AES 1Q 08 Review

»AES CorporationFirst Quarter 2008 Financial ReviewMay 9, 2008

AES Corporation 2

» 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 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 Annual Report on Form 10-K for the year ended December 31, 2007, 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.

AES Corporation 3

» Financial Highlights($ Millions except Earnings Per Share)

Gross Margin

$849$1,046

Q1 2007 Q1 2008

Income Before Taxes Equity Earnings & Minority Interest

$409$628

Q1 2007 Q1 2008

Revenue

$3,091$4,104

Q1 2007 Q1 2008

Adjusted EPS(1)(2)

$0.24

$0.39

Q1 2007 Q1 2008

Diluted EPS from Continuing Operations

$0.17

$0.34

Q1 2007 Q1 2008

Key earnings growth drivers were higher spot and contracted prices and increased volumes at generation businesses in Latin America & Europe as well as FX translation gains

(1)A Non-GAAP financial measure. See Appendix. (2)Q1 2007 Adjusted EPS excludes FAS 133 mark-to-market losses of $0.02 and net asset (gains)/losses and

impairments of $0.05. Q1 2008 Adjusted EPS excludes FAS 133 mark-to-market losses of $0.01 and net asset (gains)/losses and impairments of $0.04.

AES Corporation 4

» Financial Highlights, Cont’d.($ Millions)

Net Operating Cash Flow

$132

$471$468

Q1 2007 Q1 2008

Free Cash Flow(1)

$292

$101

$295

Q1 2007 Q1 2008

Contribution from EDC, a business AES sold in Q2 2007

Operating cash flow and free cash flow remain flat, reflecting increased working capital, primarily due to increased receivables associated with higher revenues

(1)A Non-GAAP financial measure. See Appendix.

AES Corporation 5

» First Quarter 2008 Bridge($ Per Diluted Share)

$0.04 $0.01

Q1 2007 Diluted EPS

from Continuing Operations

Q1 2008 Diluted EPS

from Continuing Operations

Impairments in Q1 2007(1)

Operational Improvements

Foreign Currency

Translation & Transaction(3)

Increase in Business

Development & Corporate

Overhead

Asset Impairments in Q1 2008(4)

Adjusted EPS Factors(5)

Q1 2008 Adjusted

EPS(5)

Impairments FAS 133

(1)Represents a $35 million or $0.05 write-off associated with our investment in AgCert.(2)Includes net interest income and other non-operating items.(3)Includes FX translation and transaction gains of $0.02 each.(4)Includes South Africa peaker development cost write-off of $19 million ($17 million net of taxes) or $0.03 and

Uruguaiana impairment of $14 million ($6 million net of minority interest) or $0.01.(5)A non-GAAP financial measure. See Appendix.

$0.04$0.02

$0.12 ($0.02)($0.04)

$0.05

$0.34$0.39

$0.17

Other Non-Operating

Items(2)

AES Corporation 6

» Appendix

AES Corporation 7

» Parent Sources and Uses of Cash($ Millions)

First Quarter

Sources 2008

221

-

-

-

2

1

2,153

2,377

-

(644)

(142)

(82)

14

(1,523)

(2,377)

2007(Restated)

Total Subsidiary Distributions(1) 137

Proceeds from Asset Sales, Net -

Refinancing Proceeds, Net -

Increased Credit Facility Commitments -

Issuance of Common Stock, Net 11

Total Returns of Capital Distributions and Project Financing Proceeds 15

Beginning Liquidity(1) 1,146

Total Sources 1,309

Uses

Repayments of Debt -

Investments in Subsidiaries, Net (316)

Cash for Development, Selling, General and Administrative and Taxes (99)

Cash Payments for Interest (82)

Changes in Letters of Credit and Other, Net 66

Ending Liquidity(1) (878)

Total Uses (1,309)

(1)A Non-GAAP financial measure. See “Definitions.”

AES Corporation 8

» First Quarter Subsidiary Distributions($ Millions)

First Quarter 2008 Subsidiary Distributions(1)

North America Latin America Europe &

Africa Asia Other(2) Total

Utilities 19 5 - - 24

Generation 119 22 30 1 172

Other 25 25

Total 138 27 30 1 25 221

Top 10 First Quarter 2008 Subsidiary Distributions(1)

Business Amount Segment Business Amount SegmentNew York 95 NA Generation Shady Point 13 NA Generation

Dominican Republic 22 LA Generation Warrior Run 9 NA Generation

Kilroot 19 E&A Generation Elsta 8 E&A Generation

IPALCO 19 NA Utilities Buffalo Gap 2 6 Other

Global Insurance 17 Other Brasiliana 6 LA Utilities

(1) See “Definitions.”(2)Other includes wind and other alternative energy projects.

AES Corporation 9

» First Quarter Consolidated Cash Flow($ Millions)

First Quarter

Purchase of Short-Term Investments (1,373) (470)

Purchase of Long Term Available for Sale Securities (5) (8)

Issuance of Non-Recourse Debt 259 370Repayments of Non-Recourse Debt (98) (380)

2008 2007(Restated)

$471 $600

(476)(174)

2326

(14)(1)9

114

-12

(680)

196

(4)(54)

914(4)1

148

1785

1,358

$1,443

(633)(186)

81,281

54-

11(13)

(268)14

(1,110)

178

(5)(4)46

(9)(2)

329

18(292)2,058

$1,766

Net Cash Provided by Operating Activities(1)

Capital ExpendituresAcquisitions - Net of Cash AcquiredProceeds from the Sales of AssetsSale of Short-Term Investments

Decrease (Increase) in Restricted CashPurchase of Emission AllowancesProceeds from the sales of Emission Allowances(Increase) Decrease in Debt Service Reserves and Other Assets

Affiliate Advances and Equity InvestmentsOther Investing

Net Cash Used in Investing Activities

Borrowings under the Revolving Credit Facilities, Net

Payments of Deferred Financing CostsDistributions to Minority InterestsContributions from Minority InterestsIssuance of Common StockFinanced Capital ExpendituresOther Financing

Net Cash Provided by Financing Activities

Effect of Exchange Rate Changes on CashTotal (Decrease) Increase in Cash & Cash EquivalentsCash & Cash Equivalents, Beginning

Cash & Cash Equivalents, Ending

(1)Depreciation & amortization from continuing operations was $244 million for 1Q08 and $220 million for 1Q07. Changes in net working capital were ($233) million for 1Q08 and $23 million for 1Q07.

Note: Certain amounts have been netted, condensed and rounded for presentation purposes.

AES Corporation 10

» First Quarter Segment HighlightsLatin America Generation($ Millions)

First Quarter Segment Highlights2008 2007

(Restated)% Change

Revenues $1,206 $738 63%

Gross Margin $399 $249 60%

IBTEE&MI $345 $207 67%

% Change Comparison Revenue Gross MarginVolume/Price/Mix 62% 66%

New Businesses/Projects 0% 0%

Currency (Net) 1% (6%)

Total 63% 60%

› Latin America generation revenue increased by $468 million to $1.2 billion, primarily due to higher volume, contract and spot prices in Chile and Argentina of $345 million, combined with favorable foreign currency translation of approximately $54 million. Higher spot prices and volumes of approximately $36 million at our Dominican Republic and Panama businesses contributed as well.

› Gross margin increased by $150 million primarily due to higher contract and spot prices at Gener in Chile of approximately $116 million and higher spot prices and volume at Alicura in Argentina of $34 million

› IBTEE&MI increased by $138 million primarily due to the increase in gross margin.

AES Corporation 11

» First Quarter Segment HighlightsLatin America Utilities($ Millions)


(Restated)% Change

Revenues $1,463 $1,171 25%


IBTEE&MI $180 $172 5%



Currency (Net) 20% 4%

Total 25% 6%

› Latin America utilities revenue increased by $292 million, primarily due to favorable foreign currency translation of $232 million combined with an increase in volume sales and other tariff related costs passed through to customers of $137 million at Eletropaulo in Brazil; offset in part by decreased rates of approximately $84 million due to the Eletropaulo tariff reset in July 2007.

› Gross margin increased by $12 million, primarily due to higher sales volume of approximately $91 million at Eletropaulo combined with favorable foreign currency translation of approximately $38 million; offset in part by the July 2007 tariff reset of approximately $84 million, increased costs of approximately $24 million at Eletropaulo and decreased rates of approximately $9 million in El Salvador.

› IBTEE&MI increased $8 million primarily due to the improvement in gross margin.

AES Corporation 12

» First Quarter Segment HighlightsNorth America Generation($ Millions)


(Restated)% Change

Revenues $551 $498 11%


IBTEE&MI $90 $74 22%


New Businesses/Projects(1) 5% 2%


Total 11% 13%

› North America generation revenues increased by $53 million, primarily due to $26 million from TEG and TEP in Mexico as a result of a full quarter of contribution in 2008, $12 million in mark-to-market derivative adjustments, $9 million in higher volume, availability and the impact of a revenue adjustment at our Thames facility in Connecticut and $8 million related to emission credit sales; offset in part by a net decrease of $6 million due to a revenue adjustment and higher natural gas prices at Merida in Mexico.

› Gross margin increased by $19 million, primarily due to $12 million in derivative adjustments, $7 million from Thames as a result of higher volume, availability and the impact of a revenue adjustment; offset in part by a net decrease of $6 million at Merida due to a revenue adjustment and higher natural gas prices

› IBTEE&MI increased by $16 million primarily due to the improvement in gross margin.

(1)Includes TEG and TEP in Mexico.

AES Corporation 13

» First Quarter Segment HighlightsNorth America Utilities($ Millions)


(Restated)% Change

Revenues $249 $263 (5%)

Gross Margin $52 $81 (36%)

IBTEE&MI $21 $51 (59%)

% Change Comparison Revenue Gross MarginVolume/Price/Mix (5%) (36%)



Total (5%) (36%)

› At IPL, our North America utility, revenue decreased by $14 million, primarily due to the establishment of a $30 million regulatory reserve related to a proposed one-time credit to customers; offset in part by an increase in rate adjustments of $11 million related to recoverable fuel costs and environmental investments.

› Gross margin decreased by $29 million due in large part to the regulatory reserve charge identified above.

› IBTEE&MI decreased by $30 million consistent with the decline in gross margin.

AES Corporation 14

» First Quarter Segment HighlightsEurope & Africa Generation(1)

($ Millions)


(Restated)% Change

Revenues $320 $252 27%


IBTEE&MI $92 $64 44%




Total 27% 37%

› Europe & Africa generation revenues increased by $68 million, primarily due to increased contracted revenues at our Northern Ireland and Hungary businesses of approximately $49 million as well as higher volumes and spot prices in Kazakhstan of approximately $24.

› Gross margin increased by $33 million, due to contributions of approximately $26 million from our Northern Ireland and Hungary plants primarily related to higher contracted capacity revenues and a net contribution of approximately $9 million from Kazakhstan as higher volumes and prices overcome an increase in fixed costs

› IBTEE&MI increased by $28 million, consistent with the improvement in gross margin

(1)Includes CIS countries.

AES Corporation 15

» First Quarter Segment HighlightsEurope & Africa Utilities(1)

($ Millions)


(Restated)% Change

Revenues $203 $166 22%


IBTEE&MI $20 $16 25%




Total 22% 14%

› Europe & Africa utilities revenue increased by $37 million, primarily due to increased tariff rates of $18 million in the Ukraine plus favorable currency translation of approximately $13 million at Sonel in Cameroon.

› Gross margin increased by $3 million, primarily due to higher tariffs in the Ukraine of approximately $4 million and reduced fuel consumption in Cameroon.

› IBTEE&MI increased by $4 million consistent with the improvement in gross margin.

(1)Includes CIS countries.

AES Corporation 16

» First Quarter Segment HighlightsAsia Generation(1)

($ Millions)


(Restated)% Change

Revenues 335 200 68%

Gross Margin 52 47 11%

IBTEE&MI 26 20 30%



Currency (Net) (1%) (1%)

Total 68% 11%

› Asia revenues increased by $135 million, primarily due to higher volumes in Pakistan of $94 million and increased dispatch in Sri Lanka of $34 million.

› Gross margin increased by $5 million, primarily due to higher availability at Barka in Oman and Kelanitissa in Sri Lanka of approximately $7 million, combined with an increase in volume at Ras Laffan in Qatar of approximately $3 million; offset in part by a $5 million decrease in rates at Chigen in China.

› IBTEE&MI increased by $6 million consistent with the year-over-year changes in gross margin.

(1)Includes the Middle East.

AES Corporation 17

» Reconciliation of Adjusted Earnings Per Share(1)

First Quarter2008 2007

(Restated)

$0.34 $0.17

0.02

-

0.05

-

$024

0.01

-

0.04

-

$0.39

Diluted Earnings Per Share from Continuing Operations

FAS 133 Mark to Market (Gains)/Losses

Currency Transaction (Gains)/Losses

Net Asset (Gains)/Losses and Impairments

Debt Retirement (Gains)/Losses

Adjusted Earnings Per Share(1)


AES Corporation 18

» Reconciliation of Cash Flow Items

First Quarter

Capital Expenditures 2008 2007(Restated)

Maintenance Capital Expenditures 179 204

Growth Capital Expenditures 463 276

Capital Expenditures 642 480

First Quarter

Reconciliation of Free Cash Flow 2008 2007(Restated)

Net Cash from Operating Activities 471 600Less: Maintenance Capital Expenditures 179 204

Free Cash Flow(1) 292 396

($ Millions)


AES Corporation 19

» Reconciliation of Subsidiary Distributions and Parent Liquidity

Quarter Ended

Mar. 31, 2008

Dec. 31, 2007

Sept. 30, 2007

June 30, 2007

Total subsidiary distributions 221 343 361 259

Total return of capital distributions 1 21 35 34

Total subsidiary distributions & returns of capital to Parent 222 364 396 293

Balance as of

Parent Company Liquidity(1)Mar. 31,

2008Dec. 31,

2007Sept. 30,

2007June 30,

2007

Cash at Parent & QHCs(1)(2) 737 1,315 619 405

Availability under revolver 786 838 896 973

Ending liquidity 1,523 2,153 1,515 1,378

($ Millions)

(1)A Non-GAAP financial measure. See “Definitions.”(2)Qualified Holding Company. See “Assumptions.”

AES Corporation 20

» Assumptions

Forecasted financial information is based on certain material assumptions. Such assumptions include, but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; (b) businesses continue to operate in a manner consistent with or better than prior operating performance, including achievement of planned productivity improvements including benefits of global sourcing, and in accordance with the provisions of their relevant contracts or concessions; (c) new business opportunities are available to AES in sufficient quantity to achieve its growth objectives; (d) no material disruptions or discontinuities occur in GDP, foreign exchange rates, inflation or interest rates during the forecast period; and (e) material business-specific risks as described in the Company’s SEC filings do not occur individually or cumulatively. In addition, benefits from global sourcing include avoided costs, reduction in capital project costs versus budgetary estimates, and projected savings based on assumed spend volume which may or may not actually be achieved. Also, improvement in certain KPIs such as equivalent forced outage rate and commercial availability may not improve financial performance at all facilities based on commercial terms and conditions. These benefits will not be fully reflected in the Company’s consolidated financial results.

The cash held at qualifying holding companies (QHCs) represents cash sent to subsidiaries of the Company domiciled outside of the U.S. Such subsidiaries had no contractual restrictions on their ability to send cash to AES, the Parent Company. Cash at those subsidiaries was used for investment and related activities outside of the U.S. These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the U.S. Since the cash held by these QHCsis available to the Parent, AES uses the combined measure of subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet its international liquidity needs. AES believes that unconsolidated parent company liquidity is important to the liquidity position of AES as a parent company because of the non-recourse nature of most of AES’s indebtedness.

AES Corporation 21

» Definitions› Non-GAAP Financial Measures

– Adjusted earnings per share – Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per sharefrom continuing operations excluding gains or losses associated with (a) mark-to-market amounts related to FAS 133 derivative transactions, (b) foreign currency transaction impacts on the net monetary position related to Brazil and Argentina, (c) significant asset gains or losses due to disposition transactions and impairments, and (d) costs related to early retirement of debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability associated with mark-to-market gains or losses related to certain derivative transactions, currency gains and losses, periodic strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of debt.

– Free cash flow – Free cash flow (a non-GAAP financial measure) is defined as net cash from operating activities less maintenance capital expenditures (including environmental capital expenditures). AES believes that free cash flow is a useful measure for evaluating our financial condition because it represents the amount of cash provided by operations less maintenance capital expenditures as defined by our businesses, that may be available for investing or for repaying debt.

– Liquidity – Defined as cash at the Parent Company plus availability under corporate revolver plus cash at qualifying holding companies (QHCs). AES believes that unconsolidated Parent Company liquidity is important to the liquidity position of AES as a Parent Company because of the non-recourse nature of most of AES’s indebtedness.

› Subsidiary distributions

– Subsidiary Distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which are determined in accordance with GAAP. Subsidiary Distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries’ business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of difference between the Subsidiary Distributions and Net Cash Provided by Operating Activities consists of cashgenerated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies.

Economy & Finance

AES 1Q 08 Review