Pyrrhic victory? The process of "unplugging" Enel's services in São Paulo could take two years.

In a historic decision, the board of directors of Aneel (National Electric Energy Agency) unanimously approved, on Tuesday, April 7, a recommendation to the Ministry of Mines and Energy (MME) to terminate Enel 's concession in São Paulo.

In practice, the regulatory agency recommended that the Ministry of Mines and Energy (MME) terminate the company's concession contract before its expiration date – which is in 2028 – due to serious and repeated failures in the concessionaire's energy distribution service in its area of operation, which includes the capital city and 23 other municipalities in the São Paulo Metropolitan Region.

The decision, however, is provisional, since Aneel decided to give Enel another chance to defend itself. After this stage, if it assesses that the arguments are not satisfactory, the agency will forward the request for termination of the contract to the federal government.

If the recommendation is accepted by the Ministry of Mines and Energy (MME), the government will have the option of defining the transition of the concession's operation in São Paulo, through a provisional operator until the end of the contract in 2028 – for which Enel had filed a renewal request, which should be ignored if the termination is decreed – or preparing a new bidding process.

But this could be a Pyrrhic victory, an expression used to refer to a triumph so costly that it ends up having an effect almost equal to that of a defeat. The term comes from King Pyrrhus of Epirus, who defeated the Romans in 279 BC, but lost so many soldiers and resources that he is said to have remarked something like: "One more victory like this and I will be lost."

The term may make sense because, according to experts consulted by NeoFeed , the procedural process at Aneel and MME to confirm the termination is lengthy and could, strictly speaking, extend until 2028 or beyond. In other words, even if defeated, Enel should continue operating the concession until the end of its contract.

Enel São Paulo serves approximately 18 million people in the São Paulo Metropolitan Region, according to official data from the concessionaire itself. In addition, the Enel group owns two other energy distribution concessions in the country: Enel Rio de Janeiro and Enel Ceará, the latter also facing considerable criticism.

The majority in favor of declaring the São Paulo concession forfeited was formed at Aneel after the reading of the votes by directors Gentil Nogueira and Agnes Maria da Costa. Two other directors of the regulatory agency – Fernando Mosna and Willamy Moreira Frota – subsequently confirmed the decision. Aneel's Director-General, Sandoval Feitosa, had already recommended the forfeiture in a previous vote.

The decision by Aneel's directors took three criteria into account. The first involved recurring blackouts and long interruptions between 2023 and 2025, leaving millions of consumers in the São Paulo Metropolitan Region without power for extended periods.

The most serious case occurred in December 2025, when an extratropical cyclone left more than 500,000 properties without power, with slow restoration considered far slower than that of other distributors in similar situations.

In March, when he cast his vote, Secretary-General Feitosa cited "interruptions exceeding 147 hours (more than six days) in 2025, characterizing long-duration extreme events, and similar to those seen in the events of November 2023 and October 2024."

Another argument from the regulatory agency was the structural flaws of the concessionaire. Director Gentil Nogueira was very harsh in his vote. He cited the continuation of these problems, complaining about the inadequacy of the measures adopted and the seriousness of the episodes: "The flaws and transgressions were not remedied in a 'structural and definitive' way, with the persistence of relevant deficiencies in the provision of the service."

Finally, the directors cited the regulatory crisis throughout the process generated by these problems, with litigation and loss of institutional confidence. Enel attempted to suspend the process in court, alleging a violation of due process, which increased tension with Aneel and the Federal Court of Accounts (TCU).

These incidents prompted strong political pressure on the company from the mayor of São Paulo, Ricardo Nunes (MDB), and the governor Tarcísio de Freitas (Republicanos).

Meanwhile, municipal and state authorities denounced insufficient staffing, poor service quality, and a prioritization of profit over investment. The sum of these factors—technical failures, recurring blackouts, political pressure, and legal challenges—led Aneel (the Brazilian Electricity Regulatory Agency) to consider termination of the contract as a possible measure to guarantee the continuity and quality of service.

Two phases

The Italian multinational Enel supplies energy to 14 million customers in 274 Brazilian cities. It also operates in power generation with 27 hydroelectric plants, 14 wind farms, and seven solar farms in the country. The Italian government holds a 29% stake in the company.

Enel took over the electricity concession for the São Paulo metropolitan region in 2018.
by acquiring 73.38% of AES Eletropaulo 's shares for R$ 5.55 billion in an auction held at B3. The concession won attracted attention for being the largest in Latin America, with almost 8 million consumer units and about 18 million people, in one of the most densely populated urban regions of the continent.

Strictly speaking, Enel's management in São Paulo can be divided into two parts. The first, between 2018 and 2023, was marked by reduced investments, with significant cuts to the workforce of the former operator, resulting in a failure to meet the minimum quality targets set by Aneel in 2021 and 2022.

However, starting in 2023, the company paid the price for the negligence of previous years, suffering from a series of extreme weather events passing through São Paulo since then – intense storms, including an extratropical cyclone last December, which knocked down trees and power poles – which only reinforced its bad reputation.

Enel São Paulo has accumulated R$ 374 million in fines imposed by Aneel and Arsesp since 2020, but has paid only R$ 29 million — about 8% of the total. The remainder, approximately R$ 345 million, is either in litigation or under appeal.

According to Rosemeire Costa, president of the National Council of Electricity Consumers ( Conacen ) – a non-profit association representing consumers in concession areas – the consumer is the ultimate beneficiary of Aneel's rigorous oversight.

“By activating regulatory tools to demand contractual compliance, the government reinforces the right to quality and continuity of an essential service,” says Costa, recalling that the Consumer Protection Code provides for the concessionaire's liability for damages, and the regulatory agency is the main instrument to monitor and guarantee this quality.

According to her, Enel faces systemic problems, not only in São Paulo, with a history of political pressure and complaints also in Ceará. "The decision by the Italian company Enel not to return the São Paulo concession and the promise to invest R$ 21 billion by 2028 covers all areas in Brazil, but the poor performance is widespread, affecting both urban and rural areas," she states.

Costa warns that the forfeiture process is lengthy and complex, exceeding 24 months. "It's not an immediate decision: it involves multiple technical areas, the preparation of reports and technical notes, as well as appeals that could extend the timeframe even further," she says.

Going to court

Daniela Poli Vlavianos, a partner at the law firm Poli Advogados e Associados, acknowledges the possibility of Enel continuing to operate the concession in São Paulo until 2028, even with the ongoing legal process.

“Even after the decision of the Granting Authority, it is common for the concessionaire to seek the Judiciary to suspend the effects of the act, which can prolong the company's stay in the operation of the service,” he states.

Vlavianos, however, notes that energy distribution is an essential service, so the government needs to organize the transition beforehand, define a temporary operator, and guarantee continuity, which takes time.

However, there are mechanisms to reduce the company's stay. "The main one is intervention, which allows for the immediate removal of the concessionaire's management, with the appointment of an intervener, without terminating the contract at that moment," he says.

Costa, from Conacen, warns that this option may be inadvisable, citing the case of a federal intervention by Aneel in the concession of the Rede Group, in Mato Grosso do Sul, in 2012. "The intervention 'stifles' management, hinders access to credit by the concessionaire and paralyzes investments," he says, stating that this option could lead to even longer legal proceedings.

Another possibility mentioned by Vlavianos is termination with immediate execution, accompanied by transitional measures, although this route increases the risk of judicial suspension. "There is also consensual termination, if there is an agreement between the government and the company, which would allow for a negotiated exit," adds the expert. Finally, re-bidding allows for the amicable return of the concession for a new bidding process, being a less litigious alternative, although not a quick one.

Contacted by NeoFeed , Enel São Paulo sent a statement regarding Aneel's decision. The company clarifies that, with today's decision, the regulatory agency did not recommend the termination of the company's concession.

"Aneel has initiated a procedure to evaluate the issue," the statement says. "Once all stages of the agency's evaluation are completed, the process may be archived or forwarded for analysis by the Granting Authority," the company emphasizes.

Enel claims it will continue working to firmly demonstrate, in all instances, that it has fully complied with all indicators stipulated in the contract and in the recovery plan presented to the regulator in 2024: "The distributor has full confidence in the legal and technical foundations that guide its operations in Brazil."