AES CORPORATION
City or location Month XX, 20XX
AES CORPORATIONAES Panama Business Review
David SundstromCountry Manager, AES Panama
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 Panama Role
AES Panama Strategic Overview
--
$3.5 Billion
13-19% per Year
11%
$2.6-2.9 Billion
--
--
--
--
--
Above Average
Above Average
Above Average
Average
Above Average
Increasing
Yes
Significant Opportunities
Significant Opportunities
Limited Opportunities
Contains Forward Looking Statements
(1) Non-GAAP financial measure. See Appendix.
3www.aes.com
Panama Highlights
Panama at a Glance
US Dollar (US$)Not Applicable, US Dollar since 1904
US $5,0212.4%
Export oriented services, the Canal, ports, free tax zone, banking, construction
Panama3.3 million
Ba1, BB, BB+ (Moody’s, S&P, Fitch)Vote on increasing the capacity of the Canal
Currency Exchange RatePer Capita GDP (2006 E)Inflation Rate (2006 E)Economic Drivers
Capital & Largest CityPopulation (2006 E)Sovereign Credit Rating (4/2006)Major Development
4www.aes.com
Six companies
57% private sector ownership
36% AES share (capacity)
12 plants
One auto-generator
1,324MW installed capacity
Maximum demand 946MW
58% hydroelectric
42% thermal
Generators free to sell to:
Distribution companies at international bid prices
Large customers at freely negotiated prices
Generation
One company
100% government owned
Transmission (230 & 115 kV)
Over 940 km of lines
Open access transmission
Tolls set every five years
Transportation Distribution Commercial Base
Panama Electricity Market Characteristics
Three companies
51% private sector ownership
Distribution companies distribute 5,085 GWh of electric consumption of the country
Regulated public service
Exclusive geographic concessions for regulated customers
Tariffs set every four years based on “model company”
Four large users supplied directly by generation companies
Above 100KW:Large customers can purchase energy directly from a generator or distribution company
Freely negotiated prices and conditions
Source: Centro Nacional de Despacho, ETESA, ACP.
5www.aes.com
Panama Generation Market Profile
www.aes.com
Capacity Market Share
Total Installed Capacity = 1,324MW
AES Panama36%
Copesa3%
Bahia Las Minas21%
Panam7%
ACP6%
Fortuna23%
Pedregal4%
Source: Centro Nacional de Despacho, ETESA, ACP.
6www.aes.com
0
200
400
600
800
1,000
1,200
1,400
1999 2001 2003 2005 2007E 2009E 2011E 2013E
Panama Electricity Demand Growth
Steady historical and projected growth in demand
Contains Forward Looking Statements
Year
Dem
and
(MW
)
0%
2%
4%
6%
8%
10%
Yea
r-ove
r-Yea
r Inc
reas
e (%
)
Demand (MW) Increase (%)
Source: Nacional de Despacho and ETESA.
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Contracts awarded in international bid processes
Minimum demand requirement > 100KW
Unregulated freely negotiated price
Economic Dispatch Center
Distribution Companies
Substation1
Unregulated
SpotTransactions
Transmission andDistribution Customers
DistributionTransmission
Substation2
Substation3
Gencothermal
Toll Payment
Dispatch based on lowest cost of production (marginal cost)
Spot price = marginal cost
Includes energy and capacity payments
Open access transmission
Toll payments for existing installations determined by regulator
Concessions granted for distribution and tariffs based on model company structure
Panama Power Market
Gencohydro
Regulated
Large
Customers
8www.aes.com
Ministry of Economy
Public Service National Authority:
Supervises compliance
Unregulated Customers
Economic Dispatch Center:Orders dispatch
Experts Panel:Resolves conflicts
Regulatory Bodies
GenerationCompanies
Transmission Companies
DistributionCompanies
Economic Dispatch Center Members
National Energy Commission:
Implements policies
Panama Power Market Organization
9www.aes.com
AES History in Panama
1998The state owned utility is privatized; AES submitted the winning bids for the acquisition of Bayano, La Estrella, and Los Valles plants
1999 AES started operations and merged the two companies into AES Panama
2000AES Panama started the greenfield development of the Estihydroelectric project
2001AES Panama started the Bayano hydroelectric expansion and upgrade project
2005 AES started the evaluation of a new hydroelectric project in Panama
2006AES announced the AES Changuinola hydroelectric project
2003AES Panama completed the Esti hydroelectric project on time and under budget
2004AES Panama completed the Bayano hydroelectric expansion and upgrade project on time and under budget
1998-1999 2000-2001 2003-2004 2005-2006
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DIVERSION DAMConstruction Operation
DIVERSION CANALConstruction Operation
STORAGE DAMConstruction Operation
SPILLWAYOperation
Hydroelectric Projects Fundamentals
11www.aes.com
PRESSURE TUNNELDrill and Blast Technique Final Breakthrough Concrete Lining
POWERHOUSETurbine Installation Power Delivery
Hydroelectric Projects Fundamentals
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AES Panama Business Structure
AES Panama
AES Panama
AES Changuinola
49% 66.5%
Los VallesBayano La Estrella Esti Changuinola
13www.aes.com
AES hydroelectric plants
AES Panama: Generation
AES in Panama470 MW hydroelectric plants (36% of Panama generation capacity)
AES Changuinola project
Estrella42MW
Valles48MW
Bayano260MW
Estí120MW
Charco AzulProgreso
Llano Sánchez
La Chorrera Panama City
Changuinola Project150MW
14www.aes.com
020406080
100120140160
9%
10%
26%
55%
Panama Marginal Capacity is Oil-Fired… ...Resulting in High Spot Prices
AES Panama Diverse Hydroelectric Portfolio …Leads to
Total: 470 MW, 9 units
Competitive advantage to capture long-term contracts Ability to provide fixed prices Hydrology risk diversificationMaintenance flexibilityEconomic dispatch of the system provides assurance of output
Thermal42%
Hydroelectric58%
AES Panama Hydroelectric Units and Location Diversity
Bayano
La Estrella
Los Valles
Esti
Monthly Average Spot Energy Price (trailing 12 months to April, 2006)
$/M
Wh
Apr-06Feb-06Dec-06Oct-06Aug-06Jun-06
15www.aes.com
AES Panama Contract Revenue by Customer
Elektra Noreste,owned by Ashmore,
62%
Edemet and Edechi, owned by Union Fenosa,
32%Large
Customers,6%
Elektra Noreste,owned by Ashmore,
20%
Edemet and Edechi, owned by Union Fenosa,
80%
2006 2012E
Contract revenues represent 80% of total revenues
Contains Forward Looking Statements
16www.aes.com
AES Panama Generation KPIs
Key Performance Indicator (KPI)
Lost time accidents (LTA)Implemented safety management system under OHSAS18001 standard
Revenues per MWh (US$/MWh)Commercial availability factor (CAF)Non-fuel O&M cost per megawatt (NFOM/MW)
Safety Excellence
Operational Excellence
Environmental Excellence
Implemented environmental management system under ISO14001 standardCertification audit on both standards is targeted before the end of this year
Contains Forward Looking Statements
17www.aes.com
AES Panama Performance Scorecard
Commercial Availability Factor (CAF)
Non-Fuel O&M Expense
90%92%94%96%98%
100%
2Q 2003 4Q 2003 2Q 2004 4Q 2004 2Q 2005 4Q 2005
0
5
10
15
20
25
2Q 2003 4Q 2003 2Q 2004 4Q 2004 2Q 2005 4Q 2005
$ / K
W y
ear
% o
f Ava
ilabi
lity
18www.aes.com
AES Panama Financial Overview
Revenue
Gross Margin
Income Before Tax &Minority Interest
Distributions to AES Corporation
2003
$74
$37
$33
$9
2004
$117
$47
$21
$19
2005
(US$ Million)
$134
$84
$55
$15
(1) Including a distribution at financial closing of the $320 million, long-term financing.Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.
(1)
19www.aes.com
AES Panama Portfolio – Diverse Geography and Impacts of New Capacity
Balanced Revenues(% of Total)
Installed Capacity Trend (MW)
Based on 2005
MWLa Estrella
14% Los Valles
17%
Esti37%
Bayano32%
0
100
200
300
400
500
1999 -2001
2002 2003 2004 2005
Thermal Hydroelectric
Hydroelectric Additions
20www.aes.com
30-48MW wind project at early evaluation stage Arrangements for wind measurements are being advanced
Platform Expansion OpportunitiesContains Forward Looking Statements
Construction of a 150MW hydroelectric plantNew PPA negotiated and signedAES Changuinola
Barrigon Wind
El Grande Wind
Hydroelectric Project
20MW wind project at early evaluation stage Wind measurements are being collected
50MW project at evaluation stage, waiting for a new bid opportunity
Panama
Costa Rica
21www.aes.com
Greenfield Project: AES ChanguinolaContains Forward Looking Statements
150MW hydroelectric power plant:$320 million project cost10-year PPA with Edemet/Edechi, owned by Union Fenosa
Development advances:Approved EIA and water concessionsSocial and environmental advancesPositive field study results to dateAdvanced designStrong government support for the projectFinancing interest in the projectOn budget development investments to dateTarget 2007 to start construction$65 million new revenues expected by 2010
Proposed AES Changuinola, Panama(draft design rendition)