Form 6-K

6-K 1 edenor-6k_0227.htm Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2008

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR)

(DISTRIBUTION AND MARKETING COMPANY OF THE NORTH )

(Translation of Registrant’s Name Into English)

Argentina

(Jurisdiction of incorporation or organization)

Azopardo 1025

Buenos Aires C1107ADQ

Argentina

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F X Form 40-F

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes No X

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .)

Full Year 2007

Page 1 of 14

Stock Information: NYSE ADR Ticker: EDN Buenos Aires Stock Exchange Class B Shares Ticker: EDN Ratio: 20 Class B = 1 ADR		EDENOR ANNOUNCES 2007 YEAR-END RESULTS Buenos Aires, Argentina, February 28, 2008 - Empresa Distribuidora y Comercializadora Norte S.A. (NYSE: EDN; Buenos Aires Stock Exchange: EDN) (“EDENOR” or “the Company”), Argentina’s largest electricity distributor, today announced its results for the year ended December 31, 2007. All figures are stated in Argentine Pesos and have been prepared in accordance with Argentine GAAP. Solely for the convenience of the reader, Peso amounts as of and for the year ended December 31, 2007 have been translated into U.S. Dollars at the buying rate for U.S. Dollars quoted by Banco de la Nación Argentina (Banco Nación) on December 31, 2007 of Ps. 3.149. 2007 Highlights Net Sales increased 43.8% to Ps. 1,981.9 million in the year ended December 31, 2007, compared to Ps.1,378.3 million in the year ended December 31, 2006, this increase is largely due to the application of the VAD increase and the Cost Monitoring Mechanism (CMM) adjustments to our non residential customers from February 1, 2007, the recording in the year ended December 31, 2007 of the full amount of the retroactive portion of the VAD increase for the period from November 1, 2005 to January 31, 2007 and, to an increase in the volume of energy sold. The retroactive portion of the VAD increase (including CMM) resulted in a positive impact of Ps. 218.6 million. As of December 31, 2007 we had already invoiced Ps. 47.3 million of that amount while Ps. 171.3 million remains unbilled. In October 2007 the ENRE allowed the Company to recognize the (CMM) adjustment for the period May 2006 - April 2007 (9.63%) applicable as of May 1, 2007. Such adjustment can be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), until their transfer to the tariff is granted by the ENRE. The impact of this adjustment in net sales for the eight month period between May and December 2007 amounted to Ps. 49.6 million. Volume of Energy Sold, increased by 7.5% to 17,886.1 GWh in the year ended December 31, 2007 from 16,632.1 GWh in the year ended December 31, 2006. The increase in volume is attributable to a 5.6% increase in the average GWh consumption per customer and a 1.8% increase in the number of customers. Gross Margin increased significantly (88.5%) to Ps. 1,092.0 million in the year ended December 31, 2007 from Ps. 579.3 million in the year ended December 31, 2006, mainly due to the application to our non residential customers of the increase in our distribution margin (VAD) from February 1, 2007 (including the May 2006 adjustment), the recording of the retroactive portion of the VAD increase for the period from November 1, 2005 through January 31, 2007, the recording of the May 2006 - April 2007 CMM adjustment and the increase in volume of energy sold.

Investor Relations Contacts: In Buenos Aires Ivana Del Rossi Investor Relations Officer Tel: 5411.4346.5127 Veronica Gysin Investor Relations Tel: 5411.4346.5231 Edenor S.A. 1025 Azopardo Street, 16th Floor (C1107ADQ) Buenos Aires, Argentina Fax: 5411.4346.5358 Email: investor@edenor.com www.edenor.com.ar In New York Melanie Carpenter/Maria Barona i-advize Corporate Communications, Inc. 82 Wall Street, Suite 805 New York, NY 10005 Tel: 212.406.3690 Fax: 212.509.7711 Email: edenor@i-advize.com

Full Year 2007

Page 2 of 14

		Net Operating Income increased significantly from Ps. 35.9 million in the year ended December 31, 2006 to Ps. 429.2 million in the year ended December 31, 2007, mainly due to the application of the VAD increase and CMM adjustments described above and to an increase in energy and power capacity sold.

		Net Income reached Ps. 122.5 million in the year ended December 31, 2007, compared to Ps. 293.1 million in the year ended December 31, 2006. In the year ended December 31, 2007, net income was positively affected by the application of the VAD increase, which results in a higher pre-tax net income of Ps. 247.4 million in 2007 compared to Ps. 125.9 million in the same period of 2006. These results were affected by the recording of an income tax charge of Ps. 125.0 million in 2007 and an income tax gain of Ps. 167.2 million in 2006.

Discussion of Financial Results:

FINANCIAL HIGHLIGHTS

	Year ended December 31 * 2007			Year ended December 31 * 2006			% Change vs. 2006
Net Sales		1,981.9	(1)		1,378.3			43.8	%
Electric power purchases		(889.9	)		(799.1	)		11.4	%
Gross margin		1,092.0	(1)		579.3			88.5	%
Net Operating Income (loss)		429.2	(1)		35.9			1,095.5	%

*In millions of Argentine Pesos

(1)

As of December 31, 2007, net sales, gross margin and net operating income include the retroactive portion of the VAD increase, which amounts to Ps. 218.6 million and is being invoiced in 55 consecutive monthly installments, starting in February 2007. Of this amount, Ps.47.3 million was invoiced as of December 31, 2007.

Net sales

Net sales increased Ps. 603.6 million (43.8%) to Ps. 1,981.9 million in the year ended December 31, 2007 from Ps. 1,378.3 million in the year ended December 31, 2006. Net energy sales represented approximately 98.3% of our net sales in 2007 (compared to 97.7% in 2006); with late payment charges, pole leases, and connection and reconnection charges representing the remaining balance. Energy sales increased by 43.7% (Ps. 600.2 million) to Ps. 1.972,7 million in the year ended December 31, 2007 from Ps. 1,372.5 million in the year ended December 31, 2006. This increase was mainly due to:

the application from February 1, 2007 of the increase in our distribution margins, or VAD, charged to our non-residential customers, including the additional increase resulting from the implementation of the CMM for the period from November 2005 to April 2006 (which together represented a 38.3% overall increase in our VAD);

Full Year 2007

Page 3 of 14

the accrual of the full amount corresponding to the retroactive portion of the VAD increase (including CMM for the period from November 2005 to April 2006) charged to our non residential customers for the period from November 1, 2005 through January 31, 2007, which amounted to Ps. 218.6 million, of which, as of December 31, 2007, we had invoiced 47.3 million;

the recognition in October 2007 of an additional 9.63% increase in our VAD corresponding to the implementation of the CMM for the period from May 2006 to April 2007. Such VAD increase amounting to Ps.49.6 is effective since May 1, 2007; and

a 7.5% increase in the volume of energy sold in 2007, compared to the volume sold in 2006.

In October 2007, the ENRE allowed the company to recognize the CMM adjustment for the period from May 2006 to April 2007 (9.63%) applicable starting May 1, 2007. However, this increase has not been incorporated into our tariff structure and, as a result, we are not billing our customers for this increase in the VAD. Instead, the ENRE has authorized us to retain all or a portion of the funds that we are required to collect and transfer to the Stabilization Fund of the electricity market (pursuant to the Plan de Uso Racional de la Energía Eléctrica, - Rational Use of Electric Energy Plan or PUREE -) to cover this May 2007 CMM increase and any future CMM increases granted by the ENRE until the new tariff structure is established pursuant to the Integral Tariff Revision process (Revisión Tarifaria Integral, or RTI) contemplated by the Adjustment Agreement. Once the new tariff structure is adopted, we will be required to compensate the amounts deducted from the PUREE. In November 2007, we accrued the full amount of the retroactive portion of the May 2007 CMM increase for the period from May 1, 2007 to October 31, 2007. Therefore, in our results as of December 31, 2007, Ps. 49.6 million has been recorded and we reserved Ps. 33.2 million collected through PUREE, corresponding to the period between September and December 2007, to compensate this amount.

Volume of energy sold increased by 7.5% to 17,886 GWh in the year ended December 31, 2007 from 16,632 GWh in the year ended December 31, 2006. The increase in volume is attributable to a 5.6% increase in the average GWh consumption per customer and a 1.8% increase in the number of our customers in 2007.

The main increase was attributable to residential customers, whose demand grew 14.4% in the year ended December 31, 2007 compared to the same period in 2006, representing 40% of the energy we dispatched and 29% of our revenues.

Electric power purchases

The amount of electric power purchases increased 11.4% to Ps.889.9 million for the year ended December 31, 2007 from Ps. 799.1 million in the year ended December 31, 2006, mainly due to the effect of a 10.5% increase in the volume of electricity purchased, from 15,491.4 GWh in the year ended December 31, 2006 to 17,122.4 GWh in the year ended December 31, 2007 (excluding wheeling system demand). This increase is mainly attributable to an 8.2% increase in demand (calculated as the purchase of energy by us and our customers under the wheeling system).

Full Year 2007

Page 4 of 14

Energy losses increased to 11.6% in the year ended December 31, 2007 from 11.1% in the year ended December 31, 2006, reflecting primarily an increase in technical losses associated with the higher level of demand in 2007.

Gross margin

Our gross margin increased significantly (88.5%) to Ps. 1,092.0 million in the year ended December 31, 2007 from Ps. 579.3 million in the year ended December 31, 2006. This increase is largely due to an increase in the volume of energy and power capacity sold and to the application of the VAD increase and the CMM adjustment described above.

Transmission and distribution expenses

Transmission and distribution expenses increased 15.3% to Ps. 417.6 million in the year ended December 31, 2007 from Ps. 362.1 million in the year ended December 31, 2006, mainly due to a Ps. 29.0 million increase in salaries and social security taxes (attributable to an increase in compensation and to a reclassification of our employees), a Ps. 20.4 million increase in outsourcing, attributable mainly to the greater activity by our contractors and to a Ps. 2.8 million increase in the consumption of materials associated with preventative maintenance due to an increase in material prices and an increase in maintenance activity.

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

	Year ended December 31,
	2007				% on 2007 net sales (excluding unbilled retroactive adjustment)⁽¹⁾			2006				% on 2006 net sales
	(in millions of Pesos)
Salaries and social security taxes	Ps.	125.8	30.1	%		6.9	%	Ps.	96.8	26.7	%		7.0	%
Supplies		22.9	5.5	%		1.3	%		20.1	5.5	%		1.5	%
Outsourcing		74.2	17.8	%		4.1	%		53.8	14.9	%		3.9	%
Depreciation of property, plant & equipment		169.5	40.6	%		9.4	%		171.2	47.3	%		12.4	%
Others		25.2	6.0	%		1.4	%		20.2	5.6	%		1.5	%
Total	Ps.	417.6	100.0	%		23.1	%	Ps.	362.1	100.0	%		26.3	%

(1)

Calculated on the basis of net sales excluding the unbilled amount of the retroactive portion of the VAD increase, but including the full amount of the May 07 MMC (Ps.49.6 million), which results in net sales of Ps. 1,810.6 million. These amounts are not intended to be representative of what they would have been if the retroactive tariff increase had been in effect only during the reported period.

Full Year 2007

Page 5 of 14

Selling expenses

Our selling expenses are related to customer services provided at our commercial offices, billing, invoice mailing, collection and collection procedures, as well as allowances for doubtful accounts. Selling expenses increased 37.2 % to Ps. 120.6 million in the year ended December 31, 2007 from Ps. 87.9 million in the year ended December 31, 2006, primarily as a result of a Ps. 19.1 million increase in our allowance for doubtful accounts attributable to the recording of an allowance for the full amount of receivables resulting from the supply of electricity to shantytowns that are not covered by the 2006 Framework Agreement (Acuerdo Marco) in light of the fact that the 2007 framework agreement has not yet been signed. We also recorded a Ps. 4.9 million increase in salaries and social security taxes, a Ps. 4.3 million increase in outsourcing attributable to price increases in our outsourcing services contracts, and a Ps. 2.0 million increase in taxes and charges due to the increase in municipal and ENRE contributions. Our past due receivables decreased from 5.2 average days of sale in 2006 to 4.0 in 2007.

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

	Year ended December 31,
	2007				% on 2007 net sales (excluding unbilled retroactive adjustment)⁽¹⁾			2006				% on 2006 net sales
	(in millions of Pesos)
Salaries and social security taxes	Ps.	25.4	21.0	%		1.4	%	Ps.	20.5	23.3	%		1.5	%
Allowance for doubtful accounts		30.7	25.4	%		1.7	%		11.6	13.2	%		0.8	%
Outsourcing		29.4	24.4	%		1.6	%		25.1	28.6	%		1.8	%
Taxes and charges		11.1	9.2	%		0.6	%		9.1	10.3	%		0.7	%
Others		24.0	20.0	%		1.3	%		21.6	24.7	%		1.6	%
Total	Ps.	120.6	100.0	%		6.7	%	Ps.	87.9	100.0	%		6.4	%

(1)

Administrative expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, systems operation and maintenance. Administrative expenses increased 33.7% to Ps. 124.7 million in the year ended December 31, 2007 from Ps. 93.3 million in the year ended December 31, 2006, primarily as a result of a Ps. 12.3 million increase in taxes on financial transactions due to an increase in collections and payments, a Ps. 6.0 million increase in outsourcing attributable to price increases in our outsourcing services contracts, a Ps. 5.4 million increase in advertising expenses (including institutional relations, radio advertising and community service programs) and a Ps. 4.9 million increase in salaries and social security taxes primarily attributed to an increase in compensation.

Full Year 2007

Page 6 of 14

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

	Year ended December 31,
	2007				% on 2007 net sales (excluding unbilled retroactive adjustment) ⁽¹⁾			2006				% on 2006 net sales
					(in millions of Pesos)
Salaries and social security taxes	Ps.	36.5	29.3	%		2.0	%	Ps.	31.6	33.9	%		2.3	%
Computer services		11.4	9.2	%		0.6	%		8.1	8.7	%		0.6	%
Outsourcing		10.9	8.7	%		0.6	%		4.9	5.3	%		0.4	%
Tax on financial transactions		31.5	25.3	%		1.7	%		19.2	20.5	%		1.4	%
Advertising expenses		15.4	12.3	%		0.8	%		10.0	10.7	%		0.7	%
Others		19.0	15.2	%		1.0	%		19.5	20.9	%		1.4	%
Total	Ps.	124.7	100.0	%		6.9	%	Ps.	93.3	100.0	%		6.8	%

(1)

Net operating income

Our net operating income increased significantly from Ps. 35.9 million in the year ended December 31, 2006 to Ps. 429.2 million in the year ended December 31, 2007. This increase is largely due to the application of the VAD increase and the CMM adjustments described above and, to a lesser extent, the increase in energy and power capacity sold, which more than offset a Ps. 55.5 million increase in transmission and distribution expenses, a Ps. 31.4 increase in administrative expenses and a Ps. 32.7 increase in selling expenses.

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

The retroactive portion of the tariff increase, which amounts in aggregate to Ps. 218.6 million, is being invoiced in 55 consecutive monthly installments, starting in February 2007. As of December 31, 2007, Ps. 47.3 million of the retroactive tariff adjustment has been invoiced to our non-residential customers.

In addition, in October 2006, we entered into a payment plan agreement with the Province of Buenos Aires with respect to amounts owed to us by the Province of Buenos Aires under the 2006 framework agreement, which amounted to Ps. 27.1 million. The amounts due under the payment plan agreement are being invoiced in 18 installments, starting in January 2007. As of December 31, 2007, the Province of Buenos Aires has paid Ps. 18.6 million.

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

Full Year 2007

Page 7 of 14

Adjustment to present value of restructured notes

We record our financial debt on our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money. In 2006, we restructured all of our outstanding debt after receiving approval from holders of 100% of our defaulted debt. We did not record any adjustment to present value before 2006 because our financial debt was in default. The adjustment to present value of the future cash flows of the debt issued in the restructuring, using a market interest rate of 10% per annum, generated an accounting loss of Ps. 21.5 million in the year ended December 31, 2007 and an accounting gain of Ps. 57.1 million in the year ended December 31, 2006 related to the non-cash adjustment to present value of payments due on our debt instruments issued in April 2006.

Debt repurchases

In 2007 in several transactions, we repurchased U.S. $ 43.7 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and US$ 218.0 million principal amount of our outstanding Discount Notes due 2014. We also redeemed US$22.0 million principal amount of our outstanding Discount Notes due 2014. After December 13, 2007 the call price of the Discount Notes was increasing from 104.85% to 110.73%, and the coupon on such Notes was stepping up from 3.5% to 10% in 2008, 11% in 2009 and 12% in the following periods, in accordance with the terms of the indenture governing such notes. As a result of these repurchases and redemption, we had no Discount Notes outstanding at December 31, 2007.

These transactions generated a net loss of Ps. 10.2 million plus a loss of Ps. 8.6 million related to the non-cash adjustment to present value of financial debt repurchase.

Our outstanding financial debt as of December 31, 2007 was US$312,7 million, composed of US$220.0 million Fixed Rate Par Notes due 2017, US$80.0 million Fixed Rate Par Notes due 2016 and US$12.7 million Floating Rate Notes due 2019.

The following graph shows our outstanding financial debt principal payment schedule as of December 31, 2007:

Full Year 2007

Page 8 of 14

Other income (expenses), net

Other income (expenses), net, includes mainly voluntary retirements, severance payments and accrual for lawsuits. We recorded a gain of Ps. 1.0 million in the year ended December 31, 2007 compared to a loss of Ps. 22.9 in the year ended December 31, 2006, mainly comprised by accrued litigation (Ps. 16.8 million) and voluntary retirements (Ps. 7.2 million) which were partially offset by the reimbursement of certain capex incurred in connection with the power lines removal required by the urban highway company, Autopistas Urbanas S.A. (Ps. 7.2 million), which expenses were recorded in the same year end and by the recognition by Electricité de France (EDF) of a credit in respect of the technical assistance fees already paid by Edenor S.A. for the period from September 2005 to September 2007 and the recovery of expenses related to the public offering of capital stock (Ps. 14.5 million).

Income tax

We recorded an income tax charge of Ps. 125.0 million in the year ended December 31, 2007, compared to a gain of Ps. 167.2 million in the year ended December 31, 2006. The income tax gain recorded in the year ended December 31, 2006 resulted from the partial reversal of the valuation allowance of our net deferred tax assets (which was mainly due to the fact that management estimated on December 31, 2006, that our tax loss carry-forward would be partially offset against future taxable income as a result of the anticipated increase in our VAD at the time).

The income tax charge of Ps. 125.0 million recorded in the year ended December 31, 2007 is attributable to:

(i) the reversal of the deferred tax asset related to the tax loss carry-forward due to a significant increase in our taxable income which was partially offset by a tax deduction for ENRE fines and penalties in 2007; and,

(ii) an increase in the valuation allowance of our net deferred tax assets due to the fact that management estimated that a higher portion of our tax loss carry-forward would not be offset against future taxable income before expiring at the end of 2007.

Net income

We recorded net income of Ps. 122.5 million in the year ended December 31, 2007, compared to net income of Ps. 293.1 million in the year ended December 31, 2006. This decrease is mainly attributable to the recording of a Ps.125.0 million income tax charge in 2007 (compared to Ps. 167.2 million income tax gain in 2006), which more than offset a significant increase in our pre-tax net income resulting from

the application of the VAD increase charged to our non-residential customers (including all the CMM adjustments) and the recording of the full amount of the retroactive portion of the increase in VAD charged to our non-residential customers for the period from November 1, 2005 to January 31, 2007.

Operating Highlights

The following table shows our energy sales by category of customer (in GWh) and the number of clients for each category:

	Year ended
	December 31, 2007					December 31, 2006					YTD %			Dec, 2007		Dec, 2006		Clients %
	In Gwh		%			In Gwh		%			Variation			Clients		Clients		Variation
Residential		7.148		40,0	%		6.250		37,6	%		14,4	%		2.162.586		2.118.447		2,1	%
Small Commercial		1.485		8,3	%		1.433		8,6	%		3,6	%		292.617		293.162		-0,2	%
Medium Commercial		1.552		8,7	%		1.446		8,7	%		7,3	%		28.676		27.414		4,6	%
Industrial		3.628		20,3	%		3.364		20,2	%		7,9	%		5.217		5.067		3,0	%
Wheeling System		3.111		17,4	%		3.211		19,3	%		-3,1	%		569		507		12,2	%
Others
Public Lighting		643		3,6	%		650		3,9	%		-1,2	%		21		21		0,0	%
Shantytowns and Others		320		1,8	%		279		1,7	%		14,6	%		378		371		1,9	%
Total		17.886		100,0	%		16.632		100,0	%		7,5	%		2.490.064		2.444.989		1,8	%

Full Year 2007

Page 9 of 14

Capital Expenditures

During 2007, our capital expenditures amounted to Ps. 342.7 million, invested mainly in the following activities:

·	Ps. 235.3 million in new connections due to increases in our customer base and grid enhancements;

·	Ps. 70.0 million in network maintenance and improvements;

·	Ps. 37.4 million in systems, communications and legal requirements.

Recent Events

November 2007 CMM - In November 2007, we requested an additional 7,51% increase in our distribution margins under the CMM to reflect variations in our distribution cost base compared to the recognized distribution cost base as adjusted by the May 2007 CMM. Although we believe that this increase complies with the terms of the CMM, we cannot assure you that the ENRE will grant us this increase in full, or at all, or, if granted, that we will be able to bill our customers or otherwise recover this increase from other sources of payment (such as the PUREE). As of today, the ENRE has not rendered a decision with respect to our request

Additional Information

Resolution 434/07

According to Resolution No.434/2007 published by the Argentine Secretary of Energy on April 30, 2007, the new tariff structure resulting from the RTI was supposed to take effect on February 1, 2008 and to be implemented in two installments, in February and August 2008. However, the RTI has not yet been regulated and although we are currently in discussions with the Argentine government regarding the RTI, we cannot predict when the RTI will be implemented or whether it will be implemented in the manner contemplated by Resolution No.434/2007.

Income tax and tax on minimum presumed income

As of December 31, 2007, the valuation allowance of the deferred tax assets was Ps. 34.5 million, which represented the portion of the tax loss carry forwards generated in 2002 that was not applied and will expire. The table below summarizes our tax loss carry forwards as of December 31, 2007, in thousands of pesos:

Full Year 2007

Page 10 of 14

	Carry forward Amount		Effect on Net Income of Carry forward Amount		Year Carry forward Expires
Tax loss carry forward in 2002		98.519		34.482		2007
Tax loss carry forward in 2005		23.761		8.316		2010
Total tax loss carry forward as of December 31, 2007		122.280		42.798

(1)	Assumes 35% tax rate and the availability of taxable income in future periods.

Additionally, the Company determines the tax on minimum presumed income by applying the current rate of 1% on the Company’s taxable assets at of the end of each year. The tax on minimum presumed income and the income tax complement each other. The Company’s tax obligation for a given year will be equal to the greater of these two taxes. However, should the tax on minimum presumed income exceed income tax in any given fiscal year, such excess will be eligible for credit against a partial payment of any excess of the income tax over the tax on minimum presumed income that may arise in any of the ten subsequent fiscal years.

For the year ended December 31, 2007 the Company has determined a minimum presumed income tax charge of Ps.15.9 million.

The tax credit on minimum presumed income as of December 31, 2007 was Ps.101.9 million.

Full Year 2007

Page 11 of 14

About Edenor

Empresa Distribuidora y Comercializadora Norte S.A. (Edenor) is the largest electricity distribution company in Argentina in terms of number of customers and electricity sold (both in GWh and Pesos). Through a concession, Edenor distributes electricity exclusively to the northwestern zone of the greater Buenos Aires metropolitan area and the northern part of the city of Buenos Aires, which has a population of approximately 7 million people and an area of 4,637 sq. km. In 2007, Edenor sold 17,886 GWh of energy and purchased 20,233 GWh of energy, with net sales of approximately Ps. 2.0 billion and net income of Ps. 122.5 million.

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management’s current view and estimates of future economic circumstances, industry conditions, Company performance and financial results. The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the Company are intended to identify forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties, including those identified in the documents filed by the Company with the U.S. Securities and Exchange Commission. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

Conference Call Information

There will be a conference call to discuss the Edenor’s quarterly results on Thursday, February 28, 2008, at 12:00 a.m. Buenos Aires time / 9:00 a.m. New York time. For those interested in participating, please dial (888)335-5539 in the United States or, if outside the United States, (973) 582-2857. Participants should use conference ID# 35718268, and dial in five minutes before the call is set to begin. There will also be a live audio webcast of the conference at www.edenor.com in the Investor Relations section.

There will be a replay of the conference call from 12:00pm (Noon) Eastern Time on February 28, 2008 to 12:00am (Midnight) on March 6, 2008. To access the replay, please dial (800) 642-1687 or (706) 645-9291, and follow the instructions. The Conference ID# for the replay is 35718268.

For more information, please access www.edenor.com

Full Year 2007

Page 12 of 14

Income Statement

(for the year ended December, 2007 and 2006)

in thousands of U.S. dollars and Argentine Pesos

	For the year ended December 31,
	2007						2006
Net sales	USD	629,383		Ps.	1,981,928		Ps.	1,378,326
Electric power purchases		(282,593	)		(889,885	)		(799,073	)
Gross margin		346,790			1,092,043			579,253
Transmission and distribution expenses		(132,599	)		(417,553	)		(362,118	)
Administrative expenses		(39,586	)		(124,656	)		(93,299	)
Selling expenses		(38,308	)		(120,633	)		(87,930	)
Net operating (loss) income		136,298			429,201			35,906
Financial income (expense) and holding gains (losses):
Generated by assets:
Exchange difference		(272	)		(855	)		2,569
Interest		4,264			13,426			13,885
Exposure to inflation and holding results		43			135			89
Generated by liabilities:
Financial expenses		(6.682	)		(21.042	)		(25,404	)
Exchange difference		(9,507	)		(29.938	)		(13,318	)
Interest expenses		(23,661	)		(74,508	)		(101,280	)
Gain on extinguishment of former debt		0			0			179,243
Adjustment to present value of the new notes		(6,826	)		(21,495	)		57,138
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and from the Payment Plan Agreement with the Province of Bs.As.		(9,406	)		(29,618	)		0
Loss from the purchase and redemption of notes		(3,248	)		(10,228	)		0
Adjustment to present value of purchased and redeemed notes		(2,741	)		(8,632	)		0
Other expenses, net		316			996			(22,944	)
Income before taxes		78,578			247,442			125,884
Income tax		(39,690	)		(124,984	)		167,182
Net income		38,888			122,458			293,066

*Financial tables have been converted into U.S. dollars at a rate of Ps. 3.149 per dollar, the buying rate as of December 31, 2007, solely for the convenience of the reader.

Full Year 2007

Page 13 of 14

Cash Flow Statement

(for the year ended December 31, 2007 and 2006)

in thousands of U.S. dollars and Argentine Pesos

	For the year ended December 31,
	2007						2006
Net income for the year	USD	38,888		Ps.	122,458		Ps.	293,066
Adjustment to reconcile net income to net cash flows provided by operating activities:
Depreciation of property, plant and equipment		55,369			174,357			178,980
Retirement of property, plant and equipment		351			1,105			650
Gain on extinguishment of former debt		0			0			(179,243	)
Adjustment to present value of notes		6,826			21,495			(57,138	)
Gain from investments in affiliated parties		(4	)		(12	)		(10	)
Adjustment to present value of the repurchased and redeemed notes		2,741			8,632			0
Loss from the repurchase and redemption of notes		3,248			10,228			0
Exchange differences, interest and penalties on loans		22,084			69,541			49,061
Supplies recovered from third parties		0			0			(5,782	)
Income tax		39,690			124,984			(167,182	)
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Bs.As		9,406			29,618			0
Changes in operating assets and liabilities:
Increase of trade receivables due to the unbilled portion of the retroactive tariff increase		(54,395	)		(171,281	)		0
Net increase in trade receivables		(11,700	)		(36,853	)		(39,009	)
Net increase in other receivables		(2,663	)		(8,385	)		(23,088	)
(Increase) decrease in supplies		(5,836	)		(18,377	)		1,433
Increase in trade accounts payable		16,744			52,728			67,065
Increase in salaries and social security taxes		4,085			12,865			25,180
Increase (decrease) in taxes		7,129			22,449			(5,695	)
Increase in other liabilities		5,636			17,748			91,667
Net increase in accrued litigation		5,142			16,191			9,537
Financial interest paid (net of interest capitalized)		(8,093	)		(25,484	)		(26,668	)
Financial interest collected		1,008			3,175			2,175
Net cash flow provided by operating activities		135,656			427,182			214,999
Cash Flow from investing activities:
Addition to property, plants and equipment		(106,971	)		(336,851	)		(179,671	)
Net cash flow used in investing activities		(106,971	)		(336,851	)		(179,671	)
Cash Flow from financing activities:
Decrease in loans		(64,649	)		(203,579	)		(310,794	)
Capital Increase		57,724			181,773			0
Net cash flows provided by (used in) financing activities		(6,925	)		(21,806	)		(310,794	)

Cash variations:
Cash at beginning of year		10,376			32,673			308,139
Cash at end of year		32,137			101,198			32,673
Net increase (decrease) in cash		21,761			68,525			(275,466	)

*Financial tables have been converted into U.S. dollars at a rate of Ps. 3.149 per dollar, the buying rate as of December 31, 2007, solely for the convenience of the reader.

Full Year 2007

Page 14 of 14

Balance Sheet

(for the year ended December 31, 2007 and the year ended December 31, 2006)

in thousands of U.S. dollars and Argentine Pesos

	For the year ended December 31, 2007 and 2006
	2007				2006
Current Assets:
Cash and banks	USD	1,098	Ps.	3,459	Ps.	481
Investments		31,038		97,739		32,192
Trade receivables		109,869		345,979		270,938
Other receivables		8,253		25,990		30,221
Supplies		7,359		23,174		13,635
Total current assets		157,619		496,341		347,467
Non-Current Assets:
Trade receivables		31,851		100,300		0
Other receivables		45,763		144,107		256,475
Investments		124		390		378
Supplies		4,369		13,759		4,921
Property, plant and equipment		982,124		3,092,709		2,925,422
Total non-current assets		1,064,232		3,351,265		3,187,196
Total assets		1,221,850		3,847,606		3,534,663
Current Liabilities:
Trade account payable		100,398		316,152		267,640
Loans		9,301		29,290		2,029
Salaries and social security taxes		19,023		59,904		51,446
Taxes		26,879		84,641		62,192
Other liabilities		3,084		9,710		26,380
Accrued Litigation		12,661		39,868		25,914
Total current liabilities		171,345		539,565		435,601
Non-Current Liabilities:
Trade account payable		11,263		35,466		31,250
Loans		301,385		949,062		1,095,490
Salaries and social security taxes		7,842		24,694		20,287
Other liabilities		89,360		281,395		241,079
Accrued Litigation		13,605		42,843		40,606
Total non-current liabilities		423,455		1,333,460		1,428,712
Total liabilities		594,800		1,873,025		1,864,313
Shareholders’ equity		627,050		1,974,581		1,670,350
Total liabilities and shareholders’ equity		1,221,850		3,847,606		3,534,663

*Financial tables have been converted into U.S. dollars at a rate of Ps. 3.149 per dollar, the buying rate as of December 31, 2007, solely for the convenience of the reader.

EDENOR S.A.

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

TOGETHER WITH THE INDEPENDENT AUDITOR’S REPORT

Shareholders and public in general who are interested in taking knowledge about the report related to the Financial Statements as of December 31, 2007, which will be published in the electronic data base of the Securities and Exchange Commission (SEC), please visit Edenor website at www.edenor.com.

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

BOARD OF DIRECTORS

CHAIRMAN:	Alejandro Macfarlane

VICE CHAIRMAN:	Marcos Marcelo Mindlin

DIRECTORS:	Damián Miguel Mindlin
	Gustavo Mariani
	Luis Pablo Rogelio Pagano
	Maximiliano Alejandro Fernandez
	Alfredo Mac Laughlin
	Ricardo Torres
	Diego Martín Salaverri
	Edgardo Alberto Volosín
	Ignacio Raúl Chojo Ortiz
	Rafael Mancuso

ALTERNATE DIRECTORS:	Jorge Grecco
	Javier Douer
	Pablo Díaz
	Ariel Schapira
	Brian Henderson
	Ricardo Sericano
	Maia Chmielewski
	Gabriel Cohen
	Eduardo Maggi
	Alejandro Mindlin
	Carlos Florencio Correa Urquiza

SUPERVISORY COMMITTEE

MEMBERS:	Javier Errecondo
	José Daniel Abelovich
	Marcelo Javier Ruiz

ALTERNATE MEMBERS:	Santiago Dellatorre
	Marcelo Héctor Fuxman
	Roberto Daniel Murmis

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

Legal address: 1025 Azopardo Street - Autonomous City of Buenos Aires

FISCAL YEAR No. 16 BEGINNING ON JANUARY 1, 2007

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007

Main business: Distribution of electricity and commercial services in the area and under the terms of the concession agreement by which this public service is regulated (Note 1).

Date of registration with the Public Registry of Commerce:

of the Articles of Incorporation: August 3, 1992

of the last amendment to the By-laws: May 28, 2007

Term of the Corporation: Through August 3, 2087

Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations): 1,559,940

CAPITAL STRUCTURE

AS OF DECEMBER 31, 2007

(Note 16.a)

(amounts stated in pesos)

Class of shares	Subscribed and paid-in

Common, book-entry shares, face value 1 and 1 vote per share

Class A		462,292,111
Class B		442,210,385
Class C		1,952,604
		906,455,100

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006

(stated in thousands of pesos)
	2007		2006				2007		2006
CURRENT ASSETS					CURRENT LIABILITIES
Cash and banks		3,459		481		Trade accounts payable (Note 6)		316,152		267,640
Investments (Exhibit D)		97,739		32,192		Loans (Note 7)		29,290		2,029
Trade receivables (Note 4)		345,979		270,938		Salaries and social security taxes (Note 8)		59,904		51,446
Other receivables (Note 5)		25,990		30,221		Taxes (Note 9)		84,641		62,192
Supplies		23,174		13,635		Other liabilities (Note 10)		9,710		26,380
Total Current Assets		496,341		347,467		Accrued litigation (Exhibit E)		39,868		25,914
						Total Current Liabilities		539,565		435,601

					NON-CURRENT LIABILITIES
						Trade accounts payable (Note 6)		35,466		31,250
						Loans (Note 7)		949,062		1,095,490
NON-CURRENT ASSETS						Salaries and social security taxes (Note 8)		24,694		20,287
Trade receivables (Note 4)		100,300		0		Other liabilities (Note 10)		281,395		241,079
Other receivables (Note 5)		144,107		256,475		Accrued litigation (Exhibit E)		42,843		40,606
Investments in other companies (Exhibit C)		390		378		Total Non-Current Liabilities		1,333,460		1,428,712
Supplies		13,759		4,921		Total Liabilities		1,873,025		1,864,313
Property, plant and equipment (Exhibit A)		3,092,709		2,925,422
Total Non-Current Assets		3,351,265		3,187,196		SHAREHOLDERS' EQUITY (as per related statements)		1,974,581		1,670,350
Total Assets		3,847,606		3,534,663		Total Liabilities and Shareholders' Equity		3,847,606		3,534,663

The accompanying notes 1 through 25 and supplemental exhibits A, C, D, E, G and H are an integral part of these financial statements

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(stated in thousands of pesos)

	2007			2006
Net sales (Note 11)		1,981,928			1,378,326
Electric power purchases		(889,885	)		(799,073	)

Gross margin		1,092,043			579,253

Transmission and distribution expenses (Exhibit H)		(417,553	)		(362,118	)
Selling expenses (Exhibit H)		(120,633	)		(87,930	)
Administrative expenses (Exhibit H)		(124,656	)		(93,299	)

Net operating income		429,201			35,906

Financial income (expense) and holding gains (losses)
Generated by assets
Exchange difference		(855	)		2,569
Interest		13,426			13,885
Holding results		135			89
Generated by liabilities
Financial expenses (*)		(21,042	)		(25,404	)
Exchange difference		(29,938	)		(13,318	)
Interest ^(**)p		(74,508	)		(101,280	)
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity
rate schedule and from the Payment Plan Agreement with the Province of Bs.As. (Notes 13 and 17.b)		(29,618	)		0
Gain on extinguishment of former debt (Note 3.k)		0			179,243
Adjustment to present value of notes (Note 3.k)		(21,495	)		57,138
Loss from the purchase and redemption of notes (Notes 3.k and 14)		(10,228	)		0
Adjustment to present value of purchased and redeemed notes		(8,632	)		0

Other income (expense), net (Note 12)		996			(22,944	)

Income before taxes		247,442			125,884
Income tax (Note 3.n)		(124,984	)		167,182

Net income for the year		122,458			293,066

Earnings per common share		0.135			0.352

(*) The breakdown of financial expenses is as follows:

Fees related to the Corporate Notes Issuance Program (Note 23)	(7,403	)	0
Expense related to the public offering of capital stock (Notes 1 and 15)	0		(10,604	)
Financial assistance Electricidad Argentina S.A. (Note 15)	(6,219	)	(8,133	)
Withholdings income tax and others financial expenses	(7,420	)	(6,667	)
Total	(21,042	)	(25,404	)

(**) Includes 7,873 as of December 31, 2006, with Related Parties (Note 15). Also includes 18,084 and 46,972 as of December 31, 2007 and 2006 respectively, for adjustment of penalties (Note 17.b)

The accompanying notes 1 through 25 and supplemental exhibits A, C, D, E, G and H are an integral part of these financial statements

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(stated in thousands of pesos)

							2007									2006
			Shareholders' contributions						Retained earnings
									Appropriated		Unappropriated
	Nominal		Adjustment to		Additional		Total		Retained Earnings		Retained Earnings
	Value		Capital		Paid-in Capital				Legal		Accumulated			Total		Total
	(Note 16.a)								Reserve		Deficit
Balance at beginning of year		831,610		996,489		-		1,828,099		53,320		(211,069	)		1,670,350		1,377,284

Capital increase resolved by the Board of Directors' meeting held on June 14, 2007, as per the power granted by the Shareholders' Meeting held on June 7, 2006 (Note 1 and 16).		74,845		-		106,928		181,773		-		-			181,773		-

Net income for the year		-		-		-		-		-		122,458			122,458		293,066

Balance at end of year		906,455		996,489		106,928		2,009,872		53,320		(88,611	)		1,974,581		1,670,350

The accompanying notes 1 through 25 and supplemental exhibits A, C, D, E, G and H are an integral part of these financial statements

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(stated in thousands of pesos)

	2007			2006
Changes in cash and cash equivalents
Cash and cash equivalents at beginning of year (Note 18.a)		32,673			308,139
Cash and cash equivalents at end of year (Note 18.a)		101,198			32,673
Net increase (decrease) in cash and cash equivalents		68,525			(275,466	)

Cash flows from operating activities
Net income for the year		122,458			293,066

Adjustments to reconcile net income to net cash flows provided by operating activities
Depreciation of property, plant and equipment (Exhibit A)		174,357			178,980
Retirement of property, plant and equipment (Exhibit A)		1,105			650
Gain from investments in affiliated parties		(12	)		(10	)
Gain on extinguishment of former debt (Note 3.k)		0			(179,243	)
Adjustment to present value of notes (Note 3.k)		21,495			(57,138	)
Loss from the purchase and redemption of notes (Notes 3.k and 14)		10,228			0
Adjustment to present value of purchased and redeemed notes		8,632			0
Exchange difference, interest and penalties on loans		69,541			49,061
Supplies recovered from third parties		0			(5,782	)
Income tax (Note 3.n)		124,984			(167,182	)
Increase in trade receivables due to the unbilled portion of the retroactive tariff increase		(171,281	)
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Bs.As. (Notes 13 and 17.b)		29,618			0

Changes in assets and liabilities:

Increase in trade receivables (net of the unbilled portion of the retroactive tariff increase)		(36,853	)		(39,009	)
Net increase in other receivables		(8,385	)		(23,088	)
(Increase) Decrease in supplies		(18,377	)		1,433
Increase in trade accounts payable		52,728			67,065
Increase in salaries and social security taxes		12,865			25,180
Increase (Decrease) in taxes		22,449			(5,695	)
Increase in other liabilities		17,748			91,667
Net increase in accrued litigation		16,191			9,537
Financial interest paid (net of interest capitalized) (Note 18.b)		(25,484	)		(26,668	)
Financial interest collected (Note 18.b)		3,175			2,175

Net cash flows provided by operating activities		427,182			214,999

Cash flows from investing activities
Additions of property, plant and equipment		(336,851	)		(179,671	)
Net cash flows used in investing activities		(336,851	)		(179,671	)

Cash flows from financing activities
Decrease in loans		(203,579	)		(310,794	)
Capital increase (Note 1 and 16.a)		181,773			0
Net cash flows used in financing activities		(21,806	)		(310,794	)
Net Increase (Decrease) in Cash and Cash Equivalents		68,525			(275,466	)

The accompanying notes 1 through 25 and supplemental exhibits A, C, D, E, G and H are an integral part of these financial statements

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.

(EDENOR S.A.)

NOTES TO THE FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2007 AND 2006

(amounts stated in thousands of Argentine pesos, except as otherwise indicated)

1. ORGANIZATION AND START UP OF THE COMPANY

In compliance with Law N° 24,065 and in agreement with the reform process of the Argentine Federal Government and the privatization program of Argentine state-owned companies, the entire business of generation, transportation, distribution and sale of electric power carried on by Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA) was declared to be subject to privatization; the operation was divided into seven business units: three for the distribution and four for the generation of electric power.

On May 14, 1992, the Ministry of Economy and Public Works and Utilities, by Resolution N° 591/92, approved the Bidding Terms and Conditions (Bid Package) of the International Public Bidding for the sale of the Class "A" shares, representing 51% of the capital stock of Empresa Distribuidora Norte S.A. (hereinafter, “EDENOR” or “the Company”) and Empresa Distribuidora Sur S.A. (EDESUR S.A.), two of the three electric power distribution companies into which SEGBA had been divided.

EDF International (EDF S.A.), Empresa Nacional Hidroeléctrica del Ribagorzana, S.A. (ENHER), Astra Compañía Argentina de Petróleo S.A. (ASTRA), Socièté D'Amenagement Urbain et Rural (SAUR), Empresa Nacional de Electricidad S.A. (ENDESA) and J.P. Morgan International Capital Corporation formed Electricidad Argentina S.A. (EASA) to bid for the Class "A" shares of EDENOR, a company organized on July 21, 1992 by Decree N° 714/92 of the Federal Government.

EASA was awarded the Class “A” shares of EDENOR based on a bid of US$ 427,973,000 (equivalent to the same amount in Argentine pesos as of such date). The corresponding contract for the transfer of 51% of EDENOR’s capital stock was executed on August 6, 1992. The award as well as the transfer contract were approved on August 24, 1992 by Decree N° 1,507/92 of the Federal Government. Finally, on September 1, 1992, EASA took over the operations of EDENOR.

In accordance with the provisions of Decree N° 282/93 of the Federal Government, dated February 22, 1993, the recorded values of assets, liabilities and net capital arising from the transfer of SEGBA, were determined on the basis of the price actually paid for 51% of EDENOR’s capital stock (represented by the totality of Class “A” shares). This price was also used as the basis to determine the value of the remaining 49% of the capital stock. In order to determine the value of the assets transferred from SEGBA, the amount of liabilities assumed was added to the value of the total capital stock of 831,610, determined as indicated above. Management estimates that the amounts of the assets transferred from SEGBA represented their fair values as of the date of the privatization.

The corporate purpose of EDENOR is to engage in the distribution and sale of electricity within the concession area. Furthermore, the Company may subscribe or acquire shares of other electricity distribution companies, subject to the approval of the regulatory agency, lease the network to provide electricity transmission or other voice, data and image transmission services, and render advisory, training, maintenance, consulting, and management services and know-how related to the distribution of electricity both in Argentina and abroad. These activities may be conducted directly by EDENOR or through subsidiaries or related companies. In addition, the Company may act as trustee of trusts created under Argentine laws, including extending secured credit facilities to service vendors and suppliers acting in the distribution and sale of electricity, who have been granted guarantees by reciprocal guarantee companies owned by the Company.

On June 12, 1996, the Extraordinary Shareholders’ Meeting approved the change of the Company’s name to Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) so that the new name would reflect the description of the Company’s core business. The amendment to the Company’s by-laws as a consequence of the change of name was approved by the National Regulatory Authority for the Distribution of Electricity (ENRE - Ente Nacional Regulador de la Electricidad), through Resolution N° 417/97 and registered with the Public Registry of Commerce on August 7, 1997.

On May 4 and June 29, 2001, EDF International S.A. (a wholly-owned subsidiary of EDF) acquired all the shares of EASA and EDENOR held by ENDESA Internacional, YPF S.A. (surviving company of ASTRA) and SAUR. Therefore, the direct and indirect interest of EDF International S.A. (EDFI) in EDENOR increased to 90%.

On June 29, 2005, the Board of Directors of EDF approved a draft agreement with Dolphin Energía S.A. (Dolphin) pursuant to which it would assign 65% of EDENOR’s capital stock (held by EDFI) through the transfer of all Class “A” common shares held by EASA and 14% of the Class “B” common shares. In this manner, EDFI would retain a 25% interest in EDENOR. The remaining 10% would be kept by the employees according to the Employee Stock Ownership Program (ESOP). The closing of the agreement took place upon its approval by the corresponding French and Argentine governmental authorities.

On September 15, 2005, by virtue of the stock purchase-sale agreement entered into by EDFI and Dolphin and Dolphin’s subsequent partial assignments of its interest in EASA and EDENOR to IEASA S.A. (IEASA) and New Equity Ventures LLC (NEV), the formal take over by Dolphin took place, together with the change in the Company’s indirect control through the acquisition of 100% of the capital stock of EASA, which is the controlling company of EDENOR, by Dolphin (90%) and IEASA (10%) (See last paragraph of this Note). Furthermore, as a result of the aforementioned agreement, the ownership of the Company’s Class “B” common shares (representing 39% of its capital stock) changed with 14% of the Company’s capital stock now being held by NEV and the remaining 25% being kept by EDFI.

On April 28, 2006, the Company’s Board of Directors decided to initiate the public offering of part of the Company’s capital stock in local and international markets, including, but not limited to the trading of its shares in the Buenos Aires Stock Exchange (BCBA) and the New York Stock Exchange (NYSE), United States of America.

On June 7, 2006, the Ordinary and Extraordinary Shareholders’ Meeting resolved to increase capital stock up to ten percent (10%), request authorization for the public offering from both the National Securities Commission (CNV) and the Securities and Exchange Commission (SEC) of the United States of America, as well as authorization to trade from both the Buenos Aires Stock Exchange and the New York Stock Exchange, entrusting the Board of Directors with the task of taking the necessary steps to implement such resolutions.

Additionally, it was decided that an American Depositary Receipts (ADRs) program, represented by American Depositary Shares (ADSs) would be created and that it would be the responsibility of the Board of Directors to determine the terms and conditions and the scope of the program.

On June 14, 2007, the Board of Directors held a meeting in which a final report on Edenor’s capital increase and public offering process, which ended on May 7, 2007 at 3 p.m., date on which the preferential subscription period established for the Company’s shareholders expired, was presented. As a result of the above-mentioned process, the Company’s Class B shares and American Depositary Shares (“ADSs”), representing Class B shares, are currently traded at the Buenos Aires Stock Exchange and the New York Stock Exchange, respectively. The final capital increase, as resolved by the above-mentioned Board of Directors’ meeting, amounted to nine percent (9%) which is represented by 74,844,900 (seventy-four million eight hundred forty-four thousand nine hundred) new shares subscribed at the international primary offering, fully placed as 3,742,245 ADS. It was also informed that 207,902,540 Class B shares were placed at the international secondary offering as of such date.

The aforementioned issuance was carried out at a price of 2.62 per share. Taking into account that the nominal value of each share is 1.00, an additional paid-in capital, amounting to 121,249, has been recorded.

For the year ended December 31, 2007 and in accordance with the provisions of section Nº 202 of the Argentine Business Organizations Law Nº 19,550 , expenses incurred by the Company in relation to this process amounted to 14,321 have been offset against the aforementioned additional paid-in capital,. Therefore, the balance of the additional paid-in capital, net of expenses, as of that date amounts to 106,928.

The Class “B” shareholders NEV and EDFI sold at the international secondary offering 49,401,480 and 179,049,520 Class “B” shares, respectively. Additionally, on May 1, 2007, the shareholders NEV and EDFI sold 57,706,040 Class “B” shares at the international secondary offering when the international underwriters fully exercised the over-allotment option (green shoe) contemplated in the prospectus for the public offering and section 2 of the underwriting agreement.

With regard to the Company’s Class “C” shares held by the Employee Stock Ownership Program (ESOP), on April 29, 2007 the ESOP was partially cancelled in advance in conformity with a procedure set forth by the Federal Government, and on April 30, 2007, an amount of 81,208,416 shares, which had been converted into Class “B” shares on April 27, 2007, was sold at the domestic secondary offering. As of the date of issuance of these financial statements, an amount of 1,952,604 Class “C” shares, representing 0.22% of the Company’s capital stock, remains outstanding.

Consequently, as of December 31, 2007, the Company’s capital stock, represented by 906,455,100 shares is held as follows:

a)	51% of the Company’s capital stock, represented by 462,292,111 Class “A” shares, which have been pledged in favor of the Argentine Government as evidenced by the certificate issued by Caja de Valores, is held by EASA,

b)	48.78% of the Company’s capital stock, represented by 442,210,356 Class “B” shares is traded in the market,

c)	0.22% of the Company’s capital stock, represented by 1,952,604 Class “C” shares is held by Banco Nación as trustee of the Employee Stock Ownership Program, and

d)	19 and 10 Class “B” shares are held by NEV and EDFI, respectively.

Furthermore, Dolphin and IEASA contributed 38,170,909 Class “B” shares of the Company, that had been transferred to them by NEV, to EASA, which is the controlling company. On April 27, 2007, the contributed shares were converted into Class “A” shares to ensure that EASA continues to hold 51% of all the Class “A” shares outstanding. Notwithstanding the fact that the abovementioned capital increase is in the process of registration, on April 30, 2007, the Company requested that Caja de Valores S.A. register the new Class “A” shares and extend thereto the regulatory pledge in favor of the Argentine Government, in compliance with the Bidding Terms and Conditions of the International Public Bidding, the provisions of the Concession Agreement of Edenor S.A., and the terms of the related pledge agreements signed on August 31, 1992 and July 14, 1994 which, in accordance with their second clause, EASA was required to extend the first-priority preferred security interest to any Class “A” Shares of the Company that EASA would acquire on a date subsequent to those of said Agreements.

Moreover, section 19 of the Adjustment Agreement entered into by the Company and the Argentine Government, which was ratified by Decree Nº 1957/2006, stipulates that the pledge on the Company’s shares in favor of the Argentine Government granted as security for the performance of the Concession Agreement will be extended to include the performance of the obligations assumed by the Company in such Adjustment Agreement.

The Company was notified that on June 22, 2007, the shareholders of Dolphin Energía S.A. and IEASA S.A. (that own 100% of the stock of Electricidad Argentina S.A., the controlling company of Edenor S.A.) and Pampa Holding S.A. entered into a memorandum of understanding whereby it was agreed that the totality of the capital stock of Dolphin Energía S.A. and IEASA S.A. would be exchanged for common shares of Pampa Holding S.A.

Furthermore, the Company received a notice from EASA whereby it was informed that the exchange for shares described in the preceding paragraph had formally been agreed-upon on September 28, 2007 under a Stock Subscription Agreement entered into among Pampa Holding S.A., Marcos Marcelo Mindlin, Damián Miguel Mindlin, Gustavo Mariani, Latin American Energy LLC, New Equity Ventures LLC and Deutsche Bank AG, London Branch. Moreover, on such date, Pampa Holding S.A. acquired 100% of the capital stock of Dolphin Energía S.A. and IEASA S.A, which together own 100% of the capital stock of EASA.

2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

Financial statements presentation

These financial statements have been prepared in accordance with accounting principles generally accepted in the Autonomous City of Buenos Aires, Argentina (hereinafter “Argentine GAAP”) and the criteria established by the National Securities Commission (CNV), taking into account that which is mentioned in the following paragraphs.

As from January 1, 2003 and as required by General Resolution N° 434/03 of the CNV, the Company reports the results of its operations, determines the values of its assets and liabilities and determines its profit and loss in conformity with the provisions of Technical Resolutions (TR) N° 8, 9 and 16 through 18 (amended text June 2003). As from January 1, 2004, the Company has applied the provisions of TR N° 21 of the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (CPCECABA), with specific few exceptions and clarifications introduced by General Resolution N° 459/04 of the CNV.

The CNV through its General Resolutions N° 485/05 and 487/06 decided to implement certain changes in the Argentine GAAP effective for fiscal years or interim periods beginning as from January 1, 2006, by requiring the application of TR N° 6, 8, 9, 11, 14, 16, 17, 18, 21, and 22 and Interpretations 1, 2, 3, and 4, of the FACPCE with the amendments introduced by such Federation through April 1, 2005 (Resolution N° 312/05) and adopted by the CPCECABA (Resolution CD N° 93/05) with certain amendments and clarifications.

Among the aforementioned changes the following can be noted: i) the comparison between the original values of certain assets and their recoverable values, using discounted cash-flows; ii) the consideration of the difference between the accounting and tax values resulting from the adjustment for inflation included in non-monetary assets, as a temporary difference, allowing the Company to either recognize a deferred tax liability or to disclose the effect of such accounting change in a note to the financial statements and (iii) the capitalization of interest cost on certain assets (only those assets that require an extended period of time to be produced or acquired would qualify) during the term of their construction and until they are in condition to be used.

The Company has completed its analysis of the impact of the application of the change mentioned in the preceding paragraph under (i) on its property, plant and equipment and has determined that said change does not have a significant impact on the Company’s financial position or net income for the year ended December 31, 2007 and 2006, given that the fair value - defined as the discounted value of net cash flows arising from both the use of the assets and their final disposal-, exceeds their recorded value (Note 3.h).

With regard to item (ii), the Company has decided to disclose said effect in a note to the financial statements. Had the Company chosen to recognize the effect of the adjustment for inflation of its property, plant and equipment as a temporary difference, a deferred tax liability of approximately 438,877 and 469,668 would have been recorded, a debit to prior year adjustment (unappropriated retained earnings - accumulated deficit) amounting to 470,177 and 503,075; and a credit to net income for the year, under the income tax account, amounting to 31,300 and 33,407, in December 31, 2007 and 2006 respectively, would have been recorded.

Additionally, had the Company elected to recognize a deferred tax liability, and excluding the effects of the allowance for impairment of value of deferred tax assets, in subsequent years, the Company would have recorded an income tax expense that would have been lower than the income tax expense that will be recorded as a result of maintaining the criterion applied up to the moment, whose distribution in subsequent years has been estimated as follows:

Year	Effect on deferred tax result Nominal value
2008		27,541
2009		26,396
2010		25,011
2011		24,084
2012 - 2016		106,866
2017 - 2021		88,058
Remainder		140,921
Total		438,877

Consideration of the effects of inflation

The financial statements fully reflect the effects of the changes in the purchasing power of the currency through August 31, 1995. As from such date, and in accordance with Argentine GAAP and the requirements of control authorities, the restatement of the financial statements to reflect the effects of inflation was discontinued until December 31, 2001. As from January 1, 2002, and in accordance with Argentine GAAP, it was established that inflation adjustment be reinstated and that the accounting basis restated as a result of the change in the purchasing power of the currency through August 31, 1995, as well as transactions with original date as from such date through December 31, 2001, be considered as restated as of the latter date. The financial statements have been restated to reflect the effects of inflation based on the variations of the Domestic Wholesale Price Index.

On March 25, 2003, the Federal Government issued Decree N° 664 establishing that financial statements for fiscal years ending as from such date had to be prepared in nominal currency. Consequently, and in accordance with Resolution Nº 441 of the CNV, the Company discontinued the restatement of its financial statements as from March 1, 2003. This criterion does not agree with Argentine GAAP which establishes that financial statements were to be restated through September 30, 2003. The Company has estimated that the effect of not having restated the financial statements through September 30, 2003 is not significant on the financial statements.

Changes in Argentine GAAP

On May 24, 2006 the Board of the CPCECABA approved TR N° 23 "Argentine GAAP - Employee benefits upon termination of labor relationship and other long-term benefits”. This TR is in effect for the Company’s financial statements for fiscal years or interim periods beginning as from January 1, 2007. The application of said resolution does not have a significant valuation impact on the Company’s financial statements. The amounts corresponding to the personnel benefits plan (pension plan) implemented by the Company are as follow (Notes 3.o and 8):

The periodical components of the personnel benefits plan for the years ended December 31, 2007 and 2006, that are disclosed in Other expense, net under Voluntary retirements - terminations (Note 12), are as follow:

	2007		2006
Cost		1,125		813
Interest		2,874		1,816
Amortization of recognized net actuarial loss		760		208
		4,759		2,837

The detail of the variations in the Company’s payment obligations under the personnel benefits plan as of December 31, 2007 and 2006, is as follows:

	2007			2006
Payment commitment under the personnel benefits plan at the beginning of the year		15,352			9,703
Cost		1,125			813
Interest		2,874			1,816
Actuarial loss		761			3,703
Benefits paid to participating employees		(1,029	)		(683	)
Payment commitment under the personnel benefits plan at the end of the year		19,083			15,352


Payment commitment under the personnel benefits plan at the end of the year		19,083			15,352
Unrecognized net actuarial loss		(5,716	)		(5,714	)
Total personnel benefits plan (pension plan) (Note 8)		13,367			9,638

Future payment commitment required under the personnel benefits plan are as follow:

Years of retirement
2008			2,480
2009			2,553
2010			3,054
2011			3,389
2012			4,070
2013-2017			14,787

Payment commitment under the personnel benefits plan projected for the 2008 fiscal year are as follow:

	2008
Cost	1,306
Interest	3,977
Amortization of recognized net actuarial loss	761
	6,044

The following information shows the effect of increasing/decreasing by 1% the discount rate used for the year’s projections:

Payment commitment under the personnel benefits plan at the end of 2007	19,083
Effect of 1% increase	18,050
Effect of 1% decrease	20,261

Actuarial assumptions used were the following:

	2007	2006
Discount rate	21%	19%
Salary increase	20%	15%
Inflation	14%	12%

The actuarial method used by the Company is the “Projected Unit Credit Method”.

As of December 31, 2007 and 2006, the Company does not have any assets related to the personnel benefit plan (pension plan).

3. VALUATION CRITERIA

The main valuation criteria used in the preparation of the financial statements are as follow:

a) Cash and banks:

-	In local currency: at nominal value.

-	In foreign currency: at the exchange rate in effect as of the end of each year. The corresponding detail is disclosed in Exhibit G.

b) Current investments:

Current investments include:

-	Time deposits, which include the portion of interest income accrued through the end of each year; those denominated in foreign currency have been valued at the rate of exchange in effect as of the end of each year,

-	Money market funds, which have been valued at the prevailing market price as of the end of each year, and

-	Notes receivable (Euro Commercial Paper), which have been valued at the prevailing market price as of the end of the year translated into pesos at the rate of exchange in effect as of year-end.

c) Trade receivables:

-	Services rendered and billed but not collected, and services rendered but unbilled as of the end of each year, at nominal value, except for the ones indicated in the following paragraph;

Services rendered but unbilled as of the end of the year ended December 31, 2007, arising from the retroactive increase deriving from the application of the new electricity rate schedule (Note 17.b) have been valued on the basis of the best estimate of the amount to be collected, discounted at a 10.5% annual nominal rate, which, in accordance with the Company’s criterion, reasonably reflects market assessments of the time value of money and risks specific to the receivable. A similar procedure was followed with the amount included in the payment plan agreement signed with the Province of Buenos Aires under the Framework Agreement (Note 13).

The amounts thus determined:

1.	are net of an allowance for doubtful accounts, as described in more detail in paragraph i) of this Note.

2.	consider the effects of that which is stated in Note 13.

d) Other receivables and liabilities (excluding loans):

-	In local currency: at nominal value.

-	In foreign currency: at the exchange rate in effect as of the end of each year (Exhibit G).

Trade accounts payable have been valued at nominal value including, if any, interest expense accrued as of the end of each year. The values thus obtained do not differ significantly from those that would have been obtained if the Argentine GAAP had been applied, inasmuch as they establish that trade accounts payable must be valued at their estimated cash price at the time of the transaction, plus interest and implicit financing components accrued on the basis of the internal rate of return determined at such opportunity.

Other receivables and liabilities have been valued at their nominal value including, if any, interest income or expense accrued as of the end of each year. The values thus obtained do not differ significantly from those that would have been obtained if the Argentine GAAP had been applied, inasmuch as they establish that other receivables and liabilities must be valued on the basis of the best estimate amount to be collected and paid, respectively, discounted at a rate that reflects the time value of money and the risks specific to the transaction estimated at the time of their being recorded in assets and liabilities, respectively.

e) Municipal Bonds

As of December 31, 2006, the Municipal Financial Restructuring Bonds (Bonos de Saneamiento Financiero Municipal) issued pursuant to Law N° 11,752 were valued at the conversion value established in the Economic Emergency and Foreign Currency Exchange System Reform Law N° 25,561 (i.e. face value converted into pesos at the rate of 1.40 Argentine Pesos per US Dollar), restated for inflation as of such year-end, including the inflation-linked CER (“benchmark stabilization coefficient”) adjustment and interest accrued through the end of that year at an annual rate of 4%.

Due to impairment indicators, as of December 31, 2006, the Company recorded an allowance to reduce the value of the above-mentioned bonds to their expected recoverable amount of 5,918 (Note 3.i and Exhibit E).

On January 4, 2007 the Company sold the aforementioned bonds at a value of 5,947.

f) Supplies:

At acquisition cost restated to reflect the effects of inflation as indicated in Note 2. The consumption of supplies has been valued based on the average cost method.

The Company has classified supplies into current and non-current depending on whether they will be used for maintenance or capital expenditures.

The carrying value of supplies, taken as a whole, does not exceed their recoverable value.

g) Non-current investments:

It represents the 50% interest held in the related company SACME S.A. (a company organized by means of equal contributions by distribution companies EDENOR S.A. and EDESUR S.A. in accordance with the Bid Package). SACME S.A. is in charge of monitoring the electric power supplied to the aforementioned distributors. As of December 31, 2007 and 2006, the investment in SACME has been recorded at its equity value.

In order to determine the equity value, the audited financial statements of SACME S.A. as of December 31, 2007 and 2006 have been used. The accounting principles used by SACME are similar to those applied by EDENOR for the preparation of its financial statements.

h) Property, plant and equipment:

Property, plant and equipment transferred by SEGBA on September 1, 1992 were valued as of the privatization date as described below, and restated to reflect the effects of inflation as indicated in Note 2. The total value of the assets transferred from SEGBA was allocated to individual assets accounts on the basis of engineering studies conducted by the Company.

The total value of property, plant and equipment has been determined based on the US$ 427 million price effectively paid by EASA for the acquisition of 51% of the Company’s capital stock at acquisition date. Such price was used to value the entire capital stock of EDENOR at 832 million pesos, which, when added to the fair value of the debts assumed by the Company under the SEGBA Privatization Bid Package for 139.2 million less the fair value of certain assets received from SEGBA for 103.2 million, valued property plant and equipment at 868 million.

SEGBA neither prepared separate financial statements nor maintained financial information or records with respect to its distribution operations or the operations in which the assets transferred to EDENOR were used. Accordingly, it was not possible to determine the historical cost of transferred assets.

Additions subsequent to such date have been valued at acquisition cost restated to reflect the effects of inflation as indicated in Note 2, net of the related accumulated depreciation. Depreciation has been calculated by applying the straight-line method over the estimated useful life of the assets which was determined on the basis of the above-mentioned engineering studies. Furthermore, in order to improve the disclosure of the account, the Company has made certain changes in the classification of property, plant and equipment, based on each technical process.

In accordance with the provisions of TR N° 17, financial costs in relation to any given asset may be capitalized when such asset is in the process of production, construction, assembly or completion, and such processes, due to their nature, take long periods of time; those processes are not interrupted; the period of production, construction, assembly or completion does not exceed the technically required period; the necessary activities to put the asset in a condition to be used or sold are not substantially complete; and the asset is not in condition so as to be used in the production or start up of other assets, depending on the purpose pursued with its production, construction, assembly or completion. The Company capitalized financial costs on property, plant and equipment from 1997 to 2001, in 2006 and during the year ended December 31, 2007. Financial costs capitalized for the year ended December 31, 2007 and 2006 amounted to 12,665 and 9,283, respectively.

During the years ended December 31, 2007 and 2006, direct and indirect costs capitalized amounted to 32,528 and 25,508 respectively.

The recorded value of property, plant and equipment, taken as a whole, does not exceed their recoverable value.

i) Allowances (Exhibit E):

- Deducted from current assets:

for doubtful accounts: it has been recorded to adjust the valuation of trade receivables and other receivables up to their estimated recoverable value. The amount of the allowance has been determined based on the historical series of collections for services billed through the end of each year and collections subsequent thereto.

- Deducted from non-current assets:

·	for impairment of value of deferred tax assets: as of December 31, 2007 and 2006 the Company has partially impaired the deferred tax asset with a valuation allowance. (Note 3.n)

·	for impairment of value of Municipal Bonds: due to impairment indicators, as of December 31, 2006 the Company recorded an allowance to reduce the value of such bonds to their expected recoverable amount (Note 3.e).

j) Accrued litigation:

Amounts have been accrued for several contingencies.

The Company is a party to certain lawsuits and administrative proceedings in several courts and government agencies, including with respect to certain tax contingencies arising from the ordinary course of business. The Argentine tax authority (“AFIP”) has challenged certain income tax deductions related to allowances for doubtful accounts made by the Company on its income tax returns for fiscal years 1996, 1997 and 1998, and has assessed additional taxes for approximately 9,300. Tax related contingencies are subject to interest charges and, in some cases, to fines. This matter is currently on appeal to the tax court. During the appeal process, payment of such claim has been suspended.

The Company is also a party to civil and labor lawsuits in the ordinary course of business.

At the end of each year, management evaluates these contingencies and records an accrual for related potential losses when: (i) payment thereof is probable, and (ii) the amount can be reasonably estimated. The Company estimates that any loss in excess of amounts accrued in relation to the above matters will not have a material adverse effect on the Company’s result of operations or its financial position.

The evolution of the accrued litigation account has been disclosed in Exhibit E.

k) Loans:

As of December 31, 2007 and 2006, the notes resulting from the restructuring process (Note 14) have been valued on the basis of the best estimate of the amount to be paid, discounted at annual nominal rates of 10.5% and 10%, respectively, which, in accordance with the Company’s criterion, reasonably reflect market assessments of the time value of money and specific debt risks as of each of those dates.

Under Argentine GAAP, the exchange of debt instruments under substantially different conditions is considered as an extinguishment of the former debt (i.e., debt before restructuring).

The extinguishment of the former debt generated a gain of 179,243 as of December 31, 2006, however the adjustment to present value of future cash flows of the notes, at the applicable market rate in effect, generated a gain of 57,138 and a loss of 21,495 as of December 31, 2006 and 2007, respectively.

During the year ended December 31, 2007, as a result of both the issuance of medium-term corporate notes due in 2017 for US$ 220,000 thousand (Note 23), and the public offering process described in Note 1, the Company, as required in the trust agreement for the issuance of corporate notes, has purchased and redeemed at market prices and in successive operations all “discount notes” and part of the “fixed rate par notes” for a nominal value of US$ 240,000 thousand and US$ 43,726 thousand, respectively. After the aforementioned purchase and redemption, the principal outstanding balance of the notes resulting from the restructuring process amounts to US$ 92,704 thousand. The aforementioned operations generated a loss of US$ 3,248 thousand equivalent to 10,228, which has been included in the statement of income for the year ended December 31, 2007 (Note 14) in the account Lossfrom the purchase and redemption of notes.

l) Shareholders' equity accounts:

These accounts have been restated to reflect the effects of inflation as indicated in Note 2, except for the "Shareholders’ Contributions - Nominal value" and “Additional Paid-in Capital” accounts which have been maintained at their nominal value. The excess of the adjusted value of Capital Stock over its nominal value has been included in the “Shareholders’ Contributions - Adjustment to Capital” account.

m) Statement of income accounts:

-	The accounts that accumulate monetary transactions for the 2007 and 2006 fiscal years have been disclosed at their nominal values.

-	The charges for non-monetary assets consumed have been valued at cost restated to reflect the effects of inflation on the basis of the date of acquisition of such assets, as indicated in Note 2.

-	Financial income (expense) and holding gains (losses) have been disclosed separately under income (expense) generated by assets and by liabilities.

-	The adjustment to present value of the notes is stated at nominal value.

-	The gain on extinguishment of former debt of the 2006 fiscal year is stated at nominal value.

The adjustment to present value of trade receivables related to both the application of the retroactive tariff increase agreed upon in the Adjustment Agreement and the payment plan agreement signed with the Province of Buenos Aires for amounts deriving from the Framework Agreement for the 2007 fiscal year is stated at nominal value.

-	The adjustment to present value of purchased and redeemed notes for the 2007 fiscal year is stated at nominal value.

-	The loss from the purchase and redemption of notes for the 2007 fiscal year is stated at nominal value.

n) Income tax and tax on minimum presumed income:

The Argentine GAAP requires the application of the deferred tax method to account for income tax. This method consists of recognizing deferred tax assets and liabilities when temporary differences arise from the valuation of assets and liabilities for accounting and tax purposes. Regarding the restatement of property, plant and equipment to reflect the effects of inflation, the Company has applied Resolution MD (the Board) N° 11/03 of the CPCECABA and General Resolution N° 487/06 of the CNV (see Note 2 - Changes in Argentine GAAP).

As of December 31, 2007, the allowance for impairment of value of deferred tax assets amounted to 34,482, which represents the portion of the tax loss generated in 2002 whose offset against future taxable income will not be possible after the filing of the 2007 income tax return, due to the fact that it will become statute-barred.

The reconciliation between the income tax as charge to the statement of income for the years ended December 31, 2007 and 2006, and the amount that would result from applying the tax rate in effect (35%) to the income before taxes for each year, is as follows:

	2007		2006
Income tax calculated at the tax rate in effect on the income before taxes		86,605		44,060
Permanent differences
Adjustment for inflation of property, plant and equipment		31,300		33,407
Accruals and other		4,858		35,277
Income tax		122,763		112,744
Increase (Decrease) in the allowance for impairment of value of deferred tax assets		2,221		(279,926	)
Income tax for the year		124,984		(167,182	)

Allowance for impairment of value of deferred tax assets
Balance at beginning of year	32,261	312,187
Increase (Decrease) in the allowance for impairment of value of deferred tax assets	2,221	(279,926	)
Balance at end of year	34,482	32,261

Additionally, the breakdown of deferred tax assets and liabilities as of December 31, 2007 and 2006 is as follows:

	2007			2006
Non-current deferred tax assets
Tax-loss carry forward		42,798			143,886
Allowance for doubtful accounts		12,906			6,426
Accruals		45,926			93,179
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and other trade receivables		10,366			0
Supplies valuation		50			159
		112,046			243,650
Non-current deferred tax liabilities
Current investments		(250	)		0
Property, plant and equipment		(22,642	)		(24,209	)
Adjustment to present value of the notes		(12,475	)		(19,998	)
		(35,367	)		(44,207	)

Net deferred tax assets before allowance for impairment of value of deferred tax assets		76,679			199,443

Allowance for impairment of value of deferred tax assets		(34,482	)		(32,261	)
Net deferred tax assets		42,197			167,182

Tax losses to be carried forward as of December 31, 2007 are as follow:

	Amount		Tax rate 35%		Year expiring
Tax loss carry forward 2002		98,519		34,482		2007
Tax loss carry forward 2005		23,761		8,316		2010
Total tax losses as of December 31, 2007		122,280		42,798

As tax losses become statute-barred within five years, the aforementioned tax losses may be applied to offset any future taxable income that may arise within such five-year term.

Additionally, the Company determines the tax on minimum presumed income by applying the current rate of 1% on the Company’s taxable assets as of the end of the year. The tax on minimum presumed income and the income tax complement each other. The Company’s tax obligation for a given year will be equal to the higher of these taxes. However, should the tax on minimum presumed income exceed income tax in any given fiscal year, such excess will be eligible for credit against a partial payment of any excess of the income tax over the tax on minimum presumed income that may arise in any of the ten subsequent fiscal years.

For the year ended December 31, 2007 the Company has estimated a tax on minimum presumed income charge of 15,879, whereas for the year ended December 31, 2006 the charge amounted to 19,872. The corresponding outstanding tax credits as of the end of each year have been included in Other non-current receivables.

ñ) Operating leases:

As lessee, EDENOR has lease contracts (buildings) which classify as operating leases.

Common characteristics of these lease contracts are that lease payments (installments) are established as fixed amounts, there are neither purchase option clauses nor renewal term clauses (except for the Handling and Energy Transformation Center contract that has an automatic renewal clause for five-year term) and there are prohibitions such as: transferring or sub-leasing the building, changing its use and/or making any kind of modifications thereto. All operating lease contracts have cancelable terms and lease periods of two or three to thirteen years.

Buildings are for commercial offices, the warehouse, the headquarters building (comprised of administration, commercial and technical offices), the Handling and Energy Transformation Center (two buildings and a plot of land located within the perimeter of Central Puerto Nuevo and Puerto Nuevo) and Las Heras substation.

As of December 31, 2007 and 2006, future minimum lease payments with respect to operating leases are as follow:

	2007		2006
2007	-		2,569
2008		2,052		856
2009		179		180
2010		147		147
2011		147		147
2012		147		147
2013		147		147
Total minimum lease payments		3,222		4,193

Total rental expenses for all operating leases for the years ended December 31, 2007 and 2006 are as follow:

	2007	2006
Total rental expenses	2,405	2,624

As lessor, Edenor has entered into several operating lease contracts with certain cable television companies granting them the right to use poles of the Company’s network. Most of such lease contracts include automatic renewal clauses.

As of December 31, 2007 and 2006, future minimum lease collections with respect to operating leases are as follow:

	2007		2006
2007		-		8,133
2008		9,680		987
2009		7,576		62
2010		14		0
2011		9		0
2012		9		0
Total minimum lease collections		17,283		9,182

Total rental income for all operating leases for the years ended December 31, 2007 and 2006, is as follows:

	2007	2006
Total rental income (Note 11)	10,745	14,315

o) Labor cost liabilities and Early retirements payable:

They include the following charges:

-	for supplementary benefits of paid leaves of absence derived from accumulated vacation,

-	for seniority-based bonus to be granted to employees with a specified number of years of employment, as stipulated in collective bargaining agreements in effect (as of December 31, 2007 and 2006, the accrual for such bonuses amounted to 5,684 and 4,847 respectively), and

-	for other personnel benefits (pension plan) to be granted to employees upon retirement, as stipulated in collective bargaining agreements in effect (as of December 31, 2007 and 2006, the accrual for these benefits amounted to 13,367 and 9,638 respectively).

Liabilities related to the above-mentioned seniority-based bonus and other personnel benefits (pension plans) to be granted to employees, have been determined taking into account all rights accrued by the beneficiaries of both plans as of December 31, 2007 and 2006, respectively, on the basis of an actuarial study conducted by an independent actuary as of December 31, 2007. Such liabilities have been disclosed under the “Salaries and social security taxes” account as seniority-based bonus and other personnel benefits, respectively (Note 8).

Early retirements payable corresponds to individual optional agreements. After employees reach a specific age, the Company may offer them this option. The related accrued liability represents future payment obligations which as of December 31, 2007 and 2006 amount to 2,394 and 2,320 (current) and 5,643 and 5,802 (non-current), respectively (Note 8).

p) Customer deposits and contributions:

Customer deposits:

Under the Concession Agreement, the Company is allowed to receive customer deposits in the following cases:

1.	When the power supply is requested and the user is unable to provide evidence of his legal ownership of the premises;

2.	When service has been suspended more than once in one-year period;

3.	When the power supply is reconnected and the Company is able to verify the illegal use of the service (fraud).

4.	When the customer is undergoing liquidated bankruptcy or reorganization proceedings.

The Company has decided not to request customer deposits from residential T1 tariff customers.

Customer deposits may be either paid in cash or through the customer’s bill, and accrue monthly interest at a specific rate of Banco de la Nación called “reference” rate.

When a customer requests that the supply service be disconnected, the customer’s deposit is credited (principal amount plus any interest accrued through the date of reimbursement). Any balance outstanding at the time of requesting the disconnection of the supply service is deducted from the amount so credited. Similar procedures are followed when the supply service is disconnected due to customer inability to pay for the electricity consumed. Consequently, the Company recovers, either fully or partially, any amount owed for electric power consumption.

When the conditions for which the Company is allowed to receive customer deposits no longer exist, the principal amount plus any interest accrued thereon are credited to the customer’s account.

Customer contributions:

The Company receives advances from certain customers for services to be provided based on individual agreements. Such advances are stated at nominal value as of the end of each year.

q) Revenue recognition:

Revenues from operations are recognized on an accrual basis and derive mainly from electricity distribution. Such revenues include electricity supplied, whether billed or unbilled, at the end of each year and have been valued on the basis of applicable tariffs.

The Company also recognizes revenues from other concepts included in distribution services, such as new connections, pole rental, transportation of electricity to other distribution companies, etc.

All revenues are recognized when the Company’s revenue earning process has been substantially completed, the amount of revenues may be reasonably measured, and the economic benefits associated with the transaction flow to the Company.

During the year ended December 31, 2007, the Company recognized revenues from the retroactive tariff increase deriving from the application of the new electricity rate schedule to non-residential consumption for the period of November 2005 through January 31, 2007 (Note 17.b) as it was during this fiscal year that the new electricity rate schedule to be applied as from February 1, 2007, was approved by Resolution No. 51/2007 of the ENRE.

On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the National Energy Secretariat. Said resolution establishes that the amounts paid by the Company for the Quarterly Adjustment Coefficient (CAT) implemented by Section 1 of Law Nº 25,957, as well as the amounts corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007 (Note 17 b and c) has to be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), until their transfer to the tariff is granted by the regulatory authority. The resolution also establishes that the MMC adjustment for the period May 2006 through April 2007, in effect as from May 1, 2007, amounts to 9.63 %.

Additionally, on October 25, 2007 the ENRE issued Resolution Nº 710/2007 which approves the MMC compensation mechanism established in the aforementioned Resolution Nº 1037/2007 of the National Energy Secretariat.

r) Estimates:

The preparation of the financial statements in accordance with Argentine GAAP requires the Company’s Board of Directors and Management to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results and amounts may differ from the estimates used in the preparation of the financial statements.

s) Earnings per common share:

It has been computed on the basis of the number of shares outstanding as of December 31, 2007, which amounts to 906,455,100, and December 31, 2006 which amounted to 831,610,200 shares. There is no earning (loss) per share dilution, as the Company has issued neither preferred shares nor corporate notes convertible into common shares.

t) Segment information:

In accordance with the provisions of TR No. 18, the Company is required to disclose segment information provided certain requirements are met. This Resolution establishes the criterion to be followed for reporting information on operating segments in annual financial statements, and requires the reporting of selective information on operating segments in interim financial reports. Operating segments are those components of a company’s activity about which different financial information may be obtained, whether for the allocation of resources or the determination of an asset’s performance. TR N° 18 also establishes the criterion to be applied by a company to disclose its products and services, geographical areas and major customers.

The Company is a natural monopoly that operates in a single business segment, electricity distribution and sale in a specific urban geographical area, pursuant to the terms of the concession agreement that governs the provision of this public service. The Company’s activities have similar economic characteristics and are similar as to the nature of their products and services and the electricity distribution process, the type or category of customers, the geographical area and the methods of distribution. Management evaluates the Company’s performance based on net income. Accordingly, the disclosure of information as described above is not necessary.

u) Risk management:

The Company operates mainly in Argentina. Its business may be affected by inflation, currency devaluation, regulations, interest rates, price controls, changes in governmental economic policies, taxes and other political and economic-related issues affecting the country. The majority of the Company’s assets are either non-monetary or denominated in Argentine pesos, whereas the majority of its liabilities are denominated in U.S. dollars. As of December 31, 2007, a minimum portion of the Company’s debts accrues interest at floating rates, consequently the Company’s exposure to interest rate risk is limited.

As of December 31, 2007 and 2006, the Company has not entered into any foreign currency forward contracts or floating interest rate forward contracts.

v) Concentration risks:

Related to customers

The Company’s accounts receivable derived primarily from the sale of electric power.

No single customer accounted for more than 10% of sales for the years ended December 31, 2007 and 2006. The collectibility of trade receivables balances related to the Framework Agreement, which amount to 4,579 and 45,552 as of December 31, 2007 and 2006, respectively, as disclosed in Notes 4 and 13, is subject to compliance with the terms of such Framework Agreement.

In addition, the aforementioned Framework Agreement expired on December 31, 2006. As from such date the Company has been negotiating the renewal of such agreement with the Government of the Province of Buenos Aires and the Federal Government. However, the Company has continued supplying electricity to low income areas and shantytowns.

Related to employees who are union members

As of December 31, 2007, approximately 78% of the Company’s employees were union members. Although the relationship with unions is currently stable, the Company may not ensure that there will be no work disruptions or strikes in the future, which could have a material adverse effect on the Company’s business and the results of operations. Furthermore, collective bargaining agreements signed with unions expired at the end of the 2007 fiscal year. There is no guarantee that the Company will be able to negotiate new collective bargaining agreements under the same terms as those currently in place or that there will be no strikes during or before the negotiation process.

The Bid Package sets forth the responsibilities of both SEGBA and the Company in relation to the personnel transferred by SEGBA through Resolution N° 26/92 of the Energy Secretariat. According to the Bid Package, SEGBA will be fully liable for any labor and social security obligations accrued or originated in events occurred before the take-over date, as well as for any other obligations deriving from lawsuits in process at such date.

In December 1998, new collective bargaining agreements were signed with the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía. These agreements would be in effect for a term of five years to commence as from the date of approval and until the signing of a new agreement. The Ministry of Labor and Social Security approved the agreements signed with both the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía on March 11, 1999 (through Resolution N° 31) and October 15, 1999 (through Resolution N° 318/99), respectively.

During 2005, two new collective bargaining agreements were signed with the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía, which expired on December 31, 2007 and October 31, 2007, respectively. These agreements were approved by the Ministry of Labor and Social Security on November 17, 2006 and October 5, 2006, respectively.

As of the date of issuance of these financial statements, meetings aimed at negotiating the renewal terms of both collective bargaining agreements, are being held with the above-mentioned unions.

w) Foreign currency translation/ transactions:

The Company accounts for foreign currency denominated assets and liabilities and related transactions as follows:

The accounting measurements of purchases, sales, payments, collections, other transactions and outstanding balances denominated in foreign currency are translated into pesos using the exchange rates described below. Thus, the resulting amount in pesos represents the amount collected or to be collected, paid or to be paid.

For translation purposes, the following exchange rates are used:

a) the exchange rate in effect at the date of the transaction, for payments, collections and other transactions denominated in foreign currency; and

b) the exchange rate in effect at the date of the financial statements, for assets and liabilities denominated in foreign currency.

For transactions and balances denominated in foreign currency, the bid price is used for assets, and the offer price is used for liabilities.

The effect of such translations has been included in the Statements of Income as “Exchange difference” under “Financial income (expense) and Holding gains (losses)”.

4. TRADE RECEIVABLES

The detail of trade receivables as of December 31, 2007 and 2006 is as follows:

	2007			2006
Current:

Receivables from sales of electricity:

Billed		177,263			112,706

Unbilled
Sales of electricity		123,641			92,803
Retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b item d)		44,101			0
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 3.c)		(2,526	)		0
Framework Agreement (Notes 3.c and 13)		4,579			45,552
Framework Agreement - Payment plan agreement with the Province of Bs. As. (Note 13)		13,557			0
Adjustment to present value of the Framework Agreement - Payment plan agreement with the Province of Bs. As. (Note 3.c)		(212	)		0
National Fund of Electricity (Note 17.a)		3,036			23,015
Cannon payable for the expansion of the network, transportation and others (Note 17.b)		12,628			11,882
In litigation		9,918			10,603
Subtotal		385,985			296,561
Less:
Allowance for doubtful accounts (Exhibit E)		(40,006	)		(25,623	)
		345,979			270,938

	2007			2006
Non-Current:
Receivables from sales of electricity:
Unbilled
Retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b item d)		127,180			0
Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 3.c)		(26,880	)		0
		100,300			0

5. OTHER RECEIVABLES

The detail of other receivables as of December 31, 2007 and 2006 is as follows:

	2007			2006
Current:

Prepaid expenses (1)		1,910			1,305
Advances to suppliers		224			1,082
Advances to personnel		685			238
Related parties (2) (Note 15)		448			4,877
Prepaid Technical Assistance Services (3)		15,182			4,338
Preliminary attachments - ENRE - (Note 17.a)		59			67
Municipal Bonds (Note 3.e)		0			11,836
Allowance for impairment of value of Municipal Bonds ( Exhibit E)		0			(5,918	)
Other debtors (4)		7,271			10,837
Allowance for other doubtful accounts (Exhibit E)		(2,900	)		(2,300	)
Other (5)		3,111			3,859
		25,990			30,221
Non-current:

Other debtors (Note 16.c)		0			3,077
Tax credit on minimum presumed income (Note 3.n)		101,910			86,031
Net deferred tax assets (Note 3.n)		76,679			199,443
Allowance for impairment of value of deferred tax assets (Exhibit E)		(34,482	)		(32,261	)
Other		0			185
		144,107			256,475

(1)	Includes 101 in foreign currency (Exhibit G) as of December 31, 2006.

(2)	Includes 4,429 in foreign currency (Exhibit G) as of December 31, 2006.

(3)	In foreign currency (Exhibit G) as of December 31, 2007 and 2006, respectively.

(4)	Includes 769 in foreign currency (Exhibit G) as of December 31, 2007.

(5)	Includes 754 in foreign currency (Exhibit G) as of December 31, 2006.

6. TRADE ACCOUNTS PAYABLE

The detail of trade accounts payable as of December 31, 2007 and 2006 is as follows:

	2007		2006
Current:

Payables for purchase of electricity and other purchases (1)		221,098		158,371
Unbilled electric power purchases		82,191		92,877
Customer contributions (Note 3.p)		11,759		16,123
Other		1,104		269
		316,152		267,640

Non-Current:

Customer deposits (Note 3.p)		35,466		31,250

(1)

Includes 34,633 and 16,271 in foreign currency (Exhibit G) as of December 31, 2007 and 2006, respectively. Also, includes balances with SACME S.A. for 757 and 676 as of December 31, 2007 and 2006, respectively and balances with Errecondo, Salaverri, Dellatorre, Gonazalez & Burgio for 74 and 16 as of December 31, 2007 and 2006 (Note 15).

LOANS

The detail of loans as of December 31, 2007 and 2006 is as follows:

	2007		2006
Current:
Bank overdraft:
Principal		12,200		0
Interest		16		0
Subtotal		12,216		0

Notes:
In foreign currency (Exhibit G and Note 14)
Interest (Note 14)		17,074		2,029
		29,290		2,029

	2007			2006

Non-current:

Notes:
In foreign currency (Exhibit G and Notes 14 and 23)
Fixed Rate Notes - Class 7		692,779			0
Fixed and Incremental Rate Par Notes - Class A		228,262			225,009
Fixed and Incremental Rate Par Notes - Class B		23,810			153,986
Floating Rate Par Notes - Class A		39,854			38,753
Fixed and Incremental Rate Discount Notes - Class A		0			466,409
Fixed and Incremental Rate Discount Notes - Class B		0			268,471
Subtotal		984,705			1,152,628
Adjustment to present value of notes		(35,643	)		(57,138	)
Notes at present value		949,062			1,095,490

8. SALARIES AND SOCIAL SECURITY TAXES

The detail of salaries and social security taxes as of December 31, 2007 and 2006 is as follows:

	2007		2006
Current:

Salaries payable and accruals		51,870		44,423
Social Security (ANSES)		5,640		4,703
Early retirements payable (Note 3.o)		2,394		2,320
		59,904		51,446
Non-Current (Note 3.o):

Other personnel benefits (Note 2)		13,367		9,638
Seniority-based bonus		5,684		4,847
Early retirements payable		5,643		5,802
		24,694		20,287

9. TAXES

The detail of taxes as of December 31, 2007 and 2006 is as follows:

	2007		2006
Current:

Provincial, municipal and federal contributions and taxes		25,212		19,568
Value Added Tax (VAT)		22,411		11,935
Tax on minimum presumed income		6,786		6,507
Withholdings		5,077		4,894
Municipal taxes		20,823		15,044
Other		4,332		4,244
		84,641		62,192

10. OTHER LIABILITIES

The detail of other liabilities as of December 31, 2007 and 2006 is as follows:

	2007		2006
Current:

Technical Assistance (1) (Note 15)		0		4,465
Capital expenditures fund - CAMMESA (Note 17.b)		1,931		0
Fees related to the initial public offering of capital stock (2)		818		3,820
Fees related to debt restructuring (Exhibit G)		0		7,299
Fees related to the issuance of Corporate Notes (3) (Exhibit G and Note 23)		4,176		0
Program for the rational use of electric power (PUREE)		91		6,926
Other (4)		2,694		3,870
		9,710		26,380

Non-current:
ENRE penalties (Note 17 a and b)		281,395		241,079

(1)	In foreign currency (Exhibit G) as of December 31, 2006. The 4,465 correspond to a balance with Electricidad Argentina S.A. as of December 31, 2006 (Note 15).

(2)	Includes 818 and 3,764 in foreign currency (Exhibit G) as of December 31, 2007 and 2006, respectively.

(3)	In foreign currency (Exhibit G) as of December 31, 2007.

(4)	Includes 1,855 and 2,435 in foreign currency (Exhibit G) as of December 31, 2007 and 2006, respectively. Also, includes balances with Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio for 628 and 208 as of December 31, 2007 and 2006, respectively (Note 15).

11. NET SALES

The breakdown of net sales for the years ended December 31, 2007 and 2006 is as follows:

	2007		2006

Sales of electricity (1)		1,948,737		1,347,295
Late payment charges		17,099		12,557
Pole leases		10,745		14,315
Connection charges		3,986		2,586
Reconnection charges		1,361		1,573
		1,981,928		1,378,326

(1) Net of ENRE penalties for 23,940 and 25,200 for the years ended December 31, 2007 and 2006, respectively (Note 17). As of December 31, 2007, includes 218,591 related to the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b. item d), and 49,646 related to the Cost Monitoring Mechanism (MMC) (Note 17.a).

12. OTHER INCOME (EXPENSE)- NET

The breakdown of other income (expense), net for the years ended December 31, 2007 and 2006 is as follows:

	2007			2006

Non operating income		1,467			4,093
Commissions on municipal taxes collection		1,761			1,537
Net expense from technical services		(1,770	)		(437	)
Voluntary retirements and terminations		(7,192	)		(14,122	)
Severance paid		(4,283	)		(3,019	)
Accrued litigation		(16,750	)		(13,400	)
Supplies recovered from third parties		0			5,782
Rebate of technical assistance services and financial expenses EDF International (Note 15)		14,845			0
Income from reimbursements of network replacement (Note 17.a)		7,203			0
Disposal of property, plant and equipment		(1,105	)		(650	)
Other		7,180			(2,728	)
		996			(22,944	)

13. FRAMEWORK AGREEMENT

On January 10, 1994, the Company, together with EDESUR S.A., the Argentine Federal Government and the Government of the Province of Buenos Aires signed a Framework Agreement aimed at resolving the issue of supplying electricity to low-income areas and shantytowns. Pursuant to such Framework Agreement, the Company is entitled to receive compensation from a Special Fund for any non-payments of electricity supplied to low-income areas and shantytowns. The ENRE approved this Framework Agreement through Resolution N° 6 dated January 20, 1994, which was then ratified by both the Federal Government through Decree N° 584 dated April 22, 1994 and the Government of the Province of Buenos Aires through Decree N° 1,445 dated June 2, 1994.

In accordance with Section 5 of the above-mentioned Agreement, the Company waived its right to any claims and/or collection of bills, adjustments, surcharges and interest arising or accrued from September 1, 1992 through January 31, 1994, as a result of direct connections, power theft, unrecorded consumption or any other form of misappropriation of electricity or illegal use thereof. The economic value assigned to the above-mentioned waiver amounted to 20,000, for which purpose a Special Fund was set up. The cost of this Special Fund was borne by the Argentine Federal Government and the Province of Buenos Aires which contributed a percentage of the bills effectively collected from users in low-income areas and shantytowns. The four-year duration of this Special Fund, which commenced as from the date on which the Framework Agreement went into effect, ended on June 30, 1998. The Company has been fully compensated for the economic effect derived from the above-mentioned waiver.

As permitted by Section 13 of the Agreement, which stipulates that the terms and conditions of the Agreement may be subject to review and/or adjustments under certain circumstances, and taking into account that not all of the objectives of the Agreement could be completely fulfilled within the originally stipulated period, although most of them had been accomplished, and considering also that new shantytowns had appeared which had to be recognized, the parties agreed to extend the term of the Agreement for an additional fifty-month period ending August 31, 2002. During such additional period the original provisions of the Framework Agreement and the Regulations continued to be in effect. Furthermore, a new population census was conducted so as to identify those shantytowns which up to then had not been recognized. Said census has been completed and approved by the regulatory agency. Furthermore, the above-mentioned extension of the Framework Agreement was approved by the Argentine Federal Government through Decree N° 93 dated January 25, 2001.

As from the expiration date of the above-mentioned Agreement, the Company continues supplying electricity to low-income areas and shantytowns.

On October 6, 2003, the Company signed a new Framework Agreement with the Argentine Federal Government and the Government of the Province of Buenos Aires for a term of four years, which retroactively covered all the services provided as from September 1, 2002. This Agreement may be renewed for another four-year term should the parties so agree.

The new Agreement, whose terms and conditions are similar to those of the previous agreement, was ratified by both the Federal Executive Power and the Government of the Province of Buenos Aires through Decree N° 1972 dated December 29, 2004 (published in the Official Gazette on January 5, 2005) and Decree N° 617 dated April 5, 2005 (published in the Official Gazette on May 23, 2005), respectively.

Receivables under the new Agreement as of December 31, 2007 and 2006 amounted to 4,579 and 45,552, respectively. During the year ended December 31, 2007, the Company collected 5,828 from the Federal Government.

On October 26, 2006, the Company entered into a Payment Plan Agreement with the Government of the Province of Buenos Aires which establishes the conditions according to which the Province of Buenos Aires will honor its obligation to the Company under the Framework Agreement expired on December 31, 2006. In such agreement, the Company claims a debt amounting to 27,114, for the period September 2002 through June 2006, which the Province agrees to verify in accordance with the provisions of chapter VI -section 13 and related sections- of the Fund Regulations of the new Agreement. Furthermore, the Province agrees to pay the debt resulting from the aforementioned verification, in 18 equal, consecutive and monthly installments.

The aforementioned payment plan agreement stipulates that together with the payment of the first six installments, the Province of Buenos Aires must pay the amounts resulting from the electricity provided to low-income areas and shantytowns during the last semester of 2006, which amounted to 5,815.

The Company waived its right to interest accrued from the date on which the New Framework Agreement went into effect through the commencement of the agreed-upon installment plan. The aforementioned waiver is subject to the compliance of the Government of the Province of Buenos Aires with the agreed-upon installment plan.

The aforementioned agreement was approved by the Company’s Board of Directors on November 7, 2006 and published in the Official Gazette of the Province of Buenos Aires on May 29, 2007.

On April 24, 2007, the Company received a payment of 5,346, which includes the first three installments of the aforementioned payment plan for a total amount of 4,519. Furthermore, on June 21 and October 24, 2007 the Province of Buenos Aires made payments of 8,722 and 4,519, respectively, on account of the total debt arising from the Framework Agreement.

The aforementioned Framework Agreement expired on December 31, 2006. As from such date the Company has been negotiating the renewal of such agreement with the Government of the Province of Buenos Aires and the Federal Government. However, the Company has continued supplying electricity to low-income areas and shantytowns.

14. RESTRUCTURING OF FINANCIAL DEBT

On January 19, 2006, the Board of Directors approved the launching of a solicitation of consent for the restructuring of the Company’s financial debt through the exchange of such debt for a combination of cash and notes (the Restructuring) pursuant to a voluntary exchange offer (the Voluntary Exchange Offer) and/or an out-of-court reorganization agreement (Acuerdo Preventivo Extrajudicial) (the APE).

Furthermore, the holders of Gain Trust Notes due in 2005, which represented an interest in the private corporate note issued by the Company and held by a financial trust, were offered to directly participate in the Restructuring by exchanging their Gain Trust Notes for Floating Rate Notes due in 2006, and then exchanging such Notes for the consideration offered in the Restructuring.

The Restructuring

The Company made an exchange offer and launched a solicitation of consent to execute an APE with eligible holders of its outstanding financial debt. An APE is an insolvency procedure available to debtors under the Argentine Bankruptcy Law (LCQ) consisting of an out-of-court reorganization agreement between a debtor and creditors holding at least two thirds of unsecured debt, which is subject to judicial confirmation. Upon judicial confirmation, the APE becomes binding on all unsecured and non-preferred creditors, including non-consenting creditors, whether or not such creditors have participated in the negotiation or execution of the APE.

Creditors holding more than 65% of the Company’s outstanding financial debt (including accrued and unpaid interest and applicable penalties, if any) have committed, by signing support agreements with the Company, to tender their debt in the Voluntary Exchange Offer and give their consent to the APE, should this procedure be initiated.

The Company could carry out the Restructuring in accordance with one of the following three alternatives:

If creditors holding at least 66% but less than 93% of the aggregate outstanding amount give their consent to the Restructuring, the Company, the Supporting Creditors and the APE Representative, on behalf of Consenting Creditors, will promptly execute the Restructuring Agreement, and the Company may, at its own option, either proceed with a Mandatory Exchange through the APE or an In-APE Exchange on the Consummation Date or on the In-APE Exchange Date, respectively, subject in each case to the fulfillment of the Conditions to the APE Restructuring Alternatives;

If creditors holding at least 93% but less than 98% of the aggregate outstanding amount give their consent to the Restructuring, the Company may, at its own option, either proceed with an In-APE Exchange (subject to the fulfillment of the Conditions to the APE Restructuring Alternatives) on the In-APE Exchange Date or carry out the Voluntary Exchange Offer (subject to the fulfillment of the Conditions to the Voluntary Exchange Offer) on the Voluntary Exchange Date; or

·	If creditors holding at least 98% of the aggregate outstanding amount give their consent to the Restructuring, the Company will carry out the Voluntary Exchange Offer (subject to the fulfillment of the Conditions to the Voluntary Exchange Offer) on the Voluntary Exchange Date.

Each of these alternatives was subject to the fulfillment of certain conditions, including all necessary regulatory approvals.

On February 22, 2006, the Company informed that creditors holding 100% of the Company’s outstanding financial debt (including accrued and unpaid interest and applicable penalties) had accepted the restructuring process of the financial debt, either by directly giving their consent and/or signing support agreements with the Company. Consequently, in accordance with the degree of acceptance received, the Company carried out the Restructuring following the third alternative mentioned above.

The Company carried out the Restructuring through the exchange of the outstanding financial debt held by consenting creditors, at such creditors’ option, subject to proration and reallocation, for one or a combination of the following alternatives, which include the issuance of notes under the current corporate notes program:

The Fixed Rate Par Option: For each US$ 1,000 principal amount of outstanding financial debt, creditors received Fixed Rate Par Notes for a nominal value of US$ 1,000. The amount of Fixed Rate Par Notes issued under the Restructuring was not subject to a maximum amount. Interest on Fixed Rate Par Notes will be payable semiannually in arrears at an annual fixed rate, as detailed in the table below, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

Year	Annual Interest Rate on Fixed Rate Par Notes	Annually Scheduled Amortization
1	3.0%	0.0%
2	4.0%	0.0%
3	5.0%	0.0%
4	6.0%	0.0%
5	8.0%	0.0%
6	9.0%	10.0%
7	9.5%	10.0%
8 through 11	10.0%	10.0%, 10.0%, 10.0%, 50.0%

An amount of US$ 123.8 million in notes, comprised of two classes (Class “A” amounting to US$ 73.5 million and Class “B” amounting to US$ 50.3 million), was issued under this option.

The Floating Rate Par Option: For each US$ 1,000 principal amount of outstanding financial debt, creditors received Floating Rate Par Notes for a nominal value equal to (i) US$ 1,000 plus (ii) any accrued and unpaid interest as of December 31, 2005 (excluding penalty interest and additional amounts, if any) in respect of such US$ 1,000 principal amount of outstanding financial debt (or, in the case of Gain Trust Notes, any accrued and unpaid interest as of December 31, 2005 (excluding any penalty interest and additional amounts, if any) in respect of such US$ 1,000 principal amount of Gain Trust Notes). A maximum of US$ 50 million principal amount of outstanding financial debt could be exchanged under this option. Interest on Floating Rate Par Notes will be payable semiannually in arrears at an annual rate equal to LIBOR plus a spread, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

Year	Annual Spread Floating Rate Par Notes	Annually Scheduled Amortization
1	0.0%	0.0%
2	0.0%	0.0%
3	1.0%	0.0%
4 through 6	1.5%	0.0%, 0.0%, 5.0%
7 through 14	2.0%	5.0%, 5.0%, 5.0%, 5.0%, 5.0% 10.0%, 10.0%, 50.0%

An amount of US$ 12.7 million in notes was issued under this option.

The Combination Option: For each US$ 1,000 principal amount of outstanding financial debt, creditors received (i) a cash payment of US$ 283 and (ii) Discount Notes for a nominal value of US$ 667. A fixed amount of US$ 360 million principal amount of outstanding financial debt could be exchanged under this option. Interest on Discount Notes will be payable semiannually in arrears at an annual fixed rate, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

Year	Discount Applicable to Annual Interest Rate	Annually Scheduled Amortization
1	3.0%	0.0%
2	3.5%	0.0%
3	10.0%	5.0%
4	11.0%	5.0%
5 through 9	12.0%	5.0%, 5.0%, 10.0%, 10.0%, 60.0%

An amount of US$ 240 million in notes, comprised of two classes (Class “A” amounting to US$ 152.3 million and Class “B” amounting to US$ 87.7 million), was issued under this option.

The Company did not make any payment or capitalized any accrued and unpaid interest or any other accrued and unpaid additional amount on any outstanding debt exchanged under the restructuring, other than as set forth in the above options.

Finally, on April 24, 2006, the Company made a cash payment of US$ 102,000 thousand to those creditors who had chosen the Combination Option, and an additional payment of US$ 4,736 thousand to those creditors who had validly given their consent and tendered their outstanding financial debt, pursuant to the terms of the restructuring proposal. The latter amount represents interest accrued on the original debt principal amount at the interest rate applicable to the notes for the period extending from January 1, 2006 to the date of issuance of the notes, which was, April 24, 2006.

Furthermore, in conformity with the options selected by the financial creditors and after applying the pro-ration and allocation mechanism, EDENOR issued the notes under the Global Corporate Notes Program.

As a result of the restructuring process, the defaulted debt prior to the restructuring, which amounted to US$ 540.9 million as of February 22, 2006, was reduced to US$ 376.4 million, with an average term of more than 8 years, at an average cost of 8% and final maturity in 2019.

Therefore, the Company’s post-restructuring and post-purchase and redemption debt structure as of December 31, 2007 was comprised of the following Notes:

Type	Class	Debt structure		Debt purchase and			Post-purchase and		Balance as of December
		in thousands		redemption			redemption debt structure		31, 2007 (Note 7)
		of us$		in thousands of us$			in thousands of us$		in thousands of pesos
	A		73,485		(998	)		72,487		228,262
Fixed Rate Par Note
	B		50,289		(42,728	)		7,561		23,810

Floating Rate Par Note	A		12,656		0			12,656		39,854

	A		152,322		(152,322	)		0		0
Discount Note
	B		87,678		(87,678	)		0		0

Total			376,430		(283,726	)		92,704		291,926

The principal amortization schedule broken down by year of total debt, including the aforementioned repurchases and without considering possible adjustments, prepayments, redemptions or cancellations, is detailed in the table below:

Year	Amount in thousands of US$
2011		8,638
2012		8,638
2013		8,638
2014		8,638
2015		8,638
2016		40,654
2017		1,266
2018		1,266
2019		6,328
		92,704

As of December 31, 2007, the loss resulting from the purchase and redemption of notes amounted to 10,228 which has been included in the statement of income for the year ended as of that date (Note 3.k).

Main covenants

As established in the trust agreement for the issuance of corporate notes, the main covenants assumed in relation to this transaction are the following:

-	Based on the level of excess cash (leverage ratio) and subject to maintaining an established minimum cash balance of US$ 15 million, the Company will be subject to the following conditions:

If EDENOR’s Leverage Ratio (defined as Total Financial Debt to Consolidated EBITDA) is higher than 3.5, any excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes.

If the Leverage Ratio is equal to or lower than 3.5, but higher than 3.0, the Company, at its discretion, will apply any excess cash as follows:

A minimum of 50% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 50% of such excess cash shall be used to make permitted capital expenditures, regulatory capital expenditures or additional capital expenditures;

A minimum of 75% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 25% of such excess cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

If the Leverage Ratio is equal to or lower than 3.0, but higher than 2.5, the Company, at its discretion, will apply any excess cash as follows:

A minimum of 50% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 50% of such excess cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

If the Leverage Ratio is equal to or lower than 2.5, the Company is exempt from complying with the above-mentioned conditions and therefore any excess cash may be applied at its discretion.

-	The Company may make permitted capital expenditures up to an agreed-upon annual amount.

Upon the occurrence of an Adverse Event, EDENOR, at its discretion, may elect to defer, reschedule and capitalize up to one year of principal amortization payments and one year of interest payments on any or all series of notes by written notice to the holders on each payment date or prior thereto. This provision may be invoked only once in respect of both an Adverse Cash Flow Event and an Adverse Devaluation Event during the term of the Notes.

Adverse Cash Flow Event means the occurrence of any event or series of events that are outside the Company’s control and result in the Company’s inability to meet its debt service obligations, to the extent that the minimum cash balance is maintained. Adverse Devaluation Event means any measure or series of measures taken by the Argentine government, general market conditions or any other event that results in a 20% or larger devaluation of the Peso in any period of 12 consecutive months after the Issuance Date as compared to its value as of January 1, 2006.

-	The Company may incur additional indebtedness subject to certain conditions that are described in the trust agreement for the issuance of the corporate notes.

Restricted Payments: No dividends shall be paid until April 24, 2008 or until such time when the Company’s Leverage Ratio is lower than 2.5, whichever occurs first. Fees payable under the technical assistance agreement shall not exceed US$ 2 million. Payments to EASA shall not exceed US$ 2.5 million in any fiscal year.

-	The Company may suspend compliance with any covenants provided that its leverage ratio is equal to or lower than 2.5.

In the case that the Company carries out a primary equity public offering and as long as the Company’s Leverage ratio is higher than 2.5, the Company shall be required to apply 25% of the net cash proceeds of the base offering amount to purchase notes through market purchases, taking into account that the Company shall have a two-year period to make the aforementioned purchases of notes through market purchases and the Company shall have no obligation to make the aforementioned purchases of notes at a price greater than the nominal value of the Notes.

As of the date of issuance of these financial statements, the Company is in compliance with its obligations as stipulated in the trust agreement related to the corporate notes issued after the restructuring of the financial debt .

15. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

In the normal course of business, the Company carries out transactions with related parties. As of December 31, 2007 and 2006, the outstanding balances with related parties are as follow:

	2007		2006
Other receivables (Note 5)
Electricidad Argentina S.A.		0		4,429
SACME S.A.		448		448
Total		448		4,877

Trade accounts payable (Note 6)
Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio	(74	)	(16	)
SACME S.A.	(757	)	(676	)
Total	(831	)	(692	)

Other liabilities (Note 10)
Electricidad Argentina S.A.	0		(4,465	)
Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio	(628	)	(208	)
Total	(628	)	(4,673	)

Transactions carried out with related parties for the years ended December 31, 2007 and 2006 are as follow:

	2007			2006
Other income
Electricidad Argentina S.A.		8			4
Total		8			4
Expenses from services
SACME S.A.		(3,337	)		(2,334	)
Electricidad Argentina S.A.		(275	)		0
EDF S.A (**)		(3,727	)		(7,128	)
Total		(7,339	)		(9,462	)
Financial expenses, interest and penalties
EDF International (**)		0			(7,873	)
Electricidad Argentina S.A.		(6,219	)		(8,133	)
Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio		(4,352	)		(244	)
Total		(10,571	)		(16,250	)

Financial debt restructuring result
EDF International (**)		0			38,114

Adjustment to present value of notes (*)
EDF International (**)					12,658

(*) Includes calculation of present value of the financial debt as of December 4, 2006, date on which it was transferred by EDF International.

(**) As from the international secondary offering described in Note 1, EDF S.A. and EDF International are no longer a related party.

Operating and Technical Assistance Agreements

In compliance with the provisions of both the Bid Package and the Transfer Contract, the Company has entered into an Operating Agreement with EDF International and ENHER, pursuant to which EDF International and ENHER would provide technical advisory services concerning the distribution and sale of electricity and would commit their experience and know-how to the achievement of an efficient and competitive management.

On July 16, 1999, ENHER assigned its rights and obligations arising from the above mentioned Operating Agreement to its controlling company ENDESA S.A.

On May 4, 2001, in compliance with that which has been mentioned in Note 1, ENDESA S.A. assigned its rights and obligations under the Operating Agreement to EDF International, thus leaving EDF International as the sole operator.

This Operating Agreement had an initial 10-year term as from September 1, 1992, which was extended until August 31, 2007.

The Company has registered said extension in the National Institute of Copyright (INPI) - Technology Transfer Division under number 9894.

On September 15, 2005, EDF International transferred the shares held in EASA (the controlling company of Edenor) and 14% of EDENOR’s shares to Dolphin. In connection with such transfer, the parties agreed to terminate the aforementioned Agreement and reduce the amount owed to EDF International for unpaid fees which amounted to 25,852.

However, since the Company still wished to have access to EDF S.A.’s know-how, experience and technical knowledge in the field of electricity distribution and sale, the Company and EDF S.A. entered into a new Technical Assistance Agreement for a period of 5 years or for such period during which Dolphin continued to be the controlling company of Electricidad Argentina S.A. In accordance with the terms of the Technical Assistance Agreement, EDENOR would pay EDF S.A. an amount of US$ 10,000,000 as technical assistance fees in five equal annual installments of US$ 2,000,000. The first annual payment was made on January 9, 2006 and the second payment was made on December 14, 2006.

On December 7, 2005, the Company registered the new agreement in the National Institute of Copyright (INPI) - Technology Transfer Division under number 11,197.

On December 27, 2007, the Company and EDF S.A. signed an amendment to the aforementioned Agreement, pursuant to which the parties agreed that, due to circumstances beyond their control, during 2006 and 2007 the amount of services required by the Company and provided by EDF S.A. within the scope of the Technical Assistance Agreement had been significantly lower than the originally expected by the parties. Otherwise, during 2008, EDF S.A. will be required to provide further services related to the Revision of the Company Tariff Structure process, the changes made to the Company’s commercial and invoicing system and the broadening of the Company’s investment plan. Consequently, the Company requested and EDF S.A. granted the following: (i) that EDF S.A. recognize a rebate of US$ 2,100 thousand, equivalent to 6,613, in relation to the US$ 4,000 thousand already paid for the Technical Assistance Agreement, and (ii) that during the year 2008 EDF S.A. continues providing services under the terms and conditions of the aforementioned Agreement, whose expiration date was fixed for December 31, 2008.

Based on the significant amount of work that is expected, the Company agreed to pay EDF S.A. an amount of US$ 6,000 thousand. From such amount, the Company deducted a total amount of US$ 4,600 thousand, equivalent to 14,485 (Note 12) composed by: (i) the aforementioned rebate for US$ 2,100 thousand, and (ii) a receivable for US$ 2,500 thousand, recognized by EDF International in favor to the Company as a reimbursement of the expenses related to the inicial public offering of capital stock incurred during the year ended December 31, 2006, which according to the IPO expenses agreement shall be creditable against any services rendered by any EDF International’s affiliate. Consequently, on December 28, 2007, the Company paid EDF S.A. the amount of US$ 1,400 thousand.

Agreement with Electricidad Argentina S.A. (controlling company)

On April 4, 2006, the Company and EASA entered into an agreement pursuant to which EASA will provide technical advisory services on financial matters as from September 19, 2005 and for a term of five years. In consideration of these services, EDENOR will pay EASA an annual amount of US$ 2,000 thousand plus VAT. Any of the parties may terminate the agreement at any time by giving 60 days’ notice, without having to comply with any further obligations or paying any indemnification to the other party.

Agreement with Comunicaciones y Consumos S.A.

On March 16, 2007, the Company and Comunicaciones y Consumos S.A. (CYCSA) entered into an agreement pursuant to which the Company granted CYCSA the exclusive right to provide telecommunications services to the Company customers through the use of the Company’s network in accordance with the provisions of Decree Nº 764/2000 of the Federal Government, which contemplates the integration of voice, data and image transmission services through the existing infrastructure of electricity distribution companies such as the Company’s network. In accordance with the terms of the agreement, CYCSA will be responsible for all maintenance expenses and expenses related to the adapting of the Company’s network for the rendering of such telecommunications services. The term of the agreement will be ten years to commence from the date on which CYCSA is granted the license to render telecommunications services. The agreement will be automatically renewed upon expiration date for subsequent periods of five years, unless notice to the contrary is given by any of the parties no less than 120 days prior to the expiration of the corresponding period. In accordance with the agreement, CYCSA shall periodically request access to the Company’s network. Such request will be evaluated by the Company and access will be granted based on the available capacity of the network. In consideration of the use of the network, CYCSA will grant the Company 2% of the annual charges collected from customers, before taxes, as well as 10% of the profits obtained from the rendering of the services. Furthermore, CYCSA will indemnify the Company for any obligation arising from the rendering of the services through the Company’s network. The agreement was signed on condition that CYCSA was to obtain the telecommunications license within a period of 180 days from the signing thereof, period which, in accordance with the terms of the agreement, could be extended. In line with that, the Board of Directors’ meeting held on November 7, 2007 authorized the extension of the period for obtaining the aforementioned license which, nevertheless, continues to be a condition in order for the agreement to be valid and go into effect.

Agreement with Préstamos y Servicios S.A.

On March 16, 2007, the Company entered into an agreement with Préstamos y Servicios S.A. (PYSSA), a company engaged in the rendering of financial services, pursuant to which the Company granted PYSSA the exclusive right to conduct its direct and marketing services through the use of the Company’s facilities and mailing services. As part of the agreement, the Company agreed to provide physical space in some of its offices so that PYSSA be able to offer financial and loan services to the Company customers. Furthermore, the Company agreed to include PYSSA marketing material in the mail sent to customers, including the invoices. The term of the agreement is 5 years, which will be automatically renewed for subsequent periods of five years, unless any of the parties gives notice to the other of his intention to terminate the agreement no less than 120 days prior to the expiration of the corresponding period. In accordance with the terms of the agreement, PYSSA will pay the Company 2% of the monthly charges collected from customers, before taxes, as well as 10% of the profits obtained from its services. Furthermore, PYSSA agreed to indemnify the Company for any obligation arising from the rendering of its services. The agreement established that its term was subject to the authorization of the ENRE, which pronounced favorably through Resolution Nº 381/2007.

16. CAPITAL STOCK

a)	General

As of December 31, 2007, the Company’s outstanding capital stock amounts to 906,455,100 shares, represented by 462,292,111 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 442,210,385 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 1,952,604 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share. Each and every share maintains the same voting rights, i.e. one vote per share. There are no preferred shares of any kind, dividends and/or preferences in the event of liquidation, privileged participation rights, prices and dates, or unusual voting rights. Moreover, there are no significant terms of contracts allowing for either the issuance of additional shares or any commitment of a similar nature. The capital increase of 74,844,900 shares resolved by the Board of Directors in the meeting held on June 14, 2007, as per the powers granted by the Shareholders’ Meeting held on June 7, 2006, was registered with the pertinent regulatory authorities on September 18, 2007 (Note 1).

As of December 31, 2006, the Company’s outstanding capital stock amounted to 831,610,200 shares, represented by 424,121,202 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 324,327,978 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 83,161,020 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share.

b)	Restriction on the transfer of the Company’s common shares

The Company’s by-laws provide that Class “A” shareholders may transfer their shares only with the prior approval of the ENRE. The ENRE must communicate its decision within 90 days upon submission of the request for such approval, otherwise the transfer will be deemed approved.

Furthermore, Caja de Valores S.A. (the Public Register Office), which keeps the Share Register of the shares, is entitled (as stated in the Company’s by-laws) to reject such entries which, at its criterion, do not comply with the rules for the transfer of common shares included in (i) the Argentine Business Organizations Law, (ii) the Concession Agreement and (iii) the Company’s by-laws.

In addition, Class “A” shares are pledged during the entire term of the concession as security for the performance of the obligations assumed under the Concession Agreement.

Additionally, in connection with the issuance of Class 2 Corporate Notes, EASA is required to be the beneficial owner and owner of record of not less than 51% of EDENOR’s issued, voting and outstanding shares.

Section ten of the Adjustment Agreement signed with the Grantor of the Concession and ratified through Decree No. 1957/06, stipulates that from the signing of the agreement through the ending of the Contractual Transition Period, the majority shareholders may not modify their ownership interest nor sell their shares.

c)	Employee Stock Ownership Program (ESOP)

At the time of the privatization of SEGBA (the Company’s predecessor), the Argentine Government assigned the Company’s Class C shares, representing 10% of the Company’s outstanding capital stock, for the creation of an Employee Stock Ownership Program (ESOP) in compliance with the provisions of Law N° 23,696 and its regulatory decrees. Through this program, certain eligible employees (including former SEGBA employees who had been transferred to the Company) were entitled to receive a specified number of Class C shares, to be calculated on the basis of a formula that took into consideration a number of factors including employee salary, position and seniority. In order to implement the ESOP, a general transfer agreement, a voting trust agreement and a trust agreement were signed.

Pursuant to the general transfer agreement, participating employees were allowed to defer payment of the Class C shares over time. As security for the payment of the deferred purchase price, the Class C shares were pledged in favor of the Argentine government. This pledge was released on April 27, 2007 upon full payment to the Argentine Government of the deferred purchase price of all Class C shares. Additionally, in accordance with the terms of the original trust agreement, the Class C shares were held in trust by Banco Nación, acting as trustee, for the benefit of the ESOP participating employees and the Argentine Government. Furthermore, in accordance with the voting trust agreement, all political rights of participating employees (including the right to vote at ordinary and extraordinary shareholders’ meetings) were to be jointly exercised until full payment of the deferred purchase price and release of the pledge in favor of the Argentine Government. On April 27, 2007, ESOP participating employees fully paid the deferred purchase price to the Argentine Government, accordingly, the pledge was released and the voting trust agreement was terminated.

In accordance with the regulations applicable to the ESOP, participating employees who retired before full payment of the deferred purchase price to the Argentine Government was made, were required to transfer their shares to the Guarantee and Repurchase Fund (Fondo de Garantía y Recompra) at a price to be calculated in accordance with a formula established in the general transfer agreement. As of the date of payment of the deferred purchase price, the Guarantee and Repurchase Fund had not fully paid the amounts due to former ESOP participating employees for the transfer of their Class C shares.

A number of former employees of both SEGBA and the Company have brought legal actions against the Guarantee and Repurchase Fund, the Argentine Government and, in few cases, against the Company, in each case in relation to the administration of the Employee Stock Ownership Program. The plaintiffs who are former employees of SEGBA were not deemed eligible by the corresponding authorities to participate in the Employee Stock Ownership Program at the time of its creation. This decision is being disputed by the plaintiffs who are therefore seeking compensation. The plaintiffs who are former employees of the Company are claiming payment for the unpaid amounts owed to them by the Guarantee and Repurchase Fund either due to non-payment of the transfer of their shares upon retirement in favor of the Guarantee and Repurchase Fund or incorrect calculation of amounts paid to them by the Guarantee and Repurchase Fund. In several of these claims, the plaintiffs have obtained attachment orders or preliminary injunctions against the Guarantee and Repurchase Fund on Class C shares and funds deposited in such Fund. Due to the fact that the resolution of these legal proceedings is still pending, the Federal Government has instructed Banco Nación to create a Contingency Fund so that a portion of the proceeds of the offering of the Employee Stock Ownership Program Class C shares be kept during the course of the legal actions.

No accrual for litigation has been recorded in the financial statements in connection with the legal actions brought against the Company as the Company’s management believes that EDENOR is not responsible for the above-mentioned claims.

In accordance with the agreements, laws and decrees that govern the Employee Stock Ownership Program, the Class C shares may only be held by personnel of the Company, therefore before the public offering of the Class C shares that had been separated from the Program, such shares were converted into Class B shares and sold. In conformity with the by-laws, the political rights previously attributable to Class C shares are at present jointly exercised with those attributable to Class B shares and the holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares when electing directors and supervisory committee members. As of December 31, 2007, 1,952,604 Class C shares, representing 0.22% of the Company’s capital stock, are outstanding.

17. REGULATORY FRAMEWORK

a)	General

The Company's business is regulated by Law N° 24,065, which created the ENRE. In this connection, the Company is subject to the regulatory framework provided under the aforementioned Law and the regulations issued by the ENRE.

The ENRE is empowered to: a) approve and control tariffs, and b) control the quality of both the service and the technical product, as established in the Concession Agreement. Failure to comply with the provisions of such Agreement and the rules and regulations governing the Company's business will make the Company liable to penalties that may include the forfeiture of the concession.

As from September 1, 1996, there has been a change in the methods applied to control the quality of both the product and the service provided by the Company. Within this new framework, compensation between areas and circuits of different quality is not allowed, instead, the specific quality provided to individual customers, rather than an average customer value, must be measured. As a result, fines will be credited to users affected by service deficiencies in future bills. Penalties are imposed in connection with the following major issues:

1. Deviation from quality levels of technical product, as measured by voltage levels and network variations;

2. Deviation from quality levels of technical service, as measured by the average interruption frequency per Kilovatios (KVA) and total interruption time per KVA;

3. Deviation from quality levels of commercial service, as measured by the number of claims and complaints made by customers, service connection times, the number of estimated bills and billing mistakes;

4. Failure to comply with information gathering and processing requirements so as to evaluate the quality of both the technical product and the technical service;

5. Failure to comply with public safety regulations.

As of December 31, 2007 and 2006, the Company has accrued the penalties for resolutions not yet issued by the ENRE corresponding to the six-month control periods elapsed through those dates. As of December 31, 2007 and 2006, the Company has applied the adjustment contemplated in the Temporary Tariff Regime (TTR) (Note 17.b item vii).

As of December 31, 2007 and 2006, liabilities for penalties amounting to 281,395 and 241,079, respectively, have been included in non-current liabilities (Note 10).

In addition, as of December 31, 2007, the Company’s management has considered that the ENRE has complied with the obligation to suspend lawsuits aimed at collecting penalties.

Furthermore, the Company has been notified of certain preliminary attachments levied on funds deposited in its bank accounts as a consequence of the executory proceedings brought by the ENRE against the Company for imposed and unpaid penalties in the amount of 59 and 67 as of December 31, 2007 and 2006, respectively (Note 5). Additionally, after December 31, 2007 and until the date of issuance of these financial statements, the Company has not been notified of any other attachments (Note 17.b).

Moreover, on July 12, 2006 the National Energy Secretariat issued Resolution N° 942/2006 which modifies the allocation of any excess funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), which provides for the application of both tariff incentives and penalties aimed at encouraging customers to reduce consumption. As from July 1, 2006, such excess funds may be applied against the amounts receivable that the Company maintains in the Trade receivables account as Unbilled -National Fund of Electricity, for “Quarterly Adjustment Coefficient of the National Fund of Electricity” (section 1 of Law N° 25,957) for 3,036 and 23,015 as of December 31, 2007 and 2006, respectively. On August 10, 2006 the ENRE issued Resolution Nº 597/2006 which regulates the aforementioned Resolution N° 942/2006 of the National Energy Secretariat and establishes the compensation mechanism to be used.

On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the National Energy Secretariat. Said resolution establishes that the amounts paid by the Company for the Quarterly Adjustment Coefficient (CAT) implemented by Section 1 of Law Nº 25,957, as well as the amounts corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007 (items b and c of this note) has to be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), until their transfer to the tariff is granted by the regulatory authority. The resolution also establishes that the MMC adjustment for the period May 2006 through April 2007, applicable as from May 1, 2007, amounts to 9.63 %.

Section 21 of the Concession Agreement clearly stipulates that any change, replacement or modification of a distribution company network must be reimbursed by the third party requesting such change, replacement or modification. Income from this concept, which amounts to 7,203, has been included in the statement of income in the account Other Income (Expense) - Net (Note 12).

b) Concession

The term of the concession is 95 years and may be extended for an additional maximum period of 10 years. The term of the concession is divided into management periods: a first period of 15 years and subsequent periods of 10 years. At the end of each management period, the Class “A” shares representing 51% of EDENOR’s capital stock, currently held by EASA, must be offered for sale through a public bidding. If EASA makes the highest bid, it will continue to own the Class “A” shares, and no further disbursements will be necessary. On the contrary, if EASA is not the highest bidder, then the bidder who makes the highest bid must pay EASA the amount of the bid in accordance with the conditions of the public bidding. The proceeds of the sale of Class “A” shares will be delivered to EASA after deducting any amounts receivable to which the Grantor of the concession may be entitled.

In accordance with the provisions of the Concession Agreement, the Company shall take the necessary measures to guarantee the supply and availability of electricity so as to meet demand in due time and in accordance with stipulated quality levels, for which purpose the Company shall be required to guarantee sources of supply.

For such purpose, the Company has the exclusive right to render electric power distribution and sales services within the concession area to all users who are not authorized to obtain their power supply from the Electric Power Wholesale Market (MEM), thus being obliged to supply all the electric power that may be required. In addition, the Company shall allow free access to its facilities to any MEM agents whenever required, under the terms of the Concession. No specific fee must be paid by the Company under the Concession Agreement during the term of the Concession.

On January 6, 2002, the Federal Executive Power passed Law N° 25,561 whereby adjustment clauses denominated in US dollars or any other foreign currencies, indexation clauses based on price indexes from other countries, as well as any other indexation mechanisms stipulated in the contracts entered into by the Federal Government, including those related to public utilities, were declared null and void as from such date. The resulting prices and rates were converted into Argentine pesos at a rate of 1 peso per US dollar. Furthermore, Law N° 25,561 authorized the Federal Executive Power to renegotiate public utility contracts taking certain requirements into account.

In accordance with the provisions of Laws N° 25,972, 26,077 and 26,204, both the declaration of economic emergency and the period to renegotiate public utility contracts were extended through December 31, 2005, 2006 and 2007, respectively.

As a part of the renegotiation process, the Unit of Renegotiation and Analysis of Public Utility Contracts (UNIREN) proposed the signing of an Adjustment Agreement that would be the basis of a comprehensive renegotiation agreement of the Concession Agreement. The Company satisfied the regulatory agency’s requirements; provided an answer to the proposal and attended the public hearing convened for such purpose, rejecting in principle the proposal on the grounds that it did not properly address the need to redefine the terms of the agreement as contemplated by the law. Nevertheless, the Company ratified its willingness to reach an understanding that would restore the financial and economic equation of the concession agreement. On September 21, 2005, the Company signed the Adjustment Agreement within the framework of the process of renegotiation of the Concession Agreement set forth in Law N° 25,561 and supplementary regulations. Due to the appointment of a new Economy and Production Minister, on February 13, 2006 a new copy of the Adjustment Agreement was signed under the same terms as those stipulated in the agreement signed on September 21, 2005.

The Adjustment Agreement establishes the following:

i)		the implementation of a Temporary Tariff Regime (RTT) effective as from November 1, 2005, including a 23% average increase in the distribution margin, which may not result in an increase in the average tariff of more than 15%, and an additional 5% average increase in the value added distribution (VAD), allocated to certain specified capital expenditures;
ii)		the requirement that during the term of said temporary tariff regime, dividend payment be subject to the approval of the regulatory authority;
iii)		the establishment of a “social tariff” for the needy and the levels of quality of the service to be rendered;
iv)		the suspension of the claims and legal actions filed by the Company and its shareholders in national or foreign courts due to the effects caused by the Economic Emergency Law;
v)		the carrying out of a Revision of the Company Tariff Structure (RTI) which will result in a new tariff regime that will go into effect on a gradual basis and remain in effect for the following 5 years. In accordance with the provisions of Law N° 24,065, the National Electric Power Regulatory Authority will be in charge of such review;
vi)		the implementation of a minimum investment plan in the electric network for an amount of 178.8 million to be fulfilled by EDENOR during 2006, plus an additional investment of 25.5 million should it be required (item f below);
vii)		the adjustment of the penalties imposed by the ENRE that are payable to customers as discounts, which were notified by such regulatory agency prior to January 6, 2002 as well as of those that have been notified, or whose cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect;
viii)		the waiver of the penalties imposed by the ENRE that are payable to the Argentine State, which have been notified, or their cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect;
ix)		the payment of the penalties imposed by the ENRE, which are described in paragraph vii above, in fourteen semiannual installments, which represent approximately two-thirds of the penalties imposed by the ENRE before January 6, 2002 as well as of those that have been notified, or whose cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect, subject to compliance with certain requirements.

Said agreement was ratified by the Federal Executive Power through Decree No. 1957/06, signed by the President of Argentina on December 28, 2006 and published in the Official Gazette on January 8, 2007. This agreement stipulates the terms and conditions that, upon compliance with the other procedures required by the regulations, will be the fundamental basis of the Comprehensive Renegotiation of the Concession Agreement of electric power distribution and sale within the federal jurisdiction, between the Federal Executive Power and the Company.

Additionally, on February 5, 2007 the Official Gazette published Resolution N° 51/2007 of the ENRE which approves the Company’s new electricity rate schedule applicable for consumption recorded as from February 1, 2007. This document provides for the following:

a)		A 23% average increase in distribution costs, service connection costs and service reconnection costs in effect which the Company collects as the holder of the concession of the public service of electric power distribution, except for the residential tariffs;
b)		Implementation of an additional 5% average increase in distribution costs, to be applied to the execution of the works and infrastructure plan detailed in Appendix II of the Adjustment Agreement. In this regard, the Company has set up the required fund, which as of December 31, 2007 amounts to 12,420. This amount is net of the amounts transferred to CAMMESA for 20,479;
c)		Implementation of the Cost Monitoring Mechanism (MMC) contemplated in Appendix I of the Adjustment Agreement, which for the six-month period beginning November 1, 2005 and ending April 30, 2006, shows a percentage of 8.032%. This percentage will be applied to non-residential consumption recorded from May 1, 2006 through January 31, 2007;
d)		Invoicing in 55 equal and consecutive monthly installments of the differences arising from the application of the new electricity rate schedule for non-residential consumption recorded from November 1, 2005 through January 31, 2007 (items i) and ii) above) and from May 1, 2006 through January 31, 2007 (item iii) above);
e)		Invoicing of the differences corresponding to deviations between foreseen physical transactions and those effectively carried out and of other concepts related to the Wholesale Electric Power Market (MEM), such as the Specific fee payable for the expansion of the network, Transportation and Others, included in Trade Receivables under Receivables from sales of electricity as Unbilled (Note 4);
f)		Presentation, within a period of 45 calendar days from the issuance of this resolution, of an adjusted annual investment plan, in physical and monetary values, in compliance with the requirements of the Adjustment Agreement.

In the year ended December 31, 2006 the Company has recorded the adjustment of the penalties described in paragraphs a) and c) of this note, for an amount of 46,972.

In the year ended December 31, 2007, the Company has recorded the adjustment of penalties deriving from the application of the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007, for an amount of 18,084.

Revenues from the retroactive tariff increase deriving from the implementation of the new electricity rate schedule applicable to non-residential consumption for the period of November 1, 2005 through January 31, 2007, have been fully recognized in the financial statements for the year ended December 31, 2007. Such amount, which totals 218,591, will be invoiced in 55 equal and consecutive monthly installments, as described in item d) of paragraph b) of this note. As of December 31, 2007, the installments corresponding to the months of February through December 2007 for a total of 47,310 have already been billed.

On April 30, 2007, the Official Gazette published Resolution No. 434/2007 of the Energy Secretariat which adjusts the time periods set forth in the Adjustment Agreement signed by the Company and the Grantor of the Concession and ratified by Decree No. 1957 of the Federal Government dated December 28, 2006.

In this regard, the aforementioned Resolution provides that the contractual transition period established in the Adjustment Agreement will be in effect from January 6, 2002 to the date on which the Revision of the Company Tariff Structure (RTI) contemplated in the aforementioned Adjustment Agreement, goes into effect.

Furthermore, the Resolution establishes that the new electricity rate schedule resulting from the RTI will go into effect on February 1, 2008. It also stipulates that, in the event that the tariff resulting from the RTI is higher than the tariff established in section 4 of the Adjustment Agreement, the transfer of the increase to the tariff will be made in accordance with the provisions of section 13.2 of the Adjustment Agreement, which establish that the first adjustment will take effect as from February 1, 2008 and the second will take effect six months later, maintaining the percentages agreed-upon in the Adjustment Agreement.

As of the date of issuance of these financial statements, no resolution has been issued related to the application of the electricity rate schedule resulting from the RTI which was expected to be in effect since February 1, 2008.

The aforementioned resolution requires the Company to present an investment plan before May 1, 2007 (which has already been complied with), and the extension of the obligations and commitments set forth in section 22 of the Adjustment Agreement until the date on which the electricity rate schedule resulting from the RTI goes into effect, allowing the Company and its shareholders to resume the claims suspended as a consequence of the Adjustment Agreement if the new electricity rate schedule does not go into effect in the aforementioned time period.

Furthermore, on July 7, 2007 the Official Gazette published Resolution N° 467/07 of the ENRE pursuant to which the first management period is extended for 5 years to commence as from the date on which the Revision of the Company Tariff Structure (RTI) goes into effect. Its original maturity would have taken place on August 31, 2007.

On September 19, 2007, the Energy Secretariat by Note No. 1006/07 requested that the Company comply with the provisions of Resolutions Nº 1875 and 223/07 of the aforementioned Secretariat, dated December 5, 2005 and January 26, 2007, respectively.

In accordance with the aforementioned resolutions, the Company must transfer to CAMMESA, 61.96% of the total amount of the special fund set up in compliance with Clause 4.7 of the Adjustment Agreement, plus any interest accrued on the financial investments made by the Company with such funds. Such funds will be used for the execution of the works for connecting Central Costanera and Central Puerto electricity generation plants with Malaver substation. As of December 31, 2007, the Company recorded 20,478 in Property, plant and equipment (Exhibit A) in the Construction in process account, and 1,931 in Other liabilities in the Capital Expenditures fund - CAMMESA account (Note 10).

c) Concession of the use of real property

Pursuant to the Bid Package, SEGBA granted the Company the free use of real property for periods of 3, 5 and 95 years, with or without a purchase option, based on the characteristics of each asset, and the Company would be responsible for the payment of any taxes, charges and contributions levied on such properties and for the taking out of insurance against fire, property damage and third-party liability, to SEGBA’s satisfaction.

The Company may make all kind of improvements to the properties, including new constructions, upon SEGBA’s prior authorization, which will become the grantor’s property when the concession period is over, and the Company will not be entitled to any compensation whatsoever. SEGBA may terminate the gratuitous bailment contract after demanding the performance by the Company of any pending obligation, in certain specified cases contemplated in the Bid Package. At present, as SEGBA’s residual entity has been liquidated, these presentations and controls are made to the National Agency of Public Properties (ONABE).

As of the date of issuance of these financial statements, the Company had acquired for an amount of 12,765, nine of these properties whose gratuitous bailment contracts had expired. The title deeds of eight of these properties have been executed at a price of 12,375. As for the remaining property, a down payment of 117 has been made while the outstanding amount of 273 will be payable upon the execution of the title deed on a date to be set by the Ministry of Economy.

18. CASH FLOW INFORMATION

a) Cash and cash equivalents:

For the preparation of the Statement of Cash Flows, the Company considers as cash equivalents all highly liquid investments with original maturities of three months or less.

	As of December 31, 2007		As of December 31, 2006		As of December 31, 2005
Cash and Banks		3,459		481		11,659
Time deposits		12,087		1,360		278,238
Money market funds		0		30,832		18,242
Notes receivable (Euro Commercial Paper)		85,652		0		0
Total cash and cash equivalents in the Statement of Cash Flows		101,198		32,673		308,139

b) Interest paid and collected:

	For the years ended December 31,
	2007			2006
Interest paid during the year (*)		(38,149	)		(35,951	)
Interest collected during the year		3,175			2,175

(*) Capitalized in Property, plant and equipment 12,665 and 9,283 as of December 31, 2007 and 2006, respectively (Notes 2 and 3.h).

19. INSURANCE COVERAGE

As of December 31, 2007, the Company holds the following insurance policies for purposes of safeguarding its assets and commercial operations:

Risk covered		Amount insured

Comprehensive (1)	US	$	417,516,597
Mandatory life insurance		$	17,570,250
Theft of securities	US	$	100,000
Vehicles (theft, third party liability and damages)		$	7,719,700
Land freight	US	$	2,000,000
Imports freight		$	2,250,000

(1)	Includes: fire, partial theft, tornado, hurricane, earthquake, earth tremors, flooding and debris removal from facilities on facilities providing actual service, except for high, medium and low voltage networks.

20. CLAIM OF THE PROVINCE OF BUENOS AIRES BOARD OF ELECTRIC POWER

On December 1, 2003, the Board of Electric Power of the Province of Buenos Aires (Board) filed a claim against EDENOR in the amount of 284,364 that includes surcharges and interest as of the date of the claim, and imposed penalties for an amount of 25,963, due to the Company’s alleged failure to act as collecting agent of certain taxes established by Decrees-law N° 7290/67 and 9038/78 from July 1997 through June 2001.

On December 23, 2003, the Company appealed the Board's decision with the Tax Court of the Province of Buenos Aires, which had the effect of temporarily suspending the Company’s obligation to pay. Such appeals were filed on the grounds that the Federal Supreme Court had declared that the regulations established by the aforementioned Decrees-law were unconstitutional, as they were incompatible with the Province of Buenos Aires’ commitment not to levy any taxes on the transfer of electricity.

On March 20, 2007, the Board of Electric Power of the Province of Buenos Aires amended the original complaint to include an additional claim in the amount of 7,720 that includes surcharges and interest as of the date of the claim for the period of July 2001 through June 2002 -extending the claim to certain Company Directors.

On June 27, 2007, the Tax Court of the Province of Buenos Aires pronounced in favor of the appeal duly lodged by the Company.

Therefore, no accrual has been recorded for these claims as the Company’s management believes that there exist solid arguments to support its position.

21. LEGAL ACTION FOR ALLEGED ENVIRONMENTAL POLLUTION

On May 24, 2005, three of EDENOR’s employees were indicted on charges of polychlorinated biphenyl (PCB)-related environmental contamination. In connection with this alleged violation, the judge ordered a preliminary attachment on the Company's assets in the amount of 150 million to cover the potential cost of damage repair, environmental restoration and court costs. On May 30, 2005, the Company filed appeals against both the charges brought against its employees and the attachment order. On December 15, 2005, the Court of Appeals dismissed the charges against all three defendants and, accordingly, revoked the attachment order against the Company’s assets. The decision of the Court of Appeals, which was based on the fact that the existence of pollution could not be proved, also established that the trial judge should order the acquittal of two ENRE public officers who had been indicted on related charges. An appeal against this decision was filed in the Tribunal de Casación (the highest appellate body for this matter), which on April 5, 2006 ruled that the appeal against the decision regarding EDENOR’s employees and the Company was not admissible.

On July 16, 2007, the Company was notified that on July 11, 2007 the Investigating Judge ruled the definitive acquittal of all Company officials and employees that had been indicted in the case, thus ordering the closing of the case. This decision may be appealed.

The Company’s management estimates that there are no legal grounds for any action against the Company or its employees in connection with this matter. Accordingly, no accrual has been recorded in the financial statements.

22. RESTRICTIONS ON THE DISTRIBUTION OF EARNINGS

In accordance with the provisions of Law N° 19,550, 5% of the net income for the year must be appropriated to the legal reserve, until such reserve equals 20% of capital stock. The Ordinary Shareholder’s Meeting held on April 16, 2007, did not appropriate any amount to said legal reserve as of December 31, 2006, due to the existence of accumulated losses as of the end of that year.

Moreover, in accordance with the provisions of Law N° 25,063, passed in December 1998, dividends to be distributed, whether in cash or in kind, in excess of accumulated taxable profits as of the fiscal year-end immediately preceding the date of payment or distribution, shall be subject to a final 35% income tax withholding, except for those dividends distributed to shareholders who are residents of countries benefited from conventions for the avoidance of double taxation, who will be subject to a lower tax rate. For income tax purposes, accumulated taxable income shall be the unappropriated retained earnings as of the end of the year immediately preceding the date on which the above-mentioned law went into effect, less dividends paid plus the taxable income determined as from such year and dividends or income from related companies in Argentina.

Since the restructuring of the Company’s financial debt referred to in Note 14, the Company is not allowed to distribute dividends until April 24, 2008 or until such time when the Company’s leverage ratio is lower than 2.5, whichever occurs first. As from such date/time, distribution of dividends will only be allowed under certain circumstances depending on the Company’s indebtedness ratio.

Certain restrictions on the distribution of dividends by the Company and the need for approval by the ENRE for any distribution have been disclosed in Note 17.b).

23. CORPORATE NOTES PROGRAM

The Annual General Shareholders’ Meeting held on February 23, 2006, approved the extension of the Global Medium-Term Corporate Notes Issuance Program for a Maximum Amount outstanding at any time of up to US$ 600,000 thousand (or its equivalent in any other currency). Said extension was also approved by the CNV through Resolution N° 15,359 issued by the CNV’s Board of Directors on March 23, 2006.

On June 14, 2007, the Company’s Board of Directors approved the updating of the Trust Agreement for the issuance of corporate notes that had been duly approved by the CNV, as required by section 76 of Chapter VI of the CNV’s Regulations. On June 1, 2007, the Company filed with the CNV a new version of the trust agreement together with accounting and financial information as well as other relevant data on the Company as of March 31, 2007.

On June 28, 2007, the Company’s Board of Directors approved the issuance and public offering, within the framework of the Program and under the terms of Law No. 23,576 as amended, of fixed rate Corporate Notes for a nominal value of up to US$ 250,000 thousand with maximum maturity in 2017.

On October 9, 2007, the Company issued and carried out the public offering of Class 7 Corporate Notes for US$ 220,000 thousand. The 10-year term Corporate Notes were issued at an issue price of 100% of the principal amount, and accrue interest as from the date of issuance at a fixed rate of 10.5% per annum, payable on April 9 and October 9 of each year, with the first interest payment maturing on April 9, 2008. Principal will be amortized by a lump sum payment at maturity date, on October 9, 2017. The Company has requested authorization for the trading of the Corporate Notes on the Buenos Aires Stock Exchange, the Mercado Abierto Electrónico S.A. (the OTC market of Argentina), the Luxembourg Stock Exchange, and the Euro MTF Market, which is the alternative market of the Luxembourg Stock Exchange. Furthermore, the Company may request authorization for the listing of the Corporate Notes on the PORTAL Market as well as authorization for their trading and/or negotiation on any other stock exchange and/or self-regulated market of Argentina and/or abroad.

Most of the net proceeds from the sale of the Corporate Notes were used for the purchase, payment or redemption of the Company’s outstanding Discount Corporate Notes due in 2014 (Note 14).

Main Covenants:

1) Negative Covenants

The terms and conditions of the Corporate Notes include a series of negative covenants that limit the Company’s actions with regard to, among others, the following:

- encumbrance or authorization to encumber its property or assets;

- incurrence of indebtedness, in certain specified cases;

- sale of the Company’s assets related to its main business;

- carrying out transactions with shareholders or related parties;

- making certain payments (including, among others, dividends, purchases of Edenor’s common shares or payments on subordinated debt).

2) Suspension of Covenants

Certain negative covenants stipulated in the trust agreement will be suspended or adjusted if:

(a)	The Company’s long-term debt rating is raised to Investment Grade, or

(b) The Company’s Level of Indebtedness is equal to or lower than 2.5.

If the Company subsequently losses its Investment Grade rating or its Level of Indebtedness is higher than 2.5, as applicable, the suspended negative covenants will be once again in effect.

However, the reinstatement of the covenants will not affect those acts which the Company may have performed during the suspension of such covenants.

3) Registration Rights

In accordance with the Registration Rights Agreement, the Company has agreed to file with the Securities and Exchange Commission (SEC), within a period of 300 days from the original date of issuance of the Corporate Notes, an application requesting authorization for an authorized exchange offer of the Corporate Notes for news notes of the same class registered with the SEC in accordance with the Securities Act, representing the same outstanding debt and subject to similar terms and conditions.

The exchanged corporate notes would have no restrictions concerning their transfer and would be freely transferable after the authorized exchange offer by those Corporate Notes holders who are not related parties of the Company.

For the year ended December 31, 2007, expenses incurred by the Company in relation to the public offering of Class 7 Corporate Notes amount to 7,403. Of such amount, payment of 4,176 is still pending (Note 10).

24. BREAKDOWN OF TEMPORARY INVESTMENTS, RECEIVABLES AND LIABILITIES BY COLLECTION AND PAYMENT TERMS

As required by the CNV’s regulations, the balances of the accounts below as of December 31, 2007, are as follow:

Term	Investments		Receivables (1)		Loans		Other payables (2)


With no explicit due date		0		0		0		281,395

With due date

Past due:

Up to three months		0		50,014		0		0
From three to six months		0		10,359		0		0
From six to nine months		0		5,818		0		0
From nine to twelve months		0		5,006		0		0
Over one year		0		100,935		0		0
Total past due		0		172,132		0		0


To become due:

Up to three months	97,739	231,155	29,290	447,593
From three to six months	0	3,964	0	13,794
From six to nine months	0	3,808	0	4,511
From nine to twelve months	0	3,816	-	4,510
Over one year	0	278,889	949,062	60,160
Total to become due	97,739	521,632	978,352	530,568

Total with due date	97,739	693,764	978,352	530,568

Total	97,739	693,764	978,352	811,963

(1) Excludes allowances

(2) Comprises total liabilities except accrued litigation and debt notes.

Due to the financial debt restructuring mentioned in Note 14, Corporate Notes accrue interest at floating and fixed rates, which amount to an average of approximately 10.19%; only 4.05% of the debt accrues interest at a floating rate whereas the remaining accrues interest at a fixed rate.

25. FINANCIAL STATEMENTS TRANSLATION INTO ENGLISH LANGUAGE

These financial statements are the English translation of those originally prepared by the Company in Spanish and presented in accordance with accounting principles generally accepted in Argentina. The effects of the differences between the accounting principles generally accepted in Argentina and the accounting principles generally accepted in the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, results of operation, shareholder’s equity or cash flows in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

EXHIBIT A

PROPERTY, PLANT AND EQUIPMENT

(stated in thousands of pesos)

	Original value												Depreciation											Net		Net
MAIN ACCOUNT	At beginning		Additions		Retirements			Transfers			At end		At beginning		Retirements		For the		Annual			At end		book value		book value
	of year										of year		of year				year		rate			of year		2007		2006
FACILITIES IN SERVICE
Substations		849,840		0		0			22,725			872,565		284,103		0		26,064		3 - 4	%		310,167		562,398		565,737
High voltage networks		343,107		0		(777	)		39,576			381,906		122,853		(367		)11,113		3 - 4	%		133,599		248,307		220,254
Medium voltage networks		748,656		0		(59	)		25,331			773,928		275,357		(34		)24,192		3 - 4	%		299,515		474,413		473,299
Low voltage networks		1,628,179		0		(740	)		30,704			1,658,143		878,202		(270		)58,794		4 - 5	%		936,726		721,417		749,977
Transformation chambers and platforms		460,791		0		0			30,368			491,159		175,334		0		15,857		3 - 4	%		191,191		299,968		285,457
Meters		546,887		0		0			36,483			583,370		211,057		0		24,109		4 - 5	%		235,166		348,204		335,830
Buildings		76,215		0		0			1,364			77,579		19,955		0		1,098		2 - 3	%		21,053		56,526		56,260
Communications network and facilities		83,637		0		0			586			84,223		48,273		0		4,327		4 - 5	%		52,600		31,623		35,364
Total facilities in service		4,737,312		0		(1,576	)		187,137			4,922,873		2,015,134		(671		)165,554					2,180,017		2,742,856		2,722,178
FURNITURE, TOOLS AND EQUIPMENT
Furniture, equipment and software projects		161,913		6,295		0			0			168,208		151,031		0		6,998		12 - 13	%		158,029		10,179		10,882
Tools and other		44,922		257		0			0			45,179		41,213		0		1,235		10 - 11	%		42,448		2,731		3,709
Transportation equipment		15,066		664		(364	)		0			15,366		13,376		(164		)570		20	%		13,782		1,584		1,690
Total furniture, tools and equipment		221,901		7,216		(364	)		0			228,753		205,620		(164		)8,803					214,259		14,494		16,281
Total assets subject to depreciation		4,959,213		7,216		(1,940	)		187,137			5,151,626		2,220,754		(835		)174,357					2,394,276		2,757,350		2,738,459
CONSTRUCTION IN PROCESS
Transmission		114,270		100,609		0			(62,301	)		152,578		0		0		0		-			0		152,578		114,270
Distribution and other		72,693		234,924		0			(124,836	)		182,781		0		0		0		-			0		182,781		72,693
Total construction in process		186,963		335,533		0			(187,137	)		335,359		0		0		0					0		335,359		186,963
Total 2007		5,146,176		342,749		(1,940	)		0			5,486,985		2,220,754		(835		)174,357					2,394,276		3,092,709		-
Total 2006		4,932,424		215,782		(2,030	)		0			5,146,176		2,043,154		(1,380		)178,980					2,220,754		-		2,925,422

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

EXHIBIT C

INVESTMENTS IN OTHER COMPANIES

(stated in thousands of pesos)

Information on the Issuer

Last financial statements issued

Name and features

of securities

Class

Face value

Number

Adjusted

cost

Value on

method

Net book value 2007

Main activity

Date

Capital

Income for the year

Equity

% interest in capital stock

Net book value 2006

NON-CURRENT

INVESTMENTS

Art. 33 Law No. 19,550

-Companies-

Affiliated Company:

SACME S.A.

Common

non-endorsable

6,000

390

Electric power services

12/31/2007

780

378

Total

390

378

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

EXHIBIT D

OTHER INVESTMENTS

(stated in thousands of pesos)

	Net book value
MAIN ACCOUNT	2007		2006

CURRENT INVESTMENTS

Time deposits
. in foreign currency (Exhibit G)		0		1,360
. in local currency		12,087		0

Money market funds
. in local currency		0		30,832

Notes receivable (Euro Commercial Paper)
. in foreign currency (Exhibit G)		85,652		0

Total		97,739		32,192

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

EXHIBIT G

FOREIGN CURRENCY DENOMINATED ASSETS AND LIABILITIES

	2007							2006
	Foreign currency			Exchange		Booked		Foreign currency			Booked
Account	type and			rate		amount in		type and			amount in
	amount (2)					thousands		amount (2)			thousands
				(1)		of pesos					of pesos
Current Assets
Cash and banks		US$	158,237		3.109		492		US$	61,953		187
ECU			30,649		4.5724		140		ECU	31,288		125
Investments
Time deposits		US$	0		3.109		0		US$	450,184		1,360
Notes receivable (Euro Commercial Paper)		US$	27,549,541		3.109		85,652		US$	0		0
Other receivables
Prepaid expenses		US$	0		3.109		0		US$	33,450		101
Prepaid Technical Assistance Services		US$	4,883,086		3.109		15,182		US$	1,435,544		4,338
Related companies		US$	0		3.109		0		US$	1,465,585		4,429
Other debtors		US$	247,433		3.109		769		US$	0		0
Other		US$	0		3.109		0		US$	249,637		754

Total Current Assets							102,235					11,294
Total Assets							102,235					11,294
Current Liabilities
Trade accounts payable		US$	10,109,541		3.149		31,835		US$	5,050,196		15,464
		ECU	604,106		4.6315		2,798		ECU	199,772		807

Loans notes		US$	5,421,935		3.149		17,074		US$	662,494		2,029
Other liabilities
Technical assistance		US$	0		3.149		0		US$	1,458,322		4,465
Fees related to the initial public offering of capital stock		US$	259,717		3.149		818		US$	1,229,162		3,764
Fees related to debt restructuring		US$	0		3.149		0		US$	2,383,781		7,299
Fees related to corporate notes issuance program		US$	1,322,369		3.149		4,164		US$	0		0
		ECU	2,650		4.6315		12		ECU	0		0
Other		US$	397,527		3.149		1,252		US$	738,336		2,261
		ECU	130,117		4.6315		603		ECU	42,986		174
Total Current Liabilities							58,556					36,263
Non-Current Liabilities

Loans notes		US$	312,704,116		3.149		984,705		US$	376,429,657		1,152,628
Total Non-Current Liabilities							984,705					1,152,628
Total Liabilities							1,043,261					1,188,891

(1) Selling and buying exchange rate of Banco de la Nación Argentina in effect at the end of the year.

(2) US$ = US Dollar; ECU = Euro

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND 2006

EXHIBIT E

ALLOWANCES AND ACCRUALS

(stated in thousands of pesos)

	2007									2006
MAIN	At		Additions		Retirements			At		At
ACCOUNT	beginning							end		end
	of year							of year		of year
Deducted from current assets
For doubtful accounts		25,623		30,100		(15,717	)		40,006		25,623
For other doubtful accounts		2,300		600		0			2,900		2,300
For impairment of value of Municipal bonds		5,918		0		(5,918	)		0		5,918
Deducted from non-current assets
For impairment of value of deferred
tax assets		32,261		2,221		0			34,482		32,261
Included in current liabilities
Accrued litigation		25,914		16,750		(2,796	)		39,868		25,914
Included in non-current liabilities
Accrued litigation		40,606		2,237		0			42,843		40,606

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

(English translation of the financial statements originally issued in Spanish - Note 25)

INFORMATION REQUIRED BY SECTION 64 CLAUSE b) OF LAW No. 19,550

EXHIBIT H
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(stated in thousands of pesos)	2007								2006
	Transmission and		Selling		Administrative
Description	Distribution		Expenses		Expenses		Total		Total
	Expenses
Salaries and social security taxes		125,800		25,368		36,544		187,712		148,908
Postage and telephone		1,358		8,068		1,364		10,790		9,838
Bank commissions		0		7,816		0		7,816		6,663
Allowance for doubtful accounts		0		30,700		0		30,700		11,590
Supplies consumption		22,949		868		1,651		25,468		22,606
Work by third parties		74,170		29,397		10,855		114,422		83,840
Rent and insurance		2,275		635		3,176		6,086		4,178
Security service		3,992		193		741		4,926		4,057
Professional Fees		1,705		166		3,061		4,932		4,078
Computer services		43		2,089		11,416		13,548		10,146
Advertising		0		0		15,362		15,362		9,975
Reimbursements to personnel		5,613		1,157		1,353		8,123		7,145
Temporary personnel		267		1,374		341		1,982		1,943
Depreciation of property, plant and equipment		169,483		1,683		3,191		174,357		178,980
Technical assistance (*)		8,583		0		0		8,583		7,128
Directors and Supervisory Committee members' fees		0		0		1,194		1,194		852
Tax on financial transactions		0		0		31,544		31,544		19,159
Taxes and charges		1,181		11,077		1,183		13,441		10,252
Other		134		42		1,680		1,856		2,009
Total 2007		417,553		120,633		124,656		662,842		-
Total 2006		362,118		87,930		93,299				543,347
(*) Includes 3,727 and 7,128 as of December 31, 2007 and 2006, respectively, with Related Parties (Note 15).

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR S.A.)

Legal address: 1025 Azopardo Street - Autonomous City of Buenos Aires

INFORMATIVE SUMMARY

FOR THE YEARS ENDED

DECEMBER 31, 2007, 2006, 2005, 2004 AND 2003

1. General Comments

(Not covered by the Independent Auditors’ Report)

(Figures stated in thousands of pesos as indicated in Note 2 to the financial statements)

In the year ended December 31, 2007, the Company recorded a net income of 122,458 due mainly to the recognition of the retroactive tariff increase derived from the implementation of the new electricity rate schedule, which amounted to 218,591. As of the end of the year, the Company’s shareholders’ equity amounts to 1,974,581. During the year, there was a capital increase of 181,773 as a result of the Initial Public Offering of capital stock.

Net operating income amounted to 429,201, which represents a significant increase as compared to the net operating income of 35,906 recorded in the previous year. The positive evolution is due to the increase recorded in the gross margin (retroactive tariff increase as of November 1, 2005 due to the ratification of the Adjustment Agreement by the Federal Government and increase in electricity demand), partially offset by the increase recorded in operating costs.

The demand for electricity in the concession area recorded an accumulated increase of 8.2% as compared to the 2006 fiscal year.

The investment in property, plant and equipment totaled 342,749. This amount was mainly allocated to increasing service quality levels and meeting current and new customer demand.

2. Comparative balance sheet structure

(figures stated in thousands of pesos as indicated in Note 2 to the financial statements)

ACCOUNTS	12.31.2007		12.31.2006		12.31.2005		12.31.2004		12.31.2003

Current Assets		496,341		347,467		575,565		500,818		423,018
Non-Current Assets		3,351,265		3,187,196		3,000,885		3,003,803		3,055,075
Total Assets		3,847,606		3,534,663		3,576,450		3,504,621		3,478,093

Current Liabilities		539,565		435,601		2,121,341		1,906,628		1,505,423
Non-Current Liabilities		1,333,460		1,428,712		77,825		71,108		355,846
Total Liabilities		1,873,025		1,864,313		2,199,166		1,977,736		1,861,269

Shareholders’ Equity		1,974,581		1,670,350		1,377,284		1,526,885		1,616,824

Total Liabilities and Shareholders’ Equity		3,847,606		3,534,663		3,576,450		3,504,621		3,478,093

3. Comparative income structure

(figures stated in thousands of pesos as indicated in Note 2 to the financial statements)

ACCOUNTS	12.31.2007			12.31.2006			12.31.2005			12.31.2004			12.31.2003

Net operating income (loss)		429,201			35,906			(438	)		39,307			67,654
Financial income (expenses) and holding gains (losses)		(182,755	)		112,922			(148,511	)		(110,685	)		157,255
Other income (expense), net		996			(22,944	)		(652	)		(18,561	)		(14,257	)

Income (loss) before taxes		247,442			125,884			(149,601	)		(89,939	)		210,652

Income tax		(124,984	)		167,182			0			0			0

Net income (loss) for the year		122,458			293,066			(149,601	)		(89,939	)		210,652

4. Statistical data (in units of power)

(Not covered by the Independent Auditors’ Report)

CONCEPT	UNIT		12.31.2007		12.31.2006		12.31.2005		12.31.2004		12.31.2003

Sales of electricity (1)		GWh		17,886		16,632		15,677		14,752		13,811
Electricity purchases (1)		GWh		20,233		18,700		17,623		16,673		15,811

(1) The related amounts include toll fees.

5. Ratios

RATIOS		12.31.2007			12.31.2006			12.31.2005			12.31.2004			12.31.2003

Current	Current assets		0.92			0.80			0.27			0.26			0.28
	Current liabilities

Solvency	Shareholders’ Equity		1.05			0.90			0.63			0.77			0.87
	Total liabilities

Fixed assets	Non-current assets		0.87			0.90			0.84			0.86			0.88
	Total assets

Income (loss) before taxes	Income (Loss) before taxes		13.36	%		9.14	%		(9.80	)%		(5.56	)%		14.98	%
	Shareholders’ Equity excluding income (loss) for the year

6. Outlook

(Not covered by the Independent Auditors’ Report)

During the 2007 fiscal year, the Argentine economy continued increasing at a high rate.

Both tax collection and the international reserves of the Argentine Central Bank continued increasing, as it occurred during 2006.

As regards inflation, the government continues monitoring the evolution of prices of some basic products and services, and has signed price agreements with several major companies.

With regard to the Adjustment Agreement, it was ratified by the Federal Government through Decree No. 1957/06 which was published in the Official Gazette on January 8, 2007. Additionally, on February 5, 2007 the Official Gazette published Resolution Nº 51/2007 of the ENRE which approves the Company’s new electricity rate schedule, to be applied for electricity consumption recorded as from February 1, 2007. Furthermore, on April 30, 2007 the Official Gazette published Resolution Nº 434/2007 of the Energy Secretariat which establishes, among other things, that the new electricity rate schedule resulting from the Revision of the Company Tariff Structure (RTI) will go into effect on February 1, 2008. On October 4, 2007, the Official Gazette published Resolution Nº 1037/2007 of the National Energy Secretariat which establishes that the amounts corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007, be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE) until their transfer to the tariff is recognized.

These regulations have allowed and will allow an increase in revenues improving the Company’s operating indicators.

The Company has successfully carried out the public offering process of part of its capital stock in local and international markets with the purpose of increasing financing resources, using the proceeds for improving the development of its activities and the rendering of services as well as for the partial reduction of its financial indebtedness.

Furthermore, on October 9, 2007, as part of the Global Medium-Term Corporate Notes Issuance Program, the Company issued 10-year term Corporate Notes for US$ 220,000 thousand, which improves the Company’s financing structure.

Buenos Aires, February 26, 2008

ALEJANDRO MACFARLANE

Chairman

INDEPENDENT AUDITORS´ REPORT

To the President and Board of Directors of

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE

SOCIEDAD ANONIMA (EDENOR S.A.)

Legal address: Azopardo 1025

City of Buenos Aires

1. Identification of the financial statements subject to audit

We have audited the accompanying financial statements of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANONIMA (EDENOR S.A.) (the “Company”), which include the balance sheet as of December 31, 2007, and the statements of income, changes in shareholders´ equity and cash flows for the year then ended, with their notes 1 to 25 (note 2 and 3 describe a summary of the significant accounting policies) and supplemental Exhibits A, C, D, E, G and H, thereto.

The financial statements and the supplemental information referred to above are presented for comparative purposes with the financial statements and the supplemental information for the year ended December 31, 2006.

The Company's Board of Directors and Management are responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in Argentina, for public companies. Such accounting principles include those approved by the Professional Council of Economic Sciences of the City of Buenos Aires and the alternatives selected by the National Securities Commission (CNV) in certain accounting areas whereby the professional accounting principles accept more than one accounting criterion. This responsibility includes (i) designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to errors or omissions or to irregularities; (ii) selecting and applying appropriate accounting policies, and (iii) making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these financial statements based on our audit carried out pursuant to the scope of work outlined in section 2 of this report.

2. Scope of our work

We conducted our audit in accordance with auditing standards generally accepted in Argentina, as adopted by the Professional Council in Economic Sciences of the City of Buenos Aires. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures, substantially on a test basis, to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to errors or omissions or to irregularities. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Company's Board of Directors and Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

3. Opinion

In our opinion the financial statements referred to in section 1, present fairly, in all material respects, the financial position of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANONIMA (EDENOR S.A.) as of December 31, 2007, the results of its operations, changes in its shareholders’ equity and its cash flows for the year then ended, in accordance with accounting principles generally accepted in Argentina, as approved by the Professional Council in Economic Sciences of the City of Buenos Aires.

Our unqualified auditors’ report on the financial statements for the year ended December 31, 2006 whose figures are presented for comparative purposes, as it is stated in section 1, and relate to those included in the financial statements corresponding to such fiscal year, was issued on February 21, 2007.

4. Information required by regulations in force

a)	The financial statements mentioned in section 1 of this report are disclosed in accordance with the regulations of Law 19,550 and of the Comisión Nacional de Valores (National Securities Commission).

b)	The data of the financial statements described in section 1 of this report agree with the Company’s accounting ledgers, which have been kept in its formal aspects in accordance with legal current regulations.

c)	The financial statements mentioned in section 1 of this report have been transcribed into the accounting and legal records.

As part of our work, with the scope described in section 2, we have reviewed the supplementary information to the notes to the financial statements and the informative summary prepared by the Board of Directors as requested by the Buenos Aires Stock Exchange and the CNV, upon which and to the extent of the matters under our responsibility we have no observation to raise.

e)	In compliance with General Resolution N° 400/02 of the CNV we inform that during the fiscal year ended December 2007:

the ratio between the total of auditing professional services rendered by the external auditor for the issuance of the auditors report on the Company’s financial statements and other special reports and certifications related to accounting or financial information billed to the Company and the total billing to the Company for all concepts, including those auditing services amounts to 95%,

ii.	the ratio between the total of such auditing professional services billed to the Company and the total of the abovementioned auditing services billed to the Company, its parent and affiliated Companies amounts to 96%, and

iii.	the ratio between the total of such auditing professional services billed to the Company and the total billing to the Company, its parent and affiliated Companies for all concepts amounts to 92%.

f)	As per the Company’s accounting records mentioned in item b), the accrued liabilities as of December 31, 2007 with the National Pension System amounted to pesos 4,677,499, none of which is past due.

5. Financial statements translation into English language

This report and the financial statements referred to in section 1 have been translated into English for the convenience of English- speaking readers. As further explained in Note 25 to the accompanying financial statements,“These financial statements are the English translation of those originally prepared by the Company in Spanish and presented in accordance with accounting principles generally accepted in Argentina. The effects of the differences between accounting principles generally accepted in Argentina and the accounting principles generally accepted in the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, results of operations, shareholders’ equity or cash flows in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina”.

City of Buenos Aires, February 26, 2008

DELOITTE & Co. S.R.L.

Daniel H. Recanatini

(Partner)

SUPERVISORY COMMITTEE’S REPORT

To the Shareholders of

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANONIMA (EDENOR S.A.)

1) In accordance with the provisions of section 294, subsection 5, of Law No. 19,550, we have examined the balance sheet of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANÓNIMA (hereinafter, “Edenor S.A.” or the “Company”) as of December 31, 2007 and the related statements of income, changes in shareholders’ equity and cash flows for the year then ended, with their notes 1 through 24 and supplemental exhibits A, C, D, E, G and H thereto, as well as the Directors’ Annual Report for said year. The preparation and issuance of the aforementioned financial statements are the responsibility of the Company’s management.

2) We have performed our review in accordance with current regulations which require that financial statements be examined in accordance with auditing standards generally accepted in Argentina and that such review include verification of the reasonableness of the significant information contained in the documents subject to the review and their consistency with the information on corporate decisions of which we have become aware, laid down in Board of Directors and Shareholders’ Meetings minutes, and whether such decisions comply with the law and the Company's by-laws as to their formal and documentary aspects. In conducting our review, we have examined the audit performed by the Company external auditors, Deloitte & Co. S.R.L., who issued their unqualified opinion dated February 26, 2008. An audit requires that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Company’s management as well as evaluating the overall financial statement presentation. We have not examined the Company’s criteria concerning production, management or selling issues, as they are the responsibility of the Company’s management.

3) Furthermore, with regard to the Directors’ Annual Report for the year ended December 31, 2007, we have verified that it contains the information required by section 66 of Law No. 19,550 and that the amounts included therein, as to matters within our professional competence, agree with the accounting records of the Company and with other pertinent documentation.

4) The figures as of December 31, 2006 that have been included in the financial statements for comparative purposes were examined by other Supervisory Committee, which issued its report dated February 21, 2007 expressing an unqualified opinion.

5) Based on the work performed, with the scope mentioned in the preceding paragraphs, we report that:

In our opinion, the financial statements of EDENOR S.A. present fairly, in all material respects, the financial position of the Company as of December 31, 2007, and the results of its operations, changes in shareholders’ equity and cash flows for the year then ended, in conformity with accounting principles generally accepted in the City of Buenos Aires;

b)	We have no observations to make, as to matters within our professional competence, in relation to the Directors’ Annual Report. However, the affirmations regarding future events included in said document, are the responsibility of the Board of Directors.

c)	With regard to the provisions of General Resolution No. 368 of the National Securities Commission, we inform that we have read the external auditors’ report, from which the following is inferred:

d)	the auditing standards applied are those approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires, which include independence requirements, and

e)	the financial statements have been prepared taking into account the accounting principles approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires and the regulations of the National Securities Commission.

6) The provisions of section 294 of Law No. 19,550 have been complied with.

City of Buenos Aires, February 26, 2008.

Signed by:

Daniel Abelovich

President of the Supervisory Committee.

CONSIDERATION OF THE ANNUAL REPORT, BALANCE SHEET, STATEMENT OF INCOME, STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY, STATEMENT OF CASH FLOWS, SUPPLEMENTARY DOCUMENTATION, INFORMATIVE SUMMARY, INFORMATION REQUIRED BY SECTION 68 OF THE BUENOS AIRES STOCK EXCHANGE REGULATIONS, REPORTS OF THE CERTIFYING ACCOUNTANT AND SUPERVISORY COMMITTEE AND ALLOCATION OF PROFITS FOR THE YEAR ENDED DECEMBER 31, 2007

ABSTRACT OF THE PERTINENT PART OF BOARD OF DIRECTORS

MINUTES No. 286

MINUTES No. 286: In the City of Buenos Aires, on February 26, 2008, at 11 a.m., the undersigned Directors of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (Edenor S.A.) (the “Company”) and the members of the Supervisory Committee, meet at 547 Bouchard Street, 26th floor. The meeting is presided over by Mr. Alejandro Macfarlane, who, upon verifying that a quorum is present, calls the meeting to order and asks Directors to consider the [.....] FOURTH ITEM of the Agenda: 4) Consideration of the Annual Report, Balance Sheet, Statement of Income, Statement of Changes in Shareholders’ Equity, Statement of Cash Flows, Supplementary Documentation, Informative Summary, Information required by section 68 of the Buenos Aires Stock Exchange Regulations, Reports of the Certifying Accountant and Supervisory Committee and Allocation of profits for the year ended December 31, 2007. The President once again gives the floor to Dr. Gustavo Gené, Administrative Manager, who proceeds to provide a detailed explanation of the principal figures of the draft financial statements for the year ended December 31, 2007, which have been updated as of to date. In this regard, he reiterates that in the fiscal year of reference, the Company recorded a net income of $122,458,000, whose components were explained when dealing with the Performance Report. The Company’s shareholders’ equity as of the end of the year amounted to $1,974,581,000, positively affected by the proceeds of the IPO process ended in April 2007, which had the following effects: (i) issuance of outstanding shares for a nominal value of $74,845,000; (ii) generation of an additional paid-in capital of $106,928,000, which is disclosed net of expenses related to the IPO for a total of $14,321,000. It must be pointed out that in spite of the profit recorded in the year, unappropriated retained earnings continue to be negative and amount to $88,611,000. After the questions made by the Directors have been answered, there follows a brief period of consideration and discussion. Immediately afterwards, upon a motion made by the President, the Board of Directors unanimously approves all the documentation brought to their consideration under this item, which is comprised of the Annual Report, Balance Sheet, Statement of Income, Statement of Changes in Shareholders’ Equity, Statement of Cash Flows, Supplementary Documentation, Informative Summary, Information required by section 68 of the Buenos Aires Stock Exchange Regulations, Reports of the Certifying Accountant and Supervisory Committee and Allocation of profits for the year ended December 31, 2007, which will be transcribed to the Company’s books. All the foregoing with the aim of submitting the aforementioned documentation for the consideration of the Ordinary Shareholders’ Meeting, which will be considered when dealing with the sixth item of the Agenda. Immediately afterwards, the President puts under consideration of those present the [......] ELEVENTH ITEM of the Agenda: 11) Miscellaneous. The President states that there being no further business to come before the board, the meeting is adjourned at 4.45 p.m. Signed by Messrs. ......

SUPERVISORY COMMITTEE MINUTES No. 199

In the City of Buenos Aires, on February 25, 2008, the members of the Supervisory Committee, Messrs. Daniel Abelovich, Marcelo J. Ruiz and alternate member Marcelo Fuxman, who is attending the meeting due to the absence of Mr. Javier Errecondo, meet on the 18^th floor of the corporate domicile of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANONIMA (EDENOR S.A.), located at 1025 Azopardo Street. At 10 a.m., the legally and statutory required quorum being present, Dr. Daniel Abelovich, president of the Supervisory Committee, opens the meeting in order to deal with the first item of the Agenda: 1) Consideration of the financial statements for the year ended December 31, 2007, notes, exhibits and supplementary documentation. Dr. Abelovich calls the meeting to order and states that as all Supervisory Committee members have been duly provided with the documentation rel ating to the fiscal year subject to consideration, together with the external auditors’ report, this Committee has examined all the documentation, including the supporting documentation of the work performed by said auditors, whose criteria are shared by this Committee. As a result of the analysis performed by this Supervisory Committee, and given the knowledge all its members possess concerning the documentation and the actions taken by the corporate bodies, Dr. Abelovich suggests that all the documentation and actions be approved. Upon extensive discussion, the motion is unanimously approved. The President then puts under consideration the second item of the Agenda: 2) Supervisory Committee’s Report, appointment of a member for the signing thereof and other related documentation. Dr. Abelovich states that it is necessary to issue the Committee’s Report and puts under consideration of those present a draft version of the report. Immediately after wards, upon consideration and discussion, said report is unanimously approved and Dr. Abelovich is authorized to sign the report as well as the rest of the aforementioned documentation whose transcription is thereupon ordered:

SUPERVISORY COMMITTEE’S REPORT

To the Shareholders of

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE

SOCIEDAD ANONIMA (EDENOR S.A.)

In accordance with the provisions of section 294, subsection 5, of Law No. 19,550, we have examined the balance sheet of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE SOCIEDAD ANÓNIMA (hereinafter, “Edenor S.A.” or the “Company”) as of December 31, 2007 and the related statements of income, changes in shareholders’ equity and cash flows for the year then ended, with their notes 1 through 24 and supplemental exhibits A, C, D, E, G and H thereto, as well as the Directors’ Annual Report for said year. The preparation and issuance of the aforementioned financial statements are the responsibility of the Company’s management.

We have performed our review in accordance with current regulations which require that financial statements be examined in accordance with auditing standards generally accepted in Argentina and that such review include verification of the reasonableness of the significant information contained in the documents subject to the review and their consistency with the information on corporate decisions of which we have become aware, laid down in Board of Directors and Shareholders’ Meetings minutes, and whether such decisions comply with the law and the Company's by-laws as to their formal and documentary aspects. In conducting our review, we have examined the audit performed by the Company external auditors, Deloitte & Co. S.R.L., who issued their unqualified opinion dated February 26, 2008. An audit requires that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Company’s management as well as evaluating the overall financial statement presentation. We have not examined the Company’s criteria concerning production, management or selling issues, as they are the responsibility of the Company’s management.

Furthermore, with regard to the Directors’ Annual Report for the year ended December 31, 2007, we have verified that it contains the information required by section 66 of Law No. 19,550 and that the amounts included therein, as to matters within our professional competence, agree with the accounting records of the Company and with other pertinent documentation.

The figures as of December 31, 2006 that have been included in the financial statements for comparative purposes were examined by other Supervisory Committee, which issued its report dated February 21, 2007 expressing an unqualified opinion.

Based on the work performed, with the scope mentioned in the preceding paragraphs, we report that:

We have no observations to make, as to matters within our professional competence, in relation to the Directors’ Annual Report. However, the affirmations regarding future events included in said document, are the responsibility of the Board of Directors.

With regard to the provisions of General Resolution No. 368 of the National Securities Commission, we inform that we have read the external auditors’ report, from which the following is inferred:

the auditing standards applied are those approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires, which include independence requirements, and

ii)

the financial statements have been prepared taking into account the accounting principles approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires and the regulations of the National Securities Commission.

The provisions of section 294 of Law No. 19,550 have been complied with.

City of Buenos Aires, February ..., 2008.

Signed by:

Daniel Abelovich

President of the Supervisory Committee.

There being no further business to come before the meeting, Dr. Abelovich adjourns the meeting at 10.50 a.m.

José Daniel Abelovich

Marcelo J. Ruiz

Marcelo Fuxman

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Empresa Distribuidora y Comercializadora Norte S.A.

By: /s/ Rogelio Pagano

Rogelio Pagano

Chief Financial Officer

Date: February 28, 2008