AES 4Q 07 Review

» AES CorporationFourth Quarter & Full Year 2007 Financial Review

March 17, 2008

AES Corporation 1

Fourth Quarter & Full Year 2007 Financial Review

» Safe Harbor DisclosureCertain 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 2


» Highlights Contains Forward Looking Statements

› Q4 and full year 2007 financials at a glance– Operating Cash Flow and Free Cash Flow(1) of $2.4 billion and $1.5 billion, respectively

› Up $119 million and $82 million, respectively, when compared to 2006, after excluding the impacts of EDC (sold in Q2 2007)

– Revenues for the year up 17% to $13.6 billion, with Gross Margin and IBT&MI at $3.4 billion and $1.6 billion, respectively

– Q4 and full year Adjusted EPS(1) of $0.19 and $1.02› Results include a one-time charge of $0.07 related to a change in Mexican tax law

› Improved operations in North American and European businesses, along with contributions from new businesses, helped offset the higher costs and lower volumes in Chile & Argentina

› Portfolio and Capital Structure Optimization Plans on track– Sold 10% stake in Chilean subsidiary (Gener) for approximately $300 million

– Issued $2 billion unsecured notes, primarily to refinance 2nd Lien notes; reducing secured debt as a percentage of total debt from 43% to 17%

– Announced sale of Ekibastuz and Maikuben for an upfront price of $1.1 billion plus up to an additional $380 million in performance based earn-outs and management fees over a 3 year period

› Making significant progress to achieving our LT Growth Targets– Announced as Winner of Bids in The Philippines and South Africa totaling 1,762 MW, subject to final negotiation

and closing conditions

– Secured coal rights for up to 2,400 MW of coal-fired capacity in India (OPCG expansion and Chhattisgarh)

– Added 427 MW of capacity to our wind operating portfolio, including the start-up of commercial operations for phase 2 of the Buffalo Gap wind farm and the acquisition of Midwest wind from GE

– Began construction of an additional 170 MW expansion to Buffalo Gap wind farm (Buffalo Gap 3)

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

AES Corporation 3


» Meeting Our Commitments

2007 Guidance(1) 2007 ResultsGross Margin $3.5 - $3.6 billion

$2.0 - $2.1 billion

$1.04

$1.07$2.2 - $2.3 billion$1.2 - $1.4 billion

$1.1 billion$0.9 - $1.0 billion$2.3 - $2.5 billion

$3.4 billionIncome Before Income Taxes and Minority Interest (IBT&MI)(1)

$1.6 billion

Diluted EPS from Continuing Operations(2)

$0.73

Adjusted EPS(3)(4) $1.02

Subsidiary Distributions(4) $1.1 billionMaintenance Capex $0.9 billionTotal Capex $2.5 billion

Net Cash from Operations $2.4 billionFree Cash Flow(4) $1.5 billion

(1)2007 results include approximately $400 million net charges relating to impairments and write-offs net of gain from sale of investments.(2)Includes $0.26 adjustments relating to impairments and write-offs net of gain from sale of investments, and an additional $0.07 one-time deferred tax charge related to a change in Mexican tax law.(3)2007 results include a one-time charge of $0.07 related to a change in Mexican tax law.(4)A Non-GAAP financial measure. See Appendix.

AES Corporation 4


($ Millions Except Earnings Per Share and Percent)

» Fourth Quarter & Full Year 2007 Highlights

Fourth QuarterFull Year Ended December 31,

2006 2007(Restated)

% Change 2007 2006(Restated)

% Change

Revenues $3,673 $2,934 25.2% $13,588 $11,576 17.4%

(0.7)

61.2

170.4%

9.7%

Gross Margin 809 789 2.5 3,409 3,434

(Loss) Income from Continuing Operations

Before Income Taxes & Minority Interest (IBT & MI)

(35) 68 (151.5) 1,614 1,001

Diluted EPS from Continuing Operations

$0.00 ($0.02) n/a $0.73 $0.27

Adjusted EPS(1) $0.19 ($0.02) n/a $1.02 $0.93

› Strong results for Q4 2007 were primarily driven by:– Improved operations in North American & European subsidiaries– New businesses– Favorable foreign currency translation

› Weaker results in Q4 2006 EPS were primarily driven by:– North America outages– Higher business development and restatement charges– Brazil restatement charges

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

AES Corporation 5


» Reconciliation of Adjusted Earnings Per Share(1)

($ Per Share)


2007 2006(Restated)

$0.00 ($0.02)

-

-

-

-

($0.02)

0.02

-

0.09

0.08

$0.19

2007 2006 (Restated)

Diluted Earnings (Loss) Per Share from Continuing Operations

$0.73 $0.27

FAS 133 Mark to Market (Gains)/Losses 0.03 (0.06)

Currency Transaction (Gains)/Losses - 0.01

Net Asset (Gains)/Losses and Impairments 0.18 0.68

Debt Retirement (Gains)/Losses 0.08 0.03

Adjusted Earnings (Loss) Per Share(1) $1.02 $0.93

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

AES Corporation 6


» Fourth Quarter 2007 Bridge($ Per Share)

($0.02)

($0.10)

($0.08)

$0.19

$0.19

$0.07

$0.11

$0.02$0.00

Higher Overhead and

Other Significant

Charges in Q4 2006(1)

Adjusted EPS

Factors(5)

Q4 2006

(Restated) Diluted EPS

from Continuing Operations

Q4 2007 Adjusted

EPS(5)

Operational Improvements

in Q4 2007 (2)

Impairments & Other

Charges in Q4 2007(3)

Debt Retirement

related charges in Q4

2007(4)

Other Adjustments

Q4 2007 Diluted EPS


(1)Primarily driven by higher G&A expenses in Q4 2006, Brazil restatement charges, Transgas restructuring charges and Panama non-recourse re-financing related write-off.(2) Primarily driven by improved operations in North American & European subsidiaries.(3)Impairments & Other Charges include: Uruguiana, AgCert, gain from sale of Gener shares, FAS 133 and other adjustments.(4)Primarily driven by costs related to early retirement of recourse debt.(5)A non-GAAP financial Measure. See Appendix.

AES Corporation 7


» Full Year 2007 Bridge($ Per Share)

$0.27

$0.73

$0.29

$1.02

$0.02$0.18$0.63

($0.08)

($0.09)($0.20)

FY 2007 Operational

Improvements(2)

FY 2007 Diluted EPS


Other Adjustments

FY 2007 Adjusted

EPS(3)

Restructuring Charges Net of

Asset Sale Gains in 2006

(1)

Foreign Currency

Translation

Higher G&A and

Restatement Charges

FY 2006

(Restated) Diluted

EPS from Continuing Operations

FY 2007 Gas Curtailment

Impact in the Southern

Cone

Adjusted EPS Factors(3)

(1) Primarily driven by $0.76 loss from Brasiliana restructuring, offset by ($0.13) gain from sale of Kingston.(2)Primarily driven by improved operations in North American & European subsidiaries and addition of new businesses.(3)A non-GAAP financial measure. See Appendix.

AES Corporation 8


» Cash Flow Highlights($ Millions)


2007 2006(Restated)

$476

Maintenance Capital Expenditures:

Less: Total Maintenance Capital Expenditures(2) $199 $292 $878 $867

Operational Maintenance Capex(2) $135 $255 $643 $702

Environmental Capex(2) $64 $37 $235 $165

$184

$488

$289

2007 2006(Restated)

Consolidated

Net Cash from Operating Activities(1) $2,357 $2,351

Free Cash Flow(2)(3) $1,479 $1,484

› Excluding the impacts of EDC, net cash from operating activities would have increased by $30 million for 4Q07 compared to 4Q06 and increased by $119 million for 2007 compared to 2006

› Excluding the impacts of EDC, free cash flow would have increased by $73 million for 4Q07 compared to 4Q06 and increased by $82 million for 2007 compared to 2006

(1)Excluding the impacts of EDC, net cash from operating activities would have been $458 million for 4Q06, $2,206 million for 2007 and $2,087 million for 2006.(2)A non-GAAP financial measure. See Appendix.(3)Excluding the impacts of EDC, free cash flow would have been $216 million for 4Q06, $1,372 million for 2007 and $1,290 million for 2006.

($ Millions)

» Fourth Quarter & Full Year 2007 Subsidiary Distributions

Fourth Quarter/Full Year Ended December 31, 2007 Subsidiary Distributions(1)

North America Latin America Europe &

Africa Asia Other(2) Total

Utilities 54 / 170 41 / 215 31 / 33 - / - 126 / 418

Generation 48 / 316 54 / 93 76 / 177 29 / 72 207 / 658

Other 10 / 23 10 / 23

Total 102 / 486 95 / 308 107 / 210 29 / 72 10 / 23 343 / 1,099

Top 10 Full Year Ended December 31, 2007 Subsidiary Distributions(1)

Business Amount Segment Business Amount SegmentIPALCO 170 NA Utilities Hawaii 49 NA Generation

New York 122 NA Generation Cartagena 42 E&A Generation

EDC(3) 97 LA Utilities Shady Point 38 NA Generation

Brasiliana 90 LA Utilities Ekibastuz 37 E&A Generation

Kilroot 69 E&A Generation Gener 36 LA Generation

AES Corporation 9


(1)A non-GAAP financial measure. See Appendix.(2)Other includes wind and other alternative energy projects.(3)AES sold EDC in Q2 2007.

AES Corporation 10


» Fourth Quarter Segment HighlightsLatin America Generation($ Millions except as noted)

Fourth Quarter Segment Highlights2007 2006

(Restated)% Change

Revenues $1,036 $710 46%

Gross Margin 324 273 19%

IBT&MI 20 149 (87%)

Comparison (% Change) Revenue Gross MarginVolume/Price/Mix 43% 24%

New Businesses/Projects 1% (1%)

Currency (Net) 2% (4%)

Total 46% 19%

› Latin America Generation revenue increased by $326 million to $1.0 billion, primarily due to:

–Higher prices and volume in Chile of approximately $184 million;

–An increase in sales to Eletropaulo and the volume of energy sold to third parties at Tiete of approximately $55 million;

–Higher spot market sales in the Dominican Republic of approximately $20 million; and

–Favorable foreign currency translation of approximately $13 million.

› Gross margin increased by $51 million to $324 million, primarily due to the Tiete energy sales.

› IBT&MI decreased by $129 million to $20 million, primarily due to the Uruguaianaimpairment offset by the Gener share sale gain.

AES Corporation 11


» Fourth Quarter Segment HighlightsLatin America Utilities($ Millions except as noted)


(Restated)% Change

Revenues $1,383 $1,155 20%

Gross Margin 94 200 (53%)

IBT&MI 3 (29) 110%

Comparison (% Change) Revenue Gross MarginVolume/Price/Mix 2% (81%)

New Businesses/Projects 0% 0%

Currency (Net) 18% 28%

Total 20% (53%)

› Latin America Utilities revenue increased by $228 million to $1.4 billion, primarily due to favorable foreign currency translation of approximately $211 million

› Gross margin decreased by $106 million to $94 million, primarily due to an increase in fixed costs and higher purchased power costs of approximately $107 million at Eletropaulo. Approximately $84 million of the increase in fixed costs is associated with an increase in the labor contingency charge recorded in 2007 versus 2006

› IBT&MI increased by $32 million to $3 million, primarily due to the Eletropaulo Special Obligation charges in 2006

AES Corporation 12


» Fourth Quarter Segment HighlightsNorth America Generation($ Millions except as noted)


(Restated)% Change

Revenues $543 $422 29%


IBT&MI 94 22 327%


New Businesses/Projects(1) 16% 22%


Total 29% 64%

› North America Generation revenue increased by $121 million to $543 million, primarily due to approximately $57 million in contributions from the newly acquired TEG and TEP businesses in Mexico and approximately $28 million attributable to higher prices in New York as well as higher volumes due to the planned Somerset outage in 2006.

› Gross margin increased by $65 million to $167 million, primarily due to the higher rates and volumes as well as lower costs at Eastern Energy, an impact of approximately $41 million, and contributions from TEG and TEP of approximately $18 million.

› IBT&MI increased by $72 million to $94 million, primarily due to the increase in gross margin coupled with Southland legal reserves in 2006.

(1)Includes TEG and TEP in Mexico.

AES Corporation 13


» Fourth Quarter Segment HighlightsNorth America Utilities($ Millions except as noted)


(Restated)% Change

Revenues $257 $253 2%


IBT&MI 38 32 19%




Total 2% 5%

› North America Utilities revenue increased by $4 million to $257 million, due primarily to an increase in wholesale power sales and environmental trackers within IPL’s rates.

› Gross margin increased by $3 million to $68 million. Lower SO2 allowance purchase costs of approximately $13 million arising from the installation of clean coal technology at the Harding Street plant contributed to the increase, offset in part by higher fixed maintenance costs of approximately $12 million.

› Consistent with the improvement in gross margin, IBT&MI showed an increase of $6 million to $38 million.

AES Corporation 14


» Fourth Quarter Segment HighlightsEurope & Africa Generation(1)

($ Millions except as noted)


(Restated)% Change

Revenues $292 $262 11%


IBT&MI 88 51 73%




Total 11% 42%

› Europe & Africa Generation revenue increased by $30 million to $292 million, primarily due to favorable foreign currency translation of approximately $23 million. Increased prices and volumes of approximately $15 million in Kazakhstan and $13 million in Kilrootcontributed as well, more than offsetting the decrease in volume at Hungary of approximately $19 million.

› Gross margin increased by $32 million to $108 million, primarily due to higher capacity pricing at Kilroot and increased prices and volume in Kazakhstan.

› IBT&MI increased by $37 million to $88 million, primarily due to increased gross margin contribution from Kilroot and Kazakhstan.

(1)Includes CIS countries.

AES Corporation 15


» Fourth Quarter Segment HighlightsEurope & Africa Utilities(1)



(Restated)% Change

Revenues $182 $152 20%

Gross Margin (1) 12 (108%)

IBT&MI (6) 3 (300%)




Total 20% (108%)

› Europe & Africa Utilities revenue increased by $30 million to $182 million, primarily due to increased rates of approximately $18 million in Ukraine and approximately $9 million in favorable foreign currency translation.

› Gross margin decreased by $13 million, primarily due to an increase in fixed maintenance costs of approximately $18 million at Sonel in Cameroon.

› Consistent with gross margin, IBT&MI decreased by $9 million, primarily due to higher fixed costs at Sonel.


AES Corporation 16


» Fourth Quarter Segment HighlightsAsia Generation(1)



(Restated)% Change

Revenues $203 $174 17%


IBT&MI 16 14 14%




Total 17% (9%)

› Asia Generation revenue increased by $29 million to $203 million, primarily due to higher volume in Sri Lanka and higher dispatch in Pakistan.

› Gross margin decreased by $4 million to $39 million, primarily due to higher fuel costs at Ras Laffan in Oman and higher coal costs in China. Increased revenue in Sri Lanka and Pakistan had only a modest impact on gross margin due to related increases in fuel costs.

› IBT&MI increased by $2 million to $16 million primarily due to asset impairments at Chigen in 2006.

(1)Includes the Middle East.

AES Corporation 17


» 2008 Guidance UpdateContains Forward Looking Statements

2008 Guidance Element 2008 Full Year GuidanceGross Margin $3.6 to 3.7 billion

Income Before Tax & Minority Interest(1) $3.0 to 3.1 billion

Diluted Earnings Per Share from Continuing Operations(1) $2.43

Adjusted Earnings Per Share Factors(1)(2) ($1.29)

Adjusted Earnings Per Share(2) $1.14

Net Cash from Operating Activities $2.3 to 2.4 billion

Maintenance Capital Expenditures $0.8 to 0.9 billion

Free Cash Flow(2) $1.4 to 1.6 billion

Growth Capital Expenditures $2.3 to 2.4 billion

Subsidiary Distributions(2) $1.0 to 1.1 billion

(1)Includes net gain of approximately $900 million or $1.29 per share primarily from sale of two indirectly owned subsidiaries in Kazakhstan, which have not yet closed.(2)A non-GAAP financial measure. See Appendix.

AES Corporation 18


» Base Case Growth Assumptions(1)

Contains Forward Looking Statements

Prior Guidance by 2011(2)

Revised Guidance by 2011

Guidance by 2012

Core PowerIncremental Capacity Online 4,000 MW 3,000 MW 4,100 MW

Incremental Capacity Under Construction

2,500 MW 2,650 MW 2,400 MW

Alternative EnergyIncremental Wind Generation Capacity on-line(3)

2,100 MW 2,100 MW 2,600 MW

Greenhouse Gas Offsets 26 Million tonnes/yr 24 Million tonnes/yr 34 Million tonnes/yr

(1)Base case puts AES in the middle of its $1.95-2.25 EPS Guidance range for 2012.(2)Per AES’s guidance given during Q4 2006 Earnings Call.(3)Includes 600 MW of projects already announced, including Buffalo Gap 2 (233 MW), Buffalo Gap 3 (170 MW) and GE Mid-West acquisition (186 MW).

AES Corporation 19


» Adjusted EPS(1) Guidance for the Next Five Years

(1)A non-GAAP measure. See Appendix(2)Per AES’s guidance given during Q4 2006 earnings call.(3)For 2009-2012, Diluted EPS from Continuing Operations and Adjusted EPS for the purposes of this slide are assumed to be the same.

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2007 2008 2009 2010 2011 2012$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2007 2008 2009 2010 2011 2012$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

2007 2008 2009 2010 2011 2012$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

2007 2008 2009 2010 2011 2012$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2007 2008 2009 2010 2011 2012

$1.02$1.20-$1.25

$1.45-$1.65

$1.70-$1.95

$1.95-2.25

$1.12-$1.20

$1.25-$1.45

$1.55-$1.85

$1.75-$2.15

Previous Guidance(2)

Overlap

Updated Guidance

2007 Actual

(3) (3) (3) (3)

Contains Forward Looking Statements

$1.14

› Base Case EPS in 2011 is $1.83, as compared to our previous guidance of $1.95. Our updated guidance includes ($0.05) charges primarily due to:1) RGGI compliance related costs and 2) non-cash impact of a contract

amendment at our Pakistan business, which triggered lease accounting. These costs were previously not included in our prior guidance.

AES Corporation 20


» Adjusted EPS(1) Growth Driven by Four FactorsContains Forward Looking Statements

0

0.5

1

1.5

2

2.5

2007 2008 2012 Low 2012 High(2) (2)

$ Pe

r Sha

re

$1.02$1.14

$1.95

$2.25

Core Power

Alternative Energy

Construction

Organic Growth

(1)A non-GAAP financial measure. See Appendix.(2)For 2012, Diluted EPS from Continuing Operations and Adjusted EPS for the purposes of this slide are assumed to be the same.

AES Corporation 21


» Forecast Shows Strong Cash Flow GrowthContains Forward Looking Statements

4.5$3.3-4.1

4$2.9-3.6

2.5-3.33.5

$2.3-2.93 2.1-2.8

$ B

illio

ns

1.8-2.6$2.2-2.5$2.4 $2.3-2.42.5 1.6-2.2

1.4-2.02 1.4-1.7 1.2-1.71.4-1.6

1.51.5 1.1-1.3

1.1 1.0-1.11

0.5

02007 2008 2009 2010 2011 2012

Net Cash from Operating Activities

Free Cash Flow(1) Subsidiary Distributions

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

AES Corporation 22


» Appendix

AES Corporation 23


» Full Year 2007 Segment HighlightsLatin America Generation($ Millions except as noted)

Full Year Segment Highlights2007 2006

(Restated)% Change

Revenues $3,510 $2,615 34%

Gross Margin 955 1,052 (9%)

IBT&MI 667 800 (17%)




Total 34% (9%)

› Latin America Generation revenue increased by $895 million to $3.5 billion, primarily due to higher contract and spot prices at Gener and Alicura of approximately $443 million and $95 million, respectively. Increased volume and intercompany sales at Tiete contributed approximately $130 million as well.

› Gross margin decreased by $97 million to $955 million, primarily due to an increase in costs of approximately $173 million as a result of gas supply curtailments, drier than normal hydrology and higher spot prices for purchased electricity in the Company’s businesses located in the Southern Cone region.

› IBT&MI decreased by $133 million to $667 million, primarily due to the Uruguaianaimpairment offset by the Gener share sale.

AES Corporation 24


» Full Year 2007 Segment HighlightsLatin America Utilities($ Millions except as noted)


(Restated)% Change

Revenues $5,172 $4,552 14%


IBT&MI 612 (163) 475%




Total 14% (3%)

› Latin America Utilities revenue increased by $620 million to $5.2 billion, primarily due to approximately $493 million in favorable foreign currency translation, as well as increased rates and volume at our Sul and El Salvador businesses of approximately $99 million.

› Gross margin decreased by $23 million to $865 million, primarily due to reduced tariff rates at Eletropaulo of $355 million offset by lower costs, favorable foreign currency translation of approximately $148 million and higher volume of $74 million.

› IBT&MI increased by $775 million to $612 million, primarily due to Brasiliana restructuring in 2006.

AES Corporation 25


» Full Year 2007 Segment HighlightsNorth America Generation($ Millions except as noted)


(Restated)% Change

Revenues $2,168 $1,928 12%


IBT&MI 536 420 28%




Total 12% 15%

› North America Generation revenue increased by $240 million to $2.2 billion, primarily due to the approximately $200 million contributed by the acquisition of the TEG and TEP facilities and $96 million in higher rate and volume sales at Eastern Energy; offset in part by $51 million of marked to market adjustments in 2006 for embedded derivatives at Deepwater and lower emission sales of $39 million.

› Gross margin increased by $92 million to $702 million, primarily due to the acquisition of TEG and TEP in Mexico, combined with higher rates and volumes and lower cost at Eastern Energy; offset by lower emission sales of $39 million.

› IBT&MI increased by $116 million to $536 million, primarily due to the NY Lease purchase.

AES Corporation 26


» Full Year 2007 Segment HighlightsNorth America Utilities($ Millions except as noted)


(Restated)% Change

Revenues $1,052 $1,032 2%


IBT&MI 196 153 28%




Total 2% 13%

› North America Utilities revenue increased by $20 million to $1.1 billion, primarily due to increased volume from favorable weather, offset by a slight decrease in tariff rates at IPL.

› Gross margin increased by $36 million to $313 million, primarily due to increased sales volume and deferred fuel cost recovery at IPL.

› Consistent with gross margin, IBT&MI increased by $43 million to $196 million.

AES Corporation 27


» Full Year 2007 Segment HighlightsEurope & Africa Generation(1)



(Restated)% Change

Revenues $975 $852 14%


IBT&MI 225 203 11%




Total 14% 11%

› Europe & Africa Generation revenue increased by $123 million to $975 million, primarily due to favorable currency translation of approximately $77 million and increased rate and volume sales of approximately $60 million at our Kazahstan businesses; offset in part by lower emission sales in Hungary and at Bohemia of approximately $28 million.

› Gross margin increased by $28 million, primarily due to rate and volume increases at our businesses in Kazakhstan and Kilroot of $44 million and $13 million, respectively; offset in part by lower emission sales in Hungary and at Bohemia.

› IBT&MI increased by $22 million to $245 million, primarily due to the increase in gross margin.


AES Corporation 28


» Full Year 2007 Segment HighlightsEurope & Africa Utilities(1)



(Restated)% Change

Revenues $660 $570 16%


IBT&MI 50 85 (41%)




Total 16% (39%)

› Europe & Africa Utilities revenue increased by $90 million to $660 million, primarily due to increased tariff rates and volume of approximately $57 million in the Ukraine and approximately $28 million in favorable foreign currency translation.

› Gross margin decreased by $40 million to $63 million, primarily due to higher fuel usage and certain non-fuel operating and maintenance costs at Sonel.

› IBT&MI decreased by $35 million to $50 million, primarily due to the decrease in gross margin.


AES Corporation 29


» Full Year 2007 Segment HighlightsAsia Generation(1)



(Restated)% Change

Revenues $889 $785 13%


IBT&MI 129 127 2%




Total 13% (4%)

› Asia Generation Revenue increased by $104 million to $889 million, primarily due to increased dispatch of approximately $83 million at Lal Pir and Pak Gen, as well as $30 million of improvement at Kelanitissa due to favorable dispatch.

› Gross margin decreased by $8 million to $193 million, primarily due to decreased volume at Chigen and higher coal prices in China. Much of the increase in revenue for Pakistan and Kelanitissa is offset by higher fuel prices.

› IBT&MI increased by $2 million to $129 million, primarily due to asset impairments at Chigen in 2006.

(1)Includes the Middle East.

AES Corporation 30


» Parent Sources and Uses of Cash($ Millions) Fourth Quarter

2007

$343

214

1,974

-

21

21

1,515

$4,088

($1,314)

(268)

(68)

(128)

(157)

(2,153)

($4,088)

Full Year Ended

Sources December 31, 2007

Total Subsidiary Distributions(1) $1,099

Proceeds from Asset Sales, Net 1,003

Refinancing Proceeds, Net 1,974

Increased Credit Facility Commitments -

Issuance of Common Stock, Net 51

Total Returns of Capital Distributions and Project Financing Proceeds 106

Beginning Liquidity(1) 1,146

Total Sources $5,379

Uses

Repayments of Debt ($1,314)

Investments in Subsidiaries, Net (1,120)

Cash for Development, Selling, General and Administrative and Taxes (323)

Cash Payments for Interest (425)

Changes in Letters of Credit and Other, Net (44)

Ending Liquidity(1) (2,153)

Total Uses ($5,379)

(1)A non-GAAP financial measure.

AES Corporation 31


» Fourth Quarter 2007 & Full Year 2007 Consolidated Cash Flow($ Millions)

Fourth Quarter Full Year Ended December 31,

Purchase of Long Term Available for Sale Securities (26) - (49) (52)

Issuance of Non-Recourse Debt 1,128 1,660 2,297 3,097

Repayments of Non-Recourse Debt (1,116) (2,125) (2,251) (4,059)

2007 2006(Restated)

$476

(463)(6)8114

(46)497

(24)58

-1

($329)

($32)-

-

(22)(125)

819(5)-

($622)

($475)49

1,784

$1,358

2007 2006(Restated)

$488 $2,357

(2,425)(315)1.136

16(490)(28)17

(13)122

554

($1,970)

($85)2,000

(1,315)

(97)(699)37458

(35)(3)

$244

$63169

1,358

$2,058

(697)

$2,351

(1,460)(19)89824

(348)(8)82

(77)39

-14

($907)

$72-

(150)

(86)(335)12578

(52)(7)

($1,317)

$12762

1,169

13016

(342)727

(10)66

-(13)

($635)

($3)2,000

(1,315)

(61)(128)

422(8)(5)

$518

$1,358

$37123

1,270

$1,664

Net Cash Provided by Operating Activities(1)(2)

Capital ExpendituresAcquisitions - Net of Cash AcquiredProceeds from the Sales of a BusinessProceeds from the Sale of AssetsSale/(Purchase) of Short-Term Investments, NetDecrease (Increase) in Restricted CashProceeds from the Sales of Emission AllowancesPurchase of Emission AllowancesDecrease in Debt Service Reserves and Other Assets

Repayment of Affiliate LoanOther Investing

Net Cash Used in Investing Activities

Repayments/(Borrowings) under the Revolving Credit Facilities, NetIssuance of Recourse Debt

Repayments of Recourse Debt

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

Net Cash Provided by (Used in) Financing Activities

Total Increase (Decrease) in Cash & Cash EquivalentsEffect of Exchange Rate Changes on CashCash & Cash Equivalents, Beginning

Cash & Cash Equivalents, Ending

(1)Depreciation and amortization from continuing operations was $249 million for 4Q07 and $217 million for 4Q06. Changes in net working capital were (42) for 4Q07 and 103 for 4Q06.(2)Depreciation and amortization from continuing operations was $932 million for 2007 and $840 million for 2006. Changes in net working capital were (234) for 2007 and (74) for 2006.Note: Certain amounts have been netted, condensed and rounded for presentation purposes.

» Reconciliation of Subsidiary Distributions and Parent Liquidity($ Millions)

Quarter EndedDec. 31,

2007Sept. 30,

2007Jun. 30,

2007Mar. 31,

2007Total subsidiary distributions $343 $361 $259 $137

Total returns of capital distributions 21 35 34 15

Total subsidiary distributions & returns of capital to Parent

$364 $396 $293 $152

Balance as ofParent Company Liquidity(1) Dec. 31,

2007Sept. 30,

2007Jun. 30,

2007Mar. 31,

2007Cash at Parent & QHCs(1)(2) $1,315 $619 $405 $74

Availability under revolver 838 896 973 804

Ending liquidity $2,153 $1,515 $1,378 $878

AES Corporation 32


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

AES Corporation 33


» AssumptionsForecasted 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 34


» Definitions of Non-GAAP Financial Measures› Adjusted earnings per share – Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings

per share from 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 earlyretirement of recourse debt. Effective January 1, 2008, the Company has decided to include costs associated with early retirement of non-recourse debt, in addition to recourse debt. This modification will apply prospectively and is not reflected in the 2007 results presented in this Form 8-K. 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 corporate 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 cash generated 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.

AES Corporation 35


» Reconciliation of Cash Flow Items(1)($ Millions)


Capital Expenditures 2007 2006(Restated)

2007 2006(Restated)

Maintenance Capital Expenditures $199 $292 $878 $867

Growth Capital Expenditures 506 176 1,582 645

Capital Expenditures $705 $468 $2,460 $1,512


Reconciliation of Free Cash Flow 2007 2006(Restated)

2007 2006(Restated)

Net Cash from Operating Activities $488 $476 $2,357 $2,351Less: Maintenance Capital Expenditures 199 292 878 867

Free Cash Flow(2) $289 $184 $1,479 $1,484

(1)Includes EDC, a business AES sold in Q2 2007.(2)A non-GAAP financial measure.

AES Corporation 36


» Reconciliation of 2006 Adjusted Earnings per Share(1)

1Q06(Restated)

2Q06(Restated)

3Q06(Restated)

4Q06(Restated)

FY2006(Restated)

($0.02) $0.27

(0.06)

0.01

0.68

0.03

$0.93

-

-

-

-

($0.02)

$0.30

(0.02)

-

-

-

Diluted Earnings (Loss) Per Share from Continuing Operations $0.51

$0.28

($0.53)

-

0.01

0.83

-

$0.31

FAS 133 Mark to Market (Gains)/Losses (0.04)

Currency Transaction (Gains)/Losses -

Net Asset (Gains)/Losses and Impairments (0.13)

Debt Retirement (Gains)/Losses 0.04

Adjusted Earnings (Loss) Per Share(1)

$0.38


AES Corporation 37


» Reconciliation of 2007 Adjusted Earnings per Share(1)

1Q07 (Restated)

2Q07 (Restated)

3Q07 (Restated)

4Q07 FY2007

- $0.73

0.03

-

0.18

0.08

$1.02

0.02

-

0.09

0.08

$0.19

$0.42

(0.01)

(0.01)

0.01

-

Diluted Earnings Per Share from Continuing Operations $0.17

$0.41

$0.14

-

-

0.03

-

$0.17

FAS 133 Mark to Market (Gains)/Losses 0.02

Currency Transaction (Gains)/Losses -

Net Asset (Gains)/Losses and Impairments 0.05

Debt Retirement (Gains)/Losses -

Adjusted Earnings Per Share(1) $0.24


AES Corporation 38


» Reconciliation of 2009-2012 Free Cash Flow

Reconciliation of Free Cash Flow 2009 2010 2011 2012Net Cash from Operating Activities $2.2 to 2.5 $2.3 to 2.9 $2.9 to 3.6 $3.3 to 4.1Less: Maintenance Capital Expenditures 0.8 0.7 0.8 0.8

Free Cash Flow $1.4 to 1.7 $1.6 to 2.2 $2.1 to 2.8 $2.5 to 3.3

AES 4Q 07 Review

Economy & Finance

year period

financial review

forwardlooking statements

financial information

year adjusted eps1

actual results

net cash

additional assumptions