Commercial operations commence using gas from Camisea; ENDESA Starts Construction of First Combined Cycle Facility in Peru.

NEW YORK -- Endesa (NYSE:ELE)

--Investment is expected at $100 million through May 2006, bringing new technology which is set to change Peruvian energy landscape.

--In addition, Etevensa, an ENDESA subsidiary, today added 300MW to the Peruvian electricity system, through its open cycle power plant at Ventanilla (Lima), using natural gas from Camisea.

--Over the last 10 years, ENDESA has invested $1.6 billion in modernizing its Peruvian generation facilities, specifically by building two new hydroelectric plants to provide 100% coverage of its concession area in Northern Lima.

Today Endesa (NYSE:ELE) commenced construction of Peru's first combined cycle plant, which will increase capacity at the Ventanilla facility, owned by Endesa's subsidiary, Etevensa, from 300MW to 380MW by May 2006. Investment commitments total $100 million and will introduce new technology set to change the Peruvian energy landscape.

Today's events coincide with the official launch of commercial operations at the Ventanilla facility, an open cycle power plant using natural gas from Camisea, in a $15 million investment project. The conventional plant at Ventanilla is located north of Lima (Peru) and will add 300MW into the national electricity system using clean, efficient fuel.

The ceremony, held at the Ventanilla facility itself, was chaired by the President of Peru, Alejandro Toledo and the CEO of Endesa, Rafael Miranda. Also present were the Minister for Energy and Mining, Jaime Quijandria, and the main executives of Endesa in Peru.

During his speech, Endesa's CEO highlighted that this new investment brought investment in Peru over the last 10 years to $1.6 billion in modernization of generation assets, construction of two new hydroelectric plants (Yanango and Chimay) and the provision of 100% electricity coverage in its concession region in Northern Lima.

Endesa's investments, together with the ongoing, related Camisea Project, have contributed to a continuous reduction in electricity prices. ENDESA has been present in Peru since 1994, where it holds 10% of its Latin American assets.

ENDESA participates in the Peruvian generation industry via its shareholdings in the Etevensa (550MW) and Piura (161MW) generators, and through Enersis it has a controlling position in Edegel, with 967MW of installed capacity. In addition, Endesa, together with Enersis, has a controlling shareholding in Edelnor, an electricity distribution company in Northern Lima with 892,000 customers.

The Ventanilla Facility

For the past four years, the Ventanilla facility has been generating electricity using fuel oil. In December 2003, Etevensa initiated the process of converting this facility to use natural gas from Camisea, representing an investment of $15 million. Said amount represents an initial phase of investment since commitments to the Peruvian government total $100 million, including the installation of the combined cycle plant in 2006.

The Camisea Project

--The Camisea gas reserves were discovered between 1983 and 1987. There are proven reserves of 8.7 trillion cubic feet. Total recoverable reserves are estimated at 6.8 trillion cubic feet of natural gas (recovery rate: 78 %) and 411 million barrels of associated natural gas liquids (propane, butane and condensed).

--En 1988, Petroperu, together with Shell, signed an Initial Framework Agreement to develop the Camisea Gas Project. However contract negotiations concluded without agreement among the parties.

--In February 2000, by means of an international public tender, the Peruvian Government granted a license for the development of the Camisea Gas Project to a Consortium led by Pluspetrol Peru Corporation S.A, and with the participation of Hunt Oil Company of Peru L.L.C, SK Corporation and Tecpetrol del Peru SAC (Grupo Techint).

--43 months after awarding the concession for the development of Camisea, and following investment of US$1.6 billion, on 5 August 2004, President Alejandro Toledo inaugurated the processing plant at Las Malvinas (in the Cusco rainforest) when he gave the order to open the valve to extract Camisea gas from underground and bring it to Lima. And so the gas era in Peru began.

Etevensa has signed contracts for the supply of transmission and distribution of natural gas from Camisea to the Ventanilla plant with Transportadora de Gas del Peru (TGP) and Gas Natural de Lima y Callao (GNLC), respectively. Both contracts guarantee supply for a period of 15 years.