Mejor Energía
ANnUAL Iintegrated report
2015 ENERGÍA ES FUTURO WE TAKE CARE OF THE PEOPLE’S WELL BEING
Colbún produces a fundamental asset for the economic development of the country, which improves the quality of life of its inhabitants: electric power. Day after day, the power produced by Colbún gets to thousands of households in Chile and Peru, and to large companies in these countries.
Angostura Reservoir MEMORIA INTEGRADA COLBÚN 2015
colbún in Numbers 2015 G4-4, G4-8, G4-9, G4-17, G4-EU1, G4-EU4 G4-3, G4-6, G4-28, G4-29, G4-30 After four years of publishing our annual Sustainability CONSOLIDATED NUMBERS CHILE perU Report, this year we wanted to give a step forward Ï nd ) and publish our first Annual Integrated Report. This is 2 6% Largest generator in the SIC, system that cov- Market share in the SEIN (in MW). ers 92% of Chile’s population. consistent with our conviction that Colbún’s business 202.1 US$ MILLION IN NET PROFITS ) r embraces the economic, social and environmental 21.3% 570 MW Market share in the SIC (in MW). Of installed capacity (100% thermoelectric). performance aspects in an integrated manner. This 583.3 r 3,282 MW p clients report was prepared in agreement with the principles US$ EBITDA MARGIN Of installed capacity / 49% hydro and 51% REGULATED (Distriluz, Luz del Sur, Edelnor). thermal. FREE (Electrodunas, Celepsa). of the International Integrated Reporting Council (IIRC), OTHER GENERATORS (Termochilca). 5 the compulsory requirements of the Superintendence of 916 KM 44% Kilometers of transmission lines Securities and Insurance (SVS) and the Global Reporting MARGEN EBITDA Ï 12,535 GWh % Initiative. In addition, this report has been checked by Of generation / 52% hydro / 48% thermal. 51 an independent auditing company. 962 Ù 1,872 fenix power perU During 2015, the most WORKERS IN CHILE Contractors working for Colbún. significant change was the
purchase of a 51% stake in Fenix Power Perú, owner of a 570 MW p 18 Clients combined cycle power plant based on natural gas located in 86 REGULATED (Chilectra, CGE, SAESA, among the district of Chilca, Perú. others). WORKERS IN PERÚ FREE (Codelco, Anglo American). This report includes the 2015 performance of The acronyms presented below certain Colbún S.A. and its Chilean affiliates. Except headings are profile and performance Ownership as expressly stated herein, this report does indicators established by the Global Reporting not include the management of Fenix Power Initiative (GRI 4). Peru, since Colbún acquired this company in .96% December of 2015. “Colbún’s indicators” show the specific 18.33 % 9.58 % 22 .13 % performance of our Company. DJSI indicators 49 AFPS ANTARCHILE S.A Others The boxes in gray show the Company’s most correspond to the Dow Jones sustainability relevant subjects (material aspects). index questionnaire. Further detail of these Matte Group indicators is provided in pages 134 - 137, under the heading "GRI Table”.
2 3 ANNUAL INTEGRATED REPORT COLBÚN 2015
Letter from the Chairman BETTER ENERGY G4-1, G4-2
Aconcagua River valley, where Colbún operates six run-of-the river hydroelectric power plants that make up 210 MW.
Dear Shareholders, Internationalization and 2015 milestones We are very pleased to present you with In connection with the Company’s the first Annual Integrated Report, the 2015 management in 2015, let me start with a management report that consolidates in milestone, which, although happened at a single document our traditional Annual year end was probably one of the highlights Report and the Sustainability Report that we of the period. Within the framework of the started to publish four years ago. internationalization process mentioned herein a year ago, in December Colbún The decision to integrate both documents entered a foreign market for the first time is consistent with the global view we after acquiring with the Peruvian investment have sought to give to the Company’s fund SIGMA and the sovereign fund Abu management, where we recognize that Dhabi Investment Authority, 100% of Fenix Colbún’s value for its shareholders increases Power Peru. The 570 MW power plant when we achieve levels of excellence in operated by Fenix is the most efficient the economic, social and environmental thermoelectric power plant based on natural management of our business. gas in Peru, and its acquisition means a relevant step forward in our objective of This 2015 Annual Integrated Report presents looking for new opportunities, diversifying management information in the areas of our sources of income and the regulatory WE UNDERTOOK THE CHALLENGE interest for our stakeholders. Also, and for risks. As the operating and controlling OF PROGRESSING TOWARD A MORE partner (51%) of the purchasing consortium, the first time ever, the data included herein DIVERSIFIED POWER GENERATION MODEL, have been submitted to verification by one of our challenges in 2016 will be to an independent auditing company, in line progress toward an integration model with BEING RESPONSIBLE FOR THE PEOPLE, THE with the best international practices in the such power plant that will enable us to SOCIETY AND THE PLANET subject. provide added value to our stakeholders. In
4 5 ANNUAL INTEGRATED REPORT COLBÚN 2015 CARTA DEL PRESIDENTE DEL DIRECTORIO
addition, our intention is to continue looking as the best industrial investment of 2014, Financial Results workers are recovering in a satisfactory hold us harmless and protect us from their We have formalized, disclosed and delimited for new opportunities in the region. while Chile’s Tourist Federation, FEDETUR, From the viewpoint of results, 2015 was a manner. occurrence. But we think it’s healthier to the roles and responsibilities of the various awarded a distinction within the category good year. Colbún’s EBITDA amounted to assume that every social system, especially Company committees. I’m referring not A second relevant milestone I would like Sustainable Destination to Angostura del US$ 583.3 in 2015, the highest in its history. I would like to thank all company’s workers, those that are highly complex such as large only to the advisory committees of the to underline is Colbún’s option to re-gasify Biobío, the tourist project financed by the This is due mainly of the growth plan who with their effort and dedication have companies, may be subject to potential Board such as the Directors’ Committee, liquefied natural gas for a volume equivalent Tourist Worktable of Angostura where embraced by the company over the last ten significantly contributed to consolidate bad practices in front of which we should the Internal Auditing Committee and the to the operation of a combined cycle power Colbún participates with the community. years, and which allowed us to add more these results. I would also like to recognize ask what can be improved in our corporate Board Woktable, but also the advisory plant such as Nehuenco complex for a than 900 MW of installed capacity, being every individual who has enabled us to work governance, control systems and corporate management committees such as the 20-year term (after participating in a bid In October this power plant also gave its the company that added more capacity collaboratively to promote the energy supply culture. Not only to minimize the risk of Risk and Sustainability Committee, the called by GNL Chile). If this option comes first public address, the reportability policy to the SIC over that period. These results that serves as the basis for the development their occurrence, but also to deepen the Regulatory and Projects Committee, among true – which will depend upon the evolution led by Colbún which started in Coronel translated into a sustained improvement of of Chile: our shareholders, customers, company’s adaptation to a context that others. of GNL Quintero expansion plan in terms of in 2013 – where Santa María Complex our financial indicators, which explains that providers, contractors and the communities is in constant scrutiny by several agents deadlines and investment costs - Colbún will completed this year its third public address – in last May Standard & Poor’s improved the where Colbún operates. with other standards of transparency and Similarly, and based upon the have direct access to the international LNG and which in 2015 extended to the districts of “investment grade” international risk rating where perceptions become massive realities Superintendence of Securities and Insurance market thereby expanding its generation Colbún (Colbún power plant), Yerbas Buenas perspective of the Company from negative Chile’s Context that are difficult to reverse, all of them questionnaire included in General Standard base available to participate in long-term (San Ignacio Power Plant), Santa Bárbara to stable. At a country level, the general economic inherent to our modern society. These are 385, we implemented policies such as the electric power bids to supply regulated and and Quilaco (Angostura Power Plant). context has not been very promising. The complex challenges as they relate to the Board’s self-assessment and a training or free clients. 2015 performance also shows the high GDP grew very modestly for the second construction and moreover the management refresher training course in matters such as Our challenge is to promote the dialogue availability of our power plants and the year in a row, only by 2.1% in 2015, while the of something more relevant than physical corporate governance and risk management Finally, also from a business perspective, and the integration of our power plants better contractual conditions achieved with net power demand in the SIC grew by 1.1% assets, credibility, in a context where systems, among other initiatives. We during 2015, a new long-term power supply with their environment. Colbún showed its the natural gas suppliers for our combined through the year. Chile, as well as other mistrust prevails. have also responded with substantiated contract with Codelco was enforced, commitment with the local development cycle power plants, which added to the emerging markets has been affected by the arguments when, in connection with which will allow the main mining company after adhering by mid-last year the Global drop in the price of other fuels allowed us economic slowdown of China and the drop The above also because an answer solely other measures suggested by the of the country to meet its requirements Compact Network, an entity created under to lower the costs and to, consequently, of “commodity” prices. We can also see based on control may ultimately affect the above-mentioned questionnaire, there with energy supplied by the Central the aegis of United Nations that seeks to improve the results. It is also important to endogenous factors behind this slowdown, inherent nature of the business activity were alternatives more efficient or more Interconnected System in a safe and promote sustainable growth and corporate underline the portfolio of long-term supply as the deepening of the crisis of confidence which is taking risks and growing. consistent with the necessary separation competitive manner and Colbún to contract social responsibility. contracts subscribed by our company with affecting all the institutions, and the reforms, between the roles of the Board of Directors part of its capacity over the long-term. various free and regulated customers, which which design and implementation, beyond Within this context, in 2015 we deepened and the Management. It is worth recalling the words mentioned allows projecting a long-term profitability the necessary debate on the pertinence and the continuous program to strengthen our In 2015 we also moved forward in the in January this year when the SOFOFA, in line with the investment and risk levels the substantiation of their objectives, have corporate governance, certifying the Crime Regardless of the importance of these permanent and ever-growing challenge of the University Adolfo Ibáñez (UAI) and undertaken. generated more uncertainty than certainty. Prevention Model, updating the policies and and other corporate governance policies, integrating our power plant operations with Capital magazine distinguished Colbún with procedures of our Board of Directors and they will remain dead letter if they are not their communities. An outstanding case the 2015 Corporate Sustainability Award: We achieved a reduction of 37% of Colbún is aware that the companies reviewing our Code of Ethics and Business captured by the ethics and the practices of is Angostura 316 MW hydroelectric power sustainability is a continuous improvement the accident rate of our workers and are insert within this scenario of lack of Conduct. Also, to expand the visibility and our organizational culture and without the plant. In addition to contributing 1,221 GWh of process, full of obstacles and difficulties, contractors, from 0.48% to 0.3%. However, confidence, which has worsen due to the scope of our complaints channel, we leadership – at all levels inside the Company renewable energy to the system, the diverse where we stand out for how we face the it is worth noting we had a considerable reproachable behaviors that have come incorporated to Colbún’s website an Ethics – that guides us through the example. tourist attractions built on the shores of problems and not for pretending they do not accident at our Chacabuquito power plant to light over the last few months. In the Hotline that allows our stakeholders to raise the reservoir hosted almost 130 thousand exist. involving two of our workers and which calls face of these events we can comfortably allegations in a confidential and anonymous visitors last year. Angostura was recognized us to double the efforts to prevent such take distance or pretend our corporate manner. in 2015 by the Corporation of Capital Assets accidents from happening. Fortunately, both governances or internal control systems will
6 7 CARTA DEL PRESIDENTE DEL DIRECTORIO
Regulatory Agenda will not stay here forever. Although one of currently regulated in Chile, and where En 2015 la Central Hidroeléctrica At the electricity industry level, the Energy them, the commissioning of new generation we think it is important to consider that Angostura consolidó su operación, con un aporte de 1.221 GWh. Agenda has been a relevant milestone in capacity should have a positive effect if it hydroelectric projects – which do not use defining the sectoral objectives and the prevails over time, the magnitude of the drop consumptive rights – require, due to their priorities assigned thereto by the Executive in fuel prices may not be permanent. And, development and construction, longer Power. The bid to regulated customers for sure, we all expect that the slow growth terms than those considered in the initiative called in last October highlighted the strong of the economic activity and the power currently being discussed. impulse of NCRE energies, which last year demand will be a temporary phenomenon. accounted for 12% of the consumption at In this sector, the current decisions (or the At the level of public sectoral policies, two the SIC. absence thereof) have consequences that initiatives should be underlined. The first is become visible over a period of five years. the implementation in April of 2015 a cross- This is good news for Chile: these are And in order to face the medium and long- sectional Presidential Advisory Commission renewable sources of flexible and modular term energy challenge, we need renewable for the study of a new Environmental construction. However, as we are dealing sources such as hydroelectricity, biomass, Impact Assessment System (SEIA). As we with variable and/or intermittent energy, solar and wind energy, but also an efficient have said in the past, we welcome every their introduction will pose challenges thermal complement. reform contributing to a greater degree to the system, such as the need to have of legitimacy and predictability of the flexible base power plants to provide for In legislative matters, in 2015 the Executive environmental institutionalism. such variability. As Europeans have already Power sponsored two draft laws that are seen, after long periods where the non- relevant for the industry. One of them is The second relevant initiative was Energía conventional renewable energies have the draft law on transmission that includes 2050, document that was sponsored by the pushed marginal costs to even negative changes in the role of the system’s operation Ministry of Energy which, in a participative levels, it is necessary to properly identify coordinator, and introduces structural and and transversal manner formulated the main and distribute the costs associated with this deep modifications to the power sector. policy guidelines for the energy sector over higher NCRE penetration so that the market As this is an extremely complex matter the next 35 years. We think the decision is given the correct signals that will enable a that has long-term implications for the to put back the hydroelectric power at the balanced development of our energy matrix. sector, we expect a well grounded technical center of the energy development of the discussion to take place, which will allow country is highly relevant, regardless of Likewise, it is fundamental that the visualizing all the necessary aspects to the project size. However, this document higher supply observed in the domestic progress toward a robust transmission poses huge challenges when it comes to power system that has pushed the prices system and an Operations Coordinator implementing the definitions stated as public down both on the spot market and in bid which, jointly with the other components policies that will ensure a balanced and processes of distribution companies, will of the sector institutionalism, will preserve sustainable power supply in the country. In not lead us to fail in complying with the the independence of the action and the circumstances where the discussion has long-term energy challenge. With this I technicality of the decisions. centered on the electric, environmental mean having enough, competitive, safe and water institutionalism, and the State and sustainable electric energy to feed the The second draft law refers to the Water maintains or undertakes relevant roles, recovery of the weak economic growth. Code reform, which introduces significant it is just about time to reactivate the Indeed, the reason behind this leeway changes to the way in which water is lingering but always pushed-back debate
8 9 on the modernization of the State. We It is worth recalling some of the Similarly, in 2015 we created an Area of think such debate should push to have environmental benefits of this initiative: it Non Conventional Renewable Energies to the National Energy Commission, the is an unregulated reservoir station, which speed up the compliance with our objective Environmental Impact Assessment System in practice means that the power plant will of incorporating NCRE sources to our and the institutions responsible for the be operated so as to preserve the flow portfolio, especially solar and wind energies, water resources, whose decisions are conditions of the river downstream of the deepening and making more professional highly complex from a technical viewpoint power station; the flooded area is quite our search for investment opportunities and which require long-term policies, limited, as it extends over the river basin through the development of own projects, move forward to becoming independent without disturbing agricultural lands or the purchase of third party’s projects or state institutions with high technical human settlements; and the project was the subscription of contracts to purchase competencies, thus replicating the positive certified to issue carbon credits. As we are electricity based on non-conventional experience in other fields. convinced of the benefits of this initiative, renewable sources. we have promoted instances of dialogue Growth perspectives and have set up local work tables to identify Finally, we will continue to look for In connection with the future of the a proper way to insert this project within its investment opportunities in other countries Company, we have an attractive portfolio environment, as we have done with other of the region. of projects that contemplate different Colbún initiatives. As we have said before, Chile and other technologies in various development phases. countries in the region will need to continue Regarding the second unit of Santa María building power generation stations that La Mina Hydroelectric Plant Project in the de Coronel Complex (350 MW), the Project utilize different technologies over the Maule Region – our third NCRE station, has already obtained the environmental medium and long-term in order to have a with 34 MW- recorded 46% construction permitting and we are assessing the various safe, competitive and sustainable supply. progress at December of 2015, in line financial, technical, environmental and social We have a long way to go in this area. At with the work schedule that forecasts its aspects to decide its construction; our Colbún, we work hard every day to be a commissioning for early 2017. best cover letter are the high technical and relevant player in achieving that goal. environmental standards of Santa Maria’s Regarding the San Pedro Hydroelectric Unit I operation. We invite you to read our first Annual Power Plant Project (170 MW) in the Region Integrated report and to know in detail the of Los Ríos, in June of 2015 we entered the Also in connection with hydroelectric performance of our Company in 2015. Environmental Impact Study with some projects we have continued to deepen adjustments to the initiative. However, the technical, design and feasibility studies of Environmental Evaluation Service of Los Ríos different initiatives that will add close to 500 suspended its environmental processing in MW, mainly in the Maule Region, and which advance due to lack of essential information. we think will significantly contribute to the We are analyzing the observations made 70% goal of renewable generation set forth Bernardo Larraín by the public services and preparing the by the document Energía 2050. Chairman of the Board, Colbún S.A. necessary background information in order to provide a timely and substantiated answer to the data requested by the
Angostura authority. Hydroelectric Power Plant
10 11 ANNUAL INTEGRATED REPORT COLBÚN 2015
Table of Contents
Angostura del Biobío Suspension Bridge Canutillar Punta Palmeras wind farm Visitors’ Center, Parque Power Plant Angostura
CONTENTS 53 ECONOMIC 81 SOCIAL 113 ENVIRONMENTAL PERFORMANCE AND PERFORMANCE PERFORMANCE Letter from the Chairman 03 Colbún 2015 in numbers GOVERNANCE 85 Human capital 115 Water resources 04 Letter from the Chairman 56 Financial management development 120 Use of resources and Bernardo Larraín 62 reliable, competitive and 90 Work practices efficiency 13 Table of contents sustainable supply 93 Human rights 123 Climate Change 69 Ethics and Corporate 100 Safety and health 126 Carbon Footprint 15 THE POWER SECTOR Governance 104 Dialogue and 128 Atmospheric emissions 16 The Chilean market 72 Risk management communication and air quality 20 The Peruvian market 74 Growth perspectives channels with our 130 Biodiversity 21 The sector’s operational stakeholders and the model society 133 GENERAL BACKGROUND 22 The sector’s 106 Local development INFORMATION commercialization model 108 Main social-environmental 134 Scope challenges 135 How the Annual Integrated 25 COLBÚN: WHO WE ARE Report was built AND WHAT WE DO 139 Verification 26 Background Information 141 Liability Statement 28 2015 Milestones 142 GRI G4 TABLES 32 Our power plants 34 Ownership structure 36 Corporate Governance 46 Business model + Information For further information, scan the QR code with your smart Phone or Tablet.
12 13 ANNUAL INTEGRATED REPORT COLBÚN 2015
r THE POWER SECTOR
WE CONTRIBUTE TO MEETING OUR CURRENT AND FUTURE CUSTOMERS’ ENERGY REQUIREMENTS
14 15
Esta parte en ingles no es igual al español. ANNUAL INTEGRATED REPORT COLBÚNCOLBÚN 2015 Regulatory Framework and Public Policies
Why is it material? Regulatory stability is fundamental for a sector as power generation, where the projects of investment have long period of development, THE POWER SECTOR execution and return for investors. On the other hand, regulatory changes must be done having in consideration the complexities of an electrical system and supporting incentives adapted for all the actors. Finally, it must have limited room for discretion and unpredictable decisions. For these reasons, it is key to monitor risks associated with possible regulative changes and to take part of the This chapter describes the evolution of the regulatory framework and the power sector discussion regarding the future of this sector. operations environment. What stakeholders are impacted by this material aspect? Issues related to the Energy Agenda and regulations concern all the groups of interest of THE CHILEAN MARKET the Company, provided that the development of this industry is key for the development of the country. the development of the economy, especially The Regulatory Framework Context on whether they will succeed or not in facing For the second year in a row, in 2015 the one of the main challenges of our country: in Chile What is our objective? economy experienced a low activity level, improving the productivity of the human Chile’s electricity framework and Colbún’s Regularity stability has been a valuable characteristic of the Chilean electric sector. Having growing only by 2.1%. External and internal capital. In connection with the energy sector, operations are mainly ruled by the General said that, regulations always can be improved. In Law on Electric Power Services, the General factors account for this behavior. It is worth the most relevant legal initiatives submitted this regards, we think that nowadays is important Environmental Law and the Water Code. mentioning in the first place, the economic in 2015 were the Transmission draft law, the an institutional and regulatory evolution that slowdown of China and the drop of copper Tariff Equity draft law and the changes to There are five main entities that ensure the allows to generate conditions to develop projects of different technologies in an environment that is prices, whereas at local level the internal the Water Code. A significant milestone for application and the compliance with the laws more complex and dynamic. demand experienced a weak performance the industry was the presentation of Energía that rule the electric power sector in Chile: due to low investment and consumption 2050: A New Energy Policy for Chile by the 1. Ministry of Energy. levels. The weaker economic activity Ministry of Energy. How do we manage it? 2. National Energy Commission (CNE). In 2013 Colbún created a Committee of Regulation reflected in the energy market, where the 3. Superintendence of Electricity and Fuel that must define a working plan to generate power demand grew at modest rates, with The drop in the price of fossil fuels during proposes of contents regarding new public (SEC). an expansion of the Central Interconnected 2015 is the main reason that accounts for the policies and/or to propose improvements in 4. Economic Load Dispatch Center (CDEC). System (SIC) of barely 1.3% in 2015. decrease in the marginal costs of the Central already existing policies. Additional, in 2014 5. Expert Panel of the General Law on Interconnected System this year followed by Colbún created an area responsible for regulative Electric Power Services. topics, which is in charge of tracking the status The Executive Power sponsored a series the entry of new generation supply. of normative changes to elaborate proposes of relevant legislative initiatives during and coordinate with the rest of the areas of the the year. An example is the Tax Reform Company Colbún’s participation. which, by means of an increased tax burden especially on corporations, seeks How do we measure it? to finance the expenses associated to the Colbun-7. EC: Colbún’s vision regarding Energy social reforms promoted by the Executive Agenda and new regulations. Power. In connection with the Labor Reform, the terms on which this initiative will be Who is responsible? approved shall have great consequences in Colbún's Committee of Regulation
16 17 ANNUAL INTEGRATED REPORT COLBÚN 2015 THE POWER SECTOR
the challenge of implementing action plans information. In addition a Tariff Equity draft law Draft Laws and Regulatory Changes in Chile Water Code Colbún-7.EC to achieving the established goals. Among is being discussed in Congress to close the gap the most important guidelines set by this between the electric rates of urban and rural The Water Code reform introduced by the Transmission and Coordinator’s Law: The a regime of open access to the networks, Colbún has actively participated both directly document is the goal to have 70% of the zones, establishing an additional discount for Government brings structural changes to draft law introduces structural and deep among other changes. The standard will also and indirectly in the discussion of this initiative generation from renewable energies as at the sites where the power plants are located. the way waters are currently regulated in modifications to the power sector; therefore, enhance the role of the system’s operator, through the Association of Generation 2050, including run-of-the-river and reservoir Chile, namely, it establishes a temporary its discussion and implementation poses replacing the current Economic Load Dispatch Companies, where it has stated its view on hydroelectric power plants (either conventional There is consensus on the need to create a nature to the grant of water rights, the a big challenge to achieve the objective of Center (CDEC) with a Coordinator, with new the project and provided some observations or non-conventional sources). The promotion strategy that allows positively transforming extinction of rights due to several causes having a robust system and setting up a structure and functions. It also grants new that would allow improving certain matters. of sustainable hydroelectricity that will entail the quality of life of the sites where the and the establishment of an environmental new operations Coordinator. Among the powers to the National Energy Commission The company has stated that the regulatory greater participation of renewable energies in generation projects are located. We expect water flow over the rights already granted, main changes in transmission, the draft law and modifies certain duties of the Expert changes that will be introduced in the near the electricity matrix of the country requires for the initiatives to progress in that sense among other matters. It is important to modifies the definition of the transmission Panel. future must be made taking into consideration us to work in action plans and regulatory by creating a sound institutionalism for prevent these changes from negatively systems, the planning, tariff setting and the complexities of the power sector, instruments that will promote this type of dialogue between the corporations and affecting of hydroelectric power investment remuneration criteria, further deepening maintaining proper incentives for investment, technology, which, in the measure of its the community, and by generating shared in Chile and the materialization of the assuring the technical and independent nature development will allow reaching the installed benefits that provide guidelines that will Energy Policy promoted by the government, of the institutions involved, perfecting the capacity forecasts proposed by the policy and leverage the future investments our country where hydroelectric power is essential necessary balance between the regulatory, contributing the regulation capacity required requires. for the long-term development of the CHILE’S COMPETENT POWER SECTOR ENTITIES supervisory, sanctioning aspects and the by the system to provide a safe and reliable country. Hydroelectric projects require long resolution of controversies among the supply. However, it is important that these development periods, have a long service life Ministry of Energy, the CNE, the SEC, the new initiatives help minimize the eventual price and use non consumptive water rights, i.e. Coordinator and the Expert Panel, so that the Associativity Mechanisms and Tariff Equity: distortions of such a relevant supply as the the water later returns to its natural source SUPERINTENDENCY NATIONAL ENERGY ECONOMIC LOAD MINISTRY OF OF ELECTRICITY EXPERT COMMISSION DISPATCH CENTER regulation provides clear and transparent rules Within the framework of promoting the electric power, by promoting collaborative for other industrial, agricultural, tourism ENERGY AND FUEL PANEL SEC CNE CDEC that consolidate stakeholders’ confidence. community acceptance of the projects, issue relationships between the corporations and activities and for human consumption. that has been broadly discussed over the past the community without the interference of Energy Policy in Chile: During 2015 many few years the Executive Power worked in a third parties’ interests or charges that are sectors discussed the document Energía Public policies Compliance Tariffs System’s Conflict single Associativity draft law in the beginning not properly substantiated. for the sector with the laws operation resolution 2050, which was later forwarded to the but finally decided to address this subject in Regulatory coordination President of the Republic; this document sets different draft laws. Along these lines, by the Government’s function advisor Economic forth the long-term energy policy including end of 2015 the Ministry launched a Guide on Expansion dispatch plans the vision for the future development of Participation Standards for the Development the energy sector, and which now presents of Energy Projects, which seeks to engage the communities in the development of projects through early participation processes and different mechanisms of dialogue and
18 19 ANNUAL INTEGRATED REPORT COLBÚN 2015 THE POWER SECTOR
THE PERUVIAN MARKET The Sector’s Operational Model (Chile and Peru)
Context costs (-40% in 2015 versus 2014), due to the The operation of the sector is based on a is measured in US$/MWh. In Chile, the costs electricity, whether produced by them or Peru experienced a growth of 2.9% in 2015, entry of more efficient power generation marginal cost schedule (cost incurred by declared by each company that owns a power purchased from other generation companies slightly higher than in 2014 (2.4%). In general, plants. the system in supplying an additional unit of plant may be subject to weekly audits. In Peru, on the spot market. little dynamism of the private investment demand), which includes in turn the safety and in turn, each company may freely declare its has been observed, which, according to the Regulatory Framework efficiency criteria in assigning the resources. costs and they are not subject to auditing. In In order to meet the power supply “safety issuing institution is due to internal (lower in Peru addition, the declaration is done once a year. and continuity” objective, the tariff model expectations from consumers and investors) To meet the “efficiency” goal, generation Power plants whose variable costs are lower also contemplates a “capacity charge” The Peruvian power sector shows a sound and external factors (drop in the price of companies coordinate their operations than the spot price earn a margin over the corresponding to an additional remuneration regulatory framework in force since 1992. products exported by Peru). through the CDEC (Economic Load Dispatch production delivered to the system. In turn, for generation companies that maintain their This has encouraged a significant increase in However, Peru’s National Interconnected Center, Centro de Despacho Económico de the last unit dispatched by the CDEC will only power plants available and that seeks to power generation with a compound growth of System (SEIN) recorded a 6.6% growth in Car¬ga) in the case of Chile and through the recover its variable production costs because promote backup capacity in the system. Its 4.8% in installed capacity from 2000 to 2014. demand with a strong reduction of marginal COES (Economic Operation Center of the its variable costs are equal to the spot price. remuneration is measured in US$/KW-per There are five main regulatory agencies: National Interconnected System) in the case Power generation companies meet their month. 1. Ministry of Energy and Mines (MINEM) of Peru. The Coordinator strives to minimize contractual sale commitments with dispatched PERU’S COMPETENT the operating costs of the system and to POWER SECTOR ENTITIES 2. Supervisory Agency for Investment in prevent its failure, in addition to ensuring the Energy and Mining (OSINERGMIN) quality and the safety of the service provided ENERGY DISPATCH SCHEME by generation and transmission companies. MINISTRY OF ENERGY SUPERVISORY ENTITY FOR ECONOMIC NATIONAL INSTITUTE 3. Entity for Environmental Evaluation and The main purpose of the dispatch system is to Variable AND MINES AGENCY FOR ENVIRONMENTAL OPERATION CENTER FOR THE DEFENSE production cost INVESTMENT IN EVALUATION AND OF THE NATIONAL OF COMPETITION Inspection (OEFA) ensure that customers are served by the most MINEM ENERGY AND INSPECTION INTERCONNECTED AND INTELLECTUAL (US$/MWh) DEMAND MINING SYSTEM PROPERTY efficient units available at every moment. Diesel engine OEFA 4. Economic Operation Center of the OSINERGMIN COES INDECOPI CA-Diesel National Interconnected System (COES) The coordination entity dispatches plants in the order of their respective variable costs System’s mar- AC-LNG 5. National Institute for the Defense of ginal cost Sectoral policy Tariffs Compliance Transmission plan Antitrust related of production, starting with the lowest-cost CC-Diesel with the laws and SEIN’s practices Competition and Intellectual Property declared plants. The declared variable Permittins Regulatory Supervision procedures (INDECOPI) CC-LNG function Ex ante production cost of the most expensive unit Standards SEIN operations Coal Controversy concentration under operation represents the marginal cost coordination control. Hydroelectric resolution / Economic dispatch of the system and will determine the price of power + NCRE Complaints energy in the spot market in each hour and Demand (in MWh)
20 21 ANNUAL INTEGRATED REPORT COLBÚN 2015
The Sector’s Commercialization Model
Generation companies both in Chile and Peru may: or select a mix of both. The generation companies (i) commit to sell energy to customers through may sign contracts with three types of customers: contracts (in general, medium /long term); (ii) or regulated clients (distribution companies), free sell their energy production to other generation clients (industrial, mining companies, etc.) or another companies with a deficit in the spot market; (iii) generation company.
Types of clients and contracts
REG2014ULATED 2015FREE OTHER REGIÓN (Distributors) Mujeres Hombres Total Mujeres Hombres GENERATORS RM 120 281 401 <2,000125 kW or >500281 kW and <2,000 kW that have declared themselves V Región 18 186 204 19 169 free clients or VI CHILERegión >2.0001 kW 23 >2,000 kW24 and <5,0001 kW that23 have declared x themselves free clients four years after the VII Región 5 94 99 publication6 of the 99law VIII Región 17 170 187 16 182 X Región 2 18 20 2 17 <2,500 kW or <200 kW and <2,500 kW XIVPERÚ Región >2.5004 kW 22 26that have declared3 themselves19 x free clients TOTAL 167 794 961 172 790
Otorgados vía TIPO DE licitaciones Bilaterally Bilaterally negotiated CONTRATO públicas negotiated reguladas
SIC Market Share by Company
MARKET SHARE BY COMPANY AT DECEMBER 2015 (% OF INSTALLED CAPACITY)
Endesa 29.08%
Colbún 20.37%
Aes Gener 10.45%
Otros 40.10%
Fuente: CNE
Colbún is the second largest generator in the SIC with a market share of 20.37% in terms of installed capacity. The electric power market is very competitive featuring more than 150 companies. Security of our plants and our workers is a priority in Colbún.
22 23 ANNUAL INTEGRATED REPORT COLBÚN 2015
pj colbún: who we are and what we do
WE MOVE FORWARD WITH ENERGY TOWARD THE DESIGN AND CONSTRUCTION OF A BETTER FUTURE
24 25 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
2006 2008 2012 HISTORY HIGHLIGHTS Tractebel sells its entire share Commissioning of Hornitos Commissioning of Santa Maria’s ownership in Colbún S.A. In this hydroelectric power plant. Unit 1 (8th Region), the first sale Antarchile S.A., company coal-fired thermoelectric power related to the Angelini group Registration of two run-of-the- plant pertaining to Colbún S.A. acquires 9.53% of the ownership river hydroelectric power plants of Colbún S.A. before the United Nations’ Publication of our first Clean Development Mechanism Sustainability Report, which 1985 2001 A new company is set up to Hornitos and Quilleco (Biobío compiles all the indicators that Commissioning of Colbún CORFO sells most of its shares develop the HidroAysén project, Region), which will allow an measure our performance in and Machicura reservoir in the local stock market and the where Colbún S.A. contributes annual reduction of 118 thousand this matter according to the hydroelectric power plants. Company’s name is changed to 49% of HidroAysén’s capital and and 172 thousand tons of CO2e Global Reporting Initiative (GRI) Colbún S.A., later expanding its Endesa contributes the other respectively. methodology. 1986 line of business. 51%. Stemming from the agreement 2009 Setting up of the affiliate to split Empresa Nacional 2002 Begins the application of Colbún Transmisión S.A. de Electricidad S.A., Endesa, Commercial operation of 2007 International Financial Reporting The affiliates Hidroeléctrica Empresa Eléctrica Colbún Nehuenco III open-cycle Commissioning of Quilleco Standards (IFRS), and the Guardia Vieja S.A.,
Machicura S.A., currently known thermoelectric power plant COLBÚN POWER PLANT and Chiburgo run-of-the-river U.S. dollar is adopted as the Hidroeléctrica Aconcagua S.A. as Colbún S.A. is created. begins. hydroelectric power plants. functional currency. and Obras y Desarrollo S.A. Chiburgo is the first Company’s merge with Colbún S.A. 1996 2004 power plant built within the Commissioning of Los Pinos Commissioning of San Ignacio Commissioning of Nehuenco II framework of the law that open-cycle thermoelectric hydroelectric power plant. combined-cycle thermoelectric promotes non conventional power plant. 2014 power plant. renewable energies. Commissioning of the 1997 Angostura reservoir CORFO ceases to be a main 2005 Start up of the dual operation 2010 hydroelectric power plant. shareholder of the Company Commercial operation of (natural gas and diesel oil) of Commissioning of San Clemente by selling 37% of its shares Candelaria open-cycle Nehuenco II power plant. mini-hydro power plant. 2015 in Empresa Eléctrica Colbún thermoelectric power plant Incorporation of the affiliates Machicura S.A. begins. Registration of Chacabuquito Issue of the first International Colbún Perú S.A. and run-of-the-river hydroelectric Bond by US$500 million for a Inversiones Las Canteras S.A. Creation of the affiliate Empresa Minera Valparaíso S.A., an power plant (5th Region)before the 10-year term. in Peru. Eléctrica Industrial S.A. affiliate of Matte Group United Nations’ Clean Development Purchase of a 51% stake in becomes the principal Mechanism, which will allow an 2011 Fenix Power Perú S.A., Peruvian 1998 shareholder of Colbún S.A. as annual reduction of approximately Registration of San Clemente company owner of a combined Commissioning of Rucúe a result of the merger with 80 thousand tons of CO2e., run-of-the-river hydroelectric cycle thermoelectric power hydroelectric power plant. Hidroeléctrica Cenelca S.A. With equivalent to removing from power plant before the plant based on natural gas, the merger, the following run- circulation more than 20 thousand UN’s Clean Development located in Chilca, Peru. 1999 of-the-river hydroelectric plants cars. It is the first hydroelectric Mechanism (CDM), which will Commercial commissioning of are incorporated: Chacabuquito, power plant in the world that allow an annual reduction of Nehuenco I combined-cycle Los Quilos, Blanco, Juncal, trades carbon credits. approximately 17 thousand tons thermoelectric power plant. Juncalito, together with of CO2e, equivalent to removing the reservoir hydroelectric Within the framework of the first from circulation more than 4 Through its affiliate Empresa plant Canutillar, and the bids with distribution companies, thousand cars. Eléctrica Industrial S.A., Colbún thermoelectric plant Antilhue. Colbún is awarded supply contracts S.A. acquires the Carena run- for 10 to 15-year term, with CGED, of-the river hydroelectric power Purchase of 100 percent of the SAESA and Chilectra for 2,800 GWh plant. share ownership of Sociedad annually, starting in 2010; and 2,500
Hidroeléctrica Melocotón Ltda. Nehuenco Power Plant Fenix Peru Power Plant GWh annually starting in 2011.
26 27 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
2015 MILESTONES
CODELCO January February March May June July September October Enforcement of new contracts Blanco station resumes End of the first summer season S&P raises Colbún’s San Pedro Project Seminar Voices with Energy The Parity Committees of Public accounts of Angostura, with Codelco operations in Angostura Park international risk rating Environmental Impact In Concepción, and within the Candelaria, Carena and Colbún, San Ignacio and Santa On January 1, 2015 two new Blanco power station (53 MW) Closing ceremony of the first perspective Assessment framework of the launching Nehuenco were distinguished by María power plants long-term (15 and 30-year term) located at the Aconcagua basin, summer season in Angostura The international agency In June of 2015 Colbún of its fourth Sustainability the Safety Mutual In October, Colbún started contracts were enforced with resumed commercial operations Park, tourist initiative developed Standard & Poor’s improved submitted the Environmental Report, Colbún conducted the The Candelaria Station Parity its annual public account Codelco for a joint contracted after one year of repair works. around the Angostura Colbún’s perspective Impact Assessment (EIA) with Seminar “Voices with Energy”. Committee was awarded the and reportability program capacity of up to 510 MW and The repair works included the hydroelectric power plant. In from ‘negative’ to ‘stable’ the adjustments to the San The seminar was led by the “Silver Category Prize” for the good to inform the communities an annual related energy of replacement of the Pelton wheel 2015, the various attractions and reaffirmed its ‘BBB‘- Pedro hydroelectric project, publicist and creator of the results obtained in the certification where its power plants approximately 4,000 GWh. The and the turbine shaft, among of this park including beach international risk rating based which was initially admitted to “NO” campaign (1988), Eugenio sponsored by the Safety Mutual operate the main social, service contracted with this free others. resorts, camping facilities, on the improvement of its processing by the Environmental García, and by an expert panel of the Chilean Chamber of operational and environmental customer considers the supply visitors’ center and a lookout credit indicators. The change Evaluation Service (SEA) of Los whose discussion was centered Construction. Similarly, the Carena performance indicators of the for Salvador, Andina, Ventanas hosted close to 130 thousand responds to the improvement Ríos. However, in August, the in sustainability challenges. power station ranked first in the facilities. Hence, meetings and El Teniente mining divisions. visitors. of financial indicators after the authority decided to terminate category Electricity, Gas and were held in the districts of commissioning of Angostura the process due to lack of Water of the Competitive Company Santa Bárbara and Quilaco Inauguration of Punta Palmeras hydroelectric power plant Relevant Information (IRE). Program of the Safety Mutual, (Angostura station), Los wind farm and the balanced commercial It should be noted that such while the Nehuenco Complex was Ángeles (Angostura station), Acciona’s Punta Palmeras wind position defined by Colbún. project was environmentally awarded a “remarkable grade” Colbún (Colbún station), Yerbas farm was built after Colbún approved in 2008. Colbún under the same program. Buenas (San Ignacio station), agreed to purchase 100% of the is working to submit a new Concepción (Santa María energy generated by such farm adjustment study to properly Getting Profits out of the Complex) and Coronel (Santa for 12 years, at a stable price. respond to the observations Combined Cycle Power Plants María Complex). The initiative contemplates an made by the competent Colbún and ENAP subscribed installed capacity of 45 MW for authorities. At the same time, gas supply contracts over the an estimated annual production the Company continues holding period 2016-2018, which adds of 124 GWh that could supply meetings and implementing to the volume contracted with 60 thousand households work tables with the Metrogas in force until 2019. In injecting energy to the Central communities and the authorities addition, Colbún may access Interconnected System (SIC) at to enable projects to be better the international LNG market, the Las Palmas 220 kV station. inserted in their environment. after obtaining re-gasification adecuadamente el proyecto a capacity reserve within the su entorno. Open Season process driven by GNL Chile.
28 29 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
October November December Angostura del Biobío was Environmental NGO Colbún ranks first in the Consortium led by Colbún awarded the distinction of distinguishes Colbún for its reputational ranking from the purchased power generation Sustainable Destination by climate change management energy and distribution sector company Fenix Power Peru (570 Fedetur The Carbon Disclosure Project The sixth Corporate Reputation MW) The Federación de Empresas ranked Colbún among the Measurement (Merco) that Within the framework of its de Turismo de Chile (FEDETUR) top eight Latin American recognizes the most respected process of internationalization in its fifth version of the 2015 companies in terms of its CO2 companies of the country and growth into new Latin Awards to Chilean Tourism, reportability, climate change risk awarded Colbún the maximum American markets, Colbún awarded Honorable Mention and opportunity management distinction in the category purchased the company Fenix in the category Sustainable analysis. Colbún annually Energy and Distribution. Power Perú S.A. through a Tourism Destination to quantifies its direct and indirect consortium where it holds a Angostura del Biobío; the emissions of Greenhouse Gas 51% ownership stake. Fenix project is located in the Biobío Emissions (GHG). Power Perú owns a 570 MW Region and was developed combined cycle thermoelectric Colbún joins Global Compact around the Angostura power plant based on natural Network Chile hydroelectric power plant. gas in the district of Chilca, As part of its commitment with The goal of this award is to approximately 64 kms south of sustainability and transparency, recognize the companies that Lima. Colbún formalized its entry to promote sustainability, social “This transaction represents the Global Compact Network responsibility, innovation and a very relevant milestone for Chile. The main purpose of this service quality in the Chilean Colbún, and allows improving entity is to promote sustainable tourist industry. the Company’s diversification development and to ensure in terms of sources of revenue, citizens’ commitment to human state-of-the art technology and rights, labor standards, the markets”, stated Thomas Keller, environment and anticorruption. Colbún’s general manager, upon To date, this network has more announcing the purchase to the than 12,000 members enrolled market. around the world.
Huequecura trail at Angostura Park, located on the shores of the Angostura reservoir.
30 31 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
CENTRAL CARENA CENTRAL CHACABUQUITO CENTRAL SAN CLEMENTE CENTRAL CANDELARIA CENTRAL CHIBURGO CENTRAL RUCÚE Our power plants Our assets MAP OF COLBUN POWER PLANTS * G4-8
Colbún operates 23 power plants in the Central Interconnected System (SIC), which covers the area from Taltal in the north of Chile to the Great Island of Chiloé in the south, supplying more N than 90% of the population, and the Peruvian power plant recently acquired. NCRE PURCHASE OF ENERGY AND/OR ATTRIBUTES In addition, the Company owns 28 substations, close to 916 km of transmission lines and 08 02 various concessions and patents, namely geothermal, electrical, transmission and water 16
rights that allow building projects for a total estimated capacity of 500 MW. All power facilities FENIX POWER PUNTA PALMERAS ACONCAGUA BASIN and water rights pertain to Colbún and its affiliates, and they are commercialized under the 570 MW I Gas Perú 45 MW I wind power 210.3 MW I run-of-the-river Chilca, Department of Lima Canela, Los Andes, San Esteban, trade name Colbún. Coquimbo Region Valparaíso Region NEHUENCO COMPLEX CENTRAL ANGOSTURA · Los Quilos (39.9 MW) 874.7 MW I Diesel / Gas LAUTARO STATION · Chacabuquito (25.7 MW) Quillota, Valparaíso Region (COMASA) · Blanco (53.0 MW) · Nehuenco I (368.4 MW) 26 MW I Biomass · Juncal (29.2 MW) · Nehuenco II (398.3 MW) Lautaro, ·Juncalito (1.5 MW) · Nehuenco III (108.0 MW) Araucanía Region · Hornitos (61.0 MW) CANDELARIA chile CARENA STATION 254 MW I Diesel / Gas 10.0 MW I run-of-the-river Mostazal, Codegua Quillota, O'Higgins Region Valparaíso Region LOS PINOS MAULE BASIN 104.2 MW I Diesel 631.3 MW I reservoir /run-of- Cabrero, Biobío Region the-river *SANTA MARÍA Colbún, Yerbas Buenas, San Clemente, 350.0 MW I coal-fired Maule Region Coronel, Biobío Region · Colbún (474.0 MW) · Machicura (95.0 MW) ANTILHUE · San Ignacio (37.0 MW) 102.6 MW I Diesel · Chiburgo (19.4 MW) Colbún Power Plant Santa María Power Plant Valdivia, · San Clemente (5.9 MW) Los Ríos Region LAJA BASIN 249.2 MW I run-of-the-river Antuco, Quilleco, Tucapel, Biobío Region · Rucúe (178.4 MW) · Quilleco (70.8 MW)
ANGOSTURA 323.8 MW I reservoir Santa Bárbara, Quilaco, Biobío Region
CANUTILLAR 172 MW I reservoir (Chapo Lake), Cochamó, * Capacity delivered to the SIC Los Lagos Region
Nehuenco II Power Plant Canutillar Power Plant * Capacity reported to the CDEC-SIC in 2015
32 33 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
Ownership Structure Property Structure G4-7, G4-13 AFFILIATES
100% EMPRESA ELÉCTRICA INDUSTRIAL S.A. Twelve largest shareholders at December 31, 2015 (%) At December 31, 2015, the Matte 100% MINERA VALPARAISO S.A. 35.17 SOCIEDAD HIDROELÉCTRICA MELOCOTÓN LTDA. group directly and through other FORESTAL COMINCO S.A. 14.00 affiliates indirectly holds the control 100% of the Company (49.96% single RÍO TRANQUILO S.A. ANTARCHILE S.A. 9.58 series shares). The Matte group AFP HABITAT S.A. 4.85 100% holds investments in the electric TERMOELÉCTRICA NEHUENCO S.A. AFP PROVIDA S.A. 4.61 power, financial, forestry, real estate, 100% BANCO DE CHILE POR CUENTA DE TERCEROS CA 4.46 telecommunications and port services TERMOELÉCTRICA ANTILHUE S.A. sectors. AFP CUPRUM S.A. 4.09 COLBÚN 100% Similarly, Antarchile S.A. (taxpayer COLBÚN TRANSMISIÓN S.A. AFP CAPITAL S.A. 3.71 number 96.556.310-5) holds 9.58% BANCO ITAU POR CUENTA DE INVERSIONISTAS 3.32 100% ownership of Colbún allowing it to COLBÚN DESARROLLO S.P.A. BANCO SANTANDER - JP MORGAN 1.86 appoint a Board member. In addition, the AFPs altogether hold a stake of 100% BOLSA DE COMERCIO STGO BOLSA DE VALORES 1.67 INVERSIONES SUD S.P.A. 18.33% in Colbún. BANCHILE. CORREDORES DE BOLSA S.A. 0.97 100% INVERSIONES ANDINAS S.P.A. Other shareholders 11.71
Total Subscribed and Paid Shares 100,00 100% 51% 100% COLBÚN PERÚ S.A. INVERSIONES LAS CANTERAS S.A. FENIX POWER PERÚ S.A.
NOTE: At December 31, the capital stock of the company consisted of 17.536.167.720 single series, fully subscribed and paid non-par value shares. The number of shareholders at the closing date amounts to 3,245.
RELATED COMPANIES
42,5% ELECTROGAS S.A.
49% COLBÚN CENTRALES HIDROELÉCTRICAS DE AYSÉN S.A.
50% TRANSMISORA ELÉCTRICA QUILLOTA LTDA.
34 35 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
Corporate governance
The corporate governance refers to the whole set of principles, standards and mechanisms ruling the operation of the company, in order to create sustainable value for its shareholders and stakeholders.
VISION AND MISSION 1 Corporate governance structure
Shareholders Colbún’s workers, managers, directors and the and Board’s advisory committees are responsible for stakeholders POLICIES enforcing the corporate governance. At the top
Board of Directors of the pyramid there are the shareholders and 1 the other stakeholders, who are impacted by the STANDARDS 2 3 Directors’ Audit governance strategy of the Company. SUSTAINABLE STRATEGY Committee Committee Board External External worktable Auditing Auditing 2 Corporate governance Auditoría Auditoría RISK MANAGEMENT externa interna strategy
Main interrelated elements that promote an General Management and adequate governance of the Company and its Advisory Committees affiliates. Board of Directors
G4-37, G4-38, G4-39, G4-40, G4-43, G4-44, G4-49, G4-51, G4-52, G4-LA12 , G4-53 y G4-34 Workers and Contractors 3 Corporate governance Colbún’s Board of Directors regulates our Corporate The Board policies and procedures contemplate an annual Governance. Our Board of Directors is composed of nine individual or group visit to the Company’s facilities by the CULTURE framework members who do not hold executive positions, can be re- board members; last year, they visited Aconcagua Complex Internal (policies and procedures) and elected indefinitely, and may or may not be shareholders. power plants where they shared with the workers.
PROCEDURES external standards (regulations) ruling The Board holds monthly meetings to address all relevant Similarly, in 2015 the Chairman of the Board met with the the manner in which Colbún’s corporate matters relating to the Company’s performance and union leaders to address subjects of interest for both governance is implemented. operation. In addition, it validates corporate objectives parties. once a year, including several dimensions: financial results, social and environmental management, occupational At the Board meetings, the General Manager reports the safety, work environment and growth. Extraordinary most relevant situations relating to the relationship with Board meetings are held to address a specific or our main stakeholders. contingent subject; once a year the Board holds the Regular Shareholders’ Meeting, where all shareholders can participate with voice and vote.
36 37 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
Board of directors Board Compensations NOTES: Remuneración Remuneración Remuneración Remuneración - At the Regular Shareholders’ Anual Anual Comité de Comité de Meeting held on April 22, 2015, the Directores Directores Integrantes Cargo Board of Directors’ compensation 2014 2015 2014 2015 for the business year was (M$) (M$) (M$) (M$) approved. The Board members Bernardo Larraín Chairman 57.624 60.147 - - have not received any payment by way of entertainment expenses, Luis Felipe Gazitúa Vice-chairman 29.620 30.039 9.580 10.056 per diem expenses, royalties or attendance payments. Additionally, Bernardo Matte Director 11.826 - - - the Board did not make any expense in advisory services during Eliodoro Matte Director 28.812 30.172 - - 2015. - In the Shareholders’ Meeting of Arturo Mackenna Director 28.803 30.067 - - 2015, the Board elected Ms. Luz Granier in replacement of Mr. Eduardo Navarro Director 28.812 30.067 - - Sergio Undurraga (ID number: 4.280.259-k; Commercial Engineer Juan Hurtado Director 28.824 30.061 - - from the Pontificia Universidad BERNARDO LARRAÍN MATTE LUIS FELIPE GAZITÚA ACHONDO VIVIANNE BLANLOT SOZA Sergio Undurraga Director 28.835 7.340 9.580 2.490 Católica de Chile) who had been CHAIRMAN VICE-CHAIRMAN INDEPENDENT DIRECTOR in the position since 2009. The Board ratified Mr. Juan Eduardo Commercial Engineer PUC Commercial Engineer U. de Chile Economist PUC Vivianne Blanlot Independent director 28.834 30.075 9.580 10.018 Correa, who replaced Mr. Bernardo Luz Granier Independent director - 22.700 - 7.565 Matte (ID number: 6.598.728-7; Commercial Engineer from the Juan Eduardo Correa Director 16.984 29.977 - - Universidad de Chile) after his resignation on May 27, 2014. The Total 289.010 300.645 28.740 30.129 other Board members were reelected.
Number of Board members by age range p`Ù Women Men
Our directory has a self-assessment procedure performance, which 61 - 70
was approved at the end of 2015. This process is led by the Chairman of 51 - 60 the Board and will be implemented by first time in the first half of 2016, JUAN EDUARDO CORREA GARCÍA LUZ GRANIER BULNES JUAN HURTADO VICUÑA range Age 41 - 50 enabling to detect opportunities to improve management of the highest DIRECTOR INDEPENDENT DIRECTOR DIRECTOR 0 1 2 3 4 governance body Civil Industrial Engineer PUC Commercial Engineer U. de Chile Civil Engineer U. de Chile Number of members
NOTE: The age ranges used are in agreement with Standard 386 issued by the Diversity indicators SVS.
Matters of inclusion, diversity criteria when proposing the Number of Board members by seniority and non-discrimination are part candidates for the Board. Women Men of our “Code of Conduct and Luz Granier joined as the second More than 12 years 0 Business Ethics”. Colbún has not female Board member early in 9 – 12 years 4 implemented a procedure or 2015. Hence, Colbún has one of the More than 6 0 policy establishing diversity criteria less than 9 years largest female representations for the designation and election Seniority 1 in its Board of Directors among 3 – 6 years 2 of Board members, as it deems 1 closed stock companies in Chile. Less than 3 years the shareholders are entitled to 1 ARTURO MACKENNA ÍÑIGUEZ ELIODORO MATTE LARRAÍN EDUARDO NAVARRO BELTRÁN consider the above-mentioned 0 1 2 3 4 DIRECTOR DIRECTOR DIRECTOR Number of members Civil Industrial Engineer U. de Chile Civil Industrial Engineer U. de Chile Commercial Engineer PUC
38 39 ANNUAL INTEGRATED REPORT COLBÚN 2015
Our vision: be the raw model in the generation and sale of safe, competitive and sustainable energy
Advisory Committees
During 2015, the Directors’ Committee met The three advisory committees, namely the Audit Committee, the Directors’ Committee and several times to discuss matters proposed the Board Worktable inform the Board of the Company’s sustainability management. by the management to the Board and also, the transactions with related companies. In connection with the latter, the Committee made sure that these match the fairness conditions prevailing in the market for this type of operations or that these are within the regular transactions of Colbún line of business to then submit them to the Board’s consideration. BOARD
Directors' Committee Board Worktable Auditing Committee Reviews and issues an opinion on Instance where the Supervises the work of the financial statementrs and the Management shares and Internal Auditing, the main transactions a Director or informs the Board of several management of the complaint Main Executive is interested in. issues of relevance to the channel and the status of In the meeting of April 28, Company. compliance with the Law 2015, the Board appointed the The Chairman and the Vice- 20,393 Criminal Responsibility independent directors Vivianne chairman of the Board are of Corporations. Blanlot, and Luz Granier and members of the Work Table. The independent directors the director Luis Felipe Gazitúa Vivianne Blanlot and Luz as members of the Directors' Granier, and Luis Felipe Committee. Gazitúa are members of the Auditing Commmitee. The CON LAS PERSONAS QUE COMPONEN NUESTRA Internal Audiring Manager performs as the Secretary of COMPAÑÍA COMPARTIMOS UN PROYECTO COMÚN, the Committee. TENEMOS UNA ACITUD PROACTIVA, ESPÍRITU
INNOVADOR Y NOS IMPORTA EL DESARROLLO PROFESIONAL Y PERSONAL
40 41 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: who we are and what we do
Executives Diversity indicators
Front-line managers Executives by age range
Older than 70 between 61 and 70 1 between 51 and 60 3 between 41 and 50 5 between 31 and 40 1 Thomas Keller 9 1 range Age 5.495.282-1 30 years old or less CHIEF EXECUTIVE OFFICER Men Women 0 1 2 3 4 5 6 Commercial Engineer, Universidad Adolfo Ibáñez Number of executives
NOTE: The age ranges used are in agreement with Standard 386 issued by the SVS.
Executives by nationality Executives by seniority
Women Men
More than 6 and less than 9 years Juan Eduardo Vásquez Eduardo Lauer Carlos Luna 7.868.160-8 6.994.492-2 25.046.079-1 Between 3 and 6 yeas ENGINEERING AND PROJECT MANAGER BUSINESS AND ENERGY MANAGER GENERATION MANAGER Less than 3 yeas Civil Electrical Engineer, Civil Mechanical Engineer, Fach Civil Engineer, 9 1 Universidad de Chile Hochschule de Munchen (Alemania) Escuela Colombiana de Ingeniería CHILE COLOMBIA
years working at Colbún working years 0 1 2 3 4 5 6
Number of executives
Sebastián Moraga Juan Pablo Schaeffer Sebastián Fernández 12.026.836-8 10.373.614-5 10.673.365-1 FINANCE AND ADMINISTRATION MANAGER SUSTAINABLE DEVELOPMENT MANAGER DEVELOPMENT MANAGER Commercial Engineer, Lawyer, Commercial Engineer, Universidad Adolfo Ibáñez Pontificia Universidad Católica de Chile Universidad de Los Andes
Rodrigo Pérez Paula Martínez Heraldo Álvarez 10.313.675-K 14.449.738-4 12.369.371-K LEGAL AFFAIRS MANAGER ORGANIZATION AND PEOPLE’S MANAGER INTERNAL AUDITING MANAGER Lawyer, Psychologist, Accountant Auditor, Pontificia Universidad Católica de Chile Universidad Diego Portales Universidad de Talca
42 43 colbún: who we are and what we do
Management support committees Our Business Model G4-12, G4-14, G4-24, G4-25, G4-35, G4-36, G4-37, G4-43, G4-50
In the development of our work, we count on several inputs, primarily local development in the communities where we operate and raise financial, industrial, social, natural and human capital resources to the quality of life of our workers and contractors. In order to protect which we give value added through our business model in order the sustainability of the business, we identify, evaluate and manage to meet strategic organizational objectives. Consequently, we the risks that may impact our Company and stakeholders. generate and commercialize reliable, competitive and sustainable energy to our clients; operate power plants pursuant to high environmental standards; add value to our investors; contribute to Managers’ Committee Risk and Sustainability Information Security Committee (*) Committee
Instance where the Main Executives share Tracks the comprehensive management Supervises the Company’s information and report on the progress of the plans, of the main Company risks, including security process, making sure of the actions and strategies of their respective sustainability risks; it meets once a month. availability of the necessary resources for an areas; it meets once a week. ongoing monitoring; it meets once a month.
Project Committee (*) Regulatory Committee (*) Tax Committee
Monitorea y revisa los Tracks and reviews the Controls and supervises the development Tracks the status of the legislative and tax issues of the Company; it meets at least and execution of Company’s projects; it administrative processing of the draft laws, once every quarter. meets once a month. regulations and decrees that affect the development of the Company’s activities; it meets once a month.
( * ) These committees include the participation of a member of the Board of Directors (Chairman or Vice President ) and may also attend other Directors of the Company.
44 45
Colbún’s Inputs ConstructionGeneration Transmission Products Value added 2015 NUMBERS
Business CLIenTS: We seek to e ciently We build safe and e ient We operate power plants to supply We operate (Distributors and and carefully use our projects, minimizing their safe and competitive energy, transmission lines to industries) business inputs. socio-environmental impact. minimizing socio-environmental supply safe energy. reliable, competitive, Customer 12,504 impacts. sustainable energy. value gWh of energy sold Model Long-term relationships. FInanCIaL CaPITaL
Shareholders’ capital Bond placement InVeSTorS Colbún is a power generation company Shareholders’ Profitability and 583.3 Bank loans value long-term value. US$ million in that owns power generation plants and eBITDa InDUSTrIaL CaPITaL sells its electricity to distributors (regulated Commercialization Power plants of reliable, competitive Lines WorKerS 750 customers) and industries (non-regulated Projects under construction and sustainable Quality employment. workers trained energy Career development. customers) through contracts and/or by HUMan CaPITaL ConTraCTorS 223 Workers US$ million purchased from selling that energy to other generation Excellence in the value local suppliers and contractors Suppliers chain. Social companies on the spot market. It also Expertise in construction Contracting of local value and operation suppliers and 5.2 participates in the power transmission contractors. US$ million in social investment SoCIaL CaPITaL business. CoMMUnITY Communities Local development. 29,294 Authorities Continuous dialogue. people visited our power plants Guilds/Unions NGO’s Media 262 enVIronMenT thousand tons of C02 reduced naTUraL CaPITaL by power plants under Excellence in Environmental the Clean Development Mechanism Water environmental value Natural gas management. Coal 704 Diesel oil tons of particulate matter o t
Material economics and governance: Social: environmental: Availability and Reliability of the Health and Safety– Career Use of the Water subjects Power Plants – Business Ethics Development – Work Resource – Use of and Corporate Governance - Environment – Labor Materials and Growth – Profitability – Energy Relations/Local Development – E y – Agenda and Legal Standards Socio-Environmental Conflicts – Climate Change - Community Dialogue Biodiversity
Atmospheric emissions Potential E s and waste Water consumption (thermoelectric stations) Impacts Disturbance of the river flow regimes Disturbance of the landscape Disturbance of land and aquatic ecosystems Demographic increase
46 47 ANNUAL INTEGRATED REPORT COLBÚN 2015
Our actions and what we seek as a Company are mirrored in our vision, mission and values
VISION We want to be the raw model in the generation and commercialization of reliable, competitive © Who we want to be? and sustainable energy.
We generate long-term value by developing and MISSION managing energy infrastructure assets, excelling ` What we do? in the integration of the economic, technical, environmental and social dimensions.
VALUES INTEGRITY · EXCELLENCE · PASSION - Ù Which ideals guide our INNOVATION · COLLABORATION actions?
Sustainability is the business
During 2015, Colbún updated its ENTAL MANAGE NM MEN IRO T E Sustainability Policy emphasizing the NV XC -E EL IO L C EN generation of value for each stakeholder and O C S E Workers the respect for Human Rights. Quality employment Community and society The result of this work is shown in the Community dialogue and development “sustainability turbine”, which stresses that sustainability is the business and it is
Contractors therefore integrated to all Company’s areas and suppliers W and activities. Excellence in the GRO TH value chain
At the center of the turbine are growth and
P Environmental E profitability; without them it is not possible O P Natural P R Y O IT L FITABIL resources to add value for our stakeholders, while each E E and environmental C M care X blade of the turbine represents a particular A E
N T stakeholder. In turn, the turbine is driven by A N G Clients E E M our excellent people, socio-environmental M and vendors E E G N Long-term A and operational management. T relationships N Investors E by means of A X M C steady supply E Maximizing the L L A L long-term value N E N IO T C A E R PE Angostura Power Plant was O commissioned at the beginning of 2014
48 49 ANNUAL INTEGRATED REPORT COLBÚN 2015 colbún: quiénes somos y qué hacemos
Communication Channels
The Sustainable Development Division are presented by the General Manager at the Starting in 2016 Colbún will set up a We are part of an industry that is fundamental for the development of the country and the quality of life of its promotes the application of sustainability monthly regular Board meetings, including the Sustainability Worktable, where all company inhabitants. So, we seek to be in synchrony and to understand our stakeholders by means of relationships that criteria across the Company and is responsible progresses in social, environmental and safety areas will be represented and which purpose promote communication, confidence and respect. As part of our continuous improvement process, in 2015 we for supporting the dissemination and the performance of the Company, as well as the is to identify and manage the gaps. incorporated to our Corporate Reputation Index the perception of our suppliers, contractors, investors and management of sustainability inside the main socio-environmental contingencies, customers. organization. The responsibility for managing eventual fines, sanctions or complaints and We promote the permanent exchange and the criteria falls upon each Company the issues relating to the progress of the communication with our stakeholders, The following dialogue and communication channels are open and available through the year. area, regardless of the methodological projects and/or operations. In connection with convinced this is the best way to understand support provided by the sustainability area. the internal control and the adherence to the each other and to build the necessary Compliance with the Sustainability Policy and Code of Conduct and Business Ethics, they are confidence and respect to manage our the risks involved are a matter of discussion regularly informed by the Auditing Manager to business jointly. The following dialogue and and analysis in the monthly meetings of the the Auditing Committee and to the Board on a communication channels are open and Risk and Sustainability Committee. The most quarterly basis. available through the year. Investors Workers Environment relevant aspects identified through the process · Area that takes care of · Meetings of the supervisory · Early and voluntary citizen Investor Relations. level employees with the involvement. · Breakfasts, work meetings General Manager. · Lectures at seminars and and conferences. · Meetings with unions, and participative talks. Innovation · Perception surveys. subscription of collective · Environmental RSE Committee agreements. and Center of Leaders for Our innovation strategy is aimed at searching initiatives and projects that add value · Work climate and internal Climate Change. improve our competitiveness and allow the installation of new capabilities and practices in services surveys. our organizational culture.
In December of 2015 Colbún was awarded a CORFO’s Innovation Portfolio Management INNOVATION ACTIVITIES IN 2015 Community and Contractors and Clients and tool. This tool will support the development 3. Innovation days at the of new ideas raised by several areas and 1. Workshops in Santiago: 2. Safety challenges: society suppliers vendors power plants: which have fostered innovation inside Dialogue worktables. Participation in business · Commercial team with • Total number of partici- • Total number of • Total number of · · the Company. The funds will be spent in Periodic meetings with forums. specialized service to clients pants: 12 participants: 240 participants: 55 · prototyping these ideas and will allow authorities and neighbors. Suppliers and bidders’ and vendors. • Total number of ideas · clearing up certain doubts and risks relating • Total number of sessions: • Total number of ideas Participation in union and website. received on the platform: · · Perception survey. to their development. 14 (distributed in 4 months collected: 630 regional associations. Feedback meetings. 238 · of work) Periodic meetings with the Perception survey. • Total number of · · • Total number of ideas The initiatives will be selected out of a • Number of projects sub- prototyped ideas: 12 media. implemented from portfolio containing the best ideas collected mitted to the Innovation Visits to power plants. the 2015 challenge: 32 • 3 ideas under · from the Innovation Days at the power Panel: 6 Public accounts. (Nehuenco: 7 ideas; analysis for eventual · plants, the workshops in Santiago and other Perception surveys. • Number of projects se- Candelaria: 5 ideas; implementation · instances that have enabled us to detect Reception of letters and lected by the Managers’ Colbún: 20 ideas) · value opportunities Committee: 3 (the 3 will telephone calls. ETHICS HOTLINE • Total number of ideas be worked out during Mass media newspaper ("+ implemented from the · We have an Ethics Hotline where any individual member of 2016) Energía", TV show, radio, 2014 challenge (Santa an internal or external stakeholder group can ask questions webpage, Facebook). María challenge): 23 or raise ethics-related allegations by email, telephone, conventional mail or in person.
50 51 ( ECONOMIC PERFORMANCE AND GOVERNANCE
WE BUILD PROJECTS TO SUPPLY reliable, COMPETITIVE AND SUSTAINABLE ENERGY
52 53 ANNUAL INTEGRATED REPORT COLBÚNCOLBÚN 2015
Profitability
Why is it material? ECONOMIC PERFORMANCE AND Profit generation enables us to be sustainable over time. To his end, we must constantly monitor and control the risks inherent to our GOVERNANCE business.
In this chapter, we go over the management of material aspects relating to the Company’s “financial and industrial capital”. What stakeholders are impacted by this material Manage resources in order to generate economic results in line with the expectations of our shareholders aspect? allows us to go no with operations in time and secure the business sustainability Although it first impacts the shareholders, profitability is an issue that affects all our stakeholders. As mentioned in our Availability and Business ethics sustainability turbine, we cannot generate MATERIAL Profitability reliability of Growth value for our stakeholders if Colbún is not a ISSUES and corporate power plants governance profitable company.
Interest rate External threat to Reputational Supply/demand and What is our objective? RELATED variation Company’s assets damage power sale price RISKS (for example: nature variation risk Maximizing the long-term value of the company Exchange rate and fires) Unethical or unlawful by means of an outstanding operation. variation business conduct Opposition to the Fuel supply development of Lower access to projects liquid funds Process and/or system failure Conflicts with local How do we manage? Lower own and communities customers’ credit Long drought To maximize the long-term value of the capacity Opposition by the Company, we seek to integrate with excellence communities Fuel price variation the operational, financial, environmental, Socio-environmental community relations, and customer /workers Variation of incidents relationship management aspects. hydrological conditions
How do we measure?
Commercial policy Relationship with Handling of Business policy Direct economic value generated and MANAGEMENT subcontracting and information of distributed (G4-EC1), EBITDA (Colbún-1.EC) AND REGULATORY Financing policy companies and interest to the Growth plan FRAMEWORK suppliers market Investment policy Efficient asset General Standard Who is accountable? Dividend policy management 385/386 (efficient All Colbún’s workers seek to improve the Risk control maintenance and Ethics Code management and operation) results of the Company. policy Information Risk control Management Policy Policy on Investor management and Relations policy Policy for the contracting of goods and services supplied by politically exposed persons
Policies and procedures of the Board
Policy on the Delegation of Authority
54 55 ANNUAL INTEGRATED REPORT COLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
Financial Management Profitability G4- EC1, Colbún-1.EC DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED (EC1, MILLION US$) 2014 2015 2015 was a good year from the viewpoint of Within the framework of the At December 31, 2015, the net consolidated Operating income 1,762.9 1,561.9 our economic results. For the second year internationalization process and the financial debt of the Company amounts to Financial income 15.2 13.4 in a row, the company obtained a record in expansion to new Latin American markets, US$1,174 million and shows a total debt/equity terms of EBITDA. This result is due mainly on December 18, 2015, through a consortium ratio of 1.01 and a coverage ratio (EBITDA to Other revenues (1) 9.2 31.2 to the good mix of energy generation and where Colbún holds a 51% stake, acquired net financial expense) of 6.45. At the same Total direct economic value generated (VEG) 1,787.3 1,606.4 low fuel costs, and the long-term energy Fenix Power Perú S.A. Such company has date, the Net Debt to EBITDA Ratio reached sale contracts which levels and terms allow a 570 MW combined cycle thermoelectric 2.0 times, largely consistent with companies Operating expenses 1,117.0 828.7 forecasting a long-term profitability in line power plant based on natural gas in the having an “investment grade” international Employees’ compensations and benefits 60.3 62.1 with the investments and risks undertaken district of Chilca, approximately 64 kms risk rating. Payment to capital providers /Financing activities 106.6 146.7 by the Company. south of Lima. Payments to the state (4) 12.2 13.9 At 2015 closing, at a national level Colbún Fixed asset investment 119.2 291.7 As compared to 2014, the average cost Fenix is valued in US$786 million, which was rated A+ by Fitch Ratings and AA- by Community investments 4.3 5.2 of own thermoelectric power generation deducted from the Company’s debt meant Humphreys, both with stable perspectives. Total economic value distributed (VED) 1,419.6 1,348.2 dropped significantly, thereby reflecting cash contribution by US$421 million. Of this At an international level, the company was the decrease in the price of fossil fuels amount, Colbún disbursed 51%, i.e. US$214 rated BBB by Fitch Ratings and BBB- by in international markets and the better million. This 51% stake implies that Colbún Standard & Poor’s (S&P), both with stable Net effect of financing activities 223.2 (22.9) contractual conditions of natural gas supply consolidates Fenix’s operation from the perspectives. RETAINED ECONOMIC VALUE (VER) 590.9 235.3 for our combined cycle power stations. date indicated above in the 2015 Financial NOTES: Statements. 1) Income from tax returns (PPUA: provisional payment for profits absorbed). 2) Expenses in dividends (shareholders) and interests (banks). Ordinary income for 2015 amounted to US$ 3) Net value of revenues and loan payments (only capital, no interests). 1,314 million, lower by 13% as compared to The net consolidated financial debt of the 4) Accrued taxes by MMUS$ 87.4 and 99.6 for 2014 and 2015, respectively. The values included herein correspond to the Company’s cash flows during 2014 and 2015, therefore, they do not 2014, due mainly to lower revenues from Company increased by US$113 between match the amounts indicated in the Comprehensive Income Statements. contracted clients as a result of lower sale December 2014 and December 2015. This CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (MILLION US$) prices over the drop in the price of fossil increase is due mainly to the disbursement 2014 2015 fuels. Raw material and fuel costs in 2015, to purchase Fenix Power Perú, as well as totaled US$ 641.1 million, down by 27% from the debt consolidation by US$378 million, Current assets 1,261.8 1,365.8 the previous management period. offset by the net positive cash flow (US$699 As a result of the above, the operating million) from operating activities in 2015. Non-current assets 5,112.2 5,787.4 income measured by EBITDA reached US$ Total Assets 6,374.0 7,153.2 583.3 million, up by 8% from 2014, and consolidated net profits reached US$ 202.1 Current liabilities 258.3 707.8 million, an increase of 146% as compared to Non-current liabilities 2,777.7 2,778.2 the previous year. Net equity 3,338.0 3,667.1
Total Liabilities and Net Equity 6,374.0 7,153.2
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ANNUAL INTEGRATED REPORT COLBÚNCOLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
Evolution of the main Colbún’s indicators
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME BY SEGMENT (JANUARY-DECEMBER, Million US$) TOTAL INCOME FROM ORDINARY ACTIVITIES EBITDA (million US$) 2014 2015 (million US$) 700 2.000 MUS$ MUS$ 600 1.500 500 Net income from ordinary activities 1,502.6 1,313.9 400 1.000 300 Raw materials and consumables used (883.7) (645.9) 500 200 Personnel expenses (59.7) (56.1) 100 0 0 Depreciation and amortization expenses (182.4) (194.9) 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Other expenses by segment (22.6) (28.5)
Other profits (losses) (1.4) 0.5
Profits from operating activities 352.8 388.8
Financial income 5.6 5.5 Profit attributable to the parent company Profit attributable to the parent company Financial costs (76.0) (90.5) (million US$) per share (in us$/1,000 shares) 250 14 Shared profits (losses) from related companies and joint ventures accounted for (99.3) 6.6 200 12 10 using the equity method 150 8 Exchange rate differences (22.4) (11.2) 100 6 50 4 Income from readjustment units 9.1 2.4 2 0 0 Earnings before tax 169.7 301.7 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 -50 Income tax expense (87.4) (99.6) -100
Cash flow from operating activities 82.3 202.1
Profit attributable to EBITDA / ACTIVO FIJO (%) Profit attributable to the parent company / net equity (%) Profit attributable to the parent company 204.7 82.3 8 % 20 % Profit attributable to non-controlling interest (2.6) - 6 % 15 %
10 % 4 %
5 % 2 %
0 0 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
58 59 ANNUAL INTEGRATED REPORT COLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
Investor Relations
It is of the utmost importance for us in Colbún that all our investors and shareholders, no matter their size, are duly informed of the Company’s operations and latest Gross financial debt / net equity (%)
80 % developments.
60 % Therefore, by means of our investor relations area, we have strengthened the 40 % communication with industry investors and analysts through visits to our power plants, 20 % participation in breakfasts, periodic meetings at our offices and local and international 0 investors’ conference calls, where we provide timely response to their requests. 2010 2011 2012 2013 2014 2015
In addition, on occasion of the quarterly publication of the financial results, this area prepares analysis reports and holds international conference calls to update the presentation of results to our investors. This material is available for any interested individual at our Company website, where it is periodically updated. Gross financial debt / EBITDA (times)
8
6
4
2 Financial Policies Approved by Our Shareholders
0 2010 2011 2012 2013 2014 2015
Generation (GWh) 14.000 SHAREHOLDERS 12.000 10.000 8.000 6.000 4.000 2.000 0 2010 2011 2012 2013 2014 2015 Dividend Policy Investment Policy Financing Policy
Investment decisions shall Financing shall seek to consider, among others, provide the necessary the Company's power sales funds for the adequate contract portfolio, the operation of the existing Installed capacity (MW) % contribution of each project assets, as well as of the 4.500 to the Company's generation new investments. The 4.000 3.500 mix and the medium to indebtedness level shall not 3.000 2.500 long term profitability. jeopardize the "investment 2.000 Total investments in the grade" credit rating of the 1.500 30 1.000 Of the net profits for the management period shall debt instruments issued. 500 period. 0 not exceed 100% of the net 2010 2011 2012 2013 2014 2015 equity.
60 61 ANNUAL INTEGRATED REPORT COLBÚN 2015
reliable competitive and sustainable supply G4-EU2, G4-EU3, G4-SO7
During 2015, Colbún updated its Commercial Policy in order to COLBÚN’S INSTALLED CAPACITY IN THE SIC CHILE 2015: Colbún maintains a personal relationship with each customer, which 3,282 MW embrace the changing market conditions and the status of our enables us to reinforce the links and provide quick response to generation and projects portfolio. Based on different hydrological their needs and concerns. In 2015 we signed contract addenda with scenarios, market analyses and forecasts of energy committed Chilectra and SAESA Group, which approached the parties’ positions under contracts, we determined the commercial guidelines for our in connection with the application of supply contracts, confirming the business. negotiation capacity and the good will of both parties. 48,6 % 51,4 %
Colbún supplies energy to 18 large customers, among which we find 15 regulated customers (distribution companies) and 3 free or industrial customers (mining companies, transport services and Hydraulic Thermal water treatment plants). Free Competition To provide safe energy, we have 3,282 MW installed in the Central COLBÚN’S GENERATION IN THE SIC CHILE 2015: Colbún promotes a Free Competition Policy Interconnected System (SIC). Our generation mix keeps a balanced 12,535 GWH approved by the Board. This policy states combination of renewable technologies (mainly hydroelectric, that all employees must fully abide by the supplemented with purchases of energy or NCRE attributes, namely free competition standards. It also defines wind and biomass generation) and thermoelectric (with very the practices understood to be against demanding emission standards), which allows a safe, competitive 51,6 % 48,4 % free competition, such as collusion or any and sustainable supply. We seek to ensure levels of excellence type of agreement between Colbún and its in managing the technical, economic, social and environmental competitors involving prices, sale conditions, dimensions of the business to meet our sustainability commitment market segmentation and production and goals. limitation, among others. Hydraulic Thermal
Since 2011, the Company trains its main NUMBER OF DISTRIBUTORS AND INDUSTRIAL CLIENTS Total Generation in the SIC (Chile) executives in order to provide them with by type of fuel Tipo de clientes 2013 2014 2015 information about the latest developments 2% in free competition matters. Distribuidoras 16 16 15 3% 2% 5% Industriales 6 6 3 Colbún has not been sued for unfair Total 22 22 18 16 % competition, antitrust conduct, or practices 45 % against free competition. NOTE: At December 31, 2015, three clients account for at least 10% of the 27 % revenues: National Copper Corporation of Chile 23%, CGE Distribución 22% and Chilectra S.A. 16%.
Hydroelectric Wind Coal Diesel LNG Solar Biomasa
62 63 ANNUAL INTEGRATED REPORT COLBÚN 2015
Physical sales to regulated customers reached Availability and reliability 11,053 GWh in 2015, down by 7% from December 2015 ENERGY SALES PER TYPE OF CUSTOMER IN CHILE (GWh) of 2014, due mainly to the termination of of our power plants Spot Market Quarter Regulated Clients Total CONAFE'S contract in April of 2015, and Codelco’s (CDEC) marginal cost contract in December of 2014, Distributors Industrial Why is it material? added to a lower demand from regulated and Jan-Mar 1,733 1,048 332 3,114 We seek to be the raw model in the generation free customers. Net YTD spot market sales at Apr-Jun 1,699 1,125 486 3,309 of reliable and safe energy according to the December 2015 totaled 1,328 GWh, more than Jul-Sep 1,636 1,106 456 3,197 commercial commitments undertaken and the double the previous year’s number. However, Oct-Dec 1,557 1,150 178 2,885 operation required by the power system so as it is worth noting that part of these sales are 6,625 4,428 to ensure its sustainability over time. To this end, credited to Codelco, per the contractual terms Total 1,452 12,504 , we must control the risks associated with our 11,053 with this client, in connection with the portion of operational continuity, such as potential failures in the processes and /or systems, the capacity to get the Santa Maria’s thermoelectric power supply. the fuel we need to operate, the long droughts and the potential threats against our generation assets. Total YTD generation in 2015 dropped by 1% as AVERAGE CAPACITY SALES PER YEAR (MW) What stakeholders are compared to the year before, due mainly to 2014 2015 lower diesel (-55%), hydroelectric (-3%) and coal Availability and reliability impacted by this material generation (-8%). This decrease was partially Total 1,710 1,699 aspect? offset by greater generation with natural gas of our power plants The availability and the reliability of our power (+14%). G4-EU6, G4-EU30 plants is an issue that impacts all our stakeholders as it affects the Company’s financial results and the cost of the power supply in the SIC.
OWN PRODUCTION AND SPOT MARKET PURCHASES (GWH) Maintenance Management What is our objective? During 2015 we progressed in the management of major maintenance, by enhancing Own Production Purchases TOTAL Quarter Our goal is to meet the reliability and availability Hydraulic Thermal Gas Thermal Diesel Thermal Coal Total CDEC Energy the planning, introducing best execution practices and reducing the scheduled commitments undertaken and seek to achieve interruption time. January – March 1,098 1,147 141 792 3,177 0 3,177 world-class standards in connection with these April - June 1,358 1,202 102 699 3,361 0 3,361 indicators.
July – September 1,724 868 0 651 3,243 0 3,243 How do we manage? October –December 2,285 204 1 263 2,753 116 2,869 Downtime (in hours)
Total 6,464 3,421 244 2,405 12,535 116 12,651 2014 2015 Together with having an efficient thermal complement that ensures a safe supply to our Planned 13,125 20,197 clients under difficult hydrological scenarios, we Unplanned 14,079 11,911 will strive to achieve an excellent management in Efficient base generation (hydroelectric and GENERATION VERSUS COMMITMENTS 2015 (GWh) Total 27,204 32,108 terms of maintenance, critical spares and safety coal) provided for 80% of yearly commitments, 1200 in our facilities. up from 2014 (78%). The other commitments were covered with natural gas supply, which 1000 How do we measure? considering the commercial conditions We also made significant progress in the prioritized implementation Average plant availability factor by energy source of the recommendations made by expert operational risk negotiated by Colbún now also represents a 800 and regulatory regime (G4-EU30) / Management cost-efficient source of generation. The following management advisors and by our insurers. to ensure the short and long-term availability of chart shows an adequate commercial balance 600 power supply (G4-EU6). between Colbún’s cost efficient generation capacity and its supply commitments. Except 400 Who is accountable? for December, where low marginal costs were Generation Division, Energy Business and recorded in the system, in 2015 all commitments 200 Management Division. were supplied with own efficient generation.
0 Ene Feb Mar Abri May Jun Jul Ago Sep Oct Nov Dic
Hydroelectric Generation Thermal Diesel Generation Thermal Coal Generation Compromisos Natural Gas Thermoelectric Generation 64 65 ANNUAL INTEGRATED REPORT COLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
MAINTENANCE OF THERMOELECTRIC Hydroelectric POWER PLANTS Power Plants
Major maintenance scheduled works were brought forward and Management indicators showed good results, with a Load Factor of 43.6% slightly lower than Nehuenco: implementation of a plan to increase the significant modernization works were undertaken, namely: in 2014 (44.2%). This load factor is normal for hydroelectric power plants and for dispatch efficiency and the reliability of the water supply for the conditions at thermoelectric power plants. Complex, with the commissioning of two reverse osmosis pilot Aconcagua Complex: improvements were made with Power plant availability reached an average of 91.5%, a significant improvement as compared plants, project that added to the computerized management of the installation of new predictive maintenance systems at the to the 88.8% of 2014. Unavailability due to power plant failure amounted to 3.52% down from existing wells through the SCADA monitoring system. Complex and major maintenance was done to Los Quilos power 2014, when it reached 4.45%. plant. Despite the numerous safety measures promoted by the Candelaria: between March and May the units underwent Company, by year-end in Chacabuquito hydroelectric station an the annual maintenance, and modifications were made to accident was recorded during the development of maintenance Availability per hydroelectric AVAILABILITY PER THERMOELECTRIC the combustion system and turbine section to meet the works. In consequence, repair and modernization works were power plant (%) POWER PLANT (%) environmental regulation and increase the efficiency of the undertaken to improve the standard of those systems in the four Station 2014 2015 units by approximately 3%. Station 2014 2015 units of the Complex. Carena 94.93% 94.32% Nehuenco I 91.62% 93.10%
Antilhue and Los Pinos: signature of a Service Agreement Los Quilos 95.69% 90.56% Nehuenco II 88.26% 92.38% Carena Station: structural reinforcement of the power plant (CSA) with General Electric for maintenance and servicing of Chacabuquito 93.89% 73.49% Nehuenco III 97.26% 98.09% tunnels for greater reliability in the carriage of water. turbine failures, including spare parts and technical assistance. Juncal 95.16% 95.16% Candelaria I 97.58% 91.46% Colbún Complex: major maintenance was done after Blanco 3.03% 83.78% Candelaria II 98.50% 93.16% Santa María: Major maintenance in November; the works 30 years of operation of Colbún’s Complex Unit 2 and major Hornitos 90.58% 95.76% Antilhue I 96.98% 97.37% included the review of the water-steam circuit for increased maintenance of Machicura’s Unit 1. San Ignacio, Chiburgo and San Colbún 97.28% 94.70% Antilhue II 84.34% 76.39% efficiency and the replacement of pipelines in the super-heater Clemente Stations also underwent maintenance. Machicura 97.07% 96.33% Los Pinos 89.55% 91.27% 4 and re-heater 1 of the boiler, maintenance of the forced draft San Ignacio 97.81% 97.69% Santa María 83.77% 79.4% ventilators and general review of the capacitor to increase the Biobío Complex: work was developed to clean the intake Chiburgo 98.80% 98.20% reliability. system fence of Angostura power plant with a method that San Clemente 98.76% 98.50% enabled us to conduct the work without causing unscheduled Angostura 71.36% 90.38% Of the gas-fired power plants, the main is interruption of the generation units and with greater safety, as Rucúe 96.46% 99.96% Nehuenco Complex, which combined cycles there was no need to use the divers’ team. Quilleco 97.96% 98.49% recorded an availability of 92.7% and a load factor of 51.6%. Simple cycle power plants Canutillar Power Plant: the power plant underwent Canutillar 91.55% 94.52% recorded an availability of 90.8% and a load major maintenance. Juncalito 87.14% 74.88% factor of 4%. Santa María Complex was
available 79.4% of the time due to major Aconcagua Power Plant maintenance done in November and a The availability of hydroelectric power failure recorded during the commissioning plants reached 94% with a load factor of after the maintenance works. The load 46.2%. It is worth mentioning the operational factor of this power plant was 78.4%. consolidation of Angostura hydroelectric power plant commissioned in 2014, and the resuming of Aconcagua’s Blanco Complex operations after 13 months of repair and modernization works.
Candelaria Power Plant
66 67 ANNUAL INTEGRATED REPORT COLBÚN 2015
Ethics and corporate governance Ethics and corporate Why is it material? Robust corporate governance, based on ethics and transparency is essential to maintain the confidence our governance investors and stakeholders. We evaluate and manage the risks associated with G4-41, G4-56, G4-57, G4-58, G4-SO3, G4-SO4, G4-SO5 potential defaults of Corporate Governance issues or other standards, and we have an Ethics Management The relevance of transmission Corporate governance framework System open to all our stakeholders. G4-EU4, G4-EU12 What stakeholders are impacted by Our corporate governance is ruled by a series of standards and policies this material aspect? Electric transmission infrastructure is Colbún owns 916 km of transmission lines and a total of 28 substa- disseminated inside the Company Ethics and corporate governance is an issue that affects fundamental to ensure the reliability of power tions. The transmission team pertains to the Energy Business and all our stakeholders. supply and its competitiveness and access to Management Division, and is made up of 39 people. the various generation sources. What is our objective?
During 2015, a dedicated transmission Managing our business in agreement with the high TRANSMISSION LINES OWNED BY COLBÚN ethics and transparency standards we have imposed on management area was set up in order to: ourselves. 2014 2015 · Define and conduct scheduled and Transmission Assets RULES AND POLICIES Km Km unscheduled maintenance activities to How do we manage? improve efficiency and reliability indicators. Colbún S.A. 652.2 652.2 We have a governance system based upon the pillars of our Code of Business Ethics, the policies and procedures · Participate in the technical definition of new Affiliates (Colbún 263.8 263.8 Trasmisión S.A.) of the Company, a crime prevention model and a com- transmission facilities developed in order plaint hotline. to meet the regulatory reliability and safety Total 916.0 916.0 standards. Code of Conduct and Business Ethics Which Global Compact principle is · Gather, complete and manage transmission 1 this aspect related to? technical data to respond to the authorities’ Principle number 10: The companies must act against requirements. TRANSMISSION LOSSES AS A PERCENTAGE OF TOTAL any form of corruption, including extortion and bribery. Delegation of Authority (DOA) Establishes criteria and general principles ENERGY · Over the long-term, the goal is to improve 2 in order to ensure that corporate transactions are reviewed and authorized by 2014 2015 the proper Company levels. How do we measure? transmission losses (measured as a Transmission losses 2.30% 1.6% Processes whereby the highest governance body percentage) and the reliability trend of the POLICIES prevents and manages potential conflicts of interest (G4- power lines. 3 Guidelines that rule internal processes, in line with the Company’s strategy, 41) / Values, principles, organizational standards and rules, Company’s principles and values. such as codes of conduct or codes of business ethics NOTE: Transmission losses are directly tied to the coordinated operation of (G4-56) / Internal and external advisory mechanisms the Central Interconnected System (SIC), which is defined by the Economic Procedures that promote an ethics and lawful business conduct, and Load Dispatch Center (CDEC-SIC, entity foreseen in the General Law 4 Description of the sequence of tasks required to undertake an activity or process. on Electric Power Services charged with determining and coordinating that help find out issues relating to the organizational the operation of the group of installations of the central power system, integrity (G4-57) /Internal and external mechanisms including power generation stations; trunk transmission lines, etc.) to inform unethical or unlawful business conducts and issues relating to the organizational integrity (G4-58) / Colbun makes available to all its workers the Corporate Policies and Procedures Number and percentage of centers where assessment Website, which allows access to the following information: has been made of the risks relating to corruption and a total of • Corporate Documents significant risks detected (G4- SO3) / Anti-corruption Colbún • Map of Company processes communication and training policies and procedures counts • Map of Policies and Procedures per process (G4-SO4)/ Confirmed cases of corruption and measures 916 with adopted (G4-SO5). Transmission lines Km 28 substations Who is accountable? All Company’s employees from the workers to the Board members
68 69 ANNUAL INTEGRATED REPORT COLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
Ethics Culture Crime Prevention Model
G4-42, G4-50
Colbún’s Code of Conduct and Business Ethics Four ethics related allegations were received in 2015 that were fully addressed and Our company has implemented a Crime Such model was certified in 2015 by the ICR risk in place since 2013 contains the principles, solved in agreement with the existing procedure. The Ethics Committee is the body Prevention Model, within the framework of Law rating agency. values and practices that must guide the daily charged with the investigation and operational analysis of the allegations and must 20,393 on Criminal Liability of Legal Entities actions and the decisions of all our workers, assure an independent, confidential and non retaliatory resolution for the reporting that seeks to prevent the risk of bribery, Similarly, during 2015, the workers from our contractors and suppliers. In 2015 the Board employee. The results of the investigation are later submitted to the Board’s Auditing money laundering and terrorism financing. The power plants and Santiago corporate offices reviewed the Code of Conduct and Business Committee, which is the final responsible for this communication channel. model contemplates an internal and external received onsite training on anti-corruption Ethics and jointly with Internal Auditing updated regulatory framework, and a Crime Prevention procedures, including the Law on Criminal the document to match it to the current events Manager (Internal Auditing Manager) Responsibility and bribery. In 2015 we received and challenges. designated by the Board of Directors. no allegations in connection with corruption The Ethics Committee channels all the cases. allegations received; it is made up of Internal To Colbún it is fundamental to act in Auditing, Legal Affairs and Organization and a consistent and transparent manner, People Management. preventing the conflicts of interest or All Colbún workers must read the Code of managing them adequately when they Conduct and Business Ethics upon joining the come up. Therefore, in our Code of Conduct The Code of Conduct Company and review it on a periodic basis and Business Ethics we defined a conflict and Business Ethics thereafter. This document is published on of interest arises in any situation where a The Code of Conduct and Business Ethics our webpage so that all of our stakeholders worker resorts to his contacts and/or his contains the principles, values and practices may have access thereto and ask questions position in the Company to its own (or close that must guide the daily actions and the or raise allegations. To this end, we have a relatives’) benefit, businesses or finances. decisions of all our workers, contractors and communication channel available on our Also, the Code provides that each worker suppliers. webpage, that operates either by phone, is responsible for preventing these issues email or personally, to receive direct and or managing them adequately, by notifying anonymous allegations relating to the (non) any situation of potential conflict of interest compliance with ethics standards, conflicts to his direct supervisor and the Internal of interest and any other issue relating to a Auditing Manager. potential non compliance of the standards. This communication channel may be used by In the event that a Board member finds any party interested. In addition, the complaint himself in a situation of potential conflict mechanisms are informed to the employees by of interest, he must report this fact to means of the intranet and on our Bulletin Board. the Board. Similarly, the disclosing Board member shall abstain from participating in the discussions relating to the reported issue, in the manner set forth by the law.
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Risk Management G4-35, G4-42, G4-45, G4-46- G4-47
• Ensure the sustainability of the business, defining mitigation actions in front of impacts brought about by Identification the adverse consequences of the variables that affect Evaluation our results.
• Integrate the risk perspectives in the corporate management of each business area. Risk • Generate an organizational structure and a communi- management management methodology that enables us to manage the Company’s risks. cation methology Definition of • Minimizar de forma costo-eficiente los riesgos para the action responder al entorno cambiante en el que se desarrolla plan el negocio. Monitoring • Track the compliance with the mitigation plans and control agreed upon and the resulting residual risks.
Main risks faced by the company:
Hydrological
The Company has set up a Risk Management Fuel prices
Unit and a Risk and Sustainability Committee Fuel supply/availability that follow up on the strategic risks faced Power Business Equipment and maintenance by Colbun. Risk management is deemed to Risks failures be a comprehensive part of the company Project construction business and is one of the matters the Economic Risks Regulatory defaults General Manager reports to the Board Demand/supply/price for discussion and analysis. The Risk and variations
Sustainability Committee holds monthly Exchange rate meetings and is made up of the General Interest rate Manager, the Main Executives and is Financial Risks Credit attended by a representative of the Board. Liquidity Other Board members can also attend these meetings. The General Manager provides a Ethics and Reputational damage Governance monthly report on these issues to the Board. Related Risk Unethical conducts Retention of professionals
Strikes Labor Risks Risks relating Occupational accidents to Social Performance Regulatory defaults Interruption of projects and/or Community operations Risks Community incidents
Climate change Environmental Environmental Risks Risks Regulatory defaults
Environmental incidents
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Growth perspectives
Why is it material?
We are a company with growth vocation that seeks to supply safe, competitive and sustainable electric power required by the Growth perspectives countries to support and encourage their economic development. In order to respond to this challenge, we must track, evaluate and project all the conditions that define our growth potential and capacity. Internationalization What stakeholders are impacted by this material In 2015 Colbún deepened the search of As a result of this development plan, on aspect? opportunities in Latin America; to such December 18, 2015 the Company subscribed end, it set up a Development Management the purchase of Fenix Power Perú that Growth is an issue that affects all our stakeholders. Unit especially dedicated to gear the owns a 570 combined cycle thermoelectric Company’s efforts toward such goal. In the power station in the district of Chilca, What is our objective? first stage, the search of opportunities has south of Lima, and accounts for 9% of the been focused on Peru and Colombia, due Peruvian generation market in the National Our goal is to add new capacity that enables the to their attractive economic situation and Interconnected System (SEIN). It is the most company to meet the demand and to ensure a competitive, safe and reliable power supply. We consolidated power regulatory framework. efficient thermoelectric power plant in the seek to grow our installed capacity in the region, Participating in such markets could improve system that operates on long-term natural with an initial focus in Chile, Peru and Colombia. diversification in terms of hydrological gas contracts and holds long-term contracts conditions, generation technologies, access with the main distribution companies. In How do we manage? to fuels and sound regulatory frameworks. order to materialize the transaction, a Our development plan is aimed at increasing The search centered on existing assets consortium was set up partnered by Blue our installed capacity maintaining an efficient in operation that would not compromise Bolt A 2015 Limited – a subsidiary controlled generation mix that contemplates a relevant our Investment Grade risk rating, comply by Abu Dhabi Investment Authority (ADIA) hydroelectric component, an efficient with the Investment Policy approved by - and the Infrastructure Investment Fund thermoelectric complement and a greater the Shareholders’ Meeting, and where managed by Sigma Peru. Pursuant to the penetration of other renewable sources. we could identify some room to apply agreement, Colbún shall have 51% of Fenix top-level management criteria in financial, Power Peru, acting as the parent company How do we measure? environmental, technical terms, taking care and the operator, while ADIA shall have 36% Long-term planned capacity versus the of our stakeholders. and Sigma, 13%. projected demand for power broken down by
energy source and regulatory regime. (G4-
EU10) / Description of the status of Company’s projects, future perspectives and growth- related goals (Colbún-6.EC).
Who is accountable?
Engineering and Projects Division, Business and Energy Management Division and Development Management.
Fenix Power thermoelectric power plant has an installed capacity of 570 MW, being the most efficient plant of the country.
74 75 ANNUAL INTEGRATED REPORT COLBÚN 2015 ECONOMIC PERFORMANCE AND GOVERNANCE
Projects Projects under Execution Colbún-6.EC
At Colbún we are committed to maximizing the value of our company, by exploring and identifying growth opportunities through projects that will enable us to meet electricity San Pedro-Ciruelos requirements in a competitive, safe and sustainable manner. Transmission Line Project
San Pedro–Ciruelos transmission line project To meet this objective, we have a diversified portfolio of projects at different development will inject energy from San Pedro power stages, which completion is subject to the technical/financial evaluation of each initiative, the plant to the Central Interconnected System power requirements of the country and the development of activities aimed at achieving an over a 47 km, 220 kV single circuit line that adequate insertion of the projects within their environment and in the communities where we will connect to Ciruelos substation, located operate. some 40 kms northeast of Valdivia. The main activities conducted so far are related to the Projects under construction line easement negotiations.
The power will be injected to the Central The project started its construction Santa Maria Complex’s Unit II La Mina Hydroelectric Project Project (350 MW) (34 MW) Interconnected System (SIC) over a 220 kV stage in January of 2015, and so far it has line at the Loma Alta substation by means progressed 46%, which is in agreement with The thermoelectric project is located in the La Mina is a non-conventional renewable of a 24 km, 66 KV single circuit high-voltage the schedule. The project is expected to municipality of Coronel, Biobío Region and energy (NCRE) project located in the district line. The power plant will use the Maule River start commercial operations early in 2017. contemplates an installed capacity of 350 of San Clemente, some 110 km east of waters downstream of the intersection with The amount to be invested, including the In June of 2015, the Company filed the San Pedro Hydroelectric MW. At present, Colbún has already obtained Talca. This run-of-the river power station Puelche River, to return them to the Maule transmission line is approximately US$130 Environmental Impact Study with the project Power Plant Project the environmental permitting to develop this contemplates an installed capacity of 34 MW River 2 km downstream of the catchment million, of which 44% has already been modifications, which was initially admitted to second unit of the complex. and an annual average generation of 191 GWh. point. expensed. (160 MW – 170 MW) processing by the Environmental Evaluation Service of Los Ríos. However, in August, the San Pedro hydroelectric power plant project During 2014-2015 we improved its design, by authority early terminated the process due is situated some 25 km northeast of Los incorporating new technology to meet the to lack of relevant information, which was Lagos Municipality in Los Ríos Region and demanding emission standard in force since confirmed after the Company presented an will use the water of the river of the same January 1, 2012. Also, analysis is being made appeal for reversal with new background name through a power plant located in of the social, economic and commercial information. the span between the outflow of Riñihue dimensions of the project to timely define Lake and Malihue Bridge. Considering the the start of the construction stage. adjustments introduced to the project, Notwithstanding the above, the Company this shall have an estimated design flow is analyzing the observations made by the of 460m3/s (+10% of overtripping) and an public services to compile and prepare approximate installed capacity of 160 – 170 the necessary background information MW for an annual generation of 950 GWh that would allow providing a timely and under normal hydrological conditions. technically sound answer to the information The power plant will be operated so as requested by the authority. In parallel, to ensure that the dam level remains the Company is developing a schedule of practically unaltered, which means that the explanatory and exploratory meetings with flow conditions of the river downstream of municipalities, public services, regional the power plant will not be disturbed by its authorities and indigenous communities, operation. among other stakeholders in order to resubmit the project at the right time.
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NCRE Projects (Non HidroAysén
Conventional Renewable Colbún holds a 49% stake in HidroAysén S.A. Energies) Notwithstanding the natural uncertainty Chile’s power legislation requires that a on the timing and the contents of the portion of the contracted energy should come court’s decisions in relation to the legal from non-conventional renewable energy instances HidroAysen has resorted to after sources, establishing a goal of 20% supply the rejection by the Ministers’ Committee, with this type of technology by 2025. and the guidelines, conditions or eventual reformulations of the processes led by the Although Colbún already owns two power government in long-term energy policy and plants recognized as NCRE – San Clemente territorial basin planning matters regarding and Chiburgo hydroelectric power plants- in the development of the hydroelectric addition to the purchase of NCRE energy and potential of Aysén, Colbún S.A. has reiterated attributes from Punta Palmeras wind farm and its conviction that the applicable water the NCRE attributes from Comasa biomass rights, the additional requests for water station, in the second half of 2015 Colbún set rights, the environmental qualification up the Renewable Energy Area, charged with resolution, the concessions, the field studies, developing and studying the participation in the engineering, authorizations and the NCRE initiatives. project’s real estate are assets acquired and developed by the company over the
LNG last eight years pursuant to the current institutionalism and to international technical Within the framework of the Open Season and environmental standards. process where GNL Chile bid part of its re-gasification capacity associated with the expansion of the re-gasification Other projects terminal located in Quintero, Colbún was The Company has continued to conduct awarded reserve capacity in the bid, technical, economic and environmental which was confirmed in December 2015, pre-feasibility studies as well as feasibility for an approximate volume equivalent to studies for hydroelectric projects that would the operation of a combined cycle. The use Colbún’s water rights for approximately Company’s participation in the above- 500 MW in the Maule Region. mentioned process grants to Colbún the option to have assured re-gasification capacity, which is part of its long-term strategy to use its power generation installed capacity based on natural gas and contribute with a competitive, safe and sustainable power supply. In 2013 Colbún signed an agreement to purchase energy and NCRE attributes from Acciona Energía’s Punta Palmeras wind farm.
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P SOCIAL PERFORMANCE
WE SEEK FOR OUR PROJECTS TO HAVE A POSITIVE IMPACT UPON THE COMMUNITIES WHERE THEY ARE LOCATED
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SOCIAL PERFORMANCE
The chapter “2015 Social Performance” gives an account of activities associated to the material aspects relating to Colbún’s “human capital” and “social capital” in Chile.
The effort and the professionalism of our workers and contractors help us achieve our objectives
MATERIAL Career Work Work Health and ISSUES development climate relations safety
Loss of key talent due to the work, Union Accident or death RELATED climate, training opportunities, conflicts of a Company’s RISKS competitiveness and /or own worker or organizational rigidity subcontractor
Knowledge transfer senior Shutdown Accidents professionals caused by the operations or incidents inside the Company facilities
MANAGEMENT · Training plans · Meeting woth · Healthy life AND · Talent and succession plans union leaders program REGULATORY · Work plan with unions and workers · Training · Zero fatality FRAMEWORK associations workshops protocol · Benefit program · Zero fatality · Activities that include workers standards families · Operational excellence · Competitive program with the Safety Mutual
WE SHARE A COMMON PROJECT WITH OUR
People’s management policy Health and WORKERS; WE PROACTIVELY RELATE WITH EACH Occupational Safety Policy OTHER, EMPHASIZING PROFESSIONAL AND PERSONAL DEVELOPMENT
Code of Ethics and Business Conduct
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Why is it material? The ongoing development and training of our workers is crucial to achieving operational excellence and people management as we conceive it. The risk of losing the experience and knowledge of our talents must be managed by offering development opportunities and constant Establishing a virtuous relationship with the communities challenges. where we operate is crucial for the continuity of Human Capital Development Colbún’s operations. G4-10, G4-LA9, G4-LA11, G4-LA13, EU-14, Colbún-8.TR What stakeholders are impacted by this material aspect? Socio- The development of our employees is an aspect that mainly MATERIAL Community Local environmental impacts our employees. Investors are also impacted insofar ISSUES dialogue development conflicts Colbun Workers (Headcount) as our workers’ performance affects the performance of the company and the communities where we operate, because Region 2014 2015 company workers are the champions of our community Women Men Total Women Men Total relations strategy. RELATED · Shutdown of the facilities due to social conflicts RISKS · Legal claims against a project or power plant RM- Metropolitan Region 120 281 401 125 281 406 · Investigation by the Environmental Superintendence V Region 18 186 204 19 169 188 What is our objective? · Conflicts with local authorities VI Region 1 23 24 1 23 24 We seek to leverage the development of people working in the · Expectations in connection with tourism development VII Region 5 94 99 6 99 105 different Colbún plants, projects and offices. · Risk of expectations regarding local manpower VIII Region 17 170 187 16 182 198 X Region 2 18 20 2 17 19 XIV Region 4 22 26 3 19 22 How do we manage? MANAGEMENT We maintain scholarships for undergraduate and graduate · Sustainability Policy Total 167 794 961 172 790 962 AND students, leadership programs, onsite and remote induction REGULATORY · Community Relations Policy sessions, visits to plants, training in languages, soft skills FRAMEWORK Contractors Workers (Headcount) and specific technical training. These formation activities are conducted through the financing of external training or Contractors and Subcontractors 2014 2015 courses offered internally. Internal mobility is encouraged Generation 1,105 1,259 through contests and direct promotions.
Projects 466 613
Total 1,571 1,872 Which Global Compact principle is this aspect related to? Principle number 6: Elimination of discrimination in employment and occupation.
How do we measure? Average hours of annual training per employee by sex and job category (G4-LA9) / Skill management and ongoing 790 172 training programs that promote workers’ employability and MEN WOMeN help them manage the end of their professional careers (G4 -LA10) / Percentage of employees whose performance and professional development is evaluated regularly by sex and professional category (G4-LA11) / Men and women base salary ratio by employee category and significance of activity location (G4-LA13) / Number and rate of contracted employees and average employee turnover broken down by Our commitment with our workers is to deliver quality employment and age, sex and job category (G4-LA1) / Positions filled through a labor environment encouraging ongoing improvement. internal contests (Colbun-8.TR) .
Who is accountable? All areas reporting to Organization and People’s Management.
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Competitive Remunerations
Relationship between the base salaries of women compared to men, broken down by professional category (G4 - MANAGEMENT LEVEL LA13). Gross monthly salary measured in chilean pesos COMPENSATION
Salary Gap Average Average Number Number Average Age Average Age US$ 2013 2014 2015 Positions Evaluated Average Seniority Seniority of Male of Female Men Women Gross Salary Men Women Workers Workers Management level Assistant Managers -3% 12 19 49 46 17 3 4,618,472 4,638,483 3.541.736 compensation Professionals and -2% 6 4 39 37 99 69 Supervisors Fixed 3,719,256 2,765,411 2.682.023
Technicians 1% 7 3 40 34 144 8 Variable 899,215 1,873,071 859.713
Administrative personnel -5% 11 8 44 36 9 16 Indemnification to Management 0 213,415 157.731 Other Positions -5% 3 8 42 49 3 14 Executives
Overall Average Gap -3% 8 8 43 40 272 110 Fixed 0 213,415 157.731
NOTE: The gap in broad categories such as “executives”, “professionals and technicians” and “other workers” could not be analyzed with a reasonable degree of confidence, so the GRI methodology that has a measurable and comparable adjusted result was used. NOTE: Fixed and variable compensation policies and structures for • Bonus paid in 2013 corresponding to 2012 period Management level executives are reviewed and validated by the • Bonus paid in 2014 corresponding to 2013 period, except executives who left the company in 2014, who were paid that year Directors’ Committee for subsequent ratification by the Board of In order to ensure the competitiveness of our salaries, each year we The above table shows the relationship between the wages of men • Bonus paid in 2014 corresponding to 2015 period Directors. Similarly, the amounts to be paid for performance bonuses acquire market studies associated to remuneration so as to compare and women, for each job category, resulting in an average wage gap • The indemnifications are fixed and are agreed upon in advance in employment contracts are also submitted to the consideration of the Board of Directors. our incomes and compensate each worker based on their skills and of 3%, well below the national average. For comparison purposes, • The difference is due to higher US$ exchange rate in 2015. In 2014 the calculation experience with a sense of internal and external fairness. only those positions and/or roles that were filled by more than two was made on the basis of $ 570.37 and in 2015 on the basis of $ 710.16. The Company has agreed to a variable Permanence Bonus with some women with equivalent responsibilities were considered. of its Senior Executives, in order to reward the bond of the worker with the company.
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Training and Development Performance Assessment
The Company is committed to training and internal promotion as mechanisms to pro- We maintain a performance assessment mote excellence in people management. system for staff with permanent contracts, which measures compliance with corporate, Along these lines, in 2015 we continued to collect Every 6 months, the Company grants divisional and individual objectives and information on competencies with Fundación approximately 50 undergraduate qualitative behavioral factors of executives Chile; operation area gaps were measured at scholarships to applicants who meet the and professionals in a systematic and all power plants and definition was made of the pre-established requirements. standardized manner. development curricula. In 2015, 944 workers (equivalent to This year, we provided in average 50 training 98% of the total headcount) underwent hours per worker and of the 136 openings performance assessment, maintaining generated, 49% were filled in through promotions the proportion of the previous year. In and internal contests (Colbún-8.TR). The company addition, this assessment process included offers scholarships and language, soft skills and Company’s sustainability objectives linked technical training courses to socio-environmental management, safety management, financial results and power plant availability indicators.
Total number of trained workers (G4-LA9)
2015 Women Men
Number of Average Number of Average Number of Number of Category Formation Formation Formation Formation Workers Workers Hours Hours Hours Hours Managerial level 4 160 40.0 29 1,089 37.6 944 Total number of workers Professionals 95 7,345 77.3 464 37,003 79.7 whose performance was Administrative assessed in 2015 23 2,285 99.3 9 686 76.2 personnel Qualified Workers 3 575 191.7 123 9,784 79.5
Total number of 125 10,365 82.9 625 48,562 77.7 Workers Trained Note: The total Colbún headcount is 172 women and 790 men 98% of headcount was assessed
88 89 ANNUAL INTEGRATED REPORT COLBÚN 2015 Work Practices
Why is it material?
The Company-workers dialoguing instances are of the utmost relevance for the sustainability of our business, due to their direct impact on the work environment and, ultimately, on the Labor Practices productivity of the Company. What stakeholders are impacted by this material Labor Relations aspect? G4-11, Colbún-9.TR, G4-LA4, G4-HR4 Labor relations impact mainly our workers. But it also has an impact on our investors, who At Colbún, we continuously seek to improve the first Training Conference for Union benefit from the better performance resulting labor relations with our employees. Mutual Leaders, where Company’s executives from good labor relations. respect and permanent dialogue between shared with workers’ representatives and management and union representatives is a the leaders met personally with the General What is our objective? very important aspect that promotes such Manager and the Chairman of the Board. We seek to maintain good relations with our relationships. Lastly, during the year the Company hosted employees through various levels: relationship a Labor Relations Workshop organized by the with supervisors, relationship with unions, In view of the above, in 2015 a Union University of Chile with the Participation of among others, strengthening the sense of belonging, commitment and pride. Management program specially designed Company supervisors and executives. for Colbún workers was offered by the How do we manage? University of Chile. The program delivered In Colbún there are 11 groups that bargained to participants an academic and practical collectively, grouping 415 workers (43% of the We promote honest, open and systematic training to strengthen their leadership total headcount). Of these 11 groups, 5 are workers’ dialogue with their supervisors. The Organization and People Management maintains and communication skills and to develop a unions and group 280 workers (28% of the ongoing contact and dialogue with union leaders. strategic vision regarding their management. total headcount). Additionally, we organize day-meetings between Also, in early June the Company conducted senior Company executives and workers' representatives, where leaders hold meetings with the General Manager and the Chairman of the Board. Which Global Compact principle is this aspect Communication channels related to? with workers Principle # 3: Companies should uphold the freedom of association and recognition of the rights to collective bargaining. The Company has made available several are reported, etc. Other sources of internal communication media. The intranet interaction with workers are measurements How do we measure? website is updated on a daily basis to of organizational development, as Work Percentage of employees covered by collective keep workers informed on all news and Environment and Internal Services agreements (G4-11) / Channels of dialogue and corporate activities; a newsletter is sent to Evaluation, where relevant information on engagement with workers (Colbun-9.TR) / all plants and corporate offices on a monthly the perception of workers regarding the Minimum notice periods for operational changes basis; the magazine “+Energía en Familia”, Company is obtained. and possible inclusion thereof in collective agreements (G4-LA4) with two issues per year, in addition to the internal mails, whereby organizational Who is accountable? changes, relevant news, births and deaths All Management areas are accountable, in particular the Organization and People Management, through their support to the different areas. 90 91 ANNUAL INTEGRATED REPORT COLBÚN 2015 Work environment Health and Safety
Why is this material? Why is it material? The work environment impacts the productivity Power generation involves working at plants that involve risks and performance of the company. to the safety and health of people. It is, therefore, of utmost importance to have these factors assessed and controlled to What stakeholders are Health and Safety protect the health and safety of those who work and live near the facility. impacted by this aspect? G4-LA5, G4-LA6, G4-LA7, EU16, EU21, EU25, Colbún-12.TR
The quality of working life is an aspect that What stakeholders are is impacted by affects mainly our workers. It also impacts this aspect? investors to the extent that the performance of Work environment Health and safety is an aspect that primarily impacts our the workforce affects the performance of the Safety Management Colbún-10.TR, G4-LA2, Colbún-11.TR employees, contractors and providers, as well as our company. communities. Our good performance in 2015 in this area was mirrored in the measurement of our work Our Safety, Occupational Health, In 2015, we pursued the work associated What is our objective? environment with the survey Great Place to Work. With 90% representation and 839 out of Environmental and Quality policy is actively with “Zero Fatality Protocols” that What is our objective?
We seek to create the conditions for each 933 workers answering the survey, the positive satisfaction level was 82%. promoted by our workers and contractors. resulted from the identification of the In broad terms, we carry out our best efforts in order for person working in Colbún to develop their The basic principles of this policy are aimed 12 most relevant hazards that could our workers and their families to enjoy good health. In more full potential. Along these lines, we want at meeting the requirements established potentially cause severe accidents. The specific terms, one of the strategic objectives of Colbún is to incorporate the families of our workers, to seek and manage “zero accident”. Also, we want our These figures are well aligned with our “High This is a reflection of the work we did to in the applicable legislation, the voluntary work was centered on monitoring the assuming a comprehensive view of the people communities to feel safe in relation to the operation of our Performance” innovation project, introduced strengthen our best practices, developing commitments and our safety, occupational controls associated with these protocols. who are part of the Company. plants and, to this end we are advancing in the dissemination in 2014 by a group of workers from different plans next to those plants that presented health, environmental and quality Despite the efforts made, in October of of our mechanisms to respond to emergencies, encouraging areas of the Company and developed in 2015. opportunities for improvements in climate How do we manage? standards. Also, the standard provides 2015 two workers of Chacabuquito power our neighbors to become part of those plans. surveys, conducting workshops, delivering that no production goal or operational station were injured during maintenance We manage it by promoting a culture based personalized support and reviewing the emergency is worth a human life. works on Unit 1. The accident was due How do we manage? on our values: integrity, excellence, innovation, structure and organization of such plants. to the explosion of a medium voltage We maintain a “Safety, Occupational Health, Environmental passion and collaboration. These values are breaker and consequently one of the and Quality Policy” certified since 2010 under ISO 14001 and supported by various benefits, activities and OSHAS 18001 standards. We have also implemented “Special initiatives that aim to incorporate the families workers ended up with burns on his Regulations for Contractors and Subcontractors (REECS)”, of our workers, and we develop work and face and the other, on one of his arms. and an “Integrated Management System (SIGECS)”, which workshops with the supervisory level of the Fortunately, both of them are quickly allow our partner companies to seek certification under Company. recovering. national or international standards. We work on the detection of the training needs in health and safety, and deliver relevant How do we measure? training.
Results GPTW (Colbun-10.TR) / Reconciling work and personal life, Reconciliation of benefits How do we measure? and policies (Colbun-11.TR) / Social benefits for We measure it according to the percentage of workers full-time employees not offered to temporary represented in formal joint safety and health committees, for or part-time employees, broken down by executives and employees, established to help monitor and significant activity location (G4-LA2). recommend safety and occupational health programs (G4- LA5) / Type and rate of injuries, occupational diseases, days Who is accountable? lost, absenteeism and fatalities related to work by region and sex (G4-LA6) / Percentage of workers within the normal/ Each management and supervisory level must healthy health range (Colbun-12.TR) / Contingency planning ensure a good work environment across the measures, disaster or emergency management plan, training Company. programs, and recovery and restoration plans (EU21). Who is accountable? Every Colbún worker must ensure self-care. However, the Occupational Health and Safety Management is responsible for generating the processes and managing this area within the Company.
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Healthy life
COLBÚN AND CONTRACTORS ACCIDENT RATE INDICATORS Occupational Health at Colbún is aimed at keeping its workers free of any disease that could be brought (G4-LA6) about by the substances they handle, the equipment, machines and tools they use or the environmental Colbún Contractor Total conditions where they develop their activities. Companies
Loss rate (1) 16.1 4.1 8.1
Accident rate (2) 0.2 0.4 0.3
Frequency Indicator (3) 0.9 2.2 1.7
Severity Indicator (4) 67.6 24.1 42.3 Epidemiological Occupational Health Public Health Professional Average number of 958.9 1,871.6 2,830.6 workers Monitoring Protocols Monitoring
Man hours 2,278,386 3,157,164 5,435,550 We track our workers’ job Noise is the main health threat From the viewpoint of Public In order to ensure that workers we have identified at Colbún’s Health, in 2015 evaluation was are physically fit for the work Accidents with time lost 2 7 9 exposure by identifying risk agents and exposure times power plants. Therefore, we made of the coronary health they must carry out, we have Days lost 154 76 230 that allow us quantifying their applied a program called Prexor, risks of the whole organization, implemented occupational magnitude to propose control consisting of a systematic through a battery of tests, health tests, thus improving Severe and/or fatal ac- 0 0 0 cidents measures. We also check their sequence of actions, such as nutritional evaluation and the health of 59.4% of our Accidents without lost time 7 17 24 health condition against specific a hygiene plan, qualitative personalized counseling. As a workers presenting some risk agents, by measuring evaluations and previous studies result of this work, which began degree of alteration in their first Vehicle accidents 14 4 18 biological indicators and testing at all stations between 2014 and in 2013, 90% of the workers examination. to detect damaged organs. 2015. are within a range regarded as
healthy. (1) Days lost per 100, divided by the average headcount for the period. (2) Number of accidents per 100, divided by the average headcount for the period. (3) Number of accidents per 1,000,000, divided by the total number of man hours for the period. (4) Days lost per 1,000,000, divided by the number of man hours for the period.
Attack against the Angostura Safety Innovation Platform Plant Faced with the challenge of adding value, raising significant At dawn on November 15, 2015, a group of masked men broke into the opportunities for our business and enhancing participation, in 2015 premises of the Angostura Hydro Plant, forcing their way past the staff our workers and contractors were invited to submit their ideas and making an arson attack on the administrative offices and some through a web platform, with the aim of making our plants the vehicles owned by the company. Immediately, Colbún staff notified this safest in Chile. Work began at the Santa Maria Plant and then spread situation to police and firefighters. Fortunately, no injuries were reported. to four more facilities. To date we have implemented more than 60 ideas from over 300 participants. Through this collaborative and Colbún deplores and categorically rejects this action, which adds to other participatory instance, we have generated value for the Company in similar nature attacks on third parties in the area in recent times. For a matter as important as the safety culture at Colbún. By 2016, we this reason, Colbún filed a complaint with the Prosecutor’s Office of Los expect to have extended this challenge to all Company complexes Angeles and expressed its conviction that the authorities will make all and plants. necessary efforts to find those responsible for the attack.
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PUBLIC SAFETY MANAGEMENT IN OUR COMMUNITIES Colbún-5.SO
Moreover, health protocols focus on All Colbún plants maintain a contingency plan for fires, earthquakes and natural disasters. Despite the measures taken, in November UTILIZATION OF THE BENEFITS DELIVERED BY WELFARE IN 2015 minimizing workers’ risks and monitoring their Drills are held annually, in which entities such as firefighters, municipal or governmental 2015 we had to mourn the death of a individual health status. Currently, protocols emergency offices, police, and/or the Safety Mutual are involved. mother and her son who accidentally fell Health and Sports Benefits have been implemented to identify: Upper in the Colbún Complex Return Channel. Benefit Beneficiary Quantity Extremity Musculoskeletal Disorders (TMERT- The issue of public safety has been raised This situation was widely discussed with EESS), Manual Handling of Loads (MMC) and Workers 610 as a priority in several consultations with authorities and residents in the districts of Psychosocial Disorders (TPS). Health Insurance Legal dependents 979 the communities where we operate. For this Colbún and Yerbas Buenas. Based on those reason, the Angostura and Colbún plants discussions, an action plan was defined that TOTAL 1.589 Regarding psychosocial disorders, Colbún (where we have our largest reservoirs) have includes the implementation of additional developed a plan based on a protocol issued Anti-flu shots at national level Workers 381 implemented fences, signage, and various physical protection in a sector of the Channel by the Ministry of Health, enforceable Reimbursement of anti-flu shot Legal dependents 12 communication channels (meetings with and the implementation of an information beginning in September 2015. Furthermore, expenses authorities and neighbors, flyers, radio and and education plan for neighbors to be the collection of information helped identify Eye doctor visits Workers 154 media interviews) to communicate potential implemented in 2016. changes the dimension “Double Presence” * risk situations. Eye-glasses purchased Workers 105 were identified in some of the work centers Additionally, in January 2015, the unfortunate (five plants and three divisions in Santiago). Dental Refund Workers 338 In addition, when visitors come to the plant, death of a child occurred on the Quilaco In order to work out this matter, actions Running Benefit Workers 11 at entry point they are made aware of safety beach, located on the shores of the have been implemented such deferred entry areas in the event of an emergency, and Angostura Reservoir. It should be noted Emergency care agreements with Workers and family 33 and exit times, improved transportation of clinics group are required to be always accompanied that the beach had lifeguards, designated workers between their homes and work, by a guide who knows the protocols to be swimming zone and warning signage. and planning of focus group in Santiago. * “Double Presence” is a health hazard resulting from the increased work burden as well as by the difficulty followed. By means of these activities, we expect to respond to work and family demands requirements simultaneously. Some of the benefits offered by Welfare can be extended to the families of the workers. to reverse the results of the survey that identified the psychosocial risk factors, to be reevaluated in May 2016, at the locations where the deviation was found.
The absence of occupational patients (EP) has been a focus at Colbún, by establishing the “0 EP” protocol, fulfilled in 2015. It should be noted that since such types of illnesses develop over time, they need to be identified and managed in a timely manner. Also, the complexity of establishing the occupational origin of a professional illness needs to be taken into account due to the absence of clinical symptoms that enable the linking of the symptoms to a specific job and its many causes.
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Community relations
The table below shows the objectives and focus of our community and authorities relation strategy for the 20 districts where we operate:
Final Objective Be, and Be Recognized, as a company that generates shared value in a sustainable way with its neighboring communities
Generating Generating Generating trust opportunities future
Build and maintain Maximize the positive Collaboratively drive associative and impact of Colbún’s the development of the collaborative relations with business in the community, community by means of the community promoting the development innovative and sustainable of local economy business projects
Energy for participation Energy for local employment Energy for education
Mapping of relevant players Collection of employability Education in energy and the and employment (Colbún v/s environment Collect data on community local offer) priorities Technical training in trades Training of local manpower and leadership skills Meetings with authorities and neighbors Definition of the minimum Educational infrastructure percentage of local and equipment Work and dialogue tables manpower Visits to power plants and the House of Energy and the Visitors’ Center Energy for entrepreneurs
Participation in community activities Productive chain (for example: honey, maqui, Alliance with union fishing, etc) associations Training in entrepreneurial Joint work with the local skills media Entrepreneurial facilitation Más Energía newspaper (infrastructure)
Funds for entrepreneurs
Energy for Energy for leadership local suppliers Energy for a better quality of life
Training to neighbor Data collection on goods Sports programs associations’ leaders and services (Colbún v/s local offer) Sports infrastructure and Support in the management equipment of public resources Training of local suppliers per Colbún’s standards Public spaces and recreational areas Contracting of local suppliers Promotion of tourism
Prompt payment policies Texto imuladoIzquierda: Bernardo Lar- Financial support raín, Presidente del Directrio de Colbún. (guarantee funds) Derecha: Thomas Keller.
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DIALOGUE WITH THE COMMUNITY AND SOCIETY
Generating Trust Why is it material? Trust relationships based on dialogue are essential to develop and maintain power DIALOGUE WITH THE COMMUNITY generation projects. In this sense, we must be proactive against potential risks arising from AND SOCIETY the opposition against project development or Company operations. G4-SO1, G4-SO2, EU19
At Colbún, we understand that the one, working hand in hand with Engineering What stakeholders are communities surrounding our 23 plants can be and Projects Division Management and with impacted by this material or feel affected by our operation. Thus, based Environmental Management. This approach is aspect? on dialogue and ongoing communication, then maintained during the operation of the Community dialogue is an aspect that impacts we strive in order for the development of plant, working with the Generation Division primarily our communities and society in general. our business to have a positive impact and Management. improve the quality of life of the communities What is our objective? where we operate and society in general. The important role played by the Public We seek to better understand the vision that To that end, community initiatives have Affairs Management should not lessen the our communities have of themselves, of their been implemented at all Colbún plants and importance of having each supervisor of hopes and concerns and of our company, and projects. To identify the potential impacts of projects under construction or operational thus design projects consistent with our pillar a new plant on neighboring communities and power plants and every worker at our power “Community Relations Policy.” then determine how to reduce the negative plants and projects establish relationships impacts and enhance positive impacts, our of mutual trust and shared values with our How do we manage?
Public Affairs Management is integrated neighboring communities. The processes of dialogue and consultation with into the process of project building from day communities are conducted regularly through the activation of various communication channels in the communities where we operate. Based on this dialogue, partnership initiatives POTENTIAL NEGATIVE IMPACTS that will benefit the hosting communities are (G4-SO2) implemented.
Project Construction Hydroelectric Generation Thermoelectric Generation How do we measure? Noise Alteration of land and water Hazardous and non- ecosystems hazardous effluents and Percentage of centers where development, residues impact assessments and local community Landscape alteration Changes in river water flow Air emissions and waste participation programs have been implemented rates water (G4-SO1) / Stakeholders’ involvement in the decision-making process related to project Relocation of communities (in Noise planning and infrastructure development (EU19). some cases) Who is accountable? Dust Water usage The Sustainable Development Division, plant Increased demographics and project supervisors and people who work in Alteration of land and water them are accountable. ecosystems One of our main focuses in the Maule Archeological findings Region has been working with farmers in order to optimize water usage.
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Communication channels Early citizen involvement G4-EU19
Within the framework of our Community Relations Strategy, our commitment to Generating Trust was channeled During the new generation plant Project study process we at Colbún conduct early through several mechanisms of interaction and dialogue with our communities. Telephone contact, letters or emails consultations with the community, in addition to the formal, legally required processes. with the supervisory level or the Public Affairs area are the most direct channel used by the Community to contact the Company. In 2015, we also implemented Colbún’s website, an Ethics hotline (confidential and anonymous) to receive related allegations.
This allows us to report on the general indigenous communities and the Los Lagos We have several tools to determine the Newsletter + Energy: In the districts features of the projects and collect the views district in order to identify potential areas views of the communities where we of Colbún, Santa Bárbara, Quilaco and of the community to this regard. The early where the project could contribute to a better operate, some of which also serve as Coronel we distribute the community points reported to stakeholders are mainly quality of life and local development. Thus, sources for dialogue: magazine “+ Energy”, issued three or four meetings with authorities (SEREMI, Mayor, agreements have been reached with most of times a year, and informing about topics of municipal councils, among others), neighbors the organizations of indigenous peoples in Publication of results and interest to the community as well as Colbún and civil society organizations. the area of the project’s direct influence. consultation processes: In activities in the area. In 2015 we added the order to inform communities in Coronel, TV program + Energía TV in Coronel. Angostura and Maule about our operational, In the specific case of the San Pedro environmental and social results, we give Touring of our facilities: At Colbún, Project (Los Ríos Region), nine months an annual public account or report to guest special emphasis has been given to the before filing the EIA containing project Other Initiatives promoted by community social leaders and members. opening of our plants to the community in adjustments, Colbún began an information order to raise awareness of our operations Generating Trust and consultation process with municipalities, Corporate Reputation Index and allowing for questions and clarifications. unions, neighborhood associations, and Communities Thermometer: More than four years ago we created the universities, NGOs and other regional Worktables: we have worktables in We conduct an annual survey on mass Energy House at the Colbún Plant; this organizations. This materialized through various communities, providing instances for perception among neighbors and educational center is part of a guided tour to meetings, visits to the project area, lectures dialogue and joint work with our neighbors. stakeholders that helps us identify the main major facilities in that complex. This center and workshops held to this date, and concerns and issues of the communities was remodeled in 2015 with a new interactive interviews on radio and written press. In CSR agreements: we have signed where we operate. In 2015 we expanded exhibition, receiving more than 4,550 people, total, in 2015 there were more than 156 mutual cooperation agreements with the Corporate Reputation Index, adding to especially schoolchildren. meetings with stakeholders in the area, and the survey our suppliers and contractors, municipalities in the areas where we 342 visits to the project. We also implemented operate. investors, customers and vendors. In the case of Santa María Plant, in 2015, the a website (www.centralsanpedro.cl) visitors program was enhanced to allow containing all the information on this initiative. Escuela de líderes: this initiative seeks Community management system 1,800 people to visit the thermoelectric Topics raising maximum interest during the to strengthen the capacities of social leaders (SGC): In order to track the commitments complex. In Angostura, the Energy Tour community consultation included project so they can better display their leadership undertaken with the community, we enabled 22,729 people to visit the Visitors design, construction times, need for a plant and functions recorded in the Community Management Center and the facilities. It should be noted of this kind in the region, location of the site, System (SGC, per its acronym in Spanish) all that in 2015 we hosted 129,469 visitors at the job safety, job options for the community, actions associated with community affairs. various attractions of the Angostura Park, and impacts on fishing and rafting. In the while Angostura Biobío was awarded the case of San Pedro, an ongoing worktable distinction of Sustainable Destination by has been implemented with the nearby FEDETUR.
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Local development
Why is it material?
Local development is one of the main expectations communities have faced with the presence of Colbún in their localities. We seek to be proactive in providing job opportunities and in identifying ways to contribute to local development associatively. What stakeholders are impacted by this material aspect?
Local development is an aspect that primarily impacts our communities, society, local contractors and providers. Generating Opportunities What is our objective? G4-EC9, Colbún-3.SO
Our purpose is to collaboratively support the development of the community through innovative, sustainable and high social impact Local Employment and Suppliers projects linked to productive development, education and promoting quality of life. In In 2015, Generating Opportunities focused At Colbún, we promote the purchase of goods and services from local addition, we seek to promote the development of the local economy, boosting employment on maximizing opportunities for the hiring suppliers, to the extent that they meet the technical and commercial and supporting suppliers to join our value chain. of local labor and suppliers. These are some conditions required. examples: GEOGRAPHICAL DISTRIBUTION OF PURCHASES How do we manage? SOCIAL INVESTMENT PER TYPE OF INITIATIVE (G4-EC9) (Colbún-3.SO) La Mina Plant Project (Maule In collaborative worktables we define Region): The percentage of local unskilled 2014 2015 the relevance assigned by people and Investment Sub-category US$ Number of Beneficiaries Amount Amount local authorities to matters of Education, labor reached 51% at December 2015. Locations N° prov. N° prov. Line MUSD MUSD Entrepreneurship and Quality of Life. On this basis, we jointly seek and find social Leadership 422,901 105 International 36,431 183 36,431 183 Generating Santa María Complex: 68% of investment projects that can be implemented Trust permanent contractors belong to the towns V - Valparaíso 18,584 243 18,630 244 by encouraging resource management through Participation 35,187 336 of Coronel and Lota. RM - Metropolitan 157,255 1,479 157,208 1,476 applications to government or other funds. Total Generating Trust 458,087 441 VI - Lib. Bdo O'Higgins 1,080 49 871 46 Santa Maria Complex Unit I How do we measure? Quality of Life 1,481,019 43,000 VII - Maule 5,582 164 5,780 163 Generating Maintenance: 47% of contractors who VIII - Biobío 32.797 792 32,816 800 Education Future 909,247 4,115 worked on this project (1,264 people in total) We measure it as the percentage of expenditure Future XIV - De Los Ríos 1,662 83 1,916 102 in areas with significant operations corresponding Entrepreneurship 1,841,338 1,512 belonged to the towns of Coronel and Lota. X - Los Lagos 1,501 86 1,244 69 to local providers (G4-EC9) / Social investment by type of initiative (Colbun-3.SO). Total Generating Future 4,231,603 48,627 Other Regions 4,734 49 4,730 46 Angostura Plant: 45 own workers, 9% Total 259,625 3,128 259,625 3,129 Who is accountable? Others Others 437,087 7,824 workers from Santa Bárbara and Quilaco and 87% from Los Angeles. TOTAL GENERAL 5,126,777 56,892 Sustainable Development Division is NOTE: The location of the supplier is determined by the taxpayer ID where they pay their duties, taxes and accountable. patents. It includes purchases of plants and projects, excluding the purchases of energy, capacity, tolls and generation fuels. As a reference, among the latter, three suppliers concentrate individually at least Note: Training delivered to local suppliers in 2015 is not included. 10% of purchases. These suppliers are: ENAP Refinerías S.A. 16%; Empresa Nacional de Gas Natural, 11%; and Transelec S.A. 11%.
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Generating future COMMUNITY DEVELOPMENT PROGRAMS Angostura Park In order to Generate Future, at Colbún we Energy for Entrepreneurship: Energy for Quality of Life: The Angostura Hydro Plant (del Biobío to a nature trail and a lookout, a focus our work with the communities along programs designed to strengthen the programs focusing on improving the living Region) was conceived as a Project to visitors’ center, arboretum and two three lines of work: capacities of our neighbors in areas conditions of those living in the areas of generate energy and create a tourist public beach resorts. production development and employability. influence of our plants and projects. destination. Some of the keys to the development of this project have been: Energy for Education: Santa Bárbara and Quilaco programs Following are some of the initiatives and Tourism Board: designed to provide support in educational programs in which these working lines Altitude Regulation: Private-public instance created in matters to youth and institutions close to materialize. In order to enable the edges of the 2011 and which has defined the main Social Development Funds river for tourism purposes, the RCA our facilities. guidelines for the promotion of commitment was established in the This program, directed to neighbors “Angostura del Biobío” as a tourist sense that the altitude would not associations and other grass-root destination; the Angostura Park is vary by more than one meter. organizations seeks to provide visibility part of this project. Representatives to high social impact projects. It operates from the municipalities of Santa Infrastructure: Bárbara and Quilaco, SERNATUR, mainly through contest funds, advisories and Three camping areas were built and the local chamber of commerce and training to leverage public resources and let to local entrepreneurs, in addition Colbún are involved. training.
In 2015, in Coronel, Social Development Angostura in numbers Cuido Mi Planeta Programa-Colbún Entrepreneurship Centers Funds (FDS) delivered benefits to 11 neighborhood associations (900 people) and (Caring for my Planet) Vertical Program 36 functional organizations (1,200 people). 129,469 42,447 4,780 In partnership with NGO Acción Emprendedora In the five years since the commencement This program seeks to promote and Sponsored by Fundación Vertical (Entrepreneurial Action), Colbún has two Visits to the different Facebook followers twitter followers (@ attractions of (facebook.com/ AngosturaBiobio) * centers, one in Coronel and another in Santa of this program, FDS implemented more encourage initiatives and projects linked and through a partnership with the Angostura Park in 2015 angosturadelbiobio/) * than 50 projects executed by neighborhood to environmental care through training, municipalities of San Clemente, Colbún Barbara. In 2015 in Santa Barbara Acción associations in Coronel and 70 functional contest funds, and recycling campaigns, and Quillota, in 2015 Colbún implemented Emprendedora received 3,773 people belonging *At March 2016 organizations projects. In 2015, in Santa among others. In 2015, under this program, a program intended to encourage the to the district and to Quilaco. In addition, in Barbara and Quilaco, the FDS delivered 72 recycling and waste management comprehensive formation of youths living 2015, the program “Energy for Entrepreneurs” benefits to 13 projects. workshops were held in the districts of in those districts, with a special focus on of the Angostura Plant awarded funding for 74 Colbún and Yerbas Buenas, in addition to a activities linked to nature and outdoor life. projects in the area, totaling about 244 projects project formulation workshop. Additionally, supported since the program started in 2012. through the second version of the In the case of Colbún, this program Pesca Futuro Environmental Management Fund Contest, In Coronel, meanwhile, through the fourth resulted in the training of 30 teachers of This program seeks to generate new support was given to the projects submitted annual version of the seed capital program “I the Ignacio Carrera Pinto High school, income, job sources and employment by three neighbors associations, five Undertake in Coronel” a total of 25 projects in including leadership and teamwork opportunities for small-scale fishermen educational institutions and a development partnership with CIDERE Biobío was awarded in techniques. In Quillota, the program and their families in Coronel, through committee. In Codegua, on the other 2015 by the NGO Acción Emprendedora and the “Development of Social Undertakings” scholarships, training or funds to project hand, in 2015, through a partnership with Coronel Municipality. In the area of training for enabled the formation of students in the associative projects. the NGO inGEA, 43 educators were given productive development, 220 training activities formulation and preparation of sustainable In 2015, 104 training activities were delivered Environmental Training Courses for Teachers, were delivered to strengthen the skills linked to initiatives designed to resolve social issues to fishermen under this program, while 12 with a total of 108 teachers trained since the entrepreneurship. affecting the district. production projects linked to fishing unions beginning of the program in 2013. made it to the implementation stage or operation. In addition, 90 scholarships were awarded. 106 107
ANNUAL INTEGRATED REPORT COLBÚN 2015
Main socio-environmental challenges Conflict and Zone Description Steps taken by Colbún Why is it material? Main socio-environmental
The socio-environmental challenges are a relevant risk when seeking to develop projects challenges * Transmission Lines In May of 2015, neighbors of the Colbún se reunió con estos vecinos or operating a power generation plant. Colbún Plant demonstrated in Colbún met with the neighbors and G4-EN24, G4-HR8, Colbún-4.SO District of Colbún, Maule Region Managing and preventing conflicts, legal claims front of the entrance of the facility local authorities, to explain that the or conflicts with the local authorities are vital for to express their concern regarding Company does not own or operate At Colbún we are convinced that depending on how socio-environmental challeng- success. the electromagnetic waves from any of the transmission lines es are addressed, they may represent an opportunity to generate value or a source power lines. associated to this demonstration What stakeholders are of risk. It is for this reason that we, at Colbún, work to manage these challenges and, therefore, it could not solve the impacted by this material through a community and environmental relations policy aimed at transforming issue. In a briefing meeting held in these challenges into opportunities for value creation, favoring direct contact and October with neighbors and opinion leaders in the district, Colbún again aspect? the management of projects for the mutual benefit of companies and neighboring addressed these concepts. The socio-environmental conflicts aspect is an communities. However, the following conflict situations occurred: issue that impacts our communities, investors, It should be noted that the workers, contractors, suppliers, vendors and government promoted a work table the society in general. with participation of residents, health agencies and other sectors What is our objective? in the area in order to address this problem. Our goal is to take a proactive stance when confronted with eventual conflicts relating to the community, maintaining an open and transparent dialogue. Colbún Dam Altitude For several years, groups of In October of 2014, Colbún sent a holiday-makers from edges letter to CDEC-SIC informing that District of Colbún, Maule Region How do we manage? of the Colbún reservoir have the Company decided to initiate in expressed their interest to set 2016 a voluntary, temporary and We have various mechanisms for dialogue a minimum water level for this experimental plan to harmonize and communication with communities. In the reservoir in the summer months the use of the Colbún reservoir event of a conflict, we always remain open in order to promote tourism. In waters with potential tourism in to dialogue, providing all the information 2014, the “Tourism Development the area. necessary to those concerned or the respective Corporation of the Colbún Lake” For reasons partially due to authority and seeking ways to enable projects was formed, bringing together lesser mountain snow melting, to be better inserted in their environment. tourism entities of the zone and and existing commitments with the municipalities of Colbún and irrigators in the basin, towards the San Clemente. How do we measure? end of January, Colbún informed the community that it was not Describe the main 2015 socio-environmental issues possible to maintain the levels and how they were addressed (Colbún-4.SO) / proposed as a target. In fact, since Number and total volume of significant spills (G4- January 6, the Colbún hydroelectric EN24). plant declared itself in depletion condition, so that the water leaving Who is accountable? the reservoir was intended to fulfill the irrigation obligations with Sustainable Development Division and farmers. Generation Division. The imposition of an all-event altitude could harm the primary purposes for which the Colbún Reservoir was created in the first place, namely, the generation of energy and the restoration of * No cases of Indigenous Peoples rights irrigation through canals. violations were reported in 2015 (G4-HR8).
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ANNUAL INTEGRATED REPORT COLBÚN 2015
Conflict and Zone Description Steps taken by Colbún Conflict and Zone Description Steps taken by Colbún
In 2014, nine months before Coronel has had coal-fired plants for Colbún has promoted various San Pedro Plant San Pedro Plant Operation Thermoelectric power filing the EIA, Colbún initiated decades now. workshops in Coronel to maintain Operation plant operation Districts of Los Lagos and a series of presentations to a permanent channel of dialogue Districts of Los Lagos and Panguipulli, Los Ríos Region District of Coronel, Biobío Region In 2012, Colbún began operating Unit trade associations, indigenous with the community. Also, since Panguipulli, Los Ríos Region I of the Santa Maria Thermoelectric In June of 2015, Colbún submitted communities, neighbors 2013, the plant makes public Complex, incorporating into its design the Environmental Impact associations, municipal councils accounts of its environmental and technologies capable of meeting Assessment (EIA) with the and other players, in order to social performance. In the 2015 European emission standards; adjustments to the San Pedro explain the adjustments made public address, all information additionally, the Company has Hydroelectric Project, an initiative to the project and clarify doubts. regarding power generation implemented a compensation plan with an approved RCA; the When the EIA was filed, a web authorized for the plant and which, in net terms, has been a early construction works have page was activated (www. all doubts to this regard were positive contribution to the Great commenced and resuming the centralsanpedro.cl) together with answered. Conception Metropolitan Area. project is subject to approval of a program of guided visits to the Aside from the objective facts, part With the same purpose, the the aforementioned adjustment project site. The environmental of the population has opposed the Company regularly holds local by the competent institutions. The authority, however, decided in development of power plants in the radio and TV sessions, giving presentation of this EIA triggered favor of the early termination of area. In September of 2015, a group accounts of its environmental the rejection of the project by the EIA process in August of 2015, of residents filed a complaint with the performance. some local players, including on grounds of lack of relevant Superintendent of the Environment environmental groups, kayakers and essential information (IRE). Guided tours of the plant have (SMA), considering that there was an and politicians in the area. Colbún immediately began also been organized: in 2015, 1,800 overproduction of energy at Unit I. discussions and consultations people visited our Plant. Also, the The same group filed an appeal for with the technical services in Company is actively involved in the protection before the Concepción order to prepare and complete Coronel Council for Environmental Court of Appeals for this reason, the necessary information and and Social Recovery (CRAS) which was rejected in January 2016. satisfactorily respond to the promoted by the Government. requirements of the authorities. Colbún has declared that the Despite this communication effort plant does produce or sell the SIC and although the Plant is in full (Interconnected System) more energy The RCA of the Angostura Plant A work table was formed between compliance with all environmental Vegetation Angostura than authorized. More importantly, establishes the obligation to clear Colbún and the Aguas Blancas regulations, without any penalty Dam the plant has met and exceeded vegetation in the reservoir area, neighbors association. Colbún has or relevant sanctions in more than District of Santa Bárbara, Biobío the environmental standards and in order to prevent environmental conducted studies to find the best three years of operation, the public Region emissions established in the impacts. However, in the particular technical solution and has offered perception of power plants in case of the Aguas Blancas area, to clear the vegetation in the Environmental Qualification Coronel remains negative. the authority allowed vegetation flood area, but the neighbors have Resolution and the Chilean new to be preserved to prevent erosion manifested greater expectations. emissions standard dated 2011, which problems and to avoid hazardous Hopefully, we will soon reach an equals the emission parameters tasks. Local residents expressed agreement. required in Europe. Also, in 2015 to Colbún that maintaining this a complaint was filed before the vegetation generated difficulties in Environmental Court of Valdivia by the use the reservoir, so they asked six fishermen’s unions in Coronel Colbún to clear the underwater and a group of fishermen from Lota, vegetation and the land access to who claim environmental damages the reservoir. resulting from the operation of the Santa Maria Plant. This claim has not been served as yet.
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ì Environmental PERFORMANCE
OUR COMMITMENT WITH THE ENVIRONMENT POINTS AT MINIMIZING OUR IMPACTS AND USING THE RESOURCES IN AN EFFICIENT MANNER
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ANNUAL INTEGRATED REPORT COLBÚN 2015 Use of water resources
Why is it material? The growing relevance of water resources coupled with lower rainfall in some areas of the country in recent years is requiring redoubled efforts to maintain the power generation capacity while respecting the importance of water as a fundamental element for the ecosystem and the communities. Noteworthy is also the fact that thermoelectric power plants use water for the cooling of equipment, while hydroelectric plants do not consume water, they just use water to generate Environmental PERFORMANCE Use of water resources power and then this water is returned it to their G4-EN8, G4-EN10 natural streams in the same condition.
Chapter “2015 Environmental Performance” shows the management of material aspects The availability of the water resource Colbún has set itself the task to build and What stakeholders are relating to Colbún’s “nature capital” in Chile. is crucial for the development of our operate its power plants pursuant to high impacted by this material business and entails a risk due to the environmental standards. For example, aspect? variability in precipitation patterns and our reservoir hydroelectric power plants The use of water is a material aspect affecting changes in the water flow regimes. exceed the international efficiency mainly our community, the environment and our Our purpose is to generate power while minimizing the standards established by the United shareholders. The availability of the resource and environmental impacts and using the resources in an efficient Faced with variable climate patterns Nations (more than 4 watts of installed how effectively it is used affect the operation of manner (precipitations and water flow regimes), capacity per square meter of flooded our plants and have an impact on the reputation regulated hydroelectric power plants area) to qualify the projects as efficient of the Company. become more important (Colbún, in terms of water management and of Machicura and Canutillar stations), as low environmental impact. The goal is to What is our objective? MATERIAL Use of the water Emissions and Biodiversity Use of materials they allow adjusting the supply, taking maximize this indicator to minimize the We have managed to gradually reduce water ASPECTS resource climate change consumption in thermoelectric plant processes and efficiency more load when consumption goes up environmental impact. Colbún strives to through technological improvements and the and being an excellent complement for achieve this objective and has improved optimization of water usage in hydroelectric renewable technologies as the solar and the relevant indicator at its power plants Variability of the water resource Environmental Failure in the fuel plants. RELATED incidents wind power, which generation is variable. over time. Payment of the green tax purchase process RISKS Emission reduction quotas Legal claims against Fuel price variations How do we manage? Citizens opposition a project or a power The Occupational Health, Safety and Environmental plant Availability of each type of fuel Availability of each Management System helps us monitor and record type of fuel our environmental performance. Citizens opposition INSTALLED CAPACITY PER M2 OF FLOODED AREA
Colbún reservoir 10 W/ m² Which Global Compact principle Machicura reservoir 12 W/ m² is this aspect related to? Angostura reservoir 44 W/ m² Principles 7, 8 and 9: Companies must support the application of a precaution judgment regarding MANAGEMENT Sustainability Policy San Pedro reservoir project 55 W/ m² environmental issues / Adopt initiatives to AND REGULATORY Forest management FRAMEWORK promote a greater environmental responsibility / Integrated management system Encourage the development and dissemination of
Environmental policy environmentally safe technologies. State-of-the art technology How do we measure? Emission of carbon credits Total water intake by source (G4-EN8) / Total Participation in the Carbon Disclosure Program (CDP) percentage and volume of water recycled and Efficient use of water reutilized in hydroelectric power plants (G4-EN10).
Agreements with irrigators
Biodiversity management Who is responsible? Business and Energy Management Division; Engineering and Projects Division; Generation Division and Environmental Management belonging to the Sustainable Development Division.
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The amount of water consumed (consumptive use) at Colbún, considering all plants, USE OF THE WATER RESOURCE AS TURBINE WATER decreased by 8.5% in 2015; this is due mainly to the lower operation levels of Santa María (only for power generation; non consumptive) Complex’s Unit 1. Power station Metering unit 2013 2014 2015
TOTAL WATER INTAKE BY SOURCE Colbún Million m3/year 9,826 13,326 12,893 (consumptive use) (G4-EN8) Canutillar Million m3/year 1,769 1,735 1,512
Carena Million m3/year 289 285 285 Source Metering Unit 2013 2014 2015 Rucúe-Quilleco Million m3/year 3,984 4,211 4,386 River/lake water m3/year 3,506 10,760 9,115 (surface) Aconcagua Million m3/year 1,293 1,110 996
Angostura Million m3/year - 10,401 10,220 Sea water (surface) m3/year 233,554,495 343,330,691 313,124,801 Total Million m3/year 17,161 31,068 30,292
Underground waters m3/year 3,789,543 3,730,196 4,482,561
Note: Angostura started its testing phase and was commissioned in 2014. Water supply from municipalities m3/year 161,786 123,795 69,663 or other water companies
Total m3/year 237,509,331 347,195,442 317,686,141 Water scarcity at the Aconcagua Basin
NOTES: As a result of the long-lasting water scarcity analysis to improve and optimize the use The above brought about savings of up Sea water is used to cool down Santa María faced by the central southern zone of our of water. Similarly, this monitoring system to 40% in the water consumed during thermoelectric power plant and is completely returned to its source. country, in 2015 we sought to reduce our (SCADA) allows achieving greater levels of the most critical months. Waste water, Water coming from rivers, lakes and underground wells reliance on the use of fresh water. aquifer stability. equivalent to 4% of the water captured is used for consumption at administrative offices and for Water used in generating hydroelectric power is fully returned to its source. cooling down processes, among others. Hence, in November of 2014, an automatic During 2015, we implemented two reverse in the Complex was delivered to third During 2015 there was a persistent drought in the central southern zone of The lower water supply by sanitary or municipal water well control system was implemented at the osmosis pilot plants in order to process parties for reutilization purposes. This companies is due mainly to a reduction in the water the country and Colbún’s water usage levels were 5% lower than in 2014. In consumption of Antilhue power plant, which in 2015 Nehuenco Complex, with high standards that water purged from the cooling towers, and waste water reached 4% of the total addition, during 2015 an innovation process was developed in order to manage reduced its generation by 86%. The increase in the use allow continuous operation, recording and reutilize the water to reduce our demand. water captured at the Complex. of underground water is due mainly to the higher water the Aconcagua basin water in a more efficient manner. consumption at Nehuenco and Los Pinos power stations that increased their generation as compared to the previous year. The use of sea water decreased by 10% as a result of a slowdown in Santa María’s Unit I thermoelectric power plant that entered a major maintenance process in November.
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Hydraulic series: reutilization of water
In order to promote energy efficiency and the sustainable use of its natural resources, PERCENTAGE AND VOLUME OF WATER RECYCLED AND REUTILIZED BY HYDROELECTRIC POWER PLANTS (G4-EN10) Colbún has developed most of its electric generation power plants by reutilizing Metering 2013 2014 2015 the waters that have been used by other unit Company’s power plants situated upstream Total turbine Mm3/year 17,160.6 31,068.8 30,291.8 in the same basins (hydraulic series). water
Volume of "re" Mm3/year 8,811.5 11,045.5 10,603 Consequently, at present close to 35% of the turbine water maximum water flows used by Colbún in its in series operations are used by more than a power generation plant owned by the Company, Percentage of % 51.3% 35.6% 35% reutilized water thus allowing a more efficient use of water.
Other energy-efficient uses of water
Hydroelectricity with water regulation compensated for saving water, while San Ignacio hydroelectric power plant (run-of-the-river): San Ignacio potential allows generating other social Colbún has more water available for power power plant takes advantage of the residual energy existing at Colbún-Machicura Complex’s benefits. This is the case of the water generation. restitution channel, thus maximizing the use of energy and water of the complex with efficiency agreement signed with the Colbún has also tapped on irrigation minimum environmental impact. Maule South Irrigators’ Association, channels and on residual water to generate which permitted water savings for energy by efficiently using water without irrigation by 28% in 2015. This is a mutual Chiburgo hydroelectric power plant (run-of-the-river): Chiburgo power increasing the environmental impacts. benefit agreement, where irrigators are plant was built in 2007 taking advantage of Colbún’s facilities, which provides water for irrigation without disturbing its quality or quantity.
USAGE OF RESIDUAL RAINFALL AND IRRIGATION WATERS (G4-EN6)
San Clemente hydroelectric power plant (run-of-the-river): This power Estimated Savings station allows using the power losses generated along the Sanatorio Gorge, as it is used to Name of Initiative Description Implemented at Metering 2013 2014 2015 return water to various irrigation channels. This power plant is registered under the United Unit Nations’ Clean Development Mechanism, resulting from CO2 emission reduction from its Optimization of Development of new plants to use energy San Ignacio GWh 121 175 171 operation. water resource remnants from water flows, such as the San Ignacio, Chiburgo and San Clemente Chiburgo GWh 69 60 70 plants San Clemente GWh 15 16 16
Total 205 251 257
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Use of materials and efficiency
Why is it material? USE OF MATERIALS AND Being able to generate the same amount of energy by using fewer materials and resources is relevant for the sustainability of the business EFFICIENCY and the protection of the environment. G4-EN6, G4-EN1, Colbún-2.EC What stakeholders are impacted by this material Over the past few years Colbún has made One of the cases where this principle has aspect? efforts to take advantage of residual been applied is Los Pinos power plant energies and to incorporate generation (combined cycle thermoelectric power The use of materials and efficiency is an aspect that impacts mainly our shareholders, clients, equipment with state-of-the-art technology plant). This unit reaches efficiencies in community and the environment. and greater efficiency, which has resulted in the order of 25 to 30% greater than other a better use of the resources. power plants of its kind, which enables it to What is our objective? contribute from 20 to 80 GWh/year more
Colbún seeks to move towards power than a conventional facility for the same fuel generation based on high environmental consumption level. efficiency indicators, in addition to technical and economic criteria. In turn, in connection with the use of materials, the main ones are fossil fuels SYSTEM ENERGY SAVINGS ATTRIBUTED TO COLBÚN’S POWER PLANTS used in our power plants. Lower diesel and coal consumption were recorded due How do we manage? (G4-EN6) to lower generation from Antilhue, Candelaria and Santa María thermoelectric Estimated savings The Occupational Safety, Health and power plants, added to the higher natural gas consumption resulting from the Environmental Management System helps Name of the Description Implemented at Metering 2013 2014 2015 more extensive use of this fuel in Nehuenco Complex combined cycle units. us monitor and record our environmental initiative unit performance. Optimization Development Los Pinos GWh 17 39 45 in the use of of a MATERIALS USED, BY WEIGHT OR VOLUME ¿Qué principios del Pacto fossil fuels thermoelectric (G4-EN1) power plant Global están relacionados? that shows Weight or Volume Cost (in millions of US$) Supplier efficiencies Principles 7, 8 and 9: Companies must support the in the order Material 2013 2014 2015 2013 2014 2015 2015 application of a precaution judgment regarding of 25 to 30% greater than environmental issues / Adopt initiatives to promote a Diesel COPEC, ENAP, other power greater environmental responsibility / Encourage the Million m3 0.16 0.12 0.053 133 101.3 40 ENEX, Petrobras plants of its (Chile) development and dissemination of environmentally kind. safe technologies. Natural Gas Metrogas S.A., 643 572 661 357.6 333.3 237 Million m3 ENAP (Chile) How do we measure? If this efficiency is added the energy from irrigation waters and residual rainfall Coal Various (Colombia, Energy consumption reduction (G4-EN6)/ Thermally Thousand 955 962 861 104.5 90.9 73 mentioned in the preceding paragraph (Chiburgo, San Clemente and San Ignacio USA, Australia) efficient generation (2.6.3 DJSI) / Materials used per tons power stations), an additional amount of approximately 300 GWh was obtained weight or volume (G4-EN1) / Investment in strategic for generation in 2015 (4% up from 2014) associated with higher efficiency supplies and main suppliers (Colbún-2.EC). initiatives. Who is responsible?
Business and Energy Management Division; Engineering and Projects Division; Generation Division and Environmental Management belonging to the Sustainable Development Division.
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Climate change
Why is it material?
Risks associated with climate change can directly affect the sustainability of the power generation business; such risks include the availability and variability of water resources, sustained drought and amount of green taxes. These factors, combined with the commitments made in COP21 require the maintenance of increasingly efficient greenhouse gas emission management (GHG). Climate change What stakeholders are impacted by this G4-EC2, G4-EN15, G4-EN16, G4-EN17, G4-EN18, G4-EN19, EU5 material aspect?
Climate change is an aspect that impacts mainly our investors, Climate change related risks can affect the Also, our experience in the accreditation and communities and the environment. Company. Faced with this scenario, we seek certification of projects before the United to reverse those risks and turn them into Nations’ Clean Development Mechanism What is our objective? opportunities, working in a strategy that and other standards, and the subsequent will allow us to better manage our business generation of carbon credits give us We seek to manage the climate change issues and maintain an emission before the requirement to curtail CO2 competitive advantages to develop more factor below the SIC average. Regarding the other emissions, we seek to emissions. robust and profitable energy projects, which meet the requirements established under Supreme Decree 13/2011, issued by the Ministry of the Environment, establishing the local contaminant will enable us to be prepared in the face of emissions standard (MP, NOx, SO2) for thermoelectric plants. At Colbún we seek to generate a balanced potential emission reduction requirements. generation mix, which means having a How do we manage? significant renewable energy component An example of the above is La Mina (hydro and NCRE) with an efficient thermal hydroelectric power plant, which certification The main management measure for both GHG emissions and local contaminants is associated mainly to the use of highly efficient contribution, so as to maintain a CO2 before the Verified Carbon Standard (VCS) equipment, so as to produce the greatest amount of energy possible emission factor below the SIC’s average. we are currently working on to be able to with the least amount of fuel, resulting in lower emissions. issue carbon credits. This has been a pioneer project in Chile for being the first power In the specific case of the GHG emissions, these are managed through the plant that measures CO2 emissions from its development of a balanced generation mix between the thermoelectric and the renewable components, which enables Colbún to show an construction stage. emission factor lower than the SIC average.
Which Global Compact principle is this aspect related to?
Colbun CO2 emissions versus SIC in 2015 Principles 7, 8 and 9: Companies must support the application of a precaution judgment regarding environmental issues / Adopt initiatives to promote a greater environmental responsibility / Encourage the 400.00
development and dissemination of environmentally safe technologies. h 300.00 How do we measure? /GW o 2 200.00 Direct GHG emissions (“Scope 1”) (G4-EN15) / Indirect GHG emissions during energy generation (“Scope 2”) (G4-EN16) / Other indirect GHG emissions 100.00 C ton (“Scope 3”) (G4-EN17) / Intensity of GHG emissions (G4-EN18) / NOX, SO₂ 0.00 and other significant emissions into the air per type and weight (G4-EN21). Dic Ene Feb Mar Abr May Jun Jul Ago Sept Oct Nov Dic
Who is responsible? SIC Colbún
Business and Energy Management Division; Engineering and Projects NOTE: Graph showing the behavior of Colbún 2015 emissions versus SIC, obtained from an internal Colbún Division; Generation Division and Environmental Management belonging tool. This application contains in its matrix all SIC plants and for each technology applied, emission factors to the Sustainable Development Division. are assigned per type of fuel.
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Power plants certified to reduce emissions Our carbon footprint
At present, four of our power plants are registered with the Clean Development Mechanism, which in 2015 yielded CO2 reductions The internal importance of Colbún’s carbon footprint monitoring and 1,134,773 by 262,104 tons of CO2e. The issue of carbon credits during 2015 brought revenues by US$ 1,134,773 to the Company. The San Pedro measurement was ratified in 2009, upon becoming the first Chilean Dollars earned from the hydroelectric power plant adds to these four stations; San Pedro has been certified before the Verified Carbon Standard (VCS) to issue Company to report GHG emissions through the Carbon Disclosure commercialization of carbon credits in 2015 carbon credits once it is commissioned. Project (currently, CDP), which are informed from 2001 to 2015.
To help reducing greenhouse gas emissions (GHG) responsible for These documents are available at the CDP’s website, where Colbún accelerating the climate change, Colbún has implemented a series of report was recognized in 2015 among the best in Latin America by initiatives within this field over the last 15 years. To such end, we have the CDP. In addition, our 2010 - 2015 carbon footprint measurements stated that any eligible project shall be registered with the Clean have been verified by a third party, thereby enabling us to Development Mechanism (CDM), or otherwise, with any voluntary corroborate the scope and the quality of the calculations developed. market standard. A significant drop of GHG emissions was recorded in 2015 due to the lower generation by the Santa María I power station. Also, In 2002, our Chacabuquito power plant (25.7 MW, Aconcagua River) the operation of Angostura hydroelectric power plant allows us became the first hydroelectric power plant in the world to trade to maintain a balanced generation mix and to continue having a carbon credits. greenhouse gas effect emission factor (tonCO2e/MWh) much lower than the average Central Interconnected System’s (SIC).
TOTAL COLBÚN GHG EMISSIONS IN CHILE, 2014-2015 GHG EMISSION FACTOR COENLBÚTRANL CLESEAN MDL D CEOVELBÚLOPMN ENT MECHANISM (G4-EN15, G4-EN16, G4-EN17) (G4-EN18) (CDM) PLANTS Scope 1 (ton CO e) Scope 2 (ton CO e) Scope 3 (ton CO e) Emissions from fuel consumption 2015 Central Entrada en MW Registro Reducción2015 2 2 2 Hydroelectric Installed CDM Startoperación Up Capacity MDLRegistration2015 Emissions Plants Year Reduction Direct Emissions Indirect Emissions Indirect Emissions Diesel (tonCO2e) 142,224 (MW) Year (ton CO2e) Chacabuquito 2002 29 2007 31.491 · Company vehicles · Own electricity consumption · Business trips Coal (tonCO2e) 1,989,783 Chacabuquito 2002 25.7 2007 31,491 Hornitos 2008 55 2008 77.366 · Thermoelectric generation units · Transportation of fuel to facilities. Natural Gas (tonCO2e) 1,293,975 Hornitos 2008 61 2008 77,366 · SF6 leaks from electrical equipment · Maritime coal transportation Quilleco 2007 71 2008 143.761 Net Generation (MWh) 12,176,253 Quilleco 2007 70.8 2008 143,761 · CH4 emissions in reservoirs (they are · Breakdown of organic waste San Clemente 2010 5 2010 9.486 Intensity (tonCO2e/MWh) 0.281 San Clemente 2010 5.9 2011 9,486 low in Chile)9 · Leased assets TOTAL 262.104 Total 262,104 · Coal and ashes movement · Transport of employees NOTE: This indicator describes the behavior of Colbún’s GHG emissions per unit of energy generated in all our facilities (tons of CO2e per MWh 2014 3,713,693 8,988 37,074 generated). Thus, by 2015 our GHG emission factor was 0.281 [tCO2e / MWh], NOTE: A power generation plant becomes eligible for carbon accreditation representing a decrease of 5% over 2014. This decrease is due mainly to systems when it shows that it reduces CO2 emissions, meets the requirements 2015 3,429,642 7,840 36,840 lower participation in the generation of the Santa Maria I thermoelectric of "additionality" and "common practice", and contributes to the sustainable power plant and the increased use of LNG at Nehuenco Complex and development of the power system. The CDM is a mechanism under the Kyoto Candelaria. Protocol, which certifies projects that help fight climate change, allowing them to emit carbon. Notes: Scope 2: Although all of our power plants generate energy at some point in time, they also take a certain amount of power from the grid (especially during maintenance processes and to feed supplementary equipment which are far from the main station). The lower energy consumption from 2014 corresponds to less energy taken from the grid at Nehuenco and Los Pinos stations given their better operating levels during 2015.
Scope 3: For liquid fuels, consideration is made of the emissions associated with land transport from the refinery to the power plant using them; while for the liquefied natural gas no consideration is given to the maritime transport.
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La Mina hydroelectric power plant project Development of Non Conventional Renewable Energies (NCRE) Carbon footprint EU8 As a company, we think it is important Colbún owns 25.3 MW of own NCRE installed capacity and our purpose is to significantly for Chile to progress toward measures expand this capacity. In order to expand the presence of this type of energies within our that promote the development of clean asset portfolio, in 2015 we set up a NCRE area inside the Business and Energy Management energies with low emission rates. Non- Division aimed at studying and developing solar and wind power projects without Conventional Renewable Energies (NCRE) discarding other types of non-conventional renewable energies. have many positive attributes, namely, they do not generate greenhouse gases, can power plants (Chiburgo with 19.4 MW and Colbún signed a 12-year term contract to be inserted in adjustable blocks and are San Clemente with 5.9 MW) in addition to six purchase the annual energy produced and socially accepted. other mini-hydro power plants that are not the related NCRE attributes. officially qualified as such because they were However, the intermittence of wind and The subscription of this contract at a built before the enforcement of the NCRE solar power entails that they must be stabilized price – i.e., constant over time - law. La Mina hydroelectric power plant (34 supported by conventional power plants, allowed Acciona to build its first wind farm MW) will be the third NCRE station operated so we should be cautious in forcing their in Chile. by Colbún. penetration because they may entail Comasa Biomass Power Plant: this 26 MW additional costs to the system. Identifying Within this context, in 2013 Colbún signed power plant situated in the municipality of and managing these costs is one of the two contracts linked to NCRE projects: Lautaro, IX Region is operated by Comasa main challenges of our power system Punta Palmeras wind farm: 45 MW wind Generación. The contract subscribed by according to Colbún. farm operated by Acciona Energía, situated Colbún is also over a 12-year term and Our company has two NCRE hydroelectric in the municipality of Canela, IV Region. comprises the NCRE attributes.
The first stage of the Project “Measurement La Mina hydroelectric power plant Project: of La Mina hydroelectric power plant The preliminary results yielded a total carbon footprint” concluded in late 2015; of 43,000 tonCO2e associated with the 2015 NCRE BALANCE this is a unique initiative in Chile that will complete construction of the power allow discussing in depth the impact of the plant, including civil works, materials, GWh 567.0 construction of a hydroelectric power plant earthworks, transport and land use change, 600 130.1 on the climate change. among others. It is worth mentioning that 500 435.4
these results confirm that the impact of 400 486.5 It entails a preliminary measurement of the hydroelectric power in terms of greenhouse 300 Carbon Footprint (which started by late 2013) gas effect emissions is completely marginal 200 64,4 80.5 based on project information from basic (considering the service life of this type of 100 64.4 16.1 and detail engineering to then compare the projects and the fact that they practically do 0 Energy Energy Energy Deficit 2015 NCRE results with data monitored and reported by not issue CO2 as a result of their operation), supplied by supplied by supplied by transfered from commitments the main contracting companies throughout proving that this is an excellent technology Chiburgo San Clemente third parties 2014 to 2015 the construction stage (monitoring currently alternative to transition our country toward Note: 1.5 GWh were carried over as surplus to the 2016 balance sheet. under development). a low carbon-producing economy.
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Atmospheric emissions and air quality Santa María compensations plan and air quality G4-EN21 An outstanding case in this matter is the Due to the high efficiency of the filters already installed, and the fact that the authority emission control of Santa María Complex’s proposed the removal of other particulate matter emitting sources upon authorizing Santa Unit I. This power plant features mitigation María power plant, in practice, the compensations plan has outperformed the emissions of equipment that have allowed reducing by this unit making a positive net contribution to the Great Concepción City in this regard.
ATMOSPHERIC EMISSIONS AND AIR QUALITY 99.9% the emissions of particulate matter and by 78% the emissions of sulfur dioxide Atmospheric emissions from fixed sources, (SO2), as well as low NOx burners to Colbún (tons/year) reduce nitrous oxide (NOx) emissions. All 2013 2014 2015 Santa Maria Complex emissions are within NOx 4,421 5,025 3,715 the standards – which are very similar
SO2 2,085 2,349 1,677 to Europe’s and in some cases, such as particulate matter, are close to 10 times MP 88 97 79 below the regulatory limit.
NOTE: Numbers consider emissions from January through December 2015 from Santa Maria I and the three units of the Nehuenco Complex. Also from January to September from Candelaria, Antilhue and Los Pinos plants. It should be noted that the latter three operated very little in the last quarter. 704 TONS OF PARTICULATE MATTER In 2015, Colbún reduced the gases issued compliance with the Emission Standards for It should be noted that by late 2015 the COMPENSATED BY SANTA MARÍA by its power plants that have an effect on Thermoelectric power plants (Supreme Decree Environmental Superintendence (SMA) filed POWER PLANT IN 2015 the quality of local air. The reduction in SO2 13/2011) from the environmental authority, a claim against Colbún for non-compliance and particulate matter is due to the higher which purpose is to ensure that emission with Environmental Qualification Resolutions Within this context, and given that air CONCENTRATION OF MP₁₀ CORONEL ug/Nm³ availability of natural gas at Nehuenco monitoring systems already certified remain in of the Nehuenco Complex in connection with quality is the result of many factors such as Complex, which translates into lower diesel optimum operating conditions. atmospheric emissions, diesel operation meteorological conditions and the behavior consumption. The lower NOx emissions result under unauthorized conditions and liquid of other emitting sources (such as urban WINTER SUMMER from fewer operating hours of Santa María In March of 2015, Santa María’s Unit waste. The charges were mainly referred to transport, the use of wooden logs with (April 1 - August 31) (December 1 - February 28) Complex’s Unit I between November and I measurement system underwent a situations, which, in the authority’s opinion heating purposes and the operation of other Year Coronel North Coronel South Year Coronel North Coronel South December of 2015. recertification process, being validated by had taken place in 2013 and to a lower extent, industries), data show that breathable air 2010 79,3 70,3 2010 34,1 31,1 the environmental authority for 2015 – 2016. It in 2014. Regardless of the fact that most in Coronel has not deteriorated since Santa 2011 74,6 82,1 2011 46,4 39,4 In 2015, we performed continuous monitoring should be noted that all continuous monitoring points identified by the SMA had already been María’s Unit I commissioning in August 2012* 82,6 84,8 2012* 55,2 55,1 of PM, NOx and SO2 emissions through the systems shall be subject to quality assurance resolved at the time of notification of the of 2012. Moreover, when comparing air 79,5 72,3 39,1 40,1 Measurement Systems already validated at tests on a daily, quarterly and annual basis. non-compliances or were not defaults as such quality (PM) levels in winter and summer, a 2013 2013 Colbún’s thermoelectric power plants. We and could have been the object of discharges, significant drop is seen in summer, which 2014 71,6 70,1 2014 46,3 47,9 implemented the Quality Assurance Plan, As in Santa María, the CEMS of the generation we presented a Compliance Program with confirms that one of the main emission 2015 55,9 69,9 2015 40,0 62,5** data reporting, auditing and Measurement units of Nehuenco Thermoelectric Complex the regulatory authority, which was approved sources is the use of wooden logs for System (CEMS, per its acronym in Spanish) and Los Pinos, Candelaria and Antilhue early in 2016. heating. * The Santa María I plant started operating in August of 2012. revalidations. Such Plan corresponds to a stations the necessary quality assurance tests The data submitted corresponds to the National Air Quality System (SNCA). specific requirement associated with the have already been conducted. ** In the summer of 2015 forest fires were recorded in Coronel-Patagual (Coronel South).
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BIODIVERSITY
Main measures relating to biodiversity Why is it material?
Power generation produces impacts on biodiversity both BIODIVERSITY in the construction and operation phases of the projects. Such impacts must be measured and properly managed Colbún-13.MA in order to prevent those that could occur and minimize 1 ANGOSTURA PLANT N 4 NEHUENCO COMPLEX or compensate those that cannot be avoided. In 2015 a degraded Roble-Raulí-Coihue Nehuenco I and II use water from a network of (Quercus-Notophagus alpine-Nothofagus dombeyi) wells. To optimize the use of the resource, a What stakeholders are impacted by forest was replanted with native species as per the control system and intelligent operation of the Preservation Plan with a total of almost 36 hectares. aquifer, its wells and the installation of two this material aspect? Native species were also established on the edges of temporary reverse osmosis plants were Biodiversity is a matter that primarily impacts our implemented, resulting in water saving of about Our environmental management shall the reservoir, along the Huequecura branch, in order communities and the environment. always embrace, value and recognize to favor the habitat for the native fauna. CHILE 100 liters / second. biodiversity and the natural habitats where Six fish species were detected in the Huequecura What is our objective? SANTA MARÍA PLANT our projects and power plants are located. River and ten in the Biobío River, such as tollo 5 (spotted dog-fish), bagre (cat fish), bagrecito (small We seek for our projects and power plants to be cat fish), pejerrey (silverside) and puye installed at the sea water intake; they operated inserted in the best possible manner in their local Thanks to our power facilities and projects, (Brachygalaxias bullock). with 99% reduction in the entry of biomass and no context, minimizing their environmental footprint and we have the opportunity to know different entry of fish. This situation was maintained in 2015. recognizing the existing environmental attributes. 4 ecosystems and natural habitats, and to 2 RUCÚE AND QUILLECO PLANTS Sixty-eight point eight (68.8%) of the ashes generated by Unit I was reused as raw material recognize a rich variety of native fauna A Geographic Information System (GIS) was How do we manage? for the cement and concrete industry, thereby species. In order to bring each Colbún’s developed to update legal backups of properties, reducing the disposal in the ash collection yard. Biodiversity is a variable present in the design of our define current uses, identify potential areas of 6 worker, neighbor or stakeholder closer to projects that seeks to achieve geographical integration state forest restoration and compensation, and The Complex has undertaken to compensate 100% this realm, we have edited and published a 1 evaluate the environmental values of the areas. 5 of its particulate matter emissions. These at the basin, sub-basin or project area in such a way guide to help in the recognition of the most measures have achieved a total reduction of 704 that they add value and enhance the interaction of Five fish species have been identified in the basins 2 tons of MP in 2015. living systems. To such end, we conduct the necessary typical species. This document contains of the Laja and Rucúe Rivers: the freshwater testing to know the species present, with special information from many of the species dogfish and Concepción Carmelita (Myrichthys 7 emphasis on protected species or categories of official pardalis) (endangered), the small boy catfish and 6 LA MINA PROJECT present from Valparaíso to Los Lagos conservation, and those located in areas that make up lake pocha (Percichthys melanops) (both 3 During the construction of the project, the felling Regions. the National System of Protected Wild Areas (SNASPE). vulnerable) and Chilean silverside (near of forest trees has been reduced by more than We seek to have a net positive impact on biodiversity. threatened). 50% as compared to the original plan (13 hectares The following map summarizes the main of native forest). Helicopters are being used for the construction of Which principle of the Global measures adopted by Colbún in connection 3 CANUTILLAR PLANT the power line in the mountainous area of steep with biodiversity. The Canutillar plant, associated facilities and parts Compact is this aspect related to? slopes to prevent the formation of roads or access of the Chapo Lake are located in a highly valuable tracks. Principles 7, 8 and 9: Companies must support the ecological area, such as National Park Alerce In 2015, the communities of phytobenthos, application of a precaution judgment regarding Andino and Reserva Nacional Llanquihue. For this zoobenthos, phytoplankton, zooplankton and fish reason, a SIG survey was conducted, which environmental issues / Adopt initiatives to promote a in nine monitoring stations have been monitored. detected sectors with potential environmental greater environmental responsibility / Encourage the Among the species studied are the small dogfish hazards and possible actions were defined. development and dissemination of environmentally and catfish, classified as “endangered” and safe technologies. After the eruption of the Calbuco volcano in 2015, “vulnerable.” How do we measure? carried out on the ecological conditions of the water systems in the basin in order to determine 7 SAN PEDRO PROJECT Surveillance, follow up and management plans for the A monitoring plan has been in place since 2009 to land and water biota, measurement and monitoring of the water and biologic units. study the condition of the native ichthyic fauna at physical variables or parameters of the different habitats, the San Pedro River during the construction phase forest and vegetation management (Colbún-13.MA). (*) For further details, refer to the maps associated to each facility in the Appendix. in order to get to know better the inter-annual natural dynamics of the ecosystem of the San Who is responsible? ACROSS-THE-BOARD MATTERS Pedro River and the Project area. Environmental Management belonging to the The presence of the Didymo invasive algae has been monitored in 2015 in the Laja, Biobío and Sustainable Development Division San Pedro Rivers. In addition to the monitoring and communication with local Sernapesca
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B GENERAL INFORMATION
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Scope HOW THE ANNUAL INTEGRATED G4-13, G4-23 REPORT WAS BUILT During 2015, the most significant change in the size and structure of the Company was the purchase of a G4-12, G4-18, G4-19, G4-20, G4-21 y G4-33 51% stake in Fenix Power Perú, owner of a 570 MW combined cycle power plant based on natural gas lo- cated in Las Salinas, District of Chilca, Peru. However, as the purchase was done in the second half of De- After four years of publishing our annual Sustainability Report, this Relevant documents for the power industry and cember, this document only contains Colbún S.A. and its Chilean affiliates’ performance, with no changes year we wanted to give a step forward and publish our first Annual Colbún in the coverage or scope of the information submitted the previous year. Also, no indicators are shown for Integrated Report. This report integrates in a single document what HidroAysén, Electrogas or Transquillota, as these are Colbún’s related companies. we used to publish separately in the Company’s Annual Report and In order to identify the characteristics, forecasts and main challenges Sustainability Report and is intended to communicate the way in which of the energy sector, we analyzed the following information: – within the context of its external environment – Colbún’s strategy, performance, governance and projects create value within the short, Relevant documents for energy Methodology industry and Colbun medium and long-term. G4-32, G4-22 Ù Corporate objectives Colbun This report was prepared in agreement with the principles of the International Integrated Reporting Coun- Ù Dow Jones Sustainability questionnaire analysis cil (IIRC), the compulsory requirements of the Superintendence of Securities and Insurance (SVS) and the Ù Global Reporting Initiative (G4 guidelines and supplement for the power sector). Also, the Integrated Report Materiality Exercise Energy strategy of Chile G4-18 is a progress communication (CoP) for the United Nations Global Compact. Ù EDP, ISAGEN , ENDESA annual reports (among others) Detail is provided of the construction process of the 2015 Annual If changes are made to the information reported these will be informed hereunder. Ù Press release analysis Integrated Report, to which end we followed the “materiality data collection” process proposed by the fourth-generation methodology of the Global Reporting Initiative guidelines*. Colbún’s Business Model G4-12 Relevant documents for BUSINESS MODEL ANALYSIS energy industry and Colbun + The business model allows identifying the manner in which a company transforms inputs into products and results, meeting the strategic objectives of the organization, managing its risks, strategically SUSTAINABILITY CHALLENGES (LONG LIST) allocating its limited resources, measuring and tracking its operations and creating value within the short, medium and long term. The different business activities can have positive or negative impacts on INTERNAL AND EXTERNAL STAKEHOLDERS CONSULTATION the stakeholders and the environment.
MATERIALS ASPECTS
* Materiality is the process whereby the relevant topics to be included in the Integrated Report are determined, either because they show the economic, environmental and social effects of the organization or they have a significant influence on our stakeholders’ decisions.
134 135 ANNUAL INTEGRATED REPORT COLBÚN 2015
Sustainability challenges (long list) CONSULTATION TO OUR INTERNAL AND EXTERNAL STAKEHOLDERS Materiality Matrix
After four years of publishing our annual Sustainability Report, this Ù INTERVIEWS TO FRONTLINE MANAGERS (3) Local Development Use of the water resource year we wanted to give a step forward and publish our first Annual · · Ù INTERVIEWS TO BOARD MEMBERS (2) Climate Change · Ethics and Corporate Integrated Report. This report integrates in a single document what · Governance Ù Socio-environmental we used to publish separately in the Company’s Annual Report and INTERVIEWS TO UNION LEADERS (2) · conflicts Health and Safety
H IG · Sustainability Report and is intended to communicate the way in which Ù INTERVIEWS TO POWER PLANT SUPERVISORS (2) · Career Development Availability and reliability of – within the context of its external environment – Colbún’s strategy, Ù INTERVIEWS TO INVESTORS (MONEDA ASSET MGMT AND · our power plants performance, governance and projects create value within the short, SCOTIABANK) medium and long-term. Growth Ù INVESTORS’ PERCEPTION SURVEY (6) Ù PERCEPTION SURVEY AT CORONEL (50) AND SANTA Profitability Local development bÁRBARA-QUILACO (50) · Dialogue with the · Energy Agenda and Growth Dialogue with the community Ù RELEVANT STAKEHOLDERS PERCEPTION SURVEY (73) Community Regulations Ù CUSTOMER PERCEPTION SURVEY (5) Biodiversity Use of materials and Ethics and Corporate Socio-environmental conflicts · · Work relations efficiency Governance Ù perception from the GI Impact KEY SUPPLIERS PERCEPTION SURVEY (2) M ED IUM · Work environment Ù CONTRACTORS AND VENDORS PERCEPTION SURVEY (142) · Energy agenda and regulations Evaluation and selection of Profitability suppliers ·
Availability and reliability of our Emissions and climate change power plants MATERIAL ASPECTS MEDIUM HIGH G4-19, G4-20 Business relationship standards Effluents and waste Impact for/from the company
After the consultation process, priority was given to the different Coverage of the impact (internal and external) Coverage of the impact (internal) Career development Biodiversity subjects according to their relevance to the stakeholders interviewed Note: This chart does not establish a relative priority of the topics inside the same box. and their impact on the Company’s operations. Work environment Use of water resources
Health and safety Use of materials and efficiency This Integrated Report will identify MATERIAL ASPECTS and answer will be provided as to why they are material, what is the stakeholder Diversity and non-discrimi- Labor relations nation affected, what is the company’s objective in connection with the subject, how it is managed, measured and who is the individual ac- VERIFICATION OF THE 2015 ANNUAL countable inside the organization (G4-27) INTEGRATED REPORT G4-33
Consultation to our internal and external Prioritization of material aspects The Annual Integrated Report was reviewed by the external auditor It should be noted that the financial information relating to the An- stakeholders G4-21 KPMG to ensure the reliability of the information provided herein nual Report requirements by the Superintendence of Securities and and the compliance with GRI G4 (Global Reporting Initiative). This Insurance is audited by E&Y. We think that the opinion of our stakeholders is decisive when it comes The following Materiality Matrix was reviewed and validated by verification process included a detail review of the materiality data to defining the relevant aspects we should manage and communicate Thomas Keller, Colbún’s Chief Executive Officer. The Board members and enabled us to find opportunities for improvement. in this Integrated Report. This is why in December of 2015 and January were also presented with this Annual Report for review and comments. of 2016, consulting companies interviewed our internal and external stakeholders, which was supplemented by perception surveys done The “Y” axis indicates the level of relevance our stakeholders assign from September to December of 2015 in order to collect data for our to each topic. The “X” axis establishes the level of impact the topic Corporate Reputation Index (CRI). can have on the Company, or – stated otherwise – the impact the Company’s operation can have on the topic. For example, the efficiency in the use of resources and water is an aspect having a high impact potential on Colbún and, on the other hand, the Company’s operation can affect the availability of the resource.
The coverage of the impact indicates whether it originates inside or outside the organization. For example, health and safety management can directly impact Colbún, but also the contractors and the communities. On the contrary, workers’ career development does have a limited impact on the Company.
136 137 138 139 ANNUAL INTEGRATED REPORT COLBÚN 2015
Liability Statement
In compliance with what is set forth in the General Standard N° 283 of the Superintendence of Securities and Insurance, the subscribing parties declare under oath that the information contained in this Annual Report is faithful expression of the truth, and, as such, we undertake the corresponding legal liability.
BERNARDO LARRAÍN MATTE PRESIDENTE 7.025.583-9
LUIS FELIPE GAZITÚA ACHONDO JUAN HURTADO VICUÑA VICEPRESIDENTE DIRECTOR 6.069.087-1 5.715.251-6
ARTURO MACKENNA ÍÑIGUEZ LUZ GRANIER BULNES JUAN EDUARDO CORREA GARCÍA DIRECTOR DIRECTORA INDEPENDIENTE DIRECTOR 4.523.287-5 7.040.317-K 12.231.796-K
ELIODORO MATTE LARRAÍN EDUARDO NAVARRO BELTRÁN THOMAS KELLER LIPPOLD DIRECTOR DIRECTOR GERENTE GENERAL 4.436.502-2 10.365.719-9 5.495.282-1
140 141 ANNUAL INTEGRATED REPORT COLBÚN 2015 GRI G4 TABLE
Verificado Material Global GRI Code Indicator Page Section Dow Jones por GRI G4 TABLE issue Compact KPMG
Declaration from the main individual Letter from G4-1 accountable for the decisions on the relevance of 4 Bernardo X X sustainability for the organizational strategy. Larraín
Letter from Brief description of the main effects, risks and G4-2 4 Bernardo X X opportunities inside the organization Larraín
Colbún in G4-3 Name of the organization 2 x Numbers
Most important Company trademarks, products Colbún 2015 in G4-4 3 x x and services. Numbers
Appendices: G4-5 Place where the organization is located. Company x identification
Description of the number of countries where the organization operates or conducts significant Colbún in G4-6 2 x x businesses having an impact on sustainability, Numbers which is the subject matter hereof.
Ownership structure / G4-7 Ownership structure and legal requirements. 34 Appendices x Ownership structure
Colbún 2015 in G4-8 Markets served. 3, 32 x Numbers
Determination of the size of the company (number of employees; operations; net sales; Colbún in G4-9 3 x x capitalization; and number of products and Numbers services offered.
Headcount broken down by type of work contract, hourly schedule, region and sex. Report Human Capital G4-10* any significant change in the number of workers. 85 x x Development Indicate the total number of subcontracted personnel.
Percentage of employees covered by collective agreements. Labor G4-11* 90 Labor Relations x x Total percentage of subcontracted personnel Relations covered by collective agreements.
Our Business G4-12 Supply chain. 45 x x Model
Significant changes over the period in terms of Ownership 34, G4-13 Company’s size, structure, share ownership or Structure / x 134 supply chain. Scope
Indication of how the company addresses the Our Business Principle G4-14 45 x precautionary principle, if applicable Model 7
142 143 ANNUAL INTEGRATED REPORT COLBÚN 2015 GRI G4 TABLE
Verificado Verificado Material Global Material Global GRI Code Indicator Page Section Dow Jones por GRI Code Indicator Page Section Dow Jones por issue Compact issue Compact KPMG KPMG
List of letters, principles or other external Appendices: Indication of the «Conformity Option» selected G4-15 economic, environmental and social initiatives Instances where x by the organization and delivery of the GRI index G4-32 134 Methodology x subscribed or adopted by the organization. we participate of the selected option. Reference is provided to the external verification report. Appendices: List of national or international associations and G4-16 Instances where x Description of the policies and practices in force Verification of organizations the Company is part of. we participate G4-33 relating to the external verification of the Annual 137 the 2015 Annual x Report. Integrated Report List of entities appearing in the consolidated financial statements. Please indicate if some Colbún 2015 in Description of the governance structure of the G4-17 3 x of those entities are not shown in the Annual Numbers organization, including the advisory committees Report. G4-34 of the Board. Indication of the committees 37 Board of Directors x x responsible for the decision-making on economic, Description of the process used in determining How the Annual environmental and social issues. G4-18 the content of the Annual Report and the 135 Integrated Report x x Description of the process whereby the highest Our Business coverage of each Material Aspect. was Built governance body delegates its authority to the Model / Risk G4-35 45, 72 x x How the Annual Upper Management and to specific employees in and Opportunity G4-19 List of Material Aspects. 135 Integrated Report x x economic, environmental and social issues. Management was Built Indication of whether the organization features How the Annual executive positions or individuals accountable for Coverage of each Material Aspect by the Our Business G4-20 135 Integrated Report x x G4-36 economic, environmental and social issues, and 45 x x Company members. Model was Built if the holders thereof render accounts directly to the highest governance body. Appendices: Description of consultation processes between Coverage of each Material Aspect by the external How the Annual Board of Directors G4-21 135 x stakeholders and the highest governance body stakeholders. Integrated Report G4-37 37, 45 / Our Business x x relating to economic, environmental and social was Built Model issues. Consequences of the reformulation of the Appendices: Members of the highest governance body and its G4-22 information provided in previous Annual Reports 134 x G4-38 37 Board of Directors x x Methodology committees and their causes. Indicates whether the individual presiding over Significant changes in the scope and coverage of G4-23 134 Scope x G4-39 the highest governance body also holds an 37 Board of Directors x x each Material Aspect. executive position. List of the stakeholders related to our Our Business G4-24 45 x x Description of the designation processes and organization. Model G4-40 selection of the highest governance body and its 37 Board of Directors x x committees. Reason behind the selection of stakeholders the Our Business G4-25 45 x x Company has decided to work with. Model Business Description of the processes whereby the highest Business Ethics Ethics and G4-41 governance body prevents and manages poten- 69 and Corporate x x Appendices: Corporate tial conflicts of interest. Governance Dialogue and Governance Company’s approach regarding the degree of G4-26 communication x x involvement of our stakeholders. channels with our Description of the duties of the highest stakeholders governance body and the Upper Management Ethics Based in the development, approval and update of the Culture / Risk G4-42 70, 72 x x purpose, values, mission, strategies, policies and and Opportunity Issues and problems resulting from stakeholders’ How the Annual objectives relating to economic, environmental Management G4-27 involvement. Specify the key issues and concerns 135 Integrated Report x x and social impacts affecting the organization. raised by each stakeholder. was Built Measures adopted to develop and improve Board of Directors Colbún 2015 in the overall the highest governance body’s G4-28 Period covered by the Annual Report. 2 x G4-43 37, 45 / Our Business x x Numbers knowledge and understanding on the economic, Model environmental and social issues Colbún 2015 in G4-29 Date of the last Annual Report. 2 x Numbers Description of the performance assessment G4-44 processes of the highest governance body. 37 Board of Directors x x Colbún 2015 in G4-30 Annual Report presentation cycle. 2 x Indicate whether it is self-assessment. Numbers Duties of the highest governance body in Appendices: A contact point is provided to solve the doubts G4-45 identifying and managing the economic, 72 Risk Management x x G4-31 Contact x arising from the content of the report. environmental and social risks and opportunities. Information
144 145 ANNUAL INTEGRATED REPORT COLBÚN 2015 GRI G4 TABLE
Verificado Verificado Material Global Material Global GRI Code Indicator Page Section Dow Jones por GRI Code Indicator Page Section Dow Jones por issue Compact issue Compact KPMG KPMG
Duties of the highest governance body in Money paid to local suppliers at sites with Local Local the analysis of the efficiency of economic, Risk Manage- G4-EC9 104 x G4-46 72 x x significant operations stated as a percentage development development environmental and social risk management ment processes. Use of Frequency of analysis by the highest governance Use of materials Risk G4-EN1 Materials by weight or volume 120 materials and x G4-47 body of economic, environmental and social 72 x x and efficiency Management efficiency impacts, risks and opportunities. Use of Committee or position charged with reviewing Use of materials Principle How this Annual G4-EN6 Energy consumption reduction 120 materials and x and approving the Company’s Sustainability and efficiency 8 G4-48 135 Integrated x x efficiency Report and with making sure all Material Aspects Report was Built are properly explained and substantiated. Use of the water Use of water G4-EN8* Total water intake according to the source 115 x x Process whereby all significant concerns are Board of resource resource G4-49 37 x x communicated to the highest governance body. Directors Water sources that have been significantly G4-EN9 Ethics Based disturbed by water intake Nature and number of significant concerns G4-50 45, 70 Culture / Ethics x x communicated to the highest governance body. Total percentage and volume of water recycled Use of the water Use of water Principle Based Culture G4-EN10 115 x and reutilized resource resource 8 Description of compensation policies for the Board of Appendices: G4-51 highest governance body and the Upper Man- 37 x x Own, leased and locally managed facilities Directors Biodiversity agement. that are adjacent to, contain or are located G4-EN11 as compared Biodiversity x x in protected and non-protected areas with to Colbún’s Process used in determining the compensation. biodiversity value indicator-13 MA Indicate if consultants are used to determine the compensation and if they are independent Board of G4-52 37 x x Appendices: from the Management. Indicate any other Directors Description of the most significant biodiversity Biodiversity type of compensated relationship between the impacts of protected or non-protected areas G4-EN12 as compared Biodiversity x x consultants and the organization. resulting from Company’s activities, products to Colbún’s and services indicator-13 MA Explanation as to how the stakeholders’ opinion is sought and considered in connection with Appendices: Board of G4-53 compensation, including, if applicable, the results 37 x Biodiversity Directors of voting processes on policies and proposals G4-EN13 Protected or restored habitats as compared Biodiversity x x relating thereto. to Colbún’s indicator-13 MA Business Business Ethics Number of species included in the red list Appendices: Description of the values, principles, standards Ethics and G4-56 69 and Corporate x x of the IUCN and national conservation lists Biodiversity and norms of the organization. Corporate Governance G4-EN14 whose habitats are located in areas disturbed as compared Biodiversity x x Governance by Company operations, according to the to Colbún’s Business species threatened with extinction indicator-13 MA Description of internal and external advisory Business Ethics Ethics and G4-57 mechanisms to ensure an ethics business 69 and Corporate x x Corporate conduct. Governance G4-EN15* Direct greenhouse gas emissions (scope 1) 123 Climate change x x Governance
Business Indirect greenhouse gas emissions upon Climate Description of the internal and external Business Ethics G4-EN16* 123 Climate change x x Ethics and generating energy (scope 2) change G4-58 mechanisms to raise allegations on unethical or 69 and Corporate x x Corporate unlawful conduct or issue. Governance Other indirect greenhouse gas emissions Climate Governance G4-EN17 123 Climate change x (scope 3) change Financial G4-EC1 Direct economic value generated and distributed 56 Profitability x x Climate Management G4-EN18 Intensity of greenhouse gas emissions 123 Climate change X x change Economic consequences and other risks and G4-EC2 opportunities resulting from climate change and 123 Climate change G4-EN19 Reduction of greenhouse gas emissions 123 Climate change Principle 8 x their impact on Company’s activities. Other Relationship between the initial salary broken Appendices: NOx, SOx and other significant atmospheric atmospheric G4-EN21 128 x x G4-EC5 down by sex, and minimum local wage at sites Competitive emissions emissions and where significant operations are developed compensations air quality
146 147 ANNUAL INTEGRATED REPORT COLBÚN 2015 GRI G4 TABLE
Verificado Verificado Global Material Global GRI Code Indicator Page Section Material issue Dow Jones por GRI Code Indicator Page Section Dow Jones por Compact issue Compact KPMG KPMG
Appendices: Structure of governance bodies and payroll G4-EN22 Total waste water, by quality and final disposal Waste generated x breakdown by employee category and sex, Board of Principle G4-LA12 x x and disposed of age, membership of a particular minority Directors 6 group and other diversity indicators Appendices: Total weight of waste, by type and treatment G4-EN23 Waste generated x x Men and women base salary ratio by method Human Capital Career Principle and disposed of G4-LA13 employee category and significance of activity x x Development Development 6 location Main socio- Socio- G4-EN24 Total number and volume of significant spills 108 environmental environmental x x Percentage of new suppliers examined based Appendices: our G4-LA14 x challenges conflicts on work practices criteria value chain
Identification, size, protection status and Appendices: Significant, actual and potential negative Appendices: our biodiversity value of water masses and the re- Biodiversity G4-LA15 impacts of work practices on the supply chain x value chain G4-EN26 lated habitats significantly disturbed by spills as compared Biodiversity x and measures adopted to address them and escorrentía resulting from Company’s to Colbún’s Number of work-related allegations submitted, activities indicator-13 MA Appendices: G4-LA16 addressed and solved by means of formal x Labor claims Monetary value of fines and number of Appendices: De- allegation mechanisms non-monetary sanctions resulting from tail of 2015 fines G4-EN29 x x non-compliance with environmental laws and and sanctioning Number of discrimination cases and corrective Appendices: Principle G4-HR3 x standards processes measures adopted Human Rights 6
Number and percentage of contracted Appendices: Career Identification of power plants and significant G4-LA1* employees and average employee turnover x x suppliers whose freedom of association and Turnover development Appendices: Principle broken down by age, sex and region G4-HR4 right to subscribe collective agreements may x Labor Relations 3 be infringed or threatened and measures Social benefits for full-time employees not Appendices: adopted to defend those rights G4-LA2 offered to temporary or part-time employees, Work x x broken down by significant activity location environment Identification of power plants and suppliers Job retention and reincorporation indices after Appendices: with significant risk of child exploitation, and Appendices: Principle G4-HR5 x G4-LA3 maternity or paternity leave, broken down by Maternity/ x x measures adopted to contribute to abolish Human Rights 5 sex paternity leave child exploitation
Minimum advance notice of significant Appendices: Labor Power plants and suppliers with significant G4-LA4 operational changes and possible Communication x Relations risk of suffering forced labor episodes, and Appendices: Principle incorporation thereof to collective agreements channels G4-HR6 x measures adopted to contribute to the Human Rights 4 Percentage of workers represented in formal elimination of all forms of forced labor Appendices: joint safety and health committees (manage- Health and G4-LA5 Safety and x ment – employees) to help control and advice Safety Health Percentage of safety personnel who have been Appendices: Principle on occupational safety and health programs G4-HR7 x trained in human rights policies or procedures Human Rights 2 Type and rate of injuries, occupational Safety and Health and G4-LA6* illnesses, days lost, absenteeism and number 93 x x Number of reported cases of violation of Main socio- Socio- Health Safety of work-related deaths, by region and sex G4-HR8 indigenous peoples’ rights and measures 108 environmental environmental x adopted conflicts conflicts Workers whose profession displays high Safety and Health and G4-LA7 93 x x Number and percentage of power plants who incidence or risk of illness Health Safety have been the object of examination or impact Appendices: Principle G4-HR9 x assessment regarding human rights violation Human Rights 1 Average annual employee training hours, Human Capital Career issues G4-LA9 85 x x broken down by sex and work category Development Development Percentage of new suppliers examined in the Appendices: Principle Skill management and ongoing training G4-HR10 x Appendices: basis of human rights criteria Human Rights 2 programs that promote workers’ employability Career G4-LA10 Training and x x and help them manage the end of their Development Number of human rights allegations submit- development Appendices: Principle professional careers. G4-HR12 ted, addressed and solved through formal x x Human Rights 1 allegation mechanisms. Human Capital Percentage of employees whose performance Development Percentage of power plants where develop- Dialogue with Career Community G4-LA11 and professional development is evaluated / Appendices: x x G4-SO1 ment, impact assessment and community in- 100 the Community x x Development dialogue regularly by sex and employee category. Performance volvement programs have been implemented. and the Society Assessment
148 149 ANNUAL INTEGRATED REPORT COLBÚN 2015 GRI G4 TABLE
Verificado Verificado Material Global Material Global GRI Code Indicator Page Section Dow Jones por GRI Code Indicator Page Section Dow Jones por issue Compact issue Compact KPMG KPMG
Dialogue with Planned capacity versus forecasted power Appendices: Power plants with significant potential or Community G4-SO2 100 the Community X x EU10 demand over the long-term, broken down by Growth Growth x actual negative effects on local communities dialogue and the Society energy and regulatory regime. perspectives
Business Transmission and distribution losses over the The relevance of Number and percentage of power plants Business Ethics EU12 68 x x Ethics and Principle energy total, stated as a percentage. transmission G4-SO3 where corruption and significant related risks 69 and Corporate x x Corporate 10 have been detected and assessed Governance Governance Appendices: Comparison between the biodiversity of Biodiversity EU13 disturbed habitats and biodiversity of transfer as compared Biodiversity x Business Business Ethics habitats. to Colbún’s Anti-corruption communication and training Ethics and Principle G4-SO4 69 and Corporate x x indicator-13 MA policies and procedures Corporate 10 Governance Governance Processes to ensure talent retention and Human Capital EU14 x x renewal. Development Business Business Ethics Confirmed cases of corruption and measures Ethics and Principle Percentage of employees who will be entitled G4-SO5 69 and Corporate x x adopted Corporate 10 to retirement within the next 5 to 10 years, Appendices: Governance EU15 x Governance broken down by employment category and Turnover region. Value of political contributions, by country and G4-SO6 x x addressee Policies and requirements relating to our own Safety and EU16 employees, contractor and subcontractors’ 93 x x Health Number of claims relating to unfair competi- Safe, competitive safety and health. G4-SO7 tion, monopolistic practices or free competi- 62 and sustainable x x tion and the result thereof supply Dialogue with Stakeholders’ involvement in decision-making the Community 100, Community Appendices: EU19 process related to project planning and and the Society x Monetary value of significant fines and number 103 dialogue Detail of 2015 infrastructure development. / Early citizen of non-monetary sanctions resulting from G4-SO8 fines and x involvement non-compliance with environmental laws and sanctioning standards processes Appendices: Approach to Approach to managing the impact of transfers Safe, competitive EU20 manage the x Installed capacity, analyzed by energy source (local residents). EU1 3 and sustainable x x impact of and regulatory regime. supply transfers
Safe, competitive Net energy production broken down by energy Contingency planning measures, disaster and EU2 62 and sustainable x x emergency management plan and training Safety and Safety and source, country and regulatory regime. EU21 93 x supply programs, and reclamation and restoration Health Health plans. Safe, competitive Number of residential, industrial, institutional EU3 62 and sustainable x and business customers. Appendices supply Number of people transferred as a result of a Social Colbún 2015 in EU22 facility expansion or the construction of a new Performance Numbers / Safe, project. – Local Length of transmission and distribution lines EU4 3, 68 competitive x x development by voltage. and sustainable Number of third parties injuries and fatalities Safety and supply EU25 93 x involving Company’s assets. Health Allocation of certified CO2 emissions analyzed EU5 123 Climate change x Availability by regulatory regime. Availability and Average plant availability factor by energy and reliabil- EU30 65 reliability of x x Availability source and regulatory regime. ity of power Availability and power plants Management to ensure the short and long- and reliability Principle plants EU6 65 reliability of X term availability and reliability of power supply. of power 9 power plants Colbún-1. Financial plants EBITDA 56 Profitability x x EC Management Development Use of Research and development activities aimed at of Non Colbún-2. Investment in strategic inputs and main Use of materials Principle 120 materials and EU8 providing reliable and safe power supply and 127 Conventional x EC vendors and efficiency 9 efficiency at promoting sustainable development. Renewable Energies (NCRE) Colbún-3. Generating op- Local Social investment by type of initiative 104 x SO portunities development
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Verificado Global GRI Code Indicator Page Section Material issue Dow Jones por Compact KPMG
Description of the main socio-environmental Main socio- Socio- Colbún-4. conflicts recorded this year and how they 108 environmental environmental x SO were addressed challenges conflicts
Mechanisms to allow the community to Public safety Colbún-5. notify or ask questions regarding spills or risk 97 management in x SO events our communities
Colbún-6. Description of Company’s project status, Growth 76 Growth x EC future growth-related perspectives and goals Perspectives
Draft laws and Colbún-7. Colbún’s vision of the energy agenda and new Energy agenda 18 regulatory x EC regulations and regulations changes in Chile
Colbún-8. Human Capital Career Positions filled through internal contests 85 X TR Development development
Colbún-9. Dialogue and communication with our 90 Labor Relations X TR workers
Colbún-10. Work Work climate survey results / GPTW 92 X TR environment
Appendices: Colbún-11. Reconciliation benefits and policies Work X TR environment
Colbún-12. Percentage of workers in the healthy/ normal Safety and Safety and 93 x TR range health conditions Health Health
Surveillance, follow up and management plans for the land and water biota, Colbún-13. Appendices: measurement and monitoring of variables or Biodiversity x MA Biodiversity physical parameters of the different habitats, forest and vegetation management.
Diversity of the Board of Directors and the Board of NCG356 39 x X Organization Directors
2.6.3 Appendices: Use Use of DJSI Thermoelectric generation efficiency of materials and materials and X efficiency efficiency
1.1.10 Appendices: Who Requirements over the shares held by DJSI we are and what X Company’s management we do
1.1.6 Appendices: DJSI Board of Directors effectiveness Board of X Directors
Appendices: 1.7 Economic DJSI Tax strategy x performance and governance
Appendices: 2.7.2 Reliability of power distribution and Economic DJSI x transmission performance and governance
NOTE: To review the Appendices, download the complete version at www.colbun.cl Biodiversity data is checked against the information reported by Colbun’s indicator-13.MA
152 ANNUAL INTEGRATED REPORT COLBÚN 2015
C Appendices
WE SEEK TO ESTABLISH COLLABORATIVE RELATIONSHIPS WITH THE COMMUNITIES WHERE WE OPERATE SO AS TO CONTRIBUTE TO LOCAL DEVELOPMENT
154154 155155 ANNUAL INTEGRATED REPORT COLBÚN 2015
Incorporation Information
The legal incorporation of Colbún S.A., originally under the name of Empresa Eléctrica Colbún Machicura S.A. is recorded in public deed drawn up and formalized on April 30, 1986 by Santiago Notary Public Mario Baros González, whose abstract was enrolled in the 1986 Trade Registry of Talca folio 86 and reverse 86 and published in Chile’s Official Gazette Nº 32,484 dated May 31, 1986. At present, following the change of the company’s business name, Colbún S.A. is inscribed in the Trade Registry of Santiago folio 12,773 Nº 10,265 of 1999.
157 Incorporation information 201 SUMMARY OF TABLE OF CONTENTS CONSOLIDATED FINANCIAL STATEMENTS (APPENDICES) 158 Chapter: The power sector 203 Report from the 160 Chapter Colbún: what we Independent Auditors do and who we are 205 Report from the Account 179 Chapter: economic Inspectors performance and governance 206 Consolidated Financial Statements Colbún S.A. 187 Chapter social and Affiliates performance 311 Reasoned Analyses of 196 Chapter environmental Consolidated Financial performance Statements
335 Summary of Financial Statements from the Affiliated Companies
366 Summary of Financial Statements from Related Companies
156 157 ANEXOSANNUAL INTEGRATED CAPÍTULO REPORT COLBÚN 2015 ANEXOS SECTOR ELÉCTRICO EN NUESTROS MERCADOS
THE POWER SECTOR
The Regulatory Framework in Chile Environmental Law: The Regulatory Framework in Peru Regulation on Power Supply Bids: The “General Environmental Law” (19,300) regulates and establishes It is aimed at establishing the norms applicable to power supply Chile’s electricity framework and Colbún’s operations are mainly the environmental framework in Chile. Among the main changes The Peruvian electric sector shows a well consolidated regulatory bids in order to ensure well in advance the timely and efficient ruled by the General Law on Electric Power Services, the General is the creation of the Environmental Ministry, the Environmental framework in force since 1992. This has encouraged a significant satisfaction of the bidders’ demands, and to encourage competition Environmental Law and the Water Code. Superintendence, the Environmental Courts and the Biodiversity increase in power generation with a compound growth of 4.8% in and investment in new power generation plants within the legal and Wild Protected Area Service. Among the main modifications is installed capacity from 2000 to 2014. The main operational regulations framework. General Law on Electric Power Services: the reformulation of the fines. In addition, there are numerous laws, and legal standards applicable to the power sector, where Fenix Power DFL No.1 of 1982 which systematic and merged text is included under regulations, decrees and municipal ordinances that may rule our Perú S.A. develops its activities are as follows: Environmental Protection Regulation on Power DFL No. 4-2006, which contains the main amendments thereto: operations or the development of new projects, which are aimed at Supply Activities (Supreme Decree No. 29-94-EM): protecting the environment. - “Short Law 1” (Ley Corta 1) Law No 19,940 enacted in 2004. This Law on Electric Concessions: The purpose of the regulation is to rule the interrelation of power law introduced (i) new regulation applicable to the transmission Law No 25,844. In agreement with this law, the Peruvian sector is generation, transmission and distribution supply activities and the system, development of the transmission system and the rates Water Code: divided into three large segments: generation, transmission and environment, under the umbrella of sustainable development. transmission facility owners can charge to users of the system Water rights are governed by the “Water Code” (“Código de Aguas”), distribution. Starting in October of 2000, the Peruvian power sector and (ii) regulation regarding reliability and ancillary services. which defines the means by which water rights may be obtained, is made up of a single National Interconnected System (SEIN), in - “Short Law 2” (Ley Corta 2), Law No 20,018 enacted in 2005. the characteristics of these water rights and how such rights may addition to some isolated systems. At present, the Company develops This law established, among other things, the framework of bids be constituted and exercised. Water rights are granted by the Water its operations within the electric generation segment under the SEIN. for energy supply to regulated customers through long-term Management Board (“Dirección General de Aguas” or “DGA”). The contracts of up to 15 year-term. These contracts are indexed to Water Code was modified for the last time in 2005, to establish, among Law to ensure an Efficient Power Generation the United States’ CPI and other relevant fuel indexes. other things, the payment of a permit for unused water rights. Development: - Law No 20,257 an amendment to the Chilean Electricity Law In 2006, Law No. 28,832 was enacted which establishes among enacted in 2008. This amendment promotes the use of non- The Transmission Regulatory Sector in Chile: its main objectives: (a) assuring sufficient and efficient power conventional renewable energies (“NCRE”). The law defines the In order to deliver our electric power to the system and to supply generation to reduce the Peruvian electric system exposure to price different types of technologies considered to be NCRE. Under this energy and capacity to our customers, we use transmission facilities volatility, lowering the risks due to lack of energy and providing law, power generation companies are required to supply 5.5% of our own as well as those of third parties. The legislation breaks the end consumer with more competitive rates, (b) decreasing the of their total contractual obligations in 2015 and will increase by down the transmission system into three types: Trunk Transmission administrative intervention in the determination of generation prices 0.5% annually up to 2024, when the requirement will reach 10% of System, Subtransmission System and Additional Transmission by means of market solutions, and (c) encouraging actual competition total contractual obligations. In addition, an amendment to this System. A transparent, participative and regulated methodology in the generation market. law was enacted in 2013, which will increase the magnitude of was established to determine the tariffs associated with the use the obligation from 10% in 2024 to 20% in 2025, for all contracts of the Trunk and Subtransmission Systems that subjects the use of Anti-monopoly and Anti-oligopoly Law in the Power entered into after July 1, 2013. This new system contemplates a Additional Systems to a bilateral negotiation between the owner and gradual application of the standard. the user. The law grants Trunk Transmission and Subtransmission Sector: - Law No. 20,805 enacted in January of 2015, which improves the Systems the nature of public service and consequently this type of Law No. 26,876 ensures that vertical concentrations equal to or electric power supply bids for clients subject to price regulations. facilities is provided free access, i.e., the owners may not restrict the greater than 5%, or horizontal concentrations equal to or greater than connection to any interested user. Transmission companies recover 15% involved in the power generation, transmission and distribution their investment through tariffs which, depending upon the type of activities are subject to preliminary authorization so as to avoid transmission installation, are charged to generation companies, end concentrations affecting free competition. customers or both. Trunk transmission and subtransmission tariffs are regulated and are set every four years by a decree issued by the Ministry of Energy.
158 159 ANEXOSANNUAL INTEGRATED CAPÍTULO REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
COLBÚN: WHO WE ARE AND WHAT WE DO
Share Transactions
The following graph shows the evolution of Colbún’s share price and the IPSA price evolution over the last two years taking as base 100 at Ownership and Control January of 2015. G4-7 Colbún share price and IPSA Index evolution 5 Main Increases in Share Ownership 2014-2015
PARTICIPATION OF MAJORITY SHAREHOLDERS AT DECEMBER 31, 2015 4200 250 900.000.000 800.000.000 Corporate Tax- 4100 Shareholder No of shares % 700.000.000 payer Number 4000 200 600.000.000 MINERA VALPARAISO S.A. 90.412.000-6 6,166,879,733 35.17 500.000.000 3900 400.000.000 FORESTAL COMINCO S.A. 79.621.850-9 2,454,688,263 14.00 300.000.000 3800 150 200.000.000 FORESTAL CONSTRUCTORA Y COMER- 91.553.000-1 34,126,083 0.19 3700 CIAL DEL PACIFICO SUR S.A. 100.000.000 0 3600 100 Banco de Chile AFP Cuprum S.A. Bolsa de AFP Habitat S.A. Inversiones FORESTAL Y MINERA CANADILLA S.A. 96.969.100-0 31,232,961 0.18 por cuenta de Comercio Stgo Marchigue Ltda 3500 terceros CA Bolsa de Valores FORESTAL CAÑADA S.A. 96.969.110-8 22,308,320 0.13 3400 50 FORESTAL BUREO S.A. 87.014.900-K 17,846,000 0.10 Nº Acciones al 31/12/2014 3300 Nº Acciones al 31/12/2015 INVERSIONES ORINOCO S.A. 96.878.540-0 17,846,000 0.10 3200 0 01-15 02-15 03-15 04-15 05-15 06-15 07-15 08-15 09-15 10-15 11-15 12-15 INVERSIONES COILLANCA LTDA. 77.320.330-K 16,473,762 0.09
TOTAL 8,761,401,122 49.96 Acción Colbún Índice IPSA
At December 31, 2015 Minera Valparaíso S.A., directly and through Bernardo Matte Larraín, ID N° 6.598.728-7 (7.79%) and his children 5 Main Decreases in Share Ownership 2014-2015 its affiliates listed below indirectly holds the control of the Company Bernardo Matte Izquierdo, ID N° 15.637.711-2 (3.44%); Sofía Matte Summary of Colbún’s share transactions over the last 2 years through single series shares. Minera Valparaíso S.A., is a corporation Izquierdo, ID N° 16.095.796-4 (3.44%), and Francisco Matte Izquierdo, 450.000.000 belonging to a business group (Matte Group) that holds investments in ID N° 16.612.252-K (3.44%). 2014 Quarter Units Amount (CH$) Average 400.000.000 the electric power, financial, forestry, real estate, telecommunications Price (CLP/ 350.000.000 and port services sectors, and whose ultimate controllers in the The shareholders mentioned above pertain by kinship to the same Share) 300.000.000 250.000.000 manner and proportions set forth below are the following individuals, business group and have signed a joint action agreement which is 1 567,035,390 71,475,652,751 126 200.000.000 all members of the families Larraín Matte, Matte Capdevilla and Matte already formalized. 2 608,015,603 84,745,993,158 139 150.000.000 Izquierdo: 100.000.000 Similarly, the Angelini group, through Antarchile S.A. (Corporate 3 490,611,316 74,218,755,868 151 50.000.000 Patricia Matte Larraín, ID N° 4.333.299-6 (6.49%) and her children Taxpayer Number 96.556.310-5) holds 9.58% of Colbún’s shares, which 0 4 640,428,318 101,851,804,801 159 Larraín Vial S.A. Banco Santander - Banchile Inmobiliaria VR Inversiones Fray María Patricia Larraín Matte, ID N° 9.000.338-0 (2.56%); María entitles it to appoint a Board member. Corredora de JP Morgan Corredores de Ltda León Limitada Magdalena Larraín Matte, ID N° 6.376.977-0 (2.56%); Jorge Bernardo Bolsa Bolsa S.A. Larraín Matte, ID N° 7.025.583-9 (2.56%), and Jorge Gabriel Larraín Nº Acciones al 31/12/2014 2015 Quarter Units Amount (CH$) Average Matte, ID N° 10.031.620-K (2.56%) ; Nº Acciones al 31/12/2015 Price (CLP/ Share) Eliodoro Matte Larraín ID N° 4.436.502-2 (7.21%) and his children 1 590,664,049 102,963,309,117 174 Eliodoro Matte Capdevila, ID N° 13.921.597-4 (3.27%); Jorge Matte Capdevila, ID N° 14.169.037-K (3.27%), and María del Pilar Matte 2 500,858,888 92,219,410,442 184 Capdevila, ID N° 15. 959.356-8 (3.27%) 3 522,308,756 94,755,706,467 181
4 496,829,527 88,977,153,068 179
160 161 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
The Company’s shares are traded on the Santiago Stock Exchange, the The following charts show information on the price, volumes and Dividend distribution Electronic Stock Exchange and the Valparaíso Stock Exchange. In the amounts in the stock exchanges where the Company’s shares are first two Stock Exchanges our stock market presence is 100%, while on traded. the Valparaíso Stock Exchange our presence is 13.31%. Dividends per share (Chilean pesos)
Management Provisional Definite Total ELECTRONIC STOCK EXCHANGE period 2010 0.50 0.50 1.00 Period Number Amount (CLP) Higher price Lower price Average price Precio (shares) (CLP) (CLP) (CLP) Cierre (CLP) 2011 - - - 1Q15 24,946,122 4,255,509,023 183.96 159.45 172.46 182,80 2012 - 0.36 0.36 2Q15 30,576,371 5,615,310,511 192.31 176.50 183.99 176,50 2013 - 0.58 0.58 3Q15 24,109,823 4,372,579,212 188.21 175.41 180.89 181,03 2014 1.46 - 1.46 4Q15 22,417,178 4,063,169,433 191.60 165.40 181.37 168,00 2015 1.62 0.44 2.06 2015 102,049,494 18,306,568,179 192.31 159.45 179.86 168.00
STOCK EXCHANGE Requirements over the shares Number Higher price Lower price Average Precio Period Amount (CLP) (shares) (CLP) (CLP) price (CLP) Cierre (CLP) held by the Company’s management 1.1.10 DJSI 1Q15 565,713,425 98,707,055,750 184.90 157.21 174.66 184,49
2Q15 470,282,517 86,604,099,931 193.35 175.50 184.16 181,95 Colbún does not set any limit on the ownership of shares as a multiple of the annual base salary. However, we are subject to a regulation that 3Q15 498,198,933 90,383,127,255 190.00 171.96 181.57 179,36 bans the trading of shares within specific periods of time to prevent 4Q15 474,412,349 84,913,983,635 193.99 161.50 178.60 169,20 insider trading.
2015 2,008,607,224 360,608,266,571 193.99 157.21 179.53 169,20 The Information Management Manual certifies compliance by the Company with a series of standards issued by the Superintendence of Securities and Insurance of Chile (SVS) and rules the manner in which an executive shall purchase or sell Company’s shares. VALPARAÍSO STOCK EXCHANGE
Number Higher price Lower price Average price Precio Cierre Period Amount (CLP) (shares) (CLP) (CLP) (CLP) (CLP)
1Q15 4,502 774,344 172.00 172.00 172.00 172,00
2Q15 0 0 0 0 0 0
3Q15 0 0 0 0 0 0
4Q15 0 0 0 0 0 0
2015 4,502 774,344 172 172 172 172
162 163 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS Affiliated Companies
Colbún Filiales
Company Name Company General Data Direct and Chairman General Manager Board of Directors Company Name Company General Data Direct and Chairman General Manager Board of Directors and Legal Purpose Purpose Indirect and Legal Purpose Purpose Indirect Participation Participation
TERMOELÉCTRICA Generation, Closed Stock 100% Luis Felipe Gazitúa Carlos Luna Luis F. Gazitúa A. Director RÍO TRANQUILO Generation, Closed Stock 100% Luis Felipe Gazitúa Carlos Luna C. Luis F. Gazitúa A. Director ANTILHUE S.A. transportation, Company. A., Director of C., Generation of Colbún S.A. S.A. transportation, Company. A., Director of , Generation of Colbún S.A. transformation Established on Colbún S.A. Division Manager Thomas Keller L., General distribution, Established on May Colbún S.A. Division Manager Thomas Keller L., General distribution, December 14, 2007. of Colbún S.A. Manager of Colbún S.A. purchase and sale 20, 2005. Owner of Colbún S.A. Manager of Colbún S.A. supply or Owner of Antilhue Juan Eduardo Vásquez of electric power of the Hornitos Juan Eduardo Vásquez commercialization thermoelectric M., Business and Energy and capacity. hydroelectric M., Business and Energy of electric power power plant. Management Division power plant. Management Division or operation of Manager of de Colbún Manager of de Colbún power plants. S.A. S.A.
COLBÚN Electricity Closed Stock 100% Luis Felipe Gazitúa Carlos Varea B.; Luis F. Gazitúa A. Director TRANSMISIÓN S.A. transmission; Company. A., Director of Transmission of Colbún S.A. commercialization Established on Colbún S.A. Manager of Colbún Thomas Keller L., General EMPRESA Production, Closed Stock 100% Luis Felipe Gazitúa Carlos Luna Luis F. Gazitúa A. Director of power June 28, 2012. S.A. Manager of Colbún S.A. ELÉCTRICA transportation, Company. A., Director of C., Generation of Colbún S.A. transportation Colbún S.A. owns Juan Eduardo Vásquez INDUSTRIAL S.A. distribution, Established on Colbún S.A. Division Manager Thomas Keller L., General and 99% of its shares. M., Business and Energy supply or December 31, 1997. of Colbún S.A. Manager of Colbún S.A. transformation Management Division commercialization Owner of Carena Juan Eduardo Vásquez capacity; Manager of de Colbún of electric power hydroelectric M., Business and Energy management S.A. and management power plant. Management Division and operation or operation of Manager of de Colbún of electric power plants. S.A. transmission installations and the delivery of services relating TERMOELÉCTRICA Production, Closed Stock 100% Luis Felipe Gazitúa Carlos Luna Luis F. Gazitúa A. Director with its purpose. NEHUENCO S.A. transportation, Company. A., Director of C., Generation of Colbún S.A. distribution, Established on Colbún S.A. Division Manager Thomas Keller L., General COLBÚN Generation, Closed Stock 100% Thomas Keller L., - Thomas Keller L., General supply or April 13, 2006. of Colbún S.A. Manager of Colbún S.A. DESARROLLO S.A. transportation, Company. General Manager Manager of Colbún S.A. commercialization In charge of the Juan Eduardo Vásquez transformation Established in of Colbún S.A. Juan Eduardo Vásquez of electric power operation of the M., Business and Energy distribution, March 18, 2015. M., Business and Energy and management power plants Management Division supply, purchase, Colbún S.A. owns Management Division or operation of that make up Manager of de Colbún sale and any 100% of its shares. Manager of Colbún S.A. power plants. the Nehuenco S.A. other activity thermoelectric Sebastián Fernández C., relating to the complex situated Development Manager of commercialization in Quillota, V Colbún S.A. of electric Region, as well as Eduardo Lauer R., capacity and of the Candelaria Engineering and Project energy, without thermoelectric Manager of Colbún S.A. limitation. power plant Sebastián Moraga situated in Z., Finance and Mostazal, VI Administration Manager Region. of Colbún S.A.
SOCIEDAD To conduct Limited Liability 100% Legal - - INVERSIONES SUD Generation, Stock Company. 100% Luis Alberto Juan Eduardo Luis F. Gazitúa A. Director HIDROELÉCTRICA prefeasibility Company, Representative: SPA transportation, Established on Letelier H. Director Vásquez M, Energy of Colbún S.A. MELOCOTÓN studies and established on Thomas Keller L., transformation, March 31, 2015. of Colbún S.A. Management Thomas Keller L., General LTDA. develop projects July 1, 1980. This General Manager distribution, Colbún S.A. owns Division Manager Manager of Colbún S.A. for hydroelectric company although of Colbún S.A. supply, purchase, 100% of its shares. of Colbún S.A. Juan Eduardo Vásquez power plants and is not currently sale and any M., Business and Energy to operate the engaged in other activity Management Division said power plants. operating activities relating to the Manager of de Colbún owns water commercialization S.A. rights to develop of electric hydroelectric capacity and projects. energy, without limitation.
164 165 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
Company Name Company General Data Direct and Chairman General Manager Board of Directors Company Name Company General Data Direct and Chairman General Manager Board of Directors and Legal Purpose Purpose Indirect and Legal Purpose Purpose Indirect Participation Participation
INVERSIONES Generation, Stock Company. 100% Luis Alberto Juan Eduardo Luis F. Gazitúa A. Director INVERSIONES DE Investment in all Closed Stock 51% - Sebastián Bernardo Larraín M., ANDINAS SPA transportation, Established on Letelier H. Director Vásquez M, Energy of Colbún S.A. LAS CANTERAS kinds of movable Company Fernández, Chairman of the Board transformation, March 31, 2015. of Colbún S.A. Management Thomas Keller L., General S.A. property, including incorporated in Development Colbún S.A. distribution, Colbún S.A. owns Division Manager Manager of Colbún S.A. the purchase agreement with Manager of Colbún Thomas Keller L., General supply, purchase, 100% of its shares. of Colbún S.A. Juan Eduardo Vásquez of shares or the laws of the S.A. Manager of Colbún S.A. sale and any M., Business and Energy rights in all kind Republic of Peru, Sebastián Fernández, other activity Management Division of companies, on November 16, Development Manager of relating to the Manager of de Colbún communities, 2015 by Inversiones Colbún S.A. commercialization S.A. foundations or Hacienda Sebastián Moraga of electric partnerships, all Montalbán S.A. Z., Finance and capacity and kinds of securities (currently Colbún Administration Manager energy, without and credit or Perú S.A.) and Juan of Colbún S.A. limitation. investment Carlos Escudero Mujeeb Ur Rehman Qazi instruments Velano, who Laurent Philippe Antoine COLBÚN PERÚ Investment in all Closed Stock 100% - Sebastián As the Owners: together with the later transferred Bernard Fortino S.A. (formerly kinds of movable Company Fernández, Bernardo Larraín M., administration his share to Luis Martín Carranza Inversiones property, including incorporated in Development Chairman of the Board and operation of the former. On Ugarte Hacienda the purchase agreement with Manager of Colbún Colbún S.A. those investments December 18, 2015 Montalbán S.A.) of shares or the laws of the S.A. Thomas Keller L., General and their fruits the partners made rights in all kind Republic of Peru, Manager of Colbún S.A. or products; and a capital increase, of companies, acquired by Colbún Sebastián Fernández, the generation, and Colbún Perú communities, Desarrollo S.p.A. Development Manager of transportation, S.A. subscribed foundations or on September Colbún S.A. transformation, and paid 51% of the partnerships, all 28, 2015. Later, As alternate directors distribution, shares, and Sigma kinds of securities by means of Juan Eduardo Vásquez supply, purchase, Infrastructure and credit or Extraordinary M., Business and Energy sale and any Investment investment Shareholders’ Management Division other activity Fund joined the instruments Meeting held on Manager of Colbún S.A., relating to the Company with 13% together with the December 15, 2015 Rodrigo Pérez S., Legal commercialization of the shares; and administration Colbún S.A. joined Affairs Manager Colbún of electric Blue Bolt A 2015 and operation of this company, S.A. capacity and Limited, also joined those investments and currently Eduardo Lauer R., energy, without the company with and their fruits holds 99.9996% Engineering and Project limitation. 36% of the shares. or products; and of the shares, and Manager Colbún S.A. the generation, Colbún Desarrollo transportation, S.p.A. owns transformation, the remaining distribution, 0.0004%. supply, purchase, sale and any other activity relating to the commercialization of electric capacity and energy, without limitation.
166 167 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
Related Companies
Company Name Company General Data Direct and Chairman General Manager Board of Directors Company Name Company Purpose General Data Direct and Chairman General Manager Board of Directors and Legal Purpose Purpose Indirect and Legal Purpose Indirect Participation Participation
TRANSMISORA Transmission, Limited Liability 50% Carlos Varea - Carlos Varea B., Gerente FENIX POWER Power generation, Closed Stock 51% - Mariella Paredes - ELÉCTRICA DE distribution and Company. B., Gerente de de Transmisión de PERU S.A. secondary Company D.1 QUILLOTA LTDA. supply of electric Owner of the San Transmisión de Colbún S.A. transmission and incorporated in power. Luis substation, Colbún S.A. Carlos Luna C., Gerente commercialization agreement with located alongside División Generación activities in the laws of the of the Nehuenco de Colbún S.A. Ricardo agreement with Republic of Peru on thermoelectric Santibáñez Z. the law; engaging September 15, 2004 complex, as well in any activity or by Enrique Víctor as of the 220 KV civil, industrial Macedo Abreu, high tension line and commercial Fernando Enrique that connects operation or Macedo Abreu, this substation in any similar and Horace Alfred with the Quillota activity or Sklar. At present substation. The operation directly Inversiones de Las company began its or indirectly Canteras S.A. owns operations in 1999. related to the 100% of the shares. Colbún holds compliance with 50% stake in this the Company’s company. purpose, as well as the exploitation of the natural resources produced as a result of such CENTRALES Development, Sociedad 49% Juan Eduardo Ignacio Quiñones S. power generation, HIDROELÉCTRICAS financing, Anónima Cerrada. Vásquez M., Ramiro Alfonsín B. as necessary, DE AYSÉN S.A. ownership and Constituida por Gerente División Carlo Carvallo A. adequate, and operation of a escritura pública Negocios y Gestión Bernardo Larraín M., as permitted hydroelectric de fecha 4 de de Energía de Presidente del Directorio by the law on Project in the septiembre de Colbún S.A. de Colbún S.A. closed stock Eleventh Region of 2006, otorgada Luis Felipe Gazitúa A., corporations. en la Notaría de Director de Colbún S.A. Santiago de don Juan Eduardo Vásquez Eduardo Avello M., Gerente División Concha. Negocios y Gestión de Colbún posee Energía de Colbún S.A. el 49% de la NOTES: propiedad de esta 1 On February 2016 Juan Miguel Cayo undertook the General Management, whereas Mariella Paredes, alternate General Manager resumed her position as the Corporate Affairs sociedad. Manager. ELECTROGAS S.A. Buy, sell, invest Closed Stock 42,5% Juan Eduardo Allan Fischer H. Juan Oliva V. - The main commercial relationships between Colbún and its affiliates are energy purchase, sale and transport contracts. Such affiliates are fully consolidated and these contracts and hold shares of Company. Vásquez M., Pedro de la Sotta S. do not have an impact on the results. In connection with the relationship with all our affiliates/related companies, it should remain unchanged. Electrogas S.A. Established on Gerente División Eduardo Lauer R., March 11, 1999. Negocios y Gestión Gerente División Inversiones de Energía de Ingeniería Proyectos Electrogas S.A. is Colbún S.A. de Colbún S.A. a company whose shareholders are
NOTE: The main commercial relationships between Colbún and its affiliates are energy purchase, sale and transport contracts. Such affiliates are fully consolidated and these con- tracts do not have an impact on the results. In connection with the relationship with all our affiliates/related companies, it should remain unchanged.
168 169 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
Subscribed and Paid In Capital, affiliates and related companies Percentage that represents the investment in each affiliated and related company over the total assets held by the Parent Company Affiliates Currency Subscribed Capital Paid In Capital Affiliates Investment US$ % over assets Empresa Eléctrica Industrial S.A. MUS$ 3,680,000 3,680,000 Empresa Eléctrica Industrial S.A. 1,895 0.03% Sociedad Hidroeléctrica Melocotón Ltda. MUS$ 1,114,000 1,114,000 Sociedad Hidroeléctrica Melocotón Ltda. 3,934 0.05% Río Tranquilo S.A. MUS$ 64,000 64,000 Río Tranquilo S.A. 44,519 0.62% Termoeléctrica Nehuenco S.A. MUS$ 212,000 212,000 Termoeléctrica Nehuenco S.A. * -17,603 -0.25% Termoeléctrica Antilhue S.A. MUS$ 3,332,000 3,332,000 Termoeléctrica Antilhue S.A. 23,745 0.33% Colbún Transmisión S.A. MUS$ 20,503,000 20,503,000 Colbún Transmisión S.A. 93,187 1.30% Colbún Desarrollo SpA MUS$ 160 160 Colbún Desarrollo SpA 160 0.00% Inversiones SUD SpA MUS$ 10 10 Inversiones SUD SpA 10 0.00% Inversiones Andinas SpA MUS$ 10 10 Inversiones Andinas SpA 10 0.00% Colbún Perú S.A. MUS$ 213,601 213,601 Colbún Perú S.A.** 211,907 2.96% Inversiones Las Canteras S.A. MUS$ 418,754 418,754
Fenix Power Perú S.A. MUS$ 620,268 620,268 (*) This Company has negative equity (**) Consolidated investment in the affiliated companies Inversiones Las Canteras S.A. and Fenix Power Perú S.A., with a stake of 51%
Related Companies Currency Subscribed Capital Paid In Capital
Electrogas S.A. MUS$ 21,266 21,266
Centrales Hidroeléctricas de Aysén S.A. M$ 12,315,187 12,315,187 Related Companies Investment US$ % over assets
Transmisora Eléctrica de Quillota Ltda. M$ 4,404,446 4,404,446 Electrogas S.A. 16,968 0.24%
Centrales Hidroeléctricas de Aysén S.A. 8,201 0.11%
Transmisora Eléctrica de Quillota Ltda. 10,843 0.15%
170 171 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS COLBÚN: QUIÉNES SOMOS Y QUÉ HACEMOS
Luz Granier Bulnes Eliodoro Matte Larraín 2015 Directors’ Committee Biographies of Colbún’s National ID card number: 7.040.317 National ID card number: 4.436.502-2 Management Board Members Born in 1965. She holds a Business Administration Major from the Born in 1945. He is a civil industrial engineer from the Universidad Universidad de Chile. She is currently an independent financial adviser. de Chile, and obtained a Master in Business Administration from the In the past, she was director of the CIMM (Research Center for Mining University of Chicago. He joined Colbún’s Board of Directors in 2011. During 2015, the Committee held meetings to review the proposals Vivianne Blanlot Soza and Metallurgy), Loginsa, Eléctrica Guacolda and TermoAndes, among He is also the Chairman of Empresas CMPC S.A. and member of the National ID card number: 6.964.638-7 by the Management to the Board of Directors, in connection with others. In addition she was the Undersecretary of Social Services, Head steering committee of Chile’s Center for Public Studies (CEP). He is transactions with related parties as per Article 147 of Law 18,046, where of Cabinet of the Ministry of Public Works and the Ministry of Mining also a Board member of Foundation Juan Pablo II. Bborn in 1955. She holds a Business Administration Major from the it agreed to propose their approval to the Board of Directors insomuch and Energy. She had an 11-year professional trajectory in Gener as the Pontificia Universidad Católica de Chile, and obtained a Master’s in Treasury Manager, Administration and Finance Manager of Norgener, Eduardo Navarro Beltrán as they were consistent with the fairness conditions prevailing in Applied Economics from the American University in the U.S. She is and finally, as the Assistant Manager of International Investments. National ID card number: 10.365.719-9 the market for this type of transactions or were part of customary director of Colbún since 2012, member of the Council on Transparency transactions within the Company’s line of business. In particular, the since 2011, and director of Antofagasta Minerals since 2014. She was Juan Hurtado Vicuña Born in 1965. He holds a Business Administration Major and a Master of previously the Minister of National Defense, Executive Secretary of the Committee provided an opinion regarding the following transactions: National ID card number: 5.715.251-6 Economics from the Pontificia Universidad Católica de Chile. He joined National Energy Commission and Executive Director of Chile’s National Colbún’s Board of Directors in 2007. He is also the General Manager Environmental Commission (CONAMA). In addition, she was a member • Rental of new offices for the Company in Santiago with Bice Born in 1948. He is a civil engineer from the Universidad de Chile and of Empresas Copec S.A., Pesquera Iquique-Guanaye S.A., and member of the Board of Trustees of the Universidad de Santiago and Banco del a member of Colbún’s Board of Directors since 2007. He is also the of the following Board of Directors: COPEC S.A., Celulosa Arauco y Vida Compañía de Seguros S.A. 20-year term contract that Estado, and director of EMOS. Chairman of Entel S.A. and Pucobre S.A., and a Board member of Constitución S.A., Abastecedora de Combustibles S.A., Corpesca S.A., will be enforced at the latest by June 30, 2018 for a value of Consorcio Seguros Vida S.A. and Santo Tomás S.A. He is also an advisor Orizon S.A. and Compañía Minera Can-Can S.A. Juan Eduardo Correa García approximately 0.51 UF/ m2, which must be added the standard to the Board of Directors of the Foundation Arturo Irarrázaval. National ID card number: 12.231.796-k equipment value that ranges between UF15 and UF19/ m2. The Committee reviewed the conditions of this contract as the Bernardo Larraín Matte Born in 1972. He is a civil engineer from the Pontificia Universidad National ID card number: 7.025.583-9 Board of Directors’ Effectiveness directors Messrs. Bernardo Larraín M., Eliodoro Matte L., Luis Católica de Chile and a member of Colbún’s Board of Directors since 1.1.6 DJSI Felipe Gazitúa A., Juan Eduardo Correa G. and Arturo Mackenna 2014. In addition, he is the General Manager of BICECORP S.A., the Born in 1966. He holds a Business Administration Major from the I. were elected directors of Colbún S.A. with the votes of the Chairman of BICE Vida Compañía de Seguros S.A., and the Vice- Pontificia Universidad Católica de Chile, obtained a M.Sc. of Finance chairman of the Banco BICE’s Board of Directors; director of the majority shareholder, which, in turn is the majority shareholder of from the London School of Economics and a Master in Business Average attendance to Board of Directors’ meetings 95% Santiago Stock Exchange and of Inmobiliaria Almahue S.A. Bice Vida Compañía de Seguros S.A. Administration from the University of Stanford. He undertook as Number of unrelated /independent Board members 2 Colbún’s General Manager in 2005, and since April of 2012 he has been • Financial contribution to the Sociedad de Instrucción Primaria Luis Felipe Gazitúa Achondo with 4 or fewer positions in other Boards of Directors the Chairman of Colbún’s Board. He is also a Board member of Minera National ID card number: 6.069.087-1 (SIP), for an educational project, which is mainly aimed at Valparaíso S.A., Puertos y Logística S.A., and the Vice-chairman of promoting the music. The amount contributed was $13,000,000. ICARE, a non for-profit organization. Born in 1955. He holds a Business Administration Major from the The Committee reviewed this transaction, as one of the directors Universidad de Chile. He is director of Colbún since 2003, and since Arturo Mackenna Íñiguez of the Sociedad de Instrucción is Ms. Magdalena Larraín M., the 2011 he is the Vice-chairman of the Board. In addition, he is the National ID card number: 4.523.287-5 sister of the Chairman Mr. Bernardo Larraín M. and the niece of Chairman of Almendral S.A. and the Vice-chairman of Entel S.A. He is also a member of the following Board of Directors: Pesquera Iquique- the Director Mr. Eliodoro Matte L. Born in 1946. He is a civil industrial engineer from the Universidad de Guanaye S.A., Orizon S.A., Corpesca S.A. and Minera Valparaíso S.A. Chile and holds a PhD in Economics from the Massachusetts Institute • Financial contribution to Chile’s Center for Public Studies (CEP) and is also an advisor to the Board of Directors of Bice Vida Compañía of Technology. He joined Colbún’s Board of Directors in 2006. He is for the study, promotion and debate of public policies within de Seguros S.A. also a Board member of Empresas CMPC S.A., Empresas Iansa S.A., the economic, social and educational field, among others, Almahue S.A. and the University Finis Terrae. aimed at fostering the development of the country. The annual amount contributed was UF 429 over 2015 and 2016, i.e. UF 858 in total. The Committee reviewed this transaction, as the President of the Steering Committee of Chile’s Center for Public Studies is the Director Mr. Eliodoro Matte L, and the directors Messrs. Bernardo Larraín M. and Eduardo Navarro B. are members of the Advisory Committee of the said Study Center.
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• Capital increase and later subscription of shares between • Reviewed the Company’s financial statements as at December 31, 2. Designation of the external auditing company: Agreement was Colbún S.A. and Centrales Hidroeléctricas de Aysén S.A., which 2014; Summary of significant facts made to designate Ernst & Young Servicios Profesionales de Auditoría y Asesorías Limitada as the external auditing company purpose is mainly to provide for the lack of use of water rights and • Met the representatives of the external auditing company Ernst reported to the SVS for the 2015 management period, and for attorneys’ fees. Colbún’s capital increase amounts to M$2,499 & Young to discuss the scope of the services provided through million. This transaction was reviewed by the committee, as 3. Definite dividend: Agreement was made to distribute as 2014, accounting criteria used and the results of the audit as at definite dividend charged to the profits for the period ended at Messrs. Bernardo Larraín M. and Luis Felipe Gazitúa A., Chairman January 30, 2015 December 31, 2014; December 31, 2014, the total sum of US$55,026,825.59 of which and Vice-Chairman of Colbún S.A., respectively, are directors of The Board informed that on January 30th, 2015 the Regular Shareholders US$42,262,264.21 correspond to the provisional dividend paid on Centrales Hidroeléctricas de Aysén S.A. • Reported the activities conducted by the Committee during 2014, Meeting approved the Financial Statements as at December 31, 2014, January 6, 2015, while the difference by US$12,764,661.38 of the and issued the Annual Management Report; reporting net profits by US$79 million and EBITDA by US$536 million. In definite dividend payable equals to US$ 0.000728 per share. addition, it provided information in connection with HidroAysén stating • Consulting Services Contract between Colbún S.A. and MR • Evaluated the Management’s proposals to designate the external that the various assets grouped under Centrales Hidroeléctricas de auditing companies for 2015, and agreed to recommend the Board Consult Limitada for the development, planning, management Aysén S.A .were acquired and developed pursuant to the current April 29, 2015 and control of the projects currently under development or to be of Directors to propose the Shareholders’ Committee to appoint institutionalism and to technical and environmental international The Board informed that during a Shareholders’ Meeting held on April developed by the Company, namely, transmission line projects, as external auditors for the 2015 management period either of the standards; and, given the level of uncertainty faced by the project, 28, 2015 it had designated Mr. Bernardo Larraín Matte and Mr. Luis two companies in the list, namely, Ernst & Young and KPMG; the Company decided to post an impairment provision in the Financial power substations, hydroelectric or thermoelectric power plants, Felipe Gazitúa A. as the Chairman and Vice-Chairman of the Board, Statements for its stake in HidroAysén S.A. by approximately US$102 and other industrial facilities pertaining to Colbún S.A. or to its respectively. It also informed that its Board Committee, elected during • Reviewed the remunerations and the compensation plans of the million. affiliates. The contract is worth $ 7 million per month, with a term the same meeting is made up of the following members: Mss. Vivianne Company’s managers, executives and workers; of 12 months, and is the fourth time it is renewed. The contract Blanlot S. and Luz Granier B, who act as independent directors, and Mr. Luis Felipe Gazitúa A. was reviewed by the Committee as MR Consult Limitada is a • Reviewed the background information and agreed to propose the March 18, 2015 company related to the director Mr. Arturo Mackenna I., who is at Board of Directors to approve two consulting services contracts The Board informed that by means of public deed registered on March the same time its majority shareholder. In addition, the Directors’ with the external auditing company Ernst& Young regulated by 18, 2015 a new affiliated company named "Colbún Desarrollo SpA” was December 18, 2015. Committee conducted the following activities: Article 242 of Law 18,045 on the Securities’ Market. The purpose incorporated with an initial capital of Ch$100 million, fully subscribed of the contracts was the external verification of the Greenhouse On such date, Colbún subscribed two Stock Purchase Agreements and paid in by Colbún S.A. Gas Emission inventory for 2014, and the performance of the due to acquire 100% of Fenix Power Perú S.A’s shares, Peruvian power diligence of the Colombian company Isagen within the framework generation company owner of a combined cycle thermoelectric power plant based on natural gas situated in Chilca, Peru with an installed of the review of such company. Finally, in 2015, the Directors’ March 31, 2015 capacity of 570 MW, and which started commercial operations as a Committee did not retain any consulting services or incur any The Board informed it had agreed to propose to the Regular combined cycle power plant in December of 2014. The Board informed expenses. Shareholders’ Meeting, among other matters, to distribute as definite that the purchase would be made through a new Colbún affiliate in dividend charged against the profits of the management period Peru, Inversiones Las Canteras S.A. (the “Buyer”). After the buyer ended December 31, 2014, the sum of US$ 12,764,661.38 equivalent to meets certain conditions, the partnership will be joined by Blue Bolt US$0.000728 per share. A 2015 Limited, subsidiary of the fund Abu Dhabi Investment Authority (ADIA) with a participation of 36%; and by the Peruvian infrastructure investment fund SIGMA with a participation of 13%. It was informed that the price agreed over 100% of Fenix’s shares amounts to US$171.4 April 23, 2015 million. Considering a net debt of approximately US$614.6 million (that The Board informed that at the Board Meeting held on April 22, 2015 includes a loan from one of the sellers by US$224.1 to be paid by Fenix the following agreements were made: as at the Closing Date with resources provided by the Buyer), the price entails an asset valuation of US$786 million. 1. Board Elections: The Board of Directors informed the renewal of its members being elected Mss. Vivianne Blanlot Soza and Luz Granier Bulnes, and Messrs. Bernardo Larraín Matte, Luis Felipe Gazitúa Achondo, Arturo Mackenna Iñíguez, Eliodoro Matte Larraín, Juan Hurtado Vicuña, Eduardo Navarro Beltrán and Juan Eduardo Correa García.
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Dialogue and communication with our stakeholders
We participate in a sector that produces a fundamental asset for the economic development of the country and the quality of life of its inhabitants. This is why we seek to empathize and understand our stakeholders, through relationships that promote open communication based on trust and respect. The following communication channels are permanently available through the year.
Stakeholder Communication and dialogue channels Stakeholder Communication and dialogue channels
Investors • Area dedicated to Investor Relations. Contractors and Suppliers • Participation at business forums • Breakfasts and work meetings. • Suppliers and bidders' website. • National and international conferences. • Feedback delivery meetings. • Perception survey. • Perception survey. • Consultation and allegation mechanisms linked to compliance with the Code of Business Ethics • Consultation and allegation mechanisms linked to compliance with the Code of Business Ethics (hotline, email or manual) (hotline and email). Clients and Vendors • Our commercial team provides personalized service to clients and vendors. Workers • Informative and participative meetings of members of the Organization and People Management • Perception survey. team at the power plants. • Consultation and allegation mechanisms linked to compliance with the Code of Business Ethics • Extended meetings of supervisors with the General Manager. (hotline and email). • Meetings with unions and workers' associations. • Work climate survey specific to Colbún and Great Place To Work (GPTW). • Internal services survey. • Consultation and allegation mechanisms linked to compliance with the Code of Business Ethics (hotline, email or manual). Environment • Early and voluntary citizen involvement. Instances where we participate • Lectures at seminars and participative talks. G4-15, G4-16 • Environmental RSE Committee and Center of Leaders for Climate Change. • Dialogue worktables with community members. Collaborative instances and institutions where we participate
Community and Society • Dialogue worktables on general and specific subjects (e.g.: tourism, fishermen, indigenous Red Pacto Global Pacto Global busca fomentar el crecimiento sustentable y la responsabilidad 2015 communities, neighbors' associations, irrigators, agreements with municipalities, etc). cívica de empresas, las que se comprometen a adoptar los diez principios • Periodic meetings with authorities and neighbors. universales en sus acciones cotidianas, a nivel mundial. • Early and voluntary citizen involvement in new projects. • Visits to power plants, Colbún's Energy House and Angostura Visitors' Center. www.pactoglobal.cl The UN Global Compact seeks to promote sustainable growth and corporate 2015 • The Public Affairs team can be readily contacted in the field. social responsibility; companies commit to adopt the ten universal principles in • Participation in union and regional associations (Board of Directors and worktables to address their daily activities around the world. specific subjects). • Periodic meetings with the national, regional and local media. Center for Business Sustainability Promueve el monitoreo y medición del uso de los recursos hídricos, a nivel 2011 • Webpage www.colbun.cl mundial. • Company’s twitter @ColbunEnergia www.cbs.uai.cl Identifies and provides solutions to the main sustainability challenges faced by 2015 • Work tables and dissemination of modifications to the San Pedro project. We also have a webpage the businesses in Chile. www.centralsanpedro.cl • Angostura del Biobío Facebook page. Water Disclosure Project (Water CDP) Promotes the monitoring and the measurement of water resources usage around 2011 • Energy House Facebook page www.cdp.net/water the world. • Entrepreneurial Centers in Santa Bárbara-Quilaco, Coronel and Concepción (data collection of the community's productive development concerns and interests). Programa Bota por mi Vida www.funda- Paper recycling at the offices of the Metropolitan Region and the 5th Region of 2011 • Public addresses and reportability accounts at Santa María Complex in Coronel and Concepción. cionsanjose.cl Chile. • "Open door" policy on Fridays at Santa María Complex to take care of the neighbors' concerns and Carbon Disclosure Project (CDP) Promotes the measurement of carbon emissions from private companies and 2009 the community in general. www.cdp.net government entities around the world. • Participative noise monitoring at Coronel. • Perception survey at key communities: Quilaco, Santa Bárbara, Coronel. Centro de Líderes Empresariales para el Fosters policies and actions to face the climate change in Chile. 2009 • Perception survey of relevant players linked to all of our projects and power plants. Cambio Climático www.clgchile.cl • Newspaper “+Energy” (contact email.document). • Webpage (communications email) Concurso Junior del Agua Seeks to increase the interest, creativity and knowledge amongst high-schoolers 2009 • Reception of letters at the power plants. www.juniordelagua.cl to promote water awareness in Chile. • TV show in Coronel “+Energy TV” Centro de Estudios Públicos (CEP) Its goal is the study and the dissemination of the values, principles and institu- 2008 • Consultation and allegation mechanisms linked to compliance with the Code of Business Ethics www.cepchile.cl tions that serve as the basis for a free society in Chile. (hotline, email or manual).
176 177 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS CAPÍTULO ANEXOS DESEMPEÑO ECONÓMICO Y DE GOBERNANZA
ECONOMIC PERFORMANCE AND GOVERNANCE
Union and business associations where we participate
Organization Description Stakeholders Member Involved since
Asociación Gremial de Riego y Drenaje Promueve el profesionalismo del sector de Riego y Drenaje, Socios relacionados 2015 (AGRYD) contribuyendo al uso eficiente de los recursos hídricos, a la protección del medio ambiente y al desarrollo agrícola sostenible Tax Strategy The importance of Corporación Regional de Desarrollo Promotes the professionalism of the irrigation and drainage Associates 2015 1.7 DJSI del Biobío sector, contributing to the efficient usage of the water resources, the environmental protection and the sustainable agricultural transmission 2.7.2 DJSI development Companies in Chile must fully comply with their tax obligations stemming from the business activities subject to the payment of Corporación Municipal de Desarrollo Seeks to facilitate the Company’s social work in the municipality Associates, Board 2015 Transmission reliability data correspond to the system’s annual Coronel (CORCORONEL) of Coronel. of Directors and levies. These tax liabilities are clearly defined in the various laws average reliability over a 5-year trailing window. Data was obtained work committees governing the matter, for example, the Tax Code, the Income Tax Law in agreement with the methodology required for the power sector in (Statutory Decree 824), VAT Law (Statutory Decree 825), etc. Visión Valdivia Instancia de coordinación, promoción y difusión de esfuerzos Socios 2015 the country, the Technical Safety and Service Quality Standard, which integrados de cooperación entre los sectores Privado, Público, is compulsory for the sector. Académico y Científico. Hence, Colbún fully meets the rules and regulations in force and there Cámara Chilena de la Construcción Instance of coordination, promotion and dissemination of Associates 2015 In addition, at Colbún we are always carrying maintenance and are no better means to develop a tax policy/strategy or guidelines (CChC) Valdivia integrated cooperation efforts between the private and public refreshing activities to achieve the most reliable, safe and efficient than the law. areas, the academia and the scientific world. operation possible. Cámara de Comercio en Industria de Contributes to the well-being of Chilean families through the Associates 2015 Valdivia development of the construction sector and the private initiative, together with the improvement of the public sector, as promot- Colbún publishes quarterly Financial Statements and an Annual Report. ers of progress and equity in the country. These public reports sent to the Superintendence of Securities and 2013 2014 2015 Exchange (SVS) contain an explanation of the tax policy and provide Asociación Gremial de Generadoras Represents the union interests of a large portion of the business Associates 2015 further detail on the Effective Tax Rate and the Tax Rate Reconciliation, Transmission reliability (as a % 99.78% 99.64% 99.52% and industrial workers of Valdivia. of time) among others. Acción RSE Promotes the development of power companies in Chile. Associates, Board 2011 of Directors and work committees In addition, we send tax documentation to the regulatory service (IRS: Asociación de Industriales del Centro Fosters CSR-related work and sustainable development in Chile. Associates, Board 2011 Internal Revenue Service) broken down pursuant to the current legal Crime Prevention Model de Talca (ASICENT) of Directors, work requirements on a monthly and annual basis. committees, event sponsoring Our company has implemented a Crime Prevention Model within the framework of Law 20,393 on Criminal Liability of Corporations that Cámara de la Producción y del Comer- Seeks to collaborate with the development of its associates and Associates 2011 seeks to prevent the risk of bribery, money laundering and financing cio de Concepción (CPCC) with the progress of the Maule Region. of terrorism. Corporación Industrial para el Desar- Fosters the productive development of Biobío Region. Associates 2010 rollo Regional del Biobío (CIDERE)
Corporación para el Desarrollo de la Works for the development of the Biobío Region. Associates, Board 2010 Information and training on anti-corruption Región de Los Ríos (CODEPROVAL) of Directors, work procedures in the organization (G4-SO4) tables and CSR Board of Workers Instituto de Ingenieros de Chile Non-for-profit organization that conducts multi-sectoral work to Associates and 2010 Directors promote the growth of Los Ríos Region. sponsoring of events Total members 9 962
Confederación de la Producción y del Promueve condiciones que permiten crear iniciativas Socios 2010 Members informed of the anti- 9 962 corruption procedures Comercio (CPC) empresariales y alentar la libre competencia y el crecimiento sustentable en Chile. % of members informed of anti- 100% 100% corruption Sociedad de Fomento Fabril (SOFOFA) Promotes the conditions that allow creating business initiatives Associates 2010 and promote free competition and sustainable growth in Chile. Members trained in anti- 3 143 corruption procedures Corporación Pro Aconcagua Promotes and disseminates good business practices. Associates and 2009 advisor % of members trained in anti- 33.3% 14.86% corruption www.proaconcagua.cl Fosters the sustainable development of the Aconcagua Valley in Associates and 2009 the Valparaíso Region. Board of Directors
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This situation increases Colbún’s costs, raising the variability of its Fuel supply risks: The Company’s exposure to this type of risks is managed through a Risk Management results based on the hydrological conditions. The Company’s exposure In connection with the supply of liquid fuels, in Chile the Company commercial policy that contemplates the effects of eventual project to hydrological risks is reasonably mitigated through a commercial holds agreements with suppliers and has own storage capacity that delays. Alternatively, term and construction cost estimates include Risk management policy policy whose purpose is to maintain a balance between the competitive allows it high reliability in the availability of this type of fuel. certain allowances. In addition, the Company’s exposure to this risk base generation (hydraulic in a mild to dry year, and coal-fired is partially covered by the contracting of “All Construction Risks” Our Risk Management strategy is aimed at reinforcing the principles thermoelectric power plants) and its commercial commitments. Under Regarding natural gas supply in Chile, Colbún has subscribed medium insurance policies that provide both for physical damages and for loss of stability and sustainability, eliminating or mitigating the uncertainty conditions of extreme and repeated droughts the eventual scarcity of term contracts with ENAP and Metrogas, and in Peru, Fenix power of income relating to the delayed commissioning as a result of a loss, variables that could or may affect the Company. water for refrigeration would affect the combined cycle generating plant has entered into long-term contracts with the consortium ECL88 both with standard deductibles for this type of insurance policies. capacity, whose impact may be mitigated with water purchased from (Pluspetrol, Pluspetrol Camisea, Hunt, SK, Sonatrach, Tecpetrol and Comprehensive risk management includes identifying, measuring, third parties and/or by operating these open cycle units. Repsol) and into gas transport agreements with TGP. The sectoral companies face a very challenging power market, analyzing, mitigating and controlling the various risks faced by the as stakeholders from the neighboring communities become more different management areas of the Company, and also estimating In Peru, Colbún owns a combined cycle power plant and its business With respect to coal purchases for Santa Maria’s unit I thermoelectric and more active in the search of more participation and relevance. their impact on the Company’s consolidated position, its follow-up and policy is aimed at selling such base energy. The exposure to dry power plant, the company has called to new bids, inviting renown In addition to the challenges involved in the incorporation of new control over time. This process involves both Colbún’s top management hydrological conditions is limited as it would only have an impact under international vendors and awarding the supply to competitive and infrastructure, the projects have to go through long and uncertain and the areas that are directly charged with managing the risks. eventual operational failures that force the company to resort to the financially sound companies. The above is in line with an early purchase environmental approval processes, followed by litigations of the spot market. In addition, the Peruvian power market offers an efficient policy so as to substantially mitigate the risk of running out of this fuel. same characteristics. The above has brought about a reduction in the Tolerable risk levels, risk measurement metrics and the frequency thermal supply and greater natural gas availability than the Chilean number of large size projects. of risk analyses are policies regulated by the Company’s Board of power market. Equipment failure and maintenance risks: Directors. The availability and the reliability of Colbún’s generation power plants Colbún has strived to harmoniously integrate the social and Fuel Price Risk: and transmission facilities are fundamental for the business. Therefore, environmental dimensions to the development of its projects. The The risk management function is performed by a Risk Committee with In Chile, in situations of low hydraulic generation, Colbún must resort Colbún’s policy reinforces scheduled, preventative and predictive Company has developed a community relationship model enabling it to the support of the Corporate Risk Management in coordination with mainly to its thermoelectric power plants or purchase energy on the maintenance of its equipment, pursuant to the manufacturers’ work with neighboring communities and the society in general starting the other divisions of the Company. spot market at marginal costs. The above entails risks due to the recommendations, and holds insurance policies for all its physical an early citizen involvement and a confidence building process in the The Company’s activities are exposed to various risks that have been variation of international fuel prices. Part of this risk is mitigated with assets including coverage for physical damages and business early stages that extends throughout the project life. divided into business and financial risks. contracts which sale prices are indexed to fuel price variations. In interruption losses. addition, the Company has engaged in hedging transactions involving Regulatory risks: Business Risks several derivative instruments, such as call and put options, among In connection with this risk and although the Company keeps daily Regulatory stability is fundamental for a sector such as power Risk management is a key strategic pillar to safeguard the Company’s others, to provide for the remaining exposure, if any. track of its operations, on October 16, 2015, while Unit 1 of Chacabuquito generation, where investment projects involve long development, stability and sustainability principles, eliminating or mitigating the power plant (25.7 MW) in Los Andes district, was undergoing execution and return on investment times. Colbún deems that uncertainty variables that could affect compliance with its objectives. In Peru, the cost of natural gas is less dependent on international maintenance, an incident was recorded with a medium voltage breaker regulatory changes must be made considering the complexities of the Comprehensive risk management includes identifying, evaluating and prices due to a large domestic supply of this hydrocarbon, which that has kept it out of service. Its commissioning is expected for the power system and the adequate investment incentives. It is important controlling the various risks faced by the different management areas allows limiting the exposure to this risk. Just like in Chile, the proportion first half of 2016. to have a regulation that provides the industry players with clear and of the Company, and also estimating their impact on the Company’s exposed to the variation of international prices is mitigated through transparent rules. consolidated position, its follow-up and control over time. This process indexation formulas of energy sale contracts. Project construction risks: involves both Colbún’s top management and the areas that are directly The development of new projects may be affected by factors such as: charged with managing the risks. Consequently, the Company’s exposure to the risk of fuel price delayed permitting, regulatory changes, litigations, higher equipment variations is largely mitigated. or labor prices, opposition from local and international stakeholders, The risk management function is performed by a Risk Committee with unforeseen geographic conditions, natural disasters, accidents or the support of the Corporate Risk Management in coordination with other unforeseen events. the other divisions of the Company.
Hydrological Risk: In Chile, 48% of Colbún’s power plants are hydroelectric; hence, they are exposed to variable hydrological conditions. To be able to meet the contracts under dry hydrological conditions, Colbún must operate its combined cycle natural gas or diesel thermoelectric power plants, operate its inefficient thermoelectric power plants or otherwise purchase energy on the spot market.
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In Chile, the energy agenda promoted by the government contemplates Financial Risks The Company’s financial debt, including the effect of interest rate Liquidity risk: several regulatory changes, which could represent an opportunity or a derivatives contracted is as follows This risk is due mainly to the need for cash funds to meet investment risk to the Company depending on how they are implemented. Especially They are associated with the impossibility of conducting transactions Financial debt profile and business expense commitments, debt maturities, etc. These cash relevant are the changes being currently discussed in Congress about or meeting commitments from operating activities due to the disbursements are financed with own resources coming from Colbún’s unavailability of funds, interest rate and exchange rate variations, regular business activities and from the contracting of credit lines that the (i) new transmission law that would redefine fundamental aspects Interest rate dec -15 sept -15 dec-14 in this segment, and a new structure for the CDEC that contemplates bankruptcy of our counterparts or other financial market variables that ensure the availability of enough funds to face the needs foreseen for the consolidation of CDEC-SIC with the CDEC-SING, (ii) the Water Code may affect Colbún’s equity. Fixe 100% 100% 100% a period of time. reform, and (iii) the tariff equity law that seeks certain equivalence in Variable 0% 0% 0% the tariffs throughout the country to facilitate the development of new Exchange rate risk: At December 31, 2015, Colbún holds cash surpluses by US$1,061.5 million, electric projects locally. The importance of transversal projects such The exchange rate risk is due mainly to the exposure to currency Total 100% 100% 100% invested in 60-day term deposits and in short-term mutual funds with as the so called “Labor Reform”” should also be noted, particularly in variations coming from two sources. The first source of exposure a holding period of less than 90 days. Also, the Company has additional what refers to the generation industry, as the qualification of “strategic comes from revenues, costs and investments made in currencies liquidity sources, namely: (i) a credit facility with local entities by UF companies” and the “minimum services” for workers’ replacement in other than the Company’s functional currency (U.S. dollar). The second As at December 31, 2015, 100% of the Company’s financial debt is 4 million, (ii) two bond lines registered with the local market by a the case of a strike. Relevant sectoral initiatives to be outlined are (i) source of risk is the accounting mismatch of assets and liabilities of the contracted at fixed rate. total amount of UF 7 million, (iii) negotiable instruments registered the definition of the country’s long-term Energy Policy (2050) and (ii) Statement of Financial Position denominated in currencies other than with the local market for UF 2.5 million and (iv)uncommitted lines for the Law on Biodiversity and Protected Areas currently discussed in the Company’s functional currency. Credit risk: approximately US$175 million. Congress, among others. The Company is exposed to credit risk as a result of a counterpart’s Our exposure to the variation of currencies other than the U.S. dollar failure to meet its contractual obligations thereby causing an economic Over the next twelve months, the company shall pay approximately In Peru, the authority is promoting certain modifications to the is quite restricted as virtually all Company’s sales are either stated in or financial loss. Historically, all the counterparts that hold energy US$518 million on financial interests and debt amortization. These energy industry. Among the regulatory changes we may mention dollars or indexed to the dollar. Likewise, the main costs relate to the supply commitments with Colbún have timely met their obligations. disbursements consider the refinancing of the current Fenix’s bank the following: (i) Proposal to modify the Law on Electric Concessions purchase of diesel oil, natural gas and coal, which incorporate price debt by approximately US$362 million that will take place during the regarding the definition of free and regulated customers and how the setting formulas based on international prices stated in dollars. In In connection with funds placed in treasury and derivative transactions, first quarter of 2016. It also considers an amortization of US$40 million regulated commitments could be modified before an eventual shift connection with capital disbursements, the Company incorporates Colbún engages with entities having high credit ratings. In addition, on an international credit facility granted to Colbún S.A. This loan, from regulated to free customers, and (ii) Proposal to regulate the indexing factors to its contracts with suppliers and resorts to the use the Company has established participation limits on each counterpart, together with the other interests and minor amortization amounts will short-term market in connection with providing free customers with of derivatives to limit its expenses in currencies other than the U.S. which are approved by the Board of Directors and reviewed on a be financed with Colbún’s own cash generation. the possibility to have direct access to the spot price market. dollar. periodic basis. The balanced development of the power market over the next few At December 31, 2015, at a national level Colbún was rated A+ by Fitch years will largely depend upon the quality of this new regulation and The Company mitigates its exposure to the mismatch of accounting As at December 31, 2015, cash surplus investments are held in mutual Ratings and AA- by Humphreys, both with stable perspectives. At an the signals provided by the authority. accounts through the application of a maximum mismatch of assets funds (of our bank affiliates) and term deposits in national and international level, the company was rated BBB by Fitch Ratings and and liabilities for structural entries stated in currencies other than international banks. The former are short term mutual funds with a BBB- by Standard & Poor’s (S&P), both with stable perspectives. Risk in the variation of electric power demand/supply and sale the dollar. For purposes of the above, Colbún maintains a relevant term not exceeding 90 days known as “money market”. In the case price: proportion of its cash surplus in dollars and resorts to derivatives such of banks, local institutions have a local risk rating equal to or greater Consequently, we deem that the Company’s liquidity risk is currently The forecasted electric power demand is very relevant to determine as swaps and forwards to manage exchange rate risks. than AA- and foreign entities have an investment degree international limited. the market price. Consequently, as at December 31, 2015 the Company’s exposure to this risk rating. At the closing of the period, the financial institution that risk is quite limited, which translates into an exchange rate difference of concentrates the greatest participation in cash surpluses reaches In Chile lower than forecasted medium-term growth in demand would approximately US$1.8 million in quarterly terms, based on a sensitivity 19%. In connection with the existing derivatives, the Company’s bring about unbalance between the supply and the demand, thereby analysis with 95% of reliability. international counterparts have a risk rating equal to or greater than affecting energy prices. In addition, this unbalance could be further A- and the national counterparts have a local risk rating of AA- or increased by the greater development of NCRE projects at more Interest rate risk: greater. It should be mentioned that no counterpart holds more than competitive costs that contribute efficient supply. Interest rate risk is mainly related to the variation of the interest rate 15% in notional terms. In Peru, a temporary unbalance between the supply and the demand value of future flows stated at variable exchange rate, and to the has also been observed due mainly to the increase in efficient supply variation in the fair value of assets and liabilities stated at a fixed (hydroelectric and natural gas power plants) entailing a reduction of interest rate that are recorded at fair value. To mitigate this risk, the energy prices over the last few months Company uses fixed interest rate swaps.
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Risk measurement The liquidity risk is regarded as low by virtue of the Company’s relevant Tax proceeding against Empresa Eléctrica Industrial cash position, the amount of financial obligations over the next twelve Detail of fines and sanctioning S.A. before the Internal Revenue Service: The Company periodically conducts analyses and measurements months and the access to additional financing sources, among which By means of tax assessment No. 373 of August 30, 2010, the Regional of its exposure to different risk variables, as presented in previous we may mention the committed and uncommitted credit lines. processes during 2015 paragraphs. G4-EN29, G4-SO8 Director of the Internal Revenue Service contested some entries of the The interest rate variation risk is fully mitigated as 100% of the financial 2007 annual tax return of Empresa Eléctrica Industrial S.A. (EEI). The In connection with business risks, especially those relating to variations debt is contracted at a fixed rate (directly and through the use of During 2015 Colbún had no environmental fines of any nature or severity. initial amount assessed was $403,409,933 (lawsuit case record 10-120- in commodity prices, Colbún has implemented mitigation measures derivatives). 2010). Later, by means of tax assessments No.439, 440 and 441, all of consisting of indexation factors to energy sale contracts and hedge Below is a summary of the main fines and sanctioning processes in other areas. August 29, 2011, the IRS challenged 3 entries of EEI’s annual tax returns derivatives to provide for an eventual exposure. Hence, no sensitivity The exchange rate risk is also limited since the main Company corresponding to the 2008, 2009 and 2010 tax periods. The initial analyses are submitted. flows (revenues, costs and capital expenditures) are either directly denominated in or indexed to the dollar. The exposure to the mismatch Fine by the SEC: amounts assessed were $183,768,837, $249,905,875 and $254,555,414, In order to mitigate equipment failure or project construction risks, of accounting accounts is mitigated through the application of a policy By means of Exempt Resolution No. 4233 of July 15, 2014, the respectively (lawsuit case record 10-541-2011) plus the fines and interests the Company has retained insurance policies that provide for physical of maximum mismatch of assets and liabilities for structural entries Superintendence of Electricity and Fuel (SEC) fined Colbún with 1,800 applicable thereto. The court issued a resolution in first instance, which damages, business interruption losses and loss of income resulting stated in currencies other than the dollar. from delays in the commissioning of a project. So, this risk is reasonably U.T.M. (Monthly Tax Units) for lack of compliance with its obligation to was notified on December 2, 2015 that rejects the complaints filed by preserve the safety of the electric power service and to ensure the most the company. The company filed an appeal for reconsideration with limited. Due to the above, as at December 31, 2015 the Company’s exposure to this risk is quite limited that translates into an exchange rate economic operation for the whole group of electric utilities; the above a supplementary appeal against this sentence on December 14, 2015. Regarding financial risks, in order to measure its exposure Colbún difference of approximately US$1.8 million in quarterly terms, based on as a result of the subscription of an energy purchase and sale contract As of today, January 20, 2016, the appeal for reconsideration with a prepares sensitivity and value-at-risk analyses to track the potential a sensitivity analysis with 95% of reliability. whereby Colbún sought to reduce its exposure to the spot market. supplementary appeal is pending resolution. losses assumed by the Company in the event the exposure finally materializes. Colbún filed a claim of unlawfulness against this resolution, mainly arguing that the SEC had wrongly qualified the facts that motivated the Tax Claim Termoeléctrica Antilhue S.A: The credit risk is quite limited as Colbún only engages with national fine, which was rejected by the Court of Appeals of Santiago. However, By means of tax assessment No. 257 of September 24, 2015, the IRS and international banking counterparts with high credit ratings and this court admitted the subsidiary petition filed by Colbún, consisting of determined differences in first category taxes for the 2013 tax period has established maximum participation limits on each counterpart that a rebate in the fine applied, establishing it at 1,000 Monthly Tax Units. for an amount of MMCLP 870, in addition to the fines and interests limit the specific concentration by these institutions. applicable thereto that was challenged by means of a voluntary Appeal for protection against Santa Maria administrative reconsideration (RAV). On December 30, 2015 the thermoelectric power plant: Company was notified of the rejection of the voluntary administrative A group of neighbors filed an appeal for protection with the Court reconsideration by the IRS, after which it filed a Tax Claim with the Tax of Appeals of Concepción, arguing that the operation of the power and Customs Courts (TTA) of the Metropolitan Region. The claim was plant would affect their right to live in an environment free of filed on January 14, 2016, and Colbún is waiting for the resolution that contamination, as it would generate greater capacity than forecasted will open up the proceeding. in its environmental evaluation. They requested an injunction from the Court of Appeals, so that it orders the reduction of Santa Maria’s gross Sanctioning proceeding by the SMA against Nehuenco capacity while the appeal is processed, which was rejected as the court thermoelectric station: did not have background information justifying such a measure. On November 18, 2015 the Environmental Superintendence (SMA) filed This appeal for protection was dismissed by the Court of Appeals of charges against Colbún for a total of 14 defaults of the environmental Concepción, and the parties are waiting for the resolution from the standards as a result of the operation of Nehuenco Thermoelectric Supreme Court. Power Plant, due mainly to the exceedance of maximum emission values, and the operation with diesel in circumstances that do not qualify as emergency situations. Colbún submitted a Compliance Program including measures to address the 14 charges made. On February 1, 2016, the merged Compliance Program was approved by the SMA which led to the suspension of the sanctioning administrative proceeding.
184 185 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS CAPÍTULO ANEXOS DESEMPEÑO SOCIAL
SOCIAL PERFORMANCE
Growth Perspectives Human capital development
At Colbún we are committed to maximizing the value of our company, Colbún’s headcount amounts to 962 workers, of which 13 are foreign- have been with the company less than 3 years; 59 from 3 to 6 years; by exploring and identifying growth opportunities in Chile that will ers. We are a diverse group: 114 people under 30 years; 356 from 30 to 48 from 6 to 9 years; 8 from 9 to 12 years, and 14 female workers joined enable us to meet electricity requirements in a competitive, safe and 40; 282 from 41 to 50; 163 from 51 to 60; 45 from 61 to 70, and 2 people the Company more than 12 years ago. sustainable manner. elder than 70. In connection with the seniority of male workers in the company: 192 Workers per type of hourly schedule people have been with the company less than 3 years; 198 from 3 to 6 Out of the total number of workers, 12 are FTEs, 7 women and 5 men. years; 174 from 6 to 9 years; 44 from 9 to 12 years, and 182 people joined Similarly, in 2015 the Company retained 4 part-time employees. Planned capacity (MW) and its maximum generation attainable versus the forecasted long-term demand for the Company more than 12 years ago. Similarly for female workers: 43 electricity, by energy source (G4-EU10) Turnover
Classification 2015 2016 2017 2018 2019 Average employee turnover, broken down by age and sex (G4-LA1) Energy source Reservoir hydroelectric power plant 1,057 1,057 1,057 1,057 1,057 2014 2015 Run-of-the river hydroelectric power plant 532 532 532 532 532 Workers who left the Company Turnover rate Workers who left the Company Turnover rate Coal-fired thermoelectric power plant 342 342 342 342 342 (No) (%) (No) (%) Thermoelectric LNG/diesel power plant 1,347 1,347 1,347 1,347 1,347 Sex Male 83 10.4% 63 7.9% Hydroelectric power plant under construction 34 34 34 Female 6 3.5% 11 6.3% Total planned capacity 3,278 3,278 3,312 3,312 3,312 Age Under 30 6 5.9% 10 8.7%
Colbún’s maximum 19,500 19,500 19,690 19,690 19,690 From 30 to 50 58 8.9% 38 5.9% forecasted generation capacity P70 (GWh) Elder than 50 25 11.9% 26 12.8%
Total forecasted demand 49,911 51,851 53,869 56,210 58,742 Total 89 9.2% 74 7.6%
39% 38% 37% 35% 34% NOTE: - This chart shows the voluntary and involuntary turnover rate. - 14.7% of the workers will be entitled to retirement within the next 5 to 10 years. The various collective agreements available in Colbún contemplate an incentive consisting of improved retirement for those who decide to retire. NOTES: Refer to Colbún’s installed capacity on the webpage www.colbun.cl Forecasted demand of the SIC defined by the National Energy Commission in the node price setting report of October 2015 Competitive remunerations The peak generation capacity differs or may differ from the capacity actually generated by the Company in 2015 or from what it expects to generate in the future. P70 implies a medium to dry hydrological scenario. Ratio between the initial salary and the local minimum salary (G4-EC5); gross average monthly salary in Chilean pesos
Initial salary in Colbún Ratio between the initial salary and the local minimum salary Sites with significant operations Women Men Women Men
Metropolitan Region 257,523 351,461 1.07 times higher 1.46 times higher
V Region 374,712 410,955 1.55 times higher 1.79 times higher
VII Region 785,159 410,696 3.26 times higher 1.70 times higher
VIII Region 674,734 524,186 2.80 times higher 2.28 times higher
NOTE: Chile’s minimum wage was set at Ch$241,000 in 2015 186 187 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS DESEMPEÑO SOCIAL
Performance Assessment
Total workers assessed (G4-LA11)
2014 2015
Women Men Total Women Men Total Parental leave Training and development Total workers 167 794 961 172 790 962
During 2015, 17 women and 32 men were entitled to their 5-day parental The development and personal growth of our workers is essential to No of workers assessed 163 782 945 164 780 944 leave; all of them resumed their normal duties. Colbún. The company bets on the training and the internal promotion % over the total num- of its workers as mechanisms to enhance peoples’ management 97.60 98.49 98.34 95.35 98.73 98.13 excellence, one of the goals set forth in our corporate guidelines. ber of workers
Training Programs (G4-LA10) Work Practices 2014 2015
% of % of Percentage of workers covered by collective agreements in 2015 (G4-11) Number of beneficiaries beneficiaries Training program Description No. of beneficiaries beneficiaries over the over the % over the total No of workers % over Date of last total total Collective agreements Site number of workers Term subscribed Colbún’s total agreement Undergraduate schol- in the facility Technical or university studies 55 5.7% 53 5.5 arships Nehuenco Union Quillota 43 57% 4% 10-2012 10-2016 Post-graduate scholar- Studies in Chilean and foreign 4 0.4% 41 4.3% ships universities Inter-provincial Los Andes 84 72% 9% 12-2012 12-2016
Leadership skills supervisory areas of Union No.2 Los Andes 19 16% 2% 12-2012 12-2016 Leadership program 134 13.9% 56 5.8% the Company Hidroeléctrica Guardia Vieja S.A. Los Andes 84 72% 9% 12-2012 10-2016 Safe driving program Training in safe driving 0.0% 22 2.3% Union No. 1 09-2013 08-2017
Livelink Documentary Hidroeléctrica Aconcagua Los Andes 19 16% 2% 12-2012 12-2016 Documentary manager attributes 6 Manager Program Candelaria Santiago 18 75% 2% 09-2012 08-2016 E-learning induction Inform relevant aspects of the business 24 Union No.1 Colbún S.A. and Affiliates 09-2013 08-2017 program to those who join the Company - Colbún Complex Talca 56 70% 6% Onsite induction Inform relevant aspects of the business 40 - Rucúe-Quilleco Los Ángeles 24 59% 2% program to those who join the Company - Angostura Los Ángeles 4 9% 0% Show the power plants to new per- Induction program visit sonnel and people from the Parent - Santiago Santiago 24 6% 2% 30 to power plants Company who have been working in the Company for many years Angostura Los Ángeles 29 62% 3% 04-2014 03-2018
Los Pinos Concepción 15 71% 2% 05-2013 05-2017 Languages Training in foreign languages 89 Santa María Coronel 49 56% 5% 02-2015 12-2018
Capacítate Soft and technical skills for workers 62 Antilhue Valdivia 12 75% 1% 10-2012 09-2016
Canutillar Puerto Montt 12 63% 1% 10-2012 09-2016 Technical training Train workers in specific technical areas 565 Union of Empresa Eléctrica Industrial S.A. Santiago 26 76% 3% 05-2013 05-2017 Total 1009 Total 415 43%
NOTE: No activities have been identified where the contractors or suppliers’ rights may be threatened in connection with their right to free association or to collective negotiation.
188 189 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS DESEMPEÑO SOCIAL
Communication channels Work environment
LA-4 Benefits Specific benefits and reconciliation policies (Colbún-11.TR) Any time there is a change in the organization the employees We believe that offering our employees benefits that are in agree- Academic excellence award Seventh version of the award that seeks to recognize the workers' families symboli- receive an email with the reason for the change and the individu- ment with their needs contributes to the sense of belonging and cally and economically, by rewarding outstanding academic performance at both als involved; collaboration is sought for the new challenge. When pride for the Company. Colbún provides benefits and offer special school and university levels. the change involves unionized workers, the union is informed in instances so that our workers can share with their families. Work day with children This is the seventh version of this initiative that takes place at all Colbún’s power advance. plants and also at the Santiago offices.
Cultural conferences Cultural conference cycles with the Cultural Network in Santiago and in regions where all workers and their families are invited. Benefits provided by the company to workers with indefinite term contracts (G4-LA2) Indulgence days The workers are given two administrative days per year to be used whenever they want. They can be broken down in four half-days. % respecto del No of workers Implementation Percentage over total de la planilla Friday half day At the parent company, workers work until 13:30 pm every Friday. This modality is Benefit Type of benefit entitled to the year the total payroll de colaboradores recently being introduced in some power plants. benefit 2015 Sandwich days The employee can either apply to a free Monday or Friday (to have a long week-end). That day must be recovered with a Friday afternoon. Supplementary health insurance 1988 Medical insurance 950 98.75 819 Flexible Schedule In Santiago we offer our employees the possibility to bring back and forth the arrival time. Three new schedules plus the current one are available. The employee must Life insurance 1988 Life insurance 950 98.75 0 choose one and keep it through the year.
Maintenance of remunerations due to 1988 Other 950 98.75 medical leave Death benefit 1988 Other 922 95.84 311 Labor Claims Our value chain G4-LA16 Christmas present for our workers’ G4-LA14, G4-LA15 1988 Other 962 100 19 No labor claims were filed during 2015; nor are there outstanding children claims before the Labor Inspection Bureau. At Colbún we are committed to the exchange of good practices Christmas party for our workers’ 1988 Other 962 100 470 with our contractors and suppliers, seeking to promote high safety, children Human Rights environmental, quality, environmental and social standards, supporting their growth and development. This will allow us to achieve excellence Scholarships for children 2008 Other 922 95.84 490 G4-HR3, G4-HR5, G4-HR6, G4-HR7, G4-HR9, G4-HR10, G4-HR12 throughout our value chain. All of our bidding and award processes with subcontracting companies As part of our commitment with sustainability and transparency, this Birth, wedding and death subsidies 1988 Other 950 98.75 505 have incorporated environmental principles and other safety and year the company joined Global Compact Chile, entity that seeks work-related issues. Such guidelines are reflected in the Special to promote the corporate commitment with human rights, labor Disability coverage 1988 Disability coverage 950 98.75 56 Standard for Contracting and Subcontracting Companies (REECS) and standards, the environment and anticorruption. the Integrated Management System (SIGECS) among other initiatives. Although none of our power plants, projects or corporate offices We check 100% subcontractors’ compliance with the requirements Birthday present 2008 Other 962 100 0 have been specifically subject to assessment by human rights watch set forth in the Environmental Qualification Resolution (RCA) of the organizations, during 2015 no human rights or discrimination-related Christmas basket 2008 Other 962 100 962 service that is being contracted. cases were recorded (principles number 1 and 2 of the Global Compact). In any case, it should be noted that 100% of our security guards have Dental refund 2008 Other 922 95.8 been trained in these matters. On the other hand, there is no risks relating to the development of child or forced labor (principles number Drug bonus/refund 2008 Other 922 95.8 4 and 5 of the Global Compact). With respect to our contractors, our contractual clauses provide for the practices promoted by the Global Compact and the work legislation. Eye-glasses refund 2008 Other 922 95.8 In addition, we have a platform called Achilles, where we can access the subcontractors’ historical records and review their human rights indicators and review, for example, their accident rates or the claims Unrestricted or emergency loans 2008 Other 856 89.0 before the Labor Inspection Bureau.
NOTE: All workers holding indefinite work contracts are entitled to more social benefits than those required by the law. These are granted directly by the Welfare Service, either through Collective Contracts or the Individual Work Contract, as agreed to upon joining the Company.
190 191 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS DESEMPEÑO SOCIAL
Number of new suppliers / contractors with whom the company has Safety and health 250 evaluated starting a relationship (1)
(1) Estimated value. Equivalent to 10% of suppliers currently working with Colbún. Workers holding formal representation in safety and health committees (G4-LA5)
2014 2015
N° DE NUEVOS PROVEEDORES/CONTRATISTAS QUE SE EXAMINARON EN FUNCIÓN DE CRITERIOS RELACIONADOS Workers repre- Contractors Workers repre- Contractors A LAS SIGUIENTES PRÁCTICAS LABORALES (G4-LA14) sented represented sented represented
Canutillar station 18 54 18 49 Criteria No. of new suppliers % of new suppliers over the total Biobío complex 79 136 79 220
Employment practices 182 73% Colbún complex 77 142 71 88
Safety and health practices 116 46% Carena station 42 35 42 27
Labor relations 182 73% Aconcagua complex 133 146 107 150
Salaries and remuneration 182 73% Antilhue station 16 20 14 16
Los Pinos station 16 81 16 90 (1) Suppliers registered with the Achilles system with whom a purchasing or service relationship was established during 2015. (2) Suppliers enrolled in a safety insurance provider (Mutual). Candelaria station 23 31 15 70
Nehuenco complex 65 82 62 107
Santa María complex 69 349 73 327 NEGATIVE, ACTUAL AND POTENTIAL IMPACTS OF WORK PRACTICES ON THE SUPPLY CHAIN (G4-LA15) Santiago office 396 22 384 24 Actual Impacts Potential Impacts Transmission Management 0 0 33 91
Failure to meet the labor legislation. Significant negative impacts of work Payment of salaries, forced labor, poor La Mina project 25 8 26 400 Failure to meet occupational health practices on the supply chain working conditions, accidents standards. San Pedro project 11 26 10 19
Santa María project 0 0 9 0
Blanco project 0 0 0 22
Assistant Management project 0 0 0 105 NUMBER OF SUPPLIERS AND/OR CONTRACTORS AND 2015 ASSESSMENT OF THE WORK PRACTICES Other small projects 0 0 0 67 Nº %
Contractors whose work practices NOTE: 182 73% impact has been assessed (1) - In facilities with less than 25 workers, Parity Committees are set up. - The total represents the annual workers’ average.
Contractors with significant negative, 80 32% actual and potential work impacts (2)
Contractors with negative work impacts with whom improvements have been 102 41% agreed to
(1): Suppliers registered with the Achilles system with whom a purchasing or service relationship was established during 2015. (2): Suppliers with provisional infractions + accidents.
192 193 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS DESEMPEÑO SOCIAL
crops, promoting good practices under an association that groups Sports Promotion Programs Support to the Fire Department (various power stations) Local Development 2,500 farmers. In 2015 it completed the second stage of the project Within the context of the significant work of the Fire Department “Irrigation Technology Transfer Program”, which allowed increasing by and their contribution to the society as a whole, Colbún has provided Support to Chapo Lake neighbors and fishermen (Canutillar 20% the average irrigation efficiency of different crops and increase support to several units in the zones where it operates, namely the station) Educational Programs the yield by 25% in the farms where it was applied. districts of Curacaví (Carena station), Yerbas Buenas (Colbún complex), As a result of the emergency resulting from the eruption of Calbuco Antuco and Quilleco (Rucúe-Quilleco stations), Cabrero (Los Pinos volcano, Colbún provided assistance to the Chapo Lake neighbors Energízate (Santa María Complex) Beekeeping Productive Development Project (Los Pinos power plant) and Quilaco and Santa Bárbara (Angostura power and to the Federation of Local Fishermen from the Reloncaví Estuary Educational project implemented in 2013 as a result of a strategic station) station). (FEPAER) by delivering pet food and seeds, among other initiatives. alliance between the University of Concepción through the Interactive Project developed through the NGO Acción Emprendedora, in El Center for Sciences, Arts and Technology (CiCAT), the Municipality Progreso and Charrúa sectors of the Cabrero district. Its objective is Sports promotion program in Coronel (Santa María Complex) of Coronel and Colbún. The initiative is a methodological innovation to provide tools and knowledge to local entrepreneurs, together with Approach to manage the impact Among the most important sports promotion initiatives of 2015, proposal that seeks to bring 5th graders and pre-college students contributing with value added to the products. it is worth noting the implementation of the Jaime Osorio Cup from the municipal schools in the district closer to energy related of resettlement championship in alliance with the Football Association of Coronel, subjects, which are part of the official curricula of both levels. In 2015 Newen Maqui (Angostura station) G4-EU20, G4-EU22 activity that benefited 120 people, with the participation of 10 this initiative benefited 1,200 students from 18 schools. In 2014, GECO, with the support of Colbún, Fosis’s IDEA Fund and the organizations and 2,200 attendees. Also in Coronel, the company and American organization The Aspen Institute developed a beverage At present, the Company is not developing any project that contemplates the municipality financed the construction of a roofed multipurpose Supplementary Training (several power plants) based on maqui, seeking to create a new market for this wild fruit. This a resettlement plan. However, our corporate vision entails considering court at Caleta Lo Rojas, project that benefited 500 people from 5 Program developed jointly with Inacap which purpose is to provide project points at generating work opportunities for the communities the particularities of each community and accompanying the families organizations. technical tools to improve the training and the employability of students from the south, fostering a traditional activity such as maqui fruit- through all the stages of the process with the support of psychologists, from the districts where Colbún operates. The program is developed in picking. There are 91 fruit-pickers enrolled in this program from social assistants and entrepreneurial experts. Football School “Energía para Campeones” (Aconcagua 15 districts along the country and has benefited 1,000 students to date. different zones of the south of Chile, including 34 fruit pickers from Complex) In 2015, a total of 137 students were trained under the FORCOM. Santa Bárbara and Quilaco who, in 2015 received their first profits. The stages considered in the Resettlement Plan may vary according to Initiative aimed at 100 children and youngsters who live by the the specificities of each project and site: International Road and who pertain to the districts of Los Andes Youth Orchestra of Cochamó (Canutillar station) Antuco Tourist and Productive Development Worktable - Preparation Program: Consists of providing all the information and San Esteban, which purpose is to promote sports and a healthy Made up of students from Cochamó district, the orchestra have spread (Rucúe-Quilleco stations). and support necessary so that every family feels free to select the lifestyle. its recognition and taken its music to different points of the southern Worktable set up in 2015, made up of public and private parties, most adequate compensation procedure. zone of our country under the motto that music is an educational namely the municipality, SERNATUR, local businessmen and Colbún, - Transfer Program: Every family is provided with technical assistance, resources and multi-disciplinary support in channel that promotes values such as discipline and continuous among others. Thanks to a year-round, joint and systematic work, the Other Programs improvement. worktable has defined and promoted training and entrepreneurial preparation for the transfer. It includes the moving allowance and tourist programs. the conditioning of the land and the housings. Productive Development Programs CSR Agreement with the Municipality of San Esteban - Continuity Program: After the move, the Company provides the (Aconcagua Complex). technical assistance, the resources and the multi-disciplinary Framework Agreement with the Association of Maule South Within the framework of this CRS agreement, we inaugurated the support required to ensure a successful resettlement. Channel Irrigators’ (Colbún Complex) roofed multipurpose court of the school Río Colorado, which will - Economic and Social Development program: We provide support Agreement between Colbún and the Association of Maule South allow the neighbors who live close to the International Road to for the development of entrepreneurial skills, opportunities for Channel Irrigators in force since 2011 that provides tools to promote practice sports and recreational activities, as well as cultural and civic economic and professional development. water savings and irrigation efficiencies, which brings about benefits gatherings through the year. Also, the Company donated equipment for agriculture and power generation. With the technical assistance to the Second Fire Department of the International Road, consisting of the Center for Global Change from the Catholic University the of uniforms and rescue gear, all certified in agreement to high quality program has enabled the irrigation of more than 100 hectares of standards. Value of political CSR Agreement with the Municipality of Quillota (Nehuenco contributions Complex) G4-SO6 Within the framework of the agreement with the municipality, 200 parking lots for bicycles were inaugurated at 18 strategic points of the Colbún S.A. made no political contributions during 2015. district, close to 400 sports implements were donated to 13 academies in Quillota and 51 youngsters were benefited with scholarships for college education. The scholarships included five professional practice posts at the Nehuenco Complex.
194 195 ANEXOSANNUAL INTEGRATED CAPÍTULO REPORT COLBÚN 2015 ANEXOS DESEMPEÑO AMBIENTAL
ENVIRONMENTAL PERFORMANCE
N N a 8 km Quillota 200 m 1 km a 8 km
Central Quilleco a 10 km a
Río Laj Antuco Use of materials and efficiency a 16 km a 3 km
Quilleco a 62 km a 12 km Complejo a 99 km Nehuenco Río Rucúe
THERMOELECTRIC POWER GENERATION EFFICIENCY (2.6.3 DJSI) NOTES: Central Rucúe • The efficiency measure only considers the power plant operation at full capacity, 2014 2015 i.e., the start-up, interruption and operation times are brought to the minimum COMPLEJO NEHUENCO CENTRAL RUCÚE Y QUILLECO required technical level. • Combustion improvements have been made, which explain the higher coal ef- Coal-fired power plant efficiency (% 34,8% 35,2% ficiency for 2015. The major maintenance of November brought about system Central térmica Ciudad cercana Monitoreo Central de pasada que Zona de fauna íctica en Monitoreo o BTU/kWh) ciclo abierto calidad del agua genera bonos de carbono estado de conservación calidad del agua improvements, which should translate in greater efficiency for 2016. Open/combined cycle gas power • In connection with the efficiency of open/combined cycle gas power plants, the Central térmica de Reforestación Medición de Reforestación Muestreo 53,0% 52,9% Central de pasada plant efficiency (% o BTU/kWh) values correspond to Nehuenco combined cycle power plant that show the highest ciclo combinado y/o revegetación calidad de aire y/o revegetación de peces utilization factors, against the simple cycle units that had low utilization factors. Medición de emisiones Medición Líneas de Dirección del Pozos de agua Ciudad cercana atmosféricas en de ruido transmisión caudal del río chimenea CEMS Líneas de Cortina vegetal transmisión
Panguipulli Biodiversity Recambio a 8 km a 30 km de estufas Proyecto a 165 km a 14 km Río San Concepción Parque Botánico Pedro a 25 km Coronel Santa Proyecto San Pedro Bárbara Río Huequecura Hospital a 40 km Talca Reserva Reserva Nacional a 91 km Yumbel a 5 km Tricahue Altos de Lircay de Coronel Central a 81 km San Clemente a 30 y Lago Riñigue Central Laguna de 120 km Central Chiburgo Embalse la Invernada Los Lagos Colbún Angostura Central Central Quillaco a 8 km A 6, 23 San Ignacio Río Maule Colbún Río Biobío Coronel y 29 km Embalse Machicura a 150 km Central Machicura N Mulchén Completo a 26 km Proyecto Embalse Santa María Linares Río Melado Lota a 1,5 km Reserva Nacional Angostura Río Quinchilca 2 km La Mina N N a 5 km Los Bellotos a 140 km N a 50 y Río Biobío 2 km 500 m Hospital de Lota a 5 km 140 km 5 km
CENTRAL SANTA MARÍA PROYECTO SAN PEDRO COMPLEJO COLBÚN Y PROYECTO LA MINA CENTRAL ANGOSTURA
Central termoeléctrica Monitoreo Parque Botánico Central hidroeléctrica Zona de fauna íctica en Monitoreo Central de pasada que Área protegida Monitoreo Central hidroeléctrica Zona de fauna íctica en Monitoreo a carbon calidad del agua de embalse estado de conservación calidad del agua genera bonos de carbono calidad del agua de embalse estado de conservación calidad del agua Medición de ruido Reforestación Medición de Zona de especies en Reforestación Muestreo Central hidroeléctrica Reforestación Muestreo Monitoreo de Reforestación Muestreo y/o revegetación calidad de aire estado de conservación y/o revegetación de peces de embalse y/o revegetación de peces temperatura del agua y/o revegetación de peces Filtros malla, captación Plan de vigilancia Líneas de Dirección del Ciudad cercana Ciudad cercana Dirección del Dirección del de agua de mar ambiental Central de pasada Ciudad cercana Monitoreo Ciudad cercana transmisión caudal del río caudal del río de Clorofila caudal del río Medición de emisiones Compra de derechos Líneas de Líneas de Zona de fauna íctica en Líneas de atmosféricas en de emisión transmisión transmisión estado de conservación transmisión chimenea CEMS Reemplazo de Centro de acopio Monitoreo de temperatura calderas hospitales de cenizas del agua Coronel y Lota Plan rescate y Análisis de peligrosidad relocalización Cortina vegetal de especies de las cenizas
196 197 ANNUAL INTEGRATED REPORT COLBÚN 2015 ANEXOS DESEMPEÑO AMBIENTAL
Waste generation and disposal G4-EN23
As a result of the industrial processes necessary for power generation some activities produce solid wastes, which are segregated at the power plants and managed independently, according Revenues from ash sales (US$) to their hazardousness and the possibility of valuing them. Hazardous waste generated by the operation of our facilities involves in general: fabrics 2014 2015 contaminated with fuels, waste oils, fluorescent tubes, paint cans, solvent containers, cells and batteries. Non-hazardous waste comprises residential waste and includes organic waste, bags, Cementos Bío Bío 15,927 35,129 plastics and others. Bicentenario 254,189 310,856
Total weight of waste generated in TONs (G4-EN23)
2013 2014 2015 Waste water disposal
Residential/Non Thermoelectric power plants 422 255 341 The disposal of waste water coming from thermoelectric plants is hazardous (Ton) made in a planned manner in agreement with what is set forth in the Hydroelectric power plants 48 69 68 environmental permits and the monitoring self-control resolutions issued by the Superintendence of Sanitary Services (SISS), which are Santiago offices 44 44 42 specific for each facility. Hazardous (Ton) Thermoelectric power plants 436 212 523
Hydroelectric power plants 33 77 53 Total waste waters and final disposal (G4-EN22) Santiago offices 0 0 0 Metering Waste water 2013 2014 2015 Final disposal Total 983 657 1028 unit
Candelaria station m3 38,421 11,359 22,196 Codegua estuary NOTE: The increase in hazardous waste generated by thermoelectric power plants in 2015 is due mainly to the Bankless channel interruption of Santa María power plant as a result of a major maintenance process, in addition to a failure in Los Pinos station m3 55,105 58,937 95,555 one of the turbines which forced us to interrupt the power plant for a second time. irrigation
Nehuenco complex m3 1,896,024 1,719,900 1,349,900 Aconcagua River
TOTAL m3 235,597,936.3 345,178,734.4 314,616,926.1 Total ash weight, Santa María power plant (TON) and final disposal
2014 2015 TOTAL m3 235.544.045 345.120.887 314.592.452 Ton % Ton %
Ash storage (carried by KDM) 71,837.6 68% 30,347.7 31% NOTES: Water surplus associated with the Antilhue power plant is drained and adequately monitored in connection with its standard irrigation Reutilization by cement plants 34,341.6 32% 66,985.8 69% parameters (NCh 1333 Of.87). The surplus water was 57,847 m3 in 2014 and 24,474 m3 in 2015. The drop observed is due to a variation in the operational criteria of the reverse osmosis plant, which reduced its weekly operating hours to maintain the stability of the processing water. Total 106,179.2 100% 97,333.5 100% This measure helped to decrease the water volume used in the backwash of coal and sand filters, in addition to reducing the amount of waste water. Drained water is within the permitted range.
The sea water flow associated with Santa María’s Unit I is not considered waste water, as it is used to cool down the power plant and is fully returned to its source. Santa María’s Unit I was stopped during November as a result of a major maintenance of its facilities and during It is worth noting the increase in the use of ashes for recycling at Santa Maria’s Unit I from December due to a failure of one of its turbines. The above brought about a reduction in the cooling down requirements from 343,330,691 m3 32% in 2014 up to 70% in 2015; ashes are used as raw material for the cement and concrete in el 2014 to 313,124,801 m3 in 2015. industries.
198 199 ANNUAL INTEGRATED REPORT COLBÚN 2015
ENERGÍA ES FUTURO
200 ANNUAL INTEGRATED REPORT COLBÚN 2015
Información de Contacto
G4-31 Para mayor información, sugerencias, inquietudes o consultas respecto a este documento, puedes escribir a Miguel Alarcón ([email protected]), (56 2) 2460 4394, Área Relación con Inversionistas. y Ana Luisa Vergara ([email protected]), (56 2) 24604428, Área de Asuntos Públicos.
Identificación de la Sociedad G4-3, G4-5
Razón Social: Colbún S.A.
Rol Único Tributario: 96.505.760-9
Tipo de Entidad: Sociedad Anónima Abierta
Inscripción en el Registro de Valores: N° 0295
Dirección: Av. Apoquindo 4775, piso 11, Santiago, Chile.
Teléfono: (56 2) 2460 4000
Fax: (56 2) 2460 4005
Sitio Web: www.colbun.cl
Twitter: @ColbunEnergia
Auditores Externos Estados Financieros: Ernst & Young Servicios Profesionales de Auditoría y Asesorías Limitada
Auditores Externos Indicadores de económicos, sociales y ambientales: KPMG
Apoyo en el desarrollo metodológico y de contenido: Gestión Social S.A.
Diseño gráfico: 100% Diseño Impresión: Ograma
202 203 www.colbun.cl