Slide 1: AES Investor Presentation
AES Investor Presentation AES CORPORATION ag, he 2 tk im = Pearls Cit January 17, 2006
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure Certain statements in the following presentation regarding AES's business operations may constitute “forward looking statements.” Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance,
Slide 3: AES is Among the Largest Global Power Companies
AES is Among the Largest Global Power Companies $9.5 billion revenue power generation and distribution business $1.6 billion net cash from operating activities Capacity to serve 100 million people in 26 countries
Slide 4: Clear Strategic Focus
Clear Strategic Focus Contains Forward Looking Statements Key Strategy Elements and Projected Financial Metrics 2003-2008 Global Deleveraging Focused Operational and Credit Growth Excellence Improvement Strategies ¥ ¥ ¥ Double-digit growth in EPS from continuing operations(") Gross margin improvemen
Slide 5: Diversified Utilities and Generation Portfolio
Diversified Utilities and Generation Portfolio 2004 Revenue 2004 Gross Margin $9.5 billion $2.8 billion Generation 48% Generation 60% Regulated Regulated — Utilities B Utilities 52% 40% ™ Regulated Utilities in 7 countries | Generation(") 78% Revenue from long-term contracts 22% Revenue from short-t
Slide 6: Generation KPI's
Generation KPI’s Key Performance Indicator (KP!) = Lost time accidents (LTA) Safety Excellence ° «Near misses Equivalent forced outage rate (EFOR) Operating cost per megawatt hour Heat rate Global sourcing (target spend & sourced savings) Operational Excellence * Equivalent forced outage rate (EFOR)
Slide 7: KPI Example - Utility Generation Plant
KPI Example - Utility Generation Plant EFOR Improvement IPL (US) and EDC (Venezuela) EFOR 2003-2005YTD\") 6% Top Decile Getting Better | 3% [ [ 2003 2004 2005YTD* EFOR miu MEDC (1) Data through September 30,2005 www.aes.com EFOR Improvement IPL sources of improvement: + Targeted equipment replacemen
Slide 8: Utility KPI's
Utility KPI’s Key Performance Indicator (KP!) * Lost time accidents (LTA) = Near misses "Public safety Safety Excellence Losses rate Collections rate O&M per customer Overhead per customer Operational Excellence + _ System interruption frequency (SAIFI) * System interruption duration (SAIDI) * Custo
Slide 9: Utility KPI Example - El Salvador
Utility KP] Example - El Salvador O&M per Customer El Salvador O&M per Customer EI Salvador O&M Cost Reduction 12/05 2003-2005YTD') ~ $50 § Getting Better | 5 8 840 3 oS ° $30 12/03. 6/04 «12/04 6/05 — O&M per customer (1) Data through September 30,2005 www.aes.com * Four distribution companies serv
Slide 10: Utility KPI Examples - Argentina Losses
Utility KPI Examples - Argentina Losses Eden Total Loss Rate Eden Total Loss Rate Reduction 2003-2005YTD"") * Distribution company serving almost 300,000 customers 14% 2 Getting Better |_| Sources of improvement: © 12% * Increased proactive contact with Fa customers possibly committing 10% fraud z *
Slide 11: Financial Strategy Elements
Financial Strategy Elements Target Capital Structure Robust Risk Management Transparent Disclosure www.aes.com Contains Forward Looking Statements $600 MM 2005-2006 parent debt reduction to achieve BB/Ba2 credit statistics Optimize return on invested capital Global interest rate, currency, energy co
Slide 12: Limited US Merchant Exposure Hedged With Creditworthy Customers
Limited US Merchant Exposure Hedged With Creditworthy Customers Contains Forward Looking Statements AES Eastern Energy Contracting Strategy Hedge Metrics (2005-6)(") Hedge % by Counterparty Credit (2005)(") 100% 2 & 80% 2 52% BBB+ S 60% 3 B 40% 6% AAA = 5 20% @ 20% 2% Unrated x 0% 9/05 12/05 3/06 6/
Slide 13: Actively Managed Floating Rate Debt Exposure
Actively Managed Floating Rate Debt Exposure Contains Forward Looking Statements AES Debt Profile AES Fixed vs. Floating Rate Debt Floating Rate Debt by Currency”) LOO Minority Interest = 80% Consolidated Adjusted 3 US Dollar 45% 51% = 60% Brazilian Real 36% 18% 3 Euro 12% 16% & 40% 6 Hungarian P08
Slide 14: Measuring Improvement through Gross Margin and Return on Invested Capital
Measuring Improvement through Gross Margin and Return on Invested Capital Performance Drivers Generation Utilities ‘Optimize Operating & Sourcing Costs Fuel Purchase Risk Management (Gueriead Coat Management ‘Currency and Other Risk Management ‘Worlang Capital and Debt Reduction ‘Asset Utlization ww
Slide 15: Free Cash Flow Growth
ig Free Cash Flow Growth Contains Forward Looking Statements $2,000 Ae — E a $4+ billion free cash flow* z $1,000 2002-2005E 5 << £ ee) oO rf 2 vs $0 2002 2003 2004 2005E (?) — Net cash from operating activities —~ Maintenance capital Free cash flow ‘!) (1) Non-GAAP financial measure. See Appendix @
Slide 16: Disciplined Use of Growing Free Cash Flow
Disciplined Use of Growing Free Cash Flow 2005 Free Cash Flow”) Profile www.aes.com 2005-2006 Strategy Achieve BB/Ba2 credit met Rebuild development pipeline Contains Forward Looking Statements 2006-2007 and Beyond Strategy Invest for growth u Alternatives if growth projects don't develop at adequat
Slide 17: Breadth of AES Capabilities
Breadth of AES Capabilities Distribution Coal-Fired Wind Power Gas-Fired www.aes.com 7
Slide 18: Rebuilding Development Pipeline
Rebuilding Development Pipeline Contains Forward Looking Statements Deep Development Pipeline Supports Sustained Growth 4-6 Years for Greenfield Projects 3-4 Years for Wind Projects Devel t Market» Negotiations/ : evelopmeni Assessment’ > Permits/ Purchase Project Construction Milestones | Feasibili
Slide 19: Demonstrated Success With Generation Growth Program
Demonstrated Success With Generation Growth Program Contains Forward Looking Statements Cumulative Generation Additions 2003-2006 (% Increase Above 2002 Base) 2003 2005 2006E @ NaturalGas een 1 Diesel M Wind © Coal 44 projects in 7 countries representing over 3,400 MW capacity 95%+ long-term contrac
Slide 20: Greenfield Example: Bulgaria
Greenfield Example: Bulgaria Contains Forward Looking Statements 670 MW lignite-fired power plant Proposed AES Maritza Plant, Bulgaria www.aes.com $1.4 billion project cost (artist rendition) 15 year contract with NEK (national utility) 16 year lignite supply agreement minimizes energy supply risks
Slide 21: Platform Expansion Example: Chile
Platform Expansion Example: Chile 120 MW San Pedro mixed-fuel power plant * $37 million project cost = Based on current generation tariff structure * Supports peaking, fuel diversification and hydrology risk management strategies * Uses diesel and natural gas * Expected 2006 start-up Proposed coal-f
Slide 22: Rigorous Capital Discipline
Rigorous Capital Discipline Strategic Objectives Market Knowledge ¥ Regional business model v Leverage existing assets Value Creation v Leverage operating model v People excellence Risk Management v Appropriate hurdle rates v Reduce portfolio earnings/cash flow volatility www aes.com Contains Forwar
Slide 23: Takeaways
akeaways Contains Forward Looking Statements = Global power market offers sizeable growth opportunities — AES well positioned to capitalize on these opportunities — Investment discipline firmly established = Strong AES financial metrics — Margin expansion — ROIC improvement — Growing free cash flow
Slide 24: AES: The power of being global. Thank you.
AES: The power of being global. Thank you.
Slide 25: Appendix - Assumptions
Appendix - Assumptions Forecasted financial information is based on certain material assumptions. Such assumptions include, but are not limited to: 1) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; 2 ) businesses continue to operate in a manner c
Slide 26: Appendix - Definitions
Appendix - Definitions * Free Cash Flow — Net cash from operating activities less maintenance capital expenditures. Maintenance capital expenditures reflect property additions less growth capital expenditures. * Lost Time Accident (LTA) - An incident in which the injured person is kept away from wor
Slide 27: Appendix - Summary Financial Information
Appendix — Summary Financial Information 2002 — September 30, 2005 Nine Months ending ‘September 30, 2005 2004 2004 2003 2002 Revenues $8,113 $6940 $9463 $8,413 $7,377 Gross margin 2,249 2,076 2,782 2,459 1,968 Income (loss) from continuing ‘operations 453 231 258 att (2,084) Diluted earnings per sh
Slide 28: Appendix - Reconciliation of Adjusted Earnings Per Share
Appendix — Reconciliation of Adjusted Earnings Per Share 2005E 20040) Adjusted Eamings Per Share $0.83 $0.58 FAS 133 Mark-to-Market Gains/(Losses)® = (0.08) Currency Transaction Gains/(Losses) - (0.08) Net Asset Gains/(Losses and Impairments) - (0.05) Debt Retirement Gains/(Losses) = (0.01) Total Ad
Slide 29: Link to searchable text of slide shown above
Link to searchable text of slide shown above Searchable text section of graphics shown above AE S Investor Presentation AES CORPORATION [GRAPHIC] January 19, 2006 Sa fe Harbor Disclosure Certain statements in the following presentation regarding AES’s business operations may constitute “forward look