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Institutional presentation 3Q10

demand perspectives The document summarizes the AES Brasil Group and its companies in Brazil. It notes that AES Brasil has a presence in Brazil since 1997 through seven companies in the energy sector. It operates in generation, distribution, trade and telecommunications. Key points include over $5.8 billion invested from 1998-2009 and strong cash generation capacity. The document also provides an overview of AES Tietê and AES Eletropaulo, the largest generation and distribution companies respectively. It discusses the companies' concession areas, operational performance, investments and financial highlights. The energy sector outlook in Brazil is also summarized, with expected growth in GDP, electricity consumption and the generation matrix through 2019.

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Institutional January, 2011 1
AES Brasil Group • Presence in Brazil since 1997 • Comprised of seven companies in the sectors of energy generation, distribution, trade and telecommunications • 7.7 thousand AES Brasil People • Investments 1998-2009: R$ 5.8 billion • Good corporate governance practices • Sustainable practices in businesses • Safety as a main value • Strong cash generation capacity • 25% of minimum pay-out according to bylaws • Differentiated dividend practice since 2006: – AES Tietê: 100% pay-out on quarterly basis – AES Eletropaulo: 95% pay-out on semi- annually basis 2
AES Brasil widely recognized in 2009-2010  Quality and safety (AES Eletropaulo) (AES Sul) (AES Eletropaulo) (AES Eletropaulo)  Management excellence (AES Tietê) (AES Eletropaulo) (AES Tietê) (AES Tietê)  Environmental concern (AES Tietê) (AES Brasil) 3
Shareholding Structure AES Corp BNDES C 50.00% + 1 share C 50.00% - 1 share P 0.00% P 100% T 46.15% T 53.85% Cia. Brasiliana de Energia C 71.35% C 76.45% C 99.99% C 99.00% P 32.34% P 7.38% C 98.25% C 99.99 % T 99.70% T 99.99% T 99.00% T 52.55% T 34.87% T 98.25% T 99.99 % AES AES AES AES AES AES Eletropaulo AES Sul Infoenergy Uruguaiana Tietê Eletropaulo Com Rio¹ Telecom¹ C = Common Shares P = Preferred Shares T = Total 4 1 – AES Atimus
Listed Companies Shareholding Composition Free Float Others¹ 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0% 5 1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively
AES Brasil is the second largest group in electric sector Ebitda1 – 2009 (R$ Billion) 4.0 3.2 2.8 2.6 2.2 1.8 1.7 1.4 1.2 0.5 CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP COPEL EDP LIGHT DUKE Net Income1 – 2009 (R$ Billion) 1.9 1.8 1.6 1.3 1.1 1.0 0.8 0.6 0.6 0.2 CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL CESP EDP LIGHT DUKE 6 1 – excluding Eletrobrás Source: Companies’ financial reports
AES Tietê is an important player among private energy generators Generation Installed Capacity (MW) - 2010 Privately held companies 2% 2% 6% 4%  AES Tietê is the 2nd largest among private 35% 5% generation companies and 10th largest overall 6%  10 largest gencos correspond to 63% of the total 6% installed capacity 7%  There are three mega hydropower plants under 10% 8% construction in the North region of Brazil with 18 GW 9% 111 GW in installed capacity AES TIETÊ DUKE – Santo Antonio and Jirau (Madeira River): 7GW TRACTEBEL COPEL PETROBRÁS CEMIG – Belo Monte (Xingu River): 11GW ITAIPU CESP ELETRONORTE FURNAS Source: ANEEL (Regulator) – BIG (October, 2010) 7 CHESF OTHERS
AES Brasil is the largest distribution group in Brazil Consumption (GWh) - 2009 13% • 64 discos in Brazil distributing 388 TWh 40% 13% AES Brasil • AES Brasil is the largest electricity CPFL Energia distribution group in Brazil: 10% – AES Eletropaulo: 41 TWh distributed, CEMIG representing 10.6% of the Brazilian 7% Neoenergia market 5% 6% 6% – AES Sul: 8 TWh distributed, Consumers – Dec/2009 Copel representing 1.9% of the Brazilian 13% Light market 30% 12%  There is a limited opportunity for EDP competition in Brazil as discos are Others restricted to operate within their 12% concession areas 5% 7% 6% 16% 8
AES Tietê Overview Concession Area  16 hydroelectric plants within the states of São Paulo and Minas Gerais  30-year concession valid until 2029; renewable for another 30 years  Installed capacity of 2,657 MW, with physical guarantee1 of 1,280 MW  All amount of energy that AES Tietê can sell in the long term is contracted to AES Eletropaulo until the end of 2015  As a pure energy generator, AES Tietê can only invest in its core business  335 employees 10 1 - Amount of energy allowed to be long term contracted
Energy sector in Brazil: supply perspectives Installed Energy Capacity in Brazil  Total installed capacity is expected to reach 167 GW by 2019  Brazilian energy matrix is not expected to materially change over the next 10 years 2010 2019 Natural gas; 8% Natural gas; 7% Biomass; 5% Biomass; 5% SHPP; 4% SHPP; 4% Oil; 3% Oil; 5% Nuclear; 2% Nuclear; 2% Others; 9% Diesel; 1% Others; 9% Diesel; 1% Hydro; 74% Hydro; 70% Wind; 1% Wind; 4% Coal; 1% Coal; 2% Steam; 1% Steam; 0% 112 GW Annual Growth: 4.5% p.a. 167 GW 11 1 - Small Hydro Power Plant Source: EPE (Energetic Research Company)
Energy sector in Brazil: contracting environment Regulated Market Free Market Auctions Spot Market PPAs1 Trading Trading Distribution Companies Companies Companies Free Clients Free Clients • Main auctions (reverse auctions): Distribution – New Energy (A-5): Delivery in 5 years, 15- Companies 30 years regulated PPA1 – 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 12 1 – Power Purchase Agreement
Operational Performance: billed energy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 130% 129% 14,706 127% 13,421 13,148 121% 118% 117 1,150 573 331 11,483 10,917 1,740 1,680 2,331 55 215 701 1,135 1,640 1,554 1,703 1,665 1,649 11,108 11,138 11,108 8,521 8,578 1,545 1,512 2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 Generation - MWAvg Generation / Physical Guarantee AES Eletropaulo MRE Spot market Other bilateral contracts 13 1- Generated energy divided by the amount of hours 2- Energy Reallocation Mechanism
2010: higher investments in maintenance and modernization of power plants Investments Breakdown (R$ million) 9M10 Investments 2% 2% 13% 93 12 54 59 57 51 83% 8 20 13 33 7 80 11 43 39 43 46 22 Equipment and Maintenance 2007 2008 2009 2010 (e) 9M09 9M10 New SHHPs 1 Investments New SHHPs IT Environment 1 – Small Hydro Power Plants 14
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 Concluded  6 MW of co-generation through biomass, contracted for 15 years beginning in 2010 (PPA1)  7 MW of hydro generation through SHPPs2 in Jaguari Mirim River Under Construction – São José SHPP (4 MW) has an estimated start-up in 1H11 – São Joaquim SHPP (3 MW) has an estimated start-up in 1H11  550 MW of thermo generation through natural gas Under Development – Location has been defined in Nov/2009 – Initiation of the environmental licensing process, conclusion estimated for 1H11 – Technical feasibility study concluded – Participation in public auction (A-5) estimated for 2H11 15 1 – Power Purchase Agreement 2 – Small Hydro Power Plants
Financial highlights Net Revenue (R$ million) Ebitda (R$ million) : 5% CAGR R: 7% CAG 1,605 1,670 1,254 1,260 1,449 1,099 1,277 1,334 1,028 1,041 2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 16
Financial highlights: 100% pay-out on quarterly basis Net Income and Dividend Payout1 (R$ million) 1 – Gross amount 17
Low debt with stable Net Debt/Ebitda ratio Net Debt (R$ billion) Amortization Schedule – Principal (R$ million) • September, 2010: – Average debt cost in 9M10 was 110% of CDI1 or 13.1% p.a. – Average debt maturity of 3.5 years – Net debt: R$ 0.4 billion – Net debt/EBITDA: 0.3x 18 1- Brazilian Interbank Interest Rate
Capital Markets AES Tietê X Ibovespa X IEE Daily Avg. Volume - R$ thousand Last 12 months1 125 + 24% 120 13,634 + 14% 115 10,187 + 13% + 13% 9,096 4,198 110 8,160 105 2,101 3,566 2,692 100 95 9,436 8,086 90 5,531 5,468 85 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 2007 2008 2009 9M10 GETI4 IEE IBOV TSR Preferred Common • Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • ADRs at US OTC Market under the tickers AESAY and AESYY 19 1 – Index: 09/30/09= 100 2 – Total Shareholder Return – considers preferred shares price variation and dividends declared in the period
AES Eletropaulo Overview Concession Area  Largest electricity distribution company in Latin America  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract valid until 2028  Concession area with the highest GDP in Brazil  46 thousand kilometers of lines, 1.1 million electricity poles and 6.0 million consumption units in a concession area of 4,526 km2  Total distributed volume of 41 TWh in 2009  As a pure energy distributor, AES Eletropaulo can only invest within its concession area  4,557 employees 21
Energy sector in Brazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth • Global financial sector recovery will not 2004-2008 2010-2014 2015-2019 take longer; World 4.6 4.2 4.0 Brazil 4.7 5.2 5.0 • Brazilian economic growth will outpace global average growth, even in an Brazilian Consumption Evolution (TWh) international context of moderate expansion; 5.0% p.a 633 • Emerging markets – especially China – 4.4% p.a. will grow faster than developed economies, positively affecting industrial 420 393 388 sector in Brazil; 358 378 331 346 • Income elasticity of energy demand (2010- 2019): 1.04 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 2009 2010 2019 22 1 - Source: EPE (Energetic Research Company)
Energy sector in Brazil: regulatory methodology Tariff Reset and Readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Next Jul/2011 − Non-manageable costs that totally − Parcel A: costs pass trough the tariff Energy pass- through to the tariff Purchase − Losses reduction improve the pass- − Parcel B: costs are set by ANEEL Transmission through effectiveness Sector Charges • Tariff Readjustment: annually − Parcel A costs pass trough the tariff Reference − Parcel B cost are adjusted by IGPM +/- X(1) Factor • Reference Company: Company (PMSO) – Efficient cost structure, determined by ANEEL (National Electricity Agency) X WACC Investment Remuneration • Remuneration Asset Base: Remuneration Asset Base – Applicable investments used to calculate the Investment Remuneration X Depreciation Depreciation (applying WACC) and Depreciation Regulatory Parcel A - Non-Manageable Costs Ebitda Parcel B - Manageable Costs 23 (1) X Factor: index that capture productivity gains
Consumption Evolution Total Market (GWh1) 9M10 Consumption Share (GWh1) 1% CAGR: 6% 6% 41,243 41,269 14% 14% 45,000  39,932 36% 36% 40,000  7,383 6,832 32,186 7,355 30,377 18% 35,000  18% 30,000  5,024 5,834 25,000  26% 26% 20,000  32,577 33,860 34,436 15,000  25,353 26,352 10,000  Residential 5,000  0  Commercial 2007 2008 2009 9M09 9M10 Free Clients Captive Market Free Clients Industrial Others 1 – Net of own consumption 24
Investments amounted R$ 383 million in 9M10 Investments Breakdown (R$ million) Investments 9M10 3% 3% 800  673 6% 700  36 13% 600  516 457 52% 500  37 47 383 324 24% 400  22 637 26 300  478 200  410 362 298 100  Customer Service / System Expansion 0  Maintenance 2008 2009 2010(e) 9M09 9M10 Losses Recovery Paid by the Clients Capex Paid by Customers Others IT 25
SAIDI & SAIFI SAIDI - System Average Interruption Duration Index 15 SAIFI - System Average Interruption Frequency Index 9.00 13 10.09 8.49 8.41 11.34 8.50 12.00 10.92 7.87 11 8.00 10.00 6.50 7.50 9 8.00 7.00 6.00 7 11.86 11.95 6.50 6.00 11.01 5.50 8.90 9.20 6.00 6.17 6.06 4.00 5 5.00 5.78 5.50 5.64 5.20 2.00 5.00 4.50 3 4.50 4.00 0.00 1 2007 2008 2009 9M09 9M10 4.00 2007 2008 2009 9M09 9M10 3rd 5th 8th 1st 1st 7th SAIDI (hours) SAIDI Aneel Target SAIFI (times) SAIFI Aneel Target ► 2010 SAIDI ANEEL Target: 9.32 hours ► 2010 SAIFI ANEEL Target: 7.39 times ABRADEE ranking position among the 28 utilities with more than 500 thousand customers 1 – System Average interruption Duration Index 2 – System Average Interruption Frequency Index Sources: ANEEL. AES Eletropaulo and ABRADEE 26
Operational Indexes Collection Rate (% over gross revenue) Losses (%) 0.2 p.p. 1.6 p.p. 110.0  14.0  11.5 11.6 11.7 12.0 105.0  101.1 101.4 101.5 11.0 99.5 98.5 12.0  100.0  10.0  5.0 5.1 5.2 5.5 4.5 95.0  8.0  6.0  90.0  4.0  6.5 6.5 6.5 6.5 6.5 85.0  2.0  80.0  0.0  2007¹ 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 Technical Losses² Commercial Losses • Disconnections and Reconnections – Monthly Average (9M09 X 9M10) • Fraud and Illegal Connections (9M10) – Disconnections: increase from 81 thousand to 97 thousand – 348 thousand inspections e 32 thousand frauds detected – Reconnection: increase from 54 thousand to 87 thousand – 47 thousand illegal connections regularized • Past due bill credit report (9M10 monthly average): 255 thousand 27 1 – The previous calculation methodology 2 - Current technical losses used retroactively as reference
Financial Highlights Net Revenues (R$ million) Ebitda (R$ million) : 4.2% CAGR: 0.2% CAGR 9,000  2,500  8,050 8,000  7,530 1,696 7,193 2,000  1,566 1,573 1,590 6,534 7,000  5,855 1,500  1,142 6,000  1,000  5,000  500  4,000  3,000  0  2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 28
Practice of 95% pay-out on semi-annually basis Net Income and Dividend Payout1 (R$ million) 100.3% 101.5% 101.6% 24.0% 100.0% 20.4% 22.0% 20.3% 80.0% 20.0% 18.0% 60.0% 14.4% 16.0% 14.0% 40.0% 12.0% 1,027 1,063 10.0% 20.0% 911 8.0% 713 0.0% 538 6.0% 2007 2008 2009 9M09 9M10 Net Income Pay-out Yeld PNB 29 1 – Gross amount
Debt Profile Net Debt (R$ billion) Amortization Schedule – Principal (R$ million) 1.8x 1.8x 1.5x 1.5x 1.4x 1.914 1.361 3.0 3.2 3.1 2.5 2.7 599 322 342 365 74 416 301 312 20 65 69 84 71 525 79 89 553 251 277 296 223 333 223 2007 2008 2009 3Q09 3Q10 2010 2011 2012 2013 2014 2015 2016 2017 2018 - 2028 Net Debt/Ebitda Adjusted with Fcesp Local Currency (ex FCesp) Fcesp¹ Net Debt (R$ billion) • September, 2010: – Average debt cost in 9M10 was 110% of CDI1 or 12.9% p.a. – Average debt maturity of 7 years – Net debt: R$ 3.1 billion – Net debt/EBITDA of 1.8x adjusted with Pension Fund 30 1- Brazilian Interbank Interest Rate
Capital Markets AES Eletropaulo X Ibovespa X IEE Average Daily Volume (R$ thousand) Last 12 months¹ 26,066 B 27,000.00 25,677 25,482 120 A + 14%25,000.00 115 + 13% 110 21,960 + 7%23,000.00 105 100 21,000.00 95 19,000.00 90 85 - 16%17,000.00 80 75 15,000.00 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 2007 2008 2009 9M10 Ibovespa IEE AES Eletropaulo PNB AES Eletropaulo TSR² A Ex dividends: 05/01/2010 B Ex dividends: 08/06/2010 • Common shares and preferred shares class A and B listed on BM&FBOVESPA under the tickers ELPL3, ELPL5 and ELPL6 • ADRs at US OTC Market under the tickers EPUMY and ELPSY 31 1 – Index: 09/30/2009 = 100 2 – Total Shareholder Return - considers preferred shares price variation and dividends declared in the period
Social Responsibility
Social Responsibility “Casa da Cultura e Cidadania” Project • Over 6.7 thousand children, teenagers, and adults have been benefited • Own and incentive investments: approximately R$ 15 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 • 7 operating units “Centros Educacionais Infantis Luz e Lápis” - Project • 300 benefited children between 1 and 6 years old • Own investments amounting R$ 1.5 million in 2009 • Units: Santo Amaro and Guarapiranga 33
Social Responsibility Volunteering Program Distributing Acting to Energy of Transform Good Specific social mobilization or Opportunities for volunteering in emergency campaign. social organizations, which are partners of AES Brazil Winter clothes, Christmas Co-workers can enroll in campaign, among others. volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br • Launched in December, 2008; • Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions; • 1,137 volunteers 34
Attachments
Brazilian Economy: good performance, fast recovery after financial crisis Brazil - GDP and Investment - Annual growth - % (IBGE) 20.9 13.9 13.6 • Strong growth was interrupted 6.1 7.3 by the financial crisis 5.2 (0.6) • The GDP for 2009 was mainly affected by lower investment (10.3) (reversal of expectations) 2007 2008 2009 2010 (1) GDP Investment (Gross Fixed Capital Formation) • Brazil´s economic performance GDP growth - Brazil x Other countries (IBGE, BCB, IMF and OECD) during crisis was better than 6.1 7.3 5.7 5.2 5.6 other countries 5.3 3.6 3.1 3.9 • Expectations for 2010 are -0.6 optimistic -2.2 -2.2 2007 2008 2009 2010 (2) Brazil Emerging markets (ex Brazil, India and China) OECD 1) Expected – Monthly Inflation Report (Brazilian Central Bank) 36 2) OECD (Organization for Economic Co-operation and Development) – international organization of 31 developed countries.
Brazilian Economy: industry recovery and recent foreign trade expansion Brazil – Industrial production - Annual growth - % (IBGE) 11.1 6.0 3.1 2.8 3.1 • Brazilian industry has reached pre-crisis level since mar/10 • In 2010, industry is expected to (7.4) grow 10.5% 2005 2006 2007 2008 2009 Jan- Nov/2010 • Exports limited the recovery in Brazil – Trade Balance – US$ billion (Funcex) 2009 25 20 15 • 2010: growth of exports (world 10 5 economy recovery) and imports 0 (capital goods) -5 -10 -15 -20 Jan-07 Jan-08 Jan-09 Jan-10 Jul-07 Jul-08 Jul-09 Jul-10 Apr-07 Apr-08 Apr-09 Apr-10 Oct-07 Oct-08 Oct-09 37 Exports Imports Trade Balance
Domestic market is responsible for the Unemployment rate - % (IBGE) good performance 14 13 12 • Brazilian´s good performance 10.7 11 9.6 9.6 10 was driven by the expansion of 9 8.3 7.6 7.4 8 7 the domestic market 5.7 6 5 – Unemployment rate has been Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 decreasing over the years Real average income (R$) and income inequality (IBGE and IPEA) 1.600 0,59 0.583 – Real income has been growing 1.500 0,58 0.572 0.569 1.400 0.563 0,57 persistently since 2005 0,56 0.556 1.300 0.548 1,492 0,55 – There was an improvement in 1,427 1,394 0.543 1,341 1.200 1,295 0,54 1,240 income distribution 1,212 1,210 1.100 0,53 1.000 0,52 2003 2004 2005 2006 2007 2008 2009 2010 Real average income Gini Index (1) 38 1) It measures the degree of income inequality. It may vary from 0 (complete equality) to 1 (complete inequality).
Domestic market is responsible for the good performance Brazil – Loans to individuals – R$ million (BCB) 600 537 500 470 394 • Besides the improvement on 400 318 labor market, credit expansion 300 238 191 was also responsible for the 200 100 good performance 2005 2006 2007 2008 2009 Oct* Brazil – Retail Sales – seasonally adjusted – 2003 = 100 (IBGE) • Retail sales is growing fast: 180 170 – 5.9% in 2009 despite the crisis 160 150 – 7.2% p. a. between 2005 and 2009 140 130 – 11.1% in 2010 (Jan-Oct) 120 110 100 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 39
Costs and Expenses Costs and operational expenses1 (R$ million) 409 365 351 292 84 196 249 112 119 90 281 239 214 159 174 2007 2008 2009 9M09 9M10 Energy Purchase, Transmission and Connection Charges, and Water Resources 2 Other Costs and Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 40
Costs and Expenses Costs and operational expenses1 (R$ million) 6,422 5,893 5,537 1,312 5,137 1,193 4,678 1,440 965 919 4,700 5,110 4,097 3,759 4,172 2007 2008 2009 9M09 9M10 Energy Supply and Transmission Charges PMS² and Others Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 41
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 • 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 • Popular law action against Federal Government, Aneel, AES Tietê, and Duke – 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense – 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals) 42
Eletrobras Lawsuit State-owned Eletropaulo was spun-off into four Eletrobras, after companies and, winning the according to our Eletrobras and Eletrobras Stated-owned interest understanding CTEEP appealed requested the 1st Eletropaulo calculation Next Steps: based on the to the Superior level of court borrowed money discussion, filed spin-off Court of Justice judge to appoint from Eletrobras an Execution Suit agreement, the (SCJ) an expert to collect the due 1- Eletrobras will discussion was amount request the transferred to auditing process CTEEP 2 - The auditing procedure will be concluded at least in 6 months 3 - After Nov/86 Dec/88 Jan/98 Apr/98 Sep/01 Sep/03 Oct/05 Jun/06 May/09 Feb/10 conclusion of the expert work, the 1st level of court decision will be released 4 - Appealing to The Judge the 2nd level of appointed the court State-owned The 2nd level of expert who will Eletropaulo and Privatization 5 - Appealing to court excluded The SCJ decided indicate the amount Eletrobras event . State- the 3rd level of AES Eletropaulo to send the and the debtor disagreed on how owned court from the Execution Suit to calculate Eletropaulo Due to a paperwork discussion based back to the 1st interest over that became AES issue, Eletrobras on the spin-off level of court loan and a lawsuit Eletropaulo will request the agreement was started expert selection again 43
Shareholders Agreement On Dec 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri Shareholders can dispose its share at any time, considering the following terms: Right of 1st  Any party with an intention to dispose its shares should first provide the other party the right to buy refusal that participation at the same price offered by a third party Tag along  In the case of change in Brasiliana’s control, tag along rights are triggered for the following rights companies (only if AES is no longer controlling shareholder): – AES Eletropaulo: Tag along of 100% in its common and preferred shares – AES Tietê: Tag along of 80% in its common shares – AES Elpa: Tag along of 80% in its common shares Drag along  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all rights its shares at the time, if the Right of 1st Refusal is not exercised by offered party 44
Brazilian Main Taxes AES Tietê AES Eletropaulo • Income Tax / Social Contribution: • Income Tax / Social Contribution: – 34% over taxable income – 34% over taxable income • ICMS (VAT tax) • ICMS: 22% over Revenue (average rate) – deferred tax – Residential: 25% • PIS/Cofins (sales tax): – Industrial and Commercial: 18% – Eletropaulo´s PPA: 3.65% over Revenue – Public Entities: free – Other bilateral contracts: 9.25% over Revenue • PIS/Cofins: minus Costs – 9.25% over Revenue minus Costs 45
Contacts: ri.aeseletropaulo@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.

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Institutional presentation 3Q10

  • 1.
  • 2.
    AES Brasil Group •Presence in Brazil since 1997 • Comprised of seven companies in the sectors of energy generation, distribution, trade and telecommunications • 7.7 thousand AES Brasil People • Investments 1998-2009: R$ 5.8 billion • Good corporate governance practices • Sustainable practices in businesses • Safety as a main value • Strong cash generation capacity • 25% of minimum pay-out according to bylaws • Differentiated dividend practice since 2006: – AES Tietê: 100% pay-out on quarterly basis – AES Eletropaulo: 95% pay-out on semi- annually basis 2
  • 3.
    AES Brasil widelyrecognized in 2009-2010  Quality and safety (AES Eletropaulo) (AES Sul) (AES Eletropaulo) (AES Eletropaulo)  Management excellence (AES Tietê) (AES Eletropaulo) (AES Tietê) (AES Tietê)  Environmental concern (AES Tietê) (AES Brasil) 3
  • 4.
    Shareholding Structure AES Corp BNDES C 50.00% + 1 share C 50.00% - 1 share P 0.00% P 100% T 46.15% T 53.85% Cia. Brasiliana de Energia C 71.35% C 76.45% C 99.99% C 99.00% P 32.34% P 7.38% C 98.25% C 99.99 % T 99.70% T 99.99% T 99.00% T 52.55% T 34.87% T 98.25% T 99.99 % AES AES AES AES AES AES Eletropaulo AES Sul Infoenergy Uruguaiana Tietê Eletropaulo Com Rio¹ Telecom¹ C = Common Shares P = Preferred Shares T = Total 4 1 – AES Atimus
  • 5.
    Listed Companies ShareholdingComposition Free Float Others¹ 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0% 5 1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively
  • 6.
    AES Brasil isthe second largest group in electric sector Ebitda1 – 2009 (R$ Billion) 4.0 3.2 2.8 2.6 2.2 1.8 1.7 1.4 1.2 0.5 CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP COPEL EDP LIGHT DUKE Net Income1 – 2009 (R$ Billion) 1.9 1.8 1.6 1.3 1.1 1.0 0.8 0.6 0.6 0.2 CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL CESP EDP LIGHT DUKE 6 1 – excluding Eletrobrás Source: Companies’ financial reports
  • 7.
    AES Tietê isan important player among private energy generators Generation Installed Capacity (MW) - 2010 Privately held companies 2% 2% 6% 4%  AES Tietê is the 2nd largest among private 35% 5% generation companies and 10th largest overall 6%  10 largest gencos correspond to 63% of the total 6% installed capacity 7%  There are three mega hydropower plants under 10% 8% construction in the North region of Brazil with 18 GW 9% 111 GW in installed capacity AES TIETÊ DUKE – Santo Antonio and Jirau (Madeira River): 7GW TRACTEBEL COPEL PETROBRÁS CEMIG – Belo Monte (Xingu River): 11GW ITAIPU CESP ELETRONORTE FURNAS Source: ANEEL (Regulator) – BIG (October, 2010) 7 CHESF OTHERS
  • 8.
    AES Brasil isthe largest distribution group in Brazil Consumption (GWh) - 2009 13% • 64 discos in Brazil distributing 388 TWh 40% 13% AES Brasil • AES Brasil is the largest electricity CPFL Energia distribution group in Brazil: 10% – AES Eletropaulo: 41 TWh distributed, CEMIG representing 10.6% of the Brazilian 7% Neoenergia market 5% 6% 6% – AES Sul: 8 TWh distributed, Consumers – Dec/2009 Copel representing 1.9% of the Brazilian 13% Light market 30% 12%  There is a limited opportunity for EDP competition in Brazil as discos are Others restricted to operate within their 12% concession areas 5% 7% 6% 16% 8
  • 10.
    AES Tietê Overview ConcessionArea  16 hydroelectric plants within the states of São Paulo and Minas Gerais  30-year concession valid until 2029; renewable for another 30 years  Installed capacity of 2,657 MW, with physical guarantee1 of 1,280 MW  All amount of energy that AES Tietê can sell in the long term is contracted to AES Eletropaulo until the end of 2015  As a pure energy generator, AES Tietê can only invest in its core business  335 employees 10 1 - Amount of energy allowed to be long term contracted
  • 11.
    Energy sector inBrazil: supply perspectives Installed Energy Capacity in Brazil  Total installed capacity is expected to reach 167 GW by 2019  Brazilian energy matrix is not expected to materially change over the next 10 years 2010 2019 Natural gas; 8% Natural gas; 7% Biomass; 5% Biomass; 5% SHPP; 4% SHPP; 4% Oil; 3% Oil; 5% Nuclear; 2% Nuclear; 2% Others; 9% Diesel; 1% Others; 9% Diesel; 1% Hydro; 74% Hydro; 70% Wind; 1% Wind; 4% Coal; 1% Coal; 2% Steam; 1% Steam; 0% 112 GW Annual Growth: 4.5% p.a. 167 GW 11 1 - Small Hydro Power Plant Source: EPE (Energetic Research Company)
  • 12.
    Energy sector inBrazil: contracting environment Regulated Market Free Market Auctions Spot Market PPAs1 Trading Trading Distribution Companies Companies Companies Free Clients Free Clients • Main auctions (reverse auctions): Distribution – New Energy (A-5): Delivery in 5 years, 15- Companies 30 years regulated PPA1 – 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 12 1 – Power Purchase Agreement
  • 13.
    Operational Performance: billedenergy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 130% 129% 14,706 127% 13,421 13,148 121% 118% 117 1,150 573 331 11,483 10,917 1,740 1,680 2,331 55 215 701 1,135 1,640 1,554 1,703 1,665 1,649 11,108 11,138 11,108 8,521 8,578 1,545 1,512 2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 Generation - MWAvg Generation / Physical Guarantee AES Eletropaulo MRE Spot market Other bilateral contracts 13 1- Generated energy divided by the amount of hours 2- Energy Reallocation Mechanism
  • 14.
    2010: higher investmentsin maintenance and modernization of power plants Investments Breakdown (R$ million) 9M10 Investments 2% 2% 13% 93 12 54 59 57 51 83% 8 20 13 33 7 80 11 43 39 43 46 22 Equipment and Maintenance 2007 2008 2009 2010 (e) 9M09 9M10 New SHHPs 1 Investments New SHHPs IT Environment 1 – Small Hydro Power Plants 14
  • 15.
    Projects - ExpansionRequirement AES Tietê has been seeking opportunities to increase its installed capacity to comply with the 15% increase requirement in the State of São Paulo Concluded  6 MW of co-generation through biomass, contracted for 15 years beginning in 2010 (PPA1)  7 MW of hydro generation through SHPPs2 in Jaguari Mirim River Under Construction – São José SHPP (4 MW) has an estimated start-up in 1H11 – São Joaquim SHPP (3 MW) has an estimated start-up in 1H11  550 MW of thermo generation through natural gas Under Development – Location has been defined in Nov/2009 – Initiation of the environmental licensing process, conclusion estimated for 1H11 – Technical feasibility study concluded – Participation in public auction (A-5) estimated for 2H11 15 1 – Power Purchase Agreement 2 – Small Hydro Power Plants
  • 16.
    Financial highlights Net Revenue(R$ million) Ebitda (R$ million) : 5% CAGR R: 7% CAG 1,605 1,670 1,254 1,260 1,449 1,099 1,277 1,334 1,028 1,041 2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 16
  • 17.
    Financial highlights: 100% pay-out on quarterly basis Net Income and Dividend Payout1 (R$ million) 1 – Gross amount 17
  • 18.
    Low debt withstable Net Debt/Ebitda ratio Net Debt (R$ billion) Amortization Schedule – Principal (R$ million) • September, 2010: – Average debt cost in 9M10 was 110% of CDI1 or 13.1% p.a. – Average debt maturity of 3.5 years – Net debt: R$ 0.4 billion – Net debt/EBITDA: 0.3x 18 1- Brazilian Interbank Interest Rate
  • 19.
    Capital Markets AES Tietê X Ibovespa X IEE Daily Avg. Volume - R$ thousand Last 12 months1 125 + 24% 120 13,634 + 14% 115 10,187 + 13% + 13% 9,096 4,198 110 8,160 105 2,101 3,566 2,692 100 95 9,436 8,086 90 5,531 5,468 85 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 2007 2008 2009 9M10 GETI4 IEE IBOV TSR Preferred Common • Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • ADRs at US OTC Market under the tickers AESAY and AESYY 19 1 – Index: 09/30/09= 100 2 – Total Shareholder Return – considers preferred shares price variation and dividends declared in the period
  • 21.
    AES Eletropaulo Overview ConcessionArea  Largest electricity distribution company in Latin America  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract valid until 2028  Concession area with the highest GDP in Brazil  46 thousand kilometers of lines, 1.1 million electricity poles and 6.0 million consumption units in a concession area of 4,526 km2  Total distributed volume of 41 TWh in 2009  As a pure energy distributor, AES Eletropaulo can only invest within its concession area  4,557 employees 21
  • 22.
    Energy sector inBrazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth • Global financial sector recovery will not 2004-2008 2010-2014 2015-2019 take longer; World 4.6 4.2 4.0 Brazil 4.7 5.2 5.0 • Brazilian economic growth will outpace global average growth, even in an Brazilian Consumption Evolution (TWh) international context of moderate expansion; 5.0% p.a 633 • Emerging markets – especially China – 4.4% p.a. will grow faster than developed economies, positively affecting industrial 420 393 388 sector in Brazil; 358 378 331 346 • Income elasticity of energy demand (2010- 2019): 1.04 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 2009 2010 2019 22 1 - Source: EPE (Energetic Research Company)
  • 23.
    Energy sector inBrazil: regulatory methodology Tariff Reset and Readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Next Jul/2011 − Non-manageable costs that totally − Parcel A: costs pass trough the tariff Energy pass- through to the tariff Purchase − Losses reduction improve the pass- − Parcel B: costs are set by ANEEL Transmission through effectiveness Sector Charges • Tariff Readjustment: annually − Parcel A costs pass trough the tariff Reference − Parcel B cost are adjusted by IGPM +/- X(1) Factor • Reference Company: Company (PMSO) – Efficient cost structure, determined by ANEEL (National Electricity Agency) X WACC Investment Remuneration • Remuneration Asset Base: Remuneration Asset Base – Applicable investments used to calculate the Investment Remuneration X Depreciation Depreciation (applying WACC) and Depreciation Regulatory Parcel A - Non-Manageable Costs Ebitda Parcel B - Manageable Costs 23 (1) X Factor: index that capture productivity gains
  • 24.
    Consumption Evolution Total Market(GWh1) 9M10 Consumption Share (GWh1) 1% CAGR: 6% 6% 41,243 41,269 14% 14% 45,000  39,932 36% 36% 40,000  7,383 6,832 32,186 7,355 30,377 18% 35,000  18% 30,000  5,024 5,834 25,000  26% 26% 20,000  32,577 33,860 34,436 15,000  25,353 26,352 10,000  Residential 5,000  0  Commercial 2007 2008 2009 9M09 9M10 Free Clients Captive Market Free Clients Industrial Others 1 – Net of own consumption 24
  • 25.
    Investments amounted R$ 383 million in 9M10 Investments Breakdown (R$ million) Investments 9M10 3% 3% 800  673 6% 700  36 13% 600  516 457 52% 500  37 47 383 324 24% 400  22 637 26 300  478 200  410 362 298 100  Customer Service / System Expansion 0  Maintenance 2008 2009 2010(e) 9M09 9M10 Losses Recovery Paid by the Clients Capex Paid by Customers Others IT 25
  • 26.
    SAIDI & SAIFI SAIDI - System Average Interruption Duration Index 15 SAIFI - System Average Interruption Frequency Index 9.00 13 10.09 8.49 8.41 11.34 8.50 12.00 10.92 7.87 11 8.00 10.00 6.50 7.50 9 8.00 7.00 6.00 7 11.86 11.95 6.50 6.00 11.01 5.50 8.90 9.20 6.00 6.17 6.06 4.00 5 5.00 5.78 5.50 5.64 5.20 2.00 5.00 4.50 3 4.50 4.00 0.00 1 2007 2008 2009 9M09 9M10 4.00 2007 2008 2009 9M09 9M10 3rd 5th 8th 1st 1st 7th SAIDI (hours) SAIDI Aneel Target SAIFI (times) SAIFI Aneel Target ► 2010 SAIDI ANEEL Target: 9.32 hours ► 2010 SAIFI ANEEL Target: 7.39 times ABRADEE ranking position among the 28 utilities with more than 500 thousand customers 1 – System Average interruption Duration Index 2 – System Average Interruption Frequency Index Sources: ANEEL. AES Eletropaulo and ABRADEE 26
  • 27.
    Operational Indexes CollectionRate (% over gross revenue) Losses (%) 0.2 p.p. 1.6 p.p. 110.0  14.0  11.5 11.6 11.7 12.0 105.0  101.1 101.4 101.5 11.0 99.5 98.5 12.0  100.0  10.0  5.0 5.1 5.2 5.5 4.5 95.0  8.0  6.0  90.0  4.0  6.5 6.5 6.5 6.5 6.5 85.0  2.0  80.0  0.0  2007¹ 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 Technical Losses² Commercial Losses • Disconnections and Reconnections – Monthly Average (9M09 X 9M10) • Fraud and Illegal Connections (9M10) – Disconnections: increase from 81 thousand to 97 thousand – 348 thousand inspections e 32 thousand frauds detected – Reconnection: increase from 54 thousand to 87 thousand – 47 thousand illegal connections regularized • Past due bill credit report (9M10 monthly average): 255 thousand 27 1 – The previous calculation methodology 2 - Current technical losses used retroactively as reference
  • 28.
    Financial Highlights Net Revenues (R$ million) Ebitda (R$ million) : 4.2% CAGR: 0.2% CAGR 9,000  2,500  8,050 8,000  7,530 1,696 7,193 2,000  1,566 1,573 1,590 6,534 7,000  5,855 1,500  1,142 6,000  1,000  5,000  500  4,000  3,000  0  2007 2008 2009 9M09 9M10 2007 2008 2009 9M09 9M10 28
  • 29.
    Practice of 95%pay-out on semi-annually basis Net Income and Dividend Payout1 (R$ million) 100.3% 101.5% 101.6% 24.0% 100.0% 20.4% 22.0% 20.3% 80.0% 20.0% 18.0% 60.0% 14.4% 16.0% 14.0% 40.0% 12.0% 1,027 1,063 10.0% 20.0% 911 8.0% 713 0.0% 538 6.0% 2007 2008 2009 9M09 9M10 Net Income Pay-out Yeld PNB 29 1 – Gross amount
  • 30.
    Debt Profile Net Debt(R$ billion) Amortization Schedule – Principal (R$ million) 1.8x 1.8x 1.5x 1.5x 1.4x 1.914 1.361 3.0 3.2 3.1 2.5 2.7 599 322 342 365 74 416 301 312 20 65 69 84 71 525 79 89 553 251 277 296 223 333 223 2007 2008 2009 3Q09 3Q10 2010 2011 2012 2013 2014 2015 2016 2017 2018 - 2028 Net Debt/Ebitda Adjusted with Fcesp Local Currency (ex FCesp) Fcesp¹ Net Debt (R$ billion) • September, 2010: – Average debt cost in 9M10 was 110% of CDI1 or 12.9% p.a. – Average debt maturity of 7 years – Net debt: R$ 3.1 billion – Net debt/EBITDA of 1.8x adjusted with Pension Fund 30 1- Brazilian Interbank Interest Rate
  • 31.
    Capital Markets AES EletropauloX Ibovespa X IEE Average Daily Volume (R$ thousand) Last 12 months¹ 26,066 B 27,000.00 25,677 25,482 120 A + 14%25,000.00 115 + 13% 110 21,960 + 7%23,000.00 105 100 21,000.00 95 19,000.00 90 85 - 16%17,000.00 80 75 15,000.00 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 2007 2008 2009 9M10 Ibovespa IEE AES Eletropaulo PNB AES Eletropaulo TSR² A Ex dividends: 05/01/2010 B Ex dividends: 08/06/2010 • Common shares and preferred shares class A and B listed on BM&FBOVESPA under the tickers ELPL3, ELPL5 and ELPL6 • ADRs at US OTC Market under the tickers EPUMY and ELPSY 31 1 – Index: 09/30/2009 = 100 2 – Total Shareholder Return - considers preferred shares price variation and dividends declared in the period
  • 32.
  • 33.
    Social Responsibility “Casa daCultura e Cidadania” Project • Over 6.7 thousand children, teenagers, and adults have been benefited • Own and incentive investments: approximately R$ 15 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 • 7 operating units “Centros Educacionais Infantis Luz e Lápis” - Project • 300 benefited children between 1 and 6 years old • Own investments amounting R$ 1.5 million in 2009 • Units: Santo Amaro and Guarapiranga 33
  • 34.
    Social Responsibility Volunteering Program Distributing Acting to Energy of Transform Good Specific social mobilization or Opportunities for volunteering in emergency campaign. social organizations, which are partners of AES Brazil Winter clothes, Christmas Co-workers can enroll in campaign, among others. volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br • Launched in December, 2008; • Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions; • 1,137 volunteers 34
  • 35.
  • 36.
    Brazilian Economy: goodperformance, fast recovery after financial crisis Brazil - GDP and Investment - Annual growth - % (IBGE) 20.9 13.9 13.6 • Strong growth was interrupted 6.1 7.3 by the financial crisis 5.2 (0.6) • The GDP for 2009 was mainly affected by lower investment (10.3) (reversal of expectations) 2007 2008 2009 2010 (1) GDP Investment (Gross Fixed Capital Formation) • Brazil´s economic performance GDP growth - Brazil x Other countries (IBGE, BCB, IMF and OECD) during crisis was better than 6.1 7.3 5.7 5.2 5.6 other countries 5.3 3.6 3.1 3.9 • Expectations for 2010 are -0.6 optimistic -2.2 -2.2 2007 2008 2009 2010 (2) Brazil Emerging markets (ex Brazil, India and China) OECD 1) Expected – Monthly Inflation Report (Brazilian Central Bank) 36 2) OECD (Organization for Economic Co-operation and Development) – international organization of 31 developed countries.
  • 37.
    Brazilian Economy: industryrecovery and recent foreign trade expansion Brazil – Industrial production - Annual growth - % (IBGE) 11.1 6.0 3.1 2.8 3.1 • Brazilian industry has reached pre-crisis level since mar/10 • In 2010, industry is expected to (7.4) grow 10.5% 2005 2006 2007 2008 2009 Jan- Nov/2010 • Exports limited the recovery in Brazil – Trade Balance – US$ billion (Funcex) 2009 25 20 15 • 2010: growth of exports (world 10 5 economy recovery) and imports 0 (capital goods) -5 -10 -15 -20 Jan-07 Jan-08 Jan-09 Jan-10 Jul-07 Jul-08 Jul-09 Jul-10 Apr-07 Apr-08 Apr-09 Apr-10 Oct-07 Oct-08 Oct-09 37 Exports Imports Trade Balance
  • 38.
    Domestic market isresponsible for the Unemployment rate - % (IBGE) good performance 14 13 12 • Brazilian´s good performance 10.7 11 9.6 9.6 10 was driven by the expansion of 9 8.3 7.6 7.4 8 7 the domestic market 5.7 6 5 – Unemployment rate has been Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 decreasing over the years Real average income (R$) and income inequality (IBGE and IPEA) 1.600 0,59 0.583 – Real income has been growing 1.500 0,58 0.572 0.569 1.400 0.563 0,57 persistently since 2005 0,56 0.556 1.300 0.548 1,492 0,55 – There was an improvement in 1,427 1,394 0.543 1,341 1.200 1,295 0,54 1,240 income distribution 1,212 1,210 1.100 0,53 1.000 0,52 2003 2004 2005 2006 2007 2008 2009 2010 Real average income Gini Index (1) 38 1) It measures the degree of income inequality. It may vary from 0 (complete equality) to 1 (complete inequality).
  • 39.
    Domestic market isresponsible for the good performance Brazil – Loans to individuals – R$ million (BCB) 600 537 500 470 394 • Besides the improvement on 400 318 labor market, credit expansion 300 238 191 was also responsible for the 200 100 good performance 2005 2006 2007 2008 2009 Oct* Brazil – Retail Sales – seasonally adjusted – 2003 = 100 (IBGE) • Retail sales is growing fast: 180 170 – 5.9% in 2009 despite the crisis 160 150 – 7.2% p. a. between 2005 and 2009 140 130 – 11.1% in 2010 (Jan-Oct) 120 110 100 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 39
  • 40.
    Costs and Expenses Costsand operational expenses1 (R$ million) 409 365 351 292 84 196 249 112 119 90 281 239 214 159 174 2007 2008 2009 9M09 9M10 Energy Purchase, Transmission and Connection Charges, and Water Resources 2 Other Costs and Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 40
  • 41.
    Costs and Expenses Costsand operational expenses1 (R$ million) 6,422 5,893 5,537 1,312 5,137 1,193 4,678 1,440 965 919 4,700 5,110 4,097 3,759 4,172 2007 2008 2009 9M09 9M10 Energy Supply and Transmission Charges PMS² and Others Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 41
  • 42.
    Expansion Requirement of15%  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 • 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 • Popular law action against Federal Government, Aneel, AES Tietê, and Duke – 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense – 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals) 42
  • 43.
    Eletrobras Lawsuit State-owned Eletropaulo was spun-off into four Eletrobras, after companies and, winning the according to our Eletrobras and Eletrobras Stated-owned interest understanding CTEEP appealed requested the 1st Eletropaulo calculation Next Steps: based on the to the Superior level of court borrowed money discussion, filed spin-off Court of Justice judge to appoint from Eletrobras an Execution Suit agreement, the (SCJ) an expert to collect the due 1- Eletrobras will discussion was amount request the transferred to auditing process CTEEP 2 - The auditing procedure will be concluded at least in 6 months 3 - After Nov/86 Dec/88 Jan/98 Apr/98 Sep/01 Sep/03 Oct/05 Jun/06 May/09 Feb/10 conclusion of the expert work, the 1st level of court decision will be released 4 - Appealing to The Judge the 2nd level of appointed the court State-owned The 2nd level of expert who will Eletropaulo and Privatization 5 - Appealing to court excluded The SCJ decided indicate the amount Eletrobras event . State- the 3rd level of AES Eletropaulo to send the and the debtor disagreed on how owned court from the Execution Suit to calculate Eletropaulo Due to a paperwork discussion based back to the 1st interest over that became AES issue, Eletrobras on the spin-off level of court loan and a lawsuit Eletropaulo will request the agreement was started expert selection again 43
  • 44.
    Shareholders Agreement On Dec2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri Shareholders can dispose its share at any time, considering the following terms: Right of 1st  Any party with an intention to dispose its shares should first provide the other party the right to buy refusal that participation at the same price offered by a third party Tag along  In the case of change in Brasiliana’s control, tag along rights are triggered for the following rights companies (only if AES is no longer controlling shareholder): – AES Eletropaulo: Tag along of 100% in its common and preferred shares – AES Tietê: Tag along of 80% in its common shares – AES Elpa: Tag along of 80% in its common shares Drag along  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all rights its shares at the time, if the Right of 1st Refusal is not exercised by offered party 44
  • 45.
    Brazilian Main Taxes AES Tietê AES Eletropaulo • Income Tax / Social Contribution: • Income Tax / Social Contribution: – 34% over taxable income – 34% over taxable income • ICMS (VAT tax) • ICMS: 22% over Revenue (average rate) – deferred tax – Residential: 25% • PIS/Cofins (sales tax): – Industrial and Commercial: 18% – Eletropaulo´s PPA: 3.65% over Revenue – Public Entities: free – Other bilateral contracts: 9.25% over Revenue • PIS/Cofins: minus Costs – 9.25% over Revenue minus Costs 45
  • 46.
    Contacts: ri.aeseletropaulo@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.