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Santander 2010

AES Brasil Group is a major electricity distribution and generation company in Brazil with 7 million clients. In 2008, AES Brasil had R$3.2 billion in Ebitda and R$1.7 billion in net income. It has significant market share in distribution and owns several hydroelectric power plants. The document provides an overview of AES Brasil's operations, financial performance, regulatory environment and strategy.

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Institutional November, 2009
AES Brasil Group Market Share 7 million clients 6 thousand AES People ... with a 2008 result: 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 Others Disco Trading Co. Genco Telecom 2
Shareholding structure BNDES AES Corp C 50.00% + 1 share P 0.00% T 46.15% O = Common Shares P = Preferred Shares T = Total C 50.00% - 1 share Cia. Brasiliana de Energia T 99.76% AES Sul C 99.99% T 99.99% AES Infoenergy C 100.00% T 100.00% AES Uruguaiana C 98.26% T 98.26% AES Com RJ C 76.46% P 7.43% T 34.80% AES Eletropaulo C 71.35% P 32.34% T 52.55% AES Tietê C 99.99 % T 99.99 % AES EP Telecom 3
Shareholding composition Federal Government or Eletrobras1 Free Float 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
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 Surveillance Committee (CMSE) Brazilian Electricity Regulatory Agency (ANEEL) Energy Research Enterprise (EPE) (Monitors energy supply) (Ruling, Inspection & Auditing, Monitoring, and Mediation) (Generation & Transmission Planning) Distribution companies Electric Energy Commercialization Chamber (CCEE) Pricing and clearing of energy transactions Transmission companies System Operator (ONS) Generation companies Trading companies Generator resources scheduling and dispatch 5
Energy sector in Brazil (Contracting Environment) Free Market Regulated Market Auctions Distribution Companies Spot Market PPAs1 Trading Companies Free Clients • Trading Companies Free Clients Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15-30 Distribution 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 1 – Power Purchase Agreement 6
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 Energy − AES Sul: each 5 years Purchase − Parcel A costs pass trough the tariff Transmission − Parcel B costs are set by ANEEL − Non-manageable costs that totally pass- through to the tariff − Losses reduction improve the passthrough effectiveness Sector Charges • Tariff Adjustment: annually − Parcel A costs pass trough the tariff − Parcel B cost are adjusted by IGPM +/- X(1) Factor X WACC Remuneration Asset Base X Depreciation (1) X Factor: index that capture productivity gains Reference Company (PMSO) Investment Remuneration Depreciation Regulatory Ebitda • Reference Company: – Efficient cost structure, determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation Parcel A Non-Manageable Costs Parcel B Manageable Costs 7
AES Eletropaulo overview Concession Area • Largest electricity distribution company in Latin America • Serving 24 municipalities in the São Paulo Metropolitan area • Concession area with the highest GDP in Brazil: São Paulo Metropolitan Area – 17.1% of the Brazilian GDP and 50.3% of São Paulo’s state GDP • • • Regional ABC 1.1 million electricity poles 4,143 employees • 5.9 million of consumption units • Total distributed volume of 41 TWh in 2008 Regional North Regional South 4,526 km2 of concession area • Regional West 46 thousand kilometers of lines Regional East Note – Data as of Sept. 2009, except GDP which is 2006 9
Ranking¹ for energy distributors 8.000 Net Revenue - R$ MM 7.000 6.000 5.000 2007 2008 4.000 3.000 2.000 CELG COELCE CPFL PIRATININGA CELPE AMPLA ELEKTRO CELESC COELBA COPEL 1.600 BANDEIRANTE 1.800 CPFL PAULISTA 1.000 LIGHT 1st CEMIG 1st AES ELETROPAULO Net Revenue Ebitda - R$ MM 1.400 1.200 1.000 Ebitda 2nd 1st 800 600 400 1 – Source: ABRADEE (Brazilian Association of Energy Distributors); research among 48 energy distributors in Brazil. RGE CEMAR CPFL PIRATININGA AMAZONAS COELCE CELPE AMPLA ELEKTRO COPEL CPFL PAULISTA COELBA LIGHT CEMIG AES ELETROPAULO 200 10
Consumption evolution Total Market - (GWh)1 9M09 Consumption Share - (GWh)1 8% 6% + 8% 17% 38,183 6,527 39,932 37% 41,243 7,383 30,730 410 31,656 32,577 30,377 5,625 7,355 14% 5,024 26% 33,860 25,105 25,353 CAGR 2006-08 9M09 +6% +0% Others Free Clients 9M08 +2% Industrial 2008 +7% Free Clients 2007 Residential Commercial 2006 +2% Captive market 1 – Own consumption not considered 11
Most important consumption classes Residential - (GWh) Commercial - (GWh) + 5% 3,742 + 3% 11,214 3,978 7,850 2,657 10,708 2,625 2,567 1Q09 2Q09 3Q09 3,494 1Q09 2Q09 3Q09 9M08 9M09 Industrial - (GWh) 7,603 9M08 Captive Market¹ - (GWh) - 11% + 1% 4,878 1,327 1Q09 1,465 2Q09 9M09 4,337 1,546 8,118 3Q09 1 – Own consumption not considered 9M08 9M09 1Q09 8,493 2Q09 8,742 3Q09 25,104 9M08 25,353 9M09 12
Investments amounted up to R$ 324 million in 9M09 Investments 9M09 Investments Breakdown – R$ million 8% 523 433 378 457 4% 4% 55 45% 16% 47 69 305 77 468 324 26 22% 36 27% 410 364 301 269 298 Customer Service and System Expansion Customer Financed 2006 2007 Capex 2008 2009e 9M08 9M09 Maintenance IT Loss Recovery Others Paid by customers 13
SAIDI & SAIFI SAIDI - System Average Interruption Duration Index 11.81 11.34 SAIFI - System Average Interruption Frequency Index 10.92 8.61 8.49 7.87 8.90 9.20 11.01 5.52 2006 2007 2008 3rd 3rd 5th SAIDI (hours) 8.41 9M09¹ SAIDI Aneel Target 5.64 2006 3rd 5.20 5.78 2007 2008 9M09¹ 1st 1st 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
Operational indexes Losses – % Collection Rate – % over gross revenue - 1.3 b.p. 99.1 99.5 - 0.4 b.p. 101.4 97.8 97.7 12.0 11.5 11.6 11.6 11.8 5.5 2007 2008 9M08 5.2 5.3 6.5 6.5 6.5 6.5 2006 9M09 5.1 6.5 2006 5.0 2007 2008 9M081 9M091 Commercial Losses • Disconnections and Reconnection – Monthly Average (9M08 X 9M09) • Technical Losses² Fraud and Illegal Connections (9M09) – – Disconnections: increase from 233 thousand to 733 thousand 271,000 inspections e 32,000 frauds detected – 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
Net revenue of R$ 5.9 billion in 9M09 Net Revenue – R$ million Ebitda – R$ million 2003 EMBI+ BR Regulatory WACC (%) 2007 4.63% 2.21% Selic target 16.50% 11.25% + 10% 17.1 7,193 15.1 7,529 6,852 1,766 5,540 2006 2007 2008 9M08 1,566 5,855 1,696 1,140 9M09 2006 2007 2008 1,143 9M08 9M09 16
Net income of R$ 538 million in 9M09 Dividend payout1 – R$ million Net Income – R$ million Pay-out Dividends + 175% 100.3% 101.5% 14.4% 1,027 20.3% 34.9% 713 Yield2 PNB 3.2% 496 373 1,043 538 715 323 130 2006 2007 2008 9M08 2006 9M09 2007 2008 9M09 • • 1 – Gross amount 2 – Considered 1st semester data 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% 17
R$ 663 million paid as dividends in 2009 Managerial Cash Flow – R$ million 3Q08 4Q08 1Q09 2Q09 3Q09 1,454 1,373 1,536 1,258 989 613 491 301 448 798 Investments (107) (126) (104) (113) (116) Net Financial Expenses (107) (37) (113) (45) (98) Net Amortizations (21) (40) (184) (54) (35) CESP Foundation (32) (46) (58) (56) (53) Income Tax (68) (80) (119) (83) (45) Dividends (359) - - (366) (297) Free Cash Flow (81) 162 (278) (269) 155 1,373 1,536 1,258 989 1,143 Initial Cash Operating Cash Flow Final Cash 18
Debt profile Amortization Schedule – R$ million Net Debt 2.1x 1.3x 1.4x 1.2x 1,532 3.7 3.0 78 2.7 2.5 2006 2007 2008 2009 9M09 Net Debt (R$ billion) 524 2010 62 66 70 250 10 41 3 250 250 75 50 80 125 375 2011 2012 2013 2014 2015 2016-2028 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
Capital market AES Eletropaulo1 X Ibovespa X IEE Average Daily Volume3 - R$ thousand YTD ’09 170 B 150 130 64% 64% C 26,066 25,677 21,187 46% A 7,508 110 90 dec-082 jan-09 feb-09 mar-09 apr-09 may-09 jun-09 jul-09 aug-09 sep-09 ELPL6 IEE 2006 2007 2008 9M09 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
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) Nova Avanhandava (347 MW) Euclides da Cunha (109 MW) Promissão (264 MW) Limoeiro (32 MW) Bariri (143 MW) 100% of assured energy contracted with AES Caconde (80 MW) Barra Bonita (141 MW) • Mogi-Guaçu (7 MW) 1 - Amount of energy allowed to be long term contracted Eletropaulo until the end of 2015 • 310 employees 22
Operational Performance Billed Energy – GWh2 Energy Generation – MW average September ’09 Prices (R$ / MWh) AES Eletropaulo 129% 121% MRE 118% 1,646 1,424 13,421 12,774 1,510 13,148 573 330 1,740 1,680 10,336 536 1,130 327 1,663 11,108 11,108 2007 Generation – MW average 2008 9M09 Generation / Assured Energy2 2006 2007 AES Eletropaulo 1 - Energy Reallocation Mechanism 2 - Amount of energy allowed to be long term contracted 10,728 607 1,571 11,138 8,346 2006 39.68 Spot (9M09 avg.) 112% 1,543 152.00 8.18 2008 9M08 MRE1 8,550 9M09 Spot Market 23
Investments Investments – R$ million 9M09 Investments New SHPP’s1 Investments 47 63 59 14 51 8 33% 20 12 33 49 43 39 • 45% 19% 35 2006 3% 11 22 2007 2008 2009(e) 9M09 9M09 x 9M08: higher reforestation expending, due to Carbon Credit Project, partially offset by lower investments on Piabanha SHPP 1- Small Hydro Power Plant Jaguari Mirim and Piabanha Equip. and Maint. New SHPPs IT Environment 24
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
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) • 7 MW of hydropower generation through SHPPs2 in Jaguari Mirim river – 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 • 500 MW of natural gas fired thermo plant – In stage of defining plant location • Concluded Concluded (PPA1)) (PPA1 32 MW of hydropower generation through SHPPs under technical and economic viability study In Progress In Progress Under Under Evaluation Evaluation 1 - Power Purchase Agreement 2 - Small Hydro Power Plant 26
Net revenue of R$ 1.3 billion in 9M09 Net Revenue – R$ million Ebitda – R$ million + 17% + 14% 1,254 1,621 1,464 1,387 1,277 1,097 1,099 1,028 1,186 2006 2007 2008 9M08 936 9M09 2006 2007 2008 9M08 9M09 27
Sustainable profitability and dividend payment Dividend Payout1 – R$ million Net Income – R$ million Dividends Pay-out 100 % 692 614 2007 2008 100 % 10% 12% 636 609 614 9M08 9M09 609 2006 495 2006 100 % 12% + 13% Yield PN2 2007 692 2008 636 9M09 • • 1 - Gross amount 2 - Average Weighted Price during the Period 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 28
Strong cash flow Managerial Cash Flow – R$ million 3T08 Initial Cash Operating Cash Flow Investments Net Financial Expenses Net Amortization Income Tax Dividends and IoE Free Cash Flow Final Cash – Parent Company Final Cash of Subs. And Assoc. Comp Final Cash 673 340 (14) (13) (50) (19) (134) 110 783 5 788 4T08 783 337 (22) (7) (52) (17) (188) 53 836 5 840 1T09 836 297 (9) (6) (53) (252) 0 (24) 812 2 814 2T09 812 332 (8) (13) (55) (20) (409) (173) 639 2 641 3T09 639 316 (14) (15) (58) (19) (199) 12 651 1 652 29
Debt Net Debt 0.6x 0.6x 0.3x 0.3x • Eletrobras Debt – 0.4 2006 2007 2008 0.4 9M09 – Monthly amortization Maturity: May 15, 2013 – 0.7 Balance: R$ 1,029 million – 0.7 Interest of 10% p.a. and monetary adjustment of IGP-M Net Debt (R$ billion) Net Debt / Ebitda 30
Capital market AES Tietê1 X Ibovespa X IEE Daily Average Volume - R$ thousand 10,109 9M092 190 9,067 + 64% + 46% + 40% 160 130 5,760 8,160 8,106 5,531 5,468 4,188 100 3,566 2,692 2,003 2007 2008 9M09 1,572 70 Dec-08 Mar-09 GETI4 Jun-09 IBOV Sep-09 IEE 1 – Shares were adjusted by declared dividend of the period under analysis 2006 Preferred 2 – Data Base: 12/30/08 =100 Common 31
Social Responsibility and Environmental Actions
Social Responsibility Volunteering Program distributing Energy of Good Acting to Transform Enterprising in the Community Specific social mobilization or emergency campaign. Opportunities for volunteering in social organizations, which are partners of AES Brazil Acknowledgement and support of projects for the development of social organizations. Winter clothes, Christmas campaign, among others. Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br Volunteers may submit projects to help other organizations develop. Launch 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
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
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
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.

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Santander 2010

  • 1.
  • 2.
    AES Brasil Group MarketShare 7 million clients 6 thousand AES People ... with a 2008 result: 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 Others Disco Trading Co. Genco Telecom 2
  • 3.
    Shareholding structure BNDES AES Corp C50.00% + 1 share P 0.00% T 46.15% O = Common Shares P = Preferred Shares T = Total C 50.00% - 1 share Cia. Brasiliana de Energia T 99.76% AES Sul C 99.99% T 99.99% AES Infoenergy C 100.00% T 100.00% AES Uruguaiana C 98.26% T 98.26% AES Com RJ C 76.46% P 7.43% T 34.80% AES Eletropaulo C 71.35% P 32.34% T 52.55% AES Tietê C 99.99 % T 99.99 % AES EP Telecom 3
  • 4.
    Shareholding composition Federal Government or Eletrobras1 FreeFloat 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 agentsin Brazil Ministry of Mines and Energy (MME) (Set Guidelines and Policies) National Council of Energy Policy (CNPE) (Formulates Policies) Electricity Sector Surveillance Committee (CMSE) Brazilian Electricity Regulatory Agency (ANEEL) Energy Research Enterprise (EPE) (Monitors energy supply) (Ruling, Inspection & Auditing, Monitoring, and Mediation) (Generation & Transmission Planning) Distribution companies Electric Energy Commercialization Chamber (CCEE) Pricing and clearing of energy transactions Transmission companies System Operator (ONS) Generation companies Trading companies Generator resources scheduling and dispatch 5
  • 6.
    Energy sector inBrazil (Contracting Environment) Free Market Regulated Market Auctions Distribution Companies Spot Market PPAs1 Trading Companies Free Clients • Trading Companies Free Clients Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15-30 Distribution 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 1 – Power Purchase Agreement 6
  • 7.
    Discos regulatory methodology (TariffReset and Adjustment) Tariff Readjustment and Reset • Tariff Reset is applied each 3 to 5 years • Parcel A Costs − AES Eletropaulo: each 4 years Energy − AES Sul: each 5 years Purchase − Parcel A costs pass trough the tariff Transmission − Parcel B costs are set by ANEEL − Non-manageable costs that totally pass- through to the tariff − Losses reduction improve the passthrough effectiveness Sector Charges • Tariff Adjustment: annually − Parcel A costs pass trough the tariff − Parcel B cost are adjusted by IGPM +/- X(1) Factor X WACC Remuneration Asset Base X Depreciation (1) X Factor: index that capture productivity gains Reference Company (PMSO) Investment Remuneration Depreciation Regulatory Ebitda • Reference Company: – Efficient cost structure, determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation Parcel A Non-Manageable Costs Parcel B Manageable Costs 7
  • 9.
    AES Eletropaulo overview ConcessionArea • Largest electricity distribution company in Latin America • Serving 24 municipalities in the São Paulo Metropolitan area • Concession area with the highest GDP in Brazil: São Paulo Metropolitan Area – 17.1% of the Brazilian GDP and 50.3% of São Paulo’s state GDP • • • Regional ABC 1.1 million electricity poles 4,143 employees • 5.9 million of consumption units • Total distributed volume of 41 TWh in 2008 Regional North Regional South 4,526 km2 of concession area • Regional West 46 thousand kilometers of lines Regional East Note – Data as of Sept. 2009, except GDP which is 2006 9
  • 10.
    Ranking¹ for energydistributors 8.000 Net Revenue - R$ MM 7.000 6.000 5.000 2007 2008 4.000 3.000 2.000 CELG COELCE CPFL PIRATININGA CELPE AMPLA ELEKTRO CELESC COELBA COPEL 1.600 BANDEIRANTE 1.800 CPFL PAULISTA 1.000 LIGHT 1st CEMIG 1st AES ELETROPAULO Net Revenue Ebitda - R$ MM 1.400 1.200 1.000 Ebitda 2nd 1st 800 600 400 1 – Source: ABRADEE (Brazilian Association of Energy Distributors); research among 48 energy distributors in Brazil. RGE CEMAR CPFL PIRATININGA AMAZONAS COELCE CELPE AMPLA ELEKTRO COPEL CPFL PAULISTA COELBA LIGHT CEMIG AES ELETROPAULO 200 10
  • 11.
    Consumption evolution Total Market- (GWh)1 9M09 Consumption Share - (GWh)1 8% 6% + 8% 17% 38,183 6,527 39,932 37% 41,243 7,383 30,730 410 31,656 32,577 30,377 5,625 7,355 14% 5,024 26% 33,860 25,105 25,353 CAGR 2006-08 9M09 +6% +0% Others Free Clients 9M08 +2% Industrial 2008 +7% Free Clients 2007 Residential Commercial 2006 +2% Captive market 1 – Own consumption not considered 11
  • 12.
    Most important consumptionclasses Residential - (GWh) Commercial - (GWh) + 5% 3,742 + 3% 11,214 3,978 7,850 2,657 10,708 2,625 2,567 1Q09 2Q09 3Q09 3,494 1Q09 2Q09 3Q09 9M08 9M09 Industrial - (GWh) 7,603 9M08 Captive Market¹ - (GWh) - 11% + 1% 4,878 1,327 1Q09 1,465 2Q09 9M09 4,337 1,546 8,118 3Q09 1 – Own consumption not considered 9M08 9M09 1Q09 8,493 2Q09 8,742 3Q09 25,104 9M08 25,353 9M09 12
  • 13.
    Investments amounted upto R$ 324 million in 9M09 Investments 9M09 Investments Breakdown – R$ million 8% 523 433 378 457 4% 4% 55 45% 16% 47 69 305 77 468 324 26 22% 36 27% 410 364 301 269 298 Customer Service and System Expansion Customer Financed 2006 2007 Capex 2008 2009e 9M08 9M09 Maintenance IT Loss Recovery Others Paid by customers 13
  • 14.
    SAIDI & SAIFI SAIDI- System Average Interruption Duration Index 11.81 11.34 SAIFI - System Average Interruption Frequency Index 10.92 8.61 8.49 7.87 8.90 9.20 11.01 5.52 2006 2007 2008 3rd 3rd 5th SAIDI (hours) 8.41 9M09¹ SAIDI Aneel Target 5.64 2006 3rd 5.20 5.78 2007 2008 9M09¹ 1st 1st 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 Losses –% Collection Rate – % over gross revenue - 1.3 b.p. 99.1 99.5 - 0.4 b.p. 101.4 97.8 97.7 12.0 11.5 11.6 11.6 11.8 5.5 2007 2008 9M08 5.2 5.3 6.5 6.5 6.5 6.5 2006 9M09 5.1 6.5 2006 5.0 2007 2008 9M081 9M091 Commercial Losses • Disconnections and Reconnection – Monthly Average (9M08 X 9M09) • Technical Losses² Fraud and Illegal Connections (9M09) – – Disconnections: increase from 233 thousand to 733 thousand 271,000 inspections e 32,000 frauds detected – 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 ofR$ 5.9 billion in 9M09 Net Revenue – R$ million Ebitda – R$ million 2003 EMBI+ BR Regulatory WACC (%) 2007 4.63% 2.21% Selic target 16.50% 11.25% + 10% 17.1 7,193 15.1 7,529 6,852 1,766 5,540 2006 2007 2008 9M08 1,566 5,855 1,696 1,140 9M09 2006 2007 2008 1,143 9M08 9M09 16
  • 17.
    Net income ofR$ 538 million in 9M09 Dividend payout1 – R$ million Net Income – R$ million Pay-out Dividends + 175% 100.3% 101.5% 14.4% 1,027 20.3% 34.9% 713 Yield2 PNB 3.2% 496 373 1,043 538 715 323 130 2006 2007 2008 9M08 2006 9M09 2007 2008 9M09 • • 1 – Gross amount 2 – Considered 1st semester data 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% 17
  • 18.
    R$ 663 millionpaid as dividends in 2009 Managerial Cash Flow – R$ million 3Q08 4Q08 1Q09 2Q09 3Q09 1,454 1,373 1,536 1,258 989 613 491 301 448 798 Investments (107) (126) (104) (113) (116) Net Financial Expenses (107) (37) (113) (45) (98) Net Amortizations (21) (40) (184) (54) (35) CESP Foundation (32) (46) (58) (56) (53) Income Tax (68) (80) (119) (83) (45) Dividends (359) - - (366) (297) Free Cash Flow (81) 162 (278) (269) 155 1,373 1,536 1,258 989 1,143 Initial Cash Operating Cash Flow Final Cash 18
  • 19.
    Debt profile Amortization Schedule– R$ million Net Debt 2.1x 1.3x 1.4x 1.2x 1,532 3.7 3.0 78 2.7 2.5 2006 2007 2008 2009 9M09 Net Debt (R$ billion) 524 2010 62 66 70 250 10 41 3 250 250 75 50 80 125 375 2011 2012 2013 2014 2015 2016-2028 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 Eletropaulo1X Ibovespa X IEE Average Daily Volume3 - R$ thousand YTD ’09 170 B 150 130 64% 64% C 26,066 25,677 21,187 46% A 7,508 110 90 dec-082 jan-09 feb-09 mar-09 apr-09 may-09 jun-09 jul-09 aug-09 sep-09 ELPL6 IEE 2006 2007 2008 9M09 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
  • 22.
    AES Tietê overview ConcessionArea • 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) Nova Avanhandava (347 MW) Euclides da Cunha (109 MW) Promissão (264 MW) Limoeiro (32 MW) Bariri (143 MW) 100% of assured energy contracted with AES Caconde (80 MW) Barra Bonita (141 MW) • Mogi-Guaçu (7 MW) 1 - Amount of energy allowed to be long term contracted Eletropaulo until the end of 2015 • 310 employees 22
  • 23.
    Operational Performance Billed Energy– GWh2 Energy Generation – MW average September ’09 Prices (R$ / MWh) AES Eletropaulo 129% 121% MRE 118% 1,646 1,424 13,421 12,774 1,510 13,148 573 330 1,740 1,680 10,336 536 1,130 327 1,663 11,108 11,108 2007 Generation – MW average 2008 9M09 Generation / Assured Energy2 2006 2007 AES Eletropaulo 1 - Energy Reallocation Mechanism 2 - Amount of energy allowed to be long term contracted 10,728 607 1,571 11,138 8,346 2006 39.68 Spot (9M09 avg.) 112% 1,543 152.00 8.18 2008 9M08 MRE1 8,550 9M09 Spot Market 23
  • 24.
    Investments Investments – R$million 9M09 Investments New SHPP’s1 Investments 47 63 59 14 51 8 33% 20 12 33 49 43 39 • 45% 19% 35 2006 3% 11 22 2007 2008 2009(e) 9M09 9M09 x 9M08: higher reforestation expending, due to Carbon Credit Project, partially offset by lower investments on Piabanha SHPP 1- Small Hydro Power Plant Jaguari Mirim and Piabanha Equip. and Maint. New SHPPs IT Environment 24
  • 25.
    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 • 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 Tietêhas 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) • 7 MW of hydropower generation through SHPPs2 in Jaguari Mirim river – 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 • 500 MW of natural gas fired thermo plant – In stage of defining plant location • Concluded Concluded (PPA1)) (PPA1 32 MW of hydropower generation through SHPPs under technical and economic viability study In Progress In Progress Under Under Evaluation Evaluation 1 - Power Purchase Agreement 2 - Small Hydro Power Plant 26
  • 27.
    Net revenue of R$1.3 billion in 9M09 Net Revenue – R$ million Ebitda – R$ million + 17% + 14% 1,254 1,621 1,464 1,387 1,277 1,097 1,099 1,028 1,186 2006 2007 2008 9M08 936 9M09 2006 2007 2008 9M08 9M09 27
  • 28.
    Sustainable profitability anddividend payment Dividend Payout1 – R$ million Net Income – R$ million Dividends Pay-out 100 % 692 614 2007 2008 100 % 10% 12% 636 609 614 9M08 9M09 609 2006 495 2006 100 % 12% + 13% Yield PN2 2007 692 2008 636 9M09 • • 1 - Gross amount 2 - Average Weighted Price during the Period 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 28
  • 29.
    Strong cash flow ManagerialCash Flow – R$ million 3T08 Initial Cash Operating Cash Flow Investments Net Financial Expenses Net Amortization Income Tax Dividends and IoE Free Cash Flow Final Cash – Parent Company Final Cash of Subs. And Assoc. Comp Final Cash 673 340 (14) (13) (50) (19) (134) 110 783 5 788 4T08 783 337 (22) (7) (52) (17) (188) 53 836 5 840 1T09 836 297 (9) (6) (53) (252) 0 (24) 812 2 814 2T09 812 332 (8) (13) (55) (20) (409) (173) 639 2 641 3T09 639 316 (14) (15) (58) (19) (199) 12 651 1 652 29
  • 30.
    Debt Net Debt 0.6x 0.6x 0.3x 0.3x • Eletrobras Debt – 0.4 2006 2007 2008 0.4 9M09 – Monthlyamortization Maturity: May 15, 2013 – 0.7 Balance: R$ 1,029 million – 0.7 Interest of 10% p.a. and monetary adjustment of IGP-M Net Debt (R$ billion) Net Debt / Ebitda 30
  • 31.
    Capital market AES Tietê1X Ibovespa X IEE Daily Average Volume - R$ thousand 10,109 9M092 190 9,067 + 64% + 46% + 40% 160 130 5,760 8,160 8,106 5,531 5,468 4,188 100 3,566 2,692 2,003 2007 2008 9M09 1,572 70 Dec-08 Mar-09 GETI4 Jun-09 IBOV Sep-09 IEE 1 – Shares were adjusted by declared dividend of the period under analysis 2006 Preferred 2 – Data Base: 12/30/08 =100 Common 31
  • 32.
  • 33.
    Social Responsibility Volunteering Program distributing Energyof Good Acting to Transform Enterprising in the Community Specific social mobilization or emergency campaign. Opportunities for volunteering in social organizations, which are partners of AES Brazil Acknowledgement and support of projects for the development of social organizations. Winter clothes, Christmas campaign, among others. Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br Volunteers may submit projects to help other organizations develop. Launch 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 daCultura 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 112195 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.