2. AES Brasil Group
7 million clients ... with a 2008 result:
Market Share 6 thousand AES People
R$ 3.2 billion (Ebitda)
R$ 1.7 billion (net income)
Discos
14,6%
85,4%
Gencos
3,0%
97,0% Investments 1998-2008:
R$ 5 billion after privatization
AES Brasil Disco Genco
Trading Co. Telecom
Others
2
3. Shareholding structure
AES Corp BNDES
C 50.00% + 1 share C 50.00% - 1 share O = Common Shares
P 0.00%
T 46.15%
P = Preferred Shares
T = Total
Cia. Brasiliana de
Energia
C 76.46% C 71.35%
C 99.99% C 100.00% C 98.26% P 7.43% P 32.34% C 99.99 %
T 99.76% T 99.99% T 100.00% T 98.26% T 34.80% T 52.55% T 99.99 %
AES AES AES AES AES AES AES EP
Sul Infoenergy Uruguaiana Com RJ Eletropaulo Tietê Telecom
3
4. Shareholding composition
Federal
Government or Free Float
Eletrobras1
16.1% 19.7% 8.0% 56.2%
24.2% 28.3% 7.9% 39.5%
1 – Federal Government and Eletrobrás correspond to AES Eletropaulo and AES Tietê, respectively 4
5. Energy sector agents in Brazil
Ministry of Mines and
Energy (MME)
(Set Guidelines and Policies)
National Council of
Energy Policy (CNPE)
(Formulates Policies)
Electricity Sector Brazilian Electricity
Energy Research
Surveillance Regulatory Agency
Enterprise (EPE)
Committee (CMSE) (ANEEL)
(Monitors energy supply) (Ruling, Inspection & Auditing, (Generation & Transmission
Monitoring, and Mediation) Planning)
Distribution
companies
Electric Energy Transmission System Operator
Commercialization companies (ONS)
Chamber (CCEE)
Generation Generator resources
Pricing and clearing of scheduling and dispatch
energy transactions companies
Trading
companies
5
6. Energy sector in Brazil
(Contracting Environment)
Regulated Market Free Market
Auctions Spot Market PPAs1
Distribution Companies Trading Companies Trading Companies
Free Clients Free Clients
• Main auctions (reverse auctions):
Distribution
– New Energy (A-5): Delivery in 5 years, 15-30 Companies
years regulated PPA
– New Energy (A-3): Delivery in 3 years, 15-30
years regulated PPA
– Existing Energy (A-1): Delivery in 1 year, 5-15
years PPA
6
1 – Power Purchase Agreement
7. Discos regulatory methodology
(Tariff Reset and Adjustment)
Tariff Readjustment and Reset
• Tariff Reset is applied each 3 to 5 years • Parcel A Costs
− AES Eletropaulo: each 4 years − Non-manageable costs that totally
Energy pass- through to the tariff
− AES Sul: each 5 years
Purchase − Losses reduction improve the pass-
− Parcel A costs pass trough the tariff
Transmission through effectiveness
− Parcel B costs are set by ANEEL Sector Charges
• Tariff Adjustment: annually Reference • Reference Company:
− Parcel A costs pass trough the tariff Company
– Efficient cost structure, determined by
(PMSO)
− Parcel B cost are adjusted by IGPM +/- X(1) ANEEL (National Electricity Agency)
Factor
X WACC Investment
Remuneration
• Remuneration Asset Base:
Remuneration
Asset – Applicable investments used to
Base calculate the Investment Remuneration
X Depreciation Depreciation
(applying WACC) and Depreciation
Regulatory Parcel A Non-Manageable Costs
Ebitda
(1) X Factor: index that capture productivity gains Parcel B Manageable Costs 7
8.
9. AES Eletropaulo overview
Concession Area
• Largest electricity distribution company in Latin America
• Serving 24 municipalities in the São Paulo Metropolitan area
São Paulo Metropolitan Area
• Concession area with the highest GDP in Brazil:
– 17.1% of the Brazilian GDP and 50.3% of São Paulo’s state GDP
• 46 thousand kilometers of lines
• 4,526 km2 of concession area
• 1.1 million electricity poles
• 4,143 employees
Regional West Regional North
Regional South Regional ABC • 5.9 million of consumption units
Regional East
• Total distributed volume of 41 TWh in 2008
Note – Data as of Sept. 2009, except GDP which is 2006 9
10. Ranking¹ for energy distributors
8.000
7.000 Net Revenue - R$ MM
6.000
5.000
2007 2008 4.000
3.000
2.000
Net Revenue 1st 1st 1.000
CPFL PAULISTA
BANDEIRANTE
PIRATININGA
ELETROPAULO
AMPLA
COELBA
ELEKTRO
COELCE
CELESC
COPEL
CELPE
CEMIG
CELG
LIGHT
CPFL
AES
1.800
1.600
Ebitda - R$ MM
1.400
1.200
1.000
800
Ebitda 2nd 1st 600
400
200
CPFL PAULISTA
ELETROPAULO
PIRATININGA
AMAZONAS
COELBA
ELEKTRO
AMPLA
CEMAR
COELCE
COPEL
CEMIG
CELPE
LIGHT
RGE
CPFL
AES
10
1 – Source: ABRADEE (Brazilian Association of Energy Distributors); research among 48 energy distributors in Brazil.
13. Investments amounted up to
R$ 324 million in 9M09
Investments Breakdown – R$ million Investments 9M09
523 8%
4%
4%
457 55
433
16% 45%
47
378 69
324
77 305
26
468 22%
36 27%
410
364
301
269 298
Customer Service and Maintenance
System Expansion
Customer Financed IT
2006 2007 2008 2009e 9M08 9M09 Loss Recovery Others
Capex Paid by customers
13
14. SAIDI & SAIFI
SAIDI - System Average Interruption Duration Index SAIFI - System Average Interruption Frequency Index
11.81 11.34 10.92
8.61
8.49 8.41
8.90 9.20 11.01
7.87
5.52 5.64 5.78
5.20
2006 2007 2008 9M09¹ 2006 2007 2008 9M09¹
3rd 3rd 5th 3rd 1st 1st
SAIDI (hours) SAIDI Aneel Target SAIFI (times) SAIFI Aneel Target
ABRADEE ranking position between 28 distributors with
over 500 thousand consumers
1 – Last twelve months
Source: ABRADEE, ANEEL e AES Eletropaulo 14
15. Operational indexes
Collection Rate – % over gross revenue Losses – %
- 1.3 b.p. - 0.4 b.p.
101.4
99.1 99.5
97.8 97.7 12.0 11.6 11.6 11.8
11.5
5.5 5.0 5.1 5.2 5.3
6.5 6.5 6.5 6.5 6.5
2006 2007 2008 9M08 9M09 2006 2007 2008 9M081 9M091
Commercial Losses Technical Losses²
• Disconnections and Reconnection – Monthly Average (9M08 X • Fraud and Illegal Connections (9M09)
9M09) – 271,000 inspections e 32,000 frauds detected
– Disconnections: increase from 233 thousand to 733 thousand
– 57,000 illegal connections regularized
– Reconnection: increase from 248 thousand to 488 thousand
• Past due bill credit report (9M09 average): 190 thousand
1 – Last 12 months 2 - Current Technical Losses used retroactively as reference 15
16. Net revenue of R$ 5.9 billion in 9M09
Net Revenue – R$ million Ebitda – R$ million
2003 2007
EMBI+ BR 4.63% 2.21%
Regulatory WACC (%) Selic target 16.50% 11.25%
+ 10%
17.1
15.1
7,529
7,193
6,852 1,766
1,566 1,696
5,855
5,540
1,140 1,143
2006 2007 2008 9M08 9M09 2006 2007 2008 9M08 9M09
16
17. Net income of R$ 538 million in 9M09
Net Income – R$ million Dividend payout1 – R$ million
Dividends Pay-out Yield2 PNB
+ 175%
100.3% 101.5%
1,027
34.9%
14.4% 20.3%
713 3.2%
538 1,043
496
373 715
323
130
2006 2007 2008 9M08 9M09 2006 2007 2008 9M09
• 25% of minimum pay-out according to bylaw
• Practice on semi-annual basis of maximum permitted
dividend distribution, since 2006 results
• Yield2 of 6.3% and pay-out² of 106.7%
1 – Gross amount 2 – Considered 1st semester data 17
19. Debt profile
Net Debt Amortization Schedule – R$ million
2.1x
1.3x 1.4x
1.2x
1,532
3.7
3.0 78
2.5 2.7
10 62 66 70
524 80
41 75 375
250 250 250 125
3 50
2006 2007 2008 9M09 2009 2010 2011 2012 2013 2014 2015 2016-2028
Net Debt (R$ billion) Local Currency (w/out Pension Fund) Pension Fund Foreign Currency2
Net Debt / Adjusted Ebitda1
• September, 2009:
– Average debt cost is 116.5% of CDI3 per year which means an effective rate of 13.9% per year
– Average debt maturity is 7.3 years
1 - Last 12 months of adjusted Ebitda 2 – Exchange rate in 09/30/2009 – US$ 1.00 = R$ 1.7781 3 - Brazil’s Interbank Interest Rate19
20. Capital market
AES Eletropaulo1 X Ibovespa X IEE Average Daily Volume3 - R$ thousand
YTD ’09
170 64%
C 64% 26,066
25,677
150 B
46% 21,187
A
130
7,508
110
90
dec-082 jan-09 feb-09 mar-09 apr-09 may-09 jun-09 jul-09 aug-09 sep-09 2006 2007 2008 9M09
ELPL6 IEE IBOV
• A) 25/02/2009 – Finsocial and São Paulo municipality agreement
• B) 16/04/2009 - Public Consultation of Tariff Reset
• C) 16/06/2009 – Conclusion of Second Periodic Tariff Reset
1 – Shares were adjusted by declared dividend of the period under analysis 2 – Data Base: 12/28/07 = 100 20
21.
22. AES Tietê overview
Concession Area
• 30 year concession, expires in 2029, renewable for
another 30 years
• 10 hydroelectric plants in the State of São Paulo at Tietê,
Pardo and Mogi Guaçu rivers
Atlantic Ocean • Installed capacity of 2,657 MW, with assured energy1 of
1,280 MW
Name and Installed Capacity of AES Tietê’s Plants:
Água Vermelha (1,396 MW) Ibitinga (132 MW) • 100% of assured energy contracted with AES
Nova Avanhandava (347 MW) Euclides da Cunha (109 MW) Eletropaulo until the end of 2015
Promissão (264 MW) Caconde (80 MW)
Barra Bonita (141 MW) Limoeiro (32 MW) • 310 employees
Bariri (143 MW) Mogi-Guaçu (7 MW)
1 - Amount of energy allowed to be long term contracted 22
23. Operational Performance
Energy Generation – MW average Billed Energy – GWh2
September ’09 Prices (R$ / MWh)
129% AES Eletropaulo 152.00
MRE 8.18
121% 118%
Spot (9M09 avg.) 39.68
112%
1,646 13,421
1,543 12,774 13,148
1,424 1,510
573 330 10,728
536
10,336
1,740 1,680 607
1,130 327
1,571
1,663
11,108 11,108 11,138
8,346 8,550
2006 2007 2008 9M09 2006 2007 2008 9M08 9M09
Generation – MW average Generation / Assured Energy2 AES Eletropaulo MRE1 Spot Market
1 - Energy Reallocation Mechanism 2 - Amount of energy allowed to be long term contracted 23
24. Investments
Investments – R$ million 9M09 Investments
New SHPP’s1
Investments 63
59
14
51
47 33%
8 20
12 33
49
3% 45%
11
43
39 19%
35 22
2006 2007 2008 2009(e) 9M09
Equip. and Maint. New SHPPs
• 9M09 x 9M08: higher reforestation expending, due to IT Environment
Carbon Credit Project, partially offset by lower investments
on Piabanha SHPP
1- Small Hydro Power Plant Jaguari Mirim and Piabanha 24
25. Expansion requirement of 15%
Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield projects or through long term
purchase agreement with new plants
The obligation was supposed to be accomplished by December 2007, however AES Tietê was not able to comply with this
requirement due to the following restrictions:
– Insufficient remaining hydro resources within the State of São Paulo
– Environmental restrictions
– Insufficiency of gas supply / timing issue
– More restricted regulation on energy sale established by the New Model of Electric Sector (Law # 10,848/2004)
which eliminated the self dealing
• In August 2008, Aneel informed that the issue is not linked to the concession
• Popular law action against Federal Government, Aneel, AES Tietê, and Duke
– Status: Defense filed on first instance in October 2008 by AES Tietê. In December, 2008, the author replied AES
Tietê defense and, since this, both parties are waiting judge movement about the necessity of proves production
• On July 27, 2009, AES Tietê was notified by the State Government Attorney’s Office to present arguments on compliance
with the expansion obligation
– The Company filed a response on July, 29th, which exhausts the procedure for notification. Possible deployment
depends on new manifestation of the Prosecution 25
26. Projects
expansion requirement
AES Tietê has been seeking opportunities to increase its installed capacity to comply with the 15%
increase requirement in the State of São Paulo
• 6MW of co-generation by biomass contracted for 15 years (initiating in 2010)
Concluded
Concluded
(PPA1))
(PPA1
• 7 MW of hydropower generation through SHPPs2 in Jaguari Mirim river
In Progress
In Progress – SHPP São José (4 MW) is expected to begin the operation in 1H10
– SHPP São Joaquim (3 MW) is expected to begin the operation in 1H10
Under
Under • 500 MW of natural gas fired thermo plant
Evaluation
Evaluation – In stage of defining plant location
• 32 MW of hydropower generation through SHPPs under technical and economic viability study
26
1 - Power Purchase Agreement 2 - Small Hydro Power Plant
27. Net revenue of
R$ 1.3 billion in 9M09
Net Revenue – R$ million Ebitda – R$ million
+ 17% + 14%
1,621 1,254
1,464
1,387 1,097 1,099
1,277 1,028
1,186 936
2006 2007 2008 9M08 9M09 2006 2007 2008 9M08 9M09
27
28. Sustainable profitability and dividend payment
Net Income – R$ million Dividend Payout1 – R$ million
Dividends Pay-out Yield PN2
+ 13% 100 % 100 % 100 %
12% 10% 12%
692
614 609 636 636
692
495 614 609
2006 2007 2008 9M08 9M09 2006 2007 2008 9M09
• 25% of minimum pay-out according to bylaw
• Practice on quarterly basis of maximum permitted
dividend distribution, since 2006 results
• Yield2 of 9.4% and pay-out of 100% in 9M09
1 - Gross amount 2 - Average Weighted Price during the Period 28
29. Strong cash flow
Managerial Cash Flow – R$ million
3T08 4T08 1T09 2T09 3T09
Initial Cash
673 783 836 812 639
Operating Cash Flow 340 337 297 332 316
Investments (14) (22) (9) (8) (14)
Net Financial Expenses (13) (7) (6) (13) (15)
Net Amortization (50) (52) (53) (55) (58)
Income Tax (19) (17) (252) (20) (19)
Dividends and IoE (134) (188) 0 (409) (199)
Free Cash Flow 110 53 (24) (173) 12
Final Cash – Parent Company 783 836 812 639 651
Final Cash of Subs. And Assoc. Comp 5 5 2 2 1
Final Cash 788 840 814 641 652
29
30. Debt
Net Debt
0.6x 0.6x
0.3x 0.3x • Eletrobras Debt
0.7 0.7 – Balance: R$ 1,029 million
0.4 0.4 – Monthly amortization
– Maturity: May 15, 2013
– Interest of 10% p.a. and monetary adjustment
of IGP-M
2006 2007 2008 9M09
Net Debt (R$ billion)
Net Debt / Ebitda
30
31. Capital market
AES Tietê1 X Ibovespa X IEE Daily Average Volume - R$ thousand
10,109
9M092
190 9,067
8,160
+ 64%
160 8,106
+ 46% 5,760 5,531
+ 40% 5,468
130
4,188
100 3,566 2,692 2,003
1,572
70
Dec-08 Mar-09 Jun-09 Sep-09 2006 2007 2008 9M09
GETI4 IBOV IEE Preferred Common
1 – Shares were adjusted by declared dividend of the period under analysis 2 – Data Base: 12/30/08 =100 31
33. Social Responsibility
Volunteering Program
distributing Acting to Enterprising in
Energy of Transform the Community
Good
Specific social mobilization or Opportunities for volunteering in Acknowledgement and
emergency campaign. social organizations, which are support of projects for the
partners of AES Brazil development of social
organizations.
Winter clothes, Christmas Co-workers can enroll in
campaign, among others. volunteer activities available at Volunteers may submit
AES Brazil volunteering portal projects to help other
since September/09 organizations develop. Launch
www.energiadobem.com.br scheduled for January/10.
• Launched in December,2008;
• Objective: to get the co-workers committed to the transformation of low income communities and development
of non-governmental institutions
• 1,100 volunteers 33
34. Social Responsibility
“Casa da Cultura e Cidadania” Project
• Over 6 thousand children, teenagers,
and adults have been benefited
• Own and incentive investments:
approximately R$ 14 million in 2009
• Activities of acting, dancing, circus arts, visual arts, music,
gymnastics, courses of income generation, and education of safe
use of electrical power and the right use of natural resources
• 5 units operating and another one to be launched in the
municipality of Osasco in November, 2009
“Centros Educacionais Infantis Luz e Lápis” - Project
• 302 benefited children between 1 and 6 years old
• Own investments amounting R$ 1.5 million in 2009
• Units: Santo Amaro and Guarapiranga
34
35. Environmental actions
• Carbon Credit
– Clean Development Methodology (CDM) approved by United Nations Framework Convention on Climate Change
(UNFCCC), allows up to 10,000 hectare reforestation on reservoir borders
– AES Tietê is seeking for good business opportunities, and has not transacted credits so far
• Reforestation
– One million of seedlings production in seed-plot of Promissão hydroelectric power plant
– Donation of seedlings to the society, rural producers, city halls, and non-governmental organizations
• Fish Farming
– Reproduction of 2.5 million fishes in 10 reservoirs of AES Tiete's plants
• Archeological Park
– Community involvement into archeological artifacts conservation and better understanding of its scientific
importance
– Social access to the archeological history of the reservoir area
35
36. Contacts:
ri.eletropaulo@aes.com
ri.aestiete@aes.com
+ 55 11 2195 7048
The statements contained in this document with regard to the business prospects, projected operating and financial results, and growth potential are merely
forecasts based on the expectations of the Company’s Management in relation to its future performance. Such estimates are highly dependent on market
behavior and on the conditions affecting Brazil’s macroeconomic performance as well as the electric sector and international market, and they are therefore
subject to changes.
