Slide 1: AES Investor Presentation
AES Investor Presentation AES CORPORATION
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 + AES OPERATIONS. $11.1 billion revenue power generation and distribution business $2.2 billion net cash provide by operating activities Capacity to serve 100 million people in 25 countries Note: 2005 fancial data, www.aes.com
Slide 4: Clear Strategic Focus
Clear Strategic Focus Contains Forward Looking Statements Key Strategy Elements Global Deleveraging Focused Operational and Credit Growth Excellence Improvement Strategies ¥ ¥ ¥ 2008 Financial Metrics ‘) Diluted EPS from continuing operations of $1.03 - $1.34 Gross margin improvement to $3.5 billion
Slide 5: Diversified Utilities and Generation Portfolio
Diversified Utilities and Generation Portfolio 2005 Revenue 2005 Gross Margin $11.1 billion $3.2 billion Generation Generation 48% 61% Regulated Regulated Utilities a Utilities = 52% 39% ™ Regulated Utilities in 7 countries | Generation?) 77% Revenue from long-term contracts, 23% Revenue from short-
Slide 6: Generation KPIs
Generation KPIs 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 Focus — Commercial Availability in North America
KPI Focus — Commercial Availability in North America 60% of the businesses that identify commercial availability as a key driver realized improvements in 2005 Red Oak, Pennsylvania * Provided better training * Applied problem solving tools + Improved maintenance practices = Invested in targeted cape
Slide 8: KPI Focus — Heat Rate in Asia
KPI Focus — Heat Rate in Asia Heat rate improved in 2005 for over half of the AES plants that identify it as a key driver OPGC, India and Kelanitissa, Sri Lanka * Improved component operations through a series of targeted operating and capital investments Improved maintenance and work identification
Slide 9: Utility KPIs
Utility KPls 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) * Custom
Slide 10: KPI Focus — Losses in Latin America
KPI Focus — Losses in Latin America Eletropaulo — Total Losses (") 15% 14.4% J Getting Better 14% 12.9% 13% 12% 1004 3004 1005 = 3005 AES El Salvador ~ Total Losses ) 10% 9.6% Pésiegban 92% 9% 87% 8% 4003 2004 4004 2005 4005 (1) Traling 12 monthe, excludes rebiled energy 2 Traling 12 onthe www.aes.c
Slide 11: Financial Strategy Elements
Financial Strategy Elements Target Capital Structure Robust Risk Management Transparent Disclosure www.aes.com Contains Forward Looking Statements Achieve BB credit statistics Optimize return on invested capital Global interest rate, currency, energy cost risk management strategies Limited recourse
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 (") Hedge % by Counterparty Credit (2006) (") 3 8 BS 80% THAMK 49% Unrated 60% 26% BBB+ 40% 20% os 11% BBB 2006 2007 2008 2009 58% At % Contracted
Slide 13: Actively Managed Floating Rate Debt
Actively Managed Floating Rate Debt Exposure 80% 60% % of Total Debt 40% 20% 0% Contains Forward Looking Statements AES Debt Profile AES Fixed vs. Floating Rate Debt jae fl | | | 12/04 12/05 12/06E 12/07E Fixed rate (") (1) Including interest rate swaps. Data as of December 31, 2005, www.aes.com Il
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: Strong Free Cash Flow
Strong Free Cash Flow Contains Forward Looking Statements $2.5 $2.0 — #&«Oi-| @ 15 = ‘Over $5 billion free cash flow (!) B $1.0 2003 - 2006E @ $0.5 $0.0 2003 2004 2005 2006E — Net cash provided by +— Maintenance capital Free cash flow (!) operating activities expenditures (1) Non-GAAP financial meas
Slide 16: Disciplined Use of Growing Free Cash Flow
Disciplined Use of Growing Free Cash Flow Contains Forward Looking Statements 2006 2007-2008 and Beyond 2006 Free Cash Flow (") Profile Strategy Strategy Achieve BB/Ba2 Parent credit metrics Invest iocqroah Free Cash t Flow Rebuild Alternatives if growth projects don't $350 MM development develop at
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 " Market Negotiations/- : : evelopment | “Assessment > Permits)» Purchase, Project Construction Milestones | Fea
Slide 19: Demonstrated Success With Generation Growth Program
Demonstrated Success With Generation Growth Program Contains Forward Looking Statements Cumulative Generation Additions 2003-2006E (% Increase Above 2002 Base) = 4,000 = 2 3,000 ro 8 g 8 © 2,000 £ ° 3 _ al Ss £ 2003 2004 2005 2006E ™@ Natural Gas Mi Hydroelectric M Diesel Ml Wind © Coal 12 projects
Slide 20: Four Elements Frame AES Growth Strategy
Four Elements Frame AES Growth Strategy Contains Forward Looking Statements * Leverage existing knowledge, relationships, and subsidiary cash = Examples: Los Vientos, Changuinola Platform Expansion J * Focus on contracted projects * Non-recourse financing = Examples: Maritza, MOUs in Vietnam and Ind
Slide 21: 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 22: 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 23: AES: The power of being global. Thank you.
AES: The power of being global. i Thank you.
Slide 24: 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 25: 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 26: Appendix — Summary Financial Information 2003–2005
Appendix — Summary Financial Information 2003 —2005 2005 2004 « 2003 « Revenues $11,086 $9,463 $8,413 Gross margin 3,178 2,782 2,459 Income (loss) from continuing ‘operations 632 264 204 Diluted earnings per share from continuing operations $0.95 $041 $049 Net cash from operating activities $2,165 $
Slide 27: Appendix — Reconciliation of Adjusted Earnings Per Share
Appendix — Reconciliation of Adjusted Earnings Per Share 2005 2004 «0. Diluted EPS from Continuing Operations $0.95 $041 FAS 133 Markto-Market (Gains)/Losses ® = 0.08 Currency Transaction (Gains)/Losses (0.04) 0.08 Net Asset (Gains)/Losses and Impairments - 0.05 Debt Retirement (Gains)/Losses. - 0.0
Slide 28: Searchable text section of graphics shown above
Searchable text section of graphics shown above AES Investor Presentation AES CORPORATION [GRAPHIC] April 4, 2006 Safe Harbor Disclosure Certain statements in the following presentation regarding AES’s business operations may constitute “forward looking statements.” Such forward-looking statements i