AES AES Kazakhstan Business Review AES ... (Unit 8) 500MW (Unit 2) 12 AES Kazakhstan Financial Overview Revenue Gross Margin Income Before Tax & Minority Interest Distributions to

AES CORPORATION

May 9, 2006

AES CORPORATION AES Kazakhstan Business Review

Dale Perry Vice President

1www.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 Kazakhstan Role

AES Kazakhstan Strategic Overview

--

$3.5 Billion

13-19% per Year

11%

$2.6-2.9 Billion

--

--

--

--

--

Above Average

Above Average

Above Average

Above Average

Above Average

Increasing

Significant

Significant Opportunities

Focused Opportunities

Focused Opportunities

Contains Forward Looking Statements

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

2www.aes.com

Kazakhstan Highlights

15,185,844 Population (July 2005 est.) AlmatyLargest City Astana Capital

major deposits of petroleum, natural gas, coal, iron ore, manganese, chrome ore, nickel, cobalt, copper, molybdenum, lead, zinc, bauxite, gold, uranium

Economic Drivers

6.9%Inflation Rate (2004 est.) US $7,800Per Capita GDP (2004 est.)

1 (KZT) = 0.007472 (USD) Exchange Rate (01/10/2006) Kazakhstan Tenge (KZT)Currency

Kazakhstan at a Glance

3www.aes.com

40

50

60

70

80

90

1992 1994 1996 1998 2000 2002 2004 2006E 2008E 2010E

Nominal GDP

Kazakhstan Electricity Demand Growth

Source: Company information

TW h

N om

inal G D

P (U

S $ B

illions)

60

50

40

30

20

10

0

Generation (TWh)

Contains Forward Looking Statements

Recent correlation between electricity demand and GDP growth expected to continue

4www.aes.com

Kazakhstan Electricity Market Characteristics

Generation Distribution Commercial BaseTransmission

18,200MW installed capacity (approximate)

67% Coal 11% Other thermal 22% Hydroelectric

50% private sector ownership (approximate)

AES is largest private sector generator

Three regional transmission systems – government owned

23,000 km of 220 KV – 500KV lines Transmission dispatch Manages system ancillary services

9 - 500KV interconnections to the Russian grid

Zonal transmission tariff ranges from $3.15 - $6.50/MWH

12 major distribution & regulated supply companies, predominantly government owned

Annual tariff review

Tariff methodology is cost plus profit

Moving away from Electricity Supply Organization (ESO) price regulation

ESO contracts typically range from hourly to quarterly

Bi-lateral contracts between generators/traders and consumers/traders

Government entities are required to purchase directly from generators (i.e. no traders)

5www.aes.com

Overview of AES Kazakhstan Power Assets

(1) Management only with no revenues Note: Capacities are gross

Ekibastuz Gres I 4,000MW (coal) Maikuben mine

Western System

Southern

Northern, Central and Eastern

Russia

Uzbekistan

Kyrgyzstan

RussiaShulbinsk 702MW (hydro)

Ust-Kamenogorsk 331MW (hydro) 1,356MW (coal CHP)

Sogrinsk CHP 301MW (coal)

Distribution Businesses Under Management

Eastern Kazakhstan REC(1) 280,000 Customers

Semipalatinsk REC(1) 180,000 Customers

Ust-Kamenogorsk Heat Net(1) 260MW (coal)

6www.aes.com

Kazakhstan Generation Market Profile

www.aes.com

2005 Generation (MWh) Market Share (%)(1)

KarGRES 10%

Total Installed Capacity = 18,200MW

AES 29%

Imports and Other 20% Aksu GRES

22%

GRES-2 12%Bukhtarma HPP 7%

AES Ekibastuz 18% AES UK HPP 4% AES Shulba HPP 4%

AES UK & Sogra CHPs 3%

(1) Excluding Western Kazakhstan 2005 generation figures

7www.aes.com

Kazakhstan Electricity Market History

Electricity sector functions as a single vertically integrated system operated by the Ministry of Energy

Sector is bankrupted by barter and non- transparent transactions

Rapid un-bundling of Generation

Creation of national grid company , Kazakhstan Electricity Grid Operating Company (KEGOC)

Stalled attempt to privatize distribution

Creation of a regulatory body to form electricity market and ensure its effective functioning

Cash collection and barter transaction issues are significant business issues

Kazakhstan and Russia are electrically disconnected due to high non-payment issues from Kazakhstan

Bi-lateral contract relationships develop

Lack of long term regulatory certainty

Reserve margins drop, with some load shedding seen in peak winter season

Convoluted mix of free market and regulated market begins to clear up

Implementation of zonal transmission tariff methodology

Continued integration with adjacent energy systems of Central Asia, Russia and China

Creation of the Wholesale Electricity Power Pool

New Electricity Law completely un-bundles electricity sector, creating retail supply companies split from distribution (wires) businesses

Sector sees regulatory interaction with both Anti-monopoly Committee (natural monopolies) and Competition Committee (market dominance activities)

Non-payment issues decrease as demand increases, in-line with country’s economic recovery

Kazakhstan and Russia are re- connected

No long term contracts exist in market

1995-1997 1998-2000 2001-2005 2006 and future

Contains Forward Looking Statements

8www.aes.com

Import/export approved by KEGOC

Regulation agreement is in place for all generators

Hot, cold reserve pool are nominated day ahead into

KEGOC

Balanced schedules submitted to KEGOC

Wholesale Energy Market

Bi-lateral trades monthly, yearly, multiyear

Kazakhstan Electricity Market Operation Model

Large Industrials

Transmission & Dispatch, System Operator

C

U

S

T

O

M

E

R

SMarket Operator

REC’s and Genco’s

Exports and Traders

9www.aes.com

Kazakhstan Power Prices are Some of The Lowest in The World

Source: IEA US DOE, national sources and ECON aggregate

Current Kazakh wholesale power prices are among the lowest in the world

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10www.aes.com

Tight Russian Reserve Margins Expected by 2009

Source: Renaissance Capital Report: “Form and Substance” August 2005

RussiaSiberiaUral North

Caucasus European

Russia

Equilibrium energy price (US$/MWh)

Required capacity payment (US$/kW*year)

Total wholesale price (US$/MWh)

Cost of new entry (US$/MWh)

Wholesale price discount to cost of new entry (%)

Peak demand (GW)

Available capacity (GW)

Available peak capacity (GW)

Reserve margin (%)

$16

80

27

27

0%

71

89

80

11%

$16

103

29

29

0%

9

10

9

(1%)

$13

97

26

26

0%

32

38

35

7%

$8

117

23

24

5%

31

35

32

1%

$16

98

29

29

0%

150

181

154

3%

Ekibastutz Target Markets

11www.aes.com

Contains Forward Looking Statements

U S

$ C

en ts

/ K W

h

2004 2005 2006E 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E

300MW (Units 3 - 7)

500MW (Unit 1)

0

1

2

3

Potential AES Ekibastuz Price and Demand Scenario Offers Attractive Growth Prospects

AES Ekibastuz Repowering Investment and Potential Timeline at Assumed Power Prices

500MW (Unit 8)

500MW (Unit 2)

12www.aes.com

AES Kazakhstan Financial Overview

Revenue

Gross Margin

Income Before Tax & Minority Interest

Distributions to AES Corporation

2003

$103

$25

$21

$29

2004

$137

$36

$30

$8

($ Millions)

2005

$158

$40