TCU recommends analysis of alternatives to the expiration of the Enel São Paulo concession

The plenary session of the Federal Court of Auditors (TCU) recommended this Wednesday (23) that the Ministry of Mines and Energy (MME) and the National Electric Energy Agency (Aneel) study alternatives to the expiration of the Enel São Paulo concession before a possible decision to terminate the contract.

The recommendation determines that the effects of the measure on consumers and the energy distribution system be evaluated. The process was reported by minister Augusto Nardes.

Forfeiture is the most severe form of termination of a concession due to non-compliance with contractual obligations. In the case of Enel, the decision still depends on the conclusion of the process at Aneel and, subsequently, the Ministry of Mines and Energy.

Impact analysis

The TCU determined that the government and Aneel carry out a “structured analysis” before a possible expiry. The study should consider which operators could take over the concession, the transition schedule, the cost of indemnifying reversible assets, the possible impact on tariffs and the risks for the distribution sector.

According to the court, it must be demonstrated, in a substantiated manner, that the expiry would produce a net benefit to the consumer.

Process at Aneel

The recommendation occurs while Aneel analyzes the process that could result in the recommendation for the expiration of the Enel São Paulo concession.

The agency's board will still decide whether or not to recommend the measure to the Ministry of Mines and Energy. The final word will rest with the federal government.

Enel disputes Aneel's conclusion that its São Paulo distributor presents “structural flaws” in the provision of services. The assessment considers, among other factors, the company's performance in recovering supply after extreme weather events recorded in 2023, 2024 and 2025.

Enel's arguments

The TCU's recommendation is in line with a request presented by Enel itself in the final arguments of the process. The company argued that Aneel should evaluate the practical consequences of a possible termination of the concession.

>> Enel presents final arguments against expiry of the concession

According to the company, these impacts had not yet been sufficiently considered. The TCU now determines an assessment that includes effects on service continuity, operational transition and tariffs.

Unreleased history

The eventual expiration of Enel São Paulo would be unprecedented in the Brazilian electricity sector. The measure has never been applied to an energy distribution concession in the country.

In previous cases, there were situations in which the public authorities took over the services or in which the operator decided to sell the concession. A possible change in Enel's command would require measures to guarantee continuity of supply.

60 day deadline

The TCU also determined that the government and Aneel present, within 60 days, a detailed schedule of the actions planned to guarantee the continuity of energy distribution in São Paulo after the end of the current Enel contract, scheduled for 2028.

The document must indicate the planned measures for the transition and maintenance of the service.

Renewal on hold

Enel had requested early renewal of the São Paulo concession, but the process is suspended until the expiry procedure is completed.

The decision on the future of the concession will depend on the next steps at Aneel and the Ministry of Mines and Energy, while the TCU monitors the possible impacts of a possible change of operator.

Origin of the process

TCU's work began in 2023, after representation from the Public Prosecutor's Office at the court. The process was opened to analyze the causes of a blackout that occurred in Enel's concession area, in Greater São Paulo, and monitor the measures adopted by the federal government.