8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 10, 2006

THE AES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-12291	54-1163725
(State or other jurisdiction	(Commission File	(I.R.S. Employer
of incorporation)	Number)	Identification Number)
4300 Wilson Boulevard, Suite 1100, Arlington, Virginia		22203
(Address of principal executive offices)		(zip code)

Registrant’s telephone number, including area code: (703) 522-1315

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01Regulation FD Disclosure

On May 8, 2006 The AES Corporation posted on its website the First Quarter 2006 Financial Review Presentation that was referenced in investor discussions during the financial review. A copy of the First Quarter 2006 Financial Review Presentation is attached hereto as exhibit 99.1.

Attached hereto as Exhibit 99.2, which is incorporated herein by reference, is a copy of certain slides used by the Company in making a presentation to analysts, potential investors and shareholders and that are expected to be used in subsequent presentations to interested parties, including analysts, potential investors and shareholders. This information is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of the Section and is not incorporated by reference into any Securities Act registration statements. Additionally, the submission of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. Any information in this report supercedes inconsistent or outdated information contained in earlier Regulation FD disclosures.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

Exhibit No.	Description
99.1	First Quarter 2006 Financial Review Investor Presentation
99.2	The AES Corporation slide presentation made available at www.aes.com on May 9, 2006

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE AES CORPORATION
	(Registrant)
	By:	/s/ Vincent W. Mathis
			Name: Vincent W. Mathis
			Title:   Deputy General Counsel
Date: May 10, 2006

3

EX-99.1

Exhibit 99.1

Searchable text section of graphics shown above

AES Corporation

First Quarter 2006 Financial Review

May 8, 2006

[LOGO]

The Global Power Company

[LOGO]
The Global Power Company Safe Harbor Disclosure

Certain statements in the following presentation regarding AES’s business operations may constitute “forward looking statements.”  Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance.  Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions.  Forecasted financial information is based on certain material assumptions.  These assumptions include, but are not limited to continued normal or better levels of operating performance and electricity demand at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth from investments at investment levels and rates of return consistent with prior experience. For additional assumptions see the Appendix to this presentation. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission including but not limited to the risks discussed under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 as well as our other SEC filings. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

1Q06 Financial Review www.aes.com

2

First Quarter 2006 Highlights

($ Millions except earnings per share and percent)

	First Quarter			First Quarter
	2006			2005			Change
Revenues	$	3,013		$	2,663		13	%
Gross Margin	$	954		$	824		16	%
as % of Sales	31.7		%	30.9		%	80 b.p.
Income Before Income Taxes and Minority Interest (IBT&MI)	$	633		$	377		68	%
Diluted EPS from Continuing Operations	$	0.52		$	0.19		174	%
Adjusted EPS (1)	$	0.42		$	0.18		133	%
Return on Invested Capital (ROIC) (1)	12.2		%	8.4		%	380 b.p

Revenue Comparison
Period-Over-Period

Price/Volume/Allowances	7	%
Currency	6	%
Total	13	%

(1)  Non-GAAP measure.  See Appendix.

3

First Quarter 2006 Earnings Bridge

[CHART]

(1)Non-GAAP measure. See Appendix.

Note: Certain elements are rounded.

4

First Quarter Cash Flow Highlights

($ Millions)

	First Quarter			First Quarter
	2006			2005
Subsidiary-Only
Subsidiary Net Cash from Operating Activities (1)	$	647		$	672
Consolidated
Net Cash from Operating Activities	$	544		$	518
Free Cash Flow (1)	$	369		$	394
Parent-Only
Subsidiary Distributions (1)	$	132		$	195
Return of Capital from Subsidiaries (1)	$	0		$	2
Recourse Debt Repayment	$	150	(2)	$	0

(1)Non-GAAP measure. See Appendix. Excludes $44 and $ 2 million in proceeds from the sale of allowance sales included in investing activities in 2006 and 2005 periods, respectively.

(2)Includes redemption of 8.875% Sr. Subordinated notes due 2027 (approximately $115MM aggregate principal amount plus a make-whole premium of $35MM).

5

First Quarter Subsidiary Distributions

($ Millions)

First Quarter 2006 Subsidiary Distributions(1)

	North		Latin				Asia &
	America		America		Europe & Africa		Middle East		Total
Regulated Utilities	$	—	$	19	$	—	$	—	$	19
Contract Generation	$	21	$	—	$	16	$	14	$	51
Competitive Supply	$	61	$	1	$	—	$	—	$	62
Total (1)	$	82	$	20	$	16	$	14	$	132

39% of First Quarter 2006 distributions were from North American Regulated Utilities and Worldwide Contract Generation.

(1)  Non-GAAP measure.  See Appendix.

6

First Quarter Segment Highlights Regulated Utilities

($ Millions except as noted)

	First Quarter						%
	2006			2005			Change
Revenues	$	1,493		$	1,399		7	%
Gross Margin	$	370		$	367		1	%
as % of Sales	24.8		%	26.2		%	-140 b.p.
IBT&MI	$	240		$	229		5	%

Revenue Comparison (QOQ)	% Change
Volume/Price/Mix	-5	%
Currency (Net)	12	%
Total	7	%

Segment Highlights

•Revenues increased primarily from favorable Latin America foreign exchange rates and higher fuel cost pass-through at IPL, largely offset by 1Q05 retroactive prior year margin recovery benefit at Eletropaulo in Brazil.

•Gross margin increased slightly due to foreign exchange effects offset by the margin recovery in Brazil and higher IPL maintenance costs. Gross margin as % of sales declined due to the margin recovery and higher maintenance costs.

•IBT&MI increase beyond gross margin variance driven mostly by an Argentina debt gain and favorable interest expense comparisons in Venezuela, partially offset by El Salvador debt costs.

7

First Quarter Segment Highlights Contract Generation

($ Millions except as noted)

	First Quarter						%
	2006			2005			Change
Revenues	$	1,151		$	985		17	%
Gross Margin	$	434		$	392		11	%
as % of Sales	37.7		%	39.8		%	-210b.p.
IBT&MI	$	436		$	253		72	%

Revenue Comparison (QOQ)	% Change
Volume/Price/Mix	17	%
Currency (Net)	0	%
Total	17	%

Segment Highlights

•The increases are driven by higher demand and pricing at businesses in Latin America and higher demand in Pakistan.

•Gross margin increased due primarily to the higher demand and pricing.  Gross margin as a % of sales declined due to higher outage costs in North America.

•IBT&MI increases beyond gross margin  variance driven mostly by gain on Kingston sale and Dominican Republic receivables settlement.

8

First Quarter Segment Highlights Competitive Supply

($ Millions except as noted)

	First Quarter						%
	2006			2005			Change
Revenues	$	369		$	279		32	%
Gross Margin	$	150		$	65		131	%
as % of Sales	40.7		%	23.3		%	1,740b.p.
IBT&MI	$	151		$	52		190	%

Revenue Comparison (QOQ)	% Change
Volume/Price/Mix	34	%
Currency (Net)	-2	%
Total	32	%

Segment Highlights

•Revenues increased as a result of better pricing in Latin America and North America as well as New York excess emission allowance sales.

•Gross margin and gross margin as a % of sales increased due to better New York’s better pricing and the emission allowance sales.

•IBT&MI increases beyond gross margin variance driven mostly by gain on a legal settlement related to AES Barry.

9

Appendix

10

2006 Guidance Elements:
Income Statement

Contains Forward Looking Statements

Guidance Element	2006 Guidance
Revenue Growth (% change)	4 to 5%
Gross Margin	$3.2 to $3.3 billion
Business Segment Income Before Tax & Minority Interest (Excludes Corporate Costs of $625 Million)	$2.3 billion
Allocated by Segment as % of Total
• Regulated Utilities	44%
• Contract Generation	38%
• Competitive Supply	18%
Diluted Earnings Per Share From Continuing Operations	$0.96
Adjusted Earnings Per Share Factors	$0.01
Adjusted Earnings Per Share(1)	$0.97

(1)  Non-GAAP measure.  See Appendix.

11

2006 Guidance Elements:
Cash Flow and Sensitivities

Contains Forward Looking Statements

Guidance Element	2006 Guidance
Net Cash From Operating Activities	$2.2 to $2.3 billion
Maintenance Capital Expenditures	$800 to $900 million
Free Cash Flow(1)	$1.3 to $1.5 billion
Subsidiary Distributions(1)	$1.0 billion
Parent Investments and Capital Expenditures(2)	$250 to $350 million
2008 Financial Targets(3)
• Diluted EPS from Continuing Operations(4)	$1.18 to $1.34
• Gross Margin	$3.5 billion
• Return on Invested Capital(1)	11%
• Net Cash Provided by Operating Activities	$2.6 to $2.9 billion

(1)Non-GAAP measures.  See Appendix.

(2)Excludes other sources of funds. Total 2006 capital expenditures are estimated to be $1.7 – $1.8 billion, including certain growth projects not yet awarded.

(3)Guidance includes growth projects committed to in 2004 and prior years.

(4)Based on 16-19% per year growth in diluted EPS from continuing operations from $0.56 per share 2003 base (pre-restatement).

12

Reconciliation of Adjusted Earnings Per Share

($ Per Share)

	First Quarter			First Quarter
	2006			2005
Diluted Earnings Per Share From Continuing Operations	$	0.52		$	0.19
FAS 133 Mark-to-Market (Gains)/Losses	—			—
Currency Transaction (Gains)/Losses	—			(0.01		)
Net Asset (Gains)/Losses and Impairments	(0.13		)	—
Debt Retirement (Gains)/Losses	0.03			—
Adjusted Earnings Per Share(1)	$	0.42		$	0.18

(1)Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses associate with (a) mark-to-market amounts related to FAS 133 derivative transactions, (b) foreign currency transaction gains and losses on the net monetary position related to Brazil, Venezuela, and Argentina, (c) significant asset gains or losses due to disposition transactions and impairments, and (d) early retirement of recourse debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability associated with mark-to-market gains or losses related to certain derivative transactions, currency transaction gains or losses, periodic strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of corporate debt.

13

Parent Sources and Uses of Cash

($ Millions)

	First Quarter 2006
Sources
Total Subsidiary Distributions(1)	$	132
Proceeds from Asset Sales, Net	108
Refinancing Proceeds, Net	—
Increased Revolver Commitments	500
Issuance of Common Stock, Net	8
Total Returns of Capital Distributions and Project Financing Proceeds	—
Beginning Liquidity(1)	624
Total Sources	$	1,372
Uses
Repayments of Debt(2)	$	(150	)
Investments in Subsidiaries, Net	(97		)
Cash for Development, Selling, General and Administrative and Taxes	(73		)
Cash Payments for Interest	(78		)
Other, Net	89
Ending Liquidity(1)	(1,063		)
Total Uses	$	(1,372	)

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

(2)Includes redemption of 8.875% Sr. Subordinated notes due 2027 (approximately $115 million aggregate principal amount plus a make-whole premium of $35 million.

14

First Quarter Reconciliation of Changes to Debt Balances

($ Millions)

	Debt Reconciliation
Parent Debt (Including Letters of Credit) at 12/31/05	$	5,176	(1)
Scheduled Debt Maturities:	—
Discretionary Debt Repayments:
Prepayment of Debt	(115		)
Other	(38		)(2)
Parent Debt (Including Letters of Credit) at 3/31/06	$	5,023
Less: Letters of Credit Outstanding at 3/31/06	(202		)
Parent Debt (Excluding Letters of Credit) at 3/31/06	$	4,821

(1)Amount reflects recourse debt of $4,882 million and $294 million of letters of credit under the parent revolver. Revolver availability at 12/21/05 was $356 million.

(2)Other includes $92 million decrease in letters of credit, a $50 million draw on the revolving credit facility, a $2 million change in unamortized discounts related to discretionary prepayment of debt and $2 million increase due to foreign currency changes.

15

First Quarter 2006 Consolidated Cash Flow

($ Millions)

	Subsidiaries			AES Corp (1)			Eliminations			Consolidated
Net Cash from Operating Activities	$	660		$	16		$	(132	)	$	544
Maintenance Capital Expenditures	(140		)	(35		)	—			(175		)
Growth Capital Expenditures	(70		)	—			—			(70		)
Investment in Subsidiaries	—			(95		)	95			—
Net Proceeds from Asset Sales	4			110			—			114
Net Proceeds from the Sale of Emission Allowances	44			—			—			44
Sale of Short Term Investments, Net of Purchases	(168		)	—			—			(168		)
Increase in Restricted Cash	(21		)	—			—			(21		)
Decrease in Debt Service Reserves and Other Assets	9			—			—			9
Other	(4		)	—			—			(4		)
Net Cash (for) from Investments	(346		)	(20		)	95			(271		)
Financing Proceeds for Growth Capital Expenditures	17			—			—			17
Financing Proceeds from Other Financings Including Refinancings	340			—			—			340
Equity Proceeds	—			8			—			8
Repayments, Net (Including Refinancings)	(590		)	(100		)	—			(690		)
Payments for Financing Costs	(9		)	(7		)	—			(16		)
Equity Contributions by Parent	95			—			(95		)	—
Distributions to Parent	(132		)	—			132			—
Returns of Capital to Parent	—			—			—			—
Other	(16		)	—			—			(16		)
Net Cash (for) from Financing	(295		)	(99		)	37			(357		)
Increase (Decrease) in Cash & Cash Equivalents	19			(103		)	—			(84		)
Effect of FX	36			—			—			36
Beginning Cash & Cash Equivalents Balance	1,122			268			—			1,390
Ending Cash & Cash Equivalents Balance	$	1,177		$	165		$	—		$	1,342

(1)Includes activity at qualified holding companies.

Note: Certain amounts have been netted, condensed and rounded for presentation purposes.

16

Reconciliation of Subsidiary Distributions and Parent Liquidity

($ Millions)

	Quarter Ended
	Mar. 31, 2006		Dec. 31, 2005		Sept. 30, 2005		June 30, 2005			Mar. 31, 2005			Dec. 31, 2004			Sept 30, 2004
Total subsidiary distributions & returns of capital to parent
Subsidiary distributions to parent	$	132	$	354	$	274	$	170		$	190		$	286		$	209
Net distributions to/(from) QHCs	—		—				—			5			(9		)	12
Total subsidiary distributions	132		354		274		170			195			277			221
Returns of capital distributions to parent	—		5		—		37			2			3			110
Net returns of capital distributions to/(from) QHCs	—		—		—		13			—			—			11
Total returns of capital distributions	—		5		—		50			2			3			121
Combined distributions & return of capital received	132		359		274		220			197			280			342
Less: combined net distributions & returns of capital to/(from) QHCs	—		—		—		(13		)	(5		)	9			(23		)
Total subsidiary distributions & returns of capital to parent	$	132	$	359	$	274	$	207		$	192		$	289		$	319

	Balance as of
	Mar. 31, 2006		Dec. 31, 2005		Sept. 30, 2005		June. 30, 2005		Mar. 31, 2005
Liquidity
Cash at parent	$	148	$	262	$	146	$	145	$	256
Availability under revolver	898		356		281		215		218
Cash at QHCs	17		6		9		19		3
Ending liquidity	$	1,063	$	624	$	436	$	379	$	477

See following page for further information.

17

Assumptions

Forecasted financial information is based on certain material assumptions. Such assumptions include, but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; (b) businesses continue to operate in a manner consistent with or better than prior operating performance, including achievement of planned productivity improvements including benefits of global sourcing, and in accordance with the provisions of their relevant contracts or concessions; (c) new business opportunities are available to AES in sufficient quantity so that AES can capture its historical market share or increase its share; (d) no material disruptions or discontinuities occur in GDP, foreign exchange rates, inflation or interest rates during the forecast period; (e) negative factors do not combine to create highly negative low-probability business situations; (f) material business-specific risks as described in the Company’s SEC filings do not occur. In addition, benefits from global sourcing include avoided costs, reduction in capital project costs versus budgetary estimates, and projected savings based on assumed spend volume which may or may not actually be achieved. Also, improvement in certain KPIs such as EFOR and commercial availability may not improve financial performance at all facilities based on commercial terms and conditions. These benefits will not be fully reflected in the Company’s consolidated financial results.

The cash held at qualifying holding companies (QHCs) represents cash sent to subsidiaries of the Company domiciled outside of the U.S. Such subsidiaries had no contractual restrictions on their ability to send cash to AES, the parent company. Cash at those subsidiaries was used for investment and related activities outside of the U.S. These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the U.S. Since the cash held by these qualifying holding companies is available to the parent, AES uses the combined measure of subsidiary distributions to parent and qualified holding companies as a useful measure of cash available to the parent to meet its international liquidity needs. AES believes that unconsolidated parent company liquidity is important to the liquidity position of AES as a parent company because of the non-recourse nature of most of AES’s indebtedness.

18

Definitions of Non-GAAP Measures

•Adjusted earnings per share (a non-GAAP financial measure), is defined as diluted earnings per share from continuing operations excluding gains or losses associated with (a) mark-to-market amounts related to FAS 133 derivative transactions, (b) foreign currency transaction impacts on the net monetary position related to Brazil, Venezuela, and Argentina, (c) significant asset gains or losses due to disposition transactions and impairments, and (d) early retirement of recourse debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and are considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability associated with mark-to-market gains or losses related to certain derivative transactions, currency gains and losses, periodic strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of corporate debt.

•Free cash flow – Net cash flow from operating activities less maintenance capital expenditures. Maintenance capital expenditures reflect property additions less growth capital expenditures.

•Liquidity – Cash at the parent company plus availability under corporate revolver plus cash at qualifying holding companies (QHCs).

•Return on invested capital (ROIC) – Net operating profit after tax (NOPAT) divided by average capital. NOPAT is defined as income before tax and minority expense plus interest expense less income taxes less tax benefit on interest expense at effective tax rate. Average capital is defined as the average of beginning and ending total debt plus minority interest plus stockholders’ equity less debt service reserves and other deposits.

•Subsidiary Distributions – Cash distributions (primarily dividends and interest income) from subsidiary companies to the parent company and qualified holding companies. These cash flows are the source of cash flow to the parent to meet corporate interest, overhead, cash taxes, and discretionary uses such as recourse debt reductions and corporate investments.

19

Reconciliation of Cash Flow Items

Net Cash from Operating Activities – First Quarter 2006 ($ Millions)

	Subsidiaries		AES Corp(1)		Eliminations			Consolidated
First Quarter 2006	$	660	$	16	$	(132	)	$	544

Reconciliation of Free Cash Flow ($ Millions)

	First Quarter 2006			First Quarter 2005
Net Cash from Operating Activities	$	544		$	518
Maintenance Capital Expenditures	(175		)	(124		)
Free Cash Flow	$	369		$	394

(1) Includes activity at qualified holding companies.

20

First Quarter 2006 Return on Invested Capital

($ Millions except percent)

	Second Quarter 2004			Third Quarter 2004			Fourth Quarter 2004			First Quarter 2005			Rolling Twelve Months First Quarter 2005			Second Quarter 2005			Third Quarter 2005			Fourth Quarter 2005			First Quarter 2006			Rolling Twelve Months First Quarter 2006
Net Operating Profit After Tax(1)
IBT&MI	$	233		$	225		$	203		$	377		$	1,038		$	186		$	484		$	411		$	633		$	1,714
Reported Interest Expense	428			500			493			467			1,888			475			450			504			434			1,863
Income Tax Expense(2)	(45		)	(396		)	(507		)	(329		)	(1,223		)	(291		)	(276		)	(207		)	(329		)	(1,071		)
Net Operating Profit After Tax	616			329			189			515			1,703			370			658			708			738			2,506
Effective Tax Rate(3)	6.9		%	54.7		%	72.9		%	39.0		%	41.8		%	44.1		%	29.5		%	22.6		%	30.8		%	29.9		%
ROIC(4)										8.4		%																12.2		%

	First Quarter 2004			First Quarter 2005			First Quarter 2006
Total Capital(5)
Total Debt	$	18,749		$	18,349		$	17,579
Minority Interest	959			1,376			1,753
Stockholders’ Equity	1,221			1,079			2,190
Debt Service Reserves and Other Deposits	(539		)	(678		)	(628		)
Total Capital	$	20,390		$	20,126		$	20,894
Average Capital(6)				$	20,258		$	20,510

(1)Net operating profit after tax,  a non-GAAP financial measure, is defined as income before tax and minority interest expense (IBT&MI) plus interest expense less income taxes less tax benefit on interest expense at the effective tax rate.

(2)Income tax expense calculated by multiplying the sum of IBT&MI and reported interest expense for the period by the effective tax rate for the period.

(3)Effective tax rate calculated by dividing reported income tax expense for the period by IBT&MI for the period.

(4)Return on invested capital (ROIC), a non-GAAP financial measure, is defined as net operating profit after tax divided by average capital calculated over rolling 12 month basis.

(5)Total capital, a non-GAAP financial measure, is defined as total debt plus minority interest plus stockholders’ equity less debt service reserves.

(6)Average capital is defined as the average of beginning and ending total capital over the last 12 months.

21

EX-99.2

Exhibit 99.2

Searchable text section of graphics shown above

	2006 AES Investor Conference Series
AES CORPORATION	Scott Cunningham
	Vice President, Investor Relations

[GRAPHIC]

May 9, 2006

Safe Harbor Disclosure

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

www.aes.com

Today’s Agenda

Opening Comments	Scott Cunningham
Asia Business Review
•Overview and Asia Business Review	Haresh Jaisinghani
•Kazakhstan	Dale Perry
•Q&A Session	All
Break
North America Business Review
•Overview	David Gee
•IPALCO	Ann Murtlow
•North America Generation East	Dan Rothaupt
•North America Generation West	Mark Woodruff
•Q&A Session	All

	AES Asia Business Review
AES CORPORATION		Haresh Jaisinghani
		President, Asia

[GRAPHIC]

AES Asia Market

[GRAPHIC]

Country	Population(MM) (2006 est.)	Per Capita PPP GDP (USD) (2005 est.)		Gener. Gross GW	GDP growth % p.a. (2005 est)
China	1,314	$	6,300	508	9.3
India	1,095	$	3,400	124	7.6
Kazakhstan	15	$	7,800	18	9.0
Sri Lanka	20	$	4,300	2	5.0

Source: The World Factbook; AES estimates.

Asia at a Glance

[GRAPHIC]

10,121MW Total Installed Capacity

2,000MW Ekibastuz and 1,000MW OPGC Expansion Potential

2 Distribution and 1 Heat Net Businesses in Kazakhstan Serve 0.6MM Customers

High Potential for Future Growth Given Strong Economic Growth and Under-Investment in Infrastructure Facilities

My Priorities

Safety First	------->	•Improve AES and contractor safety statistics •Reporting near misses •Recognized as industry leader in safety within region
Operational Excellence	------->	•Improve fuel efficiency •Reduce unplanned outages •Improve root cause analysis
Business Development	------->	•Create critical presence in ASEAN, China and India •Platform expansion at Kazakhstan & OPGC •Create value through greenfielddevelopment and complex acquisitions •Execute Vietnam project •Alternative Energy, Clean Development Mechanism (CDM) •Selected non-power, such as gas distribution, water & waste treatment
People Development	------->	•Identify internal talent pool •Implement mentoring and rotational programs

	Asia Generation Business Review
AES CORPORATION	Haresh Jaisinghani
	President, Asia

[GRAPHIC]

Asia Generation Strategic Overview

Contains Forward Looking Statements

		AES Asia
AES Goals	AES 2008 Target	Generation Role
Financial Goals
•     Revenue Growth	—	Above Average
•     Gross Margin Growth	$3.5 Billion	Below Average
•     Earnings Per Share Growth	13-19% per Year	Below Average
•     ROIC Improvement (1)	11%	Below Average
•     Cash Flow Growth	$2.6-2.9 Billion	Below Average
•     Subsidiary Distributions (1)	—	Stable
•     Refinancing Opportunities	—	Limited
Growth Goals
•     Platform Expansion	—	Attractive but Conditional
•     Greenfield Investment	—	Significant Opportunity
•     Privatization/M&A	—	Focused Opportunity

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

AES History in Asia

1992-1995	1996-2000	2001-2003	2004-2006
1992	1996	2001	2005
Entered India 1993 Founded AES Chigen	Chigen issued $180 MM Notes due 2006 Won greenfield gas-fired Mt. Stuart	Out of management of CESCO Closed first power project in Sri Lanka:	Signed MOU for development of a 1,200MW greenfield coal-fired project in Vietnam
	bid (288MW) in Australia	Kelanitissa
1994	1997
Closed first power project in China 1995-1997 Closed the existing six other power projects in China, resulting in aggregate of 2,842MW installed capacity	Won greenfield bid in Bangladesh (two gas-fired plants totaling 810MW) with award-winning project financing from ADB and World Bank 1998 Acquired 49% stake in OPGC in the first and only privatization in India	2003 Chigen issued $175 MM Bonds due 2010 to refinance previous notes due 2006 Sale of Australian and Bangladesh assets	2006 Signed MOU for development of a greenfield integrated coal mine and a 1,000MW power plant in India
	1999
	Acquired 51% in CESCO, a distribution company in India Acquired Ecogen (2 gas-fired plants totaling 960MW) in privatization in Australia

China Generation Market Characteristics

	Contains Forward Looking Statements
•     Big market: 508GW installed capacity •     High growth: 9% p.a. GDP growth in 2005 •Country rating: A-	Insights	•Do not directly translate into robust investment opportunities for foreign investors
•Generation market dominated by state-owned companies •Foreign IPPs own 2% of installed capacity •120GW capacity under construction •Economic growth expected to slow down to 7.5% p.a. from 2007-2010	Insights	•Government has successfully used domestic champions, capital, and equipment •Size rather than profitability drives local investments •Overcapacity in short to medium term
China: Installed Capacity (GW)		Ownership Structure:
		Share of Generation Capacity
[CHART]		[CHART]

Contains Forward Looking Statements

•Industry undergoing structural and regulatory changes	Insights	•Tightly controlled tariff setting •Contract enforcement a challenge
•More stringent environmental regulations •Government encourages development of energy efficient and clean technologies	Insights	•Opportunities in renewable and non -power
China: 2005 Generation Fuel Mix	[CHART]

India Generation Market Characteristics

Contains Forward Looking Statements

•Big market: 124GW installed capacity •High growth: 7-8% p.a. GDP growth from 2006-2010 •Negative reserve margin estimated at 12%	Insights	•Significant power demand •However, has not resulted in significant capacity additions
•Public sector champions cannot build all the needed capacities	Insights	•Space for private local and foreign players

Contains Forward Looking Statements

•Weak credit of utilities and overreaching regulations are legacy hurdles	Insights	•Alternatives to regulated PPAs with state-owned utilities slowly emerging as a result of open access promise
•World’s 4th largest wind capacity (4,430MW)
•Returns and regulations are reasonable	Insights	•Opportunities in renewable & CDM
•Active government support for CDM
India: 2005 Generation Fuel Mix	[CHART]

AES Portfolio in Asia

Coal	Oil	Gas	Hydro
China	China	China	China
Yangcheng, Shanxi	Hefei	Chengdu, Sichuan	Cili, Hunan
•2,100MW	•115MW	•50MW	•26MW
•25% AES Owned	•70% AES Owned	•35% AES Owned	•51% AES Owned
Jiaozuo, Henan	Sri Lanka
•250MW	Kelanitissa
•70% AES Owned	•168MW Diesel
	•90% AES Owned
Wuhu
•250MW			[GRAPHIC]
•25% AES Owned
Aixi, Sichuan
•51MW
•71% AES Owned
India
OPGC
•420MW Coal
•49% AES Owned

Asia Generation Revenues

Consolidated Revenue ($145 MM)

[CHART]

Consolidated Revenue by Customer ($145 MM)

[CHART]

Combined Revenue (1) ($720 MM)

[CHART]

(1) Combined revenue includes consolidated revenues and 100% of revenues of equity-owned affiliates.

For the year ended December 31, 2005

Asia Generation Portfolio Contracted with Full or Partial Fuel Cost Pass Through

	Contract Generation Portfolio
[GRAPHIC]
	India
	•Mine mouth plant with long-term linkage granted
	•Fuel cost passed through under PPA
[GRAPHIC]
	Sri Lanka
	•Fuel supply agreement guaranteed by government
	•Fuel cost passed through under PPA
[GRAPHIC]
	China
	•Fuel cost pass-through mechanism under PPA subject to government and regulatory approval in practice

Asia Generation KPIs

	Key Performance Indicator (KPI)
	•Lost time accident rate (LTAs)
Safety Excellence	•Days and man-hours since last LTA
	•Near miss reporting
	•SOX emissions
Environmental Excellence	•NOX emissions
	•Opacity
	•Net plant heat rate
	•Equivalent availability factor (EAF)
Operational Excellence	•Equivalent forced outage rate (EFOR)
	•Non-fuel O&M costs

Asia Generation Safety Performance

Lost Time Accidents	Safety Highlights
	•All but one plant have more than a year without an LTA
[CHART]	•Cili: 4,271 days without an LTA
	•Chengdu: 3,299 days without an LTA
	•Jiaozuo: 545 days without an LTA
	•OPGC: over 6.5 MM man-hours without an LTA

Asia Generation Heat Rate Performance

OPGC & Jiaozuo	Kelanitissa
Heat Rate (Btu/kWh)	Heat Rate (Btu/kWh)
[CHART]	[CHART]

Asia Generation KPI Focus

	Jiaozuo
OPGC	Equivalent Availability Factor
[CHART]	[CHART]

Asia Generation Portfolio Financing

China	India	Sri Lanka
•$30 MM Renminbi& US Dollar non-recourse loans outstanding at project level •Final maturity by 2009 •$175 MM US Dollar bonds due 2010 at Chigen holding	•$17 MM Rupee non-recourse project loans outstanding •Final maturity by 2012	•$65 MM Dollar based non-recourse project loans outstanding from multilateral & commercial banks •Final Maturity by 2013

Data as of December 31, 2005

Chigen Bond Financing

	Outstanding	US$175 MM
	Interest rate	8.25% p.a.
	Maturity profile	Due June 2010, bullet payment
	Credit rating	S&P: B+/Stable; Moody’s: B1
Chigen Bond Price Movement
[CHART]

Asia Generation Financial Overview

(US$ Million)

	2003		2004		2005
Revenue	$	118	$	120	$	145
Gross Margin	$	29	$	25	$	33
Income Before Tax & Minority Interest	$	50	$	31	$	59
Distributions to AES Corporation	$	123	$	32	$	37

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

Growth Strategies

Contains Forward Looking Statements

	•     Acquisition of restructuring provincial and local power companies
	•     Integrated coal mine and power plant
China	•     Non-power, such as gas distribution, water & waste treatment
	•     Renewable, clean coal technology and CDM
	•     Seek joint venture partnerships
	•     OPGC platform expansion
India	•     Greenfield integrated coal mine and power plant
	•     Renewable and CDM
	•     Distribution privatization
	•     Greenfield negotiated or limited competitive opportunities
ASEAN	•     Limited privatization opportunities
	•     Partner with local minority players and multilaterals
	•     CDM

Reserve Margin for China, India and ASEAN Countries

[CHART]

Source: EIA and AES estimates

Bars not drawn to scale: China, India and Sri Lanka

ASEAN Generation Market Characteristics

Contains Forward Looking Statements

	Philippines	Indonesia	Thailand	Vietnam
Sovereign rating	BB-	B+	BBB	BB-
GDP growth ‘05	4.5%	5.5%	4.5%	8.4%
Electricity demand growth	9%	6-7%	6%	15%
Opportunities	Immediate acquisitions / privatization (medium term for new capacities)	Urgent need for new capacities	Urgent need for new capacities	Urgent need for new capacities
Competition	Limited Western players; Japanese, Pan Asian and in-country players
New PPAs	Not possible given current law	Available and modeled on earlier successful project financed deals
Procurement process	Negotiated / limited competition	Negotiated / limited competition	Structured and well managed RFP	Negotiated / limited competition
Political climate	Active democracy with uncertainties overhang	Newly founded democracy with fading reminiscence of political / business nexus	Generally stable. However, recently Prime Minister ousted on conflict-of-interests	Communist government provides stable environment

Data from EIA

Greenfield: Mong Duong, Vietnam

Contains Forward Looking Statements

1,200MW BOT greenfieldcoal-fired negotiated opportunity	Mong Duong Project, Vietnam
•MOU signed in December 2005
•90% joint venture with Vinacomin, the state-owned coal monopoly
•Non-recourse project finance from multilateral banks based on well-established precedence	[GRAPHIC]
•US Dollar long-term PPA and FSA backed by government guarantee
•Estimated project cost $1.2 to $1.4 billion
•Target operation by 2010

Platform Expansion : OPGC, India

Contains Forward Looking Statements

	Proposed OPGC Expansion
•500 to 1,000MW coal-fired OPGC expansion
•Shared facilities built
•No new AES equity investment
•Financed by trapped cash and local (Rupee) non-recourse loans	[GRAPHIC]
•Mine mouth resulting in competitive electricity price
•Key issue under discussion with government – power sale arrangement
•Timing uncertain

	AES Kazakhstan Business Review
AES CORPORATION
	Dale Perry
	Vice President

[GRAPHIC]

May 9, 2006

AES Kazakhstan Strategic Overview

Contains Forward Looking Statements

AES Goals	AES 2008 Target	AES Kazakhstan Role
Financial Goals
•Revenue Growth	—	Above Average
•Gross Margin Growth	$3.5 Billion	Above Average
•Earnings Per Share Growth	13-19% per Year	Above Average
•ROIC Improvement(1)	11%	Above Average
•Cash Flow Growth	$2.6-2.9 Billion	Above Average
•Subsidiary Distributions(1)	—	Increasing
•Restructuring Opportunities	—	Significant
Growth Goals
•Platform Expansion	—	Significant Opportunities
•Greenfield Investment	—	Focused Opportunities
•Privatization/M&A	—	Focused Opportunities

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

Kazakhstan Highlights

[GRAPHIC]

Kazakhstan at a Glance
Currency	Kazakhstan Tenge (KZT)
Exchange Rate (01/10/2006)	1 (KZT) = 0.007472 (USD)
Per Capita GDP (2004 est.)	US $7,800
Inflation Rate (2004 est.)	6.9%
Economic Drivers	major deposits of petroleum, natural gas, coal, iron ore, manganese, chrome ore, nickel, cobalt, copper, molybdenum, lead, zinc, bauxite, gold, uranium
Capital	Astana
Largest City	Almaty
Population (July 2005 est.)	15,185,844

Kazakhstan Electricity Demand Growth

Contains Forward Looking Statements

[CHART]

Recent correlation between electricity demand and GDP growth expected to continue

Source: Company information

Kazakhstan Electricity Market Characteristics

Generation	Transmission	Distribution	Commercial Base
[GRAPHIC]	[GRAPHIC]	[GRAPHIC]	[GRAPHIC]
18,200MW installed capacity (approximate) •67% Coal •     11% Other thermal •22% Hydroelectric 50% private sector ownership (approximate)	Three regional transmission systems •     government owned •23,000 km of 220 KV – 500KV lines •Transmission dispatch •Manages system ancillary services	12 major distribution & regulated supply companies, predominantly government owned Annual tariff review Tariff methodology is cost plus profit	Bi-lateral contracts between generators/traders and consumers/traders Government entities are required to purchase directly from generators (i.e. no traders)
AES is largest private sector generator	9 -500KV interconnections to the Russian grid	Moving away from Electricity Supply Organization (ESO) price regulation
	Zonal transmission tariff ranges from $3.15 -$6.50/MWH	ESO contracts typically range from hourly to quarterly

Overview of AES Kazakhstan Power Assets

[GRAPHIC]

(1)Management only with no revenues

Note: Capacities are gross

Kazakhstan Generation Market Profile

[GRAPHIC]	2005 Generation (MWh) Market Share (%)(1)
	[CHART]
	Total Installed Capacity = 18,200MW

(1) Excluding Western Kazakhstan 2005 generation figures

Kazakhstan Electricity Market History

Contains Forward Looking Statements

1995-1997	1998-2000	2001-2005	2006 and future
Electricity sector functions as a single vertically integrated system operated by the Ministry of Energy Sector is bankrupted by barter and non- transparent transactions Rapid un-bundling of Generation Creation of national grid company , Kazakhstan Electricity Grid Operating Company (KEGOC) Stalled attempt to privatize distribution	Creation of a regulatory body to form electricity market and ensure its effective functioning Cash collection and barter transaction issues are significant business issues Kazakhstan and Russia are electrically disconnected due to high non-payment issues from Kazakhstan Bi-lateral contract relationships develop Lack of long term regulatory certainty	Creation of the Wholesale Electricity Power Pool New Electricity Law completely un-bundles electricity sector, creating retail supply companies split from distribution (wires) businesses Sector sees regulatory interaction with both Anti-monopoly Committee (natural monopolies) and Competition Committee (market dominance activities) Non-payment issues decrease as demand increases, in-line with country’s economic recovery Kazakhstan and Russia are re- connected No long term contracts exist in market	Reserve margins drop, with some load shedding seen in peak winter season Convoluted mix of free market and regulated market begins to clear up Implementation of zonal transmission tariff methodology Continued integration with adjacent energy systems of Central Asia, Russia and China

Kazakhstan Electricity Market Operation Model

Bi-lateral trades monthly, yearly, multiyear
	Transmission & Dispatch, System Operator		C
			U
Balanced schedules submitted to KEGOC		Large Industrials	S
			T
Hot, cold reserve pool are nominated day ahead into KEGOC	Wholesale Energy Market	REC’s and Genco’s	O
			M
Regulation agreement is in place for all generators		Exports and Traders	E
			R
Import/export approved by KEGOC	Market Operator		S

Kazakhstan Power Prices are Some of The Lowest in The World

Current Kazakh wholesale power prices are among the lowest in the world

[CHART]

Source: IEA US DOE, national sources and ECON aggregate

Tight Russian Reserve Margins Expected by 2009

	European			North			Ekibastutz Target Markets
	Russia			Caucasus			Ural			Siberia			Russia
Equilibrium energy price (US$/MWh)	$	16		$	16		$	13		$	8		$	16
Required capacity payment (US$/kW*year)	80			103			97			117			98
Total wholesale price (US$/MWh)	27			29			26			23			29
Cost of new entry (US$/MWh)	27			29			26			24			29
Wholesale price discount to cost of new entry (%)	0		%	0		%	0		%	5		%	0		%
Peak demand (GW)	71			9			32			31			150
Available capacity (GW)	89			10			38			35			181
Available peak capacity (GW)	80			9			35			32			154
Reserve margin (%)	11		%	(1		)%	7		%	1		%	3		%

Source: Renaissance Capital Report: “Form and Substance”August 2005

Potential AES Ekibastuz Price and Demand Scenario Offers Attractive Growth Prospects

Contains Forward Looking Statements

AES Ekibastuz Repowering Investment and Potential Timeline at Assumed Power Prices

[CHART]

AES Kazakhstan Financial Overview

($ Millions)

	2003		2004		2005
Revenue	$	103	$	137	$	158
Gross Margin	$	25	$	36	$	40
Income Before Tax & Minority Interest	$	21	$	30	$	33
Distributions to AES Corporation	$	29	$	8	$	18

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

KPI Implementation in Kazakhstan

Contains Forward Looking Statements

Current	Pricing Strategy and	Long-Term
Situation	Demand Growth Phase	Operating Model
Lost time accidents (LTAs)			Safety
			Excellence
Near-miss reporting
Pricing strategy supports repowering investments
			Revenues
Long-term domestic and export PPAs
Low cost fuel strategy
Unit on-stream optimization			Operating
			Costs
	Retrofit project management
		Operational excellence KPIs

Asset mix, fuel cost and pricing strategies drive unique operating model.

Safety is a Top Priority at AES Kazakhstan

LTA
	[GRAPHIC]
[CHART]

2005 Safety Activity
Formed Safety Steering Committees	Commenced ISO certification
Commenced Risk Assessment Training	Continued public safety educational campaign
Launched NEBOSH Training

Growth Opportunities

Contains Forward Looking Statements

	•1,800MW at low incremental capital cost
Ekibastuz Rehabilitation	•Economics well below greenfield investment
	•Low cost mine-mouth coal source
Maikuben Mine Expansion	•Additional low-cost capacity available •Leverage remaining 15 year concession term
Power Exports	•Leverage grid linkage with former Soviet Union •Potential swaps with other parties

In addition to local platform expansion, we see significant opportunities in adjacent
countries leveraging our successful business model in Kazakhstan.

2006 AES Investor Conference Series

AES CORPORATION

[GRAPHIC]

May 9, 2006

	AES North America Business Review
AES CORPORATION	David Gee
	President of North America

[GRAPHIC]

May 9, 2006

North America Business History

1986-1992	1998-2001	2000-2002	2005+
Early PURPA	Acquisitions	Greenfield Gas	Safety
Beaver Valley	Southland	Merida	Operations
Deepwater	Eastern	Ironwood	People
	Energy
Placerita		Red Oak	Growth
	IPL
Thames		Late PURPA
	US Biomass	Greenfield
Shady Point
		Warrior Run
Hawaii
		Puerto Rico

North America Strategic Overview

Contains Forward Looking Statements

AES Goals	AES 2008 Target	North America Role
Financial Goals
•Revenue Growth	—	Average
•Gross Margin Growth	$3.5 Billion	Average
•Earnings per Share Growth	13-19% per Year	Average
•ROIC Improvement (1)	11%	Average
•Cash Flow Growth	$2.6-2.9 Billion	Strong, Stable
•Subsidiary Distributions (1)	—	Strong, Stable
•Restructuring Opportunities	—	—
Growth Goals
•Platform Expansion	—	Multiple Opportunities
•Greenfield Investment	—	Focused
•Privatization/M&A	—	Limited

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

North America Overview

2005 North America	2005 North America
as % of AES	Revenues by Segment
[CHART]	[CHART]

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

North America’s Forward Capacity Profile

Contains Forward Looking Statements

[CHART]

Note: Assumes Shady Point PPA is extended in 2008. Competitive Supply hedged amounts as of March 31, 2006.

North America Priorities

Safety First	------->	•Leading, lagging indicators and programs •Daily #1 priority
Operational Excellence	------->	•Plant-specific performance indicators •North America Operating Network •Sourcing •Fuel flexibility •Overall: commercial availability, NFOM/kw
People Development	------->	•Attract, develop, excite, retain •Build bench
Targeted Growth	------->	•Platform expansion opportunities •Traditional development with angles •Insight-driven step-outs •Coal

	IPALCO Business Review
AES CORPORATION	Ann Murtlow
	President and CEO, IPALCO and IPL
[GRAPHIC]

May 9, 2006

IPALCO Strategic Overview
	Contains Forward Looking Statements

AES Goals	AES 2008 Target	IPALCO Role
Financial Goals
•Revenue Growth	—	Below Average
•Gross Margin Growth	$3.5 Billion	Below Average
•Earnings per Share Growth	13-19% per Year	Below Average
•ROIC Improvement (1)	11%	Below Average
•Cash Flow Growth	$2.6-2.9 Billion	Below Average
•Subsidiary Distributions (1)	—	Significant and Stable
•Restructuring Opportunities	—	Limited
Growth Goals
•  Platform Expansion	—	Limited
•Greenfield Investment	—	N/A
•Privatization/M&A	—	Potential

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

IPALCO History

1880-1950	1951-1975	1976-2000	2001-2005
1881 – Indianapolis Brush Electric Light & Power Co. (IBELP) is first Indianapolis electric utility	1967 – Petersburg plant begins operations & IPL forms Kentucky- Indiana Power Pool	1977 – IPL installs Indiana’s first full- scale FGD for SO2 removal	2001 – AES acquires IPALCO
1931 – First 132kV loop around city completed & Harding Street plant begins commercial operations	1970 – IPL requests first rate increase in its 44 year history	1983 – IPALCO Enterprises (IPALCO) established for non-utility business growth	2001– IPL submits application with 8 other utilities to join Midwest Independent System Operator (MISO)
1940 – IPL IPO is first large US investor owned utility to list on the New York Stock Exchange 1949 – Eagle Valley plant begins commercial operations		1994 – IPL files a case in chief with Indiana Utilities’ Regulatory Commission (IURC) for revenue requirements and corresponding tariffs based on fair market value case (concluded in 1995)	2002 – IPL files petition with IURC for tracker recovery of NOx environmental controls 2004 – IPL files petition with IURC for Multi-pollutant Plan addressing SO2 and mercury removal

IPALCO Service Area and Facilities

Petersburg
•1,722MW Coal
•8MW Oil
Harding Street & Georgetown
•     653MW Coal
•158MW Oil
•283MW Gas	[GRAPHIC]
•202MW Oil & Gas
Eagle Valley
•263MW Coal
•81MW Oil
Indianapolis Operations
•Customer Service Center (CSC)		•528m2 service territory
•Morris Street		•3,222 transmission line miles
•Arlington		•75 high voltage & 69 distribution substations
		•465,000 customers

IPALCO Electricity Demand Growth

[CHART]

IPL’s service territory energy demand and national GDP growth rates maintain a basic correlation.

Source: IPL

IPALCO Fuel Sourcing Strategy

	Coal	Natural Gas
Sourced From	Illinois Basin (mainly Indiana)	USA
Generation	99%	1%
Transportation	Rail; Truck	Texas Gas Transmission
Method		(TGT) and Panhandle
		Eastern Pipelines (PEPL)
Distance	< 100 miles	Delivered by local
		distribution company (LDC)
Key Suppliers	Black Beauty Coal Company	Proliance Energy
	(Peabody), Triad Mining
	(James River Coal), Solar
	Sources, and Sunrise Coal,
	LLC.
Fuel Flexibility	High	Not applicable
(sulfur, BTU)	> 10,900 BTU/lb
	< 10% Ash
	< 16% Moisture
	< 6 lbs/MMBTu SO2

Note: Fuel Flexibility represents company-wide maximums or minimums.

IPALCO Customer Base

Billed Consumption (GWh)
2005

[CHART]

Revenues
2005

[CHART]

Electricity Sales Trend (GWh)

[CHART]

Note: Residential includes public lighting; Wholesale includes Rural Electric Membership Corporation.

Indiana Regulatory Framework

				Fuel Adjustment
Regulatory Bodies		Rate Setting		Clause
Retail tariffs are determined at the state level •IURC – Indiana Utility Regulatory Commission •OUCC – Office of Utility Consumer Counselor		Rates are determined through a formal public hearing process and based on the record of the proceedings •Determine fair rates & charges •Determine fair rate of return on fair value of usable assets plus reasonable operating expenses		Fuel costs and fuel portion of power purchases are passed through •Quarterly hearings •Expense and earnings tests
Other Players
Citizens	IPL
Action	Industrial
Coalition	Group	IPL’s good	Low, competitive rates
		regulatory	High reliability and superior service
		relationships are	Open communications
Governor’s	Indiana
Office	Legislature	supported by	Active community involvement

The Midwest Independent System Operator

Contains Forward Looking Statements

MISO Day 1	MISO Day 2		Recovery Issues
2/1/2002 – MISO becomes operational and addresses: •Security Coordination •Long-term Regional Planning •Transmission Scheduling and Tariff Administration •Market Monitoring & Administration	4/1/2005 – Day Ahead, Real Time and Financial Transmission Rights (FTR) energy markets commence and all generation resources and customer demand are offered/bid into markets		•IPL must separate retail and wholesale transactions •Fuel costs for jurisdictional retail customers pass through via Fuel Adjustment Clause •Administration fees, uplift costs & internal compliance costs become deferred regulatory assets
9 industry sectors w/voting rights	Participation costs include:
•IPL a Transmission Owner (TO)	•Market administration & uplift
	•Internal costs of compliance
MISO Members	•Locational marginal price (LMP) load/generation differentials
•15 states
•200 market participants •28 utilities •250 asset owners •3 North America electric reliability regions	IPL is actively monitoring & lobbying re:	•Control Area Consolidation •Resource Adequacy Planning •Cost Sharing Methodologies

IPALCO Utility and Generation KPIs

		Key Performance Indicator (KPI)
Safety Excellence	•OSHA recordable incident rate •Lost time accidents (LTAs)
Operational Excellence	•Equivalent forced outage rate (EFOR) •Short term opacity performance
Reliability	•System interruption duration (SAIDI) •System interruption frequency (SAIFI)
Customer Service Excellence	•Customer satisfaction •Average speed of answer (ASA)

Implementing KPIs at IPL

[GRAPHIC]

IPL targets simultaneous operating excellence in seven key areas versus other US electric utility performance through its “Be the Best” (BTB) philosophy .

IPALCO Safety Performance Scorecard

OSHA Recordable Incident Rate

59% Improvement

[CHART]

LTA Rate

79% Improvement

[CHART]

IPL’s top priority is safety in the workplace as demonstrated by the significant safety performance improvements over the last three years.

IPALCO Generation Performance Scorecard

EFOR

63% Improvement

[CHART]

Short Term Opacity Exceedances

83% Improvement

[CHART]

Note: 2002 opacity exceedance figure includes soot blowing exceedances.

IPL’s plants have successfully improved their operations as
illustrated by the dramatic EFOR and opacity nonconformance reductions.

IPALCO Service Reliability vs. Indiana Peers

SAIFI

[CHART]

SAIDI

[CHART]

Source: IURC 2005 Reliability Report

IPL has consistently outperformed the average of Indiana peer utilities.

IPALCO Customer Service Performance Scorecard

Customer Satisfaction

5% Improvement

[CHART]

Average Speed of Answer

Consistent Performance

[CHART]

IPL offers the most competitive retail residential rates in Indiana and in the top 20 U.S. investor owned utilities (KB Parrish, 2005)
IPL ranks 2^nd out of 15 Midwestern utilities in “price and value” perception as part of a customer satisfaction survey (JD Power & Associates, 2005)

IPALCO Environmental Investments

Contains Forward Looking Statements

Projected Capital Spending Through 2008 ($ Millions)

	2005		2006E		2007E		2008E		Total (2006- 2008E)
Multi-Pollutant Plan	$	27	$	115	$	48	$	8	$	171
NOx SIP Call	$	28	$	0	$	0	$	0	$	0
Total Environmental Capex	$	56	$	115	$	48	$	8	$	171
Maintenance & Other Capex	$	56	$	98	$	72	$	132	$	302
Total Capex	$	112	$	213	$	120	$	140	$	473

IPL’s near term growth will come in part from environmental control capital expenditures which qualify for independent tracker recovery.

IPALCO Capital Structure Objectives

Contains Forward Looking Statements

Capital Structure Elements		Target
Debt to Capital Ratio		50 to 55%
Credit Rating Objectives (1)		Investment Grade
•	S&P/Fitch	BBB-
•	Moody’s	Baa3
Interest Coverage Ratio (1)		> 2.5 times
Funds from Operations to Total Debt (1)		12 to 20%
Fixed to Floating Rate (1)		85 to 90% fixed rate
Average Maturity		9.4 years

(1) Represents IPALCO consolidated debt.

IPALCO Amortization Schedule and Interest Rate Breakdown

Contains Forward Looking Statements

Amortization Schedule

[CHART]

Interest Rate Breakdown of Consolidated Co. December 31, 2005

[CHART]

IPALCO Credit Rating Trends

[CHART]

Fitch upgraded IPALCO in October 2005 citing, among other factors, “low business risk associated with IPL’s utility operations”, “ring-fencing mechanisms” & “AES credit profile improvement”.

IPALCO Financial Overview

($ Million)

	2002		2003		2004		2005
Revenue	$	823	$	832	$	884	$	951
Gross Margin	$	632	$	282	$	304	$	305
Income Before Tax & Minority Interest	$	208	$	175	$	194	$	189
Distributions to AES Corporation	$	271	$	176	$	177	$	208

Note: Information presented on an AES basis. Certain intercompany transactions may not be eliminated. Distributions to AES Corporation include common stock dividends and cash paid for income taxes.

IPALCO Strategic Issues

Contains Forward Looking Statements

Strategic Issues

Long Term Fuel Supply

•Achieve more flexible fuel mix and supplier diversity

•Continued fuel cost recovery through Fuel Adjustment Clause

•Value and treatment of emission credits related to coal sulfur content

Strategic Supply Plan

•Maintenance and outage planning and scheduling

•Timing and magnitude of environmental capital expenditures

•Potential retirement of assets and timing thereof

•New capacity additions

•Regulatory planning and implementation

	North America East Business Review
AES CORPORATION	Dan Rothaupt
	Vice President, North America East

[GRAPHIC]

May 9, 2006

North America East Business Portfolio

Contract Generation		Competitive Supply
100%	100%	100%
Beaver Valley Pennsylvania	Thames Connecticut	AES Eastern Energy New York
Pulverized Coal (125MW) 1985	CFB Coal (208MW) 1990	Pulverized Coal (1,268MW) 1999

[GRAPHIC]

North America East Business Portfolio

Contract Generation

100%	67%	100%	100%	100%
Warrior Run Maryland	Hemphill New Hampshire	Ironwood Pennsylvania	Red Oak  New Jersey	Puerto Rico
CFB Coal (205MW) 2000	Biomass (16MW) 2001	CCGT (710MW) 2001	CCGT (832MW) 2002	CFB Coal (454MW) 2002

[GRAPHIC]

North America East Revenue Model

Revenue by Customer Type (2005)

[CHART]

2005 Revenues

•88% contracted or hedged

•12% unhedged (spot sales)

North America East Revenue Model

Contract Generation

[CHART]

Competitive Supply

Top 10 Eastern Energy Counterparties: Credit Suisse First Boston
J. Aron
Constellation
Detroit Edison JP Morgan
Morgan Stanley
Erie County Kaleida Health
Merrill Lynch
Coral

North America East Contract Maturity Profile

Contains Forward Looking Statements

Gross MW Contracted or Hedged

[CHART]

(1) Competitive Supply hedge amounts as of March 31, 2006.

North America East Fuel Sourcing Strategy

	Eastern Energy Coal	Other North America East Coal	Natural Gas
Sourced From	Northern Appalachian (Pennsylvania, West Virginia)	Northern Appalachian (Maryland)	Williams (tolling agreement)
Transportation Method	Rail (CSX and Norfolk Southern)	Barge/Truck Rail/Barge Truck	Pipeline
Key Suppliers	Foundation Consol Peabody	Foundation Americoal Rosebud ICG	Williams

North America East Generation KPIs

Contains Forward Looking Statements

Provide Clean, Reliable, Affordable Energy

Key Performance Indicator (KPI)

Safety Excellence	•Leading indicators •Identifying and reporting near misses •Safety walks •Lagging Indicators •OSHA metrics (recordables, Lost Work Day Case, DART rate)
Environmental Excellence	•Emissions rate •% SO2 removal
Operational Excellence	•Reliability •Financial availability factor (FAF) •Equivalent forced outage factor (EFOR) •Low cost •Non-Fuel O&M ($/KW-yr) •Efficiency •Heat rate (BTU/KWh)

North America East Safety Performance

OSHA Recordable Incident Rate

[CHART]

Recordable incident rate is improving as a result of:

•Implementation of proactive safety activities

•Near miss identification

•Safety walks

•Additional awareness and emphasis put on safety from all levels of the company through activities such as the Safety Day

•Ongoing safety audits

Source: EEI

North America East Emissions Performance

Contains Forward Looking Statements

Eastern Energy’s Emissions Rate

(lbs/mmbtu)

[CHART]

Environmental emission rate improvements include:

•Past Improvements

•1999: SCR installed at Somerset

•2001: SCR installed on one unit at Cayuga

•Ongoing scrubber improvements at Somerset and Cayuga

•NO_X reduction combustion improvements at Westover

•Planned Improvements

•2006: Multi-pollutant control project at Greenidge

•Multi-pollutant control project at Westover being evaluated

North America East Financial Availability

Financial Availability Factor

[CHART]

•Financial availability factor (FAF) is stable

•Five plants had FAF greater than 97% in 2005

•Ongoing FAF improvement efforts include:

•Attacking identified reliability issues

•Formation of knowledge based task forces

•Increased awareness through reliability risk assessments

•Application of best practices standards

(1) Excludes the utility line outage at Thames

North America East Operations Cost

Non-Fuel O&M Cost

$/kw-yr in 2002 dollars

[CHART]

•Recent increase due to major outages in conjunction with operational reliability activity spending

•Global Sourcing efforts being expanded further

•Other cost initiatives include:

•Heat rate awareness

•Ash management

•Coal and limestone sourcing

(1) Excludes the utility line outage at Thames

Red Oak – Operational Improvement

•Applied problem solving tools to plant trips and aborted starts

•Root cause analysis

•Logic reviews

•Measured start reliability and equivalent start ratio to focus team efforts

•Improved preventative / predictive maintenance practices through Reliability Centered Maintenance techniques

•Fine-tuned engines through increased process knowledge & experience

•Strengthened technical and business skills of plant personnel through training and Users Groups

Financial Availability

[CHART]

Warrior Run Operational Improvement

•Adopted root cause analysis

•Applied corrective and preventative practices

•Expanded outage scope to address reliability risks

•Conducted reliability risk audits

•Implemented activities that remedied the risks

•Conducted situational “what if” training and drills

Financial Availability

[CHART]

Added scheduled outage time to repair generator issue

Equivalent Forced Outage Rate (EFOR)

[CHART]

Optimizing Eastern Energy

[GRAPHIC]

Dispatch decisions		Coal transportation		Outage coordination
Scrubbing capability	Allowance purchase and sales		Hedging term (credit & credit quality)		Control technology capex
Coal quality and costs		Full allowance cost accounting		Fuel flexibility capability

Optimizing Eastern Energy

[GRAPHIC]

AES Eastern Energy

Limited Merchant Exposure Hedged With Credit-Worthy Customers

Contains Forward Looking Statements

AES Eastern Energy Contracting Strategy

Hedge Metrics (1)

[CHART]

Hedge % by Counterparty Credit (2006) (1)

[CHART]

(1) As of March 31, 2006.

Emission Allowance Strategy: Selling to our Hedges

Contains Forward Looking Statements

Early installation of environmental controls

High SO_X removal efficiency at Somerset and Cayuga

Continuing environmental investments

Our long position has allowed us to sell inventory in excess of our forward sales opportunistically

•Policy of selling allowances above our forward energy sales or “selling to the hedge”

•Active management of our allowance position based on market prices for energy, fuel and allowances

•Eastern Energy emission allowance sales

•2005: $41 MM

•1Q06: $37 MM

•Active management of emission controls in response to real time allowance markets

Eastern Energy Business Sensitivities

Contains Forward Looking Statements

Simplified Wholesale Gross Margin Sensitivities (1) (2Q-4Q 2006)

Natural Gas Sensitivity:

•$7 MM change in gross margin per $1 mmbtu change in price of natural gas

Coal Sensitivity:

•$1 MM change in gross margin per $0.10/mmbtu change in price of coal

SO₂ Sensitivity:

•$2 MM change in gross margin per $100/ton change in SO₂ allowance price

Weather Sensitivity:

•$2 MM change in gross margin per 0.25 mmbtu/MWh change in Market Implied Heat Rate

(1) Sensitivities reflect impact on unhedged gross margin as of March 31, 2006.

North America East Strategy Initiatives

Contains Forward Looking Statements

Strategic Issues

Continued Air Emission Control Spending

•Greenidge retrofit; evaluating Westover retrofit

•Consider longer-term hedging and contracting strategies

•Maximize value of emission credits

Fuel Flexibility

•Consider strategic alternatives for long-term supply

•Test burns underway

•Investments underway

Strategic Opportunities

Strong Demand in Puerto Rico

•Platform expansion opportunities

New York Growth

•Platform expansion opportunities

North America East Growth Opportunities

Contains Forward Looking Statements

Platform Expansion

•Puerto Rico II: 500MW coal-fired plant

•Potential brownfield projects in NY

•Red Oak II peaker

Greenfield

•Participate in selective opportunities

•PJM, Florida and Ontario

Acquisitions

•Potential acquisition of solid fuel generation

•Opportunity to leverage AES capabilities in life extension and environmental retrofit

Adjacent Markets

•Early stage of evaluation

•Waste coal opportunities

•Coal gasification

•Leverage experience with diverse technologies including CFB

North America Competitive Supply Financial Overview

(US$ Million)

	2003		2004		2005
Revenue	$	459	$	447	$	544
Gross Margin	$	110	$	85	$	145
Income Before Tax & Minority Interest	$	65	$	61	$	142
Distributions to AES Corporation	$	121	$	101	$	104

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

	North America West Business Review
AES CORPORATION	Mark Woodruff
	Vice President, North America West

[GRAPHIC]

May 9, 2006

North America West Generation Portfolio

[GRAPHIC]

North America West Business Portfolio

North America West

Contract Generation

100%	100%	100%	55%	100%
AES Alamitos	AES Huntington Beach	AES Redondo Beach	AES Merida	AES Placerita
Southern Calif. Gas (2,047MW) 1998	Southern Calif. Gas (904MW) 1998	Southern Calif. Gas (1,376MW) 1998	Mexico Gas (484MW) 2000	Southern Calif. Gas (115MW) 1989

[GRAPHIC]

North America West Business Portfolio

North America West

Contract Generation		Competitive Supply
100%	100%	57%, 25%	100%
AES Shady Point	AES Hawaii	AES Delano AES Mendota	AES Deepwater
Oklahoma Coal (320MW) 1991	Hawaii Coal (203MW) 1992	Central Calif. Biomass (82MW) 2001	Texas Petcoke (160MW) 1986

[GRAPHIC]

North America West Customers

Revenue by Customer (2005)

[CHART]

CFE: Comision Federal de Electricidad

HECO: Hawaiian Electric Company

OGE: Oklahoma Gas & Electric Company

SCE: Southern California Edison

TXU: TXU Portfolio Management Company

North America West Revenue Model

Long-term contracts provided 93% of 2005 revenues

[CHART]

North America West Contract Maturity Profile

Contains Forward Looking Statements

Gross MW Under Contract

[CHART]

Assumes OG&E exercised options to extend Shady Point PPA.

North America West Fuel Supply

	Coal	Natural Gas	Biomass & Petroleum Coke
Sourced From	Hawaii – Indonesia Shady Point – Oklahoma	Southland – Williams (1) Merida – CFE (2) Placerita – SCE (3)	Central Valley – Local Deepwater – Local refinery
Transportation Method	Hawaii – Ships Shady Point – Trucks	Pipeline	Central Valley – Trucks Deepwater – Rail/Barge
Key Suppliers	Hawaii – KPC and Sprague Shady Point – MCS, GCI, and Brazil Creek Mining	Merida – CFE	Central Valley – Various Deepwater – Lyondell Citgo

GCI: Georges Colliers Inc.

MCS: Marine Coal Sales

KPC: PT Kaltim Prima Coal

(1)Tolling agreement with Williams.

(2)Fuel is passed through.

(3)Tolling agreement with Southern California Edison.

North America West Major Initiatives

•Incorporating Safety before anything else

•Implementing Reliability Standards

•Improving Development of People and Team Effectiveness

•Knowing our Markets and Customers and acting on opportunities

North America West Generation KPIs

Contains Forward Looking Statements

Provide Clean, Reliable, Affordable Energy

Key Performance Indicator (KPI)

	•Leading indicators
Safety Excellence	•Reporting near misses
	•Safety walks
	•Lagging Indicators
	•OSHA metrics (recordable incident rate, LTAs)
	•Emissions rates (lbs per MWh)
Environmental Excellence	•% NOX and SO2 removal
	•Opacity
	•Reliability
	•Commercial availability (CA)
Operational Excellence	•Equivalent forced outage factor (EFOF)
	•Low cost
	•Non-fuel O&M ($/KW-yr and $/MWh)
	•Efficiency
	•Best achievable heat rate gap (BTU/KWh)

North America West Safety Performance

OSHA Recordable Incident Rate

[CHART]

NA West’s incident rate is well below industry average

Safety improvements include:

•Implementation of proactive safety activities

•Near Miss identification

•Safety Rover program

•Job Safety Analyses (JSAs)

•Safety walks by leaders

•Additional awareness and emphasis on safety from all levels of the company through activities such as the Safety Day

•Ongoing safety audits, emphasis on housekeeping and implementation of SMS standards

•Creating a work environment where safe behavior is valued

North America West Emissions Performance

Contains Forward Looking Statements

NO_X Emissions Rate (lbs/MWh)

[CHART]

NO_X emissions rate improvements include:

•Previous SCR installations

•2001: Alamitos units 1-4

•2001: Huntington Beach units 1 and 2

•2001-2: Redondo Beach units 5 and 6

•2002-2003:Huntington Beach units 3 and 4 refurbishment

•Planned improvements

•2007: SCR at Deepwater

North America West Reliability Performance

Commercial Availability

[CHART]

•Commercial availability remains strong

•Four plants with commercial availability greater than 99% in 2005

•Commercial availability improvement efforts are ongoing

•Increased awareness and improved prioritization through reliability risk assessments (probability x impact)

•Implementation of good maintenance and operating practices based on reliability standards

•Pursuing opportunities for knowledge transfer and learning across North America through working groups, tech conferences, Peer Reviews and other forums

North America West Non-Fuel O&M

Non-Fuel O&M Cost

($/kw-yr) in 2002 dollars

[CHART]

•Reductions in 2002 and 2003 due to AES emergency cost cutting

•Recent efforts are focused on optimization of revenue with maintenance spending

•Focus on implementation of uniform reliability standards

•Upgrading maintenance management systems (CMMS)

•Improving root cause analysis

•Better and more consistent planning of work and outages

•Consistent standards for training and qualifications

•Developing better methods for sourcing materials and services

AES Southland Operational Improvement

•Created a high ownership work environment

•Targeted repairs on highest risk equipment using tools such as:

•Condition-Based Maintenance

•Proactive/predictive techniques

•Re-tubed oldest boilers

•Performed root cause analysis on chronic reliability issues to prevent recurrence

•Reliability improvement was achieved while reducing NFOM cost by 25% and operating the oldest units more frequently

Equivalent Availablity Factor

[CHART]

Equivalent Forced Outage Factor

[CHART]

AES Merida III Reliability Improvement

•Challenged costly recommendation to replace gas valves, and instead replaced valve seats and significantly reduced failed starts

•Used Root Cause Analysis techniques to identify and correct numerous design flaws that were causing trips

•Solved several system design problems in order to reliably transition between gas and diesel as required by CFE

•Simulator training used for start-ups and failures training

•Instituted state of the art turbine operating hours tracking

Equivalent Forced Outage Rate

[CHART]

Combustion Turbine Equivalent Starts

[CHART]

North America West Scenario Planning

Contains Forward Looking Statements

Strategic Issues

Shady Point contract extension

•Currently negotiating with OGE

•Contingency planning if OGE does not renew

Deepwater environmental capex

•Installation of SCR and low NO_X burners

•$39 million capital cost

•Expected completion 2Q 2007

Turnaround of biomass businesses

•Improving reliability

•Screening non-combustible material from fuel

Environmental regulation in California

•Participating in Climate Action Registry for CO₂ emissions

•Conducting impact studies of cooling water intake and discharge on marine life

North America West Growth Opportunities

Contains Forward Looking Statements

Platform Expansion

•Highgrove: 330MW gas-fired plant in CA

•Huntington Beach: desalination plant in CA

•Shady Point II: expansion in OK

•Deepwater II: brownfield in TX

•Ethanol associated with existing sites

Greenfield

•Participate in selective opportunities

•Mexico, Colorado, Oklahoma, British Columbia

Acquisitions

•Potential acquisition in Mexico

Coal

•Potential acquisition and development of other OK mines

North America Contract Generation Financial Overview

(US$ Million)

	2003		2004		2005
Revenue	$	1,221	$	1,258	$	1,281
Gross Margin	$	509	$	511	$	448
Income Before Tax & Minority Interest	$	236	$	275	$	208
Distributions to AES Corporation	$	266	$	206	$	234

Note: Information is presented on an AES basis and is unaudited. Certain intercompany transactions may not be eliminated.

	2006 AES Investor Conference Series
AES CORPORATION

[GRAPHIC]

May 9, 2006