愛依斯電力 (AES) 2013 Q1 法說會逐字稿

Good morning, everyone. I'm Ahmed Pasha, Vice President of Investor Relations of AES. We know it's a very busy time for all of you, so we appreciate you taking your time to join us this morning both here in New York as well as on the webcast.

Before we start today's presentation, I would like to draw your attention to slide two of today's presentation. Our discussion today will include forward-looking statements. Please refer to our SEC filings for disclosures around the risk factors that may cause our actual results to differ materially from these forward-looking statements.

Today we have a lot to talk about. You will hear from seven members of our senior management team. We have provided bios for our executive leadership team as well as for those who are presenting. In terms of the presentation, we designed the presentation to give you some more insight into the key drivers and opportunities that we see across our significant businesses.

We have also provided additional financial disclosures that we hope will give you some additional insight as to how we're going to achieve our target growth rates.

Today's presentation consists of two parts. First you will hear from Andres Gluski, our Chief Executive Officer. Please hold questions for Andres until the end of the presentation. After Andres, you will hear from the panel on our SBUs. This will be led by our COO Andy Vesey. You will also hear from Ken Zagzebski, President of our US SBU, Filipe Ceron, who leads our business in Chile, Colombia and Argentina and Britaldo Soares who is head of our Brazil operation.

We will have a Q&A session after the panel presentation and so we're going to have a 20 minutes break at about 10.20.

After that you will hear from Annmarie Reynolds who is our Chief Risk Officer and Tom O'Flynn who is our CFO. After Andres wrap up the session, we're going to have a Q&A where our entire management team will be available to answer any questions you may have.

After the presentation and Q&A we're going to have an informal lunch. So please join us and our management team will be available to answer any remaining questions you may have. With that, let me turn it over to Andres.

Well good morning everyone and everyone who is on the webcast, also thank you very much for joining us. What I'd like to do today in terms of our presentation is just first share the first quarter financial results. These have been out for some time. We had our press release this morning, then discuss our progress on executing our strategy, describe our future growth and value drivers and Tom and the SBU Presidents will be providing a lot more transparency and a lot more disclosure. And you'll also get the opportunity to meet our leaders from the field who are leading these key businesses.

Then Annmarie Reynolds, our Chief Risk Officer is going to talk about our risk management approach, our exposures, and our mitigants and then we're going to talk about our debt reduction levels, dividend policy and answer any questions.

So starting with the first quarter, our adjusted EPS for the quarter was $0.26. This was $0.11 less than the first quarter of last year. Now this decline is mostly due to two things, one is that we had a $0.06 upside in the first quarter of 2012 due to the settlement of the arbitration at our Cartagena plant in Spain. And the second is low hydrology that we've been experiencing in Latin America especially in Brazil and in Panama and that's had a -- a hit of around $0.03 during the first quarter.

Now that hydrology situation is something we expect to persist throughout the year but we are taking steps to mitigate this. Now, we did have a significant increase in both proportional and consolidated cash flow metrics for the quarter. We were up on proportional $117 million versus the same quarter of last year which is 50% and unconsolidated $84 million which is up 16%.

So we feel that this is a solid quarter, we are reaffirming our guidance for the year of adjusted EPS in the $1.24 to $1.32 and we are also confirming our cash flow metrics. Now for most of you, you are well aware of what AES is. But I wanted to take a minute and just go through AES.

So one of the metrics that we'll be talking a lot about today is a pretax contribution, so this is the money that we make in the businesses. It was $2.1 billion in 2012. And this is before corporate charges of around $700 million.

So we divide our business into two big blocks. The first is generation which is the majority contracted. The biggest businesses are the US, Chile, Brazil, Philippines and Central America and we have about 30 gigawatts of generating capacity.

The other big block of business that we have is the US utilities which is regulated, US and Brazil utilities which is regulated and this includes 8 gigawatts of generating capacity. Now how do we think about our business?

We think about our business in terms of market facing strategic business units which have a geographical basis. So except for solar, we really don't have any businesses which are specific to one technology or one fuel type.

So right now our global distribution is about 37% coal, 33% gas, 24% renewables and the rest are a combination of oil, diesel and pet coke. In terms of our strategic business units and these were designed again around to be market facing in places where we had commonalities that we could bring people together to operate in the most efficient manner.

There are six of them and that's the US, what we call Andes which is primarily Chile and Colombia and Argentina, Brazil. The other one is Mexico, Central America and the Caribbean and including Puerto Rico, and then we have Europe, Middle East and Africa and then Asia is at 10%.

So if you look at this, we are 70% a company of the Americas. This is our core in terms of where our business is located and about 29% of the rest of the world. Now one of the things, you know, we're 18 months into starting to execute on a new strategy and we had laid out sort of three drivers for driving shareholder value.

The first was improving profitability and I'll talk a little bit about the progress we've made in reducing overhead and some of the progress we've made in terms of increasing the usage of our invested capital. The second is narrowing our geographic focus. AES is a portfolio; that's one of the advantages we have and we have a fantastic footprint in a number of rapidly growing markets. But we don't have to be in as many markets as we were in to have the advantages of a portfolio.

So we have been working on simplifying our portfolio by selling assets that were not core or those assets where we really felt that we did not have a compelling, competitive advantage or a way to get a compelling, competitive advantage.

And third is working on optimizing our capital allocation. And we have a very strict investment process through an investment committee where we look at projects early on, which have the go/ no go and throughout the whole phase of development until final approval. So we compare investment opportunities not only at one point in time between different businesses but also across time because we're very well aware that if you make an investment early on, that precludes being able to make certain investments later on.

So the investment committee process we think has been a big help. We're also going to talk a little bit about our partnering strategy and other ways that we're working to increase our return on invested capital. Now, I'm going to talk about how we've streamlined operations.

Now the numbers I have up here are only the reductions in overhead, in corporate overhead. This does not include the cost-saving programs that we have at these business levels. So this is strictly AES Corp. So as of end of last year, starting from the base at which we were in 2011, our G&A was down $90 million and this is net or severance costs in terms of our reductions.

And we also established a goal of $145 million in reductions of overhead by 2014. So the big changes we're going to make this year, this year our run rate or the results we expect for this year are savings of $120 million in overhead over the base of 2011. And by 2014, if we compare 2014 to 2011, that's a reduction of almost 40%.

Now how were we able to achieve these savings? Well first of all, we determined a strategy which we shared with you and then we said, what is the optimal organization to achieve that strategy? So we're organizing to achieve that strategy. So we're going to be in less countries. If we're going to focus on platform expansions then we have -- we can spend a lot less in business development because we have a much higher hit rate and much less expenses and I would also argue a much higher risk adjusted returns because we're already in those markets.

We know the regulators. Most of these plants you will see have a two, three, even a five after them, meaning we're expanding, we're sharing certain facilities and these have been very successful. So about $10 million to $20 million of greater savings will come from streamlining -- further streamlining of corporate business development.

The reorganization into strategic business units, we eliminated a layer and others as we consolidate. That should be another $20 million to $25 million. That's happening as we speak. The third would be relocating to low cost -- low cost offices in terms of for example, we handle a lot of the European and African operations out of London. Well that office is being moved to Amsterdam.

In terms of the US generation, it used to be based in Houston, we're moving that to Indianapolis. And we used to do a lot of the Asian operations and back office from Singapore; that's being moved to Manila, so that's part of the strategic business units. We're relocating to lower cost locations. We're also centralizing those support functions where it makes more sense, you have more synergies to do with the corp.

So in all, we are well on our way to reducing these costs. And as I said, this is strictly corporate overhead. This does not include programs at the business level.

So the other thing that we've done is to really leverage our size and know-how, to really take advantage of our global scale, take advantage of synergies. So take fuel sourcing. We buy about $2 billion worth of coal a year. And we are now getting the advantages of that scale. Now, it's not just aggregation adding up how much coal we purchase around the world, we also had to look at the logistics; do we have cheap freight contracts?

Do our coal purchase contracts allow us to redirect shipments so that if one plant is burning more coal and one is burning less coal, instead of having a high stockpile in one place and a shortage in the other, we can internally redirect this. And of course to be able to do that, you have to have [tried] blendings in the plant, testing the different fuel types and how much you can blend. So we have done that and we've having significant benefits from that over time.

Regarding non-fuel sourcing, we have global relationships. What are these? Well in IT, in terms of making large scale purchases for all of our businesses, chemicals. We also have a captive insurance which we think gives us about $20 million of benefits in terms of lower cost per year because when you have an asset base of close to $50 billion, you're able to get the first-tier reinsurers interested and competing for your businesses. So you get economies of scale, but you also get first-class insurers in locations where you probably wouldn't otherwise.

In terms of maintenance and capital expenditures we're looking at aggregating capital purchases, standardizing around certain equipment to reduce our working capital and innovation like our transformer loss control program. We did some data mining and we really discovered that our biggest business interruption cost was when we lost a transformer and were unable to evacuate energy from a plant. So we have designed a multi-purpose transformer and we have positioned them in strategic locations around the globe and we have the logistics to be able to move them to any of our major plants should an event occur.

So this is a very interesting idea. Nobody has done this before and this is something that could end up being sold let's say or leased to third parties if they find themselves in this situation. So we are really pushing innovation using underlying resources, a capital that we have invested, be it desal, small add-ons like fogging technology, spill waste to increase our generation capacity at our existing facilities.

So what we're looking at is every possible way that we can make better use of our capital, make better use of our footprint and relationships that we have in key markets. So we also I think are being recognized and Andy will talk more about this as a very good operator, two cases that he will talk about, one is Masinloc.

When we bought this, this was privatized in 2008, we brought up the equivalent availability factor from 74% to 93%. I think even more impressive is what we did in Mexico where we've, I think, gained a reputation of being a first-class operator of inside the fence generation when we brought two plants, TEG-TEP. One was Exelon, the other one was ALSTOM. So this was not a privatization. This was from other private companies. We brought up the availability from 75% to 92%.

So certain technologies like coal fluidized bed we really feel that we are a world leader. Now in terms of leveraging our size, our platform and growth, over the past five years, we've brought online around 4,241 megawatts and we currently have under construction 2,443 more megawatts.

Now if you look at this what fuel types have we brought online or will bring online, 60% of this is coal, 21% is gas, 12% is renewables and 7% is oil and diesel. But what I think is very important when you look at the plants that we're building now, two things stand out, one is the number of partnerships that we have. So why are we bringing in partners?

One reason is because in most cases we get a promote. Since we had the footprint, we had the relationships, we had the site, we bring in the partner and we have a promote, that increases our return on invested capital. The second thing is we're choosing partners who can bring beneficial financing, be it through an export credit agencies or bilateral that help lower the cost of capital on these projects.

And the other thing I would say to notice is that the number that are just expansions from existing platform. So for example, in Chile, we commissioned the Angamos Plant. Now we're going to have Cochrane which is next door and is a very similar plant with the same contractors and we're bringing in a partner. That is a very low risk project.

In India with OPGC, with the same partner, we're going to build OPGC II. In Ventanas in Chile, we had Ventanas I and II, we built III and IV. And perhaps the most extreme cases Guacolda, where we had Guacolda I and II we've done III, IV and V. And V is exactly the same technology as IV with the same EPC contractor.

So in addition to again using our platforms, expanding from the base, we are also making these small investments that have higher returns and lower time. Now what have we done in terms of simplifying our portfolio? One of the things that AES was again, in a number of countries around the world almost 30 at one point and we really had to decide what countries should we focus on? Where should we focus our capital? Where should we focus our energies on?

So we really came from the view that where we don't have a compelling competitive advantage and -- or we don't have a roadmap to develop one, then we should probably exit. Now we decided to exit over time to not have a fire sale, to not really -- to really maximize the benefits from these sales and that's what we've done.

We identified 18 months ago a universe of around $2 billion of potential asset sales and by the end of this year, we should be about three quarters of the way through. And as I said, we will sell when it makes sense and in the right conditions.

Nonetheless, we are relentless in terms of simplifying our portfolio. If you look at the map, we've exited six countries over the last 18 months, China, France, Spain, Hungary, the Czech Republic and the Ukraine. And we sold we think at very good prices. And I think that the methodology that we have followed is the right way.

We will continue to do this. Now getting into optimizing our capital allocation, what have we done from the money, the $1.1 billion that we have received plus cash flow we've generated from our operations? We said early on back in September of 2011 that we wanted to reach strong BB credit metrics. So we've repaid about $1 billion in terms of debt prepayment beside sort of the normal maturities coming.

About $820 million of this was recourse debt at the parent and $197 million was expensive debt in a holdco at Brasiliana and part of the reason for doing it was not only the cost, but to make sure that we had less obstruction to getting dividends from Brazil up to Corp.

We also did a share buyback. We bought back 34 million shares at an average price of $11.55 for $390 million. And we started our first quarterly dividends and we've made two payments to date.

Now what I'd like to expand upon today is on a dividend policy now that we've established that we're paying our dividend. So we will be targeting a payout ratio of 30% to 40% of sustainable parent free cash flow. And Tom will walk you through how we derive parent free cash flow from our proportional free cash flow.

But basically this -- currently at this level, as you can see from below, what percentage was our dividend in 2012 and in 2013 and what was our parent free cash flow in those years. So it's been between -- it's been below if you average it from around 25%.

So what we plan over time is to move into the 30% to 40% ratio and a sustainable means, if one year for example, we have a blip up or down, we're not going to change our dividend as a result. So we will review this in the fourth quarter of every year to see do we feel that our sustainable free cash flow as more projects come online, as we have the benefits of the cost cutting of the simplified portfolio, should we raise the dividend at that time.

So this is our dividend policy going forward. We understand that this is somewhat of a wide range. But Tom will give you more specifics on this.

So getting back to AES, we have a footprint in rapidly growing markets. We have an important footprint in the US. But if you look at the next couple of years forecasted energy demand growth in the US markets we're in is around 1%.

So these numbers that you see for growth rates over the next couple of years is weighted by our proportional EBITDA in these countries. So it's not like all of Brazil or say all of Europe, Middle East and Africa. It's weighted by those countries that we're in. But what you see is for example, the Andes region between Chile and Colombia, you have very robust energy demand growth. And this is something that -- this is a trend that will continue given the project.

Brazil, we expect that to reach around 4%. Mexico, Central America and the Caribbean is also around 4%. Those countries that we're in in EMEA is around 5% and the Asian countries that we're in is also 5%. So I think what distinguishes AES from other companies in the S&P Utilities Index is really that we are in much more rapidly growing markets than they are, in markets that are much more short energy.

Of course in the US, as Ken will talk about, we are also doing what they're doing in terms of building -- possibly building a new combined cycle to take advantage of the cheaper gas as we have to retire some of the older coal plants, also rate basing some of the environmental investments. But AES again, we will have a smaller footprint but we're going to stay in the top quality countries where we have a competitive advantage.

Now thinking of some of our short-term projects, shorter term projects, '12 and '13, we have almost 800 megawatts under construction. So this has a total cost of around $1.4 billion. AES has already paid in full its $280 million of equity toward these projects.

Now of course, we will have growth CapEx, we will be investing in other growth projects besides these, but they will have a termination date past 2015. But when these specific projects come online, we expect a return on equity of 14% and just by half a cent, the cash yield is also 14%. So again we continue to commission these projects to execute on our platform expansions.

In terms of our risk adjusted returns, so we have given guidance of a total return of 6% to 8% from 2012 through 2015. In 2012, we had a 22% increase in our adjusted earnings per share and we expect a range of 4% to 6% from '13 through '15. And how are we going to achieve this?

As you see Tom will give you again more details, but it has to do with our increased efficiency. It has to do with the returns from those investments that we've made.

So in summing up, I feel that we are executing on the strategy that we've laid out. We are clear where we want to go and we are very focused on having the whole organization with the right incentives, with the right structure to achieve this successfully.

So first, as we mentioned, is improving our profitability, so it's not only an issue of cutting cost in corp. It's also cutting cost in the businesses, taking advantage of our scale, and also being innovative and using our footprints and to have adjacent small businesses that are related to our core businesses.

The second is narrowing our geographic focus, selling out those businesses where we -- which drive a lot of overhead quite frankly because they are small one-offs in terms of sales going to those locations where we're strongest. Being, let's say, very rigorous in terms of persisting in our sales process, making sure we get good value for the money.

And in terms of optimizing our capital allocation, having great discipline in terms of where we allocate those dollars, making not only intercompany comparisons, but intertemporal comparisons, making sure that anything that we do is derived from the strategy just as we do with the organization. And we're very clear that in terms of returning money to our shareholders.

So that is the overview. Again, today we'll be providing a lot more information and hopefully a lot more transparency in answering your questions. But the whole organization, I think, is a very coherent picture in terms of what we're doing, we're doing exactly what we laid out 18 months ago and executing on it.

So now I'd like to present Andy Vesey, our Chief Operating Officer who will talk about our new strategic business units.

Okay, good morning and welcome to those who are with us here and those on the webcast. I'm Andy Vesey. I'm Chief Operating Officer. We're going to spend about the next hour and a half or so really sort of deep-diving into some of the operations in SBUs. And we have a great opportunity because we have three of the SBU presidents here from some of the three of the most significant business units. So we'll have that opportunity.

But before we do that, I just want to give you some sense of my view of these businesses. Some of this Andres has already mentioned. But what drives our business for the most part across all the SBUs is operational excellence. And for that, that's not a throw-away phrase. We're serious. It's something we work on every day.

And the first thing on the slide talks about safety. It's very important to us. We work in a very hazardous business. It's construction. It's operation on live wires and it's operation of generating plants. And this is a 24-hour a day operation. And when the phone rings, my phone rings in the middle of the night, I know it's not good news.

But safety is important to us because it is the primary benchmark of quality operations. Everything you need to do to do safety right allows you to operate your businesses well. It takes teamwork, communication, expectation setting, accountability at all levels.

So when you look at an operating business, the first hallmark of a quality operation is safety. I would also tell you that there's a financial impact to bad safety in training, in retention, in cost and in insurance. I start every talk I make with safety and I'm not going to let this opportunity go by.

For your information, should there be a need to exit this room in an emergency, whether there is an alarm or where a hotel person will tell you to go, directly behind you exiting straight there are two exit doors. Now however, there are tables in front of them. Please continue to move through the tables out that door. You can also exit out this way and through the main lobby and then either to Central Park South or to 58th Street.

Hopefully that's not the case, but probably more important is please, the number one hazard you'll face here is tripping. People have bags in the aisles. There are wires that are taped down, so please be attentive because Andres just told me very clearly that if we had suffered any accidents, lost time incidents in this room, he would personally make sure my compensation reflected that. And I have enough at stake already. I don't need that burden.

So after we talked about that, Andres talked about sort of practices and processes. We pride ourselves on having a process-oriented business. We have major processes that all our businesses operate by. That's a discipline. It gives our business leaders the ability to operate within boundaries and operate with great empowerment, but within boundaries.

We have something called revenue management which looks at our distribution's ability to actually bring in the revenue they build. We have work management which talks about the productivity of labor in all our operations and we have asset management which, for us, means making sure that as we allocate both operating and maintenance expense and capital expense, it's done in a way that has its biggest positive benefit for the business and connection with our strategy.

We're very proud that our Tiete business in Brazil which is the 2,600 megawatts of hydro generation on the Tiete River is not only the first, but the only Latin American business to achieve a past 55 standard certification in asset management. This is issued by the British Standards Institute. It's the highest benchmark and soon will become the ISO 55000 standard.

It's our first company to achieve it. It will not be the last company to achieve it and Britaldo will talk more about this when he comes up. Andres talked a lot about scales so I won't add anything to that because he said all the key points. I will say that the one thing we didn't mention is that we have global IT platforms.

Efficient operations, efficient financial performance depends on having timely, quality data. You can't have quality, timely data that then becomes the information from management without platforms and IT and common platforms will allow us to do that well. So Elizabeth Hackenson, please raise your hand, is our CIO. It's her responsibility. She's been doing an excellent job because we're very good at moving data from the bottom of the organization to the top and taking actions on it.

The last item on the list that you see here is something that we also think is critically, critically important and quite honestly if you don't believe we're very good at this, this may not be the company for you. It's stakeholder engagement.

Large infrastructure projects in all markets require a sense of equity to be provided to all participants whether those are the government, state or local, or federal level, communities around your plants, labor, customers, investors, everybody has to feel that they are getting the proper portion of the value of a project. We spent a lot of time doing this.

Andres talked about -- he has mentioned Ventanas IV, some of you might remember that we used to call that plant Campiche. Andres and I had the pleasure of attending the inauguration of that plant two weeks ago in Santiago. And what's very interesting is that many of you may remember that in the middle of that construction project where we had over $100 million of equity in a hole on that site, the environmental permits were pulled because a suit was brought against the Chilean authority that gave us the permit.

We recovered those permits. We recovered those permits specifically through active stakeholder engagement in the local community as well as in Santiago as well as in Washington. I would say we are arguably the only people to ever do that.

So we don't underestimate the value of active and high quality stakeholder engagement. It permeates everything we do. We can only do it if we are recognized as very strong operators. So let's tell you what we're very proud of. You see a bust of Edison. If you didn't recognize him that is Thomas Edison in bronze on that slide.

Every year the Edison Electric Institute awards The Edison which is to look at people who have advanced the industry and provided industry leadership. There is both a domestic award and an international award. We are the only company to have won three awards in six years and again this year we are a finalist. I won't talk more about being a finalist yet because I can't trump EEI, but that will come out in June.

But what we like is we've been recognized in different aspects of our business, all critically important. The first in 2007 which was for our then Latin American businesses, specifically on the processes I have told you about, asset management, revenue management, work management across both our generation and distribution businesses.

In 2010, we were recognized for the turnaround of Masinloc which was we acquired from the Philippines government and turned it around. We'll talk a little bit more of that as we get into the SBUs. And lastly in 2012 we won an award for the Timely and Quality Completion of the Angamos Plant not only for the construction but the innovative use of seawater cooling to minimize the amount of water used in that plant and also the inclusion of advanced batteries to provide additional spinning reserve capability.

So across the value chain of what we do in operations, it's not only that we think we're good, it's that we have recognition from others that indeed we're achieving our goals. And it's something that we continue to work on and it's something that I spend my time on and all my SBU presidents would as well.

The other thing Andres talked about is leveraging the platform. And when we think about the platform one of the most obvious things we lever is our operating capability which we talked about, but there is more. Fundamentally every platform we have, it's the obligation of our business leaders to try to drive as much value out of those platforms as necessary -- that's available and you can see that in some of the listings.

Uruguaiana which is our combined cycle in southern Brazil, Britaldo will talk more about it. Argentinean gas stopped flowing to that project in 2009. There has been a very severe drought at the end of the last year and continues into this year in Brazil. All thermal capacity has been dispatched. Through active engagement with both the Brazilian and Argentinean government, we've been able to get Petrobras gas through Argentina to that plant and have already had that plant in operations for two months this year.

Britaldo and his team continue to work with both governments to bring back that plant on a full time basis so that we can receive a payment for the capacity and provide a service to the governments of both Brazil and Argentina to make sure they have available thermal capacity.

Keeping that plant in shape properly in hibernation allowed us to bring that back within two months with a minimal capital investment. Southland, this is our complex of gas plants in the LA Basin. Good business, it's going to be there for a long time and what it's great value? Location, location, location.

Those plants and those sites will have value for a long time. With the unavailability of this San Onofre nuclear plant last year, where we were able to bring back two units at Huntington Beach to provide service and that was something which was upside for us last year.

This year because San Onofre is still unavailable, we have invested in putting in synchronous condensers for voltage support, continuing to think about how we make value out of these sites and these plants beyond the generation they provide today is critically important.

You see a list of plants underneath that; these are all the platform extensions that Andres mentioned. The only one on this list that I don't think he talked -- there are two, one is Tunjita which is a 20 megawatt hydro that is actually bolted on to our Chivor 1,000 megawatt hydro facility in Colombia. There is an existing water flow tail race where we basically are building a small hydro plant. Most of the infrastructure is there. It is a very nice small hydro. It also qualifies for other benefits because it's considered a small hydro. Felipe may talk more about that when he presents.

The other one here is Alto Maipo. Alto Maipo is this 532 megawatt run of the river hydro that we're building in the Andes very close to Santiago, but it's a platform extension. We already have a hydro there. It's called Alfalfa which just talks about the brilliantly green Alfalfa fields around that plant.

But what this is is using the current infrastructure and also current water rights we have in the Andes and consolidating them so that we can add more capacity very close to Santiago. It doesn't need big transmission and almost all the works are underground. Felipe will talk more about that.

Adjacent business lines -- very quickly. Virtual gas distribution, as you know we operate one of the only regas facilities in the Caribbean and in the Dominican Republic. We sell gas for non-power purposes at the fence line, both compressed gas and cryogenic gas, the liquid gas. We have a cryogenic truck loading facility.

So there is natural gas in D.R. and it comes because we provide that and enable that from our own plant and it actually produces some revenue for us. And we'll talk about that when we talk more about that business unit.

And I actually skipped one which is the Inter Andes transmission line, talk about that very quickly. Gener in Chile operates a combined gas plant in Northern Argentina that for years has exported electricity into the northern grid in Chile. Our export license which has expired.

We have a 345 KV line that goes over the Andes. It's actually one of the highest altitude transmission lines in the world, the highest structure is over 15,000 feet above sea level. The team is now working to be able to bring 250 megawatts from Northern Chile into Argentina and collect it by -- and actually a tolling charge on that transmission. Felipe will talk more about that.

Adjacent business lines, we talked about gas, energy storage. We have over 50 megawatts of advanced batteries in Chile which provides spinning reserve actually allowing capacity release meaning we don't have to hold back on our coal plants. We actually can provide that service with batteries and therefore bring more capacity to market.

We also use it for frequency regulation in the states, so batteries, a very important part of our -- on our existing platforms to have additional service. Desalinization, many of our plants have to desalinate water for process use. Well if we need it, chances are other industries around us need desalinized process water as well.

So we're currently exploring opportunities to provide desalinated process water at the fence line to other process industries. We believe with current technology, we can produce that less expensively than anybody else. So this might be one of the things we'll be talking about as an additional revenue line.

Lastly Andres talked about so I won't spend much more time. We developed a transformer loss program for our own use, but now we actually see interest in the market for other people to join this program and get the same benefits that we have.

So SBUs very quickly, Andres talked to you about this and you can scan this and you'll have this in hard copy in front of you. But if you look at our markets, our markets are either highly contracted revenue or regulated revenue in, for the most part, medium or high growth markets with some exceptions as Andres pointed out.

But that's not the way we've organized. We've organized around commonality to have market facing businesses that can practice good stakeholder management and pay attention to their customers. So they're market facing. We basically also want to make sure that we have the opportunity for consolidation of functional management and also make sure that we do our back-office services in the lowest cost places as Andres talked to that as well.

But the other thing that's worth while talking about is that we've also designed these structures to be very efficient in terms of being transparent and have very good communications. In our generation businesses between me and our frontline managers, five levels; in our distribution businesses on average seven.

So if you add Andes on top of that, you've got six and eight. So we know what's happening in our businesses. It's very important because as I said, information is the key to running these businesses well. So very quickly, before we get into the details, let's go back, so let's call this the PTC wheel. This is the wheel of PTC adjusted 2012.

What we will do is we will start with -- there are 11 key businesses here that represent over 70% of that PTC and we're going to talk about all those key businesses in the next hour. We'll start with our US SBU; Ken Zagzebski will come up here in a moment. That wasn't the invitation yet. That was only the introduction.

So Ken will come up and talk to us about the businesses in the US. He'll be followed by Felipe Ceron who heads up the Andes business unit, then Britaldo Soares from Brazil. I will come back at that point and try to match the intensity of their presentations with talking to you about the MCAC, EMEA and Asia. And when we conclude that, we will all come up to the stage and be available for Q&A. And I think this is such a tremendous opportunity that you have to actually talk to some of the key business leaders and we hope you take advantage of that. And now, Ken, why don't you come up?

All right. Good morning, everybody. I'm going to talk about the US strategic business unit and just kind of give you just a setting. I'll take about 20 minutes and I have one slide just kind of gives a brief overview. Then I'm going to talk about the US generation facilities or businesses and then IPL and then Dayton Power & Light after that.

So just overall, if you take a look at the business, we've got 39 generating facilities. We've got 13,000 megawatts across the US estimated. About 50% of that is coal. About 40% is gas and about 10% is wind and other.

We also have two vertically integrated utilities. So IPL and DPL, we have about a million customers with the two of those businesses. If you look at the US generation group, again about 21 businesses and located in three general areas. So if you take a look at the map, in the southern part of the US, in Oklahoma and Texas, we got pet coke, we got wind and we have coal in that region. If we go up to the northeast, you got in the PJM area, we've got coal and we've got wind in that area.

And then if you go to the western part of the US, we got gas as Andy alluded to in Southern California. We also have wind and then we have coal in Hawaii.

Indianapolis Power & Light, headquartered in Indianapolis, so we serve the customers in that city and also the surrounding communities, 470,000 customers and that is traditional regulation. So you think of just a traditional regulation in terms of vertically integrated utility, IPL fits that description.

And also Dayton Power & Light, so like located a couple of hours to the east of Indianapolis. We serve West Central Ohio and about 24 counties in that area, a little over half million distribution customers there and that regulation is different obviously.

So the T&D is similar to that of IPL, but the generation has moved more to a competitive type market. I think the other thing I'd just like to note is that the proximity of the two utilities allow us to share resources in terms of if there are storms or other times that we need to -- need additional resource to help restore power, the proximity to the two locations allow that to happen quite easily.

Now first, I'll talk about US generation business. And I think if I leave you with one thought about US generation business, it's a low risk portfolio of businesses. So we have 21 businesses in this group. And it's a low risk business. So we have PPAs, we have got contracts with all those -- or I should just say 94% of the megawatts of that. And they all last five or more years so we don't have any material contracts falling of for over five years. The average is six and a half years.

We also, in terms of low risk, we also have a fuel pass through for the thermal facilities. So we pass through the fuel cost, the one exception to that is Hawaii. In Hawaii we have our coal contracted through 2013. We're in the process of procuring 2014 coal now, and at least early indications are that the price will come in at or lower than 2013 levels.

So if I just kind of walk through the different types of generation, just a few comments on each of those. I'll start with the coal, so on the coal we've had tremendous performance out of that group. Andy talks about the operational excellence. We've been in the top docile in terms of our availability, so as the unit has been available also and Andres talked about utilizing the footprint. So if they're going to utilize the footprint, we've added equipment to each of our coal facilities to enhance fuel flexibility and so that allows us to use or burn softer coal which is cheaper or to leverage different mines to be able to buy coal from different sources.

Next up I'll talk about the wind. Wind is a large part of our portfolio. So we have 20% of our megawatts are on wind. We also have about $700 million invested in that and what you're going to see over the course of the next five years is most of our deals are structured with tax equity partnerships, so with that you're going to see the allocation, the majority of the allocation in your earnings, you're going to ship over to AES over the next five years. So we'll see a significant earnings growth in this part of the business.

I think the other point that I noted on the wind is that we're not looking to develop any new wind facilities at this time. So we don't look at pursuing that.

Lastly, I'll talk about the gas component. So gas, it's in Southern California. So these are also facilities that have operated extremely well. We have met all of our availability targets since we're doing these assets as Andy alluded to and we've also -- we had to restart at Huntington Beach three and four last year. We did that on a very short notice this year with (inaudible). So they're making an additional revenue as a result of that.

I think Andy talked about location as well and we do have extreme location advantage here. So in terms of a couple of things, one is the, in the transmission into the area that you can pretty well guess it's difficult to add new transmission in California. Also the difference is it's difficult to site new generation, so the transmission come into these sites with the need for local reliability within the area. We've got extreme location advantage.

And so as you look to the future and it's just a ways off, but if you look to 316-B which is environmental regulations to do with water intake that's going to affect California at the end of 2020, we're looking at options to either repower or utilize those sites in other ways in that -- so as Andy said, we can look at, utilizing these sites for a long time going forward.

Indianapolis Power and Light, when you look at the business drivers of this company, I think it comes down fundamentally with the quality of the legislation the regulation of that state. It's a traditional type of utility. And when you look at the regulation there, it's been extremely favorable.

So if you go back in the past and take a look at what we've done there in terms of fuel quality adjustment, any type of environmental mandates, you can track the recovery for that. You can recover those costs immediately.

And then just recently, there are been a couple of events. So last week on Tuesday, the governor has signed the bill that allowed track recovery on T&D infrastructure investments as well and also future test years. So I point this out because I think it's important to note that the quality of legislation regulation when the states, we see that continuing going forward.

On Wednesday last week, we had a press conference announcing that we're going to pursue building the combined cycle gas plants at our Eagle Valley site, 30 miles south of the city.

The governor and the president had that press conference with me to indicate that he believe in the energy policy that they have in the state and then it's not only critical for the energy industry itself but also for economic development for the state. So, very supportive both on the legislative side and the regulatory side in the state.

I think the other part of the business drivers is our part of it, is that we got to perform extremely well and so we have the operation excellence. And if you take a look at the past with IPL, it's been recognized by EAI in the top 5 percent in terms of reliability for our customers and JD Power this past year acknowledged us as being the top performer in our category for business customers. And we have one of the lowest rates and with the large cities across the US with investor-owned utilities.

I think the other point I'd like to make on the earnings, I think the industry relatively a flat earnings and we take out the effects of major outages and weather going forward. And I just want to point that out. I'm going to spend a little bit of time on this slide. I think this is a critical slide in terms of capital expenditures.

I want to spend about a billion dollars, over a billion dollars compliant with some environmental regulations going forward with IPL. And that does a couple of things, I think one of the things with the fundamental shift in our regulatory strategy is our regulatory strategy look over the past decade and it's really to get along with the regulators as much as we can, kind of stay out of the regulatory arena and keep high margins as long as possible.

With these expenditures, we're in the radar, you know. We're going to have to have a rate case to recover some of these dollars. And so it's going to be, like I said, a fundamental shift in terms of how we interact the right way and what our expectations are.

If we look at the driver of this, the driver is primarily the utility materials that EPA issued and does two things. So if you look at the top bullet on the screen, the Mercury and Air Toxics Standards. And the 63% of the goal that's described on the pie chart, those are the base load unit. So we've got five base load units of IPL for a couple of result for the city at the Petersburg plant and one in the City of Indianapolis.

But those units we're going to have to put additional control equipment on. And that controlled equipment cost over $0.5 billion. We filed for recovery of that last fall. We expect the ruling by the commission in June sometime. I think it's also important to note that with those of the two primary interveners. We've agreed with them and the interveners, the consumer councilor and the large industrial customers all support in our filings going forward.

I think we also -- it's also important to note in terms of taking risk out of it and with the cost of the project implemented is that we've got an EPC contract associated with this and were expected. As soon as we give approval in June, we will start in the fall this year with an audit at Petersburg too.

And then the control statements will continue to be -- will continue to work on that through compliance state of April 2016. If I shift over to the CCGT, so the bottom bullet, as we're looking at building a combined cycle of gas treatment at the Beaver Valley as we indicated before. And if you look back to the pie chart again, the 14% and the 7% throughout the coal and the oil, we're basically going to have to most likely return those units as result of that same utility match rule.

So with that, we'll look to build new facility, to replace that generation. We conducted in RFP. Internally, we had over 20 people bid on that. Once we analyze that, our assessment was that the best solution, the least cost solution for our customers was to build a plant ourselves at this facility given the location on the brownfield type site.

So we're looking to build that. I think we're in that process. We just filed for that last week with the commission. We expect that approval process to take approximately one year and then the construction begin after approval. We will have that in place in service in April 2017. That would be the timeframe.

So I think, the other part of the slide that I'd like to point out is in the end when you go to the quality of the legislation and regulation again in the state, and one of the things that we have is Power Plant Recovery Act. And the Power Plant Recovery Act is two things; one is it requires an approval by the commission of a certificate of public needs and necessity -- excuse me, certificate of public needs and conveners and necessity.

So if you need approval of that from the commission before you can go forward within these types of projects, and so that approval process is it includes public hearings and we have the interveners, of course, involve in it.

But the upside of that is that once that's approved, at that point in time, then you're in essence, guaranteed recovery on and off the investment. And that's even that the project to subsequently cancelled when that's by law in Indiana.

I think the other thing I'll just point out, kind of where I started on this slide, is that this will put us in a rate test at some point in time. We have not determined the exact time that we're going to file that. We've taken a lot of things that we've taken to account. One is new legislation, that's an effect. We have to analyze that. It's recovery of the capacity cost. It's probably the other significant component of that. So we'll continue to assess that and will file when it's optimal for us to do so.

Let's shift over to DPL. So DPL, so even though we're going to a competitive environment in Ohio, on the left side of our service territory, the T&D customers, that's still exclusive franchise. That is not, in that competition, the T&D side. We continue to serve those customers for those types of services. On the generation side, I think there are three things I'd like to point out and doing differences when we take a look at the difference between day power and light and the Indianapolis power and light.

So the first one is what I mentioned before, they're moving to a competitive environment for IPL's traditionally regulated. I think the second one is we've talked about the effect of utility mass and the regulations that has in the cost that IPL will incur.

Details are not in that same situation. They do not have the material cost associated with utility mass for the plants we have today. And then the last one at the plants that they jointly owned, so IPL's plants are wholly owned. The base load generation that DPL has jointly owned with AEP or Ducand AEP.

Business drivers. As we look at business drivers at DPL, on the T&D side, there are a lot of requirements in terms of the T&D side of the business. We've met those requirements. It's essentially important place. If you look at the T&D and the reliability, we rank on top in the State of Ohio.

I think on the JD Power survey, there's a measure of customer satisfaction. We've made tremendous improvements since we go on to DPL. So we continue to make improvements there.

On the generation side, it's a little bit different. The first thing and on the next slide, there's a couple of slides and I'm going to talk about the ESP or the current rate proceeding. It's critical we get a quality out from that proceeding. So I think that's number one.

The second thing is gas prices. So with gas prices depressed, that is a critical business driver to us in terms of what we can get for our margins on the generating facilities. And then the other one is capacity prices. It continues to be frustrating of capacity prices, still a significant load of cost of new entry and it appears that that's not going to change in this upcoming auction.

And then lastly to point out is the cost improvements and we had to talk about the operation excellence. We need to continue to improve availability of our plants and lower the cost structure at the same time and we have initiatives to do that.

And the last one is we're going talk to [Thomas Flinch]. He's going to talk later today. I'm going to let him talk about the debt restructuring we have at DPL.

So the competitive market considerations, there different components. The first one is energy hedging. So the three different components we have for our energy, the first one is tariff customers, about 28% where energy goes to tariff customers. Those are obviously the highest margin customers.

We prefer to do that but we're switching that and we'll continue to decline overtime. So that's something that we'd like to keep pride of this, but it's not going to stay at that level and continue to go down. Second one is wholesale. We replaced about 5% in wholesale. That has the lowest margin. And then the last group is on the retail side, primarily through Deepler.

We've got about 67% that goes through the retail channel, again higher margins and much more clearly efficient than those in the wholesale side. A retail business through Deepler, we got about 250,000 customers located in Ohio and Illinois as where those customers are.

On the capacity side, again, if you look at the upcoming capacity auction, we have upcoming in May. Our anticipation is that oil prices somewhere in the area of the last two auctions don't anticipate to see a price increase. And again the frustrating thing is that that's always off in the cost of new entry and overtime you've got to believe it gets to that level but we're not there today. I think the price will remain in the same levels where they have been. There's more important capability, and so we don't anticipate significant change there.

We talked about the DPL rate proceeding. So just if you take a look at the chart here, this is the five key items that are associated with the current proceeding that we have. I think in terms of schedule, we expect the decision at the end of July or the last half of July. If you look at the various components of that -- and I grouped the first three items kind of together, done by possible charge and switching track in the ESP term.

Because what's that about is basically the financial stability and be able to continue as we transition to a competitive market. It's the financial stability to be able to operate reliably and safely during that period of time of transition. So by possible charges is, in our view, the most important item that we have.

I think it's positive to note that the commission staff's numbers are near our numbers. And so, again, you don't know how the commissioners will rule, but I think the positive staff sees it as very similar to what we do. The switching tracker, that switching tracker basically is customer switch. It designs in order to minimize the impact of that.

The staff had zero for the switching tracker. They basically see the switching tracker by passable, interchangeable and they put all the dollars in the non-bypassable component of it.

I think the ESP terms and the link of the term. We obviously prefer to get these revenues for a longer period of time. We proposed five years. The staff has three years. Staff position is basically consistent with other ruling that the commissioners had in the past.

Transition to market, this is how fast the customers get market pricing. A little bit of double storage here. If you don't change this at all, if you don't lower that price, your customers are going to switch out faster. You're going to lose that margin. And so you want some transition average like to hold on to that market as long as you can. So we don't any of your difference and what or proposal is and which stuff it ended up with.

And then generation separation is the last key component of it. And it really gets into a lot of the -- by financing arrangements, a lot of the terms you have and the financial agreements, when you can physically separate. And so we believe that we put a good case in front of the commission in terms of the timeframe that we've got proposed here.

Key takeaways, so I think our company has taken a look at the PTC trend. Again, we'll see a decline compared to past year in terms with the DPL customer switching focused in marching and results of that.

In 2013, we've got this long -- we've got the maintenance outage at the IPL to accommodate the utility mass but also we got a long outage and also the impact to whether I think past a couple of years, we had very hot summers and so we always anticipate normal weather.

If you look at longer term, we have a positive impact of wind and also positive impact of the tracker associated with the IPL project. So I said the takeaways that I'll leave you with, again, the US generation business, I think, is a low risk business. Our setup as well for the next five years in terms of the low risk environment stood up for investment with the location that we have in the Southland asset. And indeed that's competitive advantage that we have as we look and going forward there.

At IPL, I think reinforced that the regulatory environment, legislative environment and IPL is extremely favorable. I believe that's a quality environment. We don't anticipate any change in that anywhere in the future, foreseeable future.

I think then with DPL, we need a quality outcome of this ESP. I think that's that critical to us and then we have to move towards generation separation and be prepared for that.

So, that concludes my remarks. I'll introduce Felipe Ceron to talk about Andes.

Good morning. Thank you for joining us this morning. My name is Felipe Ceron. I'm going to present the Andes SBU. First I'm going to give an overview of the SBU and then into more detail on AES Gener, which is the largest business in the unit. A description of the named market, Chile and Colombia, I'm going to go into AES Argentina and finally from takeaway from the presentation.

This SBU is composed of two large generating companies, AES Gener and AES Argentina. It has operation since three countries -- Argentina, Colombia and Chile, which are after Brazil the second third and fourth largest economies in South America.

We have a total aggregate, total capacity of 8 megawatts. Gener, which cost operation in Chile, Colombia and Atlanta and Northern Argentina both the Chile and Argentina has a capacity of 5.1 megawatts, which amount to 63% of the capacity in the SBU.

In 2012, we have an adjusted PTC of some $369 million, and Gener contributed with 39% of that amount. Now going into more detail on Gener, Gener diversified themselves by geography, technology and customer base. They have plants throughout Northern and Central Chile and single plant in Colombia and Argentina.

We're also diversifying technology. You have either generation based on run-of-river, on thermal, burning coal, gas and oil. We have a very wide customer base, large electric customers, mining companies, industrial customers and also companies in Chile and Colombia.

We have declined in our PTC from 2011 to 2012 due mainly of determination of the exports of our plant in Argentina into Northern Chile. And then temporary imbalance between our contractual commitments and our efficient generation cause for some outages that we have in 2012 and also because of the delay in the Lantana power plant that Andy mentioned early about the operation in march of this year. That was partially offset by staring of operations for Angamos plant in Northern Chile.

Now more detail in the main marketing, which we operated -- has two main markets, Chile and Colombia which are among the most attractive market in the Latin America region. Chile has the highest grade rating in Latin America. The country has deep liquid and well-developed capital market for both equity and debt. We have very stable and constructive regulatory environment for power generation with these back to 1982.

And it's as the country keeps growing and the power demand has been growing very strongly in the last 20 to 30 years and is expected to continue growing. We are estimating a need for around 700 megawatts of new capacity per year in order to provide for the growing demand.

Gener is the oldest generating company in Chile and AES have been in Chile since late 2000 when it acquire and controlling in Gener. We are also the second largest power generating company in the country with 19% of the installed capacity and the years that we have carried in plant factor than most of the system. Our generation needs close to 30% of the total demand.

The other main market for Gener is Colombia. Colombia is also an investment radar country with also constructive and stable regular environment for the power generation that has been in place since 1994. Demand has been growing very strongly of oil. And we expect that the country will meet around 450 megawatts of new capacity per year in order to provide for this growing demand.

We are the fifth largest generating company in the country amounting to 7% of the total installed capacity. Now, as AES Gener is up for the company, Gener is among the 20th largest public list of company in the country in terms of market capitalization. AES owns 71% of Gener and 16% is owned by local pension fund.

Gener has investment grade rating by standards and one notch above investment grade by feet. In the last seven years, we have a very significant return on our stock for our shareholders. In the graph there, we have the evolution of the EPSA. The EPSA is the index that comprises the 40 more traded stocks in Chile.

The EPSA has had return of 142% in this year, whereas Gener has had more than 450%. We have also increased in the same with our market capitalization from $1 billion in '05 to $5.9 billion as of May this year.

We have made significant investments in the last few years from 2006. Until March this year, we have had the new capacity increasing Gener since total capacity by almost 50%, all of that in Chile with an investment of $3 billion.

We have other 600 megawatts. So we have a network of new capacity doubling our installed capacity in Chile. This includes eight power plants and also in a story system, the first large body story in the world was built by AES in Chile. Now the largest one is also owned by AES in the US but the second largest are in Chile. This has very high technology and makes a very good contribution in Chile by substituting the spinning reserve.

This investment that we have made in the last few year represent 50% of the base load that have been built in the country making us the company that has invested the most in the power sector in Chile and we have been not only the one that have invested the most, but also the most successful in terms of the performance in our construction by building the plant (inaudible).

We have also the result of that, double the EBITDA of AES in '06 to 2012. And we also have a very interesting future. As I said, we finished this large investment of 1700 megawatt, but we're now starting some three new large approach with an average capacity 1.2 megawatts, which I'm going to describe with more detail later, with an investment of $3.5 billion. And we have also started a smaller project in Colombia to hit 20 megawatts.

In Chile, we operate in the two largest market in the country, the so-called SIC, which is the Central Southern Grade which covers 90% of the population and the thing to note which is the most important mining district in the country. We also have Thermo Andes in Northern Argentina that disconnected to both the Argentina system and the Chilean system.

Thermo Andes exported into SING until late 2011. Now we are working with both the Chilean and Argentinean government and also with the system operators of both countries in order to make this line operation and not just to exit Argentina into Chile but also from Chile into Argentina.

This is the largest international transmission line that Chile has and the second largest that the government has. We expect to have it operationable by the end of this year. And this would be new income for us in terms of toll payments and also export from foreign country into that.

Our business strategy in Chile is based mainly into contracting our admission capacity into long-term PPAs. By efficient capacity, we mean that the capacity that has variable cost and that it's lower than the market price of energy.

We have contracted almost 70% of our capacity, which is the efficient capacity and the remaining terms of the data we have in 12 years. All those contracts are dominated in US dollars and have either close to our cost or are index to our main cost. The remaining 32% of our capacity is less efficient, but it's available for five years in the central region, the SIC. The system is based to a significant system in hydrology.

And we benefit in years by producing with this inefficient capacity and selling of the high press in the market, and also in years but reducing even our base load generation and buying cheap in the spot market. We receive capacity payment for all our generation and we also have that contracted long term.

In 2012, we experience, as I said, a temporary imbalance in terms of our contractual commitments, our efficient capacity and some outages that we're related to some boiler that we have to change in our plants, which is already solved and some of the design situations in our Angamos plant that has already been solved and also because of the delay. That's the operations in March of this year. So, all of that is already designed.

Now, going into the expansion in the future that I mentioned earlier, we have three platform expansions in Chile amounting to a total of 1.2 megawatts on $3.5 million investment to an array under construction. The first one is what we call the five plants that Andres mentioned earlier.

It is adjacent to our other four units in the peninsula in the northern part of the SIC. This plant is exactly the same for the units that we have and it's being built by the same EPC contractor, Mitsubishi with a total project cost of $450 million. It's fully contracted with a mining customer in the north of the SIC. We started the construction in October last year and we expect it to start a commercial operation in the second half of 2015.

The second plan for expansion, it's Guacolda. Guacolda is an expansion of our existing Angamos facility in the SING. It consist of two units of 532 megawatts. It's the same design of Angamos and the same EPC constructor in Busco.

Mitsubishi have joined us in this venture. They acquired 40% in November last year (technical difficulty) Japan and Korea and also some bank from the Far East. The total project cost is $1.4 billion. We have a secured long-term PPAs with three large mining customers in the North of Chile with a term of 19 years.

At this point, it also includes the energy storage system. We are scheduling the COD of the first unit for the second quarter of 2016 and the second unit last quarter of 2016. Considering this two appraisal way under construction, we work on the five. In the Cochran, we have a total under construction of six countries with four megawatts. That's nearly half of the capacity that is under construction in Chile today.

The third platform expansion is Alto Maipo. This is 531 megawatt run-of-river power plant consisting of two units. It's an expansion of our existing Alfalfa plant 50 kilometers east of Santiago. It's in a very advance stage of development. We have the environmental permit, the water permit, the construction permit.

We'll also have been granted the electrical concession and we are almost finished with the preliminary work and we are in the process in the left stages of negotiating the financing, the PPAs and also considering incorporating with it. We expect to initiate the construction by the end of this year and achieve COD in 2018. The total project cost is estimated up to $1.7 billion.

Apart from this three platform expansions, we have other project in our pipeline. We have primitive project, our coal project in the SIC. We soon have the megawatts on a solar project in the North of Chile or 250 megawatts. We are also considering some adjacent projects like desalination. Chile is a dry country, particularly the north.

There is a significant need for desalinated water and considering the advances that we have being there and our water intakes on our power generation to develop in the water desalination business.

Now in Colombia, the other bigger important market for Gener, we have been there since 1997 when we acquired Chivor. Chivor is 1,000 megawatts hydro plant. It is the third largest plant in the country which amounts to 7% of the total installed capacity. In Colombia, we contract most of our generation. We generated around 85% of what we generated for a single year.

Contract singing in the range of one to four years. We sell the balance around 15% in the spot market. We also received reliability payment which amounts to around $44 million per year. And hydrology in Colombia, it's a much more stable in Chile. There are lesser variations. So with this more stable hydrology and this reliability payment, that provides for a more stable PTC in spite of not having a very long-term contact.

We last year started our first project in Colombia since we acquired Chivor. Tiete is a $20 million hydro. It's also above on expansion and takes advantage of the water we have there and infrastructure that we have at Chivor. It has $60 million investment and the COD's expected for mid-2014.

Now Argentina, we've been in Argentina since 1992. In spite of the challenging environment there, we have been making money in Argentina in our generation businesses every single year since then. We are the third largest generator in the country. We are the most diversified with almost three megawatts of capacity. That's 11% of the installed capacity. We are the most diversified.

We have the only coal plant in the country, which is the lowest coal producer. All our thermal plants are dual, which means that they can be more than one fuel. Our coal plants can also burn natural gas and our combined cycle that (inaudible) which give us significant flexibility.

The business environment in Argentina is challenging, also the microeconomic condition. However, we have very good assets and in a very good position when this situation recovers in the future. There have been recent changes in the regulation of Argentina in which the remuneration of the generating company has been modified to us similar to Cospla.

These changes have some positive and negative news for us. There are a few items still to be defined. We re activity engaged with the government in order to finalize the definition of those items and minimize the negative impact on us and maximize this. The benefits we expected to be fully defined by the end of June, on balance, we expected to be slightly negative as compared to our expectation for this year. But it is better than what we have in 2012.

Demand continues growing very strongly in Argentina, more power will be needed and we expected in very good position once this piece of environment and the microeconomic situation improves in the country.

Finally, some summary, some conclusion and takeaways for SBU, in Chile we are in a very strong position. The second largest generator but the one that has grown the most in the last few years and also we expect to be the one that grows the most in the near future. We'll have the most attractive approach and we have been the most successful in building the new power plant.

In Colombia, we also have a strong position. It's also a very attractive and growing market. We have make it first and we expect many new projects in the country and we expect to leverage in our good position there and also in our track record and knowledge in developing and building power plants as AES and AES Gener.

In Argentina, we have excellent assets, very well diversified and are expected to an improved condition in that country sometime in the future.

Now in some trends for short term, in 2013 in the first quarter as compared to 2012, we have a lower PTC mainly due to a lower dispatch of our gas plant in Chile. In Chile there was the additional coal plants not only from our side but also from our competitors that push down spot price and reduce this part of our gas plant there. And we will also have a lower hydrology in Colombia.

However, for over the year, we expect an increase in our PTC in the range of 5% to 15%. So we expect that for the rest the year. We will not only cover this short of other increase. That will be because we have now been operating starting in March. That will be a big job. And also last year, we have the outage examination that we're particularly challenging in the second quarter of 2012.

This were related, as I said, to some change and reduce of the volume of one of our plants that has already installed in some designed project that we have and that is already installed. So we should have a significant availability for the rest of the year.

Going forward, from 2015, we have, again, kind of the availability and we expect to also to have an operation and the interconnection between Chile and Argentina going both ways on collecting toll payments. We also expect to have taking advantage of our decency with desalination capacity.

Medium to long term, 2016 onwards, the three platform expansion that I mentioned in Chile were called the five Cochran and Alto Maipo. In Colombia, we expect to have some more growth opportunities beyond Tiete. In Argentina, long-term potential with the microeconomics situation and the business situation also improves in that country.

Thank you very much for your attention. I will now like to introduce Britaldo Soares, our President of Brazil SBU.

Good morning. It feels good to be here to give you an overview on the Brazil SBU. I'll basically give you an overview of how our market works, what we have and had, and then to speak about our specific business.

This is the business we have in Brazil. We have approximately 8 million customers in distribution. In concession, it's covered by Eletropaulo and Sul. Eletropaulo is the largest distribution company in Brazil. And in 2012, our PTC performance has been heavily affected by the outcome of the 2012 reset.

So as our distribution company in the south, we have 1.2 million customers there and Sul has been a consistent contributor of PTC over the last three years. And in 2012, it has brought 152 million to our adjusted PTC. On the generation side, AES is our main business, and it represents 80% of our generation capacity, 100% hydro, and it's a business fully contracted until 2015.

Uruguaiana and the nation at the beginning is our combined cycle gas plants in the border with Argentina that we have just -- after four years, put in operation for 60 days to help the recovery of the reservoirs in Brazil given the low hydro we have seen.

And we're in negotiation to put it to long-term service. Now, I'll move to the some of the market aspect. Brazil is a large market, but very competitive. The overall energy demand in Brazil exceeded likely 500,00 gigawatt hour in 2012. And we expect an average 4% growth until 2021. 70% of the market is represented by regulated utilities and 25% by own regulated three large industrial and commercial clients.

This kind of demand growth that we see requires the increase of 5 gigawatt to 6 gigawatt in new capacity every year. The new projects are competitively did accept those that are going to supply exclusively the free market. Our image matrix is mostly hydro and we'll continue to be hydro on average approximately 70%. But the new hydro project has been mostly run-of-river with limited reservoir capacity.

Wind energy has grown substantially in the recent years and we expected to continue growing and represent 40% of the capacity due to the auction. The low hydrology that we have seen in the country has increased the requirement for thermal dispatch to provide more dispatch ability and sector supply in the country.

Given that, we see thermal energy also increasing its participation in its matrix. And today, the existing capacity represents 20% of the total generation in the country. Now I'll give you highlights on the regulatory framework that we have.

Our Brazilian utilities go through tariff reset every four to five years and these resets are based on return on assets model with a late average across the scope defined by the regulator. Currently, the after tax return is 7.5% and it was reduced from 9.5% in the prior cycle.

And with our utilities also are entitled to an inflation based adjustment and depicts through energy and transmission front. The latest tariff reset which was the third tariff reset in the country seems privatization at the end of '90s has been much more rigorous than the previous ones, tightened margins and established greater strategy of service as required.

Eletropaulo and Sul is our distributions companies have their reset in July 2012 and Sul just had it in April 2013. And I will comment on those two specific businesses in the hedge. Overall, what do we have seen in the country is a pressure for lower cost of energy to savor local industry competitiveness and inflation control.

Last September 2012, the Brazilian government has introduced the cost reduction, a tariff cost reduction program lowering the tariff by an average of 20%. And that program has been funded through two major sources, the first one was the reduction of sector charge. So we charge similar in Brazil in all the companies in the sector, and also by low OEM cost conditions for the renewable one expiring between 2015 and '17.

Our businesses have had limited deck because our concession expired between 2027 and 2029. However, the perception of increased uncertainties in the sector has affected the overall sectors top performance and our stocks have also been affected, and we will see that ahead.

This is the hydrological evolution in Brazil, and we have comparison to 2001 and because that year was the year of 20% mandatory consumption reduction across the country. And as you can see, we ended 2012 with the reservoirs at 30% liable of their total capacity. That is to arrange and also to reduce storage capacity in the system given the new projects being run-of-river.

To recover the reservoirs and secure supply, the thermo dispatch has been increased since the fourth quarter of 2012. And we expect the Brazilian government to be a bit more conscious with the reservoir levels. Since 2014 is the year of elections and the work up. The thermal dispatch is expected to be maintained between 9 gigawatt to 12 gigawatt. And we expect that go through the end of 2013.

With this situation in the country, we do have in the first quarter of 2013 an impact on its PTC of approximately $16 million and looking forward till the end of the year depending upon the level of dispatch, we are estimating and incremental impact that can range from $11 million to $35 million depending on the dispatch.

There have been recently a lot of discussions about rational risk in Brazil. But we achieved the hydrological evolution and combine that with the current thermal dispatch capacity in the country of approximately 14 gigawatt, we do not foresee rational risk as a relevant one in the short and medium term.

We're now moving to Tiete. As I mentioned before, Tiete is fully contracted with the level until the end of 2015 at very attractive commercial terms. And as mentioned by Andy before, we have done a review of our asset management OEM process in Tiete and we have obtained the certification on their past 55 off the standard institute.

What's the benefit of that? Over the last three years, we have reduced the down time of our generation unit by 75%. The stability of the Tiete revenue stream until 2015 and our strong operational reliability is what drives our PTC performance. And that has been the case for the last three years.

We expect the consistent performance of looking forward to 2015 even considering the potential impact of the hydrology. We're sharing that we have seen in the first quarter.

Looking ahead, one of the major challenges for Tiete is contracting our energy beyond 2015 with the end of the Eletropaulo BTA. Our strategy has been to accept the free market, contracting with large industrial Zen, large commercial customers since the market has offered more attractive commercial terms today in contract that average terms range from three to five years.

We also see another reason to focus on this market is that we introduced -- that has been introduced in the market like the change in the spot price population, the decrease of the proportional water storage capacity with the new hydro project in run-of-river and the higher thermal requirements looking forward in more restrictive foundations for wind energy. These factors can bring an upward trend in the free market prices.

We also have beyond 2016 challenging to expand our capacity and currently responsible on the development of two thermal plants, thermal plants in the State of Sao Paolo of approximately 1100 megawatts. And those two projects are bending and securing gas supply and also winning one of the energy auctions for being built.

We have also processed some emitting efforts more directly to the wind energy segment as one of the alternatives to grow our capacity.

We're now moving to Eletropaulo. As I mentioned, Eletropaulo is the largest distribution company in the country with 6.5 million customers, highly concentrated in residential and commercial segment which together represent approximately 74% of our revenues.

Eletropaulo had third tariff reset in July 2012 and it came one year after the original date given its longer time taken by the regulator to finalize the methodology for debt reset. It was a very severe reset and came below our expectations and it heavily impacted our PTC performance in 2012, as I mentioned at the beginning.

We have administrative view with the regulator and we expect it to be concluded in the outcome implemented with our July 13 annual tariff adjustment. We have asked the regulators to review its prior position with regard our asset based and reconsider asset exclude this from prior tariff cycle asset based and increase the recognition of incremental regulatory investment made between 2007 and 2011.

Given the significant effect of the tariff reset and increased cost of energy from the higher thermal dispatch that we have seen in the first quarter of this year. We have renegotiated our financial covenant and we expect to go back to the 3.5 times adjusted EBITDA that we originally have in the third quarter of this year.

And we have seen growth in demand and an average of 2.7% per annum over the last five years in Eletropaulo's concession area. And we expect it to continue increasing as Brazil grows in a more steady step. In addition, to this with our operational act, basically cross an efficient management while it is for the improvement to drive value we have and going to speak about efficiency pogroms in the slide ahead.

We're now moving to see the stock performance that our two listed companies have had compared to the Sao Paulo stock exchange. Basically, Eletropaulo performance has been affected by the third tariff reset with the severe outcome that we have. And more recently also the impact of the increase cost of energy for the stock performance.

But overall, when we take a longer term, Eletropaulo has outperformed the stock market since the end of 2005 primarily due to the increasing earnings and high dividend payment that we have had between 2007 and 2010.

With regards to Tiete, our stock Tiete has consistently outperformed the stock exchange. But given the introduction of the tariff reduction program in September 2012, the stock has suffered with the perception of more uncertain in the Brazilian energy sector.

Now, going to Sul, Sul is our distortion business in the south. And in comparison with Eletropaulo, it operates in a much less debt concession area which 20 times the size of Eletropaulo. And this is the policy of the agribusiness in the region drives our revenues on the first quarter of each year.

The main growth that we have seen in Sul has averaged 3.4% per annum over the last five years while the regional GDP has grown 2.5% per annum. We expect the economic growth to continue driving them in the region. And Sul had PTC performance driven by the demand growth relevant improvements of services and the efficiency part of that is we have dedicated to our cost structure. And that refinancing process initiated in 2007 with the substantial strengthening of Sul's capital structure and financial cost reduction.

This financial restructure has allowed Sul to make it first dividend payment in 2011, and increased the payout in 63% in 2012. Sul has just passed its third tariff reset and opposite to Eletropaulo has had a positive outcome on that reset. It came in line with our expectations, the asset base was fairly recognized and we see that driving value in this entire cycle until 2018. And as I mentioned before annually, we have tariff adjustment and the next one for Sul will be April 2014.

We're now giving examples here of what kind of work we have done on cost management and efficiency. We have developed and implemented a series of initiatives of the time. And that has been combined with increasing investment in technology and automation of our operational process.

This technology investment and automation has been concentrated in a higher scale on our distribution business operations because of their nature. And overall, in the last three years, through our major project we have achieved $185 million of PNL contribution, which came in the form of cost reduction, increasing revenues for the gain and avoided cost.

On the right hand side, you can see the comparison of depot material services and other expenses that we have in our distribution business comparing to our figures in the industry. We expect to achieve savings of $60 million for the entire SBU in 2013. Most of this value is associated to Eletropaulo.

More recently, we have also concentrated and consolidated our non-field activities in Eletropaulo, of Eletropaulo in a new headquarter together with our SBU corporate functions. In addition to the association, it has an overhead expansion reduction that has also free to divestment approximately $125 million in real estate properties and 70% of those real estates have already sold.

So we are now over Uruguaiana, our combined cycle thermal plant in the South of Brazil. Uruguaiana is a project that have been designed to import gas from Argentina. And it started operations in the year 2000. We wrote off the investment in 2007 and stopped commercial operations in 2008, given lack of gas supply from Argentina.

The recent low hydrology and the higher dispatch requirement in Brazil has brought a unique opportunity to put Uruguaiana back on surface after operating for the six days emergency period that we mentioned before. We're now in a negotiation process with the Brazilian and the Argentinian government to have the two countries share in the output of the plant in a long term service agreement.

Gas would be supplied by Brazil or Argentina according to their needs. Our expectation is to achieve an agreement this year and that may also contribute to the resolution of an arbitration that we have pending with YPF, the regional gas supplier to the Uruguaiana when we stopped the commercial operations.

So moving to the takeaways and giving you the key message that we see for our businesses ahead. Well, first of all, with regard to our utilities, the resolution of pending tariff view in Eletropaulo and the prior years after base discussion, those two are key drivers for Eletropaulo looking ahead and we see the outcome of that as I mentioned before, turning into a [lighter] team. And beyond that, the demand growth and our production of (inaudible) we will continue creating that either in Sul and Eletropaulo.

With regard to our generation business, I mentioned, the major other drivers for Tiete is the contracting of our energy beyond 2015 and discipline investment and expanding our capacity beyond this year. Our SBU first quarter PTC as some is going to comment, I had change below our expectations and have been affected by two major factors. The hydrology in Tiete that I mentioned at the beginning and the lower demand in Sul. Overall, we expect our adjusted PTC in the year to remain relatively stable.

Now, I will pass back to our COO, Andy Vesey and thank you very much.

Okay. What I'm going to do and try to do relatively quickly since we're running just a bit behind and we want to stay on the schedule that's in front of you. To cover the remaining three SBUs, but I'm going to do that relatively higher level and really tell you the way I think about those businesses, what I think is important to help give you context as you look at the information and quite often because I am always somewhere between Washington and New York. I'm always available to you to talk more about these issues.

So let's go on. If you go back to that PTC, we have at least three SBUs represent about 47% of the 2012 adjusted PTC. So they are still significant. First, what I want to talk about is the Mexico, Central American, Caribbean, which in and of itself represent 18% of that PTC. But more than 50% of that is actually generated by our business in the DR and I specifically want to talk a little bit more about that.

But just to give you sort of the cook's tour, if we look at this SBU, Mexico is there. Mexico is the 11th largest economy in the world. If you look at all of Latin America, not just South America, it's the second largest economy after Brazil. You have a combine population about 140 million represented here. And Panama is actually one of the fasted growing economies in the world at about 8% per annum.

In Mexico, our philosophy is what we call self-service. We build plants and operate for industrial customers. We talked about TEG-TEP, that is a two fluidized bed plants on pet coke and we also have just 400 megawatt combined cycle we call [Merida] and again, it's 100% dedicated to industrial off-takers.

We are interested in the Mexico market. We will look for more of these self-serve opportunities. And we do think it's a market of interest and stay tuned because we may be doing more there.

As we drop down to El Salvador, it is purely a distribution business. We have four of the five distribution businesses. We operate them as a single company. The major driver there is of course, regulatory outcome. 2012, we had a tariff reset. It gets reset every five years and most of the regulatory risk for the next number of years is out.

We got a result that had no surprises and was at the higher end of our expectations, so it was a very good regulatory outcome. Things to be concerned about is always the fiscal condition of the country and tariff levels as there are certain levels of subsidies in that market. The other is generation investments. Hopefully, there will be generation as that's what's in diversity of the energy source and it's something that we will encourage and enable and not necessarily participate in. But it is one of the things that we are watching.

Panama, we're all hydro. We have five plants somewhere in the river, some reservoir. We're about 40% of the generation. You may be hearing about hydrology. It's getting very severe in Panama. We've had a very extended dry season. There is a wet season and a dry season. We should have been out of the dry season. Already reservoirs are extremely low. The government has announced some issues. I think today, they'll start talking about potentially rolling blackouts. Government offices are closed, been asked to close everyday between 11.00 and 3.00. All generation not hooked into the system, people are asking for that to be run, and schools have been closed this week in Panama.

We anticipate in the end of May to have the rains begin but this is a significant issue and Tom will talk to some of the potential impacts that has in terms of the numbers.

So let's talk about the Dominican Republic and what I want to let you know. This is about half that $400 million PTC and we expect it to expect it to continue to deliver at that level. We essentially have three businesses there. We have a gas generation business which is made up of the Andres plant which is a combined cycle and something that's called DPP. It used to be Dominican Power Partners, which are open cycle gas turbines. All that gas is provided through re-gasification facility which is mostly provided by gas from BP and then very attractive Henry Hub long term gas supply contract.

We also have the only coal plant on the island. So collectively, we present and provide the lowest cost generation and we're always dispatched. This contract is very interesting that we have with gas because we provide a majority of the benefits of the real price gas contract to the public sector. And that's very important because we become critically important to this government, to the country and it gives us a very good place to be in stakeholder management.

As you know the electric sector is problematic in Dominican Republic but because of the quality of our assets, these contracts and our stakeholder management, we've been able to drive very, very good margins there.

Now let me give you a sense of how to think about it and I'm going to talk in terms now of revenue, not PTC and I will not talk about PTC because that can somehow interfere with negotiations I have going on in a lot of different fronts in the DR.

Our revenue from selling electricity out of our plants is about just north of 70% of the revenue that's produced in this business. Of that, probably less that 50%, probably 45% goes to the distribution businesses which were all publicly owned. And that's where you have the collection risk. So 45% of our electricity revenue goes to the public sector through the publicly owned distribution businesses. The rest go to high-quality off-take, those mining, industrials, and others through PPAs.

We do auxiliary services out of our plants. So about 22% of our revenue goes to the market operator in terms of frequency regulation, which is a very, very attractive source of revenue for us. The last is what I talked about earlier, which is gas at the plant fence. Excuse me, 8% was in the auxiliary services, the 22% is from the gas sales.

So as you can see, it's a diversified business with a relatively smaller portion that's expose to the collection issues. We think that we have very good platforms here and we are looking to expand the platforms. In March 25th, we announced [MO] (inaudible) with the Dominican government to expand the Atabo coal plant, 300 megawatts. That's already been announced. We're looking at expanded storage. But one of the things that Andre mentioned earlier, we do everything off platforms with partners.

So if we're going to grow in the DR, we are going to balance the risk and reward by making sure that we build a bigger and better business with partners who can help manage the risk. So that's really what I wanted to say there. And I probably didn't change the slide but you followed me anyway and you can read it later. So I'm trying to be fast.

Let's go on to EMEA. A little bit different. These are more standalone businesses and the one I really want to talk about is Maritza in Bulgaria because it is a big producer of us and there's been a lot of news on Bulgaria. But if you look at this very quickly, you see the floating blue country and it's not a geography test. That's Kazakhstan. Those who have followed us for a while know that we've done quite well there specifically when we sold our coal mine and plant complex called Ekibastuz a number of years ago.

So in total we think that we've drilled a lot of value out of Kazakhstan. What's remaining there for us is two combined heat and power plants, probably totaling, in terms of power rating about 600 megawatts and two hydro concessions all located in Eastern Kazakhstan. This does produce about $70 million in earning. The PTC, just the PTC for us and we'll continue to do that. The one thing that has happened is that there's been a new energy law which basically said that from 2013 through 2015, all net income must be reinvested in an improved investment program in these plants.

So we're not going to get any cash out. And actually it's very good that we were able to maintain our earnings by finding enough good capital investments to make. So when we come out of this period, which we expect, we will then be able to dividend out all our net income and have a much stronger businesses. But we don't have any plans for any expansion or growth in Kazakhstan. This is one of the issues where we do have to ask the questions whether this remains a strategic -- if it's a strategic business for AES.

Broadly, you see Turkey up there. Turkey is not material at this point. It's still an issue of we have to take decisions on that. Andres may talk, and you may ask him a question later about how we think about Turkey. Right now, it's more development pipeline and activities with our partner but it's not really producing anything material in terms of earnings.

In the UK, specifically in Northern Ireland, we have Ballylumford and Kilroot. Collectively, they are producing good earnings. And we've got probably I don't know I think each plant is producing about 50 million. In 2012, we expect Ballylumford to step down based on its contract but Kilroot will continue to produce at the level of about $40 million, $45 million from PTC going forward.

Sub-Saharan Africa, that's AES SONEL which is integrated utility at a 300 megawatt barge project in Nigeria. And we're not going to talk much more about that. I just want to get on to Maritza.

The news -- energy has been a big issue in politics in Bulgaria. The former government sell mostly on civil protest about energy prices. There will be a new election on May 12. Now that the heating season is over, you hear very little about energy prices. And as you know, there was a lot of concern and discussion around the distribution licenses held by the [chairs].

We have had a plan of full engagement in terms of stakeholder management. When we think about Maritza, we have built -- and Maritza is the most efficient plant in Bulgaria. Burning a domestic fuel lignite. It meets all the EU directives for environmental compliance for 2016. So it is the best piece of capacity that Bulgaria has. Our PPA, which is slightly higher than the average PPAs, reflects not only the price of the plant but the state of waste disposal facility and the waste that we're disposing as lignite ash.

So this is a very modern plant. And it represents the most significant FD, foreign direct investment in Bulgaria. Our view and we've learned the hard way that your best protection in any market is having a quality low-cost asset. All our engagement so far is that we believe that our PPA is sound. That the new government will recognize that they have structural reforms in the sectors and actually the World Bank under EU direction with the EU is working on looking at the distribution and transportation network in the country.

Our initial conversations, nobody has raised the issue of PPAs and we still believe that they will basically respect the contracts that they had. There are two PPAs for generation in Bulgaria, both with American companies. So you can believe that we've been very much in touch with not only the State Department but with our representatives to the EU, plus the fact that our major lender is the [ERBD] and our lenders are also involved in this.

So we feel relatively comfortable that we will survive the political noise but I have to be honest, we have to be engage, which we are, and this is something that will keep you informed about. But again, it's an extremely valuable asset to the Bulgarians and they need growth and they need foreign investments. So basically view their attempt to look at our PPA in a way not to support it is not something that we expect. So we'll, as I said, keep you informed.

Just covering the last SBU, which is Asia. When we talk about Asia, much more focused, much more disciplined. Philippines, we talked about Masinloc, which is the plant that we acquired from the government, turned it around. We'll talk a little bit more about that. But just to talk about really the two other things in Asia. One is the construction of the Mong Doung coal plant in Vietnam and we'll talk a little bit more about that going forward. But it's 1,250 megawatt super-critical unit using local anthracite coal, an excellent project. It is a BOT project so it has lease accounting so it has a high cash on cash returns early on.

And the other is India, where we used to have a relatively broad focus. But to be honest right now, we're focused in a very narrow way and only in one state and only on one platform. That's the Odisha Power Generating Company and I will talk more about that. We have Kelanitissa which is the little teardrop off of India, which is Sri Lanka, which is about 170 megawatt combined cycle plant, runs on diesel. The PPA expires and fundamental that it will not be contributed going forward.

So let's just talk about Masinloc and I want to use this as an example of everything we've talked about, platform growth. We acquired this plant and we turned it around. You saw the availability increase from 74% to some 94%. We've also improved the efficiency of this coal plant from heat rate north of 12,000 to just under 10,000. That's very important because that's efficiency. When we talk about efficiency and availability, that reduces to money.

So we improved the operations but we've also improved the commercial relationship. We've basically expanded our contract for Meralco from 75% of the capacity to 85% of the capacity taking out some volatility. But the other thing we did to enable us to actually grow is that our original multi-lateral 1enders really like us to buy the coal plant and get it efficient but they weren't terribly keen on having us expand.

So what we actually did is we went out and refinance with local banks, so they agree if we wanted to expand, we could. We got lower cost of money and average tenor was longer and Tom will talk more about this. But then combination of redoing the commercial relationship and the financing gives us more debt capacity for growth. So what we've actually done is we built a very interesting platform that we had the options grow on.

So this is the sort of the growth picture, and I always talked about IR people because I tell them, I really don't like these stick figure power plants. I'm an engineer and I just don't think it reflects reality. But in this case, it actually does. That is exactly the site where we would expand and we do have the option to take up to 300 to 600 megawatts there. Same equipment, typical platform expansion for us, we try to use everything the same, so we minimize our cost having the same equipment, the same turbines and everything else.

So this is an option that we're doing and we would want this to be fully contracted. So we're actually in discussion with a number off-takers now. It's going to be a contracted plant. We're in the stages to do that. The coal for this, if anybody thinks, comes from Indonesia. So it's Indonesian which is relatively slow priced for us now. So you may be hearing more about Masinloc. When we talk about Philippines, this is what we're talking about.

Moving forward, this year, we currently have about 460 megawatts in the original plant which is that sort of brick building you see in the foreground. Been there for a while, we're 49% owner. So the majority owner and our majority partner is the State of Odisha, which is very helpful to us because we get treated as a state enterprise. A lot of advantages to that; one being that the commercialization of the energy from this plant and any forward-going project goes right to the state through what they call the national grid operator in the state. And Odisha has a policy of actually using its energy as an export currency from the state to surrounding states which were also in dire need of energy.

For those who know the Indian market, solid energy and infrastructure projects are hard to develop and when you have them and they're done right, they're very valuable. The state of Odisha is known for its cleanliness of government and its integrity. As such, it's one of the only state that has preserved its allocation of coal blocks. It has two coal blocks that have been dedicated to the expansion of this project. Those two coal blocks alone could support up to another 2,400 megawatts of development and we're talking about 1,300 megawatts. We also understand that a third coal block has been offered.

Now remember, this is the coal region of India. You kick the dirt and there is coal to be found. But the fact that you have these coal blocks to allocate is very important because there was a relatively large scandal in India with coal block allocations and flipping those without building infrastructure projects. It's known as Coal-Gate. This is the one survivor of Coal-gate that has still remained and has their coal blocks.

So it's a very interesting project for us. It's not just the power plant. We call it the complex. It's the project. It's the railroad, 40-kilometer railroad to the coal and the coal mining development. AES has been asked by its partner to take responsibility for project management development of the whole project. So even though we're 49% partner, we supply the managing operational directive for the existing facility. We have operational responsibilities for the expansion and we have the construction and development of all those aspects as part of our responsibility. And we're actually quite excited about this.

Going on, this is Mong Duong. Put it up there, it's a $1.9 billion investment, super critical [exercise] of our plant. We have partners. We have 51% of the equity in the project, about 30% is Posco, which is the large Korean conglomerate in the steel and engineering construction and power business, and 19% is with the China Investment Corporation.

This project is hitting all kinds of safety records, which I said is a mark of quality. In fact, we've been asked to help other projects do this. I think we're developing a very strong brand in Vietnam. I think Vietnam is a market that we're going to take a look at because we're seeing some very interesting growth as it is becoming an outlet for Chinese manufacturing as cost labor increased in China. So Vietnam is in a very interesting position.

Lastly, just to make it complete, these are projects within these three SBUs that are currently under construction. Kribi, which is an internal combustion gas project in Cameroon, 100% off-take by AES, so now, it's in reliability testing now and should be COD June of this year.

Below, you see 36 megawatts of wind. These are two projects, Sixpenny Wood and [Novatoft]. What's critical about this is that there should be commercial in June. Sixpenny would have some glazing towers but what's critical is they had to start evacuating power in order to get the renewable credit, both have already met that requirement. So we have what we need and these projects will come along this year.

And then you see this 247 megawatt heavy fuel, oil fired Pico plant in Jordan. This is a platform extension as well and it's off our Amman east project, same project, same PPA, same partners, same off-takers project that has gotten us a lot of good stakeholder management activities and actually is a relatively attractive project in and of itself.

So let me finish and give you my wrap-up from everything you heard. One is if you think about us from an operation perspective, think about us, discipline and focus. Everything we do is by process, all our businesses do things the same way. It allows us to have efficient communication and the time of freelancing and everybody doing their own thing at AES doesn't exist anymore.

So the discipline and focus is the way you think about the management team and the team we've seen. I think you can see some of that discipline and focus in just the way they think about their businesses.

Our SBUs are collections of businesses. The main responsibility of the SBU presidents in addition to the P&L responsibilities is to constantly look for efficiencies between the businesses they run, whether that's in Brazil or whether that's in Europe, Middle East and Africa. One of my major responsibilities is to ensure that we get synergies between these businesses. So there's this constant search for efficiencies based on practices, organization and what we do.

Everybody is driven to get full value added platform. When we think about full value, we know that there's an operational value. We know that there is adjacent business value which we talked about. And we also know that there is value in property rights, whether these are air permits, or PPAs. So we constantly try to think in all these bucket how we can leverage the value that is present because it is multi-dimensional, it's not just operational.

And lastly, and I'll say it again, almost everything we do, the fabric of what we do has to have that sense of superb stakeholder engagement. We have learned that the way to be successful, even in the most difficult market, with the most difficult political situations, with the most difficult local situations is to support stakeholder engagement. And I have a group that reports directly to me that manages this and works with all our businesses to make sure we have consistent practices.

So that concludes it for me. And I think what we'll do now is bring up Britaldo, Felipe, Ken, myself will sit and we'll prepare, at least spend 20 to 30 minutes answering your questions, plus we'll be with you at lunch as well to do the same. And I think I may act as the facilitator.

If you can mention your name and name of your company, that will be helpful because it's being webcast. And we would like to finish this Q&A session by about 10.40 then we're going to have 10 minutes break.

Ali Agha from SunTrust Robinson Humphrey. Question on the Brazil business, I know you alluded to them in one of your slides, the fact that you are having discussions to potentially go back on the Eletropaulo debt reset and you expect the decision in July. Can you give us some insight into what you're asking for and the best case scenario if you get what you're asking for, what that means to the PTC of that business, would that be recorded ongoing in '13 or will that be a one-time gain.

And secondly, also in Brazil, I see the growth numbers you put up there which attractive but then I see the regulatory hurdles that you put up there as well and the push by the government to lower prices and the challenges you face with contract expiration and what have you? If that continues and the current president is reelected, what is the long term viability for Brazil for AES to work under such regime for another, let's say five years with this kind of regulatory issues?

Well, first what the debt reset that you referred, what we're asking for, we had certain assets removed from our asset base of the 2003 debt cycle of the 2003 debt reset. So we are asking the regulators to be considered that on the concept of the prior asset bases of the (inaudible). They have been suited by the regulator himself. And that's one of the requests.

The value of the asset in that discussion totals 1.2 billion [AI] more or less $600 million and in addition to that in the incremental regulatory investment that we have done in the 2007, 2011 cycle, we got recognized approximately 1.2 billion instead of 1.6 billion, almost 1.7 billion that we have done. So there is this 400 million, 500 million here under discussion also to be reconsidered in the incremental asset base that was built between 2007 and 2011.

What that may mean with regards to PTC, I think we have to wait for the discussions that we're having. And I don't think we're in a position to make an estimate today because this is the process that is going to go until the end of June. And even for strategic reason, I wouldn't comment on that at this time. But that's what we're discussing.

Based on what we're saying is if we got those things recognized, you would get the weighted average cost of capital applied to that. So the degree of success that will depend on the arguments that we're presenting to the regulator and how the whole discussions relative to the outlook at the end of June because the exact date is July 4, 2013 when we have to apply the new terms.

It wouldn't be a one-time gain because in fact you may have different effects reflect in '14 and '15 because the next debt reset is July 15. And some of the fact may go back to July 2011. Remember that the reset was delayed for a year given the whole discussions of debt reset (inaudible) between the regulator and the distribution companies in general in Brazil.

(inaudible question - microphone inaccessible)

On the regulatory front, we would use, let's say the regulatory environment has changed in a significant manner since let's say September 2012 and with third reset. What we see the distribution business is reduced margins that we're seeing that on our EBITDA levels. That of course, bring the challenge of more efficiency and that's the signal that is in the debt reset together with the question of services of increasing wealth of services requirement.

But as we look what we have done in terms of cost management and efficient projects, I see room for us to improve the performance of the business. And if you look at Sul, Sul has had a debt reset that has been slightly negative in 2013 but overall in (inaudible) 2018, it's a net positive. If I could give a range of what is the upside that we see that we got is we estimate approximately $36 million of upside in the entire cycle for Sul.

So I think we had these existing issues in Eletropaulo to address with the regulator. But we have to see the distribution business compared to the prior cycles at lower margins for sure. And the success here will be efficiency and how much technology and automation we can put on our business increase returns.

(inaudible question - microphone inaccessible)

On Sul at first, the way the tariff work in Brazil, the first three years just after debt reset, usually you see decreasing because you remove deficiencies and that's (inaudible). So if you ask me is the PTC of Sul the same size of 2012, the answer is no because this is the first year of the new tariff cycle. So what we see looking forward until 2018 is of no regulatory overhang, the investment plan being executed, asset base increasing for the next reset and the efficiency and the improvement of the wealth of services in Sul.

So I would say Sul will be recovering at the level of PTC over time along this cycle until 2018. Is that clear?

With regard to Uruguaiana, which the combined cycle plant in the south, we have two things to consider. One is putting back to long term service that would define a continuous contribution to PTC, not only 2013. It will depend upon then final terms of the negotiation but we have an authorization, a regulatory authorization to operate the plant in year 2027 and that's what we're targeting more or less. I mean, to get up that limit.

And the only thing that would be a one-time in this case is if we're successful in resolving in 2013 is the outcome of the arbitration with YPF or any kind of negotiation we may have and cope up the broader, let's say, broader negotiation by putting the plant back to operation and discussing the arbitration process.

(inaudible question - microphone inaccessible)

(inaudible question - microphone inaccessible) just start with the case. So as we take a look at strategy, obviously trying to maximize return over time and I think there's a number of factors that go into it. It's by and large, it's going to be the new capacity that's going to be the primary driver behind any type of case. So depending on when we can get, what type of recovery we can get for capacity, we'll have a gap year, according to the way the environmental regulations are now. It appears that we'll have to shut down the Eagle Valley plant and the smaller units in April 2016, the [CTGG]. We're looking at constructing or propose that constructing will be in services in 2017.

So one of the facts should be recover that capacity and that gap year and then with the CCGTs and we look to recover those cost absolutely to a rate case. I think the future test year is something that if you take a look at the overall strategies, the future test year is something that we're looking at now and the impact on that and timing that the new investments that we talked about today and how to best get those into rates.

So I think the strategy is a couple of things, one is our current cost structure and taking a look at the capacity, the gap year and then taking a look at overall, the new investments that we have.

Maybe we have 15 minutes break. So we will reconvene after 15 minutes.

(BREAK)

Thank you, Ahmed. Good morning. It's a pleasure to be here today to talk to you all about our risk management approach and strategies. I'm going to be repeating a lot of what you heard today from our SBU leaders because our business model is designed to reduce market risk. And from the commodity perspective, we engage in medium and long-term contracts to minimize our exposure to power price volatility.

Those contracts generally include director in taxation based fuel and variable cost practices. From a currency perspective, we match our revenues and expenses and in many cases, we're able to denominate back to US dollars in material agreements of our businesses.

Exception to this include our operations in Brazil where there's no local currency risk. It's entirely in AI but as the US parent, we have exposure and similarly in Bulgaria where there's no exposure locally. It's entirely euro but we as the US parent have that euro-US exposure.

Our contracting strategy and structure designed to minimize our risks to hydrology or dispatch exposure. We heard Britaldo speak earlier about [TSA] and our contracting around assured energy. While we use different terminology in different markets, the assured energy is not an average hydrology but it is a level that we have a high degree of confidence that under most scenarios will be able to deliver given normal hydrological variations.

And as you know, we have a non-recourse project finance model. And as a testament to the well-structured risk mitigants that are within our business and with that model, we have very low interest rate exposure with 85% to 90% fixed.

Proactively managing the remaining risks, so counterparty credit we're engaging with those contracts with high-quality lender approved off-takers. And in our businesses where we have a portfolio contracting strategy, not only do we have those high-quality counterparties but we also benefit from the diversification and the diversification from a recontracting perspective as well. Again, we have leverage which is a risk mitigant as the parent, but again, as a testament to the well-structured risk mitigation that's happening at the business level right up front.

From a regulatory risk perspective, many of our agreements include contractual pass through or sharing of regulatory exposure. And you heard a lot this morning about our stakeholder engagement at the local level.

Similarly on the operational risk side, we have many important contractual operational risk pass-through and risk sharing and we're engaged in the local level and the operational risk management.

What we're left then with is some residual commodity and currency exposure, and more proactively designing hedge strategies around that. And our commodities on multi-year basis and currencies on a 12-month rolling average basis. And they're designed to result in an aggregate portfolio exposure that's consistent with our risk appetite and designed to deliver on meeting our commitments.

80% of our businesses are contracted for utility. You've heard this throughout the discussions this morning. Looking at our 2013 adjusted PTC, we broke this down for you where 17% is projected to come from utilities. We have a contracted bucket we described in our 10-K. That represents about two-thirds of 2013 PTC.

We've segmented this further to help you into what we consider long term which is in excess of five years and in some cases up to 25 years in term, and medium term which is two to five years. And the last 17% comes from what we call our short term sales businesses. And I just want to be clear that this short term sales businesses are not entirely spot market transactions. There is hedging activity going on but these are businesses where the hedging activity is primarily less than two years.

The average term in the contracting bucket that two-thirds of long term and medium term has an average remaining life of seven years. If we look into where we're operating these different segments of business throughout our SBU, you could see our utility operations are primarily in the US where we operate [DCL] and [EPL]. And I want to point out that consistent with our SEC filings, all of the EPL is within the utility bucket in the US SBU.

Also in Brazil where we operate Sul and Eletropaulo, and then smaller operations in El Salvador which you heard about this morning and so now in our EMEA and Cameroon operation. The contracted bucket, long and medium term is throughout our SBUs and that's really a staple of the AES business model.

But Asia, I will point out is entirely a long term contracted model. You heard about Masinloc in the Philippines, OPGC in India and once online, our Mong Duong facility in Vietnam.

The short term sales operations are primarily in our Andes SBU where in Colombia and Argentina, there are not long term contracting opportunities. You've heard about our Colombia operation Chivor. We are hedging one to four year term although the bulk of the hedging activity and the highest degree of hedge is in the first two years, where we're 85% hedged in the current year. We have successfully re-contracted that business over time and we're confident that we'll be able to continue to engage in contracting at comparable levels.

And in Argentina, you heard as well about the regulatory changes and our engagement with the Argentine governments and the key stakeholders there to ensure that we continue to be compensated with the critical value add that our assets bring to that market, particularly at [SMS] the only coal facility in the country.

One of the things I'll mention about our Andes markets is there in Colombia and in Chile. There are very stable, strong capacity markets. They're quite different than the markets you might be familiar with here in the US that has steep demand curves. We don't see that same as the regulated market without that same steepness to the demand curve. And so we benefit from that both in Chile and in Colombia -- in Colombia where we have the short term sales operations.

The other short term sales that you've heard about are in Brazil at the Uruguaiana facility and EMEA at our Kilroot facility in Northern Ireland. And I'll point out that the Kilroot facility, Northern Ireland has a similar capacity market so it does not have that same steep demand curve that we're familiar with in the US And we benefit from that and it creates an important opportunity for us to benefit from widening spreads but you have a stable cash loads to support the business.

So from our proactively designed portfolio integrated strategies, you could see the result that our commodity sensitivity is quite low in 2013. On a 10% correlated exposure for the full year, such as $0.03 and year to go is $0.02.

The coal and gas sensitivity is primarily from Kilroot in Northern Ireland because we're highly hedged in 2013 in the US for (inaudible) and EPL. Our oil sensitivity is low and it's primarily from spot market sales where our margins are sensitive to changes in oil price in Andy's MCAC, EMEA and Asia.

Looking forward to 2015, our sensitivities grow as you would expect in a multi-year strategy when taking a longer term view, there is growth in our exposure. And the addition here is primarily related to DPL and is leveraged to the PJM dark spread improvement.

Considering the asymmetry of that risk into a greater upside potential than downside potential, we're comfortable with that level of exposure in 2015 particularly with the continued low-natural gas prices in the US. So we're positioned to make active decisions about how much of that risk we keep on and take off the table as spreads widen or contract.

And I will make mention that we have some offsetting gas exposure to the US natural gas exposure from our Henry Hub Length pricing at our LNG supply contract in the Dominican Republic.

Looking into foreign exchange, you'll see how the structure of our business has mitigated our foreign exchange risk as well as our on-top act of hedging. So while only about a fifth of our PTC is coming from our operations in the US, you could see more than half of our PTC is USD or USE equivalent. That's because in some places we're operating in USD based economies, but in other cases, because of the structuring of our businesses and our PPAs, like in Chile and in Masinloc.

The remaining 45% of the exposure is primarily euro and pound, Brazilian [real], Colombian peso, Argentine peso and to a much lesser extent from Chilean peso exposure. We again then aggregate and manage that risk on a 12-month rolling basis so proactively layering on hedges. And you can see the correlated 10% full year move to FX sensitivity after hedging activity is just [$0.045] without the hedging activity would be $0.065. On a year to go basis, it's just $0.03 in exposure.

So wrapping, key risk management takeaways, our business model helps reduce risks and is designed to mitigate our exposure. 80% of our 2013 through 2015 variable margin is insulated from commodity risk through contracts or regulatory mechanism. Our 2013 commodity exposure is low, it's asymmetric. We have more upside than downsides because of the dispatch capabilities of our plants and our position.

We're long on natural gas, in the medium to long term and a 10% correlated move in all exposed commodities is less than a 3% impact to our EPS.

FX exposure is also limited by our contract structure and our operations in USD based economies as well as then our on-top 12-month hedging program. AES directionally benefits from a weakening dollar and a 10% correlated move in our basket of currencies is less than 5% of 2013 EPS.

And with that, will hand it off to Tom O'Flynn, our CFO. Thank you.

Okay. Thanks Annmarie and thanks everybody for coming. Hopefully, we've had a good chance to the depth of our team, dive deeper into the businesses a little more, get a sense of the people who are helping us drive the business and drive the results.

What I'd like to do is then try to roll some of these up on our financials, where we are and where we're going, what it means from an earnings PTC, cash flow, capital allocation standpoint. I will say that there's more information now with the folks that are here. Federal Express had a few excuses we won't try to think which one is right.

But anyway, there is some good information in the books, good information in the appendix as well. Don't worry, we're not going to go through the appendix. But just to give you a look back a couple of pages that we've been using now since the year-end call. I think they're 108 and 109. We have five public filers, two in Brazil under Britaldo and (inaudible) public filer, the public equity and public debt. Ken has two public filers to his debt only in Dayton and Indianapolis. All those folks report ahead of us and at the end of the year, we start reporting those numbers piece by piece, both IFRS and GAAP. You can roll them up and you can see for example our three publicly traded [lot in subs] have market capital of about 5.3 billion which is obviously a big chunk of our value.

Just so you know, we also have a bunch of 10-Ks out front. As we try to work simple and talk simple, we did do a lot of work in our 10-K. So if you look at the first 50 pages or so of our 10-K, it does go through in a systematic fashion. Each of our SBUs and the major businesses within SBU's business market regulation, financial drivers, so once again, trying to help folks out.

So what I want to do here then is talk about PTC and EPS in gradually increasing timeframe; so the quarter, the year and then '12 to '15. I want to talk about proportional free cash flow, important for a number of reasons including the dividend and dividend policy that Andres talked about which gets us into capital allocation and then finish with some takeaways.

So I say, I do need the books, unlike Andy that can work with pictures, I need the books to help with numbers. This is consistent with our release here. As you can see, EPS Q1, $0.26 versus $0.37 last year, both are consistent with the pre-release that we put out about a week or so ago before we did our debt deal that I'll touch on where we said it would be 25 to 27.

Of the decrease, about half of it is the absence of Cartagena. One time arbitration settlement we had last year and then about $0.03 is due to hydrology that I'll touch on also but hydrology, impacting us both in Brazil and also in Panama.

I'm not sure Ken mentioned but we did have the positive impact in the US of the Beaver Valley PPA termination. Beaver Valley is a very old, small coal plant, ahead of PPA through '16 with PJM utility. We're operating a marginal cost that's above the market, obviously below our PPA price. The win-win for us to terminate that PPA that was done in January, we got a cash payment that's the major [diff] in Q1 '13 versus Q1 '12.

First, what's that doing is bringing earnings into the first quarter that we otherwise would have had earned over our '12 to '15 time period. So from our overall sort of return, '12 to '15 profile, just moving money around, it does help us in this quarter.

I think Felipe touched on Andes down somewhat from last year to the lower gas availability in Chile. Britaldo touched on Brazil, the hydrology issues that he went through in good detail and also slightly lower demand in Sul. We got hit, I guess in rainfall in two ways. In the north, we have hydro, it didn't rain enough and in the south where we have distribution, it rained too much. And so our irrigation load was down. So it's good we have a large portfolio across the globe but sometimes we get hit coming and going in small places.

Lower hydrology, Andy mentioned in Panama with Changuinola, I think, the bottom-line hydrology, if you think about Latin America, it impacted us negatively about $0.03, and just equate, about $0.01 is about 10 to 11 PTC. Just think about shares outstanding and about 30% tax rate. So 10 to 11 PTC is $0.01.

We said our impact of the $0.26 was impacted by about $0.03 of hydrology in Lat-Am, in Central America. As we sit here today, we think that number is going to be probably about double for the year, so call it about $0.06 is our expectations. That thing said, we are very comfortable with our guidance. We've got some other offsets, but that's just giving you a little more color in how rainfall is impacting us.

I think the other pieces have been talked about EMEA, and Asia is pretty flat. So as you can see, the quarter is laid out here.

Proportional free cash flow was strong Q1, up about 50% from $230 million to about $350 million, but a third of that number was the Beaver Valley number that I talked about. The other pieces were some lower working capital in the DR, and then some other pieces. But the $350 million, obviously, a very good start, especially when you think about our guidance as $750 million to $1.05 billion, so $350 million relative to the midpoint of that. The $900 million is quite a good start for the quarter. I'll touch more on cash flow, where it comes from, where it goes in a few slides here.

So at the end of the year, we started talking about SBUs, talked about SBU PTC profitability, added it up, consistent with how we are in the fourth quarter. We talked about directionally where we thought the SBUs would go for the year. And anticipating the next question, well, direction is fine, but give me a number. We provided some indications of PTC ranges for the year by SBU.

Once again, our focus here is on the guidance number, $1.24 billion to $1.32 billion. What drives that from the PTC standpoint is the number at the bottom, which is $1.93 billion to $2.135 billion. Nevertheless, we thought it was helpful to provide some ranges of how we get from here to there. These are consistent, generally, what you saw from each of the SBU presidents where they had -- where Ken had minus five to 15, Britaldo had a range, and Felipe also had a range.

But the US, generally, we see, will be down. DPL is down. Southland is still working very well, but it had quite a good year last year with the Huntington Beach restart, compensate for [Song's]. And then there are some planned outages at IPL. Andes, I think, Felipe went on, it's growing, continues to grow, new plants, contracts aligned, better availability.

Brazil, about equal. Sul came down. It came down consistent with our expectations, but at the same time, the Eletropaulo will be better than last year. MCAC, modest positive. We had a very constructive rate reset at the end of the year, just before New Year's. In El Salvador, modest business, but constructive rate reset and the DR margin continues to move forward.

EMEA is down, once again, with the absence of Cartagena. In Asia, solid business. Masinloc did very, very well last year. Had some length, market was quite strong. One or two plants were out, so the market popped up, we took advantage of it. We have a more conservative approach going forward. Actually, for the next seven years, we're largely contracted, which means we expect revenues to be down somewhat, margin to be down somewhat, but much more predictable.

Going to the next page, I think we've said this, we're reaffirming our guidance, EPS, proportional free cash flow. And then, the other one we don't talk about as much, consolidated net cash, which is our GAAP reconciliation. You can see the ways to get there, at the bottom, especially the $1.9 billion to $2.1 billion PTC that Andres talked about.

The commodity and foreign currencies are, as of March 31 -- those have helped us, given us a little bit of tailwind, especially the dark spread, dark spread in date and dark spread a little bit in [kill route]. Maybe that makes up for about half the hydrology, so call it $0.03 as we sit here. That's not as much as first quarter, it's more over the course of the year, but that's given us a little bit of tailwind.

Let's talk about '12 to '15. So we've talked before about our growth drivers, you can see on the right. Then on the '12 to '15, the SBUs with positive trends are really consistent with the '12 to '13 themes we just covered. But Andes, strongest growth, Brazil, especially, as Britaldo answered the question, both of our [discos] have now been through their rate reset, so you'd expect demand growth and some efficiencies to really be kicking in over the next few years. Hydro Tiete is flat from a contract perspective. So we would expect Brazil to have some growth. And MCAC, also some modest growth.

Flat-to-declining, US, really for the same reasons, some continued pressure at DPL, modest growth at IPL with MATS. The rest of the 6,000 fleet IPPs being more stable. And then EMEA and Asia. Asia will be growth. Andy Vesey went through that. Our large Vietnamese plant, Mong Duong, doesn't start until late '15, will be a modest earnings producer and very strong cash producer starting Q4 '15 and thereafter.

But you can see the components of growth, SBU growth cost cutting, capital allocation offset by some asset sales, dividend and dividend yield that will get us into the 6% to 8%. I think as Andres said many times, I think 6% to 8% total return is what we see in front of us. That being said, he's challenging us all the time to look for ways to bring that up into the 8% to 10% range. And obviously those aren't thing we want to talk about until we're comfortable and has got me on the bones to do so.

Here's the detail chart that I really need to look for, but this is really a little more color on how we get from '12 to '15, how the SBUs are going to grow, and what the segments are. And as I said, many of these are consistent with what we talked about from '12 to '13. Once again, the first column shows whether we think these SBUs will be positive, negative, or neutral.

You can see the US, quite consistent DPL, and this is '12 to '15. So this includes, obviously, '12 to '13 as well as '13 to '15, but you can see DPL. Some wind earnings, as Ken said, we don't expect to be building many wind turbines. But to some complicated partnership structures, we are into a better earnings profile period of those facilities.

Andes will have higher availability as well as the plant, the Ventanas IV and Tunjita, that Felipe mentioned. Brazil, demand growth, which is our discos. MCAC, I think, I've covered these. And then, Andy talked briefly about Kazakhstan, a new facility in Kamaroon, and then Asia. Once again, I think I covered that from '12 to '13 on the prior page. We do have some new facilities in EMEA that Andy also touched on. And then, really, a theme throughout this.

We talk about cost-cutting and have numbers really at the G&A level, the G&A level that Andres walked through, the $145 million in 2014, is primarily Arlington, with a little bit of G&A within the SBUs. But as we continue to work deeper, there's also some number at the businesses and we also fully look to work for ways to make ourselves more efficient.

But now I'd like to talk about cash flow. We talked a little about capital allocation. I think before we can use it, we got to get it. So first I want to talk about how we get cash. Proportional free cash flow is a guidance number. I showed it first quarter about $350 million on the second slide that I went through. So let's talk about where we were last year, where we expect to be this year on proportional free cash flow.

So proportional cash from operations last year was about $1.09 billion. That's cash flow from ops on the cash flow statement like any other company. For us it's suggested by proportional ownership interest. So there's some businesses that we consolidate, don't own all of, some businesses that we don't consolidate. So that's our percentage of cash flow from ops based upon the facility business we own.

We had CapEx of about $700 million last year. So that got us to a number $1.242 billion. That was the proportional free cash flow, well within our guidance range for last year. This year, what do we expect? We talk about the number on the far right, the $750 million to $1.05 billion, but let me step to the left of that right chunk and come back to that.

So similar number, proportional cash from ops, we start to be about $1.65 billion to $1.95 billion. What we're calling our normalized CapEx, which is our proportional maintenance and environmental CapEx, is about $650 million. It looks a lot like what it was last year. That gets you to about $1 billion to $1.03 billion.

Why are we only $750 million to $1.05 billion? Well, because we've got about $250 million of CapEx, about half is environmental CapEx at Gener, and the other half is environmental CapEx at IPL. You could argue whether the environmental CapEx -- we put everything in the environmental CapEx category, whether it is effectively earning a return like it does in Indianapolis, or whether it doesn't earn a return like it does in Chile. So maybe this is a little more punitive, but that's the way to walk down to get to our proportional free cash flow.

If you then look at what does that mean to get to parent free cash flow -- apologies that proportional free cash flow and parent free cash flow sound a lot like. I had that question in September. I elected not to change the definitions. So we can keep working with them. But if you look at the proportional free cash flow in 2012, once again the $1.2 billion on the left, within the businesses, before the money ever gets to the parent, we're paying down non-recourse debt every year. Some of it is project financings that have scheduled amounts, some of it is larger amounts that may be elective maturity just like you would have within any company. And that's about $500 million a year. It's pretty consistent number.

There's times we will retain cash in the business, some of it may be working capital. But probably the biggest number on this $226 million number, if you look here, is Gener retained more cash last year, which means they paid less dividend up. Why they retain cash, because they're building, because a lot of the money that Felipe and the team put into Cochrane was reserved last year. And that's a reasonable chunk of that $226 million.

So that gets us to parent free cash flow, the $521 million. That's the number that we had last year and we talked about, and I'll show you the slide that we used to talk about it. Where are we this year? We're about $1.15 billion. The reduction at the non-recourse level is a little over $500 million again, a familiar number. And then we have our non-recurring environmental CapEx. That's the $175 million. That's the same as the $250 million from the prior page. We reduced it a little bit because IPL will actually finance part of that money through debt at IPL, consistent with their $45 million, $55 million capital structure.

So that gets us to our parent cash flow range of about $450 million. Once again, our guidance or our expectations as we've talked to people about is $400 million to $500 million. That's the number we use as we talk about our dividend yield.

So kind of bottom-line from these slides, you can see how we think our parent free cash flow, a number around the $500-ish million makes sense. In the prior page, if you think about how you manage our free cash flow, if you think about our parent free cash flow, which we appreciate it's a little more complicated given our parts and our different types of consolidation, we think is about $1 billion to $1.3 billion. And those are two numbers that we focus on a lot as we manage cash for the company.

Then, what do we with it? This is what we did with it last year. You can see the $521 million, once again, with the yellow highlight. That's for me to remind me. It was along with asset sale money. We had $1.4 billion and this is how we allocated it. This is all new so I'll skip over.

For this year, we think we'll be once again about $400 million to $500 million. $450 million is the number I used a minute ago. If you go to the left, we've got $180 million of asset sales. Those have all closed at this point. The last one to close was Ukraine, closed a couple of weeks ago. We said we'll do about $500 million this year.

We still are working on that. Once again, those are things that we'll talk about when they're cooked, when they're ready to come out of the kitchen, not while they're still in the kitchen. And we've also said that such sales would reduce our EPS this year about $0.05 and we're still in that same area.

So as you can see, we've got about $1 billion, $1.1 billion as total discretionary cash, and you see on the right how we're going to use it. This is consistent with what we talked about before. The debt paid, and I'll get to it in a minute, was actually in the middle of a tender that's working quite well, and that's largely -- we'll use up that $400 million. Current dividend, $120 million; approved investments $170 million. It was about $200 million last year. So that's down perhaps at $20 million or $30 million from the last time people have seen the slide.

That still leaves us even without the incremental asset sales we talked about of about $200 million to $300 million of cash that has yet to be allocated up to $330 million, which is the blue chunk at three o'clock. As we see it, there's no meaningful large chunky use for that, with the exception of a potential participation in their equity raise, as Gener continues to build, especially Alto Maipo. They'll need to look for other non-debt capital. They may look to raise equity. No decisions have been made. The equity rates could be as high as $250 million to $300 million. We own 70% of that business.

If we elect to participate that and maintain our pro rata ownership in Gener, then that could be, call it, $150 million to $200 million of that blue. That will be a decision later this year both what Gener is going to do and what we might do. Obviously, we also have the option for other uses, potential dividend increase, so that's more probably next year to the extent it impacts cash.

Allocation to debt or growth, and also we do continue to have $300 million authorized under our share repurchase program that we talked about on our year-end call.

So just briefly then on other capital structure considerations. The company's loan had a very strong non-recourse debt philosophy. The majority of our debt, probably about two-thirds of our debt is at the subs or even more, maybe 70% is at the subs closest to the business. And that's the debt with the currency and that's the debt with the cash flows, amortizes naturally. You can see we've got manageable pieces here. The dark are utilities, which are much more financeable. But even the gen stuff, small amounts, and we've been doing this for years and all very manageable.

Just other financings we've done. I'd like to take credit as a new CFO with this, but the real bottom line is AES has been very good at financing for a long time and continue to be. Top left, we did announce about a week ago that we were going to tender for $800 million of bonds, and I'll share with you the maturity profile. That's '14, '15, '16, and '17. As part of that, we were going to issue, and we did issue a $500 million tenure note at 4.875%, very attractive rate for us.

In conjunction with that $500 million and about the $400 million from the debt usage slide at 9 o'clock, if you remember the slide, a couple, ago, will effectively take the $500 million and our $400-ish million, $375 million to $400 million and retire $800 million of bonds. The cost is greater than phase because some of those bonds are quite high coupon, buying them back at a premium. Nevertheless, it makes sense for us from an economic standpoint, especially also to push out some of our maturities.

We put out a release this morning. The tender was very well, it was oversubscribed. So the $800 million we got tend to response as for $1.14 billion. We're assessing and we'll make it a determination over the next few days of how we close it out. But bottom line, good news.

Just some other financings we've done. I'll touch on the bottom-right there. El Salvador is just an example of how our standalone businesses continue to be able to finance successfully. So they did a 10-year bond, $380 million at 7%.

And then DPL, we talk about a lot some of the fixed income folks that asked us about it. But our DPL and DP&L bank financings, about $1 billion. We're at the later stages of negotiating, getting commitments, and pushing those to 2016. So it effectively gives three years of time to Ken and the team. And then you can see, I think, both the Philippines and Cochrane were touched in the SBU discussion.

Recourse debt, we continue to bring it down. You can see on the left, the $5.7 billion does pro forma for the tender that we've done. And then you can see on the right our maturity profile at the AES level is very attractive. The shaded areas are still in play based upon what we do with the tenders, but we expect to bring each of those amounts down. But you can see very, very modest manageable maturities, '14, '15, and '16.

Credit stats, we continue to make progress on our credit stats. We've said we want to be solid BB. You can see debt comes down, cash flow goes up, we're making improvements. And the math is below.

Dividend policy, Andres touched on this, but clearly, we want to have our dividend tied to parent free cash flow. The $0.04 a quarter, about $120 million annually represents about 23% of parent free cash flow for '12 and about 27% for this year based on the middle of that range. We want to get to that payout ratio by 2015. And we will, as Andres said, review this in the fourth quarter. Really, we want to do it as we're going through our annual forecasting to be comfortable that as we're assessing potential increases, we're comfortable with that sustainable free cash flow, sustainable parent free cash flow.

So key takeaways. We are trying to improve transparency. We've had suggestions. Additional suggestions are welcome. Continuing our balanced approach to capital allocation, we're working hard to increase capital availability to support capital allocation. Reaffirming guidance, and we continue to think our stock represents an attractive value, our P/E below 11. If you look at '12 or '13, it's low relative to a lot of our peers.

Actually, one interesting thing you can do is just take out the value of our publicly listed companies, Gener, Eletro, and Tiete. You can see the market value is back there on page 108. It's about $5.3 billion. You take that out and take out the '12 earnings, you pro rata it according to their debt. I won't take you through all the math, but I get to about 9.5. So that says that if you take those businesses out that are publicly traded liquid vehicles, the P/E on our remaining businesses, the implicit P/E is low to mid-9s, which is I think folks would say that that's an attractive number.

Free cash flow yield, I think I took you through the $1 billion to $1.3 billion. Last year it was $1.24 billion, but let's just use $1 billion to $1.3 billion as a general range. $10 billion is the denominator, that gets you to $10 billion to $13 billion. And once again, we've talked about 4% to 6% EPS growth and a dividend yield with a modest dividend, but what we think are some attractive growth opportunities.

So with that, I'm going to turn it back to Andres and then I'll come back with Andres and Andy for some Q&A at the end.

Okay, thanks. What I'd like to do in the wrap-up is just go over some of the key points and also talk a little bit about executive compensation. You've met the team. You've met Andy, Tom, Elizabeth, and also Brian Miller, who's our Executive Vice President is here for Legal Affairs. He also handles government affairs, our compliance programs, and a lot of our complex negotiations and arbitration.

So one of the things that I would like to point out is that our compensation compared to our peers is very highly variable. So only about 19% at the executive vice president level is base pay. This is higher than most of our peers. The other 80% is variable.

Now, if we look at the breakdown of that, about 22% is our annual bonus, and of our annual bonus, 60% of that is financials, and 20% is operational. That's usually key performance indicators, KPIs, things like commercial availability, things like losses in the distribution company. 10% is safety, and we hold ourselves to a very high standard. In terms of safety, we really have not been achieving the 100% on this, because we do have fatalities. And 10% is strategic objective. So that 22% is very much tied to the performance of that year.

Then we have performance stock units, which is almost 30%. Now that has a double hurdle for all the officers in the company. So first we had a cash value added calculation, which is EBITDA minus our maintenance CapEx, environmental CapEx. And the reasoning behind that sort of number that's cash value added, it's like economic value added, is how much cash are you generating from the business on a sustainable basis.

Now, not only do we have to meet a three-year target, so, say, this is a year, 2012, that target will be set for '13, '14 and '15 based on the commodity prices and FX at the time. But not only do we have to do that, but we also have a second hurdle, and that second hurdle has to do with our total shareholder return, TSR, versus a group of peers. In this case, it's the S&P utilities.

So we have to have a payout, we have to be above the median for the S&P utilities over that three-year period. So it's three months at the beginning and then three months at the end. And this has been pretty tough. I can tell you that I've lost about half of possible payouts over the last three years as a result of having met this target. Then 18% is stock options and 12% is restricted stock units, which vest over three years.

Now, the other thing I'd like to point out is that, if you look at our compensation scheme, ISS as you know is quite tough on corporations, we scored the highest possible. So one is the best possible score, two is less good. We scored one on pay per performance and we scored a one on transparency of executive pay.

The other thing, I talked about the cost-cutting measures that we've taken to place. Our goal is to cut almost 40% of our overhead, corporate overhead. At the same time we've eliminated, I think, virtually every single one for the executive. So there's not only no corporate debt, which as we were, but there's no car, there's no chauffer, there's no golf club. I think our Blackberry probably is the highest sort of executive perk that we get.

Tom mentioned that we really have as internal goal to push our returns to the 8% to 10% levels, and we do have levers. I mean, we've touched on some of them today. Incremental cost reductions not only at corp., but in the businesses. We continue to leverage our scale in terms of global business procurements, in terms of how can we leverage that scale to get better deals.

Platform expansions, you see in virtually everything that we're doing now in terms of growth, our platform expansions. The evidence is the cost is much, much less to develop those, but it also provides a much better risk-adjusted return, because you know those markets very well, and also our capital allocation decision.

Now, getting to the capital allocation, what we'll be looking at is not only big deals, but a number of small additions to the facilities which have higher returns, lower risk, and lower construction time. And Andy touched on a lot of it. Of course, there are market factors which can affect us positively. One is currency and commodity trends.

Annmarie Reynolds mentioned how we benefit from a weaker dollar versus most of these currencies. We also benefit from higher natural gas prices in the US and higher oil prices globally, and higher demand growth in those key markets. Now, again, we are located in -- we have a very good footprint in markets which have much faster growth rates than the US.

So getting back to where we started. We've been implementing this for 18 months, this new strategy, and just the approach to exploiting our platforms and our businesses, and we are going to continue with that approach, and we think we're starting to see the results from that.

So improving profitability, again, EPS. Adjusted EPS was up 22% last year. Narrowing our geographic focus, we will continue to sell assets off those where we don't have a compelling competitive advantage, and to give a little bit more sort of structure what is a compelling competitive advantage. Well, we're either the low-cost provider or we have a portfolio of assets where we have different fuels, or we have a really better contracted position and a better relationship with clients. All those things come in to things from which you can have a competitive advantage.

So in terms of narrowing our geographic focus, we've exited six markets. We will exit more. We realized $1.1 billion in proceeds to AES and we've simplified -- we think we're going to continue to simplify. So hopefully we're actually simplifying the business itself. At the same time, we're providing more information and simplifying the AES story.

And finally in terms of optimizing our capital allocation, we're going to continue to have great investment discipline through investment ct process. We're really going to see where's the best use of our cash between different strategic business unit and in time as well. And the other thing that you will have notice in these presentations that in a lot of the locations we're using cash that we have in those business and can't really cost effectively get back to corp.

So, for example, the expansion in India at OPGC, from OPGC 2. That business has on-hand about $180 million. And so that will be most of the equity contribution to that project. So what we're doing is leveraging off those situations where we have cash to grow the business faster.

So in summing up, I would say that we feel that we still are a compelling investment. You're seeing the changes that are happening in the company. We're feeling a real momentum in the company. You've met the key management team, and our interests are certainly very aligned with yours.

So thank you very much. And now I'd like to go to Q&A. So Andy and Tom will be on the podium.

Hey, guys, again, Julien Dumoulin-Smith, UBS. So Andres, congratulations, the first 18 months through here talk a lot about and executed a lot in asset sales. Clearly, there's a pending spin of a certain solar business. You've talked about targeted asset sales for this year. It seems like this solar business could achieve the bulk of that. But at the same time, you talk about having a dilutive impact potentially from some of these sales.

If there's something beyond solar that we should be expecting for this year, what's the game plan from here on out, '13, '14, in terms of a glide path to get to this new profile that you talk about?

Well, to use Tom's analogy about the kitchen, we don't talk about the soufflé until we're taking it to the table. What I would say is that, if you look at this sort of $500 million number that we mentioned in the fourth quarter call, you will see that we close the sale of Ukraine, and that's over $109 million net.

We also had the closing of the final tranche of Cartagena in Spain, which is around $24 million. And then we also had a third sale, which was about another $40 million. So we're closer to, you add it up, $200 million number.

So going beyond that, what I would say is that we're looking at existing those businesses again where they don't fit to having a critical mass and a real advantage in that market, so places where we have one-off plans are obviously the targets, or places it's key that we don't have a platform that will allow us to grow from that.

So I can't really talk much about the other issue that you mentioned, but we are committed to meet that target. But what I think is very important is that we're approaching in a methodical way and making sure that, again ,we realize as much as value as we can from them.

The first sales that we did included (technical difficulty) not to say that in the future we won't continue to sell those assets, which we feel, quite frankly, that have peaked and that really don't form part of a platform that is necessary for us.

Andres, a question. First off, at the very end, you alluded to your aspiration of, again, bringing the total return up to 8% to 10%. Can you give us a sense of at this point your confidence level in capturing that extra 200 basis point of growth and when at the earliest would we be able to hear from you, bringing this stuff out of the kitchen at the earliest that that is starting to bear fruit? Then I have a second question.

Let's see. Well, (technical difficulty) -- and I think we're providing a lot more information in terms of the things that we're doing. I think a lot of them, in terms of things that will get us up, in terms of our total return, have to be done at the operating units -- continued efficiencies, small add-ons, whether it'd be an additional 25 megawatts from fogging technology or whether it'd be using the diesel capacity that you have to sell potable water, et cetera, additional cost cut.

Obviously, we do have some commodity and currency sensitivities, and those will also be a factor. So rather than, say, like at one point in time we'll continue to update you as we see, we've had slight headwinds the first quarter due to the poor hydrological conditions in Brazil and also in Panama. But we've had other things that have been offsetting that. So as time progresses and we have more concrete developments, especially on the small project, we will try to lump them together and give you some feeling sort of the timeline and the returns on those.

And in terms of the sales as well, I mean, we cannot comment on any sale until it's signed and, quite frankly, in the closing phase, on multiple levels, but first it can affect the deal and, second, of course, we will have to operate the asset until the day we turn it over.

And if I go to a separate unrelated question, Tom and both of you alluded to the fact that your valuation in the market looks attractive, looks discounted. How concerned are you that despite all these efforts that this conglomerate discount will continue to interact your valuation? And if that's the case, you come out of this program and the valuation still hasn't picked up, what are you prepared to do then, if anything, to try to bring that multiple up? I mean, how tied are you to these core markets and what different approach could you be looking at if the market just doesn't give you the recognition?

Again, I think for the 18 months, if you look at our multiples, we've had a good reaction to it and I think this is a big company with a lot of assets, and so it takes time to see the results of all the actions that you're taking. So I think we're starting together as a team and you're starting to see the results. Obviously, we are very much aligned in terms of maximizing the value of this business.

So we will reassess. We're always reassessing the strategy and if we think it would need to be changed. But I think even if you look at corp, one of the challenges that we've given ourselves in the corporate in terms of our overhead is, let's make sure that we create more value than we cost as a company, and I think we're doing that. So if you look at the degree of the cuts that we've done, if you look at the way we've become so much more cost efficient in our development, if you look at our capital allocation, again, using partners selectively to increase returns on those assets, I think we're making very good progress.

So that's a challenge we have. We're very conscious of this. And quite frankly, down the road, nothing is off the table. We will do whatever it takes to maximize the return from the set of assets.

If you could just articulate the dividend payout strategy, 30% to 40% by 2015. If you review it, each December, it looks like you'll have three opportunities to increase it by year-end and '15, and I'm just curious as to the trajectory of the dividend increases.

As Tom laid out, as part of our budget cycle in the fourth quarter, we will look at setting the dividend levels to the next year. So we'll reevaluate it at that point in time. Having a very good idea of the parent free cash flow that we have, a sustainable parent free cash, because again, we don't want this to vary greatly over time. So I think that as our parent free cash flow grows, the dividend will grow and we'll be within that band of 30% to 40%.

We've always said that we wanted to grow the dividend over time and we wanted to grow it in terms of asset proportion of the cash that we utilized. So we started from a modest pace that we've been delivering and we will prudently increase that over time, looking at how the new projects, how all these cost-cutting measures, how our increases in efficiencies are delivering parent free cash flow.

All right, just a follow-up question here, maybe this time for Tom. You talk about potentially making an injection into AES Gener. Previously we've heard perhaps more of a discussion around doing a public equity issuance locally. We also didn't hear as much as it was about share repurchase I suppose versus past quarter updates. Curious how your thinking has evolved there, if you don't mind.

Yes. Perhaps I hit the Gener capital raise too quickly. I wasn't trying to change what we said before. If Gener does need equity and Felipe and his team are still thinking through that, it will be done in the local Chilean market. And so the local participants, including pension funds at least half of the public close down there, we would expect would want to participate in that.

So the question for us is do we want to participate in our 71% of whatever that equity raise is. So let's call that up to $200 million. I want to get -- maybe see specific (inaudible) has not made a decision to do it and probably Rio got the decision in front of us. I don't want to front run the Chilean capital markets here. But from our standpoint, just to stop on that, if you think about -- so maybe you have a growth opportunity, but maybe as a simple as, is it better to invest in AES stock or is it better to invest in Gener stock, and that's something that we will and have already begun to think about.

Clearly, we think both are attractive values. I think from the Gener side, Felipe showed a great record since '05 up, 462%. So you could probably say at any point in time, you might have felt, boy, Gener is a lot better value than AES, why we sell down Gener. At any time since '05, before it would've been a negative economic decision. So we have to appreciate that there's good growth and their multiples are better than us. We think they're still a very attractive play, as we do think.

Nevertheless, we would make that debt effectively it looks a relative investment decision. I'd say that it doesn't to be in all and I think a [set of barbells, sleep the baby,] and do things in between, and certainly, we think quite a strong demand down there from the Chilean market in the event we wouldn't want to participate fully. The other thing I'd say is just that on the margin, there are some governance issues, very balanced market. We do have outsiders on our board and they need to be done probably from an arm's length standpoint. That being said (inaudible) government's standpoint for us to stay above 67%, which is once we go below two-thirds, it has governance implications. So we'll see.

What we do have, and maybe I didn't hit this enough, we do continue to have (inaudible) repurchase authority. We got that share announced during the yearend call. It continues to be something we assess. I think Andres is going through a lot of share repurchases that we've done, 50 or 60, 11-55. I think we did say for this year our initial priority for cash would be debt retirement. I think we feel that we've done that with our tender repurchase that I've touched on briefly.

We did also say that some of our cash coming up in subs was more weighted towards the latter part of the year. But these are all things that we'll take into account as we carefully invest capital allocation.

Perhaps just a quick follow-up, Tom. You talk about debt tenders and debt pay down here. Given where interest rates are currently, imagine, what you just said there, to the extent which we've already seen some debt payment announcements this year were done for the year. And perhaps, my question is, to what extent can see some further refinancing perhaps at the subsidiaries given how attractive interest rates are today.

Yes, we think we're done, our $400 million, $420 million. The tender would have us use that capital, with the pace of around $300 million cash, at $275 million, $400 million (inaudible) funds with maturity. So we think we're done, we think we continue to improve our credit dependent level. We will continue to look for some subsidiary financings. The DPL process, DPL, DP&L process is moving forward. It's being done well from a maturity standpoint. The subsidiary now, it looks like the cost of financing will be reasonable relative to expectations.

And then at the businesses, we continue to look. So I mentioned to refi El Salvador, we've done some other pieces like that. Nothing is going to be a jump step in earnings, but there are attractive markets really around the world, as you folks know better than I, and there are opportunities in a lot of our businesses. There are some examples. I put down a list of teams working on it rather than get in front of things, especially to the extent that it involves outstanding bonds, then I'll get in trouble.

Yes. Given that you have predominantly a coal burning company, do you see more pressure from outside the US, somewhere else to put more environmental-related expenses and something which you have not yet in plan or budgeted, but it may come from somewhere else, the pressure on you?

I think from an environmental standpoint, Andres, you can comment -- from an environmental standpoint, we think we're in good shape. Ken's plans in Ohio are in good shape from existing environmental standards. We're doing some work obviously at IPL. It's the right thing to do and has good rate base growth profile to it. There's something done at Chile, but I think after that we're in good shape.

Well, I think that's a very good question. We're very conscious of having to have a diversity of fuels and a mix of fuels. So the way we think about our business is, we will supply the fuel type that best suits the needs of that country. So that country, for example, take Chile, says we want to incentivize renewables, then we, for example, will see what we can do to move in that direction. For example, in Chile, we did have to invest or investing about $200 million in environmental upgrades on our coal plant. So we see a real difference.

I mean, you have countries such as Vietnam, such as India, which really starves for energy, and the local fuel source that they have is a lignite or coal, we don't see much pressure there. And quite frankly, again, give those shortages, they can't themselves the luxury, because of course, with renewables what is not talked a lot about is the spinning reserve that you have to have behind it. So during the World Cup, the wind stops blowing or a cloud comes over and the country is blacked out, you can imagine what that would cost.

So we're looking at it in that point of view in terms of a balance. So you will see renewables, you will see coal projects where they make sense. You don't see any coal projects, for example, in the US and you actually see retirements. So that's a balance in our portfolio.

So I would say, as Tom mentioned, we're overall in pretty good shape. In the States, a lot of our fleet is scrubbed and we're putting the additional investments from asset now. So that's in the numbers that you're looking at. They're in the numbers for Chile and that is where we dealt. For example, something like Bulgaria, we are the state-of-the-art and the best, most least -- I'll say the plant with the least emissions in the country.

So I think we're in pretty good shape, unless you had a real change in some of the countries like Philippines, Vietnam or India, and we don't see that in the future.

Hey, guys. Just a couple of questions. One, maybe for Tom, can you talk a little bit about, longer-term, you've gotten your balance sheet down to where, I think, you like it, but can you talk about longer-term what type of parent leverage to some distributions you're targeting? And then, separately, on DPL, it looks like you're outlining some debt reduction, can you talk about how do you plan to reduce that debt from cash on hand, operating cash? And then, more strategically, longer-term on DPL, what do you think about as you move forward towards deregulating the generation business? How does that fit into the AES plans there and sort of is it still core to your business owning some regulated generation, and what are potential hindrances to separate that out?

Okay. Let me talk about on the balance sheet and then I'll kick the strategy to my left or right. I think, let me say, from the AES perspective, I'd start there, we think as we brought the debt down, you saw in one of my slides there, we brought it down about 5-7 as we sit here now. I think the debt is in reasonable shape, especially as we think about cash flow being able to grow. We think we're getting to where we want to be in terms of solid BB.

To the extent we may -- sell additional assets, we generally pay down more debt. Generally, I think it's said that these assets are sold. We use about half of that money to pay down debt so that we're generally credited neutral. If the assets don't generate as much cash, pay down less to more cash rich than we may pay down some more. But let's say 50-50 is a good walk-in around number. So we think we made material progress and the improvement over the next couple of years will come more from cash improvement.

With respect DPL and DP&L, we are working with the banks at both the larger piece being a DPL to refinance and extend any maturities to 2016. That doesn't include the reduction of DPL, the parent. We got DPL and we got DP&L, the regulated utility. But it does involve a reduction this year of about $225 million, I think about $150 million immediately and then the rest over the year. That is with cash on hand.

DPL ended the year with some cash that came from DP&L, and it was retained within DPL. I think we said we want to do with dividend last year from DPL to AES. It was retained just for this purpose, to be able to put in to this bank and refi, bring down debt a little bit. And that basically kicks all the financing issues that will kick into '16, which is good.

The one thing we do have, we have about 400 in change DP&L first mortgage bond maturity late summer, early fall that we think is quite reasonable for finance, and we'll do that. And it will be easier to put that in once the other package is there.

So I think with that said, we still think DPL has more debt than would be appropriate, especially given the (inaudible) of last fall. So we will continue to bring that down, but it will be step by step. There are some amortizations in that bank stuff of 40 to 50-year or something like that, which we think is quite reasonable given the cash well projection.

In terms of separation, I think we'll be more specific. I think Ken talked about it -- later piece of the rate filing after the EFP gets nailed down. Generally, we look to give ourselves time until 2017. That will be separating out the DP&L gento into a sister, effectively the DP&L disco. And that will be done, I think, consistent with other folks, maybe some of the PGM companies who have broken DND from gen into sisters. And we'll have to do that in context for the overall optimization of the debt at DP&L and then DPL. We got the thoughts and we think what we're doing now facilitates those thoughts, but we'll have to do some more work on that.

Strategically, I think I'll let Andy or Andres talk it as we think about running a large competitive fleet. We'll think about that.

Okay. This was a little bit more difficult to give a lot of insight to, because while we're in the middle of the case, it doesn't actually (inaudible) to talk about what's going to come after. In fact, until we see the outcome, it's very difficult to talk about strategy. But let's talk about a few things.

The idea of the separation from generation at DP&L was not initiated by us. This wasn't an issue that came up from the interveners during the settlement discussion. And to accommodate the movement of settlement, we had committed to look at this issue of separation, and that's what you see or saw in the slide that Ken put forward. We're already functionally separated and we're relatively comfortable from an operational perspective at DP&L that we didn't believe that separation and generation had to be an inherent part of the DSP filing.

The concerns from the interveners were that there were too many opportunities for cross subs organization or unfair competitions, things of that nature, mostly by the other large utilities or interveners. But I think the issue for this is a couple of things. One is that clearly when we get through the case, coming to some view on generation, we'll become important, all right?

We have formed the SBU in the US and I made this big talk about synergies. We believe there are significant synergies from operations and strategies that look at our generation fleet as one entity, not as separate business entities. We think there are opportunities to continue to improve performance. We think there are ownership and structural issues with the DP&L fleet that could be address. But it's going to be very important for us to understand what sort of the value proposition once we've come out of the case.

And there are a number of issues that we're waiting for there before we actually take some other movements within the US SBU, and that's going to be something that Ken is going to be thinking about. But long term, we see the US as being too regulated businesses, IPL is an integrated utility. We've looked very hard at this to make sure that we're not being blindsided.

As if Indiana can go the way of Ohio and Illinois, we'll be happy to talk about them and once Ken could talk to you at length about why we think Indiana will continue the way it is. I think we'll have the regulated network business in Dayton, and then we see the US having a competitive supply business, which will have a retail component really aimed at the [Claro] efficient way of bringing generation to market.

But because we have a lot of stakeholders and a lot of people who have different views on this, until we get through the case, it's very important that we know we have to think about these issues. But we really aren't talking about them at large. And one of the reasons being, it's very important for us to see what we come out with at the other side.

So I think as Ken said, we expect a rate decision the latter half of July, and after we see that we'll start to deal with some of the structural issues and we'll be happy to talk about our plans in more detail once we're past the rate case. I know that wasn't terribly satisfying, but it's the best we can do at this time.

Only one question we can take and then --

One last question. Near term, Andres, in your presentation, there were two or three areas of concern that were raised, Brazil, regulatory and political involvement, Bulgaria, with all the uncertainty, and then I think Argentina with the change of pricing and so on. Can you just from your vantage point tell us how you rank them in areas of concern for you as you're thinking about what could go wrong here and how you get comfortable on this?

Well, what I would say, and Andy pointed out, we're very actively involved in mitigating these risks. I think when you talk about Brazil, for example, you have to step back and take a little bit of a longer view. I mean, the history in Brazil over the last seven years has actually been quite positive, and those figures that you were seeing did not include, for example, the sale of Atimus, where had a business that -- we have $50 million invested, five years later, we sold it for $1 billion. Of course, weren't the sole owners of that business and had to share that upside. That wasn't included in those numbers.

So there's really the case, as Britaldo mentioned, of Eletropaulo which has received a very severe regulatory tariff reset. And then there's a story of Sul, which is a story of operational improvement and a reasonable regulatory outcome, and then you have Tiete. So overall in Brazil, I think you have to look at it in that light.

In the case of Brazil, if you look at value, and that's really how I look in terms of what worries me more or less is how much is at stake in that business. It's really between Sul and Tiete. So Brazil will continue to grow, Brazil will continue to need energy, and some of the, say, regulatory decisions may actually make some of the existing assets over time more attractive or the expansion, because I think less things will get built in the short run.

If you mention something like Argentina, I'm sure that (inaudible) are giving us a tremendous amount of value for Argentina, but these are -- but we have some 3,000 megawatts of fantastic assets in Argentina, which have made money every year in the generation side. We made money in 2002. So these are world-class assets and I think that we're very engaged in stakeholder management in Argentina. This new regulation 95 came out.

But if you think about it somewhat longer term, these are very well-positioned assets which have a lot of upside if the situation improves in Argentina. But they have also shown themselves to be tremendously robust. It's very different to be in the distribution business in Argentina than the generation business, and we sold out of our distribution business.

If you talk about Bulgaria, as Andy mentioned, it's the modern plant in Bulgaria. It's the only plant which really meets all the EU regulations for 2016. It was a project which was very much sponsored by the EBRD, and technically we've been very successful on that project. So not to say we're not on top of them, we're not concerned about all of them, but I think that you have to take somewhat of a longer view of this, and that's how we manage them, quite frankly.

Okay, with that, we conclude today's presentation. Thank you for coming. Thank you. Bye-bye.

Thank you very much.

We're going to have lunch, and other members of management are available to answer any remaining questions you may have.