Apre 1 t03

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First Quarter Results2003

2

I. Overview of the Company

II. Energy Distribution Market

III. Operational Performance

IV. Financial Indicators

V. Regulatory Scenario

VI. Conclusion

3






4

BackgroundBackground

April 1998: Privatization of EletropauloLightgas controlled at the time – through Light – by (AES, EDF, Reliant, CSN) and BNDESpar

January 2000: BNDESPar carried out a public offering for the sale of Eletropaulo’s preferential stock

AES acquired 64% of the preferential stock for US$ 1.1 billion through AES Transgas

December/2000: CSN and Reliant sold participations in Light/Eletropaulo

February 2002: Consolidation of the restructuring process between EDF and AES

AES assumed the control of EletropauloEDF assumed the control of the administration of LightThe corporate restructuring was approved by ANEEL

June 2002: CVM approves AES ELPA to go public

November 2002: AES ELPA stock was segregated from Light’s stockAES ELPA stock is negotiated under the ticker AELP3 at BOVESPA

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Shareholder structureShareholder structure

Other20.40%

AES50,45%

EDF19.92%

Federal Govern.9.23%

Other 20.40% Federal

Gov 9.23%

AES 70.37%

Minority

Transgás Elpa AESCemig Minority Government

100% 88,2% 11,8%

64,1%PN 77,8%ON 7,4%PN 26,4%PN 22,2%ON and 2,1% PN

(*) total shares

Shareholder structure (*) before decross

Shareholder structure(*) after decross

(*) total shares

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Concession AreaConcession Area

The largest electrical energy distribution company in Latin America5.0 million consumers

The most attractive concession area in BrasilA solid economic basis containing a population with high income High percentage of sales to the residential sector

11,17%32.451290.465Energy (GWh/year)*

8,62%15.200.000176.315.325Population

0,05%4.5268.547.403Km2

%Eletropaulo Brazil

* Source: Eletrobrás and Eletropaulo

FY 2002

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II. Energy Distibution Market




8

Consumption EvolutionConsumption Evolution

35.578 35.401

32.485 32.451

33.100

37.424

2%

-0,10%

-13,20%

5,71%

-0,50%

1998 1999 2000 2001 2002 2003(p)

GWh %

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Consumption EvolutionConsumption Evolution

Monthly Consumption (GWh)

2.000

2.200

2.400

2.600

2.800

3.000

3.200

3.400

Janua

ry

Febru

ary

Mar

ch

April

May

June July

August

Sept

embe

r

Octob

er

Novem

ber

Decem

ber

1999 2000 2001 2002 2003

10

Consumption 1Q02 - GWh Consumption 1Q03 - GWh

Income 1Q02 Income 1Q03

ResidentialIndustrial

CommercialOthers

ResidentialIndustrial

CommercialOthers

Profile of ConsumersProfile of Consumers

30%

33%

27%

10%

32%

29%

29%

10%

38%

24%

30%

8%

39%

22%

31%

8%

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III. Operating Performance



12

Development of Performance IndicatorsDevelopment of Performance Indicators

FEC (times)

9,5510,70 10,88 10,70 10,74 10,76 10,21 10,19 9,52 9,20

7,518,68 8,38

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1Q03 (*)

DEC (hours)

18,66 18,76 18,06 16,37 16,32 17,4214,04

18,2115,94

11,44 11,128,99

11,09

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1Q03(*)

Pre-privatization TrendPost-Privatization Trend

TMA (minutes)

145 139 148 161187

215

158 159134

100 114 11187

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1Q03

Pre-Privatization Trend Post-Privatization Trend

Pre-Privatization Trend Post-Privatization Trend

AneelStandard2003 DEC:

12,57 hours

Aneel Standard2003 FEC:

8,95 times

Aneel Standard2003 TMA:130 min

(*) annualized rolling 12-month .

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Background of Investments in Eletropaulo Background of Investments in Eletropaulo

Installed Capacity x Market(MVA)

10.594 10.677 10.689 10.638 10.75110.993

11.23011.737 11.903

12.28612.556

4.9365.182 5.287

5.542 5.656 5.660

5.2375.528

6.273

4.630 4.746

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Nominal Capacity of the System ETD+ESD+ETSD Market (ETD+ESD+ETSD)

32000

33000

34000

35000

36000

37000

38000

1998 1999 2000 2001 2002

GW

h -

Thou

s.

0

50

100

150

200

250

300

350

400

R$

MM

Investments (Capex) Consumption - GWh

Administrative21%

Subtransmission13%

Distribution66%

Capex 2002 - R$ 180.376 Thous.

Capex 1Q03 = R$ 38 MM

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15

Eletropaulo’s Market ValueEletropaulo’s Market Value

0

50

100

150

200

250

300

350

400

jan/98 abr/99 ago/00 dez/01 mar/03

Bas

is P

oint

s

Eletropaulo Brazil Risk R$/US$

RussianCrises

ArgentinaCrises

RationingStarts

WTC’sStrike

Source: Bloomberg

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Losses with RationingLosses with Rationing

? BNDES still has to release a tranche of R$ 240 million related to rationing lossesincurred in January and February/2002

Assuming the historical growth of 3.5% estimated losses were – R$ 1,965MM

900

1.100

1.300

1.500

1.700

1.900

2.100

2.3001

Q 0

0

2 Q

00

3 Q

00

4 Q

00

1 Q

01

2 Q

01

3 Q

01

4 Tr

i 01

1 Q

02

2 Q

02

3 Q

02

4 Q

02

R$ MM

Net Revenue BNDES Loan Net Revenue w/out Rationing

?

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Debt restructuring process in 1Q2003Debt restructuring process in 1Q2003

In July 2002 Eletropaulo started a process to restructure its debt due to problems of credit liquidity by trying to establish a balance between maturity dates of obligations and Eletropaulo’s capacity for generating cash

Approximately R$ 880 million (net of funding) was paid and R$ 1.5 billion was refinancedBetween January and April of 2003 approximately R$ 282 million was paid and R$ 371 million was renegotiated

6543

105

70

150(**)

221 (*)

jan/03 fev/03 mar/03 abr/03PAID RENEGOTIATED

(*) CP and Bladex’s Loan (was renegotiated in February – pushing back final maturity from 2005 to 2006).(**) 2nd Serie of 7th Debentures issue.

(R$ MM)

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1Q2003 Debt1Q2003 Debt

In 2002 hedge contracts were not renewed due to lack of credit linesAs part of the debt restructuring process 66% of Dollar debt was converted into ReaisIn 1Q2003, Eletropaulo maintained 45% of its total debt in DollarsEletropaulo regained access to hedge lines

total hedge in March 2003 - US$ 110 million14,2% of total Dollar debt is hedged

54%

46% R$

US$

45%

55%

(*) The amounts were exchanged by Ptax in the end of each month:Dec/ 2002 – 3,533March/ 2003 – 3,353

R$

US$

9% w/ hedge 14,2% w/ hedge

Consolidated debt - 12/31/2002(R$ 5.91 billion, of which R$ 2.7 billion

were in US$)*

Consolidated debt – 03/31/2003(R$ 5.8 billion, of which R$ 2.6 billion

were in US$)*

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68%

32%

Short Term Long Term

Indebtness - Short Term x Long TermIndebtness - Short Term x Long Term

short term debt does not reflect the actual schedule for payments maturing because it includes debts with breach of contractual obligations (financial covenants) and cross-default.The amount of consolidated debt re-classified as Short Term with schedule of amortizations unaltered is R$ 1,922 million.By schedule of payment maturities, about 40% of total debt will mature in the short term

12/31/2002 03/31/2003

73%

27%

Short Term Long Term

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Due Dates of Principal Payments in 2003Due Dates of Principal Payments in 2003

Note: the maturity of principal payments of dollar debts as 03/31/2002 were converted by the exchange rate (US$/R$ = 3,3531)

The company intends to proceed with its strategy of adapting the due dates of its debt to its generation of cash by lengthening the payment terms of its loans

8 8 9 9 9 9 9 10 10

92 89

143

1 3 5

225

5

199

91

60

35

50 49

35

228

37 37

abr/03 mai/03 jun/03 jul/03 ago/03 set/03 out/03 nov/03 dez/03

US$ R$ BNDES

Syndicated Loan(US$ 25MM)

Debentures(R$ 55MM)


143

92 91 89

CommercialPaper (US$ 7,7MM) and


225Bank LoanDeustche

Bank

(US$ 60MM)

228

SyndicatedLoan JP

Morgan (R$ 160MM)

199

Commercial Paper(US$ 49MM)

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Results – 1Q2003 (R$ MM)Results – 1Q2003 (R$ MM)

4o tri 02 1o tri 03

1.542,8 1.409,1 -8,7%

(1.662,2) (1.255,9) -24%

EBITDA (119,3) 153,2 +228%

66,2 (13,9) -222%

(281,7) 70,5 +213%

(106,0) - 347%

(339,4) 14,2 +104%

Main Reasons for 1Q2003 Profit:� Decrease in Provisions� Real Revaluation

Monetary Variation in Local Currency – besides debt cost in Reais

Drop in consumption due to seasonal effects

Provision for Actuarial Liabilities with CESP Foundation– CVM 371 – It is no longer accounted as Extraordinary Item, but as Personnel Expense

(*) Consolidated Figures

Drop in: � Electric power purchase expense due to the reduction by 25% of Initial Contracts, � Other Operational Expenses due to provisions occurred in 4Q02, that did not repeat in 1Q03

NET INCOME

OPERATING EXPENSES

FINANCIAL INCOME(EXPENSES)*

RESULTS BEFORE TAXES ANDOTHER ITEMS

OTHER ITEMS NET OF TAXES

NET PROFIT (LOSSES)

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EBITDA AdjustedEBITDA Adjusted

R$ 153,2 MMEBITDA

(with CVM 371 effects)

R$ 123,6 MM

R$ 276,8 MMR$ 276,8 MM

EBITDA (WITHOUT THE EFFECT

OF PROVISIONS)

Provision for Actuarial Liabilities with CESP Foundation – CVM 371

R$ -119,3 MMEBITDA

(taking into account Provisions)

R$ 155,7 MM

R$ 273,5 MMR$ 273,5 MM

EBITDA (WITHOUT THE

EFFECT OF PROVISIONS)

Provisions for Labor and Cetemec Contingencies

R$ 148,3 MMProvision for the debt of São

Paulo City Hall

R$ 88,8 MM Provision for Doubtful Debt

4th Quarter 2002 1st Quarter 2003

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Tariff ResetTariff Reset

Privatization Reset

Annual Readjustment (X Factor = zero in first four years)

Annual Readjustment (X factor = 0)

0 1 2 3 4 5 6 7 8 9 10Year

Principle of maintainance of the economic-financial equilibrium of the concession through:

Annual Readjustment: according to the pre-established formula of the ConcessionContract

Periodic Reset: every four years after privatization, without a pre-establishedmethodology in the Concession Contract

Extraordinary Resets: When significant changes to cost base of concessions occur, altering economic-financial equilibrium

Currency devaluation in June 1999

Tariff Readjustment Index = VPA + VPB * (IGPM +/- X)Revenues

Reset

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Mechanism for Tariff ResetMechanism for Tariff Reset

* CVA – Compensation Account for Variations of Values of Parcel A’s items

Distributors have tariffs readjusted annually to pass through non-manageable costs (Parcel A) and update manageable costs (Parcel B) based on IGP-M.

CVA* was created in 2001 to allow pass through of changes in costs of Parcel A that occurred between tariff readjustments

Measure MME/MF 116/03, of the 4th of April 2003 postponed, for 12 months, the compensation of the balance of CVA and this will be compensated over 24 months starting in July 2004

Required Income =Required Income ==

Parcel A Parcel B

Manageable costs

Exchange variation – energy fromItaipuCCCCosts with transmission gridPurchased EnergyCost of monitoring Return onReturn on

CapitalCapital

DepreciationDepreciation

O & MO & M

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Eletropaulo’s Tariff Readjustment (1999 – 2002)Eletropaulo’s Tariff Readjustment (1999 – 2002)

0%2%4%6%8%

10%12%14%16%18%

1999 2000 2001 2002Parcela B Parcela A IGPM IPCA

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Tariff Reset DynamicsTariff Reset Dynamics

ReturnReturn

DepreciationDepreciation

O & MO & M

Parcel B

BaseBase

Required Income

Parcel AParcel A

MWhx

Tariff

MWhx

Tariff

Verified Income

x

Periodic Reset % = Required RevenuesVerified Revenues

WACC(Pre-Tax)

WACC(Pre-Tax)

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Tariff Reset EletropauloTariff Reset Eletropaulo

Schedule of Eletropaulo’s Tariff Reset (2003):26th May – Technical Note – Preliminary Number = 9.62%18Th June – Public Hearing – already held4th July – Tariff Reset Implementation – Final Number = 11,35%

10.95% (Tariff Reset)0.4% (collateral costs for energy purchase and some rationing costs incurred by EP during the rationing period)

The main factors that were not considered were:Rate Base calculation – Aneel is considering a preliminary level, which is a percentage of fixed assets adjusted by inflation – subject to Public Hearing to be scheduledFCESP – The actuarial cost with Cesp Foundation is not being considering by AneelTest YearAllowance for bed debts

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Regulatory PerspectivesRegulatory Perspectives

X

TARIFF

INFLATION

Tariff Reset 2003

Basis of Remuneration

WACCDoes not mirror the actual cost of capital

X FactorNot compatible with

Subjective RC* criteria

Deferral of CVA Affects leverage andcredit limit

(*) Reference Company

Does not recoverinvestments made

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I. General Overview of the Company


III. Operating Performance



VI. Conclusion

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Eletropaulo Eletropaulo

Eletropaulo is the largest energy distribution company in Latin America

Its concession area includes the Brazilian population with the highest purchasing power

Since privatization Eletropaulo has presented significant improvements in operating performance indicators, which resulted in better services for the population within its concession area

Rationing caused losses of R$ 1,965 million, only partially compensated by the Sector’s General Agreement

Rationing and closure of financial markets led to maturity concentration in the short term, the impossibility to renew hedges, and hence, the need to restructure Eletropaulo’s debt, extending maturity terms and converting Dollar debts into Reais

The greatest challenges that Eletropaulo faces at this time relate to regulatory issues, due to the Government’s intervention aimed at reducing the inflationary effect of tariff resets

Solid and feasible company that seeks to match the maturities of its loans with its cash generation and mitigate the effects of the instability

of the regulatory scenario

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First Quarter Results2003

Documents

Apre 1 t03