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A Word from the CEO
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Business of AES Tietê
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and Outlook
Environmental
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Home  Intangible Assets
Quality
Every year the quality and reliability rates of the system’s power plants improve. The 2005
results prove it: the generation plant availability index (DUG) rose from 90.9% in 2004 to
92.6% in 2005. The failure rate also showed good performance — going from 2.5 in 2004 to
1.6 in 2005 — as a result of the operating management program implemented in the plants.
Reliability
In 2005, the Company started to use the Reliability Centered Maintenance system (RCM) looking for
improvements on plant maintenance and revamping. This is an important tool for preparing an
efficient preventive maintenance timetable as it can evaluate the resistance of the physical
elements that make up each hydroelectric plant, enhancing the cost/benefit ratio.

Also considering improvements on operations, it was adopted the High Impact Low Probability (HILP)
system which contributes in maintaining high levels of availability and good performance in the
generation of electricity. This tool evaluates the safety and financial impact of low-probability
events that could have a high impact in a power plant. Through this analysis, HILP events can be
foreseen and preventive actions can be adopted. In 2005, this analysis was carried out on the
UHE Água Vermelha. In 2006, it will be extended to the other plants according to a plan established
by the AES Latin American Generation Group.
Management Tools
IAES Tietê is engaged in an international project based on SAP software, named Genesis that is being
developed by the AES Corporation and its subsidiaries over the world to improve and centralize
management tools. It will enhance performance in the commercial as well as the operational and
administrative areas, creating greater control and reliability of information. This project starts to be
developed in 2006 and shall be implemented in 2007.

As of the implementation of the Genesis Project, all data will be centralized in the holding company’s
data-center in the U.S., which will generate consolidated data, meaning greater economy of scale
and higher security.

As part of its regular routine, AES Tietê already has adopted tools such as the Balanced Scorecard
Management System, designed to guide actions and control the performance and integration of
activities in a number of different areas.
Knowledge Management
Achieving high standards of excellence requires motivated and well prepared employees.
In December 2004 AES Tietê set up the Corporate Education System based upon
Knowledge Management. The objective is to create and maintain an corporative environment of
continuous learning and transfer of knowledge.

Employees with recognized technical knowledge voluntarily disseminate their learning to
their colleagues through structured projects, acting as “multipliers”. Moreover, the Company
runs a program to develop the teaching skills of these multipliers regarding technical
aspects and methodologies.

As part of the knowledge management concept, a survey to map out the technical competences
available for establishing a pool of specializations — the Talent Pool: Acquisitions Support — also was
initiated in 2005. The initiative is designed to obtain synergy gains not only for the Company but
also for all AES subsidiaries.
Image
Improving its image with all target audiences is a priority of AES Tietê’s strategy. Since 2004,
the Company has been running programs to get closer to the various communities, particularly
the municipalities where its power plants are located.

This work is basically carried out on two levels: prevention and management of crises
(which requires the integrated efforts of professionals from several areas) and the disclosure/value
of the positive aspects of the Company, whether through direct contacts, advertising campaigns,
press relations, events or social responsibility actions integrated with the corporate strategy.

In 2005, to call attention to the operating area professionals and, at the same time, obtain greater
effectiveness in regional contacts, the Company implemented its “Communication and
Social Responsibility Council”. This Council is comprised of professionals from the power plants
coordinated by the corporate area in São Paulo and has the mission of acting as a link between the
Company and the local community. The Company frequently offers training regarding
communication and social responsibility to these employees. At the end of 2005, an advertising
campaign was initiated to disseminate public utility messages published only in
countryside of the state.
Prizes and Distinctions
As a result of efforts carried out over a number of years, AES Tietê was awarded
during 2004 and 2005:
Biggest and Best 2005, Exame Magazine (“Maiores e Melhores”)
The annual edition of Exame Magazine ranked AES Tietê as the best company in the
“ Public Services” category in 2004. The appraisal was based on criteria such as
increase in sales, profitability and capital expenditures, among others.

The Best in Personnel Management 2005
The annual “Career Value” survey of the Valor Econômico newspaper placed
AES Tietê among the 82 best companies in Brazil, elected by their own employees,
regarding organizational climate.

3rd Brazilian Environment Benchmarking 2005
AES Tietê’s Program for Reforesting Permanent Preservation areas was ranked second in the
honorable mention category. The Benchmarking selects case studies based upon benefits to the
institution, to the community and to the environment and also programs consistent to the
three sustainability dimensions: economic, social and environmental.

Platinum List 2004 of Forbes Brasil Magazine
AES Tietê was ranked eighth in the overall Platinum List 2004 of Forbes Brasil Magazine,
which classifies the 200 best Brazilian publicly-held companies, among corporations
with net equity over R$ 10 million.