Etiopatogenia

Enel’s pay policies

Variable pay at Enel breaks down as follows: > MBO (Management by Objectives).This ties variable pay to the achievement of agreed business goals that are objective and measurable. It regards about 80% of the executives and supervisors who perform roles of organizational or managerial significance.

> Sales incentives.This ties variable pay to the performance of human resources engaged in sales activities and regards supervisors and clerks.

> One-off.This is meant to reward the successful completion of important corporate projects or the attainment of an excellent level of performance. > Stock-option-Plan.The Plan concerns

about 88.5% of all executives and aims to encourage their entrepreneurial spirit, while at the same time ensuring constant attention to the creation of value for the Company.

> Programs of collective incentives.These regard all human resources who work under the electricity industry’s collective contract and are based on indicators of the Company’s economic performance (EBITDA) and productivity/quality of the operating unit.

Wind’s pay policies

The Telecommunications Division’s pay policies break down as follows: >MBO (Management by Objectives).

This regards 100% of executives, about 44% of supervisors, and a small percentage of clerks considered developing resources.

>System of sales incentives.This concerns all the human resources (supervisors and clerks) involved in corporate, consumer, wholesale and web sales and constitutes about 28% of their gross annual pay. >Results bonus.This regards all employees

(except executives) and is tied to indicators of the Company’s economic performance and customer satisfaction. The last of the above represents one of Wind’s most important objectives. Its emphasis on customer satisfaction and service quality is significantly based on the motivation and involvement of its human resources, specific characteristics that distinguish the Company in the

telecommunications industry and constitute factors of its success. The measurement and certification of customer satisfaction are entrusted to external certification agencies.

appliances at advantageous prices. In addition to the card, the welcome kit for new members also contains a “Guide to Advantages”, which lists all the participating stores and describes the different offers in detail. With every bill Enel Club members also receive the Enel Club News newsletter, which keeps them constantly up to date on the Club and the different initiatives of the Enel world.

Electricity rates

The rates reform begun by resolution n. 204/99 of the Electricity and Gas Authority (AEEG) introduced mechanisms correlating the price of electricity with the costs incurred by transmission and distribution companies. The base rates for the supply of electricity are set by the Authority as maximum prices net of taxes and are up-dated by the price- cap method. This method employs a mechanism for the annual reduction of rates amounting to the difference between the estimated rate of inflation and the increase in productivity that the company can achieve, plus other factors that may influence the rates, such as improvements in service quality. In July 2003, the AEEG initiated the consultation procedure to determine the new rates for the period 2004-2007, which concluded with the publication of resolution n.5/04, which establishes the new rates for the service of the transmission, distribution, metering and sale of electricity for the years 2004-2007.

Enel.si stores

Enel.si is present throughout Italy with an extensive and constantly expanding network of franchise stores run in a highly

professional and reliable manner. As of December 31, 2003 there were about 650 stores doing business, and it is planned that by the end of 2005 a thousand sales outlets will be open. The stores offer advanced services and solutions for electricity and heating systems for both households and businesses.

Customers

Code of business practice

In compliance with the requirements of resolution 204/99 of the Electricity and Gas Authority, Enel Distribuzione published a code of business practice whose main aims are to:

> ensure customers the possibility of making rational economic decisions; >ensure the fairness of existing rates and

new rates and contract options; >allow the electricity service to be used at

the lowest possible cost. (The code is published in its entirety on the website: www.enel.it/eneldistribuzione/diritti_del_ cliente/codice_condotta_casa.asp).

Agreements between Enel and the Italian Post Office

Thanks to two agreements entered into with the Italian Post Office, new services are at the disposal of Enel customers. The first regards the opening of QuiEnel counters inside post offices, where customers can carry out many transactions regarding their electricity contract, while the second allows them to pay their electricity bills at more than 2,300 Postamat counters.

Enel Club

The end of November 2003 saw the creation of Enel Club, a completely free-of- charge promotional initiative dedicated to Enel customers who choose to have their electricity bills charged directly to their bank account, post-office account or credit card. Customers who join Enel Club receive a card allowing them to take advantage of discounts, promotions and special offers regarding both products for the household and the family (UniEuro, Coin, Telepass Family, Ottica Salmoiraghi and Viganò) and leisure time (Mondadori bookstores, TicketOne ticket service and museums). With the card, moreover, members can also purchase highly energy-efficient electrical

> Safety: design, construction, renovation and check-ups of electricity systems; installation of systems for detecting gas leaks (and floods); installation of video- surveillance and anti-trespassing systems. > Comfort: installation and maintenance of

air-conditioners, boilers and automated household systems and related services. > Electricity conservation: sale and

installation of photovoltaic plants and high-efficiency lighting systems for workplaces.

Complete information on Enel.si products and services is available on the website: www.enelsi.it

There is also a toll-free phone number: 800 90 1515.

Micro-generation of electricity

Since early 2003 Enel has been developing an innovative generation service based on small production plants using natural gas in a cogeneration system and located directly on the premises of the final user. Micro- generation systems (CPH, Combined Power and Heat) ensure the availability at all times of the electricity required through highly efficient, innovative technologies deriving from the automobile and airplane industries. Sales began in 2002 and are mainly to small and medium-sized firms, hospitals, and large sports and shopping centers requiring an uninterrupted supply of both electricity and heat. The first customers acquire demonstrate that micro- generation ensures a saving of about 10% on costs.

The new system of customer relationship management (CRM)

At the end of 2002 Enel Distribuzione developed a new version of CRM that ensures the integration of all the contact channels made available to customers. The integrated CRM system allows the human resources of Enel Distribuzione concerned to share information on customers who use different channels for access.

50 > 51 Economic responsibility SUSTAINABILITY REPORT 2003

Meter replacement plan

Enel Distribuzione continues the free-of- charge installation of the new meters throughout Italy, and it is expected that by the end of 2005 about 30 million of them will have been installed. As of December 31, 2003 about 13 million meters had already been replaced. Replacements proceed at the rate of about 700,000 meters a month. The investment to carry out the entire project amounts to about two billion euros. On February 5, 2003 an agreement was entered into by Enel and all the consumer associations of the National Council of Consumers (CNCU) that provides for: a 21% increase for three consecutive hours of the “toleration threshold” of the new meters, the possibility of joint verification of their functioning, a common evaluation of the new multi-band rates, and the continual provision of information.

Enel-IBM alliance

Early in 2004 Enel and IBM announced that they were forming an alliance to sell to utilities all over the world Enel’s integrated system for remote metering, managing and reading the consumption of electricity. The system can increase the efficiency and quality of customer services by reducing metering errors and waiting time. In this way customers can be offered diversified rates that provide an incentive for them to use electricity at times far from peak hours. Enel and IBM estimate that the potential world market for this innovative solution has a value of more than 120 billion euros.

Enel Gas acquires customers in Sicily

At the end of 2003 Enel reached an agreement for the acquisition of the Sicilmetano group, which comprises Sicilmetano Spa (gas distribution) and Sicilmetano Energy Srl (sales). The Sicilmetano group serves about 37,000 customers in the provinces of Palermo, Catania, Ragusa, Agrigento and Siracusa. Total consideration for 100% of the share

capital of both companies was 41 million euros. With this acquisition Enel Gas continues its ambitious plan for growth in the gas market.

Suppliers

Express rescission clause

In order to strengthen ethical clauses, contracts will include their rescission in case of nonperformance: “Breach on your part of the aforesaid clauses shall entail the de jure rescission of the present contract pursuant to article 1456 of the Civil Code, without prejudice to Enel’s right to indemnification for the damage. Enel in any case reserves the right to carry out inspections of the production units concerned by the present contract in order to verify compliance with the above clauses.”

Environmental responsibility