4. Tariff Adjustment
TARIFF ADJUSTMENT 2004
Parcels %
Itaipu 1,57%
A
RGR/CCC/CDE/Other 4,70%
National Supply 3,15% X Factor 4,43%
Total Parcel A 9,42% Xe 2,37%
Total Parcel B 1,70%
Total Adjustment 11,11% Xc 0,71%
Total CVA 7,51% Xa 1,08%
50% CVA Deferred
4,12% IGP-M (Jun/30/04) 9,61%
2002-2003
Total CVA 2003-2004 3,39% Parcel B multiplying factor
1,05182
TOTAL ADJUSTMENT + CVA 18,62% (IGPM – X)
4
5. Comparison of Consumption in GWh
6,5% 1,4%
2.896 8.081
-1,5% 7.966
2.718 6,0%
2.238 2.204 2.281
2.153
-18,4%
858
700
Residential Industrial Commercial Other
3 Q03 3 Q04
3Q03 3 Q04
Obs: the graphics do not consider own consumption
5
6. Comparison of Consumption in GWh
Free Clients
6,6%
8.828
13,5%
2.887
7,5%
2.544 1,4%
2.320 8.279
2.159 8.081
7.966
-15,6%
858
724
Total w/ out Free Total w/ Free
Industrial w/ Free Commercial w/ Free Others w/ Free
3 Q03 3 Q04 3 Q03 3 Q04
Obs: the graphics do not consider own consumption
6
7. Retention of Potentially
Free Consumer
• Intensification of visits to consumers
• Value adding to the captive supply through:
• The selling of “ Interruptive Energy”
• Payments of Bills with Credits of ICMS (Merchandise and Service Circulation Tax)
• Energy Efficiency Projects
• Benefit Plans (Load Management and Preventive Maintenance)
Actual Situation
% market
Jan- Sep 2004
Billed in 2003
Migration of 41
4,1%
Consumers
38
Consumers renewed 4,3%
Contracts
Total of 65
9,1%
Free Clients
1 consumer unit which had opted for free client status, decided to return to the captive market
7
8. Results – 3Q 2004 x 2Q 2004
In R$ Million 2 Q04 3 Q04
10% Growth in Eletropaulo’s billed consumption
due to the tariff adjustment (18,62%)
Deferment of PIS/COFINS in the amount of
Net Revenue 1.714,6 2.050,3 19,6% R$117,7 million
19% increase on expenses with Electric Energy
Purchased for Resale and Transmission Charges
82% increase on sector charges
Operating Expense (1.474,9) (1.735,3) 17,7%
EBITDA * 306,6 382,2 24,7% Increase in the Net Operating Revenue
Financial Revenue (144,3) (164,2) 13,8% R$ 111,8 million loss in the translation of
accounting statements of controlled party, due
(Expense)** to the Real appreciation of 8% in the quarter
Extraordinary Items (85,4) (85,0) -0,5%
Net of Tax Effects
Net Profit (Loss) 8,1 (6,4) -178,9% Increase in the financial expense
(*) Without adjustments
(**) Consolidated Result Values
8
9. Results – 3Q 2004 x 3Q 2003
In R$ Million 3 Q03 3 Q04
20% Growth in Eletropaulo’s billed consumption
due to the tariff adjustment (18,62%)
1.4% market growth
Net Revenue 1,682.2 2,050.3 21.9% Deferment of PIS/COFINS in the amount of
R$117,7 million
18% increase on expenses with Electric Energy
Purchased for Resale and Transmission Charges
the start of amortization of 50% of deferred CVA
for the tariff year 2002-2003 and 100% of CVA
Operating Expense (1,358.9) (1,668.1) 22.8% accumulated in the year 2003-2004
increase of 245.1% in Other Operational
Expenses
EBITDA * 323.3 382.2 18.2% Increase in the Net Operating Revenue
Financial Revenue (117.1) (164.2) 40.2% R$ 111,8 million loss in the translation of
accounting statements of controlled party, due
(Expense)** to the Real appreciation of 8% in the quarter
Extraordinary Items
Net of Tax Effects (86.0) (85.0) -1.2%
Net Profit (Loss) 7.0 (6.4) -191.2% Increase in the financial and operational
expenses
(*) Without adjustments
(**) Consolidated Result Values
9
10. Adjusted EBITDA
2nd Quarter 2004 3rd Quarter 2004
R$ 306,6 MM EBITDA R$ 382,2 MM EBITDA
RTE RTE
R$ 74,1 MM R$ 82,9 MM
R$ 23,6 MM Debt Confession IIa R$ 23,9 MM Debt Confession IIa
ADJUSTED EBITDA
R$ 404 MM ADJUSTED EBITDA
R$ 489 MM
21,0% Increase
10
11. Investment Trend
R$ mn
361
321
287 289 289
217 193
180
1998 1999 2000 2001 2002 2003 3Q04 2004E
2004 Investments - R$ million
2004E
Customer Service and
System Expansion 103
Maintenance 34
Recovery of Losses 14
Personnel 89
Others 49
Total 289
11
12. ST vs. LT Indebtedness
Million
R$ 5,522 R$ 5,910 R$ 5,277 R$ 5,504
100%
32% 29%
47%
78%
50%
68% 71%
53%
22%
0%
2001 2002 2003 3Q04
ST LT
12
13. Hedging Strategy
Million
R$3,501 R$5,522 R$5,910 R$5,277 R$5,504
100%
2%
18% 14%
42% 35% 19%
80%
91.9% of
60%
41% 3% foreign currency
61% exposure is
4% hedged and only
1,6% of total
40%
debt remains
unhedged as of
Sep 2004
20%
41% 25% 54% 62% 79%
Currently 100%
0%
of foreign
2000 2001 2002 2003 3Q04
currency is
Local Currency Hedged Foreign Currency hedged
13
14. Amortization Schedule
R$ million
149
61
83 42
149 74 61
611 69 42 45
151 157 32 7
14 14 7 8
5 145 110 104 31 7
129 139
134
33 66 75
9 113 44
257 228 232
34 36 196 217 220 223 224
189 192 194 188
143 151 143 159 140 159 161
95 93 100
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
Down Payment
Downpayment
Pre Payment**
Outstanding
R$ BNDES US$ *
* Conversion rate at Sep. 30, 2004 = US$/R$=2.8586
** Relates to the “Capitalization Support to Electric Power Distribution Companies Program”. According to the calculation made by the Company,
Eletropaulo would be eligible to receive up to R$ 770 million from this program. We have assumed, in the amortization schedule above, that the
Company has received the total amount and made proportional pre-payment of tranches C and D, as agreed with creditor banks.
14
15. Ratings
Escala International
BBB-
Investment Grade
Non-Investment Grade Moeda Local Fitch
BB
B
B- MoedaLocal S&P
DDD
Moeda Estrangeira Fitch
D
Moeda Estrangeira S&P
2000 2001 2002 2003 2004
Escala Nacional
brAA
brA
brA- Investment Grade
Fitch
brBB+
Non-Investment Grade
brBB
S&P
brDDD
brD
2000 2001 2002 2003 2004
15
16. Corporate Governance
Sarbanes Oxley Law (SOX) BOVESPA Level II
• Implementation of Internal • By the time the Company
adheres to Bovespa Level II, it
Controls will be certified with a
Corporative Governance Seal
Obtain the Certification of the
which will promote
internal controls with relation
to the Sarbanes Oxley Law by A higher commitment of
the external audit the Company with their
stockholders (minority
Settle procedures and drivers and controllers)
for a better performance of
the Company Higher transparency on
the information given to
Facilitate and optimize the the Capital Markets
employees performances at
the Company Free Float maintenance of
25% of the total shares
Avoid Company’s fraud
creating a higher transparency Creation of a Fiscal
of the information Council
Higher rights to the
preferred share holders
16
19. Tariff Adjustment
• The tariffs of initial Contracts are adjusted annually in accordance with the
calculation formula provided for in the Concession Contract:
Tariff Adjustment Index = VPA + VPB x IGP-M
Revenue
• The tariff of Bilateral Contracts with Eletropaulo is readjust by IGP Variation
• Along the 3rd, the follows contracts were adjusted:
July
Bilateral Contract with Eletropaulo = 9,61%
Initial Contracts with Eletropaulo = 6,99%
August
Initial Contracts with Elektro = 7,95%
• Subsequent Events In October
The Initial Contracts with Bandeirantes and Piratininga were adjusted in 8,36%
19
20. Energy Balance – 9 months
Caconde
234.265* CPFL
Gross Generation x Billed Energy 555.199
Euclides
in MWh
416.469 Bandeirante
Limoeiro 290.732
121.127
Eletropaulo - CI
Água Vermelha 1.458.765
4.860.635
Barra Bonita TOTAL BILLED Elektro
451.046 686.732
9.075.083 8.232.656
Bariri Bragantina
=
495.846 169.407
Ibitinga
Nacional
544.989
103.167
Promissão
846.028 Piratininga
MRE 427.063
Nova Avanhandava
1.081.207 Eletropaulo - Bilateral
AES Tietê generated more than 8,6%
Mogi Guaçu of its assured energy 4.137.149
23.471
*Caconde plant didn't generate energy during the 3rd Quarter because of it's maintenance program.
**After deducing own consumption and transmission losses, the difference is addressed to the Energy Reallocation Market - MRE
20
21. Stored Energy
Southeast Reservoirs
90
70
GW - month
50
30
10
Nov
Oct
Dec
Jul
Jan
Feb
Jun
Aug
Apr
May
Sep
Mar
2000 2001 2002 2003 2004
Source: National System Operator – ONS: October/04
21
22. Statement of Earnings – 3rd Quarter
9 months 9 months 3Q03 3Q04
In R$ million
03 04 Tariff adjustment of three contracts: one
bilateral and two initial contracts
Net Revenue 561,4 740,9 213,7 247,6 15,9%
Adjustments of MAE’s accounts that
Operating Expense (166,5) (200,7) (66,3) (62,6) -5,6%
occurred in the 3rd quarter of 2003
In addition to the revenue increase,
Ebitda 442,7 587,8 163,9 200,9 22,6% EBIDTA reflects the reduction in
operating expenses
Increase in IGP-M, occurred mainly in
Financial Revenue (200,9) (221,1) (37,4) (78,6) 110,1% July and August on the debt with
(Expense) Eletrobrás
Result before
193,6 318,2 109,8 105,7
Taxation
The improvement of operating revenue
Net profit 127,5 209,9 72,01 69,7 -3,3% was compensated for the increase in
financial expenses
22
23. Conclusion
• Eletropaulo ended the 3rd quarter with • Tietê ended the 3rd quarter of 2004 with
increases of 20% in its net revenue and a profit of 69 million
of 25% in its EBITDA, as a result of the
tariff adjustment of 18.62% and of the
deferral of PIS/COFINS – R$117.7 million • The net profit, although impacted by the
financial expenses that grew due to the
IGP-M, was kept in line with that of the
• Eletropaulo has been successful in its previous quarters
program for retention of potentially free
customers, reducing its potential loss
• Tietê will soon make another distribution
of dividends to its shareholders, in the
amount of R$132.8 million, reinforcing
its commitment with both investors and
• The company has constantly sought shareholders
operational and commercial excellence,
in order to offer increasing quality in the
service provided to customers
