AES Records $2.7 Billion of Charges to Reflect Impacts of Changes in Electricity Markets.

Business Editors

ARLINGTON, Va.--(BUSINESS WIRE)--Jan. 27, 2003

          Charges Have No Effect on Parent Company Liquidity;
   Company Reports 2002 Parent Operating Cash Flow of $1.095 Billion
                    and 2002 Earnings Expectations

The AES Corporation (NYSE:AES) announced today that it will recognize charges associated with asset and goodwill impairments during the fourth quarter of 2002 aggregating $2.7 billion, or ($4.96) per share primarily related to its investments in operating businesses in the UK and Brazil as well as projects under construction in the US that will be sold or terminated.

Paul Hanrahan, CEO, stated, "These charges reflect the impacts of changes in electricity markets and economic conditions in the UK and US, and weak currency and economic conditions in Brazil during 2002. These non-cash charges will not impact AES's parent company liquidity position or violate any covenants in our corporate financing agreements, or those of AES's other operating subsidiaries. Following on from the successful completion of AES's corporate refinancing last month, we continue to move forward in our efforts to strengthen our balance sheet and improve the performance of our businesses around the world."

United Kingdom

The financial distress of certain TXU Europe companies during the fourth quarter of 2002, which has resulted in the issuance of an administration order for TXU Europe Energy Trading and TXU Europe Group plc, led to the termination of the long-term electricity sales hedging arrangement at AES Drax (a 4,000 MW coal-fired plant), and a tolling agreement at AES Barry (a 230 MW gas-fired combined cycle plant), both in the UK.

As a result of these terminations, the Company will incur an asset impairment charge for these two facilities in the amount of $1.0 billion after income taxes.

Brazil

In conjunction with the Company's annual goodwill impairment review and as a result of the unfavorable economic and regulatory environment in Brazil, AES will also incur goodwill and other asset impairment charges, after income taxes, related to its investment in Eletropaulo (an electric distribution company in Sao Paulo) of approximately $706 million, and an impairment charge of $587 million to reflect the write-down to fair value of the Company's equity method investment and a related deferred tax asset in Cemig (an integrated utility in Minas Gerais).

Other

As part of AES's efforts to strengthen its balance sheet by restructuring certain businesses, reducing discretionary capital spending, and selling or terminating the construction or operations of several businesses, the Company announced additional charges, primarily in the US.

The most significant of these are related to Mountainview, a 1,182 MW gas-fired business in California and Lake Worth, a 205 MW gas-fired plant under construction in Florida. These actions result in estimated losses on sale and termination totaling $398 million after income taxes.

2002 Parent Operating Cash Flow and Earnings

AES announced that Parent Operating Cash Flow ("POCF", as previously defined in AES's Exchange Act reports) for 2002 was $1.095 billion for the year ended December 31, 2002.

Additionally, the Company expects to report income from recurring operations for 2002 of approximately $0.78, reflecting the fourth quarter impacts of the loss of the TXU contracts at two businesses in the UK and continued slower recovery of electricity demand to pre-rationing levels in Brazil.

Income from recurring operations excludes asset and goodwill impairments and losses from discontinued operations ($6.06), the cumulative effect of losses from accounting changes ($0.65), South America foreign currency transaction losses ($0.66) and marked to market gains from FAS No. 133 of $0.08.

As a result, the Company currently expects to report a fully diluted loss per share of approximately ($6.51) for 2002. AES also announced that it will hold a conference call on February 13, 2003 at 9:00 am (eastern) to discuss its plans and expectations for 2003 as well as to present complete financial results for 2002.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release may contain "forward-looking statements" regarding The AES Corporation's business. These statements are not historical facts, but statements that involve risks and uncertainties. Actual results could differ materially from those projected in these forward-looking statements.

For a discussion of such risks and uncertainties, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses.

The company's generating assets include interests in 176 facilities totaling over 60 gigawatts of capacity, in 33 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers.

For more general information visit our web site at www.aes.com or contact investor relations at [e-mail].