority shareholder of Alto Maipo, with an approximate interest of 7%; the modification of the power supply agreements executed by Alto Maipo and AES Gener with MLP; and the modification of the terms and conditions of the current Project financing. As of December 31, 2017, the debt in Alto Maipo amounted to US$ 627 million.

Current Debt Composition as ofDecember 31, 2017

Recourse Debt Non-recourse Debt

64%

36%

US$ 3,741

MILLION

Debt ratio Unit December 2016

December 2017

Current liabilities/Shareholders' equity

(times) 2.07 2.01

Gross debt/EBITDA (times) 4.9 4.7

Net debt/EBITDA (times) 4.3 4.4

Financial expenses coverage

(times) 3.3 2.8

126 Our Management during 2017126 Our OurOOuuururur MaManaManaManaanaManaM ggggemeemmememmmeemeegggemememeeeeemeeg nt dnt dn urinuring 20g 201717


OPERATION AND MAINTENANCE

2017 was a very challenging year for the Operations Vice-Presidency. The professional team that make up the vice-presidency was focused on: (i) the preparation of the generation plants for the new operating scenarios as a result of the high penetration of the new plants for the generation of intermittent renewable energy, (ii) the performance of major maintenance tasks in some of our units and (iii) the implementation of state-of-the-art technological tools designed to improve the performance and reliability of thermal units.

AES Gener began with the installation and commissioning of two systems that perform the following activities:

• Measure the efficiency of the units on-line and give alerts of anomalous situations as compared with their normal operation (EtaPRO), and

• Optimize combustion process and blowing procedure for boilers through the implementation of logic-based machine learning (Boiler Opt).

These tools, which also help to reduce emissions of the plants, are already enabling the materialization of the first financial benefits in Ventanas and Guacolda plants.

Another tool that is being implemented during this period is an Asset Performance Management (APM) System,

which through the capture of information provided by different systems already operating in the organization, makes it possible to perform a reliability analysis on equipment and concentrate, based on that analysis, the maintenance resources in the equipment that could have biggest impact on the availability of units (Meridium). The above makes it possible to carry out maintenance based on reliability, namely, when the equipment has lost its capacity to operate as designed, rather than in hours of operation according to a preset frequency, thus getting significant savings in maintenance costs.

After the beginning of commercial operation of Cochrane units and the Andes Solar photovoltaic plant in 2016, the year 2017 was focused on strengthening and consolidating the operation of both plants, incorporating them as another asset of the Operations Vice-Presidency.

From the point of view of overhaul tasks, we make special mention of those performed in Unit 3 of Guacolda and Unit 2 of Ventanas. Both were performed under the framework agreement executed with General Electric (GE), associated to the steam turbines of the fleet, which has technical and commercial advantages.

On the other hand, and continuing with our constant concern for reducing our environmental impacts, the design of the SO2 abatement systems of the Units of

After the beginning of commercial operation of Cochrane units and the Andes Solar photovoltaic plant in 2016, the year 2017 was focused on strengthening and consolidating the operation of both plants


AES Gener Energy (GWh)

Net Generation 6,416

Purchase to Third Parties 1,621

Purchases Spot Purchases 539

Inter-company purchases 3,546

Total Purchases 5,706

Sale to distributors 4,623

SalesSale to other

customers 3,789

Spot Sales 231

Intercompany sales 3,546

Total Sales 12,189

AES Gener (SIC) 2017 Energy Balance in the SICNueva Tocopilla and Guacolda Plants was improved. This improvement allows a greater system reliability and mitigation of the risk of unscheduled maintenance as a result of contingencies.

From an operational point of view, during 2017, we suffered significant changes in the dispatch requirements of our thermal units. In fact, the load variations between minimum stable capacity and full load are common between day and night. To reduce the power value for the minimum stable capacity has become a constant challenge, therefore we have conducted studies, empirical tests and modifications in the units of Guacolda in order to, among other reasons, reduce the minimum stable capacity of the units while maintaining the reliability of their operation. This is how we have managed to reach values of up to 38 MW, in the case of Guacolda 4, which is consistent with an 25% of its maximum gross power, thus being the most flexible coal-fired thermal plant of the grid. This was achieved after a meticulous work carried out by our technicians and other external advisors specifically hired for this purpose.

As part of the regular maximum power tests established by the CEN, during this year, Laguna Verde and Renca plants were commissioned to check their respective peak performance. The tests were successful. Laguna Verde reached 40 MW and Renca Plant reached 103 MW, both proving to be fully active.

Another important issue to mention is that. since 2017, preventive/corrective maintenance and operation programs started to be developed and implemented in the Distributed Generation facilities, namely, Smart Flower, Ministry of Social Development and Vineyard Miguel Torres.

Notes

» Net Generation includes generation of Nueva Ventana, Campiche and ESSA

» Net Generation does not include Guacolda

» Intercompany Purchases are purchases of Generation from Nueva Ventanas, Campiche and ESSA


Overall Asset Performance

AES Gener Unit performance is continuously monitored through key performance indicators. These indicators are the same used by AES Corporation for performance

EAF NCF ENPHREFOR ESOF

Equivalent Availability Factor (%)

Net Capacity Factor (%)

Equivalent Net Plant Heat Rate (%)

Equivalent Forced Outage Rate (%)

Equivalent Scheduled Outage Factor (%)

1 3 52 4

follow-up at all its plants around the world and are based on the IEEE Standard 762. The main operational indicators that we use are:

It is important to mention that the indicators

individualized above, although they have

similarity with some indicators used by the

CEN, are not necessarily the same. The

use of IEEE Standard 762 is characterized

by its international nature, as it is possible

to make comparisons with plants of the

AES Corporation fleet and also with the

worldwide fleet using this standard.

Additionally, a fifth indicator, thermal plant performance, is included. Its calculation method is the ratio between the input thermal energy expressed in BTUs (British Thermal Units) and the output electric energy expressed in MW. To calculate the first of them, we will establish the mass fuel entering the process (kg) and multiply the result by the calorific value (BTU/Kg) of the incoming fuel. This way, we obtain the energy in BTU. The second variable is measured directly in the net energy meters of the Plant.

For a better understanding, the calculation formula is described below:

enhpr =Thermal energy / Net Electric Energy

energía térmica = Fuel Mass x Calorific Value


Units (*) Availability Availability 2017 (%)

Forced Output Rates 2017 %

Planned Output Rates 2017 %

Net Capacity Factor 2017 %

29 2016 (%) 90.90 3.16 6.32 62.02

87.08

It is possible to obtain, through a weighting by the net power of each Unit, a single indicator for the entire fleet of AES Gener. The greater power units contribute to each

AES Gener Consolidated

indicator in a more significant manner. This is how we can obtain the following table for year 2017:

You can find below the plants of AES Gener Group by market and by owner of assets.

AES GENER S.A.

Thermoelectric Plants

The thermoelectric units owned by AES Gener S.A. in the SIC include Units 1 and 2 of Ventanas plant, the two steam-turbine units that run with diesel from Laguna Verde Plant, the gas turbine unit of Laguna Verde Plant and the Laja Plant that runs with forest biomass.

In 2017, Unit 1 of Ventanas Plant generated 569.9 GWh net. This unit had no significant scheduled maintenance during this period.

On the other hand, the Unit 2 generated 973.2 GWh net and was subjected to overhaul, which lasted 79 days from July 16 to October 2. The original deadline was 60 days; however, a finding in the generator of the unit required the performance of tests involving the partial disassembly of the primary equipment, thus extending the works beyond the term scheduled. As part of the scheduled works, we made significant improvements in the air heaters of the boiler. This way, this unit will recover most of the efficiency and power lost during recent years.

The overhaul carried out is the second of several other overhauls scheduled for AES Gener units between 2016 and 2020 that were awarded under the framework

agreement to GE for the entire fleet. The agreement has a cost reduction in labor and services, and the overhaul will be performed in less time than as usually required by these tasks.

Other significant tasks performed in this Unit during the overhaul include:

• In boiler: 100% change of Reheater and Grid tube bank, change of tube curves of the lower vestibule. Change of Economizer Expansion Joints

• Overhaul of turbogenerator and non-destructive testing in generator.

• Change of low-thickness coal seam silos

• Modernization of heater level control and temperature monitoring system of boiler

• Maintenance to unit auxiliary transformer

• Change of forced draft fan impeller and 2F primary air fan

Run-of-river hydroelectric power plants

The hydroelectric plants owned by AES Gener S.A. -Alfalfal, Maitenes, Queltehues and Volcán-, use water

* Termoandes, Chivor and low-dispatch units are not considered. Nueva Renca is considered as a unit.


Table 4: AES Gener Thermoelectric Plants (SIC)

from neighboring rivers and are run-of-river plants, i.e. they have no reservoir, thus minimizing the impact on the environment.

These plants have an installed capacity of 271 MW and all of them are located in the commune of San José de Maipo. During 2016, the four plants remained operational on a permanent basis, thus achieving an annual net generation of 1271.1 GWh.

In April 2017, the inspection of the Colorado tunnel of Alfalfal Plant was conducted. We should remark that this work was performed by a robot that was driven through the tunnels with water and that no emptying tasks were required. As a result, we saved at least 25 days of unavailability of the central and obtained very positive results from the point of view of the inspection itself since no significant defects where found that would have required emptying tasks to make repairs. It should be noted that tunnel emptying generates a mechanical stress, which was avoided in this opportunity, through this innovative inspection procedure.

Plant Ventanas 1(1) Ventanas 2(1) Laguna Verde (1) Laguna Verde (1) Laja (1)

Location Ventanas, V Region Ventanas, V Region Laguna Verde, Valparaiso, V Region

Laguna Verde, Valparaiso, V Region Cabrero, VIII Region

Beginning of Operations 1964 1977 1939-1949 1990 1995

Turbine Coal / Steam Coal / Steam Diesel, steam Diesel, TG Biomass Cogene-ration

Units 1 1 2 1 1

Power (MW) 120 220 47 18.8 12.6

Specific Consumption (BTU/kWh) 11,055 10,826 19.031(2) 11,419(2) 15,351

Availability 2016 (%) 74.30 78.68 100.00 0.00 96.25

Availability 2017 (%) 88.84 68.7 100 0 96.34

Forced Output Rates 2017% 6.65 8.27 0.0 (3) 0.69

Planned Output Rates 2017% 2.2 24.2 0.0 (3) 3.2

Net Capacity Factor 2017 % 72.3 61.7 0.2 (3) 25.6

This 3D image delivered by the robot shows a rock of 0.5 meters in length that drew the attention of the specialists; however, taking into account its size, it represents no issues for the normal operation of the tunnel and hence for the normal operation of the plant.

(1) These facilities are owned by AES Gener(2) During this period there was no significant generation, the value is for design purpose.(3) Unavailable Unit


Table 5: AES Gener Hydroelectric Plants (SIC)

Plant Maitenes (1) Queltehues (1) Volcán (1) Alfalfal (1)

LocationLos Maitenes,

Cajón Río Colorado, Metropolitan Region

Los Queltehues, Cajón Río Maipo,

Metropolitan Region

Cajón Río Maipo, Metropolitan

Region

Cajón Río Colorado, Metropolitan

Region

Beginning of Operations 1923-1989 1948 1949 1991

Turbine Francis Pelton Pelton Pelton

Units 5 3 1 2

Power (MW) 30.8 48.9 13 178

Availability 2016 (%) 92.51 98.81 99.39 95.35

Availability 2017 (%) 97.90% 99.70% 99.56% 92.70%

Forced Output Rates 2017% 0.10% 0.00% 0.00% 0.16%

Planned Output Rates 2017% 2.03% 0.30% 0.44% 7.19%

Net Capacity Factor 2017 % 20.88% 79.89% 85.97% 49.98%

Load Dispatch Center, Operation and Maintenance of Substations and Transmission Lines in the SIC (TSIC)

The main purpose of the AES Gener Load Dispatch Center is to satisfy the need for using electrical energy in a safe and cost-effective manner, overseeing the balance between the generation of electric generation plants and the requirements of energy, power, safety and service quality of customers.

It performs the coordination, supervision and operation of the AES Gener generation and transmission system covering from the III Region to the VIII Region. It is responsible for the operational coordination and care of failure conditions of approximately 44 facilities of non-regulated customers, regulated customers (ENEL Distribución, EEPA, Chilquinta, Emelca and Emel) and approximately 20% of the power generated in the Center-South Grid of the current National Electric Grid (SEN).

It maintains direct coordination with the current National Electrical Coordinator (CEN) and the rest of the coordinated companies. In addition, it leads the Regional Operation Center in the Fifth Region (V Region COR), a duty assigned by the CEN under the service recovery plans in the event of black out or natural disasters.

In 2017, we added the SCADA (Supervisory Control and Data Acquisition) system the Distributed Generation management and we received information from Smart Flower, Ministry of Social Development and Miguel Torres Vineyard facilities in order to monitor their performance, improve their operation and the development and implementation of preventive/corrective maintenance programs for these facilities.


Substations (S/E)

On November 21, 2017, the Central Interconnected Grid (SIC) and the Great Northern Interconnected Grid (SING) were interconnected giving origin to the National Electric Grid (SEN). Through the SCADA system, we oversee the whole of the National Electric Grid (SEN) from Arica to Chiloé island.

Through Phase III Automatic Disconnection/Reduction of Generation (EDAG/ERAG), we monitor and optimize the energy transmission capacity between Maitencillo and Nogales substations. The above is necessary if we take into consideration the high incorporation of solar and wind Non-Conventional Renewable Energies (NCRE) in the northern area of the country. This system is fully monitored from the AES Gener Load Dispatch Center.

Substations

Alfalfal Maitenes Queltehues La LajaPunta de Peuco

PachacamaSan Pedro

Ventanas 110Kv

Ventanas 220 Kv

TorquemadaLaguna Verde

Sections or drop lines to S/E of other companies

Los Almendros Florida Cerro Navia Las Vegas La Calera Miraflores Quillota Nogales

During 2017, we continued with the structural improvement of the Transmission System referred to under the Continued Improvement Plan implemented in the Company. The main works are focused on strengthening the structures that make up the transmission systems and improving the height of power lines. For this purpose, the program considered periodic disconnections that have not jeopardized AES Gener energy generation.

With regard to safety, during 2017, 42,717 man hours without a lost time incident were recorded for contractors and 43,736 for AES Gener people. Moreover, and in an equivalent manner, 9,184 days without lost time incidents were recorded both for our own and contractor staff, according to OSHA standards.

SOCIEDAD ELÉCTRICA SANTIAGO SpA

During 2017, Nueva Renca plant run with LNG and diesel, thus achieving a highly reliable dual operation. In this way, the plant recorded a net generation of 1,749.1 GWh and its operation with all fuels added up 5,668 service hours with liquefied natural gas and 479 service hours with diesel. In relation to operational availability, it reached 93.21%, exceeding the assessed budget of 86.3%.

In the month of December, Nueva Renca plant was audited by the company ABS Group Services and managed to maintain its certification to ISO 55001:2014 (Asset Management). It must be remembered that this plant became the first Chilean company to be certified to this standard in December 2016.

Renca Plant was available for operation 100% of the time in 2017. At the request of CEN, Maximum Power tests were performed in September. These tests involved achieving maximum load on both units. They reached 103 MW and proved to be fully current to come into service as required for dispatch purposes.

Moreover, the Gas Turbines of Los Vientos and Santa Lidia had a mostly backup function in the SIC. Los Vientos operated with dispatch on the direct or “express” energy delivery injection point to the 110kV Cerro Navia bar and, in normal condition, to the Las Vegas substation bar, generating 18.9 GWh.


On the other hand, Santa Lidia plant generated 1.5 GWh.

From the point of view of maintenance tasks, it is worth mentioning here that the main transformer from the Santa Lidia plant was subjected to an internal review for having shown increased gas rates contained in the insulating oil during the last few months. GE was hired to

perform such review and it found out that these gases were produced due to a contact between the equipment nucleus and earth. A corrective measure was applied that will cause the gases to be kept within normal limits.

No lost time incidents were recorded and so far, almost 7 years have elapsed without lost time incidents.

Plant Renca (1) Nueva Renca (1) Los Vientos (1) Santa Lidia (1)

LocationCommune of

Renca, Santiago, Metropolitan Region

Commune of Renca, Santiago,

Metropolitan Region

Las Vegas, Llay Llay, V Region

Cabrero, VIII Region

Beginning of Operations 1962 1977 2007 2009

Turbine Diesel/ Steam Turbine Combined cycle Diesel/

Gas TurbineDiesel/

Gas Turbine

Units 2 1 gas turbine, 1 steam turbine 1 1

Power (MW) 100 379 (3) 132 139

Specific Consumption (BTU/kWh) 15,787 (2) 7,576 11,093 11,643

Availability 2016 (%) 100.00 92.1 79.85 97.09

Availability 2017 (%) 100% 93.21 96.93 100.00

Forced Output Rates 2017% 0.00% 0.63 0.01 0.00

Planned Output Rates 2017% 0.00% 6.3 3.1 0.0

Net Capacity Factor 2017 % 61.4 1.7 0.1

EMPRESA ELÉCTRICA VENTANAS S.A.

• During 2017, Ventanas Unit 3, owned by Eléctrica Ventanas, generated 1,750.1 GWh net and recorded an availability of 91.34%.

(1) These facilities are owned by Eléctrica Santiago(2) During this period there was no significant generation, it is a design value(3) Power is 355 MW with diesel and 379 MW with natural gas

From the point of view of maintenance tasks, Ventanas 3 was stopped for 22 days in the month of January to perform some minor maintenance tasks that are detailed below:


Plant Campiche

Location Ventanas, V Region

Beginning of Operations 2013

Turbine Coal / Steam

Units 1

Power (MW) 272

Specific Consumption (BTU/kWh) 9,389

Availability 2016 (%) 99.10


Forced Output Rates 2017% 6.13

Planned Output Rates 2017% 1.9

Net Capacity Factor 2017 % 77.4

Plant Nueva Ventanas (1)

Location Ventanas, V Region



Units 1

Power (MW) 272






EMPRESA ELÉCTRICA CAMPICHE S.A.

During 2017, Ventanas Unit 4, owned by Eléctrica Campiche, generated 1,674.1 GWh net and recorded an availability of 92.62%.

This Unit was subjected to minor maintenance of 15 days during May and June. The most significant works performed during this stop of the Unit were focused on the repair tubes in the boiler.

During this stage, the Boiler Opt, boiler and blowing optimization system, was connected. This is a software that allows, through logic-based machine learning, to increase efficiency in the operation of the Boiler on a continued basis.

• Turbine: Review of valves, inspection #1 bearing and mistunning to low-pressure turbine blades

• Inspection and temporary repair of broken seal pit

• Update of DCS Ovation Unit control system

GUACOLDA ENERGÍA SpA

The net generation of Guacolda thermal complex reached 3,172 GWh in 2017, considering the generation of the five units.

During 2017, as part of the annual unit scheduled maintenance program, we performed the maintenance of Units 1 and 2 for 23 days each, Unit 3 for 83 days and Units 4 and 5 were not subjected to maintenance this year.

The most relevant work performed in Units 1 and 2 was the replacement of the desulfurizator Venturis systems. This work was covered by the supply guarantee of Andritz due to the low performance with respect to the specifications of this component. In addition, in Unit 2, 35 tube panels were replaced in the boiler super-heater. This made it possible to lift the operational restrictions to which this unit was subject. The chemical cleaning of the high pressure turbine was another task performed, whose main purpose was to restore unit efficiency.

During February, there was a failure in the Electrical System that affected the 5 units of Guacolda, thus giving


rise to their sudden disconnection. The disconnection was cause by a short-circuit in the cable of the Guacolda-Maitencillo line. Immediately after the failure, all the Units started their normal stop; however, Unit 3 was damaged in the turbo generator bearings for lack of lubrication. Upon the occurrence of this event, simultaneously with the repair work to cause the Unit to return to service as soon as possible, we brought forward the overhaul of the unit under the scope of the Agreement executed between AES Gener and GE. This company mobilized its resources to bring forward the overhaul of the unit and complete the repair as soon as possible. The Unit was out of service for 83 days in total and a large part of the costs were covered by the insurance.

From an environmental point of view, it is important to mention that during the month of October, Petcoke consumption ended in the units of Guacolda, thus complying with the commitment assumed with the communities and the authority.

In December, the company Bureau Veritas conducted audits to ISO 14,001 and ISO 18,001 management systems. We were certified to both standards for one year.

Within the context of the incorporation of new technological tools, we have implemented in Guacolda, for a more efficient operation, the Boiler Opt system in Unit 5 and the EtaPRO monitoring system in the five units. From the point of view of the management of physical assets, we are incorporating a tool known as APM that will allow us to optimize the maintenance costs.

We also allocated resources in 2017 to the improvement of the operational flexibility of the units. This way, with the effort of our professionals and the collaboration

of external consultants, we ran tests and subsequent modifications in the units that made it possible to achieve a minimum stable capacity of 50MW, 45MW and 38MW for Units 1 and 2, Unit 3 and Units 4 and 5, respectively. The foregoing meant for Guacolda to be recognized with the “Speedy Awards”, which was granted by AES Corporation for the speed in which this target was achieved.

As of the date hereof, the record of time without accidents are: Guacolda Complex 11 years 8 months. On the other hand, the collaborating companies 11 years 2 months and 22 days. In Scorecard Safety Audit, Guacolda obtained 8.21 points, thus obtaining a world-class position. (In 2016 the score was 8.23).

In the field of Safety and Environment, during 2017, no lost-time accidents were recorded in our own and contractor staff.

With regard to stakeholder relations, we can highlight the execution of the Agreement with the Federation of Huasco Fishermen for 5 years. In addition, the first version of the Huasco Competitive Funds was launched, which generated a great deal of community involvement with the submission of about 40 projects. This process will be completed during 2018 with the allocation of resources for selected projects.

In 2017, we conducted negotiations with the Union of Guacolda in order to sign a new collective agreement valid for the next 2 years. In a climate of mutual confidence, this agreement was executed by both parties in the month of July, thus guaranteeing a good climate in the relations between the Company and Guacolda workers.


Plant Guacolda (1)

Location Huasco, III Region

Beginning of Operations 1995 / 1996 / 2009 2012 / 2015


Units 1

Power (MW) 760







AES Gener Energy (GWh)

Net Generation 8,211

Purchase to Third Parties 0

Purchases Spot Purchases 37

Inter-company purchases 0

Total Purchases 37

Sale to distributors 0

Sales Sale to other customers 5,738

Spot Sales 2,432

Intercompany sales 0

Total Sales 8,169

Rerouting 2,251

AES Gener (SING) 2017 Energy Balance in the SING

The balance between generation plus purchases shows differences with respect to sales due to the fact that the Coordinator recognizes that the injection of the plants is

made in a bar different from that of net generation and therefore there arise transmission losses.


Plant Nueva Tocopilla (1)

Location Tocopilla, II Region

Beginning of Operations 1995-1997


Units 2

Power (MW) 277.3






Net Capacity Factor 2017 % 83.57%

During this period preventive maintenance was performed to the transmission systems and substations owned by AES Gener and its subsidiaries Angamos and Cochrane.

• In the environment and safety field, we can highlight the period reached without a lost-time accident of 17 years and 7 months, as measured according to the OHSAS standard. World Class in Safety and Environment is also obtained through AES Gener 2017 Scorecard.

• Active participation in the International Work Team “Renewable Workforce Profile Project”, on specific topics related to Photovoltaic Plants and Energy Storage.

• Third Place in APEX Summit Global Event held in Panama in the Category 2 to 10 MMUSD with the Project “Performance Improvements in Andes Solar Photovoltaic Plant”

• A Recognition is received in the AES Innovation Congress held in Washington in the category “Everyday Innovators” with the Electromobility Inti-Atuq Project

• A cooperation agreement is executed with the Energy Development Center of the University of Antofagasta

• Support to the SIC Transmission Deputy Management in the implementation of work procedures.

(1) These facilities are owned by AES Gener

The annual Net Generation of the Nueva Tocopilla plant (ex Norgener) reached 1,800.9 GWh during 2017.

Among the works carried out in the Nueva Tocopilla plant during this period, we have installed an electrochlorination plant, which allowed to improve the performance of the circulation and cooling systems of both units. We have also modified the control system of the units to reduce the minimum stable capacity in 10 MW, thus validating a value of 55 MW (gross). This allows a greater operational flexibility of the units. In addition, the maximum power tests were performed in Unit 1 after the overhaul carried out during 2016. The tests showed a 1MW increase with respect to the previous tests, thus validating 140.6 MW gross for that unit.

In terms of safety, it is very important to mention that during 2017 fourteen years without LTIs were reached with the staff of Nueva Tocopilla under the OSHAS standard, and we were able to maintain our certification to the ISO 14,001 - ISO 9,001 and OHSAS 18,001 Integrated Management Systems, without any significant nonconformities in any of the three standards.

Load Dispatch Center, Operation and Maintenance of Substations and Transmission Lines in the SING


Substations (S/E)

Substations Sections or drop lines to S/E of other companies Energy Storage

AndesNueva Zaldívar

Laberinto Tocopilla Oeste Minsal La Cruz2 sections in Mantos

Blancos S/E

1 section in Lomas

Bayas S/E

2 sections in Crucer

S/E

2 sections in Barriles

S/E

BESS Andes 12 MW

Plant Angamos (1)

Location Mejillones, II Region



Units 2

Power (MW) 558.2




Forced Output Rates 2017% 4.00%

Planned Output Rates 2017% 6.35%


EMPRESA ELÉCTRICA ANGAMOS S.A.

During 2017, Eléctrica Angamos registered a historical net generation of 3,448 GWh and an availability of 89.95%.

Among the works carried out in Angamos Plant, during scheduled maintenance, we highlight the modification of the natural frequency made to the L-0 wheel of the low-pressure turbine of Units 1 and 2, known as mistunning. In addition, we performed improvement works in the particulate matter abatement system.

In terms of safety, it is very important to emphasize that during the year 2017 no LTIs were recorded, thus achieving 7 years without LTIs under the OSHAS standard. Moreover, we were able to maintain our certification to the ISO 14,001 - ISO 9,001 and OHSAS 18,001 Integrated Management Systems after the follow-up audit on the three standards.

• Integration of AGC signals to AES Gener SCADA

• Participation in the review of dynamic studies for increased power transfer to the SADI, with respect to SEN-SADI Interconnection

Solar Power Plant:

• Performance of Thermal Imaging Analysis

through the use of drones, which allows to reduce maintenance times

• Performance of Verification Tests of the Power-Frequency Controller to meet regulatory requirements.

• Readjustment of operational statism and approval of dynamic behavior of the solar plant

Substations (S/E)

Substations (S/E) Energy Storage

Angamos Extension of Nueva Zaldívar Extension of Laberinto BESS Angamos 20 MW


EMPRESA ELÉCTRICA COCHRANE SpA

The annual net generation of Eléctrica Cochrane units reached 2,929.5 GWh during 2017.

During this period, the major repair of the Unit 1 boiler was performed and a protective mantle in the SO2 abatement system turbojet venturi scrubbers for Units 1 & 2 was installed by POSCO as a guarantee. In addition, the performance test in Units 1 & 2 was performed.

In terms of safety, it is very important to emphasize that during the year 2017 no LTIs were recorded, thus achieving 2 years without LTIs under the OSHAS standard.

In relation the BESS of Cochrane, operational set-point was reorganized (redefinition of Deadband).

Plant Cochrane (1)

Location Mejillones, II Region



Units 2

Power (MW) 550







(1) These facilities are owned by Eléctrica Campiche


Substations (S/E)

Substations (S/E) Energy Storage

Cochrane 2 sections in Encuentro S/E BESS Cochrane 20 MW

INTERANDES

InterAndes has a concession for the transmission of electric power from the Salta Plant in Argentina and the border node at Paso Sico, boundary point with Chile. It also has a contract with TermoAndes to provide electric energy and power transmission services between Salta Plant and such border node.

Circuit Type Voltage (kV) Length (km)

Simple 345 268

Total - 268

Substations (S/E) - Salta

COLOMBIA

The weak-category meteorological phenomenon called “La Niña”, which occurred by the end of 2016, allowed the atmospheric conditions to favor the formation of rains in the first quarter of 2017 for both Chivor and the National Interconnected Grid (SIN). As from March 2017, such effect was diluted, and the area returned to a period of neutrality, to reappear again in the fourth quarter as a weak La Niña, but without direct influence in the rains of the country.

For AES Chivor, the hydrological contributions throughout the year were 86%, becoming the eighth driest year in the series of 40 years of the history of the Batá river and its affluents.

At the end of the year, the reservoir level reached 79.4% of its service output. 6,075 GWh were marketed, 2,123 GWh of which were traded through the energy exchange and the remaining 3,952 GWh, through medium-term agreements.

During year 2017, on repeated occasions, the line from the Andes side was energized as reactive compensator of the northern greater Chilean grid. Moreover, during 2017, this line operated as a link between the SING-SADI grids, mainly exporting energy from the first to the second.

This transaction was carried out at the request of the dispatches, under the scope of the commercialization of energy between AES Gener and CAMMESA.

In the field of Safety and Environment, during 2017, no lost-time accidents were recorded in our own and contractor staff. We also maintained the certifications to ISO 14,001 Environment, and the of Public Safety and Emergency Plan under Res. ENRE 57 and 22, respectively.


Installed Capacity [MW]

AES Chivor 1000

AES Tunjita 19.9

Total 1019.9

2017 AES Colombia Energy Balance Energy [Gwh]


Purchases

Purchases 2,168

Total Purchases 2,168

Sales

Contracts 3,952

Spot 2,123

Total Sales 6,075

The net generation of AES in Colombia in 2017 reached 3,853 GWh, including the Tunjita Hydroelectric Plant. In relation to domestic energy consumption, the generation of year was 5.7% of the power demand in the country (66,891 GWh-year).

Operational Sustainability

To ensure operational sustainability of the business in the long term, AES Chivor has been developing strategies to extend the useful life of La Esmeralda reservoir.

In fact, over time and from the coming into operation of the reservoir, there has been occurring a normal phenomenon of sediment accumulation. Since about ten (10) years ago, we have been studying the way to avoid or mitigate this phenomenon and its effects in the operation. After technical discussions with national and international experts, we decided to build new intakes in an upper bound than the current ones so that the sediments may continue being stored in the reservoir without causing problems to the plant operation, thus extending the useful life of the reservoir for 40 years. These new intakes will be built between 2018 and 2020.

In terms of Safety, in 2017 no lost time incidents were recorded for AES Chivor or contractor staff, thus setting a record of 17 years without lost time incidents in direct staff.

The second place awarded by the Colombian Association of Engineers (ACIEM) to AESChivor for being the best company applying Maintenance Engineering in that country has made us truly proud. The above is the result of the good practices implemented in AES Chivor in terms of asset management.

The useful life extension project received the approval of the Environmental Licensing Authority (ANLA) 3 months before the scheduled date. Therefore, we can start with the works without problems since they have the required authorizations for such purpose.

This year, Tunjita Hydroelectric Plant had a problem with its surge shaft that required immediate repair. As a result, a civil intervention was conducted in this section of the hydraulic works in order to make a repair to ensure the sustainability of the tunnel.

Finally, we can highlight the ISO 55,001 recertification in AES Chivor. This know-how has allowed us to progress in the same direction in other work centers in order to certify to the same standard during 2018.


Thermoelectric Power Plants of AES Gener Group in the SADI Gross Power (MW)

Termoandes -

Salta Plant 643

Total 643

Energy Balance Termoandes in Argentina 2017 Energía [Gwh]


Purchases

Spot Purchases

Total Purchases

Sales

Contracts 1,013

Spot 3,464

Total Sales 4,477

ARGENTINA

As a result of an increase in the demand and the lack of new investments, the regulations consider that the increase in future demand should be covered by contracts under the "Plus Energy" program, a contract modality that allows direct agreements between private parties at non-regulated prices. As TermoAndes was the most efficient plant in the system, as compared to other competitors, it is expected to continue to supply a significant part of the growing industrial demand of Argentina.

In November 2016, the Argentine energy authority (CAM-MESA) confirmed that the energy sold by TermoAndes, that exceeds the sales of the Plus Energy program, will be paid for based on Resolution 22, which sets forth higher prices than the spot prices set for those types of sales. This recognition operated retroactively since February 2016. In February 2017, the Secretary of Electric Power adjusted the prices of Resolution 22 by means of Resolution 19/2017 to be applied since February 2017.

The Salta Plant consists of a combined cycle made up of two gas turbine generators, with capacity to run either with natural gas or diesel as fuel, two heat reco-very boilers and a steam turbine generator. In addition, it can connect each of the three turbine generators to any of the two electricity grids: the SING in Chile or the SADI in Argentina, with no need for that grids so be interconnected.

During 2017, the Salta plant operated normally delivering energy to the SADI that reached 4,395 GWh, 1,051 GWh of which were sold to customers and 3,344 GWh of which were sold to the spot market.

As part of unit maintenance schedule, certain minor inspections were performed in the 1 and 2 gas turbines. Special emphasis is put in the repair work carried out in the exhaust ducts of both units.

In the field of Safety and Environment, during 2017 we maintained the certifications to ISO 9001 Quality, ISO 14,001 Environment, OHSAS 18,001, Occupational Sa-fety and Health Management System and ISO 55,001 Asset Management.

As TermoAndes was the most efficient plant in the system, as compared to other competitors, it is expected to continue to supply a significant part of the growing industrial demand of Argentina.

144 Our Management during 20171144 OuOur MananaanaManagememege nt during 2017


Plant Salta

Location Salta, Argentina


Turbine Combined cycle

Units 2 Gas Turbines,1 Steam Turbine

Power (MW) 643

Specific Consumption (BTU/kWh)


Availability 2017 (%) 91.67%

Forced Output Rates 2017% 0.53%

Planned Output Rates 2017% 8.86%


Termoandes

In February 2017, the Secretary of Electric Power adjusted the prices of Resolution 22 by means of Resolution 19/2017 to be applied since February 2017.

146 Shareholder and Investor Relations14444666 Shareholder and Investor Relations

Shareholder and Investor Relations

10

149150151

153155156156

Stock Information Stock Transactions Ownership Structure Risk Rating 2017 Dividend Policy 2016 Dividend PolicyDividends paid out of Earnings for Fiscal Year 2016

Annual Report 2017 AES Gener 147Annual Report 2017 AES GES Genener 147

148 Shareholder and Investor Relations11111114488 SharSharShaharreholholhholololdererdeddeerder anand dand InvnveIn stotstostor RReReelelleeR aaattioa ns


SHAREHOLDER AND INVESTOR RELATIONSSTOCK INFORMATION

The price of AES Gener stock showed an annual variation of -14,8%, from $239.2 as at January 1, 2017 to $203.7 as at

$275

$250

$225

$200

$175

$150

Ene/2017 Feb/2017 Mar/2017 May/2017Abr/2017 Jun/2017 Ago/2017Jul/2017 Sep/2017 Nov/2017Oct/2017 Dic/2017

Price of Gener Stock and Relevant Events

Share Price (CLP$)

34.0% -14.8%IPSA IndexAnnual variation:

AES GENER shareAnnual variation:

$239.2$203.7

From:

as at January 1, 2017 to

as at December 31, 2017

December 31, 2017, while the IPSA Index, of which AES Gener is part, varied in 34% during the same period.

Alto Maipo Restructuring Closing March 17, 2017

1st round of presidential elections in Chile November 19, 2017

2nd round of presidential elections in Chile December 17, 2017

Announcement of Sale of ESSA December 21, 2017

Anticipated redemption of bonds November 30, 2017

Announcement of Agreement with Strabag November 27, 2017

CNM Contract Termination, June 9, 2017

Report 1Q 2017, May 5, 2017

Report 2Q 2017, August 17, 2017

Report 1Q 2017, November 1, 2017

150 Shareholder and Investor Relations

Stock Transactions

During the year, there were large variations in the traded units, as opposed to the year 2015 where Inversiones Cachagua Spa sold 337,010,439 shares, and started to own a 66.7% interest in AES Gener, an event that has been maintained until the end of 2017.

Month Units Transacted Amount ($) Average price ($)

January 79,446,155 18,115,381,847 228.03

February 62,811,989 14,731,989,055 234.58

March 85,154,888 22,415,988,630 263.21

April 84,482,285 22,261,289,418 263.62

May 88,524,455 22,019,079,178 248.76

June 54,984,590 13,610,717,112 247.47

July 65,663,288 15,360,088,616 233.86

August 88,560,034 19,521,370,617 220.44

September 68,941,148 15,007,397,541 218.31

October 92,163,333 20,819,545,495 225.86

November 60,898,016 12,192,694,860 200.03

December 84,018,149 16,835,615,772 200.47

Total 915,648,330 212,891,158,141

Santiago Stock Exchange

In the Valparaiso Stock Exchange an annual amount of 14,078,350 pesos was transacted in 66,250 shares. As regards the Electronic Stock Exchange, an annual amount of 9,485,449,748 pesos was transacted divided into 41,316,397 Shares. Finally, in the Santiago Stock Exchange an annual amount of 212,891,158,141 pesos was transacted divided into 915,648,330 shares.



January 1,844,668 426,525,143 231.22

February 1,054,885 233,231,325 221.10

March 4,596,693 1,208,344,661 262.87

April 2,153,254 560,245,742 260.19

May 4,377,172 1,092,965,179 249.70

June 4.077700 1,002,016,029 245.73

July 3,569,589 833,507,990 233.50

August 4,520,603 980,564,692 216.91

September 4,326,195 945,325,117 218.51

October 2,615,484 586,751,814 224.34

November 3,781,680 748,069,605 197.81

December 4,398,474 867,902,451 197.32

Total 41,316,397 9,485,449,748


January 14.250 3,371,550 236.60

February 52.000 10,706,800 205.90

Total 66.250 14,078,350

Electronic Stock Exchange of Chile

Valparaiso Stock Exchange

Ownership Structure

As of December 31, 2017, the shareholders’ equity of the Company amounted to US$ 2,781 million, divided into 8,400,318,891 shares. At the end of the year, Inversiones Cachagua SpA recorded an interest of 66.70% in AES Gener. The US company, AES Corporation, is the indirect controller of AES Gener S.A., through its interest of

approximately 99.9% in Inversiones Cachagua SpA. The Pension Fund Managers, through the various funds managed by them, owns, at year-end, a 21.56% interest in AES Gener S.A. The remaining 11.74% is owned by various minority shareholders.


AES Corporation

Chilean Pension Funds

Minority Shareholders

21.56%

66.70%

11.74%

OWNERSHIP AND CONTROL OF THE COMPANY

AES Gener is an open corporation whose shares are listed in three Chilean stock exchanges: the Santiago Stock Exchange, the Valparaiso Stock Exchange and the Electronic Stock Exchange of Chile.

On December 31, 2017, the shareholders' equity of the Company amounted to US$ 2,781 million, divided into 8,400,318,891 shares, with no par value, all of one series, distributed among 1,382 shareholders.

The US company, AES Corporation, is the indirect controller of AES Gener, through its interest of approximately 99.9% in Inversiones Cachagua SpA. At the end of the year, Inversiones Cachagua SpA recorded a majority interest of 66.70% in the Company.

Name Tax identification (RUT) number: No. of shares Interest

Inversiones Cachagua Spa 77504.420-9 5,603,012,701 66.70%

Banco Itau on behalf of Investors 33,338,288-1 252,530,650 3.01%

Habitat C Pension Fund 33,500,000-5 231,293,883 2.75%

Banco de Chile on behalf of Third Parties 33,338,248-2 220,570,774 2.63%

Provida C Pension Fund 33,500,103-6 193,765,193 2.31%

Habitat A Pension Fund 33,500,028-5 151,190,220 1.80%

Cuprum A Pension Fund 33,500,040-4 127,665,542 1.52%

Habitat B Pension Fund 33,500,029-3 124,379,149 1.48%

Cuprum C Pension Fund 33,500,011-0 119,762,685 1.43%

Santander Bank Jp Morgan 33,338,330-6 111,615,595 1.33%

Provida A Pension Fund 33,500,101- K 94,983,917 1.13%

Capital C Pension Fund 33,500,002-1 94,473,873 1.12%

Total 12 Major Shareholders 7,325,244,182 87.20%

Other Shareholders 1,075,074,709 12.80%

Total Shareholders 8,400,318,891 100%

Main Shareholders as of December 31, 2017



No. of shares December 2017

No. of shares December 2016 N° Shares Variation

Habitat C Pension Fund 33500000-5 231,293,883 188,404,420 42,889,463

BTG Pactual Chile S.A. Corredores De Bolsa 84177300-4 68,842,368 108,388,216 -39,545,848

Banchile Corredores De Bolsa S.A. 96571220-8 53,859,555 79,674,855 -25,815,300

Banco de Chile on behalf of Third Parties Ca 33338248-2 220,570,774 242,268,966 -21,698,192

Banco Santander JP Morgan 33338330-6 111,615,595 91,501,431 20,114,164

Sample A Pension Fund 33500051-K 33,327,829 13,470,398 19,857,431

Compañía De Seguros De Vida Consorcio Nacional De Seguros S.A. 99012000-5 14,833,304 -14,833,304

Sample B Pension Fund 33500052-8 45,624,321 31,039,010 14,585,311

Capital C Pension Fund 33500002-1 94,473,873 106,753,443 -12,279,570

Habitat B Pension Fund 33500029-3 124,379,149 112,262,901 12,116,248

Cuprum A Pension Fund 33500040-4 127,665,542 115,597,905 12.067637

Habitat A Pension Fund 33500028-5 151,190,220 139,669,751 11,520,469

Company Fitch Moody’s S&P Feller (local)

AES Gener BBB- Baa3 BBB- A+

Angamos BBB- Baa3

Guacolda BBB- BB

Eléctrica Santiago A(cl) A-

Major Changes to the Ownership of the Company

The next table shows the main changes to the ownership of the Company organized according to changes in the number of shares (example table):

Risk Rating

In 2017, the local and international risk ratings of AES Gener were ratified by the major credit agencies, maintaining the BBB- and Baa3 rating in the international scale and A+ in the local scale.

The following table summarizes the national and international risk rating of the Company as of December 31, 2017.

154 Shareholder and Investor Relations154 Shareholder and Investostor Relations


The main actions performed by the rating agencies during 2017 were:

• In July, Standard & Poor’s reaffirmed its BBB rating with stable perspective of Gener, while it downgraded the rating of Guacolda from BB+ (Stable) to BB (Stable) in August.

• In August, Fitch Ratings ratified the BBB- rating for AES Gener, BBB- for Guacolda, BBB- for Eléctrica Angamos, and A(cl) for Sociedad Eléctrica Santiago on a national scale, while the perspectives of such companies were changed from Stable to Credit Watch Negative.

2017 Dividend Policy

Pursuant to the instructions of Circular No. 687 issued by the Superintendency of Securities and Insurance, the Directors resolved, in Ordinary Meeting No. 635 held on 29 March 2017, the dividend policy deemed desirable for the Company for fiscal year 2017, which reads as follows:

“The Board intends to distribute as dividends among the shareholders up to 100% of the earnings obtained during year 2017. Furthermore, the Board agreed to expressly place on record that they intend to distribute provisional dividends during year 2017. Likewise, the Board agreed to place on record that compliance with the dividend policy aforementioned will be conditioned on the earnings actually obtained, the results of the projections periodically made by the Company, the need to contribute its own funds to finance investment

projects, compliance with the restrictions contained in the by-laws of the Company regarding dividends, and the credit contracts executed with the creditors, which basically consist in being up to date in the compliance with the negative covenants set forth in the relevant credit contracts, and the compliance with the policy of cash and investments. With regard to dividends for the following years, the Board considered it proper to maintain, in the medium term, a policy similar to the one stated above.”

This policy was adopted at the Ordinary Shareholders' Meeting of AES Gener held on 26 April 2017.

The dividend policy of the previous year is described below:

• In August, Moody’s ratified the Baa3 rating for Gener, downgrading the perspective from Stable to Negative, while it ratified the Baa3 Rating (Stable) for Angamos in December.

• In August 2017, Feller Rate ratified the A+ ratings of AES Gener solvency and bond lines, while it changed the perspective from Stable to Credit Watch Negative. Meanwhile, in December 2017, the agency ratified the local A rating of Sociedad Eléctrica Santiago, thus improving their perspective from Stable to Credit Watch Positive.


2016 Dividend Policy

Pursuant to the instructions of Circular No. 687 issued by the Superintendency of Securities and Insurance, the Directors resolved, in Ordinary Meeting No. 623 held on 28 March 2016, the dividend policy deemed desirable for the Company for fiscal year 2017, which reads as follows:

“The Board intends to distribute as dividends among the shareholders up to 100% of the earnings obtained during year 2016. Furthermore, the Board agreed to expressly place on record that they intend to distribute provisional dividends during year 2016. Likewise, the Board agreed to place on record that compliance with the dividend policy aforementioned will be conditioned on the earnings actually obtained, the results of the projections periodically made by the Company, the need to contribute its own funds to finance investment projects, compliance with the restrictions contained in the by-laws of the Company regarding dividends, and the credit contracts executed with the creditors, which basically consist in being up to date in the compliance with the negative covenants set forth in the relevant credit contracts, and the compliance with the policy of cash and investments. With regard to dividends for the following years, the Board considered it proper to maintain, in the medium term, a policy similar to the one stated above.”

This policy was adopted at the Ordinary Shareholders' Meeting of AES Gener held on 26 April 2016.

Dividends Paid Out of Earnings for Fiscal Year 2016

In the Ordinary Shareholders' Meeting held on 26 April 2017, we agreed to distribute an amount of US$261,008,828 for approximately 100% of the earnings for fiscal year 2016, which was paid as follows:

• By means of a dividend of US$ 0.0173803 per share, equivalent to 55.94% of the earnings for fiscal year 2016 distributable as dividends, paid as from May 8, 2017;

• By means of a dividend of US$ 0.0071426 per share, equivalent to 22.99% of the earnings for fiscal year 2016 distributable as dividends, paid as from September 27, 2017; and

• By means of a dividend of US$ 0.0065484 per share, equivalent to 21.07% of the earnings for fiscal year 2016 distributable as dividends, paid as from November 28, 2017.

In the Ordinary Shareholders' Meeting held on 26 April 2017, we agreed to distribute an amount of US$261,008,828 for approximately 100% of the earnings for fiscal year 2016


Dividend # Dividend Type Payment Date Amount per Share (US$) Charged to FY % of earnings

88 Provisional 15-12-2009 0.0049600 2009 12.0%

89 Definitive 11-05-2010 0.0087090 2009 21.0%

90 Additional Definitive 07-07-2010 0.0055580 2009 14.0%


92 Provisional 05-01-2011 0.0090500 2010 43.0%

93 Definitive 06-05-2011 0.0119880 2010 570%

94 Eventual 06-05-2011 0.0089220 2010 24.8%

95 Provisional 14-09-2011 0.0097900 2011 24.2%

96 Definitive 08-05-12 0.0023330 2011 5.8%



99 Provisional 15-11-2012 0.0087980 2012 35.0%



102 Provisional 17-12-2013 0.0096660 2013 38.7%

103 Definitive 22-05-2014 0.0074800 2013 31.2%

104 Definitive 27-08-2014 0.0072010 2013 30.0%

105 Provisional 15-12-2014 0.0130120 2014 59.5%

106 Definitive 28-05-2015 0.075590 2014 34.6%

107 Provisional 26-11-2015 0.0060710 2015 64.7%

108 Definitive 16-05-2016 0.0060710 2013-2014 19.3%


110 Definitive 08-05-2017 0.0173803 2016 55.9%



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Our People

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Human Capital Talent Attraction Compensation and Benefits Performance Management A Great Place to Work

Annual Report 2017 AES Gener 159AAAAAnnnnnnuunnnnunuA nuun aaalal l Rl Rl RRalal RRReeporepoeepopp t 20 20202017 A7 A7 A7 A7 AES GES GE GES eeeennnnerererenenener 115555599999

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The main asset of the Company is the talent of our collaborators. For this reason and in line with our corporate values, we seek to develop our human team by providing the conditions to promote an integrity and excellence environment, where we enjoy work every day. This way, the care and development of people is a fundamental part of the Company strategy to add value to the management and ensure the success of the business goals.

To face in an optimal way our challenges, the Company seeks to attract, train, and retain our collaborators by planning the resources required for such purpose and constantly viewing the opportunities for improvement

AES Gener seeks to contrast and evaluateour practices in relation to the most relevant companies in the industry, to constantly participate in assessments of Organizational Climate and Culture and to identify the key talent to the interior of our work teams.

OUR PEOPLE

that may be necessary to implement in order to mitigate the risks inherent in the management of people.

This is how, in this matter, AES Gener seeks to contrast and evaluate our practices in relation to the most relevant companies in the industry, to constantly participate in assessments of Organizational Climate and Culture and to identify the key talent to the interior of our work teams, in order to safeguard and enhance the knowledge and capacities of our human team.

Human Capital

The figures related to our Staff as of December 2017 are as follows:

2017 2016 2015

Women 165 158 154

Men 1,336 1,340 1,245

Total 1,501 1,498 1,399


Our People

Collaborators

Officers Professionals Technical and Administrative Staff

2017

TOTAL1,501

1,333

95% 76% 97%

Chile

112Colombia

56Argentina

2017 Gender Income Gap

Gender Diversity

Salary of women / Salary of men

140

9022

3 53

1193

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AES Gener Chile / Workers by Nationality

Termoandes / Workers by Nationality

Nationality Regular Directors

Alternate Directors

General Management + Reporting Managements

Other Collaborators

Argentine - 1 2 12

Chilean 3 2 4 1287

Colombian - -

Other nationalities 4 4 - 27

Grand Total 7 7 6 1,327


Alternate Directors


Other Collaborators

Argentine 3 3 - 56

Grand Total 3 3 - 56


Alternate Directors

General Management + Managements reporting to

this Management or the Board

Other Collaborators

Colombian 2 0 - 111

Venezuelan - 1 - 1

Other nationalities 3 4 - -


AES Chivor / Workers by Nationality


AES Gener / Workers by Age Range

Termoandes / Workers by Age Range

AES Chivor / Workers by Age Range

Age Range Regular Directors

Alternate Directors


Other Collaborators

Less than 30 - - - 175

Between 30 and 40 - - 2 593

Between 41 and 50 - 4 1 300

Between 51 and 60 3 2 3 195

Between 61 and 70 4 1 - 64

More than 70 - - - -



Alternate Directors


Other Collaborators

Less than 30 - - - 2

Between 30 and 40 - - - 21

Between 41 and 50 3 2 - 13

Between 51 and 60 - 1 - 18

Between 61 and 70 - - - 2

More than 70 - - - 0



Alternate Directors


Other Collaborators

Less than 30 - - - 12

Between 30 and 40 - - - 38

Between 41 and 50 3 3 - 33

Between 51 and 60 1 1 - 28

Between 61 and 70 - 1 - 1

More than 70 1 - - -


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AES Gener / Workers by Seniority

AES Chivor / Workers by Seniority

Termoandes / Workers by Seniority


Alternate Directors


Other Collaborators

Less than 3 3 7 2 233


More than 6 and less than 9 2 - 3 189

Between 9 and 12 2 - - 293

More than 12 - - 1 186



Alternate Directors


Other Collaborators

Less than 3 1 1 - 30

Between 3 and 6 2 3 - 21

More than 6 and less than 9 - - - 9

Between 9 and 12 1 1 - 16

More than 12 1 - - 36



Alternate Directors


Other Collaborators

Less than 3 3 3 - 7


More than 6 and less than 9 - - - 5


More than 12 - - - 25



Labor Turnover2017 2016

Item Chile Argentina Colombia Chile Argentina Colombia

Admissions 117 6 7 197 1 10

Terminations 108 1 3 148 1 9

Average Annual Staffing 1,337 54 113 1,294 51 109

Total Labor Turnover 8.38% 6.54% 4.5% 12.60% 1.96% 8.75%

Talent Attraction

For AES Gener, it is essential to ensure the successful incorporation of the appropriate persons to fill the available vacancies to achieve the goals of each business unit. In terms of new incorporations to the Company, during 2017, a total of 199 vacancies were filled at a regional level, 27% of which were filled through internal changes.

In order to facilitate the process to incorporate new collaborators, during 2017, the “OnBoarding Program” of the Corporate Workday Human Resources Management System was consolidated. This system allows us to guide the employees in the necessary stages to access to key information for their first days, such as relevant policies, procedures and legal documentation in each location. In addition, the new collaborator is received by the relevant business unit Head of Human Resources, who performs a face-to-face induction to ensure rapid adaptation.

Compensation and Benefits

To ensure the necessary conditions for attracting and retaining talent within the Company, AES Gener and its affiliates have a complete Benefit and Compensation System that seeks to cover and accompany each stage of the collaborator life cycle.

This way, the Company participates in different market studies seeking to position our scale of remunerations and benefit program at the

appropriate competitiveness level required in the industry. For that purpose, these data are monitored and compared on an annual basis with the support of the most prestigious consulting firms at a worldwide level. AES Gener uses the HAY methodology for the assessment of positions. This methodology delivers standardized tools for the analysis of all the positions of the Company in terms of responsibility and decision making (among other variables). This allows us to define a common language to compare the positions regardless of the area to which they belong and also to review the conditions offered by the industry or market. This methodology, widely validated at a global level, helps to ensure that the pay scales and benefits delivered for each position are governed under the non-discrimination standards, including, without limitation, gender, age, and nationality variables.

We have worked hard in this same sense to train the Human Resources leaders and representatives of each unit in this methodology. This has made it possible to communicate and reveal to collaborators the logic of work after the management of salary bands and the process for promotions, impacting on the promotion of an equality and merit environment.

Since their admission to the Company, all AES Gener collaborators have a Benefit Plan that is implemented through different channels and reinforced through communication campaigns at different times of the year, as appropriate. Among the main benefits of the

Our People166

collaborators, we highlight the Complementary Health Insurance, under which the collaborators can include their family group to be eligible for reimbursement of medical expenses, life and accident insurance, and important discounts in the main health providers. Likewise, collaborators can access different money loans (home loan, calamity loan and free investment loan), as required, as well as various Study Scholarship programs allocated to undergraduate programs for both the contributor and his/her family group.

Added to the important range of benefits enjoyed by AES Gener workers, it is important to mention the growing concern of the company for the promotion of family and work life reconciliation. In this sense, and in accordance with the digital modernization processes in which the Company is involved, we have progressively promoted the adoption of remote work, a possibility which is extended to a significant number of collaborators in administrative positions or in positions where such modality is possible.

Performance Management

To monitor and foster the performance of our collaborators, AES Gener reinforced during 2017 the incorporation of its Performance Management process to the Workday Human Resources Management platform. This was implemented for all the collaborators of Chile, Argentina, and Colombia. The use of the Workday platform to manage performance has made it possible to align the process at a regional level, clarifying criteria and providing guidelines of action. At the same time, we have been allowed to obtain centralized reports of the main indicators of this fiscal year at a regional level, which were used as a source of accurate and precise data.

The Performance Evaluation process, which currently affects the total staff of the region, allows to establish, jointly with collaborator and heads, the key work goals to be pursued during the current year and to determine the resources that will be needed to meet such goals. This way, we promote the direct communication between contributor and heads and the allocation of responsibilities in accordance with the skills of each person and the context of the relevant business unit.

The implementation of the Workday system has also facilitated the identification of key talents in the company, which is a fundamental process for the protection of the strategic goals of each area. The 9box assessment tool, which is available in the system, has helped the leaders of different units to position their direct reports into assessment quadrants based on performance and potential. This situation has made it possible to reduce the risks inherent in the flight of talents and has played an important role in optimizing the training related resources.

Training and Development

The AES Gener training area seeks to provide the collaborators with the training necessary for the development of the skills required by the organization to meet the strategic goals of the business. In this sense, the allocation of training is focused on reducing the gap existing between the abilities shown by the collaborators in their tasks and those that they need to acquire or develop in consideration of the plans of the different business units.

During 2017, AES Gener strengthened its Corporate Language Program. Under this program we trained more than 350 collaborators in the English language at a regional level through different methodologies of study.


Chile

Colombia

Argentina

Investments US$

Investment in Hours

Courses Completed

us $2,300,000 34,825 239

us $15,000 12,400 12

us $222,000 888 116

In this sense, the Training Needs Detection process, which is performed on an annual basis, has the flexibility required to be adapted to the cultural and strategic changes needed by the Company and has proved to be key to ensure staff abilities.

In its constant concern to deliver more and better development tools to their collaborators, during 2017, AES Gener strengthened its Corporate Language Program. Under this program we trained more than 350 collaborators in the English language at a regional level through different methodologies of study. Considering the investment made in Chile, Argentina and Colombia, our investment in this program amounted to approximately US$650,000, which represented almost 30% of the total training hours of the region.

In addition, in line with the cultural changes and the digital transformation, certain Online and E-learning study methodologies have been progressively introduced, which have made it possible to optimize resources, standardize the quality of trainings and provide access to courses to a greater number of collaborators in the region. This way, during 2017, we should highlight the creation of the “Power Campus” platform that brings together the E-learning resources available to the Company, under which we were able to train more than 1,425 collaborators with a successful rate above 70% in addition to making an important contribution to the cultural integration of the region.

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Relationship with Unions

Seventy-tree percent of the collaborators of the Company are members of any of the 12 trade unions existing in the region. We believe that to maintain an open and transparent relationship with our unions constitutes the only opportunity to know about the needs of our collaborators; therefore, over time, we have been building a solid and permanent communication. During 2017, we renovated a large part of the Collective Contracts and Agreements that the company maintains in full force and effect. This has made it possible to make significant progress in line with growth of the Company. In addition, our main union leaders have received training and professional development resources from the Company, which has enabled the creation of a trust and closeness relationship whose fruits and agreements have benefited the unionized staff.

A Great Place to Work

To be a great place to work is part of the strategic goals of AES at a global level, which is also in line with one of the corporate values: Have fun through work. It is for this reason that AES Gener participates, since 5 years ago, in the measurement of Organizational Climate through the “Great Place to Work” survey. This survey allows us to evaluate, through an anonymous questionnaire addressed to all Company collaborators, critical variables in the development of a good work environment, such as credibility, respect and justice, and further allows us to receive feedbacks to monitor how these variables are expressed in the

workplace based on the comments of collaborators. In Chile, the Company currently holds the 10th place in the Great Place to Work ranking, 11 places better than in 2016. Meanwhile, Argentina also obtained the 10th place in the ranking, 5 places better than in 2016. In Colombia, meanwhile, our company ranked number 14, advancing 2 positions with respect to 2016.

To be among the best places to work in the three countries where we operate in the region is a source of pride for all collaborators who are part of the AES Gener family and is the result of the joint work of all the areas of the company.

Moreover, during 2017, the Company participated, at a global level, in the Denison Organizational Culture survey. This way, we can observe the status of the organizational culture of each unit in terms of corporate competencies at a global level. In this survey, AES evaluates twelve competencies framed in four key axes: Adaptability, Mission, Involvement and Consistency. In 2017, the region made up of Chile, Argentina, and Colombia stood out as one of the business units with higher level of development in these competences. This is evidenced by the high degree of cohesion existing between the working skills shown by our collaborators and the requirements made by the Corporation at a global level.

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Industrial Safety and Occupational Health Training and Coaching Occupational Health Occupational Safety and Health Indicators


INDUSTRIAL SAFETY AND OCCUPATIONAL HEALTH (SISO, FOR ITS ACRONYM IN SPANISH)

Safety is the first value of AES Gener. All of us have a personal responsibility towards our safety and the safety of our coworkers. Our ultimate goal is to create a workplace free of incidents putting safety first.

Our integrated Environmental, Safety, Occupational Health, and Quality Policy, which has arisen from the senior management of the Company, provides the guidelines required for the continued improvement of our management system. This allows us to maintain our commitment to safety and occupational health through compliance with our Safety Principles and respecting our Safety Beliefs.

The policy is annually reviewed and updated according to the needs of the Company. During 2017, version 5 of this policy was updated, with a cross-sectional scope covering all the businesses of Argentina, Chile and Colombia, and signed by the Chief Executive Officer.

Not only we put safety first in any task that we develop, but also each of us is responsible for keeping our workplace safe. Our six Safety Principles set expectations in terms of what we have to do to ensure the Safety of all our workers, contractors and the communities we serve.

Our safety principles are:

1. The local business leadership is responsible for the Safety performance.

2. The local business leadership will provide the appropriate human resources and materials to ensure that all people have the means required to work safely.

3. Every business and team will comply with all the safety and occupational health requirements.

4. All must comply with the safety and occupational health programs, and with the requirements adopted by the business.

5. All contractors committed to a business will meet the same safety standards of AES observed by our staff.

6. Businesses should continually strive to improve their performance in terms of safety and occupational health.

Furthermore, at AES Gener, we have four safety beliefs. These beliefs are what guide our actions to achieve our goal of creating and sustaining a workplace free of incidents.

OCCUPATIONAL HEALTH AND SAFETY


Our Safety Beliefs are:

1. Safety comes first for our people, our contractors and the individuals in our communities. All work activities need to be conducted in a safe manner that promotes personal health, safety and well-being.

2. All occupational incidents can be prevented.

3. Working safely is a condition of employment. People are responsible for their own safety as well as the safety of coworkers and their environment.

4. All AES Gener people and contractors have the right and obligation to stop work as soon as they identify a situation they believe to be unsafe.

Our Policy, values, principles, and beliefs are the fundamental pillars of Industrial Safety and Occupational Health (SISO) management, which considers multiple activities and disciplines as support within the management developed during 2017.

SISO ACTIVITIES AND MANAGEMENT

At the beginning of the year, a “Safety Reset” meeting was held in Dayton, USA. At this meeting the AES Corporation and AES Gener global leaders discussed safety issues under the motto “Safety, take it personally”. This meeting was replicated in AES Gener with the Chief Operations Officer, managers and the risk prevention heads of each business. We reviewed the topics analyzed in Dayton and the guidelines for the year, including the performance of the Company as of that date. With this information, we drafted a Plan of Action for the year. This plan was focused on nine (9) topics to be reinforced with associated activities:

The involvement of AES Gener leaders in the review of the quality of AST is increased, the AST process is reinforced as positive and educational, trainings are improved through audiovisual aids and practical workshops, positive recognition of workers carrying out good quality ASTs.

Monthly and quarterly meetings for business leaders to review the KPIs and SISO performance.

Safety walks

Safe Work Analysis(AST, for its acronym in

Spanish)

Number and distribution of safety walks to be conducted by the leaders and the locations where they will be made, improvement in the quality of these reports, strengthening in the process of positive recognition of workers during such walks.

Safety Meetings


Recognition Program and

SanctionsThe positive recognition of workers, provision of incentives, analysis of sanction system is strengthened.

Simultaneously with this action plan, within SISO management, we can highlight:

Monthly Safety Meetings

In all the business units of AES Gener, extended Safety Meetings are held, and Safety Messages are issued on monthly basis to review the following topics:

• Monthly Safety Message sent by AES Corporation: A communication issued by the senior officers of AES Corporation, the CCO, SBU Presidents and Vice-presidents, among others, where certain Occupational Safety and Health, performance, initiatives, achievements, incident issues are reviewed, all of them aimed at strengthening the Safety Culture of the Company.

• Monthly List of Safety Subjects delivered by the Industrial Safety and Occupational Health Management: The Safety Subjects are the means to correct and analyze the working practices and to raise awareness in prevention of incidents both in and outside the workplace.

• Lesson Learned from Incidents occurred in AES and/or AES Gener: The Lessons Learned provides us with an acquired knowledge and the opportunity to prevent an incident from happening again through reflection and critical analysis about factors that can or could have affected our people.

• Local Subjects: any other Safety topic deemed relevant by the Business Unit.

Safety Reports

The analysis and quality of reports is improved to obtain predictive information, analysis and distribution of incident alerts, and lessons learned, among others.

Goals and Objectives

Incorporation of forceful actions of cross-cutting areas proactively consistent with SISO

Reinforcements in the audit processes

Incorporation of time and an extra auditor to the audit pro-cess per cycles, aimed at improving the process quality.

Training and Follow-up

The programs and the use of training centers and systems (E-learning platforms, for instance) are reinforced. Alerts of audit findings, incident alerts and lessons learned are generated.


Safety Management System

With the commitment to generate continued improvement of our management system, at AES Gener S.A. and its subsidiaries, we perform the annual review and subsequent implementation of the Environmental, Safety, Occupational Health, and Quality Policy, where the commitment of the Senior Management to the management system is reaffirmed.

The documentary structure was reviewed and updated to ensure compliance with the current regulatory framework applicable to the business, and with AES Corporation regulations, programs, policies, and standards, and with commitments voluntarily taken on towards our customers and other stakeholders on Industrial Safety and Occupational Health issues.

As part of the system, certain internal audits, legal reviews and external audits were carried out by AES Corporation, which made it possible to identify opportunities for improvement in our processes and to implement the relevant actions.

The certifying company conducted audits to the certified businesses of AES Gener and, as a result, stated conformity of regulatory requirements, thus maintaining the certification to 18001 OHSAS standard.

Occupational Health and Safety Management of Collaborating Companies

Ensure that the collaborators adhere to our standards will help us to reach our goal of eliminating incidents in our workplace. For that reason and in line with our fifth safety principle “All contractors committed to a business will meet the same safety standards of AES Gener observed by our staff,” we have improved the pre-qualification and final assessment of contractors, by implementing a guide for the periodic and final SISO assessment applicable to contractors. Such assessment is based on a system of scores intended

to monitor performance in this area and to furnish them with a feedback so that they align with our Safety and Occupational Health Culture.

In addition, we have specific contractor standards, including the minimum guidelines to meet the expectations of our first value: Safety. In order to permanently monitor safety performance, we perform certain proactive activities, such as: Safety walks to be conducted by leaders, Scheduled Inspections and Observations, internal and external auditing processes, legal reviews, and Safety Culture Assessment (SMS Scorecard), which are conducted each year in the business according to our program.

Moreover, our collaborators have actively participated in the safety campaigns conducted at a regional and/or local level, for instance, strengthening the safety belief concerning the power to stop the works, incident reporting, drug consumption and alcohol abuse prevention, among others.

In our safety messages or other actions, we permanently recognize, as we do with our own staff, the workers of our collaborating companies who have had an outstanding performance in terms of safety and who have become a reference for their peers and companies for providing a safe environment.

PSYCHO-PREVENTION

Psycho-prevention is a tool based on psychology, applicable to safety management, whose matter of study is the human behavior.

The support of psycho-prevention allows a continued improvement of preventive and health processes, developing activities such as:

Behavior Based Safety Program

During 2017, the Behavior Based Safety (BBS) Program was focused on working under a continuous

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improvement model, incorporating the “deviation identification method. This process addresses the identification and modification of behaviors associated to path and environment. Therefore, not only are we working on work behaviors, but also in other actions that enhance an adequate internalization of the Safety Culture.

The program seeks, through positive reinforcement, to reach the behavioral patterns and impact on the decrease in incidents, rising awareness among the various work groups on the importance of self-care, in order to meet our world-class safety goal.

We continued working during the year on in the delivery of psycho-emotional support, which is available for our own and contractor staff.

GDP-12 Psychometric Test Battery

Regarding psychoprevention management, we incorporated the GDP-12 TEST BATTERY. This tool allows us to identify and recognize individual aptitudes and attitudes that are related to the mistakes preceding the accident. The evaluations were carried out in some businesses in Chile and Argentina. We worked together in the development and implementation of workshops to enable the evaluated persons to develop skills to reduce the gaps observed.

Psychosocial Factors / ISTAS-21 Questionnaire

Based on the demands of the Chilean laws, we implemented and evaluated the Psychosocial Risks Surveillance Protocol at work, which is framed within a legal context. As a general result of the process, we obtained the status of “No Risk” in the various work centers.

We established a work plan that aims to improve and maintain the current conditions that were identified in this process of implementation and evaluation of the protocol. TRAINING AND COACHING

In all of our business activities, we generated training and coaching activities according to the

annual program, which -updated on a yearly basis- addresses legal requirements, standards, local procedures, among other topics.

One of the ways to promote a Safety Culture among our workers is through training. We carry out such training through different media, such as our e-learning virtual platform, theoretical and practical training, and field training mainly focused on emergency response. Some of the training sessions carried out during this period were:

• Safety Walks, Inspections and Observations

• Occupational Safety

• Investigation of Incidents

• Root Cause Analysis

• Incident Reporting System (near misses, unsafe conditions, and actions)

• First Aid and CPR Training

• Safety procedures and standards

• Treatment of OHSAS 18,001:2007 non-conformities

• OHSAS 18,001:2007 In-house Auditor

• Other training associated with legal requirements.

In addition, each year, AES Gener celebrates the “Safety Day”. On this day, we organize multiple activities aimed at strengthening the safety culture at each workplace.

As part of this celebration, there is also a “Safety Day in Family”, which involves visits of the workers’ relatives to our businesses and other different activities, including trainings that are useful at home: first aid, use and handling of fire extinguishers, and other games and entertaining activities to learn safety issues.

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OCCUPATIONAL HEALTH

The Industrial Hygiene and Occupational Health activities included health assessments for the employees in each stage of their working life, starting with pre-employment check-ups and following with employment check-ups to be conducted in accordance with the labor activities and the specific risks to which workers are exposed during the performance of their duties.

With the development of occupational health activities, we can make sure that our workers are in optimal conditions to perform their activities, based on the risks to which they are exposed, and that they return to their homes in the same or better health conditions, since this occupational health programs make it possible to detect common pathologies or diseases that afflict workers without having knowledge of them, thus making an early diagnosis and allowing a timely treatment. Finally, the occupational health area pursues that the contractors ensure, though occupational tests, that their workers are medically eligible or that they are in optimal health conditions, based on the risk involved, to develop their activities in a safe manner, and that, where relevant, they check compliance with the ministry protocols and medical surveillance programs.

In the case of Chile, we also follow-up the development, evaluation, implementation and compliance of ministry protocols, including, without limitation: Work-related Musculoskeletal Disorders (TMERT, for its acronym in Spanish), Psychosocial Risks (ISTAS 21, for its acronym in Spanish), Occupational Noise Exposure Protocol (PREXOR, for its acronym in Spanish), and National

Silicosis Eradication Plan (PLANES, for its acronym in Spanish). In those relevant ministry protocols, we follow up Medical Surveillance Programs.

PREVENTION OF ALCOHOL AND DRUG CONSUMPTION

AES Gener has a Drug Consumption and Alcohol Abuse Prevention Policy, updated in 2017, whose purpose is to ensure and maintain a safe and productive work environment, fostering a good coexistence between workers, contractors, customers or other persons related to the operations of AES Gener S.A.

Consistent with this Policy, we permanently develop in all our businesses awareness campaigns where we consider, on the one hand, the delivery of information to build awareness and encourage the prevention drug consumption and alcohol abuse among its workers and, on the other hand, the measures to prevent and deter the consumption of such substances. In addition, we have equipment for the detection and control of alcohol and drug consumption. These detections tests are performed, on a permanent and random basis, to all the staff, reinforcing them on the dates of increased consumption (holidays) and during plant maintenance periods.

OTHER ACTIVITIES AND INITIATIVES

Safety Perception Survey

In AES Gener, we aim to maintain an incident-free workplace. For this reason, we developed a Safety Perception Survey (SPS) to identify opportunities to

The Industrial Hygiene and Occupational Health activities included health assessments for the employees in each stage of their working life, starting with pre-employment check-ups and following with employment check-ups to be conducted in accordance with the labor activities and the specific risks to which workers are exposed during the performance of their duties.


improve our working method and to detect gaps in our safety systems. This survey was administered by DuPont.

Report of Significant Incident and Potential (SIP)

During this year we have improved our SIP report on the understanding that a detailed compilation of incidents is a valuable source of information that we should take full advantage of, it is important to record the data relating to them and their environment for later statistical analysis, and it helps us to know the incidents and their circumstances on a comparative basis between our businesses. This is great news because the information obtained from a SIP can help us to identify and mitigate occupational hazards before they become incidents in all our business.

Together with this, the last quarter of the year we started to develop an Application for mobile devices (App) to report incidents. The foregoing is born with the purpose of facilitating, streamlining and innovating incident, actions and unsafe conditions reporting, delivering immediate information and, consistent with the above, facilitating a prompt response and implementation of control measures. This application will be available for all the workers, including both our own staff and collaborators, thus allowing to promote the identification and improvement of the unsafe conditions and actions that may have caused or cause a potential incident.

ACHIEVEMENTS AND RECOGNITION

Among the various achievements and recognitions, we have received, some of the most prominent ones during this period were:

Argentina:

• Plants of Salta Complex in the XII Group Exercise of Immediate Response, organized by the Joint

Chiefs of Staff of the Argentine Armed Forces, Ministries and Government of Salta and Jujuy, in order to put into practice, the responses and coordination of the various public agencies and bodies in the event of natural disasters.

Colombia:

• The emergency brigade of AES Chivor won the first place in the Inter-brigade Olympic Games organized by the Fire Protection Iberoamerican Organization (OPCI, for its acronym in Spanish). The oil and public services sector and the port society of Cartagena also participated in this competition.

• AES Chivor was recognized by the Sura Labor Risks Administrator (ARL, for its acronym in Spanish) with the award of excellence in the category “World-Class Occupational Safety and Health Practices”. This prize is awarded every two years and is the result of an evaluation process conducted by the ARL of the management of the Company in that period and the consistency displayed between the accident rates, management system evaluation and field audits. It is worth mentioning here that AES Chivor is the only company in Colombia that has been awarded this prize in four consecutive opportunities.

Chile:

• The emergency training field was improved with new equipment and facilities. With this training field, we can strengthen the practical points of our standards, safety procedures and train our first response brigade on a permanent basis. In addition to being used for our own and contractor staff, this field is made available, for mutual support, to local organizations such as firefighters, emergency teams, neighboring companies, social and community organizations, schools, among others.


• The First Response Brigade of Ventanas plant participated in the 2nd Congress of Emergencies Brigades organized by Universidad Técnica Federico Santa María (V Region), obtaining a recognition for its outstanding collaboration in the meeting.

OCCUPATIONAL SAFETY AND HEALTH INDICATORS

Los indicadores de incidentabilidad de los negocios de AES Gener se llevan transversalmente bajo la OSHA, por sus siglas en inglés de “Occupational

Safety and Health Administration (Administración de Seguridad y Salud Ocupacional), una agencia del Departamento de Trabajo de Estados Unidos a fin The incident indicators of AES Gener businesses are transversely kept under the OSHA, an agency of the United States Department of Labor, in order to comply with the requirements of AES Corporation. Likewise, the business of each country keeps their statistics, according to the local regulations, where applicable.

For both the operation and construction contractors, the results obtained are within the sector industries and under the Edison Electric Institute (EEI) indicators in the three countries where we have a presence.

Item Own Operation Contractors

Construction Contractors

Average # of Workers 1,450 2,656 4,199

Man-Hours Worked 3,294,692 6,405,277 10,158,940

Recordable Incident Rate 0.00 0.16 0.10

Lost Time Incident Rate 0.00 0.00 0.12

Incident Rates according to OSHA

Source: Data verified locally by Deloitte.

Occupational Health and Safety182 OcOcccucuc patpaatiationalonalnnaallllllll HeHeHHeeaaHealth lltltlthh h aaand a Safety11111888882222


2,656

6,405,277

4,199

1,450 3,294,692

Average workers

Recordable Incident Rate

Man-Hours Worked

Lost Time Incident Rate

Construction Contractors

Construction Contractors Construction Contractors

Construction ContractorsOwn

Own Own

OwnOperation Contractors

Operation Contractors

LTI for Construction Project according to EEI

Recordable Rate for Operations according to EEI



10,158,940

1,6

1,4

1,2

1

0,8

0,6

0,4

0,3

0

0,20,180,160,140,12

0,10,080,060,040,02

00 0 0

0.160.1

0.12

Our Stakeholders184 Our StakStakStakStaS eholeholeholo dederdedederrsrsde11844

OUR STAKEHOLDERS

13

186201

204208

Community EngagementSustainability ManagementOur CustomersOur Suppliers

Annual Report 2017 AES Gener 185AnnuAnnual Ral Rl RRRepoeporepore t 2020t 20000011717 A17 AAAES ES GES GES enereeennene 118855

Our Stakeholders186

COMMUNITY RELATIONS

COMMUNITY RELATIONS

Through the Local Community Engagement and Relations Policy (PVRCL, for its acronym in Spanish) we regulate our relationship with the communities where our plants and projects are located. With this, we efficiently manage with a sustainable approach community engagement in the environmental and social scope.

In addition to any CSR Policy, through AES Gener Foundation, each complex of the Company has entered into specific alliances with the communities in their environment and can then implement a diversified program portfolio addressing the potential needs of each of the communes where we operate.

Fundación AES Gener

The purpose of AES Gener Foundation is to strengthen the articulation and implementation of our social programs with special focus on design and implementation of programs covering three work spheres: Education, Community-use Infrastructure, and Employability. In addition, AES Gener Foundation develops other programs focused on support to sport, health and culture.

AES Gener Foundation has a General Council, composed of AES Gener executives and professionals, whose duty

is to ensures that its goals are met and that its resources are appropriately allocated. The work performed by AES Gener Foundation is entrusted to a Managing Director who manages, oversees and leads the proper execution of the programs and activities defined on a yearly basis.

EDUCATION

MUNK Program

Since 2011, AES Gener Foundation entrusted RSEduca with the implementation of MunK, which is a beginners English program, in all the public and private schools of the communes of Tocopilla and Mejillones.

In these establishments, we use the method and reinforcement resources of a platform specially designed to complement the pedagogical activities associated to the English language.

The global project includes program launching, initial sessions with students from each school, construction of a baseline, monitoring of progresses made in the platform, on field session support and the Munk Summer Camp.

Since 2011, AES Gener Foundation entrusted RSEduca with the implementation of MunK, which is a beginners English program, in all the public and private schools of the communes of Tocopilla and Mejillones.


The MunK program has three main objectives:

• Strengthen the educational work carried out by each school with their students to learn the English language.

• Contribute with technological and human resources to increase student's motivation to learn the English language.

• Contribute to the development of digital skills by students.

Below we show the evolution of participants during the past three years:

The drop in the number of students is mainly due to problems in the establishments and computing laboratory equipment.

2015 2016 2017

2,811 2,296 1,623

Score in Language

Score in Mathematics Weighted

2016 726 620 672

2017 637 564 601

Score in Language Score in Mathematics

2016 574 575

2017 571 559

Pre-University Scholarship and University Selection Test

Since 7 years ago, AES Gener and the Municipality of Puchuncaví have been working together to deliver better educational opportunities to the students of the Commune.

One of the main initiatives is the grant of Pre-University Scholarships. Under this scholarship, we finance the studies of the best 3rd and 4th year students of the secondary schools of Sargento Aldea of Las Ventanas and General Velásquez of Puchuncaví at Pedro de Valdivia Preuniversity School.

Through this scholarship, students prepare for the University Selection Test (PSU), improving their chances to be admitted at the University, leveling their knowledge and receiving vocational support.

As an additional commitment adopted by the Company and the Municipality with the future professionals, AES Gener provides a cash prize, freely available and in one installment, to the three best PSU scores in the Community. In turn, the municipality delivers a computer for the students who have obtained the 4th, 5th and 6th place.

The following tables show the scores obtained by the students selected in the first place.

We can find below data of the average scores obtained in the tests of Language and Mathematics during the last two years of the program.

Digital Literacy

On the understanding that to handle a computer and have computer skills in the XXI Century is necessary and useful, during three consecutive years, we conducted the Digital Literacy Program in San José de Maipo, which was segmented in three stages to get to all age groups with great deficiencies in the use of technological tools.

Groups made up of:

2015: Older adults of the commune of San José de Maipo

2016: Older adults, housewives

2017: Older adults, housewives, commune entrepreneurs

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Simultaneously with the development of the course, the participants visited the Alto Maipo plant nursery and were given a briefing. All of these instances of participation allowed most of the participants to strengthen their social relationships with their neighbors.

Another issue to be highlighted is the incorporation of 14 students from the Alto Maipo Business Strengthening Program, who have learned Word and Excel tools for two months. This initiative will allow them to gain knowledge for the development of their business.

In total, between 2015, 2016 and 2017 more than 234 students participated in the program.

Year No. of Beneficiaries

2015 77

2016 105

2017 74

Year Scholarships Awarded Amount (CLP $)

2013 12 $ 7,200,000 (US$ 11,285)

2014 20 $ 16,000,000 (US$ 25,078)

2015 50 $ 40,000,000 (US$ 62,695)

2016 62 $ 49,600,000 (US$ 77,742)

2017 62 $ 49,600,000 (US$ 77,742)

Total: 206 $ 16,000,000 (US$ 254,545)

Alto Maipo Higher Education Scholarship Contribution

The “Alto Maipo Higher Education Scholarship Contribution” consists of a cash contribution for the benefit of those students who reside in San José de Maipo and that completed their Secondary Education in municipal or private educational establishments and who are enrolled in Higher Education Institutions recognized by the Ministry of Education and certified by the National Certification Commission (CNA, for its acronym in Spanish).

The Scholarship considers a contribution of $800,000 per year (USD 1,254), which can be freely used with no reporting requirements. This way, they can meet other needs such as purchase of books, travel expenses, food, clothing, among others.

In 2017, we delivered over 62 contributions, 40 of which are for renewals and 22 for new beneficiaries.

The application to the scholarship is governed by a regulation that defines the requirements, documentation and evaluation. For year 2017, the major change resulted from a meeting requested by students and parents that were not awarded the benefit. This process of dialog led the Foundation to modify the percentages of evaluation with a 60% in the social field and a 40% in the academic field, thus giving to this benefit an approach of contribution to vulnerability, rather than a scholarship to academic excellence.

Also, the Foundation gave the students from artistic experimental establishments the possibility to be eligible for the scholarship during 2017.

Social Managers

For the third year in a row, in the commune of Puchuncaví, we offered the “Social Managers Program”. The purpose of this program is to contribute to the development of the community through the advice and training of their social leaders as change actors, thus enhancing their own skills and personal tools, considering the local reality.

The 2017 Social Managers Program trained 20 social leaders and included 70 hours of workshops conducted in 7 months, including subjects such as leadership, communication, organizational development, team

In total, the investment amount of this program is CLP $49,600.000.


Participating Schools Benefited Students

Escuela José Miguel Carrera de Huasco 186

Escuela El Olivar de Huasco Bajo 141

Total 327

Year 2015 2016 2017

Participants 16 16 20

work, community work, preparation of social projects and digital literacy.

“Alumnos Duales” (Dual Students) Program

Through collaboration agreements, AES Gener maintains a relationship with professional technical establishments of the Communes where we operate, opening spaces so that each year their students can participate in the works of the plants.

In Tocopilla, we maintain a relationship with Diego Portales Palazuelo Secondary School and in Mejillones, with Liceo Juan José Latorre. In Huasco, Guacolda has an alliance with Liceo Japón.

In Puchuncaví, since 16 years ago, the students of the Sargento Aldea Educational Complex of Las Ventanas are admitted to the program to work in the productive administrative and services areas.

During the entire educational process, the students are accompanied by another worker who acts as their teacher and guide.

As of the date hereof, more than 500 students have been graduated under this dual education method.

Additionally, this year, students of the gastronomy career of General Velásquez School of Puchuncaví were included and completed their apprenticeship in the Ventanas plant casino.

Smiles Program

At the commune Huasco, for the second year we conducted the “Smiles” Program that promotes, through an educational, community and participatory model, the promotion and prevention of oral health.

In 2017, the initiative was developed in El Olivar de Huasco Bajo and José Miguel Carrera Schools, both educational communities with high vulnerability index. The objective is to promote the value and care of the smile from early childhood and to encourage the joint responsibility of parents, guardians, teachers, principals and education assistants.

• Visualize the importance of oral health for the QoL in the educational communities.

• Enhance the formation of self-care habits adapted to each member of the educational communities.

• Strengthen the development of community initiatives for the promotion, prevention and rehabilitation of oral health.

• Enhance training and citizen participation in rights to oral health in educational communities.

SPORT

AES Gener Foundation Cup

Since, 2012, AES Gener Foundation carries out this program under an alliance with Fundación Ganamos Todos, which is developed in the commune of Tocopilla and benefits 5th to 8th graders of all the establishments in the Commune.

The program is an opportunity to permanently link sports to the development of children to contribute to a better society, by adding the values of sport and physical

Our Stakeholders190

activity to the prevention of sedentary life and overweight through physical activity, team work, equal respect for both genders, discipline, loyalty, perseverance, equity and solidarity.

Year Teams Dates Matches per Date Players Matches

playedHours

played Men Women

Tocopilla 2015 32 10 16 320 160 120 160 160

Tocopilla 2016 32 17 16 320 272 204 160 160

Tocopilla 2017 32 17 16 335 272 204 255 80

During 2017, this school league was comprised of 32 teams of ten different educational units, 16 male and 16 female teams, each of them with an average of ten members. Pedro Aguirre Cerda School for children with different abilities participates in this program since 2014.

Year Total Workers

Total Local Workers

Percentage of Accumulated Employability

2015 3415 682 19.35%

2016 4411 687 17.83%

2017 3879 577 16.46%

“Masificando Tenis” (Expanding Tennis)

During 2017, the second edition of the “Masificando el Tenis” Program was conducted, whose purposes are:

• Train physical education professors of the commune of Huasco, both theoretically and practically.

• Visits to establishments to organize tennis clinics.

TRAINING AND EMPLOYABILITY

As part of our Social Responsibility Policy, AES Gener promotes at each of its operations the employment of local labor, either directly related to the Company or through contractor companies.

The Social Agreement executed between AES Gener and the Municipality and Neighbors’ Community Council of San José de Maipo, commune where Alto Maipo project is built, establishes that the contractor of the project will contractually assume the obligation to have a minimum of 15% of local labor force for the performance of its contract, with accumulated measurement. Currently, the accumulated employability of the Project reaches 17%.

• Creation and organization of an inter-school tournament with the establishments of Huasco.

In total, the program covers 600 participants from the following schools: Escuela Mireya Zuleta Astudillo, Escuela El Olivar, Escuela José Miguel Carrera and English College.

As at the end of 2017, from a total of 4,456 workers, 577 are to neighbors of the various localities of the Commune.


Training Programs

To promote local employment, the Social Agreement includes training for entrepreneurship and courses and programs to develop skills and abilities that will enable the inhabitants of the commune to take advantage of employment opportunities in fields for which there are special strengths at a local level.

From 2010 to date, we have given 54 courses with 689 graduated neighbors.

According to information gathered at the commune, about 75% of the neighbors who have participated in training programs is working or has worked in the industry where they were trained.

Meanwhile, in the commune of Puchuncavi, during 2017, a Class B Driving Course was given with the participation of

15 neighbors who were trained during 6 months. In addition, 14 entrepreneurs in the area of Ventanas participated in a course focused on the management of businesses, accounting, administration, marketing and commercia-lization, among others.

Moreover, under this program, in the commune of Tocopilla, we offered courses of customs agent, domiciliary care for sick persons, security guard, care for the elderly and customer care service assistance. A total of 100 neighbors of the Commune were enrolled in the courses.

In Mejillones, we conducted the security guard programs with 13 graduated participants, all of whom women. This proves the relevance of inclusion in these areas. Out of the total number of graduates, five of them were hired by the Norte Complex security company.

COMMUNITY INFRASTRUCTURE

Rescue of Luisa Sebiré de Cousiño de Quintero Park

The joint work between the Municipality of Quintero, the Ministry of Environment and AES Gener made it possible to start in 2017 with the project to rescue the Luisa Sebirede Cousiño Park which seeks to turn the park into green lung and identity place for the city.

The development of this initiative considers civil works, landscaping, reforestation and closures, consolidating paths and incorporating urban furniture. Moreover, we will build the entrance, administration office, restrooms and a multipurpose room.

San José de Maipo Competitive Fund

AES Gener Foundation is the entity that manages the social program, which is part of the Social Collaboration Agreement executed with the community of San José de Maipo, under the scope of Alto Maipo construction.

As part of this program, we consider the implementation for 30 years of the San José de Maipo Competitive Fund, which benefits collective interest social projects with an annual contribution of 5,807 Development Units.

This way, territorial and functional commune social organizations can participate and submit their initiatives in the following fields:

• Education and Training

• Social Development and Community-use Infrastructure

• Support to Sport in its Various Disciplines.

• Promotion and Development of Productive Activities or Services

One of the potentialities of the application process is the training and tutorials received by the persons who are interested in participating in the process, which involves leaving tools not only to apply for funds of the Company, but also to other similar instances.

Our Stakeholders192

120

90

60

30

0

2012 2013 2014 2015 2016 (1)

Training for Development of Projects, Workshops and Tutorials

Numb

er of

Works

hops

and T

utoria

ls

Years of Execution

78

8 8 6 510

50

64

86

116

Workshops Tutorials

The winners of the Fund also have the services of a permanent consultant that will help them to develop the project and to submit each of the expense reports that are essential for the total disbursement of the amount awarded.

Year Awarded Projects

Amount (CLP $)

2012-2013 23 $123,830,019 (US$ 194,090)

2013-2014 25 $122,036,071 (US$ 191,279)

2014-2015 52 $103,009,570 (US$ 161,457)

2015-2016 62 $107,930,556 (US$ 169,170)

2016-2017 67 $126,106,920 (US$ 197,659)

Total: 229$ 582,913,136

(US$ 913,656)

AES Gener Puchuncaví Competitive Fund

The incorporation of a social program with the characteristics of the Puchuncaví Competitive Fund considers the promotion of community participation,

together with the articulation tasks between the Company and the local government, as one of the fundamental pillars of territorial management and as a specific way to improve the quality of life of each person living in the commune.

The fund will finance during 10 years, with a total amount of 4,711 UF, the projects submitted by social and territorial organizations of the commune in the following fields:

• Community-use infrastructure.

• Social Development and initiatives to promote culture at the commune.

• Promotion or development of productive activities or services that generate local employment and tourism and that enhance the commune Puchuncaví in the areas for which it has particular strength

• Support of initiatives to promote a healthy life and sport in its different disciplines

In 2017, we developed the fourth version of this social program, which in total has managed to complete 123 projects of various social organizations of the commune of Puchuncaví with an average of 2,376 direct beneficiaries.

(1) The latest edition of the San Jose de Maipo Competitive Fund was conducted between fourth quarter of 2016 and the entire 2017. The workshops and tutorials were carried out in 2016.


Years of Execution

Number of Awarded Projects

Total amount to be distributed (CLP $)

2014 31 $ 111,248,240

2015 29 $ 117,616,490

2016 32 $ 125,900,000

2017 31 122,331,484

Total: 123 $ 477,096,214

The second stage of the process is to build a database to identify the organizations that meet all the requirements to apply for the Competitive Fund. Educate and motivate the emerging groups to regularize their partnerships and promote, as a result, future applications of this and other competitive funds.

In this regard, the participation in the various Workshops conducted in the 11 locations during these 4 years of implementation has been as follows:

Year No. of Organizations Present

2014 68

2015 85

2016 116

2017 68

Renca Urban Recovery Program

In early 2017, the second phase of Renca Recovery of Public Spaces program was completed. Through this initiative, the Company sought to:

• Promote and strengthen the neighborhood organizations in the sector and community leadership, through workshops to enhance the skills of community leaders.

• Encourage the involvement and effective participation of neighbors in the local initiatives and decision-making spaces about their neighborhood.

• Develop internal and external social articulation processes in the neighborhood to promote community collaboration and leadership.

• Deliver the tools for the community to be able to manage the materialization of social and urban quality projects to answer to the structural problems and the needs prioritized by the neighbors.

Program continuity and collaborative work between AES Gener, the community and the support of the “Junto al Barrio” Foundation led to the recovery of flowerbeds and decoration with mosaics.

In the meanwhile, through participatory meetings, we discussed topics concerning the second stage of urban intervention. We agreed that we would add a space of community infrastructure which included the improvement of the space adjacent to the multi-purpose sports field of Illanes Beytía, a place which has fell into disuse and deterioration.

In this context, in addition to the participation of the young people in the sector, the fallow land was transformed into a square with skateboard ramps.

Year No. of Beneficiaries Target: Stages

2016 1000 Neighbors of Illanes Beytía of Renca

Stage 1: Recovery the four passages, mosaics,

flowerbeds

2017 2,361 Illanes Beytía and neighboring town (Victoria)

Stage 2: Nuestra Villa Hermosa Square

Our Stakeholders194

Alliance with DUOC Andes Polytechnic Secondary School

The DUOC Andes Polytechnic Secondary School has an enrollment of approximately 1,300 students, who come from different communes of the region and have a high socio-economic vulnerability rate.

During 2017, the alliance between the establishment and AES Gener Foundation enabled the students to have equipment for the development of 22 after-school workshops.

One of them is the inter-school competition of athletics, Liceo Andes Polytechnic Secondary School-AES Gener Cup-, which was conducted in the stadium of Recoleta and brought together about 120 young people from the schools of the northern sector of Santiago.

Moreover, the 10th Anniversary Run of the DUOC-UC Andes Secondary School of Renca in Parque de los Reyes. This activity was attended by about 600 people including students, teachers, parents and guardians, and AES Gener Foundation was in charge of awarding the prizes to the participants.

Except for the previous year, representatives of the Andes Polytechnic Secondary School added to their agenda the exploration of the environment engagement area, in order to open their doors to the community and show the work performed by them with AES Gener Foundation.

One of the engagement activities was the mechanical check. This initiative was conducted by students of the career of mechanics, who carried out preventive check-ups in the cars of about fifty neighbors of the Commune.

The second activity was the digital literacy workshop. This initiative enabled the Andes Polytechnic Secondary School to open its doors to the community and to invite 40 neighbors of the Community Council of Victoria, Illanes Beytía, Inés de Suárez and Francisco Infante to learn the basics of computing and Internet management.

Year No. of Beneficiaries Target:

2016 2,050Educational Community

of the Liceo (parents, teachers, students)

2017 2.,110

Educational community and four Neighbors’

Community Councils of Renca

“Puertas Abiertas” (Open Doors) Program

In the communes of Puchuncavi, Huasco and San José de Maipo, the Company develops programs to make guided tours to its facilities of the plants operating in those places.

In Puchuncaví, during 2017, 430 neighbors visited Ventanas Plant and El Pangue ash deposit to know their operation method, and to learn about implemented environment care measures and community work.

Meanwhile, in San José de Maipo, 20 visits were made to Alfalfal plant and Alto Maipo plant nursery, with the participation of 450 people.

In both cases, we highlight the visits made by higher education institutions, which constantly request permission to visit our plants.

Cycles of Outdoor Cinema

In order to empower the neighbors on the use of public spaces and to offer an alternative of entertainment during the summer season, in 2017 AES Gener included, as part our programs, cycles of outdoor cinema in the communes of Tocopilla, Mejillones, Puchuncaví and San José de Maipo.

The program is an abridged copy of “Huasco de Película”, an initiative that was held for the ninth time in 2017 with 2,400 spectators that enjoyed a set of family movies.

Meanwhile, in “Tocopilla de Película” there were 1,800 spectators and in “Puchuncaví de Película” there were 1,600 spectators.


AES Chivor

The relations strategy implemented by AES Chivor with the communities in its area of influence is based on three key premises:

• Constant Dialog

• Trust Building

• Creation of value for development

The Corporate Social Responsibility actions with focus on Sustainability of AES Chivor are consistent with the agenda for global development led by the UN (Sustainable Development Goals) and the Global Compact, which are taken as a general framework to approach Social Management strategies and to contribute to the social, economic and environmental balance.

Our area of influence is characterized by high indicators of Unsatisfied Basic Needs (UBN). This causes the social management actions to be conducted together with Local Institutions, either by means of direct conventions or contributions added to the local and regional development programs, and joint work with non-profit Community Action Councils or Bodies that seek to meet the priority needs of the neighboring communities, as suggested in the 17.17 goal that seeks to: “encourage and promote the creation of effective alliances in the public, public-private and civil society spheres, taking advantage of the experience and strategies to obtain resources from the associations”, where the contribution AES Chivor will serve as a basis to promoting greater investments to the community base.

Improving the outcomes of the previous year, we continued strengthening the alliances with local organizations and Community Action Boards (JAC, for its acronym in Spanish) to maximize the impacts and generate local management capabilities. Under this plan, we executed more than 20 work agreements (records of donation or agreements) with the Mayors of Macanal, Ubalá, Santa María, Chivor, Almeida and Sutatenza, Association of Community Action Boards of Santa María and Macanal, the Community Action

Boards of settlements such as Caño Negro and San Agustín of Santa María, Tontogue de San Luis de Gaceno and Camoyo de Chivor.

In the productive sector we joined efforts with the NGOs: SELVA, Vía Proyectos, Gal Valle de Tenza and C-Star, to strengthen the associativity, entrepreneurship, innovation, science and technology in five organizations of coffee producers, two organizations of cocoa producers and five municipalities.

Likewise, we entered into alliances with EIT Jaime Campos Jácome de Macanal, San Luis de Garagoa and Esmeralda Schools of Chivor. In the field of risk prevention and management, we provided resources for the technical training and creation of the volunteer fire brigade of Santa María and the strengthening of the volunteer fire brigade of the municipality of Villanueva Casanare.

AES Chivor Social Policy

AES Chivor is recognized as the coexistence and development manager in its areas of influence through legal compliance, responsibility in the operation and creation of effective communication channels to convey trust, respect and solidarity for mutual benefit. During 2017, the Company maintained its intervention divided into two axes: Social Responsibility and Social Solidarity, which essentially involve the distribution of contributions aimed on the one hand at investment in road infrastructure and mobility in the area of influence and, on the other hand, at actions oriented to education, risk management and productive projects, among others. The investment made in these two axes was Col$ 3,697 million for 103.6% of the budget for 2017.

Other continuity actions developed within the Investment Plan to contribute to the protection of the basin supplying water to La Esmeralda reservoir, under the scope of compliance with the provisions of the extension of Batá River Water Concession, we completed the field technical work provided for in the agreement with the National Science Institute of the Universidad Nacional (total contribution in 2016 and 2017: Col$ 421 million) for the characterization of fauna and flora in the Páramo of

Our Stakeholders196

Cristales Castillejo under the scope of the agreement with the Corporación Ambiental CORPOCHIVOR to protect the high basin of La Esmeralda Reservoir. As part of this same project, we have acquired another 121.87 hectares of land of the waste land sector in the Tásbita de Úmbita, Siguineque de Turmequé and Sacaneca de Pachavita settlements for a total value of Col$1,008 million that, together with the 150 hectares acquired in 2016, add up a total amount of 271 hectares of land allocated to natural recovery and water protection. This territory is part of the areas identified by CORPOCHIVOR as Regional Districts of Integrated Management (DRMI, for its acronym in Spanish) and these lands were assigned to the municipalities for protective specific destination to that the local management may take care of their conservation and care. The premises and the environmental characterization add up a total project value of Col$ 1,051 million for 2017.

Social Management Responsibility

To comply with the commitments assumed by the Company on social compensation issues, during 2017, the following activities were developed with a total investment of Col$ 2,424 million.

• River transport in La Esmeralda reservoir: Free service for the communities in the municipalities of Macanal, Chivor and Almeida. The passenger service is provided with three ship boats that cover 21 ports throughout the year, including a cargo barge and a ferry for the transport of vehicles. Thanks to the river transport services offered by the Company in 2017 156,249 passengers, 11,747 vehicles, 7615 motorcycles, 878 livestock and 71.4 tons of load were transported.

• Land transportation for neighbors of the municipality of Macanal: Free daily bus service for the communities in the municipalities of Macanal and Almeida through the organization of a route to and from the settlement of Media Estancia and the urban area of Macanal.

During 2017, land transport routes in addition to river transport were implemented for users during the season where water level of the reservoir is low.

• Maintenance of bridges and communication channels associated to the operation: The company works pursuant to agreements with municipalities and local boards to improve the mobility of the area. These projects include:

a. Completion of the following maintenance works of the bridges of Salitre and Las Bocas in the municipality of Santa María Campohermoso (resources of 2016).

b. Beginning of the works in the bridge of El Limon settlement and completion of box culvert in Hoya Grande settlement of the Municipality of Campohermoso (co-financed resources for year 2016).

c. Agreement executed with the Community Action Board of Tontogue of the municipality of San Luis de Gaceno to install mitigation works in La Algeria bridge.

d. Performance of permanent maintenance access roads to the Reservoir to ensure the safety of passengers at the time of getting into the boats.

e. Contribution of resources for the joint financing of the work of “Caño Aguardiente” in San Agustín settlement of Santa María.

f. Donation for the improvement of the road of Caño Negro and Guaduales settlements of Santa María.

g. Maintenance of the “tarabitas” (primitive cable railways) located in the riverbed of Batá river and audible alarms for the management of discharges.

h. Road maintenance in the sector of 70 tunnel and Camoyo settlement in partnership with Chivor municipality.


i. Agreement with the Association of Community Action Boards of Macanal for the recovery of iron materials from an old barge to be allocated to the repair of bridges in the area of influence.

j. Contribution of quarry material for the maintenance of roads in the municipality of Macanal and the critical path in Conejo port.

k. Contribution of resources for road emergencies in the sector of Quebrada Negra and Pantanos.

l. Maintenance of the lighting system of Tunnel #70.

• To foster the development, AES Chivor, after due consultation and agreement, gave financial support to the Association of Community Action Boards of Santa María to submit eight projects to departmental public call “Convite por Boyacá” with the participation of more than 123 bodies of Boyacá.

• Santa María obtained 15% of the total of the departmental resources with six projects approved for the construction of at least 390 meters of tread plate for a total value of $182 million of Colombian pesos payable by the Government, Municipalities, Boards and AES Chivor. The contributions made by AES Chivor by the end of 2017 amounted to $63 million Colombian pesos and in 2018 it will contribute the balance of $44.8 million of Colombian pesos. These resources will be wholly delivered in the first quarter of year 2018. With this initiative, in addition to achieving the necessary financial resources for the project, the Community Boards joined efforts and served as an example for the beginning of a new structure to have presence and participate in open calls at a regional level.

• Support to neighboring communities of Tunjita Plant: During the first year of operation of Tunjita Plant (which operates under the clean development mechanism (MDL, for its acronym in Spanish) scheme), we expect to capture and

sell carbon credits in the future and to reinvest a percentage of the proceeds in works for the community. According to the above, AES Chivor decided to perform some voluntary works before the sale of carbon credits, including:

» Under an agreement with ASOJUNTAS Macanal, certain resources were provided for the improvement of the road of Muceñito settlement (Macanal) up to $40 million of Colombian pesos with contributions of the Municipality and certain works were enhanced in this and other settlements. In addition, certain resources were allocated to support San Antonio settlement (Miraflores) for the improvement of the community infrastructure of the municipal school, which will be delivered between 2017 and 2018. In addition, we also allocated minor resources to support works aimed at the maintenance of local roads with the Municipal Boards of Volador and Pantanos. We completed the construction of the community center in Volador settlement for a total value of $29.7 million of Colombian pesos.

• Other voluntary actions related to the presence of Tunjita plant are related to the contribution of $130 million Colombian pesos through a deed of donation to the municipality of Almeida for the construction of the bridge foundations in Yavir mountain stream (Conejo Port) in the road Los Militares. This action shall be performed with the Department of Boyacá to install a military bridge contributed by INVIAS. This work, in spite of being started in October 2017, will be performed once the Department and INVIAS definitely approve the civil works required for being a road within its jurisdiction.

Our Stakeholders198

Social Solidarity Management

Throughout 2017, AES Chivor allocated its Social Solidarity investments to programs that help for the transformation of the communities within its area of influence through management, coordination and citizen participation processes with a long-term vision and investing resources in strategic axes:

• Education

• Productive Projects

• Vulnerable population

• Protection of waste lands and wetlands.

During 2017, the following activities were developed with a total investment of SD Col$ 1,253 million.

• Support to regional education

» “Escuela Plus” Project: The “Escuela Plus” satellite television project, which is developed under an agreement with DIRECTV Colombia, was implemented in the main rural schools and was completed to be operated by its main ally.

» Educational infrastructure: Certain resources were contributed for the development of specialized classrooms projects in the municipal school of Macanal and certain contributions were made for the maintenance of the municipal school of Limón and Naranjos settlements. During 2017, the resources contributed in 2016 to the municipality of Macanal for the installation of the cover of the theater in the rural school of Dátil settlement were provided. The Educational Project of Colegio San Luis of the municipality of Garagoa was supported.

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• Coffee Productive Project: In partnership with the Corporación Autónoma de Chivor (Corpochivor), the Vía Proyectos Foundation and coffee producer associations in the municipalities of Macanal, Chivor, Guayatá, Garagoa and Almeida, progress was made in the strengthening of the administrative capacities, the installation of nurseries for the production of coffee plants in order to increase the planted areas and the reactivation of the community benefit scheme and commercialization of cherry coffee by the Cannor de Guayatá Cooperative. The activities will continue during 2018 and will cover five organizations of producers.

• Cocoa Productive Project: During 2017, we worked with the “Selva Investigación para la Conservación del Neotrópico” non-profit association for the development of the “Cocoa Productive Project as an agroforestry strategy to generate ecological connectors and favor biodiversity in the area”, which links the associations of cocoa producers of the municipalities of Santa María and Campohermoso. This project included cooperative work components under the solidarity core scheme, field schools for farmers and was articulated to projects of other entities, such as Fedecacao, ICA, Corpochivor, among others.

• Support to Relief and Vulnerable Population Bodies: Program aimed at the prevention and support to communities at risk for conditions associated to natural events such as landslides, floods and avalanches or population in vulnerability conditions.

In 2017, a donation was subscribed with the Municipality of Santa María for the purchase and installation of a backup electric energy generator to be installed in the new Municipal Health premises and to support in case of failure in the local electricity system. Likewise, we provided support through the donation to “María de Nazareth” care home in the municipality of Santa María to adapt the living facilities for the adults of the municipality.

Moreover, the Company invested resources to carry out the Technical Study to establish the type of bioengineering and engineering works required in the basin of Caño Cangrejo, as a risk management strategy in Santa Maria, and to prevent the recurrence of avalanche-type events as those occurred in 2012 and 2013. The study was delivered to CORPOCHIVOR, the Municipal and Department Risk Management Council and the Agrarian and Environmental Attorney General in order to seek mechanisms for the development of these works.

We led the creation and organization of the Volunteer Fire Brigade of Santa María Boyaca to generate adaptability and mitigation of climate change and risk management actions. The group received the Appointment Resolution, and at the same time, it will receive the basic equipment to approach local emergencies. In addition, it will act as the operator of the elements provided by AES Chivor for the municipal project related to the “High-Rise Work Training Field”. The Fire Brigade of Villanueva was a special ally in this process and was also supported with financial resources to strengthen its emergency response capacity in the Upía river basin.

We led the creation and organization of the Volunteer Fire Brigade of Santa María Boyaca to generate adaptability and mitigation of climate change and risk management actions.

Our Stakeholders200

FOTO PENDIENTE


SUSTAINABILITY MANAGEMENTInclusion in the Dow Jones Sustainability Chile Index

For the third year in a row, AES Gener is part of the Dow Jones Sustainability Index (DJSI Chile Index), reaching the first quartile at a global level in “Electric Utilities” sector (17th place of 64), thanks to a significant progress in the scores of areas such as market opportunities, power generation, operational eco-efficiency, indicators of labor practices, talent attraction and retention and biodiversity, among others.

To be eligible for the DJSI, certain sustainability criteria must be met, including the Total Sustainability Score (TTS), calculated by using the annual RobecoSAM Corporate Sustainability Assessment. According to the method of calculation, the index in Chile is composed of 26 of the 40 companies currently participating in the IPSA.

It should be mentioned that we are part of the newly created DJSI - MILA (Integrated Latin American Market) that includes actions of companies publicly traded in Chile, Peru, Colombia and Mexico.

ISO 14.001 Management System. The Company has sought to group the requirements contained in the standards of the Corporation, national regulations, and international standards (ISO 14001 and OHSAS 18001) to develop its own integrated management system, called GENERA, which manages environmental, occupational health, and safety issues. GENERA encompasses all the operations of the Company and its affiliates in Chile.

Termoandes (Argentina) and AES Chivor (Colombia) have environmental management systems consistent with the requirements of the AES Corporation ENV-3 Protocol.

Design and Implementation of a Social Indicator Management System under the scope of Dow Jones Sustainability Index criteria

During 2018, the Company will implement a set of tools and instruments whose aim is to strengthen the sustai-nability management and to comply with the criteria of the Dow Jones Index. This process considers the design of a Sustainability Management System for the Vice Presidency of Corporate Affairs with the following goals:

1. Identify gaps: Identify the gaps existing between the current situation and the required situation under the management of the Social Dimension criteria of the Dow Jones Sustainability Index.

2. Design indicators and management tools: Key performance indicators (KPIs) will be designed to measure the social impact of the transactions of the Company and certain goals will be set to measure progress of social initiatives. In addition, we will build instruments to improve the manage-ment, monitoring and reporting of the performan-ce in the social dimension of the Index.

Our Stakeholders202

Source: Prepared by ClioDinamica

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It is worth mentioning here that the Company, through various initiatives, will work to answer to the opportunities for improvement identified by RobecoSAM

in the application of the 2016 questionnaire, specifically regarding the following criteria: Social reporting, citizenship and corporate philanthropy, and human rights.

SOCIAL REPORTING

Social performance management is an aspect that is directly related to the reputation of the Company and its brand value. Therefore, if we are transparent through the appropriate reporting of social performance monitoring, we will increase the confidence of clients and stakeholders. In order to respond to the improvement opportunities, this year, the company will focus its efforts on:

• Design of social impact KPIs: We will develop social Key Performance Indicators (KPIs) with the purpose of generating information to manage and monitor, using quantitative data, the progress and impact of the social investment program in the territories under the influence of AES Gener operations.

• Design of a sustainability management tool: We will devise a management tool that will allow us to monitor and report the social KPIs in the corporate annual report or in the different reporting instruments. The above with the purpose of increasing transparency and providing guarantees to increase the trust of stakeholders and contribute to the decision-making process of investors.

CITIZENSHIP AND CORPORATE PHILANTHROPY

For the Company to be able to meet the Sustainable Development Goals (SDG), we need to have measuring instruments and mechanisms to account for progress and achievements of the social investment program and information that will allow to make decisions with regard to the priority needs in the locations under its area of influence. To strengthen the investment program impact management, we will focus on:

• Design of social investment program impact KPIs: We will develop indicators and an impact assessment model for initiatives and philanthropic activities implemented by the Company, according to the sustainable development goals prioritized in the strategic policy from work instances developed together with the community.

• Construction of a sustainability management tool We will build a management tool that will allow us to monitor and report the impact KPIs of impact on ODS and local development of the social investment program of the Company.

Our Stakeholders204

OUR CUSTOMERS

MAIN SUPPLY AGREEMENTS OF AES GENER AND ITS AFFILIATED VALID DURING 2017

Sales to Regulated Customers under Contract GWh

Chilectra 2,547

Chilquinta 1,013

Emelectric 469

EMELAT 286

CGE 167

Conafe 111

E.E. Pte Alto 76

Luz Linares 62

Luz Parral 58

Emetal 49

Litoral 43

EDECSA 30

EMELCA 10

ELECDA 9

CODINER 1

CHILE

AES Gener serves customers throughout the National Electric Grid, from the region of Arica and Parinacota to the Region of Los Lagos, providing energy solutions to three segments: mining customers, electricity distributors and commercial and industrial customers. Although the largest supply is provided to the first two, being the demand of the mining sector focused on the northern area of the country and the demand of electricity distributors on the center, Commercial and Industrial customers have had a strong growth rate in the last period. Therefore, we have designed and implemented a specific area within the Company to be able to take care of this increase in demand and pay ad hoc attention to their specific needs.

With the incorporation of this new customer segment, AES Gener serves the country's main economic sectors, thus contributing to the development and growth of Chile and to the competitiveness of our customers of different segments, including, without limitation: steel, cement, retail, treatment and transport of water, food and beverage processing, wine, agro-industry, telecommunications, health, education, logistics and transport, office buildings managers, plastic product manufacturing, wood, textile and metals.

Today, we are fostering a customer-centered culture in AES Gener, which will become more accentuated in the coming period and will allow us to have a partnership relationship with our customers through the detection and support in the resolution of their needs and/or energy problems. The above begins with a reliable and

flexible supply of electricity, passing through distributed generation solutions, energy efficiency, energy storage, e-mobility, among others.


Our Frequent Customers of the Wholesale Market

Centrales Eléctricas de Narino S.A. E.S.P.

Codensa S.A. E.S.P.

Empresa de Energía del Pacífico S.A. E.S.P.

Centrales Eléctricas de Norte de Santander S.A. E.S.PEm-presa de Energía de Pereira S.A. E.S.P.

Electrocaquetá

Renovatio Traiding A,m S.A. E.S.P.

Electrificadora del Caribe S.A. E.S.P.

Electrificadora del Huila S.A. E.S.P.

Electrificadora del Meta S.A. E.S.P.

Empresas Municipales de Cali E.I.C.E

Compañía Energética del Tolima S.A. E.S.P.

Empresas Publicas de Medellin S.A. E.S.P.

Renovatio Traiding Américas S.A.S E.S.P

Sales to Non-regulated Customers under Contract GWh

Minera Escondida Limitada 2,754

Sierra Gorda 1,687

SQM 869

Min. La Candelaria 799

Codelco 711

Spence 642

MSA-Los Bronces 545

Min. Pelambres -Quillota 425

MSA-El Soldado 237

Quebrada Blanca 209

Pap. Norske Skog (Bio-Bio) 170

Cemento Polpaico 155

MSA-Chagres 148

CCU 91

Cristalerias Chile 73

Min. Ojos Del Salado 63

Proacer 62

Min. Altos De Punitaqui 55

Grace 44

Faenas Pham 23

Min. Tres Valles 20

Cervecera CCU Chile 18

CMPC Mad-Mininco 14

Codelco Teniente Maestranza 13

Codelco Teniente Rancagua 12

Masisa -Mapal 12

CMPC Los Angeles 11

CMPC Inforsa-Laja 10

Puerto Ventanas 10

Aguas CCU Nestle 9

Min. Pelambres -L.vilos 9

Viña San Pedro Molina 8

Min. Lo Valdes 3

PMC 1

Min. Rio Colorado 0.2

COLOMBIA

AES Chivor works with different customers of the Regulated Market (wholesaler) and the Non-regulated Market and provides energy sale services through the Energy Exchange (“Bolsa de Energía”) and medium-term contracts.

AES Chivor sells its energy through contracts with distributors and marketers and in the Energy Exchange. The Energy Exchange is a trading venue existing in the Colombian electric energy market, where the generating agents offer price and availability and the wholesalers purchase energy according to their needs. Generators can also use this trading space to buy power, as necessary, whenever they do not have sufficient resources (water, coal, gas, etc.) or simply because they prefer to keep them for a future sale.

In addition, the Company receives income from the provision of AGC services, which is a frequency regulation service for the national electrical grid, and for the Reliability Fee, which is received by generators for their contribution to grid reliability in the event of possible critical hydrologic periods.

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Since 2014, we penetrated in the non-regulated market. We have been developing this line of business with the highest standards in order to answer to the specific energy needs of our customers, creating strategic alliances and the ensuing long-term relationships.

To comply with the engagement programs concerning companies in the non-regulated market, during 2017 we successfully managed to provide technical and commercial services to Campo Rubiales de Ecopetrol, Lynde, Cryogas, Red Eagle Mining, Invermec and Frontera Energy. Moreover, we settled the energy supply to Parque Arauco, Compensar, SMI, Alimentos Polar, Tuboplex and Kappa Resources as from 2018. This means we will commercialize 455 GWh/year in the non-regulated market, i.e. 9.5% of the energy generated by AES Chivor in one year.

In the non-regulated market, we executed a 10-year contract with Tuboplex and we made during the year 30 offers of energy supply from solar photovoltaic systems equivalent to 10 MWp.

ARGENTINA

Currently, the business of our Argentine subsidiary is mainly involved in the sale of energy through two operation methods in the Argentine market: Plus Energy and Base Energy.

Established in 2006, the Plus Energy program requires the execution of a power supply agreement between the parties and the negotiation of a price that considers the costs involved and a gain margin. These contracts and the costs involved must be approved by the Ministry of Federal Planning, Public Investment and Services and the gain margin must be established by the Secretary of Energy. The agreements under the Plus Energy program are entered into with different industrial and commercial customers and will usually have terms of up to 18 months. For more details, see chapter Regulatory Framework.

TermoAndes also sells the non-contract generation under the Plus Energy program directly to the system operator -CAMMESA- under the Base Energy regulatory framework (for more information, see chapter Regulatory Framework).

Currently, the business of our Argentine subsidiary is mainly involved in the sale of energy throughtwo operation methods in the Argentine market: Plus Energy and Base Energy.

Our Stakeholders208

OUR SUPPLIERS

No. of Suppliers %

Chile - Central Area 1,452 46

Colombia - Chivor 346 11

Chile - Northern Central Area 457 15

Chile - Northern Area 633 20

Argentina - Termoandes 242 8

Total 3,130 100

Country %

Chile 74.4

USA 13.1

Colombia 4.4

Argentina 3.4

Japan 1.0

Spain 0.7

Italy 0.6

Other 23 countries 2.6

Total 100

Through the Community Engagement Standards for Contractors, framed in the Local Community Engagement and Relations Policy, AES Gener instills in its contractors the Corporate Social Responsibility (CSR) culture. This policy is intended to obtain and maintain the so-called “Social License” for operations and projects of the Company.

This license involves the enforcement of good behavior standards, activities to support development in the communities and measures to mitigate the negative impacts caused by Company contractors in surrounding communities. According to its policy, the Company, in addition, seeks to hire in the first place suppliers and contractors of the town where we operate. These suppliers and contractors need to meet the safety standards and have the required technical knowledge.

Percentage Purchased from Suppliers by Country, other than fuel

Number of Suppliers per Complex, other than fuel

A relevant aspect in the case of those who provide specialized services for AES Gener is the vocation of the Company to establish long-term relationships, based on the nature of the business. The power plant and transmission line maintenance works require high-level specialization and high safety standards. This is translated into an incentive to training and development of external staff by their employers, under the scope of a stable relationship of mutual collaboration that demands high-quality service at competitive prices.

The first responsibility of AES Gener towards our workers and contractors who work on a regular or occasional basis in our facilities is to provide the appropriate industrial hygiene and safety conditions. The safety equipment measures and standards in our facilities are shared by our own and external collaborators whenever technical work in the plants is involved.


All of us are equally required to undergo pre-employment medical check-ups to reduce the risk of accidents.

Supplier Selection System

For the purpose of ensuring transparency and access to information, we continue working with the REPRO Registry of Suppliers, administered by Achilles Chile, a company specialized in supplier management. This Registry allows vendors to see and directly update their records and the product and services offered on the Internet, a step that is subsequently validated by Achilles. This system gives greater visibility to suppliers and contractors, and at the same time generates economies of scale, given that, for being an open system available to the energy sector agents, the registered companies will be ready to work for any agent participating in the Registry of Suppliers. This system operates with the highest industry safety and control standards, thus allowing the adequate traceability of the transactions, which at the same time contributes to a more safe and reliable purchase management.

To enhance even more the transparency of supply management, AES Gener has begun to use an Electronic Purchase Portal called ARIBA. Through this channel, providers send their proposals and offers in the tenders

launched by AES Gener. The handling of information provided by the suppliers through this tool ensures total transparency and confidentiality in the process.

Corporate Social Responsibility in the Chain of Suppliers

In 2016, AES Gener launched an AES Sustainability Grade survey for suppliers. This is a program with suppliers and contractors that helps us to know about the degree of commitment of these companies to sustainability. The survey is conducted through an exclusive access and safe on-line platform where users are required to fill-in a form specific to their country and type of business. The platform collects data that help to describe the profile of AES suppliers and calculates a score that represents their degree of commitment to environmental sustainability and social responsibility. 2017 has been a year of transition in which AES Gener has not been able to increase the number of suppliers surveyed in the previous year. We are working, together with the Corporate team, to re-launch the Survey in all businesses of AES at a Global level during 2018.

To enhance even more the transparency of supply management, AES Gener has begun to use an Electronic Purchase Portal called ARIBA. Through this channel, providers send their proposals and offers in the tenders launched by AES Gener. The handling of information provided by the suppliers through this tool ensures total transparency and confidentiality in the process.

Our Stakeholders210


FUEL SUPPLY

Our thermoelectric capacity reaches 4,499 MW gross and is mainly supplied with fossil fuels such as coal, diesel and natural gas or LNG. The following table shows the composition of our installed capacity by source of energy:

The coal is purchased from different suppliers mainly on FOB basis, which are selected based on their creditworthiness and history of previous purchases to ensure supply reliability. The coal is sourced from countries such as Colombia, USA, Australia, Chile and Canada, among others.

During 2017, we acquired approximately 7.7 million metric tons of coal for our operations in Chile and Argentina. Our annual purchases are expected to be maintained during the next few years, depending on the hydrological contribution and with a downward bias in the medium term due to the penetration of renewable energies in the system. In this sense, the flexibility achieved in the supply agreements is especially important so that the implied volatility of hydrology in the national electric grid and its impact on the required volumes can be managed.

• Liquid fuels

Our Nueva Renca and TermoAndes combined cycle power plants run alternately with gas or diesel. The backup plants, i.e. Los Vientos, Santa Lidia and Renca, run with diesel.

The supply of liquid fuels (propane and diesel) is managed through agreements with local firms, with significant shares in the markets of fuels that serve us. The close business relationships developed with these suppliers provide high supply reliability.

During 2017, Nueva Renca plant entered into a tolling contract with Enel, whereby the latter provides gas to the plant. As a result, during the 2017 no relevant volumes were of LNG or diesel were purchased.

Gross Installed Power % %

Coal 3,029 67.3%

Gas/Diesel 1,022 22.7%

Diesel 437 9.7%

Biomass 13 0.3%

Total 4,501 100.0%

AES Gener Thermoelectric Capacity (MW) (1)

(1) Source: CNE.

• Generation Thermal Coal

From Chile, we process the supply of coal and maritime transport for all our generation plants, including the facilities of Guacolda and Cochrane, where AES Gener holds a 50% and 60% interest, respectively. Technology in our plants allow flexibility in the combustion of different grades of coal. This provides flexibility and diversification in the coal supply sources.

Coal is acquired mainly through international tendering processes, thus ensuring the coal supply as a portfolio for AES Gener. The contract modality will depend on the strategy, from spot purchases or contracts with terms of one or more years.

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Caring for the Environment

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Mission and Policy Basis for Environmental ManagementManagement of Environmental Variables Outstanding Events in the Environment

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Caring for the Environment214


MISSION AND POLICY

AES Gener S.A. has explicitly recognized the value of sustainability in its mission statement:

CARING FOR THE ENVIRONMENT

“To improve lives by providing safe, reliable and sustainable energy solutions in every market we serve”

To carry out our mission, on the environmental dimension of sustainability, the Company has an Environmental Department that covers the operations in Chile, Argentina, and Colombia. This Department provides specialized support to the heads of the businesses in each of those countries through field-based professional teams, and a senior staff based in Santiago.

The Environmental, Safety, Occupational Health, and Management System Quality Policy is reviewed periodically, and its latest version is dated November 2017. This Policy, which recognizes the protection of the environment as an essential part of our business performance, considers the following commitments: insert environmental variables since the moment each task is planned; ensure compliance with the regulations (local, corporate and voluntary); promote the continuous improvement of environmental performance; strengthen

the environmental and safety culture; prevent, reduce, and manage our environmental impacts; promote the efficient use of natural resources; promote the conservation of biodiversity; and incorporate climatic change mitigation and adaptation in the analysis and development of the business.

The Company has thirteen environmental standards, which establish the performance requirements complementing the regulations applicable to every business. These standards are operational requirements needed to supervise and control legal compliance and permits, air contamination monitoring, discharge to receiving bodies, handling of hazardous substances, hazardous and non-hazardous waste, biodiversity protection, standards to ensure quality of data, occupational safety and health issues, and control of contractors.


The Company conducts an annual program of cross internal environment and safety audits between the different businesses, while the parent company AES Corporation (hereinafter the Corporation) develops an external audit program coordinated by an official of the parent company. In the case of businesses in operation, external audits are conducted every three-year cycle, and in case of construction projects, every year. To establish the extension and depth of the audits, the environmental risk of the business and its previous performance are considered. Environmental audits (both cross internal and external) are devised to evaluate

businesses in: (1) site specific environmental compliance and mitigation of environmental risks, (2) compliance with environmental standards, and (3) compliance with the Environmental Management System (EMS) expectations. To guide the audit processes, the Company uses tools called “Audit Protocols”.

Its sustainability practices have allowed the Company, for the third year in a row, to be part of the Dow Jones Sustainability Index – Chile and the Dow Jones Sustainability MILA Pacific Alliance Index.


SIGNIFICANT ENVIRONMENTAL ASPECTS AND KEY ENVIRONMENTAL INDICATORS

The significant environmental aspects are determined according to a clear and thorough methodology that is applied to all processes that interact with the environment to determine the environmental aspects and then assess its environmental impacts. As a result of this analysis, the significant environmental aspects for AES Gener and its affiliates are identified and grouped as follows:

• Air Emissions: Particulate matter, Combustion Gases, Greenhouse Gases, and Noise

• Use of Water (including marine ecosystem)

• Generation of Coal Combustion Products and Wastes

• Biodiversity

The Environmental Aspects and Impacts (“EAI”) analysis is updated annually in all businesses of AES Gener and affiliates, both in operation and construction.

Based on these significant environmental aspects, and in line with the Policy commitments, the Company establishes key environmental performance indicators and environmental objectives.

The environmental information that gives rise to the indicators is reported from time to time by each business through its own system provided by the Corporation, named AES Online. Each year, in order to check the information, AES Corporation engages a third party to audit the consistency and accuracy of the data reported in the system. This is why the data for years 2012 through 2016 were audited by Lloyd’s Register LRQA, Inc., and the data for 2017 will be checked as well. At the same time, the information used for the creation of the 2015 to 2017 indicators, regarding the first three categories (air emissions, use of water, and waste), for the businesses in operation (i.e. not under construction),

was locally checked for AES Gener and affiliates by the audit firm Delloite - Chile. This work included the comparison of the data reported in AES Online with source records and related evidence, by applying standardized information analysis and auditing methodologies, in order to obtain representative samples of the Company’s reality.

GROUNDS OF ENVIRONMENTAL MANAGEMENT

The Company has developed its own integrated management system, called GENERA, which manages Environmental, Occupational Health, and Safety issues. This system groups the requirements contained in the standards of the Corporation, national regulations, and international standards (ISO 14001 and OHSAS 18001).

The scope of GENERA reaches all the operations of the Company and its affiliates in Chile. Likewise, Termoandes and AES Chivor have environmental management systems consistent with the requirements of the Corporation.

All the operations of AES Gener in Chile (except Cochrane) and its affiliate TermoAndes in Argentina, are certified to ISO 14.001:2004. During 2017, we started the phase to update the Environmental Management System in order to comply with the new version of the ISO 14,001:2015 in all businesses. This task will be completed in 2018 with the certification of Cochrane and the certification under the new standard of the Environmental Management System of AES Chivor.

MANAGEMENT OF ENVIRONMENTAL VARIABLES

Air

Air emissions are the most relevant environmental variables for the thermoelectric generation businesses since they are directly linked to combustion processes. Considering that in 2017, 76% of the gross installed capacity of the Company is of thermoelectric source,


the Company conducts a meticulous monitoring of air emissions, including the emission of Greenhouse Gases (“GHGs”), and has committed to reduce the intensity of emissions. Figure 1 shows the emissions reduction made, comparing year 2014 (prior to the commissioning of the new abatement technologies) with year 2017. During 2017, the Ministry of Environment worked hard on the air pollution prevention and decontamination plans throughout Chile, within which the areas of particular interest to the company are Concón-Quintero-Puchuncaví, Metropolitan Region, and the area of Huasco and surroundings. The plans for each area were publicly disclosed and subject to formal public consultation procedures through a Citizen Participation mechanism where the Company has actively participated. Finally, the Plans for the areas of the Metropolitan Region and Huasco were enacted during 2017. These instruments consider the steps to be taken by businesses involved to contribute to the improvement of air quality.

Regarding Climate Change, the Company is aware of the risks, both physical and regulatory, derived from national Climate Change mitigation and adaptation policies, whereby a permanent monitoring and assessment is performed. In this context, during 2017, the Company made a diagnosis of the risks inherent in all the operations of AES Gener in Chile. The Company is committed to reducing the intensity of greenhouse gas emissions by migrating to a portfolio of less GHG emissions in line with the commitments assumed by Chile in the COP-21.

Water

We monitor 100% of the water extracted, returned, and consumed at our facilities. From the analysis of the information, it is observed that consumed water represents only 1.8% of the extracted water, while the remaining 98.2% is returned to the same source in a quality similar to that of the extracted water (year 2017 data). In addition, 71% of the water consumed is of marine origin, and therefore the use of such water is not in significant competition with other users of continental fresh water. Without prejudice of the foregoing, and in

Figure 1. 2017 Emission Reduction

-0

-5

-10

-15

-20

-25

-30

-35

-40

-45

-50

PM: Particulate Matter

NOx: Nitrogen Oxide

SO2 : Sulfur Dioxide

Hg: Mercury

-44% -44%

-40%

-16%

%

accordance with our Environmental Policy that promotes the efficient use of natural resources, AES Gener and its affiliates carefully monitor their water consumption, and organize, at the same time, campaigns and projects intended to reduce water consumption.

Waste

Coal Combustion Products (hereinafter “CCP”) represent almost all the non-hazardous waste that we generate. That is why we channel our efforts into monitoring the quantity of CCPs produced, increasing their use in other industrial processes, and ensuring an appropriate final disposition. We further keep track of the percentage of CCPs which is delivered to other companies and used by them as raw materials in their processes. In fiscal year 2017, 2.3% of the CCPs generation was recovered and used as raw material in another industrial process, which accounted for twice as much as the previous year.

Likewise, we monitor the Hazardous Waste in accordance with the current regulations, which represent 0.07% of the total volume of waste generated during 2017, which represent a reduction to half the percentage recorded in 2016.

PM NOx S02 Hg


Consistent with the enactment of Supreme Decree No. 43/2016 regarding storage of hazardous substances (warehouses, ponds and lime storage silos), this year there was a significant advance in the approval and implementation of the plans for the adequacy of the facilities to the new requirements, process to be completed in 2018.

Another achievement of this year was the implementation of a computer system to support the management of hazardous substances and waste within the operations of the Company.

Biodiversity

All the businesses in operation and the projects under construction have performed the analysis of the possible risks of affecting biodiversity. It has arisen from this analysis that 5 of our 16 businesses require a Biodiversity Management Plan, which as of this date have been completely implemented and are being executed.

The businesses with Biodiversity Management Plan are: Angamos, Cochrane, Ventanas, AES Chivor and Alto Maipo (currently under construction).

2017 OUTSTANDING ENVIRONMENT FACTS

During 2017, we provided support to four educational establishments in addition to those supported in 2016, three from Tocopilla (where two kindergartens are

included for the first time) and one of Mejillones, to obtain the environmental certification delivered by the Regional Ministerial Environmental Secretary (Seremi, for its acronym in Spanish) of the Antofagasta Region. In 2018 we will continue supporting these establishments to obtain and/or achieve the “Excellence” degree.

In a new sign of our commitment to the community of Huasco and as active participant in the Environmental and Social Recovery Councils (CRAS, for its acronym in Spanish), Guacolda announced the that petcoke will no longer be used as fuel in our operations. In June 2017, Guacolda Energía obtained the environmental approval of the “Elimination of the Use of Petcoke in Guacolda Plant and Adjustment in the Electricity Generation Capacity” Project, under Environmental Qualification Resolution (RCA, for its acronym in Spanish) No. 80/2017. This project declares the commitment to eliminate definitively petcoke from fuel matrix of the Plant and also approves a 24 MW increase in power generation. The RCA considers a gradual withdrawal of petcoke within a period of 6 months, which was completed in early November 2017.

AES Gener has always been ready to join actions to ensure transparency in the operation method used by our plants from the environmental and operational point of view, such as the voluntary initiative driven by the Superintendency of Environment (SMA, for its acronym in Spanish) during 2017. This initiative is aimed at creating a mechanism that would allow the authority to access QA/QC information from the continuous stack emission

During 2017, we provided support to four educational establishments in addition to those supported in 2016, three from Tocopilla (where two kindergartens are included for the first time) and one of Mejillones, to obtain the environmental certification delivered by the Regional Ministerial Environmental Secretary (Seremi, for its acronym in Spanish) of the Antofagasta Region.


monitoring equipment in order to check whether the measurements reported from this equipment are reliable. The company developed a module for the SMA within the platform that manages the operation of the CEMS.

Among the initiatives intended to make better use of resources (in this case, a reduction in the use of energy to desalinate water), we continued with the development of environmental studies for the installation of Water Desalination Plants to sell water to third parties, whose purpose is, in the near future, to provide safety and quality to the water supply in the regions of Atacama and Valparaiso.

During the first few days of January 2017, the “Foundation for the Sustainability of the Gaviotín Chico”1, whose members are Eléctrica Angamos and Eléctrica Cochrane, informed that it obtained the issuance of Exempted Resolution No. E-25127 dated December 19, 2016, from the SEREMI of National Assets. This resolution grants

1 http://www.fundaciongaviotinchico.cl/For more information on AES Gener Environmental Management, see the annex “2007 Environmental Report”, which is available in the digital version of the 2017 Annual Report. (www.aesgener.com).

a “Concession for the Free Use of State Real Property”, which refers to “Pampa 1” site. This administrative act constitutes an important milestone, since it is the second protected nesting area of the gaviotín chico in Chile, in addition to the “Pampa 2” site, which was received last year through Exempted Resolution No. E-15042 dated October 18, 2016.

Meanwhile, Chivor obtained the modification of the Environmental Management Plan for the development of the project to build new intakes. This was granted by means of Resolution 1463 of November 2017 issued by the National Authority of Environmental Licenses (ANLA, for its acronym in Spanish).

To comply with the renewal of the water concession in La Esmeralda reservoir, we purchased 122 hectares of land in protected areas of the reservoir contributor basin. The purchase agreement set forth the assignment of the ownership to the three municipalities for the specific purpose of protecting the environment.

AES Gener S.A. Financial Statements222 AES AEAES GeneGe r S.S AA. Financial Stat temementsn2222222

Financial Statements of AES Gener S.A.

15

Annual Report 2017 AES Gener 223AnnuAnnuA al RReporeport 2017 AAES GES Generene 22233

AES Gener S.A. Financial Statements224

Report of the Independent Auditor

ToShareholders and DirectorsAES Gener S.A.

misstatements.

EY ChileAvda. Presidente Riesco 5435, piso 4,

Tel: +56 (2) 2676 1000www.eychile.cl


Opinion

Andrés Marchant V EY Audit SpA


ASSETS Note December 31, 2017 December 31, 2016

MUS$ MUS$

CURRENT ASSETS

Cash and cash equivalents 9 275,948 469,560

Other current financial assets 10 10,647 21,692

Other non-current financial assets 12 5,529 3,007

Trade debtors and other current accounts receivable, net 13 444,905 373,146

Accounts receivable from related entities, current 14 10,066 18,833

Inventory 15 155,157 136,235

Current tax assets, net 16 25,911 37,909

Assets classified as held-for-sale 8 181,539 -

Total Current Assets 1,109,702 1,060,382

NON-CURRENT ASSETS

Other non-current financial assets 10 34,398 12,824

Other non-current non-financial Assets 12 24,274 33,620

Trade debtors and other non-current accounts receivable, net 13 18,929 20,021

Investments in Associates 17 410,882 419,468

Intangible Assets, net 18 52,589 51,857

Goodwill 18 - 7,309

Property, plant & equipment 19 6,421,441 6,150,290

Current deferred tax assets, net 16 87,592 93,133

Total Non-Current Assets 7,050,105 6,788,522

TOTAL ASSETS 8,159,807 7,848,904


SHAREHOLDERS’ EQUITY AND LIABILITIES Note December 31, 2017 December 31, 2016

MUS$ MUS$

CURRENT LIABILITIES

Other Current Financial Liabilities 20 1,052,448 230,814

Current trade creditors and other accounts payable 21 355,108 358,154

Current accounts payable to related entities 14 278,918 10,654

Other current provisions 22 1,450 912

Current tax liabilities, net 16 25,542 38,180

Provisions for employee benefits, current 23 4,507 3,858

Other current non-financial liabilities 24 27,490 35,724

Total Current liabilities 1,745,463 678,296

NON-CURRENT LIABILITIES

Other non-current financial liabilities 20 2,781,566 3,672,070

Non-current trade creditors and other accounts payable 21 15,314 17,266

Non-current accounts payable to related entities 14 - 241,031

Other non-current provisions 22 286,047 71,662

Deferred tax liabilities, net 16 575,871 571,597

Provisions for employee benefits, non-current 23 35,981 28,570

Other non-financial liabilities, non-current 24 9,495 9,819

Total Non-Current Liabilities 3,704,274 4,612,015

TOTAL LIABILITIES 5,449,737 5,290,311

SHAREHOLDERS’ EQUITY

Issued capital 2,052,076 2,052,076

Retained earnings (loss) 25 412,913 544,760

Additional paid-in capital 49,864 49,864

Other interest in the Shareholders' Equity 25 238,157 237,408

Other reserves 25 (159,090) (457,378)

Shareholders' Equity attributable to Parent Company's Owners 2,593,920 2,426,730

Non-Controlling Interest 3.b 116,150 131,863

Total Shareholders’ Equity 2,710,070 2,558,593

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 8,159,807 7,848,904

AES Gener S.A. Financial Statements228 AES Gener S.A. Financial Statementnts22228


STATEMENT OF COMPREHENSIVE INCOME Note December 31, 2017 December 31, 2016

MUS$ MUS$

Statement of Income

Income (loss)

Income from ordinary activities 26 2,436,712 2,286,401

Cost of sales 27 (1,819,218) (1,660,954)

Gross income 617,494 625,447

Other income, by function 457 2,243

Administrative expenses 27 (108,656) (102,296)

Other expenses, by function (2,142) (2,981)

Other income (losses), net 28 (44,108) 534

Financial income 29 8,173 8,111

Financial costs 29 (177037) (161,531)

Interest in earnings (losses) of investees (net) 17 23,584 12,909

Exchange Differences 29 (4,662) (17297)

Income (loss), before taxes 313,103 365,139

Income tax expenses 16 (115,018) (106,830)

Income (loss) from continuing operations 198,085 258,309

Income (loss) from discontinued operations

Income (loss) 198,085 258,309

Income (loss) attributable to

Income (loss) attributable to owners of parent company 184,519 261,009

Income (loss) attributable to non-controlling interests 3.b 13,566 (2,700)

Income (loss) 198,085 258,309

Earnings per share

Basic earnings per share

Basic earnings (loss) per share from continuing operations 30 0.022 0.031

Basic earnings (loss) per share from discontinued operations

Basic earnings (loss) per share 0.022 0.031

Diluted earnings per share

Diluted earnings (loss) per share from continuing operations 0.022 0.031

Diluted earnings (loss) per share from discontinued operations

Diluted earnings (loss) per share 0.0322 0.031


DIRECT STATEMENT OF CASH FLOWS December 31, 2017 December 31, 2016

MUS$ MUS$

Cash flows from (used in) operating activities

Class of collections for operating activities

Collections coming from sale of goods and provision of services 2,714,959 2,471,871

Other collections for operating activities 21,888 29,892

Classes of payment

Payments to suppliers for the supply of goods and services (1,662,077) (1,537,769)

Payments to and by employees (81,695) (78,232)

Other payments for operating activities (136,158) (103,436)

Dividends paid (261,009) (93,374)

Dividends received 36,409 -

Interest expense (184,517) (156,745)

Interest received 3,330 3,077

Reimbursed income taxes (paid) (101,453) (97,603)

Other cash inflows (outflows) (9,020) (15,760)

Net cash flows from (used in) operating activities 340,657 421,921

Cash flows from (used in) investing activities

Cash flows from the sale of interest in investees - 616

Amounts from the sale of property, plant and equipment 595 11

Purchase of property, plant and equipment (496,938) (561,919)

Amounts from sales of intangible assets 109 1,704

Purchase of intangible assets (564) (766)

Amounts from other assets long-term assets 171,690 163,506

Amounts of other long-term assets (162,907) (144,787)

Other cash inflows (outflows) 68,406 (60)

Net cash flows from (used in) investment activities (419,609) (541,695)


DIRECT STATEMENT OF CASH FLOWS December 31, 2017 December 31, 2016

MUS$ MUS$

Net cash flows from (used in) financing activities

Amounts from issue of shares 22,156 21,280

Payments for purchase or redemption of shares of the entity (33,600) (10)

Amounts from long-term loans 242,149 608,537

Amounts from short-term loans 151,822 23,600

Payment of loans (484,669) (312,482)

Payments of finance lease liabilities (1,275) (1,879)

Interest expense (9,939)

Other cash inflows (outflows) (2,825) (21,837)

Net cash flows from (used in) financings activities (116,181) 317,209

Net increase (Decrease) in cash and cash equivalents, before effects of exchange differences (195,133) 197,435

Effect of exchange differences on cash & cash equivalents

Effect of exchange differences on cash & cash equivalents 1,521 4,892

Increase (decrease) in cash & cash equivalent, net (193,612) 202,327

Cash and cash equivalents at the beginning of the period 469,560 267,233

Cash and cash equivalents at the end of the period 275,948 469,560

Subscription and Affidavit of Liability232 Subscripiptionon andand AffidAffiddavitavitavitavi of of f ffof LiaLiabLiabLiabLLiabLia ilitilittlitl yyyy23322

Subscription and Affidavit of Liability

16

Annual Report 2017 AES Gener 233Annual Report 20017 A17 7 ES GS Geneener 22222233333333333

Subscription and Affidavit of Liability234 SubsSubsSubscripripcr tiontion andand Affiddavit of Liability234


In accordance with the current provisions of the Superintendency of Securities and Insurance, this Annual Report of AES Gener S.A. has been approved and signed by the Chief Executive Officer of the Company and the Directors mentioned below, which constitute

SUBSCRIPTION AND AFFIDAVIT OF LIABILITY

the majority of the Board of Directors of AES Gener S.A., according to its composition as of the publication of this Annual Report. They are responsible, under oath, for the veracity of the information herein contained.

ANDRÉS GLUSKI Director Passport No. 6024620 Venezuelan

BERNERD DA SANTOS Director Passport No. 037105150Venezuelan

GONZALO PAROT Director Taxpayer Id. (RUT) number 6,703,799-6Chilean

RADOVAN RAZMILIC DirectorTaxpayer Id. (RUT) number 6,283,668-7Chilean

CLAUDIA BOBADILLA Independent Director Taxpayer Id. (RUT) number 9,954,477-5 Chilean

VINEET MOHAN DirectorPassport No. E4088685L Singaporean

ARMINIO BORJAS

DirectorPassport No. D0259811 Venezuelan

RICARDO FALÚ

Chief Executive Officer Taxpayer Id. (RUT) number 21,535,942-5Argentine

Exhibits236 Exhibitss222222333333366666666

Annexes

17238274

290

Annex 1 Environment Annex 2 History of Related CompaniesAnnex 3 Essential Facts and Communications

Annual Report 2017 AES Gener 237Annual Report 2017 AES Gener 223377

Exhibits238 ExhExhiExhihiExh bitsbits2238

Annex 1

Environment


ENVIRONMENT

2 AES CORP SUSTAINABILITY STRATEGY

3 AES GENER AND AFFILIATES ENVIRONMENTAL MANAGEMENT APPROACH

3.1 Basis for Environmental Management

3.2 Significant Environmental Aspects

3.3 Environmental Key Performance Indicators

4 GENERATION, INSTALLED CAPACITY, OPERATIONAL EFFICIENCY AND TRANSMISSION

4.1 Gross Electric Power Generation (MWh)

4.2 Installed Capacity

4.3 Operational Efficiency

4.4 Availability

4.5 Electric Transmission Activities

5 MANAGEMENT OF ENVIRONMENTAL VARIABLES

5.1. Air

5.1.1 Climate Change and Greenhouse Gases (GHG).

5.1.2 Management of Air Emissions

5.2 Water

5.3 Waste Generation

5.4 Regulatory Compliance

5.5 New Relevant Regulations

5.6 Biodiversity Protection

5.7 Environmental Investment and Innovation.

245

247

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250

251

251

251

251

252

252

256

258

263

264

265

268

270

250

252

240

244

242

1 VERIFICATION LETTER

Exhibits240

ToMilton Rosales U.

AES Gener S.A.Hand-delivered

Dear Sirs:

Report of AES Gener S.A.

Scope

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-

•

•

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•


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Partner

Exhibits242

Environmental Standards

1. AES Corporation reference framework for an environmental management system

2. Spill Prevention and Containment

3. Requirements for Hazardous Waste

4. Handling of Chemicals and Raw Materials

5. Handling of Polychlorinated Biphenyls (PCB)

6. Quality Assurance for Data and Reports on Compliance of AES Environmental Standards

7. Environmental Incidents (Environmental Non-conformance Events (ENEs) and Environmental Near Misses) and Management of Environmental Operating Events (EOE)

8. Planning of Environmental Emergency Responses

9. Requirements for Dams and Hydroelectric Plants

10. Financial Reporting Obligations concerning Environmental Issues.

11. Contractor Management

12. General Environmental Requirements and Prohibitions

13. Biodiversity Assessment & Protection.

Table 1. List of AES Corporation Environmental Standards

2. AES CORPORATION SUSTAINABILITY STRATEGY

AES Corporation (hereinafter, the “Corporation”) has explicitly recognized the value of sustainability in its mission statement:

“To improve lives by providing safe, reliable and sustainable energy solutions in every market we serve.”

Its sustainability practices have allowed AES Corp, for the fourth year in a row, to be part of the Dow Jones Sustainability Index (DJSI) for North America, while AES Gener S.A. (hereinafter, AES Gener, or the “Company”) has been part of the Dow Jones Sustainability Index Chile for the third year in a row.

The Corporation provides a series a tool that help to facilitate the incorporation of sustainability in each

business, the most outstanding of which are AES Corp EHS Standards. These standards have been developed by observing the best international practices and establish performance requirements that complement the local requirements applicable to each business. The EHS standards currently regulate the operational requirements needed to supervise and control legal compliance and permits, air contamination monitoring, discharge to receiving bodies, handling of hazardous substances, hazardous waste, and non-hazardous waste, standards to ensure quality of data, occupational safety and health issues, and control of contractors and biodiversity protection. Thirteen of these standards are environmental, all of them apply to operations, and seven of them apply to projects under construction.


Name Environmental Protocols Applicable to businesses in:

ENV_1 Environmental Compliance and Environmental Risk Mitigation. Operation

ENV_2 Compliance with Environmental Standards. Operation

ENV_3 Compliance with Environmental Management System Expectations. Operation

ENV_4 Environmental Compliance, Risk Mitigation, Compliance with EMS Expectations, and Disclosure Requirements. Construction

ENV_5 Environmental Culture Assessment. Operation and Construction

Table 2. AES Corporation Auditing Protocols

The Environmental Department carries out an annual program of cross internal environment and safety audits in the different businesses. Moreover, the Corporation develops an external audit program coordinated by an officer of the parent company. In the case of businesses in operation, external audits are conducted every three-year cycle, and in case of construction projects, every year. To establish the extension and depth of the audits, the environmental risk of the business and its previous performance are considered.

Environmental audits (both cross internal and external) are devised to evaluate businesses on: (1) site specific environmental compliance and mitigation of environmental risks, (2) compliance with environmental standards, and (3) compliance with the Environmental Management System (EMS) expectations.

The Corporation delivers tools to guide the audit processes, known as “Protocols”, that are focused on the following topics:

Its sustainability practices have allowed AES Corp, for the fourth year in a row, to be part of the Dow Jones Sustainability Index (DJSI) for North America, while AES Gener S.A. (hereinafter, AES Gener, or the “Company”) has been part of the Dow Jones Sustainability Index Chile for the third year in a row.

Exhibits244

Figure 1. Main Aspects of Environmental Performance.

Regulatory Compliance BiodiversityWaste

GenerationWater

UseAir

Emissions

Power Generation and Other Businesses

3. AES GENER AND AFFILIATES ENVIRONMENTAL MANAGEMENT APPROACH

To carry out the mission as far as sustainability is concerned, the Company conducts a coordinated work between the different areas. Regarding environmental issues -the main pillar in the achievement of this sustainability-, the Company has an Environmental Department that covers the operations in Chile, Argentina, and Colombia. This Department provides specialized support to the heads of the businesses in

The environmental information that gives rise to the key environmental performance indicators is reported from time to time by each business through its own system provided by the Corporation, named AES Online. Each year, in order to check the information, AES Corporation engages a third party to audit the completeness, consistency and accuracy of the data reported in the system. This is why the data for years 2012 through 2015 were audited by Lloyd’s Register LRQA, Inc., and the data for 2016 will be checked as well.

The information used for the development of the 2015 to 2017 indicators, regarding the first three categories (air emissions, use of water, and waste), for the businesses in operation (i.e. not under construction), has been annually

each of those countries through field-based professional teams, and a senior staff working in Santiago.As part of the management of each business, the Company establishes environmental goals and indicators with respect to the main environmental aspects of the electric generation processes, as shown below. You can find further information on the definition and scope of each key performance indicator in Section 2.3.

checked for AES Gener and affiliates by the audit firm Delloite – Chile. This work included the comparison of the data reported in AES Online with source records and related evidence, by applying standard information analysis and auditing methodologies, in order to obtain representative samples of the Company’s reality.

In this context, the announcement made by the Santiago Stock Exchange and S&P Dow Jones Index in 2017 that the Company will continue to be part, for the third year in a row, of the Dow Jones Sustainability Index - Chile (DJSI - Chile) and for the first time in the Dow Jones Sustainability MILA Pacific Alliance Index has been a positive recognition for the efforts made by AES Gener in terms of sustainability and environment.


1 The AES Gener environmental policy is available at the website of the Company.

3.1 Basis for Environmental Management

ISO 14001 Certified Management System

The Company has sought to group the requirements contained in the standards of the Corporation, national regulations, and international standards (ISO 14001 and OHSAS 18001) to develop its own integrated management system, called GENERA, which manages environmental, occupational health, and safety issues.

GENERA covers all the operations of the Company and its affiliates, and the achievement and maintenance of the certification to ISO 14001 is an internal requirement. Termoandes (Argentina) and AES Chivor (Colombia) have environmental management systems consistent with the requirements of the Corporation’s Protocol ENV-3.

All the operations of AES Gener in Chile (except Cochrane) and its affiliate TermoAndes in Argentina, are certified to ISO 14.001:2004.

In 2017-2018 period, we are updating the Environmental Management System to comply with the new version of ISO 14001:2015 in all the businesses currently certified to ISO 14001:2004, and to obtain the certification to ISO 14001:2015 for Cochrane in Chile and for the Environmental Management System of AES Chivor during 2018.

During 2017, 100% of the plants in operation in Chile and Termoandes were audited by the certification agencies mentioned above for recertification or monitoring purposes,

and managed to maintain the ISO 14001 certification. Moreover, the follow-up and certification audits were completed and very few non-conformities were found, all of them of minor category, which were resolved within the required time frame.

Environmental Policy

The Environmental, Safety, Occupational Health, and Management System Quality Policy1, (hereinafter “Policy”, or “Integrated Policy”) is reviewed periodically, and its latest version is dated November 2017. This Policy, which recognizes the protection of the environment as an essential part of our business performance, considers the following commitments: insert environmental variables since the moment each task is planned; ensure compliance with the regulations (local, corporate and voluntary); promote the continuous improvement of environmental performance; strengthen the environmental and safety culture; prevent, reduce, and manage our environmental impacts; promote the efficient use of natural resources; promote the conservation of biodiversity; and incorporate climatic change mitigation and adaptation in the analysis and development of the business. As it is further sought to improve the integrated performance planning in a more consistent manner with the Company's strategy, its application scope is extended to all the business units of the Company.

Exhibits246

Commitments

• Insert variables of Safety, Occupational Health, Environment, Quality and Asset Management since the moment each task is planned.

• Ensure compliance with the current regulatory framework applicable to the business, and with AES Corporation regulations, programs, policies, and standards, and with commitments voluntarily taken on towards our customers and other stakeholders on environmental, safety, and occupational health issues.

• Strengthen and promote the environmental and safety culture in all our businesses, based on the application of the corporate standards, integrated management system procedures, and compliance with our safety principles.

• Respect our safety beliefs: (i) safety is a priority for our staff, collaborators, and those who live in the communities where we operate; (ii) all incidents can be prevented; (iii) safety is an employment condition and we are all responsible for it; (iv) we all have the right and obligation to stop the works when an unsafe condition or action is identified

• Identify hazards, assess risks, and implement the control measures required to prevent occupational accidents, injuries and diseases related to our activities

• Prevent, reduce and manage the environmental impacts of our operations, and promote efficient use of natural resources, awareness for the care of the environment, and relations with the communities where we develop our activities

• Promote the conservation of high biodiversity value areas located within our operations by protecting and promoting the knowledge of species that should be preserved in those areas

• Add climate change mitigation and adaptation in the analysis and development of businesses, in line with the regulations and commitments adopted by the country in this regard.

• Promote continued improvement of the Integrated Management System in order to enhance environmental performance, safety, and occupational health issues.

• Provide the necessary resources to ensure compliance with the commitments of this policy

• Identify, assess and manage the risks of our assets to achieve optimization of the complete life cycle, in a manner consistent with the Asset Management and Risk Management Policies of the Company.

• Meet the needs and expectations of our customers by performing support operations and services in an efficient, clean, safe and reliable manner.

Table 3. Commitments of GENERA Integrated Policy


As basis for the management of environmental aspects, and following the Policy commitments, we set annual goals for all the businesses, which are monitored and evaluated through performance indicators.

3.2 Significant Environmental Aspects

While the management system is planned, it is of vital importance to have a clear and thorough methodology to be able to identify the environmental aspects and assess their impacts and associated risk. The methodology we implement makes it possible to stop any activities that might generate environmental issues and that interact with the environment through air emission, water use, generation of wastewater, generation and disposal of waste, possible leaks and spills, other environmental interactions with the vicinity, and possible emergencies resulting from its processes.

Once these environmental issues and their source activities are identified, an assessment of impacts is performed. To that end, three main assessment criteria are considered: the existence of control measures in the processes, physical impact on the environment, and negative impact on the business. The outcome of the assessment helps us to establish which are the significant issues interacting with the environment that require action plans and the investment required to mitigate, repair, or compensate the impact according to its risks and opportunities. These plans are the fundamental basis of environmental performance in the businesses.

As a result of the analysis of Environmental Aspects and Impacts (“EAI”), the environmental aspects that are more relevant for AES Gener and its affiliates are identified and grouped as follows:

• Air Emissions: Particulate matter, Combustion Gases, Greenhouse Gases, and Noise

• Generation of Coal Combustion Products

• Use of Water (including marine ecosystem)

• Biodiversity

The EAI analysis is updated annually in all businesses of AES Gener and affiliates, both in operation and under construction.

3.3 Environmental Key Performance Indicators

Consistent with the analysis of EAI, the key environmental indicators established by the Company are organized into five categories: air emissions, water use, waste generation, biodiversity and regulatory compliance. Their scopes and requirements are detailed in table 4.

The information used for the creation of the 2015 to 2017 indicators, regarding the first three categories, for the businesses in operation, was locally checked for AES Gener and its affiliates by the audit firm Deloitte - Chile, as evidenced in the letter attached hereto as Annex. This work included the comparison of the data entered in AES Online with source records and related evidence, by applying standardized information analysis and auditing methodologies, in order to obtain representative samples of the Company’s reality.

The indicators are calculated for all our businesses and affiliates in operation, over which we have operational control. When the operation of a new business is started, data are consolidated as from the start date of commercial operation, and in the event of acquired operations, data are consolidated as from the year following their incorporation. The data and environmental indicators of the businesses operationally controlled by AES Gener are consolidated at 100% without taking into account the participating interest owned by AES Gener in the business (which is used for the preparation of the financial statements).

Exhibits248 Exhibits248


Indicator Detail

Air Emissions

Particulate Matter: absolute (t) and unit (kg/MWh).

The indicator is developed with the data obtained from Continuous Emission Monitoring System (CEMS) and/or isokinetic measurements, which must be standardized and completed according to the Annexes to Supreme Decree No. 13/2011, and related Circular Letters, issued by the Ministry of Environment that Establishes the Emission Regulations for Thermoelectric Plants

SO2: absolute (t) and unit (kg/MWh).

NOx: absolute (t) and unit (kg/MWh).

Greenhouse gases: absolute (tCO2e) and unit (tCO2e/MWh)

Scope 1: direct emissions related to combustion, SF6 emissions, and motor vehicle fleet emissions; data checked by Deloitte. Scope 2: emissions associated to the generation of energy purchased from third parties for our own consumption, and to losses in the transmission of energy not generated by AES Gener and transported through our networks; data checked by third parties at the request of AES Corporation. Scope 3: related to emissions from the production and transport of coal, and flights of the staff of AES Gener and affiliates in Chile.

Heavy metals: yearly estimation of mercury emissions (kg).

The estimation is made considering the percentage of mercury contained in each type of coal, the amount of that coal used, and the particulate matter and SO2 abatement systems available in the generating unit. Data have been recorded since January 2014

Water use

Conveyance: absolute (m3) and unit (m3/MWh) Water use includes consumption as the difference between conveyance/extraction (seawater or

continental water) and the discharge to the origin of the resource, making a distinction between Maritime and Continental Water. Under Continental Water, a distinction is made between Surface, Ground or Drinking Water (drinking water distributor, water company, municipal water utility or other similar company). During extractions, the water diverted for hydroelectric generation will not be considered as consumption, since all the water is restored to the surface bodies from which it was captured.

Discharge: absolute (m3) and unit (m3/MWh)

Consumption: absolute (m3) and unit (m3/MWh)

Waste Generation

Hazardous wastes: absolute (t) and unit (t/GWh)

All the waste regulated by Supreme Decree 148/2003, and identified in the management plans of each business, where applicable (generation above 12 t/year)

Coal combustion products: absolute (t) and unit (t/GWh)

Fly ash captured in particulate matter and SO2 emission abatement systems, and bottom ash are mainly considered. For some units, fly ash includes gypsum

Reuse of Coal Combustion Products (%)

Percentage of coal combustion products incorporated to third party processes as inputs or raw materials (e.g.: ash for cement industry)

Cumplimiento Normativo

Environmental Sanctions

The initiation of procedures for the imposition of sanctions and the fines paid according to year of payment are reported.

(It should be mentioned that as from 2016 there was a change in this KPI: fines were previously reported in the year of incident occurrence, which caused a modification in historic tables.) The procedures for the imposition of sanctions are monitored through AES Online, pursuant to Environmental Standard Nr. 7

Biodiversity

Initiatives developed or under development. Description of Projects or Initiatives

Table 4. Description of Key Environmental Performance Indicators

Source: own generation, AES Gener.

Exhibits250

Gross Generation (MWh) 2013 2014 2015 2016 2017

Argentina 4,256,804 4,534,498 4,073,252 4,735,213 4,392,407

Chile 12,031,384 14,758,678 19,320,025 22,236,550 21,069,961

Colombia 3,378,378 3,987,878 4,116,556 4,364,255 3,863,746

Total 19,666,566 23,281,054 27,509,833 31,336,018 29,326,113

Table 5. Gross Yearly Electric Generation

Source: Measured and our own data, reported and registered at AES Online. Years 2015 to 2017 are verified locally by Deloitte, while 2013 to 2017 data are verified by Lloyd's Register LRQA, Inc. at AES Corporation level.

4. GENERATION, INSTALLED CAPACITY, OPERATIONAL EFFICIENCY, AND TRANSMISSION

4.1 Gross Electric Power Generation (MWh)

The gross electric power generation is the parameter used to express emission intensity in most of our

environmental indicators. Consolidated production is detailed in Table 5.

Exhibits2225555000


4.2 Installed Capacity

Although the 2017 installed capacity matrix of AES Gener and affiliates was mainly based on fossil fuels (coal, natural gas, and diesel), the strategy of the Company considers balancing its future generation portfolio, increasing in the short term the installed power capacity in solar and/or wind plants, along with the coming into operation of the run-of-the-river hydroelectric project Alto Maipo (currently under construction).

4.3 Operational Efficiency

The Company considers that the continued improvement of efficiency in its plants is of the utmost importance, since this way the electric power generation is maximized, and the CO2 emissions resulting from fossil fuel combustion are reduced. The indicator regulating efficiency is called “Heat Rate”, for whose calculation the variable remuneration earned by the staff of AES Gener and affiliates is considered.

4.4 Availability

The Company also monitors the availability of generation units, due to the fact that a greater availability reflects a better use of the generation assets. The KPI is called EAF (Equivalent Availability Factor). The variable remuneration

earned by the staff of AES Gener and affiliates is linked to different KPIs, including EAF.

4.5 Electric Transmission Activities

Although the main business of the Company is to generate and commercialize electric power, several businesses were required to develop transmission systems to be able to be connected to the Interconnected Grids and/or its customers.

The environmental aspects of the electric transmission activities are also considered with the same standards as the power generation activities.

For instance, the continued reduction of technical losses in our lines and substations is a manner of operating with higher efficiency, which is one of the Company’s values. This reduction of our losses not only has an economic impact, but also reduces CO2 emissions.

Likewise, to increase the availability of grids is also a manner of honoring the commitment established in our Environmental Policy regarding the promotion of the efficient use of natural resources, and at the same time has a positive economic effect.

The Company considers that the continued improvement of efficiency in its plants is of the utmost importance, since this way the electric power generation is maximized, and the CO2 emissions resulting from fossil fuel combustion are reduced.

Exhibits252

5. MANAGEMENT OF ENVIRONMENTAL VARIABLES

5.1.Air

Air emissions are the most relevant environmental variables for the thermoelectric generation businesses since they are directly linked to combustion processes. These emissions are regulated by a specific regulation (Supreme Decree 13/2011), and there also exist country-wide commitments to the reduction of greenhouse gas emissions. Additionally, air emissions are a relevant part of the environmental surveys and permits, and many of our businesses are located in areas subject to Environmental Prevention and/or Decontamination Plans, which also impose additional requirements.

5.1.1. Climate Change and Greenhouse Gases (GHG)

Physical Hazards

Beyond the discussion about the causes of climate change, there are countless surveys and proofs that suggest that the existence of this phenomenon is undeniable. Climate change is mainly characterized by a progressive increase of yearly average temperatures in the atmosphere and oceans. In addition to these incremental effects, the occurrence of extreme phenomena, which are increasingly frequent and intense, is also associated to climate change: swells, rains in unusual places or out of season, increase in the surface temperature of the sea, forest fires, boulders and landslides, floods, etc.

As a result, during 2017 the Company worked on the identification of physical risks for their operations related to the climate change, both from gradual changes and

from extreme phenomena, to approach during 2018 the development of strategies, policies, and mitigation actions.

Regulatory risks

The most important AES Gener executives who are responsible for the Operations, Finance, Trade, and Development Departments are involved in the design of strategies to minimize the impacts of climate change on our business. Monthly meetings are held to analyze and monitor the mitigation and adaptation initiatives that are being developed in the countries where we operate, the major trends in this field around the world, and their impact on our business.

Within the Commercial Department, the Regulation and Climate Change Management is responsible for monitoring regulatory risks associated with national climate change mitigation and/or adaptation policies, and the coordination of actions to mitigate these risks in the Company.

Climate change brings about financial risks that AES Gener and its affiliates have tried to identify and mitigate. Those risks include taxes on CO2 emissions, possible costs of CO2 capture equipment, and cost overruns due to renewable energy goals. Our goal is to mitigate these risks through contractual policies.

The so-called “Tax Reform,” approved in Chile in September 2014 (Law 20,780) levied a tax on CO2 emissions amounting to US$ 5/tCO2. Therefore, our internal projects, which involve reduction of CO2 emissions, value those reductions at this price. This tax on CO2 emissions is accounted for as from January 2017 and will be paid in April 2018.


2 https://cdm.unfccc.int/Projects DB/CarbonCheck_Cert1425989791.25/view

Impact on the Availability of Water and its Best Exploitation

Climate change brings about new challenges, since in large areas of Chile this change is evidenced as a reduction in rains and in the availability of water at underground aquifers, in addition to the retreat of glaciers, which sometimes can generate an increase in the availability of water in glacial rivers.

Being aware of this, the water environmental indicators allow us to manage the use of this resource by the implementation of specific projects aimed at optimizing consumption of water of continental origin, and the search of other industrial uses for our water discharges, such as its use for irrigation purposes.

While seawater might seem to be an inexhaustible resource, energy is required for the desalination process; therefore, considering our commitment to the best use of resources, we have channeled our efforts into reducing the energy used in the desalination process. This was the framework for the implementation of the Reverse Osmosis (“RO”) Desalination Plant at Angamos Plan in a more efficient manner. This new plant replaced the previous Thermal Vapor Compression (“TVC”) Desalination Plant. With respect to the environmentally approved project for the extension of the desalination

plant in the Angamos Thermoelectric Plant, during the year 2017 we conducted the studies and works previously required at the beginning of the construction phase of this Project. It should be remembered that this new project will supply desalinated water to Cochrane Thermoelectric Plant (thus avoiding the use of the Cochrane TVC Desalination Plant) and will make it possible to sell desalinated water to third parties.

This way, in this new business line, which involves the development of water desalination plants, we continued with the conduct of environmental studies for Water Desalination Plants for the sale of water to third parties, whose purpose is, in the near future, to provide safety and quality to the water supply in the regions of Atacama and Valparaiso.

Carbon Credits

The “Andes Solar Plant” is the first photovoltaic electric generation plant, and is located in the dessert of Atacama, Antofagasta Region, near to Salar de Atacama and is connected to our “Andes” Substation. It has an environmental permit approved for 220 MW, and in August 2016 its first phase0 of 21 MW started operations.

Climate change brings about new challenges, since in large areas of Chile this change is evidenced as a reduction in rains and in the availability of water at underground aquifers, in addition to the retreat of glaciers, which sometimes can generate an increase in the availability of water in glacial rivers.

Exhibits254

Project Amount (tCO2e/year)

Andes Solar (141 MW) 373,203

Phase 1 (21 MW in operation) 55,583

Next phases (for up to 141 MW) 317620

Alto Maipo 1,688,164

Total 2,061,367

Table 6. Registered Carbon Credits. Greenhouse Gases (GHGs)

Source: Projects registered in UNFCCC2 and VCS3

The Carbon Credits of “Andes Solar” Plant were accepted and registered by the United Nations Framework Convention on Climate Change (UNFCC) as a Clean Development Mechanism (CDM) for 141 MW.

Our project under construction, Alto Maipo, is a run-of-the-river hydraulic project located in the commune of San José de Maipo, which is made up of two run-of-the-river hydraulic plants: (i) Alfalfal II, 264 MW, and (ii) Las Lajas, 267 MW. The estimated average annual production from the project is 2,200 MWh, which is equivalent to 1,688,164 tCO2e (2) The Alto Maipo Project will help to balance the generation portfolio of AES Gener. The Carbon Credits of this project were certified by Carbon Check and registered under the VCS (Verified Carbon Standard).

Greenhouse Gases (GHG)

The State of Chile has participated in the Conference of the Parties (COP) organized by the United Nations; and has committed itself to meet certain emissions abatement goals that should be translated into policies and regulations to support their implementation. In the COP 21 conducted in Paris, Chile committed itself to reduce its CO2 emissions per GDP unit as at 2030 in 30% as compared with the level reached in 2007, considering a future economic growth that will make it possible for Chile to implement appropriate measures to honor this commitment. The regulation that might finally arise from the Congress and the Executive Branch must be consistent with the commitments adopted by Chile, and linked to the national energy policy.

AES Gener is committed to this goal through the development of renewable energy, including hydroelectricity, solar and/or wind power, and the

storage of electric power as a mechanism to provide the flexibility required by the electrical system when it reflects a greater penetration of different renewable energies.

The Company is also committed to the development of projects aimed at the gradual increase in the efficiency of thermal generation, reduction of internal energy consumption, and increased energy efficiency of our processes, as well as increased flexibility of our thermal units.

Moreover, every quarter, the Company monitors 100% of the CO2 emissions coming from the combustion of fossil fuels for electric power generation, sulfur hexafluoride (SF6) releases, and emissions from the motor vehicle fleet, either owned or leased, used by our staff. This information is registered as

3 http://www.vcsprojectdatabase.org/” \l “/project_details/1321


2013 2014 2015 2016 2017

Gross Generation (MWh) 19,666,566 23,281,054 27,509,833 31,336,018 29,326,113

Scope 1 and Scope 2 Annual Emission (tCO2e) 10,671,878 12,826,408 19,577,381 19,641,004 18,760,048

Indicator (tCO2e/MWh) 0.54 0.55 0.71 0.63 0.64

Table 7. Scope 1 and Scope 2 Greenhouse Gas Emissions.

Source: Measured and our own data, reported and registered at AES Online. Years 2015 and 2016 are verified locally by Deloitte, while 2012 to 2016 data are verified by Lloyd's Register LRQA, Inc. at AES Corporation level.

Emission Point Total Emissions (tCO2e)

Percentage Contribution (%)

Air Trips of staff 680 0.02%

Emissions from coal extraction 423,762 13.10%

Emissions from coal post-extraction 50,702 1.57%

Coal transport 2,759,272 85.31%

Total Scope 3

Emissions3,234,416 100%

Table 8. Scope 3 GHG Emissions.

environmental indicator in absolute (tCO2e) and unit (tCO2e/MWh) amounts (Table 7). The estimation and calculation of emissions were made according to the methodologies and emission factors of “The Greenhouse Gas Protocol” mutually agreed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). The data are reported in AES Online, and then audited by Lloyd’s Register LRQA, Inc. At the same time, the information used for the creation of the 2015

to 2017 indicators was locally checked for AES Gener and its affiliates by the audit firm Delloite - Chile, as evidenced in the letter attached hereto as Annex 1.

Regarding indirect GHG emissions, we monitor emissions related to energy bought from third parties for our own consumption, and to losses in the transmission of energy not generated by AES Gener and transported through our grids (both classified as Scope 2 under the classification of the “GHG Protocol”).

Regarding Scope 3 GHG indirect emissions (according to the classification made by the “GHG Protocol”), as from January 2016, we started to keep record of the GHG emissions associated with extraction, post-extraction, and transport of the main input of the Company, coal, and emissions associated with national and international flights of the staff of AES Gener and its affiliates in Chile. Scope 3 GHG emissions are shown in Table 8 and were estimated using emission factor for the transport of passengers and coal for “Other Region”, as proposed by the GHG Protocol corresponding to the World Resources Institute (WRI) list of March 2017. The emission factors for coal extraction and post-extraction in the 2006 IPCC Guidelines for the GHG national inventories are also shown in Table 8.

Exhibits256

5.1.2 Management of Air Emissions

The regulatory framework for air emissions management in general includes: (i) national regulations, particularly Supreme Decree No. 13/2011 issued by the Ministry for Environment, which regulates concentration limits in the stack for the emission of certain pollutants from thermal power plants; (ii) obligations stipulated in the environmental qualification resolutions of each business and those stipulated in the Environmental Decontamination or Prevention Plans, as appropriate, which broadly define total emission limits (daily or annual); and, (iii) national regulations governing air quality in the receptor sites.

This set of regulations is mainly intended to regulate the emissions of Particulate Material (PM), Sulphur Dioxide (SO2), Nitrous Oxides (NOx), and Mercury (Hg). One of the main requirements of Supreme Decree 13/2011 is to have a Continuous Emission Monitoring System (CEMS) in each stack, which is implemented

under a procedure that will ensure the quality of its measurements, which is reviewed and whose validity is certified by the Superintendency of Environment (SMA, for its acronym in Spanish). Each year, the CEMS must additionally re-validated to maintain the validity of the certification of gas measurements, PM and flow. At the end of the year 2017, nine of the thirteen CEMS requiring re-validation have been already approved by resolution, and the others will continue to be under a SMA review process during 2018.

As from 2017, the validity of all the emission limits established in Supreme Decree No. 13/2011 applies to all the plants and consequently all the abatement systems commissioned during 2016 were maintained in operation.

In addition to the continuous control and monitoring of Particulate Matter, Sulfur Dioxide and Nitrogen Oxides emissions, all the thermal power generation units

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Ítem 2013 2014 2015 2016 2017

Gross Generation (MWh) 19,666,566 23,281,054 27,509,833 31,336,018 29,326,113

Annual Emissions

PM (t) 1,215 975 2,259 1,182 975

NOx (t) 7701 7,945 19,953 21,442 17,310

SO2 (t) 17,084 19,187 34,190 19,160 14,862

CO2 (t) NA NA 17,783,641 17,599,494 16,351,025

HG (kg) NA 51.75 65.05 67.24 68.38

Indicators

PM (kg/MWh) 0.062 0.042 0.082 0.038 0.033

NOx (kg/MWh) 0.39 0.34 0.73 0.68 0.59

SO2 (kg/MWh) 0.87 0.82 1.24 0.61 0.51

CO2 (t/MWh) NA NA 0.65 0.56 0.56


using solid fuels record and report to the authorities the emissions of mercury (Hg), according to the regulatory requirements and their own environmental authorizations. Additionally, since January 2014, the businesses using solid fuels report the estimated mercury emissions in AESOnline, considering the amount of fuel used, the percentage content of mercury in fuel, and the efficiency of the abatement equipment contained of their generating units.

Considering that the Particulate Matter emissions resulting from coal combustion represent almost all the PM emissions that we generate, the PM emissions

from the motor vehicle fleet that we use, or the transfer of staff, has not been accounted for.

The main air emissions are shown in Table 9. It should be mentioned here that the CO2 emissions shown in Table 7 differ from those shown in Table 9, since the first are Scope 1 and Scope 2 GHG emissions, while those of Table 9 are exclusively CO2 emissions by stack.

Yearly emission goals are set based on the emissions of the previous year, the gross power generation of the previous year, and the gross power generation estimated for the following year.

Table 9. Progress of Air Emissions - Period 2012 - 2016

Exhibits258

2013 2014 2015 2016 2017

Gross Generation (MWh) 19.666.566 23.281.054 27.509.833 31.336.018 29.326.113

Uso del Agua (m3)

Seawater

Conveyance 1,063,242,953 1,241,287,581 1,533,490,032 1,499,912,234 1,649,470,398

Discharge 1,058,138,214 1,234,960,861 1,523,493,521 1,484,188,247 1,628,822,680

Consumption 5,104,739 6,326,720 9,996,511 14,739,705 20,647,718

Continental Waters

Conveyance

Surface water / Groundwater 9,664,037 10,659,568 8,362,274 9,173,209 8,920,152

Sanitary Drinking Water 414,178 425,577 524,415 699,490 639,914

Discharge 2,919,755 1,973,849 2,552,767 2,872,310 1,096,754

Consumption 7,158,460 9,111,296 6,333,922 7,000,390 8,463,311

Total

Conveyance 1,073,321,168 1,252,372,726 1,542,376,721 1,509,575,827 1,659,030,463

Discharge 1,061,057,969 1,236,934,710 1,526,046,288 1,487,835,733 1,629,919,434

Consumption 12,263,199 15,438,016 16,330,433 21,740,095 29,111,029

Indicator (m3/MWh)

Conveyance 54.6 53.8 56.1 48.2 56.57

Discharge 54.0 53.1 55.5 47.5 55.58

Consumption 0.6 0.7 0.6 0.69 0.99

Table 10. Progress of Water Use Categories, 2012 - 2017 Period

5.2 Water

In AES Gener and affiliates, as part of AES Corporation, during years 2015 to 2017 we participated in the evaluations of the “Carbon Disclosure Project” (CDP) (www.cdproject.net), which poses huge challenges concerning monitoring, control, risk management, and awareness with respect of the water resource.

Water Sources and Uses

We monitor 100% of the water adduced/extracted and used in our premises, using the guidelines of the Global Reporting Initiative (GRI). The information related to water conveyance/extraction, discharge, and consumption is

recorded each month in AES Online, and verified by third parties both at a corporate and local level.

The water that we use in the electric generation processes can be divided by original source. Among them, we can find: seawater, drinking water and continental water (superficial and ground water). Table 10 lists the volumes of water use according to type of source. In the data of extracted water, the flow used in our hydraulic power plants is not considered, since 100% of the water used for generation is returned to its original source, without altering its quality or quantity.



Water Consumption according to Source 2017 (m3) 2017 ( % )

Seawater 20.647718 71%

Water 8,463,311 29%

Continental

Total 29,111,029 100%

Table 11. Water Consumption according to Source, year 2017

Source: Data Verified locally by Deloitte.

1,75%

98,25%

DESTINATION OF CONVEYED WATER:

CONSUMPTION AND DISCHARGE, YEAR 2017.

71%

29%WATER CONSUMPTION ACCORDING TO SOURCE,

YEAR 2017

Discharge Consumption

Continental Water ConsumptionSeawater consumptionTable 10 shows that seawater is the major source of water, given to the coastal location of many of our plants. Table 11 shows this proportion in summary form.

It is also relevant to highlight that 98.2% of the total adducted water is returned to the original source, while the consumption of the resource reaches only 1.8% of the conveyed volume, as shown in Table 12.

Destination of Conveyed Water

Annual Volume (m3)

Annual Volume (%)

Consumption 29,111,029 1.75 %

Discharge 1,629,919,434 98.25%

Total

Conveyance1,659,030,463 100.0%

Table 12. Destination of Conveyed Water: Consumption and Discharge, year 2017.

During year 2017, certain operational improvement initiatives with influence in environmental effects were implemented, some of which made it possible to reduce continental water consumption. Those initiatives or projects are described in section 4.7.

Risks related to Water

The availability of water in amount and quality is essential for the businesses developed by the Company. AES Gener and its affiliates use large quantities of water from different sources in the refrigeration processes of the electric generation plants.

Although most of the water used by the Company comes from the sea, and therefore there is no significant competition with other users of continental fresh water, if no appropriate precautions are taken, the demand of drinking and continental water from the Company can even compete with the use of water allocated to other purposes (human and animal consumption, irrigation, tourism, and ecology). This might have a negative impact on our businesses. Considering population growth, the economic development of populations, and climate change, the future trend is an increased demand of water by other users.

Source: Data Verified locally by Deloitte

Exhibits260

Water use (m3) Water use per MWh (m3/MWh)

Plant Location 2016 2017 2016 2017

Renca and Nueva Renca

Urban Area, Renca, Metropolitan Region 3,445,707 2,735,507 1.6 1.5

VentanasCoastal Area, Ventanas, Puchuncaví, Valparaíso Region

985,494 1,442,871 0.15 0.26

Los Vientos Valle Central, Llay Llay, Valparaíso Region 85,210 51,570 2.6 2.7

CordilleraCordillera Area, San José de Maipo, Metropolitan Region.

4,997 23,086 0.0035 0.0174

Table 13. Plants in Water Stress Areas with Continental Water Consumption

4 http://old.wbcsd.org/work-program/sector-projects/water/global-water-tool.aspx

Consistent with how relevant the availability of water for the Company is, and in accordance with our Environmental Policy that promotes the efficient use of natural resources, AES Gener and its affiliates carefully monitor their water consumption, and organize, at the same time, campaigns and projects intended to reduce water consumption.

The Company uses the WBCSD/WRI Global Water Tool4 to identify the plants located in areas of water scarcity (or “water stress” areas). These are areas where there is an availability of water lower than 1,700 m3/(people per year), which is consistent with the definition of the United Nations, where the following areas are established:

• Water Stress: availability of water below 1,700 m3/(people per year);

• Water Scarcity: availability of water below 1,000 m3/(people per year);

• Absolute Water Scarcity: availability of water below 500 m3/(people*year);

After an analysis of 2017, we observe that 9 of our 16 business units, which were responsible for the production of 72% of the generated energy, are located in water stress areas. Now, if we consider only the business units which, in addition to being located in water stress areas, extract continental fresh water, these are reduced to only 4 business units (i.e., 25% of the businesses), and have contributed 29% of the energy generated during 2017. These 4 business units that are located in water stress areas and use continental fresh water are: Ventanas, Cordillera, Los Vientos, and Central Renca and Nueva Renca plants, and their consumptions, are shown in Table 13.

Source: AES Online data verified locally by Deloitte. The water consumption of Cordillera Plants in 2006 are estimated values, the values of 2017 are measured values.


It should be noted here that water extraction refers to the extraction of surface and ground water, and discharged water is returned in similar condition and quality as the extracted water to the same watercourse.

For 2018, the Company has set an annual goal intended to reduce by 5% the use of water for operations which are located in water stress areas and which use continental water. This will require the implementation of actions to improve the use of this resource.

AES Gener owns the Nueva Tocopilla (formerly Norgener), Cochrane, Angamos, and Guacolda plants located in water stress areas. However, these affiliates use (appropriately treated) seawater for cooling processes, boiler feed, and consumption; therefore, they are not considered in Table 13. Without prejudice of the above, these plants also make permanent efforts to reduce the use of seawater.

The quality of the water used in the boilers and refrigeration systems is of vital importance in our plants. The quality of boiler feed water is essential for the operation of the boiler, and vapor turbine, to avoid early wearing out. Conveyed water is treated with desalination systems (where applicable) and demineralization units

to produce top quality water, as required to meet the demands of boilers and steam turbines.

As important as the above is the quality of discharged water since its parameters can affect the environmental quality of the receiving body. Therefore, the discharge parameters are monitored on a periodical and permanent basis, and such quality is specified in specific environmental authorizations and general regulations, and frequently supervised by the environmental authorities.

Particularly, monitoring over marine ecosystems (called Environmental Monitoring Programs, EMP) are periodical studies both of physical and chemical variables of seawater (water quality) and biotic variables of the marine environment (hydro-biological resources).

The main environmental variables that need follow-up include, without limitation: seawater quality, thermal and saline dispersion plume (temperature, pH, salinity, sulphate, nickel, vanadium, copper, dissolved oxygen), subtidal macrofauna, marine sediments, plankton communities, marine sediments, and intertidal communities.

Today, the businesses with EMP are listed in Table 14.

“Water use” in water stress areas is the water actually used by the plant. “Water use” is “water consumption”, which is equivalent to:

Water Consumption

Drinking Water

Discharged Water

Water Extraction

Exhibits262

Source: requirements contained in current Environmental Qualification Resolutions (RCA, for its acronym in Spanish)

Complex Generating Unit Name of Marine EMP Frequency Execution

Nueva Tocopilla (formerly Norgener) Units 1 and 2 Norgener

Thermoelectric Plant Bi-annually Since 1999

Cochrane Units 1 and 2 Angamos Thermoelectric Plant

Bi-annually and Quarterly Since 2016

Angamos Units 1 and 2 Angamos Thermoelectric Plant


Guacolda

Units 1 and 2Guacolda

Thermoelectric Plant Units 1 and 2


Unit 3Guacolda

Thermoelectric Plant Unit 3

Bi-annually Since 2006

Unit 4Guacolda



Unit 5Guacolda



Ventanas

Units 1 and 2 (Ventanas)

Ventanas Units 1-2 (Ventanas Plant) Bi-annually Since 1994

Ventanas Unit 3 (Nueva Ventanas) Bi-annually Since 2010

Ventanas Unit 3 (Nueva Ventanas) Quarterly Since 2010

Monitoring of waters of Campiche estuary

Nueva Ventanas 3Annually Since 2008

(Nueva Ventanas)

Unit 4 (Campiche)

Ventanas Unit 4 (Campiche Plant) Quarterly Since 2009

Laguna Verde Units 1 and 2 Laguna Verde Plant Bi-annually Since 1995

Table 14. Summary of Marine Environmental Monitoring Programs of AES Gener operations

Moreover, regarding hydroelectric plants, water quality is monitored at 14 sampling points in the superficial

courses and in Santa Lidia Plant water quality sampling is obtained from the surface course involved.


Waste Type 2015 2016 2017

Coal Combustion Products (t) 1,100,650 1,161,007 1,322,074

Reuse of Coal Combustion Products (CCP) (t)

21,175 44,079 29,941

Reuse of CCPs with respect to total CCPs (%)

1.9 % 3.8% 2.3%

5.3 Waste Generation

Given that Coal Combustion Products (CCPs) represent almost all the non-hazardous waste that we generate, we channel our efforts into tracking the quantity of CCPs produced, increasing their reuse, and ensuring a proper final disposition.

We also focus our efforts on tracking of Hazardous Waste in accordance with the current regulations. This information is detailed in Table 15.

The information is reported to the authorities through the authorized platforms (Pollutant Release and Transfer Register, “PRTR”, and Hazardous Waste Declaration and Monitoring System (SIDREP, for its acronym in Spanish)).

Waste Type 2016 2017

Gross Generation (MWh)

31,336,018 29,326,113

Waste generation:

Fly Ash and Gypsum 976,930 1,164,721

Bottom ash 184,077 157,353

Coal combustion products (t)

1,161,007 1,322,074

Coal Combustion Products (t/GWh) 37 45

Hazardous waste (including used oil) (t)

1,679 961

Hazardous waste (including used oil) (t/GWh)

0.054 0.033

Table 15. Annual Generation of Waste Classified according to Type, Year 2017

Source: Data Verified locally by Deloitte. Combustion products reported in 2017 on wet basis

Likewise, we monitor the percentage of Coal Combustion Products that is reused, mainly delivered to other companies to be used as input or raw materials in their processes or businesses. During year 2017, 2.3 % of the Coal Combustion Products were reused, as shown in Table 16, which accounts for more than 40% of the ash produced by Ventanas Unit 2 (the only ash currently reused in another process), thus producing an income of approximately US$ 55,000.

We are evaluating together with cement companies to increase the use of ashes from the other units for the production of cement and other products.

Table 16. Reuse of Coal Combustion Products

Source: Data Verified locally by Deloitte.

During year 2017, the company undertook a number of initiatives to promote the use of fly ash as by-product in other industries. In the regulatory field, AES Gener, to-gether with the Pontificia Universidad Católica de Chile, submitted two proposed technical standards to the Na-tional Standardization Institute (INN, for its acronym in Spanish), which seek to regulate the use of fly ash for the manufacture of concrete and establish a methodology to characterize artificial aggregates manufactured on the basis of fly ash, among others. With respect to practical cases, the Company together with cement production companies made ash application tests in order to increase the knowledge and generate the information needed to move forward in obtaining the applicable permits from both generator and user.

Exhibits264

5.4 Regulatory Compliance

In the context of the GENERA management system, the Company periodically monitors compliance with the applicable environmental regulations, as a mandatory requirement of the international standard ISO 14.001 under which all its businesses are certified, and which require annual audits by the Certification Agencies operating worldwide. This evaluation of compliance with the applicable regulations is carried out from time to time by external legal advisors and internal auditors who report to the managers of each complex so that they develop plans of action. The evaluation is also informed to the Chief Executive Officer and Chief Operations Officer of AES Gener so that they act on the prioritization of the resources necessary to close the gaps according to risk level and complexity.

Moreover, pursuant to the guidelines of our Environmental Standard “Environmental Incidents and Environmental Operating Events”, all the “Environmental Non-Conformance Events” and “Environmental Operating Events”, which include legal sanctions, are monitored in our system AESOnline.

Under this Standard, an “Environmental Non-Conformance Event” (ENE) is an event that does not conform to legally required or expected environmental performance. This standard also establishes and includes the “Environmental Near Misses” as an event, action or condition which could have but did not result in harmful environmental impact or non-conformity.

Moreover, under this Standard, an “Environmental Operating Event” (EOE) is an environmental proceeding (new or ongoing), a need for environmental remediation, a non-compliance with an environmental permit or a lack of environmental permit, or an environmental restoration obligation associated with the end of the useful life of an asset that may potentially affect the financial position of any AES Gener business.

The main aspects regulated by and of interest to the Company are related to air emission (Supreme Decree No. 13/2011) and taxes on air emission of particulate matter, nitrogen oxides, sulfur dioxide and carbon dioxide (Law No. 20780/2014, as regulated by Supreme Decree No. 18/2016), noise (Supreme Decree No. 38/2013), discharges to water bodies (Supreme Decree No. 90/2000), storage of hazardous substances (Supreme Decree No. 43/2016) and waste management (Supreme Decree No. 148/2003), and the Air Prevention and/or Decontamination Plan of the Metropolitan Region, Huasco and the area of Concon-Quintero-Puchuncavi, among other regulations. It is worth mentioning here that with the creation of the Environmental Superintendency (“SMA”, for its acronym in Spanish), and the coming into effect of its supervisory and sanctioning powers in December 2012, the visits and depth of the inspections have increased, both with respect to the Environmental Qualification Resolutions, and the applicable sectorial regulations.

On April 27, 2016, the SMA notified the Company of the initiation of a procedure for the imposition of a sanction

The main aspects regulated by and of interest to the Company are related to air emission and taxes on air emission of particulate matter, nitrogen oxides, sulfur dioxide and carbon dioxide, noise, discharges to water bodies, storage of hazardous substances and waste management, and the Air Prevention and/or Decontamination Plan of the Metropolitan Region, Huasco and the area of Concon-Quintero-Puchuncavi, among other regulations.


against Nueva Tocopilla (formerly Norgener) plant for breach of the maximum temperature differential in the discharge of water to the sea with respect to conveyance, as authorized in the environmental permit. According to current regulations, on May 18, the Company submitted a “Compliance Program” for SMA’s approval, which was obtained on June 22, 2016. This Plan was executed during 20 months with an investment of 3 million dollars, which were already provided for in the investment budget approved for year 2016. During 2017, the committed actions were completed, and in the fourth quarter of the same year the final report of the Compliance Program performance was prepared. This report should be submitted to the SMA early in 2018 and, if the SMA declares that the Program has been successfully implemented, the Administrative Procedure will be completed without sanctions for the Company.

On June 23, 2016, the SMA gave notice of the initiation of a procedure for the imposition of a sanction against the affiliate Angamos due to non-compliance with the discharge of water to the sea (Supreme Decree No. 90/2000), air emissions and certain specific instructions from the SMA regarding emission reporting. According to the current regulations, on July 15, the Company submitted a “Compliance Program” to the SMA, which was approved on August 16, 2016. This program was executed in 10 months and considered an investment of US$114,000. The final report of the program was delivered to the SMA on May 30, 2017, whose adoption was recommended the Narcotics Control Division during the last quarter of the year. It is expected that the relevant Division will declare the successful implementation of the program through a resolution by the first quarter of 2018.

On November 12, 2016, the Company was notified of a lawsuit filed in the Second Environmental Tribunal of Santiago against the Ministry of Environment and eleven companies in the Quintero Bay area, including AES Gener among them, brought by two fishing unions, divers and other trades related to the extraction of sea products, along with 18 individuals from Horcón and Ventanas villages. The plaintiffs claim the full reparation of the environment of Quintero and Ventanas bays as a result of the damage caused by the industrial activity of the companies located in that area. On January 27, 2017, AES Gener filed the answer to the complaint. On July 28, 2017, the court issued a resolution with a detail

of each of the items on which the parties are required to submit documentary, testimonial, expert and any other kind of evidence. This resolution was appealed by several defendants (including AES Gener), which were admitted to the procedure, and referred to the Court of Appeals of Santiago for knowledge and resolution. In December 2017, the Environmental Tribunal ordered the suspension of the procedure, given that the Court of Appeals, before resolving the appeals filed against the resolution that ordered the submission of evidence, found that such resolution was not notified to one of the defendants, and ordered that notice be given to such defendant. To date, the procedure remains suspended pending compliance with notification required; and it is still too early to be able to estimate the possible results of this action, and its possible financial impacts, if any.

5.5 New Relevant Regulations

On March 29, 2016, the Ministry of Health published Supreme Decree No. 43/2016 concerning storage of hazardous substances. This new regulation became applicable as of September 25, 2016 for new storage infrastructure (warehouses, ponds and lime silos), for non-structural improvements of existing facilities (signage and information standards), and for the submission of structural adequacy plans so that the existing facilities are approved by the environmental authority. The regulation grants a two-year term (March 2018) for the implementation of such adequacy plans. The non-structural adjustments have been timely made, and the adjustment plan have also been submitted and they are currently undergoing different stages of approval. During 2016, we invested almost US$ 631,000 in adjustments. In 2017, the investment reached US$ 4.8 million, while about US$ 3.1 million are expected to be required to implement the adjustment plans, amount that has already been incorporated in the budgets.

In July 2016, the Ministry for Environment issued Supreme Decree No. 18/2016, which establishes procedures for the application of the tax levied on emissions of particulate matter, nitrous oxides, sulphur dioxide, and carbon dioxide. This regulation is key to the application of this new tax, which must be paid as from April 2018. To ensure compliance with this standard, AES Gener established methodologies for the quantification of emissions from all its thermal power plants, which were approved by the environmental authority, and have been fully implemented since January 2017.

Exhibits266

On August 30, 2017, Decree 38/2016, Air Pollution Prevention Plan, for Huasco and surroundings, was published and became effective. This Plan is applicable to Guacolda Thermoelectric Plant and establishes new requirements for particulate matter emission control, including among the main ones:

• Emission cap of 30 mg/n3N for each stack, and a yearly emission cap for the establishment of 730 tn/year;

• Emission control measures in coal transport (complete closure of belts and transfers);

• Paving of road to ash landfill; and

• Sweep, withdrawal or eventual aspiration of PM falling as a result of handling and transport of materials.

Guacolda Thermoelectric Plant meets the emission caps, which will be demanded from January 1, 2018. With regard to the rest of the measures, their implementation will be defined and detailed in a “Comprehensive Control Plan” regarding of non-combustion emissions. This Plan will be submitted to the SEREMI of Environment within six months from the coming into effect of the Plan, i.e. before February 28, 2018.

On November 24, 2017, Decree 31/2016, Air Pollution Prevention and Decontamination Plan, for the Metropolitan Region, was published and became effective. This plan is applicable to sources, establishments and activities emitting Breathable Fine Particulate Matter (PM10), Breathable Fine Particulate Matter (PM2.5), Ozone (O3) and Carbon Monoxide (CO), located in the Metropolitan Region; therefore, it is applicable to Renca and Nueva Renca Plants owned by Eléctrica Santiago. It further establishes the emission control measures to comply with all applicable regulations governing air quality in 10 years, whose major requirements are:


• Emission cap for stationary sources of MP, SO2, CO and NOx, applicable to boilers and combustion processes.

• 30% reduction in emissions of particulate matter for large industrial establishments.

• Projects or activities entering the Environment Impact Assessment System will offset 120% of their total annual emissions.

Eléctrica Santiago complies with the emission caps established in the Air Pollution Prevention and Decontamination Plan for the Metropolitan Region. With respect to the measure to reduce 30% of particulate matter emissions, we are evaluating offset alternatives to be submitted during the 2018 for the approval of the Ministry of Environment.

During 2017, the Ministry of Environment worked on the Decontamination Plan of the area of Concon-Quintero-Puchuncaví. This plan was publicly disclosed and was subject to formal public participation procedures through a Citizen Participation mechanism where the Company has actively participated. As of year-end, December 26, 2017, the General Comptroller of the Republic failed to review the legality and constitutionality (“Toma de Razón”) of the decontamination plan submitted by the Ministry of Environment. This means a setback for the Ministry since it will be required to submit another preliminary draft of the plan.

In the areas of Huasco and Quintero – Puchuncaví, Environmental and Social Recovery Councils (CRAS, for its acronym in Spanish) were created in order to develop Environmental and Social Recovery Programs (PRAS, for its acronym in Spanish). The affiliate Guacolda has participated directly in the CRAS of Huasco area. Moreover, we have participated through ASIVA (Association of Region V Companies) in the CRAS of Quintero – Puchuncaví area. The Huasco PRAS was approved by the Ministry of Environment on December 1, 2017. Its main challenges are to improve air quality,

ensure the availability of water for Corporate Purposes, improve the supply of water for economic uses; and advance in the management of the environmental information. The Quintero - Puchuncaví PRAS was approved by the Ministry of Environment on July 10, 2017. Its main challenges are to have a good air quality for the health of people, ensure the availability of fresh water for human consumption, ecosystems and agriculture; and give specific legal protection to sites of high ecological value; for example, with respect to the last challenge, we are actively collaborating in the activities to recover the Petras forest.

AES Gener and affiliates, within the framework of the Environment, Safety, Occupational Health, and Quality Policy, take on the commitment to caring for the environment, ensuring faithful compliance with the national regulatory framework, AES Corporation standards, and the voluntary commitments made.

New increasingly demanding environmental regulations are continuously under development, this being an event that can modify the oper - ations and/or require additional investments for compliance purposes.

Exhibits268

5.6 Biodiversity Protection

AES Gener and its affiliates are aware that their own operations and projects under construction may adversely affect biodiversity if no appropriate precautions are taken, and they are also aware of the fact that preserving biodiversity is a key aspect to attain their sustainability goal. For this reason, it is vital to be informed of the interactions between the different production processes and the environment, so that we can assess the impacts on biodiversity and establish the measures that will mitigate, repair, or compensate any possible adverse effects. The implemented measures are monitored in order to assess whether the proposed goals are being achieved.

This way, our involvement in the selected group of companies that make up the Dow Jones Sustainability Index - Chile (DJSI - Chile) helps us to be aware of the competitive advantage represented by the protection of biodiversity in issues such as the access to financing sources, and the impact that the loss of a social license to operate as a result of an adverse impact on biodiversity would have on our operations and cash flows.

Biodiversity is considered as one of the relevant aspects in our Environmental Management System. Each year, during the review of the matrices of Environmental Aspects and Impacts, the analysis of possible impacts on biodiversity is included. Our Environmental Standard, called “Biodiversity Evaluation and Protection” also includes the requirement to provide, each year before April 15, information about biodiversity, including interventions made during the previous year near sensitive or protected areas, identification of protected species and their habitats, and biodiversity protection indicators.

Consistent with the current regulations and our own standards, the relevant biodiversity and baseline studies were conducted, and the risks related to biodiversity were established in all the businesses of AES Gener and its affiliates, including sites in operation and under construction.

We have found biodiversity risks in 5 of our 16 existing businesses; therefore, it has been set forth that the relevant biodiversity management plans will be developed by each of them. These businesses are: Angamos, Cochrane, Ventanas, AES Chivor and Alto Maipo (currently under construction). To date, such Biodiversity Management Plans have been fully implemented and are being currently executed.

The review by Environmental Authorities (Environmental Evaluation Service and Services with Environmental Authorities) of the Biodiversity Studies contained in the environmental studies of the projects (including changes and extensions), as well as the fact that the process is open to the public in general, including stakeholders, allows us to affirm that biodiversity management (including risk assessment, impact assessment, and management and monitoring plans) undergoes a due process of quality assurance.

The responsibility for the monitoring of Biodiversity Management Plans, as far as businesses in operation are concerned, falls on the Manager of the Complex, who receives the advice of the Environmental Management Head of the Complex. As regards Alto Maipo Project, the responsibility falls on the Project Manager, who receives the advice of the Environment Manager.

Compensation measures for impacts on biodiversity include, without limitation, environmental education campaigns for external and internal workers, and the community, vegetation enrichment in areas where recovery of biodiversity is possible, reforestation plants, raising of native species in nurseries, and support to the protection of certain species (for instance, the support to the Foundation for the Sustainability of the Gaviotín Chico (sterna lorata)”).


5 http://www.fundaciongaviotinchico.cl/w/wp-content/uploads/2017/06/Estudios-de-Distribucion-y-Poblaciona-les-del-Gaviotin-Chico-Informe-Final-2016.pdf

6 http://www.fundaciongaviotinchico.cl/ 7 http://ciencias.bogota.unal.edu.co/fileadmin/content/icn/publicaciones/guiasdecampo/Ebook_Aves_de_Santa_Maria.pdf

The “Foundation for the Sustainability of the Gaviotín Chico” is a public-private initiative whose purpose is to contribute to the protection of this endangered species, which is mostly present in the industrial area of Mejillones. The Foundation works for the preservation of the gaviotín through the development of research capacities, generation of new knowledge with respect to the specie, and the implementation of technical measures intended to protect it.

During the first few days of January 2017, the “Foundation for the Sustainability of the Gaviotín Chico”6, whose members are Eléctrica Angamos and Eléctrica Cochrane, informed that it obtained the issuance of Exempted Resolution No. E-25127 dated December 19, 2016, from the SEREMI of National Assets. This resolution grants a “Concession for the Free Use of State Real Property”, which refers to “Pampa 1” site. This administrative act constitutes an important milestone, since it is the second protected nesting area of the gaviotín chico in Chile, in addition to the “Pampa 2” site, which was received last year through Exempted Resolution No. E-15042 dated October 18, 2016.

In 2017, AES Gener continued to voluntarily develop projects for the improvement of the biodiversity in the communities surrounding its operations. Among these, we can mention “El Pangue Eco-Corridor”. The purpose of this project is to foster individuals mobility through a biological corridor, and to protect genetic material of native fauna and flora in the different natural habitat fragments, as well as to offer a space where certain research and environmental education actions can be developed with activities including bird watching, and botanical research, among others. The project included the planting of about 40,000

individuals of 17 native species of trees and shrubs on 55 hectares, harvesting and planting of bulbs and seeds as food for wildlife, construction of stone walls to improve the habitat of small size fauna (lizards, mice, and marsupials), development of an educational path, construction of a viewpoint, construction of intersections, and design of a plan for the development of the Eco-corridor.

In July 2016, our affiliate AES Chivor, whose hydroelectric power plant is located in the Municipality of Santa María, Department of Boyacá, Colombia, published book No. 16 of the series “Guías de Campo del Instituto de Ciencias Naturales”, under an institutional alliance with the National University of Colombia. This time the subject was “Birds of Santa María” The book was published in electronic form and 500 printed copies were distributed. 7

In 2017, we extended the agreement executed with Instituto de Ciencias Naturales from Universidad Nacional de Colombia to develop a new field guide on local biodiversity entitled “Forest Species of Santa María”. Currently in process. We also printed two additional field guides which were previously prepared and had high impact in the community, in particular the guides of butterflies and angiosperms. Five hundred copies of each guide were printed. Finally, the guide of butterflies of Santa María was published in digital format.

Moreover, to comply with the renewal of the water concession in La Esmeralda reservoir, we purchased 122 hectares of land in protected areas of the reservoir contributor basin. The purchase agreement set forth the assignment of the ownership to the three municipalities for the specific purpose of protecting the environment.

Exhibits270

5.7 Environmental Investment and Innovation.

During year 2017, the environmental investment and innovation projects covered virtually all the areas related to our main environmental impacts.

On the one hand, with the commissioning of the new Particulate Matter and Sulfur Dioxide abatement systems of units 1, 2 and 4 of Guacolda Plant, and a Nitrous Oxides abatement equipment based on Selective Catalytic Reduction (SCR) in Unit 1 of Guacolda Plant, we completed the cycle of investments in air emission abatement equipment, which started in 2012 to comply with the requirements of Supreme Decree No. 13/2011. This way, in 2017 we complete a cycle of investments in environmental improvements related to air emissions that amounted to more than the US$ 472.8 million.

In a new sign of our commitment to the community of Huasco and as active participant in the Environmental and Social Recovery Councils (CRAS, for its acronym in Spanish), Guacolda announced the that petcoke will no longer be used as fuel in our operations. In June 2017, Guacolda Energía obtained the environmental approval of the “Elimination of the Use of Petcoke in Guacolda Plant and Adjustment in the Electricity Generation Capacity” Project, under Environmental Qualification Resolution (RCA, for its acronym in Spanish) No. 80/2017. This project declares the commitment to eliminate definitively petcoke from fuel matrix of the Plant and also approves a 24 MW increase in power generation. The RCA considers a gradual withdrawal of petcoke within a period of 6 months, which was completed in early November 2017.

AES Gener has always been ready to join actions to ensure transparency in the operation method used by our plants from the environmental and operational

point of view, such as the voluntary initiative driven by the Superintendency of Environment (SMA, for its acronym in Spanish) during 2017. This initiative is aimed at creating a mechanism that would allow the authority to access QA/QC information from the continuous stack emission monitoring equipment in order to check whether the measurements reported from this equipment are reliable. The company developed a module for the SMA within the platform that manages the operation of the CEMS.

Regarding dangerous substances management, in 2017 we invested about US$ 85 million in the improvement of storage facilities and tanks so that they reach the level required by Supreme Decree No. 43/2016, as detailed in section 4.5.

Also worthy of mention are the “minor” projects implemented during the period 2016-2017, which were related to the use of water and biodiversity, and that in addition to reducing the environmental impact of the Company, have resulted in a reduction of costs, an increase in revenues, increased productivity and/or a reduction of environmental impacts:

• Reduction in the use of water in Alfalfal plant: a team of professionals of Alfalfal, motivated by the fact that the plant is located in a water stress area, verified that there is no substantial difference between water consumption at the plant during working days, when there are 120 users of water, and water consumption during weekend days, when there are 15 users of water. This led them to think that there were losses that they needed to address in the irrigation network, drinking water network, drinking water pond, or

8 http://www.sma.gob.cl/index.php/noticias/comunicados/914-sma-lanza-sistema-de-monitoreo-online-pa-ra-centrales-termoelectricas


Figure 8. Signage of the campaign "Imagine a day without water."

sanitary appliances. In addition, based on the number of users, and the surface to be irrigated, they estimated (using standard factors) that consumption should be around 31 m3/day, and that the existing consumption was close to 64 m3/day. Therefore, they implemented a project

to reduce water consumption based on three dimensions: awareness in the use of the resource (“imagine a day without water” and “live your native garden”), improvements in the network of drinking water, and repair of leaks and installation of low consumption appliances.

Exhibits272 Exhibitsb227722


Figure 9. Reforestation with native species.

The project “Live your native garden” considered in 2016 the reforesting of green areas of the plant with native species, which require a lower consumption of water. Three hundred and fifty-six specimens of native trees were planted by volunteers of the Plant. We currently maintain the “Vive tu jardín nativo” project, whereby the maintenance of native species is considered.

To date, water consumption at Alfalfal plant was reduced from 64 m3/day to 42 m3/day, i.e. the reduction was approximately 8,000 m3 per year, the equivalent to the water contained in approximately 250 regular size swimming pools, and an energy saving in pumping of 9.8 kWh, equivalent to the consumption of 980 10W LED bulbs.

• Maintenance Works in the community infrastructure: we conducted various works for maintenance of roads and pedestrian bridges over the area of influence of the Company, in order to improve mobility of the community, in particular in the contour of La Esmeralda Reservoir (Chivor).

• Environmental Education Initiatives: During 2017, we provided support to four educational establishments in addition to those supported in 2016, three from Tocopilla (where two kindergartens are included for the first time) and one of Mejillones, to obtain the environmental certification delivered by the Regional Ministerial Environmental Secretary (Seremi, for its acronym in Spanish) of the Region of Antofagasta. In 2018 we will continue supporting these establishments to obtain and/or achieve the “Excellence” degree.

Exhibits274 ExhiE bitsbits274

Annex 2

History of Related Companies as at December 31, 2017


Regular Directors Alternate Directors

Javier Giorgio Javier Dib

Luis Carlos Valenzuela Alberto Zavala

Roberto Junguito Tish Mendoza

Ricardo Falú Arminio Borjas

Italo Freitas AnnMarie Reynolds

AES CHIVOR & CIA SCA ESP

IdentificationLegal natureMembers of the Board of DirectorsForeign Partnership Limited by SharesAddress: Av. Calle 100 N° 19-54, Piso 9, Bogotá, ColombiaPhone: (57) (1) 4079555Fax: (57) (1) 6427311

Corporate PurposeGeneration and commercialization of electric power. Provision of equipment maintenance and repair services in generation or similar plants.

Capital and SharesPaid-in capitalCOP$ 233,736,958,964

N° of Subscribed and Paid Shares222,818,836

Interest99,99% indirectly through NorgenerForeign Investment SpA(222,769,668) and AES Gener S.A. (1 share)

Chief Executive OfficerFederico Echavarría

Staff*Technical and Administrative Staff: 62 Professionals: 50Executives: 1

Members of the Board of Directors

AES CHIVOR S.A. (MANAGING PARTNER OF AES CHIVOR & CIA SCA E.S.P.)

IdentificationLegal natureCorporation (Foreign) Address: Av. Calle 100 Nº 19-54 Piso 9, Bogotá, ColombiaPhone: (57) (1) 4079555Fax: (57) (1) 6427311

Corporate PurposeSuscripción, adquisición, enajenación o inversión en tí-tulos de valores, en acciones, en bonos convertibles en acciones y todo tipo de valores de renta fija; inversión en otras sociedades; inversión en toda clase de bienes para el cumplimiento de su objeto; participación como socio de otras entidades, o aporte de capitales, adquisición o tenencia de acciones y obligaciones de otras compañías. Se excluye la posibilidad de avalar y garantizar obligaciones de terceros y de sus propios accionistas.

Exhibits276

Capital and SharesCapital pagadoUS$57,554 (Col$120,000,000)

N° of Subscribed and Paid Shares120,000

Interest99-38% directly and indirectly through Norgener Foreign Investment SpA. and Sociedad Eléctrica Santiago SpA.

ALTO MAIPO SPA

IdentificationLegal nature: Stock Corporation Tax identification (RUT) number: 76,170,761-2Address: Rosario Norte N° 532, Piso 19, Las Condes, Santiago de Chile Phone: (56) (2) 26868900Fax: (56) (2) 26868990

Corporate PurposeGeneration, transmission, purchase, sale and distribution of electric energy and power anywhere in the country or abroad; execution and exploitation of civil, hydraulic or other infrastructure works; investment in all kinds of movable property and real estate; participation in all kinds of public tenders and bids, whether public or private; provision of integral consultancy services.

Capital and SharesPaid-in capital US$544,409,929.35 N° of Subscribed and Paid Shares76,219,826 subscribed and paid shares; 134,575 subs-cribed and pending payment shares

Interest93,3% indirectly through Norgener Renovables SpA

ChairmanRicardo Roizen Gottlieb (10)

Directors

Ricardo Roizen (10) Luis Knaak Quezada (6) Javier Dib (12)

Chief Executive OfficerLuis Knaak Quezada (6)

StaffTechnical and Administrative Staff: 16 Professionals: 90

ANDES SOLAR SPA.

IdentificationLegal nature: Stock Corporation Tax identification (RUT) number: 76,579,067-0Address: Rosario Norte N° 532 Piso 19 Las Condes, Santiago de Chile Phone: (56) (2) 26868900Fax: (56) (2) 26868990

Corporate PurposeElectric power generation; supply, transmission, assembly and exploitation of electric power equipment and plants, whether owned or otherwise exploited by the Company; construction, installation and exploitation of electric power generation equipment and plants, whether ow-ned or otherwise exploited by the Company; purchase, sale, import, export, processing, production, marketing and distribution to all kinds of services, goods or inputs related to the energy business, and investments in re-lation to them; provision of all kinds of energy services; to make and develop all kinds of investments relating to all types of property, movable or immovable, tangible or intangible, including their exploitation, commercialization and administration, related to electric power generation;


create and participate in other companies, whether they be subsidiaries or affiliate, of any kind and nature whose purpose is related to electric power generation.

Capital and SharesPaid-in capital US$21,629,313.12


Interest100% indirectly through Norgener Renovables SpA

Managing DirectorNorgener Renovables SpA.

Chief Executive OfficerJavier Giorgio (1)

COMPAÑÍA TRANSMISORA DEL NORTE GRANDE SPA.

IdentificationLegal nature: Stock Corporation Tax identification (RUT) number: 76,680,107-2Address: Rosario Norte N° 532 Piso 19 Las Condes, Santiago de Chile Phone: (56) (2) 26868900Fax: (56) (2) 26868990

Corporate PurposeManage, develop and exploit all kinds of electricity transport or transmission systems, on its own behalf or on behalf of third parties, either owned by the Com-pany or third parties; being able to such effects to get, acquire and enjoy the relevant concessions and permits and to exercise all the rights and granted to electricity companies by the current laws.

Capital and SharesSubscribed capital US$72,184,657.02 Paid capital US$71,430,031.77

N° of Subscribed and Paid SharesSubscribe: 72,184,657;Paid: 71,430,032

Interest100% indirectly through Norgener Renovables SpA

Managing DirectorNorgener Ronovables SpA.


EMPRESA ELÉCTRICA ANGAMOS S.A.

IdentificationLegal nature: Closed Corporation Tax identification (RUT) number: 76,004,976-KAddress: Rosario Norte N° 532, Piso 19, Las Condes, Santiago de Chile Phone: (56) (2) 26868900Fax: (56) (2) 26868990

Corporate PurposeGeneration, purchase, sale and distribution of electric or any other kind of energy, in any area of the country or abroad; extraction, distribution, commercialization and exploitation in any form, of solid, liquid and gaseous fuels; sale and provision maintenance and harbor en-gineering services; rental, construction or acquisition and exploitation of docks or ports, and performance of any other productive and commercial activities related or complementary to the businesses mentioned above.

Capital and SharesPaid-in capitalUS$ 326,869,538.99

N° of Issued and Paid Shares22,150,749,834

Interest100% directly and indirectly through Inversiones Nueva Ventanas SpA.

Exhibits278

ChairmanRicardo Falú (2)

DirectorsRicardo Falú (2)Javier Giorgio (1)Luis Knaak Quezada (6)



EMPRESA ELÉCTRICA CAMPICHE S.A.

IdentificationLegal nature: Closed Corporation Tax identification (RUT) number: 76,008,306-2Address: Rosario Norte 532 piso 19 Las Condes, Santiago de Chile Phone: (56) (2) 26868900

Corporate PurposeGeneration, purchase, sale and distribution of electric or any other kind of energy, in any area of the country or abroad; extraction, distribution, commercialization and exploitation in any form, of solid, liquid and gaseous fuels; sale and provision maintenance and harbor engineering services; rental, construction or acquisition and any kind of exploitation of docks or ports, and performance of any other productive and commercial activities related or complementary to the businesses mentioned above.

Capital and SharesPaid-in capital US$8,669,066

N° of Issued and Paid Shares522,974,841

Interest100% directly and indirectly through Inversiones Nueva Ventanas SpA.

ChairmanRicardo Manuel Falú (2)

DirectorsRicardo Falú(2)Javier Giorgio (1)Osvaldo Ledezma (4)


EMPRESA ELÉCTRICA COCHRANE SPA

IdentificationLegal nature: Stock Corporation Tax identification (RUT) number: 76,085,254-6Address: Rosario Norte N° 532, Piso 19, Las Condes, Santiago de Chile Phone: (56) (2) 26868900

Corporate PurposeLa generación, transmisión, compra, venta y distribución de energía eléctrica o de cualquier otra naturaleza, en cualquier zona del país o en el extranjero; la extracción, distribución, comercialización y explotación, de cualquier forma, de combustibles sólidos, líquidos y gaseosos; la venta y prestación de servicios de ingeniería de mantenimiento y maestranza; el arrendamiento, construcción o adquisición de muelles o puertos y su explotación, en cualquier forma que fuere, y la realización de todas aquellas otras actividades productivas y comerciales anexas o complementarias de los giros recién mencionados.


Capital and SharesPaid capital US$ 268,413,746.-

N° of Subscribed and Paid Shares436,163,745 subscribed and paid shares; 6,700,000 pending payment shares

Interest60% indirectly through Inversiones Nueva Ventanas SpA.

ChairmanRicardo Falú(2)

Chief Executive OfficerJavier Dib (12)



Javier Giorgio(1) Alberto Zavala Cavada(7)

Ricardo Manuel Falú(2) Javier Dib(12)

Rodrigo Saez(11) Juan Ricardo Inostroza

Yuji Okafuji Yasuo Ohashi

Tadashi Omatoi Kentaro Ichino

EMPRESA ELÉCTRICA VENTANAS S.A.

IdentificationLegal nature: Closed Corporation Tax identification (RUT) number: 96,814,370-0Address: Rosario Norte N° 532, Piso 19, Las Condes, Santiago de Chile Phone: (56) (2) 26868900

Corporate PurposeGeneration, transmission, purchase, sale and distribution of electric or any other kind of energy, in any area of the country or abroad; extraction, distribution, commercia-lization and exploitation in any form of solid, liquid and gaseous fuels; the sale and provision of engineering, maintenance and harbor services; leasing, construction or acquisition and any kind of exploitation of docks or ports, and performance of productive and commercial activities related or complementary to the businesses mentioned above.


N° of Subscribed and Paid Shares39,719,916,310

Interest100% directly and indirectly through Inversiones Nueva Ventanas S.A.


DirectorsJavier Giorgio (1)Luis Knaak Quezada (6)Ricardo Falú (2)


Exhibits280

ENERGEN S.A.

IdentificationLegal nature: CorporationAddress: Carlos Pellegrini 1023, 9° piso, C1009ABU Ciudad Autónoma de Buenos Aires,Argentine Republic Phone: (54 11) 4000-2300

Corporate PurposePurchase and wholesale of electric power produced by third parties and to be consumed by third parties; import, export, consignment, brokerage and marketing of electric power in Argentina and/or abroad; any type of procedure and/or activity related to the generation, transport and distribution of electric power; marketing of any kind of fuel.

Capital and SharesPaid capital AR$ 114,450.-

N° of Issued and Paid Shares114,450

Interest94% directly and 6% indirectly through Gener Argentina S.A.

ChairmanMartín Genesio

Regular DirectorsJavier GiorgioEmiliano Chaparro

Alternate DirectorsMario BassoGuillermo PaponiIván Diego Durontó

Chief Executive OfficerMartín Genesio

GASODUCTO GASANDES S.A

IdentificationLegal nature: Closed Corporation Tax identification (RUT) number: 96,721,360-8Address: Avenida Chena 11650, Parque Industrial Puerta Sur San Bernardo, Santiago de ChilePhone: (56) (2) 23665960Fax: (56) (2) 23665074

Corporate PurposeThe purpose of the company is to provide natural gas transportation services and to make investments in everything related to the industry of natural gas services in Chile or abroad, either on its own behalf or associated with or on behalf of third parties, being able to request any relevant concessions and permits as may be required for these purposes. The Company can participate in all sorts of businesses or activities directly or indirectly related to its corporate purpose, including, without limitation, establishment, operation, exploitation, management and use of gas facilities or transportation networks, separation and processing of natural gas liquids, engineering necessary for pipes or pipelines, and technical assistance related to them, provision of tube and pipeline construction services, and in general all the services or activities related to the transport, marketing, storage or processing of gas.

Capital and Shares - Issued CapitalMUS$11,914


ChairmanHugo Antranik Eurkirian


GASODUCTO GASANDES ARGENTINA S.A.

IdentificationLegal nature: Corporation (Foreign) Address: Bonpland 1745, Ciudad Autónoma de Buenos Aires Phone: (5411) 4849 6100Fax: (54 11) 4849 6130

Corporate PurposeNatural gas transportation

Capital and SharesPaid capital AR$83,467,000 (MUS$ 19,393)


Interest 13%


Hugo Antranik Eurkirian Néstor Raffaeli

Luis Santos Fernand Ketchian

Matías Brea José Rolandi

Emilio Daneri Juan Pablo Freijo

Pablo Sobarzo Mierzo

Jorge Beytía Moure Carmen Paz Talma

Klaus Lührmann Poblete Luis Arancibia Yametti

Luis Sarrás Martín Genesio

Gabriel María Wilkinson Gonzalo Romero Arrau

Class A Regular Directors Class A Alternate Directors

Eduardo Hugo Antranik Luis Alberto Santos Pablo Sobarzo Mierzo Jorge Beytía Moure

Nestor Ruben Raffaeli Fernando Ketchian

VACANT Carmen Paz Talma

Class B Regular Directors Class B Alternate Directors

Martín Genesio Emiliano Chaparro

Class C Regular Directors Class C Alternate Directors

Klaus Lührmann Poblete Luis Arancibia Yametti

Class D Regular Directors Class D Alternate Directors

Emilio José Daneri Juan Pablo Freijo

Matías María Brea José Rolandi

Class E Regular Directors Class E Alternate Directors

Gabriel Enrique María Wilkinson

Gonzalo Romero Arrau

MEMBERS OF THE BOARD OF GASODUCTO GASANDES (ARGENTINA)

GENER ARGENTINA S.A.

IdentificationLegal nature: Corporation Address: Carlos Pellegrini 1023, 9° piso, C1009ABU Autónoma de Buenos Aires, República Argentina Phone: (5411) 4000-2300

Exhibits282

Corporate PurposePerformance of financial and investment operations on its own behalf or on behalf of third parties, including granting or receiving short-term or long-term loans with or without collateral, capital contributions to an individual or other companies incorporated or to be incorporated to finance operations already performed or to be performed, purchase and sale of all kinds of shares, debentures, bonds, securities and credit papers in any of the systems or modalities created or to be created. Except for any transactions covered by the Financial Institutions Law and any other transactions requiring competitive bidding. b) To participate, either directly or through other controlled or related companies, in the bidding of stock packages of companies whose assets are hydroelectric o thermal plants not yet privatized by the Argentine Government or in the development of other projects of the electricity sector in Argentina.

Capital and SharesPaid-in capitalAR$544,443,672 (US$ 224,928,640)


Interest92.05% directly and 7.95% indirectly through Norgener SpA


Regular DirectorsJavier Giorgio (1)Emiliano Chaparro


Gerente GeneralMartín Genesio

GUACOLDA ENERGÍA S.A.

IdentificationLegal nature: Closed Corporation Tax identification (RUT) number: 96,635,700-2Address: Rosario Norte N° 532, Piso 19, Las Condes, Santiago de Chile Phone: (56) (2) 26868900Fax: (56) (2) 26868990

Corporate PurposeTo exploit the generation, transmission, purchase, distribution and sale of electric or any other kind of energy; purchase, extraction, exploitation, processing, distribution, marketing and sale of solid, liquid and gaseous fuels; sale and provision of project engineering, maintenance and harbor services; provision of port and pier services; to obtain, transfer, purchase, lease, levy and exploit any kind of concessions, as mentioned in the General Law of Electric Services, maritime concessions and water exploitation rights of any nature; invest in movable and real property, as specifically pointed out in the investment and financing policy approved each year by the Shareholders’ Meeting; organize, create and/or acquire shares or interest in companies of any nature, whether they be subsidiaries, affiliates or otherwise, whose purposes are related to energy in any of its forms, the supply of public services, or whose main input is the electric power, or consistent with any of the activities mentioned above.

Capital and SharesPaid capital US$901,340,017 thousand

N° of Issued and Paid Shares217,691,230

Interest50.01%



Interest13% directly and 87% indirectly through Gener Argentina S.A.


Regular DirectorsJavier Giorgio (1)Emiliano Chaparro



INVERSIONES NUEVA VENTANAS SPA.

IdentificationNaturaleza jurídica: Sociedad por AccionesRUT: 76.803.700Dirección: Rosario Norte N° 532, Piso 19Las Condes, Santiago de ChileTeléfono: (56 2) 26868900Fax: (56 2) 26868990

Corporate PurposeInvestment in all kinds of movable or real property; investment in all kinds of intangible property, in particular purchase and sale of bonds, securities and all kinds of commercial papers, shares and rights in national or foreign companies, and in urban and country estate, including their management, exploitation, and collection of proceeds therefrom; participation in the creation of companies of any kind and incorporation into existing companies; participation in all kinds of bids, privatizations, tenders and proposals, whether public or private; provision of counseling services; any other act, contract, business and management as agreed by the shareholders.


INTERANDES S.A.

IdentificationLegal nature: CorporationAddress: Carlos Pellegrini 1023, 9° piso, C1009ABU Autónoma de Buenos Aires, República Argentina Phone: (54 11) 4000-2300

Corporate PurposeTo perform, on its own behalf or on behalf of third parties, the following activities in Argentina or abroad: Construc-tion, operation and/or maintenance of electric power transmission lines and systems in any voltage; provision of electric power transmission services in any voltage, either within the limits of the Republic of Argentina and/or through its borders by means of transmission lines and/or systems linking its points of consumption, generation and/or other electric energy transmission systems in the Republic of Argentina with other countries, and vice versa, for electric power import and/or export purposes. Production, marketing, export and import of electric power.

Capital and SharesPaid-in capitalAR$ 135,365,996 (US$ 55,876,946.)



Javier Giorgio (1) Alberto Zavala Cavada(7)

Ricardo Manuel Falú (2) Javier Dib (12)

Mariana Soto (13) Juan Ricardo Inostroza

Jonathan Bram Patricio Chico

Thomas Frazier Robert Callahan

Randall Robertson William Gutterman

Exhibits284



Interest100% directly and indirectly through Norgener Inversiones SpA

Managing DirectorNorgener Inversiones SpA


NORGENER INVERSIONES SPA.


Corporate PurposeInvestment in companies engaged in the generation, transmission, purchase, sale and distribution of electric or any other kind of power, in any area of the country; delivery of funding to third parties by means of credit operations or through other acts or contracts having the same purpose; all other acts, contracts, businesses and procedures related to the previous purposes, as agreed by the shareholders.

Capital and SharesSubscribed and Issued Capital US$170,835,497.05


Interest100% directly

Managing DirectorAES Gener S.A.


NORGENER FOREIGN INVESTMENT SPA


Corporate PurposeInvestment in companies engaged in the generation, purchase, sale and distribution of electric or any other kind of energy, mainly abroad or in any area of the country; generation, purchase, sale and distribution of electric or any other kind of energy, mainly abroad or in any area of the country; extraction, distribution, commercialization and exploitation, in any form, of liquid and gaseous fuels; sale and provision maintenance and harbor engineering services; rental, construction or acquisition and any kind of exploitation of docks or ports, and performance of any other productive and commercial activities related or complementary to the businesses mentioned above.

Capital and SharesPaid capital US$107.365.085,34






NORGENER RENOVABLES SPA.


Corporate PurposeInvestment in companies engaged in the generation, transmission, purchase, sale, distribution of and consultancy in anything related to renewable sources of energy (whether conventional or not); generation, transmission purchase, sale and distribution of electric or any other kind of energy, in any area of the country; provision of funding to third parties by means of a credit operations or through other acts or contracts having the same purpose; any other act, contract, business or process related to the previous purposes, as agreed by the shareholders.

Capital and SharesPaid capital US$114,199,703.63





SOCIEDAD ELÉCTRICA SANTIAGO SPA.

IdentificationLegal nature: Stock Corporation Tax identification (RUT) number: 96,717,620-6Address: Jorge Hirmas 2964, Renca, Santiago de Chile Phone: (56) (2) 6804760Fax: (56) (2) 6804743

Corporate PurposeTo exploit the generation, transmission, purchase, distribution and sale of electric or any other kind of energy; purchase, extract, process, distribute, commercialize and sell solid, liquid and gaseous fuels; sell and provide engineering services for projects, maintenance and harbor, and operation, exploitation and management of electric power plants; to obtain, transfer, purchase, lease, levy and exploit any kind of concessions, as mentioned in the General Law of Electric Services; invest in personal or real properties; and organize and create companies of any nature.

Capital and SharesPaid capital US$250,992,169.37


Interest100% directly and indirectly through Norgener Foreign Investment SpA

Exhibits286




TERMOANDES S.A.

IdentificationLegal nature: CorporationAddress: Carlos Pellegrini 1023, 9° piso, C1009ABU Ciudad Autónoma de Buenos Aires, C1022AAR, República ArgentinaPhone (54 11) 4000-2300

Corporate PurposeProduction, marketing, export and import of electric power. Construction, operation and/or maintenance of low/high voltage electric power transmission lines and systems; provision of low/high voltage electric power transmission services, either within the limits of the Republic of Argentina and/or through its borders by means of transmission lines and/or systems linking its points of consumption, generation and/or other electric energy transmission systems in the Republic of Argentina with other countries, and vice versa, for electric power import and/or export purposes.

Capital and SharesPaid-in capitalAR$ 581,869,516 (US$ 299,833,447.)


Interest8.82% directly and 91.18% indirectly through Gener Argentina S.A.


Regular DirectorsJavier Giorgio(1)Emiliano Chaparro

Alternate DirectorsMario Basso Guillermo PaponiIván Diego Durontó


Staff*Technical and Administrative Staff: 27 Professionals: 29

The business relationship of AES Gener S.A. with its related companies is regulated by valid contracts. The executives of AES Gener S.A. do not receive any compen-sations for their duties as directors of related companies.

With regard to affiliates whose capital is expressed in a foreign currency other than United States dollars, the information provided in this section is in United States, using the exchange rate in effect as at December 31, 2017.

(1) Chief Executive Officer of AES Gener S.A.

(2) Chief Financial Officer of AES Gener S.A.

(3) Alternate Director of AES Gener S.A.


(4) Environment Manager of AES Gener S.A.

(5) Chief Development Officer of AES Gener S.A.

(6) Chief Engineering and Construction Officer of AES Gener S.A.

(7) General Counsel of AES Gener S.A.

(8) Chief Commercial Officer of AES Gener S.A.

(9) CIO and Senior Vice President Global Business Services AES Corporation

(10) Chief Corporate Finance Officer of AES Gener

(11) Commercial Vice President of AES Gener S.A.

(12) Controller of AES Gener

(13) Vice President of Corporate Affairs of AES Gener

*Staff of related companies that consolidate their results with those of AES Gener and have staff hired by them.

Exhibits288

Angamos Plant Avda. Séptima Industrial 1100.Barrio Industrial De Mejillones, Mejillones, Chile Phone: (56 2) 2686 8900

Alfalfal Plant Cajón del Río Colorado s/n, Km.San José De Maipo, Chile Phone: (56 2) 2686 8111

Chivor Plant Avenida Calle 100 19 – 54, Of. 901. Bogotá, Colombia Phone: (57 1) 407 9555

Guacolda plant Isla Guacolda 100. Huasco Phone: (56 2) 2680 4700

Laguna Verde Plant Camino Principal S/N, Valparaíso, Chile Pho ne: (56 2) 2216 0200

Laja Plant Camino A Laja Km. 1.5, Cabrero, Chile Phone: (56 2) 2 6868700

Los Vientos Plant Ruta 5 Norte, Km. 91 Llay Llay, Chile Phone: (56 2) 2 6864725

Maitenes Plant Ruta G-345 Km. 14, San José De Maipo, Chile Phone: (56 2) 2 6868963

Central Plant Avda. Séptima Industrial 1100. Barrio Industrial De Mejillones, Mejillones, Chile Phone: (56 2) 2686 8900

Alto Maipo Project Ruta G-345 Km 14, San José De Maipo Phonew: (56 2) 2686 4862

ADDRESSES AND TELEPHONES OF GENERATING PLANTS


Renca Administrative Building Jorge Hirmas 2960 Renca, Chile Phone: (56 2) 2 6868900

Nueva Tocopilla Plant Balmaceda S/N, Tocopilla, Chile Phone: (56 2) 2 6868900

Ventanas Plant Ruta F-30E, Camino Costero s/nPuchuncaví, Chile Phone: (56 2) 2 6868900 ext 5255

Queltehues Plant Camino el Volcán, Km. 3, San José De Maipo, Chile Phone: (56 2) 2686 8900

Renca and Nueva Renca Plants Jorge Hirmas 2964 Renca, Chile Teléfono: (56 2) 2686 8900

Santa Lidia Plant Camino A Yungay S/N Km.7 Cabrero, Chile Phone: (56 2) 2686 8900

Termoandes Plant Ruta Nacional No 9 - Km. 1557, CP 4432 (Cobos) Salta, Argentina Phone: 54 3874919600

Volcán Plant Ruta G-465, Km. 3 San José De Maipo Phone: (56 2) 2686 8900

Edificio Matta Rosario Norte 532, Piso 19, Las Condes Santiago, Chile Phone: (56 2) 2686 8900

Exhibits290 ExhiE bits2290000000000000000

Annex 3

Essential Facts and Communications


COMMUNICATIONS SENT TO SVS/CMFJANUARY 19, 2017Essential Fact

Pursuant to the provisions of article 10 of Securities Market Law No. 18,045 and the General Rule No. 30 issued by the Superintendency of Securities and Insurance, we informed as an Essential Fact that, as previously reported through essential fact dated August 17, 2016, the Alto Maipo Hydroelectric Project (the “Project”) has had certain difficulties during the performance of works. These difficulties resulted in cost overruns that could reach up to 22%, including contingencies, of the original budget of the Project (the “Cost Overruns”). The value of the Cost Overruns was submitted for the review of an independent expert, who corroborated their reasonableness. Cost Overruns gave rise to a series of negotiations with the main contractors, financiers and partners of the Project, with a view to restructure the existing finance and obtain additional funding for the Project (the “Restructuring”), to be provided by AES Gener, minority shareholders and the Project financiers, in such a way as to be able to cover the Cost Overruns and continue with the construction and development of the Project. The parties agreed the basis of the Restructuring process, which was subject, among others, to the following conditions (i) negotiation and execution of definitive documentation to formalize the various

agreements reached by virtue of the Restructuring, under terms and conditions that are satisfactory to the different parties involved; and (ii) negotiation and approval of the terms and conditions of each Financing documents. The Restructuring considered, among others, the following aspects: (I) AES Gener would acquire, either directly or indirectly, all the interest held by Minera Los Pelambres (“MLP”) as of the date hereof in Alto Maipo SpA (“Alto Maipo”), i.e. 40% of the shares of Alto Maipo; (ii) the incorporation of Strabag SpA, main contractor of the Project (“Strabag”) as minority shareholder of Alto Maipo, with an initial 7% interest in the shares of the Company; (iii) the modification of the power supply agreements executed by Alto Maipo and AES Gener with MLP; and (iv) modification of the terms and conditions of the Project senior financing valid as of that date, including, among others, extensions to deadlines and the delivery of additional financing to Alto Maipo by the parties involved. Pursuant to the provisions of Circular Letter No. 988 of the Superintendency of Securities and Insurance, we informed that on that stage we were unable to assess the effects that this transaction would have on the results of AES Gener.

Exhibits292

MARCH 17, 2017Essential Fact

Pursuant to the provisions of article 10 of Securities Market Law No. 18,045 and the General Rule No. 30 issued by the Superintendency of Securities and Insurance, on March 17, 2017, we informed as an essential fact that the financial restructuring process of Hydroelectric Project Alto Maipo (the "Project") was completed as of that date, as communicated to the aforementioned Superintendency through essential facts dated August 17, 2016 and January 19, 2017. As reported earlier, the Alto Maipo Hydroelectric Project (the “Project”) experienced difficulties during the performance of the works, which resulted in cost overruns that could reach up to 22% of the original budget of the Project, including contingencies (the “Cost Overruns”). Such cost overruns gave rise to a series of negotiations with the main contractors, financiers and partners of the Project, in order to restructure the existing financing and to obtain additional resources to cover the above-mentioned Cost Overruns, to be provided by AES Gener, the minority shareholders and Project financiers (the “Financial Restructuring”). The Financial Restructuring, whose relevant documentation was executed on such date, basically refers to the matters reported to the Superintendency through Essential Fact dated January 19, 2017, including, without limitation, the following aspects: (I) the acquisition by AES Gener S.A., of all the interest owned by Minera Los Pelambres (“MLP”) in the company Alto Maipo SpA (“Alto Maipo”); (ii) the incorporation of Strabag SpA, main contractor of the Project, as minority shareholder of Alto Maipo, with an initial percentage of approximately 7%; (iii) the modification of the power supply agreements executed by Alto Maipo and AES Gener with a MLP; and (iv) the modification of the terms and conditions of the senior Project financing valid as of that date, including, among other matters, extensions to deadlines and delivery of additional funding to Alto Maipo by the parties involved, which, in the case of AES Gener meant

an additional disbursement of approximately US$ 117

million, all according to the terms and conditions agreed in the financing agreements. The agreed Financial Restructuring upon would fully cover the Cost Overruns of the Project and continue with its development and construction, which as of that date recorded a 50% progress rate. Finally, pursuant to the provisions of Circular Letter No. 988 of the Superintendency of Securities and Insurance, we informed that, in spite of the additional disbursement committed by AES Gener S.A., as mentioned above, the reported transaction would not have a significant impact on the results of the Company.


Pursuant to the provisions of Articles 9 and 10 of Securities Market Law No. 18,045, Article 63 of the Corporations Law No. 18,046 and Section II of General Rule No. 30 issued by the Superintendency of Securities and Insurance, we reported, as an essential fact, that the Board of Directors of AES Gener S.A. resolved in the Ordinary Meeting held on March 29, 2017, to convene an Ordinary Shareholders' Meeting for April 26, 2017. The Shareholders' Meeting would aim at discussing and resolving the following subjects, among others: (i) approval of the Financial Statements and Annual Report for the year ended December 31, 2016, including the External Auditors’ report; (ii) distribution of profits and final dividends; (iii) election of the Board of Directors; (iv) determination of the remuneration of the members of the Committee of Directors, approval of the budget of the Committee and its advisors for the year 2017 and expenses report and activities developed by that Committee during year 2016; (v) appointment of an External Auditing Company and Credit Rating Agencies for 2017; (vi) Dividend Policy; and (vii) information on transactions with related parties referred to in Title XVI of Corporations Law 18,046, on Corporations.


Regular Alternate

Andrés Gluski Weilert Margaret Tigre

Radovan Razmilic Tomicic Leonardo Moreno

Vineet Mohan Juan Ignacio Rubiolo

Arminio Borjas Julian Nebreda

Bernerd da Santos Paul Freedman

Gonzalo Parot Palma Luis Hernán Palacios Correa.

Claudia Bobadilla Ferrer Antonio Kovacevic Biskupovic


Pursuant to the provisions of article 9 and paragraph 2 of article 10, both of Stock Market Law No. 18,045 and the General Rule No. 30 and Circular N°660 of the Superintendency of Securities and Insurance, we reported as an essential fact that, in Ordinary Meeting of the Board of Directors of the Company, held on March 29, 2017, where it was agreed to convene an Ordinary Shareholders' Meeting for 26 April 2017, we resolved, among other issues, to propose to the Shareholders’ Meeting the distribution of dividends out of earnings for fiscal year ended December 31, 2016 for a total amount of US$ 261,008.828, which was approximately 100% of the profits of such fiscal year distributable as dividend. The distribution of profits mentioned above would be done through final dividend of US$ 0.0310713 per share, which would be paid through a dividend of: (i) US$ 0.0173803 per share, payable as from 8 May 2017; (ii) US$ 0.0071426 per share, payable as from 27 September 2017; and (iii) US$ 0.0065484 per share payable as from 28 November 2017.

APRIL 5, 2017Essential Fact

Pursuant to the provisions of articles 9 and 10 of Securities Market Law No. 18,045 and the General Rule No. 30 issued by the Superintendency of Securities and Insurance, we informed as an essential fact that, on the above date, the Board of Directors of AES Gener S.A. Was informed of the resignation submitted by Luis Felipe Cerón Cerón from his position as Regular Director and Chairman of the Company. At the same meeting, Board appointed Bernerd Da Santos, who as of the date hereof was Regular Director, as Chairman of the Company, and Arminio Borjas, who as of the date hereof was Alternate Director, as Regular Director in replacement of Cerón.


Pursuant to the provisions of articles 9 and 10, paragraph 2, of Securities Market Law No. 18,045 and provisions of Section II No. 2.2. of the General Rule No. 30 issued by the Superintendency of Securities and Insurance, we informed as an essential fact that in the General Ordinary Shareholders’ Meeting of AES Gener S .A. held on such date we proceeded to the total renovation of the Board of Directors and to the appointment of the regular and alternate directors that will serve as such during the next three years, as follows:

In addition, we informed that the regular directors Gonzalo Parot Palma and Claudia Bobadilla Ferrer, and their corresponding alternate members, were independent directors, according to the terms provided for in Article 50 bis of Corporations Law No. 18,046.

Exhibits294


Pursuant to the provisions of article 9 and paragraph 2 of article 10, both of Stock Market Law No. 18,045 and the General Rule No. 30 of the Superintendency of Securities and Insurance, we reported that at the Ordinary of Shareholders’ Meeting of AES Gener, we agreed to distribute the amount US$261,008,828 out of earnings for the fiscal year ended December 31, 2016, which approximately is 100% of the profits of such fiscal year distributable as dividends.

The distribution mentioned above would be done through final dividend of US$ 0.0310713 per share, which would be paid as follows: by means of a dividend of US$ 0.0173803 per share, equivalent to 55.94% of the earnings for fiscal year 2016 distributable as dividends, to be paid as from May 8, 2017; by means of a dividend of US$ 0.0071426 per share, equivalent to 22.99% of the earnings for fiscal year 2016 distributable as dividends, paid as from September 27, 2017. by means of a dividend of US$ 0.0065484 per share, equivalent to 21.07% of the earnings for fiscal year 2016 distributable as dividends, paid as from November 28, 2017.

MAY 2, 2017Essential Fact

Pursuant to the provisions of articles 9 and 10, paragraph 2, of Securities Market Law No. 18,045 and provisions of Section II No. 2.2. of the General Rule No. 30 issued by the Superintendency of Securities and Insurance, we informed as an essential fact that at the Meeting of the Board of Directors held on April 27, 2017, the Board resolved to appoint Bernerd Da Santos as Chairman of Board and President of the Company. In addition, it was agreed to appoint independent director Gonzalo Parot Palma, independent director Claudia Bobadilla Ferrer and director Radovan Razmilic Tomicic as members of the Committee of Directors.

JULY 24, 2017

On July 24, 2017, we sent to the Superintendency of Securities and Insurance a communication of the Company in response to Regular Official Letter No. 19714 dated 21 July 2017, issued by that Superintendency, in relation to the journalistic information published in the newspaper “El Mostrador” on 27 June 2017 concerning the termination of the agreement entered into between Alto Maipo SpA (“Alto Maipo”) and Constructora Nueva Maipo SpA (“CNM”). In such communication, it was informed that, during the month of June 2017, Alto Maipo terminated one of the construction agreements of the Project, entered into with CNM, due to the breaches of the contractor. Since then, the Alto Maipo subsidiary has been exerting its best efforts with a view to select a contractor that will replace CNM and to restructure the main construction contract of the Project.

JULY 31, 2017Essential Fact

Pursuant to the provisions of articles 9 and 10, paragraph 2, of Securities Market Law No. 18,045 and provisions of Section II No. 2.2. of the General Rule No. 30 issued by the Superintendency of Securities and Insurance, we informed as an essential fact, regarding the progress of AES Gener business, as follows:

1. As previously reported to the Superintendency of Securities and Insurance, the Alto Maipo Hydroelectric Project had experienced some difficulties in the performance of works, which led to increased construction costs (the “Cost Overruns”), thus giving rise, in March 2017, to a renegotiation with the main contractors, financiers, customers, and partners of the Project. Such renegotiation allowed him to continue with the works of the Project, through additional funds contributed by the partners and financiers, and the incorporation of contractor Strabag as new shareholder of the Project.


2. During June 2017, Alto Maipo terminated one of the construction agreements of the Project, entered into with the company Constructora Nueva Maipo S.A. (“CNM”), due to the breaches of the contractor. Since that date, Alto Maipo took interim charge of the works and started a process to find a contractor to replace CNM. Moreover, a series of court and arbitral procedures, including the collection bank guarantees to CNM for US$73 million, were started. Even when Alto Maipo succeeded in achieving the above-mentioned guarantees, as of that date, we were unable to anticipate the result of other pending arbitral procedures with CNM until they were resolved.

3. The termination of the construction contract with CNM has brought about an event of technical default under the financing contracts. For this reason, Alto Maipo could not continue requesting disbursements under the same unless this situation was regularized. Moreover, as a result of the above-mentioned technical default, the financial debt of Alto Maipo SpA, for the disbursements made as of the date hereof, which amounted to MU$613,000 should be recorded as current debt in the Financial Statements of Alto Maipo SpA and AES Gener S.A. as long as this situation persisted.

4. The situation described above, added to a productivity lower than that established in the construction agreements, could generate new cost overruns, which Alto Maipo was making its best efforts to quantify and resolve. These efforts included negotiations with Project financiers, the main contractor and other potential contractors to replace CNM and restructure the main construction contract. If such negotiations are unsuccessful, the Company might suffer material effects, thus affecting the continuity of the Project.

5. As of March 31, 2017, the book value of long-term assets of Alto Maipo amounted to US$1,210 million. As of the date hereof, AES Gener had invested US$536 million in the project and maintained capital contribution commitments for an additional amount of US$83 million under the scope of the refinancing agreed in March 2017.

6. On June 7, 2017, Alto Maipo took interim control of the works originally contracted with CNM and continued with the construction of the Project with the available funds, while the negotiations mentioned above were ongoing. As of June 30, 2017, the project recorded a 28% progress rate.

Pursuant to the provisions of Circular Letter No. 988 of the Superintendency of Securities and Insurance, we informed that it was impossible for us to accurately assess the impact of the events reported herein on the results of AES Gener.

NOVEMBER 27, 2017Essential Fact


In a Special Meeting of the Board held on November 21, 2017, the Board was informed that its subsidiary Alto Maipo and Strabag would enter into an agreement to establish the conditions to change and restructure the tunnel construction contract then in force, including new terms and conditions and incorporating under its scope works that were originally covered under the construction contract executed between Alto Maipo and CNM.

Exhibits296

On November 24, the management of the Company and its Board members, in accordance with the procedure agreed in the Special Meeting of the Board held on November 21, 2017, were informed that such agreement was executed in terms substantially similar to those informed at such Board Meeting.

The contract considered, among others, the following aspects:

a) Strabag would carry out the works on a lump sum basis at a fixed price, with Strabag assuming the geological hazards inherent in the construction of the Project.

b) Guaranteed construction completion dates would be included and secured by means of financial guarantees submitted by Strabag

c) The construction of El Volcán and El Yeso systems, which were covered by the contract originally assigned to CNM, would be included.

d) Strabag would provide financing for part of the cost of the new contract.

e) The equity interest and subordinated claims of Strabag in Alto Maipo SpA would be increased.

Without prejudice of the above, the Project restructuring was subject to compliance, among others, of the following conditions:

a) negotiation and execution of the new construction contract with Strabag according to the terms and conditions of the contract already executed and which are satisfactory to the parties;

b) preparation and approval of a new budget of the Project, which was under discussion with the Project financiers; and

c) approval on the part of the Project financiers of the new construction contract of SD and the new financing terms.

It was expected that the above mentioned conditions would take place within the first quarter of 2018. The failure to meet such conditions would have material effects on the Company, thus affecting the viability of the Project.

DECEMBER 21, 2017Essential Fact


On December 21, 2017, AES Gener S.A. and the Norgener Foreign Investment SpA, in their capacity as shareholders, entered into an agreement with Sociedad Generadora Metropolitana SpA, whose indirect shareholders are Andes Mining and Energy Corporate SpA and EDF Chile Sp, for the sale of 100% of the shares of Sociedad Eléctrica Santiago SpA, owner of Renca, Nueva Renca, Los Vientos and Santa Lidia plants.

The price for the sale of 100% of the shares of ESSA was MUS$300,000, which would be paid to AES Gener and Norgener Foreign Investment SpA in proportion to their respective shareholdings and would be subject to eventual working capital adjustments, as stated in the Agreement.

The funds to be received by the Company as a result of this transaction would be relevant to strengthen its capital structure and to finance the growth plan of the Company.


Under the terms of the agreement, the completion of this transaction would be subject to the purchaser having obtained financing for the transaction no later than January 2, 2018 and the fulfillment, no later than on June 30, 2018, among others, of the following suspensive conditions:

• Approval of the transaction by the National Economic Prosecutor pursuant to Title IV of the DL 211 of 1973

• Implementation of a corporate restructuring of Sociedad Eléctrica Santiago SpA so that purchaser may acquire the company free of financial debt. This way, Sociedad Eléctrica Santiago SpA would keep the plants and other assets required for their operation.

We also reported that the operation would have a positive effect of about MUS$65,000 in the results of the year on which the sale is made.

DECEMBER 21, 2017

On December 21, 2017 we sent to the Superintendency of Securities and Insurance a communication in answer to ordinary official letter dated 20 December 2017 issued by that Superintendency, by virtue of which the Company was requested to inform about the veracity of the article published in the newspaper “El Mercurio” in its issue of the same date. Such article stated that AES Gener S.A. would be in advanced negotiations to sell 100% of the ownership of Nueva Renca generation plant to the company El Campesino. To that end, we inform as follows:

As of the date of receipt of the official letter, AES Gener S.A. (“AES Gener”) and its subsidiary Norgener Foreign Investment SpA (“Norgener”) were in very advanced negotiations with Generadora Metropolitana SpA.,(“Generadora Metropolitana”), a subsidiary Central El Campesino S .A., whose partners are Andes Mining and

Energy Corporate SpA, EDF Chile SpA and Bio Bio Genera SpA, for the sale of 100% of the shares of Sociedad Eléctrica Santiago SpA (“ESSA”), which is the owner of Renca and Nueva Renca (Metropolitan Region), Los Vientos (V Region ), and Santa Lidia (VIII Region) Plants.

It was also reported that, pursuant the essential fact sent to that Superintendency on the same date, at such date AES Gener, Norgener and Generadora Metropolitana had signed an agreement under which the first two would sell to the latter 100% of the shares of ESSA. The price of the transaction, which was US$300 million would be paid to AES Gener and Norgener in proportion to their respective shareholdings and would be subject to eventual working capital adjustments.

The completion of this transaction would be subject to Generadora Metropolitana having finally obtained the financing required for the transaction no later than December 29, 2017 and the satisfaction, no later than June 30, 2018, of certain suspensive conditions agreed to by the parties.

JANUARY 2, 2018

On Tuesday, January 2, 2018 we sent to the Superinten-dency of Securities and Insurance a communication in answer to ordinary official letter No. 35,508 dated 29 December 2017 issued by that Superintendency, by virtue of which the Company was requested to inform about the veracity of information published in the newspaper “Pulso” in its issue of the same date. Such article stated that AES Gener S.A. would started a due diligence pro-cess to sell a pool of assets of its transmission business. To that end, we inform as follows:

AES Gener S.A. (the “Company”) was evaluating the possibility of disposing of certain non-strategic assets of its transmission business (the “Transmission Assets”). In this context, the Company has hired the services of BTG Pactual to carry on which this process, under the scope of which we had recently received some non-binding offers, which were then being reviewed by the Company.

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The process for the sale of Transmission Assets was at a preliminary stage. We estimate that, if approved by the Board, and the sale is completed, it could be carried out during 2018, and would have a positive, but not material, effect, in the results of AES Gener, which has not been quantified as of the date hereof.

FEBRUARY 5, 2018Essential Fact

Pursuant to the provisions of articles 9 and 10, paragraph 2, of Securities Market Law No. 18,045 and provisions of Section II No. 2.2. of the General Rule No. 30 of the

The process for the sale of Transmission Assets was at a preliminary stage. We estimate that, if approved by the Board, and the sale is completed, it could be carried out during 2018, and would have a positive, but not material, effect, in the results of AES Gener, which has not been quantified as of the date hereof.

Commission for the Financial Market, we have informed, as an essential fact, to the Commission for the Financial Market that, through a letter addressed to the President of the Company, and of which the Board was informed at the special meeting held on the date hereof, Vicente Javier Giorgio submitted his resignation as Chief Executive Officer of the Company, effective as from March 31, 2018, which was unanimously accepted by the Board.

In addition, we informed that on that same meeting, the Board unanimously resolved to appoint Ricardo Manuel Falú as Chief Executive Officer, position that includes the capacity as legal representative of the Company, effective as April 1, 2018.