AES CORPORATION

City or location Month XX, 20XX

AES CORPORATIONAES Panama Business Review

David SundstromCountry Manager, AES Panama

June 28, 2006

1www.aes.com

Safe Harbor Disclosure

Certain statements in the following presentation regarding AES’s business operations may constitute “forward looking statements.” Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal or better levels of operating performance and electricity demand at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth from investments at investment levels and rates of return consistent with prior experience. For additional assumptions see the Appendix to this presentation. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission including but not limited to the risks discussed under Item 1A “Risk Factors” in the Company’s 2005 Annual Report on Form 10-K as well as our other SEC filings. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

2www.aes.com

Financial Goals

Revenue Growth

Gross Margin Growth

Earnings Per Share Growth

ROIC Improvement(1)

Cash Flow Growth

Subsidiary Distributions(1)

Restructuring Opportunities

Growth Goals

Platform Expansion

Greenfield Investment

Privatization/M&A

AES Goals AES 2008 Target AES Panama Role

AES Panama Strategic Overview

--

$3.5 Billion

13-19% per Year

11%

$2.6-2.9 Billion

--

--

--

--

--

Above Average

Above Average

Above Average

Average

Above Average

Increasing

Yes

Significant Opportunities

Significant Opportunities

Limited Opportunities

Contains Forward Looking Statements

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

3www.aes.com

Panama Highlights

Panama at a Glance

US Dollar (US$)Not Applicable, US Dollar since 1904

US $5,0212.4%

Export oriented services, the Canal, ports, free tax zone, banking, construction

Panama3.3 million

Ba1, BB, BB+ (Moody’s, S&P, Fitch)Vote on increasing the capacity of the Canal

Currency Exchange RatePer Capita GDP (2006 E)Inflation Rate (2006 E)Economic Drivers

Capital & Largest CityPopulation (2006 E)Sovereign Credit Rating (4/2006)Major Development

4www.aes.com

Six companies

57% private sector ownership

36% AES share (capacity)

12 plants

One auto-generator

1,324MW installed capacity

Maximum demand 946MW

58% hydroelectric

42% thermal

Generators free to sell to:

Distribution companies at international bid prices

Large customers at freely negotiated prices

Generation

One company

100% government owned

Transmission (230 & 115 kV)

Over 940 km of lines

Open access transmission

Tolls set every five years

Transportation Distribution Commercial Base

Panama Electricity Market Characteristics

Three companies

51% private sector ownership

Distribution companies distribute 5,085 GWh of electric consumption of the country

Regulated public service

Exclusive geographic concessions for regulated customers

Tariffs set every four years based on “model company”

Four large users supplied directly by generation companies

Above 100KW:Large customers can purchase energy directly from a generator or distribution company

Freely negotiated prices and conditions

Source: Centro Nacional de Despacho, ETESA, ACP.

5www.aes.com

Panama Generation Market Profile

www.aes.com

Capacity Market Share

Total Installed Capacity = 1,324MW

AES Panama36%

Copesa3%

Bahia Las Minas21%

Panam7%

ACP6%

Fortuna23%

Pedregal4%

Source: Centro Nacional de Despacho, ETESA, ACP.

6www.aes.com

0

200

400

600

800

1,000

1,200

1,400

1999 2001 2003 2005 2007E 2009E 2011E 2013E

Panama Electricity Demand Growth

Steady historical and projected growth in demand

Contains Forward Looking Statements

Year

Dem

and

(MW

)

0%

2%

4%

6%

8%

10%

Yea

r-ove

r-Yea

r Inc

reas

e (%

)

Demand (MW) Increase (%)

Source: Nacional de Despacho and ETESA.

7www.aes.com

Contracts awarded in international bid processes

Minimum demand requirement > 100KW

Unregulated freely negotiated price

Economic Dispatch Center

Distribution Companies

Substation1

Unregulated

SpotTransactions

Transmission andDistribution Customers

DistributionTransmission

Substation2

Substation3

Gencothermal

Toll Payment

Dispatch based on lowest cost of production (marginal cost)

Spot price = marginal cost

Includes energy and capacity payments

Open access transmission

Toll payments for existing installations determined by regulator

Concessions granted for distribution and tariffs based on model company structure

Panama Power Market

Gencohydro

Regulated

Large

Customers

8www.aes.com

Ministry of Economy

Public Service National Authority:

Supervises compliance

Unregulated Customers

Economic Dispatch Center:Orders dispatch

Experts Panel:Resolves conflicts

Regulatory Bodies

GenerationCompanies

Transmission Companies

DistributionCompanies

Economic Dispatch Center Members

National Energy Commission:

Implements policies

Panama Power Market Organization

9www.aes.com

AES History in Panama

1998The state owned utility is privatized; AES submitted the winning bids for the acquisition of Bayano, La Estrella, and Los Valles plants

1999 AES started operations and merged the two companies into AES Panama

2000AES Panama started the greenfield development of the Estihydroelectric project

2001AES Panama started the Bayano hydroelectric expansion and upgrade project

2005 AES started the evaluation of a new hydroelectric project in Panama

2006AES announced the AES Changuinola hydroelectric project

2003AES Panama completed the Esti hydroelectric project on time and under budget

2004AES Panama completed the Bayano hydroelectric expansion and upgrade project on time and under budget

1998-1999 2000-2001 2003-2004 2005-2006

10www.aes.com

DIVERSION DAMConstruction Operation

DIVERSION CANALConstruction Operation

STORAGE DAMConstruction Operation

SPILLWAYOperation

Hydroelectric Projects Fundamentals

11www.aes.com

PRESSURE TUNNELDrill and Blast Technique Final Breakthrough Concrete Lining

POWERHOUSETurbine Installation Power Delivery

Hydroelectric Projects Fundamentals

12www.aes.com

AES Panama Business Structure

AES Panama

AES Panama

AES Changuinola

49% 66.5%

Los VallesBayano La Estrella Esti Changuinola

13www.aes.com

AES hydroelectric plants

AES Panama: Generation

AES in Panama470 MW hydroelectric plants (36% of Panama generation capacity)

AES Changuinola project

Estrella42MW

Valles48MW

Bayano260MW

Estí120MW

Charco AzulProgreso

Llano Sánchez

La Chorrera Panama City

Changuinola Project150MW

14www.aes.com

020406080

100120140160

9%

10%

26%

55%

Panama Marginal Capacity is Oil-Fired… ...Resulting in High Spot Prices

AES Panama Diverse Hydroelectric Portfolio …Leads to

Total: 470 MW, 9 units

Competitive advantage to capture long-term contracts Ability to provide fixed prices Hydrology risk diversificationMaintenance flexibilityEconomic dispatch of the system provides assurance of output

Thermal42%

Hydroelectric58%

AES Panama Hydroelectric Units and Location Diversity

Bayano

La Estrella

Los Valles

Esti

Monthly Average Spot Energy Price (trailing 12 months to April, 2006)

$/M

Wh

Apr-06Feb-06Dec-06Oct-06Aug-06Jun-06

15www.aes.com

AES Panama Contract Revenue by Customer

Elektra Noreste,owned by Ashmore,

62%

Edemet and Edechi, owned by Union Fenosa,

32%Large

Customers,6%

Elektra Noreste,owned by Ashmore,

20%

Edemet and Edechi, owned by Union Fenosa,

80%

2006 2012E

Contract revenues represent 80% of total revenues

Contains Forward Looking Statements

16www.aes.com

AES Panama Generation KPIs

Key Performance Indicator (KPI)

Lost time accidents (LTA)Implemented safety management system under OHSAS18001 standard

Revenues per MWh (US$/MWh)Commercial availability factor (CAF)Non-fuel O&M cost per megawatt (NFOM/MW)

Safety Excellence

Operational Excellence

Environmental Excellence

Implemented environmental management system under ISO14001 standardCertification audit on both standards is targeted before the end of this year

Contains Forward Looking Statements

17www.aes.com

AES Panama Performance Scorecard

Commercial Availability Factor (CAF)

Non-Fuel O&M Expense

90%92%94%96%98%

100%

2Q 2003 4Q 2003 2Q 2004 4Q 2004 2Q 2005 4Q 2005

0

5

10

15

20

25

2Q 2003 4Q 2003 2Q 2004 4Q 2004 2Q 2005 4Q 2005

$ / K

W y

ear

% o

f Ava

ilabi

lity

18www.aes.com

AES Panama Financial Overview

Revenue

Gross Margin

Income Before Tax &Minority Interest

Distributions to AES Corporation

2003

$74

$37

$33

$9

2004

$117

$47

$21

$19

2005

(US$ Million)

$134

$84

$55

$15

(1) Including a distribution at financial closing of the $320 million, long-term financing.Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

(1)

19www.aes.com

AES Panama Portfolio – Diverse Geography and Impacts of New Capacity

Balanced Revenues(% of Total)

Installed Capacity Trend (MW)

Based on 2005

MWLa Estrella

14% Los Valles

17%

Esti37%

Bayano32%

0

100

200

300

400

500

1999 -2001

2002 2003 2004 2005

Thermal Hydroelectric

Hydroelectric Additions

20www.aes.com

30-48MW wind project at early evaluation stage Arrangements for wind measurements are being advanced

Platform Expansion OpportunitiesContains Forward Looking Statements

Construction of a 150MW hydroelectric plantNew PPA negotiated and signedAES Changuinola

Barrigon Wind

El Grande Wind

Hydroelectric Project

20MW wind project at early evaluation stage Wind measurements are being collected

50MW project at evaluation stage, waiting for a new bid opportunity

Panama

Costa Rica

21www.aes.com

Greenfield Project: AES ChanguinolaContains Forward Looking Statements

150MW hydroelectric power plant:$320 million project cost10-year PPA with Edemet/Edechi, owned by Union Fenosa

Development advances:Approved EIA and water concessionsSocial and environmental advancesPositive field study results to dateAdvanced designStrong government support for the projectFinancing interest in the projectOn budget development investments to dateTarget 2007 to start construction$65 million new revenues expected by 2010

Proposed AES Changuinola, Panama(draft design rendition)