AES CORPORATION

City or location Month XX, 20XX

AES CORPORATIONAES Brazil Business Review

Eduardo Bernini Britaldo SoaresCEO CFO

June 28, 2006

1www.aes.com

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. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal or better levels of operating performance and electricity demand at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth from investments at investment levels and rates of return consistent with prior experience. For additional assumptions see the Appendix to this presentation. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission including but not limited to the risks discussed under Item 1A “Risk Factors” in the Company’s 2005 Annual Report on Form 10-K as well as our other SEC filings. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

2www.aes.com

Financial Goals

Revenue Growth

Gross Margin Growth

Earnings per Share Growth

ROIC Improvement (1)

Cash Flow Growth

Subsidiary Distributions (1)

Restructuring Opportunities

Growth Goals

Platform Expansion

Greenfield Investment

Privatization/M&A

AES Goals AES 2008 Target AES Brazil Role

AES Brazil Strategic Overview

--

$3.5 Billion

13-19% per Year

11%

$2.6-2.9 Billion

--

--

--

--

--

Above Average

Above Average

Above Average

Average

Below Average

Limited Until Restructuring

In Process

Limited Until Restructuring

Limited Until Restructuring

Limited Until Restructuring(1) Non-GAAP financial measure. See Appendix.

Contains Forward Looking Statements

3www.aes.com

Brazil Highlights

S&P: BB StableMoody’s: Ba3 PositiveSovereign Credit Rating (Foreign Currency)

188 MMPopulation (July 2006 est.)São Paulo Largest City

Brasilia CapitalAgriculture, Steel and Mining, ServicesEconomic Drivers

5.7%Inflation Rate (2005 est.)US$4,300Per Capita GDP (2005)

US$1 = R$2.24Exchange Rate (6/23/2006)Brazilian real (BRL, R$)Currency

Brazil at a Glance

Sources: IBGE; IPEA; BACEN; S&P; Moody’s.

4www.aes.com

124 companies

16% private sector

1,520 plants

99GW installed capacity

74% hydroelectric

24% thermal

2% nuclear

Two contracting environments - free market and regulated market

Generation

25 companies

Mostly state owned

High voltage transmission (>230 kV)

82,995 km of lines

859 transformers

321 substations

Regulated public service with open access

Regulated transmission tariff (updated every year by inflation – IGP-M)

Transport

64 companies

335 TWh distributed in 2005

54 MM customers

1,851,934 km network

122 thousand people employed

73% private sector (nº of companies)

Tariff adjustment every year

Tariff reset every four or five years

Regulated public service

Exclusive geographic area

Regulated contracting environment

Distribution

535 free clients

Conventional sources:

Above 3 MW

Alternative sources:

At least 500 kW

Large users can purchase energy directly from a generator

Free contracting environment

Free Clients

Brazil Electricity Market Characteristics

Sources: ANEEL; CCEE; ONS; ABRADEE.

5www.aes.com

Brazil Electricity Demand Growth

1.6

1.7

1.8

1.9

2.0

2.1

2000 2001 2002 2003 2004 2005240

260

280

300

320

340

Consumption GDP

GD

P (R

$ Bi

llion)

Con

sum

ptio

n (T

Wh)5.3%

-7.9%3.5%

4.7%

4.5%

4.6%

% Change from Prior Year

Sources: IBGE; EPE.

4.4%1.3%

1.9% 0.5%

4.9%2.3%

6www.aes.com

Brazil Electric Sector

Ministry of Mines and Energy (MME)

Implements policiesNational Council of

Energy Policy (CNPE)Formulates policies

Electricity Sector Surveillance Committee (CMSE)Monitors energy supply

Brazilian Electricity Regulatory Agency (ANEEL)

Regulates and supervises

Energy Research Enterprise (EPE)

Planning

GeneratingCompanies

TransportCompanies

Distribution Companies

Free Clients

Electric Energy Commercialization Chamber (CCEE)Coordinates energy commercialization

Electric Systems National Operator

(ONS)Coordinates and

controls interconnected national system

7www.aes.com

Brazil Regulatory Framework

Primarily adjusts for inflationand sharing of market growthgains with consumers

Part A costsNon-manageable costs

– Energy Purchase– Energy Transmission– Sector Charges

Part B costsManageable costs

– O&M– Depreciation– Capital Remuneration

Part B is adjusted by inflation less an “X Factor” in order to share market growth gains with consumers

Annual Tariff Adjustment (IRT) Tariff Resets Energy Contracting

Eletropaulo tariff reset occursevery four years – next July2007

Sul tariff reset occurs everyfive years – next April 2008

Revision % change equals:

Two environments for energycontracting

Regulated contractingApplies to distcosDescending price auctionsGovernment stipulates Total Demand based on distcos’forecasted needsGovernment indicates new power plants to be auctionedPPAs executed between each seller and all the buyers (pool)

Free contractingApplies to free customers and marketersFreely negotiated bilateral agreements

Verified revenue

MWh x tariff

Required revenuePart A +Part B

÷

DepreciationGross Base

xDepreciation

CapitalRemuneration

Net Basex

Pre-tax WACC

Reference Company – O&M

8www.aes.com

AES Brazil: Distribution and Generation

.

Tietê

Uruguaiana

HydroTietê

2,650MW, 10 plants272 employees24% AES ownership

Gas Uruguaiana

639MW, 1 plant47 employees46% AES ownership

HydroelectricNatural gas

Brasilia

Sao Paulo

Porto Alegre

Rio de Janeiro

EletropauloConcession area 4,526 km2

5.3 MM customers4,377 employees34% AES ownership2005 Consumption: 36,499 GWh

SulConcession area 99,512 km2

1.0 MM customers771 employees100% AES ownership (1)

2005 Consumption: 7,011 GWh

Other (46% AES ownership)InfoEnergy (1)

AES CommunicationsEletropaulo Telecom

Utility

Sul

Eletropaulo

(1) Reflects recently announced termination of Sul Option and swap of InfoEnergy to Brasiliana.

9www.aes.com

AES Brazil History

1997

AES starts Uruguaianaproject

AES acquires Sul

1998

Privatization of Eletropaulo

Formation of AES Rio Com and Eletropaulo Telecom

1999

Privatization of Tietê

1997-1999 2000-2002 2003-2004 2005-2006

2000

Operations commence at Uruguaiana

AES Transgasacquires 64% of Eletropaulo’s non-voting shares

2001

AES increases ownership of Tietê

Formation of InfoEnergy

2002

AES increases ownership of Eletropaulo

2003

AES restructures BNDES debt

Brasiliana Energiaholding company created

First Eletropaulo and Sul tariff reset since privatization

2004

Reprofiling of Eletropaulo debt

2005

Tietê secondary offering

Eletropaulo prepaid 72% of reprofiled debt

2006

Brasiliana restructuring launched

Eletropaulo reprofileddebt 100% replaced

Sul restructuring announced

10www.aes.com

COELBA4% ELEKTRO

5%

AMPLA3%

CPFL8%

CEMIG10%

LIGHT8%COPEL

6%CELESC

6%

AES Eletropaulo15%

AES Sul2%

Piratininga3%

Others30%

Brazil Distribution Market Share

2005 Revenues

Eletropaulo and Sul represented approximately 17% of sector revenues in 2005

Source: Abradee.

11www.aes.com

Eletropaulo Overview

Area (thousand km2)

Population (MM)

Consumption (TWh/year)

Brazil

8,547.4

182.8

335.4

Eletropaulo

4.5

16.3

36.5

%

0.1%

8.9%

10.9%

Largest electricity distributioncompany in Latin America byrevenues30 year concession expiresin 2028

Concession area covers SaoPaulo and 23 municipalitiesthat make up greatermetropolitan area

Attractive concession area

Solid economic base and high population purchasing power

Consumption density: 8,065 MWh/km2

Sources: IBGE; EPE; ABRADEE.

12www.aes.com

Eletropaulo Customers

2005 Consumption36,499 GWh

2005 Revenues Before EliminationsUS$3,116 MM

0

10

20

30

40

2000 2001 2002 2003 2004 2005

Free ConsumptionCaptive Consumption

Consumption

TWh

Average Tariff (R$/MWh)

Residential

Industrial

Commercial

Others

Total

2004

287.8

189.3

253.1

185.5

241.3

2005

308.6

225.5

276.6

221.4

271.8

Change

7%

19%

9%

20%

13%

Public / Other7%

Free Clients4% Residential

41%

Industrial18%

Commercial30%

Public / Other7%

Free Clients13% Residential

33%

Industrial21%

Commercial26%

13www.aes.com

Eletropaulo Energy Supply

2005 energy supplyHydro: 98%Thermal: 2%

Contracting strategy: 100% to 103% of total demand

Auctions

Other bilateral contracts

Bilateral contract with Tiete

Initial contracts

Itaipu

0%

20%

40%

60%

80%

100%

2004 2005

14www.aes.com

Eletropaulo Tariff Evolution

2005: Pis/Cofins taxes begin to be charged directly to customer.

3.7%6.3% 4.5% 2.5% 1.7%

4.8%

1.6%

-4.3%

16.9%

11.8%

12.1%7.6%

7.5% 11.7%

1999 2000 2001 2002 2003 2004 2005

Part B Part A Pis/Cofins Tariff Reset IGP-M

11.2%13.9%

16.6%14.3%

18.6%

6.4%

Netadjustment

2.1%

(1) Revenue is recalculated at the tariff reset.

(1)

15www.aes.com

Sul Overview

30 year concession expires in 2027

Concession area represents one third of Rio Grande do Sul State(RS)

RS is one of the largest producersand exporters of grains

Industrial base:40.6% of economy concentrated in the industrial sector

Income per capita: 39% higher than Brazilian average

Consumption density: 70 MWh/km2Area (thousand km2)

Population (MM)

Consumption (TWh/year)

Brazil

8,547.4

182.8

335.4

AES Sul

99.5

4.2

7.0

%

1.2%

2.3%

2.1%

Sources: IBGE; EPE; ABRADEE.

16www.aes.com

Sul Customers

2005 Consumption7,011 GWh

2005 Revenues Before EliminationsUS$536 MM Average Tariff (R$/MWh)

Consumption

Residential

Industrial

Commercial

Others

Total

2004

363.1

177.3

330.3

160.5

235.7

2005

405.9

204.8

370.4

175.7

270.6

Change

12%

16%

12%

9%

15%

0

5

10

2000 2001 2002 2003 2004 2005

Free ConsumptionCaptive Consumption

TWh

Public / Other15%

Free Clients1% Residential

38%

Industrial29%

Commercial17%

Public / Other23%

Free Clients2% Residential

25%

Industrial37%

Commercial13%

17www.aes.com

Sul Energy Supply

2005 energy supplyHydro: 73%Gas: 20%Coal: 7%

Contracting strategy: 100% to 103% of total demand

0%

20%

40%

60%

80%

100%

2004 2005

Auctions

Bilateral contracts with Uruguaiana

Initial contracts

Itaipu

Other bilateral contracts

18www.aes.com(1) Revenue is recalculated at the tariff reset.

Sul Tariff Evolution

2005: Pis/Cofins taxes begin to be charged directly to customer.

2.4% 3.6% 6.0% 3.5% 3.4% 1.1%1.5%

-5.1% 0.4%2.7%

3.5%6.0%7.7%

17.2%

6.0%6.7%

1.9%

15.9%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Part B Part A Pis/Cofins Tariff Reset IGP-M

4.3%

10.3%

12.0% 11.1%7.1%

3.9%

Netadjustment

- 0.9%

20.7%

4.2%(1)

19www.aes.com

Brazil Generation Market Share

2005 Installed Capacity

Tietê is the 9th largest generator in Brazil and the 2nd largest private generator.Uruguaiana is the 7th largest thermal plant in Brazil.

Source: ANEEL; Gasnet.

Tractebel7%

AES Tietê3%Itaipu

7%Cemig7%

CHESF11%CESP

8%Copel

5%Furnas10%

Eletronorte8%

AES Uruguaiana1%

Others31%

Duke Energy2%

20www.aes.com

Tietê Overview

30 year concession expires in2029

10 hydro plants on the Tietê,Pardo, and Mogi Guaçu rivers

100% of assured energy issold under long-term contract

PPA with Eletropaulo through December 2015

Price adjusted annually for inflation (IGP-M)

21www.aes.com

Tietê Hydrology

Annual GenerationMW Average

Stored Energy – Southeast(% of Max)

During the last 20 years, AES Tietê has generated, on average, 18% above its Assured Energy

0%

25%

50%

75%

100%

Jan Apr Jul Oct

2000 2001 2005

1,3631,392 1,467

115%109% 107%

2003 2004 2005Generation - MW AverageGeneration / Assured Energy

22www.aes.com

Uruguaiana Overview

2005 Revenues by Customer Combined cycle natural gas

fired thermal plant

Installed capacity of 640MW

554MW sold under long-termcontracts

PPAs expire:

Eletropaulo – 2009

AES Sul – 2020

CEEE – 2020

RGE – 2020

Opportunistic exports mainlyto Uruguay and Argentina

AES Sul31%

Exports7% CEEE

27%

RGE25%

AES Eletropaulo

10%

23www.aes.com

Uruguaiana Gas Supply

Energy Sold versus GenerationLong-term gas supply agreement

with Sulgas, a Brazilian companythat sources gas from YPF Argentina

However, Argentina began rationinggas supply in 2004

Currently no gas available from Mayto September due to curtailments

Uruguaiana meets its PPAcommitments by purchasing energy

Spot market (CCEE)

Short and medium term bilateral agreements

4.1

1.7

4.5

2.3

5.0

1.7

2003 2004 2005

Energy Sold - TWh Generation - TWh

24www.aes.com

AES Brazil KPIs

Key Performance Indicators (KPI)

Safety Excellence

Technical and commercial losses ratesCollection rateEquivalent availability factor (EAF)

Operational Excellence

Contains Forward Looking Statements

Accident frequency rateAccident severity rateSafety Excellence

Service Excellence

System average interruption duration index (SAIDI)System average interruption frequency index (SAIFI)

25www.aes.com

21.0

31.7

16.4

2003 2004 2005

AES Brazil Safety Performance

Accident Severity Rate

Safety InitiativesAcceleration of collective learning through knowledge sharing and interactions across companies

Implementation of OHSAS 18001

Completion of regular audits and improvements; corrective action plans put in place

Focus on leadership training and continuous improvements in work procedures

Implementing behavior-based safety programs for AES people and contractors

Accident Frequency Rate

1.1

0.50.6

2003 2004 2005

Getting Better

Getting Better

26www.aes.com

Getting Better

AES Brazil Service Excellence

Eletropaulo Sul

SAIDI (hours) SAIFI (times) SAIDI ANEEL Standard SAIFI ANEEL Standard

6.9 6.88.98.2 9.16.4

12.412.812.6

9.0 8.7 8.7

2003 2004 2005

13.3 12.521.018.9 14.1 10.5

19.922.4

20.7

16.316.817.9

2003 2004 2005

27www.aes.com

Getting Better

AES Brazil Operating Excellence

97.2% 97.3% 98.3%

2003 2004 2005

98.5% 97.5% 99.0%

2003 2004 2005

4.4%

1.2%

4.6%

0.8%

6.1%

1.1%

5.5%

0.8%

2002 2003 2004 2005

Technical Losses Commercial Losses

Losses (%)

Ele

tropa

ulo

Sul

Collection RateAs % of Gross Revenues

Ele

tropa

ulo

Sul

5.6%

7.3%

5.6%

7.6%

5.6%

7.9%

5.6%

7.3%

2002 2003 2004 2005

Technical Losses Commercial Losses

28www.aes.com

88.9% 93.8%78.6%

2003 2004 2005

AES Brazil Operating Excellence

Tietê

Equivalent Availability Factor

96.1% 90.9% 92.6%

2003 2004 2005

Uruguaiana (1)

(1) Not considering gas supply interruptions.

29www.aes.com

100% V 100% E

100% V 100% E

AES Brazil Structure

AES BNDES

Brasiliana

Transgas Elpa

Sul (1) Eletropaulo Tietê Uruguaiana

InfoEnergy(1) EletropauloTelecom

AESCommunication

50.1% V 46.2% E100% V 100% E

49.9% V 53.8% E

100% V 100% E

V = VotingE = EconomicNet AES ownership

100% V 100% E 98.3% V 98.3% E

0% V 37.8% E 77.8% V 31.0% E

71.3% V 52.5% E 100% V 100% E

100% V 100% E

50.1% V 46.2% E 50.1% V 46.2% E 49.2% V 45.4% E

50.1% V 46.2% E38.2% V 31.5% E 35.7% V 24.3% E

Holding company

Intermediary holding co.

Operating company

(1) Reflects recently announced termination of Sul Option and swap of InfoEnergy to Brasiliana.

30www.aes.com

AES Brazil Debt Structure

Brasiliana$553 MM

100% USD, 0% BRL

AES TietêEmpr.No debt

Principalas of December 31, 2005

Energia Paulista$79 MM

0% USD, 100% BRL

Eletropaulo$1,155 MM

11% USD, 89% BRL

Tietê$616 MM

0% USD, 100% BRL

UruguaianaNo debt

InfoEnergy (1)

No debtTelecom

$2 MM0% USD,100% BRL

Sul (1)

$318 MM30% USD, 70% BRL

IHB$294 MM

100% USD, 0% BRL

Average life:3.1 years

Average cost:16.9% p.a.

60% denominatedin local currency

BRL USD

Functional Currency

(1) Reflects recently announced termination of Sul Option and swap of InfoEnergy to Brasiliana.

31www.aes.com

304

70

297

63

238

106

184

183397

177

158

152

154

130

84

320

2006 2007 2008 2009 2010 2011 2012 2013-2028

Local Currency Foreign Currency

AES Brazil Current Debt Profile

Amortization Schedule as of December 31, 2005

USD

Milli

ons

Fixed rate debt 37%

Floating rate debt 41% Tied to Brazilian interest rates and Libor

22% Tied to inflation index (IGP-M and IGP-DI)

$374 $360 $344 $367

$574

$310 $284

$405

32www.aes.com

AES Brazil Maintenance Capital Expenditures

Maintenance Capital ExpendituresUSD Millions

2005 Maintenance Capital Expenditures

Distribution90.3%

Telecom4.9%

Generation4.8%

Commercialization0.01%

$107

$143

$217

2003 2004 2005

33www.aes.com

AES Brazil Currency Effects - 2005

Effect of the conversion of thefinancial statements ofEletropaulo, Sul, and Tietê toUSD (average rate)Approximate contribution ofFX translation to 2005financial results:

Revenue: US$590 MMGross margin: US$146 MMIBT&MI: US$56 MM

Translation Impacts

Effect of USD transactions on companies with BRL asfunctional currency

USD-denominated debt at Eletropaulo and SulTietê: investment in USD

Effect of FX rate on BRL assets and liabilities of companieswith USD as functional currency

Brasiliana and UruguaianaBreakdown of 2005 FX transaction losses of US$96 MM

80% USD-denominated debt16% companies with USD functional currency4% USD-denominated investments

Transaction Gain/Loss Impacts

0.0

1.02.0

3.0

4.0

12/99 6/00 12/00 6/01 12/01 6/02 12/02 6/03 12/03 6/04 12/04 6/05 12/05

Mon

thly

Ave

rage

BR

L/U

SD

34www.aes.com

AES Brazil Financial Overview

Revenue

Gross Margin

Income Before Tax &Minority Interest

Distributions to AES Corporation

2003

$2,528

$511

$195

$40

2004

$2,925

$722

$282

$3

(US$ Million)

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

2005

$3,823

$913

$552

$3

35www.aes.com

AES Brazil 2005 Financial Detail

Revenue

Gross Margin

Income Before Tax &Minority Interest

RegulatedUtilities (1)

$3,735

$489

$288

ContractGeneration (2)

$715

$423

$338

(US$ Million)

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.(1) Regulated Utilities includes Eletropaulo, Sul, InfoEnergy, AES Communications and Eletropaulo Telecom.(2) Contract Generation includes Tietê and Uruguaiana.

Brasiliana

--

$1

($74)

Eliminations

($627)

--

--

Total

$3,823

$913

$552

36www.aes.com

AES Brazil Scenario Planning

Investments in new generation plants will determine if the future energy supply will meet the growing demandEnvironmental licenses and adequate returns on investments (new energy auctions) are essential to support demand growth

Assures dividend flow to shareholdersSimplifies structuresMinimizes FX exposure

Strategic Issues

Future energy supply & demand

Brasiliana restructuring

Contains Forward Looking Statements

2007 and 2008 tariff resetsRegulatory relations

Strategic Opportunities

Brazilian macroeconomic scenario

GDP growth is closely linked to Eletropaulo’s and Sul’s demand growthDeclining interest rates and inflation in Brazil should decrease the companies’ cost of debt

Eletropaulo replaced 100% of the reprofiled debt, reducing the average cost and increasing the average life of debt AES Sul’s debt restructuring being concluded – 100% BRLMinimizes FX exposure

Strengthen capital structure