Itaú bba 8th annual lat am ceo conference in ny

77
Institutional May, 2013 1

Transcript of Itaú bba 8th annual lat am ceo conference in ny

Page 1: Itaú bba   8th annual lat am ceo conference in ny

InstitutionalMay, 2013

1

Page 2: Itaú bba   8th annual lat am ceo conference in ny

AES Brasil Group

I B il i 1997 In Brazil since 1997 Operational Figures:

- Customers units: 7.7 million

P l ti d 20 2 illi- Population served: 20.2 million

- Distributed Energy: 54.4 TWh

- Generation Capacity: 3.298 MW

Generated Energy : 14 270 GWh- Generated Energy : 14.270 GWh

7.6 thousand AES Brasil People Investments 1998-2012: R$ 9.4 billion Solid corporate governance and Solid corporate governance and

sustainability practices Safety our #1 Value

Service Provider

DiscoGenco

2

Page 3: Itaú bba   8th annual lat am ceo conference in ny

AES Brasil widely recognized in 2009-2013

Quality and SafetyManagement Excellence Sustainability

(AES Ti tê)

(AES Tietê)

( S )(AES Sul)

(AES Brasil)

(AES Tietê)

(AES El t l )

(AES Tietê)

(AES Eletropaulo)

(AES Eletropaulo) (AES Tietê)

(AES Tietê)

(AES Eletropaulo)

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

(AES Tietê)(AES Eletropaulo)

(2009 - AES Eletropaulo) (AES Eletropaulo)(2011- AES Tietê; 2012 – AES Eletropaulo)(AES Tietê)

(AES Eletropaulo/ Tietê)

3

Page 4: Itaú bba   8th annual lat am ceo conference in ny

Mission & visions

Mission

Improving lives and promoting development by providing safeImproving lives and promoting development by providing safe, reliable and sustainable energy solutions

Visions

Be a leader in operational and financial management in the Brazilian energy generation sector and expand installed capacity

Be the best distributors in BrazilBe the best distributors in Brazil

4

Page 5: Itaú bba   8th annual lat am ceo conference in ny

Sustainability - Corporate Social Responsibility: annual investments of R$ 148 million

“Casa de Cultura e Cidadania” Project - Offers courses and activities in culture and sports. Directly benefits appro imatel 5 6 tho sand children and teenagers and indirectl 292 tho sand people in 7 nits located ithin

Development and transformation of communities

approximately 5.6 thousand children and teenagers and indirectly 292 thousand people in 7 units located within 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

“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

Education on safety and efficiency in energy consumption

thousand teachers and 404 thousand students from 900 public schools. The actions include recreational activities offered in adapted trucks.

Converting consumers to clientsDeveloped for grid connection regularization. Between 2004 and 2012, more than 500

thousand families in low income communities were benefited from better energy supply conditions and social inclusion.

5

Page 6: Itaú bba   8th annual lat am ceo conference in ny

Shareholding structure

AES Corp BNDES

C 50.00% - 1 shareP 100%T 53.85%

C 50.00% + 1 shareP 0.00%T 46.15%

Cia. Brasiliana de Energia

C 99.99%T 99.99%

C 76.45%P 7.38%T 34.87%

C 71.35%P 32.34%T 52.55%

C 99.99%T 99.99%T 99.70%

AESServiços TC

AESUruguaiana

AESEletropaulo

AESTietêAES Sul

C = Common SharesP = Preferred Shares

T = Total6

Page 7: Itaú bba   8th annual lat am ceo conference in ny

AES Tietê and AES Eletropaulo are listed i BM&FBin BM&FBovespa

Others²Free Float¹ ¹ Market Cap³

US$ 0.6 bi8.5%56.2%19.2%16.1%

US$ 3 9 bi24 2% 28 3% 39 5% 8 0% US$ 3.9 bi24.2% 28.3% 39.5% 8.0%

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, respectively3 - Base: 05/08/2013. Considers preferred shares for AES Eletropaulo and preferred and common shares for AES Tietê 7

Page 8: Itaú bba   8th annual lat am ceo conference in ny

AES Brasil among the top five in the electric sector

Ebitda 2012 (R$ billion)Ebitda – 2012 (R$ billion)

3.9 3.63.1

2 6 2 52.6 2.52.1

1.6 1.5 1.30.8 0.7 0.6

-0.3

Net income – 2012 (R$ billion)

CPFL Cemig Tractebel AES Brasil Neoenergia Cesp Copel Light EDP Duke Coelce Equatorial Celesc

( )

3.8

1.6 1.5 1.3 1.1 0.7 0.4 0.4 0.3 0.3 0.1 0.1 -0.3

Source: Companies’ financial reports 8

Cemig CPFL Tractebel Neoenergia AES Brasil Copel Light Coelce EDP Duke Cesp Equatorial Celesc

Page 9: Itaú bba   8th annual lat am ceo conference in ny

AES Tietê is the 3rd largest privategenerator in Brazil

Main privately held Companies

generator in BrazilGeneration installed capacity (MW) - 20121

ENDESA Eletronuclear

AES Tietê: 3rd largest among private

AES Tietê2,2%

CPFL2,4% Light

0,8%

S0,8%

DUKE1,7%

Eletronuclear2,8%

CGTEE0,7%

Eletrosul0,5% EDP

1,5%

Neoenergia1,2%

generation companies

Approximately 78% of country’s generationCopel

Petrobrás5%

Tractebel 6%

Demais28,9%

installed capacity is state-owned2

18 GW of hydro capacity under construction:

S t A t i d Ji (M d i Ri ) 7 GWCHESFItaipu

6%

Cemig6%

4%

– Santo Antonio and Jirau (Madeira River): 7 GW

– Belo Monte (Xingu River): 11 GW

CHESF9%

Furnas8%

Eletronorte7%

CESP6%

6%

Sources: ANEEL – Generation Data Source “BIG” (March, 2012) and Companies websites 2- Source: Banks’ reports

Total Installed Capacity: 123 GW

9

Page 10: Itaú bba   8th annual lat am ceo conference in ny

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

C D /2011p y

Consumers – Dec/201113%

12%30%

63 distribution companies in Brazildistributing 430 TWh in 2011

AES Brasil is one of the largest electricity

AAES Brasil

CPFL Energia

12%

12%5% AES Brasil is one of the largest electricity

distribution group in Brazil:Cemig

Neo EnergiaConsumption (GWh) - 201116%7%

7%

5%

Energy distributed

% of the Brazilian

Copel

Light

13%

12%

distributed (TWh)

Brazilian market

AES Eletropaulo 45 10.5

AES Sul 8.6 2.0

AES Eletropaulo is the largest distributioncompany in Brazil in terms of energy

EDP

Outros

11%

52%

distributed

Source: Brazilian Association of Electricity Distributors (ABRADEE), 2011 and EPE (Energetic Research Company)

7%

6%6%6%

10

Page 11: Itaú bba   8th annual lat am ceo conference in ny
Page 12: Itaú bba   8th annual lat am ceo conference in ny

AES Tietê overview

12 hydroelectric plants in São Paulo

Generation facilities

12 hydroelectric plants in São Paulo

30-year concession expiring in 2029

Installed capacity of 2,658 MW, with physical guarantee1

of 1,278 MW average

Physical guarantee contracted with AES Eletropaulo

(11GWh) through Dec 2015(~R$183/MWh/~US$91/MWh(11GWh) through Dec,2015(~R$183/MWh/~US$91/MWh,

annually adjusted by inflation)

369 employees as of March, 2013

Company listed at BM&Fbovespa

Rating: National International

Moody's Aa1 Baa3

1 - Amount of energy allowed to be long term contracted 12

Page 13: Itaú bba   8th annual lat am ceo conference in ny

Generated energy shows high operational availability p y

Generated energy (MW avarage1) 1Q13 Generated energy by power plant (MW average1)

Agua Vermelha

N A h d5% 3%

125% 124% 127%130%

102% Nova Avanhandava

Promissão

Ibitinga44%

5%

8%

6%102%

Bariri

Barra Bonita

Euclides da Cunha17%

12%1,599 1,582 1,629 1,753

1,480

2010 2011 2012 1Q12 1Q13

Generation - Mwavg Generation/Physical guaranteeOther Power Plants *

17%

I D b 2012 AES Ti tê th fi t L ti A i t i th PASS 55 tifi ti f th

1 – Generated energy divided by the amount of hours * Caconde, Limoeiro, Mogi and SHPPs 13

In December 2012, AES Tietê was the first Latin American company to receive the PASS-55 certification of the British Standards Institute, for its reliability and sustainability of assets

Page 14: Itaú bba   8th annual lat am ceo conference in ny

Hydrological conditions improving and rationing is unlikely

Brazilian reservoir levels1 (%) AES Tietê reservoirs levels (%)

g y

80

90

100 93%

80%

97%91%90%

80%

100% 100%

3846

5562

30

40

50

60

70

Max (%

)

0

10

20

30

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Caconde A. Vermelha B. Bonita Promissão2001 2012 2013Historical Data Since 2001 Apr-12 Apr-13

Thermal capacity available for dispatch: 14 GW vs. 4 GW in 2001

AES Ti tê Q1 13 i t f R$ 115 illi d t h d l i l i k h i

14

AES Tietê Q1 13 impact of R$ 115 million due to hydrological risk sharing

- 2013 estimated impact ranges from R$ 231 million to R$ 441 million

1 – Average reservoir levels of the National System (percent of maximum storage capacity)

Page 15: Itaú bba   8th annual lat am ceo conference in ny

System physical guarantee reduction resulted in spot market exposure since September/2012

Allocation of physical guarantee for AES Tietê (MWm) Monthly evolution of the spot price (R$/MWh)

spot market exposure since September/2012

375

16189 77 76 72 280 

376 

414 

340 320 

72

-21 -42

-108

-32-85

-31

125 

193  181 

118 119

183 

260 

215 

108

-30829

4826 12 17 32 23 20 21

37 46

4423 51 

118 91 

119 

jan feb mar apr may jun jul aug sep oct nov dec

2011 2012 2013Secondary energy Physical guarantee reduction

15

Page 16: Itaú bba   8th annual lat am ceo conference in ny

89% of net revenues and 73% of billed energy came from the bilateral contract with AES

Eletropaulo in 1Q13Net revenues (%)Billed energy (GWh)

615 8%

2% 1%

14,72916,728

15,122

1,980 1,942 3,834 1,340 1,519

1,141 301 554 615 %,

-14%AES Eletropaulo

Bilateral contracts

11,108 11,108 11,138 1 256 600

571 42163

482 89%

4,869 4,182Spot Market

ERM¹

2,879 3,058 1,256 600 42

2010 2011 2012 1Q12 1Q13

AES Eletropaulo ERM Spot Market Bilateral Contracts1

1 – Energy Reallocation Mechanism 16

AES Eletropaulo ERM Spot Market Bilateral Contracts

Page 17: Itaú bba   8th annual lat am ceo conference in ny

Investments in power plantsmodernization

Investments (R$ million)

213

2013 major investments in Nova

19

4

175 1392013 major investments in Nova

Avanhandava, Ibitinga and Agua Vermelha

power plants, that represent 71% of AES

Tietê capacity

156135

213

21

Tietê capacity

13%

17 273

2011 2012 2013 (e) 1Q12 1Q13

Investments New SHPPs¹Investments New SHPPs

1- Small Hydro Power Plants 17

Page 18: Itaú bba   8th annual lat am ceo conference in ny

Growth projects

“Thermal São Paulo” Project (550 MW)

N t l bi d l th l l t Natural gas combined cycle thermal plant

Previous license granted in Oct, 2011 valid for 5 years

Pending gas supply

Next steps: Obtain installation license

“Thermal Araraquara” Project (579 MW)

Natural gas combined cycle thermal plant

Purchase option acquired in March, 2012

Pending gas supply

Next steps: Obtain installation license Next steps: Obtain installation license

18

Page 19: Itaú bba   8th annual lat am ceo conference in ny

Contracting strategy: driven to free market

Clients portfolio evolution in 1Q13

265%Assured Energy (1,278 MW avg)

307New client portfolio

Consolidated portfolio

84

2012 2016 2020

p

1Q12 1Q13MWavg

Strategy post-2015: contract energy in the free market with large unregulated customers

- Currently serving 45 customers (307 MW) with 3-5 year contracts- Current prices for delivery in 2016: $52-$57/MWh1 (annually adjusted for inflation) – driven by supply/demand- 143 MWavg sold from 2016 onwards

191 - AES analysis

Page 20: Itaú bba   8th annual lat am ceo conference in ny

Financial highlights

Ebitda (R$ million)Net revenue (R$ million)

2 112

1,311 1,466 1,542

423 334

-21%1,754 1,8862,112

540 598

11%

75% 75% 81% 78% 56%

423 334

2010 2011 2012 1Q12 1Q13

540 598

2010 2011 2012 1Q12 1Q13

Ebitda Margin20

Net Revenue

Ebitda

Page 21: Itaú bba   8th annual lat am ceo conference in ny

Steady earnings distribution on a quarterly basisquarterly basis

Net income and dividend pay-out (R$ million)

117% 109% 108%

25% of minimum pay-out

11% 11% 10%

25% of minimum pay outaccording to bylaws

Average payout since 2006: 105%

Average dividends since 2006:gR$ 741 million per year

742 706737845 901

-24%

246 186

2010 2011 2012 1Q12 1Q13Q Q

Net Income Yield PN Payout

21

Page 22: Itaú bba   8th annual lat am ceo conference in ny

Debt profile

Net debt (R$ billion) Amortization schedule – 1st Debenture Issuance (R$ million)

0.7 0 6 0 6 0 6

1.0

0.3 0.4 0.5

0.6 0.6

0.30.5

0.6

300 300 3000.76

2013 2014 2015

D bt ti ti fl

0.4 0.40.5 0.5

Covenants Average Cost Gross Debt/Adjusted Ebitda <= 2.5

1Q12 1Q13 Average Cost (%CDI)¹ 115% 121%

Average Term (Years) 2 0 0 8

Debt amortization flow2010 2011 2012 1Q12 1Q13Net Debt Net Debt/Adjusted Ebitda Gross Debt/ Adjusted Ebitda

1 – Brazilian Interbank Interest Rate

Covenants Average Cost Net Debt/Adjusted Ebitda <= 3.5

Average Term (Years) 2,0 0,8

Interest Rate 11.3% 9.8%

22

Page 23: Itaú bba   8th annual lat am ceo conference in ny

Capital markets

Daily avg volume (R$ thousand)AES Tietê X Ibovespa

703 546 739

1,387

350

400 2005 ‐ May 2013¹

5,269

8,52913,922

20,246

12 584

21,113

250

300

350

182.1%

9,683 9,315

15,84411,717

4,239 3,269

12,584

150

200

66.8%54.3%

69.6%

Shares negotiated (thousand)

,

2010 2011 2012 YTD Mar/12

Preferred Common

50

100

Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

Market Cap: US$ 3.9 billion / R$ 7.8 billion

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

3

Ibovespa AES Tietê PN AES Tietê TSR² AES TIetê ON

2 – Total Shareholders’ Return

ADRs negotiated in US OTC Market: AESAY (common shares) and AESYY (preferredshares)

3 – Index: 05/08/2013 231 – Information until 05/08/2013. Index: 12/29/2005 = 100

Page 24: Itaú bba   8th annual lat am ceo conference in ny
Page 25: Itaú bba   8th annual lat am ceo conference in ny

AES Eletropaulo overview

Largest distribution company in Brazil in terms of energy

Concession area

distribution

Serving 24 municipalities in the São Paulo Metropolitan area

Concession contract expire in 2028p

Concession area with the highest GDP in Brazil (16,8% of

Brazilian GDP¹)

46 thousand kilometers of lines and 6 5 million consumption 46 thousand kilometers of lines and 6.5 million consumption

units in a concession area of 4,526 km2

46 TWh distributed in 2012

6,168 employees as of March, 2013

Company listed at BM&FBovespa

Investment grade: Fitch S&P Moody’s

National AA AA- Aa1

International BBB- BB Baa3251 – Source: IBGE, 2010.

Page 26: Itaú bba   8th annual lat am ceo conference in ny

Consumption evolution

159

Total market1 (GWh) Consumption by class1 – 1Q13 (%)

38

23

15

43,345 45,102 45,567

19

31

38 7,911 8,284 7,987

28 37

19 2% 68%

46%35,434 36,817 37,570

1,906 2,092 11,156 11,401

Brasil AES Eletropaulo

Residential Commercial Industrial Others

9,250 9,309

2010 2011 2012 1Q12 1Q13

Captive Market Free Clients Residential Commercial Industrial Others

1 – Net of own consumption 26

State of São Paulo GDP growth 3.3% (5-year average)- Expectation for 2013 3.0%, grows to 3.5% in 2014-2015

Captive Market Free Clients

Page 27: Itaú bba   8th annual lat am ceo conference in ny

Industrial class

Industrial class X Industrial production in São Paulo state

Consumption of industrial class by activity1 –AES Eletropaulo

15%

5%

0%

5%

10%

Vehicles, Chemical, Rubber,

Plastics and Metal

Other industries

-15%

-10%

-5%

ul-0

7

ov-0

7

ar-0

8

ul-0

8

ov-0

8

ar-0

9

ul-0

9

ov-0

9

ar-1

0

ul-1

0

ov-1

0

ar-1

1

ul-1

1

ov-1

1

ar-1

2

ul-1

2

ov-1

2

ar-1

3

Economic  recoveryEconomic crisis

Metal Products

49%

industries51%

Economic crisis

Ju No Ma Ju No Ma Ju No Ma Ju No Ma Ju No Ma Ju No Ma

Industrial production SP (% 12 months) Industrial (% 12 months)

1 – As of March, 2013. 27

Page 28: Itaú bba   8th annual lat am ceo conference in ny

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

1

4,300 

4,800 

2,000 2,100 2,200 

l ‐GW

h

Q ‐2*)

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

2 800

3,300 

3,800 

1 4001,500 1,600 1,700 1,800 1,900 

Resid

entia

Income R$

 ‐SP

 (Q

Residential consumption reflects GDP per capita growth

C ti (i kWh)

2,300 

2,800 

1,200 1,300 1,400 

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

2007 2008 2009 2010 2011 2012 2013

Avg Re

al I p p g

Average growth of the residential class (aggregate) in the last 5 years: 4.8%

258

- 8.5%

Consumption per consumer (in kWh)

Rationing

Consumption per residential consumer: average growth of 1.5% in the last 5 years

220

192199

203 207 213

219 223

228 229 234 236

Rationing

192

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1 - Two quarters of delay in relation to consumption 28

Page 29: Itaú bba   8th annual lat am ceo conference in ny

Investments focused on grid automation, operational reliability and p y

system expansionInvestments breakdown (R$ million)

22

35 739

831

647

2013 investments plan:

substation repowering, adding 133 MVA 26

647 p g, g

capacity to the system

29.7 km of new transmission lines

maintenance in over 5,200 km of

-21%717

796

621

7

184 145

,

distribution grid

regularization of 75,000 illegal

connections and replacement of 125,000

177 134

7 11

145

2011 2012 2013(e) 1Q12 1Q13

connections and replacement of 125,000

obsolete meters.

29

Own Resources Funded by the clients

Page 30: Itaú bba   8th annual lat am ceo conference in ny

SAIDI below regulatory reference and in its lowest level since 2006and in its lowest level since 2006

SAIDI¹ (last 12 months) SAIDI1 (YTD)

9.32 8.68

8.67

8.67

8.49

10.60 10.36 8.35

9.57 8.32

8 6-9%

2010 2011 2012 1Q12 1Q13

3.36 3.06

Jan-Apr 12 Jan-Apr 13

SAIDI (hours) SAIDI Aneel ReferenceABRADEE ranking position among the 28 utilities with more than 500 thousand customers

7th 6th 4th

p p

1 - System Average Interruption Duration IndexSources: ANEEL and AES Eletropaulo

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

30

Page 31: Itaú bba   8th annual lat am ceo conference in ny

SAIFI below regulatory reference

SAIFI¹ (last 12 months) SAIFI1 (YTD)

7.39 6.93 6.87 6.87 6.64

5.46 5.45 4.65 5.09 4.60

-5%

1.76 1.68

Jan-Apr 12 Jan-Apr 132010 2011 2012 1Q12 1Q13 p p3rd

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

4th

SAIFI Aneel ReferenceSAIFI (times)

3rd

1 - System Average Interruption Duration IndexSources: Aneel and AES Eletropaulo

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

31

Page 32: Itaú bba   8th annual lat am ceo conference in ny

Losses level within regulatory threshold

Regulatory Reference² - Total Losses (last 12 months)Losses (last 12 months)

10.9 10.5 10.4 10.4 10.1

6.5 6.5 6.1 6.4 6.1

10.6 10.3 9 8 9 4

4.4 4.0 4.1 4.0 4.0

9.8 9.4

2010 2011 2012 1Q12 1Q13

Non Technical Losses Technical Losses ¹

2011/2012 2012/2013 2013/2014 2014/2015

1 – In January 2012, the Company improved the assessment of the technical losses. 2 – Values estimated by the Company to make them comparable to the reference for non-technical losses determined by the Aneel 32

Page 33: Itaú bba   8th annual lat am ceo conference in ny

Financial highlights

Ebitda (R$ million)Net revenues (R$ million)

339

442 2,413

2,848

5,017 5 405 5 354

739 831 14,714 15,240 15,314

426 933

339 5,017 5,405 5,354

-14%

1,648 1,473

476

179

206

636

298 128

9,697 9,097 9,128

1,362 993 186 145

3,835 3,283

-14%-57%

476 92 122 206 6 128

2010 2011 2012 1Q12 1Q13

Adjusted Ebitda

2,286 2,146

2010 2011 2012 1Q12 1Q13

Net revenue ex-construction revenueNon-recurring¹Regulatory assets and liabilities

Deduction to Gross RevenueConstruction revenues

1 – Non recurring 2011 : Includes sale of AES Eletropaulo Telecom with a R$ 707 million impact on Ebitda. 33

Page 34: Itaú bba   8th annual lat am ceo conference in ny

Average payout of 74% p.a. since 2006 Net income and dividend payout1 (R$ million)114.4%

54.4%25.0%

25% of minimum pay-outdi b l

1,572

28.6% 17.1%2.8%

according to bylaws

Average payout since 2006:74% per year

Average dividends since 2006:621

358

365 1,348

Average dividends since 2006:R$ 890 million per year

640 586

350 621

108 97

Yi ld PNAdj t d N t I

(121) (121) (30)

229 218 29

(1)2010 2011 2012 1Q12 1Q13

1 – Gross amount2– Non recurring 2011 :Includes sale of AES Eletropaulo Telecom with a R$ 467 million impact on net income

34

Yield PNPay-out

Adjusted Net Income Non-recurring²Regulatory assets and liabilities

Page 35: Itaú bba   8th annual lat am ceo conference in ny

Cost management excellence

PMSO¹ per customer (R$ million)Efficiency programs and results

Started in 2007 and evolved from cost cutting to

business process transformation

- Strategic sourcing178

207

Strategic sourcing

- Shared services

- Process redesign

- IT tools implementation

2010-2012 cumulative P&L savings of R$ 331 million

Reducing manageable costs estimated at R$ 100

million from 2013 onwards

AES Eletropaulo among the lowest cost operators in

the countryAES Eletropaulo Comparable peers²

351 - Personnel, Material, Third Party Services and Other Costs and Expenses 2 - Eletropaulo peers: CPFL Paulista, Light, Cemig. EDP Bandeirante. Sul Peers: Elektro, RGE, CPFL Piratininga. Eletropaulo metric excludes SIRP (one timer R$29)

y

Page 36: Itaú bba   8th annual lat am ceo conference in ny

Debt refinancing conclusion of R$ 1 billion with more flexible covenants

Decrease in debt amortization volume for 2013-15 by R$ 750 million

Increase in the a erage debt mat rit from 6 6 ears to 7 2 earsBenefits Increase in the average debt maturity from 6.6 years to 7.2 years

Debt average costs decrease from CDI+1.29% to CDI+1.27%

More flexible covenantsMore flexible covenants

Debt amortization schedule

B f i After restructuring (as of October, 2012)

R$ 1,063 million R$ 319 million

Before restructuring (as of September, 2012)

302

533

228 337

226

436 321

400

180

589 478

688

323 221 180

2013 2014 2015 2016 2017 2018 2019 2020 - 2028

53 85 180 180

2013 2014 2015 2016 2017 2018 2019 2020 2021 - 2028

3636Market debt in R$ (ex-pension plan debt ) Market debt in R$ (ex-pension plan debt )

Page 37: Itaú bba   8th annual lat am ceo conference in ny

Covenants change

FROM

N t d bt / Adj t d Ebitd 3 5

TO

Gross debt / Adjusted Ebitda < 3.5Net debt / Adjusted Ebitda < 3.5

(equivalent to 4.5x Gross Debt / Adjusted Ebitda)Financial Index

If the limit is exceeded in any quarter If the limit is exceeded for two consecutive quarters

Default

Not considered in the calculationConsidered in the calculation

(same as before IFRS adoption)Regulatory assets and liabilities

Total debt recognized in liabilitiesDebt recognized in liabilities excluding the

“corridor” conceptPension plan debt

Considered in the calculation of debt Out of debt calculationCompulsory loans

37

Page 38: Itaú bba   8th annual lat am ceo conference in ny

Covenants limits amended due to tariff reset delay and higher energy costs

Amendment of covenants limits completed in March/2013:Net Debt / Adjusted Ebitda:

5 5x in 1Q13;

Accounting impacts due to

tariff reset

Covenants consider Ebitda adjusted by regulatory assets/liabilities

- 5.5x in 1Q13;

- 3.75x in 2Q13;

- 3.5x from 3Q13 onwards

tariff reset postponement Jun/12: tariff reset regulatory liability

final release (R$ 287 million)

Covenants breach is not expected to repeat since:

- no impact on LTM Ebitda after May/13 related to regulatory liabilityHigher

t d bt Higher cost of energy since Sep/12

l d h iti related to regulatory liability (Jul11/Jun2012);

- higher cost of energy funded by CDE or reflected in tariff adjustment

net debt lowered cash position

38

Page 39: Itaú bba   8th annual lat am ceo conference in ny

Debt profileNet debt Average cost

6.4 6.7 4.4x

0.9x 0.8x

4.9x

112.2% 109.8%2.4 2 3

3.12 4

3.0

1.1x

1Q12 1Q13

2.4 2.3 2.4

2010 2011 2012 1Q12 1Q13

Net Debt/Adjusted Ebitda <= 3.5x - Q1 13: limit amended to 5.5x

12.0% 11.7%Interest Rate

Average Time - years

% of CDIC

Net Debt (R$ billion) Net Debt/Ebitda Adjusted¹

- Q2 13: limit amended to 3.75x

Adjusted Ebitda/Financial Expenses >= 1.75x

1 – According the new covenants 2 – Brazilian Interbank Interest Rate 3 – Inflation Index 39

Covenants

Page 40: Itaú bba   8th annual lat am ceo conference in ny

Debt profileDebt amortization schedule (financial liabilities as of March, 2013)

2,624

677

1611,766

5663788 690

913

50 87 182590 480

690325 221 180

125 133

142 151161

171182

7339 53

5660

6771

123250

368

690562 473

2013 2014 2015 2016 2017 2018 2019 2020 2021 - 2028

Local Currency FCesp (without Corridor) FCesp (Corridor)

40

Due to the ICVM 695, the corridor (accumulated gains and losses) became fully recognized in the

Company balance sheet from January, 2013 on

Page 41: Itaú bba   8th annual lat am ceo conference in ny

AES Eletropaulo: challenges

“Criando Filling ofBeginning of

out-of-the-meritPension plan accounting

Starting to receive monthly

Valor” (Creating

Value) project launch

Filling of administrative

appeals at Aneel

thermals dispatch,

affecting discos cash flows

accounting changes

imposed by CVM

Resolution 695

Covenants limits

amendment

yCDE1 funding

to cover higher energy

costs

2013 TariffAdjustment

2010 Dec/12Sep/12 Mar/13Jan/13 Apr/13Jul/12 Jul/13

3rd Tariff Reset Cycle Debt

Sale of real estate property

Extraordinary Tariff Adjustment due to

Expected events: Decision by Aneel regardingReset Cycle

and 2012 Tariff

Adjustment

Debt restructuring(R$ 1 billion)

estate property “Cambuci” (R$

160 million), subject to

Aneel’s approval

Adjustment due to Energy Cost Reduction

Program, with 20% average tariff

d ti

by Aneel regarding administrative appeals and regulatory liabilities start to be returned through tariffs, due to the postponement of the 3rd Tariff Reset Cycle

41

reduction the 3rd Tariff Reset Cycle

1 – CDE: Energy Development Account

Page 42: Itaú bba   8th annual lat am ceo conference in ny

Capital marketsDaily avg volume (R$ thousand)AES Eletropaulo X Ibovespa

14,82423,606

19,589

28,254

360

2005 ‐ May 2013¹

14,824

210

260

310

360

24,496 26,897 23,057 22,895

110

160

210 66.8%66.7%

2010 2011 2012 YTD Mar 13

Preferred n Shares negotiated (thousand)10

60

Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

-69.1%

• Market cap³: US$ 0.6 billion/R$ 1.3 billion• BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares)

Ibovespa AES Eletropaulo PN AES Eletropaulo TSR²

1 – Information until 05/08/2013. Index: 12/29/2005 = 1002 – Total Shareholders’ Return 3 – Index: 05/08/2013 42

• ADRs at US OTC Market: EPUMY (preferred shares)

Page 43: Itaú bba   8th annual lat am ceo conference in ny

AttachmentAES Sul and AES Uruguaiana Overview

Page 44: Itaú bba   8th annual lat am ceo conference in ny

AES Sul overviewOverview and Business Drivers

Overview

Serving 118 Municipalities in the State of Rio Grande do Sul

Concession area: 99,512 km2

1.2 million consumption units

1 308 directed employees 1,308 directed employees

Concession valid until November, 2027

Business drivers

Regional GDP growth 2.5% (5-year average)

- Expectation for 2013 3.6%, grows to 4.3% in 2014-2015

2013 tariff reset concluded in April – in-line with our

expectations

Quality of services: SADI/SAIFI ~30% better than 2009 levels

Consolidation of efficiency programs, leading to operating

costs below regulatory levels (~2%)

Dividend payout of 63% in 2012 2011 clearing of regulatory

restrictions allowed distribution of dividends) 44

Page 45: Itaú bba   8th annual lat am ceo conference in ny

AES Sul financial highlights

Net revenues (R$ million) Ebitda (R$ million) Net income (R$ million)Net revenues (R$ million) Ebitda (R$ million) Net income (R$ million)

2 3411,866 2,027

2,341

586 543

-7%

281

490373

137 49

199 246 255

60 61

-64% 2%

2010 2011 2012 1Q12 1Q13 2010 2011 2012 1Q12 1Q13 2010 2011 2012 1Q12 1Q13

45

Page 46: Itaú bba   8th annual lat am ceo conference in ny

AES Uruguaiana overview

Overview and Business Drivers

Overview

Independent natural gas-fired thermal power generation Company with

commercial operations achieved in 2000

Authorization expiration in 2027

Installed capacity of 640 MW

Located in the State of Rio Grande do Sul – city of Uruguaiana

Suspended operations in 2008 due to lack of gas supply from YPF in Argentina

(pending arbitration)

Business Drivers

Emergency operation from February 2013 to March 2013 to support reservoir

recovery

Working to return the plant to long-term service

Leveraging on AES Brazil-Argentina relationship

46

Page 47: Itaú bba   8th annual lat am ceo conference in ny

AttachmentAttachmentEnergy Sector in Brazil

Page 48: Itaú bba   8th annual lat am ceo conference in ny

Energy sector in Brazil: business segments

GenerationTransmissionDistributionFree Clients

13 groups controlling 76% of68 companies 64 companiesCons mption of 14 770 MWa g 13 groups controlling 76% of total installed capacity

22% private sector

2,809 power plants

68 companies

68% private sector

High voltage transmission (>230 kV)

64 companies

448 TWh of energy distributed in 2012

72 million consumers

Consumption of 14.770 MWavg

(26% of Brazilian total market)

Conventional sources: above 3,000 kW

121 GW of installed capacity³

66% hydroelectric

27% thermoelectric

103,362 km in extension lines (SIN¹)

Regulated public service with free access

67% private sector

Annual tariff adjustment

Tariff reset every four or five

Alternative sources: between 500 kW and 3,000 kW

Large consumers can purchase energy directly from generators

3% SHPP²

2% wind

2% nuclear and others

free access

Regulated tariff (annually adjusted by inflation)

years

Regulated public service

Regulated contracting environment

energy directly from generators

Free contracting environment

1 - Interconnected National System, as of 2011

2 - Small Hydro Power Plants

3 - Aneel Fiscalization Report Sources: EPE, Aneel, ONS and Banks’ reports

Contracting environment – free and regulated markets

48

Page 49: Itaú bba   8th annual lat am ceo conference in ny

Energy sector in Brazil:contracting environmentg

Generators Independent Power Producers Generators and Independent

Regulated market Free market

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

Generators and Independent Power Producers (IPPs)

Auctions: New Energy and Existing Energy Bilateral contracts (PPAs1)

Free clientsDistribution companies

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 PPA– New Energy (A-3): Delivery in 3 years, 15-30 years regulated PPA

– Existing Energy (A-1): Delivery in 1 year, 5-15 years regulated PPA

– Extraordinary (A-0): Delivery at the same year, 1-yearr regulated PPA1 – Power Purchase Agreement

49

Page 50: Itaú bba   8th annual lat am ceo conference in ny

Electric sector in Brazil: generation market overview

Installed capacity (GW) Growth by source - new auctions (GW)

Total: 25 GW

2

33 37 40 41 41 411 2 4 6 11 17 25121 130 138 144 151 157 163 168 174

182 Thermal5 GW

116 116 116 116 116 116 116 116 116 116

5 14 22 27 33 37 40 41 41 411Hydro10 GW

Wind10 GW

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Current installed capacity Auctioned Upcoming Auctions

~ 3% annual GDP growth over the last 5 years

~ 4% annual demand growth through 2021, implying 60 GW of additional capacity needed (~6 GW/year) – 35 GW

already auctioned

Gas-fired thermal to leverage on the dispatchability benefit and on the hydrology risk

Sources: EPE (Energetic Research Company): Ten-year Energy Plan 2021; AES analysis 50

Page 51: Itaú bba   8th annual lat am ceo conference in ny

AttachmentRegulatory Environment

Page 52: Itaú bba   8th annual lat am ceo conference in ny

Distribution companies: tariff methodology

Tariff reset and adjustment

• Tariff Reset is applied each 4 years for AES Eletropaulo

Energy Purchase

TransmissionSector Charges

− Next tariff reset: Jul/2015− Parcel A: costs are largely passed through to the tariff− Parcel B: costs are set by ANEEL

• Parcel A Costs− Non-manageable costs that are largely

passed through to the tariff− Incentives to reduces costs

Regulatory Opex

(PMSO)

Sector Charges• Tariff Adjustment: annually − Parcel A : costs are largely passed through to the tariff− Parcel B: cost are adjusted by IGPM +/- X(1) Factor • Regulatory Opex:

Efficient operating cost determined by

Investment Remuneration

R ti

X WACC

• Remuneration Asset Base:

– Efficient operating cost determined by ANEEL (National Electricity Agency)

Depreciation

RemunerationAsset Base

X Depreciation

– Prudent investments used to calculate the investment remuneration (applying WACC) and depreciation

Regulatory Ebitda

Parcel A - Non-Manageable Costs

Parcel B - Manageable Costs1 – X Factor: index that captures productivity gains

52

Page 53: Itaú bba   8th annual lat am ceo conference in ny

Distribution companies: tariff methodology

3rd Cycle of tariff reset – X factor

X FACTOR = Pd Q T+ += + +

Distribution Operational expensesDistribution productivity

Quality of service Operational expenses trajectory

Sti l t

DEFINITION

Capture productivity gains

Stimulate improvement of service quality

Implement operational expenses

trajectoryOBJECTIVE

Defined at tariff reset, considers the average productivity of sector adjusted by market

growth and

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

Defined at tariff reset, considers reference

company and benchmarking APPLICATION

growth and consumption variation

performance of discos methodologies

53

Page 54: Itaú bba   8th annual lat am ceo conference in ny

3rd Cycle of Tariff Reset for AES Eletropaulofor AES Eletropaulo

Gross Regulatory Asset Base: R$ 10,748.8 million

Net Regulatory Asset Base: R$ 4 445 1 millionTariff Review 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

Tariff Review

Average effect to be perceived by the consumer: -9.33%

Economical Effect: -5.60%

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

Economical Effect: +4.45%Tariff Adjustment

T iff R i +

In 17th July Company filed as administrative appeal at Aneel about the Regulatory Asset Base and

Average effect to be perceived by the consumer : -2.26%Tariff Review +Adjustment

Administrative In 17 July, Company filed as administrative appeal at Aneel about the Regulatory Asset Base andthe non-technical losses trajectory. Aneel’s decision expected to be rendered by July, 2013

AdministrativeAppeal

54

Page 55: Itaú bba   8th annual lat am ceo conference in ny

Discussions with the Regulator

E l i R$ 1 260 illi f hi ld d Shielded RAB approved in 2003,

ArgumentsDiscussion

Exclusion R$ 1,260 million from shieldedRAB:- Exclusion of cables: R$ 728 million- Reclassification/equipment volume: R$

pp ,reconfirmed in 2007, based on globalconsistency criteriaShielded RAB

533 million

R$ 446 million investments not recognize,related to Minor Components andAdditional Costs (“CA”)

Adequacy of regulatory standards versusactual spending

Investments

Benchmark company is an outlier, previousnumber of 0 49% shall be restored

Changed the benchmark in Public Hearing(regulatory losses reduction from 0 49% toLosses number of 0.49% shall be restored(regulatory losses reduction from 0.49% to1%)

Losses

55

Page 56: Itaú bba   8th annual lat am ceo conference in ny

3rd Cycle of Tariff Reset for AES Sulfor AES Sul

Gross Regulatory Asset Base: R$ 2,503.0 milliong y

Net Regulatory Asset Base: R$ 1,488.5 million

Parcel B: R$ 542.2 million

Tariff Review

Non Technical Losses (referenced in the low voltage market): start point at 4.91% will be kept during the entire tariff cycle (no trajectory)

Average effect to be perceived by the consumer: 3.92%

Economical Effect: 4.49%

The Company will file an administrative appeal at Aneel about Regulatory Technical Losses,Administrative that were not adequately calculated by the methodologyappeal

56

Page 57: Itaú bba   8th annual lat am ceo conference in ny

Regulatory pressure to lower tariffs…

“Energy Cost Reduction Program” established by Provisional Measure 579 and Law 12.783

Valid for concessions granted before 1995Overview - Valid for concessions granted before 1995

- 20% average reduction in electricity costs, funded by:

- Generation and transmission concessions expiring 2015-2017: -13%

- Lower sector charges: -7%Lower sector charges: 7%

-Minimal impact on AES Brasil businesses – concessions expire between 2027-2029

Extension for 30 years with effects anticipated for 2013:

- Evaluation of assets using new replacement value methodology

Concession renewal will be based on O&M costs, industry charges, fees and network usage

Generation & Transmission Concessions

Extension for 30 years, as per contract

Rules for renewal has not been defined

DistributionConcessions

57

Page 58: Itaú bba   8th annual lat am ceo conference in ny

… combined with poor hydrological conditions impacted discos cash position…

Out-of-merit-order: higher EES¹

p p

Low affluence impacting reservoirs level

Thermals dispatch of 12 GW since Sep, 2012

Out of merit order: higher EES

Within the merit order: risingWithin-the-merit-order: rising energy costs

Hydrological risk transferred to

Energy Cost Reduction Program2

Hydrological risk transferred to discos through quotas allocation

Non-renewal of some generation

Exposure to the spot market (~ 2 GWavg)

concessions

Impact on cash position of discos since Sep/2012

1 - ESS (Service System Charges), which pays for the dispatch of thermals that are out-of-merit 2 – Provisional Measure 579 and Law 12.783 58

Page 59: Itaú bba   8th annual lat am ceo conference in ny

… resulted in a measure to preserve discos financial stability

C tAfter

y

ComponentDecree #7.945

Energy Purchase

ESS¹ (out-of-the-

Energy Purchase(within-the-merit-order-

thermal-dispatch)Tariff Adjustment

ESS (out of themerit-order thermal

dispatch)

CDE funding via CCEE lHydrological risk¹ CCEE settlement

59

Involuntary Exposure¹

1 – Before Decree # 7.945, such costs would be passed-through via Tariff Adjustment.

Page 60: Itaú bba   8th annual lat am ceo conference in ny

Spot price new methodology

Previous Regulation

CNPE Resolution # 3/2013

Transitory regulation From August 2013 onTransitory regulation(April to July, 2013)

From August, 2013 on

Charged fromall market

1

Resolution CNPE #3/2013:

Methodology for adequacy of risk aversionCharged from:

ESSESS agents:1

• Discos• Free cust. • Generators • Traders

Other 50%for:• Agents

with

Methodology for adequacy of risk aversion mechanisms for spot prices formation

- Risk Aversion Curve (“CAR”) of 5 years(starting from Aug/2013)

• Discos• Free cust.

ESS²

ESS

ESS

ESS

with exposure to spot prices

System Service Charges (“ESS”): prorated among all market players (including generators)

Uptrend in spot prices, which should influence

SpotPrice

SpotPrice

SpotPrice

Includes out-of-the-merit-order thermal dispatch

p p p ,prices in energy contracts representing an opportunity to AES Tietê

1 - Proportional to average commercialized energy of the last 12 months.2 - ESS (System Service Charges), which pays for the dispatch of thermals that are out-of-merit 3 – Risk Aversion Curve 60

Page 61: Itaú bba   8th annual lat am ceo conference in ny

AttachmentAES Tietê: Expansion ObligationAES Eletropaulo: Eletrobrás Lawsuit

Page 62: Itaú bba   8th annual lat am ceo conference in ny

AES Tietê's expansion obligationEfforts being made by the Company to

meet the obligation :

• Long-term energy contracts (biomass)

Privatization Notice established the

obligation to expand the installed capacity in 15% (400 MW) until

2007 either in

Aneel informed that the issue is not related to

the concession agreement and

Judicial Notice:

The Company was notified by the State of São Paulo

Attorney's Office to present its understanding on the matter having filed its

AES Tietê was summoned to answer a

Lawsuit filed by the State of São Paulo, which requested the

fulfillment of the

In March, 19th the Company’s appeal was denied. Thus, on April, 26th AES

Tietê presented “Thermo São Paulo” contracts (biomass)

totaling an average of 10 MW

• SHPP São Joaquim -started operating in

2007, either in greenfield projects and/or through long

term purchase agreements with new

plants

agreement and must be

addressed with the State of São

Paulo

matter, having filed its response on time, the

proceedings were ended, since no other action was

taken by the Attorney's Office

obligation in 24 months.

An injunction was granted in order to have

a project submitted within 60 days.

Thermo São Paulo project as the plan

to fullfill the obligation to

expand the installed capacity.

started operating in July, 2011, with 3 MW of installed capacity

• SHPP São José -1999 Jul/09Oct/08Aug/08 Sep/11Sep/10 Nov/112007 Apr/12 Dec/12started operating in March, 2012, with 4

MW of installed capacity

In response to a Popular Action:

Due to the plaintiffsCompany faces restrictions until

deadline: Lawsuit:In December 6th was joined

to the process a• Thermal SP - Project of a 550MW gas fired

thermo plant

• Thermal Araraquara

pPopular Action

(filed by individuals against the Federal Government, Aneel,

AES Tietê and Duke), the Company

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

deadline:• Insufficiency of hydro resources

• Environmental restrictions• Insufficiency of natural gas

supply N M d l f El t i S t

Lawsuit:

The Company appealed to the

State of Sao Paulo State

Court of

to the process a manifestation of the State of

São Paulo over the Expansion Plan Capacity presented by AES Tietê

Next Steps: Thermal Araraquara- Acquisition of a purchase option

), p ypresents its defense

before the first instance

Instance Court(an appeal has been

filed)

• New Model of Electric Sector (Law # 10,848/2004), which forbids

bilateral agreements between generators and distributors

Appeals and the injunction

was keptshortly, the Company shall be intimated to pronounce

on the manifestation

62

Page 63: Itaú bba   8th annual lat am ceo conference in ny

Eletrobrás lawsuit

Stated-owned Eletropaulo borrowed

Eletrobrás and CTEEP appealed to the

Eletrobrás, after winning the interest

calculation discussion, filed an Execution Suit

State-owned Eletropaulo was spun-off into four companies and, according to our understanding based Eletropaulo borrowed

money from Eletrobrás Superior Court of Justice (SCJ)

filed an Execution Suit aiming the collection of the amounts that were

in default

gon the spin-off agreement, the discussion was

transferred to CTEEP

Nov/86 Dec/88 Sep/03 Jun/06Jan/98 Oct/05Sep/01Apr/98 p

The SCJ annulled the d

pp

State-owned Eletropaulo and

Eletrobrás disagreed on how to calculate

interest over that loan

Based on the spin-off protocol, the 2nd

Instance Court excluded AES

El l f h

2nd Instance Court decision and sent the Execution Suit back to the 1st Instance Court, with the determination to identify the amount

Privatization event . State-owned

Eletropaulo became and two lawsuits, which were later merged into

one, were initiated

Eletropaulo from the lawsuit

to be paid and who should be liable for

such payment, which should be done through an appraisal procedure.

AES Eletropaulo

63

Page 64: Itaú bba   8th annual lat am ceo conference in ny

Eletrobrás lawsuit

In accordance to the procedure that was

stipulated by 2nd

Instance Court after an appeal from AES

The 1st Instance Court determined

AES Eletropaulo and CTEEP to present

Next Steps:

1 - The appraisal procedure (AP) is expected to begin in the 1st half of

The 1st instance Court dismissed the parties’ requests of

producing evidences and rendered a

The Rio de Janeiro State

Court of Appeals, granted on 15th a

preliminary Eletropaulo,

Eletrobrás requested the 1st Instance

Court to appoint an expert

CTEEP to present their arguments,

which occurred in August

p g2013 and is expected to last over 6

months

2 – AP is not expected to be concluded in a period shorter than 6

months from its beginning

decision stating AES Eletropaulo’s

responsibility for the debt pursuant to the

Spin-Off Protocol

injunction that suspended the effects of the

December 2012 decision

May/09 Dec/10 Jul/11

3 - After AP’s conclusion, a 1st

Instance Court decision will be issued

> In case of an unfavorable decision:

4 – Appeal to the 2nd Instance Court and file an injunction to stay theDec/12 Jan/12 Feb/12y and file an injunction to stay the

execution proceedings

5 – If the injunction is not granted, the execution proceeding can be resumed

and Eletropaulo will have to post a guaranteeEletrobrás requested

th ithd l f th AES Eletropaulo filed an On 21st, AES

Eletrobrás requested the beginning of the appraisal procedure

before the 1st

6 – Eletrobrás can request the seizure of the guarantee

7 - Appeals to the Superior Courts and file an injunction to stay the execution

proceedings

the withdrawal of the judicial deposit made

by state-owned Eletropaulo in 1988, which now amounts

for R$ 95 MM ( f

AES Eletropaulo filed an appeal on Jan 7th arguing that the decision is invalid, because the procedure preceding such

decision should encompass full discovery, pursuant to Superior

Courts determination Also

On 21st, AES Eletropaulo became

aware of the favorable decision

granted by the TJRJ, which fully annulled the firstbefore the 1

Instance Court (principal of the loan taken in 1986), as a

direct consequence of Eletrobrás’ victory on

the merits

Courts determination. Also, the Company requested a

preliminary injunction to stay the execution proceedings until

the ruling of the appeal

annulled the first instance decision

and determined the return of the case to

the 1st instance 64

Page 65: Itaú bba   8th annual lat am ceo conference in ny

AttachmentAES Eletropaulo: Pension planp p

Page 66: Itaú bba   8th annual lat am ceo conference in ny

Pension plan expenses and disbursements are calculated using different assumptions

ACCOUNTING EXPENSE

CASH DISBURSEMENT

g p

CVM (Brazilian SEC)Regulatory AgencyRegulatory Agency PREVIC (Pension plans regulator)

Difference between interest on actuarial liabilities and assetsDeterminationDetermination Result of the FCesp actuarial valuation

Calculated in accordance to market value (National Treasury Notes/NTN-B)Discount rateDiscount rate

Calculated in accordance to a study performed value (National Treasury Notes/NTN B)

on 12/31/2012: 3.75% p.a.Discount rateDiscount rate by FCesp (Resolution CNPC No. 9): 5.5% p.a.

Company Financial StatementsRecognitionRecognition FCesp Financial Statements

66

Page 67: Itaú bba   8th annual lat am ceo conference in ny

Main amendments on accounting rules

Until 12.31.2012 (Res. CVM 600)¹

From 01.01.2013 (Res. CVM 695)(Res. CVM 600) (Res. CVM 695)

Determined by a study of a specialized company (6.79% for 2012)

Expected return on plan assets

Expected return on plan assets

Corresponds to the actuarial liabilities discount rate (3.75% for 2013)

Accrued over the years in the "corridor" (10% excess of actuarial liabilitiesActuarial Gains Actuarial Gains Fully recognized in the Company's balance (10% excess of actuarial liabilities

recognized in the income statement)and lossesand losses sheet (Liabilities and Shareholders‘ Equity)

Amortized over the average future service period of active participants and recognized in income statement

Corridor over 10% of plan liabilities

Corridor over 10% of plan liabilities

There is no impact (fully recognized in the balance sheet of the Company)

1 – Revoked by CVM Resolution 695, on December 13, 2012 67

Page 68: Itaú bba   8th annual lat am ceo conference in ny

Impact on the income statement due to changes imposed by CVM

2012R$ million

2013R$ milllion

16 3Service costService cost 29 3Discount rate decreases from 5 5% to 3 75%

g p y

916.6Rate costsRate costs 1,018.1Discount rate decreases from 5.5% to 3.75%

16.3Service costService cost 29.3Discount rate decreases from 5.5% to 3.75%

(788.6)Expected return on plan assets

Expected return on plan assets (696.5)Rate of return decreases from 6.79% to 3.75%

Amortization Amortization 15.3of actuarial

gains and lossesof actuarial

gains and losses-Extinction of the corridor method

159.7Total expenditureTotal expenditure 350.9

Increase on expense shall be reversed through equity in the coming years due a grater expectedp g q y g y g p

profitability of the plan compared to the expected return on plan assets used in the calculation

Average return over the last five years on 16% (above the actuarial target period)68

Page 69: Itaú bba   8th annual lat am ceo conference in ny

Cash impacts with the plan

Amendments set forth by CVM 695 has no influence on assumptions and on the calculation

method of the pension plan cash disbursement

2012 2013

Cash disbursementCash disbursement

2012R$ million

2013R$ million

IGP-DI discount rate decreases from +6% to +5.5%,

+4.4%

271.7Cash disbursement before and after CVM 695

Cash disbursement before and after CVM 695 283.6

IGP DI discount rate decreases from 6% to 5.5%, offset by marking securities to market

For 2014 is not expected a significant increase on cash disbursement, since the actuarial

assumptions were maintened

69

Page 70: Itaú bba   8th annual lat am ceo conference in ny

AttachmentAttachmentOther subjects

Page 71: Itaú bba   8th annual lat am ceo conference in ny

Shareholders agreementOn Dec-2003 AES and BNDES executed a Shareholders’ Agreement to regulate their relationship as shareholders ofBrasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri,http://ri.aestiete.com.br/ and http://www.aeselpa.com.br/.

Any party with an intention to dispose its shares should first provide the other party the right to buythe corporate interest at the same price offered by a third party

Shareholders can dispose its share at any time, considering the following terms:

Right of 1st refusal the corporate interest at the same price offered by a third party

In the case of change in Brasiliana’s control, tag along rights are triggered for the following companies (only if AES is no longer controlling shareholder):

refusal

Tag alongrights companies (only if AES is no longer controlling shareholder):

– AES Eletropaulo: Tag along of 100% on its common and preferred shares– AES Tietê: Tag along of 80% on its common shares– AES Elpa: Tag along of 80% on its common shares

rights

Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all its shares at the time if the Right of 1st Refusal is not exercised by offered party

Drag alongrights its shares at the time, if the Right of 1 Refusal is not exercised by offered partyg

71

Page 72: Itaú bba   8th annual lat am ceo conference in ny

Costs and expenses

Costs and operational expenses1 (R$ million)

570

198 433 419

570

187 174

41

264126%

246 245

372

224 51

41

117

66

2010 2011 2012 1Q12 1Q13Energy Purchase, Transmission,Connection Charges and Water Resources

1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 72

Other Costs and Expenses ²

Page 73: Itaú bba   8th annual lat am ceo conference in ny

Energy costs pushed the costs and operating expenses in the 1Q13

Operating costs and expenses¹ (R$ million)

operating expenses in the 1Q13

165

2 8 4 3

282 271 267 264

165

117 117

1Q12 electric energy purchased for resale

operat. Provisions and Other Exp.

personnel, material and third party services

transmission and Conection

financ. comp. for use of wat. resources

1Q13

1 - Not including depreciation and amortization73

Page 74: Itaú bba   8th annual lat am ceo conference in ny

Costs and expenses

Costs and operational expenses1 (R$ million) PMS2 and other expenses (R$ million)

1 551

1,551 5,609 5,715

6,927

165 192

2611,255 1,251

1,551

1,255 1,251 443

513

565

15%7%

4,354 4,464 5,376

1,211 1,422 421 450

1,632 1,872 647 546

725

190 211

132 13499 106

421 450

2010 2011 2012 1Q12 1Q13

Energy Supply and Transmission Charges¹

PMS² and Others Expenses

2010 2011 2012 1Q12 1Q13

Personnel and Payroll Material and Third Party Others

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

PMS² and Others Expenses

74

Page 75: Itaú bba   8th annual lat am ceo conference in ny

Manageable PMSO¹ items below the inflation in 1Q13below the inflation in 1Q13

PMS and other expenses¹ – 1Q13 (R$ million)

-1.4%

(65)88

421450

(65)

(60) (3) 1 (3) 69

421356

297 297 294 292 292 292

362

1Q12 FCesp Contingencies, ADA and

Write-Offs

1Q12Manageable

Personal Materials and

Third Party Services

Others 1Q13Manageable

Contingencies, ADA and

Write-Offs

FCesp 1Q13

751 - Personnel, Material, Third Party Services and Other Costs and Expenses

Page 76: Itaú bba   8th annual lat am ceo conference in ny

Brazilian main taxes

AES Eletropaulo AES Tietê

• Income Tax / Social Contribution:

– 34% over taxable income

• Income Tax / Social Contribution:

– 34% over taxable income

• ICMS: 22% over Revenue (average rate)

– Residential: 25%

I d t i l d i l 18%

• ICMS (VAT tax)

– deferred tax

– Industrial and commercial: 18%

– Public entities: free

• PIS/Cofins:

• PIS/Cofins (sales tax):

– Eletropaulo´s PPA: 3.65% over Revenue

Other bilateral contracts: 9 25% over Revenue

– 9.25% over revenue minus Costs

– Other bilateral contracts: 9.25% over Revenue

minus Costs

76

Page 77: Itaú bba   8th annual lat am ceo conference in ny

Contacts:[email protected]

[email protected]

The statements contained in this document with regard to the business prospects, projected operating and financiallt d th t ti l l f t b d th t ti f th C ’ M t i

+ 55 11 2195 7048

results, and growth potential are merely forecasts based on the expectations of the Company’s Management inrelation to its future performance. Such estimates are highly dependent on market behavior and on the conditionsaffecting Brazil’s macroeconomic performance as well as the electric sector and international market, and they aretherefore subject to changes.