This excerpt taken from the ENI 20-F filed Jun 8, 2009.
Structure of the Electricity Sector
The model established pursuant to Laws No.10,847 and 10,848 seeks to provide cheaper tariffs for consumers and guarantees the expansion of the system, with the Power Research Company (EPE), a governmental body, responsible for the planning of generation and transmission activities. This model has defined an unregulated contracting environment and a regulated environment.
In the unregulated contracting environment, the conditions for purchasing energy are negotiable between suppliers and their customers. In relation to the regulated environment, where distribution companies operate, the purchase of energy must be executed pursuant to a bidding process coordinated by ANEEL.
Pursuant to the model, 100% of the energy demand from distributors must be satisfied through long-term contracts in advance of the expiration of current contracts in the regulated environment.
Another change imposed on the electricity sector is the separation of the bidding process for previously existing power and new power project. Power plants that were in existence prior to 2000 are considered previously existing power and those that were developed after 2000 are considered new power project. The government believes that previously existing power plants are able to provide power at more competitive prices and therefore it should give priority in the bidding process to power generated by new power project companies. Under the new regime, this priority will be in the form of more favorable contractual terms. For example, a generator considered new power project is guaranteed a power purchase agreement with a 20-year term if it wins the bidding process, while an existing power is not necessarily even guaranteed participation in the bidding process.