Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
SlideShare a Scribd company logo
Institutional
November, 2012

1
AES Brasil Group

•P
Presence i B il since 1997
in Brazil i
• Operational Figures:
• Consumption units: 7.7 million
53.6
• Distributed Energy: 53 6 TWh
• Installed Capacity: 2,658 MW
• Generated Energy : 13.9 TWh

• 7.4 thousand AES Brasil People
• Investments 1998-2011: R$ 8.1 billion
• Solid corporate governance and sustainable
practices
• Safety as value #1

Disco
Genco
Service Provider

2
AES Brasil widely recognized in 2009-2012
 Management Excellence

 Quality and Safety

 Environmental
Concern

(AES Tietê)
(AES Sul)
(AES El
Eletropaulo)
l )

(AES Tietê)

(AES Brasil)

(AES Tietê)
(AES El t
Eletropaulo)
l )
(AES Eletropaulo)

(AES Tietê)

(AES Brasil)
(AES Eletropaulo)
(AES Tietê)

(AES Tietê)

(AES Tietê)

(AES Eletropaulo)

(2011- AES Tietê; 2012 – AES Eletropaulo)

(AES Eletropaulo)

(AES Eletropaulo)
3
Mission & visions
Mission
• Improving lives and promoting development by providing safe
safe,
reliable and sustainable energy solutions

Visions
• Be a leader in operational and financial management in Brazilian
energy generation sector and expand installed capacity
• Be the best distributors in Brazil

4
Social responsability: annual investments
of R$ 83 million
Development and transformation of communities
“Casa de Cultura e Cidadania” Project - Offers courses and activities in culture and sports. Directly benefits
approximately 5 6 tho sand
appro imatel 5.6 thousand children and teenagers and indirectl 292 tho sand people in 7 units located within
indirectly
thousand
nits
ithin
AES Brazil companies’ areas of operation

Children educational development
“Centros Educacionais Luz e Lápis” Project - Two units in São Paulo attending 300 children from
1 to 6 years old in condition of social vulnerability

Education on safety and efficiency in energy consumption
“AES Eletropaulo nas Escolas” Project - Education about safe and efficient use of energy to 4.5
thousand teachers and 404 thousand students from 900 public schools. The actions include
recreational activities offered in adapted trucks.

Converting consumers to clients
Developed for grid connection regularization. Since 2004, more than 500 thousand families in
low income communities were benefited from better energy supply conditions and social
inclusion.

5
Shareholding structure

BNDES

AES Corp
C 50.00% + 1 share
P 0.00%
T 46.15%

C 50.00% - 1 share
P 100%
T 53.85%

Cia. Brasiliana
de Energia

T 99.70%

AES Sul

C 99.99%
T 99.99%

AES
Serviços

C 99.00%
T 99.00%

C 71.35%
P 32.34%
T 52.55%

AES
Uruguaiana

AES
Tietê

C 76.45%
P 7.38%
T 34.87%

AES
Eletropaulo

C = Common Shares
P = Preferred Shares
T = Total
6
AES Tietê and AES Eletropaulo are listed
in
i BM&F B
Bovespa

¹

¹ Free Float

Others²

Market Cap³

16.1%

19.2%

56.2%

8.5%

US$ 1.3 bi

24.2%
24 2%

28.3%
28 3%

39.5%
39 5%

8.0%
8 0%

US$ 4 0 bi
4.0

1 - Parent companies, AES Corp and BNDES, have similar voting capital on each of the Companies: approx 35.9% on AES Eletropaulo and 32.9% on AES Tietê
2 - Includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively
3 - Base: 11/07/2012. Considers preferred shares for AES Eletropaulo and preferred and common shares for AES Tietê

7
AES Brasil is the second largest group in the
electric sector

Ebitda1 – 2011 (R$ Billion)
5.4

4.9
3.8
2.9

2.9
2.0

1.9

1.5

1.2
0.7
07

CEMIG

Net

AES BRASIL

income1

2

CPFL

TRACTEBEL

NEOENERGIA

CESP

COPEL

EDP

LIGHT

0.3

0.3

DUKE

CESP

DUKE

– 2011 (R$ Billion)
(
)

3.0
2.4
1.6

1.6

1.4
1.2
0.5

AES BRASIL2

CEMIG

CPFL

NEOENERGIA

TRACTEBEL

COPEL

1 – excluding Eletrobrás
2 – includes AES Atimus sale (aprox. R$ 1 billion in EBITDA and aprox. R$ 700 million in net income)

LIGHT

0.1
01
EDP

Source: Companies’ financial reports

8
AES Tietê is the 2nd largest private
generator in Brazil

Generation installed capacity (MW) - 20121
Main privately held Companies

 AES Tietê is the 2nd largest among private
AES TIETÊ
2,2%

CPFL
2,2%

DUKE
1,9%

EDP
1,5%

generation companies

NEOENERGIA
1,2%
ENDESA
0,8%
LIGHT
0,8%

TRACTEBEL
6,0%
,

CHESF
8,9%

S
DEMAIS
28,2%

 Approximately 78% of country’s generation
country s
installed capacity is state-owned2

³

 Three

ELETRONORTE ³
7,6%

PETROBRÁS
5,1%

ITAIPU ³
5,8%

CEMIG
5,7%

CESP
6,2%

Total Installed Capacity: 117 GW

plants

under

18 GW in installed capacity
– Santo Antonio and Jirau (Madeira River): 7 GW
– Belo Monte (Xingu River): 11 GW

ELETRONUCLEAR
2,8%
2 8%
CGTEE
0,7%

hydropower

construction in the North region of Brazil with

FURNAS ³
8,1%

COPEL
3,8%

mega

³

³

ELETROSUL
0,5%

³
1- Sources: ANEEL – BIG (March, 2012) and Companies websites
3 – Eletrobrás, totaling 35%

2- Source: Banks’ reports

9
AES is among the top 3 largest
distribution players in Brazil

Consumers – D /2011
C
Dec/2011
16%
30%

• 63
13%

AES
A Brasil

Cemig

7%

in

Brazil

• AES Brasil is one of the largest electricity
distribution group in Brazil:
– AES Eletropaulo: 45 TWh distributed,

12%

7%

companies

distributing 430 TWh

CPFL Energia

5%

distribution

12%

10.5% of the Brazilian market
– AES Sul: 8.6 TWh distributed, 2.0% of the

Consumption (GWh) - 2011

Neo Energia

13%

Copel

12%
Light

Brazilian market

 AES Eletropaulo is the largest electricity
distributor in Latin America in terms of
revenue supply according to ABRAADE¹
supply,

52%
EDP

11%
Outros

7%
6%
6%

6%

1 – Brazilian Association of Electricity Distributors

 Distribution companies’ operations are
restricted to their concession areas
 Acquisitions must only be performed by
the holdings of economic groups

10
10
Energy Sector in Brazil
Energy sector in Brazil: business segments
Free Clients

Distribution

Transmission

• Consumption of 113 TWh

• 63 companies

• 68 companies

(26% of Brazilian total market)

• 430 TWh of energy

• 68% private sector

• Conventional sources: above
3,000 kW
• Alternative sources: between
500 kW and 3,000 kW
• Large consumers can
purchase energy directly
from generators
• Free contracting environment

distributed in 2011

• High voltage transmission

• 70 million consumers
• 67% private sector

(>230 kV)
• 98,648 km in extension

• Annual tariff adjustment
• Tariff reset every four or

lines (SIN¹)
• Regulated public service
with free access

five years
• Regulated public service
• Regulated contracting

• Regulated tariff (annually
adjusted by inflation)

environment

• 13 groups controlling 76% of
total installed capacity
• 22% private sector
• 1,862 power plants
• 117 GW of installed capacity
• 73% hydroelectric
• 17% thermoelectric
• 5% biomass
• 4% SHPP2
• 1% Wi d
Wind
• Contracting environment –

¹ Interconnected National System
² Small Hydro Power Plants

Generation

Sources: EPE, Aneel, ONS and Banks’ reports

free and regulated markets

12
Energy sector in Brazil:
contracting environment
g
Regulated market

Free market

Generators,
Generators Independent Power Producers
(IPPs), Trading companies and Auto producers

Generators and Independent
Power Producers (IPPs)

Auctions: New Energy
and Existing Energy

Distribution companies

•

Bilateral contracts (PPAs1)

Free clients

Main auctions (reverse auctions):
– New Energy (A-5): Delivery in 5 years, 15-30 years regulated PPA1
– New Energy (A-3): Delivery in 3 years, 15-30 years regulated PPA1
– Existing Energy (A-1): Delivery in 1 year, 5-15 years regulated PPA1

1 – Power Purchase Agreement

13
Electric sector in Brazil:
demand and supply balance
Static balance1 – Load x Supply2 (considering reserve energy3)

Static balance - Load x Suppl (MW avg)
e
ly

100,000
100 000
90,000

• Brazilian electric system

80,000

presents a surplus in the

70,000
,
60,000

energy

balance

for

the

50,000

years to come

40,000
30,000

• Low risk of rationing

20,000

• Expansion opportunities

10,000
-

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Balance (%)

5.9%

7.8%

11.2%

9.6%

8.4%

10.0%

10.6%

8.2%

5.4%

4.2%

Balance

3,528

4,875

7,443

6,684

6,097

7,590

8,404

6,734

4,673

3,770

Reserve

439

1,007

1,509

1,743

1,746

2,959

2,959

2,959

2,959

since this capacity is not

2,959

Supply

62,912

66,355

72,585

74,492

76,823

80,320

84,428

85,886

87,601

90,409

Load

59,823

62,487

66,651

69,551

72,472

75,689

78,983

82,111

85,887

yet fully contracted

89,598

1 -Ten-year Energy Plan 2020, May/2011 – EPE
2- Supply based on physical guarantee
3- Energy destined to equalize the differences between the sum of power plants’ physical guarantees and the system’s physical guarantee.

14
Generation market overview
Installed capacity (GW)1

Growth by source - new auctions (GW)

141

136

162

166

171

156

148

11

14

19

41

42

42

123

133

13

23

24

28

33

8
38

110

110

110

110

110

110

110

110

110

110

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Total: 22 GW

117
6

Current installed capacity

5

3

2

Auctioned

Thermal2
2.6
Hydro
8.6

Renewables
10.6

Upcoming auctions

• Brazilian installed capacity to grow 4-5% y.o.y (~ 5 GW) over the next 10 years
• Renewable energies will lead the capacity increase with competitive cost vs. other technologies and strong
Government support
• Gas-fired thermal to leverage on the pre-salt discoveries and on the dispatchability benefit
1- Source: EPE (Energetic Research Company), Ten-year Energy Plan 2020, May/2011
2- Amount related to thermal is an estimate of the Company

15
Regulatory framework
Distribution Companies: Tariff methodology
Tariff reset and readjustment
• Tariff Reset is applied each 4 years for AES Eletropaulo
− Base date: Jul/2011

• Parcel A Costs

− Parcel A: costs are largely passed through to the tariff
− Parcel B: costs are set by ANEEL
• Tariff Readjustment: annually
− Parcel A : costs are largely passed through to the tariff
− Parcel B: cost are adjusted by IGPM +/- X(1) Factor

X WACC

Energy
Purchase
Transmission
Sector Charges
Regulatory
Opex
(PMSO)

Investment
Remuneration

Remuneration
R
ti
Asset Base
X Depreciation

Depreciation

Regulatory
Ebitda
1 – X Factor: index that captures productivity gains

− Non-manageable costs that are largely
passed through to the tariff
− Incentives to reduces costs

• Regulatory Opex:
– Efficient operating cost determined by
ANEEL (National Electricity Agency)

• Remuneration Asset Base:
– Prudent investments used to calculate
the investment remuneration (applying
WACC) and depreciation
Parcel A - Non-Manageable Costs
Parcel B - Manageable Costs

17
Tariff methodology
3rd Cycle of tariff reset – X factor

X FACTOR

DEFINITION

OBJECTIVE

APPLICATION

=

Pd

Distribution
productivity

Capture productivity
C t
d ti it
gains

Defined at tariff reset,
considers the average
productivity of sector
adjusted by market
growth and
consumption variation

+

Q

+

T

Quality of service

Operational expenses
trajectory

Stimulate
Sti l t
improvement of
service quality

Implement
operational expenses
trajectory

Defined at each tariff
readjustment, considers
variation of SAIDI and
SAIFI and comparative
performance of discos

Defined at tariff reset,
considers reference
company and
benchmarking
methodologies

18
3rd Cycle of the Tariff Reset
for AES Eletropaulo
 Gross Regulatory Asset Base: R$ 10,748.8 million

Tariff Review

4,445.1
 Net Regulatory Asset Base: R$ 4 445 1 million
 Parcel B: R$ 2,007.1 million
 Non Technical Losses (referenced in the low voltage market): start point at 11.56% and get to 8,56%,
by the end of the cycle
 Average effect to be perceived by the consumer: -9.33%
 Economical Effect: -5.60%

Tariff Adjustment

Tariff Review +
T iff R i

 A
Average effect t b perceived b th consumer : +5.51%
ff t to be
i d by the
5 51%
 Economical Effect: +4.45%

 Average effect to be perceived by the consumer : -2.26%

Adjustment

Administrative
appeal

 In 17th July Company filed a request for reconsideration of the Homologation Resolution 1 327/2012
July,
1,327/2012
about the Regulatory Asset Base and the non-technical losses trajectory
19
Discussions with Regulator
Discussion

Arguments
 Shielded RAB was approved by Aneel in 2003



Shielded RAB

Aneel excluded R$ 728 million f
A
l
l d d
illi
from
shielded RAB, due to the decrease in
the amount of cables between the
accounting records and the shielded
RAB, between cycles
RAB b t
l

and was confirmed in 2007, considering a global
consistency criteria
 If the exclusion of the amount of cables is
maintained, an addition of R$ 660 million of
,
$
assets in operation (2003 BRR) should be
considered



Investments



Losses

Aneel did not recognize a R$ 427 million
investment performed in the incremental
period on Minor Components to Main
Equipments (“COM”) and Additional
q p
(
)
Costs (“CA”)

Aneel changed the benchmark company
proposed in the Public Hearing,
modifying
the
regulatory
losses
reduction from 0.49% to 1%

 Adequacy of the regulatory standards applied by
Aneel for the valuation of real costs incurred in
execution of works and recorded in accounting
books

 Benchmark company is an outlier
p y
 Regulatory losses reduction shall be restored to
the previous number of 0.49%
20
Provisional Measure 579: energy
cost reduction program
p g
 Program created by Provisional Measure 579 (“PM 579”) in 09/12/2012;
 Law Decree 7805 was published on 09//17/2012 and regulates the terms of PM 579;
 Conversion of this provisional measure into law depends on the approval of the Brazilian Congress
- More than 400 amendments were submitted to Congress
 It aims to reduce tariffs by an average of 20% (Residential: 16.2% and industrial 20% to 28%), as from
February, 2013, through:
- Reduction Sector Charges (
g (RGR, CCC and CDE): - 7%
,
)
%
- Renewal Leases Generation and Transmission: - 13%
 New rules are only valid for the concessions granted before 1995 i e they are not valid for AES Eletropaulo
1995, i.e,
(concession expires in 2028) nor for AES Tietê (concession expires in 2029).
21
PM 579: Concessions renewal

Generation &
Transmission

 Extension for 30 years with effects anticipated for 2013:
- Assets not depreciated / amortized will be evaluated based on the methodology of the
new replacement value (NRV). Holders of concession will be compensated with such
amount;
 Concession renewal will be based on O&M costs, industry charges, fees and network usage;
 Energy associated with the renewal of concessions will be fully allocated to the regulated market
 Extension for 30 years

Distribution
 Rules for renewal has not been defined

Other terms and
timeline

 Oct, 15 2012: companies submitted to ANEEL their intention to renew generation, distribution and
transmission concessions
 Nov, 01 2012: MME published generation initial tariff, transmission annual revenue and
compensation value to concessions to be renewed
 Dec, 04 2012: Final term for signing the amendments
 Concessions that are not renewed will be auctioned under the same conditions of the renewed
concessions

22
PM 579: Opportunities and risks
AES Tietê

Opportunities
O
t iti

 Competitive p
p
prices in the free market
(~ R$ 100 – R$ 110/MWh)
 Possible pressure of higher prices at
the free market in the short term
 Possible sale of electricity to
generators whose concessions are
expiring, to cover contracts set in the free
market between 2015 and 2017

Risks

 Investments in modernization to be
recognized by ANEEL at the end of the
concession

AES Eletropaulo
 Marginal benefits in collection and
potential decrease in delinquency, since
energy costs will be reduced
 Increase in energy consumption, as a
potential result of the drop in tariffs
 Exchange rate variation of the energy
price purchased from Itaipu will no longer
be suportted by distribution companies,
p
y
p
,
but by Eletrobras

 Cash impact between tariff
adjustments of hydrological risks due to
the allocation of energy quotas

23
Apresentação institucional 3_q12_en_v11
AES Tietê overview
Generation facilities

 12 hydroelectric plants in São Paulo
 30-year concession valid until 2029
 Installed capacity of 2 658 MW with physical guarantee1
2,658 MW,
of 1,278 MW average
 Almost all the amount of energy that AES Tietê can sell
is contracted with AES Eletropaulo until the end of 2015
 AES Tietê can invest in generation, its main activity, and
operate in energy trading
 360 employees as of September, 2012

1 - Amount of energy allowed to be long term contracted

25
Generated energy shows high
operational availability
p
y
Generated energy (MW avarage1)

9M12 Generated energy by power plant (MW average1)

130%
125%

124%

126%

129%

4%

Agua Vermelha

3% 3%

Nova A
N
Avanhandava
h d

5%

Promissão

5%

1,665

1,599

1,582

1,551

1,689

Ibitinga
59%

9%

Bariri
Barra Bonita

11%

Euclides da Cunha
Other Power Plants

2009

2010

Generation - Mwavg

2011

9M11

9M12

Generation/Physical guarantee

1 – Generated energy divided by the amount of hours

* Caconde, Limoeiro, Mogi and SHPPs

26
A significant amount of billed energy and net
revenues comes from the bilateral contract with
AES Eletropaulo
Billed energy (GWh)

Net revenues (%)

89%

15,112 112
15,112
15

14,729
14 729

14,706

301

117

13.032
13,032
554

1,150

1,340
1,980
1 980

421

1,519

2,331
2 331

11,118

1,942
1 942

346
1.192

1,083
1 083
2,970

1,535

3%
2% 6%

11,108
11 108

11,108
11 108

11,108
11 108
8,045

8,558

AES Eletropaulo
2009
AES Eletropaulo

2010
ERM1
MRE1

2011
Spot Market

1 – Energy Reallocation Mechanism

9M11

9M12

Other bilateral contracts

Other bilateral contracts
Other bilateral contracts
Spot Market
ERM
MRE11

27
Nova Avanhandava, Água Vermelha, Ibitinga
and limoeiro power plants modernization
p
p
investments
Investments (R$ million)

175

9M12 Investments

167
85%

19
119
14
82
12

72
156

4
105

70

2010

68

2011

2012(e)

9M11

9M12

4%

11%

Equipment and Modernization
New SHPPs*

Investments

* Small Hydro Power Plants

New SHPPs*

IT Projects

28
Growth opportunities
“Thermal São Paulo” Project
-

Natural
N t l gas combined cycle th
bi d
l thermal plant, with 550 MW of i t ll d capacity
l l t ith
f installed
it

-

Project will not participate in 2012 auctions (A-3 and A-5) due to gas unavailability

-

Environmental License was restored after the decision of São Paulo State Court of Justice

-

Next steps: Obtainment of the installation license

“Thermal A
“Th
l Araraquara” Project
”P j t
-

Natural gas combined cycle thermal plant, with 579 MW of installed capacity

-

Purchase option acquired in March, 2012

-

Project ill t
P j t will not participate i 2012 auctions (A 3 and A 5) d t gas unavailability
ti i t in
ti
(A-3 d A-5) due to
il bilit

-

Next steps: Obtainment of the installation license

29
Strategy for energy contracting in 2016:
p
p
composition of client portfolio
Clients portfolio evolution in 2012

• Goals:
-

2011 / 2012: commercial initiatives to
expand client portfolio in the free
market;

259

- Current portfolio comprises 259 MWa,

of which 227 Mwa sold this year and
84

90

1Q12

2Q12

87 MWm sold for 2016 onwards;

32
Before
dec/2011

3Q12

- C t
Contracts i
t involving energy d li
l i
delivery f
for

2012-2015 are “back to back”, i.e, with
no market exposure.

Mwavg
30
Financial highlights
Ebitda (R$ million)

Net revenue (R$ million)

1,466
1,320
1 320

1,254
1 254

1,250

9

1,670
1 670

1,754
1 754

1,886
,
1,344

1,618

10

1,311

1,309

1,048

1,240

(54)

2009

2010

2011

9M11

9M12

2009

2010

2011

9M11

9M12

75%

75%

78%

78%

77%

Recurring
Non-recurring
Ebitda Margin
31
Steady earnings distribution on a
quarterly
q arterl basis

Net income and dividend pay-out1 (R$ million)
110%

117%

109%

11%

11%

11%

• Dividends distribution
100% of net income
–

706

737

–

706

1 – Gross value

Yield Pref

p y
pay-out

Average payout since 2006:

582

2011

Average dividends since 2006:
R$ 745 million per year

845

Pay -out

minimum

106%
–

2009 (36) 2010

of

according to bylaws

723
31

742

25%

practice:

9M11

Recurring

720

9M12

(3)

Non-recurring
32
Debt profile
Amortization schedule – principal (R$ million)

Net debt (R$ billion)

0.7x

0.3x

0.7x

0.7x

0.6x

0.3x

0.3x

0.6x

0.4x

0.3x

300

0.4
4

2010
Net Debt

0.5

9M11

9M12

300

2013

2014

2015

0.5

2011

0.4
4

2009

0.4

300

Net Debt / Ebitda

Gross Debt/Ebitda

 Ebitda/Financial expenses of 1.75x
1 – Brazilian Interbank Interest Rate

Average Cost

3Q12

 Average Cost (% CDI)1 115%

121%

 Average Term (years)

2.5

1.5

 Effective Rate

Covenants

 Gross debt/Ebitda of 2.5x

3Q11

12.7%

9.7%
33
Capital markets
Daily avg volume (R$ thousand)

AES Tietê X Ibovespa X IEE
12 months
A

140

703
638
553

546
19,910

120
13,922

8%
-1%
-3%
-6%
-10%

100

80
Nov-11

10,187

4,239

IEE

May-12
Ibovespa

GETI4

Aug-12
TSR

3,397

9,683

9,537

2,101

14,885

8,086

2009

Feb-12

Nov-12

Preferred

5,025
12,584

2010
Common

2011

YTD Oct/12

Shares negotiated (thousand)

GETI3

A 09/12/2012: The Brazilian Government announced the Energy Reduction Program,
by
b the PM 579

•

Market Cap4: R$8.45 billion / US$ 4.02 billion

•

BM&FBovespa: GETI3 (common shares) and GETI4 (preferred shares)

•

ADRs
ADR negotiated i US OTC M k t AESAY (
ti t d in
Market:
(common shares) and AESYY
h
)
d
(preferred shares)

1 – Index: 11/07/2011 = 100

2 – Electric Energy Index

3 – Total Shareholders’ Return

4 – Index: 11/07/2012

34
Apresentação institucional 3_q12_en_v11
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; renewable for another 30
years
 Concession area with the highest GDP in Brazil
 45 thousand kilometers of lines and 6.3 million consumption
units in a concession area of 4,526 km2
 45 TWh distributed in 2011
 AES Eletropaulo, as a distribution company, can only invest in
assets within its concession area
 5,584 employees as of September, 2012
36
Consumption evolution
Total market1 (GWh)

Consumption by class – 9M12 (%)
9

15

41,269
6,832

43,345
7,911

45,102

29

25

8,284
33,769

34,032

6,246

5,918

24
34

34,436

35,434

36,817
27,523

28,114

38
26

2009

2010

2011

Captive Market

9M11

9M12

Brazil

Free Clients

Residential
1 – Net of own consumption

AES Eletropaulo

Industrial

Commercial

Others
37
Industrial class
Industrial class X Industrial production in São Paulo State
15%
10%
5%
0%

•

-5%
-10%

Economic crisis

-15%
Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12

Industrial Production SP (% 12 months)

by

is

manufacturing

industry performance in São Paulo
State

Industrial (% 12 months)

Consumption of industrial class by activity1 – AES Eletropaulo

consumption

influenced

Economic  recovery

Industrial

•

Recent slowdown is influenced by
y
the

decrease

of

industrial

production in 2011 and 2012

Other
industries
51%

1 – As of September 2012.

Vehicles,
Chemical,
Rubber,
Plastic and
Metal Products
49%

38
Residential class
Residential  Consumption x  Real Income ‐ São Paulo (Q‐2*)

Avg Real Income R$ ‐ SP (
(Q ‐2*)

2,000 

4,800 

1,900 
4,300 

1,800 
1,700 

3,800 

1,600 
3,300 

1,500 
1,400 

Residentia GWh
al ‐

Residential class X A erage income in São Paulo Metropolitan Area
Average
Pa lo

•

by average income
•

2,800 
,

•

2,300 
2008

2009

2010

2011

Metropolitan

Area

will

sustain growth of residential class

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2007

Income expansion trend in São
Paulo

1,300 
1,200 

Residential consumption driven

Average

annual

growth

(2003-

2011):

2012

– total residential market: 5.5% y.o.y

Consumption per consumer (i kWh)
C
ti
(in

– consumption per consumer: 2.1%
y.o.y

- 8.7%

258



Rationing

220
192

2000

2001

2002

199

2003

203 207

2004

2005

223
213 219

2006

2007

2008

228

229 234

237

Consumption per consumer is
still

8.7%

lower

than

in

the period before the rationing

2009

2010

2011

Sep YTD
2012

1 - Two quarters of delay in relation to consumption

39
Investments focused on grid automation,
maintenance and system expansion
y
p
Investments 9M12 (R$ million)

Investments breakdown (R$ million)

154

800
700

739
682

20
25
26

841
46

22

137

28

579

600

75

26

500
400
300

654

717

794

200

325
10

141
553

Maintenance

315

100

Client Service

0

2010

2011

2012(e)

9M11

9M12

System Expansion
Losses Recovery

Own resources

Paid by the clients
id b h li

IT
Paid by the Clients
Others

40
Best SAIDI since 2006 and
within regulatory limits
SAIDI - System average interruption duration index

10.09
9.32

8.68

- 13%
11.86

10.60

10.62

10.36

8.62
4.48

2009

2010

2011

8th

7th

10M11

Jan-Oct 11

10M12

3.90

Jan-Oct 12

6th
SAIDI (hours)

SAIDI Aneel Reference

ABRADEE ranking position among the 28 utilities with more than 500 thousand customers

►
Sources: ANEEL, AES Eletropaulo and ABRADEE

2012 SAIDI ANEEL Reference: 8.67 hours
41
SAIFI remains below the regulatory limit
and still decreasing
SAIFI - System average interruption frequency index

7.87

6.17

7.39

5.46

6.93

- 18%

5.54

5.45

2009

2010

2011

7th

3rd

10M11

4.84

8.68

Jan-Oct 11

10M12

6.99

Jan-Oct 12

4th
SAIFI (times)

SAIFI Aneel Reference

ABRADEE ranking position among the 28 utilities with more than 500 thousand customers

►
Sources: ANEEL, AES Eletropaulo and ABRADEE

2012 SAIFI ANEEL Reference: 6.87 times
42
Losses level close to the regulatory
reference for t e 3 d Cyc e o Tariff Reset
e e e ce o the 3rd Cycle of a
eset
Losses (last 12 months)

11.8

10.9
10 9

Regulatory Reference² - Total Losses (last 12 months)

10.5

10.6
10 6

10.4

5.3

4.4

4.0

4.1

6.5

6.5

6.5

2010

2011

3Q11

3Q12

9.8

9.4

2013/2014

2014/2015

6.2

2009

10.3
10 3

4.2

6.5

10.7
10 7

Technical Losses ¹

2011/2012

2012/2013

Non Technical Losses

1 – In January 2012, the Company improved the assessment of the technical losses, which were decreased to a level of 6.1%. The number for the last twelve months ended in 3Q12 is 6.2%
2 – Values estimated by the Company to make them comparable with the reference for non-technical losses determined by the Aneel

43
Financial highlights
Net revenues (R$ million)

Ebitda (R$ million)

2,413
9,697
9 697

426

9,836
,

8,786

2,848
933

1,775
7,371

7,383

87
197

339

1,491

1,648

1,716
442

1,473

324

670
1,392
439
231

2009

2010

2011

9M11

9M12

2009

2010

2011

9M11

9M12

Recurring
Regulatory assets and liabilities
1

Non-recurring
1 – Non recurring 2011 : Includes sale of AES Eletropaulo Telecom with a R$ 707 million impact on Ebitda

44
Earnings distribution
on semi-annual basis

Net income and di id d payout1 (R$ million)
N ti
d dividend
t
illi )
101.5%

114.4%
54.4%

20.4%

28.6%

17.1%

1,572

•

1,348
1,157
350
374

practice:
minimum

required

652

-

885

25% of minimum pay-out according
to bylaws

236
287

160

–

324
181

622

Dividends
distribution
distribution above the

762

634

561

Average payout since 2006: 83%
per year

–

Average

dividends

since

2006:

R$ R$ 904 million per year

439

(258)

2009

2010

2011

9M11

9M12

Pay-out
Yield PN
Net Income - ex one-off and with regulatory assets and liabilities
Regulatory assets and liabilities
1 – Gross amount
One off
2– Non recurring 2011 :Includes sale of AES Eletropaulo Telecom with a R$ 467 million impact on net income

45
Efficiency increase to operate
within the regulatory limits
“Criando Valor” (Creating Value) Project
 Aims cost control gains by increasing productivity, optimizing supporting functions and enhancing efficiency in key
processes
 Benefits to be obtained in 2012 will absorb part of tariff reset impacts and pressure on costs
Additional initiatives

Process review/
Cost reduction

Cost reduction target of R$ 100 million from 2013 onwards

$
30% increase in productivity of north region operational teams (under implementation for others
regions)
 Increase clients attended by automatic service channels from 44% to 69%, reducing costs and
enhancing client satisfaction
 Optimization of operational bases, reducing 2 units
 Review of stores portfolio by increasing outsourced services and reducing the number of units from
66 to 40
 Renegotiation of suppliers contracts
 Organizational restructuring involving 372 employees until October, with elimination of 68 positions

Debt restructuring  R$ 750 million reduction in debt amortizations between 2013 and 2015, with the flexibility of
covenants and increase in maturity from 6.6 years to 7.2 years

Real estate

 Relocation to the new corporate headquarters will increase productivity gains and demobilization of
real estate with an estimated selling value of R$239 million, benefiting 2012 and 2013 results
46
Debt refinancing conclusion of R$ 1 billion
resulting in more flexible covenants
 Decrease in debt amortization volume for 2013-15 by R$ 750 million

Benefits

 Increase in the a erage debt mat rit from 6 6 years to 7 2 years
average
maturity
6.6 ears 7.2 ears
 Debt average costs decrease from CDI+1.29% to CDI+1.27%
 More flexible covenants

Debt amortization schedule

Before restructuring

After restructuring

1.133

1.133

R$ 491 million

R$ 1,241 million

744
578
388

387
275

86
533
302

2013

51

494

44

47
228

2014

51

2015

58

280
54

337

2016

Debt in R$ (ex-pension plan debt )

436

2017

2018

321

2019

530
54

383
62

226

732

58

637

732

225
400

2020 2028

Pension plan debt

138

128

86
52

44
83

2014

2015

62

686
476

178

2013

587

47

383

321

2016

Debt in R$ (ex-pension plan debt )

2017

2018

2019

400

2020 2028

Pension plan debt

47
More flexible covenants and
considering IFRS changes
FROM

TO
Net d bt Adj t d Ebitda 3.5
N t debt / Adjusted Ebitd < 3 5

Financial Index

Gross debt / Adjusted Ebitda < 3.5

Default

If the limit is exceeded in any quarter

Regulatory assets
and liabilities

Not considered in the calculation

(equivalent to 4.5x Gross Debt / Adjusted Ebitda)

If the limit is exceeded for two consecutive
quarters

Considered in the calculation
(concept before IFRS adoption)
Debt recognized in liabilities excluding the

Pension plan debt

Compulsory loans

Total debt recognized in liabilities

Considered in the calculation of debt

“corridor” concept

Out of debt calculation
48
Debt profile
Net debt

2,7x
2,0x

2,1x
1,6x

2.9
29

2.7

2009

2.4

2.3

2010

2011

1,4x

3.1

9M11

9M12¹

2009

1,6x
1,3x
0,9x
0,8x

2010

2011

1,2x
1 2x

9M11

9M12¹

Gross Debt/Ebitda Adjusted

Net Debt (R$ billion)

Net Debt/Ebitda Adjusted

September, 2012:
Indexed by: 72% CDI²; 28% IGP-DI³ and 0.5% others

49
1 – According the new covenants

2 – Brazilian Interbank Interest Rate

3 – Inflation Index
Capital markets
Average d il volume (R$ th
A
daily l
thousand)
d)

AES El t
Eletropaulo X Ib
l
Ibovespa X IEE
12 months¹
A

145

B

125

-2%
-0.5%

105

21,960

24,496

26,897

25,365
25 365

85
65

- 37%

45

- 40%

25
Oct 11

2009

Dec 11

Ibovespa

Feb 12

IEE²

Apr 12

Jun 12

AES Eletropaulo PN

Aug 12

Oct 12

2010

2011

YTD Outubro

Preferred

AES Eletropaulo TSR³

A Material Fact 04/10/2012: technical notes published by Aneel regarding the calculation
of the preliminar tariff review rate, including the regulatory asset basis .
B Material Fact 07/02/2012 and 07/03/2012: Aneel final terms about tariff review rate,
including the regulatory asset basis and tariff adjustments .

•

Market cap4: US$ 1.3 billion/ R$ 2.7 billion

•

BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares)

•

ADRs at US OTC Market: EPUMY (preferred shares)

1 – Information until 10/31/2012. Index: 10/31/2011 = 100
3 – Total Shareholder Return

2 – Electric Energy Index
4– Index: 09/28/12. Calculation includes only preferred shares

50
Attachments
Costs and expenses
Costs and operational expenses1 (R$ million)

415

433

420
368

201

187

174

96
296
139
115

214

246

245

2009

2010

2011

181

9M11

229

9M12

Energy Purchase, Transmission and Connection Charges, and Water Resources
Other Costs and Expenses 2
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses

52
Costs and expenses
Costs and operational expenses1 (R$ million)

PMS2 and other expenses (R$ million)

1,306

6,431
1,306

6,745
1,255

254

6,945
1,256

1,255

1,256

165

122

1,133
138

5,113

6,068

893

1,133

700

893

647

622

50
600
475

5,125

5,490

5,689
4,220

4,936
352

2009

2010

2011

Energy Supply and Transmission Charges

9M11

9M12

PMS² and Others Expenses

1 – Do not include depreciation and amortization
2 - Personnel, Material, Third Party Services and Other Costs and Expenses

2009

443

513

2010

2011

Material and Third Party

368

394

9M11

9M12

Personnel and Payroll

Others

53
AES Tiete's expansion obligation
Efforts being made
Privatization Notice
established the
obligation to expand the
installed capacity in
15% (400 MW) until
2007,
2007 either in
greenfield projects
and/or through long
term purchase
agreements with new
plants

Judicial Notice:
Aneel informed
that the issue is
not related to
the concession
agreement and
must be
addressed with
the State of São
Paulo

The Company was notified
by the State of São Paulo
Attorney's Office to present
its understanding on the
matter,
matter having filed its
response on time, the
proceedings were ended,
since no other action was
taken by the Attorney's
Office

AES Tietê was
summoned to answer a
Lawsuit filed by the
State of São Paulo,
which requested the
fulfillment of the
obligation in 24 months.
An injunction was
granted in order to have
a project submitted
within 60 days.

19th

In March,
the
Company’s appeal
was denied. Thus,
on April, 26th AES
Tietê presented
“Thermo São Paulo”
Thermo
Paulo
project as the plan
to fullfill the
obligation to
expand the installed
capacity.

by the Company to
meet the obligation :
• Long-term energy
contracts (biomass)
totaling an average of
10 MW
• SHPP São Joaquim
- started operating in
July, 2011, with 3 MW
of installed capacity

1999

2007

Aug/08

Oct/08

Jul/09

Sep/10

Sep/11

Nov/11

Apr/12

Sep/12

• SHPP São José started operating in
March, 2012, with 4
MW of installed

Company faces restrictions until
deadline:
• Insufficiency of hydro resources
• Environmental restrictions
• Insufficiency of natural gas supply
• New Model of Electric Sector (Law #
10,848/2004), hi h forbids bilateral
10 848/2004) which f bid bil t l
agreements between generators and
distributors

In response to a
p
Popular Action (filed
by individuals against
the Federal
Government, Aneel,
AES Tietê and Duke),
the Company p
p y presents
its defense before the
first instance

Popular Action:
Due to the plaintiffs failure
to specify the persons that
should be named as
Defendants, a favorable
decision was rendered by
the first Instance Court
(an appeal has been filed)

Lawsuit:
The Company
appealed to the
State of Sao
Paulo State
Court of
Appeals and
the injunction
was kept

Decision in
the first
appeal level
determined
the state of
São Paulo to
express
about AES
Tietê’s
Expansion
program

capacity
• Thermal SP - Project
of a 550MW gas fired
thermo plant
• Thermal Araraquara
- Acquisition of a
purchase option
54
Eletrobras lawsuit
Next Steps:
State-owned
State owned
Eletropaulo was
spun-off into four
companies and,
according to our
understanding
based on the
spin-off
agreement, the
discussion was
transferred to
CTEEP

Stated-owned
Eletropaulo
borrowed money
from Eletrobras

Nov/86

Dec/88

Jan/98

Eletrobras, after
winning the
interest
calculation
discussion, filed
an Execution Suit
aiming the
collection of the
amounts that
were in default

Apr/98
p

Sep/01
p

Eletrobras and
CTEEP appealed
to the Superior
Court of Justice
(SCJ)

Sep/03
p

Oct/05

In
I accordance t
d
to
the procedure
that was
stipulated by 2nd
Instance Court
after an appeal
from AES
Eletropaulo,
Eletrobras
requested the 1st
Instance Court to
appoint an expert

Jun/06

May/09
y

On July 7, the
judge determined
Eletropaulo and
CTEEP to present
their
considerations,
which occurred in
August

1 - The
appraisal
procedure (AP)
is expected to
begin by the 1st
half of 2013
2 – AP is
i
expected to be
concluded in at
least 6 months
3 - After AP’s
conclusion, a
1st Instance
Court decision
will be issue

Dec/10

Jul/11

> In case of an
unfavorable
decision:
4 –Appeal to
the 2nd
Instance Court

State owned
State-owned
Eletropaulo and
Eletrobras
disagreed on how
to calculate
interest over that
loan and two
lawsuits, which
were later merged
into one, were
initiated

Privatization
event . Stateowned
Eletropaulo
became AES
Eletropaulo

Based on the
spin-off protocol,
he 2nd Instance
Court excluded
AES Eletropaulo
El
l
from the lawsuit

The SCJ annulled
the 2nd Instance
Court decision
and sent the
Execution Suit
back to the 1st
Instance Court

Eletrobras
requested the
beginning of the
appraisal procedure
before the 1stt
b f
th
Instance Court

5 - Collection
starts.
Presentation of
guaranty
6 - Request to
seize the
guaranty
7 - Appeals to
the Superior
Courts

55
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:
time

Right of 1st
refusal

 Any party with an intention to dispose its shares should first provide the other party the right to buy

Tag along
rights

 In the case of change in Brasiliana’s control, tag along rights are triggered for the following

Drag along
rights
g

 Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all

that participation at the same price offered by a third party

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

its shares at the time, if the Right of 1st Refusal is not exercised by offered party
time

56
Brazilian main taxes

AES Eletropaulo

AES Tietê
• Income Tax / Social Contribution:
– 34% over taxable income

• ICMS (VAT tax)
– deferred tax

• PIS/Cofins (sales tax):
– Eletropaulo´s PPA: 3.65% over Revenue
– Other bilateral contracts: 9 25% over Revenue
9.25%
minus Costs

• Income Tax / Social Contribution:
– 34% over taxable income

• ICMS: 22% over Revenue (average rate)
– Residential: 25%
– Industrial and commercial: 18%
– Public entities: free

• PIS/Cofins:
– 9.25% over revenue minus Costs

57
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 f
lt
d
th
t ti l
l forecasts b
t based on th expectations of th C
d
the
t ti
f the Company’s M
’ Management i
t 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.

More Related Content

Apresentação institucional 3_q12_en_v11

  • 2. AES Brasil Group •P Presence i B il since 1997 in Brazil i • Operational Figures: • Consumption units: 7.7 million 53.6 • Distributed Energy: 53 6 TWh • Installed Capacity: 2,658 MW • Generated Energy : 13.9 TWh • 7.4 thousand AES Brasil People • Investments 1998-2011: R$ 8.1 billion • Solid corporate governance and sustainable practices • Safety as value #1 Disco Genco Service Provider 2
  • 3. AES Brasil widely recognized in 2009-2012  Management Excellence  Quality and Safety  Environmental Concern (AES Tietê) (AES Sul) (AES El Eletropaulo) l ) (AES Tietê) (AES Brasil) (AES Tietê) (AES El t Eletropaulo) l ) (AES Eletropaulo) (AES Tietê) (AES Brasil) (AES Eletropaulo) (AES Tietê) (AES Tietê) (AES Tietê) (AES Eletropaulo) (2011- AES Tietê; 2012 – AES Eletropaulo) (AES Eletropaulo) (AES Eletropaulo) 3
  • 4. Mission & visions Mission • Improving lives and promoting development by providing safe safe, reliable and sustainable energy solutions Visions • Be a leader in operational and financial management in Brazilian energy generation sector and expand installed capacity • Be the best distributors in Brazil 4
  • 5. Social responsability: annual investments of R$ 83 million Development and transformation of communities “Casa de Cultura e Cidadania” Project - Offers courses and activities in culture and sports. Directly benefits approximately 5 6 tho sand appro imatel 5.6 thousand children and teenagers and indirectl 292 tho sand people in 7 units located within indirectly thousand nits ithin AES Brazil companies’ areas of operation Children educational development “Centros Educacionais Luz e Lápis” Project - Two units in São Paulo attending 300 children from 1 to 6 years old in condition of social vulnerability Education on safety and efficiency in energy consumption “AES Eletropaulo nas Escolas” Project - Education about safe and efficient use of energy to 4.5 thousand teachers and 404 thousand students from 900 public schools. The actions include recreational activities offered in adapted trucks. Converting consumers to clients Developed for grid connection regularization. Since 2004, more than 500 thousand families in low income communities were benefited from better energy supply conditions and social inclusion. 5
  • 6. Shareholding structure BNDES AES Corp C 50.00% + 1 share P 0.00% T 46.15% C 50.00% - 1 share P 100% T 53.85% Cia. Brasiliana de Energia T 99.70% AES Sul C 99.99% T 99.99% AES Serviços C 99.00% T 99.00% C 71.35% P 32.34% T 52.55% AES Uruguaiana AES Tietê C 76.45% P 7.38% T 34.87% AES Eletropaulo C = Common Shares P = Preferred Shares T = Total 6
  • 7. AES Tietê and AES Eletropaulo are listed in i BM&F B Bovespa ¹ ¹ Free Float Others² Market Cap³ 16.1% 19.2% 56.2% 8.5% US$ 1.3 bi 24.2% 24 2% 28.3% 28 3% 39.5% 39 5% 8.0% 8 0% US$ 4 0 bi 4.0 1 - Parent companies, AES Corp and BNDES, have similar voting capital on each of the Companies: approx 35.9% on AES Eletropaulo and 32.9% on AES Tietê 2 - Includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 3 - Base: 11/07/2012. Considers preferred shares for AES Eletropaulo and preferred and common shares for AES Tietê 7
  • 8. AES Brasil is the second largest group in the electric sector Ebitda1 – 2011 (R$ Billion) 5.4 4.9 3.8 2.9 2.9 2.0 1.9 1.5 1.2 0.7 07 CEMIG Net AES BRASIL income1 2 CPFL TRACTEBEL NEOENERGIA CESP COPEL EDP LIGHT 0.3 0.3 DUKE CESP DUKE – 2011 (R$ Billion) ( ) 3.0 2.4 1.6 1.6 1.4 1.2 0.5 AES BRASIL2 CEMIG CPFL NEOENERGIA TRACTEBEL COPEL 1 – excluding Eletrobrás 2 – includes AES Atimus sale (aprox. R$ 1 billion in EBITDA and aprox. R$ 700 million in net income) LIGHT 0.1 01 EDP Source: Companies’ financial reports 8
  • 9. AES Tietê is the 2nd largest private generator in Brazil Generation installed capacity (MW) - 20121 Main privately held Companies  AES Tietê is the 2nd largest among private AES TIETÊ 2,2% CPFL 2,2% DUKE 1,9% EDP 1,5% generation companies NEOENERGIA 1,2% ENDESA 0,8% LIGHT 0,8% TRACTEBEL 6,0% , CHESF 8,9% S DEMAIS 28,2%  Approximately 78% of country’s generation country s installed capacity is state-owned2 ³  Three ELETRONORTE ³ 7,6% PETROBRÁS 5,1% ITAIPU ³ 5,8% CEMIG 5,7% CESP 6,2% Total Installed Capacity: 117 GW plants under 18 GW in installed capacity – Santo Antonio and Jirau (Madeira River): 7 GW – Belo Monte (Xingu River): 11 GW ELETRONUCLEAR 2,8% 2 8% CGTEE 0,7% hydropower construction in the North region of Brazil with FURNAS ³ 8,1% COPEL 3,8% mega ³ ³ ELETROSUL 0,5% ³ 1- Sources: ANEEL – BIG (March, 2012) and Companies websites 3 – Eletrobrás, totaling 35% 2- Source: Banks’ reports 9
  • 10. AES is among the top 3 largest distribution players in Brazil Consumers – D /2011 C Dec/2011 16% 30% • 63 13% AES A Brasil Cemig 7% in Brazil • AES Brasil is one of the largest electricity distribution group in Brazil: – AES Eletropaulo: 45 TWh distributed, 12% 7% companies distributing 430 TWh CPFL Energia 5% distribution 12% 10.5% of the Brazilian market – AES Sul: 8.6 TWh distributed, 2.0% of the Consumption (GWh) - 2011 Neo Energia 13% Copel 12% Light Brazilian market  AES Eletropaulo is the largest electricity distributor in Latin America in terms of revenue supply according to ABRAADE¹ supply, 52% EDP 11% Outros 7% 6% 6% 6% 1 – Brazilian Association of Electricity Distributors  Distribution companies’ operations are restricted to their concession areas  Acquisitions must only be performed by the holdings of economic groups 10 10
  • 12. Energy sector in Brazil: business segments Free Clients Distribution Transmission • Consumption of 113 TWh • 63 companies • 68 companies (26% of Brazilian total market) • 430 TWh of energy • 68% private sector • Conventional sources: above 3,000 kW • Alternative sources: between 500 kW and 3,000 kW • Large consumers can purchase energy directly from generators • Free contracting environment distributed in 2011 • High voltage transmission • 70 million consumers • 67% private sector (>230 kV) • 98,648 km in extension • Annual tariff adjustment • Tariff reset every four or lines (SIN¹) • Regulated public service with free access five years • Regulated public service • Regulated contracting • Regulated tariff (annually adjusted by inflation) environment • 13 groups controlling 76% of total installed capacity • 22% private sector • 1,862 power plants • 117 GW of installed capacity • 73% hydroelectric • 17% thermoelectric • 5% biomass • 4% SHPP2 • 1% Wi d Wind • Contracting environment – ¹ Interconnected National System ² Small Hydro Power Plants Generation Sources: EPE, Aneel, ONS and Banks’ reports free and regulated markets 12
  • 13. Energy sector in Brazil: contracting environment g Regulated market Free market Generators, Generators Independent Power Producers (IPPs), Trading companies and Auto producers Generators and Independent Power Producers (IPPs) Auctions: New Energy and Existing Energy Distribution companies • Bilateral contracts (PPAs1) Free clients Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15-30 years regulated PPA1 – New Energy (A-3): Delivery in 3 years, 15-30 years regulated PPA1 – Existing Energy (A-1): Delivery in 1 year, 5-15 years regulated PPA1 1 – Power Purchase Agreement 13
  • 14. Electric sector in Brazil: demand and supply balance Static balance1 – Load x Supply2 (considering reserve energy3) Static balance - Load x Suppl (MW avg) e ly 100,000 100 000 90,000 • Brazilian electric system 80,000 presents a surplus in the 70,000 , 60,000 energy balance for the 50,000 years to come 40,000 30,000 • Low risk of rationing 20,000 • Expansion opportunities 10,000 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Balance (%) 5.9% 7.8% 11.2% 9.6% 8.4% 10.0% 10.6% 8.2% 5.4% 4.2% Balance 3,528 4,875 7,443 6,684 6,097 7,590 8,404 6,734 4,673 3,770 Reserve 439 1,007 1,509 1,743 1,746 2,959 2,959 2,959 2,959 since this capacity is not 2,959 Supply 62,912 66,355 72,585 74,492 76,823 80,320 84,428 85,886 87,601 90,409 Load 59,823 62,487 66,651 69,551 72,472 75,689 78,983 82,111 85,887 yet fully contracted 89,598 1 -Ten-year Energy Plan 2020, May/2011 – EPE 2- Supply based on physical guarantee 3- Energy destined to equalize the differences between the sum of power plants’ physical guarantees and the system’s physical guarantee. 14
  • 15. Generation market overview Installed capacity (GW)1 Growth by source - new auctions (GW) 141 136 162 166 171 156 148 11 14 19 41 42 42 123 133 13 23 24 28 33 8 38 110 110 110 110 110 110 110 110 110 110 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total: 22 GW 117 6 Current installed capacity 5 3 2 Auctioned Thermal2 2.6 Hydro 8.6 Renewables 10.6 Upcoming auctions • Brazilian installed capacity to grow 4-5% y.o.y (~ 5 GW) over the next 10 years • Renewable energies will lead the capacity increase with competitive cost vs. other technologies and strong Government support • Gas-fired thermal to leverage on the pre-salt discoveries and on the dispatchability benefit 1- Source: EPE (Energetic Research Company), Ten-year Energy Plan 2020, May/2011 2- Amount related to thermal is an estimate of the Company 15
  • 17. Distribution Companies: Tariff methodology Tariff reset and readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo − Base date: Jul/2011 • Parcel A Costs − Parcel A: costs are largely passed through to the tariff − Parcel B: costs are set by ANEEL • Tariff Readjustment: annually − Parcel A : costs are largely passed through to the tariff − Parcel B: cost are adjusted by IGPM +/- X(1) Factor X WACC Energy Purchase Transmission Sector Charges Regulatory Opex (PMSO) Investment Remuneration Remuneration R ti Asset Base X Depreciation Depreciation Regulatory Ebitda 1 – X Factor: index that captures productivity gains − Non-manageable costs that are largely passed through to the tariff − Incentives to reduces costs • Regulatory Opex: – Efficient operating cost determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Prudent investments used to calculate the investment remuneration (applying WACC) and depreciation Parcel A - Non-Manageable Costs Parcel B - Manageable Costs 17
  • 18. Tariff methodology 3rd Cycle of tariff reset – X factor X FACTOR DEFINITION OBJECTIVE APPLICATION = Pd Distribution productivity Capture productivity C t d ti it gains Defined at tariff reset, considers the average productivity of sector adjusted by market growth and consumption variation + Q + T Quality of service Operational expenses trajectory Stimulate Sti l t improvement of service quality Implement operational expenses trajectory Defined at each tariff readjustment, considers variation of SAIDI and SAIFI and comparative performance of discos Defined at tariff reset, considers reference company and benchmarking methodologies 18
  • 19. 3rd Cycle of the Tariff Reset for AES Eletropaulo  Gross Regulatory Asset Base: R$ 10,748.8 million Tariff Review 4,445.1  Net Regulatory Asset Base: R$ 4 445 1 million  Parcel B: R$ 2,007.1 million  Non Technical Losses (referenced in the low voltage market): start point at 11.56% and get to 8,56%, by the end of the cycle  Average effect to be perceived by the consumer: -9.33%  Economical Effect: -5.60% Tariff Adjustment Tariff Review + T iff R i  A Average effect t b perceived b th consumer : +5.51% ff t to be i d by the 5 51%  Economical Effect: +4.45%  Average effect to be perceived by the consumer : -2.26% Adjustment Administrative appeal  In 17th July Company filed a request for reconsideration of the Homologation Resolution 1 327/2012 July, 1,327/2012 about the Regulatory Asset Base and the non-technical losses trajectory 19
  • 20. Discussions with Regulator Discussion Arguments  Shielded RAB was approved by Aneel in 2003  Shielded RAB Aneel excluded R$ 728 million f A l l d d illi from shielded RAB, due to the decrease in the amount of cables between the accounting records and the shielded RAB, between cycles RAB b t l and was confirmed in 2007, considering a global consistency criteria  If the exclusion of the amount of cables is maintained, an addition of R$ 660 million of , $ assets in operation (2003 BRR) should be considered  Investments  Losses Aneel did not recognize a R$ 427 million investment performed in the incremental period on Minor Components to Main Equipments (“COM”) and Additional q p ( ) Costs (“CA”) Aneel changed the benchmark company proposed in the Public Hearing, modifying the regulatory losses reduction from 0.49% to 1%  Adequacy of the regulatory standards applied by Aneel for the valuation of real costs incurred in execution of works and recorded in accounting books  Benchmark company is an outlier p y  Regulatory losses reduction shall be restored to the previous number of 0.49% 20
  • 21. Provisional Measure 579: energy cost reduction program p g  Program created by Provisional Measure 579 (“PM 579”) in 09/12/2012;  Law Decree 7805 was published on 09//17/2012 and regulates the terms of PM 579;  Conversion of this provisional measure into law depends on the approval of the Brazilian Congress - More than 400 amendments were submitted to Congress  It aims to reduce tariffs by an average of 20% (Residential: 16.2% and industrial 20% to 28%), as from February, 2013, through: - Reduction Sector Charges ( g (RGR, CCC and CDE): - 7% , ) % - Renewal Leases Generation and Transmission: - 13%  New rules are only valid for the concessions granted before 1995 i e they are not valid for AES Eletropaulo 1995, i.e, (concession expires in 2028) nor for AES Tietê (concession expires in 2029). 21
  • 22. PM 579: Concessions renewal Generation & Transmission  Extension for 30 years with effects anticipated for 2013: - Assets not depreciated / amortized will be evaluated based on the methodology of the new replacement value (NRV). Holders of concession will be compensated with such amount;  Concession renewal will be based on O&M costs, industry charges, fees and network usage;  Energy associated with the renewal of concessions will be fully allocated to the regulated market  Extension for 30 years Distribution  Rules for renewal has not been defined Other terms and timeline  Oct, 15 2012: companies submitted to ANEEL their intention to renew generation, distribution and transmission concessions  Nov, 01 2012: MME published generation initial tariff, transmission annual revenue and compensation value to concessions to be renewed  Dec, 04 2012: Final term for signing the amendments  Concessions that are not renewed will be auctioned under the same conditions of the renewed concessions 22
  • 23. PM 579: Opportunities and risks AES Tietê Opportunities O t iti  Competitive p p prices in the free market (~ R$ 100 – R$ 110/MWh)  Possible pressure of higher prices at the free market in the short term  Possible sale of electricity to generators whose concessions are expiring, to cover contracts set in the free market between 2015 and 2017 Risks  Investments in modernization to be recognized by ANEEL at the end of the concession AES Eletropaulo  Marginal benefits in collection and potential decrease in delinquency, since energy costs will be reduced  Increase in energy consumption, as a potential result of the drop in tariffs  Exchange rate variation of the energy price purchased from Itaipu will no longer be suportted by distribution companies, p y p , but by Eletrobras  Cash impact between tariff adjustments of hydrological risks due to the allocation of energy quotas 23
  • 25. AES Tietê overview Generation facilities  12 hydroelectric plants in São Paulo  30-year concession valid until 2029  Installed capacity of 2 658 MW with physical guarantee1 2,658 MW, of 1,278 MW average  Almost all the amount of energy that AES Tietê can sell is contracted with AES Eletropaulo until the end of 2015  AES Tietê can invest in generation, its main activity, and operate in energy trading  360 employees as of September, 2012 1 - Amount of energy allowed to be long term contracted 25
  • 26. Generated energy shows high operational availability p y Generated energy (MW avarage1) 9M12 Generated energy by power plant (MW average1) 130% 125% 124% 126% 129% 4% Agua Vermelha 3% 3% Nova A N Avanhandava h d 5% Promissão 5% 1,665 1,599 1,582 1,551 1,689 Ibitinga 59% 9% Bariri Barra Bonita 11% Euclides da Cunha Other Power Plants 2009 2010 Generation - Mwavg 2011 9M11 9M12 Generation/Physical guarantee 1 – Generated energy divided by the amount of hours * Caconde, Limoeiro, Mogi and SHPPs 26
  • 27. A significant amount of billed energy and net revenues comes from the bilateral contract with AES Eletropaulo Billed energy (GWh) Net revenues (%) 89% 15,112 112 15,112 15 14,729 14 729 14,706 301 117 13.032 13,032 554 1,150 1,340 1,980 1 980 421 1,519 2,331 2 331 11,118 1,942 1 942 346 1.192 1,083 1 083 2,970 1,535 3% 2% 6% 11,108 11 108 11,108 11 108 11,108 11 108 8,045 8,558 AES Eletropaulo 2009 AES Eletropaulo 2010 ERM1 MRE1 2011 Spot Market 1 – Energy Reallocation Mechanism 9M11 9M12 Other bilateral contracts Other bilateral contracts Other bilateral contracts Spot Market ERM MRE11 27
  • 28. Nova Avanhandava, Água Vermelha, Ibitinga and limoeiro power plants modernization p p investments Investments (R$ million) 175 9M12 Investments 167 85% 19 119 14 82 12 72 156 4 105 70 2010 68 2011 2012(e) 9M11 9M12 4% 11% Equipment and Modernization New SHPPs* Investments * Small Hydro Power Plants New SHPPs* IT Projects 28
  • 29. Growth opportunities “Thermal São Paulo” Project - Natural N t l gas combined cycle th bi d l thermal plant, with 550 MW of i t ll d capacity l l t ith f installed it - Project will not participate in 2012 auctions (A-3 and A-5) due to gas unavailability - Environmental License was restored after the decision of São Paulo State Court of Justice - Next steps: Obtainment of the installation license “Thermal A “Th l Araraquara” Project ”P j t - Natural gas combined cycle thermal plant, with 579 MW of installed capacity - Purchase option acquired in March, 2012 - Project ill t P j t will not participate i 2012 auctions (A 3 and A 5) d t gas unavailability ti i t in ti (A-3 d A-5) due to il bilit - Next steps: Obtainment of the installation license 29
  • 30. Strategy for energy contracting in 2016: p p composition of client portfolio Clients portfolio evolution in 2012 • Goals: - 2011 / 2012: commercial initiatives to expand client portfolio in the free market; 259 - Current portfolio comprises 259 MWa, of which 227 Mwa sold this year and 84 90 1Q12 2Q12 87 MWm sold for 2016 onwards; 32 Before dec/2011 3Q12 - C t Contracts i t involving energy d li l i delivery f for 2012-2015 are “back to back”, i.e, with no market exposure. Mwavg 30
  • 31. Financial highlights Ebitda (R$ million) Net revenue (R$ million) 1,466 1,320 1 320 1,254 1 254 1,250 9 1,670 1 670 1,754 1 754 1,886 , 1,344 1,618 10 1,311 1,309 1,048 1,240 (54) 2009 2010 2011 9M11 9M12 2009 2010 2011 9M11 9M12 75% 75% 78% 78% 77% Recurring Non-recurring Ebitda Margin 31
  • 32. Steady earnings distribution on a quarterly q arterl basis Net income and dividend pay-out1 (R$ million) 110% 117% 109% 11% 11% 11% • Dividends distribution 100% of net income – 706 737 – 706 1 – Gross value Yield Pref p y pay-out Average payout since 2006: 582 2011 Average dividends since 2006: R$ 745 million per year 845 Pay -out minimum 106% – 2009 (36) 2010 of according to bylaws 723 31 742 25% practice: 9M11 Recurring 720 9M12 (3) Non-recurring 32
  • 33. Debt profile Amortization schedule – principal (R$ million) Net debt (R$ billion) 0.7x 0.3x 0.7x 0.7x 0.6x 0.3x 0.3x 0.6x 0.4x 0.3x 300 0.4 4 2010 Net Debt 0.5 9M11 9M12 300 2013 2014 2015 0.5 2011 0.4 4 2009 0.4 300 Net Debt / Ebitda Gross Debt/Ebitda  Ebitda/Financial expenses of 1.75x 1 – Brazilian Interbank Interest Rate Average Cost 3Q12  Average Cost (% CDI)1 115% 121%  Average Term (years) 2.5 1.5  Effective Rate Covenants  Gross debt/Ebitda of 2.5x 3Q11 12.7% 9.7% 33
  • 34. Capital markets Daily avg volume (R$ thousand) AES Tietê X Ibovespa X IEE 12 months A 140 703 638 553 546 19,910 120 13,922 8% -1% -3% -6% -10% 100 80 Nov-11 10,187 4,239 IEE May-12 Ibovespa GETI4 Aug-12 TSR 3,397 9,683 9,537 2,101 14,885 8,086 2009 Feb-12 Nov-12 Preferred 5,025 12,584 2010 Common 2011 YTD Oct/12 Shares negotiated (thousand) GETI3 A 09/12/2012: The Brazilian Government announced the Energy Reduction Program, by b the PM 579 • Market Cap4: R$8.45 billion / US$ 4.02 billion • BM&FBovespa: GETI3 (common shares) and GETI4 (preferred shares) • ADRs ADR negotiated i US OTC M k t AESAY ( ti t d in Market: (common shares) and AESYY h ) d (preferred shares) 1 – Index: 11/07/2011 = 100 2 – Electric Energy Index 3 – Total Shareholders’ Return 4 – Index: 11/07/2012 34
  • 36. 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; renewable for another 30 years  Concession area with the highest GDP in Brazil  45 thousand kilometers of lines and 6.3 million consumption units in a concession area of 4,526 km2  45 TWh distributed in 2011  AES Eletropaulo, as a distribution company, can only invest in assets within its concession area  5,584 employees as of September, 2012 36
  • 37. Consumption evolution Total market1 (GWh) Consumption by class – 9M12 (%) 9 15 41,269 6,832 43,345 7,911 45,102 29 25 8,284 33,769 34,032 6,246 5,918 24 34 34,436 35,434 36,817 27,523 28,114 38 26 2009 2010 2011 Captive Market 9M11 9M12 Brazil Free Clients Residential 1 – Net of own consumption AES Eletropaulo Industrial Commercial Others 37
  • 38. Industrial class Industrial class X Industrial production in São Paulo State 15% 10% 5% 0% • -5% -10% Economic crisis -15% Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 Industrial Production SP (% 12 months) by is manufacturing industry performance in São Paulo State Industrial (% 12 months) Consumption of industrial class by activity1 – AES Eletropaulo consumption influenced Economic  recovery Industrial • Recent slowdown is influenced by y the decrease of industrial production in 2011 and 2012 Other industries 51% 1 – As of September 2012. Vehicles, Chemical, Rubber, Plastic and Metal Products 49% 38
  • 39. Residential class Residential  Consumption x  Real Income ‐ São Paulo (Q‐2*) Avg Real Income R$ ‐ SP ( (Q ‐2*) 2,000  4,800  1,900  4,300  1,800  1,700  3,800  1,600  3,300  1,500  1,400  Residentia GWh al ‐ Residential class X A erage income in São Paulo Metropolitan Area Average Pa lo • by average income • 2,800  , • 2,300  2008 2009 2010 2011 Metropolitan Area will sustain growth of residential class 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2007 Income expansion trend in São Paulo 1,300  1,200  Residential consumption driven Average annual growth (2003- 2011): 2012 – total residential market: 5.5% y.o.y Consumption per consumer (i kWh) C ti (in – consumption per consumer: 2.1% y.o.y - 8.7% 258  Rationing 220 192 2000 2001 2002 199 2003 203 207 2004 2005 223 213 219 2006 2007 2008 228 229 234 237 Consumption per consumer is still 8.7% lower than in the period before the rationing 2009 2010 2011 Sep YTD 2012 1 - Two quarters of delay in relation to consumption 39
  • 40. Investments focused on grid automation, maintenance and system expansion y p Investments 9M12 (R$ million) Investments breakdown (R$ million) 154 800 700 739 682 20 25 26 841 46 22 137 28 579 600 75 26 500 400 300 654 717 794 200 325 10 141 553 Maintenance 315 100 Client Service 0 2010 2011 2012(e) 9M11 9M12 System Expansion Losses Recovery Own resources Paid by the clients id b h li IT Paid by the Clients Others 40
  • 41. Best SAIDI since 2006 and within regulatory limits SAIDI - System average interruption duration index 10.09 9.32 8.68 - 13% 11.86 10.60 10.62 10.36 8.62 4.48 2009 2010 2011 8th 7th 10M11 Jan-Oct 11 10M12 3.90 Jan-Oct 12 6th SAIDI (hours) SAIDI Aneel Reference ABRADEE ranking position among the 28 utilities with more than 500 thousand customers ► Sources: ANEEL, AES Eletropaulo and ABRADEE 2012 SAIDI ANEEL Reference: 8.67 hours 41
  • 42. SAIFI remains below the regulatory limit and still decreasing SAIFI - System average interruption frequency index 7.87 6.17 7.39 5.46 6.93 - 18% 5.54 5.45 2009 2010 2011 7th 3rd 10M11 4.84 8.68 Jan-Oct 11 10M12 6.99 Jan-Oct 12 4th SAIFI (times) SAIFI Aneel Reference ABRADEE ranking position among the 28 utilities with more than 500 thousand customers ► Sources: ANEEL, AES Eletropaulo and ABRADEE 2012 SAIFI ANEEL Reference: 6.87 times 42
  • 43. Losses level close to the regulatory reference for t e 3 d Cyc e o Tariff Reset e e e ce o the 3rd Cycle of a eset Losses (last 12 months) 11.8 10.9 10 9 Regulatory Reference² - Total Losses (last 12 months) 10.5 10.6 10 6 10.4 5.3 4.4 4.0 4.1 6.5 6.5 6.5 2010 2011 3Q11 3Q12 9.8 9.4 2013/2014 2014/2015 6.2 2009 10.3 10 3 4.2 6.5 10.7 10 7 Technical Losses ¹ 2011/2012 2012/2013 Non Technical Losses 1 – In January 2012, the Company improved the assessment of the technical losses, which were decreased to a level of 6.1%. The number for the last twelve months ended in 3Q12 is 6.2% 2 – Values estimated by the Company to make them comparable with the reference for non-technical losses determined by the Aneel 43
  • 44. Financial highlights Net revenues (R$ million) Ebitda (R$ million) 2,413 9,697 9 697 426 9,836 , 8,786 2,848 933 1,775 7,371 7,383 87 197 339 1,491 1,648 1,716 442 1,473 324 670 1,392 439 231 2009 2010 2011 9M11 9M12 2009 2010 2011 9M11 9M12 Recurring Regulatory assets and liabilities 1 Non-recurring 1 – Non recurring 2011 : Includes sale of AES Eletropaulo Telecom with a R$ 707 million impact on Ebitda 44
  • 45. Earnings distribution on semi-annual basis Net income and di id d payout1 (R$ million) N ti d dividend t illi ) 101.5% 114.4% 54.4% 20.4% 28.6% 17.1% 1,572 • 1,348 1,157 350 374 practice: minimum required 652 - 885 25% of minimum pay-out according to bylaws 236 287 160 – 324 181 622 Dividends distribution distribution above the 762 634 561 Average payout since 2006: 83% per year – Average dividends since 2006: R$ R$ 904 million per year 439 (258) 2009 2010 2011 9M11 9M12 Pay-out Yield PN Net Income - ex one-off and with regulatory assets and liabilities Regulatory assets and liabilities 1 – Gross amount One off 2– Non recurring 2011 :Includes sale of AES Eletropaulo Telecom with a R$ 467 million impact on net income 45
  • 46. Efficiency increase to operate within the regulatory limits “Criando Valor” (Creating Value) Project  Aims cost control gains by increasing productivity, optimizing supporting functions and enhancing efficiency in key processes  Benefits to be obtained in 2012 will absorb part of tariff reset impacts and pressure on costs Additional initiatives Process review/ Cost reduction Cost reduction target of R$ 100 million from 2013 onwards  $ 30% increase in productivity of north region operational teams (under implementation for others regions)  Increase clients attended by automatic service channels from 44% to 69%, reducing costs and enhancing client satisfaction  Optimization of operational bases, reducing 2 units  Review of stores portfolio by increasing outsourced services and reducing the number of units from 66 to 40  Renegotiation of suppliers contracts  Organizational restructuring involving 372 employees until October, with elimination of 68 positions Debt restructuring  R$ 750 million reduction in debt amortizations between 2013 and 2015, with the flexibility of covenants and increase in maturity from 6.6 years to 7.2 years Real estate  Relocation to the new corporate headquarters will increase productivity gains and demobilization of real estate with an estimated selling value of R$239 million, benefiting 2012 and 2013 results 46
  • 47. Debt refinancing conclusion of R$ 1 billion resulting in more flexible covenants  Decrease in debt amortization volume for 2013-15 by R$ 750 million Benefits  Increase in the a erage debt mat rit from 6 6 years to 7 2 years average maturity 6.6 ears 7.2 ears  Debt average costs decrease from CDI+1.29% to CDI+1.27%  More flexible covenants Debt amortization schedule Before restructuring After restructuring 1.133 1.133 R$ 491 million R$ 1,241 million 744 578 388 387 275 86 533 302 2013 51 494 44 47 228 2014 51 2015 58 280 54 337 2016 Debt in R$ (ex-pension plan debt ) 436 2017 2018 321 2019 530 54 383 62 226 732 58 637 732 225 400 2020 2028 Pension plan debt 138 128 86 52 44 83 2014 2015 62 686 476 178 2013 587 47 383 321 2016 Debt in R$ (ex-pension plan debt ) 2017 2018 2019 400 2020 2028 Pension plan debt 47
  • 48. More flexible covenants and considering IFRS changes FROM TO Net d bt Adj t d Ebitda 3.5 N t debt / Adjusted Ebitd < 3 5 Financial Index Gross debt / Adjusted Ebitda < 3.5 Default If the limit is exceeded in any quarter Regulatory assets and liabilities Not considered in the calculation (equivalent to 4.5x Gross Debt / Adjusted Ebitda) If the limit is exceeded for two consecutive quarters Considered in the calculation (concept before IFRS adoption) Debt recognized in liabilities excluding the Pension plan debt Compulsory loans Total debt recognized in liabilities Considered in the calculation of debt “corridor” concept Out of debt calculation 48
  • 49. Debt profile Net debt 2,7x 2,0x 2,1x 1,6x 2.9 29 2.7 2009 2.4 2.3 2010 2011 1,4x 3.1 9M11 9M12¹ 2009 1,6x 1,3x 0,9x 0,8x 2010 2011 1,2x 1 2x 9M11 9M12¹ Gross Debt/Ebitda Adjusted Net Debt (R$ billion) Net Debt/Ebitda Adjusted September, 2012: Indexed by: 72% CDI²; 28% IGP-DI³ and 0.5% others 49 1 – According the new covenants 2 – Brazilian Interbank Interest Rate 3 – Inflation Index
  • 50. Capital markets Average d il volume (R$ th A daily l thousand) d) AES El t Eletropaulo X Ib l Ibovespa X IEE 12 months¹ A 145 B 125 -2% -0.5% 105 21,960 24,496 26,897 25,365 25 365 85 65 - 37% 45 - 40% 25 Oct 11 2009 Dec 11 Ibovespa Feb 12 IEE² Apr 12 Jun 12 AES Eletropaulo PN Aug 12 Oct 12 2010 2011 YTD Outubro Preferred AES Eletropaulo TSR³ A Material Fact 04/10/2012: technical notes published by Aneel regarding the calculation of the preliminar tariff review rate, including the regulatory asset basis . B Material Fact 07/02/2012 and 07/03/2012: Aneel final terms about tariff review rate, including the regulatory asset basis and tariff adjustments . • Market cap4: US$ 1.3 billion/ R$ 2.7 billion • BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares) • ADRs at US OTC Market: EPUMY (preferred shares) 1 – Information until 10/31/2012. Index: 10/31/2011 = 100 3 – Total Shareholder Return 2 – Electric Energy Index 4– Index: 09/28/12. Calculation includes only preferred shares 50
  • 52. Costs and expenses Costs and operational expenses1 (R$ million) 415 433 420 368 201 187 174 96 296 139 115 214 246 245 2009 2010 2011 181 9M11 229 9M12 Energy Purchase, Transmission and Connection Charges, and Water Resources Other Costs and Expenses 2 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 52
  • 53. Costs and expenses Costs and operational expenses1 (R$ million) PMS2 and other expenses (R$ million) 1,306 6,431 1,306 6,745 1,255 254 6,945 1,256 1,255 1,256 165 122 1,133 138 5,113 6,068 893 1,133 700 893 647 622 50 600 475 5,125 5,490 5,689 4,220 4,936 352 2009 2010 2011 Energy Supply and Transmission Charges 9M11 9M12 PMS² and Others Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 2009 443 513 2010 2011 Material and Third Party 368 394 9M11 9M12 Personnel and Payroll Others 53
  • 54. AES Tiete's expansion obligation Efforts being made Privatization Notice established the obligation to expand the installed capacity in 15% (400 MW) until 2007, 2007 either in greenfield projects and/or through long term purchase agreements with new plants Judicial Notice: Aneel informed that the issue is not related to the concession agreement and must be addressed with the State of São Paulo The Company was notified by the State of São Paulo Attorney's Office to present its understanding on the matter, matter having filed its response on time, the proceedings were ended, since no other action was taken by the Attorney's Office AES Tietê was summoned to answer a Lawsuit filed by the State of São Paulo, which requested the fulfillment of the obligation in 24 months. An injunction was granted in order to have a project submitted within 60 days. 19th In March, the Company’s appeal was denied. Thus, on April, 26th AES Tietê presented “Thermo São Paulo” Thermo Paulo project as the plan to fullfill the obligation to expand the installed capacity. by the Company to meet the obligation : • Long-term energy contracts (biomass) totaling an average of 10 MW • SHPP São Joaquim - started operating in July, 2011, with 3 MW of installed capacity 1999 2007 Aug/08 Oct/08 Jul/09 Sep/10 Sep/11 Nov/11 Apr/12 Sep/12 • SHPP São José started operating in March, 2012, with 4 MW of installed Company faces restrictions until deadline: • Insufficiency of hydro resources • Environmental restrictions • Insufficiency of natural gas supply • New Model of Electric Sector (Law # 10,848/2004), hi h forbids bilateral 10 848/2004) which f bid bil t l agreements between generators and distributors In response to a p Popular Action (filed by individuals against the Federal Government, Aneel, AES Tietê and Duke), the Company p p y presents its defense before the first instance Popular Action: Due to the plaintiffs failure to specify the persons that should be named as Defendants, a favorable decision was rendered by the first Instance Court (an appeal has been filed) Lawsuit: The Company appealed to the State of Sao Paulo State Court of Appeals and the injunction was kept Decision in the first appeal level determined the state of São Paulo to express about AES Tietê’s Expansion program capacity • Thermal SP - Project of a 550MW gas fired thermo plant • Thermal Araraquara - Acquisition of a purchase option 54
  • 55. Eletrobras lawsuit Next Steps: State-owned State owned Eletropaulo was spun-off into four companies and, according to our understanding based on the spin-off agreement, the discussion was transferred to CTEEP Stated-owned Eletropaulo borrowed money from Eletrobras Nov/86 Dec/88 Jan/98 Eletrobras, after winning the interest calculation discussion, filed an Execution Suit aiming the collection of the amounts that were in default Apr/98 p Sep/01 p Eletrobras and CTEEP appealed to the Superior Court of Justice (SCJ) Sep/03 p Oct/05 In I accordance t d to the procedure that was stipulated by 2nd Instance Court after an appeal from AES Eletropaulo, Eletrobras requested the 1st Instance Court to appoint an expert Jun/06 May/09 y On July 7, the judge determined Eletropaulo and CTEEP to present their considerations, which occurred in August 1 - The appraisal procedure (AP) is expected to begin by the 1st half of 2013 2 – AP is i expected to be concluded in at least 6 months 3 - After AP’s conclusion, a 1st Instance Court decision will be issue Dec/10 Jul/11 > In case of an unfavorable decision: 4 –Appeal to the 2nd Instance Court State owned State-owned Eletropaulo and Eletrobras disagreed on how to calculate interest over that loan and two lawsuits, which were later merged into one, were initiated Privatization event . Stateowned Eletropaulo became AES Eletropaulo Based on the spin-off protocol, he 2nd Instance Court excluded AES Eletropaulo El l from the lawsuit The SCJ annulled the 2nd Instance Court decision and sent the Execution Suit back to the 1st Instance Court Eletrobras requested the beginning of the appraisal procedure before the 1stt b f th Instance Court 5 - Collection starts. Presentation of guaranty 6 - Request to seize the guaranty 7 - Appeals to the Superior Courts 55
  • 56. 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: time Right of 1st refusal  Any party with an intention to dispose its shares should first provide the other party the right to buy Tag along rights  In the case of change in Brasiliana’s control, tag along rights are triggered for the following Drag along rights g  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all that participation at the same price offered by a third party 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 its shares at the time, if the Right of 1st Refusal is not exercised by offered party time 56
  • 57. Brazilian main taxes AES Eletropaulo AES Tietê • Income Tax / Social Contribution: – 34% over taxable income • ICMS (VAT tax) – deferred tax • PIS/Cofins (sales tax): – Eletropaulo´s PPA: 3.65% over Revenue – Other bilateral contracts: 9 25% over Revenue 9.25% minus Costs • Income Tax / Social Contribution: – 34% over taxable income • ICMS: 22% over Revenue (average rate) – Residential: 25% – Industrial and commercial: 18% – Public entities: free • PIS/Cofins: – 9.25% over revenue minus Costs 57
  • 58. 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 f lt d th t ti l l forecasts b t based on th expectations of th C d the t ti f the Company’s M ’ Management i t 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.