SuSta

ina

bility R

epo

Rt 2008

Rua lourenço Marques, nº 158

Vila olímpia – São paulo/Sp

cep 04547-100

www.eletropaulo.com.br

SuStainability RepoRt 2008

2 Message from the CEO

4 Introduction

8 Profile

14 Corporate Governance

22 Management Excellence

26 Public Engagements

30 Acknowledgements

32 Financial and Economic Performance

38 Market and Customer Relations

46 Operating Performance

54 Environmental Performance

62 Social Performance

84 Index

SuStAInAbIlIty REPORt 2008

2

Message from the CEO

the year 2008 featured significant conquests for our employees – our own and outsourced – and for the customers, shareholders, and communities served by AES Eletropaulo. It was a year in which we were acknowledged for the quality of our management. We reduced accidents, increased investments, im-proved energy supply to our customers, benefited 1.3 thousand people with our company’s latest so-cial responsibility project, and achieved expressive economic-financial results.

the Fundação nacional da Qualidade (national Quality Foundation) granted us the national Quality Award (PnQ) in the finalist category - an important acknowledgement of our competent business ma-nagement. Our best corporate governance practi-ces were also recognized and our company maintai-ned its place in the select portfolio of the bOVESPA business Sustainability Index (ISE) for the fourth con-secutive year.

In Safety – our top priority – we invested more than R$ 10 million and reduced the number of accidents involving our own employees, outsourced employe-

es, and the population by 39%, 21%, and 27% respec-tively. the funds invested targeted individual and col-lective safety equipment, new technologies, training, and a mass media campaign featuring the electric energy network.

In 2008, to uphold our commitment to quality in the supply of electric energy and services to our more than 5.8 million customers, we invested R$ 457 million – up 5.3% as compared to 2007. In addition, we recor-ded the lowest FEC (Average Interruption Frequency Index) in our history, and one of the lowest in brazil.

Another highlight in 2008 was our commitment to transparent customer relations. upon implementing a new sales management system we were well aware of the many challenges we faced and therefore provi-ded our customers, regulatory and consumer protec-tion agencies, the media and employees with prior information regarding the change.

In 2008 we also consolidated the AES Eletropaulo so-cial responsibility strategy by inaugurating the Casa de Cultura e Cidadania (Culture and Citizenship Cen-

GRI – G3: 1.1

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ter) project. Approximately 1,300 children, teens, and adults in the City of São Paulo benefit from cultural, income-generating, and educational activities featu-ring the safe and efficient use of electric energy.

As to the economic-financial area, in 2008 we recor-ded a net profit of R$ 1 billion, 44% higher than in 2007, and reduced the company’s net debt by 17%. the financial restructuring carried out in recent years by AES Eletropaulo, together with strong cash gene-ration, will allow the company to weather the current worldwide credit crisis in a safer and more stable manner.

Investments scheduled for 2009 will amount to sli-ghtly over R$ 560 million – 23% more than the volume invested in 2008 – in line with our objective of ensu-ring ongoing improvement in the rendering of quality services to our customers.

AES Eletropaulo has now completed ten years of privatization and we closed this decade with signifi-cant results and recognition. these conquests were attained thanks to the efforts and support of all our employees, suppliers, shareholders, financial insti-tutions, customers, regulatory agencies, and public authorities. We are counting on this same support in 2009. It will enable us to go on working to achie-ve sustainable growth for AES Eletropaulo and for all those in any way related to the company.

Britaldo SoaresChief Executive Officer

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I n t r o d u c t I o nGRI – G3: 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.13

wellbeing

In this sustainability report, AES Eletropaulo pre-sents the main actions and results registered in 2008 in terms of economic-financial, social, and environmental performance indicators.

This yearly publication featuring the company’s actions for the period of January 1 through De-cember 31, 2008 replaces the 2007 Sustainabi-lity Report and is directed to all stakeholders in the distributor’s performance: employees, shareholders, suppliers, customers, communi-ties, regulatory agencies, and opinion formers, among others.

As in previous years (2006 and 2007), the com-pany adopted the guidelines of version 3 of the Global Reporting Initiative (GRI – G3) to report on its activities during the course of 2008. The economic-financial data are audited by Ernst & Young. In the case of verification of the GRI – G3 indicators, Media Group Consulting was contrac-ted to ensure reliability of self-declared data and the inclusion of this report on level C, as shown in the table below.

More than just supplying top quality, safe electric energy, AES Eletropaulo carries comfort and quality of life to more than 16 million people.

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In order to draw up this report in compliance with GRI – G3 principles, the Financial, Operations, Envi-ronment, Ethics and Compliance, Human Resources, Legal, Procurement, Communication and Social Res-ponsibility, Sales and Distribution departments col-lected the main data and results, all of which were

consolidated by Communication and Social Respon-sibility Management.

The economic, social, and environmental impacts of AES Eletropaulo operations within its concession area that could influence their stakeholders’ evalua-

G3 Application Level

C C+ B B+ A

Inform on items:1.12.1-2.103.1-3.8, 3.10-3.124.1-4.4, 4.14-4.15

EX

TER

NA

LLY

AU

DI T

ED

RE

PORT

Inform on all level items, plus:1.23.9, 3.134.5-4.13, 4.16-4.17

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RIO

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NA

ME

NTE

VE

RIF

ICA

DO

Same requirement as level B

Not required Disclosure of form of management for eachcategory of indicators

Disclosure of form of management for each category of indicators

Inform at least ten performance indicators, including at least one in each social, economic, and environmental area

Inform at least 20 performance indicators, at least one in each of economic, environmental, human rights, labor, society, and responsibility for the product

Inform each performance indicator essential to G3 and sector supplements, observing the principle of materiality and a) responding to the G3 indicator, orb) explaining your omission

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ND

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D

G3 Performance Indicators & Sector Supplement Indicators R

esul

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G3 Forms of Management R

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G3 Report Profile R

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tions and decisions were identified during the course of this work.

The main stages of this preliminary work were as follows:

• meetings with managers involved in the collection of data and information to decide what topics would be relevant to inclusion in the report;

• classification of the topics in accordance with rele-vance to the target public;

• definition of report content in view of feasibility in obtaining consistent data and information.

Information regarding compliance with GRI indicators is detailed in the tables, with reference to those fe-aturing total compliance (A), partial compliance (P), non-compliance (ND), and those not applicable (NA) to the AES Eletropaulo activity sector.

Questions or suggestions regarding the content of this sustainability report should be directed to the In-vestor Relations Department or by e-mail to the Com-munication and Social Responsibility Management (ri.eletropaulo@aes.com ou comunicacao@aes.com) or by mail (Rua Lourenço Marques, 158 – Vila Olímpia – São Paulo/SP – CEP 04547-100).

P r o f i l eGRI – G3: 2.1, 2.2, 2.3, 2.4, 2.6, 2.7, 2.8, 3.8

progress

Under the corporate name of Eletropaulo Metro-politana Eletricidade de São Paulo S.A., AES Ele-tropaulo serves 5.8 million clients – approximate-ly 16.3 million people – in a 4,526 km² area of the São Paulo Metropolitan Region that comprises 24 municipalities, including the capital where the company’s management headquarters are located. The population served is equivalent to the number of inhabitants of Chile, in an area 168 times smaller.

AES Eletropaulo, the largest electric energy dis-tributor in Latin America in terms of consumption and billing, closed 2008 with 4,141 own employees contracted under the Consolidation of Labor Laws (CLT) regime working in administrative units, opera-tional units, or in consumer service units. The num-ber of outsourced employees in 2008 totaled 6,368 people working mainly in commercial functions and on the power distribution network, including expansion and maintenance of overhead and un-derground networks, new customer hook-ups, me-ter reading and bill delivery, safety and surveillance services, clearing of surrounding land strips, tree pruning, and equipment overhauls.

During the course of the year, AES Eletropaulo in-vested R$ 457 million in the modernization, expan-sion, and maintenance of the electric system, and in customer services. Net income totaled R$ 7.5 billion, net profit came to R$ 1 billion, and EBITDA amounted to R$ 1.7 billion.

AeS eletropaulo drives socioeconomic development in the cities it serves

AeS CorPorAtionGRI – G3: 2.5

AES is one of the largest energy companies in the world. It was founded in the State of Texas in the United States in 1981 and within just a few years it extended its activities to several

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AES Eletropaulo BackgroundGRI – G3: 2.6

1899 – the beginning of AES Eletropaulo, fea-turing foundation of The São Paulo Railway, Light & Power Company Limited.

1923 – control of The São Paulo Railway, Light & Power Company Limited passes to the hold-ing company, Brazilian Traction Light and Power Co. Ltd.

1956 – restructuring of the holding company with the name changing to Brascan Limited.

1979 – the Brazilian government acquires share-holding control of Light – Serviços de Eletricid-ade S.A. from Brascan

1981 – Light passes to the government of the State of São Paulo, which changes the compa-ny’s name to Eletropaulo – Eletricidade de São Paulo S.A.

1997 – restructuring stemming from the privatiza-tion program splits Eletropaulo up into four com-panies: two energy distribution companies (Ele-tropaulo Metropolitana Eletricidade de São Paulo S.A. and Bandeirante Energia S.A.), one energy transmission company (EPTE – Empresa Paulista

de Transmissão de Energia Elétrica, currently CT-EEP), and one power generation company (Emae – Empresa Metropolitana de Águas e Energia S.A.).

1998 – Eletropaulo is acquired at auction by Lightgás, a consortium consisting of AES Corp., Companhia Siderúrgica Nacional, Eletricité de France, and Reliant Energy.

2001 – following new restructuring, AES Corp. takes over total control of the distributor. The corporate name of Eletropaulo remains un-changed, but the company brand name is now AES Eletropaulo.

2003 – establishment of the holding company (Companhia Brasiliana de Energia) in which BNDES (Banco Nacional de Desenvolvimento Econômico e Social) is a partner of AES Corp. AES Corp. holds 50% plus one share, and BNDES holds 50% less one share of the voting capital of Companhia Brasiliana de Energia. The companies that currently make up this holding, in addition to AES Eletropaulo, are AES Tietê, AES Uruguaiana, AES Infoenergy, AES Eletro-paulo Telecom, and AES Com Rio.

other countries and continents to become one of the largest investors in the electric energy industry worldwide.

The corporation employs more than 25,000 people working in the distribution and gene-ration of energy – hydroelectric, thermal, and

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alternative –, in 29 different countries. AES has been active in Latin America since 1993 when it acquired CTSN in Argentina. In the course of one decade AES became the regional lea-der. In addition to Argentina, the corporation is now active in Brazil, Chile, Colombia, El Sal-vador, Panama, and the Dominican Republic.

The group arrived in Brazil in 1997 and is cur-rently made up of seven companies operating in the electric energy and telecommunications industries – AES Eletropaulo, AES Sul, AES Tie-tê, AES Uruguaiana, AES Infoenergy, AES Com Rio, and AES Eletropaulo Telecom.

Shareholding makeup GRI – G3: 2.6

Shareholding Structure of AES Eletropaulo in 2008• Capital: R$ 1.057.629.316,47

• Common shares: 66.604.817 (39.80% of total shares)

• Class A preferred shares 2.369.349 (1.42% of total shares)

• Class B preferred shares: 98.369.721 (58.78% of total shares)

• Total free float: 56,18%

• Shareholders: 53.963

AES Uruguaiana Empreend. S.A. Eletropaulo

O 49.99%P 100.00%T 53.8%

O 50.01%P 0.00%T 46.15%

P 7.56%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 98.26%T 98.26%

O 77.81%P 7.56%T 30.97%

Cia. Brasiliana de Energia

AES Uruguaiana Inc (Cayman)

AES Eletropaulo Telecom Ltda.

AES Com Rio S.A

AES Elpa

AES Infoenergy Ltda. AES Tietê S.A.

O 71.35%P 32.34%T 52.55%

BNDES AES Holding Brasil Ltda

O = common stockP = preferred stockT = total

P 7.56%

The Brazilian National Bank for Economic and Social Development (BNDES) has been a partner of AES in the capital of Eletropaulo through the holding company Companhia Brasiliana de Energia S.A. since 2003.

Map of the concession area

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4,526 km2 of operating area

24 cities served

5.8 million customers

4,141 own employees

149 substations

R$ 457 million in investments in 2008

Pirapora do Bom Jesus

Cajamar

Santana de Parnaíba

Barueri

JandiraItapevi

Vargem G. Paulista

Osasco

Carapicuíba

Cotia

Embu

Taboão da Serra

Itapecerica da Serra

Embu-GuaçuSão Lourenço da Serra

Juquitiba

São Paulo

São Bernardo do Campo

São Caetano do Sul

Santo André

Ribeirão Pires

Diadema

Mauá

Rio Grande da Serra

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C o r p o r a t e G o v e r n a n C eGRI – G3: 4.8, 4.9, 4.12

transparency

AES Eletropaulo’s business activities feature transpa-rency in the disclosure of information to the market, respect toward shareholders and investors, and com-pliance with the company’s Values.

The result of such commitment is the company’s lis-ting on the BOVESPA (São Paulo Stock Exchange) Corporate Governance Index at Level 2 securities since 2004. AES Eletropaulo is the seventh company to comply with the Listing Regulation regarding diffe-rentiated practices of Level 2 Corporate Governance. Since 2005, AES Eletropaulo has been listed on the BOVESPA Corporate Sustainability Index (ISE) which lists companies with the best sustainability-related performances. The ISE is revised on a yearly basis.

Because it is a subsidiary of AES Corp., a publicly-held corporation listed on the New York Stock Exchange, AES Eletropaulo also complies with the guidelines of the North American Sarbanes-Oxley Act, the objects of which are to ensure transparency regarding finan-cial statements and strict process control.

respect and trust in the relationship between aeS eletropaulo and all its stakeholders

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Procedures in place at AES Eletropaulo that aim to enhance the company’s transparent and proactive attitude

• Adoption of a Share Trading Policy.

• Adoption of a Disclosure and Relevant Matter Policy.

• As of the first quarter of 2008, compliance with Federal Law 11.638/07 that mandated the first pha-se of convergence with the International Financial Reporting Standards (IFRS), a set of international accounting standards.

• Ongoing clarification of doubts voiced by market analysts, the specialized media, and shareholders.

• Holding of quarterly conference calls regarding re-sults, and periodic meetings with analysts.

• Adherence to the BOVESPA Market Arbitrage Chamber to resolve corporate conflicts regarding shareholding.

Internal audItInG and Independent audItInGGRI – G3: 4.12

AES Eletropaulo has an internal auditing depart-ment active in two segments: operational (business process) and financial. The first monitors all the company’s operational processes and procedures in compliance with internal standards, regulatory aspects, and AES Corp. procedures. The second analyzes the financial statements to verify complian-ce with the demands of Brazilian legislation, and regulatory standards of the electric energy industry and the Sarbanes-Oxley Act.

AES Eletropaulo financial statements are audited by independent auditors (Ernst & Young) as mandated by the Brazilian Securities and Exchange Commission (CVM) instruction No. 381/2003.

ethICS and ComplIanCeGRI – G3: 4.4, 4.12, 4.16, 4.17, SO1, SO3

Ethics is one of the pillars that support AES Eletro-paulo Corporate Governance practices. A wide-ran-ging Ethics and Compliance Program focusing on the best market practices and recognized as a benchma-rk encourages the practice of ethics in the company’s day-to-day activities.

In 2008, AES Eletropaulo became affiliated to the Corporate Pact for Integrity and Anti-Corruption, launched in 2006 by the Institute Ethos, Uniethos, Patri, United Nations Development Program (UNDP), United Nations Office on Drugs and Crime (UNO-DOC), and the Brazilian Global Compact Committee.

Applicable to all AES Group companies worldwide, the Ethics and Compliance Program is made up of:

ViSionTo be Brazil’s best electric energy concessionaire.

MiSSionTo fulfill society’s expectations by rendering energy services and solutions in a safe and socially responsible fashion.

VAluESSafety firstAct with integrityHonor commitmentsPursuit of excellenceSeek fulfillment in work

• Values Guide – from Practice to ActionOne of the objectives of AES Eletropaulo is to be recognized by its stakeholders as a company that practices its Values. To achieve this goal, the com-pany relies on the consolidation of an ethical culture and ongoing public exposure of corporate Values among employees by means of its in-house com-munication vehicles, and events coordinated by the management of the Ethics and Compliance Department.

Revista Ligado – a monthly corporate publication for Brazil’s AES Group companies – features real life cases highlighting everyday events in which employees practice company Values and reinforce ethical behavior.

In 2008 a recognition program – also aimed at all AES Brazil companies – acknowledged 106 employees, recommended by managers and co-workers, for practicing one of the five Values. Sixty AES Eletro-paulo employees were acknowledged. As a conse-quence of this work, those employees were invited to write a testimonial relating to the Value for which they were recognized. Those testimonials in turn led to publication of the book entitled Os Valores dos nossos colaboradores (Our Employees’ Values) featuring 43 stories. All employees of AES Brazil companies received gift copies of the book during the Worldwide Ethics Week.

• Worldwide Ethics Week Each year, all the companies of the AES Group throughout the world promote the Worldwide Ethics Week, the object of which is to reinforce practice of the Values by means of discussions in-volving everyday experiences, lectures, and educa-tional videos. In 2008, 1,476 participants attended the Week’s events at AES Eletropaulo.

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• Ethics CommitteeThe Ethics Committee was created in February 2007 and caters not only to AES Eletropaulo, but to all the com-panies of the AES Group in Brazil. The main duties of the committee, which meets monthly, are to analyze the trend of denouncements received through the Helpline and to discuss measures to be taken following investiga-tions carried out by the areas in charge of the findings.

• Helpline

All employees of the AES Group in Brazil have ac-cess to the Helpline, a communication channel devoted exclusively to clearing up doubts, making suggestions, and denouncing antiethical behavior or illegal business practices. Calls are toll-free, and the line is open 24 hours a day, seven days a week. Callers need not identify themselves.

All denouncements are investigated and all action plans are approved by the Ethics Committee. AES Corp. in the United States manages the investiga-tions by means of a system via Web and has the au-thority to reopen any process should it consider the result of the investigation unsatisfactory.

In 2008, 252 calls were received from AES Eletro-paulo employees. Of those, 163 were related to de-nouncements, and 89 to requests for clarification. In regard to denouncements, 84% referred to people-related behaviors or policies, 10% to business inte-ractions, 4% to safety and environment, and 2% to protection of company assets and property. As to calls aimed at clearing up doubts, 52% were related to guidance in general and conflicts of interest, 28% referred to gift and entertainment policy, 13% to re-lations with government representatives, and 7% fo-cused on invitations to take part in training or events organized by third parties.

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The volume of calls at AES Brazil was up 100% as compared to 2007. Growth was due to increased publicity of the communication channel, credibility of the investigation process, and the development of enhanced ethical awareness among employees.

• Education and trainingIn 2008, the companies of the AES Group in Bra-zil registered a record 21,000 participants in trai-ning courses, with AES Eletropaulo accounting for 13,200. Topics related to ethics are part of the in-tegration of new employees, and training courses held by the Human Resources Department. In addi-tion, there are specific educational and training ac-tions focusing on ethics that cover all levels of the company as well as suppliers.

- Discussion on Ethics: employees of the company’s operational units meet every month to discuss si-tuations that could interfere in ethical behavior or practices of company Values.

- Positive Behavior: training held in the 2nd half of 2008 via Internet, involved employees of all AES Brazil companies and addressed ethical on-the-job behavior.

- Anti-corruption: the company promotes a specific anti-corruption course that can be taken on-line or in person. Course content complies with the Ame-rican Foreign Corrupt Practices Act (FCPA) adopted by AES Corp. in all of its subsidiaries. During the past year, 193 people took part in the training. Par-ticipants included managers, directors, vice-presi-dents, as well as professionals who, given the profile of their position, might be exposed to the situation.

- Insider Trading: the purpose of this training course is to discourage employees who have access to privile-ged information from taking undue advantage of such information, thus preventing the market from being in-fluenced by information not yet disclosed to the public.

- Suppliers: lectures aimed at owners and employe-es of AES Eletropaulo’s largest suppliers of goods and services. The lectures focus on trading-partner trustworthiness and integrity, ethical commitment assumed in service contracts, and what part sup-pliers play in the context of anti-corruption practi-ces. The company considers this effort an opportu-nity for ongoing supplier development.

- Ethics Multipliers: promotes the capacity of tea-ms of the company’s administrative areas to discuss ethical dilemmas and propose the best solutions. It is held once every six months and in 2008 involved 3,311 employees of AES Brazil.

• Contract AnalysisPrior analysis of contracts and operations surpassing a pre-determined monetary value or that may imply risk of damage to the company’s image or operations is essential for AES Eletropaulo to ensure business inte-grity, follow-up on the legal and ethical conduct of tra-ding partners, and safeguard itself against situations of ethical or legal violations. In 2008 the company im-plemented a tool in its business management system to guarantee that no agreements subject to this proce-dure are signed without the respective approval of the Contract Analysis area. In 2008, analyses focused on 872 operations in a total of R$ 1.96 billion, up 20.28% compared to the number of operations analyzed in 2007.

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AES Eletropaulohas an Ethics and Compliance Program and in 2008, it signed the Corporate Pact for integrity and against Corruption.

rISk manaGementGRI – G3: 1.2, 4.9

Each year, AES Eletropaulo identifies the most rele-vant corporate risks to its image and reputation or that which could prevent it from achieving its corpo-rate goals. These risks are classified, with detailed information, according to its Strategic Planning pro-

cess, into contingency or anticipatory actions.

At the end of 2008, AES Eletropaulo started to structure an area that would focus on managing corporate risk as-sessment, subordinated to the Financial and Investor Re-lations Vice President. Its aim was to have all risk identifi-cation, assessment and response standardized by 2009, in order to institute an overall risk monitoring model.

risk factors action

Economic and financialTo periodically monitor macroeconomic environment changes based on a financial model adopted by the Company which enables it to quantify possible impacts and establish the steps required to neutralize or minimizing them. It also monitors company performance to promote adjustments, where needed.

Operational To establish a contingency plan to prevent energy supply interruptions.

Regulatory and PoliticalTo periodically monitor regulatory and political environment changes that may potentially affect the business, as well as to establish action plans to neutralize or minimize the impacts.

LegalTo periodically monitor legal environment changes. Possible impacts derived from customer, supplier, public sector and employee relations are addressed in accordance with legislation, doctrine and case law.

Socio-cultural (Image)To periodically monitor the image of AES Eletropaulo, especially considering opinion-maker comments. Action plans are prepared with a view to minimizing or neutralizing impacts.

TechnologicalTo identify and lend priority to electric system assets in need of replacement or modernization, so as to ensure the continuity of energy supply.

EnvironmentalTo establish a strategy to identify and handle environmental risks that could affect the company business. This strategy is based on ISO 14001, a certificate that was granted to AES Eletropaulo’s Environmental Management System in 2000.

Energy SupplyTo identify, measure and manage risks related to energy volume and prices, as well as to use tools to provide support to decisions related to the contracting of energy.

Ethics and ComplianceTo conduct a due diligence analysis on commercial partners, and include compliance clauses in the agreements in order to ensure the integrity of the business and protect the company image.

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Corporate GovernanCe FrameworkGRI – G3: 4.1, 4.2, 4.3, 4.4, 4.6, 4.7

The Corporate Governance Board at AES Eletropaulo is made up of the Board of Directors, the Audit Com-mittee and the Executive Board. To guarantee that conflicts of interest are avoided, the company has a policy on the monitoring and nondisclosure of classified information which prevents company professionals from using classified information they have access to becau-se of their position in the distributor. Furthermore, the AES Guide to Values sets out the guidelines on how relations between AES Eletropaulo professionals and all their diverse contacts are to be conducted.

Board of DirectorsThis is the company’s top governing body, and is res-ponsible for establishing the guidelines on how the distributor’s business is to be conducted and for ap-proving matters of relevant interest to the company. The Board of Directors is currently made up of 11 full members and seven alternates, including two inde-pendent board members1 – one full member is elec-ted by the minority shareholders2, one full member is elected by the holders of preferred shares3 and one full member and his respective alternate are elected by the distributor’s employees. Their term of office has been standardized to two years, and reelection is permitted. The chairman of the Board is also an executive officer of the AES Brasil Group.

The members of the Board of Directors of AES Eletro-paulo are reputedly competent and have professional backgrounds in the energy, financial, capital market and public administration sectors. In addition, 13 of the 18

members have long-standing experience in the energy business either in Brazil or abroad.

The Board of Directors met seven times in 2008. At these meetings, the Board oversaw the company’s economic, environmental and social performance, including associated relevant risks and opportuni-ties, by analyzing its financial statements, operating and commercial performance indicators and rele-vant lawsuits (including those related to the envi-ronment). With this information at hand, the board members identify relevant issues and propose, at these meetings, recommendations to be followed by company Management.

Composition of the Board of Directors

Chairman Britaldo Pedrosa Soares

Effective membersAndrew Martin VeseyEduardo de Vasconcellos Correia AnnunciatoHelena Kerr do AmaralJeffery Atwood SaffordJulian Jose Nebreda MárquezLucio da Silva SantosLuís Felipe Alfonso Céron CéronMarcos Cintra Cavalcanti de AlbuquerquePedro Roberto CauvillaPeter Greiner

Statutory Audit CommitteeThe Audit Committee is the company’s oversight body, especially in matters concerning accounts,

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and compliance and legality of management acts. It is a nonpermanent body, installed at the request of the shareholders at an Ordinary General Meeting. It is currently made up of five effective members and four alternates whose term of office will end at the next Ordinary General Meeting to be held in 2009, although the members may be reelected. Six of the nine members (effective plus alternates) were elec-ted by the controlling shareholder, two by the mino-rity shareholders and one by the holders of preferred shares.

Audit Committee Composition

ChairmanRicardo Berer

Effective membersAlmério Cançado de Amorim Marcio Luciano ManciniRoberto LambSebastião Bergamini Júnior

Executive BoardThe Executive Board is composed of one chief executive officer and seven director vice presidents. It coordinates the AES Eletropaulo operations, manages the business and implements the Board of Directors’ strategic deci-sions. The officers are elected for a three-year term of offi-ce and may be reelected.

Executive Board Composition

Chief Executive Officer Britaldo Pedrosa Soares

AES Guide to Values – From Practice to Action guides on how relations between AES Eletropaulo professionals and all of their different publics must be conducted.

1 Independent board member: has no link with the company other than shareholding; he is not a controlling shareholder, spouse or kin to the se-cond degree of any shareholder, nor has he or has he had any connection with the company or body related to the controlling shareholder in the past three years (individuals related to public education and/or resear-ch institutions are not subject to this restriction); he has not been in the past three years an employee or director of the company, the controlling shareholder of a subsidiary to the company; he is not a direct or indirect supplier or buyer of services and/or products to and from the company in any volume that entails loss of autonomy; he is not an employee or mana-ger of a company or entity that is supplying or demanding the company’s services and/or product; he is not a spouse or kin to the second degree of any manager of the company; he does not receive remuneration from the company other than as a board member (cash earnings from sharehol-ding are not subject to this restriction).

2 Minority shareholder: holds shares in a company without having a majori-ty holding in it or a stake in the controlling group.

3 Holder of preferred shares: is given preference (in relation to common shareholders) in collecting part of any division of company rights in the event it is liquidated, but has no voting right the general meeting.

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M a n a g e M e n t e x c e l l e n c e

mobility

The management quality of AES Eletropaulo was considered world-class in 2008, and it was one of the finalists named for the National Quality Prize awarded by the National Quality Foundation - FNQ.

This victory was the result of the ongoing evolution of the distributor’s business management, whose mi-lestone was the refinement of the strategic planning process, conducted in two stages: formulation and deployment.

• Strategy formulation: is carried out using a process (Xtrategy) that analyzes the external and internal en-vironments and corporate risks and scenarios in or-der to identify comparable references and interested party requisites and then determine, among other points, strategy pillars and high-impact projects.

• Strategy implementation: the Strategy Map is gui-ded by the company’s Mission, Vision and Values. It provides for 15 strategic goals in the Financial, So-cial, Environmental, Customer, Operational, Support, Personnel Management and Organizational Culture areas. For each of these goals, there is a short and long-term course of action.

aeS eletropaulo strives to be the best electric energy distribution concessionaire in Brazil.

24

Strategic management is followed up on under the ma-nagement system, a series of performance assessment meetings conducted with a view to guaranteeing com-pliance with the mission statement, implementation of the plans and materialization of the vision, and to but-tress organizational learning. The strategy objectives and indicators that make up the map are reviewed and refined annually.

InvolveMent and coMMItMent

AES Eletropaulo holds that in order to achieve effec-tive results, it must share its strategic planning with all its employees. Each employee must be made to understand how his or her job can contribute to the fulfillment of the strategic goals and, consequen-tly, the company’s vision: of being the best electric energy concessionaire in Brazil.

To pursue this goal, in 2008 and early 2009, all 4,100 employees took part in a training course in which the strategy map was disseminated. The map gave them - through a playful and educational game – an insight into the company’s strategic objectives and how they could each help it achieve results. In 2009, AES Ele-tropaulo aims to train all of the employees of its key service providers.

IntangIBle aSSetSGRI – G3: 4.12, 4.13

Intangible assets at AES Eletropaulo are identified and evaluated based on newly arising trends on the market (new services, demand and integrated solu-tions), in technology (new equipment and business processes) and in management (management model and demand for human resources).

These assets are classified as follows:

• Human – skills, experience and knowledge;• Market – brand, customers and relationship;• Infrastructure – different systems and customer re-gister;• Technology – research and development, proces-ses and products.

Maintenance and protection of these assets are gui-ded by and aligned to corporate strategy, which is guaranteed by a set of mechanisms that foster kno-wledge updating, attract and retain persons, enhan-ce customer satisfaction and community develop-ment, as well as product and process innovation.

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Management support tools GRI – G3: 4.4, 4.12

• BSC – Balanced Scorecard: a metho-dology based on a model that translates strategy into specific objectives and mo-nitors company performance.

• FNQ Management Excellence Model: a systemic and structured mechanism for diagnosing management which determi-nes management maturity level and in-ternalization of excellence fundaments found in world-class enterprises.

• Benchmarking Model: a system that compares the best companies in and out of the industry, internalizing the best practices identified.

• Apex (Performance excellence at AES): a methodology adopted by AES Corp. ba-sed on a set of common and consistent quality tools that can be used to improve processes and activities and also to solve any problems.

• Working standards certifications: AES Eletropaulo has also been awarded ISO 9001:2000 certification for quali-ty and 14001:2004 for environmental efforts, and is striving to secure an ISO 17025:2005 certificate for quality mana-gement for its testing and calibration la-boratories.

• Internal Committees: the purpose of the-se committees is to establish work standar-ds and to seek ongoing improvement and cost reducing opportunities, while unders-coring quality and the exchanging of expe-riences in solving problems. The main ite-ms addressed by them are the recognition of the value and growth of personnel and labor, assets and revenue management. In 2008, the 35 meetings held were atten-ded by employees across the board, from analysts to vice presidents.

AES Eletropaulo was one of the finalists named for the National Quality Prize in 2008

P u b l i c E n g a g E m E n t sGRI – G3: 4.12, 4.13

on-line

Well aware of its commitments in relation to social and environmental impacts caused by the business, AES Eletropaulo has maintained a focus on sustainability.

One of its chief concerns has been to expend great effort in ensuring the physical integrity and health of its employees and contractors. Other commitments include the adoption of policies and processes de-signed to curb, reduce or mitigate the environmental impacts caused by its operations and the implemen-tation of projects targeting sustainable development; and helping the communities located in its conces-sion area generate income and reduce electricity-related accidents involving its customers.

An important recognition of AES Eletropaulo’s com-mitment to corporate governance and social and en-vironmental responsibility is the fact that it has been listed under BOVESPA’s ISE portfolio (Corporate Sus-tainability Indicator since December 2004. The com-pany is also a signatory of the Global Compact and is committed to the advancement of the eight Mil-lennium Goals, both of which UN programs (United Nations), and has had the Abrinq seal – Child Friendly Company – since 2007. In 2008, the company signed the Corporate Pact for Integrity and Anti-Corruption.

The distributor also projects good citizenship by participating in different organizations, regardless of whether they belong to the energy industry. The main ones are:

aEs Eletropaulo provides interaction to bring people closer to one another

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• Brazilian Association of Electric Energy Distribu-tors (Abradee): its mission is to contribute to con-cessionaires’ operating and economic-financial ex-cellence, with a focus on customer service.

• Energy Industry Trade Association in the State of São Paulo (Siesp): an association that studies, coordi-nates, protects and represents agents of the energy segments of the state of São Paulo.

• Amcham (American Chamber of Commerce): a body that influences policies in Brazil and in the Unit-ed States by promoting trade, investments, and en-trepreneurial citizenship.

• World Energy Council: the largest multilateral en-ergy industry organization in the world. Its purpose is to promote the sustainable supply and use of en-ergy to the benefit to all.

communication and relationship channels Description

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Regulatory environment Relationship with federal and state regulatory agencies

General meetings Periodical or special meetings at which several issues related to company performance are addressed

Press services Contacts with the press and sending of suggestions of topics to the different communications media

AES Brazil Bulletin Institutional message sent by the Communications Department to all employees of the companies of the AES Group in Brazil designed to disclose important matters

     

 

 

   Call Center Customer hotline that operates 24 hours per day, 7 days per week

On-line connection Electronic newsletter for corporate customers

Conference on financial results Quarterly company results release

Consumer Committee Guidance, analysis, evaluation of customer services and quality of the services provided by the concessionaire, and suggestions on improvement

Energy account Commercial and institutional Information

Contact Center Communications channel tailored to private and public corporate customers

Speak to IR Prompt services provided to investors and capital market analysts

Public Authority ManagementDepartment in charge of managing relations with agents representing federal, state and municipal public authorities and public utility services, such as sanitation and transportation.          

 

 Helpline Communications channel that listens to doubts, suggestions and denouncements

on noncompliance with the Guide to Values

Intranet In-house communications channel with daily updates on the company’s routine business. It lists the company policies, standards and procedures.

Green LineA direct communications channel with the company through which organized civil society can resolve issues, give suggestions and even file complaints about the quality of pruning services  

 

   

 

 

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Public EngagEmEntsGRI – G3: 4.4, 4.14, 4.16

AES Eletropaulo is also strongly committed to trans-parency and to disclosing information to its public. To do this, the company has special communications and relationship channels tailored to the needs of each interested party.

communication and relationship channels Description

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Customer service units (12) and Postos Mais Eletropaulo (48) Personal customer services in response to requests for services

Mural AES Brasil Publication of weekly key events

Ombudsman Analyzes, forwards and answers complaints and denouncements

Talks given by electricians Voluntary addresses by electricians in the different communities on safe use of energy  

          

Participation in associations and institutions Sharing of experiences and best practices with other companies of the industry

Sponsorships Financial or institutional support to campaigns, educational projects and cultural initiatives  

         

Corporate environment survey Survey of the work environment based on six criteria: ethics, leadership, communication, competence, safety and employee devotion to the company

Customer satisfaction surveys Conducted by ABRADEE and ANEEL to gauge customer satisfaction levels

Social Responsibility Projects Actions focused on teaching children and adolescents on the correct and and safe use of electric energy

Advertising and PublicityAdvertisements in communications media aimed at brand consolidation, disclosing information to customers on important corporate actions, and important communications to the market

Sustainability Report Annual report on the company’s economic and financial and socio-environmental performance

Meetings with the union To discuss matters of interest to employees

Meetings and seminars for investors Events focused on the capital market

Monthly, weekly and daily meetings on safety (CIPA) Actions to prevent accidents and encourage safe conduct

Revista Ligado Monthly publication on the company’s main actions

Seminars Targeted at public and private corporate customers, discussions on several issues of interest to these are held at the seminars  

 

     

 

 Site (www.eletropaulo.com.br) Information on the company, filing of requests for services, sending criticisms and

suggestions

emotionDiversion and entertainment come from AES Eletropaulo’s energy

A C K N O W L E D G M E N T SGRI – G3: 2.10

Acknowledgment Institution Period

Most Shareholder Friendly Company Institutional Investor magazine Mar/08

First most prestigious company in sustainability among public utilities companies

Imprensa magazine Mai/08

Special mention received at the event “Sustainable Brazilian Companies”

Meio Ambiente Industrial maga-zine

Jun/08

Awarded second prize by ABRADEE in the “Performance Growth” category

ABRADEE Jun/08

Awarded third prize by ABRADEE in the “Quality Management” category

ABRADEE Jun/08

Special Sectorial Award for Creation of Shareholder Value, in the energy category

ABRASCA (Brazilian Association of Publicly-held Companies)

Aug/08

“Who`s Who” prize – Services categoryJornal Diário do Grande ABC (ABC daily)

Sep/08

Winner of the National Quality Prize (PNQ), in the large companies category

National Quality Foundation Oct/08

F i n a n c i a l a n d e c o n o m i c p e r F o r m a n c eGRI – G3: EC1

credibility

operating revenues

In 2008, AES Eletropaulo reported R$11.8 billion in gross operating revenues, up 3.9% in relation to the year before. The increase was due to a combination of factors: application of the 2007 tariff review of mi-nus 8.43% caused an impact on revenues as from July 4, 2007, with the positive effect of a plus 8.01% avera-ge adjustment to the company’s tariffs, beginning on July 4, 2008; 33,859.8 GWh billed consumption, up 3.9% in relation to last year’s billings; and final amorti-zation of the Special Tariff Adjustment (RTE) and Free Energy, in October 2007.

A total of R$ 4.2 billion was posted to deductions from operating revenues in the year, representing a 2.6% increase (R$ 107.2 million) in relation to 2007 deductions.

aes eletropaulo is committed to delivering business transparency and information to the market

34

• greater energy demand, totaling 40,141 GWh in 2008 as compared with 38,647 GWh in 2007;

• a 6.1% increase in the average price of the supply agreements, particularly due to a 13.44% adjust-ment in the bilateral agreement entered into with AES Tietê, effective as from July 4, 2008;

• a change in the Pis and Cofins tax system for ini-tial and bilateral agreements with AES Tietê, from noncumulative (9.25%) to cumulative (3.65%), and subsequent refund to AES Eletropaulo of overcharged amounts since the third quarter of 2004, with a reverse entry to expenses of R$ 185.9 million in the second quarter of 2007;

• a total of R$ 203.7 million in 2008, in amortization expenses connected to Itaipú’s Part A, as compa-red to R$ 32.1 million posted in 2007.

Expenses on charges for the use of the basic grid and transmission network were higher by 21% than in 2007, mainly due to an increase of R$ 154.4 million in the charges for use of the basic grid in the periods under comparison. The main reason for this was that in the fourth quarter of 2007, due to the transmitters’ Tariff Review, effective retroactively to June 2005, a reverse entry of R$55.8 million was made to the Transmitters account. This total is since being amortized in 18 months (approximately R$ 3.1 million/mo.). In 2008, a total of R$ 39.3 million was amortized. In addition, there was an 8.94% increase in the annual quota of the basic grid charge, which has been factored into the tariff, as from the July 2008 tariff adjustment.

operating costs and expenses

Operating expenses reported by AES Eletropaulo amounted to R$ 5.9 billion in 2008, R$ 356.7 million more than that registered in the same period of 2007.

Cost of purchased energy grew by 13.3% in the year, mainly due to:

AES Eletropaulo registered net operating revenues of R$ 7.5 billion, up 4.7% in relation to that posted in 2007. Growth in billed consumption in 2008, plus the final RTE amortization and Free Energy, was the main contributing factor to this increase.

Net Operating Revenues (R$ Billions)

7.57.1

2007 2008

4.7%

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Personnel expenses were down 14.7%, mainly due to a decrease in private pension fund expenses, which in 2008 amounted to R$ 26.4 million, as com-pared to R$ 111.9 million in 2007. The main reason for this decrease was a reverse entry of R$ 62.5 million in expenses related to Fundação CESP in the last quarter of 2008.

Other operating expenses fell 33%, to R$ 379 million in 2008. This drop in expenses is explained by the positive impact caused by the reverse entry of R$ 189.7 million related to PCLD and loss reco-very in 2007, as compared to R$ 134.8 million in loss write-offs and setting up of the PCLD in 2008. It also explains why the contingency reserve was down by R$ 181.9 million in 2008, due to the booking in the fourth quarter of 2007, of R$ 166 million as a result of the reviewing of labor contingencies.

ebtida

EBITDA (earnings before interest, taxes, depre-ciation and amortization) totaled R$ 1.7 billion in 2008, higher by 8.3% than the result in 2007. Ad-justed EBITDA also totaled R$ 2.1 billion in 2008, 9.2% less than in 2007. The adjusted EBITDA margin was 27.3% in 2008, versus 31.5% in 2007. In com-pliance with the provision in Provisionary Measure 449/2008, “Other receipts and expenditures”, an item formerly classified as nonoperating, is now computed in the EBITDA. This re-classification has a retroactive effect, which means that EBITDA was higher by R$ 59.6 million in 2008 and lower by R$ 90.5 million in 2007.

Financial result

In 2008, the company reported financial income of R$ 129.4 million, as compared to a financial expense of R$ 104 million in 2007. This positive change is due to a re-verse entry resulting from the expansion of the Cofins calculation base, a provision for the fine related to the Cofins rate increase of R$ 71.5 million and Finsocial tax credits amounting to R$ 210.2 million.

AES Eletropaulo has a tax claim under way questio-ning the expansion of the Cofins calculation base and increase in its rate, and has set aside a reserve for payment of the principal and interest. With res-pect to the portion earmarked for the rate increase, in October 2008, a reserve was made for the fine in the equivalent of 20% of principal (R$ 71.5 million), a condition AES Eletropaulo was required to meet in order to continue to discuss the issue in court.

With the respect to the portion referring to the ex-pansion of the calculation base, the Federal Regional Court of the 3rd Region (TRF-3R) found in favor of the company and the federal government was notified of the decision on October 13, 2008. The federal gover-nment filed an appeal at a higher level on this same date, which is within the legally established time pe-riod. Despite these appeals, however, the company believes that the decision under appeal is irreversible, in view of strong case law in favor of the company established by the higher courts. Therefore, reverse entries of R$ 190.7 million related to the principal and R$ 95.6 million related to price-level restatement were made to liabilities in December 2008, even be-fore the decision is made final.

In 2008,AES Eletropaulo registers the highest profit in its history:R$ 1 billion.

ty and efficiency levels, minimize losses and provide better customer services in all consumer categories.

The majority of the investments are allocated to the call centers, customer services and system expan-sion and maintenance. However, loss recovery has also accounted for an increasingly greater share of fund allocation. In 2008, a total of R$ 53.8 million was invested in social and economic programs ai-med at the regularization of illegal connections. This program includes the adoption of new mete-ring technologies.

debt

AES Eletropaulo’s consolidated gross debt totaled R$ 4.1 billion on December 31, 2008, 5.1% less than on December 31, 2007. This decrease was due to the reduction in the Fundação CESP loan and the regular amortization schedule.

Consolidated net debt amounted to R$ 2.5 billion on December 31, 2008, down 14.4% in relation to the same period of the year before. This decrease was due to the regular amortization schedule, as well as the R$ 1.5 billion rise in cash balance at the closing of 2008.

AES Eletropaulo’s average cost of total debt fell from CDI + 0.87% p.a. on December 31, 2007, to CDI + 0.36% p.a. in the same period of 2008. This decrease is due to the change in the future IGP-M curve, the projection of which is used to determine the future pension fund debt flow to maturity.

The average total debt maturity was extended from 6.8 years on December 31, 2007, to 7.1 years on Decem-ber 31, 2008, due to the extension of the termination date of the Mathematical Reserve Adjustment agree-ment made with Fundação CESP, from 2022 to 2028.

On December 31, 2008, 0.7% of AES Eletropaulo’s to-tal debt was pegged to the dollar, and 96.3% hedged against foreign exchange rate fluctuations, based on

net income

AES Eletropaulo reported a net income of over R$ 1 billion – the highest in its history –, against R$ 712.6 million in 2007. The contributing factors for this posi-tive result were increased consumption, an added R$ 78.7 million to net income, due to the combination of the reverse entry for the Cofins calculation base ex-pansion and to the reserve for the fine related to the increase in the Cofins rate and the positive effect of the R$ 194 million, as a result of the favorable court ruling as regards the Finsocial tax.

capital expendituresGRI – G3: EC8

In 2008, AES Eletropaulo invested a total of R$ 457 million, including R$ 47.1 million in self-financed projects (customer expenditure). The ultimate goal of these investments is to increase system reliability and system service capacity, so as to improve quali-

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Capital expenditure(R$ Millions)

456.7433.4

2007 2008

5.3%

the loan transaction balance on December 31, 2008 of R$ 27.6 million (principal + interest). The company has no other transactions pegged to foreign exchan-ge rates or involving derivatives.

In June 2008, Standard & Poor’s (S&P) raised the company’s rating at the national level from A to A+, and maintained its rating at the international level at BB-.

capital market

AES Eletropaulo is a publicly-held corporation, who-se common and preferred shares are traded on the São Paulo Stock Exchange (BOVESPA) under ticker symbols ELPL3, ELPL5 and ELPL6 and is listed under BOVESPA’s Corporate Governance Level 2 listing sin-ce December 2004, and is in BOVESPA’s Corporate Sustainability Index (ISE) portfolio for the third con-secutive year.

AES Eletropaulo’s Class B preferred shares (ELPL6) closed 2008 at R$ 25.50 per share, its value having decreased by 29.9%. The IBOVESPA’s devaluation (BOVESPA’s Index) was 41.2%, and that of IEE (Electric Energy Index), 11.6% in the same period.

Class A preferred shares (ELPL5) registered a devalu-ation of 20.3% in 2008.

ELPL6 shares were traded in all BOVESPA sessions in the year. Liquidity data show that 296,000 transactions were made, involving around 207.9 million preferred shares and a daily average trading volume of R$ 25.7 million on the spot market during the period.

More than R$ 450 million were invested by AES Eletropauloin 2008.

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Net Income(R$ Millions)

1,027

71244%

2007 2008

Net Debt(R$ Billions)

2.5

3.014.4%

2007 2008

M a r k e t a n d c u s t o M e r r e l a t i o n s

development

AES Eletropaulo closed the year with a total 5,832,309 customers – to whom it distributed a total of 41,243 GWh in energy –, 5,832,093 of which were captive customers1 and 216 free customers2. The company reported a 3.3% increase in total number of consumers, with a 6.9% and 3.2% rise in the number of consumers in the residen-tial class and industrial class, respectively, in relation to 2007.

aes eletropaulo grows and develops together with the cities situated in its concession area

Market growth in 2008 (%)

-0.4

6.9

3.3

ToTal EnErgy

Residential Industrial Commercial Rural Public authorities

Public Lighting

Public services

3.2

1.3 1.2

0.0

4.4

1 A customer that purchases energy directly from the local distributor and pays the same regulated tariffs published by ANEEL.

2 Every customer that leases space on the distributor’s grid to purchase energy from other suppliers.

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In 2008, energy consumption by the residential class expanded due to an increase in the number of billed customers (175,700 new consumer units in the past 12 months); reclassification of some industrial and com-mercial customers to residential customers, for lack of proof regarding their legal status (CAT-79); and an additional four business days.

Other contributing factors were: a 2.4% rise in real income of the population living in the São Paulo

Metropolitan Area; drop in the unemployment level to 8.4% in 2008, from 10.1% in 2007; and regulariza-tion of 74,500 illegal connections.

The increase reported by the commercial class was due to the São Paulo commercial sector’s improved performance, which in 2008, grew 12.5%, according to the Monthly Commercial Business Survey (PMC) published by IBGE, and a 30% credit facility expan-sion, which also had a positive impact on the con-

Customer Profile (% share in number of accounts per class)

0.3

Total: 5,832,093

0.56.3

92.9

Residential

Industrial

Commercial

Other classes

Energy Distribution (% share in number of accounts per class)

1 Customers that left the company’s captive customer base and now pay the tariff to use electric distribution systems (TUSD).

Total: 41,243

0.12.1

1.4

2.7

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17.9

15.9

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Public authorities

Public Lighting

Public services

Free Customers 1

Residential

IndustrialCommercial

Rural

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sumption of the residential class.

The industrial class registered a 0.4% decline in consumption due to maintenance stoppages called by some industrial customers, causing a 120 GWh impact on the industrial market, and to a pro-duction slowdown in some plants in the face of uncertainties prompted by the world crisis, which led to collective vacations being brought forward to December.

Energy consumption rose by 6.9% in the residential class in 2008 due to an increase in real income, decrease in the unemployment rate and the regularization program.

Growth of the energy market 2

(in GWh)

39,932

38,183

2006

41,243

2007 2008

4.6%

3.3%

2 Includes free customers

Growth of the captive energy market 2

(in GWh)

32,577

31,656

2006

33,860

2007 2008

2.9%

3.9%

2 Not including own consumption

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zation of the company’s in-service commercial system functionalities, which were reduced from thirty to nine.

Requiring a total investment of R$ 186 million, the project started in 2005 and was implemented in two stages. The first, in 2007, involved corporate (average1 and high voltage2) and low reactive voltage3 custo-mers; the second, which was carried out in February 2008, involved 5.7 million low-voltage energy custo-mers. During this period, some 3,500 employees – in-cluding customer service unit attendants, call center operators, electricians and meter readers – received the basic training to learn how to use this new tool.

As there are a great many challenges to overcome when a company changes over to a new commercial system, AES Eletropaulo outlined the key problems that could arise in the delivery of customer services and bearing in mind its social role and its focus on the transparency of the entire process, the company adopted measures in the communications and in the operational areas.

In the communications area, AES Eletropaulo prepa-red a broad customer communications plan that in-formed them what could happen in cases of payment arrears of electricity bills and call center saturation. This was widely broadcast in the mass media, electricity bills, customer service units and the Postos Mais. At an operational level, to mitigate the impacts on customer service quality, another 370 new operators were hired for the call center; 21 new Postos Mais were inaugu-rated and the personal customer service hours at the customer service units were increased.

The communications plan was also disseminated among the regulatory agencies, consumer protection organizations, banks (in charge of financial settling) and opinion makers, through personal meetings press interviews and letters.

tariffsgrI – g3: 2.8, EC1

AES Eletropaulo’s tariffs are adjusted annually by Aneel (National Electric Energy Agency). In 2008, the average annual adjustment made by the company on customer tariffs was established at 8.01%, effec-tive from July 4, 2008 to July 3, 2009 and divided as follows:

• Disbursements on industry charges, cost of energy and transmission costs: 4.31%.

• Capital remuneration, depreciation, personnel, ma-terial, services and sundry expenses: 3.70%.

custoMer relations

The last stage of CCS (Integrated Commercial Ma-nagement System) was implemented in 2008. This completes the integration and standardization of the company’s management, financial and commercial processes. CCS is a step up in the refinement and unification of the entire customer relations process, of services aimed at recovering revenues and optimi-

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High voltage (plants and large commercial establishments)

7.28%

Low voltage (homes, small commercial establishments and customers with the low-income tariff subsidy benefit)

8.63%

Adjustment per customer class

Throughout 2008, AES Eletropaulo’s business and in-formation technology departments put a lot of effort into stabilizing the system, both from the technical and also from a functional viewpoint. In 2009, they will be taking further action to stabilize the system to see that the CCS actually ushers in a new phase in AES Eletropaulo’s customer relations, and bring changes that will foster ongoing improvements in customer relations and services. These changes will enable it to gain better knowledge of each customer and deliver customized services in the medium term.

Sobre todos os canais de relacionamento com os clientes, leia mais na página 28.

Media MonitoringgrI – g3: 1.2

AES Eletropaulo’s Press Management monitors daily the articles and news that are published in the me-dia in general. It then classifies these in order to con-solidate indicators on positive, neutral and negative mentions about the company, and distributes this in-

Some differentiated servicesBesides making ongoing efforts in order to provide quali-ty, agile and safe energy services, AES Eletropaulo is also always looking out for new opportunities to improve custo-mer relations and achieve efficiency gains at its call centers and customer service units. The principal actions develo-ped thus far are:

- Prefixed system: that tool enables customers who suffer a power outage and call the company’s call center, to receive automatically recorded information on the estimated time that energy will be restored.

- Best time: in the event of an excessive number of calls to the call center at the same time, customers may elect to be called by the company at the time and telephone number of their choice.

- Debt renegotiation: customers whose bills have not been paid may negotiated their debts through the call centers, consumer service units and Postos Mais.

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formation to the departments, when applicable, for decision-making and action-deployment purposes.

coMpliance with new laws

AES Eletropaulo has made the necessary adjustments to its processes in order for them to become legally compliant with Decree 6523, of July 31, 2008, which went into force on December 1, 2008. This decree es-tablishes the general guidelines on consumer services and regulates Law 8078, of September 11, 1990.

With the sole purpose of complying with the decree, AES Eletropaulo trained 100% of its employees involved in customer services in the new legal requirements. This training session totaled 2,400 man-hours in just 15 days.

Among the main actions taken, worthy of note were the adoption of a suitable telephone for the audio and vi-sually impaired, changes in the electronic customer ser-vices menu, offer of a customer service number when initiating services, to supply a recording and track re-cord of customer requests, when requested.

1 Consumer units with supply voltage under 2.3 kV, pro-vided by the underground distribution system and op-tionally billed in this group, and with a supply voltage between 2.3 kV and 25 kV, 69 kV and between 30 kV and 44 kV.

2 Consumer units with supply voltage equal to or above 230 kV and between 88 kV and 138 kV.

3 Individuals or companies equipped with electronic meters that measure energy that is convertible into other forms of energy, expressed in kWh.

through the development of professional skills and recognition and motivation initiatives.

In 2008, the Behavioral Development Program was created. This demonstrates the entire service process to employees involved in customer relations, from

CuStoMEr SAtiSfACtion

grI – g3: PR5

Customer satisfaction as well as fidelity evaluation and dissatis-faction factors are rated mainly from the Residential Customer Satisfaction Survey conducted by Abradee, the Consumer Sa-tisfaction Survey conducted by Aneel and the Corporate Cus-tomer Satisfaction Survey.

Survey on Corporate Customer Satisfaction

Periodicity: annual (a special methodology deve-loped jointly with Instituto Vox Populi)

Surveyed aspects: energy quality and continui-ty, customer information/orientation, electricity billing, emergency services, manager’s role and qualifications, services provided by the main tele-phone switchboard and image

number of interviewees: 351

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professional developMent and recognition

Recognition of the value of customer service profes-sionals is essential for the evolution of customer satis-faction. At AES Eletropaulo, this recognition is given

Corporate Customer Satisfaction (%)

66.473.9

69.2

2006 2007 2008

AES Eletropaulo is inaugurating a new phase. Doing all to get closer to you

Periodicity: annual, covering Brazil’s 64 energy distributors.

Surveyed aspects: satisfaction, price perception, service quality (access to call centers, consumer sa-les services, emergency services, information provi-ded, etc.), reliability and fidelity

number of interviewees: 450

Aneel’s Consumer Satisfaction Survey

45

Periodicity: annual, and includes from 40 to 50 energy distributors

Surveyed aspects: energy supply, information and communications, electricity bills, customer services and company image

number of interviewees: 625

Abradee’s residential Customer Satisfaction Survey

the time the call center operator or customer service unit attendant takes the call to the time the electrician goes out to provide the on-field solution. The chief goals are to heighten awareness in these employe-es on the important role they each play in servicing customers, and to identify opportunities for improve-ment so as to lend greater agility and better quality to the services.

At events such as the “Teleoperator’s Day”, “Top Re-lations” and “Attendant’s Day” held in the first half of the year, the outstanding professionals receive honorable mention and are awarded prizes. The em-ployees with outstanding performance in providing customer services are elected by their peers, by spon-taneous indication.

oMbudsMan

Complaints directed to the Ombudsman are also considered a parameter to rate customer satisfaction. The monitoring and assessment of these complaints

have enabled the company to reduce repetitive cau-ses and streamline internal processes.

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ombudsman

2006 2007 2008*

No. of complaints received

21,139 21,600 36,972

Justified1 62% 56%72%

(estimated)

Unjustified2 38% 44%28%

(estimated)

* During the transition period to the CCS system (page 42), an increase in the number of customer complaints and questions was registered, which explains the greater volume of complaints in 2008 in relation to 2007 and 2006.

1 Justified complaints: cases in which the customer’s complaint has grounds.

2 Unjustified complaints: cases in which the customer’s complaint is groundless.

Aneel’s Customer Satisfaction Survey (%)

2006

65.10

2007 2008

65.5264.70

Note: national average in 2008 – 62.62%

residential Customer Satisfaction Survey – ABrADEE (%)

2006

80.4

2007 2008

75.175.4

Note.: ABRADEE average in 2008 – 77.4%

O p e r a t i n g p e r f O r m a n c eGRI – G3: SO1

diversion

AES Eletropaulo invested R$ 457 million in 2008 to guarantee that its market demand was fully met with adequate levels of quality and service continuity.

R$ 410 million of the investment total was funded by the company itself, and R$ 47 million by third parties.

Investments were mainly allocated to renovating and modernizing grid components, expanding con-sumer service capacity, increasing the reliability of energy supply, reducing power outages, improving technical and operational indicators and the quality of services, as well as information technology and loss recovery rates.

All the projects developed with a view to implement-ing or expanding transmission lines or substations comply with the environmental requirements estab-lished in current legislation. With respect to existing facilities, the work to adjust these and make them le-gally compliant is being planned and given priority.

aeS eletropaulo’s energy inspires special moments

partnerShip with the public authOritieS

The burgeoning of cities calls for the expansion of their road and urban transportation systems. These works impact AES Eletropaulo’s electric system in-frastructure, which needs to be adjusted to allow for improvements. In 2008, the main projects undertak-en by AES Eletropaulo to enable the public authori-ties to move forward with their own undertakings were the following:

- Elevation of two overhead transmission lines to al-low for the building of the Frias de Oliveira cabled-stayed bridge, which boasts concrete structures measuring up to 53 meters in height.

- Start of work on the elevation of three transmission lines to allow for the implementation of the Metro’s Green Line and continuation of the works started in 2007, to raise and reposition transmission line and distribution circuits for the construction of the southern section of the Mário Covas beltway.

integrated maintenance SyStem

A pilot project introduced in 2008, the SMI (Inte-grated Maintenance System) is a tool designed to offer operation and management support to the company’s high voltage assets maintenance.

Not only does it add efficiency to the registration and control of these assets, with an impact on the remuneration base, but the SMI also aims to im-prove control process and maintenance registers, as well as to increase team productivity through more efficient service orders and application of PDA tech-nology (palm-held computer).

Key projects in 2008

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Anhanguera Project

A necessary set of projects to adequately service, center, western and southern re-gions of the concession area, to adjust trans-mission installation systems, directly ben-efitting a population of around 1.6 million inhabitants. The main contracts were the reconstruction of LTA (Overhead Subtrans-mission Line) Edgard de Souza–Mutinga 1-2 and the construction of LTA Anhanguera–Mutinga 1-2.

Milton Fornasaro Project

These works were needed to meet the grow-ing market of the western region of the city of São Paulo and municipalities of Cajamar and Pirapora do Bom Jesus. Their purpose was to lend greater operational flexibility, and thus greater energy supply reliability for the benefit of a population of approximately 1.2 million consumers.

The project involved the reconstruction and expansion of LTA Milton Fornasaro–Remé-dios 1-2 and switch installation and realloca-tion of LTA Pirituba–Vila Rami 1-2.

Paineiras Project

These works are under way in response to market growth and to lend greater opera-tional flexibility and reliability to the system for 51,500 customers in the southern re-gion of the city of São Paulo, especially in the districts of Butantã, Morumbi, Vila Sônia and part of the municipality of Taboão da Serra. The project consists of the construc-tion of the underground subtransmission line Paineiras 1-2; the overhead distribution line Paineiras; the underground distribution line Paineiras and implementation of the 120 MVA ETD Paineiras (Distribution Transform-er Station).

The pilot project’s study and evaluation results will serve as one of the pillars underpinning the imple-mentation of the PLM project and GIS – Subtrans-mission system.

fleet renewal

AES Eletropaulo started to renew its entire fleet in 2008, a process it expects to complete by the end of the first half of 2009. This initiative – one of the requests made by the employees during Pé na Es-trada, started in August 2008, with the delivery of 64

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GIS – Subtransmission

For about two years, AES Eletropaulo has been using and continuously enhancing its geographical information system. In 2008, work was started on the incorporation of the subtransmission system to its data base.

After this incorporation, the system will provide access to physical data on all trans-mission lines and substations, and serve as

the single corporate management system for these assets.

GIS also benefits several other processes. It provides support for operation analysis, feasibility studies of new works, studies on connection of new sources and new customers, mitigation of environmental impacts caused by the construction or re-construction of new transmission lines and cost reduction.

PLMGRI – G3: PR1

In 2008, AES Eletropaulo started to plan the development of the PLM project (Prod-uct Lifecycle Management). This process is designed to manage the lifecycle of a prod-uct in technical and operational processes aimed at the expansion and maintenance of electric system assets. The distributor proposes to invest R$ 17.7 million in this project by 2010.

PLM involves redesigning the technical and operational process with a focus on ISO 9001 requirements and reimplementing a solution that will allow for asset manage-ment using GPS type of system (acronym for

Global Positioning System) and PDA (palm-held computer) technology synchronized and integrated to other existing corporate systems (ERP – Integrated Corporate Man-agement System and GIS – Geographic In-formation System).

As a result of implementing the PLM, AES Eletropaulo will be following the best prac-tices and technologies available on the market. It will increase the reliability of its technical and financial data and guarantee the consistency of all data on assets in-stalled in its concession area, i.e., between the physical assets base and the accounted assets base. For the customer, the project will translate into energy supply gains in efficiency and agility.

new vehicles. The project provides for the replace-ment of some 1,200 vehicles, 611 of which light cars and 574 heavy vehicles equipped with cargo boxes and hydraulic equipment. The average age of the fleet, which is currently 11.5 years, will be reduced to one to two years as a result of this effort.

All of the vehicles have flex-fuel engines, which was one of the initiatives taken by the company to re-duce atmospheric emissions. Another innovation from AES Eletropaulo was to outsource its entire light vehicle fleet, which should result in financial and operational gains.

agility in handling and addreSSing incidentS

AES Eletropaulo monitors its concession area contin-uously so as to supply energy with safety and quality, independently of the external factors that impact the electric system. Heavy rains, storms and major events (whether in public spaces or not) are some examples of matters that have to be addressed, in real time, by the 130 operators of AES Eletropaulo’s operation centers, requiring work on the electric grid to guar-antee services and avoid electricity-related accidents. These operators direct the work of the 2,512 elec-tricians directly involved in resolving technical and emergency problems from a distance.

The traffic – a major challenge for those who need to quickly get from one place to another in the city of São Paulo – prompted the company to also hire mo-to-attendants. There are 90 such professionals, who are able to get to the incident sites with greater agil-ity, to close these sites off so as to avoid accidents, and who receive the necessary information from the operation center to direct the team of electricians that will be sent to address the problem.

In 2008, AES Eletropaulo implemented a moto-call system, which automatically forwards complaints to the moto-attendants, without necessarily using radio communication.

Another system introduced by the company was the call-back, whereby it can call back a customer who has

complained about power interruption. Using the call menu, the customer can answer whether or not the energy supply has been re-established. If the reply is yes, the complaint is shelved, and futile deployment of an emergency team to the site is avoided. The sys-tem also allows the company to call back customers in order to inform them when power is expected to be restored.

AES Eletropaulo has also updated its weather moni-toring system and implemented a functionality known as Detecta. This tool enables it to follow up on the evolution of atmospheric phenomena in its conces-sion area, responsible for heavy storms that cause power outages.

A unified service order management system is ex-pected to go into operation in 2009 - Atende Unifi-cado. The system fosters the management and quick dispatching of emergency service orders, and the combating of irregular consumption, public lighting and commercial services. The automatic forwarding module will also be installed in 2009. This is a system that will send data to the PDA terminals to be handed out to the teams.

technical quality indicatOrS

AES Eletropaulo’s DEC (Equivalent Duration of Inter-ruption per Consumer Unit) or average duration of en-ergy interruption suffered by each customer in a given period, and FEC (Equivalent Frequency of Interruption per Consumer Unit) or the number of times, on aver-

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age, that each customer has its power cut off in a given period, were 9.20 and 5.20, respectively, in 2008.

Despite its being close to the reference value stipu-lated by Aneel (National Energy Agency), the DEC rate in 2008 was higher than that posted in 2007 due to atypical climate conditions in August, following a long period of drought, which caused damages to the electric grid.

The FEC rate was 8% less than that registered in 2007 and the lowest in AES Eletropaulo’s history, thanks to major efforts that were put into maintenance, automa-tion and revision of the distribution protection system.

In 2008, AES Eletropaulo was given recognition by Abradee (Brazilian Energy Distributors Association) for reporting the lowest FEC rate (5.64) among all distribu-tors having over 400,000 customers.

OperatiOn Summer

All the investments and efforts made to maintain and expand the electric system prepared the company for the summer’s rainy season (December to March), when demand rises by almost 20%, to close to 1,000 incidents per day. During this period, the company has a task force of 200 distribution electricians (33% more), 127 moto-attendants, 60 subtransmission elec-trician teams (15% more) and up to 1,000 extra call center operators (10% more than those listed on the regular payroll). During Christmas and New Year, it also has a task force on hand to tackle emergencies.

In 2008, the FEC rate was the lowest in AES Eletropaulo’s history. In this same year, Abradee recognized that the company had already registered the lowest FEC rate in Brazil in 2007.

DEC

8.907.87

2006 2007 2008

11.81 11.60

9.20

10.92

Aneel

Determined

FEC

5.645.52

2006 2007 2008

8.61 8.66

5,20

8.41

Aneel

Determined

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electric energy lOSSGRI – G3: 1.2

AES Eletropaulo annually plans and enforces its Electric Energy Loss Reduction Program. Energy loss is the difference between the energy required in a given period and that effectively sold to cus-tomers, and it is calculated as a percentage of the total energy required.

The distributor has been intensifying efforts and investing in technology designed to reduce ener-gy loss due to both technical reasons (heating and magnetism, for example) and commercial reasons (frauds to and failure in equipment or administrative processes) since 2003. In 2008, the total loss rate was 11.58%; 6.49% in technical losses and 5.09% in commercial losses.

The Loss Reduction Program is principally aimed at combating commercial losses, which it does on three main fronts:

• Inspections

In 2008, 270 AES Eletropaulo teams visited low, medium and high voltage installations with a view to identifying consumer units that were register-ing lower energy consumption than that effectively consumed, either due to irregular procedures or metering equipment failures. The company di-rected R$ 53 million to this action, which resulted in 434,600 inspections, the replacement of 38,200 meters, the correction of energy measurement at 20,200 facilities and the recovery of R$ 43 million in revenues and 296 GWh in energy.

Another action taken was to seal off 6,500 collec-tive meter boxes in low-income housing projects in order to make it more difficult for unauthorized persons to gain access to the meters.

The efficiency of these inspections has been grow-ing over the years due to technology advances and use of software to identify irregularities and of increasingly smarter and more efficient electronic metering and monitoring equipment.

• Regularization of illegal connections

Through the Transforming Consumers into Customers Program, the company is legalizing irregular consum-er units and heightening awareness among the low-income community dwellers on illegal connections to the AES Eletropaulo distribution networks, using both

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Electric Energy Loss (%)

12.91

2002 2003 2004 2005 2006 2007 2008

13.23 13.5312.91

11.9911.48 11.58

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its own and funds provided under the Energy Efficien-cy Program. In 2008, a total 74,500 illegal connections were legalized, R$ 21 million of which was financed by the company and R$ 20 million from funds provided under the Energy Efficiency Program.

• Administrative Losses

AES Eletropaulo monitors its equipment and processes with a view to identifying failures that could cause reg-istration of less energy than that effectively consumed at the installation; inconsistencies in technical and commercial registration data that could cause losses derived from billing; and regularizes installations that are billed a fixed amount, due to the lack of metering equipment (agreement). As a result of this effort, in 2008 AES Eletropaulo reduced energy loss on the mar-ket by 25.1 GWh.

technOlOgy and ServiceS

Company assets management is essential to guar-anteeing the reliability of the equipment used in the electric system and adequately provisioning for their replacement.

At AES Eletropaulo, this job is undertaken in a tech-nology complex, the only one of its kind in the en-ergy distribution business and a benchmark in Bra-zil. It consists of laboratories with different functions and equipment repair and testing shops.

One example is the metrology lab, which is respon-sible for calibrating the equipment used by the monitoring and inspection teams to identify energy consumption frauds. The reports on electric energy meters showing signs of irregularities are issued by Inmetro (National Institute of Industrial Metrology, Standardization and Quality), which has had a coop-eration agreement with AES Eletropaulo since 2004. Under this agreement, the institute maintains a lab-oratory on the company’s premises which provides services not only to the company, but also to other concessionaires of the energy industry.

Another example is the chemistry lab, which con-trols the quality of the isolation mineral oil used in transformers and switches to prevent damaging of equipment and the grid. This lab also controls the quality of one million liters of recycled isolation oil per year, which the company re-uses.

In all, over 60,000 tests are carried out each year at the Quality Control Lab, which attests to the con-ditions of use of the aerial basket work platforms and such individual and collective protection equip-ment as gloves, sleeves and helmets, all important contributing factors to employee safety. In 2008, the company purchased acoustic emission testing equipment that analyzes the structural behavior of the aerial basket work platforms, to ensure that they are totally reliable and safe.

To provide support services to the Engineering De-partment and personnel working on the field, the company runs an automation and protection labo-ratory. Its purpose is to create a simulated test en-vironment before adopting automatic on-field su-pervision and control systems. All substations are equipped with remote terminal units that undertake data acquisition and basic control.

The company has units that are responsible for re-forming and testing electric system equipment, which have ISO 9001:2000 certifications. In 2008, 161,000 energy meters and 6,800 transformers for both the overhead and underground distribution grids were reformed. As a result of these efforts, the company saves on investments and manages its assets efficiently, while having a strategic inventory of equipment on reserve to meet the needs of the electric system.

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health

EnvironmEntal managEmEntGRI – G3: EN26, SO1

AES Eletropaulo’s environmental management is struc-tured in accordance with the AES Group’s Environmen-tal, Health and Occupational Safety Policy in Brazil. To fulfill the commitments stipulated in this Policy, AES Eletropaulo relies on its Environmental Management System (SGA), which has earned ISO 14001:2004 Certi-fication.

The company also follows the guidelines issued by AES Corp., which establish the minimum environmental standards and requirements that the entire AES Group is required to comply with. Among other things, the guidelines rule that internal audits are to be held at least every three years to check out the implementation of the requirements, as well as compliance with legal rulings.

Among other examples, the SGA provides for the sys-tematization of all corporate activities, most notably the ones posing greater risk to the environment, such as actions that can adversely affect the quality of the air, water and soil. The system also provides for actions designed to identify whether the company’s suppliers, services and materials meet the requirements of envi-ronmental law, company policies and the guidelines on prevention of environmental impacts and accidents.

aES Eletropaulo contributes to a healthier life

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iSo 14001:2004 certificationGRI – G3: 4.12

Although the SGA has been implemented across the company, ISO 13001:2004 certification currently only applies to its administrative buildings, region-al headquarters, six customer service units and all 149 electric energy substations.

In 2008, AES Eletropaulo had established the goal that between 2009 and 2012 it would earn this certification for all other processes, such as equipment repair shops (transformers and me-ters), the chemical lab (monitoring of the isolating mineral oil used in transformers and switches) and metrology lab (gauging of inspection equipment used to identify energy consumption frauds), sub-transmission lines, underground and overhead dis-tribution grids.

actionS in bEnEfit of thE EnvironmEntGRI – G3: EN11, EN12, EN14, EN26, EN30

In 2008, AES Eletropaulo allocated some R$ 65.3 million to actions and projects that were beneficial to the environment and reduced the impact caused by the concessionaire’s activities.

Protected grid

The compact network is being installed on stretch-es of existing lines requiring greater system reli-ability. It has reduced tree pruning frequency and been the standard form of installation of new pri-mary grid circuits (13,800 kV) since 2005. In 2008, the company increased its protected network to 1,100 kilometers, 34% more than in 2007.

Wooden cross-arms

The company is carrying out a project for the gradual replacement of wooden cross-arms with galvanized steel ones. Although they cost more, this type of cross-arm is lighter and has a useful life 20 years longer than the wooden cross-arms. The main goal is to discourage native forest wood extraction to make the product. Fol-lowing a preliminary study, around 300 galvanized steel cross-arms will be installed in 2009.

Urban trees

Tree pruning is an important preventive action to avoid accidents involving the energy grid and the community, as well as to reduce power supply in-terruptions caused by the contact of tree branches with the distribution lines. Besides this preventive action, AES Eletropaulo’s customers are given the benefit of an emergency call hotline (0800 72 72 196). Organized civil society, represented by the associations of residents, city halls, environment bodies and the public prosecuting office, also has a special phone line – the Green Line, to help the company monitor the quality of the tree pruning services performed by its contractors. Access to the Guide to Urban Tree Planting, where there are sug-gestions on the proper plant species to plant under the network, is possible on the company website (www.eletropaulo.com.br).

Urban orchard

A project that is being conducted with the São Paulo State administration, the Urban Orchard aims to pro-mote the recuperation of the environment and land-scape along the banks of the river Pinheiros, to train

professionals and to foster environmentally-related educational activities.

From the beginning of 1999 to date, the Urban Or-chard project has reclaimed sixteen kilometers of the left bank and six kilometers of the right bank of the river Pinheiros. The environment educational center hosts 2,000 visitors per month, and there are more than 1,300 persons in the work fronts receiving professional train-ing in gardening. The program is sponsored by 23 com-panies, including AES Eletropaulo, which has granted 70% of its safety strip for this purpose and has taken charge of maintaining two stretches of the river bank.

Watershed ProjectGRI – G3: EN11

The projects purposes are to ensure compliance with environmental legislation and to contribute to the downsizing of illegally occupied areas under water-shed protection (APMs). The partnership forged be-tween the Department of Use and Occupation of the Metropolitan Surface (Dusm), the city halls and AES Eletropaulo, dating back to 2006, now has nine out of the thirteen municipalities located in watershed areas in the concession area involved. The project has insti-tuted a commercial service procedure (new connection and extension of the energy grid) for the municipalities located in the APMs, which represents 48.5% of the dis-tributor’s concession area.

Serra do mar State ParkGRI – G3: EN14

In 2008, the company pioneered a new project target-ing the reduction of the impacts caused by the com-pany’s vehicles on the Serra do Mar State Park, where

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it has subtransmission pylons that require maintenance. As a result, some of the routes (pathways) were altered and vehicle and pedestrian access open only to the subtransmission line maintenance teams were defined, in order to protect the springs and avoid the possibility of erosion. This work has served as a reference which has been followed by other companies operating in the same area.

community vegetable gardensGRI – G3: EC9

AES Eletropaulo has offered the swathes under its transmission lines on free lease for the develop-ment of community vegetable gardens since the 80’s. There are currently 1,391 such lessors, with a total planted area of 3.2 million square meters. In 2008, these lessors attended lectures on organic planting, or, pesticide-free plantations, and tech-niques to avoid soil erosion (for example, by plant-ing hay). They were also given directions on how to contact public authorities for information. In 2009, the company proposes to organize a complete course featuring these themes and have a special-ized company deliver it. This practice complies with the contractual requirements on appropriate use of the swathes, from an environmental viewpoint.

Environment Week

From June 2 to 9, AES Eletropaulo organized an Environment Week, and among other initiatives, en-couraged the use of recycled paper throughout the entire corporation, and reinforced awareness among its employees regarding the proper use of water and energy, shown by way of a communications cam-paign featuring faucets and light switches.

noise

In 2008, AES Eletropaulo initiated a study to fine-tune the measurment of noise emissions from its substations. The initiative will be put into practice by 2010, with priority to be given to critical residen-tial areas, and will establish how much AES Eletro-paulo’s equipment contributes to environmental noise emissions in these areas.

research and development projects

Technology innovation has been an important ally in improving the company’s processes and services. Through its Research and Development Program (R&D), AES Eletropaulo is also involved in other projects focused on reducing the company’s envi-ronmental impacts in partnership with several insti-tutions and universities.

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Project 0bjective action result

Tree planting

Diagnose tree interference on the power lines and improve tree planning management

Data registry on trees found in the areas under the scope of the project in the city of São Paulo to the georeference information system, including of their physiological features and the risk of tree interference on the energy system

10,975 trees were registered to the GIS system (page 49) , and the software was upgraded so that reports could be prepared, information gleaned and diagnoses made for a more specific targeting of tree-planting actions and management

Biomass of tree cuttings

Use of pruning waste, evaluation of environmental impacts caused by it and an analysis of the results of the technical, economic and environmental feasibility study on the use of such waste as a source of energy or organic compost

Implementation of a mini compost plant that would use the residual vegetation from the Urban Orchard as raw material

Main products: analysis of the environmental impacts caused by waste disposal – 50% of the municipal authorities dispose of this waste on garbage sites or sanitary landfills; estimated volume of waste generated; economic feasibility study on use of this waste as fertilizer as compared to other fertilizers on the market and an analysis on heating power. The compost generated (urban environment) is competitive in terms of cost with those on the market, although slightly more expensive than that produced in the rural environment. Statistically, the aeration method proved more efficient than the manual. As for the heating power, it was found that this potentially exists, but further detailed research is needed

Underground Chamber Effluents

Development and evaluation of alternatives for disposing of water accumulated in the underground transformer chambers and cable passage wells in the city of São Paulo

Survey of the chambers where water accumulation happens more often; development of software subject to applicable legal requirements and performance of a comparable analysis with the physiochemical analyses already conducted

Project in progress

Research and Development Projects

matErial managEmEnt GRI – G3: EN1, EN26

AES Eletropaulo establishes quality and perfor-mance standards in the pursuit of new solutions with materials and equipment used on the energy grid, and is also concerned with the impacts caused by the production of these materials. This work involves a sample analysis; periodical meetings with employees who use the materials in field work; discussions on possible improvements to equip-ment; and managing the appropriate use of elec-tric system materials and equipment so as to avoid waste, increase its useful life and comply with envi-ronmental laws.

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WaStE managEmEntGRI – G3: EN12, EN14, EN22, EN26

AES Eletropaulo identifies and stipulates how the man-agement, treatment and final disposal of the waste pro-duced from the business is to be made. This process also includes ground and water contamination preven-tive actions, especially by hazardous waste, which is sub-ject to the recommendations of SGA, the guidelines of AES Corp., and the provisions of environmental laws.

Scrap material

AES Eletropaulo sells all scrap material produced by its activities to environmentally-certified recycling

2006 2007 2008

Electric copper conductors (m) 2.154.437 2.196.943 2.188.807

Electric aluminum conductors (m) 4.868.188 4.905.098 4.495.627

Steel strand (m) 150.205 406.097 261.000

Energy meters (unit) 266.549 335.503 328.407

Overhead and underground distribution transformers (unit) 839 2.344 2.944

Concrete posts (unit) 8.287 9.885 13.301

Wooden posts (unit) 1.280 1.300 720

Steel posts (unit) 14.930 7.950 14.505

Wooden cross-arms (unit) 30.210 30.200 43.240

Lightning rods (unit) 17.614 21.816 30.462

Voltage and current transformers (unit) 11.248 14.037 16.791

Principal materials used in the company business

Material 2006 2007 2008 Destination

PCB1 capacitors (kg)1,800 in 2006

and 200749,785 31181 Incineração

Public Lighting Lamp Bulbs (unit) 36,667 7,155 7,521 unitsDecontamination and sent for recycling of metal parts

Fluorescent lamps (kg) - 11,198 11,580Decontamination and sent for recycling of metal parts

Batteries (kg) 17,411 43,046 118,975 Recycling

Oil-impregnated materials (kg) 96,383 23,180 462,000Co-processing in cement kilns / incineration 2

Isolating mineral oil (kg) 23,180 4,000 2,110 Re-refinement 3

Lubricant oil (l) 1,810 4,000 2,110 Re-refinement

Hazardous Waste

1 From 1999 to 2006, AES Eletropaulo removed all PCB capacitors from the grid. By way of a preventive measure, the company periodically checks to see whether there is any equipment that still has these capacitors, if any are found, they are immediately removed and appropriately disposed of.

2 Use of combustible industrial waste and/or raw material in blast furnaces. 3 Industrial process that removes additives, contaminants and degrading products from used or contaminated lubricant oil.

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companies. The principal materials sold are alumi-num, iron, bronze, copper, wooden spools, wooden cross-arms, posts, reactors and material made out of porcelain. In 2008, the company sold a total of 3.7 tons in scrap material.

recycling Program

Since 2000, AES Eletropaulo has had a Recycling Pro-gram, through which the 3R concept (reduce, reutilize and recycle) is disseminated to the public in order to encourage separation the for recycling, of paper, plas-tic, glass, metal waste and used printer ink cartridges in all of its administrative and operating units.

atmoSPhEric EmiSSionSGRI – G3: EN12, EN14, EN16, EN17, EN18, EN19, EN26, EN29

One of the impacts caused by the company business is the emission of CO2 by its vehicle fleet. Emissions in 2008 totaled 8,619.64 tons in CO2 equivalent.

As its fleet has 1,200 vehicles, including light and heavy vehicles, the company monitors its diesel-powered fleet, every three months, based on the Ringelmann Chart – 470 units. A more detailed monitoring of emissions is performed twice a year at repair shops accredited by Cetesb (Companhia de Tecnologia e Saneamento Ambiental).

Before the end of the first half of 2009, AES Eletro-paulo will be replacing its entire fleet, with prefer-ence to be given to ethanol-powered vehicles so as to reduce its C02 emissions. Among other steps the

company is taking to reduce atmospheric emissions is the training of drivers to improve their driving skills with a view to benefiting the environment.

The company also monitors emission of gases that step up the greenhouse effect and destroy the ozone layer (SF6, Fluid R22, Fluid R134 and Fluid FM200) in existing equipment pertaining to the electric system utilized for maintenance of the air-conditioning and fire-fighting systems.

The company’s chief goals are to re-use these gases and act preventively to avoid leakages. As a result, in 2008, SF6 atmospheric emissions were reduced by 359.76 kilograms.

Through the “Transforming Consumers into Custom-ers” project, AES Eletropaulo plans to replace refrig-erators owned by the low-income population for ones that do not have gases that impact the ozone layer, hence, no greenhouse effects.

WatEr anD ElEctricity conSUmPtionGRI – G3: EN3, EN4

AES Eletropaulo’s administrative and operating units monitor water and electricity consumption every month. In 2008, the installations and con-sumption were analyzed by AES Eletropaulo, jointly with AES Infoenergy, so that they could put into practice integrated water and electricity consump-tion reducing solutions at the administrative and operating units. The study, however, showed that the level of reduction achieved did not justify the necessary investment.

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AES Eletropaulo planted 1,495 saplings and delivered 7,286 seedlings to municipal nurseries and to the Urban Orchard project with a view to maintaining and/or restoring the environmental balance of the new project sites.

EnvironmEntal licEnSing GRI – G3: EN14, EN26

All undertakings constructed by AES Eletropaulo after 2004 are duly licensed, as required by the envi-ronmental agencies. In other words, measures have been taken to prevent and control any impact these undertakings may have on the environment, taking into account the sustainability of the business.

The company secured 17 environmental licenses and authorizations in 2008 for new projects, expan-sion or recapacitation of subtransmission lines, dis-tribution grids and substations.

Implementation of the Environmental Management Plan in the projects initiated in 2008 and after, fos-tered better management of the activities carried by AES Eletropaulo’s contractors. By performing 48 environmental inspections on these sites, the com-pany seeks to guarantee the environmental quality of the services delivered and effective compliance with the requirements established in the licenses.

Environmental liabilitiesGRI – G3: EN28, SO8

AES Eletropaulo has been conducting environmental surveys, in compliance with CETESB requirements, to confirm whether there has been any water or ground contamination or not, due to oil leakages. In 2008, the distributor earmarked R$ 5.3 million to investigate and reduce environmental liabilities.

2006 2007 2008

Gasoline and diesel (l) 2,310,800 2,684,040 3,194,018

Ethanol (l) 144,400 559,280 658,842

Natural gas (m3) 5,254 14,950 136,109

Fuel Consumption

2006 2007 2008

Fluid R134 (kg) - 22 58

Fluid R22 (kg) 20 83 -

Gas Emission

2006 2007 2008

Water (m3) 129,942 127,627 120,478

Electric energy (GWh) 33 40 46

Consumed by the Company

Material 2006 2007 2008

Paper and cardboard (kg) 98,445 58,368 44,493

Plastic (kg) 30,492 26,244 32,045

Glass (kg) 144 5,333 262

Metal (kg) 264 609 1,178

Ink cartridges (unit) 1,350 1,267 11

Recycling Program

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StaffGRI – G3: LA1

AES Eletropaulo closed 2008 with a total of 4,141 company employ-ees and 6,368 outsourced employees in its 21 administrative and operational units and 60 customer service units and Postos Mais.

“Hit the Road” GRI – G3: 4.4

Targeted at improving the corporate framework, Pé na Estrada was launched in 2008, when the chief executive officer of AES in Brazil weighed the results of the past years and explained the company’s strategy for the 2008-2011 period at a meeting with the employees of all the Group’s companies.

More than just a simple event, Pé na Estrada was an opportunity for a representative section of the employees to answer two important questions that would make the company redirect its actions in relation to internal personnel: what is working and what is not working at the company?

Based on the answers, the company compiled a broad plan of action consisting of 57 steps, 49 of which have already been implemented in 2008. The initiative includes not only pinpoint actions of specific interest to a particular operating unit, but also strategic actions such

S o c i a l P e r f o r m a n c e

educationaeS eletropaulo transforms the future of the communities it serves

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as the definition of the internal recruitment policy and renewal of the company fleet. The actions that were not completed will now be completed in 2009.

Human resources Policy

Another highlight in 2008 was the integration of the policies on human resources of AES Brasil Group’s companies. As a result of this effort involving 14 pro-cesses, a greater synergy among the group compa-nies was achieved, besides a greater transparency in employee relations, which has galvanized career de-velopment. For example, recruitment and selection criteria were unified, scholarship grants were given and the transfer of employees from one company to another facilitated. The company expects to inte-grate seven major processes in 2009, most of which are subject to collective bargaining.

trainingGRI – G3: LA10, LA11

To enable it to put its five values into effect – En-sure safety first; Act with integrity; Honor commit-ments; Pursuit of excellence; and Self-fulfillment at Work –, AES Eletropaulo believes that it is essential to invest in ongoing professional development and training of its workforce.

The steps taken by the company in this regard are broken down into three main initiatives: leadership development, extended education and technical-operational training.

Leadership development is geared to prepare leaders for rapid responses to the challenges of the organiza-tion, to direct its employees in the achievement of goals and to disseminate company culture.

Employees by position (%)

Analysts

Assistants

Attendants

Coordinators, Managers and Directors

Electricians

Engineers

Operators

Technicians

222

16

13

11

8

46

Number of employees by gender

Men

Women

3,316

825

Employees by administrative unit (in %)

36,6

Regional ABC

Regional East

Regional North

Regional West

Regional South

Revenue Management

Marketing and Customers

Operations and Engineering

Technology and Services

Administrative units and headquarters

18.1

15.8

10.69.6 11.8

9.5

9.1

65.7

3.8

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Under the Extended Education Program, AES Eletro-paulo provides scholarship grants for graduation and language courses, and encourages their participation in outside seminars and workshops. It also holds a va-riety of internal updating seminars, lectures and work-shops, and specific courses in several fields such as computer skills, grammar revision and self-develop-ment via the e-learning and Corporate TV systems.

The training and technical - operational skills upgrad-ing programs focus on the requirements contained in labor laws regarding the basic qualifications of employees who are directly engaged in operations, sales, technical or administrative services and, ulti-

mately, on preparing them for specific process man-agement and control duties and teaching them basic people management and integration activities.

leaDerSHiP DeVeloPment

Program objective attendance in 2008

PDL (Leadership Development Program)To prepare leaders at all levels, including future leaders, and skills the AES Group considers essential to personnel management

19 newly trained leaders this year, with 420 professionals having attending the PDL project since its inception

Leader CoachTo stimulate the sharing of the leaders’ experiences and knowledge with employees, based on the “organization that learns” concept, through talks given by the executive officers

200 employees

Evaluation of the leadership-coordinator profile

To develop the skills of coordinators, with a special focus on leadership, conflict management, planning and control, decision-making, negotiation, change management, safety and communications

201 coordinators involved

Leader CoachTo prepare the leaders to act as Leader Coach and to create a feedback culture

All company managers (90)

eXtenDeD eDUcation

Program objective attendance in 2008

Grants for undergraduate and graduate (MBA, M.A and Ph.D. degrees) and language courses, participation in seminars, congresses and workshops

To update and upgrade employee skills 333 participants

Distance LearningSelf-development of employees via the 23 points where Corporate TV programs are shown, and through the e-learning program (Internet course)

1,400 corporate TV programs exhibited and 5,400 visits to the Internet courses (e-learning)

tecHnical anD oPerational traininG

Program objective attendance in 2008

Technical trainingTo train, subject to legal requirements and basic schooling program requirements, employees to work on the electric system and in sales and customer services

80,139 participants

Energy Rodeo

To disseminate best practices and award the teams of electricians who perform specific tests with agility, safety and technical knowledge. It also organizes activities for the employees who work in sales and customer services

5,869 participants, including employees and contractors and their family members

Principal development initiatives by professional category

2007 2008

Man-hours of training 708,588 591,929

Average per employee 167 hours 137 hours

Attendance at courses, talks, seminars and training programs

130,600 80,100

Training

Performance evaluationGRI – G3: LA12

AES Eletropaulo carries out performance evalu-ations (360º) on every employee. The system ap-plied includes self-evaluation, peer reviews and evaluations by managers and subordinates. This process significantly reduces subjectivity and lends greater credibility to the evaluation, as comments on employees come from multiple sources. 2008 was the first year in which performance was evaluat-ed in all of the Group’s companies, so that employ-ees from different companies were able to evaluate each other.

This tool enables the company to evaluate behavioral and technical skills its employees must show when per-forming their duties and in achieving targets. Commit-tees are then set up to analyze and standardize these evaluations in order to identify talents and successors to key positions, and also to prepare professional ad-vancement and career plans.

Lastly, in what is known as the I deserve a feedback stage, managers talk over the results with each individ-ual and establish a specific development plan for that employee.

remunerationGRI – G3: EC5, LA14

AES Eletropaulo’s remuneration plan is divided into fixed (functional) and variable, in line with the gen-eral guidelines set out by AES Corp. for all the group companies in Brazil.

Fixed remuneration is pegged to the responsibili-ties that go with position. The variable portion of

remuneration is based on each employee’s perfor-mance evaluation. The collective PLR (profit shar-ing) is paid out to all of the employees from man-agement level down.

The company’s remuneration management is guided by four strategic components.

• ensure internal employee equality by supporting the functional and organizational plans;

• outline the job and salary framework;

• identify the best remuneration practices on the mar-ket and guarantee competitiveness so as to attract and retain talents;

• provide the tools and processes required by man-agers to make remuneration management decisions in relation to their subordinates.

The lowest salary paid in 2008 to an AES Eletropaulo employee was equivalent to 1.9 of the minimum wage, which stood at R$ 415 in December 2008. In this same period, men’s salaries were, on average, 39% higher than those earned by women at the administrative level. In management positions, men were paid, on av-erage 7% more than women, and in operational posi-tions, women earned on average 24% more than men.

BenefitsGRI – G3: EC3, LA3, LA8

The company offers employees and their family mem-bers a benefit package that is in keeping with market practice, and more than what is legally required. For example, the personal support program (PAP) is a tele-phone service that provides psycho-social guidance to employees facing financial, legal and personal prob-lems. The service is designed to promote well-being and a harmonious work environment.

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Employees also have a complementary private pension plan, which will complement the pen-sion paid by the National Social Security Insti-tute – INSS, to which the company contributes a like amount to that paid by the employee, up to a given ceiling.

recruitment and selectionGRI – G3: LA2

AES Eletropaulo favors in-house recruitment to fill in vacant positions in the company. In 2008, this process, known internally as Job Posting, was re-structured and adopted by all of the AES Group companies in Brazil. As a result, standard rules and criteria were set out for selecting and job posting – one of the chief personnel-related actions derived from the Pé na Estrada event – and applied at all of the companies, thereby increasing opportunities for professional growth for the Group’s employees. Where vacancies cannot be filled in by internal per-sonnel, the company starts an external selection process. In 2008, there were 218 new vacancies at AES Brasil, and 880 employees applied for the se-lection process.

The employee turnover rate was 9.35% in 2008, as compared to 3.68% in 2007.

employment Program for the Disabled

In 2008, AES Eletropaulo trained 50 physically dis-abled persons so that they could occupy positions in its administrative and operational units. This ini-tiative, implemented in partnership with National Industrial Apprenticeship Service – SENAI and In-stituto Edison, is part of the Employment Program for the Disabled maintained by the company since

2007 2008

Food 21,921 24,478

Private pension plan 111,936 26,391

Health 20,562 25,853

Education 2,040 2,036

Professional skills training and development

629 1,035

Day-care centers or day-care assistance 635 681

Benefits (R$ Thousands) 1

1 Excluding employees who work part-time.

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2005, which is aimed at promoting the inclusion of disabled persons in the labor market, in compliance with labor legislation.

In December 2008, AES Eletropaulo had 59 dis-abled persons on its payroll. In addition to this train-ing, the company was involved in other actions to increase this figure (52 in December 2007). These actions are in the form of internal campaigns that encourage employees to suggest candidates, or consulting nongovernmental organizations (NGOs) for prospective qualified candidates for the job, in the case of external recruitment.

Safety Priority nUmBer oneGRI – G3: 4.12, LA6, LA7, LA8, LA9

AES Eletropaulo works proactively in the preven-tion of occupational accidents involving employees or contractors. This stance relies on the support of the Occupational Health and Safety Management System (SGSSO), which was implemented across the board in compliance with Brazilian law and AES Corp. guidelines.

The SGSSO, which was designed to fulfill the guide-lines of the international Occupational Health and Safety Assessment System (OHSAS) standard 18.001, provides for the identification and assessment of haz-ards and risks to the company’s administrative and operational activities. It establishes health and safety objectives and targets, and calls for the training and

awareness programs for the taskforce on accident prevention together with a critical analysis by Upper Administration on measures adopted.

certification

One of the company’s goals is to earn the OHSAS 18.001 certification. Firstly, the aim is to secure cer-tification of its subtransmission business (lines and substations) in the second half of 2009, followed by its extension to other company divisions.

Drop in the number of accidents with sick leave

In 2008, the number of accidents requiring sick leave involving employees and contractors decreased by 39% and 21%, respectively. This performance resulted from intensified actions promoted by the company for the prevention of accidents, plus an outlay of R$ 8 million to purchase individual and collective protec-tion equipment (EPI and EPC).

contractor safety

Safety, AES Eletropaulo’s Priority Number 1, is a matter that is permanently discussed in its contacts with service providers. Every month, its safety tech-nicians meet with contractors to discuss and rein-force standards and procedures designed to pre-vent accidents in the workplace.

In addition, audits are conducted both on outsourced contractors’ documentation and also on the linemen

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teams while they are working on the electric grid to verify if they are using the individual and collective safety equipment properly and following the correct work procedures. These inspections help reduce the frequency and gravity rates and are conducted on 100% of the outsourced taskforce.

Safety is Priority Number 1 at AES Eletropaulo, which, in 2008, invested R$ 8 million to purchase individual and collective protection equipment for its employees.

company employees 2006 2007 2008

Frequency rate 1 4.12 2.34 1.25

Gravity rate 2 1,715 37 70

contractors

Frequency rate 9.90 3.10 2.47

Gravity rate 1,380 627 1,042

Frequency and gravity rate based on Brazilian legislation

1 Accidents with sick leave per million man-hours of risk exposure in a period of one year.

2 Days not worked due to accidents with leave of absence per million man-hours of risk exposure in a period of one year.

company employees 2006 2007 2008

Fatal accidents 2 0 0

Accidents with sick leave 30 18 11

Accidents without sick leave 78 78 55

total 110 96 66

outsourced contractors

Fatal accidents 1 1 0

Accidents with sick leave 72 16 8

Accidents without sick leave 40 51 41

total 113 68 49

Occupational Accidents

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Training by the Safety, Operational Training

and Corporate Education Departments of AES

Eletropaulo totaled 137 man-hours in 2008 and

featured mandatory regulations established in

health and safety standards, and skills training

and upgrading.

Safety discussions – before they start working,

electricians and technicians discuss safety pro-

cedures and other matters connected to acci-

dent prevention.

Field inspections – inspections are conducted

when the teams are on the job to check wheth-

er they are complying with safety regulations

and using the protection equipment.

Hazard reports – situations that could cause

accidents are reported by employees to the

Safety Department, which then takes the nec-

essary steps to eliminate or minimize risks.

BBS (Behavior-Based on Safety) – started in

2005 at AES Eletropaulo, the purpose of this

program is to change behavior and attitude

towards safety. By observing the behavior of

the workforce and informally guiding them on

safe and unsafe employee conduct, it seeks to

further the employee’s ability to identify and

control risk in their activities and reinforce

safety practices in their daily routines. In 2008,

120 new behavioral observers received training

at the company, totaling 620 employees who

have been trained since BBS went on stream.

This figure includes safety technicians.

Sipat – during the Internal Occupational Ac-

cident Prevention Week (Sipat) held in May

2008 for all of the AES Group’s companies in

Brazil at once, the World Safety Day was cele-

brated (by all AES Corp. companies). Using the

motto “Viver é bom demais” (Living is just too

good) as its theme, SIPAT focused on recogni-

tion of the importance of a family. This aimed

to show, through talks and videos with family

Main efforts to ensure Safety

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GRI – G3: LA6

testimonies, that working with safety is not

only important for the employees, but also

and especially for those to whom their lives

are also dear, that is, family members. Ban-

ners, posters, jingles, skits and workshops,

all featuring the same theme, were shown

to create awareness among both employees

and contractors. SIPATs are organized by the

Internal Accident Prevention Committees

(CIPAs), which represents 100% of the work-

force in discussions on occupational safety

and health. These committees are made up

of employees and managers.

Energy Environmental Risk Prevention – in

force since 2003, the Energy Environmental

Risk Prevention Program (PPRAE) anticipates,

recognizes, assesses and monitors biological,

chemical and ergonomic risks related to the

electric energy distribution business in both

open spaces and enclosed areas.

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In 2008, the surveys in this field centered on

underground energy distribution chambers,

in order to determine the presence of fungi,

bacteria or viruses in this type of environment

and monitor employee exposure to these bio-

logical agents. Although no type of pathol-

ogy associated to work in the underground

chambers was found, to prevent these bio-

logical agents from being taken from these

chambers to the employees’ homes, AES Ele-

tropaulo is studying a way of having the uni-

forms used by the team members who work

in these enclosed spaces washed at a special

industrial washing facility.

In 2009, PPRAE will continue, with monitor-

ing the noise and heat levels to which elec-

tricians and technicians who work on the

overhead lines are exposed to, as well as in

relation to the activities performed at the

company’s equipment repair and mainte-

nance shops.

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material anD SerVice SUPPlierSGRI – G3: HR1, SO1

Material and service suppliers play an important role in AES Eletropaulo’s business. It has some 450 contracts with material and service suppliers, amounting to approximately R$ 1.6 billion.

These partners sell the distributor material used di-rectly in its electric system such as connectors, con-ductors, posts, isolators, transformers and meters and provide services through a taskforce of 6,368

The company meets all the requirements set out in the law on occupational disease prevention. These initia-tives include occupational health examinations and ac-tion programs organized under the Medical Monitor-ing of Occupational Health Program (PCMSO).

Occupational and clinical exams – all employees un-dertake these exams annually. Beginning in March 2008, measurement of the employees’ Body Mass In-dex (BMI) was incorporated to the periodical health exams. According to their respective BMI, every em-ployee is given specific medical orientation. This infor-mation has played a major role in enabling the compa-ny to organize healthy eating and obesity prevention campaigns. Employees are also given individual coun-seling on how to prevent heart diseases.

Disease prevention campaigns – a number of pre-ventive actions were organized by the company

HealthGRI – G3: LA6, LA7

during the year, the most important of which was workplace exercising, which is held throughout the group. The purpose of exercising is to prevent dis-eases caused by several risk factors related to the business. In 2008, talks and lectures were delivered on ergonomics, hearing protection systems, shoul-der health and prevention of STDs/Aids, obesity and high blood pressure, which were attended by 14,200 persons.

Workplace exercise program – instituted through-out the company in September 2006, the workplace exercise program of AES Eletropaulo has contributed significantly to reducing occupational diseases. From 2007 to 2008, the company reported:

• a 65% decrease in the number of Occupational Accidents Reported to INSS (CATs) due to occupa-tional diseases;

• a 27% drop in the number of reported osteomuscu-lar disturbances in the periodical health exams;

• a 65% fall in typical shoulder problems and lumbalgia.

professionals who work on the electric grid and in commercial positions such as in overhead and underground grid expansion and maintenance, connection of new customers, electricity meter readings and bill delivery, safeguarding and se-curity services, clearing of strips, tree pruning and equipment repair.

AES Eletropaulo invests in an ethical and transpar-ent relationship with its suppliers, which is always subject to the guidelines set out in the Company’s Guide to Values. The company thus strives to en-

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Vaccination campaigns – in 2008, vaccination cam-paigns were performed against hepatitis A and B, diphtheria and tetanus, totaling 730 doses. As there were insufficient flu vaccines available on the Brazilian market last year, this campaign was not held at AES Eletropaulo in 2008.

Hearing conservation campaigns – Besides the control carried though the occupational exams, the company also delivers informative talks on the pre-vention of hearing diseases to all of its employees and, particularly, to those who are exposed to this type of hazard due to their work. In 2008, a total of 1,000 participants attended the talks.

Energy Rodeo and Sipat – the initiatives in benefit of employee health are also included in events car-ried out by the company during the year such as the Energy Rodeo and SIPAT. The focus at the Rodeo was on skin cancer prevention, with the distribution of sun blockers, and on stopping smoking. Some 3,000 people, including employees, contractors

gage its partners in accident prevention practices and compliance with labor and environmental laws, as well as with safety standards.

One of the steps taken along this line was to include as part of the checking routine for accreditation of its chief material and service suppliers, submission by suppliers of a certificate on the nonexistence of child, forced or slave labor, and also, of a document to attest to their compliance with labor and occupa-tional safety and health regulations. The company also verifies the list issued by the Labor Ministry on

forced and slave labor to check whether any of its suppliers are on this list.

Material and service suppliers are also encouraged by way of the agreement, to replicate the values and guidelines followed by AES Eletropaulo in their pro-duction chain, as well as those related to human rights. The company organizes talks for its business partners in which the concepts established in its Guide to Values are disclosed and ethical and compliance issues are discussed. It also has a special communications channel that helps clear doubts and receives denouncements.

and their family members, took part in the event.

Other initiatives were conducted in partnership

with Hospital São Camilo (see the text below).

During SIPAT, the company organized actions to

encourage participation in the periodical health

exams and create awareness among employees on

the benefit of the workplace exercising program.

Some tips on how to sleep better and recover from

daily fatigue were also offered.

Partnerships – AES Eletropaulo has adhered to the

Company Health Program sponsored by Hospital

São Camilo, which holds several lectures on pre-

vention and occupational health for companies. The

hospital’s contribution to the Energy Rodeo was to

provide an ambulance with an intensive care unit,

free of charge, throughout the event, and offer glu-

cose tests and blood pressure measurements, and

to distribute handouts with information on back

pains and women’s and men’s health.

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1 – calculation Base 2008 total (in thousands of reais) 2007 total (in thousands of reais)

Net revenues (RL) 7,529,860 7,192,848Operating revenues (RO) 1,456,260 1,067,034Gross payroll (FPB) 587,119 673,476

2 – internal Social indicators total (r$ thousands) % of fPB % of rl total (r$ thousands) % of fPB % of rl

Meals 24,478 4.17% 0.33% 21,921 3.25% 0.30%Mandatory social security charges 74,330 12.66% 0.99% 73,150 10.86% 1.02%Private Pension Plan 26,391 4.50% 0.35% 111,936 16.62% 1.56%Health 25,853 4.40% 0.34% 20,562 3.05% 0.29%Occupational health and safety 10,795 1.84% 0.14% 5,446 0.81% 0.08%Education 2,036 0.35% 0.03% 2,040 0.30% 0.03%Culture - 0.00% 0.00% - 0.00% 0.00%Professional training and development 1,035 0.18% 0.01% 629 0.09% 0.01%Daycare centers or daycare assistance 681 0.12% 0.01% 635 0.09% 0.01%Profit sharing plan 50,016 8.52% 0.66% 31,603 4.69% 0.44%Others 20,395 3.47% 0.27% 44,509 6.61% 0.62%total – internal Social inDicatorS 236,010 40.20% 3.13% 312,431 46.39% 4.34%

3 – external social indicators total (r$ thousands) % of ro % of rl total (r$ thousands) % of ro % of rl

Education 13,477 0.93% 0.18% 11,021 1.03% 0.15%Culture 6,676 0.46% 0.09% 6,643 0.62% 0.09%Health and sanitation - 0.00% 0.00% - 0.00% 0.00%Sports 1,277 0.09% 0.02% - 0.00% 0.00%Daycare centers 1,558 0.27% 0.11% 1,135 0.17% 0.11%Fight against hunger and food assurance 1,754 0.12% 0.02% 1,561 0.15% 0.02%Others 10,465 0.72% 0.14% 8,636 0.81% 0.12%Total contributions to society 35,207 2.42% 0.47% 28,996 2.72% 0.40%Taxes (excluding social security contributions) 3,282,389 225.40% 43.59% 3,292,742 308.59% 45.78%total – eXternal Social inDicatorS 3,317,596 227.82% 44.06% 3,321,738 311.31% 46.18%

4 – environmental indicators total (r$ thousands) % of ro % of rl total (r$ thousands) % of ro % of rl

Capital expenditures related to production/operations 10,241 0.70% 0.14% 3,474 0.33% 0.05%

Capital expenditures on external programs and/or projects 55,026 3.78% 0.73% 42,263 3.96% 0.59%

Total environmental capital expenditures 65,267 4.48% 0.87% 45,737 4.29% 0.64%

In relation to establishing “annual targets” to minimize waste, overall consumption by production/operations and to enhance efficient use of natural resources, the company:

( ) has no targets( ) complies from 0 to 50%( ) complies from 51 to 75%(X) complies from 76 to 100%

( ) has no goals( ) complies from 0 to 50%( ) complies from 51 to 75%(X) complies from 76 to 100%

5 – Workforce indicators 2008 2007 2007

No. of employees at the end of the period 4,141 4,241No. of person hired during the period 283 335No. of contractors (outsourced workers) 6,368 4,507No. of interns 60 95No. of employees over 45 years old 721 587No. of women working at the company 825 840% of top positions held by women 22.00% 17.00%No. of Afro-Brazilians working at the company 410 261% of top positions held by Afro-Brazilians 1.00% 3.00%No. of disabled or persons with special needs 59 53

6 –relevant information on exercise of corporate citizenship 2008 2009 targets

Ratio between highest and lowest salary at the company 61.7 0

Total number of occupational accidents 11 0Social and environmental projects developed by the company were defined by: ( ) directors ( X ) directors and

managers ( ) all employees ( ) directors ( X ) directors and managers ( ) all employees

Work environment safety and health standards were defined by: ( X ) directors and managers ( ) all employees ( ) all + CIPA ( ) directors and

managers ( X ) all employees ( ) all + CIPA

In relation to Unions’ free right to collective bargaining and to internally represent workers, the company:

( ) does not become involved

( ) complies with ILO standards

( X ) encourages this and complies with ILO

standards

( ) does not become involved

( ) complies with ILO standards

( X ) encourages this and complies with ILO

standards

Private Pension Plan is extended to: ( ) directors ( ) directors and managers ( X ) all employees ( ) directors ( ) directors and

managers ( X ) all employees

Profit Sharing Plan is extended to: ( ) directors ( ) directors and managers ( X ) all employees ( ) directors ( ) directors and

managers ( X ) all employees

On selecting suppliers, the same ethical, social responsibility and environmental standards followed by the company are:

( ) not taken into account ( ) suggested ( X ) required ( ) not taken into

account ( x) suggested ( X ) required

With respect to employee participation in volunteer work programs, the company:

( ) does not become involved ( ) lends its support ( X ) organizes and

encourages this( ) does not become

involved ( ) lends its support ( X ) organizes and encourages this

Total number of complaints and criticisms brought by consumers::

at Company32,459

at PROCON4,512

at court11,121

at Company0

at PROCON0

at court0

% of complaints and criticisms met or resolved: at Company72.00 %

at PROCON64.00 %

at court_______%

at Company_______%

at PROCON_______%

at court_______%

Total added value to be distributed (R$ Thous.): in 2008: r$ 5,982,807 in 2007: r$ 5,787,254

Value Added Distribution (DVA):72.2 % government 7.1 % employees -0.4 % withheld 71.9 % government 8.8 % employees 0.0% withheld

17.6 % shareholders 3.6 % contractors 12.4 % shareholders 6.9 % contractors

7 – outras informações

In 2008 studies on and improvement in data collection were performed for better information disclosure to the market. The studies caused some changes to be made to the reported 2007 base year figures.

Annual Social Scorecard / 2008

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Society

2008 was the year in which AES Eletropaulo consoli-dated its social responsibility strategy, which was redesigned so as to be geared principally to the economic and socio-environmental development of the communities it serves.

The company sought to meet its objective and transparent aim of reviving the spirit of citizenship in children, adolescents and adults by offering edu-cational, cultural, sports and income-generating ac-tivities, based on its commitment to creating aware-ness among the population regarding the safe and appropriate use of electric energy as the overarch-ing theme.

The company has thus reassessed its investments on social projects, whether funded by the compa-ny or from tax benefit programs such as the Roua-net Law, Donations to the Municipal Funds for the Rights of Children and Adolescents and the Cultural Action Program (PAC).

culture and citizenship center

Inaugurated in March 2008, Casa de Cultura e Cidada-nia located in Vila Guacuri (SP) is AES Eletropaulo’s major social responsibility project. The result of the expansion and redesigning of the Art Circus, spon-sored by the company since 1988, Casa de Cultura e Cidadania cares for 1,000 children and adolescents ranging from 6 to 17 years of age in a space especially designed for training, expression and leisure.

Regular courses on visual arts, circus skills, theater, dance, computer skills and story-telling are available at the Center Mondays through Fridays, from 8:00 a.m.

to 5:00 p.m. In addition, special emphasis is placed to heighten awareness among the participants regarding the proper and safe use of electric energy. The teach-ing methodology was developed and is directed by a multidisciplinary team of curators of national and in-ternational reputation.

Because it is involved with a socially highly vulnerable community, Casa de Cultura e Cidadania also has eve-ning and Saturday professionalization and income-generating courses in partnership with several other corporations, nongovernmental organizations and public entities. This initiative has proved instrumental in galvanizing the social and economic transformation of the Center’s neighboring communities.

AES Eletropaulo monitors the project based on indi-cators, which help it follow up on the activities that are being carried out by the Center, as well as the results and impact the project is having on the communities.

To know the level of satisfaction of the people the project caters to is another fundamental measure to gauge the continuity of the activities performed at the Center, which is financed by the company itself and from tax incentive programs. Between September and December 2008, a survey was conducted by the In-stituto IdeaFix among the beneficiaries of the project – youngsters between the ages of 14 and 17 and the persons responsible for the children in the 6 to13 year bracket – showing that 97% were satisfied with the activities promoted at the Center (considered excel-lent and good). A survey among the educational staff also showed a 90% rate of satisfaction and trust in the pedagogic guidelines.

According to the survey, the points that need improve-ment are the reinforcement of the theme on safe and

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proper use of electric energy, and a greater number of workshops and adult professionalization courses aimed at income generation. These and other aspects will be worked on during 2009.

light and Pencil infant educational centers

AES Eletropaulo has maintained two Light and Pen-cil Infant Educational Centers (CEIs), with its own re-sources. These are located in the districts of Santo Amaro and Guarapiranga in the city of São Paulo. In 2008, there were 268 children enrolled, between the ages of one year and five years and eleven months, from low-income families or under some form of so-cial risk. The company hopes to expand this number to 339 students in 2009.

Certified as a civil society organization of public interest (Oscip), these children’s educational centers have had – as in the case of Casa de Cultura e Cidadania – their strategic guidelines restructured in the second half of 2007, a process that was completed in 2008. The major alteration was to the pedagogic methodology to a con-

structivist model, which encourages children to explore and discover all of the possibilities of their bodies, their capacity to observe, think and act, and to contribute to the exercising of citizenship.

Another fundamental step was to make sure that all the children actually had the profile the project required. Interviews were thus conducted with fam-ily members, who had to demonstrate their social and economic standing. Visits were even made in some cases, to secure evidence of their being un-der dire social or financial conditions. Average fam-ily income lies between one and three minimum wages per month. Most of the children live in slums, favelas and shelters, with fathers who usually per-form manual labor and mothers usually employed as housemaids.

The Light and Pencil CEIs have 45 employees – one director, the coordinators, teachers and their assis-tants – to implement the strategy established by the Executive Board. This Board is made up of a chair-man, a vice-chairman, first and second treasurers, and is overseen by an Audit Committee composed of six members. The members, of both the Executive Board and the Audit Committee, are volunteer employees of AES Eletropaulo, who were appointed in Decem-ber 2007, by the General Meeting, for a two-year term of office.

Good Deed energy Program

Volunteer work is one of the simplest and most legiti-mate ways of improving and transforming the reality of these underprivileged communities. With this in mind, the AES Brasil Group launched the Good Deed Energy Program in all of its companies, including AES Eletropaulo, in the second half of 2008.

Its purpose is to offer the support and seek the en-gagement of employees who desire to do volun-

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course Beneficiaries Partnership

Manicuring and hairdressing

16 young adults and adults

teruya

Administrative assistant

34 adolescents

nurap (rotary apprenticeship nucleus

Entrepreneurship and inclusion in the labor market

98 adolescents and young adults

conexão

Special courses offered by Casa de Cultura e Cidadania

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teer work, to devote their time and skills to transform low-income communities and develop nongovern-mental organizations.

The Good Deed Energy Program also included the first Survey on Volunteers conducted among the com-panies belonging to the AES Group, including AES Eletropaulo. This survey is expected to be closed, analyzed and the results disclosed in 2009.

The Good Deed Energy Program has three main work fronts:

Distributing Good Deed Energy – is aimed at mo-bilizing society to take local or emergency actions such as Warm Coats Campaign, the Christmas Cam-paign, and at encouraging donations to social proj-ects in aid of children and adolescents, which can be subsequently deducted from their personal tax statements.

Driving for Transformation – targets social engage-ment and implementing actions in the communi-ties. Some of these actions involve selecting and monitoring social projects that have been submit-ted to the Municipal Child and Adolescent Coun-cils (CMDCAs), to which 1% of the company’s tax-able income is transferred. There are also talks, activities held at the schools, communities and in-stitutions, besides the social projects patronized by the company.

Selection of projects to be submitted to CMDCAs in the company’s concession area was the first action on that work front in 2008. There were 36 volunteer employees from AES Eletropaulo undertaking the selection. They assessed 32 projects based on such criteria as infrastructure, goals, human resources, activities, impacts and forecast results. From these, they chose 13 projects, which received a total of R$ 1.2 million in pass-ons from AES Eletropaulo.

Social projects carried out with own resources - 2008GRI – G3: EC1

Total: R$ 2.3 million

Allocated to the following projects: Casa de Cultura e Cidadania, child educational centers and Good Deed Energy Program

Social projects funded from 2007 tax benefits - 2008

Total: R$ 5 million (Rouanet Law)

Allocated to the following project: Casa de Cultura e Cidadania

Social projects funded from 2008 tax benefits - 2008

Total: R$ 1.5 million (Cultural Action Program – PAC)Allocated to the following project: please refer to page 78

Donation to the Municipal Fund for the Rights of Children and Adolescents - 2008

Total: R$ 1.2 million

action result

Warm Coats Campaign36,300 items collected, including warm clothing, footwear and blankets to be donated to the São Paulo State Social and Cultural Development and Solidarity Fund.

Support to those who lost their homes due to the Santa Catarina State floods

5,000 items, including garments, food and mineral water bottles, plus cash donations

Christmas Campaign Donation of toys to 326 children from five institutions

Actions promoted in 2008 by the group “Distributing Good Deed Energy”

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Fostering Entrepreneurship/Venturing in the Com-munity – a project that fosters the social entrepre-neurship spirit, through presentations of prospective social projects to be developed with the company’s support within the communities. Implementation of that initiative in 2009 is being studied.

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Project Guri

AES Eletropaulo has been the sponsor of the Acetel branch of the Project Guri, located in the district of Cidade Tiradentes in the city of São Paulo, since October 2008. As a result of that sponsorship, this branch was able to in-

ProjectsTotal (R$

ThousandsDescription

An Electrifying Story 253.8A theater play written for children and young adolescents featuring the theme “Energy Safety and Economy”. A little booklet is also handed out during performances, which reinforces the concepts demonstrated in the play

Cultural Sunday 259.0A series of performances held on the anniversary of the City of São Paulo and the Municipal Market. It lasted for two whole days - January 24 and 25, and starred several well-known local musical performers such as Inezita Barroso, Samba School, etc.

Música na Rua (Music on the Street) 171.5 Fifteen performances by the Brazilian pop singer Roberta Granchi

Circuito Estradafora / Auto de Natal (Roadshow/Short Christmas play)

90.8Itinerant cultural projects that have put on a Christmas play for the inhabitants of the cities of Cajamar, Itapecerica da Serra and Santana.

Movie- Fights 396.6Movie (animated) depicting four interconnected stories at different periods in Brazilian history to be exhibited at movie theaters

Hip Hop Dj Documentary 89.4Documentary on DJs who live in the suburbs of the city of São Paulo and took part in Latin America’s major DJ championship - Hip Hop DJ

MAM 60 years – MAM Family 112.0This is designed to integrate the family through educational initiatives, guided visits to exhibitions and other activities offered by this Museum. The educational guides associate the artwork viewed by the participants with the daily routine and current events in the world

Ecoteca 99.8Two libraries built from recycled materials with 500 general literature books for children and adolescents and 20 toy books each

Projects sponsored by the Cultural Action Program

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crease its capacity and enroll up to 300 children and ado-lescents, ages 8 to 18, from low-income families.

Created by the São Paulo State Cultural Office in 1995, the Project Guri is designed to heighten sociability, self-esteem and citizenship of those participating in the pro-gram, by giving them an opportunity to study musical instruments and classical music.

transforming consumers into customersGRI – G3: SO1

Financed partly from Energy Efficiency Program funds and partly from the company’s own funds, the Transforming Consumers into Customers Program – previously called the Illegal Connection Regular-ization Program – targets low-income communities, where it regularizes the illegal energy connections to the grid and promotes a culture of responsible use of electricity. The name was changed due to the scope of the program. Rather than view any financial return, the program’s main goal is social inclusion.

The work involved reformation of the external and in-ternal electric wiring of the homes, donations of stan-dard entry points, replacing high energy consuming refrigerators with energy-saving ones, replacing incan-descent lamps with fluorescent lamps, public lighting of streets and alleys, installation of shower solar heat-ers and initiatives by AES Eletropaulo to raise aware-ness and teach the population living in the community about the safe and correct use of electricity. The project has disseminated information on the safe and correct use of electric energy to 574,000 low-income com-munity dwellers. In partnership with other institutions, it has also provides guidance on health, employment, healthy eating and beauty care, as well as a free mani-cures and hairstyling.

year connections regularized

Standard entry points donated

Substituted refrigerators

lamps donated

2006 80,013 80,013 200 47,000

2007 71,844 71,844 4,867 103,000

2008 74,500 74,500 3,332 -

Main actions under the Transforming Consumers into Customers program

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Transforming consumers into customers (2008)

74.5 thousand families benefitted

335 areas regularized

R$ 41 million invested (R$ 21 million company funded and R$ 20 million from the Energy Efficiency Program)

From 2004, when the program was first started, to date, 290,000 families (or 1.2 million persons) from low-income communities in the municipality of São Paulo have benefited from the program.

Safety of the populationGRI – G3: 4.11, SO1

In 2008, AES Eletropaulo reported a 30% drop in the number of fatal and nonfatal accidents involving power lines and the population of its concession area. This accident rate, which includes those reported to the company, is the result of its seeking to inform and guide customers on the safe use of energy.

All of the campaigns carried out during the year in mass communication media (TV, radio, newspapers and posters on regular and subway trains) addressed the same theme. Aimed at creating awareness among the C, D and E classes, in which the accident rate is highest, the message showed how accidents could be avoided when building or renovating a house or even when installing a TV antena, the main causes for the accidents involving the power lines. The campaign was so successful that it will be continued in 2009.

The company also organized talks in schools, district associations, companies and building material stores geared at children and construction workers. In 2008, 2,879 talks were held for a public of 460,843 persons. At these encounters, the speakers – AES Eletropaulo employees – handed out games to reinforce the idea among the children, and informative handouts to the adults. These handouts are also available on the elec-tricians’ maintenance trucks and handed out by the crew to the public at large.

AES Eletropaulo participated in the III National Safety Week promoted by the Brazilian Electric

Energy Distributors Association – (Abradee), held from November 3 to 8. During this Week, the dis-tributor centered its activities in the municipalities of Osasco, Embu, Carapicuíba and Taboão da Serra and in the districts of Itaquera, Ermelino Matarazzo, Cidade Tiradentes, Brasilândia, Perus and Heliópo-lis in the city of São Paulo.

During November, the company also reinforced its accident prevention initiatives on the customer rela-tions channels (the website - www.eletropaulo.com.br, call center, consumer service units and Postos Mais Eletropaulo), and gave talks and materials with infor-mation on Safety Week. Messages about the risks in-volved in the energy grid continue to be sent out on

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the electricity bills, a measure started in March 2008..

raising awareness regarding the efficient use of electric energyGRI – G3: SO1

In addition to orientation on safety in relation to the energy grid, AES Eletropaulo also had campaigns

Population 2006 2007 2008

Minor accidents 95 107 67

Serious accidents 56 42 37

Fatal accidents 33 30 22

total 184 179 126

Accidents within the AES Eletropaulo concession area

Don’t build or reform close to power lines

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broadcast on mass media, especially on television and radio, featuring the efficient use of electric en-ergy, financed with funds from energy efficiency. One of the main themes featured in the campaigns was the efficient use of electric showers, refrigera-tors and television sets. The campaign will continue to be shown during 2009, this time including other appliances as well, such as the washing machine and electronic equipment standby modes.

The project geared to the schools provides infor-mation on the safe use and proper consumption of electricity to public school students and teachers. In 2008, 36,932 students and 1,354 teachers at 61 mu-nicipal schools in São Paulo were given the oppor-tunity to participate in these talks. The estimated cost of the project was R$ 2.2 million. This money was used during 2006, 2007 and 2008 to purchase mainly materials and equipment.

energy efficiency GRI – G3: EN5, EN6, SO1

As determined by the National Electric Power Agency – Aneel, the company must earmark 0.5% of its net operating revenue for energy efficiency projects. Since 1998, AES Eletropaulo has invested R$ 263 mil-lion in projects tailored to customers from the com-mercial, industrial, residential, public authorities and public services segments and, as a result, has man-aged to save around 690,000 MWh/year, enough to supply energy to more than 250,000 homes. In 2008, the total number of projects was 96 and investments, R$ 33.9 million. The Energy Efficiency Program further allocated R$ 20 million to the Transforming Consum-ers into Customers Program.

The technology improvements brought about through the energy efficiency projects include the

substitution of lighting equipment, climatization, refrigeration, motive power and water heating. Talks are also held to inform civil servants, private com-pany employees and municipal agency managers about the proper use of energy.

In 2008, the company installed 1,153 more efficient electromagnetic induction lamps in the tunnels in the City of São Paulo. Electrodeless lamps provide bet-ter color reproduction and have a longer working life (100,000 hours – which is four times that of sodium vapor lamps). In addition, 4,000 traffic lights were in-stalled using LED technology, which consumes less energy and also has a longer working life.

yearSaved energy

(mWh/year)investments

(r$ millions)

2006 11,096 12

2007* 25,627 27.5

2008* 33,600 33.9

Energy Efficiency Projects - Investments and Savings

* The projects are divided into cycles. The increase in 2007and 2008 was due to an accumulation of cycles in the two years.

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Customer End use Total (R$ Thousands)

AACD – Associação de Assistência à Criança Deficiente Solar heating system 163

Irmandade da Santa Casa de Misericórdia de São Paulo Lighting 1,284

Cinemateca Brasileira de São Paulo Climatization 1,153

State Justice Office Lighting 550

Hospital das Clínicas de São Paulo – 2nd phase Climatization 5,320

Academia Barro Branco Solar Heating and Lighting 1,205

Military Police Force – several units Lighting 1,173

CPTM – Companhia Paulista de Trens Metropolitanos Lighting 1,390

Nove de Julho Tunnel Public Lighting 2,190

Sesc Itaquera Solar Heating and Lighting 1,044

Pacaembu Sports Complex Lighting 895

São Bernardo do Campo City Hall Lighting 1,198

Ibirapuera Sports Complex Lighting 764

CET – Companhia de Engenharia de Tráfego Public Lighting 1,465

Municipal schools in Santo André Lighting 1,131

Municipal schools in São Paulo Lighting 3,103

Casa de Saúde Santa Marcelina Lighting 528

State Health Office Lighting 1,431

Educational and Sports Centers run by the municipal authorities of São Paulo Lighting 1,729

Major Energy Efficiency Projects completed in 2008

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research and developmentGRI – G3: SO1

In compliance with the law governing the energy sec-tor, AES Eletropaulo earmarks 0.2% of its net operating revenue to research and development (R&D) projects. More than a regulatory requirement, the R&D project fosters innovation and poses an investment opportuni-ty aligned with the company’s strategy and recognition of the value of the knowledge produced by employ-ees, in partnership with institutions and universities.

In ten years more than R$ 100 million were invested through the AES Eletropaulo’s Research and Development ProgramProjects: 109 projectsResults: 80% of the projects resulted in some type of application, either a prototype or a pilot project installed on the energy grid, or development of an IT system for company use.

To develop projects aimed at reducing environmental impacts is another goal sought by the AES Eletropaulo R&D Program.

In 2008, the company designated R$ 15.8 million to 35 R&D projects, all of which were completed during the course of the year. The 54 projects under way in 2009 will call for R$ 30.4 million in funds, without considering another estimated 24 new projects. AES Eletropaulo has invested roughly R$ 100 million in 109 R&D projects over a period of ten years.

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Project result total (r$ thousands)

Automation as a planning tool in allocating reserves for contingencies

Pilot area installed with application of automation on the network associated with the planning system

1.401

Development of a computer tool to evaluate the impact caused by distribution of generated energy on the stability of electric energy systems

Prototype of a generated computer system that can be used in engineering and operations projects

886

Method for evaluating and quantifying aging of paper-oil isolation systems in voltage transformers using dielectric response measurement techniques

New methodology adopted by the maintenance departments using application of powered equipment.

807

Development of a computer system to manage and monitor energy data and information through distance measurement

System installed in large-size consumer for distance management of its energy consumption (data collection)

415

Research and development of a standardized data objectives model designed to integrate applications of an energy concessionaire

IT CIM (common interface mode) Model and standardization of data traffic of the entire sector

455

Study on the energy potential from using the biomass resulting from tree pruning and clearing in the AES Eletropaulo concession area

Pilot area installed and operating by using pruning waste in a joint effort with the Orchard Project

299

R&D Projects completed in 2008

Index Global Reporting Initiative (GRI) GRI-G3: 3.12

Strategy and analySiS a P na nd link

1.1 Statement from the most senior decision-maker of the organization (e.g., CEO, chairperson, or equivalent senior position) about the relevance of sustainability to the organization and its strategy. The statement should present the overall vision and strategy for the short-term, medium-term (e.g., 3-5 years), and long-term, particularly with regard to managing the key challenges associated with economic, environmental, and social performance.

2

1.2 Description of key impacts, risks, and opportunities. The reporting organization should provide two concise narrative sections on key impacts, risks, and opportunities. 19, 43, 52

OrganizatiOnal PrOfile a P na nd link

2.1 Name of the organization. 82.2 Primary brands, products, and/or services. 82.3 Operational structure of the organization, including main divisions, operating companies,

subsidiaries, and joint ventures. 8

2.4 Location of the organization’s headquarters. 82.5 Number of countries where the organization operates, and names of countries with either major operations

or ones that are specifically relevant to the sustainability issues covered in the report. 10

2.6 Nature of ownership and legal form. 8, 10, 112.7 Markets served (including geographic breakdown, sectors served, and types of customers/

beneficiaries). 8

2.8 Scale of the reporting organization, including: number of employees; net sales (for private sector organizations) or net revenues (for public sector organizations); total capitalization broken down in terms of debt and equity (for private sector organizations); quantity of products or services provided; total assets; beneficial ownership (including identity and percentage of ownership of largest shareholders); breakdowns by country/region of the following: sales/revenues by countries/regions that make up 5 percent or more of total revenues; discrimination of countries/regions that make up 5 percent or more of total revenues.

8, 42

2.9 Significant changes during the reporting period regarding size, structure, or ownership including: The location of, or changes in operations, including facility openings, closings, and expansions; and, changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations).

there were no significant changes in the period covered by this report

2.10 Awards received during the reporting period. 30rePOrt ParameterS a P na nd link

REPORT PROfiLE

3.1 Reporting period 43.2 Date of most recent previous report 43.3 Reporting cycle (annual, biennial, etc.) 43.4 Contact point for questions regarding the report or its contents. 4

REPORT SCOPE AND BOuNDARy

3.5 Process for defining report content, including: Determining materiality; Prioritizing topics within the report; identification of stakeholders and organizations expected to use the report. 4

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). 43.7 State any specific limitations on the scope or boundary of the report. if boundary and scope do not

address the full range of material economic, environmental, and social impacts of the organization, state the strategy and projected timeline for providing complete coverage.

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations. 8

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRi indicator Protocols.

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/ acquisitions, change of base years/periods, nature of business, measurement methods).

there were no significant changes

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

there were no significant changes

GRi CONTENT SuMMARy

3.12 Table identifying the location of the Standard Disclosures in the report. 84

ASSuRANCE

3.13 Policy and current practice with regard to seeking external assurance for the report. if not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organization and the assurance provider(s).

4

(A) fully compliant (P) Partially compliant (ND) Non-compliant (NA) Not applicable

ind

ex

85

gOvernance, cOmmitment and engagement indicatOrS a P na nd link

GOvERNANCE

4.1 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. 20

4.2 indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement) 20

4.3 for organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members. 20

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. 16, 20, 25, 29, 62

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives and the organization’s performance (including social and environmental performance).

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. 204.7 Process for determining the qualifications and expertise of the members of the highest governance

body for guiding the organization’s strategy on economic, environmental, and social topics. 20

4.8 internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. 14, 19

4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles

14

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

COMMiTMENTS TO ExTERNAL iNiTiATivES

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization. 80

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses 14, 16, 24, 25, 26, 56, 68

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: has positions in governance bodies; participates in projects or committees; provides substantive funding beyond routine membership dues; or, views membership as strategic.

24, 26

STAkEhOLDER ENGAGEMENT

4.14 List of stakeholder groups engaged by the organization. 294.15 Basis for identification and selection of stakeholders with whom to engage.

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 16, 29

4.17 key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns. 16

ecOnOmic indicatOrS a P na nd link

ECONOMiC PERfORMANCE

ec1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

32, 42, 77

ec2 financial implications and other risks and opportunities for the organization’s activities due to climate change.

ec3 Coverage of the organization’s defined benefit plan obligations. 66ec4 Significant financial assistance received from government.

MARkET PRESENCE

ec5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. 66

ec6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.

ec7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation.

iNDiRECT ECONOMiC iMPACTS

ec8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement. 36

ec9 understanding and describing significant indirect economic impacts, including the extent of impacts. 57

(A) fully compliant (P) Partially compliant (ND) Non-compliant (NA) Not applicable

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envirOnmental PerfOrmance indicatOrS a P na nd link

MATERiALS

en1 Materials used by weight or volume. 59en2 Percentage of materials used that are recycled input materials.

ENERGy

en3 Direct energy consumption by primary energy source. 60en4 indirect energy consumption by primary source. 60en5 Energy saved due to conservation and efficiency improvements. 81en6 initiatives to provide energy-efficient or renewable energy based products and services, and reductions

in energy requirements as a result of these initiatives. 81

en7 initiatives to reduce indirect energy consumption and reductions achieved.

WATER

en8 Total water withdrawal by source.

en9 Water sources significantly affected by withdrawal of water.

en10 Percentage and total volume of water recycled and reused.

BiODivERSiTy

en11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. 56, 57

en12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversityvalue outside protected areas. 56, 59, 60

en13 habitats protected or restored.

en14 Strategies, current actions, and future plans for managing impacts on biodiversity. 56, 57, 59, 60, 61en15 Number of iuCN Red List species and national conservation list species with habitats in areas

affected by operations, by level of extinction risk.

EMMiSiONS, EffLuENTS AND WASTE

en16 Total direct and indirect greenhouse gas emissions by weight. 60en17 Other relevant indirect greenhouse gas emissions by weight. 60en18 initiatives to reduce greenhouse gas emissions and reductions achieved. 60en19 Emissions of ozone-depleting substances by weight. 60en20 NO, SO, and other significant air emissions by type and weight.

en21 Total water discharge by quality and destination.

en22 Total weight of waste by type and disposal method. 59en23 Total number and volume of significant spills.

en24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex i, ii, iii, and viii, and percentage of transported waste shipped internationally.

en25 identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff.

PRODuCTS AND SERviCES

en26 initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. 54, 56, 59, 60, 61

en27 Percentage of products sold and their packaging materials that are reclaimed by category.

COMPLiANCE

en28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations. 61

TRANSPORT

en29 Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce. 60

GENERAL

en30 Total environmental protection expenditures and investments by type. 56

SOCiAL PERfORMANCE iNDiCATORS a P na nd link

EMPLOyMENT

la1 Total workforce by employment type, employment contract, and region. 62la2 Total number and rate of employee turnover by age group, gender, and region. 67la3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by

major operations. 66

LABOR / MANAGEMENT RELATiONS

la4 Percentage of employees covered bycollective bargaining agreements.100% of employees are represented by unions and colletive bargaing

(A) fully compliant (P) Partially compliant (ND) Non-compliant (NA) Not applicable

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la5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.

OCCuPATiONAL hEALTh AND SAfETy

la6 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programs. 68, 70, 72

la7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region. 68, 72

la8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. 66, 68

la9 health and safety topics covered in formal agreements with trade unions. 68

TRAiNiNG AND EDuCATiON

la10 Average hours of training per year per employee by employee category. 64la11 Programs for skills management and lifelong learning that support the continued employability of

employees and assist them in managing career endings. 64

la12 Percentage of employees receiving regular performance and career development reviews. 66

DivERSiTy AND EquAL OPPORTuNiTy

la13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.

la14 Ratio of basic salary of men to women by employee category. 66

iNvESTMENTS AND PROCuREMENT PRACTiCES

Hr1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening. 72

Hr2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.

Hr3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

NON-DiSCRiMiNATiON

Hr4Total number of incidents of discrimination and actions taken.

there were no cases of discrimination

fREEDOM Of ASSOCiATiON AND COLLECTivE BARGAiNiNG

Hr5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

ChiLD LABOR

Hr6Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.

no operations under these terms were identified

fORCED AND COMPuLSORy LABOR

Hr7Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.

no operations under these terms were identified

SECuRiTy PRACTiCES

Hr8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

iNDiGiNOuS RiGhTS

Hr9 Total number of incidents of violations involving rights of indigenous people and actions taken. there were no cases

COMMuNiTy

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

16, 46, 54, 72, 79, 80, 81, 83

CORRuPTiON

SO2 Percentage and total number of business units analyzed for risks related to corruption. there were no cases SO3 Percentage of employees trained in the organization’s anti-corruption policies and procedures. 16SO4 Actions taken in response to incidents of corruption. there were no cases

PuBLiC POLiCy

SO5Public policy positions and participation in public policy development and lobbying.

values guide (www.eletropaulo.com.br)

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

values guide (www.eletropaulo.com.br)

ANTi-COMPETiTivE BEhAviOR

SO7 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes. there were no cases

COMPiLANCE

SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations. 61

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(A) fully compliant (P) Partially compliant (ND) Non-compliant (NA) Not applicable

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COSTuMER hEALTh AND SAfETy

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. 49

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcome. there were no cases

PRODuCT AND SERviCE LABELLiNG

PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcome. there were no cases

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

MARkETiNG COMMuNiCATiONS

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcome. there were no cases

COSTuMER PRivACy

PR8 Total number of substantiated complaints regarding breaches of customer privacy and loss of customer data.

there were no cases

COMPLiANCE

PR9 Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services.

88

(A) fully compliant (P) Partially compliant (ND) Non-compliant (NA) Not applicable

Acknowledgements

general coordinator

Márcia Magno Office of Communication and Social Responsibility

editorial coordinator

Luciana Alvarez External Communication and Social Responsibility Management

text

Sandra Coelho

gri consultancy

The Media Group

layout and graphic design

Report Design

Photography

List available in the CD

translation

Brauns&Brauns Language Consultancy

Print Services

Neoband