August 11, 2006August 11, 2006

2nd quarter 2006 Results2nd quarter 2006 Results

Highlights

Market

Tariff Adjusment and Operating Performance

Financial Performance

Debt Profile

Cash Flow

Highlights

Operating Performance

Bilateral Contract

Financial Performance

Conclusion

4

HighlightsHighlights

Subsequentevents

2Q06•Consolidated Net Debt reduction of 12% in the last 12 months and conclusion of the early liquidation of renegotiated debt•Adjusted EBITDA of R$ 1,253.6 million in 1H06 and R$ 671.2 million in 2Q06 – increases of 15.7% and 15.3% compared to equivalent periods of 2005•Net profit of R$ 227 million in 1H06 (R$ 107 million higher than 1H05 figure) and R$ 201.9 million in 2Q06 (R$ 176.8 million higher than 1Q06 figure)

•Tariff Adjustment – 11.45% (07/04/2006)•Rating increased by S&P in 07/07/2006 (national scale –from “BBB” to “BBB+”) •Approved in Extraordinary General Meeting (07/11/2006) the creation of new class B of Eletropaulo’s preferred shares that will offer 100% of tag along

1Q06•Adjusted EBITDA of R$ 582.4 million and net profit of R$ 25.1 million •Compliance to the new rules of BOVESPA’s Level 2

•Increase of tag along from 70% to 80%•Board of Directors with at least 20% of independent members

5

Consumption Comparison in Consumption Comparison in GWhGWh

NOTE: Charts do not consider own consumption

1,1821,663

619

1,654

680

2,434

1,902

2,9523,209

2,433

Residential Industrial Commercial Public Sectorand Others

FreeConsumers

2Q05 2Q06

7,968

9,1509,578

7,924

Billed Market Total Market

8.7%

-8.9%

-12.5%39.9%

-0.6%

4.7%

RESIDENTIAL 307.3 306.1 - 0.4%

INDUSTRIAL 219.6 242.5 + 10.5%

COMMERCIAL 272.1 281.0 + 3.2%

OTHERS 210.4 230.5 + 9.5%

TOTAL 267.3 279.1 + 3.9%

2Q06 Variation %2Q05

Average Tariff R$/MWh

6

Retention of Potentially Free ConsumersRetention of Potentially Free Consumers

1,654

1,182

641479

750 806964

1,312 1,4071,500

1930

3848 54

78 8495 99 106

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06

Free Consumers (GWh) TUSD (R$ million)

Captive Consumers

81%

Free Consumers17%

Potentially Free Consumers

2%

Captive Market Evolution* (GWh)Increase of 5.3% (12 months)

Captive Consumers X Free% Total Market – 2Q06

7,6217,4657,4537,3156,9987,0767,0166,718 6,983 7,261

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06

Net Revenues with TUSD X Free Consumers consumption

* Excluding all current free consumers from all previous periods

7

3.7%6.3% 4.5% 2.5% 3.6% 4.8%

7.5%7.6% 12.1%

11.8% 7.3%1.6% 9.9%

-4.3%

1.6%1.7%

16.9%

1999 2000 2001 2002 2003 2004 2005 2006

Part B Part A PIS/COFINS IGPM

Tariff EvolutionTariff Evolution

2.1%

18.6%

11.6%

14.3%17.6%

11.1%

13.8%

11.5%

2006 Tariff Adjustment by Consumption Class IndexLow voltage -1.91%High voltage 8.26%

A2 (88 to 138 kV) 4.57%A3a (34.5 kV) 6.20%A4 (2.3 to 25 kV) 9.08%

8

Operating HighlightsOperating Highlights

Collection Rate -% over Gross Revenue

Loss Evolution (%)

7.9 7.3 7.8 6.6

13.5 12.9 13.412.2

5.65.65.65.6

2004 2005 1H05 1H06

Technical Losses Commercial Losses

99.097.799.097.5

2004 2005 1H05 1H06

-9%

+1.4%

Fraud combat:

239 thousand inspections and 33 thousand frauds detected

Cost of R$ 29 million

Retroactive Energy negotiated + Energy Added – 135 GWh (R$ 64 million)

Regularization of Clandestine Connections:

38 thousand regularizations – Revenue of R$ 26 million

Investment – R$17 million

Collection Rate (current bills)

Public Sector: 102.6%

Private Sector: 98.8%

Increase of monthly average of cuts from 75 thousand to 111 thousand (1H05x1H06)

9

CapexCapex 2Q062Q06R$ R$ millionmillion

76

32

49

217

330

404

70

355297

186

33

1611

92 81

2003 2004 2005 1Q06 2Q06

Capex Self Financed

R$ 173 million invested in the first semester of 2006

10

ResultsResultsR$ millionR$ million

1,055.9

1,561.5

348.0408.0348.0365.8157.6168.5 188.9 157.6

1,055.91,036.41,243.4

1,561.51,633.31,777.7

2Q05 2Q06 1Q06 2Q06Operating Expenses Sector Charges Electricity + Transport

Gross Revenue Operating Expenses EBITDA

• Increase over 1Q06: increase of 1.4% of billed market and 2.8% of total market

• Reduction over 2Q05:

• Conclusion of Tariff Review Process 2003 (additional revenue of R$ 106.9 million in 2Q05)

• Revenue’s reversal of R$ 35 million in 2Q06 (devolution to tariff of the increase in Pis/Cofins taxes applied to Initial Contracts)

• Reduction over 1Q06: decrease of 50% in “Other Operating Expenses”

• Reversal of contingency with an impact of R$ 13.8 million in the result

• Reduction over 2Q05: decrease of 25.2% in energy purchased costs

• Change in the energy purchase mix, with higher volume acquired in auctions

• Adjusted EBITDA 2Q06:– Liability Expenses - FCESP: R$

60.6 million

– RTE: R$ 82.2 million

– Provision - RTE: R$ 5.0 million

-12.2% -4.4%

635.7737.1 730.7

2911.2 2744.2 2711.4

2007.11980.62007.12275.5

737.1

2744.2

2Q05 2Q06 1Q06 2Q06

Net Revenue Deductions from Operating Revenue

+1.2%-5.7%

671.2582.4

671.2

523.3423.8523.3571.6

147.972.6158.6

147.9

644.2

33.4% 33.4%29.4%

28.3%

2Q05 2Q06 1Q06 2Q06EBITDA Adjust Adjusted EBTIDA Margin

4,2% 15,3%

11

ResultsResultsR$ millionR$ million

(126.1)(121.7)(126.1)

(77.9)

2Q05 2Q06 1Q06 2Q06

• Negative variations stemmed from:

• The financial revenues’ reduction in the period:

– The reduction of Selic rate from 19.75% in 2Q05 to 16.50% in 1Q06 and 15.25% in 2Q06, that decreased regulatory assets’ remuneration

– The regulatory assets’ balance reduction on which the Selicremuneration is applied

• Lower Real appreciation against the dollar (0.4% in 2Q06, compared to 11.8% in 2Q05 and 7.2% in 1Q06) -collaborated to reversals of monetary variation expenses of R$ 229 million in 2Q05 and R$ 85 million in 1Q06

• Net Profit’s increase in the quarter:• Operating Expenses’ reduction

• IR/CS expenses reduction (71% over 1Q06 and 84% compared to 2Q05)

Financial Result Net Profit

61.9%

3.7%

201.9

25.1

201.9

136.8

2Q05 2Q06 1Q06 2Q06

705.0%

47.7%

12

IGP-DI45.05%

CDI/Selic40.26%

Others/R$0.13%

Libor3.33%

Fixed Rate11.22%

Consolidated Debt Consolidated Debt R$ millionR$ million

Creditors X Indexes – 2Q06

Gross Debt – R$ 4, 877 million

Short Term X Long Term

4,8774,8775,256

4,2564,828

2Q05 2Q06 1Q06 2Q06LT ST Net Debt

4,256

77%

23%

73%

27%

77%

23%

76%

24%

4,4114,774

--3.5%3.5%

• Pension Fund - R$ 2,196 million

• Private Creditors - R$ 2,127 million

• BNDES - R$ 554 million

--11.9%11.9%

* Exchange Rate Conversion on 06/30/2006 - US$ 1.00 = R$ 2.1643

Amortization Schedule - Current

13

• Gross Debt: reduction of 7% (R$ 380 million)

• Net Debt: reduction of 12% (R$ 572 million)

• Foreign Currency: reduced from 12% to 3% of total

• Hedge: 79% of foreign currency debt

• Borrowing of R$ 300 million of CCB’s - amortization of remaining balance of renegotiated debt (R$ 235 million) and liquidation of its swaps

CDI +6.84%

CDI +2.90% CDI +

2.50% CDI +1.82%

Bonds 8th Debenture 9th Debenture CCB

Consolidated Debt Consolidated Debt R$ millionR$ million

Interest rates evolution

--17.4%%

--1.6%--1.4%%

112.0%

100.8% 100.4%

3.81 3.9

2.05

2Q05 1Q06 2Q06Avg cost - %CDI Avg Life - years

Average Cost and Average Life

RatingS&PS&P

Indebtedness Highlights – last 12 months

National Scale

International Scale

DDD

BB

BBB

D

B -

B +

‘03

‘04

‘05

BBB+‘06

B +

National Scale

International Scale

DDD

BB

BBB

D

B -

B +

‘03

‘04

‘05

BBB+‘06

B +

14

CashCash FlowFlow

Eletropaulo - Consolidated Cash Flow (Million) 1Q06 2Q06 1H06

Initial Cash 492 356 492

Operating cash generation 687 653 1,340

Investments (101) (88) (189)

Net Financial Expenses (196) (85) (281)

Net Amortization (245) (45) (290)

Pension Fund Expenses (134) (108) (242)

Income Tax (147) (67) (214)

Free Cash (136) 261 125

Final Cash 356 617 617

15

ConclusionConclusion

• Net profit of R$ 227.0 million in 1H06, representing an increase of R$ 107.0 million compared to 1H05 net profit

• Adjusted EBITDA of R$ 1,253.5 million, 17.2% higher than 1H05’ figure• Debt evolution in the last 12 months:

• Reduction of 11.9% of consolidated net debt• Reduction of 10.3% of average cost • Increase of average life from 2 to 4 years• Foreign currency debt reduced from 12.2% to 3.3%• Conclusion of the pre-payment of March 2004 renegotiated debt

• Operating Highlights in the last 12 months:• Loss reduction of 9.0%• Collection rate increased 1.4%

• Corporate Governance Differentiated Standards:• Creation of new class B of preferred shares with 100% of tag along and

convertibility ratio of 1:1 for current preferred shareholders

16

17

Highlights 1H06Highlights 1H06

1Q06

2Q06

• Best Public Utility in 2005 according to Exame Magazine’s Melhores e Maiores Ranking

• Best Public Held Company in 2005 according to the Platinum List of the Forbes Brasil

• EBITDA: R$ 269 million in the 2Q06 and R$ 543 million in the 1H06

• Net Income: R$ 153 million in the 2Q06 and R$ 306 million in the 1H06

• Starting in Jan/06, 100% of assured energy is sold through the bilateral contract with Eletropaulo

• EBITDA = R$ 274 million

• Net Income = R$ 153 million

Subsequent Events• Readjustment of the price of the bilateral contract with

Eletropaulo in 0.9%

• Reversal of the allowance recorded related to penalties determined by CCEE in November and December/05 (R$ 3.9 million)

18

Caconde197.2

Euclides267.8

Limoeiro77.4

Ibitinga366.1

Bariri301.0

Barra Bonita299.5

Água Vermelha3,891.2

Promissão573.0

Nova Avanhandava757.6

Mogi Guaçu18.2

MRE/CCEE*1,191.9

Eletropaulo - Bilateral5,557.0

Energy BalanceEnergy Balance–– 1H061H06

Energy Generated x Billed Energy in GWh

*After deducing own consumption and transmission losses, the difference is addressed to the Energy Reallocation Mechanism – MREand to the Chamber of Energy Marketing – CCEE..

TOTAL

6,748.9

BILLED

6,748.9

82.3%57.7%

1.1%

2.9%

4.0%

4.4%

4.5%

5.4%

8.5%

11.2%

0.3%

17.7%

19

2.8%

2.2% 2.3% 2.5%

1.6%

2.2%

3.0%

95.7%97.2% 96.8% 94.2% 96.1%

90.9% 92.6%

2000 2001 2002 2003 2004 2005 1S06*

Failure Index Equivalent Availability Factor

Generation and ReliabilityGeneration and Reliability

AES Tietê’s assured energy is 1,275 MW average

1H06: generation was 22% over the assured energy. During the last 20 years, AES Tietê has generated an average of 18% above the assured energy

Failure Index (FI) and Equivalent Availability Factor (EAF) figures exceed the requirements established by the National Eclectic Energy Agency - ANEEL: 2.9% for (FI) and 92.8% for EAF.

Average of 6.8 years of operations without accidents requiring the removal of personnel from the worksite

Failure Index x AvailabilityFailure Index x Availability

*Annualized

0.5Bariri2.9Euclides da Cunha3.2Caconde4.3Promissão5.8Barra Bonita5.9Limoeiro7.9Água Vermelha8.5Nova Avanhandava11.4Mogi-Guaçu18.0Ibitinga

Period Without Accidents –Years

Plant

GenerationGeneration

1,617 1,619 1,581 1,5021,040

1,258 1,392 1,363 1,467 1,554

122%115%123% 120% 123% 117%

81%98%

109% 107%

1997 1998 1999 2000 2001 2002 2003 2004 2005 1S06

Generation - MW Average Generation / Assured Energy

20

Bilateral ContractBilateral Contract

• Initial Contracts ended December 31, 2005

• Starting in January 2006, 1.268 MW (100% assured energy) is sold through the bilateral contract with Eletropaulo

Price readjusted by the IGP-M variation in JulyCurrent Price = R$ 133.87 / MWh, readjusted in 0.86% in July 2006Maturity: December 2015 Collateral: receivables

Average Revenue Average Revenue –– R$/ R$/ MWhMWh133.9

45.9 48.854.0

73.6

94.4

119.6

2000 2001 2002 2003 2004 2005 BilateralContract

21

Operational ProvisionOperational Provision

PIS and Cofins• In June 2006, Aneel published Technical Note, reaffirming its understanding of the PIS

/ Cofins taxation rules and determined that the amounts paid in excess due to the application of non-cumulative taxation rules to the initial contracts should be returned.

• AES Tietê took the following measures:Made a formal inquiry to the Secretariat of the Federal Tax Office to confirm the taxation rules applicable to the Company;Initiated administrative proceedings at Aneel, requesting that the reimbursements to the distribution companies be suspended until the Company has obtained a reply to its inquiry from the Secretariat of the Federal Tax Office;Requested court injunctions to suspend the effect of Aneel’s resolutions concerning the reimbursement until the Secretariat of the Federal Tax Office has produced a reply to the inquiry made by AES TietêRegistered an allowance of the amount to be reimbursed to the distribution companies as corresponding tax credit is still a matter of controversy (R$ 15,3 million)

RTE• Provision referring to the monetary correction of the balance of the credits to receive

from energy distributors regarding the RTE (R$ 9.7 million, in the 1H06)

22

37

2525

36 49 17 241714

2624

1112

16

2019

22

54

40

142

61

96

190

1H05 1H06 2Q05 2Q06

538

698

268349

1H05 1H06 2Q05 2Q06

ResultsResultsR$ millionR$ million

• Increase in the volume of energy sold through the bilateral contract – 100% of assured energy since January / 2006

• Price readjustment occurred in July 2005: from R$ 117.59/MWh to R$ 132.73/MWh

• Power Purchase - Transmission fees - increase in volume of sales through bilateral contract

• Provisions – R$ 25.0 million in the 1H06 related to monetary correction of RTE (R$ 9.7 million) and allowance for PIS / Cofins levied on the initial contracts (R$ 15.3 million)

Net RevenueNet Revenue Costs and Operational ExpensesCosts and Operational Expenses

Power Purchase

OthersOperational Expenses

Royalties Provisions

30%30%34%34%

30%30%59%59%

23

427543

223269

83.4%77.7%

79.5%77.1%

1H05 1H06 2Q05 2Q06(75)

(47)

(34)(24)

1H05 1H06 2Q05 2Q06

153113

306

210

43.8%39.1%

43.8% 42.3%

1H05 1H06 2Q05 2Q06

ResultsResultsR$ millionR$ million

• Increase in financial income: more funds invested in securities

• Decrease in financial expenses in 1H06: reduction in the IGP-M, from 1.8% in the 1H05 to 1.4% 1H06

• Increase in volume of energy sold through the bilateral contract

• Improvement in the financial results

Financial ResultsFinancial Results Net IncomeNet Income

• Increase in volume of energy sold through the bilateral contract

• Decrease in EBITDA margin due to the increase in the operational provisions

EBITDAEBITDA

27%27%

20%20%

37%37%

30%30%

45%45%

35%35%

24

DebtDebt

Net Debt Net Debt –– R$ billionR$ billion Breakdown of Financial InvestmentsBreakdown of Financial Investments

Cash availability = R$ 776.7 million (jun06)

Federal T Bonds (Ba3)

88%

Foreign Bonds - US$ - (Aa3)

6%

Foreign Bonds - US$ - (Aa1)

5%

Prived Bonds (A3)1%

1.1

1.4

0.6

0.9

1.3

0.7

1.1 1.10.6x

1.1x1.4x

2.0x

3.2x3.3x3.0x

0.7x

2000 2001 2002 2003 2004 2005 1H05 1H06

Net Debt (R$ million) Net Debt / EBITDA

Creditor Amount - R$ million Maturity Terms Collateral

Eletrobras 1,405.8 May-13 IGP-M + 10% p.y. ReceivablesFunCesp III 20.4 Nov-17 IGP-DI + 6% p.y. Receivables

25

CAPEXCAPEX

Increase Capacity Requirement: waiting decision of ANEEL and São Paulo StateGovernmentCapex – 1H06: R$ 11.1 million:

Bariri: re-equipping and modernization of the Generating Unit 2Reforestation

Reducing the expected capital expenditure for 2006: R$ 43.7 million

CapexCapex –– 1H061H06CapexCapex –– R$ millionR$ million

11.1

43.7

27.5

21.9

12.4

30.537.5

17.7

2000 2001 2002 2003 2004 2005 1S06 2006Revised

68%

25%

7%

Equipment Environmental Others

26

DividendDividend

Dividend Payment: Payout of 100% of the net income reported in the 1H6: R$ 305.5 million

R$ 3.06 for 1,000 common sharesR$ 3.36 for 1,000 non voting shares

Payment in August 29, 2006

11.8%

13.6%

12.3%

6.6%

12.4%

14.1%

13.4%

11.4%

1S06*

2005

2004

2003

Votting Non Votting* annualized

PayPay--out Ratioout Ratio Dividend YieldDividend Yield

100.0%

96.9%

95.0%

95.0%

1S06

2005

2004

2003 185.6 million

276.9 million

538.9 million

305.5 million

27

ConclusionConclusion

Generation was 22% higher than assured energy;

Operational Excellence: FR and EAF above ANEEL requirements;

Assured energy completely sold in the long term;

EBITDA of R$ 542.5 million in 1H06 – increase of 26.9% compared with the same period of 2005;

Net Income of R$ 305.5 million in the 1H06, 45.2% higher than the 1H05 – net margin of 43.8% in the semester.