3. Highlights
Adjusted EBITDA of R$ 558.9 million, 15.2% lower than 3Q06
(R$ 1,452.9 million in 9M07)
Net Profit of R$ 197.6 million, R$ 150.3 million higher than 3Q06 (R$ 703.1
million in 9M07)
PIS/COFINS: reduction of approximately R$ 79.0 million per year of expenses on
energy purchase due to the change in the taxation system by AES Tietê
3Q07 2nd of Tariff Reset: average index of -8.43% applicable to the Company’s tariff
since July 4th, 2007
Amendment of the 9th issue of debentures (R$ 250.0 million) – August/07:
CDI + 1.75% p.a., average life of 9.4 years and maturity of 11.0 years
ANEEL did not approve the amendment to the bilateral contract with Tiete,
that extended its maturity to 2028
Dividends Payment (September/07): R$ 487.8 million relative to 1H07 earnings
10th Issue of Debentures (R$ 600.0 million) – October/07: CDI + 0.90% p.a.,
Subsequent average life of 5.0 years and maturity of 6.0 years. Resources were used to pay in
advance the balance of the 8th Issue of Debentures
Events
Cost reduction plan: Voluntary Dismissal Program announced in October
3
4. Market
Consumption Evolution (GWh) and Average Tariff
% Total Market (3Q07) Average Tariff R$/MWh
Captive Consumers 3Q06 3Q07 V%
Residencial 304.0 280.1 - 7.9%
80.1% 18.7% Free Clients Industrial 260.1 240.0 - 5.4%
Commercial 292.3 275.3 - 5.8%
Potentially Free Clients*
1.2% Others 236.3 223.6 - 5.4%
TOTAL 286.1 267.3 - 6.6%
Consumption Evolution (GWh)**
6.1%
10,020
4.6% 9,448
7,790 8,150
8.1%
1.4%
3,195 3,455 1.4% 12.8%
2,371 2,506 7.4%
1,632 1,655 1,658 1,870
592 636
Residencial Industrial Commercial Public Sector and Free Clients Captive Market Total Market
Others
(*) Aneel Resolution 247/07 (conventional sources)
(**) Charts do not consider own consumption 3Q06 3Q07
4
5. Operating Highlights
Collection Rate (% over Gross Revenue) Loss Reduction (%)
160 b.p. 150 b.p. 40 b.p.
99.0 99.1 99.2 99.2 13.5
97.5 12.9
12.0 12.2 11.8
7.0 6.4 5.5 5.8 5.3
6.5 6.5 6.5 6.5 6.5
2004 2005 2006 9M06 9M07 2004 2005 2006 3Q06 3Q07
Technical Losses Commercial Losses
Collection Rate (9M07) Fraud and Clandestine Connections (9M07)
− Public Sector: 100.7%
− 223,000 inspections and 20,000 frauds detected
− Private Sector: 99.0%
− 58,000 clandestine connections regularized
Cuts and Reconnections – Monthly average
(3Q06 X 3Q07)
− Cuts – decrease from 126,000 to 115,000 Net growth of clients in 12 months:
− Reconnections - increase from 80,000 to 86,000 172.7 thousand
(*) Current Technical Losses used retroactively as reference
5
6. Investments
Investments (R$ Million) 3Q07: R$ 104.8 Million
9%
459.8
11%
403.6 43.3
38%
377.7
48.8
58.4 13%
298.0
41.4
416.5 14%
354.8 15%
319.3
256.6
Costumer Service and System Expansion
Information Technology
Maintenance
Self - Financed
2005 2006 9M07 2007 (e) Others
Capex Self - Financed Loss Recovery
6
7. Eletropaulo’s Tariff Evolution
Tariff Evolution
30% PIS/COFINS
25% Part A
18.6%
20% Part B
15% 11.6% 11.5% IGPM
10% 2.1% 9.9%
8.0%
5% 16.9% 1.6%
3.6% 4.8%
0% 1.7% 1.6%
-2.2%
-4.3%
-5% -6.2%
-10%
-8.4%
-15%
2003 2004 2005 2006 2007
Pending Issues – Tariff Reset
Provisory Reference Company
Administrative Appeal:
− Exclude all assets fully depreciated from the Gross RAB
− Depreciation between Oct/06 and Jun/07 by Replacement Value – increased accumulated depreciation and
consequently reduced Net RAB
− X Factor – adjustment may change it from 2.42% to 1.57%
7
8. Results
Gross Revenue (R$ Million) Operating Expenses* (R$ Million)
1.8%
0.6%
8,299.0 8,448.7
3,829.9 3,805.3
3,138.9 3,190.5 687.7 544.0
7.7%
6.2%
2,906.4 2,725.4 2,269.2 2,431.2
1,420.4 1,311.1
5,160.1 5,258.2 1,102.9 957.5 173.5 201.8
883.6 866.5
1,803.5 1,767.9 873.0 830.1
363.3 242.8
9M06 9M07 3Q06 3Q07
9M06 9M07 3Q06 3Q07
Net Revenue Deduction of Operating Revenue
Other Operating Expenses Energy Purchase Transport
9M06 x 9M07: Energy Purchase Expense (3Q06 x 3Q07):
− Increase of 1.1%
− Total market increased (captive + free
− Amortization of Liability CVA’s Basic Grid in 3Q06, reverting
consumers): 4.6% R$ 20.3 million of transmission charges
− However, there was a reduction of R$ 11.5 million related to
3Q06 x 3QT07: energy purchase through Bilateral Contract with AES Tietê
− Increase of 6.1% in the total market Other Operating Expenses (3Q06 x 3Q07):
− Tariff reset of -8.43% applied since July 4th, 2007 − Reduction of 33.2%
− Extraordinary provision of R$ 120.9 million due to the final
review of legal and administrative procedures in 3Q06
− Reduction of 51.7% of Private Pension Fund expenses
(*) Does not include depreciation motivated by actuarial surplus
8
10. Results
Financial Result (R$ Million) Net Profit (R$ Million)
9M06 9M07 3Q06 3Q07
703.1
27.2
(36.2) 156.3%
(52.9)
274.4 317.6%
31.6%
197.6
47.3
(300.7)
9M06 9M07 3Q06 3Q07
Improvement of financial result: Market increase
– Decrease in Financial Expenses: − 3Q06 x 3Q07: 6.1%
- Reduction of R$ 695.2 million on gross debt − 9M06 x 9M07: 4.6%
- Lower average cost (14.2 % p.a. in Sep/06 to Reduction of operational costs and
12.7 % p.a. in Sep/07)
expenses
- Reduction of Selic rate from 14.6% in 3Q06 to
11.5% in 3Q07
End of the recognition in the balance
sheet of the debt with the Pension Fund
10
11. Consolidated Debt
Short Term x Long Term (R$ Million) Quarterly Highlights - Debt
- 18.7%
+10.0% Gross Debt:
4,800
4,435
4,105 1,023 4,030 4,105 − Reduction of 14.5% (R$ 695.2 million)
597
523 523
2,979
3,276 3,276 Net Debt:
− Reduction of 18.7% (R$ 754.5 million)
3,838 3,582 3,777 3,582
Amendment of the 9th Issue of Debentures
Subsequent Events:
2Q07 3Q07 3Q06 3Q07
− 10th and 11th Issues of Debentures replacing the 8th
Long Term Short Term Net Debt Issue
New terms and conditions
9th Issue 10th Issue 11th Issue*
Date 20/8/2007 23/10/2007 23/10/2007
Amount (R$ million) 250.0 600.0 200.0
Interest Rate CDI + 1.75% CDI + 0.90% CDI + 1.75%
Maturity (years) 11.0 6.0 11.0
Average Life (years) 9.4 5.0 10.0
(*) Approved by Board of Directors and being registered at CVM
11
12. Consolidated Debt
Average Cost and Average Life Gross Debt – 3Q07
5.9 6.4
5.4 5.5 5.5 5.5
IGP-DI
113.0%
Fixed
109.9%
57.3%
105.3%
104.3%
102.6%
97.3%
Rate
12.1%
CDI/Selic Libor
3Q06 4Q06 1Q07 2Q07 3Q07 3Q07* 29.3% 1.3%
CDI Avg. Life - years
CDI Evolution**
Pension Fund R$ 2,351 million
15.2%
14.2%
11.9%
Private Creditors R$ 1,754 million
11.1%
TOTAL R$ 4,105 million
30-Jun-06 30-Sep-06 30-Jun-07 30-Sep-07
CDI
*Including the 10th Issue of Debentures
** Daily CDI
12
13. Managerial Cash Flow
R$ million 3Q06 4Q06 1Q07 2Q07 3Q07
Initial Cash 619 767 1.166 1.301 1.457
Operating Cash Flow 725 741 634 738 519
Investments (75) (85) (95) (94) (93)
Net Financial Expenses (176) (91) (187) (130) (133)
Net Amortization (158) (111) (71) (83) (225)
Pension Fund Expenses (85) (55) (48) (48) (49)
Income Tax (83) - (97) (99) (161)
Dividends - - - (130) (485)
Free Cash Flow 148 399 135 155 (627)
Final Cash 767 1.166 1.301 1.457 830
Operating Cash Flow: reduction in the 3Q07 is due to the average tariff review index of -8.43% applicable since July 4th,
2007
Financial Expenses: semi-annual payments of interest of the 8th issue of debentures (R$ 59.0 million) and the Bond
denominated in Reais (R$ 45.3 million)
Net amortization: R$ 200.0 million regarding the 8th issue of debentures
Dividends: payment of R$ 487.8 million on September 3rd, 2007 relative to 1H07 results
Income Tax: increase due to net profit of R$ 340.0 million in 2Q07
13
14. Conclusion
Total Market increased 6.1% compared to 3Q06, amounting
10,020.1 GWh
Net Profit of R$ 197.6 million in 3Q07 and R$ 703.1 million in
9M07, compared to R$ 274.4 million in 9M06
Reduction of 18.7% in the consolidated net debt in the last 12
months
Extension of total debt’s average life from 5.4 years in 3Q06 to
6.4 years in 3Q07, considering the new issues of debentures
R$ 487.8 million of dividends paid on September 3rd, 2007
relative to 1H07 results
14
16. Highlights
EBITDA of R$ 276.7 million in the 3Q07, stable when compared to
3Q06 (R$ 796.5 million in 9M07)
Net profit of R$ 141.1 million in the 3Q07, 1.6% lower than 3Q06 (R$
443.7 million in 9M07)
3Q07 Aneel did not approve the Amendment to the bilateral contract with
Eletropaulo, that extended its expiration to 2028
Incorporation of Tietê Participações S.A. by AES Tietê effective as of
September 30th, 2007
On November 12th, the Board of Directors approved the payment of
R$ 141.1 million in dividends, which correspond to 100% of 3Q07
net earnings
− R$ 1.41 per 1,000 common shares
Subsequent
− R$ 1.55 per 1,000 preferred shares
Events
Approval from the United Nations of its Clean Development
Methodology (CDM) - the proposal will allow reforesting 5,700 km of bordering
lands
16
17. Energy Balance
Generation – MW Average Billed Energy – GWh
10,520
9,818
641
126%
198
115%
109% 112% 1,308 1,583
107%
98%
81%
1,392 1,467 1,424
1,606 8,311 8,296
1,258 1,363
1,040
2001 2002 2003 2004 2005 2006 9M07 9M06 9M07
Generation - MW Average Generation / Assured Energy
Eletropaulo MRE CCEE/Losses
Increase of 7.2% in energy generated (9M07 x Current Price – Bilateral Contract with
9M06) Eletropaulo: R$ 131.98/MWh
− July/07 - adjustment of 3.89% based on
Generation was 25.9% higher than the
IGP-M’s variation
assured energy (1,275 MW average)
Tariff MRE – R$ 7.47/MWh
Growth of 47.7% in the volume sold through CCEE Tariff* – R$ 103.80/MWh
CCEE/MRE
* Average 3Q07
17
18. Capex
Capex – 9M07: R$ 31.0 million 9M07
− Restoration and upgrade in equipments – R$ 19.2 million
2.4%
− Environment (reforestation) – R$ 6.7 million 2.3% 11.6%
− Small Hydropower Plants – R$ 3.6 million
− Others (SAP, Hidroway etc.) – R$ 15 million
21.4%
62.3%
2007 Capex estimate was revised to R$ 52.5 million
− Postponement of investments in construction of three SHPPs
located on the Jaguari Mirim River in the interior of the state Equip. Environment. Hidroway IT SHPPs
of São Paulo, which together total 8MW of installed capacity
R$ Million
Investment in Small Hydropower Plants
52.5
− Acquisition of License to build three small hydropower plants 46.5
in the State of Rio de Janeiro, with a total installed capacity of
31.0
52 MW and average 28.97 MW of assured energy, approved 21.9
27.5
by ANEEL – forecasted investments of R$ 257 million in 2 12.4
years, from which R$ 18.2 million were already invested
− Environmental licenses already obtained
2003 2004 2005 2006 9M07 2007 (E)
18
19. Expansion Requirement
Requirement: increase installed capacity by at least 15% (400 MW), until December 2007:
− Increase the installed capacity in São Paulo State; or
− Purchase energy from new plants, located in São Paulo, through long term agreements (at least 5
years)
Restrictions to increase the capacity:
− State of São Paulo – no hydro resources and environmental restrictions to thermal plants
− Gas supply
− “New Model of the Electric Sector” (Law # 10,848/04)
Proposal from AES Tietê to the State Government of São Paulo:
− To be supported by a specialized consulting company to produce a report in 12 months regarding
technical, financial, regulatory and environmental aspects of the expansion possibilities in the State of
São Paulo and in compliance with the “New Model of the Electric Sector”
Neither ANEEL nor the State Government of São Paulo have sent a formal reply to AES Tietê
with regard to this issue so far
19
20. Results
Net Revenues Costs and Operation Expenses
R$ Million R$ Million
+6.1% +31.1%
356.8
1,104.5
1,040.6
272.1
+6.3% 231.9
108.1 +25.8%
364.1 103.6
342.6
82.4
113.4
76.1 56.4
33.9
50.6 48.8 32,3 31.0
16.2 16.2
9M06 9M07 3Q06 3Q07 9M06 9M07 3Q06 3Q07
Power Purchase and sector charges
Depreciation
Operational Expenses
3.9% price adjustment granted in July/07 for Sector Charges - increase of the transmission
the energy sold under the bilateral contract charge (TUSDgeneration) for the 2007/2008
Higher energy volume sold to CCEE / MRE cycle, since July/07, approximately R$ 11.0
Reversal of the provision taken for COFINS million per quarter
litigations in the amount of R$ 5.4 million –
3Q07
20
22. Results
Financial Results – R$ Million Net Income – R$ Million
9M06 9M07 3Q06 3Q07 43.1% 40.2%
-1.2%
41.9%
38.8%
(28.9)
449.0 443.7
-1.6%
(47.1)
+63.0%
(66.0) 143.5 141.1
(76.0)
-13.2% 9M06 9M07 3Q06 3Q07
Net income Net Margin
9M06 x 9M07 Payment of R$ 141.1 million in dividends,
− Positive impact, explained by the monetary gains which correspond to 100% of 3Q07 net
accounting on PIS/Cofins, which totaled R$ 36.6 earnings
million in 2Q07 − R$ 1.41 per 1,000 common shares
3Q06 x 3Q07 − R$ 1.55 per 1,000 preferred shares
− Increase in the average IGP-M from 0.84% in Ex-Dividends: November 22nd, 2007
3Q06 to 2.57% in 3Q07
Payment: November 30th, 2007
22
23. Debt
in R million
$
Amount Creditor Maturity Cost Collateral
1,296.2 Eletrobrás May, 2013 IGP-M + 10% p.a. Receivables
3.7 FunCesp III Sep, 2027 IGP-DI + 6% p.a. Receivables
Net Debt – R$ Million
3.2x
2.0x
1,405.8 1.4x
1,253.5 0.7x 0.6x 0.7x
1,096.3
676.5 681.9 703.6
2002 2003 2004 2005 2006 9M07
Net Debt (R $ million) Net Debt / EBITDA
Cash availability = R$ 596.3 million (September, 2007)
− Marketable securities with maturities lower than 90 days
− Average rates around 100% of CDI
23
25. Conclusion
Generation was 26% higher than assured energy in 9M07
Accumulated Net Revenues of R$ 1,104.5 million in 2007, 6.1% lower than those of
the same period of 2006 (R$ 364.1 million in the 3Q07)
EBITDA of R$ 796.5 million in 9M07, decrease of 2.7% compared to 9M06 (R$ 276.7
million in 3Q07)
Net Income of R$ 443.7 million accumulated in 2007, reduction of 1.2% when
compared to 9M06 (R$ 141.1 million in 3Q07)
Dividends payment of R$ 443.7 million, corresponding to 100% of 9M07* net
earnings
– R$ 141.1 million, refer to 3Q07, to be paid on November 30th, 2007
* R$ 160.5 million refer to 1Q07 net earnings distributed in June, 2007 and R$ 142.1 million refer to 2Q07 net earnings distributed in September, 2007
25
26. 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.
26
