November 12, 2004November 12, 2004

Results of 3rd quarter 2004Results of 3rd quarter 2004

• Tariff Adjustment and Market

• Finance and Operational Performance

• Debt Profile

• Operating Performance

• Financial Performance

Conclusion

3

4

Tariff Adjustment

1,08%Xa

0,71%Xc

9,61%IGP-M (Jun/30/04)

2,37%Xe

Parcel B multiplying factor (IGPM – X)

X Factor

1,05182

4,43%

18,62%TOTAL ADJUSTMENT + CVA3,39%Total CVA 2003-2004

4,12%50% CVA Deferred 2002-2003

7,51%Total CVA11,11%Total Adjustment

1,70%Total Parcel B9,42%Total Parcel A3,15%National Supply4,70%RGR/CCC/CDE/Other1,57%Itaipu

A

%ParcelsTARIFF ADJUSTMENT 2004

5

858700

2.718

2.238 2.153

2.896

2.204 2.281

Residential Industrial Commercial Other

3Q03 3 Q04

7.966

8.081

3 Q03 3 Q04

6,5%

-1,5%6,0%

-18,4%

1,4%

Comparison of Consumption in GWh

Obs: the graphics do not consider own consumption

6

Comparison of Consumption in GWhFree Clients

2.544

858

2.887

2.1592.320

724

Industrial w/ Free Commercial w/ Free Others w/ Free

3 Q03 3 Q04

13,5%

-15,6%

7,5%

7.966

8.279

8.081

8.828

Total w/ out Free Total w/ Free

3 Q03 3 Q04

6,6%

Obs: the graphics do not consider own consumption

1,4%

7

Actual Situation

Migration of 41Consumers

38Consumers renewed

Contracts

Jan- Sep 2004

4,1%

4,3%

% marketBilled in 2003

Total of 65Free Clients 9,1%

Retention of PotentiallyFree 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)

1 consumer unit which had opted for free client status, decided to return to the captive market

8

2 Q04 3 Q04

Net Revenue 1.714,6

Operating Expense (1.474,9)

EBITDA * 306,6

Financial Revenue(Expense)**

(144,3)

Extraordinary ItemsNet of Tax Effects

(85,4) -0,5%

Net Profit (Loss) 8,1 (6,4)

2.050,3

(1.735,3)

382,2

(164,2)

(85,0)

Results – 3Q 2004 x 2Q 2004

19,6%

17,7%

24,7%

13,8%

-178,9%

10% Growth in Eletropaulo’s billed consumption due to the tariff adjustment (18,62%)Deferment of PIS/COFINS in the amount of R$117,7 million

19% increase on expenses with Electric Energy Purchased for Resale and Transmission Charges82% increase on sector charges

Increase in the Net Operating Revenue

R$ 111,8 million loss in the translation of accounting statements of controlled party, due to the Real appreciation of 8% in the quarter

Increase in the financial expense

(*) Without adjustments(**) Consolidated Result Values

In R$ Million

9

3 Q03 3 Q04

Net Revenue

Operating Expense

EBITDA *

Financial Revenue(Expense)**

Extraordinary ItemsNet of Tax Effects

Net Profit (Loss)

Results – 3Q 2004 x 3Q 2003

20% Growth in Eletropaulo’s billed consumption due to the tariff adjustment (18,62%)1.4% market growthDeferment of PIS/COFINS in the amount of R$117,7 million

18% increase on expenses with Electric Energy Purchased for Resale and Transmission Chargesthe start of amortization of 50% of deferred CVA for the tariff year 2002-2003 and 100% of CVA accumulated in the year 2003-2004increase of 245.1% in Other Operational Expenses

Increase in the Net Operating Revenue

R$ 111,8 million loss in the translation of accounting statements of controlled party, due to the Real appreciation of 8% in the quarter

Increase in the financial and operational expenses

(*) Without adjustments(**) Consolidated Result Values

In R$ Million

1,682.2

(1,358.9)

323.3

(117.1)

7.0 (6.4)

2,050.3

(1,668.1)

382.2

(164.2)

21.9%

22.8%

18.2%

40.2%

-191.2%

(86.0) (85.0) -1.2%

10

R$ 382,2 MM

R$ 23,9 MM

R$ 489 MM

2nd Quarter 2004

R$ 306,6 MM

R$ 74,1 MM RTE

R$ 23,6 MM

R$ 404 MM

R$ 82,9 MM RTE

Adjusted EBITDA

3rd Quarter 2004

EBITDA

Debt Confession IIa

ADJUSTED EBITDA

EBITDA

Debt Confession IIa

ADJUSTED EBITDA

21,0% Increase

11

Investment Trend

321 287361

289

180 217 193289

1998 1999 2000 2001 2002 2003 3Q04 2004E

R$ mn

2004 Investments - R$ million

103

34

Recovery of Losses 14

Personnel 89

Total 289

2004E

Others 49

Customer Service and System Expansion

Maintenance

12

53%68% 71%

22%

47%32% 29%

78%

0%

50%

100%

2001 2002 2003 3Q04

ST LT

ST vs. LT Indebtedness

R$ 5,277 R$ 5,504R$ 5,522 R$ 5,910Million

13

Hedging Strategy

0%

20%

40%

60%

80%

100%

2000 2001 2002 2003 3Q04

Local Currency Hedged Foreign Currency

41%

41%

18% 14%

61%

25%

42%

4%

54%

3%

35%

62%

2%

19%

79% Currently 100% of foreign

currency is hedged

91.9% of foreign currency

exposure is hedged and only

1,6% of total debt remains

unhedged as of Sep 2004

R$3,501 R$5,522 R$5,910 R$5,277 R$5,504

Million

14

Amortization ScheduleR$ million

95 93143 151

100

611

159 140 159 161 196 189 192 194 217 188 220 223 257 224 228 23234 36

75113

129 134139 145

151 157110 104

66

7469 42

83 42 61

45 61

143

44

149

14 31 14 877732

933

149

5

1Q04

2Q04

Dow

n Pa

ymen

t

3Q04

4Q04

Out

stan

ding

Dow

npay

men

t

Pre

Paym

ent**

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

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.

15

Ratings

Escala International

2000 2001 2002 2003 2004

Moeda Local Fitch

MoedaLocal S&P

Moeda Estrangeira Fitch

Moeda Estrangeira S&P

Escala Nacional

2000 2001 2002 2003 2004

Fitch

S&P

Investment Grade

Non-Investment Grade

Investment Grade

Non-Investment Grade

BBB-

BB

DDD

D

brAA

brA

brDDDbrD

brBB

B

brBB+brA-

B-

16

Corporate Governance

• Implementation of Internal Controls

Obtain the Certification of the internal controls with relation to the Sarbanes Oxley Law by the external audit

Settle procedures and drivers for a better performance of the Company

Facilitate and optimize the employees performances at the Company

Avoid Company’s fraud creating a higher transparency of the information

• By the time the Company adheres to Bovespa Level II, it will be certified with a Corporative Governance Seal which will promote

A higher commitment of the Company with their stockholders (minority and controllers)

Higher transparency on the information given to the Capital Markets

Free Float maintenance of 25% of the total shares

Creation of a Fiscal Council

Higher rights to the preferred share holders

Sarbanes Oxley Law (SOX) BOVESPA Level II

17

18

Contracts PortfolioContracts Portfolio

0%

25%

50%

75%

100%

2003 2004 2005 2006

Piratininga

Nacional

Bragantina

Bandeirante

Elektro

CPFL

Eletropaulo - CI

Eletropaulo - CB

19

• The tariffs of initial Contracts are adjusted annually in accordance with the calculation formula provided for in the Concession Contract:

• 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%

AugustInitial Contracts with Elektro = 7,95%

• Subsequent Events In October

The Initial Contracts with Bandeirantes and Piratininga were adjusted in 8,36%

Tariff Adjustment Index = VPA + VPB x IGP-MRevenue

Tariff AdjustmentTariff Adjustment

20

Energy Balance Energy Balance –– 9 months9 months

TOTAL

9.075.083

MRE

=

Gross Generation x Billed Energyin MWh

AES Tietê generated more than 8,6% of its assured energy

Caconde234.265*Euclides416.469

Limoeiro121.127

Ibitinga544.989

Bariri495.846

Barra Bonita451.046

Água Vermelha4.860.635

Promissão846.028

Nova Avanhandava1.081.207

Mogi Guaçu23.471

Bandeirante290.732

Nacional103.167

Bragantina169.407

Elektro686.732

Eletropaulo - CI1.458.765

Piratininga427.063

CPFL555.199

Eletropaulo - Bilateral4.137.149

BILLED

8.232.656

*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

21

Stored EnergyStored Energy

Source: National System Operator – ONS: October/04

Southeast Reservoirs

10

30

50

70

90

Jan

Feb

Mar

Apr

May Jun

Jul

Aug Sep

Oct

Nov

Dec

GW

- m

onth

2000 2001 2002 2003 2004

22

Statement of Earnings Statement of Earnings –– 33rdrd QuarterQuarter

Net Revenue 15,9%

Operating Expense -5,6%

Ebitda 22,6%

Financial Revenue(Expense)

110,1%

Result before Taxation

Net profit

Increase in IGP-M, occurred mainly in July and August on the debt with Eletrobrás

In addition to the revenue increase, EBIDTA reflects the reduction in operating expenses

Adjustments of MAE’s accounts that occurred in the 3rd quarter of 2003

213,7 247,6

(66,3) (62,6)

163,9 200,9

(37,4) (78,6)

109,8 105,7

Tariff adjustment of three contracts: one bilateral and two initial contracts

3Q03In R$ million 9 months 03

561,4

(166,5)

442,7

(200,9)

193,6

127,5 -3,3%The improvement of operating revenue

was compensated for the increase in financial expenses

72,01 69,7

9 months 04

3Q04

740,9

(200,7)

587,8

(221,1)

318,2

209,9

Conclusion

• Eletropaulo ended the 3rd quarter with increases of 20% in its net revenue and 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

• Eletropaulo has been successful in its program for retention of potentially free customers, reducing its potential loss

• The company has constantly sought operational and commercial excellence, in order to offer increasing quality in the service provided to customers

• Tietê ended the 3rd quarter of 2004 with a profit of 69 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 previous quarters

• 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 shareholders

24November 12, 2004November 12, 2004

Results of 3rd quarter 2004Results of 3rd quarter 2004