2010 sustainability report...message from the ceo 4 sustainability report 2010 message from the ceo...

2010 Sustainability Report

About the reportMessage from the CEOProfileCorporate governanceStrategy and management Safety Economic-financial performance Operating performanceCommercial performanceEmployeesSuppliersCustomersSocietyEnvironmentIndexAcknowledgments

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IGRI 2.1; 3.1; 3.2; 3.3; 3.4; 3.5; 3.8

n this Sustainability Report, Eletropaulo Metropolitana

Eletricidade de São Paulo S.A. (AES Eletropaulo) presents its

initiatives to guarantee the development of its businesses

by describing the company’s economic and socio-environmental

issues. Published for the fifth consecutive year under the Global

Reporting Initiative (GRI) guidelines, the document complies with

level B of the GRI guidelines, including the indicators specific to

the electric sector.

Published annually, this report covers the period between

January 1 and December 31, 2010. The information refers to AES

Eletropaulo’s operations within its concession area, which covers

24 municipalities in the metropolitan region of São Paulo.

The content of this report was jointly defined by all areas of the

company and through consultation with the stakeholders during

the second cycle of dialogue, an AES Brasil process of engagement

which involves employees, suppliers, customers (corporate and

residential) together with representatives from the varied segments

of society (such as public authorities, NGO’s and other institutions).

Queries and suggestions regarding this report should be

forwarded to the Office of Investor Relations or the Office of

Communication and Social Responsibility

[email protected] ou [email protected]

letterRua Lourenço Marques 158, Vila Olímpia – São Paulo (SP), Brazil

CEP 04547-100.

ReportApplication level

G3 Profile Disclosures

G3 Management approach disclosures

G3 performance indicators e sector supplement

performance indicators

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Report on:1.1; 2.1 - 2.10; 3.1 - 3.8; 3.10 - 3.12; 4.1 - 4.4; 4.14 - 4.15.

C

Not required

* Sector supplement in final version

Report on a minimum of 20 performance indicators, at least one from each os economic, environmental, human rights, labor, society, product responsibility.

Report on each core G3 and sector supplement* indicator with due regard to the materiality principle by either: a) reporting on the indicator or b) explaining the reason for its omission.

Same as requiriment for level B

C+ B+ A+B A

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Report on all criteria listed for level C plus: 1.2; 3.9; 3.13; 4.5 - 4.13; 4.16 - 4.17

Management approach disclosures for each indicator category

Management approach disclosures for each indicator cattegory

Report on a minimum of 10 performance indicators, including at least one from each of: economic, social and environmental.

3 2010 Sustainability Report

about the report

MeSSaGe FroM the Ceo

4 Sustainability Report 2010

Messagefrom the CEO

IGRI 1.1; 1.2

n 2010 the AES Brasil Group invested R$ 1.1 billion, 42%

more than in 2009. Our investments were channeled toward

the continuous improvements in the quality of customer

service, the maintenance of our assets and also in technology and

modernization. For 2011, we have defined an investment program

of R$ 1.2 billion.

At AES Eletropaulo – the largest electric power distributor in

Latin America –we invested in 2010, R$ 682.3 million (32.3%

more than in 2009) in preventive maintenance, automation,

expansion of the electric system capacity and in connections for

new customers. Over the course of 2010, we have taken a series

of initiatives with a view to reduce the frequency and duration

of power outages, specifically with the addition of 212 new work

teams, giving AES Eletropaulo the ability to deploy up to 2,200

professionals to serve our customers in emergency situations and

to prune the 320 thousand trees in the company’s concession

area. We closed 2010 with a 10% reduction in the frequency and

duration of power outages compared to 2009. The DEC (average

number of hours a customer is without power) was reduced by

1.18 hours, closing the year at 10.60 hours, a rate lower than the

average in the Southeastern region (11.43 hours according to the

National Electric Power Agency - Aneel). The FEC (average number

of times a customer is without power) was 5.42 times, whereas

the average for the region was 6.6 times. In 2011, AES Eletropaulo

will invest R$ 720 million, aiming for continual improvement in

the quality of customer services.

AES Sul closed 2010 with investments totaling R$ 265.2

million, an increase of 86.7% compared to 2009. These funds

have been channeled to improve the reliability of the grid, to

expand the company’s capacity to satisfy consumption demand

and to increase the safety of the system. The result was a

reduction of 14% and 15% in DEC and FEC, to 18.05 hours and

10.11 times, respectively.

In generation, AES Tietê invested about R$ 82.2 million in

maintenance, modernization and expansion of its hydroelectric

plants, 45% higher than the amount invested in 2009. In 2011,

we plan to invest R$ 158 million. With the goal of expanding

the installed power generating capacity in the State of São

Paulo, we are proceeding with the development of a natural

gas thermoelectric project - Termo São Paulo – with a capacity

equivalent to 550 MW. We have acquired the land necessary for

the project’s implementation in the municipality of Canas, The

environmental licensing process is in progress and we expect to

participate in new energy futures auctions (A-5) this very year.

In the telecommunications segment, AES Atimus, the new brand

of the companies, AES Eletropaulo Telecom and AES Com Rio,

expanded its operations in the corporate sector. We invested R$

70 million in the expansion and capillarity of our fiber optics

network, 21% above that applied in 2009. We increased our

customer base by 70% and by 2015 our investment forecast is in

the region of R$ 400 million.

The AES uruguaiana thermoelectric facility with a generating

capacity of 639.9 MW, remains deactivated – due to the lack

of gas supply from Argentina – and we continue studying

alternatives for the future of this undertaking.

In 2010, we defined our new platform of sustainability,

contemplating five strategic themes: safety, generation of

sustainable energy; efficient use of resources; innovation in

products and services; development and respect for employees,

suppliers and the community. All will have a plan of action and

established targets for the period between 2011 and 2015.

Safety – our Top Priority is one of the strategic themes. In

2010, we reduced accidents among our contracted employees

by 25% - with or without days lost - and among the

population by 9%. Among our own co-workers there was an

increase of 11% in the number of accidents – with or without

MeSSaGe FroM the Ceo

5 Relatório de Sustentabilidade 2010

days lost – a result that shows we have room for improvement,

We invested R$ 7 million in the training and qualification of our

teams and leaders. We closed the year with 7,568 professionals,

up 29% in relation to 2009, having transferred meter reading and

bill delivery in-house at both AES Eletropaulo and AES Sul, with a

view to improve our customer service.

We have intensified our social activities in the communities,

inaugurating another Casa da Cultura e Cidadania in Rio de

Janeiro. The Project, now implemented in seven towns and cities

directly benefits more than 6.8 thousand people. In 2011, we will

open a new unit in Novo Hamburgo, Rio Grande do Sul within the

AES Sul concession area.

In 2010 the AES Brasil Group, posted net income of R$ 2.2

billion, 2.7% more than 2009. EBITDA (income before interest,

taxes depreciation and amortization) was R$ 4.2 billion, up

21.8%compared to the previous year.

In 2011, the third tariff review cycle will be held for AES

Eletropaulo, the methodology of which is being defined by

Aneel. We have contributed to the advancement of this

methodology, through our provision of favorable conditions to

enable the electric power distribution sector to develop with

an equilibrium that responds adequately to the necessities for

investment in view of the country’s continued economic growth

perspective, thus attaining continual improvements in the

quality of services.

In 2010, we received several acknowledgments. Here are some

of the highlights:

- AES Eletropaulo received the Íbero-americano Qualidade

Award, conferred by the Íbero-americano Quality Foundation;

won the Modern Consumer Award for Excellence in Customer

Service, from the Modern Consumer Magazine; was elected

once again the most admired company in Brazil in the category,

Supply of Electric Power by the magazine Carta Capital; and has

maintained its listing on the BM&FBovespa Index of Corporate

Sustainability (ISE).

- AES Sul won the National Quality Prize conferred by the

National Quality Foundation and the Gaúcho Quality Awards

Gold Trophy.

- AES Tietê was considered the Sixth Best Company to Invest

in, according to the 2010 Agência Estado Empresas Awards; and

maintains its listing on the BM&FBovespa Index of Corporate

Sustainability (ISE).

- AES Atimus-SP was awarded the Silver Medal at the Paulista

Quality Management Awards and was the first operator in Latin

America to receive the MEF Certificate (Metro Ethernet Fórum),

classifying its network among the highest standards of quality.

We thank our customers for the trust they place in us, our

employees for their dedication and commitment, and we thank

our suppliers, shareholders, the community, regulatory bodies,

public authorities and investors for their support.

Britaldo Soares

AES Brasil Group Chief Executive Officer

Profile

A Company for all

The biggest energy distributor in Latin America, AES Eletropauloserves 6,1 million customers in a concession area of 4,526 km²in the metropolitan region of São Paulo.

b GRI 2.2; 2.3 ; 2.4; 2.5; 2.6; 2.7;

y consumption and billing

AES Eletropaulo is the largest

distributor of electric power in

Latin America, and in 2010, served 6,1

million customers in 24 municipalities

in the metropolitan region of São

Paulo including the capital, where it is

headquartered. The concession area covers

4,526 Km² with 16.5 million people.

The company distributes electric power

to residential, industrial, commercial

and public authority customers. In

2010, 43,345 GWh* of energy was

commercialized generating net income of

R$ 1.3 billion.

AES Eletropaulo is a publicly-held

company, which participates in Level 2

of Corporate Governance Differentiated

Practices on the BM&FBovespa (Bolsa de

Valores, Mercadorias e Futuros de São

Paulo). Since 2005 the company has

also been listed on Bovespa’s Corporate

Sustainability Index (ISE), a portfolio

of companies acknowledged for social

responsibility, corporate sustainability

and for encouraging best practices in the

Brazilian market.

As of January 2011, the company

has been listed on the ICO2, a rating

developed by BM&FBovespa jointly with

BNDES (The National Development Bank),

whose portfolio only considers companies

that adopt transparent practices in

relation to greenhouse gas emissions. AES

Eletropaulo monitors and measures its

*�According to data from the National Program of Electric Power (Procel), 1 MW is equivalent to 3.6 GJ and is sufficient to power 22,448 refrigerators with a capacity of 300 liters for a month.

**�Free float (or shares in circulation): means all shares issued by the company, except shares held by the controlling shareholder, by associated parties, by company administrators, those in treasury and special preferred class with the purpose of guaranteeing differentiated political rights, both non-transferable and the exclusive property of the privatized entity.

43,345 GWhWas the total of electric Power commercialized by AES Eletropaulo in 2010, an amount 5% higher than 2009.

AES Eletropaulo in numbers GRI 2.8

5,663 own employees and 7,847 outsourced

6.1 million customers

24 towns and cities served

149 substations

40,697 km of overhead distribution grid

3,038 km of subterranean distribution grid

R$ 1.3 billion net income

R$ 682.3 million invested

43,345 GWh of energy distributed to captive and free

customers

R$ 1,057,629,316.47 of share capital

62 thousand shareholders

56.18% Free float**


proFIle

emissions, reinforcing its commitment to

climatic and environmental issues.

The controlling shareholder is AES Elpa

S.A., a publicly-held company whose

controlling shareholder is Companhia

Brasiliana de Energia. The share capital

of the Companhia Brasiliana de Energia

is currently held by the Banco Nacional

de Desenvolvimento Econômico e Social

(BNDES), by means of the fully owned

subsidiary, BNDES Participações S.A.

(BNDESPAR), and the North American AES

Corp.,one of the largest generation and

energy distribution groups in the world.

The corporation is based in Arlington uSA

and through other directly or indirectly

controlled companies, controls AES

Holdings Brasil Ltda.

To satisfy market demand and to raise

the quality of its services, AES Eletropaulo

invested R$ 682.3 million in 2010, mainly

on the expansion and maintenance of

its system, as well as customer service

improvements.

AES Corp.

AES Corp. is a global company that operates in the energy

sector with businesses in generation and distribution which

includes a diversified portfolio of thermal and renewable

fuel sources. With a presence in 29 countries, the global

workforce of AES is 27 thousand people, who are committed

to operational excellence and to meet the world’s constantly

changing energy needs. Founded in 1981, the company built

its first plant in 1985 in Texas (uSA) and in the early 90s was

already running three other plants in the country. In the early

90s, as markets opened globally, AES began generating energy

in the united Kingdom, and soon expanded to Argentina,

Pakistan, China, Hungary and Brazil. In 1998 the company

acquired a minority stake in a power plant in the first and only

generation privatization in India. In West Africa and Central

America, AES brought electricity to places that never knew

reliable power, while electrifying urban centers.

AES HAS helped pioneer new pollution control technologies

and biomass conversions while expanding — to Qatar, Oman,

Sri Lanka, Cameroon—and more recently to Bulgaria.


TECHNICAL DATA (INPuT, PRODuCTION CAPACITy, SALES, LOSSES) 2008 2009 2010

Number of consumers served - loyal consumers 5,832,093 5,999,506 6,142,064

Number of consumers served - free consumers 214 213 273

Number of municipalities served 24 24 24

Number of own employees 4,141 4,360 5,663

Number of outsourced service providers 6,368 7,191 7,847

Number of business offices 60 75 75

Energy generated (GWh) NA NA NA

Energy purchased (GWh) 38,886 41,131 41,337

Itaipu 10,614 10,436 10,079

Initial contracts 0 0 0

Bilateral contracts 11,762 11,339 11,316

with third parties 220 204 208

with related party 11,542 11,135 11,108

Auction 0 0 0

Proinfa (Alternative Energy Sources Incentive Program) 598 873 984

CCEAR (Energy Purchase Agreements in Regulated Market) 15,912 18,482 18,960

MCSD (Energy Surplus/Deficit Compensation Mechanism) 31 123 849

Global Electric Losses (GWh) 5,433 5,548 5,373

Electric losses - total (%) on the energy requirement 11.58 11.81 10.92

Technical losses - (%) on the energy requirement 6.49 6.49 6.49

Non-technical losses - (%) on the energy requirement 5,09 5,32 4.43

Energy sold (GWh) - loyal market 33,906 34,483 35,480

Residential 13,843 14,433 14,890

Residential - Low Income 583 581 655

Commercial 10,301 10,752 11,081

Industrial 6,559 6,032 6,137

Rural 27 26 28

Government 1,100 1,148 1,200

Operational and Productivity Indicators GRI 2.7; 2.8, Eu1; Eu2; Eu3; Eu4; Eu10 Eu28; Eu29


TECHNICAL DATA (INPuT, PRODuCTION CAPACITy, SALES, LOSSES) 2008 2009 2010

Public Lighting 878 899 861

Public services 568 565 582

Own consumption 46 47 46

Substations (in units) 148 149 149

Installed capacity (MVA) 12,952 13,118 13,361

Transmission lines - km NA NA NA

Subtransmission lines - km 1,743 1,737 1,735

Distribution network - km 42,794 43,251 43,735

Distribution transformers (in units) 195,580 196,453 197,793

Sale of energy per installed capacity (GWh/MVA*no. hours/year) 0.00030� 0.00030� 0.00030

Energy sold by employee (GWh) 8.2� 7.9 6.3�

Number of consumers per employee 1,408 1,376 1,085

Value added/GWh sold (R$ 000) 179 193 206�

DEC1 (Equivalent Duration of Interruption per Consumer unit) 9.20 11.86 10.68

FEC2(Equivalent Frequency of Interruption per Consumer unit) 5.20 6.17 5.43

1. Number of hours a customer is without power over a given period 2. Number of times a customer is without power over a given period


01 Barueri 02 Cajamar03 Carapicuiba 04 Diadema05 Cotia06 Embu07 Embu-Guaçu08 Itapecerica da Serra 09 Itapevi10 Jandira11 Juquitiba12 Mauá

13 Osasco 14 Pirapora do Bom Jesus15 Ribeirão Pires16 Rio Grande da Serra17 Santana do Parnaíba18 Santo André19 São Bernardo do Campo20 São Caetano do Sul21 São Lourenço da Serra22 São Paulo23 Taboão da Serra24 Vargem Grande Paulista

The company’sconcession area GRI 2.7

Vision GRI 4.8

To be the best energy distribution

concessionaire in Brazil by 2012

MissionTo serve society through the provision

of energy services and solutions by

adopting a safe and socially responsible

approach

Values• Safety first

• Act with integrity

• Honor commitments

• Seek excellence

• Fulfillment at work

Vision, Mission and Values GRI 4.8

In 2007, AES Eletropaulo’s vision

was defined as being an instrument of

challenge for its employees and leaders

which would also describe the ambition of

the company. To quantify this, the Abradee

Award has been adopted as a reference,

with its five criteria of verification and

methodology to annually acknowledge

the best companies in the electric

energy distribution sector. There are 28

distributors, each with over 500 thousand

customers competing for the award. In

2007, AES Eletropaulo came in 20th place in

the Abradee ranking (Brazilian Association

of Electric Power Distributors) and the

current standing is 9th. The 2011 rankings

will be released in June.

Awards and Acknowledgments GRI 2.10

After winning the National Quality Award

in 2009, in 2010 AES Eletropaulo became the

first company in the sector to win the Ibero-

American Gold Award for Quality, which

acknowledges management excellence

among participating companies and

organizations. The company was winner in

the category Large Publicly-Held Company.

Coordinated by SEGIB (Ibero-American

General Secretary) and administered by

FuNDIBEQ (Ibero-American Foundation

for Quality Management), the award

is a project associated with the Ibero-

American summit of Heads of State

and the Government which recognizes

the excellence of the award-winning

Other Acknowledgments in 2010 GRI 2.10

• Modern Consumer magazine Excellence

in Customer Service Award in the Electric

Power Category.

• Best Electric Power Company in the

category “Companies that most respect

the Consumer in Brazil” (Modern

Consumer Magazine).

• 10th ABT Award for social networks

– AES Eletropaulo was recognized as a

success story through its use of social

networks in customer service.

• Best Customer Experience (BCx) -

Energy Segment and utilities - ranking

sponsored by the Magazine Consumidor

Moderno and Izo Brasil Consultoria.

• Award for Best Company-Customer

Relations - Energy category by the

Associação Ibero-americana de Relações

Empresa-Cliente - Aiarec (Ibero-American

Company Relations Association).

organizations. Since 1999, over 70

companies have received the accolade.

The company has also been included

in the 13th edition listing of the Most

Admired Companies in Brazil, sponsored

in partnership with the magazine Carta

Capital and the consultancy Officina

Sophia. Between June and August 2010,

over 1,100 executives chose the best

companies in ten sectors. AES Eletropaulo

received the most votes in the Energy

Supply category.

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History

AES Eletropaulo came into being from

the split up in 1997, and the privatization

in 1998, of AES Eletropaulo by the State

Government of São Paulo. On December

31, 1997, the company was restructured,

resulting in the creation of Eletropaulo –

Eletricidade de São Paulo S.A. and three other

companies. AES Eletropaulo was privatized on

April 15, 1998 by public auction.

In 1999, AES Corporation (AES Corp.)

purchased another 4.4% of the company’s

share capital through its subsidiaries,

and through further acquisitions and

reorganizations, the company became

2003The holding company, Companhia Brasiliana de Energia S.A. is created with the shareholders, AES Holdings Brasil Ltda., with 50% plus one voting stock and BNDES Participações S.A. – BNDESPAR, holding 50% less one voting stock.

1899The founding of The São Paulo Railway Light and Power Company Limited.

1923 Brazilian Traction Light and Power Co. Ltd. assumes control of the São Paulo Railway Light and Power Company Limited.

1956Restructuring of the holding company which is thereafter known as Brascan Limited.

1979The Brazilian government acquires from Brascan the shareholding control of Light – Serviços de Eletricidade S.A.

1981The State Government of São Paulo assumes control of Light Serviços de Eletricidade S.A. and change the company’s name to Eletropaulo – Eletricidade de São Paulo S.A.

1997The privatization process results in new restructuring, creating four companies; two distribution companies, Eletropaulo – Eletricidade de São Paulo S.A., the current AES Eletropaulo and EBE - Empresa Bandeirante de Energia S.A.; a transmission company – a EPTE - Empresa Paulista de Transmissão de Energia Elétrica, now Companhia de Transmissão de Energia Elétrica Paulista (CTEEP); and a generating company – EMAE - Empresa Metropolitana de Águas e Energia S.A.

1998AES Eletropaulo is acquired, through public auction, by Lightgás, a consortium comprising AES Corp., Companhia Siderúrgica Nacional (CSN), Électricité de France (EDF) and Reliant Energy.

2001After a new reorganization process, the entire indirect control of the company is held by AES Corp.

the main indirect controller in 2001. The

present shareholding composition is the

consequence of the corporate reorganization

process implemented by Companhia

Brasiliana de Energia, AES Corp. and the

Banco Nacional de Desenvolvimento

Econômico e Social (BNDES) in 2003.


Corporate Governance

Transparencyadds value

AES Eletropaulo practices guarantee fairness between shareholders and stakeholders

aGRI 4.12

ES Eletropaulo’s corporate

governance is aimed at

creating value for both its

shareholders and stakeholders. Its main

practices are established in the bylaws

and the corporate governance manual,

which indicate the regulations and norms

on which the governance is based and the

entities responsible for its maintenance:

Executive Officers, Audit Committee, Board

of Directors and the General Meeting. The

adoption of good practices is essential

for strategic and efficient business

management and, therefore, serves as the

base for the creation of value. This is why

AES Eletropaulo continuously strives to

improve its corporate governance practices.

For the sixth consecutive year, AES

Eletropaulo has been listed in the portfolio

of the Corporate Sustainability Index (ISE)

of the Securities, Commodities and Futures

Exchange (BM&FBOVESPA), which selects

companies with the best performance

in sustainability. The 2010/2011 index is

composed of preferred shares (ELPL4).

As a company that is indirectly controlled

by the AES Corporation, a publicly-held

company trading securities on the New

york Stock Exchange, the controls at AES

Eletropaulo are adjusted to meet the

requirements of the Sarbanes-Oxley act

(SOx), which aims to ensure reliability of

financial statements of companies trading

stocks on the uS market.

AES Eletropaulo participates in level 2 of

the BM&FBOVESPA Corporate Governance

Differentiated Practices, through which

the company, its administrators, audit

committee and controllers adopt a wide-

reaching set of governance practices and

additional rights for minority shareholders,

thus increasing transparency through the

release of a greater volume and better

quality of information, facilitating the

tracking of its performance.

The total number of AES Eletropaulo

shares is 167,343,887 of which 66,604,817

are common shares and 100,739,070

are preferred shares. The company’s

common shares confer to the holder

the right to vote at the company’s

Annual and Extraordinary Meetings, at

which decisions are made based on the

majority of votes. On the other hand, the

company’s preferred shares give priority

on capital reimbursements (based on

integrated capital without premium rights

in an eventual winding-up), confers to

the holder the right to dividends 10%

higher than those of common shares and

the right to a restricted vote, exclusively

on pre-determined topics stipulated in

the second paragraph, article 5 of the

For the sixth consecutive year, AES Eletropaulo is listed on the BM&FBOVESPA CorporateSustainability Index (ISE)

*�Both can be accessed by the public on the AES Eletropaulo investor relations site (www.aeseletropaulo.com.br/ri).


CorporateGovernanCe

company’s bylaws. Preferred shares also

bear full voting rights if the company

fails to pay, for three consecutive years,

rightful dividends. Finally, in any eventual

divestiture of the company, the holders of

the common and preferred shares will have

the right to receive an amount per share

corresponding to at least 100% of the

amount paid to controlling shareholders,

holders of the common shares. (Tag-along)

MANAGEMENT 2008� 2009 2010

Total compensation and/or fees (R$ 000) (A) 9.983,00 7.341,00 7.860,76

Number of Officers (B) 8 6 6

Average compensation and/or fees A/B (R$ 000) 1.130,00 1.160,00 1.310,13

Board of Directors compensation (R$ 000) (C) 361,00 346,00 1.007,40

Number of Directors (D) 11 11 10

Average compensation C/D (R$ 000) (considering only the directors who receive compensation) 54,00 56,00 100,74

Governance structure GRI 4.1

AES Eletropaulo is managed by a Board

of Directors – which in turn is advised by

the Investment and Operational Policy

Management Committee – and the Board

of Executive Officers. Since 2010, it has

had the support of an audit committee,

installed in the General Meetings at the

request of shareholders. The current

members of the Audit Committee were

elected at the behest of shareholders at

the Annual and Extraordinary General

Meeting held on April 30.


Board of DirectorsGRI 4.3; 4.5; 4.7; 4.9

The Board of Directors of AES Eletropaulo

is responsible for defining the strategy for

conducting the distributors business and

the approval of the most relevant matters.

The Board comprises 10 active members, 2

of which are independent and 8 alternates.

One active member and his respective

alternate were elected by the minority

shareholders and one member and his

respective alternate were elected by the

company employees. The term of office

for all members is 2 years, reelection being

permitted. The mandate of the current

Board Members will reach its conclusion at

the Annual General Meeting which will be

held in 2011 to discuss the financial and

social statements.

The members of the company’s Board

of Directors are qualified and have

recognized professional experience in the

energy, finance, stock market and public

administration sectors. The compensation

payable to the Members of the Board of

Directors, as well as any benefits of any

nature and representation fees, is approved

by the Annual Shareholders’ Meetings.

The Board of Directors met 13 times

over the year. At these meetings the Board

deliberated on the company’s economic,

environmental and social performance,

including material risks and opportunities,

by analyzing its financial statements,

operational and business performance

indicators and primary lawsuits (including

environmental litigation), overseeing new

projects and businesses, among other

strategic themes, as well as approving

subject matter over which it has exclusive

powers under the terms of the Company

Bylaws. Having access to such information,

the members identify the relevant matters

and propose recommendations to the

company’s Executive Officers.

Composition of the Board of Directors* GRI 4.2

Chairman

Andrew Martin Vesey

active Members

Britaldo Pedrosa Soares

Berned Raymond Da Santos Ávila

Francisco Jose Morandi Lopéz

Helena Kerr do Amaral

Luis Felipe Alfonso Céron Céron

Lucio da Silva Santos

Luiz Gonzaga de Mello Belluzzo

Sergio Canuto da Silva

Sergio Silva do Amaral

alternate Members

Airton Ribeiro de Matos

Arminio Francisco Borjas Herrera

Fernando Simões Paes

Marcelo de Carvalho Lopes

Patricia Rosa de Oliveira

Pedro de Freitas Almeida Bueno Vieira

Rinaldo Pecchio Junior

Roberto Mario Di Nardo

*At December 31, 2010


Audit Committee

The Audit Committee is made up of five

active members and five alternates, and

is responsible for auditing the company,

especially company accounts and the

correctness and legality of management

acts practiced by the administrators. It is a

non-permanent entity whose members are

elected from the shareholders’ indication

for a one-year term, which terminates at

the first Ordinary General Meeting after

its installation. Of the ten active and

alternate members of the Audit Committee

elected at the Ordinary and Extraordinary

General Meeting held on April 30, 2010,

six were put forward by the Companhia

Brasiliana de Energia by designation of

BNDESPAR. This indication complies with

item 4.11 of the Companhia Brasiliana de

Energia shareholder agreement, entered

into on December 22, 2003 and filed at

the company head office together with

posterior amendments. Furthermore, an

active member and respective alternate

were elected by the minority shareholders

holding ordinary shares and another active

member and respective alternate were

elected by the minority shareholders

holding preferred shares.

Composition of the Audit Committee* GRI 4.2

president

Ricardo Berer

active members

Marcio Luciano Mancini

Marcus Pereira Aucélio

Roberto Lamb

Sebastião Bergamini Júnior

alternate members

Charles Carvalho Guedes

Kurt Janos Toth

Luiz Ferreira xavier Borges

Manuel Jeremias Leite Caldas

Mauro Thomaz de Oliveira Gomes

Composition of the Board of Executive Officers*

Chief executive officer

Britaldo Pedrosa Soares

vice president and head of

Investor relations

Rinaldo Pecchio Junior

vice presidents

Cibele Castro

Jorge Luiz Busato

Pedro de Freitas Almeida Bueno Vieira

Sheilly Caden Contente

* At December 31, 2010

Board of Executive Officers

The Board of Executive Officers is

responsible for the management of

business and the execution of strategic

decisions made by the Board of Directors

and the resolutions made at the Ordinary

General Meeting, performing its functions

in accordance with the corporate

objective and in strict observance with

the provisions of the company Bylaws. It

is composed of a Chief Executive Officer,

a Vice President and Head of Investor

Relations and four Vice Presidents, with a

three-year term of office, reelection being

permitted. The mandate of the current

members of the Executive Board will end

at the Annual General Meeting which will

discuss the financial and social statements

for the year ending 2012.

The compensation payable to the

members of the Board of Executive

Officers, as well as any benefits of

any nature and representation fees, is

determined by the Annual Shareholders’

Meeting.

The AES Eletropaulo Board of Directors is responsible for the definition of the distributor’s business strategy


Shareholding composition

Since 2003, the share capital of AES

Eletropaulo has been mostly held by the

direct equity interest of AES Elpa S.A., a

publicly-held company whose controlling

shareholder is the Companhia Brasiliana

de Energia. The total share capital of

the Companhia Brasiliana de Energia is

currently held by the Banco Nacional de

Desenvolvimento Econômico e Social

(BNDES), through its wholly owned

subsidiary BNDES Participações S.A.

(BNDESPAR), and the North American

Company AES Corp., one of the largest

energy generation and distribution groups

in the world, based in Arlington uSA,

which through other directly and indirectly

controlled companies, controls AES

Holdings Brasil Ltda.

SHAREHOLDERS ON % PN % TOTAL %

AES ELPA 51,825,798 77.8% 0 0.0% 51,825,798 31.0%

união Federal 13,342,384 20.0% 258 0.0% 13,342,642 8.0%

Cia. Brasiliana de Energia

0 0.0% 7,434,388 7.4% 7,434,388 4.4%

BNDESPAR 1 0.0% 734,576 0.7% 734,577 0.4%

Others (free float) 1,436,634 2.2% 92,569,848 91.9% 94,006,482 56.2%

TOTAL 66,604,817 100.0% 100,739,070 100.0% 167,343,887 100.0%

Net worth: R$ 3.3 billionCapital stock: R$ 1,057,629,316.47 Number of shareholders: 62,472

Shareholding Composition

AES Corp (USA)

BNDESPAR

AES International Holdings II, Ltd.

AES Cayman Guaiba, Ltd.

AES Guaiba II Empreendimentos

Ltda.

AES Sul

Cia. Brasiliana de Energia

O Common sharesP Preferred sharesT Total

AES Infoenergy

AES Atimus-RJAES

TietêAES

Atimus-SPAES

EletropauloAES Uruguaiana

Inc.

AES Uruguaiana Empreendimentos

S.A.

AES Rio PCH

AES Minas PCH

AES Elpa

AES Holdings Brasil Ltda.

T 99.70%

T 99.99999996%O 99.99999996%

T 99.999989%O 99.999989%

O 98.26%T 98.26% O 77.81%

P 0.00%T 30.97%

O 50.00% -1açãoP 100.00%T 53.85%

O 50.00% +1açãoP 0.00%T 46.15%

O 71.35%P 32.34%T 52.55%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 99.99%T 99.99%

O 99.00%T 99.00%

O 99.99%T 99.99%

O 99.99999992%T 99.99999992%

T 100.00%O 100.00%

T 100.00%O 100.00%


Ethics and Compliance GRI 4.8

The aim of the Ethics and Compliance

program is to establish the highest possible

ethical standards to AES Group decision-

making, disseminating a culture of best

practices among all the employees and

stakeholders. The activities of the AES

Brasil companies are infused with the

Guia de Valores, (Values Guide) known as

“The AES Values – From Words to Action”,

a document based on the AES Corp.

guidelines which sustains the company’s

corporate governance practices.

As a signatory to the united Nations

Global Compact, which holds among its

principles the fight against corruption, AES

Eletropaulo is committed to do business

with companies and people who adopt

high ethical standards. For this reason

the company needs to know its business

partners through investigations aimed at

identifying their image and reputation as

well as compliance with current national

and international anticorruption legislation.

In 2010, World Ethics Day was promoted

in all the Group companies, under the

concept Ética: quando falta faz falta

(Ethics: when it’s missing you miss it) The

initiative sought to stimulate reflection

on the topic by means of talks, as well

as a message from the AES Brasil CEO,

Britaldo Soares.

Another highlight was the consolidation

of the Ethics Committee, which brings

together top management on a monthly

Commitments GRI 4.12

AES Eletropaulo is signatory to the Corporate Compact for

Integrity and Anti-Corruption, a joint initiative with the Instituto

Ethos, uniethos, Patri, the united Nations Development Program

(uNDP), the united Nations Office on Drugs and Crime

(uNODC) and the Brazilian Global Compact Committee.

The company is also a member of the National Quality

Foundation Ethics Committee (FNQ), whose purpose is to

contribute, together with other organizations in the joint

development of best practices and in the production of material

to assist other companies who wish to make their practices

transparent and trustworthy.

The FNQ bank of best practices includes four initiatives in

the AES Brasil Group ethics and compliance area: the Values

Guide, ethics and compliance training structure, AES Helpline

and the compliance revision process. The Group is considered

a benchmark for including initiatives that go beyond Brazilian

market practices.


basis to discuss the results of the more

sensitive denouncement investigations,

among other activities.

Training was offered to the employees

(in person or via intranet) with a view

to reinforcing company Values and the

responsibility of each and every one to

encourage and practice these Values.

Some of the policies contained in the

Values Guide were expanded on, gaining a

broader discourse.

All the ethics and compliance initiatives

are based on four pillars:

1. Values Guide – from Words to Action

2. Helpline

3. Training and Education

4. Contractual Compliance Review

Helpline GRI 4.4; SO4

The Helpline is a communication

channel directed at employees and other

stakeholders to clear up doubts, conflicts

and ethical dilemmas as well as denouncing

anti-ethical behavior and illegal or corrupt

business practices. The channel can be

accessed by telephone (toll-free) or by

Internet with service available 24/7.

Queries, suggestions and denouncements

- made anonymously – are treated with

confidentiality, and secrecy is guaranteed

by an outsourced company located in the

uSA, thus ensuring fairness, transparency

and trustworthiness with regard to the

process under inquiry.

All denouncements are analyzed and

investigated by the AES Brasil Ethics

Compliance area, and the most sensitive

cases are taken before the Ethics

Committee. AES Corp. oversees the results

of the investigations and may reopen the

cases if deemed necessary.

In 2010, the Group received a total of

419 calls of which 105 were related to

clarifications and 314 to allegations that

could infringe on the company Values.

Compared to 2009, there was an increase

of 25% in calls, a result of the wide-

reaching efforts of divulgation and training

carried out by the area.

At AES Eletropaulo, of the 324 calls

received, 244 referred to allegations and

80 were requests for guidance. Of the

allegations, 84% referred to behavioral

or policy matters, 9% corresponded to

topics related to business interaction,

5% to workplace safety and 2% to

company property and assets. Of the

requests for guidance, 40% were general

concerns, 30% conflict of interests, 20%

invitations from suppliers and 10% gift

and entertainment policy.

As a Signatory of the uN Global Compact, AES Eletropaulo holds the principle of only dealing with companies that adopt the highest ethical standards


Training and education 4.6; LA10; SO3

In 2010, the AES Brasil companies carried

out six training initiatives prepared by the

ethics and compliance area. As well as

being part of the new employee induction

process, this training is also present in

specific initiatives that involve not only

employees in all group levels, but also

suppliers. These are:

ethics Disseminators: developed

by AES Corp. along with university of

Virginia – Darden School of Business – this

training stimulates the debate on ethical

dilemmas between employees of all the

company’s areas in order to encourage

open discussion on the theme and support

employees in their decision-making

process, based on the highest ethical

standards. In 2010, 3,599 employees were

trained at AES Eletropaulo.

positive behavior: situations where there

is possibility of conflict of interest and may

be contrary to the company’s Values are

presented in a clear manner. The purpose is

to train every employee every year.

World ethics Day: all AES Group

companies throughout the world

annually promote the World Ethics Day,

in order to strengthen the Group’s Values

practices through discussions, lectures

and educational videos. In 2010, 2,650

employees were trained at AES Brasil.

Induction of new employees: is aimed at

ensuring that new employees know the AES

Values Guide and practice it in their daily

activities, as well as the AES Helpline service.

Contractual compliance review

All low-risk agreements and operations

of the AES Brasil group companies

above the amount of uS$ 100,000

or those that may jeopardize the

company’s image or activities, are

analyzed with regard to the group’s

ethical stance and Values by the Ethics

and Compliance area of the company.

It is a mechanism that seeks to ensure

the integrity of business, monitor the

legal and ethical conduct of business

partners and protect the company

from unethical or illegal situations.

Read more in Suppliers (page 76).

values Guide and aeS helpline: is a

reflection on AES Values and discussion of

some cases. The AES Helpline process is

explained and guidance on its adequate

use is detailed. At AES Eletropaulo, 697

employees were trained.

Certification of the values Guide: in

2010, 100% of AES Eletropaulo employees

formally received the AES Values Guide

and agreed to act in accordance with its

precepts.

anticorruption: the content complies

with the North American Law against

foreign corrupt practices (FCPA – Foreign

Corrupt Practices Act), adopted by the AES

Corp. in all its subsidiaries.

lectures on ethics: held monthly,

encourages debate among employees

at operational bases on situations which

could interfere in ethical behavior and the

company’s Values practices.


Disclosure Policy

The AES Eletropaulo Disclosure Policy on

Material Information and Securities Trading

provides for the broad and transparent

dissemination of information, in accordance

with the rules issued by the regulatory

agencies of the financial market, such

as the Brazilian Securities and Exchange

Commission (CVM) and BM&FBovespa. The

company’s material facts are disclosed in

order to offer investors the time necessary

to make decisions, as stipulated in CVM

Instruction 358/02.

However, the purpose of the Trading Policy

is to prevent the use of confidential and

inside information in the trading of securities,

thus inhibiting insider trading, also in

compliance with CVM Instruction 358/02.

AES Eletropaulo annually releases its

financial statements in widely-circulated

newspapers containing the analysis of its

operational, economic, environmental and

social performance. This information is also

disclosed in this sustainability report.

Company administrators are prohibited

to intervene in any social operation

involving a conflict of interest with the

company as well as with any deliberations

taken on the matter by the other

administrators, and must agree to advise

of any impediment in the minutes of a

general or executive meeting, the nature

and extent of the interest.

All information of interest to investors,

such as quarterly results, annual results,

material information, press releases,

teleconferences, corporate policies

and other institutional information is

permanently available on the site: www.

aeseletropaulo.com.br/ri.

Audits

Independent Auditors

Ernst&young Terco Auditores

Independentes S.S. is the audit firm

responsible for carrying out the

independent audit of the financial

statements. Pursuant to the provisions set

forth in CVM Instruction 381/03, the audit

firm does not provide any other services,

other than external audit services. The

2010 Ibase Social Report was also audited

by Ernst&young Terco.

Internal Audits

AES Eletropaulo has an internal audit

department which operates in both the

operational and financial areas with the

principal objective of revising and assessing

effectiveness, sufficiency and the application

of accountancy, regulatory, financial, and

operational controls of the company.

Shareholders and Investors GRI 4.4

To communicate with the investors,

AES Eletropaulo uses mainly the Investor

Relations Site (www.aeseletropaulo.com.

br/ri), which brings together the most

relevant information, news results and

company share prices.

In addition, the company also provides

its shareholders with an email (ri.

[email protected]), access to the

site by means of cell phone, an update

alert system sent directly to the e-mail of

the requesting shareholder, an RI page on

Twitter, which also communicates with

diverse sectors of the institution, besides

the quarterly videoconferences open to all

shareholders.

Material information is disclosed opportunely to give investors the necessary time to make decisions, and information of interest is permanently available on the site www.eletropaulo.com.br/ri


Risk Management GRI 4.11

In 2010 the AES Brasil Group consolidated

the Integrated Risk Management (GIR) with

the introduction of the Risks Management

Committee, the valuation of the main

risks identified by the company and the

management of risks in a single systemic

CATEGORy RISK ACTION

Strategy

Socio-cultural (Image)

The Communication and Social Responsibility area periodically monitors AES Eletropaulo’s image through the consideration of comments from potential opinion makers, which could affect the business and actions plans are prepared to minimize or neutralize impacts.

Ethics and Compliance (reputation)

The Compliance area applies due diligence with respect to proposed business partners, including appropriate compliance terms in agreements, in order to ensure the integrity of the company’s business and the protection of its image.

FinancialEconomic-Financial

The Financial and Investor Relations area periodically monitor changes in the macroeconomic environment, reflected by the financial model adopted by the company, which allows the quantification of any potential impacts affecting the economic-financial equilibrium as well as the establishment of a plan of action aimed at neutralizing and/or minimizing the impact

Operational

TechnologyThe Distribution area proposes an investment plan (CAPEx), helped by the “Asset Management” program, which identifies and prioritizes electricity assets to be substituted and modernized, thus assuring continuity of energy distribution, as well as the establishment of an action plan aimed at neutralizing and/or minimizing the impact.

EnvironmentThe Workplace Safety and Environmental area establishes the strategy that permits the identification and treatment of environmental risks that could potentially affect AES Eletropaulo’s business, with the support of the Environmental Management System.

Regulatory

Regulatory and Political

The Regulatory Affairs area monitors changes in the regulatory and political environments that may affect the business, as well as establishing an action plan to neutralize and/or minimize the impact. As a Preventive measure the Regulatory Affairs area is active in public audiences and consultations, assisting in the evolution of standards that will affect the regulatory environment.

Legal The Legal Affairs area monitors the potential impact that could stem from customer relations, suppliers, the public sector and employees, observing studies relating to legislation, doctrine and applicable case law, whilst offering opinions regarding the situation, its risks and consequences and the legal steps to take.

base, with a vision of its impact on strategy.

The 117 risks that were evaluated were

prioritized according their degree of

exposure and probability of occurring. They

were grouped in four categories (Strategic,

Financial, Operational and Regulatory)

and 59 subcategories; the objective being,

after detailed analysis, to identify the most

relevant risks and to establish adequate

methods of dealing with them, with

oversight and control.

The Group companies are working on four

risk-monitoring indicators: Projects Follow-up,

Outsourcing, Legal and Human Resources.

Risks assumed by AES Eletropaulo in 2010


Strategy and Management

Prepared for the future

Investment in the refinement of the strategic planning process and in management excellence is the foundation for growth and sustainable business

The starting point of planning is xtrategy: a method of formulating strategy developed by AES Corp. and adapted by AES Brasil.

aES Eletropaulo continually

invests in the refinement of the

strategic planning process and

management excellence. The

starting point of planning is xtrategy: a

method of formulating strategy developed

by AES Corp. and adapted by AES Brasil. The

process analyzes risks and opportunities in

seven stages:

Definition of the business: determines

the business’s field of operation and its

identity, serving to guide the other stages.

Interested parties: identify stakeholders

who can affect the company’s

performance and its expectations

and needs; its comparative references

(RCs) and requisites (RPIs); its level of

satisfaction and whether this is related to

the service attributes.

analysis of scenarios (external and

internal) and risks: qualify the corporate

risks of the business and set up scenarios

from the non-controllable drivers.

pillars of the strategy: define the

elements that will enable the attainment

of the outlined strategy.

analysis of alternatives: verifies the

outcome of each strategic pillar and tries

to visualize the new reality if each pillar

was improved.

high impact projects: actions that,

if executed successfully, fill in the gaps

between the current situation and the

desired situation.

Strategy summary: complements

the Mission and Vision to effectively

communicate the strategy to the

organization.

RPI – Stakeholders’ requisitesExpectations and necessities of the parties which will later be considered for the establishment of organizational targetsRC – Comparative referenceAn appropriate reference to evaluate the level of competitiveness above an attained result in the market, or in the sector of operation, always considering the organization’s strategy BSC – Balanced ScorecardIt can be viewed as a management method that helps companies transform their strategic planning into organized objectives, plans, targets and indicators that allow the periodic monitoring of their performance.

Xtrategy Methodology

1. Definition of the

business

2. Interested parties

(Expectations and Needs)

3. Scenarios and Risk Analyses

4. Pillars of Strategy

(Develop)

5. Analysis of alternative strategies

6. High impact projects

7. Strategy Summary

(Each business in Brazil

Field of operation and

identity

Shareholders, Customers, Employees, Community,

Suppliers, Regulatory Bodies

Qualify and quantify the risk profile

Elements to attain strategies,

including assets and intangibles

Study of probabilities and

parameters

Business levers

The strategy of each of AES Brasil’s different businesses is aligned with the Group’s general planning cycle. Strategic plans are drawn up annually with perspectives for the next five years. The planning cycle is annual and is structured in six steps, which are in turn

organized in two junctures (figure below): strategy formulation (steps 1 and 2) and strategy execution (steps 3 to 6). The process includes periodic evaluation of the performance and operational plan (steps 4 and 5), which defines the necessity for five-yearly adjustments.

RPIs RCs


StrateGy anD ManaGeMent

In 2010, multidisciplinary working

groups were installed to assess risks and

opportunities of the Group’s different

businesses. Based on this analysis, the main

strategies of each business were validated

and the implementations carried out.

The deployment occurs at the

implementation of the strategies within

the short term, by means of a strategic

map, which is guided by the organizational

Mission, Vision and Values and contains the

objectives, targets, plans of action together

with the respective operational budgets

(Opex) and investment (Capex).

Learning Map

Adopted by AES Eletropaulo in 2008, the

concept of the Learning Map is aimed at

encouraging dialog and building a shared

understanding of strategy and how,

individually all employees contribute with

their respective efforts and achievements.

Thereupon, it became possible to maximize

communication and the understanding

of the strategy with the employees, in

line with the concepts of the Balanced

Scorecard. The solution consists of the

application of a clear methodology, which

translates the strategy into a common

language to all employees, from the

leadership to the workforce which interacts

with the customers.

Formalized Commitment

To involve employees in the company’s strategy is key to

ensuring everybody’s commitment and dedication. In this

way, as well as disseminating strategy through training

sessions, talks and staff meetings, AES Eletropaulo uses the

management agreement: a document signed by the company

and the employees which formalizes the commitments, and

links, together with the administration of performance, targets

for variable remuneration thus providing a high performance

workplace.

This project is currently being applied from executive positions

upwards. The forecast is that it will soon reach all the other

positions in the group.

1st Step

6th Step 3rd Step

5th Step

2nd Step

Group Strategy- Mission, Vision and Values- Xtrategy- Strategy Formation

learning and revision- Cause and Effect Analysis- New strategies- Key Process Improvements

organization alignment- Administrative Contracts- Communication to Employees

performance evaluation- Strategy Revision- Operational Plan Revision

business Strategy- Goals, Indicators- Projects and Strategic Initiatives

1st

3rd 5th

2nd

4th 6th

…..Where and What we will do!

…How, When, How much and Who will do it!

Strategy Formulation

Strategy Execution

4th Step

operational planning: allocation plan- OPEX and CAPEX- Objectives and Goals by Area


The National Quality Foundation guidelines are used to diagnose and refine the AES Eletropaulo management model

Management Excellence

AES Eletropaulo has adopted the

Management Excellence Model (MEG),

from the National Quality Foundation,

as a tool to diagnose and enhance its

management model.

The culture of excellence is strengthened

through the following management

practices:

Dissemination of values

• Safety first

• Act with integrity

• Honor commitments

• Seek excellence

• Fulfillment at work

Management System

A series of monthly meetings, with

the purpose of evaluating the success of

strategies and plans, by promoting the

cultural changes necessary to achieve

the planned operational performance,

to accomplish the mission and fulfill

the vision. The system includes the

committees: human resources, safety,

ethics, customers, investment, R&D and

energy efficiency.

Cultura Apex (aeS performance

excellence)

The AES Excellence Program is a

structured set of quality methodologies

and tools that can be used to improve

business processes and identify solutions

for various kinds of problems through

projects. Apex tools are applied within

diverse contexts and situations relating

to operations, finance, customer services,

among others.

All projects developed within the scope

of Apex are evaluated annually at an

international event on recognition and

learning sponsored by AES Corp.

learning organization (Organização

que Aprende)

For AES Eletropaulo, the continual

learning process symbolizes the origin of

the concept of the creation, acquisition,

transfer and retention of relevant

knowledge and, at the same time,

offering people a learning experiences,

in particular the work groups: Apex,

round table, work management, asset

management, among others.

The company, through the consolidation

of such an approach, directs its actions

to the challenges represented by the

pillars of growth, financial and operational

excellence, brand and reputation, talent

and culture, in line with the prospects in

the strategic map: financial, customers

and society, internal processes, people

and culture.

Management tools

• balanced scorecard (bSC): a

methodology model which allows the

conversion of the strategy into strategic

and specific goals, and to monitor the

company’s performance.

• Management contracts: deployment

of the strategy at the level of the areas,

aligning the efforts and formalizing the

commitments by means of a document

that contemplates all strategic indicators

under the management of each

executive office.

• FnQ Management excellence Model:

systemic and structured management

diagnosis mechanism which allows the

verification of the level of maturity of

management and the adoption of the

principles of excellence found in world

class companies.

• benchmarking Model: a system of

comparison with the best companies

both within and outside the sector which

permits the adoption of best practices in

the business and support processes.

• Internal committees: aimed at defining

labor standards by identifying continuous

improvement and cost reduction

opportunities, prioritizing the quality and

exchange of experiences in the solution of

problems. The key processes involved refer

to the respect and development of people

and labor, asset and revenue management.


Dialog with the Stakeholders GRI 4.14; 4.15; 4.16; 4.17

In order to establish an engagement

process with its stakeholders and improve

the sustainability process reporting, in

September 2010, AES Brasil held its II Cycle

of Dialog with its stakeholders. Present were

representatives from employees, residential

and corporate customers, public authorities

and society, totaling 130 people.

Mediated by the company with the

help of the the specialized consultancy

Lume, the participants analyzed the 2009,

sustainability report, expressing opinions

and proposing improvements for the

next editions. Among the main topics

covering this publication, the following

stand out: integration of the company’s

social responsibility projects; description of

the main challenges and impacts; putting

information in the correct context and the

inclusion of targets.

The event also proposes to align

and deepen knowledge of AES Brasil’s

sustainability, define material themes,

specifically the ones with the most relevance

to the business or the stakeholders – and

present opportunities for management

improvements within these themes.

Intangible Assets

In order to keep the non-accountable

intangible assets aligned with corporate

strategy, AES Eletropaulo has as its disposal

a series of mechanisms that permit the

renovation of knowledge, attraction and

retention of personnel and development

of communities, as well as product and

process innovation.

Non-accountable intangible assets are

identified and evaluated according to

the market (new services, demand and

integrated solutions), technological (new

equipment and business process) and

administrative trends (management model

and human resources demand). Based on

this analysis, intangible assets are classified

as follows:

• human: skill, experience and knowledge.

The development and retention of talented

people are decisive to the company’s growth.

AES Eletropaulo has plans and programs that

aim at providing employees with tools for

their professional development.

• Market: brand, customers and

relationships. The company’s reputation and

perception by customers are at the core of

work developed since 2009, involving the

repositioning of AES Brasil brand.

• Infrastructure: diverse systems and

customer database. Investments in

systems and tools aiming at improving

services are made on annual basis.

• technology: research and development,

processes and products, investments in

R&D projects and modernization of the

distribution grid and products on offer are

made on annual basis.

Public CommitmentsGRI 4.12; 4.13; HR7

AES Eletropaulo is a signatory of the

Global Compact and promotes the

eight Millennium Goals, both initiatives

of the united Nations (uN). The first

encourages the corporate community

to adopt, sponsor and promote the ten

basic and universal human rights, labor

practices, environmental, corruption and

bribery prevention principles. Signatories

are invited to adopt the ten principles in

the conduction of business and activities

and annually report their progress to

the uN and to society. The Millennium

Goals, known in Brazil as the Eight Ways

to Change the World, defined eight

measures targeted at hunger and poverty

eradication, universal education, gender

equality, child mortality reduction and

maternal health, the combat of AIDS

and other diseases and environmental

sustainability.

In 2010, the AES Brasil Group signed a

National Compact for the eradication

of slave labor in Brazil. In addition, new

suppliers can only be accredited on the

condition that they present documenta-

tion and attestations, as well as a consul-

tation with the Ministry of Labor, in order


to certify that the supplier is not listed as

an employer of slave labor. The company

publicly demands the same posture from

its suppliers.

AES Eletropaulo adheres to the Corporate

Compact for Integrity and Anticorruption,

participates in discussions with civil socie-

ty regarding its operations and encourages

corporate citizenship. The company main-

tains relations with the following:

• Associação Brasileira de Distribuidores

de Energia Elétrica (the brazilian

association of electric power

Distributors) - abradee: contributes to

the operational and financial-economic

excellence of concessionaires, focused on

customer service.

• Sindicato da Indústria de Energia no

Estado de São Paulo (energy Industry

union of the State of São paulo) -

Siesp: studies, coordinates, protects and

represents the agents of the energy sectors

in the State of São Paulo.

• Grupo de Institutos, Fundações

e Empresas (Group of institutes,

Foundations and Companies) - Gife:

promotes private social investment, by

disseminating concepts and practices

relating to the use of private resources in

projects focused on the development of

the common good.

• Instituto Ethos de Empresas e

Responsabilidade Social: (ethos Institute

of Companies and Social responsibility):

assists companies in incorporating the

concept of social responsibility in their

management, through a process of

continual evaluation and improvement.

• Fundação Abrinq (abrinq Foundation):

aims at mobilizing society towards issues

related to child and adolescent rights.

AES Eletropaulo participates in the Child

Friendly Company Program (“Programa

Empresa Amiga da Criança”), which

encourages private social investment in

initiatives on behalf of the children and

adolescents.

• Grupo + Unidos: a partnership between

the u.S. Diplomatic Corps in Brazil and

u.S. companies established in Brazil,

whose objective is to showcase the

investment that member companies make

in environmental, social and economic

development projects and to promote

corporate social responsibility within

diverse segments of society.


Safety

Our top priorityIn 2010, the re-structuring of the safety team and the implementation of new standard programs at AES Eletropaulo reduced the total number of accidents among employees and outsourced workers by 13%

IGRI LA6; LA7

n 2010, the re-structuring of the

safety team and the implementation

of new standard programs at AES

Eletropaulo reduced the total number

of accidents among employees and

outsourced workers by 13%

In 2010, AES Eletropaulo reduced by 13%

the number of accidents involving employees

and outsourced workers, registering 150

cases, compared to 173 in 2009. Besides

the statistical reduction it was noted that

gravity of the accidents was in general lower

than the previous year, albeit with one

company employee fatality in 2010. Such

data demonstrate that the safety strategy is

consolidated and is following the tendency

of continual improvement. The target for

2011 is to reduce the rate of accidents

by 10% among company employees and

outsourced workers.

This development is owed mainly to

the restructuring of the safety team and

the implementation of the AES Corp.

safety standards, from the qualification

of leaders, weekly safety training courses

and new procedures. The Occupational

Safety Management is charged with

dissemination knowledge on procedures

and rules and to offer all the technical

support and infrastructure. At the end of

2010, the 28th “Leader in Action” class

was held – with team leaders, in order

to exchange information on the results

obtained and their causes, sector trends

and proactive and reactive initiatives.

The safety strategy also includes

the search for references, tools and

technologies considered as safety

benchmarks in other sectors. An example

is the Task Card idea, inspired by an

obligatory practice in aviation, which

consists of a list of diverse safety items

that need to be observed before a task is

begun. All linemen carry out a check list.

There has also been growth in the number

of team inspections in the field, which

started at 1,200 per month in 2009 to

3,200 per month in 2010.

The organization also maintains two

formal safety committees: The AES Brasil

Committee on Occupational Safety and the

AES Eletropaulo Regional Committee, which

represent 100% of the employees’ interests.

Number of accidents with outsourced workers GRI LA7

35

2010

Number of accidents with own employees GRI LA7

201020092008

Fatal accidentsAccidents with loss

of working daysAccidents without los

of working days

OCCuPATIONAL SAFETy AND HEALTH 2008 2009 2010

Average overtime per employee/year 164 228 189

Total number of occupational accidents with employees 68 56 63

Total number of occupational accidents with outsourced workers 105 117 87

Average occupational accidents per employee/year 0.016 0.012 0.011

Accidents resulting in temporary absence of employees and/or outsourced workers (%) 21.38 26.58 38.93

Accidents that caused mutilation or other injuries to employees and/or outsourced workers, resulting in permanent absence of job (including RSI) (%)

0.57 0.00 0.67

Accidents that resulted in death of employees and/or outsourced workers (%) 0.57 1.73 0.67

Total company's Frequency Rate for the period - employees 7.71 6.22 6.55

Total company’s Frequence Rate for the period – outsourced employees 9.64 9.98 5.26

Company’s Severity Rate for the period - employees 71 51 672

Company’s Severity Rate for the period - employees - outsourced employees 1,025 1,649 349

Frequency rate: accidents resulting in time off per million man hours of risk exposure during a period of one year. Gravity rate: days lost due to accidents per million man hours of risk exposure during a period of one year.

2008

57

11

2009

43

1327

11326

78

33

81

56

31


SaFety

Pro-active company

In 2010, AES Eletropaulo received the

results of the SMS (Safety Management

Systems) audit, carried out by the AES

Corp. team. The SMS measures the level

of adherence to the Safety Management

System, in which, on a scale of 0 to 100,

the company scored 68.95%. This means

that the company has a “pro-active”

system of safety, capable of applying

risk-prevention actions with efficiency.

A positive result but still leaves room for

improvement. The next step is to reach the

level of “safety promoter” which means,

more than a set of norms and procedures,

safety becomes a lifestyle.

Safety policy

Created in 2009, The Occupational

Health and Safety Management System

(SGSSO) is the tool that guides AES

Eletropaulo in the evaluation and

identification of risk situations and the

improvement of health and safety in

the workplace. It consists of a set of

procedures that guide and coordinate

the health and safety actions of the

employees, with the aim of identifying,

controlling and reducing situations that

could cause accidents. Its guidelines are

periodically updated to keep them aligned

with operational activities and conditions.

At AES Eletropaulo, the SGSSO

requisites are based on the OHSAS

18001 (Occupational Health and Safety

Assessment Series) and the AES Corp.

standards, both of which offer guidelines

for the implementation of a management

system which establishes and maintains

a methodology to identify, evaluate and

deal with risks. The commitments made by

the company in the Integrated Policy on

the Environment and Occupational Health

and Safety were also determinant. AES

Eletropaulo’s target is to certificate all the

company sectors with the OHSAS 18001,

by 2012.

*��The OHSAS 18001 is a Management System focused on occupational health and safety that allows the company to systematically control and improve the performance of its requirements.

C) SECuRITy IN THE CONSuMERS’ FINAL uSE OF ENERGy 2008 2009 2010

SR (Severity Rate) for accidents with third parties for electric shock on the concessionaire's network 126 134 85

Number of improvements implemented to offer safer products and services 3 4 5

The Occupational Health and Safety Management System is based on OHSAS 18001 specifications and AES Corp. standards


Union Agreements GRI LA8; LA9

The organization maintains formal

agreements established with unions,

regarding employees’ health and safety,

which cover topics such as hazard pay; sick

pay and accident caused sick pay premium;

health and dental care assistance; special

indemnification (life insurance); and a two-

year job stability term, starting one year

after the termination of the mandate for

members of the Internal Commission for

PRACTICES METHODOLOGy OBJECTIVES

Risk and Hazard Identification Spreadsheet

Systemic analysis of all existing tasks, classifying them as to their severity and establishing controls to mitigate their risks.

Enable a global vision of existing hazards and risks in the company, strategically establishing the control actions to be adopted.

Preliminary Risk Assessment (APR)

Preliminary risk analysis technique involving personnel, equipment, materials and working environment.

Promote and encourage teamwork and personal responsibility.

Risk Assessment and Safety Measures (ARMS)

Preliminary critical risk analysis technique on activities (no procedures in place).

Analyze critical risks, procedures and adequate control measures.

Documented Planning Definition of the execution sequence for programmed disconnections. Control risks and divulge safety measures.

Preliminary Analysis of Occupational Hygiene (APRHO)

Draw up a survey on chemical, physical and biological risks to which employees are exposed to.

Control risks in a systemic manner.

Hazard Reports (RP) Identify damage potential in planned or unplanned situations. Reduce accidents and adopt control measures.

Accident Prevention (CIPA).

Some additions to the agreements are

also maintained, such as the Internal

Week for the Prevention of Work-Related

Accidents (Sipat), Pension Background

Profile (PPP), Environmental Risk-

Prevention Program (PPRA), Ergonomic

Reports, Occupational Health Medical

Control Program (PCMSO), Emergency

Brigade and the implementation of norms,

OHSAS 18001:2007.

Risk identification practices

the Safety Game

One of the tools for disseminating

risk-prevention concepts was a hit

in 2010: the game of safety. It is a

creative and pioneering tool which

uses the virtual environment in an

explicit way to provide the lineman

with an opportunity to test his own

knowledge on the importance of good

planning and to comply with the rules

and procedures in order to ensure

safe working conditions. Introduced

in 2009, the game has been played

by 7,600 own and outsourced

employees.


Public safety GRI Eu24; Eu25

In 2010, AES Eletropaulo changed the

method of communication with the public,

seeking to reduce the number of accidents

and fatalities in its concession area.

In common with other energy sector

companies, AES Eletropaulo faces a major

social problem regarding accidents on

the power grid, inasmuch as most of

these accidents are the result of irregular

building work in low income communities,

which do not respect the safety zone of

the power grid.

To direct the publicity campaigns

with more appropriate messages to

this segment of the population, AES

Eletropaulo commissioned an ethnographic

survey with the purpose of identifying

habits, lifestyle and the relationship of this

segment of society with the electricity

network, evaluating their awareness of the

risks and verifying the effectiveness of the

publicity campaign.

Based on these results, the company

changed the focus of the mass media

safety campaigns, adopting a more

direct strategy with a stronger emotional

emphasis, showing the consequences of an

accident on the power grid.

As well as utilizing mass media

(especially TV, radio, and mass transit)

which reaches 16.5 million people,

the company offers talks in schools,

neighborhood associations, companies and

churches. In 2010, around 330 thousand

people participated in the talks.

Considering that the majority of accidents

are related to construction work (do-it-

yourself house building), in low-income

communities, AES Eletropaulo launched

Operation Zero Accidents, a safety blitz

consisting of site visits to disseminate

information on the risks of electric energy

and on safe procedures and the right

attitude when working close to power lines.

This initiative reached over 6.2 thousand

people and was renewed in January 2011.

Between 2007 and 2010, the number of

accidents among the population fell by

53%. In 2010 there were 23 fatalities. The

company’s target for 2011 is to reduce the

number of fatalities among the population

by 30%.

Other initiatives

Throughout the year, AES Eletropaulo

has maintained campaigns in the most

diverse media outlets, both traditional and

alternative, focusing on the safe use of

electricity. The following are some of the

main initiatives:

Two other stand-out social projects which

focus on awareness-raising on the safe use

of electric energy are AES Eletropaulo in

the Community and AES Eletropaulo in the

schools. Read more on page 90.

To watch the videos sponsored by AES

Eletropaulo in the media, log on

www.youtube.com/aeseletropaulo.

COMMuNICATION INITIATIVES COVERAGE

Stickers on posts with safety messages 10 thousand stickers glued to posts in the municipalities of Barueri, Embu-Guaçu, Embu, Jandira, Santo André and São Bernardo do Campo

Information on pizza boxes 30 thousand families

Pamphlets in company supplied food hampers 230 thousand families

Company communication channels The channels of communication and service are widely used throughout the year to divulge the risks of the electric grid (electricity bills, customer service stores and the franchised network. A Twitter page and videos on youtube)


Economic and Financial Performance

Evolution by numbers

Bolstered by a 36% increase in cash flow generation in relationto 2009, net income rose by R$ 191.2 million in 2010,to a total R$ 1.3 billion.

In 2010, gross operating revenue was

R$ 14.7 billion, up 10.4% on the figure

for the same period in 2009, due to

an adjustment in the tariffs - made

annually in July – and to a 2.9% captive

market expansion.

Operating expenses grew 4.9% over

2009, which contributed towards the

strong 35.9% growth of in cash flow

generating capacity.

These factors likewise fostered the

16.5% increase in net profit reported by

AES Eletropaulo, to a total R$ 1,347.7

million in the year.

In 2010, the average impact of tariff adjustment perceived by consumers was 1.62% as against 13.03% in 2009

CONSOLIDATED IFRS (R$ THOuSANDS) 2009 2010 CHANGE

Gross revenues 13,331. 1 14,731.7 10.4%

Net revenues 8,785.6 9,697.2 10.4%

Operating costs and expenses 6,430.5 6,745.0 4.9%

EBITDA 1,775.4 2,412.8 35.9%

Financial income 270.4 103.0 - 61.9%

– Financial revenues 498.1 274.5 - 44.9%

– Financial expenses (227.7) (171.5) -24.7%

Pre-tax Income 1,477. 3 1,943.3 31.5%

Net profit 1,156.6 1,347.7 16.5%

Adoption of IFRS

AES Eletropaulo’s 2010 financial

statements have been drawn up using the

International Financial Reporting Standards

(IFRS) established by the International

Accounting Standards Board (IASB).

Among the resulting effects of applying

IFRS on taxable income, we highlight:

• Fair value was adopted as the initial fixed

assets measurement, which increased the

company’s depreciation costs. These are

now based on the economic life of the

assets instead of on their fiscal useful life;

• Amortization of intangible assets

representing the company’s right to

charge consumers for use of infrastructure,

improvement and expansions made in its

concession area up to 2028;

• Obligations and rights arising from

benefit plans (AES Corp. stock options)

extended to executive officers are being

recognized in shareholders’ equity.

Publication of financial statements

according to International Financial

Reporting Standards (IFRS) became

compulsory as of December 31, 2010.

2010 results - highlights


eConoMIC anD FInanCIal perForManCe

Operating revenues

The 10.4% increase in gross revenues to

R$ 14.7 billion in 2010 is due to a year-

over-year 2.9% growth in the captive

market, the annual tariff adjustment made

in the month of July and an accretion of

R$ 177.5 million due to the recognition

of building revenues as established in

IFRS. These revenues are related to works

executed to meet customer demands

and have a counter entry to costs, which

means that they had no effect on the

company’s profit.

Operating revenue deductions rose by

10.4% in relation to 2009, to a total R$

5.0 billion. The rise is due to an increase in

charges resulting from the year-over year

stepping up of energy supply revenues,

as well as charges related to the Fuel

Consumption Account (CCC) and Energy

Development Account (CDE).

As a result of these changes, AES

Eletropaulo’s net operating revenues

amounted to R$ 9.7 billion in 2010, higher

by R$ 911.5 million than in 2009.

Operating Costs and Expenses

In 2010, operating expenses amounted

to R$ 6.7 billion, 4.9% or R$ 314.2 million

over the figure reported in 2009.

operating Costs: the cost of purchased

energy rose by 5.0% in 2010, due to a

greater volume and higher average price of

purchased energy. In 2010, disbursement

made to pay for the use of the power and

transmission grid was higher by 16.3%

over the level in 2009, particularly due to

increased System Service Charges (ESS).

personnel: personnel costs and expenses

fell by 7.5% as a result of a reduction in

payments into the private pension plan

and for labor settlements and awards.

This reduction more than made up for the

added personnel expenses and charges,

due mainly to the annual collective

bargaining agreement, the hiring of the

previously outsourced 1,200 bill deliverers

and meter readers, and the ending of

central management cost sharing and

of the recognition of post-terminations

medical health plans.

other operating expenses: this set of

expenses dropped by 34.9% to R$ 165.4

million in 2010, down R$ 88.7 million in

relation to 2009. The main highlight is the

reverse entry of R$ 86.9 million related to

the document signed with Fundação CESP,

recognizing the latter’s sole legal liability

for paying supplementary pension and

retirement benefits resulting from claims.

Other Revenues and Expenses

In 2010, other revenues and expenses

netted a total R$ 539.4 million in expenses,

as against a net expense of R$ 579.6 million

in 2009. The following four factors explain

the R$ 40.2 million decrease:

• the nonrecurring positive effect of

the settlement related to the transfer of

OPERATING ExPENSES (R$ MILLION) 2009 2010 CHANGE

Electric energy purchased for resale 4,148.0 4,353.8 5.0%

Transmission 976. 5 1,135.9 16.3%

Personnel 699.9 647.1 -7.5%

Outsourced services 321.5 406.9 26.6%

Materials 30.4 35.8 18.0%

Other 254.2 165.4 -34.9%


Eletropaulo Telecomunicações Ltda. quotas

to Companhia Brasiliana for a total R$

265.4 million in June 2010;

• the nonrecurring negative effect

caused by the sales of assets prompted by

agreements made with SPTrans and EMTu

in 2010, totaling R$ 41.0 million;

• increased expenses related to execution

of works of R$ 177.5 million, which are

now posted to other operating expenses,

according to IFRS and CPC 17. This total

is offset by other receipts of equivalent

value; and

• an assets write-off of R$ 31.1 million

after the closing of the physical assets

inventory in 2010.

EBITDA – (acronym for income

before interest, taxes, depreciation and

amortization).

EBITDA in 2010 amounted to R$ 2.4 billion,

up 35.9% over the 2009 figure. The main

contributing factors to this increase were

market growth, increased tariffs, the positive

effect of the R$ 265.4 million financial

settlement of AES Eletropaulo Telecom

quotas and the reverse entry related to

additional retirement payment claims.

Financial Result

In 2010, the company posted R$ 103.0

million in financial income, down R$ 270.4

million on the figure recorded in 2009.

The main reasons for this change were:

the effect of the company’s adhesion to

the REFIS program (Federal Taxes Term

Payment Program) in 2009, which caused

a R$ 275.3 million impact to financial

income, partially offset by a total income

of R$ 106.3 million in 2010, resulting from

the end of discussions on the agreement

entered into with Banco Santos.

Net Income

In 2010, the company registered a net

income of R$ 1.3 billion, which represents

an increase of R$ 191.2 million. This

performance is mainly explained by the

positive effects of the R$ 175.1 million

settlement of the AES Eletropaulo Telecom

quotas and of the agreement made with

Banco Santos’ bankruptcy estate. The

adoption of IFRS accounted for the R$

161.5 million increase in net profit in 2010

and R$ 93.3 million in that of 2009.

Shareholder Remuneration

AES Eletropaulo’s management proposed

to pay out the full legally established 25%

dividend payment (R$ 1.5 billion) in 2010

by way of dividend payments and interest

on net equity, corresponding to 114.4% of

the year’s net profit. This distribution was

approved by the Ordinary General Meeting

(AGO) held on April 29, 2011, which also:

• Ratified intermediary dividend payments

related to the first half of 2010, which were

paid on September 15 and December 7,

2010, totaling R$ 625.5 million

• Ratified payment of interest on net

equity, as resolved at the Board of Directors’

meeting held on December 2, 2010

AES Eletropaulo’s net profit in 2010 was R$ 1.3 billion, surpassing the 2009 result by R$ 191.2 million


• Approved the proposal on supplementary

dividend payments related to the net profit

posted in the second half of 2010

The company’s 2010 dividend payment

base was increased by R$ 322.6 million as

a result of the adoption of IFRS.

In 2010, total dividends proposed by

the company’s management came to R$

1,469.1 million and interest on net equity,

to R$ 72.8 million. Together this means R$

8.69 for every common share and R$ 9.56

for every preferred share.

Total Debt

In compliance with Law No. 11,638,

the Company included leasing and rental

contracts in the total debt balance under the

heading Leasing. These agreements stepped

up the debt balance by R$ 16.3 million in

2009 and R$ 15.4 million in 2010. However,

for assessment purposes, these figures were

not considered in the total debt.

The company’s gross debt at the end of

2010 amounted to R$ 4.1 billion, up 4.5%

on the level reported in December 31,

2009 (R$ 3,940.2 million). The R$176.0

million rise in gross debt was due to two

debenture issues in April and May 2010,

in the sum of R$ 800 million, with these

issues being designed to amortize Real-

denominated bonds worth R$ 474 million

and to finance part of the company’s

investments in that year.

At the closing of 2010, cash equivalents

totaled R$ 1.7 billion, higher by R$ 415.2

million than in the same period of 2009, due

mainly to the aforementioned debenture

issues and the settlement of the sale of AES

EP Telecom in the second quarter of 2010

for R$ 265.4 million. Net debt was R$ 2.4

billion at December 31, 2010, down 8.9% on

the prior end-of-year figure (R$ 2.7 billion).

The growth in cash equivalents more than

compensated for the increase in gross debt.

The average cost of AES Eletropaulo’s

total debt dropped from CDI + 1.35% p.a.

at December 31, 2009 to CDI + 1.10% p.a.

at year’s end in 2010. This drop is due to

the settlement of Real-denominated bonds

on June 28, 2010, totaling R$ 474 million

at the cost of 19.13% p.a., which was

partially offset by a higher IGP-DI reported

in the period (-0.26% on December 31,

2009 and 0.69% on December 31, 2010).

The debt owed to Fundação CESP is

adjusted for inflation based on the IGP-DI

(General Price Index-Domestic Availability).

The average debt maturity period was

extended from 7 years on December 31,

2009 to 7.2 years on December 31, 2010.

Investments

AES Eletropaulo invested a total R$ 682.3

million in 2010, 32.3% more than the

amount invested the year before. The sum

of R$ 28.1 million out of the year’s total

investments referred to projects financed

by consumers and R$ 654.1 million were

for projects financed by the company itself.

In 2011, the company estimates that it will

be investing R$ 739.7 million, R$ 35.9 million

of which will be funded by customers.


Main Investments

System expansion and consumer

service: R$ 348.1 million, R$ 131.6 million

of which were allocated to meet the

needs of an additional 179 thousand new

consumers. The remaining R$ 216.6 million

were invested in the ongoing projects of

the Anhanguera–Casa Verde underground

Transmission Line and the Parque

Ibirapuera underground Distribution Line,

with a view to improving the quality of

energy supply, and services provided to

approximately 1.2 million inhabitants.

loss recovery: R$ 63.8 million were

invested to make 55.5 thousand connections

legally compliant and to correct 35.6

thousand irregularities identified as a result

of monitoring frauds and anomalies. In

addition, a total of 141.9 thousand obsolete

meters were replaced in 2010.

Maintenance: R$ 186.4 million were

invested in 3,265 km of network aimed at

upgrading subtransmission, automating

the power system, modernizing the

underground system and purchasing/

replacing field equipment.

INVESTMENTS (R$ MILLION) 2009 2010 CHANGE

Consumer service and system expansion 226.2 348.1 53.9%

Maintenance 120.7 186.4 54.4%

Loss recovery 76.1 63.8 -16.1%

Information technology 25.8 28.0 8.5%

Other 29.5 27.8 -5.5%

Total invested by company 478.3 654.1 36.8%

Total funded by customers 37.4 28.1 -24.7%

TOTAL 515.7 682.3 32.3%

AES Eletropaulo invested R$ 682.3 million in 2010 and the forecast for 2011 is R$ 739.7 million


Capital Market

AES Eletropaulo’s preferred class B (ELPL6) shares were merged

with its preferred class A (ELPL5) shares and started to be traded

under ticker ELPL4, all under the single name of preferred shares, as

approved by the Extraordinary General Meeting held on December

20, 2010. Thus, in addressing the company’s preferred shares, the

history of the ELPL6 ticker has been taken into account.

In 2010, AES Eletropaulo’s common shares (ELPL3) closed the

year at R$ 30.01, down 9.0%, whereas its preferred shares (ELPL4)

closed the year at R$ 32.11, down 6.8%. In this same period,

IBOVESPA registered an appreciation of 1.0% and IEE of 12.0%.

The company’s preferred shares (ELPL6) were traded at all of the

BM&FBovespa’s trading sessions in 2010. Liquidity data showed a

total 503,158 transactions, involving 179.3 million preferred shares,

with a reported daily average trading volume of R$ 24.5 million on

the spot market in 2010. Its common shares were traded in 34 of

the 247 sessions, in which 67 transactions were conducted involving

some 10.1 thousand common shares with a reported daily average

trading volume of R$ 1.7 thousand In December 31, 2010, the

company’s market value was estimated at R$ 5.2

ECONOMIC - FINANCIAL OVERVIEW GRI EC1 2008 2009 2010

GENERATION OF WEALTHR$

THOuSANDS% CHANGE %

R$ THOuSANDS

% CHANGE %R$

THOuSANDS% CHANGE %

Gross operating revenue from energy sales and services

12,388,837 - 5.23% 13,069,761 - 5.50% 14,764,807 - 12.97%

Energy supply 4,983,813 100% 7.06% 5,404,254 100% 8.44% 6,006,228 100.00% 11.14%

Residential 4,960,602 99.53% 2.02% 5,536,582 102.45% 11.61% 6,111,628 101.75% 10.39%

Residential - low income - 0.00% 0.00% - 0.00% 0.00% - 0.00% 0.00%

Commercial 3,356,622 67.35% -0.42% 3,639,110 67.34% 8.42% 3,940,951 65.61% 8.29%

Industrial 1,978,433 39.70% 1.54% 1,922,232 35.57% -2.84% 2,046,940 34.08% 6.49%

Rural 3,695 0.07% 3.41% 2,209 0.04% -40.22% 3,297 0.05% 49.25%

Lighting 151,645 3.04% -3.68% 163,694 3.03% 7.95% 171,307 2.85% 4.65%

Services 144,563 2.90% 1.72% 150,641 2.79% 4.20% 164,035 2.73% 8.89%

Public Authorities 341,865 6.86% -2.14% 366,193 6.78% 7.12% 399,153 6.65% 9.00%

Other (Amortization of RTE - Extraordinary Tariff Recomposition, unbilled, etc.)

160,401 3.22% -134.85% 74,477 1.38% -53.57% 71,532 1.19% -3.95%

Transfer to the distribution activity

(6,114,013) -122.68% 6.92% (6,450,884) -119.37% 5.51% (6,902,615) -114.92% 7.00%


ECONOMIC - FINANCIAL OVERVIEW GRI EC1 2008 2009 2010

GENERATION OF WEALTHR$

THOuSANDS% CHANGE %

R$ THOuSANDS

% CHANGE %R$

THOuSANDS% CHANGE %

Energy supply (short-term energy)

3,945 - -90.64% 30,019 - 660.94% 119,048 - 296.58%

Availability of the transmission and distribution system

6,676,315 - 6.07% 7,184,309 - 7.61% 7,674,591 - 6.82%

Other operating revenues 86,462 - -72.51% 122,416 - 41.58% 134,535 - 9.90%

(Provision) reversal for bad debt provision

(34,106) - 127.72% (261,337) - 666.25% 51,115 - 119.56%

Other revenues and (expenses)

131,323 - -245.14% - - - - - -

Remuneration of financial assets

- - - 58,930 - 0.00% 70,582 - 19.77%

Revenue for construction of own assets

541,085 - 24.44% 531,170 - -1.83% 708,708 - 33.42%

yEAR 2008 2009 2010

(-) INPuTS R$ thousands Change % R$ thousands Change % R$ thousands Change %

(-) INPuTS (inputs acquired from third parties: purchase of energy, materials, third party services, etc)

6,348,269 7.19% 6,514,384 2.62% 7,194,241 10.44%

Materials 37,194 21.15% 31,252 -15.98% 36,786 17.71%

Other operating costs 293,475 -55.13% (8,775) -102.99% (5,727) -34.74%

Cost of energy purchased and transmission

5,170,121 14.44% 5,628,849 8.87% 6,038,929 7.29%

Third party services 306,394 7.44% 331,888 8.32% 415,545 25.21%

Construction of own assets 541,085 24.44% 531,170 -1.83% 708,708 33.42%

Depreciation and amortization

369,096 11.69% 497,592 34.81% 499,725 0.43%

(=) Value added produced by the company, net

5,671,472 2.73% 6,057,785 6.81% 7,070,841 16.72%

(+) Value added received on transfer (financial revenues, equity in earnings/loss in subsidiaries)

403,998 41.47% 498,114 23.30% 274,469 -44.90%

Equity in earnings (losses) in subsidiaries

0 100.00% 0 0.00% 0 0.00%

Financial revenues/expenses 403,998 15.53% 498,114 23.30% 274,469 -44.90%

(=) Total value added to distribute

6,075,470 4.64% 6,555,899 7.91% 7,345,310 12.04%

Distribution of wealth - per stakeholder

R$ thousands Change % R$ thousands Change % R$ thousands Change %

Employees 427,339 7.03% 635,981 9.70% 566,207 7.71%

Government (taxes, fees and contributions and sector charges)

4,337,615 71.40% 4,525,508 69.03% 5,250,915 71.49%

Financing entities/third parties

211,667 3.48% 237,884 3.63% 180,500 2.46%

Shareholders/retained 1,098,849 18.09% 1,156,526 17.64% 1,347,688 18.35%

(=) Value added distributed 6,075,470 100.00% 6,555,899 100.00% 7,345,310 100.00%


DISTRIBuTION OF WEALTH - GOVERNMENT AND SECTOR CHARGES

2008 2009 2010

TAxES, FEES AND CONTRIBuTIONS

R$ THOuSANDS

%R$

THOuSANDS%

R$ THOuSANDS

%

Taxes, fees and contributions

ICMS (state VAT) 2,178,530 35.86% 2,493,505 38.03% 2,634,081 35.86%

PIS/PASEP (taxes on revenues)

107,988 1.78% 116,909 1.78% 128,931 1.76%

Cofins (tax on revenues) 495,808 8.16% 527,183 8.04% 593,868 8.08%

INSS (social security contribution)

46,643 0.77% 51,262 0.78% 65,844 0.90%

ISS (service tax) 800 0.01% 690 0.01% 690 0.01%

IPTu (municipal real estate tax)

16,835 0.28% 16,761 0.26% 18,306 0.25%

Social charges - other 11,181 0.18% 12,669 0.19% 15,077 0.21%

Other 2,660 0.04% 5,194 0.08% 6,393 0.09%

IRPJ (income tax), CSSL (social contribution tax) and CPMF (financial transactions tax) payable for the year

497,964 8.20% 391,619 5.97% 668,347 9.10%

Sector charges R$ thousands Change % R$ thousands Change % R$ thousands Change %

RGR (Global Reversal Reserve)

56,186 0.92% 63,580 0.97% 73,161 1.00%

CCC (Fuel Consumption Account)

465,697 7.67% 333,167 5.08% 487,761 6.64%

CDE (Energy Development Account)

343,097 5.65% 386,920 5.90% 399,021 5.43%

Consumer charges - Proinfa 14,118 0.23% 25,248 0.39% 41,709 0.57%

CFuRH (tax for use of hydric resources)

NA NA NA NA NA NA

TFSEE (Energy Service Inspection Fee)

20,923 0.34% 17,906 0.27% 19,252 0.26%

Law nº 12.111 - 0.00% - 0.00% 26,031 0.35%

ECE (Emergency Capacity Charge) + EAEE (Emergency Energy Purchase Charge)

358 0.01% 18 0.00% 7 0.00%

P&D (Research and Development, Energy Efficiency, FNDCT (National Fund for Scientific and Technologic Development) and EPE (Energetic Research)

78,827 1.30% 82,877 1.26% 72,436 0.99%

Other 0 0.00% 0 0.00% 0 0.00%

(=) Amount distributed (total) 6,075,470 100.00% 6,555,899 100.00% 7,345,310 100.00%

Sector default R$ thousands Change % R$ thousands Change % R$ thousands Change %

Energy purchased (describe) NA - NA - NA -

sector charges R$ thousands Change % R$ thousands Change % R$ thousands Change %

RGR NA - NA - NA -

CCC NA - NA - NA -

CDE NA - NA - NA -

CFuRH NA - NA - NA -

TFSEE NA - NA - NA -

ESS NA - NA - NA -

P&D NA - NA - NA -

Total (A) NA - NA - NA -

Default percentage NA - NA - NA -

Total default (A)/operating income, net

NA -- NA -- NA --


yEAR 2008 2009 2010

Investments R$ thousands Change % R$ thousands Change % R$ thousands Change %

Expansion of distribution / transmission (expansion, maintenance)

203,294 26.00% 226,239 11.00% 348,156 53.9%

Renovation of distribution/transmission

131,822 3.65% 187,329 42.00% 238,644 27.4%

Subtransmission 6,030 316.70% 9,463 156.93% 11,507 21.6%

IT and Operational Support 68,399 -7.93% 55,264 -19.20% 55,829 1.0%

Third Party Resources 47,125 -31.89% 37,380 -20.68% 28,144 -24.7%

Other indicators R$ thousands Change % R$ thousands Change % R$ thousands Change %

Gross operating revenue (R$) 11,750,535 3.93% 13,331,098 13.45% 14,713,692 10.37%

Deduction to Gross Revenue (R$ 000)

(4,220,675) 2.61% (4,545,461) 7.70% (5,016,535) 10.36%

Net operating revenue (R$ 000)

7,529,860 4.69% 8,785,637 16.68% 9,697,157 10.38%

Operating costs and expenses for services (R$ 000)

(6,262,570) 6.74% (7,507,903) 19.89% (7,784,125) 3.68%

unrecoverable revenues R$ 000)

104,941 6.49% 113,297 7.96% 123,127 8.68%

Income from service (R$ 000)

1,267,290 -4.40% 1,277,734 0.82% 1,913,032 49.72%

Financial (expenses) income (R$ 000)

129,387 -224.45% 270,411 108.99% 103,003 -61.91%

IRPJ/CSSL (R$ 000) (497,964) 17.95% (391,619) -21.36% (668,347) 70.66%

Earnings (loss), net (R$ 000) 1,027,109 44.13% 1,156,526 12.60% 1,347,688 16.53%

Interest on shareholders’ equity (R$ 000)

68,813 1.51% 70,799 2.89% 72,764 2.78%

Dividends (R$ 000) 974,162 50.51% 1,120,223 14.99% 1,469,139 31.15%

Operating costs and expenses per MWh sold (R$ 000)

(184,71) 2.69% (217,73) 17.87% (219,68) 0.90%

Wealth (value added, net) per employee (R$ 000)

1,370 5.21% 1,389 1.45% 1,249 -10.13%

Wealth (value added, net) per operating income/expenses (R$)

0.46 -2.37% 0.46 1.25% 0.48 3.32%

EBITDA or LAJIDA (R$ 000) 1,695,970 12.95% 1,775,326 4.68% 2,412,757 35.91%

EBITDA or LAJIDA margin (%)

22.5% 7.90% 20.2% -10.28% 24.9% 23.13%

Current liquidity (current assets/current liabilities)

1.1 -15.38% 1.1 0.00% 1.3 18.18%

General liquidity (current assets + long-term assets)/(current liabilities +long-term liabilities)

0.6 2.15% 0.7 11.51% 0.7 1.96%

Gross margin (net income /gross operating revenue) (%)

8.7% 38.68% 8.7% -0.75% 9.2% 5.58%

Net margin (net income/net operating revenue) (%)

13.6% 37.68% 13.2% -3.49% 13.9% 5.58%

Return on shareholders' equity (net income /shareholders' equity) (%)

31.1% 45.13% 31.1% -0.19% 36.1% 16.04%

Capital structure R$ thousands Change % R$ thousands Change % R$ thousands Change %

Own capital (R$ 000) 3,298,824 -0.69% 3,721,729 12.82% 3,737,357 0.42%

Onerous third party's capital (loans and financing) (R$ 000)

4,169,242 -3.32% 3,978,293 -4.58% 4,156,316 4.47%

Customers’ default (accounts overdue for more than 90 days/gross operating revenue for the past 12 months)

2.1 -4.55% 2.0 -4.76% 2.2 10.00%


Operating Performance

Record investment

Aiming to be among the distributors with the best consumer service indicators, AES Eletropaulo invested over R$ 682.3 million in improvements in supply.

TGRI Eu6

o be one of the companies

with the best consumer service

indicators: it was with this

target in mind that AES Eletropaulo

invested R$ 682.3 million (of which R$

28.1 million was in resources financed by

customers) in 2010, the largest amount

since the company was privatized in

1998. The goal is to provide greater

reliability to electric energy supply in

the growing market of metropolitan São

Paulo, reduce the number of outages,

recover losses and achieve better

technical-operational indicators.

The investments were applied in

preventive and corrective maintenance,

and technological improvements – such

as replacing batteries in 40 substations,

installing cameras for remote monitoring

of company facilities and the replacement

of metallic cabling with digital radio,

increasing the reliability of supervision

systems and system control. Investments

were also allocated to expansion and

increasing energy distribution capacity to

serve the growing market demand.

New connections amounting to 179

thousand units, together with increased

consumption due to the resumption of

economic growth, resulted in growth to

the system’s maximum demand. Requests

for increased carrying capacity and new

customer connections accounted for

R$132 million of the investment in 2010.

Recovery of the indicators

The DEC (System Average Interruption

Duration Index – SAIDI) operating

indicator, relating to the average number

of hours each customer is without

power during a given period, and the FEC

(System Average Interruption Frequency

Index – SAIFI) indicator, relating to the

number of times a customer is without

power over a given period, suffered at the

end of 2009 and the beginning of 2010

due to the abnormal rainfall during the

period. AES Eletropaulo invested R$ 50

million in recovering these energy supply

quality indicators.

One of the central points in this plan was

to increase tree-pruning operations, aimed

at reducing the number of power outages

resulting from tree trunks and branches

falling on the power lines. In total, 320

thousand trees were pruned in 2010

almost double the amount in 2009.

Despite investments and improvements in

the indicators compared to 2009, the DEC

indicator did not reach the target stipulated

for the year by the regulatory agency.

Electric system assets

In order to provide customers with

quality and safety, AES Eletropaulo has a

distribution and sub-transmission network

totaling 43,735 kilometers of overhead

and underground lines, around 1,530

circuits and 1.1 million poles installed.

Since 1998, over R$4.8 billion has been

invested in network modernization,

expansion and maintenance, R$682.3

million in 2010 alone.

To maintain the reliability of the

distribution system and the quality of the

electric energy supply, AES Eletropaulo

continuously monitors its concession area

with 140 operators in its operating centers.

They track the lineman’s work in the field in

real time, especially during rain, storms and

other events that could cause power outages.

Speed in service is also ensured with

service personnel using motorbikes, able

to travel more easily through traffic,

making sure the site is safe and gathering

information for the operations center to

guide its teams in the field.

This year, the company also replaced

its remote terminal facilities at 20% of

its substations, increasing the quality

and quantity of information sent to AES

Eletropaulo Distribution Operations Center

(COD).

INDICATOR (By CONSuMER uNIT) GRI Eu28; Eu29

2008 2009 2010

DEC (Average Power Outage Duration per Consumer

unit) – score attained

9.20 11.86 10.60

DEC (Average Power Outage Duration per Consumer unit) – limit

10.92 10.09 9.32

FEC (Average Power Outage Frequency per Consumer unit) – score attained

5.20 6.17 5.42

FEC (Average Power Outage Frequency per Consumer unit) – limit

8.41 7.87 7.39

DEC – (SAIDI) System Average Interruption Duration IndexFEC – (SAIFI) System Average Interruption Frequency Index


operatInG perForManCe

TyPE GRI EN1yEAR

2008 2009 2010

Meters (m)

Electric conductors – copper 2,188,807 3,077,206 2,012,731

Electric Conductors – aluminum 4,495,627 5,227,564 5,753,286

Steel strand 261,000 488,756 293,915

Total (m) 6,945,434 8,793,527 8,059,932

Units

Electricity meters 328,407 491,415 512,879

Overhead and underground distribution transformers 2,944 2,307 2,576

Concrete poles 13,301 15,577 15,396

Wooden poles 720 280 160

Iron poles 14,505 18,535 16,885

Wooden cross-arms 43,240 21,540 18,120

Lightning rods 30,462 25,074 30,416

Voltage and current transformers 16,791 21,291 23,125

Total (units) 450,370 596,019 619,557

Main Materials Used GRI EN1


Expansion and improvement in sub-

transmission GRI EC8

In 2010, AES Eletropaulo invested in

a series of programs to maintain and

expand its sub-transmission systems,

aimed at increasing reliability in the

company’s energy distribution. R$ 217

million was invested in work expanding

the electric grid, resulting in the expansion

of nine substations and increased installed

capacity in the system to 13,361 MVA, an

increase of 2% over 2009.

In 2010, AES Eletropaulo installed a

complex underground transmission

line, the LTS Anhanguera (exit of the

Anhanguera terminal and connection to

the Anhanguera Transition Station (ETR)

Anhanguera). To mitigate environmental

impact, a structure of underground

cables was developed, passing beneath

the Anhanguera and Bandeirantes

highways, with a transmission load of

300 MVA and extending for 4.5 km, the

only one with this length in Brazil.

Communication between substations

To enhance communications with

substations and improve repair,

maintenance and inspection processes,

AES Eletropaulo is replacing its current

metallic network communication data

transmission technology with modern

systems that include 11 AES Atimus

links, which complement the fiber

optic and digital radio systems, thus,

increasing communication availability,

which will cover 99% of the system in

2011, the year in which the program is

expected to be completed.

More stable and with a wider

bandwidth, the new installations

enable broadband data traffic,

images via digital security cameras

(CFTV) and VoIP, expanding remote

monitoring and intervention in the

facilities.

Environmental improvements

During the year, the company also

continued with its plan to upgrade

substations, installing 10 oil-collection

sumps to mitigate potential environmental

and fire-risk problems.

An inspection is in progress to check

the generation and effect of noise in

150 substations. At the end of 2010, 46

substations had been inspected. In 2011,

locations requiring the construction of

sound insulation walls to minimize noise

impact will be mapped.

R$ 217 million was invested in the expansion of power grid and in the increase of installed capacity to 13,361 MVA


Operation Summer

Since most of the AES Eletropaulo electric

system is above ground, the network

is greatly impacted by meteorological

phenomena such as storms, high winds,

atmospheric discharges and sudden

changes in temperature. During summer,

the season with the highest rainfall, there

is a considerable increase in the number

of occurrences, which can reach one

thousand in a single day.

The company puts its Operation Summer

into action during this period, covering

the last two months of the year and the

first three months of the following year. In

this period the number of distribution and

sub-transmission linemen is increased by

40%, 48 service personnel on motorbikes

operate in the streets and staff at call-

centers are increased by up to 40%, mainly

for emergencies.

One of the biggest challenges in

continuous supply at this time of year

is broken branches falling on the power

lines. To minimize this, AES Eletropaulo

expanded its tree-pruning program. Based

on compliance with current environmental

legislation, the program is approved by

EQuIPMENT INSTALLED/RENOVATED QuANTITy FuNCTION

Replacement of substation batteries 40 Ensure quality of feed to station supervision systems

Replacement of high-voltage sectioning switches 29upgrade sectioning device used to switch on/off, isolate and protect equipment

Replacement of high-voltage circuit breakers 5 Increase system safety

Replacement of gas relays 80 Increase substation reliability protection

Automatic re-connectors 560 Improve network protection and avoid disconnections

Replacement of Remote Terminal units 24 Improve availability and quality of information for the Operations Center

Computerization of ETDs (Station Distribution Transformers) 5Render information received remotely more accurate and increase the possibility of remote control

Installation of CCTV system (closed-circuit TV) in ETDs 9 Improve monitoring of operating facilities

Automatic switches 80 Speed up power grid operations

all 24 City Halls in its concession area. In

2008, 177 thousand trees were pruned,

in 2009, 145 thousand and in 2010, 320

thousand. This year, 240 thousand trees

are programmed to be pruned.

For the summer of 2011, the company

contracted 212 teams for emergency

work. It also expanded the use of teams

for this work: on normal summer days, up

to 536 teams are deployed to attend to

power outage complaints. On critical days,

the company can use up to 757 teams to

reduce outage times.


PLM Project

The planned implementation of the

Product Lifecycle Management program

(PLM) was postponed until the fall of 2011,

as the program’s structure had to be re-

formulated to comply with the standards

set by the new Electric Sector Assets

Control Manual (MCPSE).

The PLM’s goal is to innovate, integrate

and undertake the management of assets

in technical-operating processes aimed at

the expansion and maintenance of electric

system assets. It aims to reformulate

technical-operating processes, replacing

the various systems and current tools with

solutions allowing asset management in

a synchronized manner, integrated with

other existing corporate systems, such as

the ERP (Integrated Business Management

System) and the GIS (Geo-referenced

Information System).

By the end of 2010, R$11.5 million had

been invested.

Geo-referenced Information Systems

In 2010, AES Eletropaulo expanded the functions of its

Geo-referenced Information System (GIS). Aiming to improve

the management of its assets, the company concluded a

certification quality project of the registry begun in 2009,

based on a field survey of all electric assets in its database,

in compliance with a decision by the Brazilian electric energy

agency, Aneel. With this information, the company database

will be continuously updated, speeding up processes such as

identification of the customer’s supply area and even which

power outlet is being used.

The GIS also supplies auxiliary information for operational

analysis, feasibility studies for new operations, new sources and

new customer connection studies, and studies on environmental

impacts resulting from the construction or reconstruction of

new distribution lines.

*� Georeferencing is a type of image cataloging or a map of a specific system of reference based on its coordinates or control points, location that offer identifiable physical characteristics, such as highway, crossroads, rivers, lakes, airport runaways, prominent structures, mountain peaks, among others. Such coordinates can be obtained in the field or by means of image digitalization or maps already digitalized.

For the summer of 2011, 212 teams were contracted to deal with any eventual power outages.


Commercial Performance

The expanding market

“Continuous Improvements in Service” is the guideline at AES Eletropaulo for maintaining service quality in its concession area.

In 2010, the total market consumption in

the AES concession area, which includes

the consumption of both captive* and

non-captive customers, totaled 43,345

GWh, an increase of 5% over 2009 (41,269

GWh). For the captive market, 35,434 GWh

were distributed, up 2.9%. In the residential

and for the commercial categories, growth

was 3.5% and 3.1% respectively, while

industrial customers accounted for an

increase of 1.7%.

In 2010, 7,911 GWh was distributed to

free customers*, an increase of 15.8%

in comparison to the previous year. AES

Eletropaulo, being an energy distribution

company, does not sell energy in GWh on

the free market but only charges for the

use of the lines (TuSD - Tariff for the use

of the Electric Distribution System)

Compared to 2009, the performance of

the entire AES Eletropaulo market was

less that that presented by the domestic

market (Brazil) and by the Southeastern

region, due mainly to the share of each

consumer class

As in the other regions of the country,

the consumption of electric energy by

the industrial class negatively impacted

the AES Eletropaulo market in 2009.

The industrial class for most distributers

represents about 45% of the total market,

so any variation in this class would have

a greater impact on the national market

compared to the AES Eletropaulo market,

with an industrial class participation of

only 27%. This is why the distributors

*�Captive customer: a consumer who acquires electric energy from a concessionary utility or licenale whose network is connected in accordance with regulated tariffs

* Free customer: a consumer who chooses an electric

energy supplier (generator or trader) through free

bargaining according paragraph 5 art 26 of

Law nº 9.427, of 26/12/1996

whose share of industrial customers is

higher than that of AES Eletropaulo had

their consumption reduced even more in

2009 (the period when the industrial class

was negatively impacted by the global

financial crisis) and, as a consequence were

the ones with the greater growth in 2010

with the recovery of the economy.

The graphs below illustrate both the

market share by consumption class, and

the growth of the total electric energy

market in the country, the Southeastern

region, The State of São Paulo and AES

Eletropaulo.


CoMMerCIal perForManCe

Residential

3.5%

1.7%

3.1%

1.2%

2.9%

15.8%

5%

15,01415,546

6,032 6,137

Industrial Captive Market

Commercial Non-CaptiveMarket

Public Authoroties and

Others

Total Market

2009

2010

Comparison of Consumption (GWH)

10,75211,081

1,148 1,200

34,43635,434

6,832 7,911

41,26943,345

Purchase of energy

AES Eletropaulo buys electric energy to

serve its captive consumers in accordance

with the Brazilian electric sector model

instituted in 2004, which only allows the

purchase of energy through energy on

the regulated market, auctions organized

by the government and the Câmara de

Comercialização de Energia Elétrica –

CCEE (Electric Power Commercialization

Chamber), authorized by Aneel.

Transforming consumers into customers GRI SO1

Since 2004, AES Eletropaulo has operated the Transformation of

Consumers into Customers program, which aims to improve the

conditions of power supply in low-income communities through

the regularization of electric connections and the donation of

more efficient appliances.

up until 2010, the company had regularized 411,039 connections,

benefiting 1.64 million people in 991 of the 2.2 thousand low-

income communities in its concession area. A further 80 thousand

connections are expected to be regularized by 2012.

In addition to this initiative, which functions as a tool for social

inclusion, the program has already substituted 18,226 refrigerators

in a poor state of conservation for refrigerators with the Procel seal,

880,000 incandescent light bulbs for compact fluorescent ones and

installed 3,101 lighting points in alleys. Residences also benefited

from 1,709 internal electrical renovations, with the installation of

new switches, sockets, circuit breakers, fuse boxes and shower heads.

In 2010 alone, 55,473 connections were regularized, benefiting

221,892 people. The average investment per customer was

R$327.55 and involved the construction and renovation of the

distribution network.

2008 2009 2010

4.435.09 5.32

6.49 6.496.49

Commercial losses

Technical losses

Losses

Brazil

7.8%8.4%

5.9%5.0%

-1.0% -2.4% -0.7% -0.1%

Southeast São Paulo State AES Eletropaulo

2009/2008

2010/2009

Total Evolution of the Market

2009 2010 GROWTH

AES Eletropaulo 41,269 GWh 43,345 GWh 5.0%

Brazil 388,688 GWh 419,016 GWh 7.8%

São Paulo State 118,061 GWh 125,029 GWh 5.9%

Comparison between the Brazilian and São Paulo markets


Losses

Losses in the distribution network

represent the difference between the

energy required in the year (49,185

GWh) and the energy effectively sold

to customers in the same period. These

losses are calculated based on the “Criteria

of Physical Losses”, not taking into account

energy billed in terms of fraud recovery.

Based on this methodology, the losses

in 2010 were 10.92% (5,373.5 GWh),

divided into technical (6.49%) and

commercial losses (4.43%). Technical

losses refer to losses in the distribution

system, and commercial losses, which

are caused mainly by improper actions

by consumers on the distribution grid,

and equipment failure. The failures

are caused by: end of useful life, which

provokes errors in calibration; external

factors; such as atmospheric discharges

and flooding; the application of a

higher load than that informed by the

customer at the time of connection;

modification of the equipment by

the customer and, to a lesser degree,

fabrication defects of the equipment.

In 2010, AES Eletropaulo carried out

286,500 inspections in the fight against

fraud and anomalies, from which 40,800

irregularities were found in the metering.

Also regularized were 55,500 informal

connections (read more on page 53).

Consumption in Brazil

Consumption of electricity in

Brazil totaled 419,016 GWh in 2010,

representing an increase of 7.8% over

2009, according to figures released by

energy research company EPE.

Industrial consumption grew 10.6% over

the previous year, growth that was more

accentuated in the country’s Southeastern

region, which posted an increase of 12.1%.

In São Paulo, industrial consumption in

the state was up 7.6% compared to the

previous year.

Residential consumption grew by 6.3%

over 2009. The result reflects the increase

in the number of consumers and also

in average consumption per residence.

In 2010, 2.06 million consumer units

were incorporated into the electric grid,

a monthly average of 172 thousand

connections.

Commercial consumption posted growth

of 5.9% over the previous year. This was

due to increased income and greater

credit availability offered to stimulate

commerce and the services sector,

especially in the North and Northeast.

Other Customers

Commercial

Industrial

Residential

Brazil

44 46 44 27

36272526

16

14 12 11 917 18 28

Southeast São Paulo State AESEletropaulo

Total 2010 market share by consumer class – %


Employees

An all-roundteam

Our employees are fundamental to the development of our continual improvement policy focused on ensuring service quality and customer satisfaction.

aGRI LA12

ES Eletropaulo’s challenge

in 2010 was to continue

integrating and developing

the AES Brasil Group culture among all

the employees. The focus is to make the

employee feel fulfilled in his work and

aware that this work brings benefits to the

population at large.

In the vision of the AES Brasil Group, a

good working environment is that which

encourages mutual respect and team

work and has a diversity of experience and

opinions. In this manner, the employee

develops together with other people,

integrating cultures, sharing knowledge

and working creatively.

The values of AES are multiplied by

means of management instruments such

as the Siga Livre (Moving Forward) –

Professional Growth Program, promoting

organization of the positions and careers

plan, and Performance Administration,

involving leadership and the employees

themselves in the analysis of the

performance of subordinates and peers.

With the use of both, the enhancement

of the employee’s profile has become more

evident. Those employees who attain the

expectations of alignment and commitment

with the common goal of the company –

expressed in the management contracts,

individual targets and collective targets

– are rewarded. Those employees whose

performance does not match expectations

assume a formal recovery commitment

with a development plan, clearly and

transparently setting out which points

need to be developed by the employee.

This evaluation is even used with executive

positions.

The company’s Strategic Map is

disseminated among all employees

through the Energy that Transforms

program – learning map, which encourages

dialog and the understanding of the

company’s main strategic points..

For AES Brasil, a good working environment is that which encourages mutual respect, team work and has a diversityof experience and opinions.

Pé na estrada (On the road)

Is a direct dialog between AES Brasil’s

top administration and employees,

presenting the yearly results from the

previous year, the company strategy,

the investment plan and the targets for

the year, in addition to responding to

questions from employees in an open

microphone session.

In its third year, 224 people were also

selected from all areas, distributed in

18 groups, to represent AES Eletropaulo

at the round tables held before the

event.

utilizing the APEx – AES Performance

Excellence Methodology, the

suggestions made by employees were

analyzed, classified and resulted in 159

action plans.

The implementation of these actions,

considered as pertinent and high

priority, was monitored to ensure

the improvement of any issues that

could interfere in the organizational

environment and the operating

performance. Of this total, 154 plans

were concluded in 2010 and five held

over until 2011..


Employee profile GRI LA1

AES Eletropaulo ended the year with

5,663 company employees, an increase of

30% over 2009 as a result of transferring

the activity of meter reading and bill

delivery in-house. With an average age

of 35.65, the majority of the employees

(88%) have completed high school and

have been with the company for at least

10 years.

POSITION By CATEGORy 2010

Company officers 27

Managers 91

Administrative 2,444

Operational 3,095

TyPE OF CONTRACT 2010

Interns 68

Apprentices 91

Trainees 20

CLT 5,657

Internalization of meter readers

Since August the AES Eletropaulo

workforce has gained a further

1,084 employees: meter readers and

electricity bill delivery personnel

who were previously outsourced and

who have been contracted with the

aim of providing a higher quality bill

delivery service.

The advantage of this internalization

process is having employees working

in closer synergy with AES Brasil

Values and with an even higher level

of commitment.

In addition to improving the processes

of meter reading and bill delivery,

the internalization allowed the

training of all employees in using new

technology, such as photographic

registry for reducing errors in reading

and other impediments; transmission

of data collected from the reading via

Bluetooth and radio-frequency; use of

GPS for setting reading routes.

To further improve the quality of the bill delivery service, AES Eletropaulo has hired 1,084 formerly outsourced meter readers


Diversity GRI LA13; LA14

AES Eletropaulo has adopted inclusion

policies in support of ethnic, age, gender

and social equality in its workforce,

through the performance of its Human

Resources department and upper

management, right from the hiring process.

In its work force, 19.83% of employees

are women. At the director level, the

proportion is 23.07% and at the vice-

presidential level, 40%.

Age groupsNote: Only direct company employees

2010

1,740

2,273

1,319

331

Employees up to 30Employees aged 31 to 40Employees aged 41 to 50Employees over 50

2010

Other indicatorsNote: Only direct company employees

Number of women in managerial positionsNumber of African-Brazilian female employeesNumber of African-Brazilian male employees

29122

994

91.31%108.94%

90.06%109.58%

140.79% 145.11%

2010

Company officersManagersLeadership/Coordination

Technical/SupervisionAdministrativeOperational

Ratio of average salary between men and women

2010

1,123

4,540

Diversity in the work force GenderNote: Only direct company employees

WomenMen


Inclusion GRI LA13

AES Eletropaulo also runs the program,

Employing People with Disabilities, which

at its initial stages raises awareness among

the work force and prepares them to

welcome future employees, maps suitable

work activities and workplaces and then

the program chooses a disabled person.

The company contracts technical schools

to train them, which prepares them

for AES Eletropaulo’s selective process.

Management is encouraged to support the

inclusion of the disabled.

AES Eletropaulo maintains qualification

courses for the disabled at Senai (the

National Association of Industries) and

the Instituto Edison. The aim is to provide

training in preparation for the labor market

and internal opportunities.

At Senai, the courses offered are for

quality control analyst, administrative

assistant, supplies assistant and production

programmer, with the main focus being on

training qualified administrative assistants,

able to compete for the best positions on

the market.

The Instituto Edison offers a full electro-

technician’s course, in which subjects

such as electronics, technical design,

standardization and safety procedures,

electro-technical business management,

etc. are taught.

Internal survey on organizational climate

The AES Group, with the help of an outsourced specialized firm,

has conducted annual surveys on organizational climate, taking

into account six areas for analysis: competence, leadership,

communication and affiliation to company, safety and the code

of conduct.

In 2010, the general satisfaction index at the AES Group was

82% and at AES Eletropaulo, 79%.

Number of disabled employees

2009 20102008

59 60 62


Attraction and retention of talent

It is an AES Brasil Group policy to

prioritize opportunities for vacancies

through the Internal Recruitment and

Selection Program, through which

vacancies are made available to all

employees from every region.

The goal is to show the requirements

and competencies needed for vacancies

transparently so that employees can

see whether they are qualified to fill

them, or prepare a career plan to fill

them in the future. These vacancies are

posted to all employees through internal

communication tools (intranet, mural

and bulletins) and in this way everyone

has the opportunity for development and

professional growth.

The Recruitment and Selection Program

is currently in its third year. In 2010, 317

places were offered and 1,318 candidates

from the whole Group applied.

When vacancies are not filled internally,

the process is opened up to external

selection, coordinated by the Human

Resources department with the active

participation of the leadership in the

vacancy’s area.

The recruitment and selection process

for interns at the technical and superior

levels is carried out in partnership with

a specialized consultancy to guarantee

quality in the selection process. For

places in the young apprentice and young

citizen programs, NGOs and schools are

contracted to manage the recruiting and

apprenticeship process. Both the young

apprentice and the young citizens programs

have proved effective in inserting young

people into the labor market. Proof of this

lies in the fact that, in 2010, the company

hired seven employees who had taken part

in these programs.

AES Brasil Group has also been running

its Trainees Program since 2010, the

aim of which is to prepare successors

for future key positions and at the same

time give these trainees the opportunity

for personal and professional

development. In the first class there

were 14,382 applications for 20 places

available in the various sectors of Grupo

AES Brasil. In the second class, also in

2010, there were 3,246 candidates for

nine engineering posts.

The program takes two years, split into

four semesters. At each stage, the trainee

learns about a specific company area and

hands in a project that will part of his

performance evaluation. To complement

the training, Grupo AES companies also

provide technical and behavioral training.

In addition, the AES management acts

as mentor for these trainees, helping

them on questions about their careers.

At the end of the program, trainees with

satisfactory evaluations are promoted to

senior positions.


Employee turnover GRI LA2

Total employee turnover was 6.02%

in 2010. During the period 1,644 were

admitted and 341 left, of which 253

were men and 88 women. Of this rate,

1.97% was voluntary turnover, the target

for which at Group companies is 5%

maximum.

TOTAL LEAVING (By GENDER) 2010

Male 253 (74.19%)

Female 88 (25.81%)

Number leaving by age group

under 30 120 (35.19%)

Between 30 and 50 193 (56.60%)

Over 50 28 (8.21%)

Number leaving by region*

South-eastern region 341 (100%)

Management of employability and retirement GRI LA11

AES Eletropaulo runs a succession plan

to identify employees with the potential

to assume management and executive

positions in the short (12 to 18 months)

and long (18 to 24 months) terms.

These evaluations have been carried

out since 2009, at the managerial level.

The recommendations are made by

their immediate superiors and, after

detailed analysis at an executive officers’

meeting, undergo a vetting process.

In 2010, a Retirement Incentive

Program was set up for employees

about to retire, with social and financial

benefits. At the end of the year, 700

employees were facing retirement

within the next five to ten years.


Professionaldevelopment GRI LA11; Eu14

AES Eletropaulo offers opportunities for its

employees to grow professionally, following

the Siga Livre program.

In addition to aiming to guarantee

conditions that make each employee feel

fulfilled, useful and motivated in the working

environment, the company also concerns

itself with quality of life in the employees’

personal life and offers social and cultural

activities – many extended to family

members. The company also runs continuous

education programs, internal recruitment,

and invests in the permanent upgrading of

its work force.

Siga livre (Free ahead)

Since 2009, employees have been

operating within new positions, careers

and recognition plans established by the

Siga Livre – Professional Growth Program,

with definitions of hierarchy, attributes,

knowledge, training and experience

needed to exercise the functions of each

position. In this way employees have

parameters to visualize the competencies,

skills and knowledge necessary for their

professional growth.

The program is also the basis for

defining the framework for salary levels

and promotion raises, as well as providing

the internal recruitment and selection

program with support for the succession,

training and development plan and

allocation of resources.

Since its implementation, 3,986

alterations have been made at AES

Eletropaulo, with 347 position adjustments

and 3,013 merits (salary alteration without

changes in position) and 626 promotions

(alteration to a higher position).

Performance management GRI LA12

The performance evaluation model

used at AES Brasil involves 100% of its

employees and is carried out integrally by

all companies. This allows employees and

leaders from different Group companies to

evaluate each other.

The performance evaluation process

PROFESSIONAL DEVELOPMENT 2008 2009 2010

Education level - describe the percentage in relation to the total employees % % %

Elementary school (%) 9.85 10.96 11.50

Secondary school (%) 47.56 53.58 59.53

High school (%) 37.89 30.39 24.64

Post-graduated (especialization, master degree, doctorate) (%) 4.70 5.07 4.33

Amount invested in professional development and education (%) 1.47 1.31 1.09

Number of professional development hours per employee/year 136 118 161

AES Eletropaulo guarantees its staff the conditions to feel fulfilled, useful and motivated within the working environment


involves self-evaluation, analysis by peers

and subordinates (in the case of leaders) and

evaluation by the manager, supported by the

analysis and comments of others involved.

The evaluation model is structured on

eight competencies for non-executives:

technical and functional; guidelines for

results; problem solving; team work;

initiative; relations; safety; commitment to

the company and to the practice of AES

Brasil Group Values.

For those in executive positions, other

competencies inherent to the exercise

of leadership are added, related to

business vision, global thinking and people

management.

The general results of the evaluations are

also discussed, equalized and validated by

committees and also have the purpose of

identifying talents and validating successors

for the company’s key-positions and giving

support to individual development plans.

Recognition program GRI LA12

Structured in 2009, the recognition

program is an incentive for employees

that have stood out for their excellence on

the job. Since its launch, the program has

promoted the recognition of 556 people at

AES Eletropaulo, with 306 of them in 2010.

The program considers three types of

recognition:

Dynamic recognition:

rewards on a monthly basis, specific

employee actions that have had an impact

on the company and have generated results

beyond those expected for the position/team.

Each officer can recommend each month,

an employee or group of employees from

his area deserving of recognition. In 2010,

215 employees at AES Eletropaulo were

recognized, including individuals and teams.

Management recognition:

each quarter, leaders are rewarded for

achievements that surpass expectations

and that demonstrate their leadership

competencies and the AES Group Values. In

2010, 14 executives were recognized.

recognition for aeS values: recognizes

employees who are models in their

working areas and demonstrate the AES

Values (Safety, Commitment, Integrity,

Excellence and Fulfillment at Work). In

2010, the awards were presented by the

CEO to 77 AES Eletropaulo employees

during the Pé na Estrada event.

Training and qualification

GRI LA8; LA10; LA11

In 2010, to maintain its personnel updated

and working safely, AES Eletropaulo invested

an average of 161 hours of training per

employee, 40% more than the training given

the previous year. Among the main issues

debated were ethics and compliance, health

and safety and leadership development.

AES Eletropaulo divides its training and

qualification programs into four categories:

• leadership Development: prepares

leaders to respond quickly to the

organization’s challenges, to manage their

employees in reaching their targets and

publicize the company’s culture and Values.

TRAINING SESSIONS 2008 2009 2010

Man-hours of training 591,929 502,446 695,400

Average per employee 137 hours 118 hours 161 hours

Participations in courses, talks, seminars and training sessions

80.1 thousand 71 thousand 82 thousand


In addition to regular programs, AES Corp.

maintains a partnership with the Darden

School of Business at the university of

Virginia (uSA), a renowned international

business management institution, with the

goal of training leaders with an emphasis

on corporate vision and global thinking,

AES business management, finance and

strategy. The programs are given on an

immersion basis and last two weeks. In

LEADERSHIP TRAINING 2010

Number of participants 677

Man-hour training 11,308

Average hours per employee 16

COuRSES, SEMINARS AND WORKSHOPS 2010

Number of participants 116

Man-hours of training 2,573

Average hours per employee 22

2010, two AES Eletropaulo company

officers took part in the program.

• Study Grants for Continued education

programs and languages: AES

Eletropaulo offers subsidized study grants

for postgraduate, Master’s and Doctorate

courses when the content is in accordance

with the organization’s strategy.

In addition to the formal program, a

partnership has operated since 2009 for

PROGRAM GOAL PARTICIPANTS IN 2010

Leader Development Program

Develops competencies in managers and coordinators that are considered essential for the management of the Group’s personnel. Customized by AES Brasil from AES leadership competencies, and given by consultants over the last five years.

32 leaders trained (managers and coordinators)

Executive Program for Company officers

Given by the Dom Cabral Foundation in two immersion modules over three days. The first module was taught in August 2010 with the aim of dealing with and upgrading knowledge of AES Brasil’s strategic vision and developing competencies in planning and execution. The next module is to be given in April 2011 and will have as its focus personnel management and innovation.

22 AES Eletropaulo employees

Development Program for Leadership Competencies - Coordinators

Aims to qualify AES Brasil coordinators, to upgrade practical and conceptual knowledge and to supply tools to broaden the vision of the impact of their performance. Two-day modules for each competence: Leadership, Communication, Change Management, Conflict Management and Negotiation.

602 AES Eletropaulo employees

Leadership development programs GRI LA11


offering reduced fees at the Escola Superior

de Propaganda e Marketing - ESPM and with

the Fundação Instituto de Administração

- FIA/uSP, offering employees and their

families the opportunity to study for an

MBA in Business Management, Finances

and Energy Management at a cost well

below the market price. In 2010, 316

students took part in this partnership - in

wich there isn’t financial support by AES

Eletropaulo.

The company also runs a study grant

program for undergraduate and technical

courses aimed at helping employees in

their professional growth. It also subsidizes

language courses for employees in positions

that require proficiency in another language.

• Seminars and Workshops: AES

Eletropaulo sponsors employees’

participation in external seminars and

workshops, in addition to promoting

internal seminars, talks and workshops in-

class and IT courses, grammar reviews and

self-development via e-learning.

technical-operational training: for

the operational levels, there are three

groups of training: the first aims to comply

with specific legislation regulating the

electric power sector and accounts for

35% of the annual amount of technical-

operational training; the second is

aimed at offering basic, minimal and

obligatory training for employees in the

operational, administrative, technical

and commercial areas (approximately

400 courses accounting for 50% of total

technical training); the third concerns

specialization in management and

processes control functions, principles of

PROGRAM GOAL GRANTEES IN 2010

Study grants for postgraduate studies (MBA, Master’s and Doctorate)1

updating of knowledge and upgrading of functional competencies for employees who perform well, preparing them to take on greater challenges and increasing their potential for retention by the organization.

50

LanguagesTeaching of language courses for employees whose positions require proficiency in a foreign language.

30

Study grants for undergraduate and technical courses

Monthly grant to subsidize employees wishing to take part in courses compatible with business strategy.

50

1. It counts with financial support by AES Eletropaulo.

Programs for Continued Education and Languages GRI LA11

At AES Eletropaulo, the performance evaluation model involves 100% of its employees


basic people management and integration

activities. At this level, specific training

was given for regulatory standards NR-

10, NR 33 and to the emergency brigade

and in the procedures of the company’s

Sistema de Gestão de Saúde e Segurança

do Trabalho – Occupational Health and

Safety Management System (SGSST) to all

company newcomers.

PROGRAM GOAL PARTICIPATIONS IN 2010

Internal Knowledge Management

Provide suitable and updated theoretical content by offering programs of training/instruction through corporate events, talks and workshops, directed mainly to the administrative area with the more relevant topics involving their work, both at the basic “day-to-day” management level and as well as more complex subjects aimed at supporting increased intellectual capacity at the company.

3,453

Education/training

Project for operational

employees for the

labor market

Train workers for activities as assistants/linemen in the AES Eletropaulo Electric Power System and in contracted companies through the “Electricians Pool project” consisting of identifying professionals on the market and training them for work in the overhead power lines.

1,500

Technical training Qualify employees, in compliance with legal requirements, supplying basic compulsory training, so they can work in the electric power system and in commercial and customer service positions.

77 thousand

electricians pool

The Electricians Pool is an AES Eletropaulo

initiative in partnership with Senai. The

project is aimed at providing the community

with training opportunities, expanding

opportunities for hiring professionals and

ensuring that the labor force is qualified. The

candidates, chosen after a rigorous selection,

can work in various company areas, such as

emergency, underground, sub-transmission

and loss recovery work.

Technical-operational training programs GRI LA11


Our Way, Our Attitude

The launch of the new brand of AES

Brasil, in 2009, went beyond a mere

change in the logo: it represented

a cultural transformation aimed

at strengthening the integration

of Group companies. To align the

behavior of company workers with the

essence and pillars of this new culture,

training was begun in Our Way, Our

Attitude in May, aimed at all AES

Brasil employees.

With the slogan “you too are part of

this team”, the behavioral training

encourages employees to reflect

on how they can contribute to this

stage of the Group companies’

transformation, as well as

disseminating knowledge on the brand

among all the organization’s teams.

The work is being developed in

stages: from April to November 2010,

training was carried out in the energy

distributors; in 2011, it will be the

turn of employees at the generation

and telecommunications companies.

The final result of this training will be

the AES Brasil Behavior Manual, put

together from employees’ opinions.

Occupational Health andQuality of Life GRI LA8

AES Eletropaulo’s Sistema de Gestão

de Segurança e Saúde Ocupacional

- Occupational Health and Safety

Management System (SGSSO) is based on

the OHSAS 18001 and on BBS – Behavior

Based on Safety. The company seeks to

identify danger and risk factors related

to occupational health and implements

control measures related to health, safety

and ergonomics.

The company also runs its quality of life

program, Viva Bem Viva Mais – Live Well,

Live Longer, aimed at reducing daily stress

and promoting physical and mental health,

contributing to employees’ professional

and personal development. The program is

divided along three lines:

Viva o Corpo - Long Live the Body

Actions contributing to improved health

for employees:

Respire Saúde: Respiratory Health:

aimed at combating smoking, this

program is open not only AES Brasil

employees, but also their families. In 2010,

63 people took part in the program at AES

Eletropaulo, which offers informative and

motivational talks, weekly psychological

support group sessions and medication

when necessary. Family members receive

a discount on the purchase of medication

and distance psychological help. In 2010,

the success rate of the Respiratory Health

program at AES Brasil, in its second year,

was 94% (participants who actually gave

up smoking).

Alimente-se Bem: Eating Well: aimed at

re-educating employees on eating habits

and helping them to adopt a healthier

routine, this program holds monthly

educational talks and personalized

fortnightly sessions, as well as physical

evaluations and assessments on diet,

nutrition and body composition, with

the aim of losing weight and improving

general health. In 2010, the program

registered 546 people at AES Brasil, with

351 at AES Eletropaulo. In this group,

weight loss amounted to a total 437.4 kg

(at AES Eletropaulo 193.4 kg) at the end

of the meetings.

Viva a Mente – Long Live the Mind

Aimed at reducing stress and sedentary

lifestyles through the following activitiess:

Caminhada e corrida de rua: Walking

and jogging in the street: encourages the

practice of sport through a natural activity

- effective at preventing the most varied

health problems and at combating stress.

At AES Brasil there are 24 training points

available. In 2010, 380 employees and

family members registered and took part

in the program, of which 268 were from

AES Eletropaulo.

Agita julho: Agitate July: taking

advantage of the school holidays, AES

Brasil offers its employees and their

families a sports competition in seven


sporting activities - indoor soccer,

volleyball, tennis, walking and jogging

in the street, card games and chess,

in addition to recreational games for

employees and family members. The 2010

event at AES Brasil registered 1,313 people

(732 from AES Eletropaulo), an increase

of 110% over the previous year. In 2010,

this championship took place in the cities

of São Paulo, Bauru, Rio de Janeiro, São

Leopoldo, uruguaiana and Santa Maria.

Viva Mais – Live Longer

Initiatives and campaigns in favor of

physical and mental health through:

Work-related gymnastics: carried

out in all company installations, three

times a week, with the goal of controlling

ergonomic risks and the prevention of

osteo-muscular problems caused by fatigue

resulting from muscular tension at work, and

uncorrected posture, as well as movements

or efforts that are harmful to joints. Work-

related gymnastics registered an average

participation of 80% over the year.

talks and lectures: a preventive and

educational initiative. In 2010, topics

dealt with included ergonomics, hearing

protection, health of the shoulders

and prevention of STD/Aids, obesity

and hypertension, with 22 thousand

participations in all of AES Brasil. AES

Eletropaulo was partnered by the Hospital

São Camilo in the Health Program.

hearing preservation Campaign: open

to all employees with focus on those whose

work exposes them to risk. The company

also makes available informative bulletins

on hearing preservation and vocal health,

among other issues, on the intranet. 128

people took part at AES Eletropaulo.

vaccination Campaigns: in 2010 AES

Brasil applied 4,484 doses of flu vaccine (a

trivalent vaccine that includes H1N1, or swine

flu), with 3,435 AES Eletropaulo employees

being immunized against flu (75.93%). It

should be emphasized that in 2010 the

Federal Government invested heavily in

the campaign, giving early vaccinations to

groups at risk. In the company, 27 employees

received immunization shots against

Hepatitis A and/or B.

In 2010, the big news was the creation

of the Gestação Saudável - Healthy

Pregnancy Program, the aim of which is to

guide pregnant employees in fortnightly

meetings with a specialist at which issues

related to care during pregnancy and

childbirth are discussed. This year 42

people participated at AES Eletropaulo.

OCCuPATIONAL SAFETy AND HEALTH 2008 2009 2010

Investments in HIV holders programs (R$ thousands) 0 0 0 0

Investments in drugs and alcohol prevention and treatment programs (R$ thousands) 24.8 30.6 43.3 42.1


Remuneration GRI EC5

AES Eletropaulo maintains a

remuneration policy in accordance

with the Hay methodology and aims

at maintaining its attractiveness and

competitiveness in the market. It uses the

Balanced Scorecard to publicize global

targets and thus, encourages employees to

obtain high-performance results promoting

a culture of excellence. Comparisons in

the market take into account the electric

energy sector for technical positions and,

for other levels, companies of the same

size, number of employees and billing, etc.,

are taken into account.

The remuneration package is composed

of the nominal salary (fixed remuneration),

additional remunerations, benefits, and

Participation in Profits and Results (PLR).

The fixed remuneration is linked to the

attributes of the position and its function,

according to its responsibility. Variable

remuneration on the other hand is based

on the individual performance evaluation

and also on the company’s results and is

paid through the Profit Sharing and Results

Participations Program.

The lowest base-salary remuneration paid

by the company corresponds to 1.5 times

the minimum salary in effect in 2010.

In operational positions, men were paid a

salary 1% greater. In 2009, this difference

was 8.2%.

Private Pension Plan GRI EC3

In 2010, investment made by the

company in the Private Pension Plan was

R$ 6.13 million compared to R$6.039

million in 2009.

Among its benefits, AES Eletropaulo

provides pension plans such as Fundação

Cesp, Previdência Itaú-unibanco and MetLife¹.

Participation is voluntary and offered to

employees in all positions and in all units.

Three kinds of plans are available – defined,

supplementary and voluntary – and

contributions are stipulated according to the

TyPE OF BENEFIT METRICS COVERAGE

Collective PLR Performance in relation to corporate targets set by the management.

All employees (except company officers and the CEO).

Individual PLR Individual performance evaluation. All employees (except managers, company officers and the CEO).

Bonus Individual and business performance evaluation. Managers, company officers and the CEO.

Long-Term IncentiveThe Long-Term Incentive Policy is that of AES Corp. and the program has a three-year cycle for evaluation.

Company officers and the CEO.

Participation in Profits and Results

*�1: Previdência Itaú/unibanco and MetLife are not defined benefits, however there is a counterpart from the company in the plans (general company funds) and there is no pension fund. For both, the plans cover benefits for total and permanent disability and a benefit in the case of death.

The remuneration policy at AES Eletropaulo aims to maintain the Company’s market attractiveness and competitiveness


COMPENSATION 2008 2009 2010

Gross payroll (R$ thousands) 206,438,00 225,912,00 364,727,00

Mandatory social charges (R$ thousands) 82,030,00 83,004,00 101,845,00

BENEFITS 2008 2009 2010

Education (R$thousands) 3,038,00 3,286,00 3,540,35

Meal (R$ thousands) 23,102,00 25,950,00 35,921,00

Transportation (R$ thousands) 2,422,00 2,105,00 4,546,00

Health (R$ thousands) 23,449,00 25,454,00 30,945,00

Foundation (R$ thousands) 5,358,00 6,039,00 6,630,70

Other (specify) (R$ thousands) – – –

Compensation, benefits, carreers

specifications of each of them, with payments

made by employees and by the company.

For the Fundação Cesp, the calculation of

the defined benefit is based on 70% of the

employee’s salary and multiplied by the

corresponding rate in the list – Plano de

Suplementação de Aposentadorias e Pensão

- Pension and Retirement Supplements Plan

(PSAP). In this type, the company participates

with 100% of the amount. The calculation

for voluntary contribution is based on 30%

of the employee’s salary, who can choose to

contribute from 1 to 100%. In this type, the

company participates with a limit of 5% of

the amount.

The contribution of the Previdência

Itaú-unibanco is divided between two

groups of participants, with the company

participating with 100% of the basic

contribution:

Group 1: participants with a contribution

salary above 10 uRA (R$ 2,980.00) – basic

contribution of 1%, plus complementary

contribution of from 1% to 10%;

Group 2: participants with a contribution

salary of less than 10 uRA (salaries below

R$ 2,980.00) – basic contribution of 1%.

In the case of MetLife, AES Eletropaulo

makes an annual contribution for its

executives in the month of December.

Benefits GRI LA3

The factors affecting people’s

satisfaction, motivation, wellbeing and

commitment are analyzed and dealt with

by AES Eletropaulo’s Human Resources

department. The company therefore

makes available to all employees various

benefits, services and policies, which are

continually upgraded, according to the

organizational climate and market surveys,

using the Hay methodology.


PREPARATION FOR RETIREMENT GRI Eu15 2008 2009 2010

Investment in complementary pension (R$ Thousands) 5,400,00 6,039.00 6,130.40

Number of beneficiaries in the complementary pension plan 3,405 3,499 3,633

IDENTIFy THE PERCENTAGE OF EMPLOyEES IN EACH SALARy LEVEL 2008 2009 2010

up to 5 monthly minimum wages (%) 60.80 47.90 64.75

from 6 to 10 monthly minimum wages (%) 23.10 33.50 23.91

from 11 to 15 monthly minimum wages (%) 8.50 10.70 6.06

Above 15 minimum wages (%) 7.60 7.90 5.28

PER CATEGORIES (AVERAGE SALARy FOR THE CuRRENT yEAR) - R$

office positions 28,163.09 26,756.50 28,866.74

management positions 13,231.42 13,780.00 14,350.86

administrative positions 3,217.48 3,357.70 3,950.97

production positions 1,846.82 1,923.77 1,640.58

Compensation profile

BENEFITS DESCRIPTION RANGE

Life Insurance Offered to all employees without monthly payment. Death by any cause and Disability. Capital of R$ 1,300,000.00 - Generali Seguros

All

Funeral AssistanceOffered to all employees and direct dependents by Generali Seguros. No monthly payment

All

Personal Support ProgramChannel for dealing with personal problems, conflicts, finances, drug addiction, psychological, social etc. At no cost and confidential.

All

Meal VouchersPaid in the amount of R$ 471.00 to all active employees. Sliding-scale discount varying from R$0.01 to R$37.61 depending on salary

All

Food Voucher Paid in the amount of R$106.50 to all employees receiving a salary of up to R$ 5,431.78. R$10 is discounted from the employee

All

Transport Voucher Paid to the employee who opts for it. Discount of up to 6% of salary All

Holiday Meal/Food Voucher Benefit offered to all employees receiving a monthly salary of up to R$ 9,404.58 for holidays. Value of R$1,100.00

All

Snack Voucher Paid to employees working overtime. up to 5 hours, R$6.31; from 5 to 8 hours, R$12.66; over 8 hours, R$21.41

All

Private Pension Employee can opt for the following plans: Benefits of Mixed Plan offered by the Fundação Cesp. Defined Contribution and Benefit. PGBL or VGBL Plan

All

Medical Assistance Benefit offered by Bradesco Saúde with co-participation and deductible percentage. It extends to dependents and cohabitants registered prior to 2000

All

Dental Assistance Benefit offered by Odontoprev with no monthly payment. Discounts co-participation. It extends to dependents and cohabitants registered prior to 2000

All

Complement to Work Accident/Sickness Assistance

Employee on medical leave receives the salary complement

up to the 24th month of leaveAll

Special Assistance to Employee with disabled child

Benefit paid to employee’s child suffering from a disability with medical attestation. Amount R$378.00

All

Daycare Assistance Offered to employees with children up to age 7 who are at school, in daycare, maternal care or nursery care during working hours. Amount R$351.00

All

Nanny assistance Offered to employees with children from 4 months to 7 years old and who are being cared for by a nanny. Amount R$351.00

All

Check-up Annual benefit offered to the company officers without co-participation Company officers and management

Automobile Benefit given to company officers with a subsidy of 400 liters of fuel per month Company officers

LoansCooperative agreement with the Fundação Cesp and the Banco BMG discounted from salary

All

Travel Insurance Given to upper Management when on business travel Company officers

Main Benefits GRI LA3; LA8


Internal Communications

In 2010, AES Brasil expanded and consolidated

the operations of its internal communications

channels with the Rede Ligado (Connected

Network) – an internal network composed of

six integrated communications channels – for

bringing people closer by means of clear and

dynamic language.

The Rede Ligado is made up of the following

channels:

Revista Ligado (Ligado Magazine): monthly

publication featuring the main news at the

AES Brasil Group, such as the organization’s

strategies, events, services and articles

focused on safety, social responsibility, ethics,

behavior, the environment and quality of life.

It is sent to employees’ homes by mail.

Portal Ligado (Ligado Gateway): corporate

intranet, launched in March 2010, focusing

on services, the latest news and online social

networks.

Boletim Ligado (Ligado Bulletin): sent by

e-mail, with urgent and important news about

the companies, for immediate release.

Conexão Ligado (Ligado Connection): mural

updated weekly with corporate information, as

well as the main indicators.

Estação Ligado (Ligado Station): monthly

podcast (digital audio archive) via web, 10

minutes long, on entertainment, information,

services and integration between the

companies.

Gestor Ligado (Ligado Manager): digital

bulletin, sent every two months to managers at

AES Brasil, on leadership, campaigns, initiatives

and activities to be launched.

Union�relations�GRI LA9

AES Brasil maintains constant relations

with the unions of the various

categories of company employees

working at the company. There is even

a specific department for maintaining

a constant dialog.

The Group has been striving to create

increasingly closer relations between

unions and the company. It is an active

relationship, with continuous dialog

for reaching satisfactory solutions for

all parties, especially on matters where

divergences arise.

GENERAL INFORMATION GRI LA1; LA13 2008 2009 2010

Total number of employees 4,141 4,360 5,663

Employees up to 30 years old (%) 27.10 26.80 30.73

Employees between 31 and 40 years old (%) 42.80 42.90 40.14

Employees between 41 and 50 years old (%) 25.90 25.20 23.29

Employes above 50 years old (%) 4.20 5.10 5.84

Number of female employees in relation to the total number of employees (%) 20.00 20.40 19.83

Women holding management positions in relation to the total management positions (%)

22.00 20.70 24.18

Black female employees (black and brown) in relation to the total employees (%) 1.20 1.70 2.15

Black male employees (black and brown) in relation to the total employees (%) 9.90 12.90 17.55

Black employees (black and brown) holding management positions in relation to the total management positions (%)

1.00 6.00 1.10

Interns in relation to the total employees (%) 1.44 1.42 1.20

Employees under the apprenticeship program (%) 0.17 0.80 0.62

Disabled employees 59 60 62


PROFIT SHARING GRI EC5 2008 2009 2010

Total investment in the company’s profit sharing program (R$ thousands) 32,200.00 43,943.00 48,873.44

Amounts distributed in relation to the gross payroll (%) 15.60 19.45 13.40

Company shares held by employees (%) NA NA NA

Division of the highest cash compensation by the lowest cash compensation paid by the company (including profit sharing and bonuses)

61.7 57.98 69.06

Division of the company’s lowest compensation by the current monthly minimum wage (including profit sharing and bonuses)

1.1 1.80 1.49

CONDuCT IN CASE OF DISMISSALS 2008 2009 2010

Number of employees at the end of period 4,141 4,360 5,663

Number of hirings during the period 283 516 1,640

Labor claims filed per total employees dismissed over the period (%) 34 29 14.99

Labor claims GRI SO8

Amount claimed in court (R$ 000) 587,214 547,040 515,300

Provision recorded in liabilities (R$ 000) 389,945 406,550 347,999

Number of lawsuits in progress 4,775 4,678 4,015

Number of employees acting as parties to the lawsuits 5,316 6,385 4,567


Suppliers

Joint development

AES Eletropaulo seeks much more than a simple business interaction. It encourages its partners to look for continual improvement in their processes and performance

aGRI EN6

ES Eletropaulo’s suppliers are

small, medium and large-scale

companies, both Brazilian

and multinational. They are responsible

for supplying the material used in the

electric system, such as: conductors,

connectors, poles, insulators, transformers,

meters and various materials used in

the administrative units. In 2010, the

Company maintained contracts with 554

companies.

The service providers are qualified for

expansion and maintenance activities

in the overhead and underground grid,

connecting new customers, meter-

reading and delivery of bills, security and

surveillance services, clearing vegetation,

tree-pruning and repairing equipment.

Over 90% of contracted companies

are composed of suppliers and service

providers based in the region. In 2010,

7,847 people worked at AES Eletropaulo

through service providers.

Management of suppliers includes their

registration according to technical, legal

and tax requirements, aligned with the

policies of Compliance, Safety and the

Environment.

Contracting policy GRI EC6

In the AES Eletropaulo contracting

processes, the needs and expectations of

the suppliers are identified, analyzed and

used to improve the practices relative to

the relationship, aimed at complying with

the best ways of adapting the company’s

expectations to the suppliers’ ability to

execute them in sustainable fashion.

During the term of the contracts, various

meetings, events and workshops are held

to guarantee continuity of supply without

prejudice to either of the parties. The main

topics addressed are Ethics and Safety.

AES Eletropaulo has specific rules for

selecting its suppliers, the application of

which begins at the start of the registration

process, where information is made

available on the Basic Guidelines for

Safety, the Environment and the Code of

Corporate Ethics and Conduct. At this stage

documentation is required for juridical, fiscal

and tax authorization. Specific consultations

are also made regarding the company’s

financial health and its compliance with

socio-environmental legislation.

For more complex processes, AES

Eletropaulo may require specific licenses,

such as ISO 9001 and ISO 14001,

compliance with occupational safety

requirements, training in areas such as

regulatory standards NR10 and NR33,

evaluation of prototypes, industrial

ratification and a compliance questionnaire.

During the contract’s term, suppliers’

compliance with AES Eletropaulo’s

requirements is ensured by means of

periodic inspections of reception, industrial

evaluation, the ethics and compliance

questionnaire, socio-environmental

responsibility and through technical audits

WAyS OF TRANSMITTING THE SuPPLy REQuIREMENTS TO THE SuPPLIERS

Basic Guidelines for Safety and the Environment;

Ethical Values Guide;

General Hiring Conditions;

Contracts for Supply and Provision of Services;

Specific formal communication;

Work meetings; and

Forums and workshops

In the contracting process, AES Eletropaulo seeks to adjust its expectations to the supplier’s capacity to deliver


SupplIerS

carried out by specialized companies.

Contractual and compliance reviewGRI HR2; HR6; HR7

The contractual review is aimed at

ensuring AES Eletropaulo’s business

integrity, monitoring the legal conduct

and ethics of commercial partners and

safeguarding the company from situations

of ethical or legal violations.

In the contracts, specific compliance

clauses are included in which the contracted

company agrees not to become involved in

any criminal scheme or any which involves

violating human rights, such as slave or child

labor. In 2010, 100% of suppliers involved

in the Compliance process were evaluated

regarding these aspects, as well as health

and safety conditions.

The forms for contracting suppliers and

service providers also deal with specific

questions of ethics and compliance. When

doubts arise, the compliance team conducts

investigations on the company involved and

tries to clarify them with the contracted

company. In the case of serious evidence,

contracting does not proceed.

In 2010, 1,075 operations were analyzed

at AES Eletropaulo, involving a total value of

R$1.8 billion.

Action to combat child and slave labor

AES Eletropaulo takes action to eradicate

child labor and to impede forced and

degrading labor in its supply chain by using

a diverse set of tools. Additionally, at the

registration phase, information concerning

the Code of Ethics and Corporate Conduct

is made available, and specific clauses on

the theme are inserted in the contracts.

AES Eletropaulo carries out on-site audits

of suppliers, where one of the evaluation

items is child or slave labor. During Safety

Inspections, this is also one of the items that

make up the verification check-list.

To ratify this commitment, in 2010, AES

MATERIALS SERVICES

Areva Transmissão e Distribuição FM Rodrigues & Cia Ltda

Prysmian Energia, Cabos e Sistemas Socrel Serviços de Eletricidade

Landis & Gyr Equipamentos Conecta Empreendimentos Ltda

ABB Ltda B. Tobace Instalações Elétricas

Nansen S.A. Instrumentos Amara Brasil Ltda.

Main types of supplier at AES Eletropaulo

Brasil signed the National Compact for the

eradication of slave labor in Brazil.

Ethics and Compliance with the suppliers

In September 2010, AES Brasil held the

1st Forum on Ethics and Compliance

for 150 suppliers of Group companies.

The goal was to clarify the company’s

contracting policy so that its partners could

understand the analyses made before the

signing of contracts. During the event, an

invited specialist spoke on how the issue of

corruption is dealt with in various parts of

the world.


OuTSOuRCED WORKERS 2008 2009 2010

Number of outsourced workers 6,368 7,191 7,847

Total cost (R$ thousands) 150,700 166,300 262,935

Outsourced workers in relation to the total headcount (%) 61 62 59

Compensation level - identify the percentage of employees in each salary level ND ND ND

EDuCATION LEVEL - IN RELATION TO THE TOTAL OuTSOuRCED WORKERS - DESCRIBE (%)

Elementary school ND ND ND

Secondary school ND ND ND

High school, post-graduation ND ND ND

SELECTION AND EVALuATION OF SuPPLIERS (CONCERNING CHILD LABOR, FORCED LABOR AND OCCuPATIONAL HEALTH AND SECuRITy CONDITIONS)

2008 2009 2010

Suppliers inspected by the company / total suppliers (%) – concerning child and forced labor ND 2.5 12.94

Suppliers inspected by the company / total suppliers (%) – concerning occupational health and security conditions 100.00 100.00 100.00

unqualified suppliers (incompliant with the company’s social responsibility criteria) / total suppliers (%) 0 0 0

SuPPORT FOR SuPPLIERS’ DEVELOPMENT (CONCERNING CHILD LABOR, FORCED LABOR AND OCCuPATIONAL HEALTH AND SECuRITy CONDITIONS):

2008 2009 2010

Number of training offered to suppliers 110 207 3,214

Number of training hours offered to suppliers 728 1,650 391,838

Suppliers GRI HR6; HR7; Eu16; Eu18;


Customers

Focus on quality

In the challenge to serve with quality almost 6,1 million customers, AES Eletropaulo seeks to understand their particular needs and find the most suitable solution for each one.

aGRI Eu26; PR5

ES Eletropaulo serves 6.1

million consumer units in 24

municipalities located within

its concession area. the majority with an

urban profile in an area 100% served by

the energy distribution grid. The company’s

market corresponds to its concession area.

which represent 34.7% of the total in São

Paulo State and 10.4% of the national

market.

In 2010. the company was certified

at the ISO 9001:2008 quality standard

within the scope of Call Center Services.

Stores and the Contact Center. following a

sequence of audits covering several areas.

carried out by ABS Quality Evaluations

Inc. This positioned the company on an

internationally prescribed quality level.

which will be maintained and improved on

even further.

To maintain a quality service with

safety. fulfilling the customer’s needs. the

company divides its service into groups:

corporate customers and retail customers.

Corporate Customers

Eletropaulo’s corporate customers are

divided as follows:

Captive Corporate Customers: this

segment is given personalized service with

an account manager. whose purpose is to

understand the particular business needs

of his customers and develop specific and

suitable solutions for each. The account

managers therefore make periodic visits

and use traditional communications means

(telephone. email and the internet). as well

as holding events in business associations

(FIESP. CIESP. Fecomércio. among others)

and talks on the energy sector. AES

Eletropaulo also has a contact center

available for these customers. which carries

out the commercial service. Currently 13

customer managers and 39 commercial

assistants at the contact center are

responsible for this market’s management.

non-captive Corporate Customers:

similar to corporate captive customers.

non-captive customers represent a diverse

segment. which includes industrial.

commercial and service customers. This

covers customers who choose their electric

energy supplier through free negotiation.

contracting the connection and the use

of the distribution network with AES

Eletropaulo. These customers are also

served by customer managers and by the

contact center. All facilities and services

available to the captive customer are also

offered to non-captive customers.

Retail segment customers GRI PR5

The retail segment has a demand for

voltage below 500 kW. mostly residential.

but also with rural. small businesses and

industrial customers. They are served

by the call center. service stores. the

franchised network. chat. website or

ombudsman.

In 2010. the company expanded the call

center operations. maintaining the service

methodology. the content of the courses.

the indicators and the 450 service

posts. all located within AES Eletropaulo

itself. It has also invested in training via

e-learning. applied to all employees in

this area since October 2010.

Within the strategy of maximizing

the relationship potential. the company

resumed the online chat. opening a new

channel for customer communications. In

2010 there were 108.866 hits.

Another innovation with the company’s

call center was the remodeling of

the uRA (Audible Response unit).

responsible for greater speed in

attending to the customer. Separating

the calls by city neighborhoods rather

than by region allowed the operators to

respond with greater agility and with a

more focused response.

Within its concession area, which includes 24 municipalities, AES Eletropaulo serves 6.1 million consumer units


CuStoMerS

Consumers’ Council GRI PR5

The AES Eletropaulo Consumer Council

is formed by representatives from

various consumer categories (residential.

commercial. industrial. rural and public

authorities) who act voluntarily with

the aim of analyzing questions of final

consumer interest related to electric energy.

such as tariffs and the quality of the services

provided.

The Council meets on a monthly basis

and discusses questions referring to

adapting services. as well as forwarding and

following up on complaints and suggestions.

cooperating in inspections of the company’s

actions. based on the General Conditions

of Electric Energy Supply set by Brazilian

Energy Agency Aneel.

Since they are volunteers. it is essential

that the council members appointed are

suited to the function. ready to defend the

public interest and are representative of that

public. To guarantee impartiality. authority

and reliability of the Consumers’ Council. its

members cannot occupy or be candidates

for elected public office.

Find out who the members of

the Consumer Council are at: www.

aeseletropaulo.com.br/clientes/Paginas/

ConselhodeConsumidores.aspx

Entering the social networks GRI PR5

In 2009, AES Eletropaulo began monitoring information about

the company posted on social networks such as Twitter, Facebook

and Orkut. A company hired for the purpose is responsible for

the monitoring and carries out the sorting of the information

in three categories: positive, negative and neutral, sending them

on so that AES Eletropaulo can get in touch and respond to the

suggestions or criticism.

On Twitter, the company’s profile (@AESEletropaulo) gives tips

on safety and the power grid, conscientious consumption and

energy efficiency, as well as information on the main power

outages, working hours of the two customer service channels

during public holidays and news about new products and

services. It also monitors complaints and answers various types

of question from internet users.

On youTube, the company’s page (www.youtube.com/

AESEletropaulo) posts videos with information of public interest,

such as correct and safe use of electricity, and on service channels.

In 2010, the company began tracking customer comments left on

the site Reclame Aqui (Complain Here), replying whenever necessary.

The company broadcasts on YouTube (www.youtube.com/AESEletropaulo) public-interest videos on the correct and safe use of electric energy


Personal service

More comfort and practicality: based

on these concepts. in May 2010 AES

Eletropaulo inaugurated its first model

store in São Paulo’s Southern zone

neighborhood of Santo Amaro. Its purpose

is to improve service quality and guarantee

customer well being and satisfaction.

Located at Avenida Barão do Rio Branco

425. the new Customer Service Store is

adapted to serve various customer profiles.

Those preferring agility and speed. for

example. can use the electronic totems

and telephones in the self-service space.

Those needing a more personalized

solution go through a sorting process

according to type of service and are

directed to the service counters.

The waiting room is equipped with LCD

screen TVs with preferential seats for the

elderly. pregnant women and the disabled.

as well as adapted restrooms. The store’s

visual communication is clearer and

facilitates identification and recognition of

the location. The internal spaces. for example.

are identified by colors. enabling a better

understanding of the services available.

Courtesy and politeness are

characteristics of the attendants. They

receive continual training and technical

qualification and. last year. they all

attended the behavioral training course

Nosso Jeito. Nossa Atitude (Our Way. Our

Attitude).

In early 2011. the second model store was

inaugurated out of a total of 12; between

2010 and 2011. 26 of 63 Rede Conveniada

de Atendimento (franchised customer

service stores) have been opened within

the new concept. By the end of 2012. the

company is expected to complete the

remodeling of all company-owned and

franchised stores in its network.

Satisfaction with quality service GRI PR5

AES Eletropaulo tracks its customers’ levels

of satisfaction by means of satisfaction

surveys applied in each of its segments.

Retail segment customers

In the retail segment. AES Eletropaulo

uses the Brazilian Electric Energy

Distributors Association – Abradee’s

survey. carried out annually. which takes

into account 39 quality attributes divided

into seven macro categories (energy

supply; information and communication;

electricity bill; customer service; company

image; social responsibility and public

lighting). The individual results of each

interview are subsequently forwarded

to AES Eletropaulo. which then makes

various comparative analyses.

According to the Abradee survey.

AES Eletropaulo customers’ Perceived

Satisfaction with Quality Index (ISQP)

was 76.6% in 2010. a drop in relation

to 2009 (80.1%). This decrease is due

mainly to the items. Energy Supply (9.3

percentage points) and Information and

Communication (10.5 points). According

to Abradee. the heavy rains in Southeast

Brazil in the summer of 2010. the media


driven effect of the power outage on

November 11. 2009. throughout the

Central-South of Brazil and the persistence

at the time. of the negative media

exposure. contributed significantly to the

fall in the general perception of customer

satisfaction at AES Eletropaulo and many

other electric energy distributers in Brazil.

Of the 29 distributors with over 500

thousand consumers in Brazil. 23 suffered

a decrease in customer satisfaction

between 2009 and 2010.

The management of customer

satisfaction surveys in the electric sector

is usually annual. Intending to break

with this paradigm and be innovative.

AES Eletropaulo created its Online

Survey of Customer Satisfaction. which

investigates satisfaction on a daily basis.

This is a phone survey carried out by call

center operators. with sample planning

similar to that of the Abradee Survey.

The consolidation of the data researched.

the generation of satisfaction indicators

and the publication of the results on the

intranet are carried out automatically and

online at the company.

The impact of this action on the

organization is remarkable and naturally

encourages everyone’s mobilization in the

customer area. Activities of the Customer

Satisfaction Plan. a strategic company

program. are prioritized in regional terms by

means of the survey results. The practice

has been adopted in other AES Group

companies (AES Sul and AES El Salvador).

Corporate customers

For Corporate Customers. the Corporate

Customer Satisfaction Survey. carried out

annually. face-to-face by the Vox Populi

Institute. evaluates 66 attributes grouped

into eight quality areas (account manager;

telephone service; image; information and

communication; supply quality. billing

and tariffs; social responsibility and public

illumination projects) and identifies the

level of importance each customer gives

to each of these. The forms are individual

and allow the customer’s identification.

facilitating the development of specific

actions.

The 2010 General Satisfaction Index

(ISG) of this corporate customer survey

was 77.6%. representing an increase of 8.5

percentage points over 2009.

Aiming to anticipate any customer

demands and consistently monitor

corporate customer satisfaction

throughout the year. AES Eletropaulo

created the Continuous Corporate

Customer Satisfaction Survey. carried

out through questionnaires filled in by

the customers. via the internet. on a web

survey platform. Four surveys were carried

out in 2010.

In addition to the surveys. the company

monitors and manages complaints

received. taking actions to continuously

improve customer satisfaction.

In 2010, the corporate customer General Satisfaction Index grew 8.5 percentage points compared to 2009


Torpedo fácil - Easy SMS

Implemented in 2009 in all 24

municipalities in the concession area,

the sending of SMS messages (texting

via cell phone) by the customer to

the company was consolidated as a

reliable form of communication in

2010. Customers have assimilated

text message culture and the service

has been widely used. The following

services are available via Torpedo Fácil:

bill copy request, communication

of power outage and reconnection

requests. In 2010, the communication

channel was responsible for 7% of

calls/texts made due to power outages.

Satisfaction with customer service

channels GRI PR5

Retail customer service channels are

also evaluated on a daily basis. The call

center carries out surveys after the calls

have been dealt with automatically by

uRA (Audible Response unit). without

interference from the operator. The

customer service stores and service posts

of the Franchised Network. carry out

surveys by means of an “opinionmeter”

device. available on every operator’s

desk. The self-service chat carries out a

satisfaction survey at the end of the web

customer service.

All these surveys follow the same standards

when evaluating the service channel. the

posture. knowledge and cordiality of the

operator. and are therefore comparable.

The results are collected daily and result in

various corrective actions in processes.

Tariff review

The mechanisms used by Aneel to alter

the tariffs are the annual readjustment

and the tariff review. It should be

noted that in the annual adjustments.

the part of the tariff that includes the

manageable revenue costs (remuneration

from investment. costs of operation.

maintenance and asset depreciation)

is monetarily updated by the General

Market Price Index (IGP-M) released by

the Fundação Getúlio Vargas. reduced

by Factor x (a factor defined in the

concession contract. the purpose of which

is to share gains in productivity with

customers). On July 4. 2010. the average

tariff adjustment was 8%.

In the periodic tariff review. the revenue

needed to cover efficient operational costs¹

and a suitable remuneration on prudent

investments is calculated. In 2011. Aneel

(Brazilian Electric Energy Agency) will begin

the distribution concessionaires’ third cycle

of periodic tariff review. the methodology of

which is still in a public hearing.

For AES Eletropaulo. the tariff review

will be held in July 2011. with the process

happening every four years. Monitoring

the preparation of the methodology is a

strategic matter for AES Eletropaulo.

¹Aneel calculates the revenue needed to set a new tariff level, in such a way as to adequately remunerate investment and cover operating costs. As regards the latter, so that this result does not depend solely on information supplied by the distributor, which could jeopardize the review process, Aneel utilizes the “Reference Company” methodology for the calculation of the operating costs, in this case called “efficient”. In short, it means dealing with a theoretical model that seeks to reflect the efficient operating costs that an ideal concessionary company would have operating in the same concession area. The efficient operating costs are used for the calculation of the distributors’ revenue.


Division of the tariff

Based on current tariffs. AES Eletropaulo

receives around 21% of the total amount

billed to customers. The remaining 79% is

divided between generation. transmission.

taxes and charges. updated tariff values

can be found at www.aeseletropaulo.

com.br/clientes/informacoes/Paginas/

tarifasdeenergia.aspx.

Relationship channelsMAIN CHANNELS CuSTOMER SEGMENT DESCRIPTION

Electricity Bill All Customers uses the back of the bill and leaflets in the same envelope for commercial. institutional and promotional communication.

Call center All Customers Telephone customer service available 24/7.

Stores and Franchised Customer Service Network

All Customers Personal service for requests and clearing up doubts.

Web site and chat All Customers Disseminates services. safety hints and useful information in banners and specific pages

Ombudsman All Customers Relationship channel that receives. analyzes. forwards and responds to complaints. denouncements. suggestions and praise.

Publicity and Advertising All Customers Advertisements in communications media to consolidate the company brand. information on safe and proper use of electricity. Disseminated via TV. press. radio. billboard and bus advertising.

Sponsorship All Customers Financial or institutional support for campaigns. events. cultural and educational projects and actions for the dissemination of safe and proper use of electric energy.

Connection online Newsletter

Corporate CustomersDistributed quarterly via email and available on the site. carrying important information for corporate customers for the sustainability of their business.

Contact Center Corporate Customers Telephone channel for exclusive communication.

Press Office All Customers Serves journalists and communications media and sends releases with pertinent information.

Twitter All CustomersDisseminates information on power outages. scheduled disconnections. safety hints and achievements.

cont

With the resources allocated to it. the

company pays salaries. legal charges. and its

employee benefits. invests in service quality.

in energy supply infrastructure and derives

its remuneration from it.

In 2010, Easy SMS messaging was responsible for 7% of power outage communications


MAIN CHANNELS CuSTOMER SEGMENT DESCRIPTION

youTube All Customers With the use of videos. shows information on safety and efficient electric energy use.

Courses. Technical Seminars. Workshops

Corporate CustomersEvents on trends in the services sectors. industry. commerce and public authorities on best options for contracting energy.

Sustainability Reports All Stakeholders Annual report. available on the company site. reporting its economic-financial and socio-environmental performance.

Torpedo Fácil (SMS) All CustomersCopy of bill can be requested or power outages reported and reconnection requested via SMS text message.

Service for the Hearing Impaired

Hearing Impaired Customers Relationship channel exclusively for the hearing impaired. carried out using a telephone interface. The flow of request handling is similar to that of the call-center.

Targets

AES Eletropaulo intends to guarantee continuity in improvement

in the quality indicators and attain the mark of 85% of service

responses within the first 30 seconds of the customer’s call.

The company will also act more forcefully on two fronts:

• Improving indicators. expanding benefits offered to customers;

• Expanding surveys made on the call center. reaching 100% of calls.

Adjustment to Resolution 414 GRI 1.2

Normative Resolution 414. of 2010. established new conditions

for the provision of services linked to electric energy. Among

the main changes are obligatory personal services in all

municipalities served by the concessionaire. the reduction of

connection times for residential and rural consumers. small

commercial establishments and businesses (from three to two

working days) and for medium and high voltage consumers

(from ten to seven working days). Reconnection times were also

reduced from 48 to 24 hours.

Aneel also changed the rules regarding power shut-off due to non-

payment: the consumer must have prior notice of at least 15 days.

but the power can only be shut off 90 days after the due date of

the unpaid bill. In addition. the company must offer. 24 hours per

day. free telephone service to the caller. regardless of the type of

call (landline or cell). In accordance with the rules. the call must

be answered by the second ring and calls must be directed to a

human operator within 60 seconds.

In order to comply with these decisions. AES Eletropaulo is restructuring

its franchised service network and working on adapting the call

center to satisfy the new requirements. In addition. it has signed new

partnerships with suppliers and informed all the medium and high

voltage units of the new rules for billing.

For more information on Normative Resolution 414. Aneel has

made a folder available that can be found on the internet. at:

www.aneel.gov.br/arquivos/PDF/folder_perguntas%20e%20

respostas_414_final.pdf


ExCELLENCE IN SERVICES 2008 2009 2010

profile of consumers and clients GRI 2.7; PR5

Energy sale per rate class (GWh): % total

Residential 40.88 41.91 42.02

Residential - low income 1.72 1.69 1.85

Commercial 30.42 31.22 31.27

Industrial 19.37 17.52 17.32

Rural 0.08 0.08 0.08

Government 3.25 3.33 3.39

Public Lighting 2.59 2.61 2.43

Public Services 1.68 1.64 1.64

Client satisfaction

Satisfaction level obtained through the IASC - ANEEL survey 65,10 71,51 71,51

Satisfaction levels verified by surveys made by other entities (Abradee. Vox Populi and other) and/or own survey (to specify) ISQP – Index of Quality Satisfaction obtained from residential clients – ABRADEE (Brazilian Association for Electric Power Distributors) survey.

80,40 80,10 76,6

Customer services

Number of calls answered (Call Center) 8,554,295 8,661,057 9,975,540

Number of answers at the regional offices 1,444,023 2,131,813 2,420,564

Number of answers through the Internet 3,449,935 3,738,775 4,724,343

Complaints in relation to the total phone calls answered (%) 2,21 1,03 0,00

Average waiting time until the beginning of an answer (minutes) 1,42 0,19 0,35

Average answer time (minutes) 5,22 4,28 4,82

Number of consumers’ complaints submitted to:

the company 29,511 27,204 29,251

Aneel state/regional offices) 2,948 4,433 9,394

Procon (Consumer Protection Agency) 4,512 5,044 5,281

Court 2,330 3,416 3,288

Complaints - main reasons (%) (%) (%)

Term for performance of services (%) ND 3,2 7,0

Inadequate supply of energy (%) 0,6 0,9 0,8

Interruptions (%) 1,2 1,9 2,6

Emergencies (%) 1,2 1,0 0,7

Consumption/measurement (%) 20,7 22,2 16,6

undue energy cut off (%) ND ND 0,1

undelivered bills (%) 11,5 8,6 6,5

Poor performance of services (%) 0,2 0,3 0,5

Electric damages (%) 4,1 7,3 10,5

Irregularities in measurement (fraud. energy misappropriation) (%) 2,5 4,3 3,3

Other 58,0 50,3 51,5

COMPLAINTS RESOLVED 2008 2009 2010

During the answer (%) 49,00 59,00 50,4

In up to 30 days (%) ND 67,00 84,10

Between 30 and 60 days (%) ND 14,00 13,00

After more than 60 days (%) ND 19,00 2,90

Complaints considered valid in relation to the total complaints (%) 72,00 59,00 51,00

Complaints resolved in relation to the number of valid complaints (%) 100,00 100,00 100,00

Number of innovations implemented due to the interference of the ombudsman and/or customer service

ND ND ND


Society

Inclusion and citizenship

Making a difference, practicing sustainability, encouraging inspired relationships and educating current and future generations

t GRI EC4

he supply of reliable and

accessible electric energy is the

central point in promoting the

socio-economic development of society,

especially in low-income communities.

AES Eletropaulo invests its own and

tax-incentive sourced resources in social

projects, energy efficiency and research

and development.

In 2010, around R$160 million was

allocated to projects promoting: social

inclusion and citizenship; education for

conscientious and safe use of energy;

reduction of energy consumption; culture,

sport and income generation in low-

income communities.

Social Projects GRI SO1

AES Eletropaulo runs seven social

projects in its concession area, divided

along two lines: Education, Culture and

Sport and Inclusive and Social Businesses.

In 2010, R$38.3 million was invested from

own and tax incentive funds.

Among tax incentive funds, R$1.4 million

was allocated to cultural projects through

ProAC (São Paulo State Cultural Activity

Program), which uses resources from the

ICMS (sales tax). Examples of the projects

benefiting from this program are the

Oficinas Querô, the object of which was

the production of a short film with 31

adolescents from the community of Vila

Guacuri; Boca do Céu, which brought story-

telling to the units of the Casa de Cultura e

In 2010, AES Eletropaulo invested R$160 million in projects of social inclusion, citizenship, education, culture, sport, conscientious energy use and income generation.

Cidadania; and the Cineco, which foresees

the installation of seven structures for

showing films on DVD.

Prior to the implementation of a social

project, the company makes an analysis of

the region’s socio-economic profile using

the Índice Paulsta de Vulnerabilidade Social

(IVPS)* (São Paulo State Index of Social

Vulnerability) and evaluates the size of the

population to be benefited. The lower the

IVPS and the higher the population, the

greater the probability of a social project’s

implementation is. The decision on which

can be proactive on the part of the company,

or due to the demand from society.

Once the community where the social

project is to be implemented has been

identified, the next step is to enter into

a dialog with the Public Authorities and

the local leaders, to align the expectations

of the community with the company’s

social responsibility strategy, part of the

company’s strategic map.

After the project’s implementation,

AES Eletropaulo monitors the results by

surveying the people benefiting from the

initiatives.

Indicators

To measure the socio-environmental

performance of the company and to

attain the strategic goal of being the

sector’s best distributor regarding Social

Responsibility, AES Eletropaulo uses

three tools: the indicators of the Ethos

Institute**, allowing an evaluation of

* A system of indicators that express the degree of social and economic development among the 645 municipalities of the State of São Paulo.

** The Ethos Institute of Corporate and Social

Responsibility is an Oscip (a Public Interest Civil

Society Organization) which has the mission of

mobilizing and helping companies manage their

businesses in a socially responsible way.

Cultural incentives

AES Eletropaulo allocated R$ 1.4

million to cultural projects through

the São Paulo State Cultural Initiative

Program (ProAC), which makes use

of ICMS (tax on the movement of

goods and services) tax incentives.

Among the projects that benefit

from this program are the Officina

Queiro, which produces short films

with adolescents in the Vila Guacuri

community; the Boca do Céu, which

brings story-telling to the Casa de

Cultura e Cidadania; and Cineco, which

foresees the installation of seven

structures to exhibit movies in DVD.


SoCIety

the management of social responsibility

practices; the Abradee Customer

Satisfaction Survey; evaluating the

perception on the company’s social

action; and the results of the Ibase Social

Audit, an annual balance sheet with

accounting information on the projects,

benefits and socio-environmental actions

involving company employees, outside

stakeholders and the environment.

In 2010, AES Eletropaulo came in 6th place

in the national ranking of the Abradee Social

Responsibility Awards, among distributors

with over 500 thousand customers.

Casa de Cultura e Cidadania (House of

Culture and Citizenship)

AES Brasil’s main project, the Casa

de Cultura e Cidadania has the goal of

transforming the reality of thousands of

children, adolescents and adults through

activities involving art, culture, citizenship,

quality of life and income generation.

Focused primarily on low-income

communities, the project directly benefits

5.2 thousand people in its activities and

47 thousand people with its presentations

and talks. In AES Eletropaulo’s units, 1.6

thousand people benefit directly from the

project and 33 thousand people in low-

income communities benefit from the

talks and other activities of the Casa de

Cultura e Cidadania.

Acting in the two spheres of Social

Responsibility (Education, Culture and

Sport and Inclusive and Social Businesses),

the project has seven units: São Paulo

and Osasco, with investment from AES

Eletropaulo and support from AES Atimus;

Barra Bonita, Lins, São José do Rio Pardo

and Caconde, under the responsibility of

AES Tietê; and Rio de Janeiro, coordinated

by AES Atimus. In 2011 a new unit will

be inaugurated in Novo Hamburgo in Rio

Grande do Sul state, sponsored by AES Sul.

The program at the Casa de Cultura e

Cidadania includes two fronts of action,

which have a transversal theme of safe

and efficient use of electric energy and

responsible consumption of natural

resources. The first of them, offered on

Mondays to Fridays from 8am to 5pm, is

directed toward children and adolescents

and presents activities such as storytelling,

circus arts, visual and digital arts, music,

theater, dance, artistic gymnastics

and sports gymnastics. The teaching

methodology applied was developed by a

multidisciplinary team of curators.

The other front, for adolescents and

adults, promotes vocational and business

training courses, workshops on income

generation and talks. The courses are given

in the evening from Monday to Friday and

on Saturdays.

To evaluate and manage the benefits

of the Casa da Cultura e Cidadania,

AES Eletropaulo carries out a weekly

satisfaction survey, conducted by the

Instituto IdeaFix, and tracks the Casa’s

monthly management indicators and

its activities, together with six-monthly

indicators on the real use of the benefits.

The Casa has consultative councilors,

made up of members of AES Eletropaulo,

the company that renders the project

operational, and from the community. The

main goal is to exercise citizenship through

periodic meetings – with the participation

of community leaders, educators, parents

or those responsible for the children,

adolescents from the project and

representatives from the public authorities

– so that in the medium term the council

can have an influence on questions of

public policies that directly affect the

community in which they live.

In 2010, the AES Brasil Group won the

10th edition of the Fundação Coge Award

in the category, Social Responsibility

Actions, with the Project, Casa de Cultura

e Cidadania. Over 80 projects and 32

energy companies were competing for the

Fundação Coge Award.

Centro Educacional Infantil Luz e Lápis

(Light and Pencil Children’s Educational

Center)

The Centro Educacional Infantil (CEI) Luz

e Lápis is a Civil Society Organization in the

Public Interest (OSCIP) serving 320 children

aged from one year to five years and eleven

months of age, from low-income families or

in a situation of social risk. Structured on AES

Brasil’s pillar of Education, Culture and Sport,

the project has two units – Santo Amaro and

Guarapiranga, in the Southern zone of the city

of São Paulo and employs about 60 people.

*Category grouping energy distributors with over 500,000 customers

**Group comprising companies positioned in the top ten, based on general performance

Compliance with Ethos – Abradee* Indicators

Abradee Survey (Customer Satisfaction – Social Responsibility Attributes)*GRI PR5

2008

83.0% 94.0%

2009 Reference**

88.0%

2008

82.1% 82.0%

2009 Reference**

95.3%


Maintained for over 20 years by AES

Eletropaulo, the CEIs use a constructivist

pedagogical project, aimed at encouraging

the children to develop their own ability to

observe, discover, think and act by having

as its principles, respect for the dignity and

rights of children; the right to play; access

to available socio-cultural resources; the

socialization of the children and the right

to essential care.

The project also provides access to

children’s literature through two Ecotecas

– ecological libraries, built with box

packaging made from recycled material.

This project was made possible by ProAC

– Programa de Ação Cultural do Estado de

São Paulo (the São Paulo State Cultural

Action Program) – with investment from

AES Eletropaulo. The minimum collection

is 500 books per unit.

To evaluate the work, climate surveys are

carried out among the employees, who

assess the strong points and improvements

(which result in a plan of action), and a

360º, performance assessment which

helps in the understanding of training and

development needs.

In 2010, Luz e Lápis implemented the

Educar para a Vida (Educate for Life)

project which, through a cooperative

agreement with the São Paulo Municipal

Fund for Children’s and Adolescents Rights

(Fumcad), enabled the development of

activities in arts, music, dance, physical

education and IT, in addition to the hiring

of a psychologist for the children.

The project team is composed of a

teaching director, teaching coordinators,

educators, nursing assistants, a health

agent, a psychologist, chefs and cleaning

personnel, administrative and janitors. The

educators (teachers and assistants) take

part in talks by professional specialists and

attend courses upgrading the activities.

Members of both the Executive Board

and the Audit Committee are employee

volunteers from AES Eletropaulo, appointed

at the general meeting in December 2009

for a period of two years.

AES Eletropaulo in the Community and

AES Eletropaulo in Schools

AES Eletropaulo develops two social

education projects for conscientious and

safe consumption of electric energy: AES

Eletropaulo in the Community and AES

Eletropaulo in Schools.

With playful and interactive activities,

the aeS eletropaulo in the Community

project is composed of itinerant modules

(trucks and tents) using multimedia

resources and scientific experiments to

transmit knowledge on efficient and safe

energy consumption habits.

In 2010, the project served 104.7

thousand people in the two trucks,

equipped with an interactive video

projected on a 180º touch-sensitive

screen, and 48.5 thousand people in the

tents. Children and adolescents from the

state school system benefited as well as

those from neighborhood associations and

Partnerships

Unidade Básica de Saúde de Santo

Amaro (Santo amaro primary

health Care unit) –appointments

with pediatricians and further

appointments for specialist treatment;

Albergue Reencontro e Casa da

Criança e do Adolescente de Santo

Amaro (Santo amaro Shelter for

Children and adolescents) – Priority

service for children, with reserved

places at the Santo Amaro unit;

Conselho Tutelar e Vara da Infância

(Guardianship council and children’s

court) – priority service for children

referred onwards;

unip (paulista university) – children

and parents referred for psychological

treatment.


other institutions from the communities’

surrounding areas including those in

the Transformation of Consumers into

Customers Program (see more on page 94).

With a focus on the qualification of

teachers in the state school system, the

aeS eletropaulo in Schools project works

directly in the training of multipliers to

disseminate information in the classroom on

responsible and safe use of electric energy.

The project, which also has a truck equipped

with 15 computers and an educational game

in which students test their knowledge on

the subject, served 456 state-run schools

in 15 municipalities in the AES Eletropaulo

concession area, reaching around 62

thousand children and adolescents in 2010.

Students taking part develop artistic

works on the topic that vary from

models of equipment to plays, music and

dance. In 2010, the students produced

4,236 projects which were shown to the

community in open exhibitions organized

by the schools and the Educational

Secretaries of the participating towns.

Investment for the Energy Efficiency

Program was R$5 million.

To reinforce awareness on the proper use

of electric energy, AES Eletropaulo invests in

the mass media – with advertisements on

TV and radio – and in 2010 launched the

Consumo Mais Inteligente (More Intelligent

Consumption) Program, focused on

encouraging attitudes that result not only

in financial savings but also in improving

the public’s quality of life. Energy Efficiency

projects, run out by the company, are

described on the Consumo Mais Inteligente

site (www.consumomaisinteligente.com.br).

Fornecedor Cidadão (Citizen supplier)

In the Inclusive and Social Business sphere,

the Fornecedor Cidadão project was created

to provide training aimed at the distribution

business and to train people to be AES Brasil

suppliers. The result of ideas developed in

the Ethos Institute’s Grupo Referencial de

Empresas em Sustentabilidade - Sustainability

Reference Group of Companies in (GRES),

the project’s goals are: the generation of

income for the low-income community; the

inclusion of women in the energy sector,

increased diversity; and the reduction of the

turnover rate among suppliers.

The project’s first initiative was the

Training of Women Electricians, which

offered a vocational training course in

electricity – divided into two classes - for 41

women from low-income communities. The

women are linked to the suppliers Socrel

and FM Rodrigues, service providers for AES

Eletropaulo, in the activity of shutting off

and reconnecting electric connections. The

target for 2011 is to expand the project to

other AES Brasil suppliers.

Among the preliminary results, were

approval by the supplier (no dismissals),

incorporation of the safety culture into the

employees’ daily work routine and high

productivity.

Empreender com Energia (Enterprise

with Energy)

The Empreender com Energia (Enterprise

with Energy) program encourages social

enterprise in low-income communities. For

this, community members organize a mini-

company and with monitoring, learn how

to administer it during a year. In 2010,

two groups with 22 community members

were formed with individual entrepreneurs

from activities such as handicrafts in

general, sewing, IT and cleaning products.

Programa de Voluntariado Energia do

Bem (Energy for Good Volunteer’s

Program)

Energia do Bem is an AES Brasil

volunteer’s program whose aim is to

engage with and offer support to company

and outsourced employees and their

family members who want to voluntarily

contribute to the development of the

communities in which AES is active.

Launched in 2009, in 2010 the project

had 713 volunteers from AES Eletropaulo

(12.5% of the workforce).

To support the program, AES Brasil

companies offer a link to divulge voluntary

opportunities, and the donation is up

to four hours per month from working

hours for voluntary work, including

transportation by a company-licensed taxi

to the institution closest to the workplace.


The spheres of Energia do Bem

Distributing Energia do Bem: has the

objective of mobilizing employees to take part

in periodic and emergency campaigns, such

as the Campanhas do Agasalho e de Natal

(Clothes Donation and Christmas Campaigns),

encouraging donations for social projects in

aid of children and adolescents. In 2010,

AES Brasil’s Christmas Campaign helped

1,188 children and the Clothes Donation

Campaign involved 37 institutions

throughout the concession areas where

Group companies operate. The Program

also mobilized employees to contribute to

helping people affected by natural disasters

such as those in Chile and Haiti, São Paulo

and São Luis do Paraitinga. Clothes, shoes

and domestic utensils were collected

and bank accounts opened for financial

donations.

Agindo para Transformar (acting for

Change): aimed at social engagement and

the employees’ voluntary participation

in AES Eletropaulo’s partner institutions.

It also includes the selection and

monitoring of social projects registered

in the Conselhos Municipais dos Direitos

da Criança e do Adolescente Municipal

Councils for Children’s and Adolescents’

Rights (CMDCAs), which receive 1% of

income tax owed by the company. In

2010, AES Eletropaulo allocated R$2.3

million to 15 social projects in three

municipalities in the concession area.

Empreendendo na Comunidade

(enterprise in the Community):

implemented in 2010, the goal is to

encourage social enterprise among

employees through the presentation of

social projects to be developed – with

the support of AES Eletropaulo – in

the communities. The results will be

evaluated in 2011.

MANAGEMENT OF THE COMPANy’S IMPACT ON THE NEIGHBORING COMMuNITy GRI SO1 GRI PR5 GRI SO1

2008 2009 2010

Number of the community’s complaints – impacts caused by the company’s activities

19 11 7

Number of improvements implemented in the company’s processes based on the community’s complaints

2 3 1

B) COMPANy’S INVOLVEMENT IN LOSSES RELATED TO THIRD PARTIES

2008 2009 2010

Amount claimed in lawsuits (R$ 000) 124,370 144,905 158,717

Provision recorded in liabilities (R$ 000) 11,146 11,435 14,995

Number of lawsuits in progress 256 249 273

Number of parties to the lawsuits 325 323 353

cont

Number of volunteers

557

713

2009 2010


COMPANy’S INVOLVEMENT IN SOCIAL ACTIONS GRI EC4

2008 2009 2010

Resources applied in education (R$ 000) 12,100 16,385 23,653

Resources applied in health and sanitation (R$ 000) 0 0 0

Resources applied in culture (R$ 000) 7,295 6,109 11,885

Other resources applied in social actions (R$ 000) 1,276 974 2,757

Amount intended for social actions (not including legal obligations, taxes, employee benefits) (%)

23.05 27.86 30.00

Of the total intended for social actions, percentage of donations in products and services (%)

0,00 0,00 0,00

Of the total intended for social actions, percentage of donations in cash (%) 8 7 5

Of the total intended for social actions, percentage of investments in own social project (%)

87.48 90.30 87.00

Employees who perform voluntary work for the community outside the company / total employees (%)

ND 12.77 13.00

Number of monthly hours donated (released from the normal work day) by the company for employees’ voluntary work

ND ND 2,852

Consumers enrolled in the “Bolsa Família” program/ number of consumers in the low-income class (%) 6.10 6.80 13.8

COMPANy’S INVOLVEMENT IN CuLTuRAL, SPORTS AND OTHER PROJECTS (ROuANET LAW, STATE INCENTIVES)¹

2008 2009 2010

Amount of resources intended for the projects (R$ 000) 8,971 7,001 15,513

Number of projects benefited by the sponsorship 22 30 39

Amount of resources intended to the largest project (R$ 000) – provide details of the largest project: project title, beneficiaries (sponsored person: individual or legal entity)

7.261 Casa de Cultura e Cidadania. Applicant - H. Melilo. Description: this Project serves 1,000 low-income children and teenagers highly subject to social vulnerability, in addition to 300 adults of the community itself with projects for income gener

5.771 Casa de Cultura e Cidadania. Applicant - H. Melilo. Description: this project serves 1,500 low-income children and teenagers highly subject to social vulnerability, in addition to 400 adults of the community itself with projects for income generation ncentive.

9.051 Casa de Cultura e Cidadania. Applicant - H. Melilo. Description: this project serves 1,500 low-income children and teenagers highly subject to social vulnerability, in addition to 400 adults of the community itself with projects for income generation ncentive.

GOVERNMENT AND SOCIETy

a) Management of the company’s impact on the neighboring community

2008 2009 2010

Resources allocated to federal, state and municipal governmental programs (not provided for in law) (R$ 000)

0.00 0.00 0

Number of initiatives, events and campaigns focused on the citizenship development (voting exercise, conscientious consumption, anti-corruption practices, children’s rights etc)

2,883 3,647 8,887

Publicity resources intended for citizenship development institutional campaigns (R$ 000)

7,057 9,440 12,405

Resources invested in tax incentive-based programs/total social investment resources (%)

43 30 34

LOW-INCOME RATE

2008 2009 2010

Number of low-income clients/consumers 724,378 729,547 758,850

Total clients/consumers with low-income rate in relation to the total residential clients/consumers (%)

13.77 13.40 13.50

Revenue from residential low-income consumers (R$ 000) 95,344 102,948 112,753

Total residential low-income revenues in relation to the total residential revenues (%)

2.62 2.48 2.49

Subsidy received (Eletrobrás) for low-income consumers (R$ 000) 26,135 8,876 39,730

1 Lei Rouanet, incentivos estaduais, etc.


Energy EfficiencyCampaign GRI Eu7; Eu24

AES Eletropaulo allocates 0.5% of its net

operating revenue to the Energy Efficiency

Campaign, in compliance with the decision

of the Brazilian energy agency, Aneel,

in addition to company funds. In 2010,

investments totaled R$18.2 million from

company funds and R$62.5 million from

compulsory resources.

Part of the Energy Efficiency program is

the Turning Consumers into Customers

project – the regularization of electricity

connections in low-income communities –

and projects aimed at public and corporate

customers, as well as Eletropaulo in

Schools (read more on page 90).

Turning Consumers into Customer GRI EC9; SO1; Eu22

The aim of the Turning Consumers into

Customers Program is the regularization

of electric energy connections, improving

energy supply conditions to low-income

communities and the surrounding area,

disseminating guidelines on safe and

efficient use of electricity and promoting

social inclusion.

Since 2004, over 411 thousand families

have benefited from the regularization

of their electricity connections. In 2010

alone, 55.5 thousand regularizations

were made, with an investment of

R$48.4 million, with R$18.2 million from

company funds and R$30.2 million from

compulsory resources as part of the

Energy Efficiency Program.

The starting point is a visit to the

community to build the relationship, get to

know people and explain the project’s goals.

After these contacts, the regularization

work begins.

To help the community have the financial

conditions to pay their electricity bills, AES

Eletropaulo contributes to reducing energy

consumption, replacing incandescent light

bulbs with compact fluorescent ones,

as well as refrigerators in a precarious

state, installing smart showers and also

renovating internal electric installations in

houses in poor condition.

In addition to being more efficient in

terms of energy consumption, the new

refrigerators use isobutane gas and foam

with cyclopentane gas that does not harm

the ozone layer. Moreover, the precarious

refrigerators are disposed of correctly by

specialist companies, who recycle and re-

use the component materials.

The Turning Consumers into Customers

Project also promotes citizenship, given

that the customer ends up with a proof

of residence (the electricity bill), enabling

eligibility for diverse benefits in society.

To measure the project’s results, periodic

satisfaction surveys are carried out in

the regularized communities. The next is

scheduled for 2011.

For 2011, the target is to reduce the

default rate among new customers. The

campaign “Pagou em dia, é só alegria”

(Happiness is paying on time) was launched

in 2010, with a seven-month duration.

All customers in the areas regularized by

AES Eletropaulo between 2004 and June

2010 and with their bills paid up and their

registration regularized take part in the

campaign. Participation is automatic, as

numbers are generated automatically, with

a monthly draw on the campaign site:

(www.pagouemdiaesoalegria.com.br).

Each month, 60 tickets worth R$200 are

drawn, and one worth R$5,000. Throughout

the campaign, those who have already

won are eligible to win two prizes worth

R$105,000 each to do a makeover of their

houses by architect Marcelo Rosenbaun,

the same as in the feature “Lar, Doce Lar”

(Home, Sweet Home) in the Rede Globo TV

program “Caldeirão do Huck”.

In three months of the campaign, the

number of paid-up customers rose by 6.3%.


Energy efficiency projects GRI EN6; EN26

As well as the project aimed at low-

income customers, AES Eletropaulo

invests in projects for customers in the

commercial, industrial, public authorities

and services groups. In 2010, AES

Eletropaulo invested R$32.3 million in

projects for these groups and enabled

savings of 18,932 MWh/year, enough to

supply over 7 thousand residences.

PROJECT DESCRIPTION SEGMENT ACTIVITy BENEFITED FINAL uSE INVESTMENT (R$)

State Education Secretary

Total replacement of schools’ lighting systems, including external areas, such as sports courts, parking and forecourts. The project included the raising of teachers and students’ awareness on questions referring to energy efficiency, safety and the environment. Material removed in previous administration scheduled for disposal.

Public Authorities

Education 400 Lighting R$ 13,166,771.00

Schools in São Caetano

Modernization of lighting system in public buildings with use of energy-saving light bulbs, electronic reactors and high-reflection guttering.

Public Authorities

Public Buildings

16 Lighting R$ 654,076.00

Cidade I Building

Modernization of the building’s air-conditioning system with the installation of 02 chillers with a centrifugal 500TR compressor, 56 humidifier units replaced the existing self-contained units, 3 chilled water circulation pumps for the secondary circuit built to feed the air-conditioners in blocks 1 to 4, 3 condensation water circulation pumps and two chilling towers.

Public Authorities

Public Authorities

1 Air-conditioning

R$ 5,954,929.00

Beneficência Portuguesa Hospital - blocks 3, 4 and 5

52 self contained units removed and replaced with fan coils, supplied with chilled water from Chilled Water unit built for the project. The unit has a capacity for 600 TR divided into 2 chillers of 300 TR each.

Commercial Health 1 Air-conditioning

R$ 4,394,484.00

PM Mauá - Nardini Hospital

Modernization of the lighting system of public buildings with the use of energy-efficient light bulbs, electronic reactors and high-reflection guttering.

Public Authorities

Health 1 Lighting R$ 196,662.00

cont

Among the energy efficiency projects,

technological improvements were

implemented such as the replacement

of equipment in systems for lighting, air

conditioning, refrigeration, electric motors

and water heating. One of the main

benefits for society is the reduction of

energy consumption and also of carbon

emissions.


PROJECT DESCRIPTION SEGMENT ACTIVITy BENEFITED FINAL uSE INVESTMENT (R$)

ETEC and FATEC


Public Authorities


Rio Grande da Serra City Hall


Public Authorities

Public Authorities

12 Lighting R$ 123,213.00

Diadema Public Buildings


Public Authorities

Public Buildings

75 Lighting R$ 1,707,254.00

Itapecerica da Serra Hospital


Public Authorities

Health 1 Lighting R$ 225,008.00

Santana de Parnaíba Public Buildings


Public Authorities

Public Buildings

10 Lighting R$ 452,740.00

PMSP Municipal Schools (100)


Public Authorities


Ayrton Senna underpass

Complete replacement of the old lighting system of 3,008 sodium light bulbs of from 150 to 400W by LEDS with 24.5W to 86W reducing consumption by more than 80%. Conclusion scheduled for Jan. 2011.

IP IP 1 Lighting R$ 4,286,386.00

São Paulo Municipal Hospitals


Public Authorities

Health 15 Lighting R$ 1,355,751.00

Incor (Hospital das Clinicas + Children’s Institute)

Project begun in 2010 with conclusion scheduled for 2011 where 3,500 m2 of thermal film will be installed in the building’s glass façade to reduce use of air conditioning systems and the Children’s Institute’s CAG will be renovated with the removal of three 80 TR chillers and the installation of two 120 TR chillers with the replacement of the water pumps and the installation of an automated system. The chillers and pumps removed will be disposed of by the company contracted by AES Eletropaulo for the execution of this project.

Health Health 2 Air conditioning

R$ 425,670.00

Sports Educational Centers PMSP

Replacement of the whole lighting system in 32 municipal parks. Project started in 2010 with completion scheduled for 2011.

Public Authorities

Sports and Leisure

32 Lighting R$ 74,668.00

Finance Secretariat

Modernization of the lighting system of public buildings with the use of energy-efficient light bulbs, electronic reactors and high-reflection guttering Project started in 2010 with completion scheduled for 2011.

Public Authorities

Public Authorities

1 Lighting R$ 33,950.00

São Paulo Legislative Assembly

Project begun in 2010 with completion scheduled for 2011 where 300 window air conditioning units were replaced with a new air conditioning system using Variable Refrigerant Volume (VRV) technology with a total capacity of 230 TR.

Public Authorities

Public Authorities

1 Air conditioning

R$ 957,781.00

PM Jandira Modernization of the lighting system of public buildings with the use of energy-efficient light bulbs, electronic reactors and high-reflection guttering Project started in 2010 with completion scheduled for 2011.

Public Authorities

Public Buildings

47 Lighting R$ 21,695.00

PM Ribeirão Pires

Modernization of the lighting system of public buildings with the use of energy-efficient light bulbs, electronic reactors and high-reflection guttering. Project begun in 2010 with completion scheduled for 2011.

Public Authorities

Public Authorities

59 Lighting R$ 27,068.00

cont


energetic efficiency program - uses of resources per consumer class (r$ thousand)

RESIDENTIAL 2008 2009 2010

With no charge for consumer (A) 0 0 0

With charge for consumer (B) 0 0 0

Total resources in the segment ( C ) 0 0 0

Total units served in the segment (D) 0 0 0

Average investment per consumer (C/D) 0 0 0

RESIDENTIAL - LOW INCOME 2008 2009 2010

Without charge for consumer (A) 20,107 32,832 30,195

With charge for consumer (B) NA NA NA

Total resources in the segment ( C ) 20,107 32,832 30,195


Total units served in the segment (D) 74,500 80,177 55,473

Average investment per consumer (C/D) 0.2699 0.4095 0.5443

Population served (total number of inhabitants residential + low income) (E) 298,000 320,708 221.,892

Average investment per population served (total cost: residential + low income per inhabitant) (C/E)

0.0675 0.1024 0.1361

COMMERCIAL 2008 2009 2010


With charge for consumer (B) 1,300 1,194 144



Average investment per consumer (C/D) 329.73 336.00 1,781.50

INDuSTRIAL 2008 2009 2010

Without charge for consumer (A) 0 0 0

With charge for consumer (B) 1,247 232 0

Total resources in the segment ( C ) 1,247 232 0


Average investment per consumer (C/D) 20.11 33.14 0

RuRAL 2008 2009 2010


With charge for consumer (B) 0 0 0



Average investment per consumer (C/D) 0 0 0

PuBLIC LIGHTING 2008 2009 2010

Without charge for consumer (A) 5,154 359 4,286

With charge for consumer (B) NA NA 0

Total resources in the segment ( C ) 5,154 359 4,286

Total kW installed (F) 0 0 0

Average investment per kW installed (C/F) 0 0 0

PuBLIC SERVICES 2008 2009 2010





Average investment per consumer (C/D) 11.80 0.00 0,.00

GOVERNMENT 2008 2009 2010





Average investment per consumer (C/D) 34.45 17.76 61.58

MuNICIPAL ENERGETIC MANAGEMENT 2008 2009 2010

Invested resources - own 25 0 0

Invested resources - third parties NA NA 0

Total resources 25 0 0

cont


EDuCATION - ENERGy CONSERVATION AND RATIONAL uSE (R$ 000) 2008 2009 2010

Invested resources - own 278 575 4,928

Invested resources - third parties 0 0 0

Total resources 278 575 4,928

SOLAR HEATING (FOR REPLACEMENT OF ELECTRIC SHOWERS) 2008 2009 2010

Invested resources - own 2,893 213 0

Invested resources - third parties NA NA 0

Total resources 2,893 213 0

RuRAL 2008 2009 2010

Invested resources - own 0 0 0

Invested resources - third parties 0 0 0

Total resources 0 0 0

TOTAL RESOuRCES INVESTED IN ENERGETIC EFFICIENCy PROJECTS (R$ THOuSANDS)

2008 2009 2010

With no charge for consumer 60,550 55,800 62,409

With charge for consumer 2,547 1,426 144

Total resources 63,097 57,226 62,553

RELATIVE PARTICIPATION OF THE RESOuRCES IN ENERGETIC EFFICIENCy PROJECTS (R$ THOuSANDS)

2008 2009 2010

Per consumer class

Residential segment resources in relation to the total invested in the PEE (Energetic Efficiency Program) (%)

0.00 0.00 0.00

Low-income residential resources in relation to the total invested in the PEE (%) 31.9 57.4 48.3

Commercial resources in relation to the total invested in PEE (%) 13.6 7.6 5.7

Industrial resources in relation to the total invested in the PEE (%) 2.0 0.4 0.0

Rural resources in relation to the total invested in the PEE (%) 0.0 0.0 0.0

PARTICIPAçãO RELATIVA DOS RECuRSOS EM PROJETOS DE EFICIêNCIA ENERGÉTICA (R$ MIL)

2008 2009 2010

Per consumer class

Public Lighting resources in relation to the total invested in the PEE (%) 8.2 0.6 6.9

Public services resources in relation to the total invested in the (%) 0.4 0.0 0.0

government resources in relation to the total invested in the PEE (%) 27.1 25.9 31.3

Per types of project

Municipal energetic management resources in relation to the total invested in the PEE (%)

0.0 0.0 0.0

Education resources in relation to the total invested in the PEE (%) 12.3 7.7 7.9

Solar heating resources in relation to the total invested in the PEE (%) 4.60 0.40 0.0

RESIDENTIAL 2008 2009 2010

Energy saved (in MWh) per year NA NA NA

Reduction in peak demand (in MW) NA NA NA

Cost avoided with the energy saved NA NA NA


Energy saved (in MWh) per year 111,233.00 143,579.00 69,415.15

Reduction in peak demand (in MW) 70.26 83.15 32.77

Cost avoided with the energy saved 0.18 0.23 0.43

COMMERCIAL 2008 2009 2010

Energy saved (in MWh) per year 4,953.87 2,306 1,435

Reduction in peak demand (in MW) 1,495.25 807.00 551.00


INDuSTRIAL 2008 2009 2010

Energy saved (in MWh) per year 3,770.30 792.23 0

Reduction in peak demand (in MW) 698.43 148.60 0

Cost avoided with the energy saved 0.33 0.29 0

RuRAL 2008 2009 2010

Energy saved (in MWh) per year 0 0 0

Reduction in peak demand (in MW) 0 0 0

Cost avoided with the energy saved 0 0 0

PuBLIC LIGHTING 2008 2009 2010

Energy saved (in MWh) per year 7,849.44 456.00 2,840.00

Reduction in peak demand (in MW) 106.40 55.00 469.00


cont


PuBLIC SERVICES 2008 2009 2010

Energy saved (in MWh) per year 267.68 0 0

Reduction in peak demand (in MW) 73.33 0 0

Cost avoided with the energy saved 0.88 0 0

GOVERNMENT 2008 2009 2010

Energy saved (in MWh) per year 18,252.45 14,312.00 14,657.00

Reduction in peak demand (in MW) 4,310.26 3,953.00 4,530.00

Cuts avoided with the energy saved 0.94 1.03 1.34

SOLAR HEATING 2008 2009 2010

Energy saved (in MWh) per year 1,491.87 109.00 0

Reduction in peak demand (in MW) 1,042.12 71.00 0

Cost avoided with the energy saved 1.94 1.95 0

INTERNAL EFFICIENCy (INTO THE COMPANy) 2008 2009 2010

Energy saved (in MWh) per year NA NA 0

Reduction in peak demand (in MW) NA NA 0

Cost avoided with the energy saved NA NA 0

Total NA NA 0

Research and DevelopmentGRI EC8; Eu8

Research and Development (R&D) at AES

Eletropaulo encourages innovation and

creates investment opportunities aligned

with the business strategy and the valuing

of knowledge produced by employees in

partnership with institutes, universities,

manufacturers and public and private

companies for technology development.

The R&D program is part of the daily

routine at AES Brasil Group companies,

within the perspective of continuous

improvement and quality in its processes

using tools that guarantee the safety and

reliability of the services. The program

also encourages opportunities for

sustainable growth, capable of generating

benefits for customers, shareholders,

employees, partners, suppliers and society.

In addition to practical results, the

intangible results (Masters, Doctorates,

employee specializations) provide future

expectations and opportunities that can be

economically valued.

The company allocates 0.2% of its net

operating revenue (ROL) to the R&D

program, in compliance with electric

energy sector legislation. The projects

also include technical, commercial

and operating processes; the safety of

employees and outsourced workers, in

addition to the promotion of sustainable

initiatives for the communities, among

other related topics.

Among the projects concluded, the

Virtual Environment Simulation for

the training on critical tasks in the

area of power distribution should be

emphasized, the result of which was the

development of a virtual reality platform

for live-wire team training, a system

comprising a training room, software

and methodology. This project provided

for the creation of an interactive and

real training process leading to more

integrated action by maintenance teams


Resources invested in Technological and Scientific Research and Development - (R$ thousand)PER RESEARCH TOPIC (R&D MANuAL - ANEEL) 2008 2009 2010 TARGET 2010

Energetic efficiency (A) 0 2,659 3,480 4,461

Renewable or alternative source (B) 0 0 0 0

Environment (C) 683 509 2,916 4,119

Quality and reliability (D) 1,818 1,919 3,499 3,486

Planning and operation (E) 5,395 10,061 18,239 24,452

Supervision, control and protection (F) 394 4,192 3,165 4,137

Measurement (G) 1,831 1,451 3,144 3,242

Network data transmission (H) 678 1,082 2,152 4,367

New materials and components (I) 288 36 1,738 3,359

Development of technology against fraud and theft (J) 1,414 2,950 1,874 5,562

total r&D investment (K) 12,500 24,858 40,205 57,184

Investment in Energetic Efficiency (A) over Total invested in R&D (K) (%) 0.0 10.7 9% 8%

Investment in Renewable or Alternative Source (B) over Total invested in R&D (K) (%)

0.0 0.0 0% 0%

Investment in Environment (C) over Total invested in R&D (K) (%) 5.5 2.0 7% 7%

Investment in Quality and Reliability (D) over Total invested in R&D (K) (%) 14.5 7.7 9% 6%

in critical situations involving risk in the

execution of live-wire tasks; the project

to optimize the reticulated underground

distribution system implemented

a signaling system for faults in

underground power lines, together with

the so-called maneuvering switches.

Installed in the energy feeder circuits, by

way of power control, this tool allows

cable connection maneuvers to be made

in order to re-establish or redirect the

power load, improving the energy supply

quality indicators.

Among the projects in progress are the

Project SIM – Sistema de Informações

Meteorológicas (Meteorological Information

System); the main product of which will

be an automated meteorological tracking

system and the issuing of alerts for short-

term severe weather conditions. This system

will enable the carrying out of mobilization

strategies for resources needed to mitigate

impacts on the power grid, improving the

supply quality; the Comunicação Inteligente

Integrado a Transformador de Distribuição

– (Smart Transformer Project); these smart

cont

transformers are able to monitor themselves

and the power supply grid, as well as interact

with the company’s supervision and control

systems reliably and in real time, significantly

improving the capacity and speed of grid

problem solving, resulting in improved power

supply quality indicators.

In 2010, R$40.2 million was invested in

98 projects, of which 19 were completed

the same year. For 2011, investments

in the order of R$39.7 million in R&D

projects are expected, in a total of 54

projects to be carried out during the year.


PER RESEARCH TOPIC (R&D MANuAL - ANEEL) 2008 2009 2010 TARGET 2010

Investment in Planning and Operation (E) over Total invested in R&D (K) (%) 43.2 40.5 45 43

Investment in Supervision, Control and Protection (F) over Total invested in R&D (K)(%)

3.1 16.9 8 7

Investment in Measurement (G) over Total invested in R&D (K) (%) 14.6 5.8 8 6

Investment in Network Data Transmission (H) over Total invested in R&D (K) (%) 5.4 4.4 5 8

Investment in New Materials and Components (I) over Total invested in R&D (K) (%)

2.3 0.1 4 6

Investment in Development of Technology Against Fraud and Theft (J) over Total invested in R&D (K) (%)

11.3 11.9 5 10

Public bodies GRI 4.13; SO5

Electric energy distribution is a regulated

activity and requires the company’s

cooperation with the public authorities

at various levels, and with the agencies

that set the sector’s regulatory standards.

The main energy sector regulatory body

is the Brazilian Electric Energy Agency

(Aneel), linked to the Ministry of Mines

and Energy, which represents the Federal

Government in terms of the technical,

economic and financial aspects of

the service concession, regulating and

inspecting the production, transmission

and sale of electric energy, in compliance

with federal policies and guidelines.

The company is also associated with

the Câmara de Comercialização de

Energia Elétrica (CCEE) - (Electric Power

Commercialization Chamber), a civil

association that administers contracts signed

between the generators, sales companies,

distributors and non-captive consumers.

For environmental questions, AES

Eletropaulo maintains relations with the

Instituto Brasileiro do Meio Ambiente

e dos Recursos Naturais Renováveis

(Ibama) (Institute for the Environment and

Renewable Natural Resources) the agency

responsible for environmental licensing. The

company also maintains a relationship with

state agencies, such as Arsesp (São Paulo

State Regulatory Agency for Sanitation

and Energy) and municipal governmental

agencies responsible for certain licenses,

such as Cetesb, in charge of licensing

activities in São Paulo state. With the Public

Prosecutor’s Office, the company studies the

incorporation of this body’s guidelines into

its socio-environmental practices.

AES Eletropaulo also maintains a close

commercial and institutional relationship

with São Paulo state government secretaries

and municipalities in its concession area, with

the aim of adequately complying with their

specific requirements (diverse works and

electric energy consumption) as well setting

up partnerships that benefit the public.

Sendi 2010

The National Seminar of Electric Energy

Distribution – SENDI is one of the most

important events in the distribution sector.

Held every two years it promotes the

exchange of experiences among the energy

concession utilities and contacts with

international specialists on the theme. In

2010, the event took place in São Paulo

and was coordinated by Abradee and AES

Eletropaulo.

Held on November 22 to 25, the event

included plenary sessions, presentations of

technical projects, lectures and exhibitions

on the electric power distribution sector.


Annual Social Scorecard/20101 - CALCuLATION BASE 2010 AMOuNT (R$ THOuSANDS) 2009 AMOuNT (R$ THOuSANDS)

Net revenues (RL) 9,697,157 8,785,637

Operating result (RO) 1,913,032 1,277,734

Gross payroll (FPB) 479,330 519,298

2 - INTERNAL SOCIAL INDICATORS AMOuNT (R$ THOuSANDS)

% OF FPB % OF RLAMOuNT (R$ THOuSANDS)

% OF FPB % OF RL

Meals 35,922 7.49% 0.37% 26,998 5.20% 0.31%

Compulsory social charges 101,769 21.23% 1.05% 81,816 15.76% 0.93%

Private Pension 167,914 35.03% 1.73% 180,612 34.78% 2.06%

Health 30,945 6.46% 0.32% 27,457 5.29% 0.31%

Occupational health and safety 14,002 2.92% 0.14% 9,045 1.74% 0.10%

Education - 0.00% 0.00% 1,387 0.27% 0.02%

Culture - 0.00% 0.00% - 0.00% 0.00%

Professional training and development 3,540 0.74% 0.04% 1,908 0.37% 0.02%

Daycare or daycare assistance 979 0.20% 0.01% 754 0.15% 0.01%

Profit sharing 48,873 10.20% 0.50% 42,778 8.24% 0.49%

Others - 0.00% 0.00% 22,375 4.31% 0.25%

Total - Internal social indicators 403,944 84.27% 4.17% 395,694 76.20% 4.50%

3 - ExTERNAL SOCIAL INDICATORS AMOuNT (R$ THOuSANDS)

% OF RO % OF RLAMOuNT (R$ THOuSANDS)

% OF RO % OF RL

Education 21,789 1.14% 0.22% 16,228 1.27% 0.18%

Culture 11,885 0.62% 0.12% 5,176 0.41% 0.06%

Health and sanitation - 0.00% 0.00% - 0.00% 0.00%

Sport 2,350 0.12% 0.02% 975 0.08% 0.01%

Daycare 1,845 0.10% 0.02% 1,914 0.15% 0.02%

Fight against hunger and food safety - 0.00% 0.00% 2,080 0.16% 0.02%

Others 408 0.02% 0.00% 10,538 0.82% 0.12%

Total contribution to society 38,277 2.00% 0.39% 36,911 2.89% 0.42%

Taxes (excluding social security) 3,942,676 206.10% 40.66% ,677,620 287.82% 41.86%

Total - External social indicators 3,980,953 208.10% 41.05% 3,714,568 290.72% 42.28%

4 - ENVIRONMENTAL INDICATORS GRI EN30AMOuNT (R$ THOuSANDS)

% OF RO % OF RLAMOuNT (R$ THOuSANDS)

% OF RO % OF RL

Investments related to production/operations 9,903 0.52% 0.10% 15,885 1.24% 0.18%

Investments on external programs and/or projects 66,704 3.49% 0.69% 52,528 4.11% 0.60%

Total environmental investments 76,607 4.00% 0.79% 68,413 5.35% 0.78%

In relation to establishing “annual goals” to minimize waste and overall consumption in production/operations and to enhance efficient use of natural resources, the company:

( ) has no goals ( ) fulfills 51 to 75%( ) fulfills 0 to 50% ( X ) fulfills 76 to 100%

( ) has no goals ( ) fulfills 51 to 75%( ) fulfills 0 to 50% ( X ) fulfills 76 to 100%

5 - WORKFORCE INDICATORS GRI LA13 2010 2009

No. of employees at the end of the period 5.663 4.360

No. of persons hired during the period 1.643 516

No. of outsourced workers 7.847 7.191

No. of interns 68 62

No. of employees over 45 years of age 1.023 678

No. of women working at the company 1.123 890

% of management positions held by women 24,18% 20,70%

No. of African-Brazilians working at the company 994 633

% of management positions held by African-Brazilians

1,10% 6,00%

No. of disabled or persons with special needs 62 60

cont


6 – RELEVANT INFORMATION ON THE ExERCISE OF CORPORATE CITIZENSHIPGRI HR5; EC1

2010 2011 TARGETS

Ratio between highest and lowest salary at the company

69.06 0

Total number of work-related accidents 63 0

Social and environmental projects developed by the company are defined by:

( ) directors(X) directors

and management

( ) all employees

( ) directors(X) directors

and management

( ) all employees

Working environment safety and health standards are defined by:

(X) directors and

management

( ) all employees

( ) all + Cipa( ) directors

and management

(X) all employees

( ) all + Cipa

In relation to the unions’ free right to collective bargaining and to internally represent workers, the company:

( ) is not involved

( ) follows OIT rulings

(X) encourages and follows OIT rulings

( ) is not involved

( ) follows OIT rulings

(X) encourages and follows OIT rulings

The private pension plan is extended to: ( ) directors( ) directors

and management

(X) all employees

( ) directors( ) directors

and management

(X) all employees

The profit sharing plan is extended to: ( ) directors( ) directors

and management

(X) all employees

( ) directors( ) directors

and management

(X) all employees

On selecting suppliers, the same ethical, social responsibility and environmental standards followed by the company are:

( ) not considered

( ) are suggested

(X) are demanded

( ) not considered

( ) are suggested

(X) are demanded

With respect to employee participation in volunteer work programs, the company:

( ) is not involved

( ) gives support

(X) organizes and

encourages

( ) is not involved

( ) gives support

(X) organizes and

encourages

Total number of complaints and criticisms by consumers:

In the company 29,251

at Procon 5,281

In Court 3,288In the

company 0at Procon 0 In Court 0

% of complaints and criticisms met or resolved:In the

company 67%at Procon 57% In Court 41%

In the company _______%

at Procon _______%

In Court _______%

Total added value to be distributed (R$ Thousands):

In 2010 :7,326,058 In 2009: 6,537,993

Value Added Distribution (DVA):71% government 8% employees 18% sharehold-

ers 2% third parties 69% government 10% employees 18% share-

holders 4% third parties


Environment

To preserve is to raise awareness

With the release of the inventory of the Carbon Disclosure Project, AES Eletropaulo takes another step forward in reducing greenhouse gas emissions.

The environmental policy is aimed at raising the awareness of employees and the general public and guides investments in technology and research and development projects.

a GRI EN26; SO5

ES Eletropaulo uses as a guide

its Environmental Management

System (SGA) and AES Brasil

Group’s Integrated Policy for Environment

and Occupational Health and Safety,

in which commitments that must be

assumed by all company workers are

defined, This policy provides for raising

the awareness of employees and the

public in general, as well as investments in

technology and research and development

projects aimed at environmental

conservation,

The SGA is aimed at ensuring compliance

with the regulations relating to the

environment and includes company

activities, mainly those that present

greater environmental risk, so as to

minimize impacts, It also covers the

qualification and management of services

and materials suppliers in terms of

compliance with environmental legislation,

the company’s policies and the prevention

of environmental impacts and accidents,

In the search for continual improvement,

the system develops goals, targets and

management programs, Integrated to the

company’s Occupational Health and Safety

System (SSO), its prime mission is to give

support to the guidelines of AES Corp,

regarding environmental standards, This

system is audited annually to confirm its

compliance with these requirements and

Investments GRI EN30

During 2010, AES Eletropaulo spent and

invested R$76,6 million in Environmental

activities, such as training, improvements

in processes, new technologies,

evaluations for interested parties, studies,

licensing, environmental compensation,

investigation of potential liabilities and

environmental rectifications with suppliers,

legal standards, The company also takes

part in forums on environmental topics and

interacts with its partners and suppliers for

the development of its value chain,

AES Eletropaulo maintains the

ISO 14001:2004 certification of its

Environmental Management System

applicable to the segment of transmission

lines, sub-stations, administrative

headquarters buildings, customer service

stores and Operations Center (COE),

Currently, 62,5% of the segments are

certified and the company aims to

continue expanding this percentage,

In 2010, the company maintained

initiatives reflecting its commitment to

sustainability: it began releasing the results

of its greenhouse gases inventory - the

Carbon Disclosure Project (CDP), It was also

an integral part of the Energy Committee

together with Cetesb and the Climate

Change and Eco-economy Committee

organized by the Municipal Secretary for

Green and the Environment of São Paulo

(SVMA/SP); and joined the Empresas pelo

Clima (Companies for Climate) initiative

- EPC, organized by the Getúlio Vargas

Foundation aimed at strengthening public

policies related to the topic,

*� The results are in the CDP Brazil Report 2010, available at CDP Project.net

envIronMent

ISO 14001:2004

AES Eletropaulo maintained

the ISO 14001:2004

certification of its

Environmental Management

System. Currently, 62.5% of

the company’s

segments are certified.


Projeto Mananciais (Headwaters Project) GRI EN11; EN13

Headwaters are bodies of water used –

or of potential use – for public supply or

consumption by the public, Occupying

headwater areas illegally causes serious risks

and can jeopardize the water source, This

type of habitation has no basic sanitation

structure and its residues, including

sewage, end up draining into the water, The

impermeability of the soil is also damaged

by the removal of forest cover,

Implemented in 2006, the Projeto

Mananciais operates in ten of the thirteen

municipalities in the AES Eletropaulo

concession area, which are home to

headwaters protection areas (APMs),

The aim is to guarantee compliance with

environmental legislation and contribute

to public policies for a reduction in the

irregular occupation of these areas,

In 2010, AES Eletropaulo sought to

improve its Geographical Information

System (GIS), initiating discussions of a

technical cooperative agreement with

Cetesb that provides for geographical

information sharing and other guidelines

to manage and control electric grid

connections in headwater areas,

Atmospheric Emissions GRI EC8; EN18; EN19

To mitigate environmental impacts

resulting from its activities, AES

Eletropaulo has implemented management

actions in its operations and sets up

partnerships with public/private bodies,

The goal is to provide incentives for the

use of cleaner technologies and reduce the

emission of greenhouse gases (GGE),

The Energy Efficiency measures in the

State Schools Project, which includes

modernization of the lighting system by the

replacement of reactors and light bulbs, the

company expects to reduce emissions by

the equivalent of 1,106 tons of CO2,

Replacement of inefficient refrigerators

among low-income families (read more

on page 94) is expected to result in a

reduction of the equivalent of 2,300

tons of CO2 over the year, In addition,

the new refrigerators have no ozone

depletion potential (ODP),

The company also evaluates the

emission of gases with ozone depletion

potential (Fluid R22, Fluid R134 and Fluid

FM200), present in electrical equipment

systems and used in the maintenance of

air-conditioning and fire fighting, HCFC-

22 (R22) gas is used in air conditioning

systems, As well as R22, the company

also uses R134a and R407C gases in

air conditioning, which have no ozone

depletion potential,

01 Barueri 02 Cajamar03 Carapicuiba 04 Diadema05 Cotia06 Embu07 Embu-Guaçu08 Itapecerica da Serra 09 Itapevi10 Jandira11 Juquitiba12 Mauá

13 Osasco 14 Pirapora do Bom Jesus15 Ribeirão Pires16 Rio Grande da Serra17 Santana de Parnaíba18 Santo André19 São Bernardo do Campo20 São Caetano do Sul21 São Lourenço da Serra22 São Paulo23 Taboão da Serra24 Vargem Grande Paulista

Headwater protection areas

Headwater Protection Areas in the concession area

05 06

11

08

0412

16

18

20

22

2324

21

19

13

14

15

17

01

1009

02

03

07

GÁS GRI EN 19 2008 2009 2010

Carbon Hexafluoride (SF6)(t) Unavailable 0.304 0

Fluid R134 (t) 58 13 13

Equivalent tons of CFC 0.022 4.8 8.91*

*The increase in consumption of this gas was due to the renewal plans for air-conditioning equipment and systems at AES

Eletropaulo. The amount was increased in 30 new units of equipment installed in various company areas. Another factor

contributing to the increased consumption of this gas was the identification of equipment previously not included among

the preventive maintenance needing the use of gas R22. The expansion of preventive maintenance plans means that the

consumption will increase until it reaches 100% of the mapped equipment (scheduled to be completed in December

2011). After this, the consumption is expected to fall, with further increases depending on when the renovation, or

replacement, of the equipment and installations recurs.

Reservoirs


Vehicle fleet GRI EN18; EN 29

Started in 2009, the renewal of the

vehicle fleet prioritizes the acquisition of

vehicles with flex-fuel technology, less

polluting and more efficient compared

to previously used models, In 2010, the

fleet emitted 4,644 tCO2 from vehicles, a

reduction of 14% over the previous year,

In addition, every three months, AES

Eletropaulo monitors the emissions of its

diesel fleet – 42% of the total number of

vehicles – and, twice annually, prepares

a more detailed analysis in workshops

certified by Cetesb,

Clean development mechanisms

Activities related to greenhouse gas

emission (GGEs) reduction are included

in the company’s management plan

through joint initiatives with its operating

units, Some of them are considered Clean

Development Mechanisms (CDMs) by

international protocols, permitting their

trading as Reduced Emission Certificates,

or Carbon Credits,

Carbon Credits are certificates issued

by organizations that have been able

to reduce their emissions of GGEs,

The certificate can be traded on the

international market to countries needing

to fulfill emissions reductions targets

stipulated in the Kyoto Protocol,

Starting in 2010, the company

began managing its direct and indirect

greenhouse gas emissions in accordance

with practices stipulated by the GHG

Protocol, and started publishing its

company emissions inventory system, The

document was made public via the Carbon

Disclosure Project (CDP) on the site

www,cdproject,net,

Climate change and impacts on energy distribution GRI EC2

Climatic variations tend to cause problems in electric energy

distribution due to excess rain and wind in certain regions,

especially in summer,

To reduce the damage caused by the changes and to serve

the public, AES Eletropaulo created its Plano Verão (Summer

Plan), in which emergency situations are prioritized and a

greater number of teams are deployed, The company also runs

preventive projects such as the pruning of trees that could

cause risk to the electric system, (read more on page 46),

2008 2009 2010

10.21

6.36

4.21

6.52

4.21

9.73

6.05

9.2

Fuel consumption

Gasoline and diesel (Km/l)Alcohol (Km/l)Natural Gas/GNV/GN (Km/l)

MAIN PROJECTS FOR CREATING CARBON CREDITS

Project DescriptionAmount of equivalent CO2 reduced

Energy Efficiency Measures in Public State Schools

This project aims to modernize the lighting system in state schools in São Paulo by replacing reactors and light bulbs.

1,106 tons

Replacement of Refrigerators in low-income communities

The project replaces refrigerators in low-income communities in the metropolitan area of São Paulo with more efficient units.

2,3 tons


Environmental licensing

In 2010, Cetesb issued authorizations

to intervene in vegetation and areas of

permanent preservation, enabling AES

Eletropaulo to carry out grid maintenance

without the need to seek constant

approval from the public bodies,

Continuing with its environmental

licensing and regularization process, AES

Eletropaulo obtained 25 licenses and

authorizations to expand or build new

installations in 2010, During the period,

four exemptions for environmental

licensing were obtained as well as an

authorization to cross a body of water

from the Departamento de Águas e e

Energia Elétrica (Department of Water and

Electric Energy) – DAEE, for the overhead

branch of the Peri Substation,

Environmental Management Plans

are also in progress for works planned

or installed, aimed at reducing any

environmental impacts in the new

undertakings, Worksites are frequently

inspected to ensure environmental quality

in the work’s execution and services and

compliance with the conditions stipulated

in the license,

In 2010, the company also began

negotiations with Cetesb to obtain

licensing for projects built before 2004, All

projects begun after that date are licensed

in accordance with the requirements of

the environmental authorities,

Target

The target for 2011 is to obtain all the necessary environmental

licenses.


Environmental compensation GRI EN 14

Environmental compensation is a

mechanism created to counterbalance

environmental impacts resulting from

company activities, such as expansion

of the electric system that cannot be

mitigated,

In 2010, AES Eletropaulo planted 1,550

native saplings in Itapevi and 152 saplings

in Ribeirão Pires as a compensatory

measure, It also donated 520 saplings to the

Barueri municipality, 585 to Osasco and 89

to Taboão da Serra,

The company also invested In the

Pomar urbano (urban Orchard) Program,

recovering 37,3 hectares maintained

beneath a sub-transmission line,

LICENSES

Overhead Section of the Monte Azul Substation (LP)

Overhead Section of the ETD Tiradentes Substation (LO)

Overhead Section of the Peri Substation (LI)

Ibirapuera Substation Distribution Transformer (LI)

LTA BAN – Itaim (LI)

Relocation of the Overhead Sub-transmission Lines of the Piratininga Complex (LI)

Overhead Section of the Monte Azul Substation (LI)

Canindé Substation Distribution Transformer (LI)

Morumbi Substation Distribution Transformer (LI)

Santo Amaro Substation Distribution Transformer (LI)

Overhead Section of the ETD Sertãozinho Substation (LP)

Overhead Section of the Guaianazes Substation(LI)

Overhead Sub-transmission Line Bandeirante – Itaim (LI - Modified)

Overhead Sub-transmission Line Piratininga Sul (LO)

Authorization for suppression/intervention in area of permanent preservation (APP)

Maintenance of the Overhead Sub-transmission Line Itapevi

Maintenance of the Anastácio Distribution Circuit 106

Widening of the Safety Margin – Imigrantes 103

Relocation of Overhead Sub-transmission Lines of the Piratininga Complex

Overhead Sub-transmission Line Bandeirantes - Itaim

Overhead Distribution Line Ribeirão Pires - 103

Overhead Distribution Line Ribeirão Pires - 104

Overhead Line Monte Azul Substation

underground Sub-transmission Line Anhanguera

Overhead Sub-transmission Line Pirituba – Bandeirante

Overhead Section Ermelino Matarazzo Substation

Exemptions from Environmental Licensing

Oratório Substation Distribution Transformer

Overhead Section Lubeca Substation

Anhanguera underground Sub-transmission Line

João Clímaco Substation Distribution Transformer

LP – Prior License. LI – Installation License. LO – Operating License.


Waste disposal GRI EN22; EN26; EN30

Waste management follows the

guidelines of the Environmental

Management System (SGA) and AES Corp,

standards, and is focused on prevention

of soil and water pollution, All waste

resulting from company operations

undergoes a process of identification,

treatment and final disposal in

compliance with environmental

legislation, R$351,2 thousand was

invested to treat and dispose of all

hazardous waste,

HAZARDOuS WASTE2008 2009 2010

DISPOSALuNITS KILOS (KG)¹

Public lighting bulbs 31,181 24,665 4,292 Decontaminated and sent for recycling of metal parts

Fluorescent light bulbs 7,521 4,108 13,548 Decontaminated and sent for recycling of metal parts

Total 38,702 28,773 17,840

KILOS (KG)

Batteries 11,580 11,820 51,000 Recycling

Material impregnated with oil 118,975 91,231 90,000 Co-processing in cement kilns²

Insulating mineral oil 462,000 866,000 1,300,000 Re-refining³

Total (Kg) 592,555 969,051 1,441,000

LITERS (L)

Lubricant oil 2,110 3,600 32,000 Re-refining

Total (L) 2,110 3,600 32,000

1) The disposal of light bulbs in 2010 was counted in kilos in alignment with the content of the disposal license.2) Use of industrial fuel waste and/or raw material in high-temperature kilns. 3) Industrial use for removal of additives, contaminant elements and products to degrade used or contaminated lubricant oils.

AES Eletropaulo makes efforts to heighten the employees’ awareness on the importance of the reuse of materials


GRI EN21

The company acquired another gas

chromatograph, used in monitoring the

quality of insulating fluids in transformers,

This enables more annual analyses for

checking the amount of PCB – harmful to

humans – found in insulating mineral oil

for electric equipment,

The resulting scrap is sold to

environmentally-evaluated recycling

companies, The principal materials recycled

are aluminum, iron, bronze, copper,

wooden crossarms, poles, reactors and

porcelain, In 2010, around four tons of

scrap was sold for R$7,7 million, The liquid

effluents are sent to the basic sanitation

network, where they receive suitable

treatment, During the year, 132,882 m³ of

effluent was generated,

Investigation and rectification of

environmental liabilities GRI EN30

AES Eletropaulo runs an Investigation

Program of Potential Environmental

Liabilities and Rectifications, responsible

for the evaluation and verification of areas

under risk of contamination and in situations

of property purchase and sale, The studies

are carried out in compliance with Cetesb

standards and are aimed at evaluating

impacts on the soil and ground water,

Currently the main interference of

company activities on the environment is

caused by oil leaks, In 2010, the company

installed 10 oil collector basins, avoiding

risks of fire and soil contamination

from the oil used in its transformers,

It also concluded the rectification of

the Santana and Medidores Section, A

Research and Development program

was started with the Instituto de

Pesquisas e Tecnologias de São Paulo

(São Paulo Institute of Research and

Technology) - IPT for the biological

recuperation of the soil as part of the

search for biological alternatives for the

recuperation of soil contaminated by

insulating mineral oil, Total investment

amounted to R$10,3 million.

Programa Reciclando (Recycling Program) GRI EN22; EN26

The Recycling Program aims at raising

awareness of all employees on the

importance of reusing materials by

separating waste, disseminating the

application of the 3Rs concept (reduce,

reuse and recycle), advising of the need

to recycle paper, plastic, glass, metal and

printer cartridges.

The project also maintains collector

bins in the operating and administrative

units and sells the waste. The income

generated is used for social projects.

MATERIALS SENT FOR RECyCLING (KG)

2008 (KG) 2009 (KG) 2010 (M³)1

Paper 45,344 51,066 1,963

Plastic 32,709 35,511 1,209

Glass 262 484 323

1) In 2010, these items started to be quantified in cubic meters and no longer in kilos.

In the quest for biological options for soil recovery, R$ 10.3 million has been invested in a bio-remediation program at the IPT in São Paulo


Energy efficiency and water

consumption GRI EN4; EN5; EN8; EN26

The AES Eletropaulo Energy Efficiency

Program is aimed at encouraging the

proper use of energy, Among the actions

undertaken are those directed at schools,

daycare centers and hospitals enabling a

reduction in electric energy consumption,

and the modernization of lighting systems,

AES Eletropaulo runs programs aimed at

employees with the focus on responsible

electricity and water consumption in its

facilities, In 2010, AES Eletropaulo developed

infrastructure projects generating savings

in electric energy consumption, Among

them are the change in the layout of the

operating bases and customer service

stores, improving lighting use, the reform

of the changing rooms to save water, the

(Read more on page 94),

The company has also created internal

projects, such as the recuperation of

transformers and Electricity meters and

the regeneration of insulating materials,

minimizing consumption of renewable

resources, conserving non-renewable

resources and recycling and reusing

materials,

installation of energy efficient light bulbs

and the application of a thermal film over

the reinforced concrete covering of the 25 de

Janeiro unit, All administrative and operating

units are monitored on a monthly basis,

MAIN ACTIONS TO MINIMIZE IMPACTS FuNCTION OF THE MODIFICATIONS

Recovery of transformers Reuse of equipment in the overhead and underground distribution network

Recovery of electricity meters Reuse of equipment in the electric system, reducing the need to purchase new equipment

Regeneration of insulating mineral oil Prevent environmental pollution and reduce the need to acquire new oil, given that the manufacturing process significantly impacts the environment

Recycling bulbs in public lighting Reutilize materials and prevent soil and water pollution

use of recycled paper Avoid the felling of trees for paper manufacture

WATER AND ELECTRIC POWER CONSuMPTION GRI EN3; EN8

2008 2009 2010

Total consumption of water (m³) 112,147 104,950 127,621

Electric energy (GWh) 46 47 42


Pruning and urban tree planting

To reduce energy supply interruptions

caused by tree interference on the power

grid, AES Eletropaulo undertakes preventive

pruning of trees next to the electric

system, It also offers training in urban

tree care for employees of contractors

and the São Paulo City Hall, as well as

offering the Guia de Arborização urbana

(Guide to urban Tree Care) on the Internet

(available at: www,aeseletropaulo,com,br/

responsabilidadesocioambiental/

Paginas/ProjetosAmbientais,aspx ), with

information on suitable techniques for tree

pruning and species suitable for planting

near the power lines and tips on pruning

these species,

The company has an emergency service

channel available (0800 7272 196), for

customers to report the need for pruning,

in addition to the Linha Verde (Green

Line), so the public can check the quality

of the service,

With the aim of improving the

continuous supply of energy, in 2010

the company intensified its pruning

activities, intervening in around 320,227

trees, It also trained 245 people in urban

tree-care training.

Also in 2010, the company held the 4th

urban Tree Care Technical Meeting, with

the participation of 336 professionals,

Urban orchard GRI SO1

Carried out in partnership with the São Paulo State

Government, the urban Orchard project seeks to promote

the environmental and landscape recovery of the banks of the

Pinheiros River and to train professionals in gardening. AES

Eletropaulo is responsible for two kilometers of these banks and

supports the program together with another 23 companies.

Customers can communicate pruning needs and report on the quality of the work through the emergency service channel (0800 7272 196) and by the Linha Verde (Green Line)


Raising awareness among

takeholders GRI 4.16

To engage suppliers and encourage

them to use best environmental

practices, AES Eletropaulo unified the

environmental qualification guidelines

with supply management, This allowed

the identification of potentially critical

suppliers in terms of the environment

and helps the company to ratify and

periodically inspect their partners,

The company also has manuals on

training and procedures for tree-pruning,

contractual clauses on adherence to socio-

environmental commitments, and talks

and meetings to align activities,

In 2010, AES Eletropaulo investigated 68

companies regarding their environmental

and safety practices, 45 of which were

ratified,

In addition to giving internal classroom

environmental training, AES Eletropaulo

shows videos and interactive projections

to facilitate learning and offer employees

an opportunity to do their training at the

time most convenient to them,

For customers, the company publicizes

the topic in its customer service

stores using videos, Messages are also

included in the electricity bills, aimed at

raising awareness of the importance of

conscientious consumption, together with

social projects in the community,

World Environmental Day

To commemorate World Environment Day, AES Eletropaulo used

internal advertising emphasizing its environmental guidelines

and programs and the responsibility each one has in preserving

the environment.

Talks in various schools were also held, aimed at raising

awareness among children on the need for environmental

conservation, and a partnership was also formed with a non-

profit institution for planting tree saplings at an outside event,

held on June 5.

As well as publicizing the environmental theme using videos in

the customer service stores, pamphlets were also distributed

with 50 tips on preserving the planet. Messages were sent via

electricity bills on the importance of conscientious energy

consumption for a more sustainable world.


Electric and Magnetic Fields

Electric and magnetic fields are Inherent

to the distribution of electric energy,

mainly in sub-transmission (high voltage)

undertakings, The electric fields occur

due to the voltage of the operation, and

magnetic fields are due to the passage of

the current,

AES Eletropaulo, with its concern

for the wellbeing of the communities

located in the vicinity of its activities

and in compliance with the legislation

applicable (Federal law 11,934 of May

5, 2009, regulated by Aneel normative

resolution No, 398, of March 23, 2010,

periodically carries out, in partnership

with the Brazilian Association for

Electromagnetic Compatibility – Abricem,

measurement and simulation studies of

electric and magnetic fields, however,

within the municipality of São paulo,

in the case of new undertakings or the

reform of existing ones, the results

of the studies are shared with the

Department of environmental Quality

Control (Decont),

In addition, AES Eletropaulo, using

funds for Research and Development

projects, has been studying these electric

and magnetic fields and has applied the

knowledge to projects developed for

transmission lines and substations, The

company is also studying a magnetic

field measurement gauge, which is in the

implementation phase for testing with

conclusion expected by December 2011,

Environmental notices and fines GRI EN28

urban vegetation plays a vital role in the

quality of life of our cities, In alignment

with this concept, AES Eletropaulo has

been striving to reduce the impact of

its tree pruning operations to guarantee

quality in its power distribution, In

2010, to minimize interruptions in the

power supply, the company increased its

intervention in trees at risk of coming into

contact with the overhead grid, This action,

despite training given to both its own and

outsourced teams beyond the contractual

requirements, resulted in an increased

number of fines, mainly due to the quality

of tree pruning and the incorrect disposal

of waste in public thoroughfares,

Of the 23 environmental fines or legal

notifications involving the company,

totaling R$573,7 thousand, 20 resulted

from these activities, Of the total received,

seven fines were paid relating to pruning,

totaling R$ 4,890, The remainder is the

subject of defense and administrative

appeal proceedings,

Certain of the relevance of good

environmental practices and despite

the disproportionate number of fines

received compared to the services carried

out, AES Eletropaulo is committed to

harmony between vegetation and the

power grid, correcting the errors found and

intensifying preventive measures, With

this aim, in 2010 the company invested in

initiatives such as:

• The review and re-publication of the

Guide to urban Vegetation and the Pruning

Manual, for consultation and technical

support for employees and neighborhood

associations;

• Sponsoring of the IV GEPAuRB – Major

Meeting of urban Tree Professionals,

with the participation of city halls and

the public, emphasizing the importance

of planting species of suitable size on

sidewalks and under electric power lines,

as well as carrying out technical skills

training, given by agronomist and forestry

engineers, to employees in the operating

teams and the teams of partner companies

and the municipalities;

• Tracking of the evolution of errors and

the interaction with our partners in the

search for improvement;

• A partnership with the Neighborhood

Association AME JARDINS and a

cooperative agreement with the São Paulo

city hall aimed at improving the care

taken with trees within the municipality,

seeking the optimization of planning, as

well as the specific care (vegetation health

care) needed for each tree, to prevent and

avoid accidents involving the public and to

identify the health of each individual tree

in order to plan corrective action.


RECOVERy OF DEGRADED AREAS GRI EN28

2008 2009 2010 TARGET

Area preserved and/or recovered through sustainable management of plant life below the transmission and distribution lines (in ha)

37,30 37,30 37,30 37,30

Preserved area / total preserved area within the concession area, as required by law (%)

NA NA N/A NA

Contribution for the increase of green areas in the municipalities through the urban Afforestation Program ( in ha)

0 0 0 0

Isolated protected network (ecologic network or green line) within the urban area (in km)

1,942 2,135 2,509 2,377

Isolated protected network percentage in relation to the total distribution network within the urban area

10,0 11,0 13 12,0

Costs for environmental impact management (afforestation, sustainable management, use of protected equipment and network) (R$ 000)

65,267,00 68,412,83 76,780,39 ND

Number of accidents due to violation of the environmental security norms

0 0 0 0

Number of assessments and/or fines for violation of environmental rules 4 2 23 0

Amount incurred for assessments and/or fines for violation of environmental rules (R$)

34,218,40 0 4,890,00 0

GENERATION AND TREATMENT OF WASTES GRI EN16 2008 2009 2010 TARGET

EMISSION

Annual volume of greenhouse gases (CO2, CH4, N2O, HFC, PFC, SF6) emitted to the atmosphere (in tons of CO2 equivalents)

283,303 290,115 136,794 ND

Annual volume of emissions that destroy the ozone (in tons of CFC-equivalents)

5,0 4,8 8,91 ND

GENERATION AND TREATMENT OF WASTES GRI EN19; EN22; EN30 2008 2009 2010 TARGET

EFFLuENTS

Total effluents volume (m³) 112,700 105,169 132,882 ND

Total volume of treated effluents (m³) 112,700 105,169 132,882 ND

Treated effluents (%) 100 100 100 100

SOLID WASTES

Annual quantity (in m3) of solid wastes generated (garbage, discharges, debris, etc.)

73,875 82,593 68,975 ND

Percentage of wastes sent for recycling with no association with the company

19.62 30.82 56.22 ND

Percentage of recycled waste per unit or entity associated with the company (specific project)

0 0 0 0

Waste recycling costs (R$ THOuSANDS) 932.00 860.00 668.59 ND

PERCENTAGE OF CONSuMPTION MATERIAL REuSED (RAW MATERIALS, EQuIPMENT, ELECTRIC WIRES AND CABLES) GRI EN2 2008 2009 2010 TARGET

Distribution transformers (%) 70.57 64.41 91.00 ND

Energy meters (%) 32.89 31.67 41.73 100% ¹

Insulating mineral oil (%) 100 100 100 100

Costs for final destination of non-hazardous wastes (R$ THOuSANDS) 343.00 477.80 1.924.96 ND

HANDLING OF HAZARDOuS WASTES GRI EN22; EN30 2008 2009 2010 TARGET

Equipment replaced by non-PCB insulating mineral oil - Askarel (%) 100 100 100 100

Percentage of decontaminated lamps in relation to the total replaced in the company (%)

100 100 100 ND

Percentage of decontaminated lamps in relation to the total replaced in the consumer units (%)

ND ND 100 ND

Costs for treatment and destination of toxic wastes (incineration, embankment, biotreatment) (R$ 000)

2,670,93 8,366,00 2,185,01 ND

uSE OF RESOuRCES IN THE PRODuCTION PROCESS AND MANAGEMENT PROCESSES OF THE ORGANIZATION GRI EN3; EN4 2008 2009 2010 TARGET

TOTAL ENERGy CONSuMPTION PER SOuRCE

hydroelectric (%) 95 95 93 ND

fossil fuels (%) 4 2 5 ND

alternative sources (gas, eolian energy, solar energy, etc,) (%) 1 3 2 ND

Total energy consumption (GWh) 46 47 42 ND

Energy consumption per kWh distributed (sold) 0.00137 0.00138 0.00129 ND

cont

1. Limited to 300 thousand meters removed from the network in recoverable conditions.


TOTAL FOSSIL FuEL CONSuMPTION By THE COMPANy’S VEHICLE FLEET PER KM DRIVEN GRI EN29 2008 2009 2010 TARGET

oil (km/l) 6.35 5.87 5.39 ND

diesel (km/l) 3.86 3.86 3.81 ND

alcohol (km/l) 6.36 6.52 6.05 ND

natural gas (km/m3) 4.21 4.21 0.00 ND

TOTAL WATER CONSuMPTION PER SOuRCE (M3) GRI EN8 2008 2009 2010 TARGET

supply (public system) 112.147 104.950 127.621 ND

underground source (well) ND ND ND ND

superficial impounding (water course) NA NA NA NA

Total water consumption (m3) 112.147 104.950 127.621 ND

Water consumption per employee (m3) 27.00 24.00 22.53 ND

Cost reduction obtained by the reduction of consumption of energy, water and consumer materials (R$)

118,271,24 108,098,94 ND ND

ORIGIN OF PRODuCTS - CONSuMER MATERIAL 2008 2009 2010 TARGET

Percentage of material acquired in accordance with the environmental criteria verified by the company / total material acquired

ND ND ND ND

Percentage of material acquired with Green Seal and other certified (Procel, Inmetro, etc, )

ND 44 56 ND

Percentage of material acquired with forest certification ( Imaflora, FSC and other)

0 0 25 ND

ENVIRONMENTAL EDuCATION AND AWARENESS – COMMuNITy – IN THE ORGANIZATION GRI EN30 2008 2009 2010 TARGET

Number of employees trained under the environmenta education programs

4.116 4.253 4.073 5.663

Percentage of employees trained under the environmental education programs / total employees

99.00 97.86 71.92 100

Number of environmental training hours / total training hours 10.14 8.28 2.86 ND

Resources invested (R$ thousands) 324.00 447.00 82.11 ND

ENVIRONMENTAL EDuCATING - COMMuNITy GRI SO1 2008 2009 2010 TARGET

Number of elementary and secondary school units served 61 2 456 400

Percentage of schools served /total number of schools in the concession area

2.0 0.0 6.0 10.0

Number of students served 36.932 180 97.413 38.000

Percentage of students served /total number of students of the school network in the concession area

ND 0 4 2

Number of qualified teachers 1.354 0 2.072 2.000

Number of technical and high school units served ND 0 0 0

Percentage of schools served/total number of schools in the concession area

ND 0 0 0

Number of students served ND 0 0 0

Percentage of students served /total number of students from the school system in the concession area

ND 0 0% 0

Resources invested (R$ thousands) 300.00 535.00 4.905 4.000

ENERGy EFFICIENCy PROGRAMS (PEES) FOCuSED ON THE CuLTuRE OF CONSERVATION AND RATIONAL uSE OF ENERGy GRI EN6 2008 2009 2010 TARGET

Number of low-income domiciles served by the program 74.500 80.177 55.473 45.000

Percentage of low-income domiciles served by the program in relation to the total low-income domiciles

10.23 10.99 7.31 6.16

Number of efficient equipment donated 4.786 135.026 604.956 250.000

Number of domiciles served for adequation of the electric installations of the house

0 600 609 650

Number of electrician professionals trained by the program 0 0 0 0

PEES - SOLAR HEATING 2008 2009 2010 TARGET

Number of solar heating systems installed 30 6 0 100

PEES MuNICIPAL ENERGETIC MANAGEMENT 2008 2009 2010 TARGET

Number of municipalities served by the municipal energetic program 1 0 0 0

Percentage of municipalities served in relation to the total municipalities of the concession area (%)

4 0 0 0

R&D FOCuSED ON THE ENVIRONMENT 2008 2009 2010 TARGET

Resources invested (R$ thousands) 1,295,00 2,087,00 2,915,15 4,119,00

Number of patents registered with the INPI (Brazilian Intellectual Property Office)

0 0 0 0


PERFORMANCE INDICATORS

MEASuREMENT uNITS

INDICATOR'S PuRPOSE

2008 2009 2010

Plant life suppression M2 of area suppressed (per quarter)

Measure the areas subject of plant life suppression either for construction of substations or for opening of access.

135,160 47,000 154,397

Lopping Volume of wastes generated per month (in m3)

Measure the lopping waste volume generated from the network maintenance.

1,122 2,041 9,873.70

Burnings Number of occurrences and area degraded by burnings (per year)

Measure the efficiency of preventive and corrective burning actions.

ND ND ND

Oil spill Spill points (per month) Measure the efficiency of preventive and corrective actions for equipment oil spills.

114 101 101

use of alternative sources in environmentally protected areas

Number of residences served

Measure the efficiency of programs aiming at mitigating impacts caused by the concessionaire in areas of great interest and under environmental protection

NA NA NA

R&D actions that favor the prevention of pollution

Physical/financial schedule on the project development

Measure the efficiency of programs aiming at establishing pollution prevention actions.

3 4 4


Summary of Contents

Global guidelinesThe summary below shows where to find in this report the following information: • Table of contents for the Global Reporting Initiative Indicators – GRI• Correlation with the Global Compact – PG• Actions favorable to the Millennium Development Objectives – ODM

PROFILE

GRI PG ODM Page

STRATEGy AND ANALySIS

1.1. Statement of relevance of sustainability

4

1.2. Description of the principal impacts, risks and opportunities

4, 85

ORGANIZATIONAL PROFILE

2.1. Name of organization 3

2.2. Principal brands, products and/or services

7

2.3. Operating structure 7

2.4. Location of Corporate Headquarters

7

2.5. Number of countries and names of those relevant to sustainability

7, 11

2.6. Type and legal nature of property 7

2.7. Markets served 7, 9, 11, 86

2.8. Size of organization 7, 9

2.9. Principal changes during the period covered by the report

There were no changes in relation to the previous year, 7

2.10. Awards received during the period covered by the report

11

PARAMETERS OF THE REPORT

Profile of the report

3.1. Period covered by the report 3

3.2. Date of most recent previous report 3

3.3. Publication cycle of reports 3

3.4. Details for contact 3

Scope and limit of the report

3.5. Process for the definition of the report’s contents

3

3.6. Limit of the reportAll AES Eletropaulo operations and page 3

3.7. Limitations to the scope or the limit of the report

No limit

3.8. Basis for preparation of the report All AES Eletropaulo operations, 3

3.9. Techniques for measurement of data and bases for calculation

In accordance with GRI protocols, otherwise, there will be explanatory notes

3.10. Consequences of reformulations of information

None during the period covered by this report

3.11. Significant changes in comparison to previous years

None during the period covered by this report

Summary of the GRI Content

3.12. GRI Table identifying location of information

119

Verification

3.13. Current policy and practice for external verification of the report

There was no external verification of data referring to GRI indicators. The economic and financial data and Ibase Social Report were audited by Ernst&young Auditores Independentes S.A.

PROFILE

GRI PG ODM Page

GOVERNANCE COMMITMENTS AND ENGAGEMENT

Governance

4.1. Structure of organization’s governance

15

4.2. Indication in the case of the president of the highest body of governance also being an executive officer

16, 17

4.3. Declaration of number of executive members, independent or not, of the highest body of governance

16

4.4. Mechanisms for shareholders and employees to make recommendations to the highest body of governance

20, 22

4.5. Relationship between remuneration for members of the highest body of governance, board of directors and other executives and the organization’s performance

16

4.6. Processes in the highest body of governance to avoid conflicts of interest

21

4.7. Process for the determination of the qualifications and knowledge of members of the highest body of governance

16

4.8. Statements of mission and values, codes of conduct and internal principles

11, 19

4.9. Procedures of the highest body of governance for overseeing the management of economic, environmental and social performance

16

4.10. Processes for self-evaluation of the performance of the highest body of governance

The company does not apply a process of performance self-evaluation or qualification to members of the Board of Directors

Commitments to External Initiatives

4.11. Principle of precaution 7 23

4.12. Charters, principles or other initiatives to which the company subscribes

14, 19, 28

4.13. Participation in associations and/or domestic and international bodies of defense

28, 101

Engagement of Stakeholders

4.14. Relationship of stakeholders engaged by the organization

28

4.15. Basis for identification and selection of stakeholders

The stakeholders are established and chosen internally, taking into account the strategic importance of each of the selected groups to the company's activities.

4.16. Approaches for the engagement of stakeholders

28, 114

4.17. Principal topics and concerns raised by the stakeholders

28


SuMMary oFContentS


GRI – ECONOMIC PERFORMANCE PG ODM Page

Form of management 52

EC1. Direct economic value generated and distributed

8 41, 101

EC2. Climate change risks and opportunities

7 e 8 107

EC3. Coverage of the obligations in the pension plan benefit

69

EC4. Significant financial assistance received from government.

88,93

Market Presence

EC5. Variation in the proportion of the lowest salary compared to the local minimum salary in important operating facilities

6 69, 73

EC6. Spending on local suppliers 8 75

Indirect Economic Impacts

EC8 - Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement.

48, 99, 106

EC9. Indirect economic impacts 8 94

ENVIRONMENTAL PERFORMANCE PG ODM PAGE


Materials

EN1. Materials used 8 7 47

EN2. Percentage of materials used from recycled material

8 e 9 7 116

Energy

EN3. Direct energy consumption 8 7112, 116

EN4. Indirect energy consumption 8 7112, 116

EN5. Energy saved 8 e 9 7 112

EN6. Initiatives to supply low energy consumption products and services, or which use energy generated from renewable sources and the reduction in energy needed as a result of these initiatives

8 e 9 775, 95, 117

Water

EN8. Total water usage 7 112, 117

EN9. Water sources significantly affected by water consumption

Water supply is exclusively from the public system

Biodiversity

EN11. Area within, or adjacent to, protected areas and areas of high biodiversity outside the protected areas

7 106

EN13. Habitats protected or restored 8 7 106

EN14. Management of impacts on biodiversity

8 7 109


ENVIRONMENTAL PERFORMANCE PG ODM PAGE

Emissions, Effluent and Waste

EN16. Total direct and indirect emission of gasses causing the greenhouse effect

7 116

EN18. Initiatives to reduce greenhouse gas emissions and reductions achieved

8 e 9 7 106, 107

EN19. Emission of substances destructive to the ozone layer

7 106, 116

EN21. Total discharge of water, by quality and destination

8 7 111

EN22. Total weight of waste, by type and method of disposal

8 7 110, 111, 117

Products and services

EN26. Initiatives to mitigate environmental impact of products and services

8 e 9 795, 105, 110, 111, 112

Compliance

EN28. Significant fines and total number of non-monetary sanctions resulting from non-compliance with environmental laws and regulations

7 115, 116

Transport

EN29. Environmental impacts from transporting products and other goods and materials used for the organization’s operations and transporting members of the workforce

7 107, 117

General

EN30. Total investment and expenditure on environmental protection

8 7102, 105, 110, 11, 116, 117

SOCIAL PERFORMANCE – LABOR PRACTICES AND DECENT WORKING CONDITIONS

PG ODM PAGE


Employment

LA1. Total workers by type of job, work contract and region

57, 72

LA2. Total number and turnover rate of employees

6 61

LA3. Benefits provided to full time employees that are not provided to temporary or part-time employees, by major operations

6 7 70, 71

LA4. Percentage of employees covered by collective bargaining agreements

1 e 3

100% of the employees are covered by agreements and collective bargaining



SOCIAL PERFORMANCE – HuMAN RIGHTS

PG ODM Page

Child Labor

HR5 -Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be voilated or at significant risk, and actions taken to support these rights.

103

HR6. Operações com risco de trabalho infantil

1, 2 e 5

4 76, 77

Forced Labor or that Analogous to Slavery

HR7. Operations with risk of occurrence of forced labor or that analogous to slavery

1, 2 e 4

28, 76, 77

SOCIAL PERFORMANCE – SOCIETy PG ODM Page


Community

SO1. Programs and practices to assess and manage impacts of operations on the communities

1 1 e 253, 88 to 94, 113, 117

Corruption

SO2. Business units analyzed for risks related to corruption

10

The business units are not submitted to risk assessment regarding corruption

SO3. Employees trained in anticorruption policies and procedures

10 21

SO4. Actions taken in response to incidents of corruption

10 20

Public Policies

SO5. Public policy positions and participation in public policy development and lobbying

10101, 105

SO8 - Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations.

73

SOCIAL PERFORMANCE – RESPONSIBILITy FOR THE PRODuCT

PG ODM Page


PR2. Total number of cases of non-compliance with regulations and voluntary codes regarding impacts caused by products and services in health and safety during the life-cycle, itemized by type of result

There was no instance of non-conformity in 2010.

PR5. Practices related to customer satisfaction, including results of surveys measuring this satisfaction

79 to 83, 86, 89


SOCIAL PERFORMANCE – LABOR PRACTICES AND DECENT WORKING CONDITIONS

PG ODM PAGE

Relations between workers and the governance

Helath and safety in the workplace

LA6. Representation in health and safety committees

7 31

LA7. Rates for injuries, occupational diseases, days lost, absenteeism and deaths

7 31

LA8. Programs for education, training, counseling, prevention and control of risk to employees, their families or members of the community in terms of severe illness

6 33, 63, 67, 71

LA9. Issues regarding health and safety covered by formal agreements with unions

7 33, 72

Training and education

LA10. Average hours of training 21, 63

LA11. Programs for management of competencies and continued education supporting the continued employability of employees and for administering end of career

8 61 to 66

LA12. Percentage of employees receiving analyses of performance and career development on a regular basis

8 56, 62, 63

DIVERSITY AND EQUALITY OF OPPORTUNITIES

LA13. Composition of groups responsible for corporate governance and of the other employees

1 e 6 3 58, 59, 72, 102

LA14. Ratio of basic salary between men and women

1 e 6 3 58

SOCIAL PERFORMANCE – HuMAN RIGHTS

PG ODM Page

Form of management 1 e 2 76

Investment and procurement practices

HR2 -Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken.

76

HR4. Total number of discrimination cases

1, 2 e 6

During the years 2009 and 2010, reports were made concerning the matter of discrimination. The facts were investigated and were proved to be unsubstantiated, and as a consequence there is no disciplinary measure



SECTOR INDICATORS – ENERGy PG ODM Page

Eu1. Installed capacity (MW), broken down by energy source and regulatory regime.

9

Eu2. Net production of energy broken down by primary energy source and regulatory regime.

9

Eu3. Number of residential, industrial, institutional and commercial customer accounts.

9

Eu4. Length of above and underground transmission and distribution lines by regulatory regime.

9

Eu6. Form of management to ensure availability and reliability of electricity in the short and long term.

7 46

Eu7. Demand-side management programs including residential, commercial, institutional and

industrial programs.

7 94

Eu8. Activities and expenses related to research and development to maintain reliability of electricity supply and to promote sustainable development.

7 99

Eu10. Planned capacity against the long-term electricity demand forecast, broken down by energy source and regulatory regime.

9

Eu14. Programs and processes to ensure the availability of a skilled workforce.

1 e 2 62

Eu15. Percentage of employees eligible to retire in the next 5 and 10 years broken down by job category and by region.

1 71

Eu16. Policies and requirements regarding health and safety of employees and employees of contractors and subcontractors.

77

Eu18. Percentage of contractor and subcontractor employees that have undergone relevant health and safety training.

77

Eu22. Programs aimed to improve or maintain access to electricity.

1 94

Eu24. Practices to address language, cultural, low literacy and disability related barriers to accessing and safely using electricity and customer support services.

34, 94

Eu25. Number of injuries and fatalities to the public involving company assets including legal judgments, settlements and pending legal cases of disease.

34

Eu26: Percentage of population without service in licensed distribution or service areas

79

Eu28: Power outage frequency. 9, 46

Eu29: Average power outage duration.

9, 46

Eu30: Average plant availability factor by energy source and by regulatory regime

AES Eletropaulo does not generate power


General Coordination

Márcia Magno

Office of Communication and

Social Responsibility

Content orientation

Luciana Alvarez

Management of External Communication

and Social Responsibility

Content Coordination

Sandra Coelho

Communication Analyst

Content, analysis, of indicators and

graphic project

Report Comunicação

revision

Assertiva Produções Editoriais

photos

AES image bank

Na Lata Photography Agency

translation

Brauns&Brauns Language Consultancy


aCKnoWleDGMentS

2010 sustainability report...message from the ceo 4 sustainability report 2010 message from the ceo...

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