2. AES Brasil Group
• Presence in Brazil since 1997
• Comprised of seven companies in the sectors
of energy generation, distribution, trade and
telecommunications
• 7.6 thousand AES Brasil People
• Investments 1998-2010: R$ 6.9 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
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 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
6. AES Brasil is the second largest group in
electric sector
Ebitda1 – 2010 (R$ Billion)
4.5
4.2
3.4
3.0
2.6
2.0 1.6
1.6
1.5
0.6
CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP EDP LIGHT COPEL DUKE
1
Net Income – 2010 (R$ Billion)
2.3 2.2
1.8
1.6
1.2
1.0
0.6 0.6
0.2 0.1
CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL EDP LIGHT DUKE CESP 6
1 – excluding Eletrobrás Source: Companies’ financial reports
7. 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
5%
36% generation companies and 10th largest overall
6%
10 largest gencos correspond to 64% of the total
6% installed capacity
7% There are three mega hydropower plants under
9% construction in the North region of Brazil with 18 GW
8%
8%
114 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 (May, 2011) 7
CHESF OTHERS
8. AES Brasil is the largest distribution group
in Brazil
Consumption (GWh) - 2010
13%
• 64 discos in Brazil distributing 419 TWh
40% 12%
• AES Brasil is the largest electricity
distribution group in Brazil:
10% – AES Eletropaulo: 43 TWh distributed,
representing 10.3% of the Brazilian
7%
6% 6% market
6%
– AES Sul: 9 TWh distributed,
Consumers – Dec/2010
representing 2.2% of the Brazilian
12%
market
30%
12% There is a limited opportunity for
competition in Brazil as discos are
restricted to operate within their
12% concession areas
5%
7%
7% 16% 8
9.
10. 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
328 employees
10
1 - Amount of energy allowed to be long term contracted
11. 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% Coal; 1% Others; 14% Coal; 2%
Hydro; 74% Hydro; 70%
Diesel; 1% Diesel; 1%
Wind; 4%
Wind; 1%
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, May/2010)
12. 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
13. Billed energy growth due to high availability
and bilateral contracts
Energy Generation (MW average1) Billed Energy (GWh)
143%
136%
130% 14,706 14,729
125% 13,148 117 301
1,150 1,340
118% 331
1,680 2,331 1,980
1,979 4,276
1,665 1,599 1,612 11,138 11,108 11,108 3,645
1,512 52
643 108
566 424
587
3,015 2,526
2008 2009 2010 1Q10 1Q11 2008 2009 2010 1Q10 1Q11
2
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. Investments in the modernization of Nova
Avanhandava, Ibitinga and Caconde
power plants
Investments1 (R$ million) 2011 Investments
158 89%
6
82
57 12
5% 6%
13 152 35
70 4
8
43
30
1
7
Equipment and Modernization
2009 2010 2011 (e) 1Q10 1Q11
2 New SHPPs
Investments New SHPPs
IT projects
1 - Do not include capitalization of interests during plants modernization and development of projects
14
2 - Small Hydro Power Plants
15. Expansion of 550 MW of installed capacity
through the Termo SP Project
Plant localization (Canas/SP)
• Project objectives
- Expansion of installed capacity in the State of São Paulo
- Offering competitively energy prices
• Project features
- Combined cycle using natural gas
- 2 gas turbines, 2 heat recovery boilers and 1 steam turbine
- Estimated investment of R$ 1.1 billion
- Natural gas consumption: 2.5 million m3/day
• Expected Timetable
- May 26, 2011: Public hearing
- July/11: Expectation of issuance of environmental license
(expected)
- 2nd half of 2011: Power auction realization (expected)
Project Website: www.aestiete.com.br/termosaopaulo
15
17. Practice of 100% pay-out
on quarterly basis*
Net Income and Dividend Pay-out1 (R$ million)
110% 117%
100%
12% 11% 11%
692 706 737
220 193
2008 2009 2010 1Q10 1Q11
Net income Pay-out Yield PN
17
1 – Gross amount (*) 2009 and 2010 numbers in IFRS
18. Debt profile
Net Debt (R$ billion) Amortization Schedule – Principal (R$ million)
0.4x
0.3x 0.3x 0.3x 0.3x
300 300 300
0.5
0.4 0.4 0.4 0.4
2013 2014 2015
2008 2009 2010 1Q10 1Q11
Net debt Net debt / EBITDA
• March, 2011:
– Average debt cost in 1Q11 was 114% of CDI1 p.a. or 14% p.a.
– Average debt maturity of 3.1 years
– Net debt: R$ 0.5 billion
– Net debt/EBITDA: 0.4x
18
1 – Brazilian Interbank Interest Rate
19. Capital Markets
AES Tietê X Ibovespa X IEE Daily Avg. Volume (R$ thousand)
120 1Q111
110 +10%
13,922
+3%
13,253
100
10,187
-1% 8,160 4,239 3,274
2,101
90 2,692
8,086 9,683 9,979
5,468
80
Dec-10 Jan-11 Feb-11 Mar-11
2008 2009 2010 1Q11
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: 12/31/2010 = 100
20.
21. 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
45 thousand kilometers of lines, 1.2 million electricity poles and
6.1 million consumption units in a concession area of 4,526 km2
Total distributed volume of 43 TWh in 2010
As a pure energy distributor, AES Eletropaulo can only invest
within its concession area
5,629 employees
21
22. 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)
23. 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
33. Social Responsibility
“Casa da Cultura e Cidadania” Project
• Over 5.2 thousand children, teenagers,
and adults have been benefited
• Own and incentive investments:
approximately R$ 17 million in 2010
• 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$ 2.1 million in 2010
• 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;
• 1,199 volunteers 34
36. Costs and Expenses
Costs and operational expenses1 (R$ million)
415 433
351
187
201
112
246 82 78
239 214
34 29
48 49
2008 2009 2010 1Q10 1Q11
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 36
37. Costs and Expenses
Costs and operational expenses1 (R$ million)
6,745
6,431
5,537
1,255
1,306
1,440
5,125 5,490
4,097 1,665 1,707
342 348
1,323 1,359
2008 2009 2010 1Q10 1Q11
Energy Supply and Transmission Charges PMS and Others Expenses²
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 37
38. 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)
38
39. Eletrobras Lawsuit
State-owned
Eletropaulo was Eletrobras
spun-off into four requested the
Eletrobras, after
companies and, beginning of the
winning the
according to our Eletrobras and Eletrobras appraisal
Stated-owned interest
understanding CTEEP appealed requested the 1st procedure , which
Eletropaulo calculation
based on the to the Superior level of court is under 5th Civil
borrowed money discussion, filed
spin-off Court of Justice judge to appoint Court analysis.
from Eletrobras an Execution Suit
agreement, the (SCJ) an expert AES Eletropaulo
to collect the due
discussion was and CTEEP should
amount
transferred to be notified during
CTEEP next months
Next Steps:
1 - The auditing
procedure will be
Nov/86 Dec/88 Jan/98 Apr/98 Sep/01 Sep/03 Oct/05 Jun/06 May/09 Feb/10 Dec/10 concluded in at
least 6 months
2 - After
conclusion of the
expert work, the 1st
level of court
decision will be
released
State-owned The 2nd level of
Eletropaulo and Privatization 3 - Appealing to
court excluded The SCJ decided The Judge
Eletrobras event . State- the 2nd level of
AES Eletropaulo to send the appointed the
disagreed on how owned court
from the Execution Suit expert who will
to calculate Eletropaulo discussion based back to the 1st indicate the amount 4 - Appealing to
interest over that became AES on the spin-off level of court and the debtor the 3rd level of
loan and a lawsuit Eletropaulo agreement court
was started
39
40. 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
40
41. 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
41
42. 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.
