ONLINE AND TELECONFERENCE RESULTS PRESENTATION SEPTEMBER 2015

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1 DATE: November 10, 2015 SUMMARY ONLINE AND TELECONFERENCE RESULTS PRESENTATION SEPTEMBER 2015 Good morning to everyone joining this teleconference. The idea is present you with the results of the third quarter and year to date for To do so, we are going to discuss five points: relevant events, the regulation of the industry up to September, the trends of the market in general, as well as ISAGEN'S, the financial results of this period up to the month of September, and finally, we will give a short presentation on the current situation of the electric power industry, which is the talk of the media. RELEVANT EVENTS We have three relevant events: the first is that ISAGEN had a perfect score again in relation to its accountability practices; the score was given by Transparencia por Colombia on its assessment of public utility companies. Also, during the third quarter, we got the news that we are still in the Dow Jones Index, which is the most demanding standard in terms of sustainability. Finally, the Board of Directors authorized the accounting reclassification. The reason for the reclassification is that this is the first year where the Company's official information is presented under International Financial Reporting Standards and all the items have been rigorously reviewed, particularly the reliability charge refunds and the commercial responsibility of the AGC, finding that certain reclassifications had to be made to handle these items more appropriately in accounting. Later on, we will review the implications thereof in further detail. INDUSTRY REGULATION As regards the Industry Regulations, we have the following Resolutions of the quarter: The first is Resolution 088 / 2015, which provides clarifications and makes amendments to the compensations by gas transporters for the imbalances occurring in normal operations at the gas inlets and outlets This Resolution defines exactly, within a range of approximately 5%, whether there are entries exceeding by 5% or are 5% lower than what has been nominated, defining how the adjustments will be made, how they have to be compensated if the exits are higher than the nominations and how they will be recovered in the event that they are lower. It defines the collection of those compensations and establishes that the National Gas and Electrical Operations Council will have to coordinate the protocols for these purposes. CREG Resolution 105 / 2015 defined the index of the gas contracts. At the beginning of the year, there was a great deal of commotion about the indices that were being used, defining that the index will be the combination between an index associated with the WTI and the US producer price index, consisting of a factor that can be negotiated between the parties, and if the parties do not reach an agreement, the factor indicated by the CREG will be used, thus dealing with and regulating the indexation issue of the gas supply contracts.

2 Then comes a Draft Resolution that is very important. It is a proposal that is being discussed on the market and it is related to the adjustments that the CREG is thinking of making to the reliability charge. The first thing established by this Draft Resolution is that it is going to call for an auction to request new energy generation, but with one condition, and that is for the variable costs to be less than or equal to 80% of the scarcity price. We believe that this is important in the sense that the CREG was looking to increase the quantity of the generation supply with variable costs lower than the scarcity cost. As we will see in the end, part of the problem today is that the variable costs of certain thermal power plants, in particular those that generate using liquid fuels, are exceeding that scarcity price, so the CREG is anticipating how to correct the situation in the future. The other part of this Resolution is an attempt at defining how to better modify or regulate the allocation of firm energy obligations to existing power plants. To do so, in this Draft Resolution, the CREG is making the following proposal: At present, the allocation is prorated at the ENFICC of the existing plants. What this Resolution is proposing is, on one hand, that allocation could also be prorated, but considering the prices bid on the spot market, privileging the plants with prices lower than the spot market price, that is to say, t is aimed at having variable prices lower than normal. As an alternative to this prorating, which would be done in a managed way, the CREG was proposing annual auctions where the firm energy obligations would be allocated for existing plants, in which proposals for new projects could even be accepted, which in essence is what Resolution 109 is proposing. Finally, CREG Resolution 138 / 2015, which is aimed at power plants that are not centrally dispatched, that is to say, up to now, they were the power plants under 20 MW, power plants that went directly to dispatching and did not have to collect and therefore, return the reliability charge. What this Resolution does is define that the foregoing is going to continue to be the treatment for power plants under 5 MW; for power plants between 5 MW and 20 MW, this Resolution sets forth that they will be entitled to the same treatment, provided the difference between what they bid and the actual generation is within a range of more or less 5%, which in our opinion is a difficult range to comply with, and this Resolution is practically limiting the treatment of power plants lower than the ones under 5 MW. ENERGY MARKET The year-to-date demand at September 2015 compared to 2014 has grown 3.9%, which is higher than the growth determined and projected by the Mining and Energy Planning Unit (UPME, for the Spanish original), fundamentally due to the high temperatures throughout the year, particularly in the last quarter, which leads to the increase in the use of air conditioners, pumps and aqueducts. The growth has been mainly in the regulated market. However, the demand is growing beyond the projections of the UPME. As regards the weather forecasts, as we already know, we are going through a full-blown phase of El Niño weather conditions, where we can clearly see that, up to the month of February, El Niño is likely to maintain the same intensity, or in the order of 90%. In March, the probability will drop to 80%. It will not be until April that El Niño will begin to weaken, and definitely, according to this projection, there would be a probability between El Niño and neutral conditions of approximately 50% around May, that is to say, it is being confirmed that the

3 current El Niño weather conditions, which are very strong, will be around until the month of April when they will begin to weaken. With regard to rainfall, trends have been in line with the El Niño weather conditions in the last quarter. In slide No. 13, the green line represents the historical average, and we can see how, from the middle of the year 2012, there has continuously been deficient rainfall, particularly in the last quarter and specifically in the month of September, where the rainfall began to decrease significantly, to around 66% of the historical average at the end of the quarter. Despite the above, the figure below, which is in slide No. 14, shows the trend of the reserves in the reservoirs, which began to recover in June, ending the quarter at a level of 67.56%, that is to say, this is logical behavior in view of the imminence of the presence of El Niño, which explains the rainfall. In turn, the trend of the reservoirs specifically explains the spot market price of energy, where the year-to-date average for 2015 has been 221 $/kwh, where the highest spot market price was in September (459 $/kwh on average), which is a clear sign that the El Niño weather conditions were beginning. As regards the average contract price, they have been on an upward trend that was more pronounced in the last quarter, and the reasons for this growth are fundamentally the PPI trend, which is the main indicator used to index contracts and, on the other hand, the market behavior, where the supply that can be contracted, which is the water supply, is lower than the contract demand, and that causes the contracts to go up. In terms of power generation in the particular case of ISAGEN, when comparing year-to-date generation up to September 2014 and 2015, it has increased by 37%, which is in line with the start-up of the Sogamoso Hydroelectric Power Plant. However, slide No. 16 shows that the last quarter has had a substantial decrease compared to the first two quarters of the year, where there was a total generation of 3,700 GWh in the first quarter, and about 3,550 GWh in the second quarter, while it barely reached 3,000 GWh in the third quarter, that is to say, you can already see the impact of El Niño making generation lower than what was projected. If we look at the generation of each power plant, in the first year of Sogamoso's operations, its generation has been around 2,700 GWh. The behavior of Amoyá is similar to last year's. Termocentro's behavior has also been similar to last year's, although this year's was a little lower. San Carlos' generation has increased by 11% compared to last year. Finally, the Miel I Hydroelectric Power Plant has been affected a great deal by the El Niño weather conditions, with a reduction of more than 200 GWh comparatively between 2014 and FINANCIAL RESULTS As I mentioned in the beginning, the purpose of the accounting reclassification was to carry out more appropriate accounting, more in line with the conceptual essence of these items. In the first place, there is the refund of the reliability charge. Actually, the refund of the reliability charge is an account that leads the market administrator to decrease the collection made on behalf of ISAGEN, although it is not entitled because it was not assigned this reliability charge, these firm energy refunds; throughout 2015, from January to September, they

4 amounted to COP 150,845 million, and what has changed is that it should be considered a lower revenue and not a cost. On another note, there is the commercial responsibility of the AGC, which is a fixed cost that all generators have to pay the AGC that some generators are going to cover in accordance with the needs of the plants. That obligation has been for COP 37,673 million, and up to now, only the net amount was being recorded in accounting; the reclassification is being made because it is necessary to express it in order for the item to be recorded correctly. The cost, regardless of the possible revenue if we are awarded the AGC, has been COP 37,673 million between January and September. As you can see in the table of slide No. 19, this is a reclassification that does not involve any variation in the basic indicators of the financial statements, that is to say, the operating profit, the EBITDA and net profit are exactly the same value. There is a change as regards the margin, a slight change when calculating based on revenue, but this is the best way to record these items in accounting. After explaining this, let's take a look at the effect on revenue. Clearly, the biggest impact on the revenue that rose 12% comparatively between the year-to-date at September 2014 and 2015, on one had was the value of the contracts, and on the other, the trading on the spot market. It is fundamentally these two concepts that explain the value of the increase in revenue. As regards the operating costs, unlike revenue, they have decreased by 17%, now standing at COP 1,026,505 million, while the most important item to explain this decrease is energy purchases. In 2014, major quantities of energy had to be purchased to fulfill our commercial commitments. Since the Sogamoso Power Plant began operating, these purchases have reduced substantially and, as you can see in the table on the right of slide No. 21, energy purchases have dropped 69% and restrictions and other costs have decreased by 58%. This explains the general trends in costs. However, it is important to mention the increase in depreciation explained by the start-up of the Sogamoso Power Plant. As for the revenue with these year-to-date income and expenditures at September 2015, as we already mentioned, we have a 12% increase in revenue, standing at COP 1,903,036 million, operating costs decreased by 17% standing at COP 1,026,505 million, and administrative expenses increased by 41%, going from COP 85,261 million to COP 120,491 million. The fundamental explanation of this increase is the wealth tax recorded starting in the first quarter of the year for approximately COP 30,000 million. The total operating costs and expenses dropped 13%, resulting in an operating profit of COP 756,040 million. Upon reviewing the main indicators, such as: EBITDA, operating profit, operating margin, net profit and net margin, you can see that the net profit has not maintained the growth of the EBITDA and operating profit, which is mainly due to the payment of the interest on the loan taken to fund the Sogamoso Hydroelectric Power Plant Project. This interest is not capitalized, but rather recorded in expenses. In turn, the debt service has been affected by the exchange rate. It is important to mention that only 9% of ISAGEN's debt is in US dollars, and that is the portion that has been affected, which is reflected in this result. In addition, there is the impact of the last tax reform, which has caused net profit to drop 3% despite the Company's revenue.

5 If you compare the results obtained at September with those expected, you can see that EBITDA performance improved by 28%, operating profit by 25% and net profit by 14%. This year's projections took El Niño weather conditions at the end of last year in to account, where all the forecasts indicated that it was a weak El Niño and was going to end in the first half of the year, which caused our budget and the hydrological forecasts to be deficient in the first half, and normal rainfall in the second half. However, the reality has been different. The rainfall in the first half of the year was better than expected, and those of the second half, which we are going through now, with strong El Niño conditions, have led to better results than what we had expected in the budget. MARKET SITUATION It seems very important to us to mention to all of you, in the simplest way possible, the situation we are going through with the strong El Niño weather conditions, which are expected to last until April next year. The El Niño weather conditions have clearly affected market behavior. In the figure of slide No. 26, the spot market price for this year is in blue, and the scarcity price is in yellow. As you can see, starting in September, there is a very big increase in the spot market price. This increase reflects the effort of the hydroelectricity generators to keep water in the reservoirs and prepare for El Niño that was gaining strength, when the thermal power plants were expected to react and begin to replace the hydroelectric generation. However, in the second half of September and the first half of October, this did not happen, and that is why the spot market price reached levels of approximately 2,500 $/kwh. Accordingly, the Government, on behalf of the Ministry of Mines and Energy, and the CREG set forth a series of measures to intervene the market and try to regulate it in order to get the thermal power plants to start generating power. The reason why the thermal power plants did not start generating power is that the operating costs were much higher than the scarcity price, and the market was only paying that price. In the figure, you can see how the scarcity price dropped when the El Niño conditions got worse, which was illogical, thus showing that the market had a structural issue. Finally, the figure shows that in mid-october, the spot market price was stable the entire time, which is due to the regulator's interventions in the sense of placing a price cap on the market of approximately 810 $/kwh, which is 75% of the first tier rationing cost. That places a cap on all hydroelectricity generators at that price, and causes dispatching by drawing lots, in which random variables are used to see who will dispatch. This has a difficult implication for hydroelectricity generators in the sense that we do not have full control over our reservoirs, but we rather dispatch as a result of a random decision made by the market administrator. In general terms, this is what is happening in relation to the spot market prices and their relationship with the scarcity price. Later on, we will see why thermal energy generators had problems, but now, let's take a look at a summary of the Government's actions through the Ministry and the CREG. The first thing is that the Ministry issued a Decree in which it ordered the CREG to take all measures in order to avoid any problems on the market, to ensure the continuity and provision of the service. In our opinion, the Colombian Government did what it had to do, that is to say,

6 the main thing was to ensure the continuity of the service and be able to take the measures for the industry to get through the El Niño weather conditions without rationing, and based on this guideline from the Ministry, the CREG has issued several Resolutions. In the first place, we have Resolutions 170 and 174, which to increase the flexibility of the issue of sale in the aspects of quantities and terms, in order to try to bring in more gas to the thermal power generation sector for the power plants of this type to be able to generate at lower costs. Resolution 171 temporarily increases the participation of smaller power plants on the market, that is to say, minor plants have some surplus, which can be used to meet the demand. Resolution 172 is the one that, as we mentioned earlier, placed a cap on the spot market price at 75% of the first tier rationing cost, that is to say, approximately 810 $/kwh, which is why we are going to see the spot market price at around that value in the coming months. Resolution 173 is a Draft Resolution, which is not final yet, but it is very important for us because it changes the dispatching rules and allows hydroelectricity generators to offer an amount of energy in accordance with what they have in their reservoirs to get through the El Niño weather conditions. In other words, the offers can be limited in quantity, considering the rainfall forecast, the position of the reservoir and that the water we spend will be enough to get through El Niño and fulfill our firm energy obligations with the market, and not the way it is today where we simply dispatch the following day as a result of a random draw, and not necessarily with the utmost care that each generator can take with its reservoirs. This Resolution is not final yet and we are waiting for it in order to be able to better manage our reservoirs. Resolution 175 modifies the contract registry, allowing buyers exposed to the spot market and even if those who are still exposed to the supply to register new contracts, that is to say, if they get contracts, they will be used to relieve the problem, particularly as regards their exposure to the spot market. Resolutions 176 and 195 change the reconciliation price by discriminating between hydroelectric power plants and thermal power plants, where the hydroelectric power plants receive the scarcity price and return the reconciliations at spot market prices. This is actually a discrimination and, in our opinion, transfers some of the revenue to which the hydroelectricity generators should be entitled under the current regulations on the market to relieve the situation. Resolution 195 defines that the maximum price that can be paid for the demand due to restrictions is 9.9 $/kwh. What this does is place a cap on the demand of 9.9 $/kwh for all the concepts that cause restrictions plus the 7 $/kwh that are regulated. Now we see this in another regulation to relieve the situation of thermal power plants running on liquid fuels. What this is going to do is reduce the cash flow of the generators a little. Resolution 177 defines the timetable for the allocation of the reliability charge for the , and periods. In other words, what it says is that the reliability charge will remain the same until the year 2019, that is to say, the reliability charge will be allocated up to the period. CREG Resolution 178 creates an option for thermal power plants with liquid fuels during this critical period. With this option, the thermal power plants running on liquid fuels can accept settlement at a benchmark scarcity price, not at the current 300 $/kwh, but rather at 470

7 $/kwh in order to relieve the loss they are suffering. The difference between 300 $/kwh and 470 $/kwh is that the remaining 7 $/kwh are going to be transferred to the demand in the next 36 months to relieve the situation of the thermal power plants running on liquid fuels. Finally, there is Resolution 179, which increases the flexibility of the connection requirements for smaller power plants, co-generators and self-generators, so that all the energy available on the market can be injected in the network and help relieve the situation we are going through. To end with this figure, we would like to present you with the situation we have already described, but has been occurring depending on the type of technology. In the figure, the yellow line is the scarcity price, which is now around 302 $/kwh, and the dotted blue line is the price cap set by the regulator, which is approximately 800 $/kwh. If we take just any day, for instance, in this case, it was October 30, and we look at the prices that the thermal power plants were trading on the spot market, that is to say, the prices in accordance with their operating costs, you can see the following: Coal-fired power plants are bidding between 150 $/kwh and 180 $/kwh below the scarcity price. The power plants that have coal and gas technology are approximately 200 $/kwh below the scarcity price. Simple and combined cycle gas power plants are trading between 100 $/kwh and 300 $/kwh. In this case, the difference between those trading at 100 $/kwh and those trading at 300 $/kwh depends on the circumstances of each power plant, and in particular, the price at which they purchase gas, because now, on the gas market, there can be contracts from USD 3 to USD 8, 9 and more. That is why it is interesting that the range is so wide, but it all depends on the negotiations made by the thermal power plants and their actual costs. With regards to the power plants that have the possibility of generating on gas and liquid fuels, such as the case of Termocentro, where starting in January, we are going to have half a power plant running on liquid fuels and half a power plant running on gas, it would be around 400 $/kwh to 450 $/kwh. In this case, the generation price of these agents is above the scarcity price and the market will only pay this price. The agents that are generating on liquid fuels are bidding between 400 $/kwh and up to 700 $/kwh, so the loss suffered by generators running only on liquid fuels is the difference between the 700 $/kwh and 300 $/kwh of the scarcity price. That is to say, they would be losing around 400 $/kwh, which results in really enormous amounts, and that is why they complained that they could reach a point of financial unfeasibility, which caused the Government and the Regulator to allow them to settle and receive a benchmark scarcity price of 470 $/kwh to assume part of the loss that is being transfered to the demand. However, they will still be at a loss. In general terms, the regulation included by the Regulator will allow the power plants to recover or stop losing one third of the loss they were suffering and continue to take two thirds of that loss to their balance sheets. Finally, in the particular case of Termocentro, which has been generating with gas, in practically the last three years, and we have gas contracts to generate with the entire power plant up to

8 December 31, 2015, as of January 1, we may have to operate half of the power plant with liquid fuels and the other half with gas if we do not get enough gas during that time. That is the particular situation of Termocentro. This is what we wanted to talk to you about regarding the results for the third quarter, year to date up to September, and an explanation about the situation of the industry given the El Niño weather conditions. Thank you very much, we will be available to answer any questions you may have.