Aes dominicana 2013 8 5x8 5 web ingles by AES Dominicana

ANUAL REPORT 2012 “Un equipo que refuerza nuestro compromiso”

Administrative Offices: Av. Winston Churchill #1090 Torre Citigroup en la Plaza Acropolis, Piso 23 Piantini, Santo Domingo Dominican Republic www.aesdominicana.com.do Independent Auditors: Ernst & Young Investors Relations: Please visit our webpage www.aesdominicana.com.do Maribel Álvarez Director of Corporate Finances maribelalvarez@aes.com Carmen Mancebo Investors Relations Manager carmen.mancebo@aes.com inversoraescac@aes.com Vice-presidency of Corporate Communications Germán Toro Ghio Executive Vice-president of Communications German.toro@aes.com Bredyg A. Disla Director of Strategic Communications Bredyg.disla2aes.com

Layout and Design: Víctor José Santana Rojas

Table of Contents

Mission and values

Letter from the president

Company profile

Main indicators

Operational performance

Financial performance

Management areas • Safety, occupational health & the environment • Human resources • Corporate social responsibility

Good governance report

Mission and values

Mission Improving lives by providing safe, reliable and sustainable energy solutions in every market we serve.

AES Values AES People Put safety first Act with integrity Fulfill their commitments Strive for excellence Enjoy their work

LETTER FROM THE PRESIDENT

We are pleased to present our business management results for the year 2012, a period in which we consistently implemented significant improvements in the operational and financial areas, as well as in all our support areas, which led to a safer and more socially responsible company with world-class performance ratios. All of this, without a doubt, gave us the satisfaction of a job well done. The results presented throughout this document show the sustained efforts made by each team: Operations once again hit efficiency records in the units and obtained better management indicators, resulting in a higher contribution from our plants by reaching on a consolidated basis 5,045 GWh, approximately 38% of the power generation injected in the National Interconnected Electrical System (SENI - Sistema ElĂŠctrico Nacional Interconectado). On a financial level, it is worth mentioning the highly efficient funds management of the companies and the preservation of the cash position, which helped mitigate the impact of the extended non-collection periods on the area of operations - such as the one beginning in February 2012, upon conclusion of the Stand-by Agreement with the International Monetary Fund (IMF) - where the companies experienced delays in collections of nearly five months. On the subject of safety, one of the areas we most emphasize on a day-to-day basis to preserve the integrity of all our collaborators and contractors, during the year 2012 we reached 1,000,000 man hours without accidents and four years without Lost Time Incidents (LTIâ&#x20AC;&#x2122;s) in AES Andres; eight consecutive years without incidents in DPP. In the case of Itabo, although we did not reach the zero lost time incident goal, an additional effort was made to increase all proactive activities. The commercial team continued managing our gas distribution customers successfully. In 2012, natural gas proved once more to be a competitive fuel. This is evidenced by the increase experienced by the local gas consumption in 2012. This was the year with the highest sales of natural gas to third parties.

At a national level and in the Central American and Caribbean Region, AES Dominicana continues reaffirming its leadership as one of the best places to work, as evidenced by both the GPTW ranking and measurements from local agencies. In an effort to strengthen the potential of our in-house talents, we started the “Doing Business” program. This program focuses on exchanging knowledge between areas in order to bring forth an increase in the overall understanding of all key aspects of the business and how they all come together thus contributing to the management’s end results. Other actions that were strengthened and improved throughout the year 2012 were our Corporate Social Responsibility (CSR) projects, through the AES Dominicana Foundation, which include working with the communities we serve, highlighting the sponsoring of elementary and middle schools with AMCHAMDR/USAID and the Junior Achievement Foundation as our strategic partners in this program. In addition, we broadened the scope of the recycling programs in the communities we serve, and we have been able to make significant contribution in the area of community development. We also maintain the internship project with students from the Politécnico de Haina (IPHA), who are already being included in the annual scheduled maintenance works within our units. It is important to point out that all our projects have the resolute support of the company’s group of volunteers, who are directly involved in these projects, offering their time and effort in order to achieve their sustainability. I would also like to take this opportunity to thank the team of professionals that make up AES Dominicana, as these extraordinary results would not have been possible without their support.

Marco De la Rosa President

About AES Dominicana

AES Dominicana is an affiliate of the North American company AES, a multinational with a presence in 25 countries around the world, which distributes and generates electricity through plants that use a wide variety of fuels, including natural gas, coal, petroleum, wind, biomass, and water. AES began its operations in the Dominican Republic in 1997, with the firm conviction of contributing value to the national energy market and contributing to the development of the communities it serves. Today AES Dominicana is positioned as the principal investment group of the Dominican electricity sector, with investments of more than 1.2 billion dollars. It owns 100% of the shares of the generating companies Dominican Power Partner (DPP) and AES AndrĂŠs, and 50% of the shares of ITABAO, S.A. It has modern facilities for the production of energy, with cutting-edge technology and the most competitive variety of fuels for the generation of electricity. AES Dominicana owns two deep-water port infrastructures: the Itabo International Terminal to off-load the coal it uses for the production of

03 electricity, and the AES Andrés International Terminal to off-load the liquid natural gas that it uses to produce electricity and sell it to third parties. In addition, the AES Andrés installations include the first terminal in the country and Latin America for the distribution of liquid natural gas in trucks. As a business group, AES Dominicana combines a global perspective with deep local knowledge and an untiring commitment to operational excellence, in order to help communities grow through a safe and reliable supply of electrical energy. One demonstration of this fact is that each year the AES businesses exceed their own historical records of availability, generation, and efficiency, in addition to providing demonstrable proof of transparency by employing the best practices of corporate governance in the Dominican electrical industry. AES Dominicana sustains the growth of the business growth on pillars such as Corporate Social Responsibility, care for the environment, and the encouraging of talent. Our values guide us: In AES Dominicana we have a robust corporate philosophy that expresses itself in terms of the following mission, vision, and values: • Putting safety first • Acting with integrity • Fulfilling commitmentss • Striving for excellence • Enjoying our work

Relevant events

Sobre AES Dominicana

Natural gas continues to be a competitive fuel within the national energy basket. This is demonstrated by the increase in local consumption. During 2012 the greatest sale of natural gas to third parties occurred: 11.12 Tbtu

Operational performance

Operational performance Regarding records, there were several milestones regarding operational statistical values, of which the most important are the following: • Greatest historical volume of Off-loading of liquid natural gas: 139,772.63 M3 (14/15 January 2011, British Diamond) • Highest rate of off-loading: 10,848 M3/hr (11/12 October 2011, British Ruby) • Highest annual number of off-loadings from ships: (17) Seventeen • The AES Dominicana generating units maintain ISO 9001 and 14001 certifications • Total net generation of 5,037 GWh equivalent to 38% of SENI

Generation of AES Dominicana (Consolidated) in 2012 and how much it represented with respect to 2011.

Operational performance

Principal benchmarks in the operations area

Financial performance

• Itabo • AES Andres • Dominican Power Partners • Fitch reviewed its outlook for Andres and Itabo’s credit rating and S&P ratified the credit rating of both companies.

Financial performance 2012 was a challenging year for our company, mainly due to the expiration of the Stand-By Agreement with the International Monetary Fund (IMF) in February 2012 and because new governmental authorities were in place since August 2012. However, the year had better results supported by higher electricity generation and significant growth of LNG sales, emphasizing the efficiency in fund management, preserving the cash position in order to mitigate the impact on operations during prolonged periods of low collections, as happened after the conclusion of the IMFâ&#x20AC;&#x2122;s Stand-by Agreement, when the company reached five Months of Sales (MOS). During 2012 the government made significant efforts to maintain accounts receivable in manageable levels, for this reason, on July 18th, 2012, the Congress approved a bill to add RD$71.5 billion (US$ 1.8 billion) for the 2012 National budget and to authorize the Ministry of Finance to issue a local sovereign bond by US$500.0 million. These bonds were placed in the local market and the proceeds were used to pay the outstanding receivables with generation companies. At the end of 2012, Andres, DPP and Itabo reached 3.26 months of receivables. In August 2012 a new government began in the Dominican Republic facing significant challenges to preserve economic stability and growth, and a difficult domestic macroeconomic situation, affected by a complex international environment. For those reasons, in November 2012 a new tax reform was enacted, significantly impacting the private sector.

Financial Performance

During 2012, AES Dominicana honored all its financial commitments, including debt service in local market bonds, in the case of Itabo, and internationally, for Andres and Itabo. In that sense, complied with the laws and regulations in the securities markets where our issuances are registered. Additionally, Itabo paid dividends to its shareholders for gross amount of RD$133.0 million from 2011 retained earnings, and Andres paid a total of RD$3,933.6 million for the same concept. Credit facilities In May 2012, Andres was able to successfully renegotiate the Stand-By Letter of Credit as guarantee for the LNG purchase, for one year and US$15.0 million.

Financial Performance

Financial Results Analysis Itabo In 2012, the total revenues amounted RD$9,427.7 million, increasing 0.1% over 2011, due to higher contracted energy sales volume, partially offset by lower energy sales volume in the spot market. The costs of electricity purchases decreased by 24.9% compared to 2011, due to higher generation that decreased the need to buy energy in the spot market. Fuel costs for generation decreased due to lower average costs of coal. During 2012 the coal purchase strategy included contracts to cover production of each semester, reflecting prices to which the contracted sales are indexed. The general, operating and maintenance costs increased 6.2% to RD$1,296.5 million, derived of higher maintenances hours, including a forced outage in unit II during June-July 2012 for 18 days and the major maintenance, which began on November 17th, 2012. The depreciation increased 17.7% due a change in the method from asset category to component. Interest income and interest expenses increased to RD$ 448.3 million and RD$1,032.7 million, respectively or 36.0% and 96.9%. In 2011 the spot market interests were eliminated through an agreement signed by the electricity sector agents. Other expenses were RD$ 45.7 million or a reduction of 61.3%. During 2012, Itabo generated a net income of RD$1,005.5 million, which reflects better conditions for coal purchase and operational performance improvement, reaching the highest energy generated since the company capitalization in 1999. Net cash provided by operating activities was RD$1,326.2 million versus RD$610.6 million in 2011, due to higher net income and lower inventory levels, partially offset by the reduction of accounts payable and the increment in accounts receivable, that reached 107 Days outstanding (DOS) in December 2012 from 72 days in 2011. Capital expenditures (CAPEX) decreased by 9.9% due to additions made in 2011 related to San Lorenzo project, while in 2012 there were only items related to the maintenances performed on Itabo I & II.

Financial Performance

During 2012, Itabo paid dividends on 2011 retained earnings by RD$133.0 million. As of December 31st, 2012, net assets of the company amounted to RD$16,011.5 million, an increase of 8.6% compared to 2011, due to higher accounts receivable days and higher sales and due to the increment of cash by 9.8%. The current liabilities increased due to dividends declared by the Board Meeting held in December 2012 for a net amount of RD$256.9 million, also due to the reclassification as short-term of the local bonds by US$15.0 million and the increase in accounts payable, primarily related to energy purchases at the end of 2012 for the major maintenance performed in unit II. The decrease in long-term liabilities is related to the adjustment of the local bonds to short-term. As of December 2012, Itabo reached RD$3,243.4 million of working capital, with a current ratio of 1.8 times and an acid test of 1.6 times in this period, reflecting adequate liquidity in the company. The return on assets (ROA) in 2012 was 6.3%.

AES Andres The 2012 was a good year for AES Andres, mainly due to the significant growth of the natural gas market. As of December 31st, 2012, Andresâ&#x20AC;&#x2122; revenues increased 26.6% compared to 2011, to RD$19,336.7 million, primarily due to higher natural gas sale, as a result of higher volume and higher prices, reflecting the spot market behavior of this fuel. The Cost of sales increased by 36.9%, due to the increase of the average natural gas cost, related to the purchase of LNG shipments at spot price and higher LNG consumption derived from higher generation. The net interest expense decreased as a result of higher income related to the spot market interest not eliminated by the electric sector general agreement signed in 2011 that was not renewed for 2012. During 2012, Andres net profit was RD$4,022.3 million, an increase of 5.1% compared to 2011. For 2012 period, Andres had net cash provided by operating activities of RD$4,388.7 million, as result of higher net income due to higher sales, additionally higher accounts payable, partially offset by the increment of cash used for inventory purchase, mainly of Natural Gas. As of December 31st, 2012, the total assets of AES Andres increased 6.9% to RD$22,212.7 million. The company preserved extraordinary levels of working capital, reaching RD$10,106.2 million as of December 2012, an increase of 1.3% compared to 2011 and a liquidity ratio of 4.9 times. At the end of 2012, the total Debt amounted RD$6,742.6 million (US$ 167.6 million), consisting of the Senior Notes at 9.5% of AES Dominicana LTD, issued in November 2010 and maturity in 2020. This company also paid the interest generated for the intercompany loan with AES Corporation, for a total amount of US$38.3 million. Likewise the company renewed with better conditions the Stand by Letter of Credit used to the guarantee payments of natural gas purchases.

Desempe単o Financial Performance Financiero

Dominican Power Partners During 2012, Dominican Power Partners (DPP) was dispatched as base load plant in the Dominican interconnected electricity system. The revenues decreased 5.4% compared to 2011, mainly due to lower contracted prices, partially offset by higher sales volume and higher spot prices. Energy-related purchases increased 17.4%, to RD$2,025.1 million, due to lower generation and higher sales volume. Contracted Energy is purchased to AES Andres. The fuel costs decreased 11.4% to RD$ 3,350.3 million due to lower cost of natural gas and lower generation. General, operating and maintenance costs increased 39.6% due to higher salary and benefit costs, maintenance, insurance, consulting and legal fees and lower positive effect of accounts receivable recovered as result of the agreement signed with CDEEE to recover payments made to the National Energy Commission and the Electricity Superintendence in 2011. Net interest income increased by 122.1% to RD$592.1 million due to in 2011 the interest related to the spot market was eliminated by the electric sector general agreement. Other expenses increased 131.9% to RD$167.3 million from a gain of RD$525.3 million, due to in 2011 DPP signed a Reimbursement Agreement for the payment done to

Financial Performance

the fiscal authorities in October 2011 for the taxes generated during the tax exemption period. In 2012, DPP resulted with a net gain of RD$788.4 million, representing a decrease of 49.9% compared to that reported at the end of 2011. The total assets decreased 3.9%, driven primarily for lower cash levels and partially offset by higher accounts receivable and higher additions to property, plant and equipment during the maintenance.

Fitch reviewed the outlook of the credit rating and S&P ratified the credit rating of Andres and Itabo At the end of 2012, Fitch affirmed the ratings of Itabo, Dominicana LTD (subsidiary of Itabo) and Andres Dominicana, Ltd., (a subsidiary of Andres BV) at ‘B’ and revised the outlook from ‘positive’ to ‘stable’ This basically as a result of sovereign outlook review from ‘positive’ to ‘stable’, due to the deterioration of the fiscal accounts and the challenges of the new authorities to reduce it. Itabo’s local rating was affirmed at ‘A-(dom)’. In January 2013, Fitch affirmed these ratings. In December, Standard and Poor’s ratified the corporate credit rating of ‘B-’ ‘Stable’ for Itabo Dominicana LTD and ratified the long-term rating ‘B -’ for the Senior Notes by US$116.4 million issued by this company and guaranteed by Itabo. Furthermore, Standard & Poor’s affirmed the ‘B’ ‘stable’ rating of AES Andres Dominicana, LTD. Also, it affirmed its ‘B’ ‘Stable’ for the Senior Notes by US$ 167.6 million issued by this company and guaranteed by AES Andres, BV and Dominican Power Partners, LTD. These bonds are part of the US$284.0 million Notes Units placed in the international market by AES Dominicana in November 2010.

Management Areas

• Safety & the environment • Human resources • Corporate social responsibility

Safety & the environment Safety First. This is the company´s principal value, and it honors it with a defined culture of proactive safety. Under this scheme, some 1,333 inspections were performed of high and medium risk work during 2012. These inspections are done to prevent the occurrence of incidents and to demonstrate the commitment to safety on the part of the company´s leaders. Another proactive action of the generating company was the performing of evacuation drills, with the objective of measuring the time required to evacuate the facility in case of an emergency. Below we present a list of the different proactive actions performed by the three generating companies to maintain world-class indicators in terms of safety:

Itabo Proactive safety indicators 1,333 safety inspections performed on medium- and high-risk jobs. These inspections are performed in a proactive manner in order to prevent the occurrence of incidents, and to demonstrate the commitment to safety on the part of the company´s leaders. 9,825 Man Hours of training in safety:

• Safe Work Permit • Entering confined spaces • Blockage, Signage, and Labeling • Electrical Safety • Analaysis of Risk of the Task and prior Speech • First Aid • Certification in hoisting • Segregation of waste

832,432 Man hours worked without lost time incidents.

Management areas

Performing of evacuation drills, in order to measure the time it takes to evacuate the facility in case of emergency. Obtained 86 points in validation of the twelve elements of the Safety and Health Management System. Evaluation performed by the Corporate Directorate of Safety, Occupational Health, and the Environment. The Corporate Directorate establishes that obtaining a score of >80% is considered to mean that the Safety Management System is world-class in Reactive Safety Indicators. Reactive safety indicators A business of this nature is not free from incidents. The efforts made proactively are precisely to mitigate their occurrence. As a result of the efforts, during 2012 only one (1) incident with lost time was recorded in the Itabo generating unit.

Environmental actions in itabo • Installation of large-volume meters to continuously monitor PM-10 (particulate material) in the community of Haina. • Renewal and modification of Environmental Permit No. 0006-01 to include the San Lorenzo generator. The renewal of permits is mandatory according to the Regulation for Environmental Authorizations of the Ministry for the Environment and Natural Resources. • Obtaining of a Special Mention in the National Cleanest Production Award for the project of ash recycling in the ash deposit, in the category of materials. • Change of the heaters of regenerative air in Unit II in order to improve efficiency in the heat Exchange between the discharge gases and the air entering the boiler, which translates into an improvement in the capturing of particulate material in the electrostatic precipitators. • Installation of continuous measurement of emissions in the chimney in order to instantly monitor compliance with the norms on emissions from fixed chimney sources. • Implementation of an internal recycling program, in which paper, plastics, and cardboard are recycled. • Compliance with the internal goal of “zero” reportable spill. During this period there were no spills greater than 55 gallons, which must be reported according to Dominican norms. • Delivery of the Environmental Compliance Report No. 22 corresponding to the period of January-June 2012, in order to demonstrate compliance with the Environmental Management and Adjustment Program. • 57,052 tons of flying ash recycled in the cement industry, saving 57,052 tons of CO2 that were not emitted into the atmosphere during the cement manufacturing process, since the production of one ton of Portland cement produces approximately one ton of CO2 compared to zero CO2 produced using flying ash to manufacture it.

Management areas

Andres Safety 4 years without lost time accidents. 872,408 Man hours direct and 1,406,610 Man hours contractors since the period August 2008 – December 2012 without lost time accidents. 858 safety inspections performed on medium- and high-risk work. These inspections are performed proactively in order to prevent the occurrence of incidents, and to demonstrate the commitment to safety on the part of the company´s leaders. 8378 Man hours of safety training. • Safe Work Permit • Entering confined spaces • Blockage, Signage, and Labelling • Electrical Safety • First Aid • Certification in hoisting • Fire fighting/extinguishing • Emergency response plans • Heat work • Task Risk Analysis and Prior Talk • Spill Prevention, Control, and Management • Control of Atmospheric Emissions • Noise Monitoring • Air Quality Monitoring • Order and Cleanliness • Liquid Effluent Control • Introduction to Environmental Protection

Management areas

Obtaining 86 points in the validation of the twelve elements of the Safety and Health Management System. Evaluation performed by the Corporate Directorate for Occupational Health and Safety and the Environment. The Corporate Directorate establishes that obtaining a score of >80% means that the Safety Management System is considered to be world class. Performing of emergency drills, using a scenario of spills of fuel and fire, in order to measure response times of the emergency brigade or the support agencies such as the Fire Department and Red Cross. Performing of a table drill to validate responsibilities and actions to be taken in the Emergency Plan of the AES Andrés-DPP Gas Pipeline. Implementation of the SafeStart program, a behavior/performance-based safety program. The program emphasis controlling the states (hurry, frustration, fatigue, and complacency) which detonate critical errors (mind on the job, eyes on the job, line of fire, and loss of balance, traction, and grip) which turn minor risks into major risks. The “Segulider” program, which promotes the communication of critical errors that turn minor risks into major risks. These are: Mind on the Job, Eyes on the Job, Line of Fire, and Loss of Balance, Traction, and Grip. Four teams were created, made up of AES people and contractors, where each team had to motivate its companions not to commit these critical errors, and identify them in the field in order to eradicate their recurrence.

Management areas

Safety, a lifestyle, a program that focuses on safety at home. This program consists of 4 modules: • Fire Prevention • Electrical Safety • Handling of Chemicals • Food Safety The program was based on training internal facilitators in fire prevention; they were trained by the Fire Department. It emphasized the use and handling of propane gas, which is very common in the Dominican Republic, with a high rate of incidents caused by improper use and incorrect installations. After the collaborator and contractors pass this training, they made safety inspections with a checklist prepared by the Safety Department, and wrote down the anomalies detected, and proceeded to make the appropriate repairs and/or adjustments. The objective is that safety not only be a topic dealt with in our installations, but also that the relatives of our collaborators benefit from a culture of safety. In addition, during the holding of the Summer Camp for the children (2-14 years of age) of AES collaborators, the Fire Department held chats using the NFPA program “My First Steps” in fire prevention. The reason why we have undertaken this program is for all the AES values of “Put Safety First” be learned in the family, and therefore we have to make safety better known in the household.

Management areas

Environment Obtaining the Certificate for Successful Implementation of Cleanest Production, in the National Cleanest Production Award, granted by the Ministry for the Environment and Natural Resources, for the Boil Off Gas Project (BOG). Obtaining the recertification of ISO14001 Norm of the Environmental Management System. Delivery of the No. 15 Environmental Compliance Report corresponding to the period of January-June 2012, to the Ministry for the Environment and Natural Resources, with the objective of demonstrating compliance with the Environmental Management and Adjustment Program.

Dominican Power Partners (DPP) Safety 8 years without lost time accidents. 100,000 Man hours without lost time accidents. 339 safety inspections performed on medium- and high-risk work. These inspections are performed proactively to prevent the occurrence of incidents, and to demonstrate the commitment to safety on the part of the company´s leaders. 2,578 Man hours safety training • Safe Work Permit • Entering confined spaces • Blockage, Signage, and Labelling • Electrical Safety • First Aid • Certification in hoisting • Fire fighting/extinguishing • Emergency response plans • Heat work • Task Risk Analysis and Prior Talk • Spill Prevention, Control, and Management • Control of Atmospheric Emissions • Noise Monitoring • Air Quality Monitoring • Order and Cleanliness • Liquid Effluent Control • Introduction to Environmental Protection

Management areas

Obtaining 86 points in the validation of the twelve elements of the Health and Safety Management System. Evaluation performed by the Corporate Directorate for Health, Safety, and the Environment. The Corporate Directorate establishes that the obtaining of a score of >80% indicates that the Safety Management System if world-class. Performing of emergency drills, with a scenario of fuel spills and fire, with the objective of measuring response times of the emergency brigade and Fire Department.

Environment • Obtaining of recertification of ISO14001 norm for the Environmental Management System. • Delivery of Environmental Compliance Report No. 7 corresponding to the period of January-June 2012 to the Ministry for the Environment and Natural Resources, with the objective of demonstrating compliance with the Environmental Management and Adjustment Program. • Renewal of Environmental Permit No. 0481-06. The renewal of permits is mandatory according to the Environmental Authorizations Regulation of the Ministry for the Environment and Natural Resources. • Holding of speeches with the community near DPP to explain the plant´s operation and the existing environmental controls.

Human resources For the fifth consecutive year we have participated in the ranking of the best companies for working in Central America and the Caribbean, a recognition granted by the Great Place to WorkÂŽ Institute (GPTW). This recognition gives great satisfaction and pride to all AES Dominicana collaborators, and forms part of an integral plan headed by our Human Resources Directorate. For this reason, it is not by chance that our company is one of the most admired firms both locally and internationally. On the local level in 2012 we were recognized by the magazine Revista Mercado as number 1 among the 50 best companies to work for in the Dominican Republic. We were also recognized by the magazine Revista Summa as the most admired company in the Dominican Republic, and one of the 36 most admired in Central America, in its special edition of â&#x20AC;&#x153;Leading Companies by Country.â&#x20AC;? This magazine takes as a parameter important aspects such as finance, operations, products and services, client service, human resources, corporate social responsibility, and corporate image. Our promotion of talent, active during 2012 Aware that the most important asset of any company is its people, over the course of 2012 the AES Dominicana Group worked with large projects under the supervision of the Human Resources Directorate. During this year not only did we dedicate 15,143 hours to training, but we also strengthened our Culture of functional technical excellence by focusing our training on technical specializations. Within the initiation of the Human Resources plan to mark a difference in the labor market, in alignment with our corporate strategy, we recertified our plants in the ISO 9001 and 14001 norms. Given the new challenges that AES Dominicana has been facing, we have determined that we need leaders with a global vision that can embrace all aspects of organization for decision-making, minimizing risks and with the benefit of optimizing resources. Knowing the type of high-tech industry and complexity that characterize us, we do everything possible to find better and more innovative ways to train to higher levels about the way of knowing, understanding, and managing the business and how AES makes money.

Management areas

07 For this level of specialization we´ve mentioned, and our leadership in the country´s energy sector, we have identified the fact that the key knowledge of the industry that every AES leader must have is inside the organization. In this regard we have created an internal Executive Development Program called “Doing Business.” In 2012, together with the human resources personnel, professionals with experience in the central areas of the business, such as operations, commercial, compliance, legal, finance, and others, have developed a modular program of 56 hours of training with high quality standards and metrics on the learning process. In addition, we worked on the development of leadership by sending several collaborators to Costa Rica to train in the INCAE “Emerging Leader Program.” AES believes in the development of its people, so it has an Educational Assistance Program that grants scholarships for university, graduate, and master´s level studies, encouraging those with talent to continue to learn and polish their professional training. One of its main focuses is on maximizing the potential for the development and growth of its people, so it makes great efforts in its performance management system, which translate into business plans and strategic goals to be achieved in line with the individual and team goals, s well as the development of leadership competencies that reflect that values and skills that AES requires for individual and organizational success. Understanding that a high-performance culture is based on recognizing and motivating differentiating behaviors, AES Dominicana continues to strengthen its formal program of recognition called Lumen by adding a new chapter to encourage constant and informal recognition through its program Huellas, and renewing the program frequently.

Management areas

More quality of life for our people As is already a tradition in this Group, we strive to encourage a culture of healthy living among our collaborators and their families, through the Quality of Life Program, which promotes the search for mental and physical balance. For this reason, this year was full of initiatives that encouraged this Culture within AES Dominicana. Some of the most outstanding of these include: the Prenatal Care Program, targeted free for our collaborators and the wives of our collaborators, who are pregnant; the Family Planning Program, which includes doctorsÂ´ consultations and X-ray studies, at no cost; and the Program for the Promotion and Prevention of Diabetes and Hypertension, that works to combat these diseases, through free medical consultations offered to our employees. In this same regard AES made additional efforts to improve the health benefits of our collaborators. Other aspects of the Quality of Life Program were represented in the Free Medications Plan and the Nutrition, Life, and Health Program, monitored by a nutritionist who is an expert in reducing obesity and diseases related to nutritional imbalance, contributing to create healthy habits, a healthier lifestyle, and better body mass Ăndices among our AES people.

Summer camps for the children of our collaborators The families of our collaborators are also taken into account by the AES Dominicana Group. In 2012 we held our traditional summer camps, one for the children of collaborators from 4 to 12 years of age, and the other for those between the ages of 13 and 18. With these educational and recreational activities, AES not only entertained and integrated our little ones into the environment, but also gave workshops on topics of safety to our adolescents, as well as on leadership, ethics, values, and team work. These young people also belong to a continuous program of chats and social encounters that take place throughout the year.

Management areas

Direct benefits to collaborators and their families During 2012

Management areas

Corporate social responsibility

Safety Through the AES Dominicana Foundation, the AES group´s entity for Corporate Social Responsibility in the Dominican Republic has been holding activities in the areas of Education, the Environment, and Community Support, as part of the commitment assumed by the companies to the sustainable development of the communities where it operates, and which include the following:

Environment Haina recycles This is a Project sponsored by Empresa Generadora de Electricidad Itabo, S.A., and the AES Dominicana Foundation, to create awareness about the importance of recycling PET (polyethylene teraphthalate) and PEAD (high-density polyethylene) plastic materials through the 32 educational centers in the township of Bajos de Haina. It was supported by logistics from the Agro-Forest Development Center (CEDAF) and the collaboration of the Patronato pro Desarrollo de Haina, the City Hall of the Township of Bajos de Haina, the Ministry for the Environment and Natural Resources, and the Ministry of Education, through School District 04-06, and, as a strategic ally, Exportadora M&F, which was in charge of the final pick-up of the material collected. The launching of “Haina Recycles” was held in March in the installations of the Industries and Businesses Association of Haina and the South, an organization which has also lent all its support to this important project. The principal objective of “Haina recycles” is for students, teachers, and employees of these Educational Centers, and indirectly the inhabitants of this Township, to become aware of and implement the 3Rs Culture (Reduce, Reuse, Recycle). Young people from the community of Haina and volunteers from AES Dominicana gave chats to teach about the separation of these two types of plastics to students from these schools, and the students in turn will act as multiplier agents of this good habit in their homes and communities. The educational centers served as collection centers, and those centers that had the best performance in the categories of gross weight and per capita weight received prizes. Haina Recycles managed to separate and evaluate more than 36,500 pounds of plastics, getting them out of the Homes, streets, rivers, and creeks in the Township of Haina and surrounding areas; in this way it drew the interest of persons involved in the Project in looking at plastic not just as garbage but as a resource that generates income and benefits schools and communities. 55

International coastline cleanup day With the principal objective of creating a change of attitude regarding the care of our beaches, rivers, and creeks, 600 volunteers between AES Dominicana collaborating employees, members of the communities, collaborators from social associations, the municipal government, and educational centers participated in September in Gringo Beach in the in the largest volunteer action in the world. During this operation they collected 5,388 pounds of trash, this being the largest amount collected on this beach this year.

Join in………. it´s time to reforest Contributing to the conservation and care of our Environment, and involving the collaborators and their families in activities of integration are a commitment assumed by AES Dominicana as part of its corporate philosophy as an environmentally responsible entity through the generation of clean energy. In 2012 some 35 volunteers from AES Dominicana, together with the Ministry for the Envrionment and Natural Resources, performed a reforestation operation in the Mirador Oeste Park in Haina San Cristóbal, where they planted 800 trees of sea grape, almond, and acacia on the banks of the Haina River.

Management areas

Afternoon of flamboyan trees in Mirador Sur Within the framework of the alliance to care for and conserve the Mirador Sur Park, AES Dominicana participated as a collaborator in a march to appreciate and enjoy the splendor of flamboyan trees. These wildly color varieties of trees are found along the 5 kilometers length of this beautiful park, which is looked on as the â&#x20AC;&#x153;lungsâ&#x20AC;? of the city of Santo Domingo.

Management areas

07 Education With the program Care For Your School, several activities were held that benefit 2,693 students from the Km 17 and Ercilia Pepin Schools in Bajos de Haina, Pueblo Nuevo, in los Minas, María Caro in La Caleta, and Brisas de Caucedo Sur in Andrés, Boca Chica. The work benefitting these schools include the construction of a dividing fence at School Km 17, the construction of a pre-school in the Pueblo Nuevo School, the repair of bathrooms, the installation of murals, and the construction of cafeterias in the Brisas de Caucedo Sur and María Caro schools, and the donation of school materials for all children in the schools accompanied by the program. Likewise, we continued the educational programs carried out in Alliance with Junior Achievement and the American Chamber of Commerce, with the collaboration of the USAID. Together with Junior Achievement and the program “The Advantages of Staying in School,” we introduced new topics related to moral and civic values, in order to create solid bases for the youngest in the schools, and in this way encourage the spirit of entrepreneurship that will allow them in the future to be better persons in society. These programs are:

a. Know yourself, for children up to the second grade in elementary school b. Know my family, for children up to the third grade in elementary school c. Know your community, for children up to the fourth grade in elementary school d. Know my region, for children up to the fifth grade in elementary school e. And know my country, for children up to sixth grade in elementary school

With the USAID/AMCHAMDR´s Basic Education program, donations were made to the Ercilia Pepín, Km 17, Pueblo Nuevo, and Brisas de Caucedo Sur Schools, of reading books, materials, and equipment necessary for optimum functioning of the schools, and to improve the basic conditions of the students, such as water fountains, radios, fans, laptops, printers, and teaching materials for pre-primary, and the first and second cycle of elementary school. Also, the directors of these schools participating in the training on the management of educational centers, and teachers who work in these centers received training to promote reading among their students.

Program of collaboration with the Haina Polytechnical Institute (IPHA) This educational center houses more 500 middle-school students, so that upon completing their high school studies they are prepared in different technical areas such as electricity, mechanics, refrigeration, information technology, and accounting, areas very related to ItaboÂ´s businesses. The IPHA during 2012 benefited from 600 gallons of fuel for the electrical generator, thus contributing to prevent incidents that would interrupt teaching because of a lack of electricity. In October 2012 8 young people began their 6-month internship in the Itabo Plant, as part of the internship program for talented young people.

Pies Intec- Fundacion AES Dominicana scholarships In 2012, within the framework of the collaboration agreement of PIES scholarships, 5 outstanding Young people from different regions around the country were chosen to study in this University; we supported their university studies by contributing scholarships. The students selected have to fulfill all the requirements of PIES scholarships.

Áreas de Gestión

Sports In sports, Itabo, S.A., participated as sponsor of two important sports events in the community of Los Bajos de Haina. One of them was the 6th Haina Superior Basketball Tournament and the Little League Baseball Series of the Caribbean. Very significant contributions were made in these two events, which led to their success. Likewise, through the AES Dominicana Foundation and the support of the Haina Pro-Development Association, uniforms were donated to all the teams participating in the Basketball Tournament, and the Gringo baseball stadium where the Little League Baseball Series was held was refurbished and equipped with lighting. In the community of Brisas de Caucedo we donated baseball uniforms, gloves, baseballs, and catcherÂ´s kits, to the children attending the Ozuna Baseball League, which is located in the center of this community. This donation benefited some 60 children from this community. Support to these sports events is intended to tighten the bonds of friendship between the teams, developing talent among the children and Young people, and firmly implanting in them the ideals of good behavior, honesty, loyalty, and health sports competition, so that they can develop as exemplary human beings.

Management areas

Support to the community: Within the framework of the collaboration agreement with the Haina Pro-Development Association (Padesha) in which all the activities, projects, and assistance to the community of Los Bajos de Haina is channeled, have carried out joint work which includes the following:

1. Conditioning of the Ballet Hall of the Casa de la Cultura 2. Assistance with fuel for the Haina Fire Department 3. Rental of a pick-up truck for use of Civil Defense in the Easter Week 2012 Operations 4. Repair of door of Km 17 School and Ă&#x2018;agasito ball field. 5. Support for the Inter-Collegiate Science and Book Fairs. 6. Workshop for teachers on uses of recyclable materials

This agreement continues to consolidate the relationship between the community and the company, and the promotion of programs for growth and sustainable community development.

Repair of Ñagá Creek Through the Association of Industries and Businesses of Haina and the South, Itabo participated as collaborating company for the repair of Ñagá Creek, which was affected by the amount of rubble left by the torrential rains that fell in the month of April. This creek is located in the very heart of the community of Gringo, which is next to the generating plant, and many of the houses lying near the creek were severely affected. In this regard, we channeled the collaboration for purchasing of mattresses to be donated to the families affected by the floods. Passage of water pipelines to the community of Brisas de Caucedo Sur. AES Dominicana, with the coordination and collaboration of the City Hall of Boca Chica and the Santo Domingo Aqueduct and Sewerage System Corporation (CAASD) constructed a 320-meter pipeline pass to bring potable water to 174 families in the Community of Brisas de Caucedo Sur, in Andrés Boca Chica.

DPP ecological mural and Arcoiris Park. As part of the beautification of the surroundings of the Dominican Power Partners generating plant, we created the 2nd ecological mural, with paintings from the winners of the painting contest “Paint the Energy.” Along the entire front of the plant some 25 paintings were created, replicas by the Dominican painter José Pelletier, with the collaboration of 5 talented young painters. Lighting was also installed along the entire area covered by the paintings, and the Arcoiris Park which borders the DPP plant, thus contributing to roadway and civic safety in the zone and permitting members of the community who reside in this area to have space healthy and safe recreation.

Management areas

Culture Lotoman 2.0 sponsorship AES Dominicana, supporting the growth of Dominican film-making through the framework of the Dominican Law for the Promotion of the Film-Making Industry in the Dominican Republic, participated as investor in the film “Lotoman 2.0,” a movie by Archie López. This new sequel described the story of the importance of family unity for overcoming any type of adversity. Over the last few years AES Dominicana has made important contributions, through the AES Dominicana Foundation, to the development of emerging talents in different areas of art and culture, such as music, photography, and literature, which led it to enthusiastically support national film-making as well.

AES Dominicana good corporate governance

• Corporate structure • Structure of supervision and control • Governing bodies

The AES Dominicana Group continuously updates its system of Corporate Governance System, which is comprised by its respective By-Laws, Corporate Policies, Internal Code of Good Corporate Governance, and other internal Procedures approved by the AES Dominicana ´s competent entities.

Corporate structure The AES Dominicana Group is composed by four entities: Empresa Generadora de Electricidad Itabo, S. A., AES Andres, B. V., Dominican Power Partners, Ldc., and Fundación AES Dominicana, Inc. Empresa Generadora de Electricidad ITABO, S. A. (“ITABO”) is a limited liability company incorporated under the laws of the Dominican Republic on September 8, 1999.

ITABO’s shareholders composition is as follows:

AES Dominicana good corporate governance

AES Andres, B.V. (“AES Andres”) is a limited liability company incorporated under the laws of The Netherlands on September 14, 1999. On May 29, 2000, AES Andres was authorized to operate in the Dominican Republic. AES Andres is an indirect and wholly owned subsidiary of The AES Corporation. Dominican Power Partners, LDC. (DPP) is a limited liability company incorporated under the laws of the Cayman Islands on November 14, 1995. On May 12, 1997, DPP was authorized to operate in the (Dominican Republic). DPP is an indirect and wholly owned subsidiary of The AES Corporation. Fundación AES Dominicana, Inc. (AES Dominicana Foundation) is a non-governmental organization incorporated under the laws of the Dominican Republic on May 8, 2008.

Structure of supervision and control The structure of supervision and control apply to all AES Dominicana entities previously described. These mechanisms and provisions for supervision and control apply indistinctly to each of the entities, unless the legislation of their respective jurisdictions establishes otherwise, or the nature of their respective businesses limits the scope of implementation, in which case they will be expressly indicated by the Corporate Governance Committee at the request of the interested party. AES Dominicana’s Corporate Governance system is composed by the following. Internal control Each business unit leader is responsible for the ethical conduct of its members, and must ensure that the principles of internal control are established, communicated, documented, and maintained within their respective business units. Compliance with the principles will be monitored periodically through control audits and self-evaluations.

AES Dominicana good corporate governance

Internal financial auditing The AES Corporation´s Financial Auditing Committee is made up of members of the AES Corporation´s Board of Directors and independent directors selected in accordance with the standards of the companies traded on the United States stock exchange and best international practices followed by the most important corporations throughout the world. Internal auditing directorate of the AES Dominicana group AES Dominicana forms part of the Central American Caribbean and Mexico Busines Unit of Internal Auditing, whose members are located geographically in Panama. Basically this committee determines the auditing plans for the year; then they carry out the audits; and lastly they provide follow-up to the observations so that they be implemented.

Composition:

Martin Lazzati, Auditing Director Manuel Diaz Lazo, Auditing Manager Mauricio Corado, Auditing Senior

Directorate of investor relations

Composition:

Maribel Álvarez, Corporate Finance Director Carmen Mancebo, Investor Relations Manager

External auditing AES Dominicana companies´ external auditors are selected by the AES Corporation Auditing Committee and the Board of Directors. The auditors are rotated every 10 years to guarantee the objectivity of the financial reports. Currently, the firm of Ernst & Young has been designated as our external auditors, and have been performing this task since 2008.

AES Dominicana good corporate governance

Regional compliance officer The Regional Compliance Officer was designated in January 2007 by the Chief Compliance Officer of the AES Corporation.

Composition of the compliance directorate:

Paola Guerrero, Regional Compliance Officer

Executive committee This committee is made up of the President, the Vice Presidents of the AES Dominicana companies and its Foundation, and the directors of Human Resources and Corporate Finance. This committee meets each Wednesday of every month. This committee is a deliberative and decision-making body. Consultation committee This is a consultative body made up of the President, the Vice Presidents, and all the Directors of the AES Dominicana General Administration. It may also include the Controller and the corporate financial director of AES Dominicana, who will attend as permanent guests. This committee meets once per month. Advisory committee Its mission is limited to being an entity of consultation and reflection on the development and performance of the businesses in bi-monthly or quarterly meetings. The members of this Committee are independent and highly reputed in Dominican society. They may not represent or act on behalf of AES Dominicana. General administration It is made up of the Presidency, in turn made up of the President and Vice Presidents and the general directorate, made up of the various directors of the areas of management and development of the business, and the teams of collaborators who respond to each one of these directorates.

Governing bodies General shareholders assembly This is the supreme corporate entity for supervision and control of each one of the companies that make up AES Dominicana. Each one has the broadest powers of solution of the affairs submitted for its consideration.

Board of administration Composition of the board of administration of ITABO, S. A.:

In the case of Itabo, the Secretary of the Board is nominated and designated in his functions in the General ShareholdersÂ´ Assembly by the Patrimonial Fund of Reformed Enterprises (FONPER), in representation of the Class A shareholders, who also include the former employees of the former CDE.

AES Dominicana good corporate governance

Board of administration of Dominican Power Partners:

Board of administration of AndrĂŠs:

AES Dominicana good corporate governance

Commissary of accounts Companies incorporated under the jurisdiction of the Dominican Republic, include within their supervisory structure the position of commissar of accounts. In the case of the AES Dominicana enterprises, this position is incorporated in the Itabo By-Laws. According to the General Law on Companies and Individual Enterprises with Limited Liability No. 479-08 and Article 76 of the new Implementing Regulation of the Stock Market Law, which establishes the functions of the commissar, the latter will perform his functions permanently in the partnership or corporation, during the period for which he has been designated. It must be independent with regard to the members of the Board of Administration of the partnership, and of the companies linked to same, and in addition to the powers attributed to him by the Law on Corporations, he will have the following rights, duties, and powers: a) To inspect the administration of the company, for which effect he may examine its books and documents, and have access to all information and documentation he deems necessary for fulfillment of his obligations. b) Convene at any time the board of administration of the company, as well as the General ShareholdersÂ´ Assembly, when there is no board of administration. c) Supervise the functioning of the internal control and administrative-accounting systems, as well as the reliability of the latter and all financial information or relevant facts that must be sent to the Superintendence and to the bourse or stock market where the company is registered. d) Review the application of the companyÂ´s risk management policies. e) Provide an opinion on compliance with legal requirements and the rationality of conditions for the issuing of stock and securities representing debt. f) Verify compliance with the mechanisms for implementation of the companyÂ´s standards of conduct. g) Verify availabilities and publicly traded securities, as well as obligations and their compliance.

AES Dominicana good corporate governance

h) Provide to shareholders at any time when the latter so require, information about the affairs concerning them. i) Submit for the hearing by the General Shareholders Assemblies, those affairs they deem appropriate. j) Investigate denunciations presented in writing by the shareholders, and report in the General Shareholders´ Assemblies about the corresponding results, considerations, and proposals. k) Provide an opinion regarding the proposal of the board of administration for the designation of external auditors to be contracted by the company, and oversee their Independence. l) Issue an opinion with basis regarding the operations with related parties. For the case of the companies of AES Andres and DPP the Commissar of Accounts is not established in their jurisdiction of origin.

Itabo´s commissars of accounts are: Domingo Valerio – Commissar of Accounts of Class B Shareholders Luis Arturo Geraldino – Commissar of Accounts of Class A Shareholders

Corporate governance committee The objective of this committee is to supervise the compliance, progress, and development of the provisions contained in the CBGC, and to advise the different Boards of Administration of AES Dominicana and the Board of Directors of the Foundation about the best practices of Corporate Governance. This committee is composed of the President, the Vice President for Strategic Communications, the Director of Investor Relations, the Regional Compliance Officer, and the Office of the Legal Consultant.

Este documento está impreso en papel reciclado. This document is printed on recycled paper.

“Un equipo que refuerza nuestro compromiso”